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      Exhibit
        10.1

       

       

      EMPLOYMENT
        AGREEMENT

       

      THIS
        EMPLOYMENT AGREEMENT
        (this
“Agreement”),
        is
        entered into on September 1, 2007, (the “Effective
        Date”)
        by and
        between H2Diesel Holdings, Inc., a Delaware corporation (the “Company”),
        and
        Michael Burstein (the “Executive”).

       

      WHEREAS,
        the
        Company desires to employ Executive, and Executive desires to be employed
        by the
        Company, upon the terms and conditions hereinafter set forth.

       

      NOW,
        THEREFORE,
        in
        consideration of the covenants herein contained, and other good and valuable
        consideration, the receipt and adequacy of which are hereby forever
        acknowledged, the parties, with the intent of being legally bound hereby,
        agree
        as follows:

       

      1.  Term.
        The
        term of this Agreement shall commence on the Effective Date and shall end
        on
        December 31, 2010 unless the Executive’s employment is terminated earlier in
        accordance with this Agreement (the “Initial
        Term”);
        provided, however, that the term of this Agreement shall automatically be
        extended beyond the Initial Term for a one year period, effective January
        1,
        2011 (the “Renewal
        Term”)
        unless
        either party notifies the other by a date which is two-hundred seventy (270)
        days prior to the expiration of the Initial Term that such party desires
        not to
        extend the Initial Term beyond the third anniversary of the Effective Date.
        This
        Agreement shall continue for successive one-year Renewal Terms unless and
        until
        either party gives two-hundred seventy (270) days notice to the other of
        its
        desire not to extend further the term of this Agreement beyond the end of
        the
        then-current Renewal Term, or this Agreement is otherwise terminated pursuant
        to
Section
        5
        hereof.
        The term of this Agreement, whether during the Initial Term or any Renewal
        Term,
        shall be referred to as the “Term.”

       

      2.  Position
        and Responsibilities.

       

      2.1  Position.
        Executive will be employed by the Company to render services to the Company
        in
        the position of Chief Financial Officer. In
        that capacity, the Executive shall solely, under supervision of the President
        and Chief Executive Officer (the “CEO”),
        have
        general supervision over the financial and accounting matters of the
        Company,
        and perform other duties reasonably assigned to the Executive from time to
        time
        by the CEO provided the duties relate to the business of the Company and
        are
        consistent with the Executive’s position as Chief Financial Officer, as well as
        Executive’s background and experience. The Executive shall diligently perform
        all such services.
        The
        Executive shall report directly to the CEO. Executive shall, in all material
        respects, abide by all material and written Company rules, policies, and
        practices as adopted or modified, from time to time, in the Company’s sole
        discretion; and Executive shall attempt to use his best efforts in the
        performance of his duties hereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.2  Other
        Activities.
        While
        employed by the Company, Executive shall devote substantially all of his
        business time, attention, and skill to perform his assigned duties, services,
        and responsibilities hereunder, and shall act at all times in the furtherance
        of
        the Company’s business and interests. Executive shall not, during the term of
        this Agreement engage, directly or indirectly, in any other business activity
        (whether or not pursued for pecuniary advantage) which could reasonably be
        expected to materially interfere with Executive’s duties and responsibilities
        hereunder or create a conflict of interest with the Company. The foregoing
        limitations shall not prohibit Executive from: (i) serving as a consultant
        to
        another entity provided that such service would not violate Section 6.1 below
        or
        (ii) making and managing his personal and family investments in such form
        or
        manner as will neither require Executive’s services in the operation or affairs
        of the companies or enterprises in which such investments are made nor
        materially interfere with the performance of the Executive’s duties hereunder.
        The Company acknowledges that Executive will from time-to-time serve on the
        boards of corporations, advisory committees, trade organizations, philanthropic
        organizations or other entities. Accordingly, the foregoing limitations shall
        not prohibit Executive from serving on the boards of corporations, advisory
        committees, trade organizations, philanthropic organizations or other entities,
        provided that such service does not create a material conflict of interest
        with
        the Company.

       

      2.3  No
        Conflict.
        Executive represents and warrants that Executive’s execution of this Agreement,
        Executive’s employment with the Company, and the performance of Executive’s
        proposed duties under this Agreement shall not violate any obligations Executive
        may have to any other employer, person, or entity, including but not limited
        to
        any obligations with respect to not disclosing any proprietary or confidential
        information of any other person or entity.

       

      3.  Compensation
        and Benefits.

       

      3.1  Base
        Salary.
        In
        consideration of the services to be rendered under this Agreement, the Company
        shall pay Executive an initial base salary of eighteen thousand seven hundred
        fifty ($18,750) dollars per month (“Base
        Salary”)
        in
        accordance with the Company’s standard payroll practices. Such Base Salary shall
        be subject to such withholding or deductions as may be mutually agreed between
        the Company and Executive or as required by law. Executive’s Base Salary will be
        reviewed annually, and may be adjusted (upward, but not downward) at the
        discretion of the CEO and the Compensation Committee of the Board.

       

      3.2  Stock
        Options.
        In
        consideration of the services to be rendered under this Agreement:

       

      (a)
        The
        Company hereby grants to the Executive options to purchase 300,000 shares
        of the
        Company’s Common Stock at a price of $6.00 per share, of which 75,000 shares
        shall vest on the date hereof and the remainder shall vest in annual tranches
        as
        follows (collectively, the “Time Based Options”):

       

      75,000
        shares shall vest on the first anniversary of the Effective Date;

       

      75,000
        shares shall vest on the second anniversary of the Effective Date;
        and

      

      75,000
        shares shall vest on the third anniversary of the Effective Date.

       

      
        
          
          

        

        
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      (b)
        The
        Company hereby grants to the Executive options to purchase 450,000 shares
        of the
        Company’s Common Stock at a price of $6.00 per share which shall vest in annual
        tranches if certain annual performance targets (the “Performance
        Targets”) to be established by the CEO and the Compensation Committee of the
        Board (the “Compensation Committee”) are met, as more fully set forth
        below (collectively, the “Performance Options”): 

       

      
        	 	
                75,000
                  shares if the Performance Options shall vest in respect of the
                  fiscal year
                  ending December 31, 2007 if the Performance Targets for such year
                  are
                  met;

              

      

      
        
           

          
            	 	
                    125,000
                      shares shall vest in respect of the fiscal year ending December
                      31, 2008
                      if the Performance Targets for such year are met;
                      and

                  

          

           

        

        
          	 	
                  125,000
                    shares shall vest in respect of the fiscal year ending December
                    31, 2009
                    if the Performance Targets for such year are met;
                    and

                

        

         

      

      
        
          	 	
                  125,000
                    shares shall vest in respect of the fiscal year ending December
                    31, 2010
                    if the Performance Targets for such year are
                    met.

                

        

         

      

      Commencing
        with the fiscal year ending December 31, 2008, the Performance Targets for
        each
        fiscal year shall be established by the Compensation Committee not later
        than
        February 28 of such fiscal year. The Compensation Committee shall determine
        whether the Performance Targets for the preceding fiscal year have been met
        not
        later than seven days after the date that the Company’s audited financial
        statements in respect of such fiscal year become available, and if such
        Performance Targets are determined to have been met, the Performance Options
        in
        respect of such fiscal year shall be deemed to be vested as of such date
        of
        determination. The Time Based Options and the Performance Options shall be
        more
        fully documented in one or more Stock Option Agreement(s) containing customary
        terms and conditions and shall expire on the tenth (10th)
        anniversary of the Effective Date. 

       

      3.3  Equity
        Compensation.
        To the
        extent that the Board and the stockholders of the Company approve an equity
        compensation or incentive plan (the “Plan”),
        the
        Executive shall be eligible to participate in such plan. The amount of any
        equity awards to the Executive and terms and conditions thereof shall be
        determined not less frequently than annually by a committee of the Board
        appointed pursuant to the Plan, or by the Board, and the Chief Executive
        officer
        in each of its discretion and pursuant to the Plan.

       

      3.4  Benefits.
        Executive shall be entitled to participate in the pension and health and
        welfare
        benefit plans and perquisites that the Company generally makes available
        to its
        employees or other executives, at a level commensurate with his position
        (the
“Executive
        Benefits”).

       

      3.5  Vacation.
        During
        the Term, Executive shall be entitled to vacation each year in accordance
        with
        the Company’s policies in effect from time to time, but in no event less than
        four (4) weeks paid vacation per calendar year. The Executive shall also
        be
        entitled to such periods of sick leave as is customarily provided by the
        Company
        for its senior executive employees. In addition, Company acknowledges and
        agrees
        that Executive will not work (either at the office or remotely) during Jewish
        holidays.

       

      
        
          
          

        

        
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      3.6  Business
        Expenses.
        Throughout the term of Executive’s employment hereunder, the Company shall
        reimburse Executive for all reasonable and necessary travel, entertainment,
        promotional, and other business expenses that may be incurred by Executive
        in
        the course of performing Executive’s duties. Authorized expenses shall be
        reimbursed by the Company in accordance with policies and practices adopted,
        from time to time, by the Company concerning expense reimbursement for employees
        and shall be reimbursed upon timely presentation to the Company of an itemized
        expense statement with respect thereto, including substantiation of expenses
        incurred and such other documentation as may be required by the Company’s
        reimbursement policies from time to time and in accordance with Internal
        Revenue
        Service guidelines.

       

      3.7  Bonus
        Plan  The
        Executive shall be eligible to participate in an annual cash bonus plan
        established by the Compensation Committee (the “Bonus
        Plan).
        The
        Executive’s bonus will be targeted at 50% of the Executive’s Base Salary,
        subject to achieving certain performance targets (the “Bonus
        Plan Targets”).
        The
        Executive’s bonus with respect to the fiscal year ending December 31, 2007 shall
        be not less than 22% of the Executive’s Base salary, prorated for the number of
        days the Executive is actually employed by the Company. The Executive’s bonus
        with respect to the fiscal year ending December 31, 2008 shall be not less
        than
        22% of the Executive’s Base salary. Commencing with the fiscal year ending
        December 31, 2008, the Bonus Plan and the performance targets for each fiscal
        year shall be established by the Compensation Committee not later than February
        28 of such fiscal year. The Compensation Committee shall determine whether
        the
        Bonus Plan Targets for the preceding fiscal year have been met not later
        than
        seven days after the date that the Company’s audited financial statements in
        respect of such fiscal year become available and the bonus in respect of
        such
        fiscal year, if earned, shall be payable promptly after such determination.
        Any
        bonus paid under this Section shall be paid in accordance with the Bonus
        Plan
        and the Company’s payroll practices.

       

      3.8  Relocation
        Expenses.
        The
        Executive hereby agrees to relocate within 50 miles of the Company’s executive
        offices, which will be established at a location to be determined by the
        Board,
        currently anticipated to be Lake Mary, Florida. 

       

      (a)  The
        Company will provide the Executive with a lump-sum payment of $50,000 (the
        “Relocation Payment”) for all reasonable and necessary actual out-of-pocket
        relocation expenses paid or incurred by the Executive. The Relocation Payment
        will be made within thirty days after the Executive completes the
        relocation.

