Document:

Unassociated Document

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this "Agreement")
      is
      made and entered into as of September 7, 2007, by and among Sino Gas
      International Holdings, Inc., a Utah corporation (the "Company"),
      and
      the purchasers listed on Schedule
      I
      hereto
      (the "Purchasers").
      

    

    WHEREAS,
      on September 7, 2006 and October 20, 2006, the Company and the Purchasers
      entered into Series B Convertible Preferred Stock Purchase Agreements (the
      “Stock
      Purchase Agreements”)
      pursuant to which the Purchasers purchased from the Company shares of its Series
      B Convertible Preferred Stock and Warrants to purchase shares of Common Stock,
      and in connection therewith, the parties entered into Registration Rights
      Agreements with respect to the rights of the Purchasers to have certain of
      the
      Company’s securities issued pursuant to the Stock Purchase Agreements registered
      for resale;

    

    WHEREAS,
      in connection with a new financing by the Company to be consummated on or before
      September 30, 2007, pursuant to which it will sell shares of its Common Stock
      to
      new investors for gross proceeds of not less than $10,000,000 (the “New
      Financing”),
      the
      Purchasers and the Company deem it desirable to enter into this Agreement to
      memorialize the registration rights of the Purchasers and the investors in
      the
      New Financing;

    

    This
      Agreement is being entered into pursuant to the Warrant Repurchase Agreement,
      Amendment and Waiver dated as of the date hereof among the Company and the
      Purchasers (the "Amendment
      Agreement").

    

    The
      Company and the Purchasers hereby agree as follows:

    

    
      	
            	1.	
              Definitions.

            

    

    

    Capitalized
      terms used and not otherwise defined herein shall have the meanings given such
      terms in the Amendment Agreement. As used in this Agreement, the following
      terms
      shall have the following meanings:

    

    "Advice"
      shall
      have meaning set forth in Section 3(m).

    

    "Affiliate"
      means,
      with respect to any Person, any other Person that directly or indirectly
      controls or is controlled by or under common control with such Person. For
      the
      purposes of this definition, "control,"
      when
      used with respect to any Person, means the possession, direct or indirect,
      of
      the power to direct or cause the direction of the management and policies of
      such Person, whether through the ownership of voting securities, by contract
      or
      otherwise; and the terms of "affiliated,"
      "controlling"
      and
      "controlled"
      have
      meanings correlative to the foregoing.

    

    "Board"
      shall
      have meaning set forth in Section 3(n).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      "Business
      Day"
      means
      any day except Saturday, Sunday and any day which shall be a legal holiday
      or a
      day on which banking institutions in the state of New York generally are
      authorized or required by law or other government actions to close.

    

    "Closing
      Date"
      means
      the date of the Closing pursuant to the Amendment Agreement.

    

    "Commission"
      means
      the Securities and Exchange Commission.

    

    "Common
      Stock"
      means
      the Company's Common Stock, par value $.001 per share.

    

    “Conversion
      Shares”
means
      the shares of the Common Stock issuable upon conversion of the Preferred
      Stock.

    

    "Effectiveness
      Date"
      means,
      subject to Section 2(b) hereof, with respect to the Registration Statement,
      the
      earlier of (A) the ninetieth (90th)
      day
      following the Filing Date (or in the event the Registration Statement receives
      a
“full review” by the Commission, the one hundred twentieth (120th)
      day
      following the Filing Date) or (B) the
      date
      which is within three (3) Business Days after the date on which the Commission
      informs the Company that (i) the Commission will not review the Registration
      Statement or (ii) the
      Company may request the acceleration of the effectiveness of the Registration
      Statement and the Company makes such request; provided that,
      if the
      Effectiveness Date falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Effectiveness Date shall be the following Business Day.

    

    "Effectiveness
      Period"
      shall
      have the meaning set forth in Section 2.

     

    "Event"
      shall
      have the meaning set forth in Section 7(e).

    

    "Event
      Date"
      shall
      have the meaning set forth in Section 7(e).

    

    "Exchange
      Act"
      means
      the Securities Exchange Act of 1934, as amended.

    

    "Filing
      Date"
      means,
      subject to Section 2(b), with respect to the Registration Statement,
the
      later
      of (i) sixty (60) days following the sale of substantially all of the
      registrable securities included in the last registration statement filed in
      connection with the New Financing and (ii) six (6) months following the
      effective date of the last registration statement filed in connection with
      the
      New Financing, or such earlier or later date as permitted or required by the
      Commission; provided that,
      if the
      Filing Date falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Filing Date shall be the following Business Day.

    

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

     

    
      
        
        

      

      
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    "Indemnified
      Party"
      shall
      have the meaning set forth in Section 5(c).

    

    "Indemnifying
      Party"
      shall
      have the meaning set forth in Section 5(c).

     

    "Losses"
      shall
      have the meaning set forth in Section 5(a).

    

    “New
      Financing”
shall
      have the meaning ascribed to such term in the recitals to this
      Agreement.

    

    “New
      Warrants”
means
      warrants exercisable for 271,074 shares of Common Stock to be issued by the
      Company to the Purchasers at the Closing.

    

    "Person"
      means
      an individual or a corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or political subdivision thereof) or
      other entity of any kind.

    

    "Preferred
      Stock"
      means
      the shares of the Company’s Series B Convertible Preferred Stock issued to the
      Purchasers pursuant to Stock Purchase Agreements and the Amendment
      Agreement.

    

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

    

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

    

    "Registrable
      Securities"
      means
      (i) the shares of Common Stock issuable upon conversion of the Preferred Stock
      (including, without limitation, 2,919,708
      shares issuable upon the conversion of shares of Preferred Stock held by Vision
      Opportunity Master Fund, Ltd. (“Vision”)
      and
      770,897 shares of Common Stock issuable upon conversion of the new shares of
      Preferred Stock issued to Vision pursuant to Section 1.1(b) of the Amendment
      Agreement),
      (ii)
      the shares of Common Stock issuable upon exercise of the Warrants (including,
      without limitation, 2,657,807
      shares of Common stock issuable upon the exercise of the Series C Warrant held
      by Vision),
      (iii)
      136,120 shares of Common Stock acquired by Vision from the Company’s prior
“shell company” holders, (iv) 321,168 shares of Common Stock issued to Vision as
“make good” shares for 2006 under the Stock Purchase Agreements, (v) 1,094,891
      shares of Common Stock issued upon the exercise of certain warrants held by
      Vision, and (vi) 271,074 shares of Common Stock issuable upon exercise of the
      New Warrants.
      

     

    
      
        
        

      

      
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    "Registration
      Statement"
      means
      the registration statements and any additional registration statements
      contemplated by Section 2, including (in each case) the Prospectus, amendments
      and supplements to such registration statement or Prospectus, including pre-
      and
      post-effective amendments, all exhibits thereto, and all material incorporated
      by reference in such registration statement.

    

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

    

    "Rule
      158"
      means
      Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

    

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

    

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

    

    "Securities
      Act"
      means
      the Securities Act of 1933, as amended.

    

    "Special
      Counsel"
      means
      Kramer Levin Naftalis & Frankel LLP, for which the Holders will be
      reimbursed by the Company pursuant to Section 4.

    

    “Transaction
      Documents”
means
      this Agreement, the Stock Purchase Agreements (and any agreements entered into
      in connection with the execution of the Stock Purchase Agreements which have
      not
      been terminated pursuant to the Amendment Agreement) and the Amendment
      Agreement.

    

    "Warrants"
      means
      the Series C and Series D warrants held by the Purchasers which were purchased
      pursuant to the Stock Purchase Agreements and the New Warrants.

    

    “Warrant
      Shares”
means
      the Common Stock issuable by the Company upon exercise of the
      Warrants.

     

    
      
        
        

      

      
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            	2.	
              Resale
                Registration.

            

    

    

    (a) On
      or
      prior to the Filing Date the Company shall prepare and file with the Commission
      a "resale" Registration Statement providing for the resale of all Registrable
      Securities for an offering to be made on a continuous basis pursuant to Rule
      415. The Registration Statement shall be on Form SB-2 (except if the Company
      is
      not then eligible to register for resale the Registrable Securities on Form
      SB-2, in which case such registration shall be on another appropriate form
      in
      accordance herewith and the Securities Act and the rules promulgated
      thereunder). Such Registration Statement shall cover to the extent allowable
      under the Securities Act and the rules promulgated thereunder (including Rule
      416), such indeterminate number of additional shares of Common Stock resulting
      from stock splits, stock dividends or similar transactions with respect to
      the
      Registrable Securities. The Company shall (i) not permit any securities other
      than the Registrable Securities and the securities to be listed on Schedule
      II
      hereto
      to be included in the Registration Statement and (ii) use its best efforts
      to
      cause the Registration Statement to be declared effective under the Securities
      Act as promptly as possible after the filing thereof, but in any event prior
      to
      the Effectiveness Date, and to keep such Registration Statement continuously
      effective under the Securities Act until such date as is the earlier of (x)
      the
      date when all Registrable Securities covered by such Registration Statement
      have
      been sold or (y) the date on which the Registrable Securities may be sold
      without any restriction pursuant to Rule 144(k) as determined by the counsel
      to
      the Company pursuant to a written opinion letter, addressed to the Company's
      transfer agent to such effect (the "Effectiveness
      Period").
      The
      Company shall request that the effective time of the Registration Statement
      is
      4:00 p.m. Eastern Time on the effective date. If at any time and for any reason,
      an additional Registration Statement is required to be filed because at such
      time the actual number of shares of Common Stock into which the Preferred Stock
      is convertible and the Warrants are exercisable plus the number of shares of
      Common Stock exceeds the number of Registrable Securities remaining under the
      Registration Statement, the Company shall have twenty (20) Business Days to
      file
      such additional Registration Statement, and the Company shall use its best
      efforts to cause such additional Registration Statement to be declared effective
      by the Commission as soon as possible, but in no event later than sixty (60)
      days after filing. 

