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SECURITIES PURCHASE AGREEMENT

This SECURITIES  PURCHASE  AGREEMENT  (this  “Agreement”),  dated  as  of  June  6,

2016, is entered into  by and  between  CLEAN   ENERGY   TECHNOLOGIES,   INC.,   a   Nevada

corporation  (the  “Company”),  and  EMA  Financial,  LLC,  a  Delaware  limited  liability  company

(the “Purchaser”).

WHEREAS,  subject  to  the  terms and  conditions  set  forth  in this  Agreement  and  pursuant

to  Section  4(2)  of  the  Securities  Act  of  1933,  as  amended  (the  “Securities  Act”  or  “1933  Act”),

and  Rule 506 promulgated thereunder  by the United States Securities and Exchange Commission

(the “SEC”), the  Company desires to  issue and  sell to the Purchaser, and  the Purchaser desires to

purchase  from  the  Company  a  12%  Convertible  Note  of  the  Company,  in  the  form  attached

hereto  as  Exhibit  A,  in  the  principal  amount  of  $87,500.00  (together  with  any  note(s)  issued  in

replacement  thereof  or  as  interest  thereon  or  otherwise  with  respect  thereto  in  accordance  with

the  terms  thereof,  the  “Note”),  convertible  into  shares  (“Conversion  Shares”)  of  common  stock,

$0.001  par  value  per  share  (the  “Common  Stock”),  of the  Company,  upon  the  terms  and  subject

to the  limitations and conditions set  forth in such Note.

NOW,  THEREFORE,  IN  CONSIDERATION  of  the  mutual  covenants  contained  in  this

Agreement, and  for other good and valuable consideration, the receipt  and adequacy of which are

hereby acknowledged, the Company and the Purchaser agree as follows:

1.   Purchase and Sale of Note.

a)

Purchase  of  Note.  On  the  Closing  Date  (as  defined  below),  the  Company

shall  issue  and  sell  to  the  Purchaser,  and  the  Purchaser  agrees  to  purchase  from  the  Company,

the Note for an aggregate purchase price of $80,000.00 (“Purchase Price”).

b)

Form  of  Payment.  On  the  Closing  Date  (i)  the  Purchaser  shall  pay  the

Purchase  Price  by  wire  transfer  of  immediately  available  funds  to  the  Company,  in  accordance

  with  the  Company’s  written  wiring  instructions,  simultaneously  with  delivery  of  the  Note,  and

(ii)  the  Company  shall  deliver  such  Note  duly  executed  on  behalf  of  the  Company  to  the

Purchaser, simultaneously with delivery of such Purchase Price.

c)

Closing   Date.   Subject   to   the   satisfaction   (or   written   waiver)   of   the

conditions  thereto  set  forth  in  Section  6  and  Section  7  below,  the  closing  of  the  transactions

contemplated  by  this  Agreement  (the  “Closing”)  shall  occur  on  the  first  business  day  following

the  date  hereof  or  such  other  mutually  agreed  upon  time  (the  “Closing  Date”)  at  the  offices  of

  Purchaser’s counsel.

2.   Purchaser’s   Representations   and    Warranties.  The    Purchaser    represents   and

warrants to the Company that:

a)

Investment   Purpose.  Purchaser   is   acquiring   the   Securities   for   its  own

account  and  not  with  a  view  towards,  or  for  resale  in  connection  with,  the  public  sale  or

distribution thereof in  violation of applicable  securities  laws; provided,  however,  by  making  the

representations  herein,  Purchaser  does  not  agree,  or  make  any  representation  or  warranty,  to

hold  any  of  the  Securities  for  any  minimum  or  other  specific  term  and  reserves  the  right  to

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dispose  of  the  Securities  at  any  time  in  accordance  with  or  pursuant  to  a  registration  statement

or an exemption under  the  1933  Act.   The  Purchaser  is acquiring  the Securities  hereunder  in the

ordinary  course  of  its  business.   The  Purchaser   does  not  presently  have  any  agreement  or

understanding,  directly  or  indirectly,  with  any  person  to  distribute  any  of  the  Securities  in

violation of applicable securities laws.

b)

Accredited  Investor  Status.  The  Purchaser  is  an  “accredited  investor”  as

  that term is defined  in Rule 501(a) of Regulation D (an “Accredited Investor”).

c)

Reliance on Exemptions. The Purchaser understands that the Securities are

being   offered   and   sold   to   it   in   reliance   upon   specific   exemptions   from   the   registration

requirements  of United  States  federal  and  state  securities  laws  and  that  the  Company  is  relying

upon  the  truth  and  accuracy  of,  and  the  Purchaser’s  compliance  with,  the  representations,

warranties,  agreements,  acknowledgments  and  understandings  of  the  Purchaser  set  forth  herein

in  order  to  determine  the  availability  of  such  exemptions  and  the  eligibility  of  the  Purchaser  to

acquire the Securities.

d)

Information.  The  Purchaser  and  its  advisors,  if  any,  have  been,  and  for  so

long  as  the  Securities  remain  outstanding  will  continue  to  be,  furnished  with  all  materials

relating  to  the  business,  finances  and  operations  of  the  Company  and  materials  relating  to  the

offer  and  sale  of  the  Securities  which  have  been  reasonably  requested  by  the  Purchaser  or  its

advisors, provided  that  the Purchaser  has not  been  furnished with, and  the Company shall not  in

the  future  deliver  to  the  Purchaser  without  its  consent,  any  material  non-public  information

concerning  the  Company.  The  Purchaser  and  its  advisors,  if  any,  have  been,  and  for  so  long  as

the  Securities  remain  outstanding  will  continue  to  be,  afforded  the  opportunity to  ask  questions

of the  Company.  Neither  such  inquiries  nor  any  other  due  diligence  investigation  conducted  by

Purchaser  or  any  of  its  advisors  or  representatives  shall  modify,  amend  or  affect  Purchaser’s

  right  to  rely  on  the  Company’s  representations  and  warranties  contained  in  Section  3  below.

The  Purchaser  understands  that  its  investment  in  the  Securities  involves  a  significant  degree  of

risk.

e)

Governmental  Review.  The  Purchaser  understands  that  no  United  States

federal  or  state  agency  or  any  other  government  or  governmental  agency  has  passed  upon  or

made any recommendation or endorsement of the Securities.

f)

Transfer  or  Re-sale.  The  Purchaser  understands  that  (i)  the  sale  or  re-sale

of the  Securities  has  not  been  and  is  not  being  registered  under  the  1933  Act  or  any  applicable

state  securities  laws,  and  the  Securities  may  not  be  transferred  unless  (a)  the  Securities  are  sold

pursuant  to  an  effective  registration  statement  under  the  1933  Act,  (b)  the  Purchaser  shall  have

delivered  to  the  Company  an  opinion  of  counsel  that  shall  be  in  form,  substance  and  scope

customary  for  opinions  of counsel  in  comparable  transactions  to  the  effect  that  the  securities  to

be   sold   or   transferred   may   be   sold   or   transferred   pursuant   to   an   exemption   from   such

registration, which opinion shall be reasonably acceptable to the Company,  (c) the Securities are

  sold  or  transferred  to  an  “affiliate”  (as defined  in  Rule  144  promulgated  under  the  1933  Act  (or

  a  successor  rule)  (“Rule  144”)  of  the  Purchaser  who  agrees  to  sell  or  otherwise  transfer  the

Securities  only  in  accordance  with  this  Section  2(f)  and  who  is  an  Accredited  Investor,  (d)  the

Securities  are  sold  pursuant  to  Rule  144,  or  (e)  the  Securities  are  sold  pursuant  to  Regulation  S

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  under the 1933 Act  (or a successor rule) (“Regulation S”) and the  Purchaser shall have delivered

to  the  Company  an  opinion  of  counsel  reasonably  acceptable  to  the  Company  relating  to  such

Regulation S; (ii) any sale of such Securities made  in reliance on Rule 144  may be made only in

accordance with the terms of such Rule and  further, if such Rule is not  applicable, any re-sale of

such Securities under  circumstances  in  which the  seller  (or the person through whom the  sale  is

made)  may be deemed to be an underwriter (as that term is defined  in the 1933 Act) may require

compliance  with  some  other  exemption  under  the  1933  Act  or  the  rules  and  regulations  of  the

SEC  thereunder;  and  (iii)  neither  the  Company  nor  any  other  person  is  under  any  obligation  to

register  such  Securities  under  the  1933  Act  or  any  state  securities  laws  or  to  comply  with  the

terms   and   conditions   of   any   exemption   thereunder   (in   each   case).   Notwithstanding   the

foregoing  or  anything  else  contained  herein  to  the  contrary,  the  Securities  may  be  pledged  as

collateral in connection with a  bona  fide  margin account or other lending arrangement.

g)

Legends.  The  Purchaser  understands  that  the  Securities  have  been  issued

(or  will  be   issued   in  the  case  of  the  Conversion  Shares)  pursuant  to   an  exemption  from

registration  or  qualification  under  the  1933  Act  and  applicable  state  securities  laws,  and  except

as set  forth below, the Securities shall bear any legend as required  by  the “blue sky” laws of any

state  and  a  restrictive  legend  in  substantially  the  following  form (and  a  stop-transfer  order  may

be placed against  transfer of such stock certificates):

“NEITHER   THE   ISSUANCE   AND   SALE   OF   THE   SECURITIES

REPRESENTED  BY  THIS  CERTIFICATE  NOR  THE  SECURITIES

INTO    WHICH    THESE    SECURITIES    ARE    [CONVERTIBLE]

[EXERCISABLE]

HAVE

BEEN][THE

SECURITIES

REPRESENTED   BY   THIS   CERTIFICATE   HAVE   NOT   BEEN]

REGISTERED   UNDER   THE   SECURITIES   ACT   OF   1933,   AS

AMENDED,  OR  APPLICABLE  STATE  SECURITIES  LAWS.  THE

SECURITIES    MAY    NOT    BE    OFFERED    FOR    SALE,    SOLD,

TRANSFERRED  OR  ASSIGNED  (I)  IN  THE  ABSENCE  OF  (A)  AN

EFFECTIVE

REGISTRATION

STATEMENT

FOR

THE

SECURITIES    UNDER    THE    SECURITIES    ACT    OF    1933,    AS

AMENDED,    OR    (B) AN    OPINION    OF    COUNSEL    TO    THE

HOLDER   (IF   REQUESTED   BY   THE   COMPANY),   IN   A   FORM

REASONABLY    ACCEPTABLE    TO    THE    COMPANY,    THAT

REGISTRATION  IS  NOT  REQUIRED  UNDER  SAID  ACT  OR  (II)

UNLESS   SOLD   OR   ELIGIBLE   TO   BE   SOLD   PURSUANT   TO

RULE

144

OR

RULE

144A

UNDER

SAID

ACT.

NOTWITHSTANDING    THE    FOREGOING,    THE    SECURITIES

MAY   BE   PLEDGED   IN   CONNECTION   WITH   A   BONA   FIDE

MARGIN    ACCOUNT    OR    OTHER    LOAN    OR    FINANCING

ARRANGEMENT SECURED BY THE SECURITIES.”

The  legend  set  forth  above  shall  be  removed  and  the  Company  shall  issue  a  certificate

without  such  legend  to  the  holder  of any  Security  upon  which  it  is  stamped,  if,  unless  otherwise

required  by  applicable  state  securities  laws,  (a)  such  Security  is  registered  for  sale  under  an

effective  registration  statement  filed  under  the  1933  Act  or  otherwise  may  be  sold  pursuant  to

Rule  144  or  Regulation S  without  any restriction as to  the number  of securities as of a particular

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date that  can then be  immediately sold, or (b) such holder provides the Company with an  opinion

of  counsel  at  the  Company’s  expense,  in  the  form,  substance  and  scope  customary  for  opinions

of counsel  in  comparable  transactions,  to  the effect  that  a public  sale or transfer  of such Security

may  be   made  without  registration  under  the  1933  Act,   which  opinion  shall  be   reasonably

accepted  by the  Company  so  that  the  sale  or  transfer  is  effected.  The  Purchaser  agrees  to  sell  all

Securities,   including  those  represented   by  a   certificate(s)   from  which  the   legend   has   been

removed,  in compliance with applicable prospectus delivery requirements, if any.

h)

Authorization;  Enforcement.  This  Agreement  has  been  duly  and  validly

authorized.  This  Agreement  has  been  duly  executed  and  delivered  on  behalf  of  the  Purchaser,

and  this  Agreement  constitutes  a  valid  and  binding  agreement  of  the  Purchaser  enforceable  in

accordance with its terms.

3.   Representations  and  Warranties  of  the  Company.  The  Company  represents  and

warrants to the Purchaser, as of the date hereof and the Closing Date,  that:

a)

Organization and Qualification. The Company and  each of its Subsidiaries

(as defined  below),  if any,  is a  corporation duly organized,  validly existing and  in good standing

under  the  laws  of  the  jurisdiction  in  which  it  is  incorporated,  with  full  power  and  authority

(corporate and  other) to  own,  lease, use and operate  its properties and to  carry on its business as

and  where  now  owned,  leased,  used,  operated  and  conducted.  Schedule  3(a)  sets  forth  a  list  of

all  of  the  Subsidiaries  of  the  Company  and  the  jurisdiction  in  which  each  is  incorporated.  The

Company  and  each  of  its  Subsidiaries  is  duly  qualified  as  a  foreign  corporation  to  do  business

and  is  in  good  standing  in  every  jurisdiction  in  which  its  ownership  or  use  of  property  or  the

nature  of  the  business  conducted  by  it  makes  such  qualification  necessary  except  where  the

failure  to  be  so  qualified  or  in  good  standing  would  not  have  a  Material  Adverse  Effect.

  “Material Adverse Effect”  means any material adverse effect  on the business, operations, assets,

financial condition or  prospects of the  Company or  its Subsidiaries,  if  any,  taken  as  a whole,  or

on  the  transactions  contemplated  hereby  or  by  the  agreements  or  instruments  to  be  entered  into

in  connection  herewith.   “Subsidiaries”  means  any  corporation  or  other  organization,  whether

incorporated  or  unincorporated,  in  which  the  Company  owns,  directly  or  indirectly,  any  equity

or other ownership  interest.

b)

Authorization;  Enforcement.  (i)  The  Company  has  all  requisite  corporate

power  and  authority to  enter  into  and  perform this  Agreement  and  the Note  and  to  consummate

the transactions contemplated hereby and thereby and to  issue the Securities,  in accordance with

the  terms  hereof and  thereof,  (ii)  the  execution  and  delivery of this  Agreement  and  the  Note  by

the  Company  and  the  consummation  by  it  of  the  transactions  contemplated  hereby  and  thereby

(including  without  limitation,  the  issuance  of  the  Note  and  the  issuance  and  reservation  for

issuance  of  the  Conversion  Shares  issuable  upon  conversion  and  exercise  thereof)  have  been

  duly authorized  by the Company’s Board of Directors and no  further consent  or authorization of

the  Company,  its  Board  of  Directors,  or  its  shareholders  is  required,  (iii)  this  Agreement  has

been  duly  executed  and  delivered  by  the  Company  by  its  authorized  representative,  and  such

authorized  representative   is  the  true  and  official  representative   with  authority  to   sign  this

Agreement  and  the  other  documents  executed  in  connection  herewith  and  bind  the  Company

accordingly,   and  (iv)  this   Agreement  constitutes,  and  upon  execution  and  delivery  by  the

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Company  of  the  Note  and  each  of  such  instruments  will  constitute,  a  legal,  valid  and  binding

obligation of the Company enforceable against the Company in accordance with its terms.

c)

Capitalization.  As  of  the  date  hereof,  the  authorized  capital  stock  of  the

Company,  and  number  of  shares  issued  and  outstanding,  is  as  set  forth  in  the  Company’s  most

recent  periodic  report  filed  with  the  SEC.  Except  as  disclosed  on  Schedule  3(c)  hereof,  no

  shares  are  reserved  for  issuance  pursuant  to  the  Company’s  stock  option  plans.  Except  as

disclosed  in  the  SEC  Documents  no  shares  are  reserved  for  issuance  pursuant  to  securities

exercisable  for,  or  convertible  into  or  exchangeable  for  shares  of  Common  Stock.  All  of  such

outstanding  shares of capital stock are, or upon issuance will be, duly authorized,  validly issued,

fully  paid  and   non-assessable.   No   shares  of  capital  stock  of  the   Company  are  subject   to

preemptive  rights or  any other  similar  rights of the shareholders of the Company or  any liens or

encumbrances  imposed  through the  actions or  failure to  act  of the Company.  As  of the effective

date  of  this  Agreement,  and  except  as  disclosed  in  the   SEC  Documents,  (i)  there  are   no

outstanding  options,  warrants,  scrip,  rights  to  subscribe  for,  puts,  calls,  rights  of  first  refusal,

agreements,  understandings,  claims or other  commitments or  rights of any character  whatsoever

relating  to,  or  securities,  notes  or  rights  convertible  into  or  exchangeable  for  any  shares  of

capital stock of the  Company or any of its Subsidiaries, or arrangements by which the Company

or  any of  its  Subsidiaries  is  or  may  become  bound  to  issue  additional  shares  of capital  stock  of

the  Company  or  any  of  its  Subsidiaries,  (ii)  there  are  no  agreements  or  arrangements  under

which  the  Company  or  any  of  its  Subsidiaries  is  obligated  to  register  the  sale  of  any  of  its  or

their  securities  under  the  1933  Act  and  (iii)  there  are  no  anti-dilution  or  price  adjustment

provisions  contained  in  any  security  issued  by  the  Company  (or  in  any  agreement  providing

rights  to  security  holders)  that  will  be  triggered  by  the  issuance  of  any  of  the  Securities.  The

Company has furnished to the Purchaser true and correct  copies of the Company’s Certificate of

  Incorporation  as  in  effect  on  the  date  hereof  (“Certificate  of  Incorporation”),  the  Company’s

By-laws,   as   in   effect   on  the  date   hereof  (the   “By-laws”),   and  the  terms  of  all  securities

convertible  into or exercisable  for Common Stock of the Company and the material rights of the

holders thereof in respect thereto.

d)

Issuance   of   Shares.   The   Conversion   Shares   are   duly   authorized   and

reserved  for  issuance  and,  upon  conversion  of the  Note,  as the case  may  be,  in  accordance  with

their  respective  terms,  will  be  validly  issued,  fully  paid  and  non-assessable,  and  free  from  all

taxes,  liens,  claims  and  encumbrances  with  respect  to  the  issue  thereof  and  shall  not  be  subject

to  preemptive  rights or other  similar  rights of shareholders of the Company and  will  not  impose

personal liability upon the holder thereof.

e)

Acknowledgment   of   Dilution.   The   Company’s   executive   officers   and

directors  understand  the   nature  of  the  Securities  being  sold  hereby  and  recognize  that  the

issuance  of  the  Securities  will  have  a  potential  dilutive  effect  on  the  equity  holdings  of  other

  holders  of  the  Company’s  equity  or  rights  to  receive  equity  of  the  Company.   The  board  of

directors of the Company has concluded,  in its good faith business judgment  that the issuance of

the  Securities  is  in  the  best  interests of the  Company.   The  Company  specifically acknowledges

that  its  obligation  to  issue  the  Conversion  Shares  upon  conversion  of the  Notes  is  binding  upon

the   Company   and   enforceable   regardless   of   the   dilution   such   issuance   may   have   on  the

ownership  interests of other stockholders of the Company or parties entitled to  receive equity of

the Company.

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f)

No  Conflicts. The execution, delivery and performance of this  Agreement,

the   Note   by   the   Company   and   the   consummation   by   the   Company   of   the   transactions

contemplated hereby and thereby (including, without  limitation, the issuance and reservation for

issuance  of  the  Conversion  Shares)  will  not  (i)  conflict  with  or  result  in  a  violation  of  any

provision of the  Certificate  of Incorporation or  By-laws,  or  (ii)  violate or  conflict  with,  or  result

in a  breach of any provision of, or constitute a default  (or an event  which with notice or  lapse  of

time  or  both  could  become  a  default)  under,  or  give  to  others  any  rights  of  termination,

amendment,  acceleration  or  cancellation  of,  any  agreement,  indenture,  patent,  patent  license  or

instrument  to  which  the  Company or  any of  its Subsidiaries  is  a part y and  that  is  not  filed  as an

SEC  Document  or  other  document  filed  with  the  SEC,  or  (iii)  result  in  a  violation  of  any  law,

rule,  regulation,  order,  judgment  or  decree  (including  federal  and  state  securities  laws  and

regulations  and  regulations  of  any  self-regulatory  organizations  to  which  the  Company  or  its

securities  are  subject)  applicable  to  the  Company  or  any  of  its  Subsidiaries  or  by  which  any

property or asset  of the Company or any of its Subsidiaries is bound or affected (except  for such

conflicts,  defaults,  terminations,  amendments,  accelerations,  cancellations  and  violations  as

would  not,  individually  or  in  the  aggregate,  have  a  Material  Adverse  Effect).  Neither  the

Company  nor  any  of  its  Subsidiaries  is  in  violation  of  its  Certificate  of  Incorporation,  By-laws

or  other  organizational  documents  and  neither  the  Company  nor  any  of  its  Subsidiaries  is  in

default  (and  no  event  has  occurred  which  with  notice  or  lapse  of  time  or  both  could  put  the

Company  or  any  of  its  Subsidiaries  in  default)  under,  and  neither  the  Company  nor  any  of  its

Subsidiaries  has  taken  any  action  or  failed  to  take  any  action  that  would  give  to  others  any

rights  of  termination,  amendment,  acceleration  or  cancellation  of,  any  agreement,  indenture  or

instrument  to  which the  Company or  any of its Subsidiaries  is a party or  by which  any property

or  assets  of  the  Company  or  any  of  its  Subsidiaries  is  bound  or  affected,  except  for  possible

defaults  as  would  not,  individually  or  in  the  aggregate,  have  a  Material  Adverse  Effect.  The

businesses  of  the  Company  and  its  Subsidiaries,  if  any,  are  not  being  conducted,  and  shall  not

be  conducted  so  long  as  the  Purchaser  owns  any  of  the  Securities,  in  violation  of  any  law,

ordinance  or  regulation of any governmental entity.  Except  as specifically  contemplated  by this

Agreement  and  as  required  under  the  1933  Act  and  any  applicable  state  securities  laws,  the

Company  is  not  required  to  obtain  any  consent,  authorization  or  order  of,  or  make  any  filing  or

registration   with,    any   court,   governmental   agency,    regulatory   agency,    self   regulatory

organization or  stock  market  or  any third  party in  order  for  it  to  execute,  deliver  or  perform any

of  its  obligations  under  this  Agreement  and  the  Note  in  accordance  with  the  terms  hereof  or

thereof or to  issue  and  sell  the  Securities  in  accordance with the terms hereof and  thereof and  to

issue the Conversion Shares. All consents, authorizations, orders, filings and registrations which

the  Company  is  required  to  obtain  pursuant  to  the  preceding  sentence  have  been  obtained  or

effected   on  or   prior   to   the   date   hereof.   The   Company   is   not   in   violation   of   the   listing

requirements of the Over-the-Counter Bulletin Board (the “OTCBB”), or OTCQB, or OTC Pink

and  does  not  reasonably  anticipate  that  the  Common  Stock  will  be  delisted  by  the  OTCBB,  or

OTCQB, or  OTC  Pink  in the  foreseeable  future.  The Company and  its Subsidiaries are unaware

of any facts or circumstances which might  give rise to any of the foregoing.

g)

SEC Documents; Financial Statements. The Company has filed  all reports,

schedules,  forms,  statements and  other  documents required  to  be  filed  by  it  with the  SEC (all of

the  foregoing  filed  prior  to  the  date  hereof  and  all  exhibits  included  therein  and  financial

statements   and   schedules   thereto   and   documents   (other   than  exhibits   to   such  documents)

  incorporated    by   reference    therein,    being    hereinafter    referred    to    herein   as   the   “SEC

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SPA –  CETY, T1, 2016-06-06

Documents”).   Upon   written   request   the   Company   will   deliver   to   the   Purchaser   true   and

complete  copies  of  the  SEC  Documents,  except  for  such  exhibits  and  incorporated  documents.