       

      (b)  If
        this
        Agreement is terminated under Section 5(c) or 5(g) then the Executive will
        reimburse the Company the full amount of the Relocation Payment

       

      
        
          
          

        

        
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      4.  Nondisclosure
        of Confidential and Proprietary Information.
        At all
        times before and for five (5) years after the termination of Executive’s service
        (for any reason by the Company or by Executive), Executive agrees to keep
        all
        Confidential or Proprietary Information in strict confidence and secrecy,
        and
        not to disclose or use the Confidential or Proprietary Information in any
        way
        outside of Executive’s assigned responsibilities for the Company. “Confidential
        or Proprietary Information” means any non-public information or idea (whether or
        not a trade secret) relating to the business of the Company obtained by
        Executive in the course of employment by the Company that is not generally
        known
        outside the Company or not generally known in the industry or by persons
        engaged
        in businesses similar to that of the Company (including information which
        may be
        available from sources outside the Company, but not in the form, arrangement,
        or
        compilation in which it exists within the Company) that should reasonably
        be
        considered confidential, including, but not limited to: (i) customer lists
        and
        records of current, former, and prospective customers; (ii) special needs
        and
        characteristics of current, former, or prospective customers; (iii) present
        or
        future business plans; (iv) trade secrets, proprietary, or confidential
        information of any customer or other entity to which the Company owes an
        obligation not to disclose such information; (v) marketing, financing, business
        development, or strategic plans; (vi) sales methods, practices, and procedures;
        (vii) personnel information; (viii) research and development data and
        projections; (ix) information or data concerning the Company’s competitive
        position in its various lines of business; (x) existing, new, or envisioned
        products, programs, services, methods, techniques, processes, projects, or
        systems; and (xi) sales, pricing, billing, costs, and other financial data
        and
        projections. All documents containing this information will be considered
        Confidential or Proprietary Information whether or not marked with any
        proprietary or confidential notice or legend. Notwithstanding the foregoing,
        nothing herein shall prohibit the Executive from disclosing any information:
        (1)
        in connection with performance of his duties hereunder as he deems in good
        faith
        to be necessary or desirable; or (2) if compelled pursuant to the order of
        a
        court or other governmental or legal body having jurisdiction over such matter;
        or (3) if necessary for Executive to defend his rights in a legal or regulatory
        proceeding. In the event Executive is compelled by order of a court or other
        governmental or legal body to communicate or divulge any such information,
        knowledge or data, he shall promptly notify the Company.

       

      5.  Termination;
        Rights and Obligations on Termination. The
        Executive’s employment under this Agreement may be terminated in any one of the
        followings ways:

       

      (a)  Death.
        The
        death of Executive shall immediately and automatically terminate the Executive’s
        employment under this Agreement. If Executive dies while employed by the
        Company, any vested options may be exercised on or before the earlier of
        (i) the
        option’s expiration date or (ii) twelve months after the Executive’s death. Any
        option that remains unexercised after this period shall be forfeited. Upon
        the
        Executive’s death, the Executive’s legal representative shall receive: (1) any
        compensation earned but not yet paid, including and without limitation, any
        bonus if declared or earned but not yet paid for a completed fiscal year
        (and
        also in any event including the guaranteed bonuses for 2007 and 2008, pro
        rata,
        based on time served during the applicable year through the date of
        termination), any amount of Base Salary earned but unpaid, any accrued vacation
        payable pursuant to the Company’s policies, and any unreimbursed business
        expenses, which amounts shall be promptly paid in a lump sum, and (2) any
        other
        amounts or benefits owing to the Executive under the then applicable employee
        benefit plans, long term incentive plans or equity plans and programs of
        the
        Company which shall be paid or treated in accordance with the terms of such
        plans and programs (subsections (1) and (2) shall be collectively referred
        to
        as, the “Accrued
        Amounts”).
        Other
        than the benefits described above, no further compensation or benefits shall
        be
        due or owing upon the Executive’s death.

       

      
        
          
          

        

        
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      (b)  Disability.
        If as a
        result of incapacity due to physical or mental illness or injury, Executive
        shall have been absent from Executive’s duties hereunder for six (6) consecutive
        months, then thirty (30) days after receiving written notice (which notice
        may
        occur before or after the end of such six (6) month period, but which shall
        not
        be effective earlier than the last day of such six (6) month period), the
        Company may terminate Executive’s employment hereunder provided Executive is
        unable to substantially perform his duties hereunder at the conclusion of
        such
        notice period (a “Disability”),
        as
        determined by a physician mutually selected by the parties hereto. In the
        event
        the Executive’s employment is terminated as a result of Disability, Executive
        shall receive from the Company, in a lump-sum payment due within ten (10)
        days
        of the effective date of termination, an amount equal to the sum of the Base
        Salary and bonus, if any, that would have been paid to Executive through
        the end
        of the then remaining Term if the Executive were not disabled or for six
        (6)
        months, whichever is less (assuming that Executive would have received no
        further increases in his Base Salary (including for the sake of clarity the
        automatic achievement of 2007 and 2008 guaranteed bonuses, pro rata based
        on
        time that would have been served during the applicable year through the end
        of
        the Term or the 12 month period described above, as applicable)). The Executive
        shall also be entitled to the Accrued Amounts. Additionally, if Executive
        is
        terminated due to a Disability, the next unvested tranche of Performance
        Options
        will vest.if the applicable Performance Targets are actually met. Any vested
        options may be exercised on or before the option’s expiration date. Any option
        that remains unexercised after this period shall be forfeited. Other than
        the
        benefits described above, no further compensation or benefits shall be due
        or
        owing upon the Executive’s termination due to a Disability.

       

      (c)  Cause.
        The
        Company may terminate this Agreement immediately upon written notice to
        Executive for “Cause,” which shall mean: (i) the Executive’s willful, material,
        and irreparable breach of this Agreement; (ii) Executive’s willful misconduct in
        the performance of any of his material duties and responsibilities hereunder
        that has a material adverse effect on the Company; (iii) Executive’s intentional
        and continued non-performance (other than by reason of disability or incapacity)
        of any of the Executive’s material duties and responsibilities hereunder or of
        any reasonable, lawful instructions from the Board, which continues for ten
        (10)
        days after receipt by Executive of written notice from the Company; (iv)
        Executive’s material and willful dishonesty or fraud with regard to the Company
        (other than good faith expense account disputes) that has a material adverse
        effect on the Company (whether to the business or reputation of the Company;
        or
        (v) Executive’s conviction of a felony (other than as a result of vicarious
        liability or a traffic related offense). For purposes of this paragraph,
        no act,
        or failure to act, on Executive’s part shall be considered “willful” unless done
        or omitted to be done, by him not in good faith and without reasonable belief
        that his action or omission was in the best interests of the Company. In
        the
        event of the Executive’s termination of employment by the Company for Cause the
        Executive shall receive the Accrued Amounts, the Executive shall repay the
        Relocation Payment and the Executive may exercise his vested options for
        a
        period of thirty (30) days following termination for Cause.

       

      Notwithstanding
        the foregoing, following the Executive’s receipt of written notice from the
        Company of any of the events described in subsections (i) through (iv) above,
        the Executive shall have ten (10) days in which to cure the alleged conduct
        (if
        curable).

       

      
        
          
          

        

        
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      (d)  Without
        Cause.
        At any
        time after Executive’s commencement of employment, the Company may, without
        Cause, terminate the Executive’s employment, effective thirty (30) days after
        written notice is provided to Executive. In the event Executive is terminated
        by
        the Company without Cause, Executive shall receive from the Company within
        ten
        (10) days after such termination, in a lump sum payment, an amount equal
        to the
        sum of the Base Salary and bonus, if any, that would have been paid to Executive
        through the end of the then remaining Term if the Executive had not been
        terminated or for twelve (12) months, whichever is less (assuming that Executive
        would have received no further increases in his Base Salary and assuming
        achievement of all applicable Bonus Plan Targets (including for the sake
        of
        clarity the automatic achievement of 2007 and 2008 guaranteed bonuses, pro
        rata
        based on time that would have been served during the applicable year through
        the
        end of the Term (or the renewal term, as applicable) or the 12 month period
        described above, as applicable). The Executive shall also receive the Accrued
        Amounts. Additionally, if Executive is terminated by the Company without
        Cause,
        all of the unvested Time Based Options will vest and the next tranche of
        unvested Performance Options will vest as if the applicable Performance Targets
        had been met. Any vested options may be exercised on or before the option’s
        expiration date. Any option that remains unexercised after this period shall
        be
        forfeited.

       

      (e)  Resignation
        for Good Reason.
        At any
        time after Executive’s commencement of employment, the Executive may resign for
        Good Reason (as defined below) effective thirty (30) days after written notice
        is provided to the Company. Upon the Executive’s termination of employment for
        Good Reason, the Executive shall be entitled to all payments and benefits
        as if
        his employment was terminated by the Company without Cause as provided in
        subsection (d) above. For purposes of this Agreement, Good Reason means:
        (i) any
        adverse change in the Executive’s position, title or reporting relationship or a
        material diminution of his duties, responsibilities or authority or the
        assignment to Executive of duties or responsibilities that are inconsistent
        with
        the Executive’s position; (ii) any
        reduction in salary or bonus opportunities; (iii) the failure by the Company
        to
        continue in effect any material compensation or benefit plan or arrangement
        in
        which Executive participates unless an equitable and substantially comparable
        arrangement (embodied in a substitute or alternative plan) has been made
        with
        respect to such plan or arrangement, or the failure by the Company to continue
        Executive’s participation therein (or in such substitute or alternative plan or
        arrangement) on a basis not less favorable, both in terms of the amount of
        benefits provided and the level of participation relative to other participants,
        as existed at the time of the Executive’s commencement of employment;
        (iii) any
        material breach of this Agreement (or any other written agreement entered
        into
        between the Executive and the Company) by the Company; (v) failure of any
        successor to the Company (whether direct or indirect and whether by merger,
        acquisition, consolidation or otherwise) to assume in a writing delivered
        to
        Executive upon the assignee becoming such, the obligations of the Company
        hereunder; or (vi) a requirement by the Company that the Executive relocate
        a
        second time.

       

      Notwithstanding
        the foregoing, following the Company’s receipt of written notice from the
        Executive of any of the events described in subsections (i) through (iv)
        above,
        the Company shall have ten (10) days in which to cure the alleged conduct
        (if
        curable).

       

      
        
          
          

        

        
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      (f)  Change
        in Control of the Company.
        In the
        event that a Change of Control (as defined below) in the Company shall occur
        during the Term of this Agreement, and within 12 months thereafter the
        Executive’s employment shall be terminated without Cause pursuant to Section
        5(d) above or for Good Reason pursuant to Section 5(e) above, then the
        Executive’s severance compensation will be as set forth above for termination
        without Cause or Good Reason, as the case may be; provided, however, that
        all
        unvested options (both Perfomance and Time Based) will vest and remain
        exercisable for the balance of the option term. The Company shall have no
        further liability under this Agreement. (For the sake of clarity, if the
        Executive’s employment is not terminated within 12 months after a Change of
        Control, the compensation payable to Executive for terminations thereafter
        without Cause pursuant to Section 5(d) above or for Good Reason pursuant
        to
        Section 5(e) above shall remain as stated in those sections.)

       

      For
        purposes of this Agreement, the term “Change of Control” shall
        mean:

       

      (i) approval
        by the stockholders of the Company of (x) a reorganization, merger,
        consolidation or other form of corporate transaction or series of transactions
        (other than the issuance by the Company of equity securities to investors
        whether in private placements or public offerings (an “Equity
        Offering”)),
        in
        each case, with respect to which persons who were the stockholders of the
        Company immediately prior to such reorganization, merger or consolidation
        or
        other transaction do not, immediately thereafter, own more than 50% of the
        combined voting power entitled to vote generally in the election of directors
        of
        the reorganized, merged or consolidated company’s then outstanding voting
        securities, in substantially the same proportions as their ownership immediately
        prior to such reorganization, merger, consolidation or other transaction,
        or (y)
        a liquidation or dissolution of the Company or (z) the sale of all or
        substantially all of the assets of the Company (unless such reorganization,
        merger, consolidation or other corporate transaction, liquidation, dissolution
        or sale is subsequently abandoned);

       

      (ii) individuals
        who, as of the Effective Date of this Agreement, constitute the Board (the
        “Incumbent
        Board”)
        cease
        for any reason to constitute at least a majority of the Board, provided that
        any
        person becoming a director subsequent to the Effective Date of this Agreement
        whose election, or nomination for election by the Company’s stockholders, was
        approved by a vote of at least a majority of the directors then comprising
        the
        Incumbent Board (other than an election or nomination of an individual whose
        initial assumption of office is in connection with an actual or threatened
        election contest relating to the election of the directors of the Company)
        shall
        be, for purposes of this Agreement, considered as though such person were
        a
        member of the Incumbent Board; or 

       

      (iii) the
        acquisition (other than from the Company) by any person, entity or “group”,
        within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
        Act of 1934, as amended (the “Securities
        Exchange Act”),
        of
        beneficial ownership within the meaning of Rule 13-d promulgated under the
        Securities Exchange Act of more than 50% of either the then outstanding shares
        of the Company’s common stock or the combined voting power of the Company’s then
        outstanding voting securities entitled to vote generally in the election
        of
        directors (hereinafter referred to as the ownership of a “Controlling
        Interest”)
        excluding, for this purpose, any acquisitions by (1) the Company or its
        subsidiaries, (2) any person, entity or “group” that as of the Effective Date of
        this Agreement owns beneficial ownership (within the meaning of Rule 13d-3
        promulgated under the Securities Exchange Act) of a Controlling Interest,
        (3)
        any employee benefit plan of the Company or its subsidiaries, or (4) any
        acquisition in one or more Equity Offerings.

