Document:

Exhibit
      10.16

    

    Registration
      Rights Agreement

    

    

    This
      Registration Rights Agreement (this “Agreement”)
      sets
      forth certain registration rights of purchasers (each, a “Purchaser”
and
      collectively, the “Purchasers”)
      of
      shares of Series B Convertible Preferred Stock (“Shares”)
      of
      Cyber Merchants Exchange, Inc., a California corporation (the “Company”)
      and
      warrants (the “Investor
      Warrants”)
      to
      purchase shares of the Company’s Common Stock (as defined herein) pursuant to
      Subscription Agreements to which this Agreement is a part (each, a “Subscription
      Agreement”
and
      collectively, the “Subscription
      Agreements”),
      and
      of Keating Securities, LLC (“Keating”)
      to
      which the Company has issued a warrant (the “Agent
      Warrant”
and
      together with the Investor Warrants, the “Warrants”)
      to
      purchase shares of the Company’s Common Stock.

    

    1. Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the following respective
      meanings:

    

    “Approved
      Market”
means
      the Nasdaq National Market, the Nasdaq Capital Market, the New York Stock
      Exchange, Inc., the American Stock Exchange, Inc. or the NASD’s OTC Bulletin
      Board.

    

    “Blackout
      Period”
means,
      with respect to a registration, a period:

    

    (a) in
      each
      case commencing on the day immediately after the Company notifies the Holders
      that they are required, pursuant to Section
      4(f),
      to
      suspend offers and sales of Registrable Securities during which the Company,
      in
      the good faith judgment of its Board of Directors, determines (because of the
      existence of, or in anticipation of, any acquisition, financing activity, or
      other transaction involving the Company, or the unavailability for reasons
      beyond the Company’s control of any required financial statements, disclosure of
      information which is in its best interest not to publicly disclose, or any
      other
      event or condition of similar significance to the Company) that the registration
      and distribution of the Registrable Securities to be covered by such
      registration statement, if any, would be seriously detrimental to the Company
      and its shareholders and ending on the earlier of (1) the date upon which the
      material non-public information commencing the Blackout Period is disclosed
      to
      the public or ceases to be material and (2) such time as the Company notifies
      the selling Holders that the Company will no longer delay such filing of the
      Registration Statement, recommence taking steps to make such Registration
      Statement effective, or allow sales pursuant to such Registration Statement
      to
      resume; provided,
      however,
      that (i)
      the Company shall limit its use of Blackout Periods described in the
clause
      (a),
      in the
      aggregate, to 30 Trading Days in any 12-month period and (ii) no Blackout Period
      pursuant to this clause
      (a)
      may
      commence sooner than 60 days after the end of a prior such Blackout Period;
      or

    

    (b)
       commencing
      on the day immediately after the Company notifies the Holders that they are
      required pursuant to Section
      5
      to
      suspend offers and sales of Registrable Securities because, with respect to
      a
      registration statement on a form other than Form S-3, the Company reasonably
      determines that, based on the advice of counsel, a post-effective amendment
      to
      the registration statement must be filed with the Commission in order to update
      the audited financial statements in the registration statement, or the Company
      elects, in its discretion, to file a post-effective amendment to such
      registration statement for the purpose of converting it to a Form S-3 after
      such
      form becomes available for use by the Company, and, in either case, such
      post-effective amendment is reviewed by the Commission, and ending at such
      time
      as the post-effective amendment is declared effective by the Commission;
provided,
      however,
      that (i)
      the Company shall use its best efforts to promptly cause such post-effective
      amendment to be declared effective by the Commission and (ii) the Company may
      suspend effectiveness of a registration statement for a period not to exceed
      75
      consecutive days, provided that the Company may not suspend its obligation
      under
      this clause
      (b)
      for more
      than 90 days in the aggregate during any 12 month period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      periods set forth in (a) and (b) above are not exclusive of each other. The
      period set forth in (a) will be included in the calculation of the period set
      forth in (b) and vice versa.

    

    “Business
      Day”
means
      any day of the year, other than a Saturday, Sunday, or other day on which the
      Commission is required or authorized to close.

    

    “Closing
      Date”
means
      the date on which the closing of the offering contemplated by the Subscription
      Agreements shall occur, or such other time as is mutually agreed between the
      Company and the Purchasers for the closing of the sale referred to in Recital
      A
      above.

    

    “Commission”
means
      the Securities and Exchange Commission or any other federal agency at the time
      administering the Securities Act.

    

    “Common
      Stock”
means
      the common stock, no par value per share, of the Company and any and all shares
      of capital stock or other equity securities of: (i) the Company which are added
      to or exchanged or substituted for the Common Stock by reason of the declaration
      of any stock dividend or stock split, the issuance of any distribution or the
      reclassification, readjustment, recapitalization or other such modification
      of
      the capital structure of the Company; and (ii) any other corporation, now or
      hereafter organized under the laws of any state or other governmental authority,
      with which the Company is merged, which results from any consolidation or
      reorganization to which the Company is a party, or to which is sold all or
      substantially all of the shares or assets of the Company, if immediately after
      such merger, consolidation, reorganization or sale, the Company or the
      stockholders of the Company own equity securities having in the aggregate more
      than 50% of the total voting power of such other corporation.

    

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      of the Commission promulgated thereunder.

    

    “Family
      Member”
means
      (a) with respect to any individual, such individual’s spouse, any descendants
      (whether natural or adopted), any trust all of the beneficial interests of
      which
      are owned by any of such individuals or by any of such individuals together
      with
      any organization described in Section 501(c)(3) of the Internal Revenue Code
      of
      1986, as amended, the estate of any such individual, and any corporation,
      association, partnership or limited liability company all of the equity
      interests of which are owned by those above described individuals, trusts or
      organizations and (b) with respect to any trust, the owners of the beneficial
      interests of such trust.

    

    “Holder”
means
      each Purchaser, Keating, or any of such Purchaser’s respective successors and
      Permitted Assigns who acquire rights in accordance with this Agreement with
      respect to the Registrable Securities directly or indirectly from a Purchaser
      or
      Keating, including from any Permitted Assignee.

    

    “Inspector”
means
      any attorney, accountant, or other agent retained by a Purchaser for the
      purposes provided in Section
      4(j).

    

    “Majority
      Holders”
means
      at any time Holders of a majority of the Registrable Securities.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Permitted
      Assignee”
means
      (a) with respect to a partnership, its partners or former partners in
      accordance with their partnership interests, (b) with respect to a
      corporation, its shareholders in accordance with their interest in the
      corporation, (c) with respect to a limited liability company, its members
      or former members in accordance with their interest in the limited liability
      company, (d) with respect to an individual party, any Family Member of such
      party, (e) an entity that is controlled by, controls, or is under common control
      with a transferor, or (f) a party to this Agreement.

    

    The
      terms
“register,”
      “registered,”
and
      “registration”
refers
      to a registration effected by preparing and filing a registration statement
      in
      compliance with the Securities Act, and the declaration or ordering of the
      effectiveness of such registration statement.

    

    “Registrable
      Securities”
means
      a
      number of shares of Common Stock equal to 100% of the shares of Common Stock
      issued or issuable to each Purchaser upon conversion of the Shares or exercise
      of the Investor Warrants issued to each pursuant to the Subscription Agreements
      and issued or issuable to Keating upon exercise of the Agent Warrant,
excluding
      (i) any
      Registrable Securities that have been publicly sold or may be sold immediately
      without registration under the Securities Act either pursuant to Rule 144 of
      the
      Securities Act or otherwise; provided a legal opinion with respect to the
      availability of Rule 144 for the resale of Regisgrable Securities received
      upon
      conversion of the Preferred Shares has been rendered by a law firm acceptable
      to
      both the Company and the Holder as evidence that Rule 144 is available for
      such
      Registrable Securities; (ii) any Registrable Securities sold by a person in
      a
      transaction pursuant to a registration statement filed under the Securities
      Act
      or (iii) any Registrable Securities that are at the time subject to an effective
      registration statement under the Securities Act. 

    

    “Registration
      Default Date”
means
      the date which is 150 days following the Closing Date; provided,
      however,
      (i) if
      the Registration Statement is not subject to review by the Commission’s staff
      and the 150th
      day
      following the Closing Date falls during a Blackout Period, the Registration
      Default Date shall be the date immediately following the last day of such
      Blackout Period, and (ii) if the Registration Statement is subject to review
      by
      the Commission’s staff and the Company is unable to file necessary pre-effective
      amendments to the Registration Statement with the Commission because of a
      Blackout Period, the Registration Default Date shall be extended by the number
      of calendar days that the Company is unable to file any such pre-effective
      amendment during any such Blackout Period that occurs prior to the end of the
      150-day period. 

    

    “Registration
      Default Period”
means
      the period following the Registration Default Date during which any Registration
      Event occurs and is continuing.

    

    “Registration
      Event”
means
      the occurrence of any of the following events:

    

    (a) the
      Company fails to file with the Commission the Registration Statement on or
      before the Registration Filing Date pursuant to Section
      3(a);

    

    (b) the
      Registration Statement covering Registrable Securities is not declared effective
      by the Commission on or before the Registration Default Date;

    

    (c) after
      the
      SEC Effective Date, sales cannot be made pursuant to the Registration Statement
      for any reason (including without limitation by reason of a stop order, or
      the
      Company’s failure to update the Registration Statement) but except as (i)
      excused pursuant to Section
      3(a),
      (ii)
      for the reasons specified in clause
      (d)
      or (iii)
      as otherwise permitted by this Agreement, including pursuant to a Blackout
      Period and as provided in Section
      5;
      or

    

    (d) the
      Common Stock generally or the Registrable Securities specifically are not listed
      or included for quotation on an Approved Market, or trading of the Common Stock
      is suspended or halted on the Approved Market, which at the time constitutes
      the
      principal market for the Common Stock, for more than two full, consecutive
      Trading Days; provided,
      however,
      a
      Registration Event shall not be deemed to occur if all or substantially all
      trading in equity securities (including the Common Stock) is suspended or halted
      on the Approved Market for any length of time.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Registration
      Statement”
means
      the registration statement required to be filed by the Company pursuant to
      Section
      3(a).

    

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any similar federal statute
      promulgated in replacement thereof, and the rules and regulations of the
      Commission thereunder, all as the same shall be in effect at the
      time.

    

    “SEC
      Effective Date”
means
      the date the Registration Statement is declared effective by the
      Commission.

    

    “Trading
      Day”
means
      a
      day on whichever (a) the national securities exchange, (b) the Nasdaq Stock
      Market, or (c) such other securities market, in any such case which at the
      time
      constitutes the principal securities market for the Common Stock, is open for
      general trading of securities.

    

    2. Term.
      This
      Agreement shall continue in full force and effect for a period of two (2) years
      from the date of the Subscription Agreement (the “Effective
      Date”),
      unless terminated sooner hereunder. 

