Document:

Exhibit
      10.16

    
      	
              CONFIDENTIAL
                TREATMENT

            
	
               REQUESTED
                PURSUANT TO RULE 24b-2

            
	
               

            
	
              Certain
                portions of this exhibit have been omitted pursuant to a request
                for
                confidential treatment under Rule 24b-2 of the Securities Exchange
                Act of
                1934. The omitted materials have been filed separately with the Securities
                and Exchange Commission.

            

    

     

    RA
      CAPACITY CONFIRMATION

    BETWEEN

    MMC
      ENERGY NORTH AMERICA, LLC

    AND

    OCCIDENTAL
      POWER SERVICES, INC.

    

    This
      Long
      Form Resource Adequacy (“RA”) Capacity Confirmation (“Confirmation Agreement”)
      shall confirm and effectuate the agreement reached on January 23, 2007 (the
      “Confirmation Effective Date”) between MMC Energy North America, LLC (“MMC” or
“Seller”) and Occidental Power Services, Inc. (“OPSI” or “Buyer”), each
      individually a “Party” and together the “Parties”, in which Seller agrees to
      provide to Buyer the right to the RA capacity product described herein (the
      “Product”). Subject to the terms and conditions of this Confirmation Agreement,
      Seller shall sell to Buyer and Buyer shall purchase from Seller the Product
      as
      specified below. Capitalized terms used but not otherwise defined in this
      Confirmation Agreement have the meanings described in the Tariff (as defined
      below).

    

    ARTICLE
      1

    DEFINITIONS

    

    
      	1.1  	
              “Applicable
                Laws” means any law, rule, regulation, order, decision, judgment, or other
                legal or regulatory determination by any Governmental Body having
                jurisdiction over one or both Parties or this Transaction, including
                without limitation, the Tariff. 

            

    

     

    
      	1.2  	
              “Bankrupt”
                means with respect to any entity, such entity (i) files a petition
                or
                otherwise commences, authorizes or acquiesces in the commencement
                of a
                proceeding or cause of action under any bankruptcy, insolvency,
                reorganization or similar law, or has any such petition filed or
                commenced
                against it, (ii) makes an assignment or any general arrangement for
                the
                benefit of creditors, (iii) otherwise becomes bankrupt or insolvent
                (however evidenced), (iv) has a liquidator, administrator, receiver,
                trustee, conservator or similar official appointed with respect to
                it or
                any substantial portion of its property or assets, or (v) is generally
                unable to pay its debts as they fall
                due.

            

    

     

    
      	1.3  	
              “Business
                Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank
                holiday. A business day shall open at 8:00 a.m. and close at 5:00
                p.m.
                local time for the relevant Party’s principal place of business. The
                relevant Party, in each instance unless otherwise specified, shall
                be the
                Party from whom the notice, payment or delivery is being sent, and
                by whom
                the notice or payment or delivery is to be
                received.

            

    

     

    
      	1.4  	
              “Buyer”
                has the meaning specified in the introductory paragraph
                hereof.

            

    

    
       

      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    
      	1.5  	
              “CAISO”
                means the California Independent System Operator, or its
                successor.

            

    

     

    
      	1.6  	
              “CAISO
                Control Area” has the meaning specified in the
                Tariff.

            

    

     

    
      	1.7  	
              “CAISO
                Controlled Grid” has the meaning specified in the
                Tariff.

            

    

     

    
      	1.8  	
              “Capacity
                Replacement Price” means (a) the price paid for any Replacement Capacity
                purchased by Buyer pursuant to Section 5.3
                hereof, plus costs reasonably incurred by Buyer in purchasing such
                Replacement Capacity, or (b) absent a purchase of any Replacement
                Capacity, the market price for such Designated RA Capacity not provided
                at
                the Delivery Point. 

            

    

     

    
      	1.9  	
              “Confirmation
                Agreement” has the meaning specified in the introductory paragraph
                hereof.

            

    

     

    
      	1.10  	
              “Confirmation
                Effective Date” has the meaning specified in the introductory paragraph
                hereof.

            

    

     

    
      	1.11  	
              “Contingent
                Firm RA Product” has the meaning specified in Section 3.3
                hereof.

            

    

     

    
      	1.12  	
              “Contract
                Price” means, for any Monthly Delivery Period, the product of the RA
                Capacity Flat Price and the Price Shape for such
                period.