       

      
        
          
          

        

        
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      (g)  Resignation
        without Good Reason or Retirement by Executive.
        The
        Executive may resign without Good Reason or retire upon 90 days’ written notice,
        and upon such termination of employment he shall receive the Accrued
        Amounts.

       

      (h)  Superseding
        Agreement.
        This
        Agreement shall be terminated immediately and automatically if the parties
        enter
        into another employment agreement which supersedes this Agreement. In the
        event
        the parties enter into a superseding agreement, no severance pay or other
        compensation shall be due to Executive with respect to the termination of
        this
        Agreement.

       

      6.  Use
        and Return of Company Property.
        Executive acknowledges the Company’s proprietary rights and interests in its
        tangible and intangible property. Accordingly, Executive agrees that upon
        termination of Executive’s employment with the Company, for any reason, and at
        any time, Executive shall deliver to the Company all Company property,
        including: (a) all documents, contracts, writings, disks, diskettes, computer
        files or programs, computer-generated materials, information, documentation,
        or
        data stored in any medium, recordings and drawings pertaining to trade secrets,
        proprietary or confidential information, or other inventions and works of
        the
        Company; (b) all records, designs, plans, sketches, specifications, patents,
        business plans, financial statements, accountings, flow charts, manuals,
        notebooks, memoranda, lists, and other property delivered to or compiled
        by
        Executive, by or on behalf of the Company or any of its representatives,
        vendors, or customers which pertain to the business of the Company, all of
        which
        shall be and remain the property of the Company, and shall be subject, at
        all
        times, to its discretion and control; (c) all equipment, devices, products,
        and
        tangible property entrusted to Executive by the Company; and (d) all
        correspondence, reports, records, notes, charts, advertisement materials,
        and
        other similar data pertaining to the business, activities, or future plans
        of
        the Company, in the possession or control of Executive, shall be delivered
        promptly to the Company without request by it. Executive shall certify to
        the
        Company, in writing, within five (5) days of any request by the Company,
        that
        all such materials have been returned to the Company. Notwithstanding the
        foregoing or anything else to the contrary in this Agreement, the Executive
        may
        (i) retain and use in his discretion his rolodex and similar address and
        telephone directories (whether in writing or electronic format) and (ii)
        retain
        the personal computer provided to Executive by Company., 

       

      6.1  Non-competition.
        At all
        times while the Executive is employed by the Company and for a period of:
        (i)
        two (2) years after any termination of the Executive’s employment for Cause or
        the Executive’s termination of his employment without Good Reason; (ii) the
        lesser of one (1) year or the remainder of the Term after any termination
        of the
        Executive’s employment by the Company without Cause or the Executive’s
        termination for Good Reason; and (iii) one (1) year following the non-renewal
        of
        this Agreement or any termination pursuant to Section
        5,
        the
        Executive shall not, directly or indirectly, engage in or have any interest
        in
        any person (whether as an employee, officer, director, partner, agent, security
        holder, creditor, consultant or otherwise) that directly or indirectly (or
        through any affiliated entity to the extent the combined entities derive
        fifty
        percent (50%) or more of their revenues through a business competitive with
        the
        Company’s Business) competes with the Company’s Business (as defined below);
        provided that such provision shall not apply to the Executive’s ownership of
        securities of the Company or the acquisition by the Executive, solely as
        an
        investment, of securities of any issuer that is registered under Section
        12(b)
        or 12(g) of the Securities Exchange Act of 1934, as amended and that are
        listed
        or admitted for trading on any United States national securities exchange
        or
        that are quoted on the National Association of Securities Dealers Automated
        Quotations System, or any similar system or automated dissemination of
        quotations of securities prices in common use, so long as the Executive does
        not
        control, acquire a controlling interest in or become a member of a group
        which
        exercises direct or indirect control of, more than five percent of any class
        of
        capital stock of such issuer. For purposes of this Section
        6.1,
        the
        term “Business” shall mean the biofuels Business and any other business in which
        the Company is engaged prior to the delivery of a notice of termination by
        the
        Company or the Executive hereunder and which business the Company is engaged
        at
        the date of termination of the Executive’s employment.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      6.2  Non-Solicitation.
        At all
        times while the Executive is employed by the Company and for a period of:
        (i)
        two (2) years after any termination of the Executive’s employment for Cause or
        the Executive’s termination of his employment without Good Reason; (ii) the
        lesser of one (1) year or the remainder of the Term after any termination
        of the
        Executive’s employment by the Company without Cause or the Executive’s
        termination for Good Reason; and (iii) one (1) year following the non-renewal
        of
        this Agreement or any termination pursuant to Section
        5,
        the
        Executive shall not, directly or indirectly, for himself or for any other
        person
        (a) employ or attempt to employ or enter into any contractual arrangement
        with
        any employee or former employee of the Company, or (b) call on or solicit
        any of
        the actual or targeted prospective customers or suppliers of the Company
        on
        behalf of any person in connection with any business that competes with the
        Business of the Company nor shall the Executive make known the names and
        addresses of such customers or suppliers or any information relating in any
        manner to the Company’s trade or business relationships with such customers or
        suppliers, other than in connection with the performance of Executive’s duties
        under this Agreement.

       

      6.3  Reasonable
        Restrictions.
        Executive hereby acknowledges and agrees that the limits on his ability to
        engage in activities that are competitive with the Company, as defined above,
        are warranted in order to protect the Company’s trade secrets and Confidential
        or Proprietary Information, and further, are warranted to protect the Company
        in
        developing and maintaining its reputation, goodwill, and status in the
        marketplace. Executive specifically agrees that the time period, geographic
        scope, and nature of the restrictions set forth in Sections 6.1
        and
6.2
        are
        reasonable and necessary to protect the Company’s legitimate business interests
        and do not impose any limitations greater than those necessary to protect
        those
        interests.

       

      6.4.  Remedies.
        Executive hereby acknowledges and agrees that the services Executive has
        rendered and will continue to render to the Company are of a special and
        unique
        character, which gives this Agreement a peculiar value to the Company, and
        further acknowledges and agrees that the loss of those services to a direct
        competitor or the direct competition by Executive against the Company cannot
        be
        reasonably or adequately compensated for by damages in an action at law.
        Executive further acknowledges and agrees that any material breach by Executive
        of any provision of Sections
        4
        or
6
        of this
        Agreement shall cause irreparable harm to the Company, which harm cannot
        be
        reasonably or adequately compensated for by damages in an action at law.
        Accordingly, without prejudice to the rights and remedies otherwise available
        to
        the Company, Executive agrees that, in addition to any other right or remedy
        the
        Company may have, upon adequate proof of a material breach the Company shall
        be
        entitled to a temporary restraining order and to a preliminary and permanent
        injunction enjoining or restraining the breach of this Agreement by Executive,
        without the necessity of proving the inadequacy of monetary damages or the
        posting of any bond or security. Executive acknowledges and agrees that the
        preceding remedies shall be in addition to any and all other rights available
        to
        the Company at law or in equity. The failure of the Company to promptly
        institute legal action upon any breach of this Agreement shall not constitute
        a
        waiver of that or any other breach hereof.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      7.  Indemnification;
        Insurance.

       

      7.1  Indemnification
        of Executive.
        Except
        as otherwise provided by applicable law, while the Executive is employed
        by the
        Company and thereafter, in the event Executive is made a party to any
        threatened, pending, or contemplated action, suit, or proceeding, whether
        civil,
        criminal, administrative, or investigative (other than an action by the Company
        against Executive), by reason of the fact that Executive is or was performing
        services under this Agreement, then the Company shall indemnify Executive
        to the
        fullest extent permitted by applicable law against all expenses (including
        attorneys’ fees), judgments, fines, and amounts paid in settlement, as actually
        and reasonably incurred by Executive in connection therewith. In the event
        that
        both Executive and the Company are made a party to the same third party action,
        complaint, suit, or proceeding, the Company will engage competent legal
        representation, and Executive will use the same representation, provided
        that if
        counsel selected by the Company shall have a conflict of interest that prevents
        such counsel from representing Executive, then the Company may engage separate
        counsel on Executive’s behalf, and subject to the provisions of this
Section
        7,
        the
        Company will pay all attorneys’ fees of such separate counsel..

       

      7.2  Insurance
        Provided by Company.
        As soon
        as practicable after the Effective Date, the Company shall obtain a directors
        and officers liability insurance policy covering all directors and officers
        of
        the Company, including Executive, which insurance policy shall provide adequate
        insurance coverage for each of such persons, as shall be approved by the
        Board.
        The Executive shall be entitled to such coverage while employed and thereafter
        while potential liability exists.

       

      8.  Assignment;
        Binding Effect.
        Executive shall have no right to assign this Agreement to another party other
        than by will or by the laws of descent and distribution. This Agreement may
        be
        assigned or transferred by the Company only to an acquirer of all or
        substantially all of the assets of the Company, provided such acquirer promptly
        assumes all of the obligations hereunder of the Company in a writing delivered
        to the Executive and otherwise complies with the provisions hereof with regard
        to such assumption. Nothing in this Agreement shall prevent the consolidation,
        merger, or sale of the Company or a sale of any or all or substantially all
        of
        its assets. Subject to the foregoing restriction on assignment by Executive,
        this Agreement shall be binding upon, inure to the benefit of, and be
        enforceable by the parties hereto and their respective heirs, legal
        representatives, successors, and assigns.

       

      9.  Additional
        Provisions.

       

      9.1  Damages.
        Nothing
        contained herein shall be construed to prevent the Company or the Executive
        from
        seeking and recovering from the other damages sustained by either or both
        of
        them as a result of its or his breach of any term or provision of this
        Agreement. In the event that either party hereto brings suit for the collection
        of any damages resulting from, or the injunction of any action constituting,
        a
        breach of any of the terms or provisions of this Agreement, then the party
        found
        to be at fault shall pay all reasonable court costs and attorneys’ fees of the
        other.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      9.2  Amendments;
        Waivers; Remedies.
        This
        Agreement may not be amended, and no provision of this Agreement may be waived,
        except by a writing signed by Executive and by a duly authorized representative
        of the Company. Failure to exercise any right under this Agreement shall
        not
        constitute a waiver of such right. Any waiver of any breach of this Agreement
        shall not operate as a waiver of any subsequent breaches. All rights or remedies
        specified for a party herein shall be cumulative and in addition to all other
        rights and remedies of the party hereunder or under applicable law.

       

      9.3  Notices.
        Any
        notice under this Agreement must be in writing and addressed to the Company
        or
        to Executive at the corresponding address below. Notices under this Agreement
        shall be effective upon: (a) hand delivery, when personally delivered; (b)
        written verification of receipt, when delivered by overnight courier or
        certified or registered mail; or (c) acknowledgment of receipt of electronic
        transmission, when delivered via electronic mail or facsimile. Executive
        shall
        be obligated to notify the Company, in writing, of any change in Executive’s
        address. Notice of change of address shall be effective only when done in
        accordance with this Section
        9.3.

       

      
        	
                Company’s
                  Notice Address:

              	
                H2Diesel,
                  Inc.