    

    3. Registration.

    

    (a) Shelf
      Registration.
      As
      promptly as reasonably practicable after the date hereof, but in any event
      not
      later than 30 days after the Closing Date (the “Registration
      Filing Date”),
      the
      Company shall file with the Commission a shelf registration statement pursuant
      to Rule 415 promulgated under the Securities Act relating to the resale by
      the
      Holders of all of the Registrable Securities; provided,
      however,
      that
      the Company shall not be obligated to effect any such registration,
      qualification, or compliance pursuant to this Section
      3(a),
      or keep
      such registration effective pursuant to Section
      4:
      (i) in
      any particular jurisdiction in which the Company would be required to qualify
      to
      do business as a foreign corporation or as a dealer in securities under the
      securities or blue sky laws of such jurisdiction or to execute a general consent
      to service of process in effecting such registration, qualification or
      compliance, in each case where it has not already done so; or (ii) during any
      Blackout Period, in which case the Registration Filing Date shall be extended
      to
      the date immediately following the last day of such Blackout
      Period.

    

    (b) Piggyback
      Registration.
      If the
      Company shall determine to register for sale for cash any of its Common Stock,
      for its own account or for the account of others (other than the Holders),
      other
      than (i) a registration relating solely to employee benefit plans or securities
      issued or issuable to employees, consultants (to the extent the securities
      owned
      or to be owned by such consultants could be registered on Form S-8) or any
      of
      their Family Members (including a registration on Form S-8) or (ii) a
      registration relating solely to a Commission Rule 145 transaction, a
      registration on Form S-4 in connection with a merger, acquisition, divestiture,
      reorganization, or similar event, the Company shall promptly give to the Holders
      written notice thereof (and in no event shall such notice be given less than
      20
      calendar days prior to the filing of such registration statement), and shall,
      subject to Section
      3(c),
      include
      in such registration (and any related qualification under blue sky laws or
      other
      compliance) (a “Piggyback
      Registration”),
      all
      of the Registrable Securities specified in a written request or requests, made
      within 10 calendar days after receipt of such written notice from the Company,
      by any Holder or Holders. However, the Company may, without the consent of
      the
      Holders, withdraw such registration statement prior to its becoming effective
      if
      the Company or such other stockholders have elected to abandon the proposal
      to
      register the securities proposed to be registered thereby. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Underwriting.
      If a
      Piggyback Registration is for a registered public offering involving an
      underwriting, the Company shall so advise the Holders in writing or as a part
      of
      the written notice given pursuant to Section
      3(b).
      In such
      event the right of any Holder to registration pursuant to Section
      3(b)
      shall be
      conditioned upon such Holder’s participation in such underwriting and the
      inclusion of such Holder’s Registrable Securities in the underwriting to the
      extent provided herein. All Holders proposing to distribute their securities
      through such underwriting shall (together with the Company and any other
      stockholders of the Company distributing their securities through such
      underwriting) enter into an underwriting agreement in customary form with the
      underwriter or underwriters selected for such underwriting by the Company or
      selling stockholders, as applicable. Notwithstanding any other provision of
      this
Section
      3(c),
      if the
      underwriter or the Company determines that marketing factors require a
      limitation of the number of shares to be underwritten, the underwriter may
      exclude some or all Registrable Securities from such registration and
      underwriting. The Company shall so advise all Holders (except those Holders
      who
      failed to timely elect to distribute their Registrable Securities through such
      underwriting or have indicated to the Company their decision not to do so),
      and
      the number of shares of Registrable Securities that may be included in the
      registration and underwriting, if any, shall be allocated among such Holders
      as
      follows: 

    

    (i)
      In
      the
      event of a Piggyback Registration that is initiated by the Company, the number
      of shares that may be included in the registration and underwriting shall be
      allocated first to the Company and then, subject to obligations and commitments
      existing as of the date hereof, to all selling stockholders, including the
      Holders, who have requested to sell in the registration on a pro rata basis
      according to the number of shares requested to be included; and

    

    (ii)
      In
      the
      event of a Piggyback Registration that is initiated by the exercise of demand
      registration rights by a stockholder or stockholders of the Company (other
      than
      the Holders), then the number of shares that may be included in the registration
      and underwriting shall be allocated first to such selling stockholders who
      exercised such demand and then, subject to obligations and commitments existing
      as of the date hereof, to all other selling stockholders, including the Holders,
      who have requested to sell in the registration, on a pro rata basis according
      to
      the number of shares requested to be included.

    

    No
      Registrable Securities excluded from the underwriting by reason of the
      underwriter’s marketing limitation shall be included in such registration. If
      any Holder disapproves of the terms of any such underwriting, such Holder may
      elect to withdraw therefrom by written notice to the Company and the
      underwriter. The Registrable Securities and/or other securities so withdrawn
      from such underwriting shall also be withdrawn from such registration;
provided,
      however,
      that,
      if by the withdrawal of such Registrable Securities a greater number of
      Registrable Securities held by other Holders may be included in such
      registration (up to the maximum of any limitation imposed by the underwriters),
      then the Company shall offer to all Holders who have included Registrable
      Securities in the registration the right to include additional Registrable
      Securities pursuant to the terms and limitations set forth herein in the same
      proportion used above in determining the underwriter limitation. 

    

    (e) Other
      Registrations.
      Prior
      to the SEC Effective Date the Company will not, without the prior written
      consent of the Majority Holders, file or request the acceleration of any other
      registration statement filed with the Commission, and during any time subsequent
      to the SEC Effective Date when the Registration Statement for any reason is
      not
      available for use by any Holder for the resale of any Registrable Securities,
      the Company shall not, without the prior written consent of the Majority
      Holders, file any other registration statement or any amendment thereto with
      the
      Commission under the Securities Act or request the acceleration of the
      effectiveness of any other registration statement previously filed with the
      Commission, other than (A) any registration statement on Form S-8 or Form S-4
      and (B) any registration statement or amendment which the Company is required
      to
      file or as to which the Company is required to request acceleration pursuant
      to
      any obligation in effect on the date of execution and delivery of this
      Agreement. Notwithstanding the foregoing or anything contained herein to the
      contrary, the
      Company may include on the Registration Statement: (i)
      2,000,000 shares of Common Stock which are currently outstanding and have been
      granted piggyback registration rights, (ii) 7,104,160 shares of Common Stock
      currently held by KI Equity Partners II, LLC (“KI Equity”) which do not have
      piggyback registration rights, (iii) 2,850,000 shares of Common Stock to be
      issued by the Company to Worldwide Gateway Co., Ltd. immediately prior to the
      closing of a certain Exchange Agreement, dated July 7, 2006, by and among the
      Company, KI Equity, Prime Fortune Enterprises Limited (“Prime Fortune”) and each
      of the stockholders of Prime Fortune (the “Exchange Agreement”), (iv) shares of
      Common Stock underlying the Series A Convertible Preferred stock to be issued
      to
      Hamptons Investment Group, Ltd. pursuant to the Exchange Agreement (or, if
      converted, the shares of Common Stock issued upon conversion of thereof), and
      (v) shares of Common Stock issued to the legal counsel of Infosmart Group
      Limited for fees in connection with the Exchange Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f) Failure
      to File Registration Statement.
      If a
      Registration Event occurs, then the Company will make payments to each Purchaser
      (“Registration Default Payments”), as partial liquidated damages for the damages
      to the Purchaser by reason thereof, and not as a penalty, at a rate equal to
      two
      percent (2%) of the purchase price of the Shares held by such Purchaser per
      month, for each calendar month of the Registration Default Period (pro rated
      for
      any period less than 30 days), subject to a cumulative maximum value of 14%
      (the
“Registration Default Payment Cap”); provided,
      however,
      if a
      Registration Event occurs (or is continuing) on a date more than one year after
      the Purchaser acquired the Registrable Securities (and thus the one year holding
      period under Rule 144(d) has elapsed), the partial liquidated damages shall
      be
      paid only with respect to that portion of a Purchaser’s Registrable Securities
      that cannot then be immediately resold in reliance on Rule 144; provided a
      legal
      opinion with respect to the availability of Rule 144 for the resale of
      Registrable Securities received upon conversion of the Preferred Shares has
      been
      rendered by a law firm acceptable to both the Company and the Holder as evidence
      that Rule 144 is available for such Registrable Securities. Each such payment
      shall be due and payable within five Business days after the end of each
      calendar month of the Registration Default Period until the termination of
      the
      Registration Default Period and within five Business days after such
      termination. Such payment shall be made in cash. The foregoing payments shall
      be
      in partial compensation to the Purchaser, and shall not constitute the
      Purchaser’s exclusive remedy for such events. The Registration Default Period
      shall terminate upon (i) the filing of the Registration Statement in the case
      of
clause
      (a)
      of the
      definition of “Registration Event,” (ii) the SEC Effective Date in the case of
clause
      (b)
      of the
      definition of “Registration Event,” (iii) the ability of the Purchaser to effect
      sales pursuant to the Registration Statement in the case of clause
      (c)
      of the
      definition of “Registration Event,” (iv) the listing or inclusion
      and/or trading
      of the Common Stock on an Approved Market, as the case may be, in the case
      of
clause
      (d)
      of the
      definition of “Registration Event,” and (v) in the case of the events described
      in clauses
      (b)
      and
(c)
      of the
      definition of “Registration Event,” the earlier termination of the Registration
      Default Period. The amounts payable as partial liquidated damages pursuant
      to
      this paragraph shall be payable in lawful money of the United States. Amounts
      payable as partial liquidated damages to each Purchaser hereunder with respect
      to each share of Registrable Securities shall cease when the Purchaser no longer
      holds such share of Registrable Securities or such share of Registrable
      Securities can be immediately sold by the Purchaser in reliance on Rule 144;
      provided a legal opinion with respect to the availability of Rule 144 for the
      resale of Regisgrable Securities received upon conversion of the Preferred
      Shares has been rendered by a law firm acceptable to both the Company and the
      Holder as evidence that Rule 144 is available for such Registrable Securities.
      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4. Registration
      Procedures.
      In the
      case of each registration, qualification, or compliance effected by the Company
      pursuant to Section
      3
      hereof,
      the Company will keep each Holder including securities therein reasonably
      advised in writing (which may include e-mail) as to the initiation of each
      registration, qualification, and compliance and as to the completion thereof.
      At
      its expense with respect to any registration statement filed pursuant to
Section
      3,
      the
      Company will:

    

    (a) prepare
      and file with the Commission with respect to such Registrable Securities, a
      registration statement on a form for which the Company then qualifies or which
      counsel for the Company shall deem appropriate, and which form shall be
      available for the sale of the Registrable Securities in accordance with the
      intended method(s) of distribution thereof, and use its commercially reasonable
      efforts to cause such registration statement to become and remain effective
      at
      least for a period ending with the first to occur of (i) the sale of all
      Registrable Securities covered by the registration statement, (ii) the
      availability under Rule 144(k) for the Holder to immediately, freely resell
      without restriction all Registrable Securities covered by the registration
      statement; provided a legal opinion with respect to the availability of Rule
      144
      for the resale of Registrable Securities received upon conversion of the
      Preferred Shares has been rendered by a law firm acceptable to both the Company
      and the Holder as evidence that Rule 144 is available for such Registrable
      Securities, and (iii) one year after a registration statement filed pursuant
      to
Section
      3(a)
      is
      declared effective by the Commission (in either case, the “Effectiveness
      Period”);
      provided,
      however,
      if at
      the end of such one year period, any Holder is not able to immediately, freely
      resell all Registrable Securities that it owns, the Effectiveness Period shall
      continue until terminated pursuant to clause
      (i)
      or
(ii);
      provided that no later than two Business days before filing with the Commission
      a registration statement or prospectus or any amendments or supplements thereto,
      the Company shall (i) furnish to each Holder a copy of the “Plan of
      Distribution” and “Selling Shareholder” portions of the registration statement
      and the other portions of such documents proposed to be filed that the Company
      considers not to contain material, non-public information (excluding any
      exhibits other than applicable underwriting documents), in substantially the
      form proposed to be filed and (ii) notify each Holder of Registrable Securities
      covered by such registration statement of any stop order issued or threatened
      by
      the Commission and take all reasonable actions required to prevent the entry
      of
      such stop order or to remove it if entered;