            

    

     

    
      	1.13  	
              “Contract
                Quantity” means the total Unit Contract Quantity for all
                Units.

            

    

     

    
      	1.14  	
              “CPUC”
                means the California Public Utilities Commission or any successor
                thereto.

            

    

     

    
      	1.15  	
              “CPUC
                Decisions” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042,
                06-06-064, 06-07-031 and subsequent decisions related to resource
                adequacy, as may be amended from time to time by the
                CPUC.

            

    

     

    
      	1.16  	
              “Delivery
                Period” has the meaning specified in Section 4.1
                hereof.

            

    

     

    
      	1.17  	
              “Delivery
                Point” has the meaning specified in Section 4.2
                hereof.

            

    

     

    
      	1.18  	
              “Designated
                RA Capacity” means, for each Unit, the amount of RA Capacity that Seller
                provides to Buyer pursuant to this Confirmation that is certified
                for
                inclusion in RAR Showings and if applicable LAR Showings, in each
                case as
                determined or approved by the CPUC (and/or, to the extent authorized
                by
                the CPUC, by the CAISO) pursuant to the CPUC Decisions, or by an
                LRA
                having jurisdiction. Designated RA Capacity shall include those attributes
                associated with the capacity identified in Article
                2
                and Article
                3
                hereof.

            

    

     

    
      	1.19  	
              “Downgrade
                Event” shall mean, with respect to each of the Parties, either that such
                Party no longer meets the credit requirements necessary to participate
                in
                markets operated by the CAISO or shall have become
                Bankrupt.

            

    

     

    
      	1.20  	
              “Early
                Termination Date” has the meaning set forth in Section 13.1
                hereof.

            

    

     

    
      	1.21  	
              “Event
                of Default” shall have the meaning set forth in Section 13.1
                hereof.

            

    

     

    
      	1.22  	
              “Firm
                RA Product” has the meaning specified in the Section 3.2
                hereof.

            

    

     

    
      	1.23  	
              “Governmental
                Body” means any federal, state, local, municipal or other government; any
                governmental, regulatory or administrative agency, commission or
                other
                authority lawfully exercising or entitled to exercise any administrative,
                executive, judicial, legislative, police, regulatory or taxing authority
                or power; and any court or governmental
                tribunal.

            

    

    
       

      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	1.24  	
              “LAR”
                means local area reliability, which is any program of localized resource
                adequacy requirements established for jurisdictional LSE’s by the CPUC
                pursuant to the CPUC Decisions, or by another LRA having jurisdiction
                over
                the LSE. LAR may also be known as local resource adequacy, local
                RAR, or
                local capacity requirement in other regulatory proceedings or legislative
                actions.

            

    

     

    
      	1.25  	
              “LAR
                Attributes” means, with respect to a Unit, any and all resource adequacy
                attributes (or other locational attributes related to system reliability),
                as may be identified from time to time by the CPUC, CAISO, LRA, or
                other
                Governmental Body having jurisdiction, associated with the physical
                location or point of electrical interconnection of the Unit within
                the
                CAISO Control Area, that can be counted toward LAR, but exclusive
                of any
                RAR Attributes which are not associated with where in the CAISO Control
                Area the Unit is physically located or electrically interconnected.
                For
                clarity, it should be understood that the LAR Attributes associated
                with a
                Unit by virtue of its location or point of electrical interconnection
                may
                change as the CAISO, LRA, or other Governmental Body, defines new
                or
                re-defines existing local areas and such change will not result in
                a
                change in payments made pursuant to this transaction.
                

            

    

     

    
      	1.26  	
              “LAR
                Showings” means the LAR compliance showings (or similar or successor
                showings) an LSE is required to make to the CPUC (and, to the extent
                authorized by the CPUC, to the CAISO) pursuant to the CPUC Decisions,
                or
                to an LRA having jurisdiction over the
                LSE.

            

    

     

    
      	1.27  	
              “LRA”
                means a Local Regulatory Authority, as defined in the
                Tariff.

            

    

     

    
      	1.28  	
              “LSE”
                means load-serving entity. LSEs may be an investor-owned utility,
                an
                electric service provider, a community aggregator or community choice
                aggregator, or a municipality serving load in the CAISO Control Area
                (excluding exports).

            

    

     

    
      	1.29  	
              “Monthly
                Delivery Period” means each calendar month during the Delivery
                Period.