                20283
                  State Road 7, Suite 40

                Boca
                  Raton, FL 33498

                Attn.:
                  David A Gillespie

                Telephone:
                  713 973 5720

                Facsimile:
                  713 973 5777

              
	 	 
	
                Executive’s
                  Notice Address:

              	
                Michael
                  Burstein

                6740
                  Willow Lane

                Dallas,
                  TX 75230

                 

              

      

      9.4  Severability.
        If any
        provision of this Agreement shall be held by a court of competent jurisdiction
        to be invalid, unenforceable, or void, such provision shall be enforced to
        the
        fullest extent permitted by law, and the remainder of this Agreement shall
        remain in full force and effect. In the event that the time period or scope
        of
        any provision is declared by a court of competent jurisdiction to exceed
        the
        maximum time period or scope that such court deems enforceable, then such
        court
        shall reduce the time period or scope to the maximum time period or scope
        permitted by law.

       

      9.5  Taxes.
        All
        amounts paid under this Agreement (including, without limitation, Base Salary)
        shall be reduced by all applicable state and federal tax withholdings and
        any
        other withholdings required by any applicable jurisdiction.

       

      9.6  Governing
        Law.
        The
        validity, interpretation, enforceability and performance of this Agreement
        shall
        be governed by and construed in accordance with the laws of the State of
        Texas,
        without regard to conflict of laws principles that would cause the laws of
        another jurisdiction to apply.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      9.7  Venue.
        Each of
        the parties hereto irrevocably submits to the exclusive jurisdiction of the
        courts of the State of Texas, Harris County and the Federal Courts of the
        United
        States of America located in Harris County, Texas for the purposes of any
        suit,
        action, or other proceeding arising out of this Agreement or any transaction
        contemplated hereby.

       

      9.8  Interpretation.
        This
        Agreement shall be construed as a whole, according to its fair meaning, and
        not
        in favor of or against any party. Sections and section headings contained
        in
        this Agreement are for reference purposes only, and shall not affect, in
        any
        manner, the meaning or interpretation of this Agreement. Whenever the context
        requires, references to the singular shall include the plural and the plural
        the
        singular.

       

      9.9  Survival.
        All of
        those portions of this Agreement that require performance by either party
        following termination of Executive’s employment hereunder shall survive any
        termination of this Agreement.

       

      9.10   
         Counterparts.
        This
        Agreement may be executed in several counterparts (including by means of
        telecopied signature pages), each of which shall be deemed an original but
        all
        of which shall constitute one and the same instrument.

       

      9.11  
          Authority.
        Each
        party represents and warrants that such party has the right, power, and
        authority to enter into and execute this Agreement and to perform and discharge
        all of the obligations hereunder, and that this Agreement constitutes the
        valid
        and legally binding agreement and obligation of such party and is enforceable
        in
        accordance with its terms.

       

      9.12   
         Additional
        Assurances.
        The
        provisions of this Agreement shall be self-operative and shall not require
        further agreement by the parties except as may be herein specifically provided
        to the contrary; provided, however, that at the request of the Company,
        Executive shall execute such additional instruments and take such additional
        acts as the Company may deem necessary to effectuate this
        Agreement.

       

      9.13    
        Entire
        Agreement.
        This
        Agreement is the final, complete, and exclusive agreement of the parties
        with
        respect to the subject matter hereof and supersedes and merges all prior
        or
        contemporaneous representations, discussions, proposals, negotiations,
        conditions, communications, and agreements, whether written or oral, between
        the
        parties relating to the subject matter hereof and all past courses of dealing
        or
        industry custom. No oral statements or prior written material not specifically
        incorporated herein shall be of any force and effect, and no changes in or
        additions to this Agreement shall be recognized unless incorporated herein
        by
        amendment, as provided herein (such amendment to become effective on the
        date
        stipulated therein).

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      9.14  Executive
        Acknowledgment.
        Executive acknowledges that, before signing this Agreement, Executive was
        advised of his right to consult with an attorney of his choice to review
        this
        Agreement and that Executive had sufficient opportunity to have an attorney
        review the provisions of this Agreement and negotiate its terms. Executive
        further acknowledges that Executive had a full and adequate opportunity to
        review this Agreement before signing it; that Executive carefully read and
        fully
        understood all the provisions of this Agreement before signing it, including
        the
        rights and obligations of the parties; and that Executive has entered into
        this
        Agreement knowingly and voluntarily.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF,
        the
        parties have executed this Agreement as of the date first above
        written.

       

      
        	 	
                COMPANY:

                 

                
H2DIESEL
                  HOLDINGS, INC.

                

                

                By:
                  /s/
                  David A. Gillespie

                Name:
                  David A Gillespie

                Title:
                  President and Chief Executive Officer

                

                

                

                EXECUTIVE:

                

                /s/
                  Michael Burstein

                Michael
                  Burstein

              

      

       

      
        
          
          

        

        
          15Unassociated Document

    SECURITIES
      PURCHASE

    AND
      SUBSCRIPTION AGREEMENT

    

    This
      Securities Purchase and Subscription Agreement (the “Agreement”)
      is
      dated as of September 7, 2007, among Chase Packaging Corporation, a Texas
      corporation (the “Company”),
      and
      the purchasers identified on the signature pages hereto (each, a “Purchaser”
and
      collectively, the “Purchasers”).

    

    WHEREAS,
      subject
      to the terms and conditions set forth in this Agreement and pursuant to Section
      4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”),
      the
      Company desires to issue and sell to each Purchaser, and each Purchaser,
      severally and not jointly, desires to purchase from the Company, certain
      securities of the Company as more fully described in this
      Agreement.

    

    NOW,
      THEREFORE, IN CONSIDERATION
      of the
      mutual covenants contained in this Agreement, and for other good and valuable
      consideration the receipt and sufficiency of which are hereby acknowledged,
      the
      Company and each of the Purchasers, severally and not jointly, agree as
      follows:

    

    ARTICLE
      I

    DEFINITIONS

    

    1.1
       Definitions.  In
      addition to the terms defined elsewhere in this Agreement, the following terms
      have the meanings indicated:

    

    “Affiliate”
      means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144 under the Securities Act. With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.

    

    “Business
      Day”
means
      any day other than Saturday, Sunday, or other day on which the Federal Reserve
      Bank of New York is closed.

    

    “Closing”
      means
      the closing of the purchase and sale of the Securities pursuant to Section
      2.1.

    

    “Closing
      Date”
      means
      August 23rd (or as soon thereafter as practicable).

    

    “Commission”
      means
      the Securities and Exchange Commission.

    

    “Common
      Stock”
      means
      the common stock of the Company, par value $0.10 per share.

    

    “Company
      Counsel”
      means
      Haynes and Boone, LLP, counsel to the Company.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Eligible
      Market”
      means
      any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ
      Global Select Market, NASDAQ Global Market, the NASDAQ Capital Market, or the
      OTC Bulletin Board.

    

    “Excluded
      Stock” means
      any
      of the following:

    

    (i) Units
      and/or Securities issued or issuable to the current holders of $56,500 of
      convertible notes owing by the Company (it being understood that, on the
      Closing, all of such notes will be exchanged by the holders thereof for Units
      at
      the face amount of such Notes plus accrued interest - the total amount estimated
      to be approximately $62,500);

    

    (ii) shares
      or
      options or warrants for Common Stock granted to officers, directors, and
      employees of, and consultants to, the Company pursuant to stock option or
      purchase plans or other compensatory agreements approved by the Board of
      Directors;

    

    (iii) shares
      of
      Common Stock or Preferred Stock issued in connection with any pro rata stock
      split, stock dividend, or recapitalization by the Company;

    

    (iv) shares
      of
      capital stock, or options or warrants to purchase capital stock, issued in
      connection with a strategic commercial agreement or commercial relationship
      as
      determined by the Company, the primary purpose of which is not to raise capital;
      

    

    (v) shares
      of
      capital stock, or options or warrants to purchase capital stock, issued pursuant
      to the acquisition of another corporation or entity by the Company by
      consolidation, merger, purchase of all or substantially all of the assets,
      or
      other reorganization in which the Company acquires, in a single transaction
      or
      series of related transactions, all or substantially all of the assets of such
      other corporation or entity or fifty percent (50%) or more of the voting power
      of such other corporation or entity or fifty percent (50%) or more of the equity
      ownership of such other corporation or entity, in each case the primary purpose
      of which is not to raise capital; and

    

    (vi) shares
      of
      capital stock issued in a bona-fide underwritten public securities offering
      with
      a nationally recognized underwriter with net proceeds of at least $20 Million;
      

    

    (vii) securities
      issuable upon conversion or exercise of the securities set forth in paragraphs
      (i) - (vi) above.

    

    “Lien”
means
      any lien, charge, claim, security interest, encumbrance, right of first refusal,
      or other restriction.

    

    “Person”
      means
      any individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision thereof) or any court
      or
      other federal, state, local, or other governmental authority or other entity
      of
      any kind.

    

    “Per
      Unit Purchase Price”
means
      $150.00.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Preferred
      Stock”
means
      the Series A 10% Convertible Preferred Stock of the Company, par value $1.00
      per
      share, stated value $100 per share.

    

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

    

    “Securities”
      means
      the Preferred Stock, the Shares, and the Warrants.

    

    “Shares”
      means
      the shares of Common Stock which are being issued and sold to the Purchasers
      at
      the Closing.

    

    “Trading
      Market”
      means
      the OTC Bulletin Board or any other Eligible Market, or any national securities
      exchange, market, or trading or quotation facility on which the Common Stock
      is
      then listed or quoted.

    

    “Transaction
      Documents”
      means
      this Agreement, the Registration Rights Agreement, the Statement of Resolution
      Establishing Series of Preferred Stock, the Preferred Stock Certificate, the
      Common Stock Certificate, the Warrant Agreement, and any other documents or
      agreements executed in connection with the transactions contemplated
      hereunder.

    

    “Underlying
      Shares”
      means
      the shares of Common Stock issuable :(i) upon conversion of the Preferred Stock;
      and (ii) upon exercise of the Warrants.

    

    “Unit”
means:
      (i) one share of Preferred Stock, (ii) five hundred (500) Shares, and (iii)
      five
      hundred (500) Warrants.

    

    “Warrants”
means
      the five year warrants, each of which is exercisable into one share of the
      Company’s Common Stock at $0.15 per share. 

    

    

    

    ARTICLE
      II

    PURCHASE
      AND SALE

    

    2.1
       Subject
      to the terms and conditions set forth in this Agreement, at the Closing the
      Company shall issue and sell to each Purchaser, and each Purchaser shall,
      severally and not jointly, purchase from the Company, one or more Units
      (consisting of the Preferred Stock, the Shares, and the Warrants) for the
      purchase price set forth on Schedule
      A
      hereto
      under the heading “Purchase Price”. The Closing shall take place at the offices
      of Rumson-Fair Haven Bank and Trust, 636 River Road, Fair Haven, New Jersey
      07704 immediately following the execution hereof or at such other location
      or
      time as the parties may agree.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    2.2
       Closing
      Deliveries.

    

    (a)
       At
      the
      Closing, the Company shall deliver or cause to be delivered to each Purchaser
      the following:

    

    (i)
       a
      Preferred Stock Certificate;

    

    (ii)
       a
      Common
      Stock Certificate for the Shares; and

    

    (iii)
       a
      Warrant
      Agreement and Certificate.

    

    (b)
       At
      the
      Closing, each Purchaser shall deliver or cause to be delivered an amount equal
      to the Per Unit Purchase Price multiplied by the number of Units purchased,
      in
      United States dollars and in immediately available funds, by check made payable
      to “Chase Packaging Corporation” or by wire transfer to the Company’s account
      at:

    

    Rumson-Fair
      Haven Bank and Trust Company

    636
      River
      Road

    Fair
      Haven, New Jersey 07704

    (732)
      345-1100

    ABA:
      021
      213 504

    Account
      Name - Chase Packaging Corporation

    Account
      Number - 0223005786

    For
      Benefit of: “Title/Name of Investor”

    

    The
      total
      purchase price payable by each Purchaser shall be set forth on Schedule
      A
      hereto
      under the heading “Purchase Price.”