    

    (b) if
      a
      registration statement is subject to review by the Commission, promptly respond
      to all comments and diligently pursue resolution of any comments to the
      satisfaction of the Commission;

    

    (c) prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective during the Effectiveness
      Period (but in any event at least until expiration of the 90-day period referred
      to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto,
      thereunder, if applicable), and comply with the provisions of the Securities
      Act
      with respect to the disposition of all securities covered by such registration
      statement during such period in accordance with the intended method(s) of
      disposition by the sellers thereof set forth in such registration
      statement;

    

    (d) furnish,
      without charge, to each Holder of Registrable Securities covered by such
      registration statement (i) a reasonable number of copies of such registration
      statement (including any exhibits thereto other than exhibits incorporated
      by
      reference), each amendment and supplement thereto as such Holder may request,
      (ii) such number of copies of the prospectus included in such registration
      statement (including each preliminary prospectus and any other prospectus filed
      under Rule 424 under the Securities Act) as such Holders may request, in
      conformity with the requirements of the Securities Act, and (iii) such other
      documents as such Holder may reasonably request in order to facilitate the
      disposition of the Registrable Securities owned by such Holder, but only during
      the Effectiveness Period;

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e) use
      its
      commercially reasonable best efforts to register or qualify such Registrable
      Securities under such other applicable securities or blue sky laws of such
      jurisdictions as any Holder of Registrable Securities covered by such
      registration statement reasonably requests as may be necessary for the
      marketability of the Registrable Securities (such request to be made by the
      time
      the applicable registration statement is deemed effective by the Commission)
      and
      do any and all other acts and things which may be reasonably necessary or
      advisable to enable such Holder to consummate the disposition in such
      jurisdictions of the Registrable Securities owned by such Holder; provided
      that the
      Company shall not be required to (i) qualify generally to do business in any
      jurisdiction where it would not otherwise be required to qualify but for this
      paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
      (iii) consent to general service of process in any such
      jurisdiction;

    

    (f) as
      promptly as practicable after becoming aware of such event, notify each Holder
      of such Registrable Securities at any time when a prospectus relating thereto
      is
      required to be delivered under the Securities Act of the happening of any event
      which comes to the Company’s attention if as a result of such event the
      prospectus included in such registration statement contains an untrue statement
      of a material fact or omits to state any material fact required to be stated
      therein or necessary to make the statements therein not misleading and the
      Company shall promptly prepare and furnish to such Holder a supplement or
      amendment to such prospectus (or prepare and file appropriate reports under
      the
      Exchange Act) so that, as thereafter delivered to the purchasers of such
      Registrable Securities, such prospectus shall not contain an untrue statement
      of
      a material fact or omit to state any material fact required to be stated therein
      or necessary to make the statements therein not misleading, unless suspension
      of
      the use of such prospectus otherwise is authorized herein or in the event of
      a
      Blackout Period, in which case no supplement or amendment need be furnished
      (or
      Exchange Act filing made) until the termination of such suspension or Blackout
      Period; 

    

    (g) comply,
      and continue to comply during the period that such registration statement is
      effective under the Securities Act, in all material respects with the Securities
      Act and the Exchange Act and with all applicable rules and regulations of the
      Commission with respect to the disposition of all securities covered by such
      registration statement, and make available to its security holders, as soon
      as
      reasonably practicable, an earnings statement covering the period of at least
      twelve (12) months, but not more than eighteen (18) months, beginning with
      the
      first full calendar month after the SEC Effective Date, which earnings statement
      shall satisfy the provisions of Section 11(a) of the Securities
      Act.

    

    (h) as
      promptly as practicable after becoming aware of such event, notify each Holder
      of Registrable Securities being offered or sold pursuant to the Registration
      Statement of the issuance by the Commission of any stop order or other
      suspension of effectiveness of the Registration Statement at the earliest
      possible time;

    

    (i) permit
      the Holders of Registrable Securities being included in the Registration
      Statement and their legal counsel, at such Holders’ sole cost and expense
      (except as otherwise specifically provided in Section
      6)
      to
      review and have a reasonable opportunity to comment on the Registration
      Statement and all amendments and supplements thereto at least two Business
      Days
      prior to their filing with the Commission and shall not file any such document
      to which the Majority Holders reasonably object; provided that in the event
      a
      Holder fails to comment on the Registration Statement within the time period
      specified above, such Holder shall be deemed to waive its rights with respect
      to
      reviewing and commenting on the Registration Statement provided in this Section
      4(i);

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (j)
       make
      available for inspection by any Holder and any Inspector retained by such
      Holder, at such Holder’s sole expense, all records of the Company as shall be
      reasonably necessary to enable such Holder to exercise its due diligence
      responsibility, and cause the Company’s officers, directors, and employees to
      supply all information which such Holder or any Inspector may reasonably request
      for purposes of such due diligence; provided,
      however, that
      such
      Holder shall hold in confidence and shall not make any disclosure of any record
      or other information which the Company determines in good faith to be
      confidential, and of which determination such Holder is so notified at the
      time
      such Holder receives such information, unless (i) the disclosure of such record
      is necessary to avoid or correct a misstatement or omission in the Registration
      Statement and a reasonable time prior to such disclosure the Holder shall have
      informed the Company of the need to so correct such misstatement or omission
      and
      the Company shall have failed to correct such misstatement of omission, (ii)
      the
      release of such record is ordered pursuant to a subpoena or other order from
      a
      court or governmental body of competent jurisdiction or (iii) the information
      in
      such record has been made generally available to the public other than by
      disclosure in violation of this or any other agreement. The Company shall not
      be
      required to disclose any confidential information in such records to any
      Inspector until and unless such Inspector shall have entered into a
      confidentiality agreement with the Company with respect thereto, substantially
      in the form of this Section
      4(j),
      which
      agreement shall permit such Inspector to disclose records to the Holder who
      has
      retained such Inspector. Each Holder agrees that it shall, upon learning that
      disclosure of such records is sought in or by a court or governmental body
      of
      competent jurisdiction or through other means, give prompt notice to the Company
      and allow the Company, at the Company’s expense, to undertake appropriate action
      to prevent disclosure of, or to obtain a protective order for, the records
      deemed confidential. The Company shall hold in confidence and shall not make
      any
      disclosure of information concerning a Holder provided to the Company pursuant
      to this Agreement unless (i) disclosure of such information is necessary to
      comply with federal or state securities laws, (ii) disclosure of such
      information to the Staff of the Division of Corporation Finance is necessary
      to
      respond to comments raised by the Staff in its review of the Registration
      Statement, (iii) disclosure of such information is necessary to avoid or correct
      a misstatement or omission in the Registration Statement, (iv) release of such
      information is ordered pursuant to a subpoena or other order from a court or
      governmental body of competent jurisdiction, or (v) such information has been
      made generally available to the public other than by disclosure in violation
      of
      this or any other agreement. The Company agrees that it shall, upon learning
      that disclosure of such information concerning a Holder is sought in or by
      a
      court or governmental body of competent jurisdiction or through other means,
      give prompt notice to such Holder and allow such Holder, at such Holder’s
      expense, to undertake appropriate action to prevent disclosure of, or to obtain
      a protective order for, such information. Notwithstanding the foregoing, the
      Company will not disclose to any Holder or Inspector any material non-public
      information concerning the Company without the consent of such Holder or
      Inspector. In the event any Holder or Inspector consents to and receives an
      material non-public information concerning the Company, the Holder shall abide
      by all laws and regulations relating to securities transactions while in
      possession of material non-public information;

    

    (k) use
      its
      best efforts to cause all the Registrable Securities covered by the Registration
      Statement to be quoted on an Approved Market;

    

    (l) provide
      a
      transfer agent and registrar, which may be a single entity, for the Registrable
      Securities at all times;

    

    (m) cooperate
      with the Holders of Registrable Securities being offered pursuant to the
      Registration Statement to issue and deliver certificates (not bearing any
      restrictive legends) representing Registrable Securities sold pursuant to the
      Registration Statement within five Trading Days after delivery of certificates
      to the Company and enable such certificates to be in such denominations or
      amounts as the Holders may reasonably request and registered in such names
      as
      the Holders may request;

    

    (n) during
      the Effectiveness Period, refrain from bidding for or purchasing any Common
      Stock or any right to purchase Common Stock or attempting to induce any person
      to purchase any such security or right if such bid, purchase or attempt would
      in
      any way limit the right of the Holders to sell Registrable Securities by reason
      of the limitations set forth in Regulation M under the 1934 Act;
      and

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (o) take
      all
      other commercially reasonable actions necessary to expedite and facilitate
      disposition by the Holders of the Registrable Securities pursuant to the
      Registration Statement. 

    

    5. Suspension
      of Offers and Sales.
      Each
      Holder of Registrable Securities agrees that, upon receipt of any notice from
      the Company of the happening of any event of the kind described in Section
      4(f)
      hereof
      or of the commencement of a Blackout Period, such Holder shall discontinue
      disposition of Registrable Securities pursuant to the registration statement
      covering such Registrable Securities until such Holder’s receipt of the copies
      of the supplemented or amended prospectus contemplated by Section
      4(f)
      hereof
      or notice of the end of the Blackout Period, and, if so directed by the Company,
      such Holder shall deliver to the Company (at the Company’s expense) all copies
      (including, without limitation, any and all drafts), other than permanent file
      copies, then in such Holder’s possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such notice. In the
      event the Company shall give any such notice, the period mentioned in
Section
      4(a)(iii)
      hereof
      shall be extended by the greater of (i) ten Business days or (ii) the number
      of
      days during the period from and including the date of the giving of such notice
      pursuant to Section
      4(f)
      hereof
      to and including the date when each Holder of Registrable Securities covered
      by
      such registration statement shall have received the copies of the supplemented
      or amended prospectus contemplated by Section
      4(f)
      hereof.

    

    6. Registration
      Expenses.
      The
      Company shall pay all expenses in connection with any registration, including,
      without limitation, all registration, filing, stock exchange fees, printing
      expenses, all fees and expenses of complying with securities or blue sky laws,
      and the fees and disbursements of counsel for the Company and of its independent
      accountants; provided that, in any underwritten registration, each party shall
      pay for its own underwriting discounts and commissions and transfer taxes.
      Except as provided above in Section
      9,
      the
      Company shall not be responsible for the expenses of any attorney or other
      advisor employed by a Holder of Registrable Securities.