As  of  their  respective  dates,  the  SEC  Documents  complied  in  all  material  respects  with  the

requirements  of  the  Securities  Exchange  Act  of  1934,  as  amended  (“1934  Act”  or  “Exchange

  Act”), and  none of the SEC Documents, at the time they were filed with the  SEC, contained any

untrue statement  of a  material fact  or omitted to  state a material fact  required to  be stated therein

or  necessary  in  order  to  make  the  statements  therein,  in  light  of the  circumstances  under  which

they  were  made,  not  misleading.  None  of  the  statements  made  in  any  such  SEC  Documents  is,

or   has   been,   required   to   be   amended   or   updated   under   applicable   law   (except   for   such

statements  as  have  been  amended  or  updated  in  subsequent  filings  prior  the  date  hereof).  As  of

their  respective  dates,  the  financial statements of the  Company  included  in  the  SEC Documents

complied  as  to  form  in  all  material  respects  with  applicable  accounting  requirements  and  the

published  rules  and  regulations  of the  SEC  with  respect  thereto.  Such  financial  statements  have

been  prepared   in  accordance   with  United  States  generally  accepted  accounting  principles,

consistently  applied,  during  the  periods  involved  and  fairly  present  in  all  material  respects  the

consolidated  financial position  of the  Company and  its consolidated  Subsidiaries as of the  dates

thereof  and  the  consolidated  results  of  their  operations  and  cash  flows  for  the  periods  then

ended  (subject,  in  the  case  of  unaudited  statements,  to  normal  year-end  audit  adjustments).

Except  as set  forth  in the  financial  statements of the  Company  included  in  the  SEC Documents,

the  Company  has  no  liabilities,  contingent  or  otherwise,  other  than  (i)  liabilities  incurred  in  the

ordinary  course  of  business,  and  (ii)  obligations  under  contracts  and  commitments  incurred  in

the  ordinary course  of business and  not  required  under  generally accepted  accounting  principles

to  be  reflected  in  such  financial  statements,  which,  individually  or  in  the  aggregate,  are  not

material to the  financial condition or  operating results of the Company. The Company  is subject

to the reporting requirements of the 1934 Act.

h)

Absence  of  Certain  Changes.  Since  March  31,  2016,  there  has  been  no

material adverse  change  and  no  material adverse development  in the assets,  liabilit ies,  business,

properties, operations,  financial condition, results of operations, prospects or 1934 Act  reporting

status of the Company or any of its Subsidiaries.

i)

Absence  of  Litigation.  There  is  no  action,  suit,  claim,  proceeding,  inquiry

or   investigation  before  or   by  any  court,   public   board,   government   agency,   self-regulatory

organization  or  body  pending  or,  to  the  knowledge  of  the  Company  or  any  of  its  Subsidiaries,

threatened  against  or  affecting  the  Company  or  any  of  its  Subsidiaries,  or  their  officers  or

directors  in  their  capacity  as  such,  that  could  have  a  Material  Adverse  Effect.  Schedule  3(i)

contains  a  complete  list  and  summary  description  of  any  pending  or,  to  the  knowledge  of  the

Company,  threatened  proceeding  against  or  affecting  the  Company  or  any  of  its  Subsidiaries,

without  regard  to  whether  it  would  have  a  Material  Adverse  Effect.  The  Company  and  its

Subsidiaries  are  unaware  of  any  facts  or  circumstances  which  might  give  rise  to  any  of  the

foregoing.

j)

Patents,  Copyrights,  etc.  The  Company  and  each  of  its  Subsidiaries  owns

or  possesses  the  requisite  licenses  or  rights  to  use  all  patents,  patent  applications,  patent  rights,

inventions,  know-how, trade  secrets, trademarks,  trademark  applications,  service  marks,  service

names, trade names and  copyrights (“Intellectual Property”) necessary to  enable it  to  conduct  its

business  as  now  operated  (and,  as  presently  contemplated  to  be  operated  in  the  future);  there  is

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SPA –  CETY, T1, 2016-06-06

no  claim  or  action  by  any  person  pertaining  to,  or  proceeding  pending,  or  to  the  Company’s

knowledge  threatened,  which  challenges  the  right  of  the  Company  or  of  a  Subsidiary  with

respect  to  any  Intellectual  Property  necessary  to  enable  it  to  conduct  its  business  as  now

operated  (and,  as  presently  contemplated  to  be  operated  in  the  future);  to  the  best  of  the

  Company’s  knowledge,   the  Company’s  or  its  Subsidiaries’  current   and   intended  products,

services  and  processes  do  not  infringe  on  any  Intellectual  Property  or  other  rights  held  by  any

person  and/or  entity;  and  the  Company  is  unaware  of  any  facts  or  circumstances  which  might

give  rise  to  any  of  the  foregoing.  The  Company  and  each  of  its  Subsidiaries  have  taken

reasonable   security   measures   to   protect   the   secrecy,   confidentiality   and   value   of   their

Intellectual Property.

k)

No  Materially Adverse Contracts, Etc. Neither  the Company nor any of its

Subsidiaries  is  subject  to  any  charter,  corporate  or  other  legal  restriction,  or  any  judgment,

  decree,  order,  rule  or  regulation  which  in  the  judgment  of  the  Company’s  officers  has  or  is

expected  in  the  future  to  have  a  Material  Adverse  Effect.  Neither  the  Company  nor  any  of  its

  Subsidiaries  is  a  party  to  any  contract  or  agreement  which  in  the  judgment  of  the  Company’s

officers has or is expected to  have a Material Adverse Effect.

l)

Tax  Status.  The  Company  and  each  of  its  Subsidiaries  has  made  or  filed

all  federal,  state  and  foreign  income  and  all  other  tax  returns,  reports  and  declarations  required

by  any  jurisdiction  to  which  it  is  subject  (unless  and  only  to  the  extent  that  the  Company  and

each  of  its  Subsidiaries  has  set  aside  on  its  books  provisions  reasonably  adequate  for  the

payment  of  all  unpaid  and  unreported  taxes)  and  has  paid  all  taxes  and  other  governmental

assessments  and  charges  that  are  material  in  amount,  shown  or  determined  to  be  due  on  such

returns, reports and  declarations, except  those being contested  in good faith and  has set  aside on

its  books  provisions  reasonably  adequate  for  the  payment  of all  taxes  for  periods  subsequent  to

the  periods  to  which  such  returns,  reports  or  declarations  apply.  There  are  no  unpaid  taxes  in

any  material  amount  claimed  to  be  due  by  the  taxing  authority  of  any  jurisdiction,  and  the

officers of the  Company know  of no  basis  for  any  such claim.  The Company  has  not  executed  a

waiver  with  respect  to  the  statute  of  limitations  relating  to  the  assessment  or  collection  of  any

  foreign,  federal,  state or  local tax.  None of the Company’s tax returns  is presently being  audited

by any taxing authority.

m)

Certain  Transactions.  Except  for  arm’s  length  transactions  pursuant  to

which  the  Company  or  any  of  its  Subsidiaries  makes  payments  in  the  ordinary  course  of

business  upon terms  no  less  favorable than  the Company or  any of its Subsidiaries  could  obtain

from third parties and other than the grant  of any stock options disclosed on Schedule 3(c), none

of  the  officers,  directors,  or  employees  of  the  Company  is  presently  a  party  to  any  transaction

with  the  Company  or  any of  its  Subsidiaries  (other  than  for  services  as  employees,  officers  and

directors),  including  any  contract,  agreement  or  other  arrangement  providing  for  the  furnishing

of  services  to  or  by,  providing  for  rental  of  real  or  personal  property  to  or  from,  or  otherwise

requiring payments to or from any officer, director or such employee or, to the knowledge of the

Company,  any  corporation,  partnership,  trust  or  other  entity  in  which  any  officer,  director,  or

any such employee  has a substantial interest or is an officer, director, trustee or partner.

n)

Disclosure.  All  information  relating  to  or  concerning  the  Company  or  any

of its Subsidiaries set  forth in this  Agreement  and  provided  to  the  Purchaser  pursuant  to  Section

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SPA –  CETY, T1, 2016-06-06

2(d)  hereof  and  otherwise  in  connection  with  the  transactions  contemplated  hereby  is  true  and

correct  in  all  material  respects  and  the  Company  has  not  omitted  to  state  any  material  fact

necessary  in  order  to  make  the  statements  made  herein  or  therein,  in  light  of  the  circumstances

under  which  they  were  made,  not  misleading.  No  event  or  circumstance  has  occurred  or  exists

with  respect  to  the  Company  or  any  of  its  Subsidiaries  or  its  or  their  business,  properties,

prospects,  operations  or  financial  conditions,  which,  under  applicable  law,  rule  or  regulation,

requires public disclosure or announcement  by the Company but  which has not  been so  publicly

announced or disclosed.

o)

Acknowledgment   Regarding   Purchaser’   Purchase   of   Securities.   The

Company  acknowledges  and  agrees  that  the  Purchaser  is  acting  solely  in  the  capacity  of  arm’s

length  purchaser  with  respect  to  this  Agreement  and  the  transactions  contemplated  hereby.  The

Company  further   acknowledges  that  the   Purchaser   is   not   acting  as   a   financial  advisor   or

fiduciary  of  the  Company  (or  in  any  similar  capacity)  with  respect  to  this  Agreement  and  the

transactions  contemplated  hereby  and  any  statement   made  by  the   Purchaser   or  any  of  its

respective  representatives  or  agents  in  connection  with  this  Agreement  and  the  transactions

contemplated   hereby   is   not   advice   or   a   recommendation   and   is   merely   incidental  to   the

Purchaser’s purchase of the Securities.

p)

No  Integrated  Offering.  Neither  the Company,  nor  any of its affiliates,  nor

any person acting on its or their  behalf,  has directly or  indirectly made any offers or sales in  any

security  or  solicited  any  offers  to  buy  any  security  under  circumstances  that  would  require

registration  under  the  1933  Act  of the  issuance  of  the  Securities  to  the  Purchaser.  The  issuance

of  the   Securities   to   the   Purchaser   will   not   be   integrated   with  any  other   issuance   of  the

  Company’s   securities   (past,   current   or   future)   for   purposes   of   any   shareholder   approval

provisions applicable to the Company or its securities.

q)

Brokers.    The  Company  hereby  represents  and  warrants  that  it  has  not

hired,  retained  or  dealt  with  any  broker,  finder,  consultant,  person,  firm  or  corporation  in

connection  with  the  negotiation,  execution  or  delivery  of  this  Agreement  or  the  transactions

contemplated  hereunder.  The  Company  covenants  and  agrees  that  should  any  claim  be  made

against  Purchaser  for any commission or other compensation  by any broker, finder, person, firm

or corporation,  including without  limitation, the Broker,  based upon the Company’s engagement

of  such  person  in  connection  with  this  transaction,  the  Company  shall  indemnify,  defend  and

  hold  Purchaser  harmless  from  and  against  any  and  all  damages,  expenses  (including  attorneys’

fees  and  disbursements)  and  liability  arising  from  such  claim.   The  Company  shall  pay  the

commission of the Broker, to the attention of the Broker, pursuant  to their separate agreement(s)

between the Company and the Broker.

r)

Permits;  Compliance.  The  Company  and  each  of  its  Subsidiaries  is  in

possession  of  all  franchises,   grants,  authorizations,   licenses,  permits,  easements,   variances,

exemptions,  consents,  certificates,  approvals  and  orders  necessary  to  own,  lease  and  operate  its

  properties and  to  carry on  its business as  it  is now  being  conducted  (collectively,  the  “Company

  Permits”),  and  there  is  no  action  pending  or,  to  the  knowledge  of  the  Company,  threatened

regarding  suspension  or  cancellation  of any of the  Company  Permits.  Neither  the  Company  nor

any  of  its  Subsidiaries  is  in  conflict  with,  or  in  default  or  violation  of,  any  of  the  Company

Permits,  except  for  any  such  conflicts,  defaults  or  violations  which,  individually  or  in  the

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SPA –  CETY, T1, 2016-06-06

aggregate,  would  not  reasonably  be  expected  to  have  a  Material  Adverse  Effect.  Since  March

31,  2016,  neither  the  Company  nor  any  of  its  Subsidiaries  has  received  any  notification  with

respect  to  possible conflicts, defaults or violations of applicable laws, except  for notices relating

to  possible  conflicts,  defaults  or  violations,  which  conflicts,  defaults  or  violations  would  not

have a Material Adverse Effect.

s)

Environmental Matters.

i.

There   are,   to   the   Company’s   knowledge,   with   respect   to   the

Company  or  any  of  its  Subsidiaries  or  any  predecessor  of  the  Company,  no  past  or  present

violations  of  Environmental  Laws  (as  defined   below),   releases  of   any  material  into   the

environment,  actions,  activities,  circumstances,  conditions,  events,  incidents,  or  contractual

obligations  which  may  give  rise  to  any  common  law  environmental  liability  or  any  liability

under  the  Comprehensive  Environmental  Response,  Compensation  and  Liability  Act  of  1980

or  similar   federal,   state,  local  or   foreign  laws   and   neither  the  Company  nor  any  of  its

Subsidiaries  has  received  any  notice  with  respect  to  any  of  the  foregoing,  nor  is  any  action

     pending  or, to the  Company’s knowledge,  threatened  in connection with any of the  foregoing.

     The  term  “Environmental  Laws”  means  all  federal,  state,  local  or  foreign  laws  relating  to

pollution  or  protection  of  human  health  or  the  environment  (including,  without  limitation,

ambient  air,  surface  water,  groundwater,  land  surface or  subsurface strata),  including,  without

limitation,  laws relating  to  emissions,  discharges,  releases or threatened  releases of chemicals,

pollutants contaminants,  or toxic  or  hazardous substances  or  wastes (collectively,  “Hazardous

     Materials”)   into   the   environment,   or   otherwise   relating   to   the   manufacture,   processing,

distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as

well  as  all  authorizations,  codes,  decrees,  demands  or  demand  letters,  injunctions,  judgments,

licenses,   notices   or   notice   letters,   orders,   permits,   plans   or   regulations   issued,   entered,

promulgated or approved thereunder.

ii.

Other  than  those  that  are  or  were  stored,  used  or  disposed  of  in

compliance  with  applicable  law,  no  Hazardous  Materials  are  contained  on  or  about  any  real

property  currently  owned,  leased  or  used  by  the  Company  or  any  of  its  Subsidiaries,  and  no

Hazardous Materials were  released  on or  about  any real  property previously owned,  leased  or

used  by  the  Company  or  any  of  its  Subsidiaries  during  the  period  the  property  was  owned,

leased  or  used  by  the  Company  or  any  of  its  Subsidiaries,  except  in  the  normal  course  of  the

     Company’s or any of its Subsidiaries’ business.

iii.

There  are   no   underground   storage  tanks   on  or  under  any  real

property  owned,  leased  or  used  by  the  Company  or  any  of  its  Subsidiaries  that  are  not  in

compliance with applicable  law.

t)

Title   to   Property.   The   Company   and   its   Subsidiaries   have   good   and

marketable  title  in  fee  simple  to  all real property and  good  and  marketable title to  all personal

property   owned   by   them   which   is   material   to   the   business   of   the   Company   and   its

Subsidiaries,  in  each  case  free  and  clear  of all  liens,  encumbrances and  defects except  such as

are  described  in  Schedule  3(t)  or  such  as  would  not  have  a  Material  Adverse  Effect.  Any real

property and  facilities  held  under  lease  by the Company and  its Subsidiaries  are  held  by them

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SPA –  CETY, T1, 2016-06-06

under  valid,  subsisting  and  enforceable  leases  with  such  exceptions  as  would  not  have   a

Material Adverse Effect.

u)

Insurance.  The  Company  and  its  Subsidiaries  are  insured  by  insurers  of

recognized  financial responsibility against  such losses and risks and  in such  coverage amounts

as  are  prudent  and  customary  in  the  businesses  in  which  the  Company  is  engaged,  including,

but  not  limited  to,  directors and  officers  insurance coverage  with coverage amounts  that  are at

least  equal to  the  aggregate  Purchase Price.   Neither the Company nor  any Subsidiary has any

reason to  believe  that  it  will  not  be  able to  renew  its existing  insurance coverage as and  when

such coverage expires or to obtain similar  coverage from similar  insurers as may be necessary

to continue  its business without  a significant  increase in cost.

v)

Internal  Accounting  Controls.  Except  as  disclosed  in the  SEC Documents,

the  Company  and  each  of  its  Subsidiaries  maintain  a  system  of  internal  accounting  controls

     sufficient,   in  the   judgment   of  the   Company’s   board   of  directors,   to   provide   reasonable

assurance  that  (i)  transactions  are  executed   in  accordance  with  management’s  general  or

specific  authorizations,  (ii)  transactions  are  recorded  as  necessary  to  permit  preparation  of

financial  statements   in   conformity  with  generally  accepted   accounting   principles   and   to

maintain  asset  accountability,   (iii)  access  to  assets  is  permitted  only  in  accordance  with

     management’s general or  specific  authorization and  (iv)  the recorded  accountability  for  assets

is  compared  with  the  existing  assets  at  reasonable  intervals  and  appropriate  action  is  taken

with respect to  any differences.

w)

Foreign   Corrupt    Practices.    Neither    the   Company,    nor    any   of   its

Subsidiaries,  nor  any director, officer,  agent,  employee or other  person acting  on behalf of the

Company  or   any  Subsidiary  has,   in  the   course  of  his  actions   for,   or  on   behalf  of,   the

Company, used any corporate funds for any unlawful contribution, gift, entertainment  or other

unlawful  expenses  relating  to  political activity;  made  any  direct  or  indirect  unlawful  payment

to  any foreign  or  domestic  government  official or  employee  from corporate funds;  violated  or

is   in   violation  of  any  provision  of  the  U.S.   Foreign  Corrupt   Practices   Act   of  1977,   as

amended,  or  made  any  bribe,  rebate,  payoff,  influence  payment,  kickback  or  other  unlawful

payment  to any foreign or domestic government official or employee.

x)

Solvency.  Except  as disclosed  in  the  SEC Documents,  the Company (after

giving  effect  to  the  transactions  contemplated  by  this  Agreement)  is  solvent  (i.e.,  its  assets

have  a  fair  market  value  in  excess  of the  amount  required  to  pay  its  probable  liabilities  on  its

existing  debts  as  they  become  absolute  and  matured)  and  currently  the  Company  has  no

information  that  would  lead  it  to  reasonably  conclude  that  the  Company  would  not,  after

giving  effect  to  the  transaction  contemplated  by  this  Agreement,  have  the  ability  to,  nor  does

it  intend  to  take  any  action  that  would  impair  its  ability  to,  pay  its  debts  from  time  to  time

incurred  in connection therewith as such debts mature.

y)

No  Investment  Company.  The Company  is  not,  and  upon the  issuance  and

sale   of   the   Securities   as   contemplated   by   this   Agreement   will   not   be,   an   “investment

     company”   required   to   be   registered   under   the   Investment   Company   Act   of   1940   (an

     “Investment  Company”). The Company is not controlled by an Investment  Company.

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SPA –  CETY, T1, 2016-06-06

z)

No  “Shell”.  The  Company  is  not,  and  has  not  at  any  time  previously  been

a Shell Company, as defined  in Rule 144.