    

    (b) Notwithstanding
      anything to the contrary set forth in this Section 2, in the event the
      Commission does not permit the Company to register all of the Registrable
      Securities in the Registration Statement because of the Commission’s application
      of Rule 415 or the Commission requires the Company to either exclude shares
      held
      by certain Holders or deem such Holders to be underwriters with respect to
      their
      Registrable Securities, the Company shall register in the Registration Statement
      such number of Registrable Securities as is permitted by the Commission without
      naming such Holder as an underwriter (unless such Holder agrees to be named
      as
      an underwriter), provided,
      however,
      that
      the number of Registrable Securities to be included in such Registration
      Statement or any subsequent registration statement shall be determined in the
      following order: (i) first, 136,120 shares of Common Stock acquired by Vision
      from the Company’s prior “shell company” holders, (ii) second, 321,168 shares of
      Common Stock issued to Vision as “make good shares” for 2006 under the Stock
      Purchase Agreements, (iii) third, 1,094,891 shares of Common Stock issued upon
      the exercise of certain warrants held by Vision, (iv) fourth, the
      shares of Common Stock issuable upon conversion of the Preferred Stock
      (including, without limitation, 2,919,708
      shares issuable upon the conversion of shares of Preferred Stock held by Vision
      and 770,897 shares of Common Stock issuable upon conversion of the new shares
      of
      Preferred Stock issued to Vision pursuant to Section 1.1(b) of the Amendment
      Agreement) shall be registered on a pro rata basis among the holders of the
      Preferred Stock,
      (v)
      fifth, the shares of Common Stock issuable upon exercise of the New Warrants,
      and (vi) sixth,
      the
      shares of Common Stock issuable upon exercise of any other outstanding Warrants
      (including, without limitation, 2,657,807
      shares of Common stock issuable upon the exercise of the Series C Warrant held
      by Vision) shall be registered on a pro rata basis among the holders of the
      Warrants.
      In
      the
      event the Commission does not permit the Company to register all of the
      Registrable Securities in the initial Registration Statement, the Company shall
      use its commercially reasonable efforts to file subsequent Registration
      Statements to register the Registrable Securities that were not registered
      in
      the initial Registration Statement as promptly as possible and in a manner
      permitted by the Commission. For purposes of this Section 2(b), “Filing
      Date”
      means
      with respect to each subsequent Registration Statement filed pursuant hereto,
      the
      later
      of (i) sixty (60) days following the sale of substantially all of the
      Registrable Securities included in the initial Registration Statement or any
      subsequent Registration Statement and (ii) six (6) months following the
      effective date of the initial Registration Statement or any subsequent
      Registration Statement, as applicable, or such earlier or later date as
      permitted or required by the Commission. For
      purposes of this Section 2(b), “Effectiveness
      Date”
means
      with respect to each subsequent Registration Statement filed pursuant hereto,
      the earlier of (A)
      the
      ninetieth (90th)
      day
      following the filing date of such Registration Statement (or in the event such
      Registration Statement is reviewed by the Commission, the one hundred twentieth
      (120th)
      day
      following such filing date) or (B) the date which is within three (3) Business
      Days after the date on which the Commission informs the Company (i) that the
      Commission will not review such Registration Statement or (ii) that
      the
      Company may request the acceleration of the effectiveness of such Registration
      Statement and the Company promptly makes such request; provided that,
      if the
      Effectiveness Date falls on a Saturday, Sunday or any other day which shall
      be a
      legal holiday or a day on which the Commission is authorized or required by
      law
      or other government actions to close, the Effectiveness Date shall be the
      following Business Day.

     

    
      
        
        

      

      
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            	3.	
              Registration
                Procedures.

            

    

    

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

     

    (a)
       Prepare
      and file with the Commission on or prior to the Filing Date, a Registration
      Statement on Form SB-2 (or if the Company is not then eligible to register
      for
      resale the Registrable Securities on Form SB-2 such registration shall be on
      another appropriate form in accordance herewith and the Securities Act and
      the
      rules promulgated thereunder) in accordance with the plan of distribution as
      set
      forth on Exhibit
      A
      hereto
      and in accordance with applicable law, and cause the Registration Statement
      to
      become effective and remain effective as provided herein; provided,
      however,
      that
      not less than five (5) Business Days prior to the filing of the Registration
      Statement or any related Prospectus or any amendment or supplement thereto
      (including any document that would be incorporated therein by reference), the
      Company shall (i) furnish to the Holders and any Special Counsel, copies of
      all
      such documents proposed to be filed, which documents (other than those
      incorporated by reference) will be subject to the review of such Holders and
      such Special Counsel, and (ii) cause its officers and directors, counsel and
      independent certified public accountants to respond to such inquiries as shall
      be necessary, in the reasonable opinion of Special Counsel, to conduct a
      reasonable review of such documents. The Company shall not file the Registration
      Statement or any such Prospectus or any amendments or supplements thereto to
      which the Holders of a majority of the Registrable Securities or any Special
      Counsel shall reasonably object in writing within three (3) Business Days of
      their receipt thereof.

    

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to the Registration Statement as may be necessary to keep the
      Registration Statement continuously effective as to the applicable Registrable
      Securities for the Effectiveness Period and prepare and file with the Commission
      such additional Registration Statements as necessary in order to register for
      resale under the Securities Act all of the Registrable Securities; (ii) cause
      the related Prospectus to be amended or supplemented by any required Prospectus
      supplement, and as so supplemented or amended to be filed pursuant to Rule
      424
      (or any similar provisions then in force) promulgated under the Securities
      Act;
      (iii) respond as promptly as possible, but in no event later than ten (10)
      Business Days, to any comments received from the Commission with respect to
      the
      Registration Statement or any amendment thereto and to provide the Holders,
      within such ten (10) Business Day period, true and complete copies of all
      correspondence from and to the Commission relating to the Registration
      Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
      Act no later than 1:00 p.m. Eastern Time on the Business Day following the
      date
      the Registration Statement is declared effective by the Commission; and (v)
      comply in all material respects with the provisions of the Securities Act and
      the Exchange Act with respect to the disposition of all Registrable Securities
      covered by the Registration Statement during the Effectiveness Period in
      accordance with the intended methods of disposition by the Holders thereof
      set
      forth in the Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

     

    
      
        
        

      

      
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    (c) Notify
      the Holders of Registrable Securities and any Special Counsel as promptly as
      possible (and, in the case of (i)(A) below, not less than three (3) Business
      Days prior to such filing, and in the case of (iii) below, on the same day
      of
      receipt by the Company of such notice from the Commission) and (if requested
      by
      any such Person) confirm such notice in writing no later than one (1) Business
      Day following the day (i)(A) when a Prospectus or any Prospectus supplement
      or
      post-effective amendment to the Registration Statement is filed; (B) when the
      Commission notifies the Company whether there will be a "review" of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement and (C) with respect to the Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other Federal or state governmental authority
      for amendments or supplements to the Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission of any stop
      order suspending the effectiveness of the Registration Statement covering any
      or
      all of the Registrable Securities or the initiation or threatening of any
      Proceedings for that purpose; (iv) if at any time any of the representations
      and
      warranties of the Company contained in any agreement contemplated hereby ceases
      to be true and correct in all material respects; (v) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Registrable Securities for sale
      in
      any jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (vi) of the occurrence of any event that makes any statement made
      in the Registration Statement or Prospectus or any document incorporated or
      deemed to be incorporated therein by reference untrue in any material respect
      or
      that requires any revisions to the Registration Statement, Prospectus or other
      documents so that, in the case of the Registration Statement or the Prospectus,
      as the case may be, it will not contain any untrue statement of a material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading.

    

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

     

    
      
        
        

      

      
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    (e) If
      requested by the Holders of a majority in interest of the Registrable
      Securities, (i) promptly incorporate in a Prospectus supplement or
      post-effective amendment to the Registration Statement such information as
      the
      Company reasonably agrees should be included therein and (ii) make all required
      filings of such Prospectus supplement or such post-effective amendment as soon
      as practicable after the Company has received notification of the matters to
      be
      incorporated in such Prospectus supplement or post-effective
      amendment.

    

    (f) If
      requested by any Holder, furnish to such Holder and any Special Counsel, without
      charge, at least one conformed copy of each Registration Statement and each
      amendment thereto, including financial statements and schedules, all documents
      incorporated or deemed to be incorporated therein by reference, and all exhibits
      to the extent requested by such Person (including those previously furnished
      or
      incorporated by reference) promptly after the filing of such documents with
      the
      Commission.

    

    (g) Promptly
      deliver to each Holder and any Special Counsel, without charge, as many copies
      of the Prospectus or Prospectuses (including each form of prospectus) and each
      amendment or supplement thereto as such Persons may reasonably request; and
      subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents
      to the use of such Prospectus and each amendment or supplement thereto by each
      of the selling Holders in connection with the offering and sale of the
      Registrable Securities covered by such Prospectus and any amendment or
      supplement thereto.

    

    (h) Prior
      to
      any public offering of Registrable Securities, use its best efforts to register
      or qualify or cooperate with the selling Holders and any Special Counsel in
      connection with the registration or qualification (or exemption from such
      registration or qualification) of such Registrable Securities for offer and
      sale
      under the securities or Blue Sky laws of such jurisdictions within the United
      States as any Holder requests in writing, to keep each such registration or
      qualification (or exemption therefrom) effective during the Effectiveness Period
      and to do any and all other acts or things necessary or advisable to enable
      the
      disposition in such jurisdictions of the Registrable Securities covered by
      a
      Registration Statement; provided,
      however,
      that
      the Company shall not be required to qualify generally to do business in any
      jurisdiction where it is not then so qualified or to take any action that would
      subject it to general service of process in any such jurisdiction where it
      is
      not then so subject or subject the Company to any material tax in any such
      jurisdiction where it is not then so subject.

    

    (i) Cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be sold pursuant to a
      Registration Statement, which certificates, to the extent permitted by the
      Transaction Documents and applicable federal and state securities laws, shall
      be
      free of all restrictive legends, and to enable such Registrable Securities
      to be
      in such denominations and registered in such names as any Holder may request
      in
      connection with any sale of Registrable Securities.

    

    (j) Upon
      the
      occurrence of any event contemplated by Section 3(c)(vi), as promptly as
      possible, prepare a supplement or amendment, including a post-effective
      amendment, to the Registration Statement or a supplement to the related
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference, and file any other required document so that, as thereafter
      delivered, neither the Registration Statement nor such Prospectus will contain
      an untrue statement of a material fact or omit to state a material fact required
      to be stated therein or necessary to make the statements therein, in the light
      of the circumstances under which they were made, not misleading.

     

    
      
        
        

      

      
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    (k) Use
      its
      best efforts to cause all Registrable Securities relating to the Registration
      Statement to be listed on the OTC Bulletin Board or any other securities
      exchange, quotation system or market, if any, on which similar securities issued
      by the Company are then listed or traded as and when required pursuant to the
      Transaction Documents.