    

    

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

    

    3.1
       Representations
      and Warranties of the Company.  The
      Company hereby represents and warrants to each of the Purchasers as
      follows:

    

    (a)
       Subsidiaries.  The
      Company has no direct or indirect Subsidiaries.

    

    (b)
       Organization
      and Qualification.  The
      Company is an entity duly organized, validly existing, and in good standing
      under the laws of the State of Texas, with the requisite power and authority
      to
      own and use properties and assets and to carry on business. The Company is
      not
      in violation of any of the provisions of its Articles of Incorporation, Bylaws,
      or other organizational or charter documents.

    

    (c)
       Authorization;
      Enforcement.  The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations hereunder and thereunder. The
      execution and delivery of each of the Transaction Documents by the Company,
      and
      the consummation by it of the transactions contemplated hereby and thereby,
      have
      been duly authorized by all necessary action on the part of the Company, and
      no
      further consent or action is required by the Company, its Board of Directors,
      or
      its stockholders. Each of the Transaction Documents has been (or upon delivery
      will be) duly executed by the Company and, assuming the due authorization,
      execution, and delivery by the other parties thereto, is, or when delivered
      in
      accordance with the terms hereof will, constitute the valid and binding
      obligations of the Company enforceable against the Company in accordance with
      its terms.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (d)
       No
      Conflicts.  The
      execution, delivery, and performance of the Transaction Documents by the
      Company, and the consummation by the Company of the transactions contemplated
      hereby and thereby, do not and will not: (i) conflict with or violate any
      provision of the Company’s Articles of Incorporation, Bylaws, or other
      organizational or charter documents; (ii) conflict with, or constitute a default
      (or an event that with notice or lapse of time or both would become a default)
      under, or give to others any rights of termination, amendment, acceleration,
      or
      cancellation (with or without notice, lapse of time, or both) of, any agreement,
      credit facility, debt, or other instrument (evidencing a Company debt or
      otherwise) or other understanding to which the Company is a party or by which
      any property or asset of the Company is bound or affected; or (iii) result
      in a
      violation of any law, rule, regulation, order, judgment, injunction, decree,
      or
      other restriction of any court or governmental authority to which the Company
      is
      subject (including federal and state securities laws and regulations and the
      rules and regulations of any self-regulatory organization to which the Company
      or its securities are subject), or by which any property or asset of the Company
      is bound or affected.

    

    (e)
       Issuance
      of the Securities.  The
      Securities (including the Underlying Shares) are duly authorized and, when
      issued and paid for in accordance with the Transaction Documents, will be duly
      and validly issued, fully paid and nonassessable, free and clear of all Liens
      and shall not be subject to preemptive rights or similar rights of stockholders.
      The Company has reserved from its duly authorized capital stock the maximum
      number of shares of Common Stock currently issuable upon conversion of the
      Preferred Stock and exercise of the Warrants.

    

    (f)
       Capitalization.  Of
      the Company’s total authorized Common Stock of 25,000,000 shares, 8,627,275
      shares are currently issued and outstanding. There are no other securities
      of
      the Company issued and outstanding. All outstanding shares of capital stock
      are
      duly authorized, validly issued, fully paid and nonassessable, and have been
      issued in compliance with all applicable securities laws. No securities of
      the
      Company are entitled to preemptive or similar rights, and no Person has any
      right of first refusal, preemptive right, right of participation, or any similar
      right to participate in the transactions contemplated by the Transaction
      Documents. Except as explained below in this paragraph (f), there are no
      outstanding options, warrants, script rights to subscribe to, calls, or
      commitments of any character whatsoever relating to, or securities, rights,
      or
      obligations convertible into or exercisable or exchangeable for, or giving
      any
      Person any right to subscribe for or acquire, any shares of Common Stock, or
      contracts, commitments, understandings, or arrangements by which the Company
      is
      or may become bound to issue additional shares of Common Stock, or securities
      or
      rights convertible or exchangeable into shares of Common Stock. There are no
      anti-dilution or price adjustment provisions contained in any security issued
      by
      the Company (or in any agreement providing rights to security holders). The
      issue and sale of the Securities (including the Underlying Shares) will not
      obligate the Company to issue shares of Common Stock or other securities to
      any
      Person (other than the Purchasers) and will not result in a right of any holder
      of Company securities to adjust the exercise, conversion, exchange, or reset
      price under such securities. Set forth in Schedule
      3.1(f)
      is a
      capitalization table showing the Company’s current capitalization and a
      pro-forma capitalization showing the results of this offering transaction.
      On
      the closing of such offering, the current holders of $56,500 of convertible
      notes owing by the Company to its directors will be exchanged by the holders
      for
      416 additional Units at the face amount of such Notes plus accrued interest
      (estimated to be a total of approximately $62,500).

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (g)
       SEC
      Reports; Financial Statements; Press Releases.  The
      Company has filed all reports required to be filed by it under the Exchange
      Act,
      including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date (the foregoing materials [together with any materials filed
      by the Company under the Exchange Act, whether or not required]) being
      collectively referred to herein as the “SEC
      Reports”
      and,
      together with this Agreement and the Schedules to this Agreement, the
“Disclosure
      Materials”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. Such
      SEC Reports comply in all material respects with the requirements of the
      Securities Act and the Exchange Act and the rules and regulations of the
      Commission promulgated thereunder, and none of the SEC Reports, when filed,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading. The financial statements of the Company included in the SEC Reports
      comply in all material respects with applicable accounting requirements and
      the
      rules and regulations of the Commission with respect thereto as in effect at
      the
      time of filing. Such financial statements have been prepared in accordance
      with
      United States generally accepted accounting principles applied on a consistent
      basis during the periods involved (“GAAP”),
      except
      as may be otherwise specified in such financial statements or the notes thereto,
      and fairly present in all material respects the financial position of the
      Company as of and for the dates thereof and the results of operations and cash
      flows for the periods then ended, subject, in the case of unaudited statements,
      to normal, immaterial, year-end audit adjustments.

    

    (h)
       Material
      Changes.  Since
      the date of the latest audited financial statements included within the SEC
      Reports, except as specifically disclosed in the SEC Reports: (i) there has
      been no event, occurrence, or development that, individually or in the
      aggregate, has had or that is reasonably likely to result in a material adverse
      effect on the Company; (ii) the Company has not incurred any liabilities
      (contingent or otherwise) other than in connection with the proposed private
      placement offering of the Securities; (iii) the Company has not altered its
      method of accounting or the identity of its auditors; (iv) the Company has
      not declared or made any dividend or distribution of cash or other property
      to
      its stockholders or purchased, redeemed, or made any agreements to purchase
      or
      redeem any shares of its capital stock; and (v) the Company has not issued
      any equity securities to any officer, director, or Affiliate.

    

    (i)
       Absence
      of Litigation.  There
      is no action, suit, claim, proceeding, inquiry, or investigation before or
      by
      any court, public board, government agency, self-regulatory organization or
      body
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company that is reasonably likely to, individually or in the aggregate, have
      a
      material adverse effect on the Company.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (j)
       Compliance.  The
      Company: (i) is not in default under or in violation of (and, to the
      knowledge of the Company, no event has occurred that has not been waived that,
      with notice or lapse of time or both, would result in a default by the Company
      under), nor has the Company received written notice of a claim that it is in
      default under or that it is in violation of, any indenture, loan, or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived); (ii) is not in violation of any order of any
      court, arbitrator, or governmental body; or (iii) is not in violation of
      any statute, rule, or regulation of any governmental authority, including
      without limitation all foreign, federal, state, and local laws relating to
      taxes, environmental protection, occupational health and safety, product
      quality, and safety and employment and labor matters, except in each case as
      could not, individually or in the aggregate, have or result in a material
      adverse effect on the Company.

    

    (k)
       Shell
      Corporation.  At
      the present time, the Company is functioning solely as a shell corporation.
      It
      owns no significant assets and is not conducting any business operations. For
      additional risk factors, see “Risk Factors” contained in the Private Placement
      Memorandum accompanying this document.

    

    (l)
       Certain
      Fees.  No
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor, or consultant, finder, placement agent,
      investment banker, bank, or other Person with respect to the transactions
      contemplated by this Agreement, and the Company has not taken any action that
      would cause any Purchaser to be liable for any such fees or
      commissions.

    

    (m)
       Private
      Placement.  Neither
      the Company nor any Person acting on the Company’s behalf has sold or offered to
      sell or solicited any offer to buy the Securities by means of any form of
      general solicitation or advertising. Neither the Company nor any of its
      Affiliates nor any Person acting on the Company’s behalf has, directly or
      indirectly, at any time within the past six months, made any offer or sale
      of
      any security or solicitation of any offer to buy any security under
      circumstances that would: (i) eliminate the availability of the exemption from
      registration under Regulation D under the Securities Act in connection with
      the
      offer and sale of the Securities as contemplated hereby; or (ii) cause the
      offering of the Securities pursuant to the Transaction Documents to be
      integrated with prior offerings by the Company for purposes of any applicable
      law, regulation, or stockholder approval provisions, including, without
      limitation, under the rules and regulations of any Trading Market. Assuming
      the
      accuracy of the Purchasers representations and warranties set forth in Section
      3.2, no registration under the Securities Act is required for the offer and
      sale
      of the Securities by the Company to the Purchasers as contemplated hereby.
      The
      Company is not, and is not an Affiliate of, an “investment company” within the
      meaning of the Investment Company Act of 1940, as amended.

    

    (n)
       Listing
      and Maintenance Requirements.  The
      Company has not, in the two years preceding the date hereof, received notice
      (written or oral) from any Trading Market on which the Common Stock is or has
      been listed or quoted to the effect that the Company is not in compliance with
      the listing or maintenance requirements of such Trading Market. The Company
      is,
      and has no reason to believe that it will not in the foreseeable future continue
      to be, in compliance with all such listing and maintenance
      requirements.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (o)
       Registration
      Rights.  Other
      than the Registration Rights Agreement being executed simultaneously herewith,
      the Company has not granted or agreed to grant to any Person any rights
      (including “piggy-back” registration rights) to have any securities of the
      Company registered with the Commission or any other governmental authority
      that
      have not been satisfied.

    

    (p)
       Application
      of Takeover Protections.  There
      is no control share acquisition, business combination, poison pill (including
      any distribution under a rights agreement), or other similar anti-takeover
      provision under the Company’s charter documents or the laws of its state of
      incorporation that is or could become applicable to any of the Purchasers as
      a
      result of the Purchasers and the Company fulfilling their obligations or
      exercising their rights under the Transaction Documents, including, without
      limitation, as a result of the Company’s issuance of the Securities and the
      Purchasers’ ownership of the Securities.

    

    (q)
       Disclosure.  The
      Company confirms that neither it nor any other Person acting on its behalf
      has
      provided any of the Purchasers or their agents or counsel with any information
      that constitutes or might constitute material, nonpublic information (other
      than
      the existence of the transactions contemplated by this Agreement, which shall
      be
      disclosed in the press release issued pursuant to Section 4.1). The Company
      understands and confirms that each of the Purchasers will rely on the foregoing
      representations in effecting transactions in securities of the Company. To
      the
      best of Company’s knowledge, all disclosure materials provided to the Purchasers
      regarding the Company, its business and the transactions contemplated hereby,
      furnished by or on behalf of the Company are true and correct and do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in the light of the
      circumstances under which they were made, not misleading. No event or
      circumstance has occurred or information exists with respect to the Company
      or
      its financial condition, which, under applicable law, rule, or regulation,
      requires public disclosure or announcement by the Company but which has not
      been
      so publicly announced or disclosed. The Company acknowledges and agrees that:
      (i) no Purchaser makes or has made any representations or warranties with
      respect to the transactions contemplated hereby other than those specifically
      set forth in Section 3.2; or (ii) any statement, commitment, or promise to
      the
      Company or, to its knowledge, any of its representatives which is or was an
      inducement to the Company to enter into this Agreement or
      otherwise.