4.   COVENANTS.

a)

Best  Efforts.  The  parties  shall  use  their  best  efforts  to  satisfy  timely  each

of the conditions described  in Section 6 and 7 of this Agreement.

b)

Form  D;  Blue  Sky  Laws.  The  Company  agrees  to  timely  file  a  Form  D

with respect  to  the  Securities as required  under  Regulation D  and  to  provide a copy thereof to

the  Purchaser  promptly  after  such  filing.  The  Company  shall,  on  or  before  the  Closing  Date,

take  such  action  as  the  Company  shall  reasonably  determine  is  necessary  to  qualify  the

Securities  for  sale  to  the  Purchaser  at  the applicable  closing  pursuant  to  this  Agreement  under

     applicable  securities  or  “blue  sky”  laws  of  the  states  of  the  United  States  (or  to  obtain  an

exemption  from such qualification),  and  shall provide evidence of any  such action  so  taken to

the Purchaser on or prior to the Closing Date.

c)

Use  of Proceeds.  The Company shall use the proceeds  from the sale of the

Securities  for  general  corporate  purposes,  marketing  and  sales,  product  development,  key

personnel recruiting and business development  purposes.

d)

Financial   Information.   Upon   written   request    of   the   Purchaser,   the

Company  agrees  to  send  or  make  available  the  following  reports  to  the  Purchaser  until  the

Purchaser  transfers,  assigns,  or  sells  all  of  the  Securities:  (i)  within  ten  (10)  days  after  the

filing (or the applicable deadline to so file)  with the SEC or OTC Markets Group, a copy of its

Annual  Report  and  its  Quarterly  Reports  and  any  Supplemental  Reports;  (ii)  within  one  (1)

day after release, copies of all press releases issued  by the Company or any of its Subsidiaries;

and  (iii)  contemporaneously  with  the  making  available  or  giving  to  the  shareholders  of  the

Company,  copies  of  any  notices  or  other  information  the  Company  makes  available  or  gives

to  such  shareholders.  Notwithstanding  the  foregoing,  the  Company  shall  not  disclose  any

material nonpublic  information to the Purchaser without  its consent  unless such information is

disclosed to the public prior to or promptly following such disclosure to the Purchaser.

e)

Listing.  The  Company  will obtain  and,  so  long  as  the  Purchaser  owns  any

of  the  Securities,  maintain  the  listing  and  trading  of  its  Common  Stock  on  the  OTCBB,  and

OTCQB,  or  OTC  Pink  or  any  equivalent  replacement  exchange,  the  NASDAQ  Stock  Market

     (“NASDAQ”), the New  York Stock Exchange (“NYSE”), or the  NYSE MKT,  f/k/a  American

     Stock  Exchange  (“AMEX”),  and  will  comply  in  all  respects  with  the  Company’s  reporting,

filing  and  other  obligations  under  the  bylaws  or  rules  of  the  Financial  Industry  Regulatory

     Authority  (“FINRA”)   and   such   exchanges,   as   applicable.   The   Company   shall   promptly

provide  to  the  Purchaser  copies of any  notices  it  receives  from the  SEC,  OTC Markets Group

and  any  other  exchanges  or  quotation  systems  on  which  the  Common  Stock  is  then  listed

regarding  the  continued  eligibility  of  the  Common  Stock  for  listing  on  such  exchanges  and

quotation   systems,   provided   that   it   shall   not   provide   any   notices   constituting   material

nonpublic  information.

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SPA –  CETY, T1, 2016-06-06

f)

Corporate  Existence.   So   long  as  the   Purchaser   beneficially  owns   any

Securities,   the   Company  shall   maintain   its   corporate  existence   and   shall   not   sell  all   or

     substantially  all  of  the  Company’s  assets,  except  in  the  event  of  a  merger  or  consolidation  or

     sale of all or substantially all of the Company’s assets, where the surviving or successor entity

     in   such   transaction   (i)   assumes   the   Company’s   obligations   hereunder   and   under   the

agreements  and  instruments  entered  into  in  connection  herewith  and  (ii)  is  a  publicly  traded

corporation whose Common Stock  is listed for trading on NASDAQ, NYSE or AMEX.

g)

No  Integration.  The  Company  shall  not  make  any  offers  or  sales  of  any

security  (other  than  the  Securities)  under  circumstances  that  would  require  registration  of  the

Securities  being  offered  or  sold  hereunder  under  the  1933  Act  or  cause  the  offering  of  the

Securities  to  be  integrated  with  any  other  offering  of  securities  by  the  Company  for  the

purpose of any stockholder approval provision applicable to the Company or its securities.

h)

Securities  Laws  Disclosure;  Publicity.   The  Company  shall  comply  with

applicable  securities  laws  by  filing  a  Current  Report  on Form 8-K,  within  four  (4)  Trading  Days

following  the  date  hereof,  disclosing  all  the  material  terms  of  the  transactions  contemplated

hereby,  if  the  Company  deems  the  transactions  contemplated  hereby  to  constitute  material  non-

public  information.  The  Company  and  Purchaser  shall  consult  with  each  other  in  issuing  any

other   press   releases   with   respect   to   the   transactions   contemplated   hereby,   and   neither   the

Company  nor  Purchaser  shall  issue  any  such  press  release  or  otherwise  make  any  such  public

statement  without  the  prior  consent  of  the  Company,  with  respect  to  any  press  release  of  any

Purchaser,  or  without  the  prior  consent  of  Purchaser,  with  respect  to  any  press  release  of  the

Company,  except  if  such  disclosure  is  required  by  law,  in  which  case  the  disclosing  part y  shall

promptly provide the other party with prior notice of such public statement  or communication.

i)

Non-Public  Information.    Except  with  respect  to  the  material  terms  and

conditions  of  the  transactions  contemplated  by  this  Agreement,  the  Company  covenants  and

agrees  that  neither  it  nor  any  other  person  acting  on  its  behalf  will  provide  the  Purchaser  or  its

agents  or  counsel  with  any  information  that  the  Company  believes  constitutes  material  non-

public  information,  unless  prior  thereto  the  Purchaser  shall  have  executed  a  written  agreement

regarding  the  confidentiality  and  use  of  such  information.    The  Company  understands  and

confirms that  the Purchaser shall be relying on the foregoing covenant  in effecting transactions in

securities of the Company.

j)

Subsidiaries.   So  long as the  Note remains outstanding, the Company shall

not  transfer  any  assets  or  rights  to  any  of  its  subsidiaries  or  permit  any  of  its  subsidiaries  to

engage  in any  significant  business or  operations,  whether  such  subsidiaries are currently  existing

or hereafter created.

k)

Insurance.   So  long  as  the  Note  remains  outstanding,  the  Company and  its

Subsidiaries   shall   maintain   in   full   force   and   effect   insurance   reasonably   believed   by   the

Company  to  be  adequate  coverage  (a)  on  all  assets  and  activities,  covering  property  loss  or

damage  and  loss  of  income  by  fire  or  other  hazards  or  casualty,  and  (b)  against  all  liabilities,

claims  and  risks  for  which  it  is  customary  for  companies  similarly  situated  to  the  Company  to

insure,  including  without  limitation  applicable  product  liability  insurance,  required  workmen’s

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compensation  insurance,  and  other  insurance  covering  injury  or  damage  to  persons  or  property,

but  excluding directors and officers  insurance coverage.   The Company shall promptly furnish or

cause  to  be  furnished  evidence  of  such  insurance  to   the  Purchaser,   in  form  and  substance

reasonably satisfactory to the Purchaser.

l)

Par Value.   If the closing  bid price at  any time the Note is outstanding  falls

below  $0.005,  the  Company  shall  cause  the  par  value  of  its  Common  Stock  to  be  reduced  to

$0.0001 or less.

m)

[Intentionally Omitted].

n)

Future  Financings:  From  the  date  hereof  until  such  time  as  the  Purchaser

no  longer  holds  any  of  the  Securities,  in  the  event  the  Company  issues  or  sells  any  shares  of

Common  Stock  or  securities  directly  or  indirectly  convertible  into  or  exercisable  for  Common

Stock  (“Common  Stock  Equivalents”)  or  amends  the  transaction  documents  relating  to  any  sale

or  issuance  of  Common  Stock  or  Common  Stock  Equivalents,   if  the  Purchaser  reasonably

believes  that  the  terms  and  conditions  thereunder  are  more  favorable  to  such  investors  as  the

terms  and  conditions  granted  under  the  Transaction  Documents,  upon  notice  to  the  Company  by

such Purchaser, the Transaction Documents shall be deemed automatically amended so  as to  give

the  Purchasers  the  benefit  of  such  more  favorable  terms  or  conditions.  Promptly  following  a

request  to  the  Company  the  Company  shall  provide  Purchaser  with  all  executed  transaction

documents  relating  to  any  such  sale  or  issue  of  Common  Stock  or  Common  Stock  Equivalents.

Company   shall   deliver   acknowledgment   of   such   automatic   amendment   to   the   Transaction

Documents  to  Purchaser  in  form  and  substance  reasonably  satisfactory  to  the  Purchaser  (  the

“Acknowledgment”)   within   three   (3)   business   days   of  Company’s   receipt   of  request   from

Purchaser    (the    “Deadline”),    provided    that    Company’s    failure    to    timely    provide    the

Acknowledgement   shall   not   affect   the   automatic   amendments   contemplated   hereby.   If   the

Acknowledgement   is   not   delivered   by  the   Deadline,   Company   shall  pay  to   the   Purchaser

$1000.00  per  day  in  cash,  for  each  day  beyond  the  Deadline  that  the  Company  fails  to  deliver

such Acknowledgement.

5.   Transfer   Agent   Instructions.   Upon   receipt   of   a   duly   executed   Notice   of

Conversion,  the  Company  shall  issue  irrevocable  instructions  to  its  transfer  agent  to  issue

certificates,  registered  in  the  name  of the  Purchaser  or  its nominee,  for  the Conversion Shares

in  such  amounts  as  specified  from  time  to  time  by  the  Purchaser  to  the  Company  upon

conversion  of  the   Note,   or   any  part   thereof,   in  accordance   with  the   terms   thereof  (the

     “Irrevocable  Transfer  Agent  Instructions”).  In the event  that the  Company proposes to  replace

its transfer agent, the Company shall provide, prior to the effective date of such replacement, a

fully executed Irrevocable Transfer  Agent  Instructions in a form as initially delivered pursuant

to  this  Agreement  and  the  Securities  (including  but  not  limited  to  the provision to  irrevocably

reserve  shares  of Common Stock  in the  Reserved  Amount  (as defined  in  the Note))  signed  by

the  successor  transfer   agent   to   Company  and  the  Company.   Prior  to  registration  of  the

Conversion  Shares  under  the  1933  Act  or  the  date  on  which  the  Conversion  Shares  may  be

sold  pursuant  to  Rule  144  without  any  restriction  as  to  the  number  of  Securities  as  of  a

particular  date that  can then  be  immediately sold,  all such certificates shall bear  the restrictive

legend  specified  in  Section  2(g)  of  this   Agreement.  The  Company  warrants  that:  (i)   no

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instruction other  than the  Irrevocable Transfer  Agent  Instructions referred  to  in this Section 5,

and   stop   transfer   instructions   to   give   effect   to   Section   2(f)   hereof   (in   the   case   of   the

Conversion  Shares,  prior  to  registration  of  the  Conversion  Shares  under  the  1933  Act  or  the

date on which the Conversion Shares may be sold  pursuant  to Rule 144 without  any restriction

as  to  the  number  of Securities  as  of  a  particular  date  that  can  then  be  immediately  sold),  will

be  given  by the  Company to  its transfer  agent  and  that  the Securities  shall otherwise  be  freely

transferable  on  the  books  and  records  of  the  Company  as  and  to  the  extent  provided  in  this

Agreement  and the Note; (ii)  it  will not  direct  its transfer agent  not to transfer or delay,  impair,

and/or  hinder  its  transfer  agent  in  transferring  (or  issuing)(electronically  or  in  certificated

form)  any  certificate  for  Conversion  Shares  to  be  issued  to  the  Purchaser  upon  conversion  of

or  otherwise  pursuant  to  the  Note  as  and  when  required  by  the  Note  and  this  Agreement;  and

(iii)  it  will not  fail to remove (or direct  its transfer agent  not to  remove or impair, delay, and/or

hinder  its  transfer  agent  from  removing)  any  restrictive  legend  (or  to  withdraw  any  stop

transfer  instructions  in  respect  thereof)  on  any  certificate  for  any Conversion  Shares  issued  to

the  Purchaser  upon  conversion  of or  otherwise  pursuant  to  the  Note  as  and  when  required  by

the  Note  and  this  Agreement.  Nothing  in  this  Section  shall  affect  in  any  way  the  Purchaser’s

obligations  and  agreement  set  forth  in  Section  2(g)  hereof  to  comply  with  all  applicable

prospectus  delivery  requirements,  if  any,  upon  re-sale  of  the  Securities.  If  the  Purchaser

provides the  Company with (i)  an opinion of counsel  in  form,  substance and  scope customary

for  opinions  in  comparable  transactions,  to  the  effect  that  a  public  sale  or  transfer  of  such

Securities  may  be  made  without  registration  under  the  1933  Act  and  such  sale  or  transfer  is

effected  or  (ii)  the  Purchaser  provides  reasonable  assurances  that  the  Securities  can  be  sold

pursuant   to   Rule   144,   the   Company   shall   permit   the   transfer,   and,   in   the   case   of   the

Conversion  Shares,  promptly  instruct  its  transfer  agent  to  issue  one  or  more  certificates,  free

from   restrictive   legend,   in   such   name   and   in   such   denominations   as   specified   by   the

Purchaser.  The  Company  acknowledges  that  a  breach  by  it  of  its  obligations  hereunder  will

cause  irreparable  harm to the  Purchaser,  by vitiating  the  intent  and  purpose of the transactions

contemplated  hereby.  Accordingly,  the  Company  acknowledges  that  the  remedy  at  law  for  a

breach  of  its  obligations  under  this  Section  5  may  be  inadequate  and  agrees,  in  the  event  of a

breach  or  threatened  breach  by  the  Company  of  the  provisions  of  this  Section,  that  the

Purchaser   shall  be  entitled,   in  addition  to   all  other  available  remedies,   to   an  injunction

restraining  any  breach  and  requiring  immediate  transfer,  without  the  necessity  of  showing

economic  loss and without any bond or other security being required.

6.   Injunction Posting  of  Bond.   In  the  event  the  Purchaser  shall  elect  to  convert  the

Note  or  any  parts  thereof,  the  Company  may  not  refuse  conversion  or  exercise  based  on  any

claim  that  Purchaser  or  anyone  associated  or  affiliated  with  Purchaser  has  been  engaged  in

any  violation  of  law,  or  for  any  other  reason.    In  connection  with  any  injunction  sought  or

attempted  by the  Company,  the  Company shall  be required  to  post  a bond  at  least  equal to  the

greater of either:  (i)  the  outstanding  principal amount  of the Note; and  (ii)  the  market  value  of

the  Conversion Shares sought  to  be converted,  exercised  or  issued,  based  on the sale price  per

share of Common Stock on the principal market  on which it  is  traded.

7.   Delivery of Unlegended Shares.

a)

Within   three   (3)   business   days   (such   third   business   day   being   the

     “Unlegended  Shares  Delivery  Date”)  after  the  business  day  on  which  the  Company  has

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received   (i)   a   notice  that   Conversion  Shares,   or  any  other  Common  Stock  held   by  the

Purchaser  has  been  sold  pursuant  to  a  registration  statement  or  Rule  144  under  the  1933  Act,

(ii)  a  representation  that  the  prospectus  delivery  requirements,  or  the  requirements  of  Rule

144,  as  applicable  and  if  required,  have  been  satisfied,  (iii)  the  original  share  certificates

representing  the  shares  of  Common  Stock  that  have  been  sold,  and  (iv)  in  the  case  of  sales

under Rule 144, customary representation letters of the  Purchaser and,  if required,  Purchaser’s

broker  regarding  compliance  with  the  requirements  of Rule  144,  the  Company  at  its  expense,

(y)  shall  deliver,  and  shall  cause  legal  counsel  selected  by  the  Company  to  deliver  to  its

transfer  agent  (with  copies  to   Purchaser)  an  appropriate  instruction  and  opinion  of  such

counsel,  directing  the  delivery of shares  of Common  Stock  without  any  legends  including  the

     legend   set   forth   in   Section   4(h)   above   (the   “Unlegended   Shares”);   and   (z)   cause   the

transmission  of  the  certificates  representing  the  Unlegended  Shares  together  with  a  legended

certificate  representing  the  balance  of  the  submitted  Common  Stock  certificate,  if  any,  to  the

Purchaser  at  the  address  specified  in  the  notice  of  sale,  via  express  courier,  by  electronic

transfer or otherwise on or before the Unlegended  Shares Delivery Date.

b)

The  Company  understands  that  a  delay  in  the  delivery  of  the  Unlegended

Shares  later  than  the  Unlegended  Shares  Delivery  Date  could  result  in  economic  loss  to  the

Purchaser.    As  compensation  to  Purchaser  for  such  loss,  the  Company  agrees  to  pay  late

payment  fees (as liquidated damages and  not  as a penalty) to the  Purchaser  for  late delivery of

Unlegended  Shares  in  the  amount  of $1,000.00  per  business  day  after  the  Unlegended  Shares

Delivery  Date.  If  during  any  three  hundred  and  sixty  (360)  day  period,  the  Company  fails  to

deliver  Unlegended  Shares  as  required  by  this  Section  for  an  aggregate  of  thirty  (30)  days,

then  Purchaser  or  assignee  holding  Securities  subject  to  such  default  may,  at  its  option,

require  the  Company  to  redeem  all  or  any  portion  of  the  shares  subject  to  such  default  at  a

price  per  share  equal  to  the  greater  of  (i)  200%  of  the  most  recent  closing  price  of  the

Common  Stock  or  (ii)  a  fraction  in  which  the  numerator  is  the  highest  closing  price  of  the

Common Stock during the aforedescribed thirty (30) day period and the denominator of which

is the  lowest  conversion price during such thirty (30) day period,  multiplied  by the  conversion

price  or  exercise  price,  as  the  case  may  be  (“Unlegended  Redemption  Amount”).    The

Company  shall  pay  any  payments  incurred  under  this  Section  in  immediately  available  funds

upon demand.

8.   Conditions  to  the  Company’s  Obligation  to  Sell.  The  obligation  of  the  Company

hereunder   to   issue   and   sell  the   Note   to   the   Purchaser   at   the   Closing   is   subject   to   the

satisfaction,   at   or   before  the   Closing   Date  of   each  of  the   following   conditions   thereto,

provided  that  these  conditions  are  for  the  Company’s  sole  benefit  and  may  be  waived  by  the

Company at  any time  in its sole discretion:

a)

The  Purchaser  shall  have  executed  this  Agreement  and  delivered  the  same

to the Company.

b)

The Purchaser shall have delivered the Purchase Price  to the Company.

c)

The  representations  and  warranties  of  the  Purchaser  shall  be  true  and

correct  in all  material respects as of the date when  made and  as of the Closing  Date as though

made  at  that  time  (except  for  representations  and  warranties  that  speak  as  of  a  specific  date),

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and  the  Purchaser  shall  have  performed,  satisfied  and  complied  in  all  material  respects  with

the   covenants,   agreements   and   conditions   required   by  this   Agreement   to   be   performed,

satisfied or complied with by the  Purchaser at or prior to the Closing Date.

d)

No  litigation,  statute,  rule,  regulation,  executive  order,  decree,  ruling  or

injunction  shall  have  been  enacted,  entered,  promulgated  or  endorsed  by  or  in  any  court  or

governmental  authority  of  competent  jurisdiction  or  any  self-regulatory  organization  having

authority  over  the  matters  contemplated  hereby  which  prohibits  the  consummation  of  any  of

the transactions contemplated by this Agreement.

9.   Conditions  to  The  Purchaser’s  Obligation  to  Purchase.  The  obligation  of  the

Purchaser  hereunder  to  purchase  the  Note  at  the  Closing  is  subject  to  the  satisfaction,  at  or

before the Closing Date of each of the following conditions, provided that these conditions are

for  the  Purchaser’s  sole  benefit  and  may  be  waived  by  the  Purchaser  at  any  time  in  its  sole

discretion:

a)

The  Company  shall  have  executed  this  Agreement  and  delivered  the  same

to the Purchaser.

b)

The  Company  shall  have  delivered  to  the  Purchaser  the  duly  executed

Note  (in  such  denominations  as  the  Purchaser  shall  request)  in  accordance  with  Section  1

above.

c)

The   Irrevocable   Transfer   Agent   Instructions,   in   form   and   substance

satisfactory to the  Purchaser,  shall have  been delivered to  and  acknowledged  in writing  by the

     Company’s  Transfer  Agent  (a  copy  of  which  written  acknowledgment  shall  be  provided  to

Purchaser simultaneously with Closing).

d)

The  representations  and  warranties  of  the  Company  shall  be  true  and

correct  in all  material respects as of the date when  made and  as of the Closing  Date as though

made  at  such  time  (except  for  representations  and  warranties  that  speak  as  of a  specific  date)

and  the  Company  shall  have  performed,  satisfied  and  complied  in  all  material  respects  with

the   covenants,   agreements   and   conditions   required   by  this   Agreement   to   be   performed,

satisfied  or  complied  with  by  the  Company  at  or  prior  to  the  Closing  Date.  The  Purchaser

shall  have  received  a  certificate  or  certificates,  executed  by  the  chief  executive  officer  of  the

Company, dated as of the  Closing Date, to the foregoing effect  and  as to  such other  matters as

may  be  reasonably  requested  by  the  Purchaser  including,  but  not  limited  to  certificates  with

     respect  to  the  Company’s  Certificate  of  Incorporation,  By-laws,  incumbency,  and  Board  of

     Directors’ resolutions relating to the transactions contemplated hereby.

e)

No  litigation,  statute,  rule,  regulation,  executive  order,  decree,  ruling  or

injunction  shall  have  been  enacted,  entered,  promulgated  or  endorsed  by  or  in  any  court  or

governmental  authority  of  competent  jurisdiction  or  any  self-regulatory  organization  having

authority  over  the  matters  contemplated  hereby  which  prohibits  the  consummation  of  any  of

the transactions contemplated by this Agreement.

f)

No  event  shall  have  occurred  which  could  reasonably  be expected  to  have

a  Material  Adverse  Effect  on  the  Company  including  but  not  limited  to  a  change  in  the  1934

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Act  reporting  status  of  the  Company  or  the  failure  of  the  Company  to  be  timely  in  its  1934

Act  reporting obligations.

g)

The  Conversion  Shares  shall  have  been  authorized  for  quotation  on  the

OTCBB,   OTCQB,   and   OTC   Pink,   and   trading   of  the   Common  Stock  on  the   OTCBB,

OTCQB,  and  OTCPink  shall  not  have  been  suspended  by  the  SEC  or  the  OTC  Markets

Group.