    

    (l) Comply
      in
      all material respects with all applicable rules and regulations of the
      Commission and make generally available to its security holders all documents
      filed or required to be filed with the Commission, including, but not limited,
      to, earning statements satisfying the provisions of Section 11(a) of the
      Securities Act and Rule 158 not later than 45 days after the end of any 12-month
      period (or 90 days after the end of any 12-month period if such period is a
      fiscal year) commencing on the first day of the first fiscal quarter of the
      Company after the effective date of the Registration Statement, which statement
      shall conform to the requirements of Rule 158.

    

    (m) The
      Company may require each selling Holder to furnish to the Company information
      regarding such Holder and the distribution of such Registrable Securities as
      is
      required by law to be disclosed in the Registration Statement, Prospectus,
      or
      any amendment or supplement thereto, and the Company may exclude from such
      registration the Registrable Securities of any such Holder who unreasonably
      fails to furnish such information within a reasonable time after receiving
      such
      request.

    

    If
      the
      Registration Statement refers to any Holder by name or otherwise as the holder
      of any securities of the Company, then such Holder shall have the right to
      require (if such reference to such Holder by name or otherwise is not required
      by the Securities Act or any similar federal statute then in force) the deletion
      of the reference to such Holder in any amendment or supplement to the
      Registration Statement filed or prepared subsequent to the time that such
      reference ceases to be required.

    

    Each
      Holder covenants and agrees that it will not sell any Registrable Securities
      under the Registration Statement until the Company has electronically filed
      the
      Prospectus as then amended or supplemented as contemplated in Section 3(g)
      and
      notice from the Company that the Registration Statement and any post-effective
      amendments thereto have become effective as contemplated by Section
      3(c).

    

    Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
      such Holder will forthwith discontinue disposition of such Registrable
      Securities under the Registration Statement until such Holder's receipt of
      the
      copies of the supplemented Prospectus and/or amended Registration Statement
      contemplated by Section 3(j), or until it is advised in writing (the
      "Advice")
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (n) At
      any
      time following the date that the Registration Statement is declared effective
      by
      the Commission, if (i) there is material non-public information regarding the
      Company which the Company's Board of Directors (the "Board")
      determines not to be in the Company's best interest to disclose and which the
      Company is not otherwise required to disclose, (ii) there is a significant
      business opportunity (including, but not limited to, the acquisition or
      disposition of assets (other than in the ordinary course of business) or any
      merger, consolidation, tender offer or other similar transaction) available
      to
      the Company which the Board determines not to be in the Company's best interest
      to disclose, or (iii) the Company is required to file a post-effective amendment
      to the Registration Statement to incorporate the Company’s quarterly and annual
      reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
      Company may postpone or suspend effectiveness of a registration statement for
      a
      period not to exceed twenty (20) consecutive days; provided that the Company
      may
      not suspend effectiveness of a registration statement under this Section 3(n)
      for more than forty-five (45) days in the aggregate during any three hundred
      sixty (360) day period; provided,
      however,
      that no
      such suspension shall be permitted for consecutive twenty (20) day periods
      arising out of the same set of facts, circumstances or
      transactions.

    

    
      	
            	4.	
              Registration
                Expenses.

            

    

    

    All
      fees
      and expenses incident to the performance of or compliance with this Agreement
      by
      the Company, except as and to the extent specified in this Section 4, shall
      be
      borne by the Company whether or not the Registration Statement is filed or
      becomes effective and whether or not any Registrable Securities are sold
      pursuant to the Registration Statement. The fees and expenses referred to in
      the
      foregoing sentence shall include, without limitation, (i) all registration
      and
      filing fees (including, without limitation, fees and expenses (A) with respect
      to filings required to be made with the OTC Bulletin Board and each other
      securities exchange or market on which Registrable Securities are required
      hereunder to be listed, if any, (B) with respect to filing fees required to
      be
      paid to the National Association of Securities Dealers, Inc. and the NASD
      Regulation, Inc. and (C) in compliance with state securities or Blue Sky laws
      (including, without limitation, fees and disbursements of counsel for the
      Holders in connection with Blue Sky qualifications of the Registrable Securities
      and determination of the eligibility of the Registrable Securities for
      investment under the laws of such jurisdictions as the Holders of a majority
      of
      Registrable Securities may designate)), (ii) printing expenses (including,
      without limitation, expenses of printing certificates for Registrable Securities
      and of printing prospectuses if the printing of prospectuses is requested by
      the
      holders of a majority of the Registrable Securities included in the Registration
      Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
      disbursements of counsel for the Company and Special Counsel for the Holders,
      in
      the case of the Special Counsel, up to a maximum amount of $7,500, (v)
      Securities Act liability insurance, if the Company so desires such insurance,
      and (vi) fees and expenses of all other Persons retained by the Company in
      connection with the consummation of the transactions contemplated by this
      Agreement, including, without limitation, the Company's independent public
      accountants (including the expenses of any comfort letters or costs associated
      with the delivery by independent public accountants of a comfort letter or
      comfort letters). In addition, the Company shall be responsible for all of
      its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit, the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder.

     

    
      
        
        

      

      
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            	5.	
              Indemnification.

            

    

    

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, managers, partners, members,
      shareholders, agents, brokers, investment advisors and employees of each of
      them, each Person who controls any such Holder (within the meaning of Section
      15
      of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all losses, claims,
      damages, liabilities, costs (including, without limitation, costs of preparation
      and attorneys' fees) and expenses (collectively, "Losses"),
      as
      incurred, arising out of or relating to any violation of securities laws or
      untrue or alleged untrue statement of a material fact contained in the
      Registration Statement, any Prospectus or any form of prospectus or in any
      amendment or supplement thereto or in any preliminary prospectus, or arising
      out
      of or relating to any omission or alleged omission of a material fact required
      to be stated therein or necessary to make the statements therein (in the case
      of
      any Prospectus or form of prospectus or supplement thereto, in the light of
      the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that such untrue statements or omissions are based
      solely upon information regarding such Holder or such other Indemnified Party
      furnished in writing to the Company by such Holder expressly for use therein.
      The Company shall notify the Holders promptly of the institution, threat or
      assertion of any Proceeding of which the Company is aware in connection with
      the
      transactions contemplated by this Agreement.

    

    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents and employees
      of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses (as determined by a court of competent jurisdiction
      in a final judgment not subject to appeal or review), as incurred, arising
      solely out of or based solely upon any untrue statement of a material fact
      contained in the Registration Statement, any Prospectus, or any form of
      prospectus, or arising solely out of or based solely upon any omission of a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of any Prospectus or form of prospectus or supplement
      thereto, in the light of the circumstances under which they were made) not
      misleading, to the extent, but only to the extent, that such untrue statement
      or
      omission is contained in any information so furnished in writing by such Holder
      or other Indemnifying Party to the Company specifically for inclusion in the
      Registration Statement or such Prospectus. Notwithstanding anything to the
      contrary contained herein, each Holder shall be liable under this Section 5(b)
      for only that amount as does not exceed the net proceeds to such Holder as
      a
      result of the sale of Registrable Securities pursuant to such Registration
      Statement.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

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

    

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

    

    All
      fees
      and expenses of the Indemnified Party (including reasonable fees and expenses
      to
      the extent incurred in connection with investigating or preparing to defend
      such
      Proceeding in a manner not inconsistent with this Section) shall be paid to
      the
      Indemnified Party, as incurred, within ten (10) Business Days of written notice
      thereof to the Indemnifying Party (regardless of whether it is ultimately
      determined that an Indemnified Party is not entitled to indemnification
      hereunder; provided,
      that the Indemnified Party shall reimburse all such fees and expenses to the
      extent it is finally judicially determined that such Indemnified Party is not
      entitled to indemnification hereunder).

    

    (d) Contribution.
      If a
      claim for indemnification under Section 5(a) or 5(b) is due but unavailable
      to
      an Indemnified Party because of a failure or refusal of a governmental authority
      to enforce such indemnification in accordance with its terms (by reason of
      public policy or otherwise), then each Indemnifying Party, in lieu of
      indemnifying such Indemnified Party, shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such Losses, in such proportion
      as is appropriate to reflect the relative benefits received by the Indemnifying
      Party on the one hand and the Indemnified Party on the other from the offering
      of the Preferred Stock and the Warrants. If, but only if, the allocation
      provided by the foregoing sentence is not permitted by applicable law, the
      allocation of contribution shall be made in such proportion as is appropriate
      to
      reflect not only the relative benefits referred to in the foregoing sentence
      but
      also the relative fault, as applicable, of the Indemnifying Party and
      Indemnified Party in connection with the actions, statements or omissions that
      resulted in such Losses as well as any other relevant equitable considerations.
      The relative fault of such Indemnifying Party and Indemnified Party shall be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact or omission
      or alleged omission of a material fact, has been taken or made by, or relates
      to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the parties'
      relative intent, knowledge, access to information and opportunity to correct
      or
      prevent such action, statement or omission. The amount paid or payable by a
      party as a result of any Losses shall be deemed to include, subject to the
      limitations set forth in Section 5(c), any reasonable attorneys' or other
      reasonable fees or expenses incurred by such party in connection with any
      Proceeding to the extent such party would have been indemnified for such fees
      or
      expenses if the indemnification provided for in this Section was available
      to
      such party in accordance with its terms. In no event shall any selling Holder
      be
      required to contribute an amount under this Section 5(d) in excess of the net
      proceeds received by such Holder upon sale of such Holder’s Registrable
      Securities pursuant to the Registration Statement giving rise to such
      contribution obligation.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph. No Person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the Securities Act) shall be entitled to contribution from any Person who was
      not guilty of such fraudulent misrepresentation. The indemnity and contribution
      agreements contained in this Section are in addition to any liability that
      the
      Indemnifying Parties may have to the Indemnified Parties pursuant to the law.
      