            

    

     

    
      	1.30  	
              “Monthly
                RA Capacity Payment” has the meaning specified in Section 4.4
                hereof.

            

    

     

    
      	1.31  	
              “NERC/GADS
                Protocols” means the North American Electric Reliability Council (NERC)
                Generating Availability Data System (GADS) protocols, as may be updated
                from time to time.

            

    

     

    
      	1.32  	
              “Non-Excusable
                Event” means Seller's (a) negligence, (b) failure to perform its
                obligations under this Confirmation, including, without limitation,
                the
                failure to cause the owner, operator or SC of a Unit to comply with
                the
                operations and maintenance standards specified in Section 8.2(f),
                or (c) failure to comply, or cause the owner, operator or SC of the
                Units
                to comply, with the Tariff with respect to the Units providing RAR
                Attributes and LAR Attributes, as
                applicable.

            

    

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	1.33  	
              “Outage”
                means any CAISO approved disconnection, separation or reduction in
                the
                capacity of any Unit that relieves all or part of the offer obligations
                of
                the Unit consistent with the
                Tariff.

            

    

     

    
      	1.34  	
              “Performance
                Assurance” means collateral in the form of either cash, Letter(s) of
                Credit or other security acceptable to the Requesting
                Party.

            

    

     

    
      	1.35  	
              “Planned
                Outage” shall have the meaning in CPUC Decisions, namely a planned,
                scheduled, or any other Outage for the routine repair or maintenance
                of
                the Unit, or for the purposes of new construction work, and does
                not
                include any Outage designated as either forced or unplanned as defined
                by
                the CAISO or NERC/GADS protocols.

            

    

     

    
      	1.36  	
              “Price
                Shape” means the Price Shape specified in the Monthly Payment Price Shape
                Table in Section 4.4
                hereof.

            

    

     

    
      	1.37  	
              “Product”
                has the meaning specified in the introductory paragraph
                hereof.

            

    

     

    
      	1.38  	
              “Prorated
                Percentage of Unit Factor” means the percentage of RA Capacity, as
                specified in Article
                2
                hereof, from the Unit that is dedicated to
                Buyer.

            

    

     

    
      	1.39  	
              “RA
                Availability” means, for each Unit, expressed as a percentage, (a) the
                Unit's Designated RA Capacity for a Monthly Delivery Period, divided
                by
                (b) the Unit Contract Quantity, provided that a Unit's RA Availability
                shall not exceed [***].

            

    

     

    
      	1.40  	
              “RA
                Capacity” means the qualifying and deliverable capacity of the Unit for
                RAR and LAR purposes for the Delivery Period, as determined by the
                CAISO,
                or other Governmental Body authorized to make such determination
                under
                Applicable Laws. RA Capacity encompasses both the RAR Attributes
                and LAR
                Attributes of the capacity provided by a
                Unit.

            

    

     

    
      	1.41  	
              “RA
                Capacity Flat Price” means the price specified in the RA Capacity Flat
                Price Table in Section 4.4
                hereof.

            

    

     

    
      	1.42  	
              “RAR”
                means the resource adequacy requirements established for LSEs by
                the CPUC
                pursuant to the CPUC Decisions, or by an LRA or other Governmental
                Body
                having jurisdiction.

            

    

     

    
      	1.43  	
              “RAR
                Attributes” means, with respect to a Unit, any and all resource adequacy
                attributes, as may be identified from time to time by the CPUC, LRA,
                or
                Governmental Body having jurisdiction, that can be counted toward
                RAR,
                exclusive of any LAR Attributes.

            

    

     

    
      	1.44  	
              “RAR
                Showings” means the RAR compliance showings (or similar or successor
                showings) an LSE is required to make to the CPUC (and/or, to the
                extent
                authorized by the CPUC, to the CAISO), pursuant to the CPUC Decisions,
                or
                to an LRA having jurisdiction.

            

    

     

    
      	1.45  	
              “Replacement
                Capacity” has the meaning specified in Section 5.3
                hereof.

            

    

     

    
      	1.46  	
              “Replacement
                Unit” means a generating unit meeting the requirements specified in
                Section 5.2
                hereof.

            

    

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	1.47  	
              “Resource
                Category” shall be as described in the CPUC’s 2007
                Filing Guide for System and Local Resource Adequacy (RA) Compliance
                Filings,
                as such may be modified, amended, supplemented or updated from time
                to
                time.