    

    7. Assignment
      of Rights.
      No
      Holder may assign its rights under this Agreement to any party without the
      prior
      written consent of the Company; provided,
      however,
      that a
      Holder may assign its rights under this Agreement without such restrictions
      to a
      Permitted Assignee as long as (a) such transfer or assignment is effected in
      accordance with applicable securities laws; (b) such transferee or assignee
      agrees in writing to become subject to the terms of this Agreement; (c) the
      Company is given written notice by such Holder of such transfer or assignment,
      stating the name and address of the transferee or assignee and identifying
      the
      Registrable Securities with respect to which such rights are being transferred
      or assigned; and (d) such assignment is made, (I) prior to the registration
      statement required to be filed pursuant to Section 3(a) hereof is first declared
      effective by the Commission or (II) after such registration statement has been
      declared effective but only if such registration statement is not available
      to
      be used by the selling shareholders set forth in such registration statement
      to
      sell shares of the Company’s common stock registered pursuant to such
      registration statement.

    

    8. Information
      by Holder.
      The
      Holder or Holders of Registrable Securities included in any registration shall
      furnish to the Company such information regarding such Holder or Holders and
      the
      distribution proposed by such Holder or Holders as the Company may request
      in
      writing within two (2) Business Days. In the event a Holder shall fail to
      furnish such requested information to the
      Company in accordance with this Section 8, the Company may exclude such Holder’s
      Common Stock from the Registration Statement in its sole
      discretion.

    

    9. Indemnification.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) In
      the
      event of the offer and sale of Registrable Securities held by Holders under
      the
      Securities Act, the Company shall, and hereby does, indemnify and hold harmless,
      to the fullest extent permitted by law, each Holder, its directors, officers,
      partners, each other person who participates as an underwriter in the offering
      or sale of such securities, and each other person, if any, who controls or
      is
      under common control with such Holder or any such underwriter within the meaning
      of Section 15 of the Securities Act, against any losses, claims, damages or
      liabilities, joint or several, and expenses to which the Holder or any such
      director, officer, partner or underwriter or controlling person may become
      subject under the Securities Act or otherwise, insofar as such losses, claims,
      damages, liabilities or expenses (or actions or proceedings, whether commenced
      or threatened, in respect thereof) arise out of or are based upon any untrue
      statement or alleged untrue statement of any material fact contained in any
      registration statement under which such shares were registered under the
      Securities Act, any preliminary prospectus, final prospectus or summary
      prospectus contained therein, or any amendment or supplement thereto, or any
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements therein in light of the
      circumstances in which they were made not misleading, and the Company shall
      reimburse the Holder, and each such director, officer, partner, underwriter
      and
      controlling person for any legal or any other expenses reasonably incurred
      by
      them in connection with investigating, defending or settling any such loss,
      claim, damage, liability, action or proceeding; provided that the Company shall
      not be liable in any such case (i) to the extent that any such loss, claim,
      damage, liability (or action or proceeding in respect thereof) or expense arises
      out of or is based upon an untrue statement or alleged untrue statement in
      or
      omission or alleged omission from such registration statement, any such
      preliminary prospectus, final prospectus, summary prospectus, amendment or
      supplement in reliance upon and in conformity with written information furnished
      to the Company through an instrument duly executed by or on behalf of such
      Holder specifically stating that it is for use in the preparation thereof or
      (ii) if the person asserting any such loss, claim, damage, liability (or action
      or proceeding in respect thereof) who purchased the Registrable Securities
      that
      are the subject thereof did not receive a copy of an amended preliminary
      prospectus or the final prospectus (or the final prospectus as amended or
      supplemented) at or prior to the written confirmation of the sale of such
      Registrable Securities to such person because of the failure of such Holder
      or
      underwriter to so provide such amended preliminary or final prospectus and
      the
      untrue statement or alleged untrue statement or omission or alleged omission
      of
      a material fact made in such preliminary prospectus was corrected in the amended
      preliminary or final prospectus (or the final prospectus as amended or
      supplemented). Such indemnity shall remain in full force and effect regardless
      of any investigation made by or on behalf of the Holders, or any such director,
      officer, partner, underwriter or controlling person and shall survive the
      transfer of such shares by the Holder.

    

    (b) As
      a
      condition to including any Registrable Securities to be offered by a Holder
      in
      any registration statement filed pursuant to this Agreement, each such Holder
      agrees to be bound by the terms of this Section
      9
      and to
      indemnify and hold harmless, to the fullest extent permitted by law, the
      Company, its directors and officers, and each other person, if any, who controls
      the Company within the meaning of Section 15 of the Securities Act, against
      any
      losses, claims, damages or liabilities, joint or several, to which the Company
      or any such director or officer or controlling person may become subject under
      the Securities Act or otherwise, insofar as such losses, claims, damages or
      liabilities (or actions or proceedings, whether commenced or threatened, in
      respect thereof) arise out of or are based upon any untrue statement or alleged
      untrue statement in or omission or alleged omission from such registration
      statement, any preliminary prospectus, final prospectus or summary prospectus
      contained therein, or any amendment or supplement thereto, if such statement
      or
      alleged statement or omission or alleged omission was made in reliance upon
      and
      in conformity with written information about such Holder as a Holder of the
      Company furnished to the Company, and such Holder shall reimburse the Company,
      and each such director, officer, and controlling person for any legal or other
      expenses reasonably incurred by them in connection with investigating,
      defending, or settling and such loss, claim, damage, liability, action, or
      proceeding; provided,
      however,
      that
      such indemnity agreement found in this Section
      9(b)
      shall in
      no event exceed the gross proceeds from the offering received by such Holder.
      Such indemnity shall remain in full force and effect, regardless of any
      investigation made by or on behalf of the Company or any such director, officer
      or controlling person and shall survive the transfer by any Holder of such
      shares.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Promptly
      after receipt by an indemnified party of notice of the commencement of any
      action or proceeding involving a claim referred to in Section
      9(a)
      or
(b)
      hereof
      (including any governmental action), such indemnified party shall, if a claim
      in
      respect thereof is to be made against an indemnifying party, give written notice
      to the indemnifying party of the commencement of such action; provided that
      the
      failure of any indemnified party to give notice as provided herein shall not
      relieve the indemnifying party of its obligations under Section
      9(a)
      or
(b)
      hereof,
      except to the extent that the indemnifying party is actually prejudiced by
      such
      failure to give notice. In case any such action is brought against an
      indemnified party, unless in the reasonable judgment of counsel to such
      indemnified party a conflict of interest between such indemnified and
      indemnifying parties may exist or the indemnified party may have defenses not
      available to the indemnifying party in respect of such claim, the indemnifying
      party shall be entitled to participate in and to assume the defense thereof,
      with counsel reasonably satisfactory to such indemnified party and, after notice
      from the indemnifying party to such indemnified party of its election so to
      assume the defense thereof, the indemnifying party shall not be liable to such
      indemnified party for any legal or other expenses subsequently incurred by
      the
      latter in connection with the defense thereof, unless in such indemnified
      party’s reasonable judgment a conflict of interest between such indemnified and
      indemnifying parties arises in respect of such claim after the assumption of
      the
      defenses thereof or the indemnifying party fails to defend such claim in a
      diligent manner, other than reasonable costs of investigation. Neither an
      indemnified nor an indemnifying party shall be liable for any settlement of
      any
      action or proceeding effected without its consent. No indemnifying party shall,
      without the consent of the indemnified party, consent to entry of any judgment
      or enter into any settlement, which does not include as an unconditional term
      thereof the giving by the claimant or plaintiff to such indemnified party of
      a
      release from all liability in respect of such claim or litigation.
      Notwithstanding anything to the contrary set forth herein, and without limiting
      any of the rights set forth above, in any event any party shall have the right
      to retain, at its own expense, counsel with respect to the defense of a
      claim.

    

    (d)
      In
      the
      event that an indemnifying party does or is not permitted to assume the defense
      of an action pursuant to Section
      9(c)
      or in
      the case of the expense reimbursement obligation set forth in Section
      9(a)
      and
(b),
      the
      indemnification required by Section
      9(a)
      and
(b)
      hereof
      shall be made by periodic payments of the amount thereof during the course
      of
      the investigation or defense, as and when bills received or expenses, losses,
      damages, or liabilities are incurred.

    

    (e) If
      the
      indemnification provided for in this Section
      9
      is held
      by a court of competent jurisdiction to be unavailable to an indemnified party
      with respect to any loss, liability, claim, damage or expense referred to
      herein, the indemnifying party, in lieu of indemnifying such indemnified party
      hereunder, shall (i) contribute to the amount paid or payable by such
      indemnified party as a result of such loss, liability, claim, damage or expense
      as is appropriate to reflect the proportionate relative fault of the
      indemnifying party on the one hand and the indemnified party on the other
      (determined by reference to, among other things, whether the untrue or alleged
      untrue statement of a material fact or omission relates to information supplied
      by the indemnifying party or the indemnified party and the parties’ relative
      intent, knowledge, access to information and opportunity to correct or prevent
      such untrue statement or omission), or (ii) if the allocation provided by
clause
      (i)
      above is
      not permitted by applicable law or provides a lesser sum to the indemnified
      party than the amount hereinafter calculated, not only the proportionate
      relative fault of the indemnifying party and the indemnified party, but also
      the
      relative benefits received by the indemnifying party on the one hand and the
      indemnified party on the other, as well as any other relevant equitable
      considerations. No indemnified party guilty of fraudulent misrepresentation
      (within the meaning of Section 11(f) of the Securities Act) shall be entitled
      to
      contribution from any indemnifying party who was not guilty of such fraudulent
      misrepresentation.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f) Other
      Indemnification.
      Indemnification similar to that specified in the preceding subsections of this
      Section
      9
      (with
      appropriate modifications) shall be given by the Company and each Holder of
      Registrable Securities with respect to any required registration or other
      qualification of securities under any federal or state law or regulation or
      governmental authority other than the Securities Act.

    

    10. Rule
      144.
      For
      a
      period of at least 24 months following the Closing Date,
      the
      Company will use its commercially reasonable best efforts (a) to timely file
      all
      reports required to be filed by the Company after the date hereof under the
      Securities Act and the Exchange Act (including the reports pursuant to Section
      13(a) or 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule
      144) and the rules and regulations adopted by the Commission thereunder), (b)
      if
      the Company is not required to file reports pursuant to such sections, it will
      prepare and furnish to the Purchasers and make publicly available in accordance
      with Rule 144(c) such information as is required for the Purchasers to sell
      shares of Common Stock under Rule 144, and (c) to take such further action
      as
      any holder of shares of Common Stock may reasonably request, all to the extent
      required from time to time to enable the Purchasers to sell shares of Common
      Stock without registration under the Securities Act within the limitation of
      the
      exemptions provided by Rule 144, including causing its attorneys to issue and
      deliver any appropriate legal opinion required to permit a Purchaser to sell
      shares of Common Stock under Rule 144 upon receipt of appropriate documentation
      relating to such sale, and causing its transfer agent to remove any stop-order
      or restrictive transfer legend on such certificates.