     

    
      	
            	6.	
              Rule
                144.

            

    

    

    As
      long
      as any Holder owns Preferred Stock, Warrants or Registrable Securities, the
      Company covenants to timely file (or obtain extensions in respect thereof and
      file within the applicable grace period) all reports required to be filed by
      the
      Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
      Act. As long as any Holder owns Preferred Stock, Warrants or Registrable
      Securities, if the Company is not required to file reports pursuant to Section
      13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
      and make publicly available in accordance with Rule 144(c) promulgated under
      the
      Securities Act annual and quarterly financial statements, together with a
      discussion and analysis of such financial statements in form and substance
      substantially similar to those that would otherwise be required to be included
      in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
      as
      any other information required thereby, in the time period that such filings
      would have been required to have been made under the Exchange Act. The Company
      further covenants that it will take such further action as any Holder may
      reasonably request, all to the extent required from time to time to enable
      such
      Person to sell Conversion Shares and Warrant Shares without registration under
      the Securities Act within the limitation of the exemptions provided by Rule
      144
      promulgated under the Securities Act, including providing any legal opinions
      relating to such sale pursuant to Rule 144. Upon the request of any Holder,
      the
      Company shall deliver to such Holder a written certification of a duly
      authorized officer as to whether it has complied with such
      requirements.

     

    
      
        
        

      

      
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            	7.	
              Miscellaneous.

            

    

    

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

    

    (b) No
      Inconsistent Agreements.
      Except
      as contemplated by the New Financing or as disclosed in the Transaction
      Documents, neither the Company nor any of its subsidiaries has, as of the date
      hereof entered into and currently in effect, nor shall the Company or any of
      its
      subsidiaries, on or after the date of this Agreement, enter into any agreement
      with respect to its securities that is inconsistent with the rights granted
      to
      the Holders in this Agreement or otherwise conflicts with the provisions hereof.
      Except in connection with the New Financing or as disclosed in the Transaction
      Documents or on Schedule
      II
      hereto,
      neither the Company nor any of its subsidiaries has previously entered into
      any
      agreement currently in effect granting any registration rights with respect
      to
      any of its securities to any Person. Without limiting the generality of the
      foregoing, without the written consent of the Holders of a majority of the
      then
      outstanding Registrable Securities, the Company shall not grant to any Person
      the right to request the Company to register any securities of the Company,
      under the Securities Act unless the rights so granted are subject in all
      respects to the prior rights in full of the Holders set forth herein, and are
      not otherwise in conflict with the provisions of this Agreement.

    

    (c) No
      Piggyback on Registrations.
      Neither
      the Company nor any of its security holders (other than the Holders in such
      capacity pursuant hereto or as disclosed on Schedule
      II
      hereto)
      may include securities of the Company in the Registration Statement, and the
      Company shall not after the date hereof enter into any agreement providing
      such
      right to any of its securityholders, unless the right so granted is subject
      in
      all respects to the prior rights in full of the Holders set forth herein, and
      is
      not otherwise in conflict with the provisions of this Agreement.

     

    
      
        
        

      

      
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    (d) Piggy-Back
      Registrations.
      Except
      in connection with the registration statement to be filed in connection with
      the
      New Financing, if at any time when there is not an effective Registration
      Statement providing for the resale of the Registrable Securities, the Company
      shall determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, the Company shall
      send to each holder of Registrable Securities written notice of such
      determination and, if within thirty (30) days after receipt of such notice,
      or
      within such shorter period of time as may be specified by the Company in such
      written notice as may be necessary for the Company to comply with its
      obligations with respect to the timing of the filing of such registration
      statement, any such holder shall so request in writing (which request shall
      specify the Registrable Securities intended to be disposed of by the
      Purchasers), the Company will cause the registration under the Securities Act
      of
      all Registrable Securities which the Company has been so requested to register
      by the holder, to the extent requisite to permit the disposition of the
      Registrable Securities so to be registered, provided that if at any time after
      giving written notice of its intention to register any securities and prior
      to
      the effective date of the registration statement filed in connection with such
      registration, the Company shall determine for any reason not to register or
      to
      delay registration of such securities, the Company may, at its election, give
      written notice of such determination to such holder and, thereupon, (i) in
      the
      case of a determination not to register, shall be relieved of its obligation
      to
      register any Registrable Securities in connection with such registration (but
      not from its obligation to pay expenses in accordance with Section 4 hereof),
      and (ii) in the case of a determination to delay registering, shall be permitted
      to delay registering any Registrable Securities being registered pursuant to
      this Section 7(d) for the same period as the delay in registering such other
      securities. The Company shall include in such registration statement all or
      any
      part of such Registrable Securities such holder requests to be registered;
      provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k)
      of the Securities Act. In the case of an underwritten public offering, if the
      managing underwriter(s) or underwriter(s) should reasonably object to the
      inclusion of the Registrable Securities in such registration statement, then
      if
      the Company after consultation with the managing underwriter should reasonably
      determine that the inclusion of such Registrable Securities would materially
      adversely affect the offering contemplated in such registration statement,
      and
      based on such determination recommends inclusion in such registration statement
      of fewer or none of the Registrable Securities of the Holders, then (x) the
      number of Registrable Securities of the Holders included in such registration
      statement shall be reduced pro-rata among such Holders (based
      upon the number of Registrable Securities requested to be included in the
      registration), if the Company after consultation with the underwriter(s)
      recommends the inclusion of fewer Registrable Securities, or (y) none of the
      Registrable Securities of the Holders shall be included in such registration
      statement, if the Company after consultation with the underwriter(s) recommends
      the inclusion of none of such Registrable Securities; provided,
      however,
      that if
      securities are being offered for the account of other persons or entities as
      well as the Company, such reduction shall not represent a greater fraction
      of
      the number of Registrable securities intended to be offered by the Holders
      than
      the fraction of similar reductions imposed on such other persons or entities
      (other than the Company).

     

    
      
        
        

      

      
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    (e) Failure
      to File Registration Statement and Other Events.
      The
      Company and the Purchasers agree that the Holders will suffer damages if the
      Registration Statement is not filed on or prior to the Filing Date and not
      declared effective by the Commission on or prior to the Effectiveness Date
      and
      maintained in the manner contemplated herein during the Effectiveness Period
      or
      if certain other events occur. The Company and the Holders further agree that
      it
      would not be feasible to ascertain the extent of such damages with precision.
      Accordingly, if (A) the Registration Statement is not filed on or prior to
      the
      Filing Date, or (B) the Registration Statement is not declared effective by
      the
      Commission on or prior to the Effectiveness Date (or in the event an additional
      Registration Statement is filed because the actual number of shares of Common
      Stock into which the Warrants are exercisable exceeds the number of shares
      of
      Common Stock initially registered is not filed and declared effective with
      the
      time periods set forth in Section 2), or (C) the Company fails to file with
      the
      Commission a request for acceleration in accordance with Rule 461 promulgated
      under the Securities Act within three (3) Business Days of the date that the
      Company is notified (orally or in writing, whichever is earlier) by the
      Commission that a Registration Statement will not be "reviewed," or not subject
      to further review, or (D) the Registration Statement is filed with and declared
      effective by the Commission but thereafter ceases to be effective as to all
      Registrable Securities at any time prior to the expiration of the Effectiveness
      Period, without being succeeded promptly by a subsequent Registration Statement
      filed with and declared effective by the Commission in accordance with Section
      2
      hereof, or (E) the Company has breached Section 3(n), or (F) trading in the
      Common Stock shall be suspended or if the Common Stock is delisted from or
      no
      longer quoted on the OTC Bulletin Board (or other principal exchange on which
      the Common Stock is listed or traded) for any reason for more than three (3)
      Business Days in the aggregate (any such failure or breach being referred to
      as
      an "Event,"
      and
      for purposes of clauses (A) and (B) the date on which such Event occurs, or
      for
      purposes of clause (C) the date on which such three (3) Business Day period
      is
      exceeded, or for purposes of clause (D) after more than fifteen (15) Business
      Days, or for purposes of clause (F) the date on which such three (3) Business
      Day period is exceeded, being referred to as "Event
      Date"),
      the
      Company shall pay an amount in cash as liquidated damages to each Holder equal
      to two percent (2%) for each calendar month (prorated for shorter periods)
      of
      the Holder’s initial investment in the Preferred Stock from the Event Date until
      the applicable Event is cured; provided,
      however,
      that in
      no event shall the amount of liquidated damages payable at any time and from
      time to time to any Holder pursuant to this Section 7(e) exceed an aggregate
      of
      twenty percent (20%) of the amount of the Holder’s initial investment in the
      Preferred Stock. The Company shall not be liable for liquidated damages under
      this Agreement as to any Registrable Securities which are not permitted by
      the
      Commission to be included in a Registration Statement because of its application
      of Rule 415 until such time as the provisions of this Agreement as to the
      Registration Statements required to be filed pursuant to Section 2(b) are
      triggered, in which case the provisions of this Section 7(e) shall once again
      apply, if applicable. In such case, the liquidated damages shall be calculated
      to only apply to the percentage of Registrable Securities which are permitted
      by
      the Commission to be included in the Registration Statement. Notwithstanding
      anything to the contrary in this paragraph (e), if (i) any of the Events
      described in clauses (A), (B), (C), (D) or (F) shall have occurred, (II) on
      or
      prior to the applicable Event Date, the Company shall have exercised its rights
      under Section 3(n) hereof and (III) the postponement or suspension permitted
      pursuant to such Section 3(n) shall remain effective as of such applicable
      Event
      Date, then the applicable Event Date shall be deemed instead to occur on the
      second Business Day following the termination of such postponement or
      suspension. Liquidated damages payable by the Company pursuant to this Section
      7(e) shall be payable on the first (1st)
      Business Day of each thirty (30) day period following the Event Date.
      Notwithstanding anything to the contrary contained herein, in no event shall
      any
      liquidated damages be payable with respect to the Warrants or the Warrant
      Shares.

     

    
      
        
        

      

      
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    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of a majority of the Registrable
      Securities outstanding.

    

    (g) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earlier of (i) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile telephone number specified for
      notice prior to 5:00 p.m., New York City time, on a Business Day, (ii) the
      Business Day after the date of transmission, if such notice or communication
      is
      delivered via facsimile at the facsimile telephone number specified for notice
      later than 5:00 p.m., New York City time, on any date and earlier than 11:59
      p.m., New York City time, on such date, (iii) the Business Day following the
      date of mailing, if sent by overnight delivery by nationally recognized
      overnight courier service or (iv) actual receipt by the party to whom such
      notice is required to be given. The addresses for such communications shall
      be
      with respect to each Holder at its address set forth under its name on
Schedule
      I
      attached
      hereto with copies to its legal counsel named therein, or with respect to the
      Company, addressed to:

    

    Sino
      Gas International Holdings, Inc.

    N0.18
      Zhong Guan Cun Dong St.