            

    

     

    
      	1.48  	
              “RMR
                Agreement” has the meaning specified in Section 8.2(b)
                hereof.

            

    

     

    
      	1.49  	
              “Scheduling
                Coordinator” or “SC” has the meaning defined in the
                Tariff.

            

    

     

    
      	1.50  	
              “Seller”
                has the meaning specified in the introductory paragraph hereof.
                

            

    

     

    
      	1.51  	
              “Supply
                Plan” means the supply plans, or similar or successor filings, that each
                Scheduling Coordinator representing RA Capacity submits to the CAISO,
                LRA,
                or other Governmental Body, pursuant to Applicable Laws, in order
                for that
                RA Capacity to count for its RAR Attributes or LAR
                Attributes.

            

    

     

    
      	1.52  	
              “Tariff”
                means the tariff and protocol provisions of the CAISO, as amended
                or
                supplemented from time to time.

            

    

     

    
      	1.53  	
              “Transaction”
                has the meaning specified in the introductory paragraph
                hereof.

            

    

     

    
      	1.54  	
              “Unit”
                or “Units” shall mean the generation assets described in Article
                2
                hereof (including any Replacement Units), from which RA Capacity
                is
                provided by Seller to Buyer.

            

    

     

    
      	1.55  	
              “Unit
                Contract Quantity” means the quantity of RA Capacity for a Unit as of the
                Confirmation Effective Date, as specified in Section 4.3
                hereof.

            

    

     

    ARTICLE
      2

    UNIT
      INFORMATION

     

    [***]

     

    ARTICLE
      3

    RESOURCE
      ADEQUACY CAPACITY PRODUCT

     

    During
      the Delivery Period, Seller shall provide the Product to Buyer pursuant to
      the
      terms of this Confirmation. The Product shall (a) include both RAR Attributes
      and LAR Attributes, and (b) be a Firm RA Product or a Contingent Firm RA
      Product, as selected below. The Product does not confer to Buyer any right
      to
      the electrical output from the Units, other than the right to include the
      Designated RA Capacity associated with the Contract Quantity in RAR Showings,
      LAR Showings if applicable, and any other capacity or resource adequacy markets
      or proceedings as specified in this Confirmation. Specifically, no energy or
      ancillary services associated with any Unit is required to be made available
      to
      Buyer as part of this Transaction and Buyer shall not be responsible for
      compensating Seller for Seller's commitments to the CAISO required by this
      Confirmation. Seller retains the right to sell any RA Capacity from a Unit
      in
      excess of that Unit’s Contract Quantity, and any RAR Attributes or LAR
      Attributes not otherwise sold under this Confirmation.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      3.1  RAR
        and LAR Attributes

    

     

    Seller
      shall provide Buyer with the Designated RA Capacity and the RAR Attributes
      and
      LAR Attributes from each Unit, as measured in MWs. For each Monthly Delivery
      Period, a Unit's Designated RA Capacity shall be equal to the product of (x)
      the
      Unit's RA Capacity, after reflecting adjustments for Outages, if any, as
      determined by the CPUC (and, to the extent authorized by the CPUC, by the
      CAISO), or by an LRA having jurisdiction, and (y) the Unit's Prorated Percentage
      of Unit Factor, provided that the total amount of Designated RA Capacity from
      all Units shall not exceed the Contract Quantity.

     

    
      3.2  o 
Firm
        RA
        Product

    

     

    Seller
      shall provide Buyer with Designated RA Capacity from the Units in the amount
      of
      the Contract Quantity. If the Units are not available to provide the full amount
      of the Contract Quantity for any reason other than Force Majeure, including
      without limitation any Outage or any adjustment of the RA Capacity of any Unit,
      Seller shall provide Buyer with Designated RA Capacity from one or more
      Replacement Units pursuant to Section 5.2
      hereof.
      [***]

     

    
      3.3  X
        Contingent Firm RA Product

    

     

    Seller
      shall provide Buyer with Designated RA Capacity from the Units in the amount
      of
      the Contract Quantity. If the Units are not available to provide the full amount
      of the Contract Quantity because of a Non-Excusable Event, Seller shall provide
      Buyer with Designated RA Capacity from one or more Replacement Units pursuant
      to
      Section 5.2
      hereof.
      In such case, if Seller fails to provide Buyer with replacement Designated
      RA
      Capacity from Replacement Units pursuant to Section 5.2,
      then at
      Buyer’s option, (a) Seller shall be liable for damages pursuant to Section
5.4
      hereof,
      or (b) Seller shall indemnify Buyer for penalties or fines pursuant to Section
      5.5
      hereof.
      If the Units provide less than the full amount of the Contract Quantity for
      any
      reason other than a Non-Excusable Event, Seller is not obligated to provide
      Buyer with replacement Designated RA Capacity or to indemnify Buyer for
      penalties or fines pursuant to Section 5.5
      hereof.