    

    (r)
       Acknowledgment
      Regarding Purchasers’ Purchase of Securities.  The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm’s length purchaser with respect to this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that no
      Purchaser is acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby, and any advice given by any Purchaser or any of their
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
      that the Company’s decision to enter into this Agreement has been based solely
      on the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

    

    (s)
       Transactions
      With Affiliates and Employees.  Except
      as explained in paragraph (f) above, none of the officers or directors of the
      Company and, to the knowledge of the Company, none of the employees of the
      Company is presently a party to any transaction with the Company (other than
      for
      services as employees, officers and directors), including any contract,
      agreement, or other arrangement providing for the furnishing of services to
      or
      by, providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director, or such employee or, to
      the
      knowledge of the Company, any entity in which any officer, director, or any
      such
      employee has a substantial interest or is an officer, director, trustee, or
      partner.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (t)
       Financial
      Statement.  Attached
      hereto as Schedule
      3.1(t)
      is an
      (unaudited) balance sheet showing a negative net worth of $68,729 and negative
      working capital of $6,229. The Company has experienced losses for the last
      five
      years.

    

    (u)
       Sarbanes-Oxley
      Act.  The
      Company is in compliance with applicable requirements of the Sarbanes-Oxley
      Act
      of 2002 and applicable rules and regulations promulgated by the Commission
      thereunder in effect as of the date of this Agreement, except where such
      noncompliance could not be reasonably expected to have, individually or in
      the aggregate, a material adverse effect on the Company. In the event of the
      Company’s involvement in an acquisition transaction structured as a reverse
      triangular merger, the Company (or the surviving entity in the transaction)
      could be faced with significant additional expenses in order to meet the
      applicable requirements of the Sarbanes-Oxley Act.

    

    

    3.2
       Representations
      and Warranties of the Purchasers.  To
      induce the Company to sell the Securities to the Purchasers, with the intent
      that such representations and warranties: (a) be relied upon by the Company
      in determining each Purchaser’s suitability as a purchaser of the Shares; and
      (b) shall survive the purchase of the Securities, each Purchaser hereby
      represents and warrants to the Company that:

    

    (a) The
      undersigned Purchaser hereby adopts, accepts, and agrees, provided this
      Agreement is accepted by the Company, to be bound by all the terms and
      provisions of this Agreement and the Registration Rights Agreement, and to
      perform all obligations and duties therein imposed upon an
      investor.

    

    (b) The
      undersigned Purchaser has adequate means of providing for the undersigned’s
      current needs and possible personal contingencies and has no need now, and
      anticipates no need in the foreseeable future, to sell the Securities for which
      the undersigned hereby subscribes. The undersigned has
      carefully evaluated the financial resources and investment position of the
      undersigned and the risks associated with an investment in the Company and
      is
      able
      to bear the economic risks of this investment and consequently, without limiting
      the generality of the foregoing, the undersigned is able to hold the Securities
      for an indefinite period of time and has a sufficient net worth to sustain
      a
      loss of the entire investment of the undersigned in the Company in the event
      such loss should occur.

    

    (c) The
      undersigned Purchaser, either alone or with the personal representative(s)
      of
      the undersigned, is sophisticated and has such knowledge and experience in
      financial, business, and investment matters as to be capable of evaluating
      the
      merits and risks of an investment in the Company. In
      addition, the undersigned represents and warrants that, on the basis of the
      business and financial experience of the undersigned, the undersigned has
      acquired the capacity to protect the undersigned’s own interest in investments
      of this nature.
      The
      undersigned recognizes that the investment of the undersigned in the Company
      involves a high degree of risk. The undersigned further understands that an
      investment in the Company is highly speculative and is not suitable for
      investors who cannot afford to lose all of their investment. The undersigned
      is
      familiar with the nature of, and risks attendant to, investments in securities
      of the type being subscribed for hereby and has determined that the purchase
      of
      such securities is consistent with the investment objectives of the
      undersigned.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (d) The
      undersigned Purchaser is acquiring the Securities for the undersigned’s own
      account for investment and not with a view to, or for resale in connection
      with,
      any distribution of the Securities except in compliance with applicable
      Securities Laws.

    

    (e) The
      undersigned Purchaser has not offered or sold any portion of the Securities
      and
      has no present intention of dividing the Securities with others or of selling,
      distributing, or otherwise disposing of any portion of the Securities either
      currently or after the passage of a fixed or determinable period of time or
      upon
      the occurrence or non-occurrence of any predetermined event or circumstance
      except in compliance with applicable Securities laws.

    

    (f) The
      undersigned Purchaser is aware that the undersigned must bear the economic
      risk
      of this investment in the Company for an indefinite period of time because
      the
      Securities have not been registered under the Securities Act, or under the
      Securities laws of any states and, therefore, such Securities cannot be sold
      unless they are subsequently registered under the Securities Act and any
      applicable state Securities laws or an exemption from registration is available.
      Further, the undersigned understands that only the Company can take action
      so as
      to register the Securities on behalf of the Company, and except as set forth
      in
      the Registration Rights Agreement, the Company has no other obligations to
      do
      so. The undersigned understands that neither
      the Securities and Exchange Commission nor the Securities Administrator of
      any
      state has made any finding or determination relating to the fairness or
      desirability of an investment in the Company and that the
      Securities have not been approved or disapproved by the Securities and Exchange
      Commission or by any other federal or state agency, and no such agency has
      passed on the accuracy or adequacy of this Agreement or the Private Placement
      Memorandum.

    

    (g) The
      undersigned Purchaser understands and agrees that the undersigned cannot sell,
      transfer, or otherwise dispose of any of the Securities pursuant to a resale
      registration statement unless, prior to consummation of such transaction, the
      undersigned acknowledges and agrees that the Securities will not be transferred
      on the books of the Company unless the certificate or certificates evidencing
      such Securities, when submitted to the transfer agent, is accompanied by a
      separate certificate executed by an officer of, or other person duly authorized
      by, the undersigned to the effect that the Securities have been sold in
      accordance with the resale registration statement, and the undersigned has
      delivered a current prospectus in accordance with applicable Securities
      laws.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (h) The
      undersigned Purchaser understands and agrees that the undersigned cannot sell,
      transfer, or otherwise dispose of any of the Securities received pursuant to
      this Agreement in a transaction not subject to the registration requirements
      of
      the Securities Act and in accordance with applicable State Securities Laws
      unless, prior to consummation of such transaction, the undersigned delivers
      to
      the Company an opinion of counsel satisfactory to the Company that the
      transaction contemplated by the undersigned would not violate the Securities
      Act
      or any applicable State Securities Laws.
      In
      addition, the undersigned acknowledges that there can be no assurance that
      the
      undersigned will be able to sell or dispose of the Securities at any point
      in
      the future.

    

    (i) The
      undersigned Purchaser has received a copy of the Private Placement Memorandum
      and has read it carefully and is fully familiar with the contents, has had
      the
      opportunity to obtain any additional information necessary to verify the
      accuracy of the information, and has been given the opportunity to meet with
      the
      Company and to have the Company answer any questions regarding the terms and
      conditions of an investment in the Company, and all such questions have been
      answered to the full satisfaction of the undersigned. The
      undersigned further acknowledges that the Company has made
      available to the undersigned the opportunity to obtain additional information
      to
      evaluate the merits and risks of this investment.

    

    (j) The
      undersigned Purchaser confirms that the Securities were not offered to the
      undersigned by any means of general solicitation or advertising, and the
      undersigned has received no representations from the Company or any employees,
      attorneys or agents, other than those contained in this Agreement. The
      undersigned has made such independent investigation that the undersigned deemed
      necessary for the purpose of making a decision to invest in the Company. In
      making a decision to purchase the Securities, the undersigned has relied solely
      upon the undersigned’s review of the Private Placement Memorandum and
      independent investigations made by the undersigned without assistance of the
      Company, and
      the
      undersigned confirms that all documents, records, and books pertaining to this
      proposed investment have been made available to the undersigned.

    

    (k) The
      undersigned Purchaser has been advised to consult with the undersigned’s own
      attorney regarding legal matters concerning the Company, an investment in the
      Company, and to consult with the undersigned’s tax advisor regarding the state
      and federal tax consequences of acquiring the Securities.

    

    (l) The
      decision to invest, and the execution and delivery of this Agreement and the
      Registration Rights Agreement, have been duly authorized by the undersigned,
      and
      the person executing this Agreement and the Registration Rights Agreement on
      behalf of the undersigned has all right, power, and authority, in his, her,
      or
      its capacity as an officer, general partner, trustee, executor, or other
      representative of the undersigned, as the case may be, to execute and deliver
      this Agreement and the Registration Rights Agreement on behalf of the
      undersigned.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (m) The
      undersigned Purchaser is a bona fide resident of, and maintains domicile in,
      the
      state set forth on the signature page hereof.

    

    (n) The
      undersigned Purchaser has listed all the beneficial owners and relevant contact
      information of the beneficial owners of such entity on Schedule
      3.2
      to this
      Agreement.

    

    (o) This
      Agreement and the Registration Rights Agreement constitute legal, valid, and
      binding obligations of the undersigned, enforceable against the undersigned
      in
      accordance with their terms, and the execution, delivery, and performance of
      this Agreement and the Registration Rights Agreement, and the fulfillment and
      compliance with their respective terms, do not and will not conflict with,
      violate, or cause a breach of the terms, conditions, or provisions of the
      undersigned’s charter documents, any agreement, non-compete provision, contract,
      or instrument to which the undersigned is a party or any judgment, order, or
      decree to which the undersigned is subject.

    

    (p) The
      undersigned Purchaser
      acknowledges that the information provided to the undersigned in connection
      with
      the investment of the undersigned in the Company is confidential and non-public,
      and the undersigned agrees that all such information shall be kept in confidence
      and neither used by the undersigned to the personal benefit of the undersigned
      (other than in connection with this Agreement) nor disclosed to any third party
      for any reason; provided,
      however,
      that
      this obligation shall not apply to any such information which: (1) is or
      becomes part of the public knowledge or literature and readily accessible
      (except as a result of violation of any confidentiality agreements); or
      (2) is received from third parties (except third parties who disclose such
      information in violation of any confidentiality agreements).

    

    (q) No
      one
      acting on behalf of the Company has made any representations, warranties, or
      agreements to or with the undersigned with respect to the purchase of the
      Securities, except as described in this Agreement and the Private Placement
      Memorandum.

    

    (r) The
      undersigned Purchaser represents that the funds provided for this investment
      are
      either separate property of the undersigned, community property over which
      the
      undersigned has the right of control, or are otherwise funds as to which the
      undersigned has the right of management.

    

    (s) The
      undersigned Purchaser
      is an
“eligible purchaser,” meaning that the undersigned is an “accredited investor,”
as defined in Regulation D promulgated under the Securities
      Act.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (t) The
      undersigned Purchaser hereby represents and warrants that the undersigned can
      bear the economic risk attendant to the purchase of the Securities subscribed,
      including
      the total loss of the investment of the undersigned.

    

    3.3
       Schedules.  For
      purposes of the Transaction Documents, disclosure of information in the
      Schedules, regardless of section references or headings, shall automatically
      constitute disclosure where such disclosure is applicable or may be
      necessary.

    

    

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

    

    4.1
       Securities
      Laws Disclosure; Publicity.  The
      Company shall, on or before 8:30 a.m., New York City time on the first Business
      Day following the Closing Date, issue a Press Release acceptable to the
      Purchasers disclosing all material terms of the transactions contemplated
      hereby. Prior to the second Business Day after the Closing Date, the Company
      shall file a Current Report on Form 8-K with the Commission (the “8-K
      Filing”) describing
      the terms of the transactions contemplated by the Transaction Documents and
      including as exhibits to such Current Report on Form 8-K this Agreement and
      the
      form of the Securities in the manner required by the Exchange Act. Thereafter,
      the Company shall timely file any filings and notices required by the Commission
      or applicable law with respect to the transactions contemplated hereby and
      provide copies thereof to the Purchasers promptly after filing.