    Haidian
      District

    Beijing,
      China

    Attention:
      Chen Fang

    Tel.
      No.:
      011-86-10-82600527

    Fax
      No.:
      011-010-82600042

    

    with
      copies (which copies 

    shall
      not
      constitute notice 

    to
      the
      Company)
      to:                         
GUZOV OFSINK, LLC

    600
      Madison Avenue, 14th Floor

    New
      York,
      New York 10022

    Attention:
      Darren Ofsink

    Tel.
      No.:
      (212) 371-8008, ext. 127

    Fax
      No.:
      (212) 688-7273

    

    or
      to
      such other address or addresses or facsimile number or numbers as any such
      party
      may most recently have designated in writing to the other parties hereto by
      such
      notice. Copies of notices to each Holder (in addition to the legal counsel
      set
      forth on Schedule
      I
      hereto)
      shall be sent to Kramer Levin Naftalis & Frankel LLP, Kramer Levin Naftalis
& Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036,
      Attention: Christopher S. Auguste, Telephone No.: (212) 715-9100, Facsimile
      No.:
      (212) 715-8000.

    

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

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    (i) Assignment
      of Registration Rights.
      The
      rights of each Holder hereunder, including the right to have the Company
      register for resale Registrable Securities in accordance with the terms of
      this
      Agreement, shall be automatically assignable by each Holder to any Person of
      all
      or a portion of
      the
      Preferred Stock or
      Registrable Securities if: (i) the Holder agrees in writing with the transferee
      or assignee to assign such rights, and a copy of such agreement is furnished
      to
      the Company within a reasonable time after such assignment, (ii) the Company
      is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned, (iii) following such transfer or assignment the further
      disposition of such securities by the transferee or assignees is restricted
      under the Securities Act and applicable state securities laws, (iv) at or before
      the time the Company receives the written notice contemplated by clause (ii)
      of
      this Section, the transferee or assignee agrees in writing with the Company
      to
      be bound by all of the provisions of this Agreement, and (v) such transfer
      shall
      have been made in accordance with the applicable requirements of the Transaction
      Documents. The rights to assignment shall apply to the Holders (and to
      subsequent) successors and assigns. 

    

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

    

    (k) Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York, without giving effect to any of the conflicts
      of
      law principles which would result in the application of the substantive law
      of
      another jurisdiction. This Agreement shall not be interpreted or construed
      with
      any presumption against the party causing this Agreement to be drafted. The
      Company and the Holders agree that venue for any dispute arising under this
      Agreement will lie exclusively in the state or federal courts located in New
      York County, New York, and the parties irrevocably waive any right to raise
      forum
      non conveniens
      or any
      other argument that New York is not the proper venue. The Company and the
      Holders irrevocably consent to personal jurisdiction in the state and federal
      courts of the state of New York. The Company and the Holders consent to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address in effect for notices to it under this Agreement
      and
      agrees that such service shall constitute good and sufficient service of process
      and notice thereof. Nothing in this Section 7(k) shall affect or limit any
      right
      to serve process in any other manner permitted by law. The Company and the
      Holders hereby agree that the prevailing party in any suit, action or proceeding
      arising out of or relating to this Agreement or the Transaction Documents,
      shall
      be entitled to reimbursement for reasonable legal fees from the non-prevailing
      party. The parties hereby waive all rights to a trial by jury.

    

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

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

    

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

    

    (n) Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    (o) Shares
      Held by the Company and its Affiliates.
      Whenever the consent or approval of Holders of a specified percentage of
      Registrable Securities is required hereunder, Registrable Securities held by
      the
      Company or its Affiliates (other than any Holder or transferees or successors
      or
      assigns thereof if such Holder is deemed to be an Affiliate solely by reason
      of
      its holdings of such Registrable Securities) shall not be counted in determining
      whether such consent or approval was given by the Holders of such required
      percentage.

    

    (p) Independent
      Nature of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under the
      Transaction Documents are several and not joint with the obligations of any
      other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under the Transaction
      Documents. The Company acknowledges that the decision of each Purchaser to
      purchase Securities pursuant to the Transaction Documents has been made by
      such
      Purchaser independently of any other Purchaser and independently of any
      information, materials, statements or opinions as to the business, affairs,
      operations, assets, properties, liabilities, results of operations, condition
      (financial or otherwise) or prospects of the Company or of its Subsidiaries
      which may have made or given by any other Purchaser or by any agent or employee
      of any other Purchaser, and no Purchaser or any of its agents or employees
      shall
      have any liability to any Purchaser (or any other person) relating to or arising
      from any such information, materials, statements or opinions. The Company
      acknowledges that nothing contained herein, or in any Transaction Document,
      and
      no action taken by any Purchaser pursuant hereto or thereto (including, but
      not
      limited to, the (i) inclusion of a Purchaser in the Registration Statement
      and
      (ii) review by, and consent to, such Registration Statement by a Purchaser)
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      The
      Company acknowledges that each Purchaser shall be entitled to independently
      protect and enforce its rights, including without limitation, the rights arising
      out of this Agreement or out of the other Transaction Documents, and it shall
      not be necessary for any other Purchaser to be joined as an additional party
      in
      any proceeding for such purpose. The Company acknowledges that for reasons
      of
      administrative convenience only, the Transaction Documents have been prepared
      by
      counsel for  one
      of
      the Purchasers and such counsel does not represent the other Purchasers and
      the
      other Purchasers
      have retained their own individual counsel with respect to the transactions
      contemplated hereby.  The Company acknowledges that it has elected to
      provide all Purchasers with the same terms and Transaction Documents for the
      convenience of the Company and not because it was required or requested to
      do so
      by the Purchasers. 

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

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

    
      	 	 	 
	 	
              SINO
                GAS
                INTERNATIONAL HOLDINGS,

              INC.

            
	 
 	 
 	 
 
	 	By:  	
              /s/ Chen Fang

              
                

              
Name: Chen Fang
	 	 	Title:
              Chief Financial Officer
	 	 	 

    

    
      	
            	 	 
	 	
              VISION
                OPPORTUNITY MASTER FUND,

              LTD.

            
	 
 	 
 	 
 
	 	By:  	
              
                /s/
                  Adam Benowitz
                  

                

              
Name: Adam
              Benowitz
	 	 	
              Title:

            
	 	 	
               

            

    

    
      
        	
              	 	 
	 	
                SEI
                  PRIVATE TRUST CO. FAO -

                THE
                  JM
                  SMUCKER CO. MASTER TRUST

              
	 
 	 
 	 
 
	 	By:  	
                
                  /s/
                    Zach Easton

                  

                
Name: Zach Easton
	 	 	Title:
	 	 	 
                

      

      
        
          	
                	 	 
	 	CORONADO
                  CAPITAL PARTNERS LP
	 
 	 
 	 
 
	 	By:  	
                  
                    /s/
                      Authorized Officer
                      

                    

                  
Name:
	 	 	Title:
	 	 	 
                  
	 	 	 

        

        
          	
                	 	NITE
                  CAPITAL LP
	 
 	 
 	 
	 	By:  	
                  
                    /s/
                      Authorized Officer
                      

                    

                  
Name:
	 	 	Title:
	 	 
	 	
                
	 	 
	 	
                  /s/ Ijaz Malik

                  
                    
Ijaz
                    Malik

                
	 	 

        

      

    

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    Schedule
      I

    List
      of Purchasers 

    

      
        	
                Names
                  and Addresses

              	 	
                Number
                  of Preferred Shares

              
	
                of
                  Purchasers

              	 	
                &
                  Warrants

              
	 	 	 
	
                Vision
                  Opportunity Master Fund, Ltd.

              	 	
                Preferred
                  Shares: 4,187,505

              
	
                20
                  W 55th St., 5th floor 

              	 	
                Series
                  C Warrants: 2,668,807

              
	
                New
                  York, NY 10019

              	 	 
	
                Tax
                  ID: 27-0120759

              	 	 
	 	 	 
	
                SEI
                  Private Trust Co. FAO 

              	 	
                Preferred
                  Shares: 200,790

              
	
                The
                  JM Smucker Co. Master Trust

              	 	
                Series
                  C Warrants: 127,442

              
	
                1
                  Freedom Valley Dr

              	 	 
	
                Oaks,
                  PA 19456

              	 	 
	
                Attn:
                  Suzanne Rokosny

              	 	 
	
                Tax
                  ID: 23-3060382

              	 	 
	 	 	 
	 	 	 
	
                Coronado
                  Capital Partners LP 

              	 	
                Preferred
                  Shares: 258,159 

              
	
                c/o
                  MS Howells 

              	 	
                Series
                  C Warrants: 163,854

              
	
                20555
                  N Pima Rd, Suite 100 

              	 	 
	
                Scottsdale,
                  AZ 85255

              	 	 
	
                Attn:
                  Christine Nichols

              	 	 
	
                Tax
                  ID: 20-2427088 

              	 	 
	
                Scottsdale,
                  AZ 85255

              	 	 
	
                Attn:
                  Christine Nichols

              	 	 
	
                Tax
                  ID: 20-2427088 

              	 	 
	 	 	 
	
                Nite
                  Capital LP

              	 	
                Preferred
                  Shares: 183,203

              
	 	 	
                Series
                  C Warrants: 116,279

              
	 	 	 
	
                Izak
                  Malik

              	 	
                Preferred
                  Shares: 28,684

              
	 	 	
                Series
                  C Warrants: 18,206

              

      

    

    

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    Securities
      Permitted to be Included on Registration Statement 

    

    None.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

    Plan
      of Distribution

     

    The
      selling security holders and any of their pledgees, donees, assignees and
      successors-in-interest may, from time to time, sell any or all of their shares
      of common stock being offered under this prospectus on any stock exchange,
      market or trading facility on which shares of our common stock are traded or
      in
      private transactions. These sales may be at fixed or negotiated prices. The
      selling security holders may use any one or more of the following methods when
      disposing of shares:

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	·  	
              privately
                negotiated transactions;

            

    

     

    
      	·  	
              to
                cover short sales made after the date that the registration statement
                of
                which this prospectus is a part is declared effective by the
                Commission;

            

    

     

    
      	·  	
              broker-dealers
                may agree with the selling security holders to sell a specified number
                of
                such shares at a stipulated price per
                share;

            

    

     

    
      	·  	
              a
                combination of any of these methods of sale;
                and

            

    

     

    
      	·  	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      shares may also be sold under Rule 144 under the Securities Act of 1933, as
      amended (“Securities Act”), if available, rather than under this prospectus. The
      selling security holders have the sole and absolute discretion not to accept
      any
      purchase offer or make any sale of shares if they deem the purchase price to
      be
      unsatisfactory at any particular time.