    

    11. Independent
      Nature of Each Purchaser’s Obligations and Rights.
      The
      obligations of each Purchaser under this Agreement are several and not joint
      with the obligations of any other Purchaser, and each Purchaser shall not be
      responsible in any way for the performance of the obligations of any other
      Purchaser under this Agreement. The decision of each Purchaser to purchase
      Shares and Warrants and enter into this Agreement has been made by each
      Purchaser independently of any other Purchaser. Nothing contained herein and
      no
      action taken by any Purchaser pursuant hereto, shall be deemed to constitute
      such 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 this Agreement. Each Purchaser acknowledges that
      no
      other Purchaser has acted as agent for the Purchaser in connection with making
      its investment in Shares and that no other Purchaser will be acting as agent
      of
      the Purchaser in connection with monitoring its investment in the Shares or
      enforcing its rights under this Agreement. Each Purchaser shall be entitled
      to
      independently protect and enforce its rights, including without limitation
      the
      rights arising out of this Agreement, and it shall not be necessary for any
      other Purchaser to be joined as an additional party in any proceeding for such
      purpose.

    

    12. Miscellaneous

    

    (a) Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of California and the United States of America, both substantive and
      remedial. Any
      judicial proceeding brought against either of the parties to this agreement
      or
      any dispute arising out of this Agreement or any matter related hereto shall
      be
      brought in the state courts located in California or in the United States
      District Court located in Los Angeles, California and, by its execution and
      delivery of this agreement, each party to this Agreement accepts the
      jurisdiction of such courts. The foregoing consent to jurisdiction shall not
      be
      deemed to confer rights on any person other than the parties to this
      Agreement.

    

    (b) Successors
      and Assigns.
      Except
      as otherwise provided herein, the provisions hereof shall inure to the benefit
      of, and be binding upon, the successors, Permitted Assigns, executors and
      administrators of the parties hereto. In the event the Company merges with,
      or
      is otherwise acquired by, a direct or indirect subsidiary of a publicly traded
      company, the Company shall condition the merger or acquisition on the assumption
      by such parent company of the Company’s obligations under this Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Entire
      Agreement.
      This
      Agreement constitutes the full and entire understanding and agreement between
      the parties with regard to the subjects hereof.

    

    (d) Notices,
      etc.
      All
      notices or other communications which are required or permitted under this
      Agreement shall be in writing and sufficient if delivered by hand, by facsimile
      transmission, by registered or certified mail, postage pre-paid, by electronic
      mail, or by courier or overnight carrier, to the persons at the addresses set
      forth below (or at such other address as may be provided hereunder), and shall
      be deemed to have been delivered as of the date so delivered: 

    

    
      	If to the Company: 	Cyber Merchants Exchange, Inc.
	
               

            	5th
              Floor, QPL Industrial Building
	 	126-140 Texaco Road
	 	Tsuen Wan, Hong Kong
	 	Attn: Andy Kwok, CEO
	 	(852) 2595-0911 telephone 
	 	(852) 2558-7316 telecopy
	 	 
	with a copy to:  	Richards & Patel LLP
	 	10900 Wilshire Blvd., Suite 500
	 	Los Angeles, California 90024
	 	Attn: Kevin K. Leung, Esq.
	 	(310) 208-1182 telephone
	 	(310) 208-1154 telecopy
	 	 
	If to the
              Purchasers:   	To each Purchaser at the address
	 	set forth on Exhibit A
	 	 
	with a copy to	Timothy J. Keating, President
	 	Keating Securities, LLC
	 	5251 DTC Parkway, Suite 1090
	 	Greenwood Village, Colorado USA
              80111-2739
	 	(720) 889-0131 telephone
	 	(720) 889-0135 telecopy 
	 	 

    

    

    or
      at
      such other address as any party shall have furnished to the other parties in
      writing.

    

    (e) Delays
      or Omissions.
      No
      delay or omission to exercise any right, power or remedy accruing to any Holder
      of any Registrable Securities, upon any breach or default of the Company under
      this Agreement, shall impair any such right, power or remedy of such Holder
      nor
      shall it be construed to be a waiver of any such breach or default, or an
      acquiescence therein, or of or in any similar breach or default thereunder
      occurring; nor shall any waiver of any single breach or default be deemed a
      waiver of any other breach or default theretofore or thereafter occurring.
      Any
      waiver, permit, consent or approval of any kind or character on the part of
      any
      Holder of any breach or default under this Agreement, or any waiver on the
      part
      of any Holder of any provisions or conditions of this Agreement, must be in
      writing and shall be effective only to the extent specifically set forth in
      such
      writing. All remedies, either under this Agreement, or by law or otherwise
      afforded to any holder, shall be cumulative and not alternative.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f) Severability.
      In the
      case any provision of this Agreement shall be invalid, illegal or unenforceable,
      the validity, legality and enforceability of the remaining provisions shall
      not
      in any way be affected or impaired thereby.

    

    (g) Amendments.
      The
      provisions of this Agreement may be amended at any time and from time to time,
      and particular provisions of this Agreement may be waived, with and only with
      an
      agreement or consent in writing signed by the Company and by the holders of
      a
      75% majority of the number of shares of Registrable Securities outstanding
      as of
      the date of such amendment or waiver. The Purchasers acknowledge that by the
      operation of this Section
      12(h),
      the
      holders of a 75% majority of the outstanding Registrable Securities may have
      the
      right and power to diminish or eliminate all rights of the Purchasers under
      this
      Agreement.

    

    (h) Limitation
      on Subsequent Registration Rights.
      After
      the date of this Agreement, the Company shall not, without the prior written
      consent of the Holders of at least a majority of the Registrable Securities
      then
      outstanding, enter into any agreement with any holder or prospective holder
      of
      any securities of the Company that would grant such holder registration rights
      senior to those granted to the Holders hereunder.Exhibit
      10.17

     

     

    THIS
      WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE
      SECURITIES LAWS. THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
      EXERCISE OF THIS WARRANT (“WARRANT SHARES”) MAY NOT BE SOLD, PLEDGED, ASSIGNED
      OR OTHERWISE TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, PLEDGEE, TRANSFEREE
      OR
      ENDORSEE HEREOF OR THEREOF BE RECOGNIZED BY THE ISSUER AS HAVING ACQUIRED THE
      WARRANT OR ANY WARRANT SHARES FOR ANY PURPOSE, UNLESS (I) A REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO SUCH SECURITIES SHALL THEN
      BE
      IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE
      SECURITIES LAWS OR (II) AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION
      SHALL BE AVAILABLE UNDER THE SECURITIES ACT AND SUCH LAWS, SUPPORTED BY AN
      OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED, WHICH OPINION AND
      COUNSEL ARE REASONABLY ACCEPTABLE TO THE COMPANY. THIS WARRANT AND THE COMPANY’S
      SUBSCRIPTION AGREEMENT, INCLUDING THE REGISTRATION RIGHTS AGREEMENT, WITH THE
      WARRANT HOLDER SET FORTH THE COMPANY’S OBLIGATIONS TO REGISTER FOR RESALE THE
      WARRANT SHARES. A COPY OF SUCH SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS
      AGREEMENT IS AVAILABLE FOR INSPECTION AT THE COMPANY’S OFFICE.

     

     

    THIS
      WARRANT MAY NOT, IN ANY EVENT, BE TRANSFERRED TO ANY PERSON OR ENTITY THAT
      IS
      NOT AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501, PROMULGATED UNDER
      THE
      SECURITIES ACT.

     

    _______Warrants

    

    

    Void
      after 5:00 p.m., California time on ___________, 2011

    

    COMMON
      STOCK

    PURCHASE
      WARRANT

    

    OF

    

    CYBER
      MERCHANTS EXCHANGE, INC.

     

    CYBER
      MERCHANTS EXCHANGE, INC., a California corporation (the “Company”), hereby
      certifies that, for value received,
      ______________ (the
      “Initial Warrant Holder”, and together with any subsequent holder hereof, the
“Warrant Holder” and collectively with all other holders of Warrants issued
      pursuant to the Subscription Agreements (as defined below), the “Warrant
      Holders”) is the owner of the number of common stock purchase warrants
      (“Warrants”) specified above, each of which entitles the holder thereof to
      purchase, at any time during the period commencing on the Commencement Date
      (as
      defined in Section
      2.1)
      and
      ending on the Expiration Date (as defined Section
      2.7),
      one
      fully paid and non-assessable share of common stock, no par value per share,
      of
      the Company (“Common Stock”) at a purchase price equal to the Exercise Price (as
      defined in Section
      1.2)
      in
      lawful money of the United States of America. These Warrants are part of the
      duly authorized issuance of Series B Convertible Preferred Stock (“Series B
      Preferred Stock”) for aggregate proceeds in the maximum amount of $10,000,000
      and attached Warrants to purchase shares of Common Stock, issued or to be issued
      by the Company pursuant to Subscription Agreements between the Company and
      the
      holders of the Series B Preferred Stock, (the “Subscription Agreements”) and a
      certain private placement memorandum dated July 10, 2006, as amended or
      supplemented (the “Private Placement”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.  WARRANT;
      EXERCISE PRICE.

     

    1.1  Each
      Warrant shall entitle the Warrant Holder the right to purchase one share of
      Common Stock (individually, a “Warrant Share” severally, the “Warrant Shares”),
      subject to adjustment as provided in Section
      8.
      

     

    1.2  The
      purchase price payable upon exercise of each Warrant (“Exercise Price”) shall be
      $0.326 per share, subject to adjustment as provided in Section
      8. 

     

    2.  EXERCISE
      OF WARRANTS; EXPIRATION DATE.
      

     

    2.1  Exercise
      of Warrant

     

    (a) Exercise
      for Cash.
      The
      Warrants are exercisable during the period commencing on ___________, 2006
      (“Commencement Date”) and ending on the Expiration Date (as defined below in
Section
      2.7),
      in
      whole, or from time to time, in part, at the option of the Warrant Holder,
      upon
      delivery to the Company, the Company’s Transfer Agent and the Company’s counsel,
      or such other person as the Company may designate, a duly completed and executed
      form of exercise attached hereto (indicating exercise by payment of the Exercise
      Price) and payment of an amount equal to the then applicable Exercise Price
      multiplied by the number of Warrant Shares then being purchased upon such
      exercise.
      The
      payment of the Exercise Price shall be in cash or by certified check or official
      bank check, payable to the order of the Company.

     

    (b) Cashless
      Exercise.
      In lieu
      of exercising Warrants pursuant to Section 2.1(a), provided that a valid Company
      prospectus covering the public re-sale of the Warrant Shares is not available
      to
      the Warrant Holder, Warrants may be exercised in whole, or from time to time,
      in
      part, at the option of the Warrant Holder, upon surrender of the Warrants to
      the
      Company, or such other person as the Company may designate, together with a
      duly
      completed and executed form of exercise attached hereto (indicating exercise
      by
      cashless exercise), specifying the number of Warrants to be exercised. The
      number of Warrant Shares to be issued to the Warrant Holder upon such cashless
      exercise shall be computed using the following formula:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              X
                =
                (P)(Y)(A-B)/A

            
	 
	
              Where

            	
              X
                =

            	
              the
                number of shares of Warrant Shares to be issued to the Warrant Holder
                for
                the Warrants being converted.

            
	 	 	 
	 	 	
              P
                =

            	
              the
                number of Warrants being converted expressed as a decimal
                fraction.

            
	 	 	 	 
	 	 	
              Y =

            	
              the
                total number of Warrant Shares issuable upon exercise of the Warrants
                in
                full.