10. Governing Law; Miscellaneous.

a)

Governing  Law.  This  Agreement  shall  be  governed  by  and  construed  in

accordance with the  laws of the State of New York without  regard  to  principles of conflicts of

laws  thereof  or  any  other  State.   Any  action  brought  by  any  party  against  any  other  party

hereto  concerning  the  transactions  contemplated  by  this  Agreement  shall  be  brought  only  in

the  state  courts  of  New  York  or  in  the  federal  courts  located  in  the  state  and  county  of  New

York.  The  parties  to  this  Agreement  hereby  irrevocably  waive  any  objection  to  jurisdiction

and  venue  of any action  instituted  hereunder  and  shall  not  assert  any defense  based  on  lack  of

jurisdiction  or   venue   or   based   upon forum  non   conveniens.   The   parties   executing   this

Agreement  and  other  agreements  referred  to  herein  or delivered  in  connection  herewith

on  behalf of the  Company  agree  to  submit  to the in  personam jurisdiction  of such  courts

and  hereby  irrevocably  waive  trial  by  jury.   The  prevailing  party  shall  be  entitled  to

     recover  from  the  other  party  its  reasonable  attorney’s  fees  and  costs.   In  the  event  that  any

provision  of  this  Agreement  or  any  other  agreement  delivered  in  connection  herewith  is

invalid  or  unenforceable  under  any  applicable  statute or  rule  of  law,  then  such provision  shall

be  deemed  inoperative  to  the  extent  that  it  may  conflict  therewith  and  shall  be  deemed

modified  to  conform  with  such  statute  or  rule  of  law.   Any  such  provision  which  may  prove

invalid  or  unenforceable  under  any  law  shall  not  affect  the  validity  or  enforceability  of  any

other  provision  of  any  agreement.   Each  party  hereto  hereby  irrevocably  waives  personal

service  of  process  and  consents  to  process  being  served  in  any  suit,  action  or  proceeding  in

connection  with  this  Agreement  or  any  other  transaction  document  contemplated  hereby  by

mailing  a  copy thereof  via  registered  or  certified  mail or  overnight  delivery (with  evidence  of

delivery)  to  such  party  at  the  address  in  effect  for  notices  to  it  under  this  Agreement  and

agrees  that  such  service  shall  constitute  good  and  sufficient  service  of  process  and  notice

thereof.   Nothing  contained  herein  shall  be  deemed  to  limit  in  any  way  any  right  to  serve

process in any other  manner permitted by law.

b)

Removal  of  Restrictive   Legends.   In  the  event  that   Purchaser   has  any

     shares  of  the  Company’s  Common  Stock  bearing  any  restrictive  legends,  and   Purchaser,

through its counsel or other representatives, submits to the Transfer  Agent  any  such shares  for

the  removal  of  the  restrictive   legends  thereon  in  connection  with  a  sale  of  such  shares

pursuant  to any exemption  to  the  registration  requirements  under  the  Securities  Act,  and  the

Company  and  or  its  counsel  refuses  or  fails  for  any  reason  (except  to  the  extent  that  such

refusal  or  failure  is  based  solely  on  applicable  law  that  would  prevent  the  removal  of  such

restrictive  legends)  to  render  an  opinion  of  counsel  or  any  other  documents  or  certificates

required  for  the  removal  of  the  restrictive  legends,  then  the  Company  hereby  agrees  and

acknowledges  that   the  Purchaser   is  hereby  irrevocably  and  expressly  authorized  to  have

counsel  to  the  Purchaser  render  any  and  all  opinions  and  other  certificates  or  instruments

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which  may  be  required  for  purposes  of  removing  such  restrictive  legends,  and  the  Company

hereby   irrevocably   authorizes   and   directs   the   Transfer   Agent   to,   without   any   further

confirmation  or  instructions  from  the  Company,  issue  any  such  shares  without  restrictive

legends  as  instructed  by  the  Purchaser,  and  surrender  to  a  common  carrier  for  overnight

delivery to the address as specified  by the Purchaser, certificates, registered  in the name of the

Purchaser  or  its  designees,  representing  the  shares  of  Common  Stock  to  which  the  Purchaser

is  entitled,  without  any  restrictive  legends  and  otherwise  freely  transferable  on  the  books  and

records of the Company.

c)

Filing  Requirements.   From the date of this  Agreement  until  the  Notes are

no  longer  outstanding,  the  Company  will  timely  and  voluntarily  comply  with  all  reporting

requirements  that  are  applicable  to  an  issuer  with  a  class  of  shares  registered  pursuant  to

Section  12(g)  of  the  1934  Act,  whether  or  not  the  Company  is  then  subject  to  such  reporting

requirements,  and  comply  with  all  requirements  related  to  any  registration  statement  filed

pursuant  to  this  Agreement.   The  Company  will  use  reasonable  efforts  not  to  take  any  action

or  file  any  document  (whether  or  not  permitted  by  the  1933  Act  or  the  1934  Act  or  the  rules

thereunder)  to  terminate  or  suspend  such  registration  or  to  terminate  or  suspend  its  reporting

and  filing  obligations under  said  acts until the  Notes are  no  longer  outstanding.  The Company

will maintain the quotation or listing of its Common Stock on the  OTCBB, OTCQB, and OTC

Pink,  NYSE,  or  NASDAQ  Stock  Market  (whichever  of  the  foregoing  is  at  the  time  the

     principal  trading  exchange  or  market  for  the  Common  Stock  (the  “Principal  Market”),  and

     will  comply  in  all  respects  with  the  Company’s  reporting,  filing  and  other  obligations  under

the   bylaws   or   rules   of  the   Principal  Market,   as   applicable.   The   Company  will  provide

Purchaser  with  copies  of  all  notices  it  receives  notifying  the  Company  of  the  threatened  and

actual  delisting  of  the  Common  Stock  from  any  Principal  Market.   As  of  the  date  of  this

Agreement  and  the  Closing  Date,  the  OTC  Pink,  is  the  Principal  Market.  Until  the  Note is  no

longer  outstanding,  the  Company  will  continue  the  listing  or  quotation  of the  Common  Stock

     on a Principal Market  and will comply in all respects with the Company’s reporting,  filing and

other obligations under the bylaws or rules of the Principal Market.

d)

144  Default.    In  the  event  commencing  twelve  (12)  months  after  the

Closing  Date  and  ending  twenty-four  (24)  months  thereafter, the  Purchaser  is  not  permitted to

resell  any  of  the  Conversion  Shares  without   any  restrictive   legend   or  if   such  sales   are

permitted  but  subject  to  volume  limitations  or  further  restrictions  on  resale  as  a  result  of  the

unavailability  to  Subscriber  of  Rule  144(b)(1)(i)  under  the  1933  Act  or  any  successor  rule  (a

     “144  Default”),   for  any  reason  except  for   Purchasers’  status  as  an  Affiliate  or  “control

     person”  of the  Company,  or  as  a  result  of a  change  in  current  applicable  securities  laws,  then

the  Company  shall  pay  such  Purchaser  as  liquidated  damages  and  not  as  a  penalty  an  amount

equal to  two  percent  (2%)  of the  value of  Conversion Shares  (based  on the closing  sale of the

Common  Stock)  subject  to  such  144  Default  during  the  pendency  of  the  144  Default  of  each

thirty day period thereafter (or portion thereof).

e)

Fees and  Expenses.   On  or  prior  to  the Closing,  the Company  shall  pay  or

reimburse  to  Purchaser  a  non-refundable,  non-accountable  sum  equal  to  $5,000.00  as  and  for

the  fees,  costs  and  expenses  (including  without  limitation  legal  fees  and  disbursements  and

due  diligence  and  administrative  expenses)  incurred  by  the  Purchaser  in  connection  with  the

     Purchaser’s  due  diligence   and   negotiation,   preparation  and   execution  of  the  Transaction

19

SPA –  CETY, T1, 2016-06-06

Documents  and  consummation  of  the  Transactions.   The  Purchaser  may  withhold  and  offset

the   balance   of  such  amount   from  the   payment   of   its  Purchase  Price  otherwise  payable

hereunder  at  Closing,  which  offset  shall  constitute  partial  payment  of  such  Purchase  Price  in

an amount  equal to  such offset.   Except  as expressly set  forth in this  Agreement  or the Note to

the  contrary,  each  party  shall  pay  the  fees  and  expenses  of  its  advisers,  counsel,  accountants

and  other  experts,  if  any,  and  all  other  expenses  incurred  by  such  party  incident  to  the

negotiation,   preparation,   execution,   delivery   and   performance   of   this   Agreement.     The

Company  shall  pay  all  transfer  agent  fees,  stamp  taxes  and  other  taxes  and  duties  levied  in

connection with the delivery of any Securities to the Purchaser.

f)

Usury.   To  the  extent  it  may  lawfully  do  so,  the  Company  hereby  agrees

not  to  insist  upon  or  plead  or  in  any  manner  whatsoever  claim,  and  will  resist  any  and  all

efforts to  be  compelled  to  take the  benefit  or  advantage of,  usury laws wherever  enacted,  now

or  at  any time  hereafter  in  force,  in  connection  with  any claim,  action  or  proceeding  that  may

be   brought   by   the   Purchaser   in  order   to   enforce   any  right   or   remedy  under   the   Note.

Notwithstanding  any  provision  to  the  contrary  contained  in  herein  or  under  the  Note,  it  is

expressly  agreed  and  provided  that  the  total  liability  of  the  Company  under  the  Note  for

payments  in  the  nature  of interest  shall  not  exceed  the  maximum  lawful rate authorized  under

     applicable  law  (the  “Maximum  Rate”),  and,  without  limiting  the  foregoing,  in  no  event  shall

any  rate  of  interest  or  default  interest,  or  both  of them,  when  aggregated  with  any  other  sums

in  the  nature  of  interest  that  the  Company  may  be  obligated  to  pay  under  the  Note  or  herein

exceed such Maximum Rate.  It  is agreed that  if the maximum contract rate of interest  allowed

by  law  and   applicable   to  the   Note  is   increased  or  decreased   by  statute  or  any  official

governmental action subsequent  to  the date hereof, the new  maximum contract  rate of interest

allowed  by  law  will  be  the  Maximum  Rate  applicable  to  the  Note  from  the  effective  date

forward,  unless  such  application  is  precluded  by  applicable  law.   If  under  any  circumstances

whatsoever,  interest  in  excess of the  Maximum Rate is paid  by the  Company to  the  Purchaser

with  respect  to  indebtedness  evidenced  by  the  Note,  such  excess  shall  be  applied  by  the

Purchaser  to  the  unpaid  principal  balance  of  any  such  indebtedness  or  be  refunded  to  the

Company, the  manner of handling such excess to be at the Purchaser’s election.

g)

Headings.   The   headings   of   this   Agreement   are   for   convenience   of

reference only and shall not  form part  of, or affect  the interpretation of, this Agreement.

h)

Severability.  In  the  event  that  any  provision  of  this  Agreement  is  invalid

or  unenforceable  under  any  applicable  statute  or  rule  of  law,  then  such  provision  shall  be

deemed  inoperative  to  the  extent  that  it  may  conflict  therewith  and  shall  be  deemed  modified

to  conform with such  statute or  rule of law.  Any provision  hereof which  may prove  invalid  or

unenforceable  under  any  law  shall  not  affect  the   validity  or  enforceability  of  any  other

provision hereof.

i)

Entire   Agreement;  Amendments.   This   Agreement   and  the   instruments

referenced  herein  contain  the  entire  understanding  of  the  parties  with  respect  to  the  matters

covered  herein  and  therein  and,  except  as  specifically  set  forth  herein  or  therein,  neither  the

Company nor the Purchaser  makes any representation, warranty, covenant  or undertaking with

respect  to  such  matters.  No  provision  of  this  Agreement  may  be  waived  or  amended  other

than by an instrument  in writing signed by the  Purchaser.

20

SPA –  CETY, T1, 2016-06-06

j)

Notices.  All  notices,  demands,  requests,  consents,  approvals,  and  other

communications  required  or  permitted  hereunder  shall  be  in  writing  and,  unless  otherwise

specified   herein,   shall  be   (i)   personally  served,   (ii)   deposited   in  the   mail,   registered  or

certified,  return  receipt  requested,  postage  prepaid,  (iii)  delivered  by  reputable  air  courier

service   with   charges   prepaid,   or   (iv)   transmitted   by   hand   delivery,   telegram,   email   or

facsimile,  addressed  as  set  forth  below  or  to  such  other  address  as  such  party  shall  have

specified  most  recently  by  written  notice.  Any  notice  or  other  communication  required  or

permitted  to  be  given  hereunder  shall  be  deemed  effective  (a)  upon  hand  delivery or  delivery

by  facsimile  or  email,  with  accurate  confirmation  generated  by  the  transmitting  facsimile

machine  or  computer,  at  the  address,  email  or  number  designated  below  (if  delivered  on  a

business  day  during  normal  business  hours  where  such  notice  is  to  be  received),  or  the  first

business day  following  such delivery (if delivered  other than on a business day during  normal

business   hours  where  such  notice  is  to  be  received)  or  (b)  on  the  second  business  day

following  the  date  of  mailing  by  express  courier  service,  fully  prepaid,  addressed  to  such

address,  or  upon actual receipt  of such  mailing,  whichever  shall  first  occur. The addresses  for

such communications shall be:

Purchaser:

EMA Financial, LLC

40 Wall Street, Suite 1700

New York, NY 10005

Attn: Felicia Preston

admin@emafin.com

Company:

Clean Energy Technologies, Inc.

150 Bake Street E

Costa Mesa, CA 92626

Attn: Kam Mahdi, CEO

Email: ________________

Fax: ________________

Each party shall provide  notice to the other party of any change in address.

k)

Successors  and  Assigns.  This  Agreement  shall  be  binding  upon  and  inure

to  the  benefit  of  the  parties  and  their  successors  and  assigns.  Neither  the  Company  nor  the

Purchaser  shall assign this  Agreement  or  any rights or obligations  hereunder  without  the  prior

written  consent  of  the  other.  Notwithstanding  the  foregoing,  subject  to  Section  2(f),  the

Purchaser  may  assign  its  rights  hereunder  to  any  person  that  purchases  Securities  in  a  private

transaction  from  the  Purchaser  or  to  any  of  its  “affiliates,”  as  that  term  is  defined  under  the

1934 Act, without the consent  of the Company.

l)

Third  Party  Beneficiaries.  This  Agreement  is  intended  for  the  benefit  of

the  parties  hereto  and  their  respective  permitted  successors  and  assigns,  and  is  not  for  the

benefit  of, nor may any provision hereof be enforced by, any other person.

m)

Survival.  The  representations  and  warranties  of  the  Company  and  the

agreements  and  covenants  set  forth  in  this  Agreement  shall  survive  the  closing  hereunder

notwithstanding  any  due  diligence  investigation  conducted  by  or  on  behalf  of  the  Purchaser.

21

SPA –  CETY, T1, 2016-06-06

The  Company  agrees  to  indemnify  and  hold  harmless  the  Purchaser  and  all  their  officers,

directors,  employees  and  agents  for  loss  or  damage  arising  as  a  result  of  or  related  to  any

breach  or   alleged   breach  by  the  Company  of  any  of  its  representations,   warranties  and

covenants  set  forth  in  this  Agreement  or  any  of  its  covenants  and  obligations  under  this

Agreement, including advancement  of expenses as they are incurred.

n)

Further  Assurances.  Each  party  shall  do  and  perform,  or  cause  to  be  done

and  performed,  all  such  further  acts  and  things,  and  shall  execute  and  deliver  all  such  other

agreements,   certificates,   instruments   and   documents,   as   the   other   party   may   reasonably

request  in order to  carry out the  intent  and  accomplish the purposes of this  Agreement  and  the

consummation of the transactions contemplated hereby.

o)

No  Strict  Construction.  The   language  used  in  this   Agreement  will  be

deemed to  be the  language chosen by the parties to express their  mutual intent, and  no  rules of

strict  construction will be applied against  any party.

p)

Remedies.   The   Company   acknowledges   that   a   breach   by   it   of   its

obligations  hereunder  will  cause  irreparable  harm  to  the  Purchaser  by  vitiating  the  intent  and

purpose  of  the  transaction  contemplated  hereby.  Accordingly,  the  Company  acknowledges

that  the  remedy at  law  for  a  breach of its obligations  under  this  Agreement  will  be  inadequate

and  agrees,  in the  event  of a  breach or threatened  breach  by the Company of the provisions of

this  Agreement, that  the  Purchaser  shall  be entitled,  in addition to  all other  available remedies

at  law  or  in  equity,  and  in  addition  to  the  penalties  assessable  herein,  to  an  injunction  or

injunctions  restraining,  preventing  or  curing  any  breach  of  this  Agreement  and  to  enforce

specifically  the  terms  and  provisions  hereof,  without  the  necessity  of  showing  economic  loss

and without  any bond or other security being required.

q)

Counterparts.     This   Agreement   may   be   executed   in   any   number   of

counterparts, each of which when so  executed  and  delivered  shall be deemed  to  be an original

and all of which together shall be deemed to be one and the same agreement.

r)

Signatures.     Any   signature   transmitted   by   facsimile,   e-mail,   or   other

electronic  means shall be deemed to  be an original signature.

(Remainder of page intentionally left  blank)

22

SPA –  CETY, T1, 2016-06-06

IN   WITNESS   WHEREOF,   the   undersigned   Purchaser   and   the   Company   have   caused   this

Agreement to  be duly executed as of the date first  above written.

CLEAN ENERGY TECHNOLOGIES, INC.

By:

Name:  Kam Mahdi

Title: CEO

EMA FINANCIAL, LLC

By:

Name:  Felicia Preston

Title:    Director

GUARANTY

Each   of   the   undersigned   subsidiaries   of   the   Company   jointly   and   severally,   absolutely,

unconditionally  and  irrevocably,  guarantees  to  the  Purchaser  and  their  respective  successors,

indorsees,  transferees  and  assigns,  the  prompt  and  complete  payment  and  performance  by  the

Company  when due  (whether  at  the  stated  maturity,  by acceleration or  otherwise)  of all  amounts

due  under,  and  all  other  obligations  under,  the  Note.   Each  such  subsidiary’s  liability  under  this

Guaranty shall be unlimited, open and continuous for so  long as this  Guaranty remains in  force.

TRIDENT MANUFACTURING, INC.

HEAT RECOVERY

SOLUTIONS

By:

Print  Name/Title:

By:

Print  Name/Title:

CLEAN ENERGY HRS, LLC.

By:

Print  Name/Title:

23

SPA –  CETY, T1, 2016-06-06NEITHER  THE  ISSUANCE  AND  SALE  OF  THE  SECURITIES  REPRESENTED  BY
THIS  CERTIFICATE  NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES
ARE  CONVERTIBLE  HAVE  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT
OF   1933,   AS   AMENDED,   OR   APPLICABLE   STATE   SECURITIES   LAWS.
THE
SECURITIES   MAY   NOT   BE   OFFERED   FOR   SALE,   SOLD,   TRANSFERRED   OR
ASSIGNED    (I)    IN    THE    ABSENCE    OF    (A)    AN    EFFECTIVE
REGISTRATION
STATEMENT  FOR  THE  SECURITIES  UNDER  THE  SECURITIES  ACT  OF  1933,  AS
AMENDED,  OR  (B)  AN  OPINION  OF  COUNSEL  (WHICH  COUNSEL  SHALL  BE
SELECTED  BY  THE  HOLDER),  IN  A  GENERALLY  ACCEPTABLE  FORM,  THAT
REGISTRATION  IS  NOT  REQUIRED  UNDER  SAID  ACT  OR  (II)  UNLESS  SOLD
PURSUANT      TO      RULE      144      OR      RULE      144A      UNDER
SAID      ACT.
NOTWITHSTANDING  THE  FOREGOING,  THE  SECURITIES  MAY  BE  PLEDGED  IN
CONNECTION  WITH  A  BONA  FIDE  MARGIN  ACCOUNT  OR  OTHER  LOAN  OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

PRINCIPAL AMOUNT: US$77,750                   ISSUE DATE: JULY 6, 2016
PURCHASE PRICE: US$77,750

                    CONVERTIBLE PROMISSORY NOTE

      FOR  VALUE  RECEIVED,  CLEAN  ENERGY  TECHNOLOGIES,  INC.,  a  Nevada
corporation   (hereinafter   called   the   "Borrower"),   hereby   promises
to   pay   to   the   order   of
AUCTUS   FUND,   LLC,   a   Delaware   limited   liability   company,   or
registered   assigns   (the
"Holder")  the  sum  of  US$77,750  together  with  any  interest  as  set
forth  herein,  on  April  6,  2017
(the "Maturity Date"), and to pay interest on the unpaid principal balance
hereof at the rate of ten
percent  (10%)  (the  "Interest  Rate")  per  annum  from  the  date  hereof
(the  "Issue  Date")  until  the
same  becomes  due  and  payable,  whether  at  maturity  or  upon  acceleration
or  by  prepayment  or
otherwise.   This  Note  may  not  be  prepaid  in  whole  or  in  part  except
as  otherwise  explicitly  set
forth  herein  with  the  written  consent  of  the  Holder  which  may  be
withheld  for  any  reason  or  for
no reason. Any amount of principal or interest on this Note which is not paid
when due shall bear
interest  at  the  rate  of  twenty-four  percent  (24%)  per  annum  from  the
due  date  thereof  until  the
same is paid (the "Default Interest").   Interest shall commence accruing on the
date that the Note
is  fully  paid  and  shall  be  computed  on  the  basis  of  a  360-day  year
and  the  actual  number  of  days
elapsed.  All payments due hereunder (to the extent not converted into common
stock, $0.001 par
value  per  share  (the  "Common  Stock")  in  accordance  with  the  terms
hereof)  shall  be  made  in
lawful  money  of  the  United  States  of  America.   All  payments  shall  be
made  at  such  address  as
the  Holder  shall  hereafter  give  to  the  Borrower  by  written  notice
made  in  accordance  with  the
provisions  of  this  Note.   Whenever  any  amount  expressed  to  be  due  by
the  terms  of  this  Note  is
due on any day which is not a business day, the same shall instead be due on the
next succeeding
day which is a business day and, in the case of any interest payment date which
is not the date on
which  this  Note  is  paid  in  full,  the  extension  of  the  due  date
thereof  shall  not  be  taken  into
account  for  purposes  of  determining  the  amount  of  interest  due  on
such  date.   As  used  in  this
Note,  the  term  "business  day"  shall  mean  any  day  other  than  a
Saturday,  Sunday  or  a  day  on
which  commercial  banks  in  the  city  of  New  York,  New  York  are
authorized  or  required  by  law

<PAGE>

or  executive  order  to  remain  closed.    Each  capitalized  term  used
herein,  and  not  otherwise
defined,  shall  have  the  meaning  ascribed  thereto  in  that  certain
Securities  Purchase  Agreement
dated   the   date   hereof,   pursuant   to   which   this   Note   was
originally   issued   (the   "Purchase
Agreement").