     

    The
      selling security holders may pledge their shares to their brokers under the
      margin provisions of customer agreements. If a selling security holder defaults
      on a margin loan, the broker may, from time to time, offer and sell the pledged
      shares.

     

    Broker-dealers
      engaged by the selling security holders may arrange for other broker-dealers
      to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the selling security holders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, which
      commissions as to a particular broker or dealer may be in excess of customary
      commissions to the extent permitted by applicable law.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    If
      sales
      of shares offered under this prospectus are made to broker-dealers as
      principals, we would be required to file a post-effective amendment to the
      registration statement of which this prospectus is a part. In the post-effective
      amendment, we would be required to disclose the names of any participating
      broker-dealers and the compensation arrangements relating to such
      sales.

     

    The
      selling security holders and any broker-dealers or agents that are involved
      in
      selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
      sales. Commissions received by these broker-dealers or agents and any profit
      on
      the resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act. Any broker-dealers or agents
      that are deemed to be underwriters may not sell shares offered under this
      prospectus unless and until we set forth the names of the underwriters and
      the
      material details of their underwriting arrangements in a supplement to this
      prospectus or, if required, in a replacement prospectus included in a
      post-effective amendment to the registration statement of which this prospectus
      is a part.

     

    The
      selling security holders and any other persons participating in the sale or
      distribution of the shares offered under this prospectus will be subject to
      applicable provisions of the Exchange Act, and the rules and regulations under
      that act, including Regulation M. These provisions may restrict activities
      of,
      and limit the timing of purchases and sales of any of the shares by, the selling
      security holders or any other person. Furthermore, under Regulation M, persons
      engaged in a distribution of securities are prohibited from simultaneously
      engaging in market making and other activities with respect to those securities
      for a specified period of time prior to the commencement of such distributions,
      subject to specified exceptions or exemptions. All of these limitations may
      affect the marketability of the shares.

     

    If
      any of
      the shares of common stock offered for sale pursuant to this prospectus are
      transferred other than pursuant to a sale under this prospectus, then subsequent
      holders could not use this prospectus until a post-effective amendment or
      prospectus supplement is filed, naming such holders. We offer no assurance
      as to
      whether any of the selling security holders will sell all or any portion of
      the
      shares offered under this prospectus.

     

    We
      have
      agreed to pay all fees and expenses we incur incident to the registration of
      the
      shares being offered under this prospectus. However, each selling security
      holder and purchaser is responsible for paying any discounts, commissions and
      similar selling expenses they incur.

     

    We
      and
      the selling security holders have agreed to indemnify one another against
      certain losses, damages and liabilities arising in connection with this
      prospectus, including liabilities under the Securities Act.

     

    
      
        
        

      

      
        -24-TRIANGLE
      PETROLEUM CORPORATION

    2007
      INCENTIVE STOCK OPTION PLAN

    
       

    

    
      

      

    

    The
      Triangle Petroleum Corporation
      2007 Incentive Stock Option Plan
      (the
      "Plan")
      is
      designed to retain directors, executives and selected employees and consultants
      and reward them for individual performance that contributes to the success
      of
      the Company. These objectives are accomplished by issuing Options to purchase
      Stock in the Company under the Plan thereby providing Participants with a
      proprietary interest in the growth and performance of the Company.

    

    
      	
              1.

            	
              Definitions.

            

    

    

    
      	 	
              (a)

            	
              "Board"
                -
                The Board of Directors of the
                Company.

            

    

    

    
      	 	
              (b)

            	
              "Code"
                -
                The Internal Revenue Code of 1986, as amended from time to
                time.

            

    

    

    
      	 	
              (c)

            	
              "Committee"
                -
                The Compensation Committee of the Company's Board, or such other
                committee
                of the Board that is designated by the Board to administer the Plan,
                composed of not less than two members of the Board whom are disinterested
                persons, as contemplated by Rule 16b-3 ("Rule
                16b-3")
                promulgated under the Securities Exchange Act of 1934, as amended
                (the
                "Exchange
                Act").

            

    

    

    
      	 	
              (d)

            	
              "Company"
                -
                TRIANGLE PETROLEUM CORPORATION and its subsidiaries including subsidiaries
                of subsidiaries.

            

    

    

    
      	 	
              (e)

            	
              "Exchange Act"
                -
                The Securities Exchange Act of 1934, as amended from time to
                time.

            

    

    

    
      	 	
              (f)

            	
              "Fair
                Market Value"
                -
                The fair market value of the Company's issued and outstanding Stock
                as
                determined in good faith by the Board or
                Committee.

            

    

    

    
      	 	
              (g)

            	
              "Grant"
                -
                The grant of any form of stock option to a Participant pursuant to
                such
                terms, conditions and limitations as the Committee may establish
                in order
                to fulfill the objectives of the
                Plan.

            

    

    

    
      	 	
              (h)

            	
              "Grant
                Agreement"
                -
                An agreement between the Company and a Participant that sets forth
                the
                terms, conditions and limitations applicable to a
                Grant.

            

    

    

    
      	 	
              (i)

            	
              "Option"
                -
                Either an Incentive Stock Option, in accordance with Section 422
                of the
                Code, or a Nonstatutory Option, to purchase the Company's Stock that
                may
                be awarded to a Participant under the Plan. A Participant who receives
                an
                award of an Option shall be referred to as an "Optionee."

            

    

    

    
      	 	
              (j)

            	
              "Participant"
                -
                A director, officer, employee or consultant of the Company to whom
                an
                Award has been made under the Plan.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (k)

            	
              "Securities
                Act"
                -
                The Securities Act of 1933, as amended from time to
                time.

            

    

    

    
      	 	
              (l)

            	
              "Stock"
                -
                Authorized and issued or unissued shares of common stock of the
                Company.

            

    

    

    
      	
              2.

            	
              Administration.
                The Plan shall be administered by the Board, provided however, that
                the
                Board may delegate such administration to the Committee. Subject
                to the
                provisions of the Plan, the Board and/or the Committee shall have
                authority to (a) grant, in its discretion, Incentive Stock Options
                in
                accordance with Section 422 of the Code, or Nonstatutory Options;
                (b)
                determine in good faith the fair market value of the Stock covered
                by any
                Grant; (c) determine which eligible persons shall receive Grants
                and the
                number of shares, restrictions, terms and conditions to be included
                in
                such Grants; (d) construe and interpret the Plan; (e) promulgate,
                amend
                and rescind rules and regulations relating to its administration,
                and
                correct defects, omissions and inconsistencies in the Plan or any
                Grant;
                (f) consistent with the Plan and with the consent of the Participant,
                as
                appropriate, amend any outstanding Grant or amend the exercise date
                or
                dates thereof; (g) determine the duration and purpose of leaves of
                absence
                which may be granted to Participants without constituting termination
                of
                their employment for the purpose of the Plan or any Grant; and (h)
                make
                all other determinations necessary or advisable for the Plan's
                administration. The interpretation and construction by the Board
                of any
                provisions of the Plan or selection of Participants shall be conclusive
                and final. No member of the Board or the Committee shall be liable
                for any
                action or determination made in good faith with respect to the Plan
                or any
                Grant made thereunder.

            

    

    

    
      	
              3.

            	
              Eligibility.

            

    

    

    
      	 	
              (a)

            	
              General:
                The persons who shall be eligible to receive Grants shall be directors,
                officers, employees or consultants to the Company. The term consultant
                shall mean any person, other than an employee, who is engaged by
                the
                Company to render services and is compensated for such services.
                An
                Optionee may hold more than one Option. Any issuance of a Grant to
                an
                officer or director of the Company subsequent to the first registration
                of
                any of the securities of the Company under the Exchange Act shall
                comply
                with the requirements of Rule
                16b-3.

            

    

    

    
      	 	
              (b)

            	
              Incentive
                Stock Options:
                Incentive Stock Options may only be issued to employees of the Company.
                Incentive Stock Options may be granted to officers or directors,
                provided
                they are also employees of the Company. Payment of a director's fee
                shall
                not be sufficient to constitute employment by the
                Company.

            

    

    

    The
      Company shall not grant an Incentive Stock Option under the Plan to any employee
      if such Grant would result in such employee holding the right to exercise for
      the first time in any one calendar year, under all Incentive Stock Options
      granted under the Plan or any other plan maintained by the Company, with respect
      to shares of Stock having an aggregate fair market value, determined as of
      the
      date of the Option is granted, in excess of $100,000. Should it be determined
      that an Incentive Stock Option granted under the Plan exceeds such maximum
      for
      any reason other than a failure in good faith to value the Stock subject to
      such
      option, the excess portion of such option shall be considered a Nonstatutory
      Option. To the extent the employee holds two (2) or more such Options which
      become exercisable for the first time in the same calendar year, the foregoing
      limitation on the exercisability of such Option as Incentive Stock Options
      under
      the Federal tax laws shall be applied on the basis of the order in which such
      Options are granted. If, for any reason, an entire Option does not qualify
      as an
      Incentive Stock Option by reason of exceeding such maximum, such Option shall
      be
      considered a Nonstatutory Option.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              Nonstatutory
                Option:
                The provisions of the foregoing Section 3(b) shall not apply to any
                Option
                designated as a "Nonstatutory
                Option"
                or which sets forth the intention of the parties that the Option
                be a
                Nonstatutory Option.

            

    

    

    

    
      	
              4.

            	
              Stock.

            

    

    

    
      	 	
              (a)

            	
              Authorized
                Stock:
                Stock subject to Grants may be either unissued or reacquired
                Stock.

            

    

    

    
      	 	
              (b)

            	
              Number
                of Shares:
                Subject to adjustment as provided in Section 5(i) of the Plan, the
                total
                number of shares of Stock which may be purchased or granted directly
                by
                Options or purchased indirectly through exercise of Options granted
                under
                the Plan shall not exceed Two Million (2,000,000). If any Grant shall
                for
                any reason terminate or expire, any shares allocated thereto but
                remaining
                unpurchased upon such expiration or termination shall again be available
                for Grants with respect thereto under the Plan as though no Grant
                had
                previously occurred with respect to such shares. Any shares of Stock
                issued pursuant to a Grant and repurchased pursuant to the terms
                thereof
                shall be available for future Grants as though not previously covered
                by a
                Grant.