            
	 	 	 	 
	 	 	
              A
                =

            	
              the
                fair market value of one Warrant Share which shall mean the “last sale
                price” as determined in accordance withSection
                2.4.

            
	 	 	 	 
	 	 	
              B
                =

            	
              The
                Exercise Price on the date of conversion.

            
	 	 	 	 

    

    2.2  Each
      exercise of a Warrant shall be deemed to have been effected immediately prior
      to
      the close of business on the day on which such Warrant shall have been
      surrendered to the Company as provided in Section
      2.1.
      At such
      time, the person or persons in whose name or names any certificates for Warrant
      Shares shall be issuable upon such exercise in accordance with Section
      2.3
      shall be
      deemed to have become the holder or holders of record of the Warrant Shares
      represented by such certificates.

     

    2.3  Subject
      to the provisions of Section
      2.5,
      6.3
      and
6.4,
      not
      later than three (3) trading days after the exercise of this Warrant pursuant
      to
Section
      2.2,
      in full
      or in part, the Company, at its expense, will cause to be issued in the name
      of,
      and delivered to, the Warrant Holder, or, subject to the terms and conditions
      hereof, to such other individual or entity as such Warrant Holder may
      direct: 

     

    (a)  a
      certificate or certificates for the number of full Warrant Shares to which
      such
      Warrant Holder shall be entitled upon such exercise plus, in lieu of any
      fractional share to which such Warrant Holder would otherwise be entitled,
      cash
      in an amount determined pursuant to Section
      2.4
      hereof,
      and 

     

    (b)  in
      case
      such exercise is in part only (including as a result of Section
      2.5,
      6.3
      and
6.4
      hereof),
      a new Warrant or Warrants (dated the date hereof) of like tenor, stating on
      the
      face or faces thereof the number of shares currently stated on the face of
      this
      Warrant minus the number of such shares purchased by the Warrant Holder upon
      such exercise as provided in Section
      2.1.

     

    (c) If
      within
      three (3) Trading Days after receipt by the Company, the Company’s transfer
      agent and the Company’s counsel of the facsimile copy of a Notice of Exercise
      the Company shall fail to issue and deliver a certificate to the Warrant Holder
      or credit such Warrant Holder's balance account with DTC for the number of
      shares of Common Stock to which such Warrant Holder is entitled upon such
      Warrant Holder's exercise of the Warrant, and if on or after such Trading Day
      the Warrant Holder purchases (in an open market transaction or in another bona
      fide transaction) Common Stock to deliver in satisfaction of a sale by the
      Warrant Holder of the Common Stock issuable upon such exercise that the Warrant
      Holder anticipated receiving from the Company (a "Buy-In"),
      then
      the Company shall, within three (3) Trading Days after the Warrant Holder's
      request and in the Warrant Holder's discretion, either (i) pay cash to the
      Warrant Holder in an amount equal to the Warrant Holder's total purchase price
      (including brokerage commissions, if any) for the Common Stock so purchased
      (the "Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation to
      deliver to the Warrant Holder a certificate or certificates representing such
      Common Stock and pay cash to the Warrant Holder in an amount equal to the excess
      (if any) of the Buy-In Price over the product of (A) such number of shares
      of
      Common Stock, times (B) the Closing Price on the date of exercise. “Closing
      Price”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed on a Principal Market other
      than
      the Over-the-Counter Bulletin Board, the last trading price per share of the
      Common Stock for such date (or the nearest preceding date) on such Principal
      Market as reported by Bloomberg Financial L.P. (based on a Trading Day from
      9:30
      a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is quoted
      on the Over-the-Counter Bulletin Board, the most recent bid price per share
      of
      the Common Stock for such date (or the nearest preceding date) on the
      Over-the-Counter Bulletin Board; (c) if the Common Stock is not then listed
      or
      quoted on the OTC Bulletin Board and if prices for the Common Stock are then
      reported in the “Pink Sheets” published by the National Quotation Bureau
      Incorporated (or a similar organization or agency succeeding to its functions
      of
      reporting prices), the most recent bid price per share of the Common Stock
      so
      reported; or (d) in all other cases, the fair market value of a share of Common
      Stock as determined by an independent appraiser selected in good faith by the
      Holder and reasonably acceptable to the Company.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    The
      Company shall, upon request of the Holder, use its best efforts to deliver
      any
      certificate or certificates required to be delivered by the Company hereunder
      electronically through the Depository Trust Corporation or another established
      clearing corporation performing similar functions, if available.

     

    2.4  The
      Company shall not be required upon the exercise of this Warrant to issue any
      fractional shares, but shall make an adjustment thereof in cash on the basis
      of
      the “last sale price” (as defined below) of the Company’s Common Stock on the
      trading day immediately prior to the date of exercise. For purposes of this
      Section
      2.4,
“last
      sale price” means (i) if the Common Stock is listed on a national securities
      exchange or the Nasdaq National Market or Nasdaq Capital Market, the last
      trading price per share of the Common Stock for such date, (ii) if the Common
      Stock is quoted on the NASD OTC Bulletin Board (or successor such as the
      Bulletin Board Exchange), the closing bid price of the Common Stock on such
      date, (iii) if the Common Stock is traded in the residual over-the-counter
      market, the closing bid price for the Common Stock for such date as reported
      by
      the Pink Sheets, LLC or similar publisher of such quotations, and (iv) if the
      fair market value of the Common Stock cannot be determined pursuant to clause
      (i), (ii) or (iii) above, such price as the Board of Directors of the Company
      shall determine, in good faith. 

     

    2.5  In
      the
      event of a dispute between the Company and a Warrant Holder as to (i) the
      calculation of the Exercise Price (including, without limitation, the
      calculation of any adjustment to the Exercise Price following any adjustment
      thereof), or (ii) the number of Warrant Shares issuable upon exercising any
      Warrants, the Company shall issue to such Warrant Holder the number of Warrant
      Shares that are not disputed in accordance with the time period set forth in
      Section
      2.3
      hereof,
      and shall submit the disputed calculations to a certified public accounting
      firm
      of national reputation (other than the Company’s regularly retained accountants)
      by such date. The Company shall cause such accountant to calculate the Exercise
      Price in accordance herewith and to notify the Company and such Holder of the
      results in writing no later than five (5) business Days following the day on
      which such accountant received the disputed calculations (the “Dispute
      Procedure”). Such accountant’s calculation shall be deemed conclusive absent
      manifest error or fraud. The fees of any such accountant shall be borne by
      the
      party whose calculations were most at variance with those of such
      accountant.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    2.6  If
      the
      Company fails to deliver to the Holder a certificate or certificates
      representing the Warrant Shares and cash in lieu of any fractional shares in
      accordance with Section
      2.3,
      then
      the Warrant Holder will have the right to rescind the exercise of the applicable
      Warrants.

     

    2.7  The
      term
“Expiration Date” shall mean 5:00 p.m., California time on ____________, 2011
      [five-year anniversary of the closing date], or if such date shall in the State
      of California be a holiday or a day on which banks are authorized to close,
      then
      5:00 p.m., California time the next following day which in the State of
      California is not a holiday or a day on which banks are authorized to
      close.

     

    2.8  The
      Warrants are not redeemable by the Company.

     

    3.  REGISTRATION
      AND TRANSFER ON COMPANY BOOKS.

     

    3.1  The
      Company (or an agent of the Company) will maintain a register containing the
      names and addresses of the Warrant Holders. Any Warrant Holder may change its,
      his or her address as shown on the warrant register by written notice to the
      Company requesting such change.

     

    3.2  The
      Company shall register upon its books any transfer of a Warrant upon surrender
      of same as provided in Section
      5.

     

    4.  RESERVATION
      OF SHARES.
      Immediately following the completion of the Authorized Shares Increase (as
      defined in Section 6.3), the Company will at all times reserve and keep
      available, solely for issuance and delivery upon the exercise of this Warrant,
      such Warrant Shares and other stock, securities and property, as from time
      to
      time shall be issuable upon the exercise of this Warrant. The Company covenants
      that all Warrant Shares so issuable when issued will be duly and validly issued
      and fully paid and non-assessable.

     

    5.  EXCHANGE,
      LOSS OR MUTILATION OF WARRANTS.
      Warrants are exchangeable, without expense, at the option of the Warrant Holder,
      upon presentation and surrender hereof to the Company for other warrants of
      different denominations entitling the holder thereof to purchase in the
      aggregate the same number of shares of Common Stock purchasable hereunder on
      the
      same terms and conditions as provided herein. Subject to the provisions of
      Section
      6,
      if
      applicable, this Warrant may be divided or combined with other warrants which
      carry the same rights upon presentation hereof at the Company’s office together
      with a written notice specifying the names and denominations in which new
      Warrants are to be issued and signed by the Warrant Holder hereof. The term
      “Warrant” as used herein includes any Warrants into which this Warrant may be
      divided or exchanged. Upon receipt by the Company of reasonable evidence of
      the
      ownership and the loss, theft, destruction or mutilation of this Warrant and,
      in
      the case of loss, theft or destruction, receipt of indemnity reasonably
      satisfactory to the Company, or, in the case of mutilation, upon surrender
      and
      cancellation of the mutilated Warrant, the Company shall execute and deliver
      in
      lieu thereof a new Warrant of like tenor and date representing an equal number
      of Warrants.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    6.  LIMITATION
      ON EXERCISE AND SALES.

     

    6.1  The
      Warrant Holder acknowledges that the Warrants and the Warrant Shares have not
      been registered under the Securities Act and the rules and regulations
      thereunder, or any successor legislation, and agrees not to sell, pledge,
      distribute, offer for sale, transfer or otherwise dispose of any Warrant, or
      any
      Warrant Shares issued upon its exercise, in
      except
      in compliance with the requirements of Section
      6.2.

     

    6.2  The
      Warrants and the rights granted to the Warrant Holder are transferable only
      to
      accredited investors in whole or in part, upon surrender of this Warrant,
      together with a properly executed assignment in the form attached hereto, at
      the
      office or agent of the Company; provided,
      however, that
      if
      at the time of the surrender of this Warrant in connection with any exercise,
      transfer or exchange of this Warrant, this Warrant (or, in the case of any
      exercise, the Warrant Sharers issuable hereunder), shall not be registered
      for
      resale under the Securities Act or under applicable state securities or blue
      sky
      laws, then the Company may require, as a condition of allowing such exercise,
      transfer or exchange (i) a written opinion of counsel, which opinion and counsel
      are acceptable to the Company, to the effect that such exercise, transfer or
      exchange may be made without registration under the Securities Act or under
      applicable state securities or blue sky laws, (ii) that any transferee of the
      Warrant execute and deliver to the Company a document containing investment
      representations and warranties substantially similar to those set forth in
      the
      Subscription Agreement pursuant to which the Initial Warrant Holder acquired
      this Warrant, and (iii) prior to exercise of the Warrant, the Warrant Holder
      shall have executed the form of exercise annexed hereto.

     

    6.3  Notwithstanding
      the foregoing, in the event of an exercise of any Warrant prior to such time
      that the Company increases its authorized shares of Common Stock, as described
      in the Subscription Agreements (“Authorized Shares Increase”), unless sufficient
      shares of Common Stock are otherwise available, the Company shall be obligated
      to effect such exercise and deliver a certificate or certificates pursuant
      to
Section
      2.5
      only
      upon completion of such Authorized Shares Increase. 