    

    4.2
       Use
      of Proceeds.  The
      Company will utilize the net proceeds from the sale of the Securities hereunder
      for working capital and general corporate purposes. The Company’s Directors plan
      to actively seek interested merger partners to allow the utilization of the
      Company’s public company status. Although Sarbanes-Oxley provisions have made
      public ownership less desirable and more expensive, there appears to be a
      significant group of domestic and foreign companies that would like to merge
      their business with a US traded shell. No assurance can be given that the
      Directors will be successful in their endeavors to merge with an independent
      company on terms favorable to all shareholders. If a minimum of $1,000,000
      gross
      proceeds from the sale of the Units have not been received by 5:00 p.m. on
      September 15, 2007, no Units will be issued and all proceeds of this offering
      will be returned to the Purchasers without interest.

    

    4.3
       Acknowledgment
      of Dilution.  The
      Company acknowledges that the issuance of the Securities (including the
      Underlying Shares) will result in dilution of the outstanding shares of Common
      Stock, which dilution will be substantial (see Schedule
      3.1(f)).
      The
      Company further acknowledges that its obligations under the Transaction
      Documents, including without limitation its obligation to issue the Securities
      (including the Underlying Shares) pursuant to the Transaction Documents, are
      unconditional and absolute and not subject to any right of set off,
      counterclaim, delay, or reduction, regardless of the effect of any such dilution
      or any claim that the Company may have against any Purchaser. Anything in this
      Agreement or elsewhere herein to the contrary notwithstanding, it is understood
      and agreed by the Company: (i) that none of the Purchasers have been asked
      to
      agree, nor has any Purchaser agreed, to desist from purchasing or selling,
      long
      and/or short, securities of the Company, or “derivative” securities based on
      securities issued by the Company or to hold the Securities for any specified
      term; (ii) that future open market or other transactions by any Purchaser,
      including short sales, and specifically including, without limitation, short
      sales or “derivative” transactions, before or after the closing of this or
      future private placement transactions, may negatively impact the market price
      of
      the Company’s publicly traded securities; (iii) that any Purchaser, and counter
      parties in “derivative” transactions to which any such Purchaser is a party,
      directly or indirectly, presently may have a “short” position in the Common
      Stock; and (iv) that each Purchaser shall not be deemed to have any affiliation
      with or control over any arm’s length counter party in any “derivative”
transaction.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    ARTICLE
      V

    CONDITIONS

    

    5.1
       Conditions
      Precedent to the Obligations of the Purchasers.  The
      obligation of each Purchaser to acquire Securities at the Closing is subject
      to
      the satisfaction or waiver by such Purchaser, at or before the Closing, of
      each
      of the following conditions:

    

    (a)
       Representations
      and Warranties.  The
      representations and warranties of the Company contained herein shall be true
      and
      correct in all material respects as of the date when made and as of the Closing
      as though made on and as of such date;

    

    (b)
       Performance.  The
      Company and each other Purchaser shall have performed, satisfied, and complied
      in all material respects with all covenants, agreements, and conditions required
      by the Transaction Documents to be performed, satisfied, or complied with by
      it
      at or prior to the Closing;

    

    (c)
       No
      Injunction.  No
      statute, rule, regulation, executive order, decree, ruling, or injunction shall
      have been enacted, entered, promulgated, or endorsed by any court or
      governmental authority of competent jurisdiction that prohibits the consummation
      of any of the transactions contemplated by the Transaction
      Documents;

    

    (d)
       Adverse
      Changes.  Since
      the date of execution of this Agreement, no event or series of events shall
      have
      occurred that reasonably would be expected to have or result in a material
      adverse effect upon the Company; and

    

    (e)
       No
      Suspensions of Trading in Common Stock; Listing.  Trading
      in the Common Stock shall not have been suspended by the Commission or any
      Trading Market (except for any suspensions of trading of not more than one
      Trading Day solely to permit dissemination of material information regarding
      the
      Company) at any time since the date of execution of this Agreement, and the
      Common Stock shall have been at all times since such date listed for trading
      on
      an Eligible Market;

    

    5.2
       Conditions
      Precedent to the Obligations of the Company.  The
      obligation of the Company to sell Securities at the Closing is subject to the
      satisfaction or waiver by the Company, at or before the Closing, of each of
      the
      following conditions:

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (a)
       Representations
      and Warranties.  The
      representations and warranties of the Purchasers contained herein shall be
      true
      and correct in all material respects as of the date when made and as of the
      Closing Date as though made on and as of such date;

    

    (b)
       Performance.  The
      Purchasers shall have performed, satisfied, and complied in all material
      respects with all covenants, agreements, and conditions required by the
      Transaction Documents to be performed, satisfied, or complied with by the
      Purchasers at or prior to the Closing; and

    

    (c)
       No
      Injunction.  No
      statute, rule, regulation, executive order, decree, ruling, or injunction shall
      have been enacted, entered, promulgated, or endorsed by any court or
      governmental authority of competent jurisdiction that prohibits the consummation
      of any of the transactions contemplated by the Transaction
      Documents.

    

    The
      Securities being sold hereunder are being offered and sold by the Company
      through and by means of a Private Placement Memorandum. In connection with
      that
      offering, each Purchaser will enter into a Registration Rights Agreement of
      even
      date herewith with the Company providing for each Purchaser to have certain
      SEC
      registration rights for the Securities. With regard to such SEC registration
      rights, reference is hereby made to such Registration Rights Agreement, all
      of
      the provisions of which are herein incorporated by reference.

    

    

    ARTICLE
      VI

    MISCELLANEOUS

    

    6.1
       Entire
      Agreement.  The
      Transaction Documents, together with the Schedules thereto, contain the entire
      understanding of the parties with respect to the subject matter hereof and
      supersede all prior agreements and understandings, oral or written, with respect
      to such matters, which the parties acknowledge have been merged into such
      documents and schedules. At or after the Closing, and without further
      consideration, the Company will execute and deliver to the Purchasers such
      further documents as may be reasonably requested in order to give practical
      effect to the intention of the parties under the Transaction
      Documents.

    

    6.2
       Notices.  Any
      and all notices or other communications or deliveries required or permitted
      to
      be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of: (a) the date of transmission, if such notice
      or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section prior to 6:30 p.m. (New York City time) on a Trading Day; (b)
      the
      next Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      on
      a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
      on
      any Trading Day; (c) the Trading Day following the date of deposit with a
      nationally recognized overnight courier service; or (d) upon actual receipt
      by
      the party to whom such notice is required to be given. The addresses and
      facsimile numbers for such notices and communications are those set forth on
      the
      signature pages hereof, or such other address or facsimile number as may be
      designated in writing hereafter, in the same manner, by any such
      Person.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    6.3
       Amendments;
      Waivers.  No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and Purchasers
      holding a majority of the Securities or, in the case of a waiver, by the party
      against whom enforcement of any such waiver is sought. No waiver of any default
      with respect to any provision, condition, or requirement of this Agreement
      shall
      be deemed to be a continuing waiver in the future or a waiver of any subsequent
      default or a waiver of any other provision, condition, or requirement hereof,
      nor shall any delay or omission of either party to exercise any right hereunder
      in any manner impair the exercise of any such right.

    

    6.4
       Construction.  The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

    

    6.5
       Successors
      and Assigns.  This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Purchasers. Any Purchaser may assign its rights under this
      Agreement to any Person to whom such Purchaser assigns or transfers any
      Securities, provided such transferee agrees in writing to be bound, with respect
      to the transferred Securities, by the provisions hereof that apply to the
“Purchasers.” Notwithstanding anything to the contrary herein, Securities may be
      assigned to any Person in connection with a bona fide margin account or other
      loan or financing arrangement secured by such Securities.

    

    6.6
       No
      Third-Party Beneficiaries.  This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

    

    6.7
       Governing
      Law; Venue; Waiver Of Jury Trial.  ALL
      QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT, AND INTERPRETATION
      OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND PURCHASERS HEREBY
      IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
      SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION
      OF
      ANY DISPUTE BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER, IN CONNECTION
      HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
      (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS),
      AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION,
      OR
      PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT
      PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT,
      ACTION, OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL
      SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT,
      ACTION, OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED
      MAIL
      OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS
      IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE
      SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.
      NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE
      PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND PURCHASERS HEREBY WAIVE
      ALL RIGHTS TO A TRIAL BY JURY.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    6.8
       Survival.  The
      representations, warranties, agreements, and covenants contained herein shall
      survive the Closing and the delivery and/or exercise of the Securities, as
      applicable.

    

    6.9
       Execution.  This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

    

    6.10
       Severability.  If
      any provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

    

    6.11
       Replacement
      of Securities.  If
      any certificate or instrument evidencing any Securities is mutilated, lost,
      stolen, or destroyed, the Company shall issue or cause to be issued in exchange
      and substitution for and upon cancellation thereof, or in lieu of and
      substitution therefor, a new certificate or instrument, but only upon receipt
      of
      evidence reasonably satisfactory to the Company of such loss, theft, or
      destruction and customary and reasonable indemnity, if requested. The applicants
      for a new certificate or instrument under such circumstances shall also pay
      any
      reasonable third-party costs associated with the issuance of such replacement
      Securities.

    

    6.12
       Remedies.  In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages each of the Purchasers and the Company will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be
      adequate.

    

    6.13
       Independent
      Nature of Purchasers’ Obligations and Rights.  The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under any Transaction Document. The decision of each Purchaser to
      purchase Securities pursuant to this Agreement has been made by such Purchaser
      independently of any other Purchaser and independently of any information,
      materials, statements, or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise), or prospects of the Company which may have been made or given by
      any
      other Purchaser or by any agent or employee of any other Purchaser, and no
      Purchaser or any of its agents or employees shall have any liability to any
      other Purchaser (or any other Person) relating to or arising from any such
      information, materials, statements, or opinions. Nothing contained herein or
      in
      any Transaction Document, and no action taken by any Purchaser pursuant thereto,
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture, or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Document. The
      Company hereby confirms that it understands that the Purchasers are not acting
      as a “group” as that term is used in Section 13(d) of the Exchange Act. Each
      Purchaser acknowledges that no other Purchaser has acted as agent for such
      Purchaser in connection with making his, her, or its investment hereunder and
      that no other Purchaser will be acting as agent of such Purchaser in connection
      with monitoring his, her, or its investment hereunder. Each Purchaser shall
      be
      entitled to independently protect and enforce his, her, or its rights, including
      without limitation the rights arising out of this Agreement or out of the other
      Transaction Documents.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Agreement to be duly executed by their
      respective authorized signatories as of the date first indicated
      above.

    

    
      	 	 	 
	 	Chase
              Packaging Corporation
	 
 	 
 	 
 
	
            	By:  	/s/
              Herbert M. Gardner
	 	
              
Herbert
              M. Gardner
	 	Vice
              President

    
      	 	 	Address
              for
              Notice:  
	
            	 	636
              River
              Road 
	
            	 	Fair
              Haven, New
              Jersey 07704 
	 	 	Facsimile
              No.:
              (732) 741-1500 
	 	 	Telephone
              No.: (732)
              741-1925 
	 	 	 
	 	 	 
	 	 	With a copy to: 
	 	 	Haynes and Boone,
              LLP 
	 	 	201 Main Street, Suite
              2200 
	 	 	Fort Worth, TX
              76102 
	 	 	Facsimile No.:
              817.347.2384 
	 	 	Telephone No.:
              817.347.6611 
	 	 	Attn: Rice M. Tilley, Jr.,
              Esq. 
	 	 	 