            

    

    

    
      	 	
              (c)

            	
              Reservation
                of Shares:
                The Company shall reserve and keep available at all times during
                the term
                of the Plan such number of shares as shall be sufficient to satisfy
                the
                requirements of the Plan. If, after reasonable efforts, which efforts
                shall not include the registration of the Plan or Grants under the
                Securities Act, the Company is unable to obtain authority from any
                applicable regulatory body, which authorization is deemed necessary
                by
                legal counsel for the Company for the lawful issuance of shares hereunder,
                the Company shall be relieved of any liability with respect to its
                failure
                to issue and sell the shares for which such requisite authority was
                so
                deemed necessary unless and until such authority is
                obtained.

            

    

     

    
      	
            	(d)	
              Application
                of Funds:
                 The
                proceeds received by the Company from the issuance of Stock pursuant
                to
                the exercise of Options will be used for general corporate
                purposes.

            

    

    

    
      	 	
              (e)

            	
              No
                Obligation to Exercise:
                The issuance of a Grant shall impose no obligation upon the Participant
                to
                exercise any rights under such
                Grant.

            

    

    

    
      	
              5.

            	
              Terms
                and Conditions of Options. Options granted hereunder shall be evidenced
                by
                agreements between the Company and the respective Optionees, in such
                form
                and substance as the Board or Committee shall from time to time approve.
                The form of Incentive Stock Option Agreement attached hereto as
                Exhibit
                A
                and the three forms of a Nonstatutory Stock Option Agreement for
                employees, for directors and for consultants, attached hereto as
                Exhibit
                B-1, Exhibit
                B-2
                and
                Exhibit B-3,
                respectively, shall be deemed to be approved by the Board. Option
                agreements need not be identical, and in each case may include such
                provisions as the Board or Committee may determine, but all such
                agreements shall be subject to and limited by the following terms
                and
                conditions:

            

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (a)

            	
              Number
                of Shares:
                Each Option shall state the number of shares to which it
                pertains.

            

    

    

    
      	 	
              (b)

            	
              Exercise
                Price:
                Each Option shall state the exercise price, which shall be determined
                as
                follows:

            

    

    

    
      	
            	(i)	
              Any
                Incentive Stock Option granted to a person who at the time the Option
                is
                granted owns (or is deemed to own pursuant to Section 424(d) of the
                Code)
                stock possessing more than ten percent (10%) of the total combined
                voting
                power or value of all classes of stock of the Company ("Ten Percent
                Holder") shall have an exercise price of no less than 110% of the
                Fair
                Market Value of the Stock as of the date of grant;
                and

            

    

    

    
      	
            	(ii)	
              Incentive
                Stock Options granted to a person who at the time the Option is granted
                is
                not a Ten Percent Holder shall have an exercise price of no less
                than 100%
                of the Fair Market Value of the Stock as of the date of
                grant.

            

    

    

    For
      the
      purposes of this Section 5(b), the Fair Market Value shall be as determined
      by
      the Board in good faith, which determination shall be conclusive and binding;
      provided however, that if there is a public market for such Stock, the Fair
      Market Value per share shall be the average of the bid and asked prices (or
      the
      closing price if such stock is listed on the NASDAQ National Market System
      or
      Small Cap Issue Market) on the date of grant of the Option, or if listed on
      a
      stock exchange, the closing price on such exchange on such date of
      grant.

    

    
      	 	
              (c)

            	
              Medium
                and Time of Payment:
                The exercise price shall become immediately due upon exercise of
                the
                Option and shall be paid in cash or certified check made payable
                to the
                Company. The Company will not issue any Stock pursuant to the exercise
                of
                Options prior to payment being received in full for such Options.
                

            

    

     

    
      	 	
              (d)

            	
              Term
                and Exercise of Options:
                Any Option granted to an employee of the Company shall become exercisable
                over a period of no longer than five (5) years. In no event shall
                any
                Option be exercisable after the expiration of ten (10) years from
                the date
                it is granted, and no Incentive Stock Option granted to a Ten Percent
                Holder shall, by its terms, be exercisable after the expiration of
                five
                (5) years from the date of the Option. Unless otherwise specified
                by the
                Board or the Committee in the resolution authorizing such Option,
                the date
                of grant of an Option shall be deemed to be the date upon which the
                Board
                or the Committee authorizes the granting of such Option.
                

            

    

    

    Each
      Option shall be exercisable by rounding up to the nearest whole share, in
      installments or otherwise, as the respective Option agreements may provide.
      During the lifetime of an Optionee, the Option shall be exercisable only by
      the
      Optionee and shall not be assignable or transferable by the Optionee, and no
      other person shall acquire any rights therein. To the extent not exercised,
      installments (if more than one) shall accumulate, but shall be exercisable,
      in
      whole or in part, only during the period for exercise as stated in the Option
      agreement, whether or not other installments are then exercisable.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              Termination
                of Status as Employee, Consultant or Director:
                If
                Optionee's status as an employee shall terminate for any reason other
                than
                Optionee's disability or death, then Optionee (or if the Optionee
                shall
                die after such termination, but prior to exercise, Optionee's personal
                representative or the person entitled to succeed to the Option) shall
                have
                the right to exercise the portions of any of Optionee's Incentive
                Stock
                Options which were exercisable as of the date of such termination,
                in
                whole or in part, within 10 days after such termination (or, in the
                event
                of "termination
                for good cause"
                as that term is defined in Nevada case law related thereto, or by
                the
                terms of the Plan or the Option Agreement or an employment agreement,
                the
                Option shall automatically terminate as of the termination of employment
                as to all shares covered by the Option).

            

    

    

    With
      respect to Nonstatutory Options granted to employees, directors or consultants,
      the Board may specify such period for exercise, not less than 10 days (except
      that in the case of "termination
      for cause"
      or
      removal of a director), the Option shall automatically terminate as of the
      termination of employment or services as to shares covered by the Option,
      following termination of employment or services as the Board deems reasonable
      and appropriate. The Option may be exercised only with respect to installments
      that the Optionee could have exercised at the date of termination of employment
      or services. Nothing contained herein or in any Option granted pursuant hereto
      shall be construed to affect or restrict in any way the right of the Company
      to
      terminate the employment or services of an Optionee with or without
      cause.

    

    
      	 	
              (f)

            	
              Disability
                of Optionee:
                If
                an Optionee is disabled (within the meaning of Section 22(e)(3) of
                the
                Code) at the time of termination, the three (3) month period set
                forth in
                Section 5(e) shall be a period, as determined by the Board and set
                forth
                in the Option, of not less than six months nor more than one year
                after
                such termination. 

            

    

    

    
      	 	
              (g)

            	
              Death
                of Optionee:
                If
                an Optionee dies while employed by, engaged as a consultant to, or
                serving
                as a director of the Company, the portion of such Optionee's Option
                which
                was exercisable at the date of death may be exercised, in whole or
                in
                part, by the estate of the decedent or by a person succeeding to
                the right
                to exercise such Option at any time within (i) a period, as determined
                by
                the Board and set forth in the Option, of not less than six (6) months
                nor
                more than one (1) year after Optionee's death, which period shall
                not be
                more, in the case of a Nonstatutory Option, than the period for exercise
                following termination of employment or services, or (ii) during the
                remaining term of the Option, whichever is the lesser. The Option
                may be
                so exercised only with respect to installments exercisable at the
                time of
                Optionee's death and not previously exercised by the
                Optionee.

            

    

    

    
      	 	
              (h)

            	
              Nontransferability
                of Option:
                No
                Option shall be transferable by the Optionee, except by will or by
                the
                laws of descent and distribution.

            

    

    

    
      	 	
              (i)

            	
              Recapitalization:
                Subject to any required action of shareholders, the number of shares
                of
                Stock covered by each outstanding Option, and the exercise price
                per share
                thereof set forth in each such Option, shall be proportionately adjusted
                for any increase or decrease in the number of issued shares of Stock
                of
                the Company resulting from a stock split, stock dividend, combination,
                subdivision or reclassification of shares, or the payment of a stock
                dividend, or any other increase or decrease in the number of such
                shares
                affected without receipt of consideration by the Company; provided,
                however, the conversion of any convertible securities of the Company
                shall
                not be deemed to have been "effected
                without receipt of consideration"
                by the Company.

            

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    In
      the
      event of a proposed dissolution or liquidation of the Company, a merger or
      consolidation in which the Company is not the surviving entity, or a sale of
      all
      or substantially all of the assets or capital stock of the Company
      (collectively, a "Reorganization"),
      except as provided in the following paragraph, any Option granted hereunder
      shall terminate, but, provided that the Optionee shall have the right ten (10)
      days prior to any such Reorganization to exercise his Option in whole or in
      part
      whether or not the vesting requirements set forth in the stock option agreement
      have been satisfied.. 

    

    If
      the
      stockholders of the Company receive capital stock of another corporation
      (“Exchange Stock”) in exchange for their Common Shares in any Reorganization,
      all options granted hereunder shall terminate in accordance with the provision
      of the preceeding paragraph unless the Directors and the corporation issuing
      the
      Exchange Stock in their sole and arbitrary discretion and subject to any
      required action by the stockholders of the Company and such corporation, agree
      that all such Options granted hereunder are converted into options to purchase
      shares of Exchange Stock. The amount and price of such options shall be
      determined by adjusting the amount and price of the Options granted hereunder
      in
      the same proportion as used for determining the number of shares of Exchange
      Stock the holders of the Common Shares receive in such merger, consolidation,
      acquisition of property or stock, separation or reorganization. The vesting
      schedule set forth in the stock option agreement shall continue to apply to
      the
      options granted for the Exchange Stock.

    

    Subject
      to any required action of shareholders, if the Company shall be the surviving
      entity in any merger or consolidation, each outstanding Option thereafter shall
      pertain to and apply to the securities to which a holder of shares of Stock
      equal to the shares subject to the Option would have been entitled by reason
      of
      such merger or consolidation.

    

    In
      the
      event of a change in the Stock of the Company as presently constituted, which
      is
      limited to a change of all of its authorized shares without par value into
      the
      same number of shares with a par value, the shares resulting from any such
      change shall be deemed to be the Stock within the meaning of the
      Plan.