     

    ARTICLE
      4

    DELIVERY
      AND PAYMENT

     

    
      4.1  Delivery
        Period

    

     

    The
      Delivery Period shall be: [***] through [***], inclusive.

     

    
      4.2  Delivery
        Point

    

     

    The
      Delivery Point for each Unit shall be the CAISO Control Area and, if applicable,
      the LAR region in which the Unit is electrically interconnected. 

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

       

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      4.3  Unit
        Contract Quantity

    

     

    The
      Contract Quantity of each Unit for each Monthly Delivery Period shall
      be:

     

    Unit
      Contract Quantity (MWs)

     

    
      	
              Month

            	 	
              2007

            	 	
              2008

            	 	
              2009

            	 	
              2010

            	 	
              2011

            	 	
              2012

            	 	
              2013

            	 	
              2014

            	 
	
              January

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              February

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              March

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              April

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              May

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              June

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              July

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              August

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              September

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              October

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              November

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            
	
              December

            	 	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            	 	
              [***

            	
              ]

            

    

    

    If
      any
      portion of the Unit Contract Quantity of any Unit providing a Contingent Firm
      RA
      Product is not available after the Confirmation Effective Date for reasons
      other
      than a Non-Excusable Event, the Unit Contract Quantity shall be adjusted to
      the
      product of the Unit's (a) RA Capacity following adjustment, and (b) Prorated
      Percentage of Unit Factor, provided that the resulting Unit Contract Quantity
      shall not exceed the original Unit Contract Quantity on the Confirmation
      Effective Date.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      4.4  Monthly
        RA Capacity Payment

    

     

    Buyer
      shall make a Monthly RA Capacity Payment to Seller for each Unit, in arrears,
      following each Monthly Delivery Period. Each Unit's Monthly RA Capacity Payment
      shall be equal to [***]. Each Monthly RA Capacity Payment may be subject to
      reduction in accordance with Section 4.5
      hereof.

     

    RA
      CAPACITY FLAT PRICE TABLE

     

    
      	
              Contract

              Year

            	 	
              RA
                Capacity Flat Price

              [***]

            	 
	
              2007

            	 	 	
              [***

            	
              ]

            
	
              2008

            	 	 	
              [***

            	
              ]

            
	
              2009

            	 	 	
              [***

            	
              ]

            
	
              2010

            	 	 	
              [***

            	
              ]

            
	
              2011

            	 	 	
              [***

            	
              ]

            
	
              2012

            	 	 	
              [***

            	
              ]

            
	
              2013

            	 	 	
              [***

            	
              ]

            
	
              2014

            	 	 	
              [***

            	
              ]

            

    

     

    The
      respective monthly Price Shape, set forth in the Monthly
      Payment Price Shape Table
      below,
      shall apply throughout the entire Delivery Period. 

     

    MONTHLY
      PAYMENT PRICE SHAPE TABLE

     

    
      	
              Contract
                Month

            	 	
              Price
                Shape

              (%)

            	 
	
              Jan

            	 	 	
              [***

            	
              ]

            
	
              Feb

            	 	 	
              [***

            	
              ]

            
	
              Mar

            	 	 	
              [***

            	
              ]

            
	
              Apr

            	 	 	
              [***

            	
              ]

            
	
              May

            	 	 	
              [***

            	
              ]

            
	
              Jun

            	 	 	
              [***

            	
              ]

            
	
              Jul

            	 	 	
              [***

            	
              ]

            
	
              Aug

            	 	 	
              [***

            	
              ]

            
	
              Sep

            	 	 	
              [***

            	
              ]

            
	
              Oct

            	 	 	
              [***

            	
              ]

            
	
              Nov

            	 	 	
              [***

            	
              ]

            
	
              Dec

            	 	 	
              [***

            	
              ]

            

    

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      4.5  Reduction
        of Monthly RA Capacity Payment (Contingent Firm RA Product
        only)