	 	 	
              
(Name
              of Purchaser)  
	 	 	 
	 	 	 
	 	
              By: 
Name:
Title: 

            	
              
  
	 	
               

            	 
	 	
               

            	Address for
              Notice: 
	 	 	 
	 	 	
              
  
	 	 	
              
  
	 	 	
              
  
	 	 	Facsimile No.: 
	 	 	
              
                

              

              Telephone
                No.:  

            
	 	 	
              
                

              

              Attn:  

            
	
            	
            	
              
                

              

            

    

     

    
      
         

        
          
            
            

          

          
            18

            
              

            

          

          
            
            

          

        

        
          Schedule
            A

           

          
            	
                     

                    Purchasers

                  	 	
                     

                    Units

                  	 	
                    Preferred

                       Stock   

                  	 	
                    Common   Stock  

                  	 	
                     

                    Warrants

                  	 	
                    Purchase
                      Price   

                  	 
	
                    Nicholas
                      A Baker III

                  	 	 	
                    170
                      

                  	 	 	
                    170
                      

                  	 	 	
                    85,000

                  	 	 	
                    85,000

                  	 	
                    $

                  	
                    25,500.00

                  	 
	
                    TD
                      Ameritrade Clearing, Inc. Cust FBO William J Barrett, Jr. IRA
                      Rollover
                      

                  	 	 	
                    334
                      

                  	 	 	
                    334
                      

                  	 	 	
                    167,000

                  	 	 	
                    167,000

                  	 	
                    $

                  	
                    50,100.00

                  	 
	
                    Sara
                      Barrett

                  	 	 	
                    334
                      

                  	 	 	
                    334
                      

                  	 	 	
                    167,000

                  	 	 	
                    167,000

                  	 	
                    $

                  	
                    50,100.00

                  	 
	
                    William
                      J. Barrett

                  	 	 	
                    1,667
                      

                  	 	 	
                    1,667
                      

                  	 	 	
                    833,500

                  	 	 	
                    833,500

                  	 	
                    $

                  	
                    250,050.00

                  	 
	
                    TD
                      Ameritrade Clearing, Inc. Cust FBO William R. Cast IRA 

                  	 	 	
                    300
                      

                  	 	 	
                    300
                      

                  	 	 	
                    150,000

                  	 	 	
                    150,000

                  	 	
                    $

                  	
                    45,000.00

                  	 
	
                    TD
                      Ameritrade Clearing, Inc. Cust FBO Donald E Cutler IRA Rollover
                      

                  	 	 	
                    334
                      

                  	 	 	
                    334
                      

                  	 	 	
                    167,000

                  	 	 	
                    167,000

                  	 	
                    $

                  	
                    50,100.00

                  	 
	
                    Robert
                      Deputy

                  	 	 	
                    600
                      

                  	 	 	
                    600
                      

                  	 	 	
                    300,000

                  	 	 	
                    300,000

                  	 	
                    $

                  	
                    90,000.00

                  	 
	
                    Edward
                      L. Flynn

                  	 	 	
                    334
                      

                  	 	 	
                    334
                      

                  	 	 	
                    167,000

                  	 	 	
                    167,000

                  	 	
                    $

                  	
                    50,100.00

                  	 
	
                    Leona
                      T. Flynn

                  	 	 	
                    334
                      

                  	 	 	
                    334
                      

                  	 	 	
                    167,000

                  	 	 	
                    167,000

                  	 	
                    $

                  	
                    50,100.00

                  	 
	
                    Arthur
                      J Gajarsa 

                  	 	 	
                    340
                      

                  	 	 	
                    340
                      

                  	 	 	
                    170,000

                  	 	 	
                    170,000

                  	 	
                    $

                  	
                    51,000.00

                  	 
	
                    CGMI
                      IRA Cust FBO Arthur J Gajarsa 

                  	 	 	
                    667
                      

                  	 	 	
                    667
                      

                  	 	 	
                    333,500

                  	 	 	
                    333,500

                  	 	
                    $

                  	
                    100,050.00

                  	 
	
                    David
                      S. Gardner

                  	 	 	
                    500
                      

                  	 	 	
                    500
                      

                  	 	 	
                    250,000

                  	 	 	
                    250,000

                  	 	
                    $

                  	
                    75,000.00

                  	 
	
                    Elizabeth
                      R. Gardner

                  	 	 	
                    167
                      

                  	 	 	
                    167
                      

                  	 	 	
                    83,500

                  	 	 	
                    83,500

                  	 	
                    $

                  	
                    25,050.00

                  	 
	
                    Herbert
                      M. Gardner

                  	 	 	
                    567
                      

                  	 	 	
                    567
                      

                  	 	 	
                    283,500

                  	 	 	
                    283,500

                  	 	
                    $

                  	
                    85,050.00

                  	 
	
                    Janney
                      Montgomery Scott LLC Cust FBO Herbert M. Gardner Keogh 

                  	 	 	
                    533
                      

                  	 	 	
                    533
                      

                  	 	 	
                    266,500

                  	 	 	
                    266,500

                  	 	
                    $

                  	
                    79,950.00

                  	 
	
                    Mary
                      Gardner

                  	 	 	
                    167
                      

                  	 	 	
                    167
                      

                  	 	 	
                    83,500

                  	 	 	
                    83,500

                  	 	
                    $

                  	
                    25,050.00

                  	 
	
                    Peter
                      H. Gardner and Linda Gardner

                  	 	 	
                    67
                      

                  	 	 	
                    67
                      

                  	 	 	
                    33,500

                  	 	 	
                    33,500

                  	 	
                    $

                  	
                    10,050.00

                  	 
	
                    Stuart
                      M. Gerson & Pamela E. Somers, JTWROS

                  	 	 	
                    333
                      

                  	 	 	
                    333
                      

                  	 	 	
                    166,500

                  	 	 	
                    166,500

                  	 	
                    $

                  	
                    49,950.00

                  	 
	
                    TD
                      Ameritrade Clearing, Inc. Cust FBO Ann C W Green IRA 

                  	 	 	
                    225
                      

                  	 	 	
                    225
                      

                  	 	 	
                    112,500

                  	 	 	
                    112,500

                  	 	
                    $

                  	
                    33,750.00

                  	 
	
                    Tammy
                      Klein

                  	 	 	
                    667
                      

                  	 	 	
                    667
                      

                  	 	 	
                    333,500

                  	 	 	
                    333,500

                  	 	
                    $

                  	
                    100,050.00

                  	 
	
                    Richard
                      Leibner

                  	 	 	
                    666
                      

                  	 	 	
                    666
                      

                  	 	 	
                    333,000

                  	 	 	
                    333,000

                  	 	
                    $

                  	
                    99,900.00

                  	 
	
                    William
                      D. Marohn

                  	 	 	
                    235
                      

                  	 	 	
                    235
                      

                  	 	 	
                    117,500

                  	 	 	
                    117,500

                  	 	
                    $

                  	
                    35,250.00

                  	 
	
                    Allen
                      T. McInnes

                  	 	 	
                    1,376
                      

                  	 	 	
                    1,376
                      

                  	 	 	
                    688,000

                  	 	 	
                    688,000

                  	 	
                    $

                  	
                    206,400.00

                  	 
	
                    Pershing,
                      LLC IRA FBO C Richard Stafford 

                  	 	 	
                    1,000
                      

                  	 	 	
                    1,000
                      

                  	 	 	
                    500,000

                  	 	 	
                    500,000

                  	 	
                    $

                  	
                    150,000.00

                  	 
	
                    First
                      Clearing Corp Cust William Sutherland R/O IRA 

                  	 	 	
                    350
                      

                  	 	 	
                    350
                      

                  	 	 	
                    175,000

                  	 	 	
                    175,000

                  	 	
                    $

                  	
                    52,500.00

                  	 
	
                    TD
                      Ameritrade Clearing Inc. Cust FBO Sidney Todres IRA 

                  	 	 	
                    400
                      

                  	 	 	
                    400
                      

                  	 	 	
                    200,000

                  	 	 	
                    200,000

                  	 	
                    $

                  	
                    60,000.00

                  	 
	
                    Esther
                      K. Zyskind

                  	 	 	
                    667

                  	 	 	
                    667
                      

                  	 	 	
                    333,500

                  	 	 	
                    333,500

                  	 	
                    $

                  	
                    100,050.00

                  	 
	
                    TOTALS

                  	 	 	
                    13,334
                      

                  	 	 	
                    13,334
                      

                  	 	 	
                    6,667,000

                  	 	 	
                    6,667,000

                  	 	
                    $

                  	
                    2,000,100.00

                  	 

          

        

         

         

        
          
            
            

          

          
            19

            
              

            

          

          
            
            

          

        

        
          Schedule
            3.1(f)

        

         

      

    

    
      	
              Capitalization 

            	 	
              June
                30, 2007 

            	 
	 	 	
              Current

            	 	
              Pro
                Forma (1)

            	 
	
              Convertible
                Notes

            	 	
              $

            	
              56,500
                

            	
              (2)

            	
              $

            	
              -0-

            	 
	Preferred
              10% Series A - Shares	 	 	-0-	 	 	13,750
	(2)(3)
	Common
              Stock - Shares	 	 	8,627,275	 	 	
              15,502,275 

            	
              (2)(4)

            
	
               (6,667,000
                to be sold)

            	 	 	
            	 	 	
            	 
	
              5-Year
                Warrants

            	 	 	
              -0-
                

            	 	 	
              6,875,000
                

            	 

    

    

    

    
      	(1)	
              Assumes
                sale of all 13,334 Units

            

    

    
      	
              (2)

            	
              Convertible
                notes, estimated at $62,500 (including accrued interest) representing
                debt
                currently owing by the Company to its directors and an officer will
                be
                exchanged for an additional 416
                Units.

            

    

    
      	
              (3)

            	
              Convertible
                into 13,750,000 shares of Common
                Stock

            

    

    
      	
              (4)

            	
              Total
                fully diluted Common Stock will be 29,252,275 shares prior to warrant
                exercise and no dividend payments in
                kind

            

    

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    Schedule
      3.1(t)

    Unaudited
      Pro-Forma Condensed Balance Sheet

     

    
      	
              Assets

            	 	
              June
                30, 2007

            	 
	 	 	
              Unaudited

            	 	
               Pro-Forma(1)

            	 
	
              Current
                Assets

            	 	 	 	 	 
	
              Cash
                and cash equivalents

            	 	$	
              512
                

            	 	$	
              1,960,612
                

            	(1)
	
              Total
                Assets

            	 	$	
              512
                

            	 	$	
              1,960,612
                

            	 
	 	 	 	 	 	 	 	 
	
              Liabilities
                and Shareholders’ Equity (Deficit)

            	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              Current
                Liabilities

            	 	 	 	 	 	 	 
	
              Accrued
                expenses

            	 	$	
              6,741
                

            	 	$	
              6,741
                

            	 
	
              Total
                Current Liabilities

            	 	 	
              
                6,741

              

            	 	 	
              6,741
                

            	 
	
              Convertible
                notes payable (including estimated

              accrued
                and unpaid interest of approx. $6,000)

            	 	 	
              62,500
                

            	 	 	
              —

            	 
	
              Shareholders’
                Equity (Deficit)

            	 	 	
              (68,729

            	
              )

            	 	
              1,953,871
                

            	(2)
	 	 	 	 	 	 	
              
              

            	 
	
              Total
                Liabilities and Shareholders’ Equity (Deficit)

            	 	$	
              512
                

            	 	$	
              1,960,612
                

            	 

    

     

    
      
        
          

        

      

      (1)
        Reflects
        the sale of $2,000,100 of Units net of estimated offering expenses of $40,000.
        Net Proceeds to be initially invested in short term U.S. Treasury Securities
        and
        used for working capital and general corporate purposes. Approximately $62,500
        of debt of the Company will be exchanged for 416 Units.

      (2)
        Does not reflect valuation for warrants
        issued and possible beneficial conversion feature of Preferred
        Stock.

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    Schedule
      3.2

    

    
      	
              NAME
                OF PURCHASER

            	
              NAME
                OF BENEFICIAL OWNERS

            	
              CONTACT
                INFORMATION FOR

              BENEFICIAL
                OWNERS

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

    
      
        
        

      

      
        22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]