    

    To
      the
      extent that the foregoing adjustments relate to stock or securities of the
      Company, such adjustments shall be made by the Board, whose determination in
      that respect shall be final, binding and conclusive. Except as expressly
      provided in this Section 5(i), the Optionee shall have no rights by reason
      of
      any subdivision or consolidation of shares of stock of any class or the payment
      of any stock dividend or any other increase or decrease in the number of shares
      of stock of any class, and the number or price of shares of Stock subject to
      any
      Option shall not be affected by, and no adjustment shall be made by reason
      of,
      any dissolution, liquidation, merger, consolidation or sale of assets or capital
      stock, or any issue by the Company of shares of stock of any class or securities
      convertible into shares of stock of any class.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    The
      Grant
      of an Option pursuant to the Plan shall not affect in any way the right or
      power
      of the Company to make any adjustments, reclassifications, reorganizations
      or
      changes in its capital or business structure or to merge, consolidate, dissolve,
      or liquidate or to sell or transfer all or any part of its business or
      assets.

    

    
      	 	
              (j)

            	
              Rights
                as a Shareholder:
                An
                Optionee shall have no rights as a shareholder with respect to any
                shares
                covered by an Option until the effective date of the issuance of
                the
                shares following exercise of such Option by Optionee. No adjustment
                shall
                be made for dividends (ordinary or extraordinary, whether in cash,
                securities or other property) or distributions or other rights for
                which
                the record date is prior to the date such stock certificate is issued,
                except as expressly provided in Section 5(i) hereof.
                

            

    

    

    
      	 	
              (k)

            	
              Modification,
                Acceleration, Extension, and Renewal of Options:
                Subject to the terms and conditions and within the limitations of
                the
                Plan, the Board may modify an Option, or, once an Option is exercisable,
                accelerate the rate at which it may be exercised, and may extend
                or renew
                outstanding Options granted under the Plan or accept the surrender
                of
                outstanding Options (to the extent not theretofore exercised) and
                authorize the granting of new Options in substitution for such Options,
                provided such action is permissible under Section 422 of the Code
                and
                applicable state securities laws. Notwithstanding the provisions
                of this
                Section 5(k), however, no modification of an Option shall, without
                the
                consent of the Optionee, alter to the Optionee's detriment or impair
                any
                rights or obligations under any Option theretofore granted under
                the
                Plan.

            

    

    

    
      	 	
              (l)

            	
              Other
                Provisions:
                The Option agreements authorized under the Plan shall contain such
                other
                provisions, including, without limitation, restrictions upon the
                exercise
                of the Options, as the Board or the Committee shall deem advisable.
                Shares
                shall not be issued pursuant to the exercise of an Option, if the
                exercise
                of such Option or the issuance of shares thereunder would violate,
                in the
                opinion of legal counsel for the Company, the provisions of any applicable
                law or the rules or regulations of any applicable governmental or
                administrative agency or body, such as the Code, the Securities Act,
                the
                Exchange Act, applicable state securities laws, Nevada corporation
                law,
                and the rules promulgated under the foregoing or the rules and regulations
                of any exchange upon which the shares of the Company are listed.
                Without
                limiting the generality of the foregoing, the exercise of each Option
                shall be subject to the condition that if at any time the Company
                shall
                determine that (i) the satisfaction of withholding tax or other similar
                liabilities, or (ii) the listing, registration or qualification of
                any
                shares covered by such exercise upon any securities exchange or under
                any
                state or federal law, or (iii) the consent or approval of any regulatory
                body, or (iv) the perfection of any exemption from any such withholding,
                listing, registration, qualification, consent or approval is necessary
                or
                desirable in connection with such exercise or the issuance of shares
                thereunder, then in any such event, such exercise shall not be effective
                unless such withholding, listing registration, qualification, consent,
                approval or exemption shall have been effected, obtained or perfected
                free
                of any conditions not acceptable to the
                Company.

            

    

    

    
      	
              6.

            	
              Investment
                Intent. All Grants under the Plan are intended to be exempt from
                registration under the Securities Act provided by Rule 701 thereunder.
                Unless and until the granting of Options or sale and issuance of
                Stock
                subject to the Plan are registered under the Securities Act or shall
                be
                exempt pursuant to the rules promulgated thereunder, each Grant under
                the
                Plan shall provide that the purchases or other acquisitions of Stock
                thereunder shall be for investment purposes and not with a view to,
                or for
                resale in connection with, any distribution thereof. Further, unless
                the
                issuance and sale of the Stock have been registered under the Securities
                Act, each Grant shall provide that no shares shall be purchased upon
                the
                exercise of the rights under such Grant unless and until (i) all
                then
                applicable requirements of state and federal laws and regulatory
                agencies
                shall have been fully complied with to the satisfaction of the Company
                and
                its counsel, and (ii) if requested to do so by the Company, the person
                exercising the rights under the Grant shall (i) give written assurances
                as
                to knowledge and experience of such person (or a representative employed
                by such person) in financial and business matters and the ability
                of such
                person (or representative) to evaluate the merits and risks of exercising
                the Option, and (ii) execute and deliver to the Company a letter
                of
                investment intent and/or such other form related to applicable exemptions
                from registration, all in such form and substance as the Company
                may
                require. If shares are issued upon exercise of any rights under a
                Grant
                without registration under the Securities Act, subsequent registration
                of
                such shares shall relieve the purchaser thereof of any investment
                restrictions or representations made upon the exercise of such
                rights.

            

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              Amendment,
                Modification, Suspension or Discontinuance of the Plan. The Board
                may,
                insofar as permitted by law, from time to time, with respect to any
                shares
                at the time not subject to outstanding Grants, suspend or terminate
                the
                Plan or revise or amend it in any respect whatsoever, except that
                without
                the approval of the shareholders of the Company, no such revision
                or
                amendment shall (i) increase the number of shares subject to the
                Plan,
                (ii) decrease the price at which Grants may be granted, (iii) materially
                increase the benefits to Participants, or (iv) change the class of
                persons
                eligible to receive Grants under the Plan; provided, however, no
                such
                action shall alter or impair the rights and obligations under any
                Option
                outstanding as of the date thereof without the written consent of
                the
                Participant thereunder. No Grant may be issued while the Plan is
                suspended
                or after it is terminated, but the rights and obligations under any
                Grant
                issued while the Plan is in effect shall not be impaired by suspension
                or
                termination of the Plan.

            

    

    

    In
      the
      event of any change in the outstanding Stock by reason of a stock split, stock
      dividend, combination or reclassification of shares, recapitalization, merger,
      or similar event, the Board or the Committee may adjust proportionally (a)
      the
      number of shares of Stock (i) reserved under the Plan and (ii) available for
      Incentive Stock Options and Nonstatutory Options ; (b) the Stock prices related
      to outstanding Grants; and (c) the appropriate Fair Market Value and other
      price
      determinations for such Grants. In the event of any other change affecting
      the
      Stock or any distribution (other than normal cash dividends) to holders of
      Stock, such adjustments as may be deemed equitable by the Board or the
      Committee, including adjustments to avoid fractional shares, shall be made
      to
      give proper effect to such event. In the event of a corporate merger,
      consolidation, acquisition of property or stock, separation, reorganization
      or
      liquidation, the Board or the Committee shall be authorized to issue or assume
      stock options, whether or not in a transaction to which Section 424(a) of the
      Code applies, and other Grants by means of substitution of new Grant Agreements
      for previously issued Grants or an assumption of previously issued
      Grants.

    

    
      	
              8.

            	
              Tax
                Withholding. The Company shall have the right to deduct applicable
                taxes
                from any Grant payment and withhold, at the time of delivery or exercise
                of Options or vesting of shares under such Grants, an appropriate
                number
                of shares for payment of taxes required by law or to take such other
                action as may be necessary in the opinion of the Company to satisfy
                all
                obligations for withholding of such taxes. If Stock is used to satisfy
                tax
                withholding, such stock shall be valued based on the Fair Market
                Value
                when the tax withholding is required to be made.
                

            

    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	
              Availability
                of Information. During the term of the Plan and any additional period
                during which a Grant granted pursuant to the Plan shall be exercisable,
                the Company shall make available, not later than one hundred and
                twenty
                (120) days following the close of each of its fiscal years, such
                financial
                and other information regarding the Company as is required by the
                bylaws
                of the Company and applicable law to be furnished in an annual report
                to
                the shareholders of the Company. 

            

    

     

    
      	
              10.

            	
              Notice.
                Any written notice to the Company required by any of the provisions
                of the
                Plan shall be addressed to the chief personnel officer or to the
                chief
                executive officer of the Company, and shall become effective when
                it is
                received by the office of the chief personnel officer or the chief
                executive officer. 

            

    

    

    
      	
              11.

            	
              Indemnification
                of Board. In addition to such other rights or indemnifications as
                they may
                have as directors or otherwise, and to the extent allowed by applicable
                law, the members of the Board and the Committee shall be indemnified
                by
                the Company against the reasonable expenses, including attorneys'
                fees,
                actually and necessarily incurred in connection with the defense
                of any
                claim, action, suit or proceeding, or in connection with any appeal
                thereof, to which they or any of them may be a party by reason of
                any
                action taken, or failure to act, under or in connection with the
                Plan or
                any Grant granted thereunder, and against all amounts paid by them
                in
                settlement thereof (provided such settlement is approved by independent
                legal counsel selected by the Company) or paid by them in satisfaction
                of
                a judgment in any such claim, action, suit or proceeding, except
                in any
                case in relation to matters as to which it shall be adjudged in such
                claim, action, suit or proceeding that such Board or Committee member
                is
                liable for negligence or misconduct in the performance of his or
                her
                duties; provided that within sixty (60) days after institution of
                any such
                action, suit or Board proceeding the member involved shall offer
                the
                Company, in writing, the opportunity, at its own expense, to handle
                and
                defend the same. 

            

    

     

    
      	
              12.

            	
              Governing
                Law. The Plan and all determinations made and actions taken pursuant
                hereto, to the extent not otherwise governed by the Code or the securities
                laws of the United States, shall be governed by the law of the State
                of
                Nevada and construed accordingly. 

            

    

    

    
      	
              13.

            	
              Effective
                and Termination Dates. The Plan shall become effective on the date
                it is
                approved by the holders of a majority of the shares of Stock then
                outstanding. The Plan shall terminate ten years later, subject to
                earlier
                termination by the Board pursuant to Section 8.

            

    

    

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

    

     

    The
      foregoing Plan (consisting of 10 pages, including this page) was duly adopted
      and approved by the Board of Directors on [ ], 2007.

    

    
      	 	
              TRIANGLE
                PETROLEUM CORPORATION

              a
                Nevada corporation  

            
	 	 
	 	By:	/s/
              MARK
              GUSTAFSON
	 	 	Mark
              Gustafson
	 	Its: 	Chief Executive
              Officer

    

    

    
      
        
        

      

      
        -10-

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