    

     

    For
      any
      Contingent Firm RA Product, the Monthly RA Capacity Payment for each Unit shall
      be reduced by its RA Availability Adjustment, which is calculated as follows:
      

     

    [***]

     

    
      4.6  Allocation
        of Other Payments and Costs

    

     

    Seller
      may retain any revenues it may receive from the CAISO or any other third party
      with respect to any Unit for (a) start-up, shut-down and minimum load
      costs, (b) capacity revenue for ancillary services, (c) energy sales, and (d)
      any revenues for black start or reactive power services. However, Buyer shall
      be
      entitled to receive and retain all revenues associated with the Designated
      RA
      Capacity of any Unit during the Delivery Period (including any capacity or
      availability revenues from RMR Agreements for any Unit, and Reliability
      Compensation Services Tariff capacity payments, but excluding payments described
      in clauses (a) and (b) above). In accordance with Section 4.4
      of this
      Confirmation, all such revenues received by Seller, a Unit’s SC, owner, or
      operator shall be remitted to Buyer, and Seller shall indemnify Buyer for any
      such revenues that Buyer does not receive, and Seller shall pay such revenues
      to
      Buyer if the Unit’s SC, owner, or operator fails to remit those revenues to
      Buyer. If Seller fails to pay such revenues to Buyer, Buyer may offset any
      amounts owing to it for these revenues against any future amounts it may owe
      to
      Seller under this Confirmation. If a centralized capacity market develops within
      the CAISO region, Buyer will have exclusive rights to offer, bid or otherwise
      submit Designated RA Capacity provided to Buyer pursuant to this Confirmation
      for re-sale in such market, and retain and receive any and all related revenues.
      

     

    ARTICLE
      5

    SELLER'S
      FAILURE TO DELIVER CONTRACT QUANTITY

     

    
      5.1  Notices
        and Filings

    

     

    If
      the
      Units will not be available to provide Designated RA Capacity in the full amount
      of the Contract Quantity for any RAR and/or LAR Showings for the Delivery
      Period, Seller shall, no later than the earlier of (a) [***] after the loss
      of
      any Designated RA Capacity, or (b) [***] before the relevant deadline for such
      RAR or LAR Showing, notify Buyer of the Designated RA Capacity of each Unit
      which can be included in such Showings. Seller shall, on a timely basis, submit,
      or cause each Unit's Scheduling Coordinator to submit, Supply Plans to identify
      and confirm the Designated RA Capacity of each Unit sold to Buyer. Seller shall
      cause the Unit’s Scheduling Coordinator to certify to Buyer, no later than the
      earlier of (a) [***] after the Confirmation Effective Date, or (b) [***] before
      the relevant deadline for any applicable RAR or LAR Showing, that Buyer will
      be
      credited with the Designated RA Capacity for the Delivery Period in the Unit’s
      Scheduling Coordinator’s Supply Plan. Seller shall indemnify and hold harmless
      Buyer from any costs, monetary penalties or fines Buyer may incur in the event
      any Unit’s Scheduling Coordinator fails to timely submit Supply Plans that
      identify Buyer’s right to the Designated RA Capacity purchased hereunder. If
      Seller fails to pay those costs, monetary penalties or fines, or fails to
      reimburse Buyer for those costs, monetary penalties or fines, then Buyer may
      offset any amounts owing to it under this Section 5.1
      against
      any future amounts it may owe to Seller under this Confirmation.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      5.2  RA
        Capacity from Replacement Units

    

     

    If
      Seller
      is required to provide Designated RA Capacity from one or more Replacement
      Units
      pursuant to Sections 3.2
      or
3.3,
      Seller
      shall, at no cost to Buyer, provide Buyer with replacement RA Capacity from
      one
      or more Replacement Units, such that the total amount of Designated RA Capacity
      provided to Buyer from all Units and Replacement Units equals the Contract
      Quantity. The designation of any Replacement Unit by Seller shall be subject
      to
      Buyer’s prior written approval, which shall not be unreasonably withheld. For
      clarity, in the aggregate all Units and Replacement Units must provide to Buyer
      RAR Attributes and LAR Attributes equivalent to those that were provided by
      the
      original Units and that were sold under this Confirmation. Seller shall identify
      Replacement Units meeting the above requirements no later than the earlier
      of
      [***] after the loss of any Designated RA Capacity, or [***] before the relevant
      deadline for Buyer's RAR Showing and/or LAR Showing. Once Seller has identified
      in writing any Replacement Units that meet the requirements of this Section
      5.2,
      any
      such Replacement Unit shall be automatically deemed to be a Unit for purposes
      of
      this Confirmation until Seller notifies Buyer, in writing, of the availability
      of the original Units.