      This  Note  is  free  from  all  taxes,  liens,  claims  and  encumbrances
with  respect  to  the  issue
thereof and shall not be subject to preemptive rights or other similar rights of
shareholders of the
Borrower and will not impose personal liability upon the holder thereof.

      The following terms shall apply to this Note:

                      ARTICLE I.  CONVERSION RIGHTS

           1.1 Conversion  Right.   The  Holder  shall  have  the  right  from
time  to  time,  and  at
any  time  following  one  hundred  eighty  (180)  days  after  the  date  of
this  Note  and  ending  on  the
later  of  (i)  the  Maturity  Date  and  (ii)  the  date  of  payment  of  the
Default  Amount  (as  defined  in
Article  III)  pursuant  to  Section  1.6(a)  or  Article  III,  each  in
respect  of  the  remaining  outstanding
principal  amount  of  this  Note  to  convert  all  or  any  part  of  the
outstanding  and  unpaid  principal
amount  of  this  Note  into  fully  paid  and  non-assessable  shares  of
Common  Stock,  as  such
Common  Stock  exists  on  the  Issue  Date,  or  any  shares  of  capital
stock  or  other  securities  of  the
Borrower  into  which  such  Common  Stock  shall  hereafter  be  changed  or
reclassified  at  the
Conversion  Price  (as  defined  below)  determined  as  provided  herein  (a
"Conversion");  provided,
however,  that  in  no  event  shall  the  Holder  be  entitled  to  convert
any  portion  of  this  Note  in
excess of that portion of this Note upon conversion of which the sum of (1) the
number of shares
of  Common  Stock  beneficially  owned  by  the  Holder  and  its  affiliates
(other  than  shares  of
Common   Stock   which   may   be   deemed   beneficially   owned   through
the   ownership   of   the
unconverted portion of the Notes or the unexercised or unconverted portion of
any other security
of  the  Borrower  subject  to  a  limitation  on  conversion  or  exercise
analogous  to  the  limitations
contained  herein)  and  (2)  the  number  of  shares  of  Common  Stock
issuable  upon  the  conversion
of the portion of this Note with respect to which the determination of this
proviso is being made,
would  result  in  beneficial  ownership  by  the  Holder  and  its  affiliates
of  more  than  4.99%  of  the
outstanding shares of Common Stock.   For purposes of the proviso to the
immediately preceding
sentence,  beneficial  ownership  shall  be  determined  in  accordance  with
Section  13(d)  of  the
Securities  Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act"),  and
Regulations  13D-G
thereunder,   except   as   otherwise   provided   in   clause   (1)   of   such
proviso,   provided,   further,
however, that the limitations on conversion may be waived by the Holder upon, at
the election of
the  Holder,  not  less  than  61  days'  prior  notice  to  the  Borrower,  and
the  provisions  of  the
conversion   limitation   shall   continue   to   apply   until   such   61st
day   (or   such   later   date,   as
determined  by  the  Holder,  as  may  be  specified  in  such  notice  of
waiver).   The  number  of  shares
of  Common  Stock  to  be  issued  upon  each  conversion  of  this  Note  shall
be  determined  by
dividing  the  Conversion  Amount  (as  defined  below)  by  the  applicable
Conversion  Price  then  in
effect  on  the  date  specified  in  the  notice  of  conversion,  in  the
form  attached  hereto  as  Exhibit  A
(the  "Notice  of  Conversion"),  delivered  to  the  Borrower  by  the  Holder
in  accordance  with
Section 1.4 below; provided that the Notice of Conversion is submitted by
facsimile or e-mail (or
by  other  means  resulting  in,  or  reasonably  expected  to  result  in,
notice)  to  the  Borrower  before
6:00  p.m.,  New  York,  New  York  time  on  such  conversion  date  (the
"Conversion  Date").   The

                                     2

<PAGE>

term  "Conversion  Amount"  means,  with  respect  to  any  conversion  of  this
Note,  the  sum  of  (1)
the  principal  amount  of  this  Note  to  be  converted  in  such  conversion
plus  (2)  at  the  Holder's
option,  accrued  and  unpaid  interest,  if  any,  on  such  principal  amount
at  the  interest  rates
provided  in  this  Note  to  the  Conversion  Date,  provided  however,  that
the  Borrower  shall  have
the  right  to  pay  any  or  all  interest  in  cash  plus  (3)  at  the
Holder's  option,  Default  Interest,  if  any,
on  the  amounts  referred  to  in  the  immediately  preceding  clauses  (1)
and/or  (2)  plus  (4)  at  the
Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof.

           1.2 Conversion Price.

                 (a)  Calculation  of  Conversion  Price.   Subject  to  the
adjustments  described
herein,  and  provided  that  no  Event  of  Default  (as  defined  in  Article
III)  has  occurred,  the
conversion  price  (the  "Conversion  Price")  shall  equal  the  lesser  of
(i)  55%  multiplied  by  the
lowest  Trading  Price  (as  defined  below)  (representing  a  discount  rate
of  45%)  during  the
previous  twenty  (20)  Trading  Day  period  ending  on  the  latest  complete
Trading  Day  prior  to  the
date  of  this  Note  and  (ii)  the  Variable  Conversion  Price  (as  defined
herein)  (subject  to  equitable
adjustments  for  stock  splits,  stock  dividends  or  rights  offerings  by
the  Borrower  relating  to  the
Borrower's   securities   or   the   securities   of   any   subsidiary   of
the   Borrower,   combinations,
recapitalization,  reclassifications,  extraordinary  distributions  and
similar  events).   The  "Variable
Conversion   Price"   shall   mean   55%   multiplied   by   the   Market
Price   (as   defined   herein)
(representing  a  discount  rate  of  45%).    "Market  Price"  means  the
lowest  Trading  Price  (as
defined  below)  for  the  Common  Stock  during  the  twenty  (20)  Trading
Day  period  ending  on  the
latest  complete  Trading  Day  prior  to  the  Conversion  Date.    "Trading
Price"  means,  for  any
security  as  of  any  date,  the  lesser  of:  (i)  the  lowest  trade  price
on  the  Over-the-Counter  Bulletin
Board  (the  "OTCBB"),  OTCQB  or  applicable  trading  market  as  reported  by
a  reliable  reporting
service  ("Reporting  Service")  designated  by  the  Holder  or,  if  the
OTCBB  is  not  the  principal
trading  market  for  such  security,  the  trading  price  of  such  security
on  the  principal  securities
exchange  or  trading  market  where  such  security  is  listed  or  traded
or,  if  no  trading  price  of  such
security  is  available  in  any  of  the  foregoing  manners,  the  average  of
the  trading  prices  of  any
market  makers  for  such  security  that  are  listed  in  the  "pink  sheets"
by  the  OTC  Markets  Group,
Inc.,  or  (ii)  the  closing  bid  price  on  the  OTCBB,  OTCQB  or
applicable  trading  market  as
reported  by  a  Reporting  Service  designated  by  the  Holder  or,  if  the
OTCBB  is  not  the  principal
trading  market  for  such  security,  the  closing  bid  price  of  such
security  on  the  principal  securities
exchange  or  trading  market  where  such  security  is  listed  or  traded
or,  if  no  closing  bid  price  of
such  security  is  available  in  any  of  the  foregoing  manners,  the
average  of  the  closing  bid  prices
of  any  market  makers  for  such  security  that  are  listed  in  the  "pink
sheets"  by  the  OTC  Markets
Group,  Inc.   To  the  extent  the  Conversion  Price  of  the  Borrower's
Common  Stock  closes  below
the  par  value  per  share,  the  Borrower  will  take  all  steps  necessary
to  solicit  the  consent  of  the
stockholders to reduce the par value to the lowest value possible under law. The
Borrower agrees
to  honor  all  conversions  submitted  pending  this  adjustment.
Furthermore,  the  Conversion  Price
may  be  adjusted  downward  if,  within  three  (3)  business  days  of  the
transmittal  of  the  Notice  of
Conversion to the Borrower, the Common Stock has a closing bid which is 5% or
lower than that
set  forth  in  the  Notice  of  Conversion.  If  the  shares  of  the
Borrower's  Common  Stock  have  not
been  delivered  within  three  (3)  business  days  to  the  Borrower,  the
Notice  of  Conversion  may  be
rescinded.   At  any  time  after  the  Closing  Date,  if  in  the  case  that
the  Borrower's  Common  Stock
is  not  deliverable  by  DWAC  (including  if  the  Borrower's  transfer  agent
has  a  policy  prohibiting

                                     3

<PAGE>

or   limiting   delivery   of   shares   of   the   Borrower's   Common   Stock
specified   in   a   Notice   of
Conversion), an additional 10% discount will apply for all future conversions
under all Notes.   If
in  the  case  that  the  Borrower's  Common  Stock  is  "chilled"  for  deposit
into  the  DTC  system  and
only   eligible   for   clearing   deposit,   an   additional   15%   discount
shall   apply   for   all   future
conversions  under  all  Notes  while  the  "chill"  is  in  effect.   If  in
the  case  of  both  of  the  above,  an
additional  cumulative  25%  discount  shall  apply.   Additionally,  if  the
Company  ceases  to  be  a
reporting  company  pursuant  to  the  1934  Act  or  if  the  Note  cannot  be
converted  into  free  trading
shares  after  one  hundred  eighty-one  (181)  days  from  the  Issue  Date,
an  additional  15%  discount
will  be  attributed  to  the  Conversion  Price.   If  the  Trading  Price
cannot  be  calculated  for  such
security  on  such  date  in  the  manner  provided  above,  the  Trading  Price
shall  be  the  fair  market
value  as  mutually  determined  by  the  Borrower  and  the  holders  of  a
majority  in  interest  of  the
Notes  being  converted  for  which  the  calculation  of  the  Trading  Price
is  required  in  order  to
determine  the  Conversion  Price  of  such  Notes.   "Trading  Day"  shall
mean  any  day  on  which  the
Common  Stock  is  tradable  for  any  period  on  the  OTCBB,  OTCQB  or  on
the  principal  securities
exchange  or  other  securities  market  on  which  the  Common  Stock  is  then
being  traded.    The
Borrower  shall  be  responsible  for  the  fees  of  its  transfer  agent  and
all  DTC  fees  associated  with
any such issuance.

                 (b)  Conversion  Price  During  Major  Announcements.
Notwithstanding
anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public
announcement  that  it  intends  to  consolidate  or  merge  with  any  other
corporation  (other  than  a
merger  in  which  the  Borrower  is  the  surviving  or  continuing
corporation  and  its  capital  stock  is
unchanged)  or  sell  or  transfer  all  or  substantially  all  of  the  assets
of  the  Borrower  or  (ii)  any
person,  group  or  entity  (including  the  Borrower)  publicly  announces  a
tender  offer  to  purchase
50%  or  more  of  the  Borrower's  Common  Stock  (or  any  other  takeover
scheme)  (the  date  of  the
announcement  referred  to  in  clause  (i)  or  (ii)  is  hereinafter  referred
to  as  the   "Announcement
Date"),  then  the  Conversion  Price  shall,  effective  upon  the
Announcement  Date  and  continuing
through  the  Adjusted  Conversion  Price  Termination  Date  (as  defined
below),  be  equal  to  the
lower  of  (x)  the  Conversion  Price  which  would  have  been  applicable
for  a  Conversion  occurring
on the Announcement Date and (y) the Conversion Price that would otherwise be in
effect. From
and   after   the   Adjusted   Conversion   Price   Termination   Date,   the
Conversion   Price   shall   be
determined  as  set  forth  in  this  Section  1.2(a).   For  purposes  hereof,
"Adjusted  Conversion  Price
Termination  Date"  shall  mean,  with  respect  to  any  proposed  transaction
or  tender  offer  (or
takeover  scheme)  for  which  a  public  announcement  as  contemplated  by
this  Section  1.2(b)  has
been  made,  the  date  upon  which  the  Borrower  (in  the  case  of  clause
(i)  above)  or  the  person,
group  or  entity  (in  the  case  of  clause  (ii)  above)  consummates  or
publicly  announces  the
termination  or  abandonment  of  the  proposed  transaction  or  tender  offer
(or  takeover  scheme)
which caused this Section 1.2(b) to become operative.

                 (c)   Pro  Rata  Conversion;  Disputes.  In  the  event  of  a
dispute  as  to  the
number of shares of Common Stock issuable to the Holder in connection with a
conversion of this
Note,  the  Borrower  shall  issue  to  the  Holder  the  number  of  shares  of
Common  Stock  not  in
dispute and resolve such dispute in accordance with Section 4.13.

           1.3 Authorized   Shares.     The   Borrower   covenants   that
during   the   period   the
conversion  right  exists,  the  Borrower  will  reserve  from  its  authorized
and  unissued  Common

                                     4

<PAGE>

Stock  a  sufficient  number  of  shares,  free  from  preemptive  rights,  to
provide  for  the  issuance  of
Common Stock upon the full conversion of this Note issued pursuant to the
Purchase Agreement.
The  Borrower  is  required  at  all  times  to  have  authorized  and  reserved
seven  times  the  number  of
shares  that  is  actually  issuable  upon  full  conversion  of  the  Note
(based  on  the  Conversion  Price
of  the  Notes  in  effect  from  time  to  time)  (the  "Reserved  Amount").
The  Reserved  Amount  shall
be increased from time to time in accordance with the Borrower's obligations
pursuant to Section
3(d)  of  the  Purchase  Agreement.   The  Borrower  represents  that  upon
issuance,  such  shares  will
be duly and validly issued, fully paid and non-assessable.  In addition, if the
Borrower shall issue
any  securities  or  make  any  change  to  its  capital  structure  which
would  change  the  number  of
shares   of   Common   Stock   into   which   the   Notes   shall   be
convertible   at   the   then   current
Conversion  Price,  the  Borrower  shall  at  the  same  time  make  proper
provision  so  that  thereafter
there shall be a sufficient number of shares of Common Stock authorized and
reserved, free from
preemptive  rights,  for  conversion  of  the  outstanding  Notes.   The
Borrower  (i)  acknowledges  that
it has irrevocably instructed its transfer agent to issue certificates for the
Common Stock issuable
upon  conversion  of  this  Note,  and  (ii) agrees  that  its  issuance  of
this  Note  shall  constitute  full
authority  to  its  officers  and  agents  who  are  charged  with  the  duty
of  executing  stock  certificates
to  execute  and  issue  the  necessary  certificates  for  shares  of  Common
Stock  in  accordance  with
the  terms  and  conditions  of  this  Note.    Notwithstanding  the  foregoing,
in  no  event  shall  the
Reserved   Amount   be   lower   than   the   initial   Reserved   Amount,
regardless   of   any   prior
conversions.

           If,  at  any  time  the  Borrower  does  not  maintain  or  replenish
the  Reserved  Amount
within three (3) business days of the request of the Holder, the principal
amount of the Note shall
increase  by  Five  Thousand  and  No/100  United  States  Dollars  ($5,000)
(under  Holder's  and
Borrower's  expectation  that  any  principal  amount  increase  will  tack
back  to  the  Issue  Date)  per
occurrence.

           1.4 Method of Conversion.

                 (a)  Mechanics  of  Conversion.   Subject  to  Section  1.1,
this  Note  may  be
converted by the Holder in whole or in part at any time from time to time after
the Issue Date, by
(A) submitting  to  the  Borrower  a  Notice  of  Conversion  (by  facsimile,
e-mail  or  other  reasonable
means of communication dispatched on the Conversion Date prior to 5:00 p.m., New
York, New
York  time)  and  (B) subject  to  Section  1.4(b),  surrendering  this  Note
at  the  principal  office  of  the
Borrower.

                 (b)  Surrender  of  Note  Upon  Conversion.   Notwithstanding
anything  to  the
contrary  set  forth  herein,  upon  conversion  of  this  Note  in  accordance
with  the  terms  hereof,  the
Holder  shall  not  be  required  to  physically  surrender  this  Note  to  the
Borrower  unless  the  entire
unpaid  principal  amount  of  this  Note  is  so  converted.    The  Holder
and  the  Borrower  shall
maintain records showing the principal amount so converted and the dates of such
conversions or
shall use such other method, reasonably satisfactory to the Holder and the
Borrower, so  as  not to
require physical surrender of this Note upon each such conversion.  In the event
of any dispute or
discrepancy, such records of the Borrower shall, prima facie, be controlling and
determinative in
the  absence  of  manifest  error.    Notwithstanding  the  foregoing,  if  any
portion  of  this  Note  is
converted  as  aforesaid,  the  Holder  may  not  transfer  this  Note  unless
the  Holder  first  physically

                                     5

<PAGE>

surrenders  this  Note  to  the  Borrower,  whereupon  the  Borrower  will
forthwith  issue  and  deliver
upon the order of the Holder a new Note of like tenor, registered as the Holder
(upon payment by
the  Holder  of  any  applicable  transfer  taxes)  may  request,  representing
in  the  aggregate  the
remaining unpaid principal amount of  this  Note.   The Holder and any assignee,
by acceptance of
this  Note,  acknowledge  and  agree  that,  by  reason  of  the  provisions  of
this  paragraph,  following
conversion  of  a  portion  of  this  Note,  the  unpaid  and  unconverted
principal  amount  of  this  Note
represented by this Note may be less than the amount stated on the face hereof.

                 (c)  Payment  of  Taxes.   The  Borrower  shall  not  be
required  to  pay  any  tax
which  may  be  payable  in  respect  of  any  transfer  involved  in  the
issue  and  delivery  of  shares  of
Common  Stock  or  other  securities  or  property  on  conversion  of  this
Note  in  a  name  other  than
that  of  the  Holder  (or  in  street  name),  and  the  Borrower  shall  not
be  required  to  issue  or  deliver
any  such  shares  or  other  securities  or  property  unless  and  until  the
person  or  persons  (other  than
the  Holder  or  the  custodian  in  whose  street  name  such  shares  are  to
be  held  for  the  Holder's
account)  requesting  the  issuance  thereof  shall  have  paid  to  the
Borrower  the  amount  of  any  such
tax or shall have established to the satisfaction of the Borrower that such tax
has been paid.

                 (d)  Delivery  of  Common  Stock  Upon  Conversion.    Upon
receipt  by  the
Borrower  from  the  Holder  of  a  facsimile  transmission  or  e-mail  (or
other  reasonable  means  of
communication)  of  a  Notice  of  Conversion  meeting  the  requirements  for
conversion  as  provided
in  this  Section  1.4,  the  Borrower  shall  issue  and  deliver  or  cause
to  be  issued  and  delivered  to  or
upon  the  order  of  the  Holder  certificates  for  the  Common  Stock
issuable  upon  such  conversion
within  three  (3)  business  days  after  such  receipt  (the  "Deadline")
(and,  solely  in  the  case  of
conversion  of  the  entire  unpaid  principal  amount  hereof,  surrender  of
this  Note)  in  accordance
with the terms hereof and the Purchase Agreement.

                 (e)  Obligation  of  Borrower  to  Deliver  Common  Stock.
Upon  receipt  by
the Borrower of a Notice of Conversion, the Holder shall be deemed to be the
holder of record of
the  Common  Stock  issuable  upon  such  conversion,  the  outstanding
principal  amount  and  the
amount  of  accrued  and  unpaid  interest  on  this  Note  shall  be  reduced
to  reflect  such  conversion,
and,  unless  the  Borrower  defaults  on  its  obligations  under  this
Article  I,  all  rights  with  respect  to
the  portion  of  this  Note  being  so  converted  shall  forthwith  terminate
except  the  right  to  receive
the   Common   Stock   or   other   securities,   cash   or   other   assets,
as   herein   provided,   on   such
conversion.    If  the  Holder  shall  have  given  a  Notice  of  Conversion
as  provided  herein,  the
Borrower's  obligation  to  issue  and  deliver  the  certificates  for  Common
Stock  shall  be  absolute
and  unconditional,  irrespective  of  the  absence  of  any  action  by  the
Holder  to  enforce  the  same,
any  waiver  or  consent  with  respect  to  any  provision  thereof,  the
recovery  of  any  judgment
against  any  person  or  any  action  to  enforce  the  same,  any  failure  or
delay  in  the  enforcement  of
any  other  obligation  of  the  Borrower  to  the  holder  of  record,  or  any
setoff,  counterclaim,
recoupment,  limitation  or  termination,  or  any  breach  or  alleged  breach
by  the  Holder  of  any
obligation  to  the  Borrower,  and  irrespective  of  any  other  circumstance
which  might  otherwise
limit  such  obligation  of  the  Borrower  to  the  Holder  in  connection
with  such  conversion.   The
Conversion  Date  specified  in  the  Notice  of  Conversion  shall  be  the
Conversion  Date  so  long  as
the  Notice  of  Conversion  is  received  by  the  Borrower  before  5:00
p.m.,  New  York,  New  York
time, on such date.

                                     6

<PAGE>

                 (f)  Delivery   of   Common   Stock   by   Electronic
Transfer.     In   lieu   of
delivering   physical   certificates   representing   the   Common   Stock
issuable   upon   conversion,
provided   the   Borrower   is   participating   in   the   Depository   Trust
Company   ("DTC")   Fast
Automated   Securities   Transfer   ("FAST")   program,   upon   request   of
the   Holder   and   its
compliance  with  the  provisions  contained  in  Section  1.1  and  in  this
Section  1.4,  the  Borrower
shall  use  its  commercially  reasonable  best  efforts  to  cause  its
transfer  agent  to  electronically
transmit  the  Common  Stock  issuable  upon  conversion  to  the  Holder  by
crediting  the  account  of
Holder's  Prime  Broker  with  DTC  through  its  Deposit  Withdrawal  At
Custodian  ("DWAC")
system.

                 (g)   DTC  Eligibility  &  Sub-Penny.  If  the  Borrower  fails
to  maintain  its
status  as  "DTC  Eligible"  for  any  reason,  or,  if  the  Conversion  Price
is  less  than  $0.01,  the
principal  amount  of  the  Note  shall  increase  by  Fifteen  Thousand  and
No/100  United  States
Dollars   ($15,000)   (under   Holder's   and   Borrower's   expectation   that
any   principal   amount
increase  will  tack  back  to  the  Issue  Date).   In  addition,  the
Variable  Conversion  Price  shall  be
redefined  to  mean  forty  percent  (40%)  multiplied  by  the  Market  Price,
subject  to  adjustment  as
provided in this Note.