     

    6.4  The
      Company shall not issue Warrant Shares upon an exercise of Warrants in an amount
      which results in the Warrant Holder and its affiliates beneficially owning
      an
      aggregate of more the 4.99% of the outstanding Common Stock of the Company,
      after giving effect to the issuance of Warrant Shares upon such exercise, with
      beneficial ownership being determined by reference to Rule 13d-3 under the
      Securities Exchange Act of 1934, as amended. For the purposes hereof, the
      determination of beneficial ownership shall exclude shares of Common Stock
      issuable upon exercise or conversion of the unexercised or nonconverted portion
      of any other securities of the Company (including, without limitation, any
      other
      Warrants) subject to a limitation on conversion or exercise analogous to the
      limitation contained herein beneficially owned by such Warrant Holder or any
      of
      its affiliates. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    6.5  Certificates
      delivered to the Warrant Holder upon exercise hereof shall be imprinted with
      a
      legend in substantially the following form if such Warrant Shares are not
      registered at the time of exercise: 

     

    “This
      security has been acquired for investment and has not been registered under
      the
      Securities Act of 1933, as amended (the “Act”), or applicable state securities
      or “blue sky” laws. This security may not be sold, pledged, assigned or
      otherwise transferred nor will any assignee, pledgee, vendee, transferee,
      endorsee thereof be recognized by the issuer as having acquired such securities
      for any purpose unless (i) a registration statement under the Act with respect
      to such security shall then be in effect and such transfer has been qualified
      under all applicable state securities or “blue sky” laws or (ii) an exemption
      therefrom shall be available under the Act and such laws, supported by an
      opinion of counsel that such registration is not required, which opinion and
      counsel are reasonably satisfactory to the Company and its
      counsel.”

     

    7.  REGISTRATION
      RIGHTS OF WARRANT HOLDER.
      The
      Initial Warrant Holder (and certain assignees thereof) is entitled to the
      benefit of such registration rights in respect of Warrant Shares in accordance
      with and subject to the terms and conditions of the Registration Rights
      Agreement executed and delivered by the Initial Warrant Holder and the Company.
      

     

    8.  ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES DELIVERABLE.
      The
      Exercise Price and the number of Warrant Shares purchasable pursuant to each
      Warrant shall be subject to adjustment from time to time as hereinafter set
      forth in this Section
      8:

     

    (a)  If
      the
      Company shall (i) issue any shares of its Common Stock as a stock dividend
      or
      (ii) subdivide the number of outstanding shares of its Common Stock into a
      greater number of shares, the Exercise Price shall be proportionately reduced
      and the number of Warrant Shares at that time purchasable pursuant to this
      Warrant shall be proportionately increased. If the Company shall reduce the
      number of outstanding shares of Common Stock by combining such shares into
      a
      smaller number of shares, the Exercise Price per Warrant Share shall be
      proportionately increased and the number of Warrant Shares at that time
      purchasable pursuant to this Warrant shall be proportionately decreased. If
      the
      Company shall, at any time during the life of this Warrant, declare a dividend
      payable in cash on its Common Stock and shall at substantially the same time
      offer to its stockholders a right to purchase new Common Stock from the proceeds
      of such dividend or for an amount substantially equal to the dividend, for
      purposes of this Warrant, all Common Stock so issued shall be deemed to have
      been issued as a stock dividend. Any dividend paid or distributed upon the
      Common Stock in stock of any other class of securities convertible into shares
      of Common Stock shall be treated as a dividend paid in Common Stock to the
      extent that shares of Common Stock are issuable upon conversion
      thereof.

     

    (b)  If
      the
      Company shall be recapitalized by reclassifying its outstanding Common Stock,
      (other than a change in par value or a subdivision or combination as provided
      in
Section
      8(a)),
      or the
      Company or a successor corporation shall consolidate or merge with or convey
      all
      or substantially all of its or of any successor corporation’s property and
      assets to any other corporation or corporations (any such other corporations
      being included within the meaning of the term “successor corporation”
hereinbefore used), then, as a condition of such recapitalization,
      consolidation, merger or conveyance, lawful and adequate provision shall be
      made
      whereby the Warrant Holder shall thereafter have the right to receive upon
      the
      exercise hereof the kind and amount of shares of stock or other securities
      or
      property which such Warrant Holder would have been entitled to receive if,
      immediately prior to any such reorganization or reclassification, such Warrant
      Holder had held the number of shares of Common Stock which were then purchasable
      upon the exercise of this Warrant. In any such case, appropriate adjustment
      shall be made in the application of the provisions set forth herein with respect
      to the rights and interest thereafter of the Warrant Holder such that the
      provisions set forth in this Section
      8
      (including provisions with respect to adjustment of the Exercise Price and
      number of shares purchasable upon the exercise of this Warrant) shall thereafter
      be applicable, as nearly as may be in relation to any shares of stock or other
      securities or property thereafter deliverable upon the exercise of this
      Warrant.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (c) Adjustment
      of Exercise Price

     

    (i) Except
      as
      provided in Section
      8(a)(iii),
      whenever the Company issues or sells, or, pursuant to any provision of
Section
      8(a)(ii),
      is
      deemed to have issued or sold, any shares of Common Stock for a consideration
      per share less than eighty percent (80%) of the then applicable Exercise Price,
      then, immediately upon such issuance or sale, the Exercise Price shall be
      reduced to one hundred twenty-five percent (125%) of the lowest per share price
      of Common Stock in such issuance or sale or deemed issuance or
      sale.

     

    (ii) Any
      grant
      by the Company (whether directly or by assumption in a merger or otherwise,
      in
      any manner) of any warrants, rights to subscribe for, or options to purchase
      any
      Common Stock (collectively, the “Options”) or any issuance or sale by the
      Company (whether directly or by assumption in a merger or otherwise, in any
      manner) of any security convertible into or exchangeable for shares of Common
      Stock (“Convertible Securities”) shall be deemed to be an issuance of Common
      Stock, whether or not immediately exercisable or convertible. The number of
      shares of Common Stock deemed to be issued shall be equal to the maximum number
      of shares of Common Stock issuable upon the exercise of such Options or
      conversion of such Convertible Securities. The price per share of Common Stock
      in such deemed issuance or sale of Common Stock shall be determined by dividing
      the amount determined in (A) below, by the amount determined in (B)
      below:

     

    (A)
      the
      sum of (x) the total amount, if any, received or receivable by the Company
      as
      consideration for the granting of such Options or issuance of such Convertible
      Securities, plus (y) the minimum aggregate amount of additional consideration
      payable to the Company upon the full exercise of all such Options or the full
      conversion of all such Convertible Securities (“Total Consideration”);

     

    (B)
      the
      total maximum number of shares of Common Stock issuable upon the exercise of
      such Options or the conversion of such Convertible Securities.

     

    For
      purposes of this Section
      8(c)(ii),
      in the
      event that there is a change in the Total Consideration for any Options or
      Convertible Securities, as determined above (a “Price Change”), at any time
      (including, but not limited to, changes designed to protect against dilution),
      the price per share of Common Stock in such deemed issuance or sale of Common
      Stock shall be readjusted immediately to the price per share of Common Stock
      which would have been in effect if such Options or Convertible Securities had
      provided for such Price Change at the time initially granted, issued or sold.
      Except as otherwise provided in the preceding sentence, no adjustment of the
      price per share of Common Stock in such deemed issuance or sale of Common Stock
      under this Section
      8(c)(ii)
      shall be
      made upon the exercise of the Options or upon the conversion of the Convertible
      Securities.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (iii) Notwithstanding
      anything in this Warrant to the contrary, no downward adjustment shall be made
      to the Exercise Price under this Section
      8(c):
      (1) for
      the issuance of Common Stock upon conversion of the Company’s Series A Preferred
      Stock issued pursuant to that certain Exchange Agreement, dated July 7, 2006,
      by
      and among the Company, Prime Fortune Enterprises, Ltd. and the stockholders
      of
      Prime Fortune Enterprises, Ltd. (the “Exchange Agreement”), in accordance with
      the Certificate of Determination of the Series A Preferred Stock, (2) for the
      issuance of Common Stock to Worldwide Gateway Co., Ltd. pursuant to the Exchange
      Agreement, (3) for the issuance of Common Stock to Infosmart Group Limited’s
      legal counsel for fees in connection with the Exchange Agreement and the Private
      Placement, (4) for the issuance of Common Stock upon the exercise of Warrants
      (including any Warrants issued to the placement agents) pursuant to the terms
      of
      such Warrants, or upon conversion of shares of Series B Preferred Stock pursuant
      to terms of the Certificate of Determination of the Series B Preferred Stock,
      issued in connection with the Private Placement, or (5) for the issuance of
      Common Stock (whether directly or through Options or other Convertible
      Securities) to employees or directors of the Company pursuant to an equity
      incentive plan or agreement approved by the Company’s shareholders. If the
      amount of Registration Default Payments (as defined in the Registration Rights
      Agreement") paid or payable, in the aggregate, to any Purchaser exceeds the
      Registration Default Payment Cap (as defined in the Registration Rights
      Agreement"), the Exercise Price shall be reduced on the last business day of
      each subsequent calendar month by an amount equal to the quotient of (i) the
      sum
      of any Registration Default Payments that would have been due to the Holder
      on
      such date without regard to the Registration Default Payment Cap, and (ii)
      the
      maximum number of shares of Common Stock issuable to such Holder upon the full
      exercise of the Warrants (as adjusted in accordance with this Section 8);
      provided, however, that the Exercise Price shall not be adjusted below a minimum
      Exercise Price of $0.15.

     

    (d)  The
      Exercise Price then in effect will be reset downward by such percentage of
      the
      Exercise Price that is determine by dividing (x) the 2007 Net Income Deficiency
      (as defined below) by (y) ten million dollars ($10,000,000), subject to a
      maximum cumulative downward adjustment of fifty percent (50%) of the initial
      Exercise Price as of the date hereof (as adjusted for any prior adjustments
      to
      the Exercise Price other than for this Section
      8(d))
      (the
“Maximum Reset”). The “2007 Net Income Deficiency” shall mean the amount equal
      to nine million dollars ($9,000,000) less the Company’s 2007 Adjusted Net Income
      (as hereinafter defined). For the purposes hereof, the Company’s “2007 Adjusted
      Net Income” shall mean the consolidated net income (or loss) of the Company for
      the twelve (12) month period ending December 31, 2007 determined in accordance
      with U.S. generally accepted accounting principles consistently applied
      (“GAAP”), plus, to the extent separately identified in the statement of net
      income (or loss) for such period, the non-cash charges incurred by the Company
      as a result of the issuance of the securities in connection with the Private
      Placement for any amortization of the warrants issued to investors or the
      placement agent or amortization relating to the beneficial conversion feature
      (if any) of the Series B Preferred Stock. No later than one hundred twenty
      (120)
      days after the end of the twelve month period ended December 31, 2007, the
      Company shall deliver to the Warrant Holder in accordance with Section
      18
      audited
      financial statements prepared in accordance with GAAP for and as of the end
      of
      such period. In the event that the Company fails to timely deliver such
      financial statements to the Warrant Holder as herein provided, the Exercise
      Price then in effect shall be immediately adjusted downward by the Maximum
      Reset.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (e)  If
      the
      Company shall sell all or substantially all of its property or dissolve,
      liquidate, or wind up its affairs, lawful provision shall be made as part of
      the
      terms of any such sale, dissolution, liquidation or winding up, so that the
      holder of this Warrant may thereafter receive upon exercise hereof in lieu
      of
      each Warrant Share that it would have been entitled to receive, the same kind
      and amount of any securities or assets as may be issuable, distributable or
      payable upon any such sale, dissolution, liquidation or winding up with respect
      to each share of Common Stock of the Company, provided, however, that in any
      case of any such sale or of dissolution, liquidation or winding up, the right
      to
      exercise this Warrant shall terminate on a date fixed by the Company; such
      date
      so fixed to be not earlier than 5:00 p.m., Eastern time, on the forty-fifth
      (45th)
      day
      next succeeding the date on which notice of such termination of the right to
      exercise this Warrant has been given by mail to the registered holder of this
      Warrant at its address as it appears on the books of the Company.