                 (h)  Failure   to   Deliver   Common   Stock   Prior   to
Delivery   Deadline.
Without  in  any  way  limiting  the  Holder's  right  to  pursue  other
remedies,  including  actual
damages  and/or  equitable  relief,  the  parties  agree  that  if  delivery  of
the  Common  Stock  issuable
upon  conversion  of  this  Note  is  not  delivered  by  the  Deadline  (other
than  a  failure  due  to  the
circumstances  described  in  Section  1.3  above,  which  failure  shall  be
governed  by  such  Section)
the  Borrower  shall  pay  to  the  Holder  $2,000  per  day  in  cash,  for
each  day  beyond  the  Deadline
that  the  Borrower  fails  to  deliver  such  Common  Stock  until  the
Borrower  issues  and  delivers  a
certificate  to  the  Holder  or  credit  the  Holder's  balance  account  with
OTC  for  the  number  of
shares  of  Common  Stock  to  which  the  Holder  is  entitled  upon  such
Holder's  conversion  of  any
Conversion Amount (under Holder's and Borrower's expectation that any damages
will tack back
to  the  Issue  Date)..   Such  cash  amount  shall  be  paid  to  Holder  by
the  fifth  day  of  the  month
following  the  month  in  which  it  has  accrued  or,  at  the  option  of
the  Holder  (by  written  notice  to
the Borrower by the first day of the month following the month in which it has
accrued), shall be
added  to  the  principal  amount  of  this  Note,  in  which  event  interest
shall  accrue  thereon  in
accordance  with  the  terms  of  this  Note  and  such  additional  principal
amount  shall  be  convertible
into  Common  Stock  in  accordance  with  the  terms  of  this  Note.   The
Borrower  agrees  that  the
right  to  convert  is  a  valuable  right  to  the  Holder.   The  damages
resulting  from  a  failure,  attempt
to  frustrate,  interference  with  such  conversion  right  are  difficult  if
not  impossible  to  qualify.
Accordingly  the  parties  acknowledge  that  the  liquidated  damages
provision  contained  in  this
Section 1.4(h) are justified.

                 (i)   Rescindment  of  a  Notice  of  Conversion.   If  (i)
the  Borrower  fails
to  respond  to  Holder  within  one  (1)  business  day  from  the  Conversion
Date  confirming  the
details  of  Notice  of  Conversion,  (ii)  the  Borrower  fails  to  provide
any  of  the  shares  of  the
Borrower's Common Stock requested in the Notice of Conversion within three (3)
business days
from  the  date  of  receipt  of  the  Note  of  Conversion,  (iii)  the  Holder
is  unable  to  procure  a  legal
opinion  required  to  have  the  shares  of  the  Borrower's  Common  Stock
issued  unrestricted  and/or
deposited  to  sell  for  any  reason  related  to  the  Borrower's  standing,
(iv)  the  Holder  is  unable  to

                                     7

<PAGE>

deposit  the  shares  of  the  Borrower's  Common  Stock  requested  in  the
Notice  of  Conversion  for
any  reason  related  to  the  Borrower's  standing,  (v)  at  any  time  after
a  missed  Deadline,  at  the
Holder's  sole  discretion,  or  (vi)  if  OTC  Markets  changes  the
Borrower's  designation  to  `Limited
Information'  (Yield),  `No  Information'  (Stop  Sign),  `Caveat  Emptor'
(Skull  &  Crossbones),
`OTC',  `Other  OTC'  or  `Grey  Market'  (Exclamation  Mark  Sign)  or  other
trading  restriction  on
the  day  of  or  any  day  after  the  Conversion  Date,  the  Holder
maintains  the  option  and  sole
discretion to rescind the Notice of Conversion ("Rescindment") with a "Notice of
Rescindment."

           1.5 Concerning   the   Shares.      The   shares   of   Common
Stock   issuable   upon
conversion of this Note may not be sold or transferred unless   (i) such shares
are sold pursuant to
an  effective  registration  statement  under  the  Act  or  (ii)  the  Borrower
or  its  transfer  agent  shall
have  been  furnished  with  an  opinion  of   counsel  (which  opinion  shall
be  in  form,  substance  and
scope  customary  for  opinions  of  counsel  in  comparable  transactions)  to
the  effect  that  the  shares
to  be  sold  or  transferred  may  be  sold  or  transferred  pursuant  to  an
exemption  from  such
registration  or  (iii) such  shares  are  sold  or  transferred  pursuant  to
Rule  144  under  the  Act  (or  a
successor  rule)  ("Rule  144")  or  (iv)  such  shares  are  transferred  to
an  "affiliate"  (as  defined  in
Rule 144)  of  the Borrower  who  agrees  to  sell or  otherwise transfer  the
shares  only  in  accordance
with  this  Section  1.5  and  who  is  an  Accredited  Investor  (as  defined
in  the  Purchase  Agreement).
Except  as  otherwise  provided  in  the  Purchase  Agreement  (and  subject  to
the  removal  provisions
set forth below), until such time as the shares of Common Stock issuable upon
conversion of this
Note  have  been  registered  under  the  Act  or  otherwise  may  be  sold
pursuant  to  Rule  144  without
any  restriction  as  to  the  number  of  securities  as  of  a  particular
date  that  can  then  be  immediately
sold, each certificate for shares of Common Stock issuable upon conversion of
this Note that has
not  been  so  included  in  an  effective  registration  statement  or  that
has  not  been  sold  pursuant  to
an effective registration statement or an exemption that permits removal of the
legend, shall bear
a legend substantially in the following form, as appropriate:

      "NEITHER      THE      ISSUANCE      AND      SALE      OF      THE
SECURITIES
      REPRESENTED   BY   THIS   CERTIFICATE   NOR   THE   SECURITIES   INTO
      WHICH      THESE      SECURITIES      ARE      EXERCISABLE      HAVE
BEEN
      REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED,  OR
      APPLICABLE  STATE  SECURITIES  LAWS.   THE  SECURITIES  MAY  NOT  BE
      OFFERED   FOR   SALE,   SOLD,   TRANSFERRED   OR   ASSIGNED   (I)   IN
THE
      ABSENCE  OF  (A)  AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR  THE
      SECURITIES  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED,  OR  (B)
      AN  OPINION  OF  COUNSEL  (WHICH  COUNSEL  SHALL  BE  SELECTED  BY
      THE     HOLDER),     IN     A     GENERALLY     ACCEPTABLE     FORM,
THAT
      REGISTRATION   IS   NOT   REQUIRED   UNDER   SAID   ACT   OR   (II)
UNLESS
      SOLD   PURSUANT   TO   RULE   144   OR   RULE   144A   UNDER   SAID   ACT.
      NOTWITHSTANDING    THE    FOREGOING,    THE    SECURITIES    MAY    BE
      PLEDGED  IN  CONNECTION  WITH  A  BONA  FIDE  MARGIN  ACCOUNT  OR
      OTHER    LOAN    OR    FINANCING    ARRANGEMENT    SECURED    BY    THE
      SECURITIES."

           The  legend  set  forth  above  shall  be  removed  and  the
Borrower  shall  issue  to  the
Holder  a  new  certificate  therefore  free  of  any  transfer  legend  if  (i)
the  Borrower  or  its  transfer
agent  shall  have  received  an  opinion  of  counsel,  in  form,  substance
and  scope  customary  for
opinions of counsel in comparable transactions, to the effect that a public sale
or transfer of such

                                     8

<PAGE>

Common   Stock   may   be   made   without   registration   under   the   Act,
which   opinion   shall   be
reasonably  accepted  by  the  Borrower  so  that  the  sale  or  transfer  is
effected  or  (ii)  in  the  case  of
the  Common  Stock  issuable  upon  conversion  of  this  Note,  such  security
is  registered  for  sale  by
the Holder under an effective registration statement filed under the Act or
otherwise may be sold
pursuant  to  Rule  144  without  any  restriction  as  to  the  number  of
securities  as  of  a  particular  date
that  can  then  be  immediately  sold.  In  the  event  that  the  Borrower
does  not  accept  the  opinion  of
counsel provided by the Buyer with respect to the transfer of Securities
pursuant to an exemption
from  registration,  such  as  Rule  144  or  Regulation  S,  at  the  Deadline,
it  will  be  considered  an
Event of Default pursuant to Section 3.2 of the Note.

           1.6 Effect of Certain Events.

                 (a)  Effect  of  Merger,  Consolidation,  Etc.   At  the
option  of  the  Holder,  the
sale,  conveyance  or  disposition  of  all  or  substantially  all  of  the
assets  of  the  Borrower,  the
effectuation by the Borrower of a transaction or series of related transactions
in which more than
50%  of  the  voting  power  of  the  Borrower  is  disposed  of,  or  the
consolidation,  merger  or  other
business  combination  of  the  Borrower  with  or  into  any  other  Person
(as  defined  below)  or
Persons  when  the  Borrower  is  not  the  survivor  shall  either:  (i)  be
deemed  to  be  an  Event  of
Default  (as  defined  in  Article  III)  pursuant  to  which  the  Borrower
shall  be  required  to  pay  to  the
Holder  upon  the  consummation  of  and  as  a  condition  to  such
transaction  an  amount  equal  to  the
Default  Amount  (as  defined  in  Article  III)  or  (ii)  be  treated
pursuant  to  Section  1.6(b)  hereof.
"Person"   shall   mean   any   individual,   corporation,   limited   liability
company,   partnership,
association, trust or other entity or organization.

                 (b)  Adjustment  Due  to  Merger,  Consolidation,  Etc.   If,
at  any  time  when
this  Note  is  issued  and  outstanding  and  prior  to  conversion  of  all
of  the  Notes,  there  shall  be  any
merger,   consolidation,   exchange   of   shares,   recapitalization,
reorganization,   or   other   similar
event,  as  a  result  of  which  shares  of  Common  Stock  of  the  Borrower
shall  be  changed  into  the
same  or  a  different  number  of  shares  of  another  class  or  classes  of
stock  or  securities  of  the
Borrower  or  another  entity,  or  in  case  of  any  sale  or  conveyance  of
all  or  substantially  all  of  the
assets  of  the  Borrower  other  than  in  connection  with  a  plan  of
complete  liquidation  of  the
Borrower,  then  the  Holder  of  this  Note  shall  thereafter  have  the
right  to  receive  upon  conversion
of this Note, upon the basis and upon the terms and conditions specified herein
and in lieu of the
shares   of   Common   Stock   immediately   theretofore   issuable   upon
conversion,   such   stock,
securities  or  assets  which  the  Holder  would  have  been  entitled  to
receive  in  such  transaction  had
this  Note  been  converted  in  full  immediately  prior  to  such  transaction
(without  regard  to  any
limitations  on  conversion  set  forth  herein),  and  in  any  such  case
appropriate  provisions  shall  be
made  with  respect  to  the  rights  and  interests  of  the  Holder  of  this
Note  to  the  end  that  the
provisions  hereof  (including,  without  limitation,  provisions  for
adjustment  of  the  Conversion
Price  and  of  the  number  of  shares  issuable  upon  conversion  of  the
Note)  shall  thereafter  be
applicable,  as  nearly  as  may  be  practicable  in  relation  to  any
securities  or  assets  thereafter
deliverable  upon  the  conversion  hereof.   The  Borrower  shall  not  affect
any  transaction  described
in  this  Section  1.6(b)  unless  (a)  it  first  gives,  to  the  extent
practicable,  thirty  (30)  days  prior
written  notice  (but  in  any  event  at  least  fifteen  (15)  days  prior
written  notice)  of  the  record  date
of  the  special  meeting  of  shareholders  to  approve,  or  if  there  is  no
such  record  date,  the
consummation    of,    such    merger,    consolidation,    exchange    of
shares,    recapitalization,

                                     9

<PAGE>

reorganization  or  other  similar  event  or  sale  of  assets  (during  which
time  the  Holder  shall  be
entitled  to  convert  this  Note)  and  (b)  the  resulting  successor  or
acquiring  entity  (if  not  the
Borrower)  assumes  by  written  instrument  the  obligations  of  this  Section
1.6(b).    The  above
provisions  shall  similarly  apply  to  successive  consolidations,  mergers,
sales,  transfers  or  share
exchanges.

                 (c)  Adjustment Due to Distribution.  If the Borrower shall
declare or make
any  distribution  of  its  assets  (or  rights  to  acquire  its  assets)  to
holders  of  Common  Stock  as  a
dividend,  stock  repurchase,  by  way  of  return  of  capital  or  otherwise
(including  any  dividend  or
distribution  to  the  Borrower's  shareholders  in  cash  or  shares  (or
rights  to  acquire  shares)  of
capital  stock  of  a  subsidiary  (i.e.,  a  spin-off))  (a  "Distribution"),
then  the  Holder  of  this  Note
shall  be  entitled,  upon  any  conversion  of  this  Note  after  the  date
of  record  for  determining
shareholders entitled to such Distribution, to receive the amount of such assets
which would have
been  payable  to  the  Holder  with  respect  to  the  shares  of  Common
Stock  issuable  upon  such
conversion  had  such  Holder  been  the  holder  of  such  shares  of  Common
Stock  on  the  record  date
for the determination of shareholders entitled to such Distribution.

                 (d)  Adjustment  Due  to  Dilutive  Issuance.   If,  at  any
time  when  any  Notes
are issued and outstanding, the Borrower issues or sells, or in accordance with
this Section 1.6(d)
hereof  is  deemed  to  have  issued  or  sold,  except  for  shares  of  Common
Stock  issued  directly  to
vendors  or  suppliers  of  the  Borrower  in  satisfaction  of  amounts  owed
to  such  vendors  or
suppliers  (provided,  however,  that  such  vendors  or  suppliers  shall  not
have  an  arrangement  to
transfer,  sell  or  assign  such  shares  of  Common  Stock  prior  to  the
issuance  of  such  shares),  any
shares  of  Common  Stock  for  no  consideration  or  for  a  consideration
per  share  (before  deduction
of  reasonable  expenses  or  commissions  or  underwriting  discounts  or
allowances  in  connection
therewith)  less  than  the  Conversion  Price  in  effect  on  the  date  of
such  issuance  (or  deemed
issuance)  of  such  shares  of  Common  Stock  (a  "Dilutive  Issuance"),  then
immediately  upon  the
Dilutive  Issuance,  the  Conversion  Price  will  be  reduced  to  the  amount
of  the  consideration  per
share received by the Borrower in such Dilutive Issuance.

                 The  Borrower  shall  be  deemed  to  have  issued  or  sold
shares  of  Common
Stock  if  the  Borrower  in  any  manner  issues  or  grants  any  warrants,
rights  or  options  (not
including employee stock option plans), whether or not immediately exercisable,
to subscribe for
or  to  purchase  Common  Stock  or  other  securities  convertible  into  or
exchangeable  for  Common
Stock  ("Convertible  Securities")  (such  warrants,  rights  and  options  to
purchase  Common  Stock
or  Convertible  Securities  are  hereinafter  referred  to  as  "Options")  and
the  price  per  share  for
which  Common  Stock  is  issuable  upon  the  exercise  of  such  Options  is
less  than  the  Conversion
Price  then  in  effect,  then  the  Conversion  Price  shall  be  equal  to
such  price  per  share.    For
purposes  of  the  preceding  sentence,  the  "price  per  share  for  which
Common  Stock  is  issuable
upon  the  exercise  of  such  Options"  is  determined  by  dividing  (i)  the
total  amount,  if  any,
received  or  receivable  by  the  Borrower  as  consideration  for  the
issuance  or  granting  of  all  such
Options,  plus  the  minimum  aggregate  amount  of  additional  consideration,
if  any,  payable  to  the
Borrower  upon  the  exercise  of  all  such  Options,  plus,  in  the  case  of
Convertible  Securities
issuable   upon   the   exercise   of   such   Options,   the   minimum
aggregate   amount   of   additional
consideration  payable  upon  the  conversion  or  exchange  thereof  at  the
time  such  Convertible
Securities  first  become  convertible  or  exchangeable,  by  (ii)  the
maximum  total  number  of  shares

                                    10

<PAGE>

of  Common  Stock  issuable  upon  the  exercise  of  all  such  Options
(assuming  full  conversion  of
Convertible  Securities,  if  applicable).    No  further  adjustment  to  the
Conversion  Price  will  be
made upon the actual issuance of such Common Stock upon the exercise of such
Options or upon
the conversion or exchange of Convertible Securities issuable upon exercise of
such Options.

                 Additionally,  the  Borrower  shall  be  deemed  to  have
issued  or  sold  shares
of  Common  Stock  if  the  Borrower  in  any  manner  issues  or  sells  any
Convertible  Securities,
whether  or  not  immediately  convertible  (other  than  where  the  same  are
issuable  upon  the
exercise  of  Options),  and  the  price  per  share  for  which  Common  Stock
is  issuable  upon  such
conversion  or  exchange  is  less  than  the  Conversion  Price  then  in
effect,  then  the  Conversion
Price  shall  be  equal  to  such  price  per  share.    For  the  purposes  of
the  preceding  sentence,  the
"price  per  share  for  which  Common  Stock  is  issuable  upon  such
conversion  or  exchange"  is
determined  by  dividing  (i)  the  total  amount,  if  any,  received  or
receivable  by  the  Borrower  as
consideration  for  the  issuance  or  sale  of  all  such  Convertible
Securities,  plus  the  minimum
aggregate   amount   of   additional   consideration,   if   any,   payable   to
the   Borrower   upon   the
conversion  or  exchange  thereof  at  the  time  such  Convertible  Securities
first  become  convertible
or  exchangeable,  by  (ii)  the  maximum  total  number  of  shares  of  Common
Stock  issuable  upon
the  conversion  or  exchange  of  all  such  Convertible  Securities.    No
further  adjustment  to  the
Conversion Price will be made upon the actual issuance of such Common Stock upon
conversion
or exchange of such Convertible Securities.

                 (e)  Purchase  Rights.    If,  at  any  time  when  any  Notes
are  issued  and
outstanding,  the  Borrower  issues  any  convertible  securities  or  rights
to  purchase  stock,  warrants,
securities  or  other  property  (the  "Purchase  Rights")  pro  rata  to  the
record  holders  of  any  class  of
Common   Stock,   then   the   Holder   of   this   Note   will   be   entitled
to   acquire,   upon   the   terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
Holder could have
acquired  if  such  Holder  had  held  the  number  of  shares  of  Common
Stock  acquirable  upon
complete  conversion  of  this  Note  (without  regard  to  any  limitations  on
conversion  contained
herein)  immediately  before  the  date  on  which  a  record  is  taken  for
the  grant,  issuance  or  sale  of
such  Purchase  Rights  or,  if  no  such  record  is  taken,  the  date  as  of
which  the  record  holders  of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.

                 (f)  Notice  of  Adjustments.    Upon  the  occurrence  of
each  adjustment  or
readjustment  of  the  Conversion  Price  as  a  result  of  the  events
described  in  this  Section  1.6,  the
Borrower,  at  its  expense,  shall  promptly  compute  such  adjustment  or
readjustment  and  prepare
and furnish to the Holder a certificate setting forth such adjustment or
readjustment and  showing
in  detail  the  facts  upon  which  such  adjustment  or  readjustment  is
based.   The  Borrower  shall,
upon  the  written  request  at  any  time  of  the  Holder,  furnish  to  such
Holder  a  like  certificate
setting  forth  (i)  such  adjustment  or  readjustment,  (ii)  the  Conversion
Price  at  the  time  in  effect
and  (iii)  the  number  of  shares  of  Common  Stock  and  the  amount,  if
any,  of  other  securities  or
property which at the time would be received upon conversion of the Note.

           1.7 Trading  Market  Limitations.  Unless  permitted  by  the
applicable  rules  and
regulations  of  the  principal  securities  market  on  which  the  Common
Stock  is  then  listed  or
traded,  in  no  event  shall  the  Borrower  issue  upon  conversion  of  or
otherwise  pursuant  to  this
Note  and  the  other  Notes  issued  pursuant  to  the  Purchase  Agreement
more  than  the  maximum

                                    11

<PAGE>

number  of  shares  of  Common  Stock  that  the  Borrower  can  issue  pursuant
to  any  rule  of  the
principal  United  States  securities  market  on  which  the  Common  Stock  is
then  traded  (the
"Maximum Share Amount"), which shall be 4.99% of the total shares outstanding on
the Closing
Date  (as  defined  in  the  Purchase  Agreement),  subject  to  equitable
adjustment  from  time  to  time
for stock splits, stock dividends, combinations, capital reorganizations and
similar events relating
to  the  Common  Stock  occurring  after  the  date  hereof.   Once  the
Maximum  Share  Amount  has
been  issued,  if  the  Borrower  fails  to  eliminate  any  prohibitions  under
applicable  law  or  the  rules
or  regulations  of  any  stock  exchange,  interdealer  quotation  system  or
other  self-regulatory
organization with jurisdiction over the Borrower or any of its securities on the
Borrower's ability
to  issue  shares  of  Common  Stock  in  excess  of  the  Maximum  Share
Amount,  in  lieu  of  any
further  right  to  convert  this  Note,  this  will  be  considered  an  Event
of  Default  under  Section  3.2
of the Note.

           1.8 Status  as  Shareholder.    Upon  submission  of  a  Notice  of
Conversion  by  a
Holder,  (i)  the  shares  covered  thereby  (other  than  the  shares,  if
any,  which  cannot  be  issued
because  their  issuance  would  exceed  such  Holder's  allocated  portion  of
the  Reserved  Amount  or
Maximum  Share  Amount)  shall  be  deemed  converted  into  shares  of  Common
Stock  and  (ii)  the
Holder's  rights  as  a  Holder  of  such  converted  portion  of  this  Note
shall  cease  and  terminate,
excepting  only  the  right  to  receive  certificates  for  such  shares  of
Common  Stock  and  to  any
remedies  provided  herein  or  otherwise  available  at  law  or  in  equity
to  such  Holder  because  of  a
failure  by  the  Borrower  to  comply  with  the  terms   of  this  Note.
Notwithstanding  the  foregoing,
if  a  Holder  has  not  received  certificates  for  all  shares  of  Common
Stock  prior  to  the  tenth  (10th)
business  day  after  the  expiration  of  the  Deadline  with  respect  to  a
conversion  of  any  portion  of
this  Note  for  any  reason,  then  (unless  the  Holder  otherwise  elects  to
retain  its  status  as  a  holder
of Common Stock by so notifying the Borrower) the Holder shall regain the rights
of a Holder of
this  Note  with  respect  to  such  unconverted  portions  of  this  Note  and
the  Borrower  shall,  as  soon
as   practicable,   return   such   unconverted   Note   to   the   Holder   or,
if   the   Note   has   not   been
surrendered, adjust its records to reflect that such portion of this Note has
not been converted.  In
all  cases,  the  Holder  shall  retain  all  of  its  rights  and  remedies
(including,  without  limitation,  (i)
the  right  to  receive  Conversion  Default  Payments  pursuant  to  Section
1.3  to  the  extent  required
thereby  for  such  Conversion  Default  and  any  subsequent  Conversion
Default  and  (ii)  the  right  to
have the Conversion Price with respect to subsequent conversions determined in
accordance with
Section 1.3) for the Borrower's failure to convert this Note.

           1.9 Prepayment.   Notwithstanding anything to the contrary contained
in this Note,
the  Borrower  may  prepay  the  amounts  outstanding  hereunder  pursuant  to
the  following  terms
and conditions:

                 (a)  At  any  time  during  the  period  beginning  on  the
Issue  Date  and  ending
on the date which is ninety (90) days following the Issue Date, the Borrower
shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the
Holder of the Note
to  prepay  the  outstanding  Note  (principal  and  accrued  interest),  in
full  by  making  a  payment  to
the  Holder  of  an  amount  in  cash  equal  to  125%,  multiplied  by  the
sum  of:  (w)  the  then
outstanding  principal  amount  of  this  Note  plus  (x) accrued  and  unpaid
interest  on  the  unpaid
principal amount of this Note plus (y) Default Interest, if any.

                                    12

<PAGE>

                 (b)  At  any  time  during  the  period  beginning  the  day
which  is  ninety  one
(91)  days  following  the  Issue  Date  and  ending  on  the  date  which  is
one  hundred  eighty  (180)
days  following  the  Issue  Date,  the  Borrower  shall  have  the  right,
exercisable  on  not  less  than
three  (3)  Trading  Days  prior  written  notice  to  the  Holder  of  the
Note  to  prepay  the  outstanding
Note  (principal  and  accrued  interest),  in  full  by  making  a  payment  to
the  Holder  of  an  amount  in
cash  equal  to  135%,  multiplied  by  the  sum  of:  (w)  the  then
outstanding  principal  amount  of  this
Note  plus  (x) accrued  and  unpaid  interest  on  the  unpaid  principal
amount  of  this  Note  plus  (y)
Default Interest, if any.

                 (c)  After  the  expiration  of  one  hundred  eighty  (180)
days  following  the
date of the Note, the Borrower shall have no right of prepayment.

Any notice of prepayment hereunder (an "Optional Prepayment Notice") shall be
delivered to the
Holder  of  the  Note  at  its  registered  addresses  and  shall  state:  (1)
that  the  Borrower  is  exercising
its  right  to  prepay  the  Note,  and  (2)  the  date  of  prepayment  which
shall  be  not  more  than  three
(3)  Trading  Days  from  the  date  of  the  Optional  Prepayment  Notice.
On  the  date  fixed  for
prepayment   (the   "Optional   Prepayment   Date"),   the   Borrower   shall
make   payment   of   the
applicable  prepayment  amount  to  or  upon  the  order  of  the  Holder  as
specified  by  the  Holder  in
writing  to  the  Borrower  at  least  one  (1)  business  day  prior  to  the
Optional  Prepayment  Date.   If
the Borrower delivers an Optional Prepayment Notice and fails to pay the
applicable prepayment
amount  due  to  the  Holder  of  the  Note  within  two  (2)  business  days
following  the  Optional
Prepayment  Date,  the  Borrower  shall  forever  forfeit  its  right  to
prepay  the  Note  pursuant  to  this
Section 1.9.

                      ARTICLE II.  CERTAIN COVENANTS

           2.1 Distributions  on  Capital  Stock.    So  long  as  the  Borrower
shall  have  any
obligation  under  this  Note,  the  Borrower  shall  not  without  the
Holder's  written  consent  (a)  pay,
declare  or  set  apart  for  such  payment,  any  dividend  or  other
distribution  (whether  in  cash,
property or other securities) on shares of capital stock other than dividends on
shares of Common
Stock  solely  in  the  form  of  additional  shares  of  Common  Stock  or  (b)
directly  or  indirectly  or
through  any  subsidiary  make  any  other  payment  or  distribution  in
respect  of  its  capital  stock
except for distributions pursuant to any shareholders' rights plan which is
approved by a majority
of the Borrower's disinterested directors.

           2.2 Restriction  on  Stock  Repurchases.   So  long  as  the
Borrower  shall  have  any
obligation  under  this  Note,  the  Borrower  shall  not  without  the
Holder's  written  consent  redeem,
repurchase  or  otherwise  acquire  (whether  for  cash  or  in  exchange  for
property  or  other  securities
or otherwise) in any one transaction or series of related transactions any
shares of capital stock of
the Borrower or any warrants, rights or options to purchase or acquire any such
shares.

           2.3 Borrowings.    So  long  as  the  Borrower  shall  have  any
obligation  under  this
Note,   the   Borrower   shall   not,   without   the   Holder's   written
consent,   create,   incur,   assume
guarantee,   endorse,   contingently   agree   to   purchase   or   otherwise
become   liable   upon   the
obligation   of   any   person,   firm,   partnership,   joint   venture   or
corporation,   except   by   the
endorsement of negotiable instruments for deposit or collection, or suffer to
exist any liability for
borrowed  money,  except  (a)  borrowings  in  existence  or  committed  on  the
date  hereof  and  of

                                    13

<PAGE>

which  the  Borrower  has  informed  Holder  in  writing  prior  to  the  date
hereof,  (b)  indebtedness  to
trade  creditors  financial  institutions  or  other  lenders  incurred  in  the
ordinary  course  of  business
or (c) borrowings, the proceeds of which shall be used to repay this Note.

           2.4 Sale  of  Assets.   So  long  as  the  Borrower  shall  have  any
obligation  under  this
Note,  the  Borrower  shall  not,  without  the  Holder's  written  consent,
sell,  lease  or  otherwise
dispose  of  any  significant  portion  of  its  assets  outside  the  ordinary
course  of  business.    Any
consent  to  the  disposition  of  any  assets  may  be  conditioned  on  a
specified  use  of  the  proceeds  of
disposition.

           2.5 Advances  and  Loans.    So  long  as  the  Borrower  shall  have
any  obligation
under  this  Note,  the  Borrower  shall  not,  without  the  Holder's  written
consent,  lend  money,  give
credit  or  make  advances  to  any  person,  firm,  joint  venture  or
corporation,  including,  without
limitation,  officers,  directors,  employees,  subsidiaries  and  affiliates
of  the  Borrower,  except
loans,  credits  or  advances  (a)  in  existence  or  committed  on  the  date
hereof  and  which  the
Borrower  has  informed  Holder  in  writing  prior  to  the  date  hereof,  (b)
made  in  the  ordinary
course of business or (c) not in excess of $100,000.

           2.6 Section  3(a)(9)  or  3(a)(10)  Transaction.  So  long  as  this
Note  is  outstanding,
the  Borrower  shall  not  enter  into  any  transaction  or  arrangement
structured  in  accordance  with,
based  upon,  or  related  or  pursuant  to,  in  whole  or  in  part,  either
Section  3(a)(9)  of  the  Securities
Act  (a  "3(a)(9)  Transaction")  or  Section  3(a)(l0)  of  the  Securities
Act  (a  "3(a)(l0)  Transaction").
In  the  event  that  the  Borrower  does  enter  into,  or  makes  any
issuance  of  Common  Stock  related
to  a  3(a)(9)  Transaction  or  a  3(a)(l0)  Transaction  while  this  note  is
outstanding,  a  liquidated
damages  charge  of  25%  of  the  outstanding  principal  balance  of  this
Note,  but  not  less  than
Fifteen  Thousand  Dollars  $15,000,  will  be  assessed  and  will  become
immediately  due  and
payable to the Holder at its election in the form of cash payment or addition to
the balance of this
Note.

           2.7 Preservation  of  Existence,  etc.  The  Borrower  shall
maintain  and  preserve,  and
cause  each  of  its  Subsidiaries  to  maintain  and  preserve,  its
existence,  rights  and  privileges,  and
become  or  remain,  and  cause  each  of  its  Subsidiaries  (other  than
dormant  Subsidiaries  that  have
no  or  minimum  assets)  to  become  or  remain,  duly  qualified  and  in
good  standing  in  each
jurisdiction  in  which  the  character  of  the  properties  owned  or  leased
by  it  or  in  which  the
transaction of its business makes such qualification necessary.

           2.8 Non-circumvention.   The   Borrower   hereby   covenants   and
agrees   that   the
Borrower  will  not,  by  amendment  of  its  Certificate  or  Articles  of
Incorporation  or  Bylaws,  or
through  any  reorganization,  transfer  of  assets,  consolidation,  merger,
scheme  of  arrangement,
dissolution,  issue  or  sale  of  securities,  or  any  other  voluntary
action,  avoid  or  seek  to  avoid  the
observance  or  performance  of  any  of  the  terms  of  this  Note,  and  will
at  all  times  in  good  faith
carry  out  all  the  provisions  of  this  Note  and  take  all  action  as
may  be  required  to  protect  the
rights of the Holder.

                      ARTICLE III.  EVENTS OF DEFAULT

                                    14

<PAGE>

           If any of the following events of default (each, an "Event of
Default") shall occur:

           3.1 Failure  to  Pay  Principal  or  Interest.   The  Borrower  fails
to  pay  the  principal
hereof  or  interest  thereon  when  due  on  this  Note,  whether  at
maturity,  upon  acceleration  or
otherwise.

           3.2 Conversion  and  the  Shares.   The  Borrower  fails  to  issue
shares  of  Common
Stock  to  the  Holder  (or  announces  or  threatens  in  writing  that  it
will  not  honor  its  obligation  to
do  so)  upon  exercise by  the  Holder  of  the conversion  rights  of  the
Holder  in  accordance with  the
terms  of  this  Note,  fails  to  transfer  or  cause  its  transfer  agent  to
transfer  (issue)  (electronically  or
in  certificated  form)  any  certificate  for  shares  of  Common  Stock
issued  to  the  Holder  upon
conversion  of  or  otherwise  pursuant  to  this  Note  as  and  when  required
by  this  Note,  the
Borrower  directs  its  transfer  agent  not  to  transfer  or  delays,
impairs,  and/or  hinders  its  transfer
agent  in  transferring  (or  issuing)  (electronically  or  in  certificated
form)  any  certificate  for  shares
of  Common  Stock  to  be  issued  to  the  Holder  upon  conversion  of  or
otherwise  pursuant  to  this
Note  as  and  when  required  by  this  Note,  or  fails  to  remove  (or
directs  its  transfer  agent  not  to
remove  or  impairs,  delays,  and/or  hinders  its  transfer  agent  from
removing)  any  restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any
certificate for any
shares  of  Common  Stock  issued  to  the  Holder  upon  conversion  of  or
otherwise  pursuant  to  this
Note as and when required by this Note (or makes any written announcement,
statement or threat
that  it  does  not  intend  to  honor  the  obligations  described  in  this
paragraph)  and  any  such  failure
shall  continue  uncured  (or  any  written  announcement,  statement  or
threat  not  to  honor  its
obligations  shall  not  be  rescinded  in  writing)  for  three  (3)  business
days  after  the  Holder  shall
have  delivered  a  Notice  of  Conversion.   It  is  an  obligation  of  the
Borrower  to  remain  current  in
its  obligations  to  its  transfer  agent.  It  shall  be  an  event  of
default  of  this  Note,  if  a  conversion  of
this  Note  is  delayed,  hindered  or  frustrated  due  to  a  balance  owed
by  the  Borrower  to  its  transfer
agent.  If  at  the  option  of  the  Holder,  the  Holder  advances  any  funds
to  the  Borrower's  transfer
agent in order to process a conversion, such advanced funds shall be paid by the
Borrower to the
Holder within forty eight (48) hours of a demand from the Holder.

           3.3 Failure   to   Deliver   Transaction   Expense   Amount.     The
Borrower   fails   to
deliver  the  Transaction  Expense  Amount  (as  defined  in  the  Purchase
Agreement)  to  the  Holder
within three (3) business days of the date such amount is due.

           3.4 Breach  of  Covenants.   The  Borrower  breaches  any  material
covenant  or  other
material  term  or  condition  contained  in  this  Note  and  any  collateral
documents  including  but  not
limited  to  the  Purchase  Agreement  and  such  breach  continues  for  a
period  of  ten  (10)  days  after
written notice thereof to the Borrower from the Holder.

           3.5 Breach  of  Representations  and  Warranties.   Any
representation  or  warranty  of
the Borrower made herein or in any agreement, statement or certificate given in
writing pursuant
hereto  or  in  connection  herewith  (including,  without  limitation,  the
Purchase  Agreement),  shall
be  false  or  misleading  in  any  material  respect  when  made  and  the
breach  of  which  has  (or  with
the passage of time will have) a material adverse effect on the rights of the
Holder with respect to
this Note or the Purchase Agreement.

                                    15

<PAGE>

           3.6 Receiver  or  Trustee.   The  Borrower  or  any  subsidiary  of
the  Borrower  shall
make  an  assignment  for  the  benefit  of  creditors  or  commence
proceedings  for  its  dissolution,  or
apply  for  or  consent  to  the  appointment  of  a  receiver  or  trustee  for
it  or  for  a  substantial  part  of
its  property  or  business,  or  such  a  receiver  or  trustee  shall
otherwise  be  appointed  for  the
Borrower  or  for  a  substantial  part  of  its  property  or  business
without  its  consent  and  shall  not  be
discharged within sixty (60) days after such appointment.

           3.7 Judgments.   Any  money  judgment,  writ  or  similar  process
shall  be  entered  or
filed against the Borrower or any subsidiary of the Borrower or any of its
property or other assets
for more than $50,000, and shall remain unvacated, unbonded or unstayed for a
period of twenty
(20)  days  unless  otherwise  consented  to  by  the  Holder,  which  consent
will  not  be  unreasonably
withheld.

           3.8 Bankruptcy.  Bankruptcy,    insolvency,    reorganization    or
liquidation
proceedings  or  other  proceedings,  voluntary  or  involuntary,  for  relief
under  any  bankruptcy  law
or  any  law  for  the  relief  of  debtors  shall  be  instituted  by  or
against  the  Borrower  or  any
subsidiary  of  the  Borrower,  or  the  Borrower  admits  in  writing  its
inability  to  pay  its  debts
generally as  they mature, or have filed against it an involuntary petition for
bankruptcy relief, all
under  federal  or  state  laws  as  applicable  or  the  Borrower  admits  in
writing  its  inability  to  pay  its
debts  generally  as  they  mature,  or  have  filed  against  it  an
involuntary  petition  for  bankruptcy
relief, all under international, federal or state laws as applicable.

           3.9 Delisting of Common Stock.  The Borrower shall fail to maintain
the listing of
the  Common  Stock  on  at  least  one  of  the  OTCBB,  a  tier  of  the  OTC
Markets  Group  Inc.  or  an
equivalent  replacement  exchange,  the  Nasdaq  National  Market,  the  Nasdaq
Small  Cap  Market,
the New York Stock Exchange, or the NYSE MKT.

           3.10     Failure  to  Comply  with  the  Exchange  Act.    The
Borrower  shall  fail  to
comply  with  the  reporting  requirements  of  the  Exchange  Act;  and/or  the
Borrower  shall  cease  to
be subject to the reporting requirements of the Exchange Act.

           3.11     Liquidation.     Any  dissolution,  liquidation,  or
winding  up  of  Borrower  or
any substantial portion of its business.

           3.12     Cessation  of  Operations.    Any  cessation  of  operations
by  Borrower  or
Borrower  admits  it  is  otherwise  generally  unable  to  pay  its  debts  as
such  debts  become  due,
provided, however, that any disclosure of the Borrower's ability to continue as
a "going concern"
shall not be an admission that the Borrower cannot pay its debts as they become
due.

           3.13     Maintenance  of  Assets.   The  failure  by  Borrower  to
maintain  any  material
intellectual property rights, personal, real property or other assets which are
necessary to conduct
its business (whether now or in the future).

           3.14     Financial Statement Restatement.The   restatement   of   any
financial
statements filed by the Borrower with the SEC for any date or period from two
years prior to the
Issue  Date  of  this  Note  and  until  this  Note  is  no  longer
outstanding,  if  the  result  of  such

                                    16

<PAGE>

restatement  would,  by  comparison  to  the  unrestated  financial  statement,
have  constituted  a
material  adverse  effect  on  the  rights  of  the  Holder  with  respect  to
this  Note  or  the  Purchase
Agreement.

           3.15     Reverse Splits.  The  Borrower  effectuates  a  reverse
split  of  its  Common
Stock without twenty (20) days prior written notice to the Holder.

           3.16     Replacement of Transfer Agent. In the event that the
Borrower proposes to
replace  its  transfer  agent,  the  Borrower  fails  to  provide,  prior  to
the  effective  date  of  such
replacement,  a  fully  executed  Irrevocable  Transfer  Agent  Instructions  in
a  form  as  initially
delivered  pursuant  to  the  Purchase  Agreement  (including  but  not  limited
to  the  provision  to
irrevocably  reserve  shares  of  Common  Stock  in  the  Reserved  Amount)
signed  by  the  successor
transfer agent to Borrower and the Borrower.

           3.17     Cessation  of  Trading.   Any  cessation  of  trading  of
the  Common  Stock  on
at  least  one  of  the  OTCBB,  a  tier  of  the  OTC  Markets  Group  Inc.  or
an  equivalent  replacement
exchange,  the  Nasdaq  National  Market,  the  Nasdaq  Small  Cap  Market,  the
New  York  Stock
Exchange,  or  the  NYSE  MKT,  and  such  cessation  of  trading  shall
continue  for  a  period  of  five
consecutive (5) Trading Days.

           3.18     Cross-Default.   Notwithstanding  anything  to  the
contrary  contained  in  this
Note  or  the  other  related  or  companion  documents,  a  breach  or  default
by  the  Borrower  of  any
covenant  or  other  term  or  condition  contained  in  any  of  the  Other
Agreements,  after  the  passage
of all applicable notice and cure or grace periods, shall, at the option of the
Holder, be considered
a  default  under  this  Note  and  the  Other  Agreements,  in  which  event
the  Holder  shall  be  entitled
(but  in  no  event  required)  to  apply  all  rights  and  remedies  of  the
Holder  under  the  terms  of  this
Note   and   the   Other   Agreements   by   reason   of   a   default   under
said   Other   Agreement   or
hereunder.   "Other  Agreements"  means,  collectively,  all  agreements  and
instruments  between,
among  or  by:  (1)  the  Borrower,  and,  or  for  the  benefit  of,  (2) the
Holder  and  any  affiliate  of  the
Holder,  including,  without  limitation,  promissory  notes;  provided,
however,  the  term  "Other
Agreements"  shall  not  include  the  agreements  and  instruments  defined  as
the  Documents.   Each
of the loan transactions will be cross-defaulted with each other loan
transaction and with all other
existing and future debt of Borrower to the Holder.

           3.19     Bid  Price.   The  Borrower  shall  lose  the  "bid" price
for  its  Common  Stock
($0.0001  on  the  "Ask"  with  zero  market  makers  on  the  "Bid"  per  Level
2)  and/or  a  market
(including  the  OTCBB,  any  tier  of  the  OTC  Markets  Group  Inc.   or  an
equivalent  replacement
exchange).

           3.20     OTC   Markets   Designation.      OTC   Markets   changes
the   Borrower's
designation   to   `No   Information'   (Stop   Sign),   `Limited   Information'
(Yield   Sign),   `Caveat
Emptor'  (Skull  and  Crossbones),  or  `OTC',  `Other  OTC'  or  `Grey  Market'
(Exclamation  Mark
Sign).