     

    (f)  No
      adjustment in the per share Exercise Price shall be required unless such
      adjustment would require an increase or decrease in the Exercise Price by at
      least $0.01; provided, however, that any adjustments that by reason of this
      subsection are not required to be made shall be carried forward and taken into
      account in any subsequent adjustment. All calculations under this Section
      8
      shall be
      made to the nearest cent or to the nearest 1/100th of a share, as the case
      may
      be.

     

    (g)  The
      Company will not, by amendment of its Articles of Incorporation or through
      any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms to be observed or performed
      hereunder by the Company but will at all times in good faith assist in the
      carrying out of all the provisions of this Section
      8
      and in
      the taking of all such actions as may be necessary or appropriate in order
      to
      protect against impairment of the rights of the Warrant Holder to adjustments
      in
      the Exercise Price.

     

    (h)  Upon
      the
      happening of any event requiring an adjustment of the Exercise Price hereunder,
      the Company shall give written notice thereof within five (5) business days
      to
      the Warrant Holder stating the adjusted Exercise Price and the adjusted number
      of Warrant Shares resulting from such event and setting forth in reasonable
      detail the method of calculation and the facts upon which such calculation
      is
      based.

     

    9.  VOLUNTARY
      ADJUSTMENT BY THE COMPANY.
      The
      Company may, at its option, at any time during the term of the Warrants, reduce
      the then current Exercise Price to any amount deemed appropriate by the Board
      of
      Directors of the Company and/or extend the date of the expiration of the
      Warrants. 

     

    10.  RIGHTS
      OF THE HOLDER.
      The
      Warrant Holder shall not, by virtue hereof, be entitled to any rights of a
      stockholder in the Company, either at law or equity, and the rights of the
      Warrant Holder are limited to those expressed in the Warrant and are not
      enforceable against the Company except to the extent set forth herein.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    11.  NOTICES
      OF RECORD DATE.
      In
      case: (a) the Company shall take a record of the holders of its Common Stock
      (or
      other stock or securities at the time deliverable upon the exercise of this
      Warrant) for the purpose of entitling or enabling them to receive any dividend
      or other distribution, or to receive any right to subscribe for or purchase
      any
      shares of any class or any other securities, or to receive any other right,
      or
      (b) of any capital reorganization of the Company, any reclassification of the
      capital stock of the Company, any consolidation or merger of the Company with
      or
      into another corporation (other than a consolidation or merger in which the
      Company is the surviving entity), or any transfer of all or substantially all
      of
      the assets of the Company, or (c) of the voluntary or involuntary dissolution,
      liquidation or winding-up of the Company, then, and in each such case, the
      Company will mail or cause to be mailed to the Warrant Holder a notice
      specifying, as the case may be: (i) the date on which a record is to be taken
      for the purpose of such dividend, distribution or right, and stating the amount
      and character of such dividend, distribution or right, or (ii) the effective
      date on which such reorganization, reclassification, consolidation, merger,
      transfer, dissolution, liquidation or winding-up is to take place, and the
      time,
      if any is to be fixed, as of which the holders of record of Common Stock (or
      such other stock or securities at the time deliverable upon the exercise of
      this
      Warrant) shall be entitled to exchange their shares of Common Stock (or such
      other stock or securities) for securities or other property deliverable upon
      such reorganization, reclassification, consolidation, merger, transfer,
      dissolution, liquidation or winding-up. Such notice shall be mailed at least
      twenty (20) days prior to the record date or effective date for the event
      specified in such notice, provided that the failure to mail such notice shall
      not affect the legality or validity of any such action.

     

    12.  SUCCESSORS.
      The
      rights and obligations of the parties to this Warrant will inure to the benefit
      of and be binding upon the parties hereto and their respective permitted heirs,
      successors, assigns, pledgees, transferees and purchasers. 

     

    13.  CHANGE
      OR WAIVER.
      Any
      term of this Warrant may be changed or waived only by an instrument in writing
      signed by the party against whom enforcement of the change or waiver is sought.
      

     

    14.  HEADINGS.
      The
      headings in this Warrant are for purposes of reference only and shall not limit
      or otherwise affect the meaning of any provision of this Warrant.

     

    15.  GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of California as such laws are applied to contracts made and to be fully
      performed entirely within that state between residents of that
      state.

     

    16.  JURISDICTION
      AND VENUE.
      The
      Company (i) agrees that any legal suit, action or proceeding arising out of
      or
      relating to this Warrant shall be instituted exclusively in the federal courts
      located in Los Angeles, California, U.S.A., (ii) waives any objection to the
      venue of any such suit, action or proceeding and the right to assert that such
      forum is not a convenient forum, and (iii) irrevocably consents to the
      jurisdiction of the federal courts located in Los Angeles, California, U.S.A.
      in
      any such suit, action or proceeding, and the Company further agrees to accept
      and acknowledge service or any and all process that may be served in any such
      suit, action or proceeding in the federal courts located in Los Angeles,
      California, U.S.A. in person or by certified mail addressed as provided in
      the
      following Section.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    17.  AMENDMENT
      AND WAIVER.
      Any
      amendment or waiver of any of the terms or conditions of the Warrants by the
      Company must be in writing and must be duly executed by or on its behalf. Any
      of
      the terms or conditions of the Warrants may be amended or waived by the Warrant
      Holders only upon the written consent of Warrant Holders representing 75% of
      the
      Warrants then outstanding. Any such amendment or waiver shall be binding on
      all
      Warrant Holders whether they consented or not or whether their consent was
      solicited or not. The failure of a party to exercise any of its rights hereunder
      or to insist upon strict adherence to any term or condition hereof on any one
      occasion shall not be construed as a waiver or deprive that party of the right
      thereafter to insist upon strict adherence to the terms and conditions of this
      Warrant at a later date. Further, no waiver of any of the terms and conditions
      of this Warrant shall be deemed to or shall constitute a waiver of any other
      term of condition hereof (whether or not similar).

     

    18.  MAILING
      OF NOTICES, ETC.
      All
      notices and other communications under this Warrant (except payment) shall
      be in
      writing and shall be sufficiently given if delivered to the addressees in
      person, by Federal Express or similar overnight courier service, or if mailed,
      postage prepaid, by certified mail, return receipt requested, as follows:

     

     

     

    
      	Registered Holder: 	To
              his or her last known address as indicated on the Company’s books and
              records.
	 	 
	 The Company:	To
              the Company’s Chief Executive Officer at the address of the Company’s
              principal office as set forth in the last filing by the Company with
              the
              SEC

    

          

     

            

     

    or
      to
      such other address as any of them, by notice to the others, may designate from
      time to time. Notice shall be deemed given (a) when personally delivered, (b)
      the scheduled delivery date if sent by Federal Express or other overnight
      courier service or (c) the fifth day after sent by certified mail.

    

    
      
        12

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
      authorized officer as of the _____ day of _______________, 2006.

     

     

     

     

    
      	 	 	 CYBER
              MERCHANTS EXCHANGE, INC.
	 
 	 
 	 
 
	: 	By:  	 
	 	
              
Name:
	 	Title 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      Notice
        of Exercise

    

    To
      Be
      Executed by the Warrant Holder

    In
      Order
      to Exercise Warrants

     

    The
      undersigned Warrant Holder hereby irrevocably elects to exercise ______ Warrants
      represented by this Warrant by: 

    

    (check
      one)

     ̈
      payment
      of the Exercise Price in cash pursuant to Section 2.1(a) of the
      Warrant

     ̈
      the
      cashless exercise option pursuant to Section 2.1(b) of the Warrant

     

    for
      the
      shares of Common Stock issuable upon the exercise of such Warrants, and requests
      that certificates for such shares of Common Stock shall be issued in the name
      of

     

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

     

    
      	 

    

     

       

      
        

      

    

     

     

      
        

      

    

    (please
      print or type name and address)

     

    and
      be
      delivered to

     

     

    
      
        

      

       

       

        
          

        

      

      (please
        print or type name and address)

    

     

     

    and
      if
      such number of Warrants shall not be all the Warrants evidenced by this Warrant,
      that a new Warrant for the balance of such Warrants be registered in the name
      of, and delivered to, the registered Warrant Holder at the address stated
      above.

    

    The
      undersigned hereby represents and warrants to the Company that it is an
“Accredited Investor” within the meaning of Rule 501(c) of the Securities Act of
      1933, as amended (the “Securities Act”), and is acquiring these securities for
      its own account and not with a view to, or for sale in connection with, any
      distribution thereof, nor with any present intention of distributing or selling
      the same. The undersigned further represents that it does not have any contract,
      agreement, understanding or arrangement with any person to sell, transfer or
      grant the shares of Common Stock issuable under this Warrant. The undersigned
      understands that the shares it will be receiving are “restricted securities”
under Federal securities laws inasmuch as they are being acquired from CYBER
      MERCHANTS EXCHANGE, INC., in transactions not including any public offering
      and
      that under such laws, such shares may only be sold pursuant to an effective
      and
      current registration statement under the Securities Act or an exemption from
      the
      registration requirements of the Securities Act and any other applicable
      restrictions including the requirements of state securities and “blue sky” laws,
      in which event a legend or legends will be placed upon the certificate(s)
      representing the Common Stock issuable under this Warrant denoting such
      restrictions. The undersigned understands and acknowledges that the Company
      will
      rely on the accuracy of these representations and warranties in issuing the
      securities underlying the Warrant.

    

      Dated:_________________        

      _________________________________

      (Signature
        of Registered Holder)

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    To
      be
      executed by the Warrant Holder

    In
      order
      to Assign Warrants

    

    FOR
      VALUE
      RECEIVED,____________________________________ hereby sell, assigns and transfer
      unto

     

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

    
       

      
        	 

      

       

    

     

    
      

    

     

     

      
        

      

    

     

     

      
        

      

    

    (Please
      print or type name and address)

    

     

    ______________________
      of the Warrants represented by this Warrant, and hereby irrevocably constitutes
      and appoints ________________________ Attorney to transfer this Warrant on
      the
      books of the Company, with full power of substitution in the
      premises.

     

     

    Dated:______________________                                ____________________________________________

    (Signature
      of Registered Holder)

     

                                                                           
____________________________________________

    (Signature
      Guaranteed)

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