Upon the occurrence and during the continuation of any Event of Default
specified in Section 3.1
(solely  with  respect  to  failure  to  pay  the  principal  hereof  or
interest  thereon  when  due  at  the
Maturity  Date),  the  Note  shall  become  immediately  due  and  payable  and
the  Borrower  shall  pay

                                    17

<PAGE>

to  the  Holder,  in  full  satisfaction  of  its  obligations  hereunder,  an
amount  equal  to  the  Default
Sum (as defined herein).  UPON THE OCCURRENCE AND DURING THE CONTINUATION
OF   ANY   EVENT   OF   DEFAULT   SPECIFIED   IN   SECTION   3.2,   THE   NOTE
SHALL
BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO
THE   HOLDER,   IN   FULL   SATISFACTION   OF   ITS   OBLIGATIONS   HEREUNDER,
AN
AMOUNT  EQUAL  TO:  (Y)  THE  DEFAULT  SUM  (AS  DEFINED  HEREIN);  MULTIPLIED
BY  (Z)  TWO  (2).  Upon  the  occurrence  and  during  the  continuation  of
any  Event  of  Default
specified  in  Sections  3.1  (solely  with  respect  to  failure  to  pay  the
principal  hereof  or  interest
thereon  when  due  on  this  Note  upon  acceleration),  3.3,  3.4,  3.6,  3.8,
3.9,  3.11,  3.12,  3.13,  3.14,
3.15,  3.16.  3.17,  3.18,  3.19  and/or  3.20  exercisable  through  the
delivery  of  written  notice  to  the
Borrower  by  such  Holders  (the  "Default  Notice"),  and  upon  the
occurrence  of  an  Event  of
Default  specified  the  remaining  sections  of  Article  III  (other  than
failure  to  pay  the  principal
hereof  or  interest  thereon  at  the  Maturity  Date  specified  in  Section
3,1  hereof),  the  Note  shall
become   immediately   due   and   payable   and   the   Borrower   shall   pay
to   the   Holder,   in   full
satisfaction  of  its  obligations  hereunder,  an  amount  equal  to  (i)  130%
times  the  sum  of  (w)  the
then outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid
principal  amount  of  this  Note  to  the  date  of  payment  (the  "Mandatory
Prepayment  Date")  plus
(y)  Default  Interest,  if  any,  on  the  amounts  referred  to  in  clauses
(w)  and/or  (x)  plus  (z)  any
amounts  owed  to  the  Holder  pursuant  to  Sections  1.3  and  1.4(g)  hereof
(the  then  outstanding
principal  amount  of  this  Note  to  the  date  of  payment  plus  the
amounts  referred  to  in  clauses  (x),
(y)  and  (z)  shall  collectively  be  known  as  the  "Default  Sum")  or
(ii)  at  the  option  of  the  Holder,
the  "parity  value"  of  the  Default  Sum  to  be  prepaid,  where  parity
value  means  (a)  the  highest
number  of  shares  of  Common  Stock  issuable  upon  conversion  of  or
otherwise  pursuant  to  such
Default  Sum  in  accordance  with  Article  I,  treating  the  Trading  Day
immediately  preceding  the
Mandatory  Prepayment  Date  as  the  "Conversion  Date"  for  purposes  of
determining  the  lowest
applicable Conversion Price, unless the Default Event arises as a result of a
breach in respect of a
specific  Conversion  Date  in  which  case  such  Conversion  Date  shall  be
the  Conversion  Date),
multiplied  by  (b)  the  highest  Trading  Price  for  the  Common  Stock
during  the  period  beginning
on the date of first occurrence of the Event of Default and ending one day prior
to the Mandatory
Prepayment   Date   (the   "Default   Amount")   and   all   other   amounts
payable   hereunder   shall
immediately  become  due  and  payable,  all  without  demand,  presentment  or
notice,  all  of  which
hereby  are  expressly  waived,  together  with  all  costs,  including,
without  limitation,  legal  fees  and
expenses,  of  collection,  and  the  Holder  shall  be  entitled  to  exercise
all  other  rights  and  remedies
available  at  law  or  in  equity.   Further,  if  a  breach  of  Sections
3.9,  3.10  and/or  3.19  occurs  or  is
continuing after the six (6) month anniversary of this Note, then the principal
amount of the Note
shall  increase  by  Fifteen  Thousand  and  No/100  United  States  Dollars
($15,000)  (under  Holder's
and  Borrower's  expectation  that  any  principal  amount  increase  will  tack
back  to  the  Issue  Date)
and  the  Holder  shall  be  entitled  to  use  the  lowest  Trading  Price
during  the  delinquency  period  as
a  base  price  for  the  conversion  with  the  Variable  Conversion  Price
shall  be  redefined  to  mean
forty  percent  (40%)  multiplied  by  the  Market  Price,  subject  to
adjustment  as  provided  in  this
Note.  For  example,  if  the  lowest  Trading  Price  during  the  delinquency
period  is  $0.01  per  share
and  the  conversion  discount  is  50%,  then  the  Holder  may  elect  to
convert  future  conversions  at
$0.005  per  share.   If  this  Note  is  not  paid  at  Maturity  Date,  then
the  outstanding  principal  due
under this Note shall increase by Fifteen Thousand and No/100 United States
Dollars ($15,000).

                                    18

<PAGE>

If  the  Borrower  fails  to  pay  the  Default  Amount  within  five  (5)
business  days  of  written  notice
that  such  amount  is  due  and  payable,  then  the  Holder  shall  have  the
right  at  any  time,  so  long  as
the Borrower remains in default (and so long and to the extent that there are
sufficient authorized
shares), to require the Borrower, upon written notice, to immediately issue, in
lieu of  the Default
Amount,  the  number  of  shares  of  Common  Stock  of  the  Borrower  equal
to  the  Default  Amount
divided   by   the   Conversion   Price   then   in   effect.     This
requirement   by   the   Borrower   shall
automatically apply upon the occurrence of an Event of Default without the need
for any party to
give any notice or take any other action.

If  the  Holder  shall  commence  an  action  or  proceeding  to  enforce  any
provisions  of  this  Note,
including, without limitation, engaging an attorney, then if the Holder prevails
in such action, the
Holder  shall  be  reimbursed  by  the  Borrower  for  its  attorneys'  fees
and  other  costs  and  expenses
incurred in the investigation, preparation and prosecution of such action or
proceeding.

                       ARTICLE IV.  MISCELLANEOUS

           4.1 Failure  or  Indulgence  Not  Waiver.    No  failure  or  delay
on  the  part  of  the
Holder  in  the  exercise  of  any  power,  right  or  privilege  hereunder
shall  operate  as  a  waiver
thereof,  nor  shall  any  single  or  partial  exercise  of  any  such  power,
right  or  privilege  preclude
other  or  further  exercise  thereof  or  of  any  other  right,  power  or
privileges.    All  rights  and
remedies  existing  hereunder  are  cumulative  to,  and  not  exclusive  of,
any  rights  or  remedies
otherwise available.

           4.2 Notices.     All   notices,   demands,   requests,   consents,
approvals,   and   other
communications   required   or   permitted   hereunder   shall   be   in
writing   and,   unless   otherwise
specified  herein,  shall  be  (i)  personally  served,  (ii)  deposited  in
the  mail,  registered  or  certified,
return  receipt  requested,  postage  prepaid,  (iii)  delivered  by  reputable
air  courier  service  with
charges  prepaid,  or  (iv)  transmitted  by  hand  delivery,  telegram,  or
facsimile,  addressed  as  set
forth  below  or  to  such  other  address  as  such  party  shall  have
specified  most  recently  by  written
notice.   Any  notice  or  other  communication  required  or  permitted  to  be
given  hereunder  shall  be
deemed  effective  (a)  upon  hand  delivery  or  delivery  by  facsimile,  with
accurate  confirmation
generated  by  the  transmitting  facsimile  machine,  at  the  address  or
number  designated  below  (if
delivered on a business day during normal business hours where such notice is to
be received), or
the  first  business  day  following  such  delivery  (if  delivered  other
than  on  a  business  day  during
normal  business  hours  where  such  notice  is  to  be  received)  or  (b)  on
the  second  business  day
following  the  date  of  mailing  by  express  courier  service,  fully
prepaid,  addressed  to  such
address,  or  upon  actual  receipt  of  such  mailing,  whichever  shall  first
occur.   The  addresses  for
such communications shall be:

         If to the Borrower, to:

           Clean Energy Technologies, Inc.
           2990 Redhill Avenue
           Costa Mesa, CA 92626
           Attn:  John Bennett, CFO
           E-mail:  jbennett@cetyinc.com

                                    19

<PAGE>

         With a copy to (which copy shall not constitute notice):

           Law Office of Andrew Coldicutt
           1220 Rosecrans Street, PMB 258
           San Diego, CA 92106
           Attn:  Andrew Coldicutt, Esq.
           E-mail: andrew@coldicuttlaw.com

         If to the Holder:

           Auctus Fund, LLC
           101 Arch Street, 20th Floor
           Boston, MA 02110
           Attn: Lou Posner
           Facsimile: (617) 532-6420

         With a copy to (which copy shall not constitute notice):

           Lucosky Brookman LLP
           101 Wood Avenue South, 5th Floor
           Woodbridge, NJ 08830
           Attn: Joseph M. Lucosky, Esq.
           Facsimile: (732) 395-4401

           4.3 Amendments.   This  Note  and  any  provision  hereof  may  only
be  amended  by
an  instrument  in  writing  signed  by  the  Borrower  and  the  Holder.    The
term  "Note"  and  all
reference  thereto,  as  used  throughout  this  instrument,  shall  mean  this
instrument  (and  the  other
Notes  issued  pursuant  to  the  Purchase  Agreement)  as  originally
executed,  or  if  later  amended  or
supplemented, then as so amended or supplemented.

           4.4 Assignability.     This   Note   shall   be   binding   upon
the   Borrower   and   its
successors  and  assigns,  and  shall  inure  to  be  the  benefit  of  the
Holder  and  its  successors  and
assigns.   Each transferee of this Note must be an "accredited investor" (as
defined in Rule 501(a)
of  the  1933  Act).    Notwithstanding  anything  in  this  Note  to  the
contrary,  this  Note  may  be
pledged   as   collateral   in   connection   with   a   bona   fide   margin
account   or   other   lending
arrangement.   The  Holder  and  any  assignee,  by  acceptance  of  this  Note,
acknowledge  and  agree
that following conversion of a portion of this Note, the unpaid and unconverted
principal amount
of this Note represented by this Note may be less than the amount stated on the
face hereof.

           4.5 Cost  of  Collection.    If  default  is  made  in  the  payment
of  this  Note,  the
Borrower   shall   pay   the   Holder   hereof   reasonable   costs   of
collection,   including   reasonable
attorneys' fees.

           4.6 Governing  Law.  This  Note  shall  be  governed  by  and
construed  in  accordance
with the laws of the State of Nevada without regard to principles of conflicts
of laws.  Any action

                                    20

<PAGE>

brought  by  either  party  against  the  other  concerning  the  transactions
contemplated  by  this  Note
shall  be  brought  only  in  the  state  courts  of  Massachusetts  or  in  the
federal  courts  located  in  the
Commonwealth  of  Massachusetts.     The  parties  to  this  Note  hereby
irrevocably  waive  any
objection  to  jurisdiction  and  venue  of  any  action  instituted  hereunder
and  shall  not  assert  any
defense  based  on  lack  of  jurisdiction  or  venue  or  based  upon  forum
non  conveniens.    THE
BORROWER  HEREBY  IRREVOCABLY  WAIVES  ANY  RIGHT  IT  MAY  HAVE  TO,
AND  AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE  ADJUDICATION  OF
ANY  DISPUTE  HEREUNDER  OR  IN  CONNECTION  WITH  OR  ARISING  OUT  OF
THIS  NOTE  OR  ANY  TRANSACTION  CONTEMPLATED  HEREBY.    The  prevailing
party  shall  be  entitled  to  recover  from  the  other  party  its
reasonable  attorney's  fees  and  costs.   In
the event that any provision of this Note or any other agreement delivered in
connection herewith
is  invalid  or  unenforceable  under  any  applicable  statute  or  rule  of
law,  then  such  provision  shall
be  deemed  inoperative  to  the  extent  that  it  may  conflict  therewith
and  shall  be  deemed  modified
to  conform  with  such  statute  or  rule  of  law.   Any  such  provision
which  may  prove  invalid  or
unenforceable  under  any  law  shall  not  affect  the  validity  or
enforceability  of  any  other  provision
of  any  agreement.      Each  party  hereby  irrevocably  waives  personal
service  of  process  and
consents  to  process  being  served  in  any  suit,  action  or  proceeding  in
connection  with  this
Agreement  or  any  other  Transaction  Document  by  mailing  a  copy  thereof
via  registered  or
certified  mail  or  overnight  delivery  (with  evidence  of  delivery)  to
such  party  at  the  address  in
effect  for  notices  to  it  under  this  Agreement  and  agrees  that  such
service  shall  constitute  good
and sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to
limit in any way any right to serve process in any other manner permitted by
law.

           4.7 Certain Amounts.  Whenever pursuant to this Note the Borrower is
required to
pay  an  amount  in  excess  of  the  outstanding  principal  amount  (or  the
portion  thereof  required  to
be  paid  at  that  time)  plus  accrued  and  unpaid  interest  plus  Default
Interest  on  such  interest,  the
Borrower  and  the  Holder  agree  that  the  actual  damages  to  the  Holder
from  the  receipt  of  cash
payment  on  this  Note  may  be  difficult  to  determine  and  the  amount  to
be  so  paid  by  the
Borrower  represents  stipulated  damages  and  not  a  penalty  and  is
intended  to  compensate  the
Holder  in  part  for  loss  of  the  opportunity  to  convert  this  Note  and
to  earn  a  return  from  the  sale
of  shares  of  Common  Stock  acquired  upon  conversion  of  this  Note  at  a
price  in  excess  of  the
price  paid  for  such  shares  pursuant  to  this  Note.   The  Borrower  and
the  Holder  hereby  agree  that
such  amount  of  stipulated  damages  is  not  plainly  disproportionate  to
the  possible  loss  to  the
Holder  from  the  receipt  of  a  cash  payment  without  the  opportunity  to
convert  this  Note  into
shares of Common Stock.

           4.8 Purchase  Agreement.   By  its  acceptance  of  this  Note,  each
party  agrees  to  be
bound by the applicable terms of the Purchase Agreement.

           4.9 Notice  of  Corporate  Events.   Except  as  otherwise  provided
below,  the  Holder
of this Note shall have no rights as a Holder of Common Stock unless and only to
the extent that
it  converts  this  Note  into  Common  Stock.  The  Borrower  shall  provide
the  Holder  with  prior
notification  of  any  meeting  of  the  Borrower's  shareholders  (and  copies
of  proxy  materials  and
other  information  sent  to  shareholders).   In  the  event  of  any  taking
by  the  Borrower  of  a  record
of  its  shareholders  for  the  purpose  of  determining  shareholders  who
are  entitled  to  receive
payment  of  any  dividend  or  other  distribution,  any  right  to  subscribe
for,  purchase  or  otherwise

                                    21

<PAGE>

acquire (including by way of merger, consolidation, reclassification or
recapitalization) any share
of any class or any other securities or property, or to receive any other right,
or for the purpose of
determining  shareholders  who  are  entitled  to  vote  in  connection  with
any  proposed  sale,  lease  or
conveyance  of  all  or  substantially  all  of  the  assets  of  the  Borrower
or  any  proposed  liquidation,
dissolution  or  winding  up  of  the  Borrower,  the  Borrower  shall  mail  a
notice  to  the  Holder,  at
least  twenty  (20)  days  prior  to  the  record  date  specified  therein  (or
thirty  (30)  days  prior  to  the
consummation  of  the  transaction  or  event,  whichever  is  earlier),  of
the  date  on  which  any  such
record  is  to  be  taken  for  the  purpose  of  such  dividend,  distribution,
right  or  other  event,  and  a
brief  statement  regarding  the  amount  and  character  of  such  dividend,
distribution,  right  or  other
event to the extent known at such time.   The Borrower shall make a public
announcement of any
event   requiring   notification   to   the   Holder   hereunder   substantially
simultaneously   with   the
notification  to  the  Holder  in  accordance  with  the  terms  of  this
Section  4.9  including,  but  not
limited to, name changes, recapitalizations, etc. as soon as possible under law.

           4.10     Usury.  If  it  shall  be  found  that  any  interest  or
other  amount  deemed
interest due hereunder violates the applicable law governing usury, the
applicable provision shall
automatically  be  revised  to  equal  the  maximum  rate  of  interest  or
other  amount  deemed  interest
permitted  under  applicable  law.  The  Borrower  covenants  (to  the  extent
that  it  may  lawfully  do
so)  that  it  will  not  seek  to  claim  or  take  advantage  of  any  law
that  would  prohibit  or  forgive  the
Borrower from paying all or a portion of the principal or interest on this Note.

           4.11     Remedies.     The   Borrower   acknowledges   that   a
breach   by   it   of   its
obligations  hereunder  will  cause  irreparable  harm  to  the  Holder,  by
vitiating  the  intent  and
purpose  of  the  transaction  contemplated  hereby.   Accordingly,  the
Borrower  acknowledges  that
the remedy at law for a breach of its obligations under this Note will be
inadequate and agrees, in
the event of a breach or threatened breach by the Borrower of the provisions of
this Note, that the
Holder  shall  be  entitled,  in  addition  to  all  other  available  remedies
at  law  or  in  equity,  and  in
addition  to  the  penalties  assessable  herein,  to  an  injunction  or
injunctions  restraining,  preventing
or  curing  any  breach  of  this  Note  and  to  enforce  specifically  the
terms  and  provisions  thereof,
without  the  necessity  of  showing  economic  loss  and  without  any  bond
or  other  security  being
required.   No provision of this Note shall alter or impair the obligation of
the Borrower, which is
absolute  and  unconditional,  to  pay  the  principal  of,  and  interest  on,
this  Note  at  the  time,  place,
and rate, and in the form, herein prescribed.

           4.12     Severability.    In  the  event  that  any  provision  of
this  Note  is  invalid  or
unenforceable  under  any  applicable  statute  or  rule  of  law,  then  such
provision  shall  be  deemed
inoperative  to  the  extent  that  it  may  conflict  therewith  and  shall  be
deemed  modified  to  conform
with such statute or rule of law.  Any provision hereof which may prove invalid
or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof.

           4.13     Dispute  Resolution.  In  the  case  of  a  dispute  as  to
the  determination  of  the
Conversion  Price,  Conversion  Amount,  any  prepayment  amount  or  Default
Amount,  Default
Sum, Closing or Maturity Date, the closing bid price, or fair market value (as
the case may be) or
the arithmetic calculation of the Conversion Price or the applicable prepayment
amount(s) (as the
case  may  be),  the  Borrower  or  the  Holder  shall  submit  the  disputed
determinations  or  arithmetic
calculations  via  facsimile  (i)  within  two  (2)  Business  Days  after
receipt  of  the  applicable  notice

                                    22

<PAGE>

giving  rise  to  such  dispute  to  the  Borrower  or  the  Holder  or  (ii)
if  no  notice  gave  rise  to  such
dispute,  at  any  time  after  the  Holder  learned  of  the  circumstances
giving  rise  to  such  dispute.  If
the  Holder  and  the  Borrower  are  unable  to  agree  upon  such
determination  or  calculation  within
two  (2)  Business  Days  of  such  disputed  determination  or  arithmetic
calculation  (as  the  case  may
be)  being  submitted  to  the  Borrower  or  the  Holder,  then  the  Borrower
shall,  within  two  (2)
Business  Days,  submit  via  facsimile  (a)  the  disputed  determination  of
the  Conversion  Price,  the
closing  bid  price,  the  or  fair  market  value  (as  the  case  may  be)  to
an  independent,  reputable
investment  bank  selected  by  the  Borrower  and  approved  by  the  Holder
or  (b)  the  disputed
arithmetic  calculation  of  the  Conversion  Price,  Conversion  Amount,  any
prepayment  amount  or
Default  Amount,  Default  Sum  to  an  independent,  outside  accountant
selected  by  the  Holder  that
is reasonably acceptable to the Borrower. The Borrower shall cause at its
expense the investment
bank or the accountant to perform the determinations or calculations and notify
the Borrower and
the  Holder  of  the  results  no  later  than  ten  (10)  Business  Days  from
the  time  it  receives  such
disputed  determinations  or  calculations.  Such  investment  bank's  or
accountant's  determination
or calculation shall be binding upon all parties absent demonstrable error.

           4.14     Terms of Future Financings.  So long as this Note is
outstanding, upon any
issuance  by  the  Borrower  or  any  of  its  subsidiaries  of  any  security
with  any  term  more  favorable
to  the  holder  of  such  security  or  with  a  term  in  favor  of  the
holder  of  such  security  that  was  not
similarly  provided  to  the  Holder  in  this  Note,  then  the  Borrower
shall  notify  the  Holder  of  such
additional  or  more  favorable  term  and  such  term,  at  Holder's  option,
shall  become  a  part  of  the
transaction  documents  with  the  Holder.   The  types  of  terms  contained
in  another  security  that
may  be  more  favorable  to  the  holder  of  such  security  include,  but
are  not  limited  to,  terms
addressing  conversion  discounts,  prepayment  rate,  conversion  lookback
periods,  interest  rates,
original   issue   discounts,   stock   sale   price,   private   placement
price   per   share,   and   warrant
coverage.

           4.15     Piggyback  Registration  Rights.   The  Borrower  shall
include  on  the  next
registration statement the Borrower files with SEC (or on the subsequent
registration statement if
such  registration  statement  is  withdrawn)  all  shares  issuable  upon
conversion  of  this  Note.
Failure  to  do  so  will  result  in  liquidated  damages  of  25%  of  the
outstanding  principal  balance  of
this  Note,  but  not  less  than  Fifteen  Thousand  and  No/100  United
States  Dollars  ($15,000),  being
immediately due and payable to the Holder at its election in the form of cash
payment or addition
to the balance of this Note.

                            [signature page follows]

                                    23

<PAGE>

      IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by its
duly authorized officer as of the date first above written.

                                        CLEAN    ENERGY    TECHNOLOGIES,
                                        INC.

                                        By:

                                        Name: Meddy Sahebi
                                        Title: Executive Chairman

                                    24

<PAGE>

                                EXHIBIT A
                          NOTICE OF CONVERSION

           The  undersigned  hereby  elects  to  convert
$_________________principal  amount
of  the  Note  (defined  below)  together  with  $________________  of  accrued
and  unpaid  interest
thereto,  totaling  $_____________  into  that  number  of  shares  of  Common
Stock  to  be  issued
pursuant  to  the  conversion  of  the  Note  ("Common  Stock")  as  set  forth
below,  of  Clean  Energy
Technologies,  Inc.,  a  Nevada  corporation  (the  "Borrower"),  according  to
the  conditions  of  the
convertible  note  of  the  Borrower  dated  as  of  July  6,  2016  (the
"Note"),  as  of  the  date  written
below.  No fee will be charged to the Holder for any conversion, except for
transfer taxes, if any.

Box Checked as to applicable instructions:

      [ ]  The  Borrower  shall  electronically  transmit  the  Common  Stock
issuable  pursuant
           to this Notice of Conversion to the account of the undersigned or its
nominee with
           DTC through its Deposit Withdrawal At Custodian system ("DWAC
Transfer").

           Name of DTC Prime Broker:
           Account Number:

      [  ] The   undersigned   hereby   requests   that   the   Borrower   issue
a   certificate   or
           certificates  for  the  number  of  shares  of  Common  Stock  set
forth  below  (which
           numbers  are  based  on  the  Holder's  calculation  attached
hereto)  in  the  name(s)
           specified immediately below or, if additional space is necessary, on
an attachment
           hereto:

           Name: [NAME]
           Address: [ADDRESS]

           Date of Conversion:                      _____________
           Applicable Conversion Price:            $____________
           Number of Shares of Common Stock to be Issued
             Pursuant to Conversion of the Notes:  ______________
           Amount of Principal Balance Due remaining
             Under the Note after this conversion: ______________
           Accrued and unpaid interest remaining:  ______________

           [HOLDER]

           By:_____________________________
           Name:  [NAME]
           Title:    [TITLE]
           Date:  [DATE]

4818-3048-2483, v.  1-2690-2064, v.  1-0454, v.  1

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