     

    For
      purposes of this Confirmation, Seller shall be deemed to have failed to provide
      Buyer with Designated RA Capacity in the full amount of the Contact Quantity
      if
      the Units and Replacement Units providing such Designated RA Capacity do not
      in
      the aggregate provide to Buyer the RAR Attributes and LAR Attributes contracted
      for pursuant to this Confirmation.

     

    
      5.3  Purchase
        of Replacement Capacity

    

     

    If
      Seller
      fails to provide any portion of Designated RA Capacity from Replacement Units
      as
      required by Section 5.2
      hereof,
      Buyer may, but shall not be required to, replace any Designated RA Capacity
      not
      provided by Seller with capacity (such replacement capacity being referred
      to as
      "Replacement Capacity") having equivalent RAR and LAR Attributes compared to
      the
      Designated RA Capacity not provided by Seller. Buyer may enter into purchase
      transactions with one or more other parties to replace Designated RA Capacity
      not provided by Seller. Additionally, Buyer may enter into one or more
      arrangements to repurchase its obligation to sell and deliver the Product to
      another party, and such arrangements shall be considered to be the procurement
      of Replacement Capacity. Buyer shall act in a commercially reasonable manner
      in
      purchasing any Replacement Capacity.

     

    
      5.4  Damages
        for Failure to Deliver

    

     

    If
      Seller
      is required to provide Designated RA Capacity from one or more Replacement
      Units
      pursuant to Sections 3.2
      or
3.3,
      and
      fails to do so pursuant to Section 5.2
      hereof,
      then, for purposes of determining the damages due to Buyer, Seller shall pay
      to
      Buyer an amount equal to [***]. If Seller fails to pay those damages, then
      Buyer
      may offset those damages owed it against any future amounts it may owe to Seller
      under this Confirmation.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      5.5  Indemnities
        for Failure to Deliver Designated RA Capacity

    

     

    Seller
      agrees to indemnify Buyer for any monetary penalties or fines assessed against
      Buyer by the CPUC or the CAISO, or an LRA having jurisdiction, resulting from:
      [***]. With respect to the foregoing, the Parties shall use commercially
      reasonable efforts to minimize such penalties and fines, [***].

     

    ARTICLE
      6

    CAISO
      OFFER REQUIREMENTS

     

    During
      the Delivery Period, except to the extent any Unit is on an Outage, or is
      affected by an event of Force Majeure that results in a partial or full Outage
      of that Unit, Seller shall either schedule or cause the Unit’s Scheduling
      Coordinator to schedule with, or make available to, the CAISO each Unit’s
      Designated RA Capacity in compliance with the Tariff, and shall perform all,
      or
      cause the Unit’s Scheduling Coordinator, owner, or operator, as applicable, to
      perform all obligations under the Tariff that are associated with the sale
      of
      Designated RA Capacity hereunder. Buyer shall have no liability for the failure
      of Seller or the failure of any Unit’s Scheduling Coordinator, owner or operator
      to comply with such Tariff provisions, including any penalties or fines imposed
      on Seller or the Unit’s Scheduling Coordinator, owner, or operator for such
      noncompliance.

     

    ARTICLE
      7

    PLANNED
      OUTAGES

     

    For
      Contingent Firm Products, no later than [***], Seller shall submit, or cause
      the
      Unit's Scheduling Coordinator to submit to Buyer each Unit's schedule of
      proposed Planned Outages ("Outage Schedule") for the following twenty four
      (24)
      month period or to the end of the Delivery Period, whichever is shorter. Within
      [***] after its receipt of an Outage Schedule, Buyer shall notify Seller in
      writing of any reasonable request for changes to the Outage Schedule, and Seller
      shall, consistent with Good Utility Practices, accommodate Buyer's requests
      regarding the timing of any Planned Outage. Seller or the Unit's Scheduling
      Coordinator shall notify Buyer within [***] of any change to the Outage
      Schedule. 

     

    Planned
      Outages cannot aggregate more than [***] (unless the Parties, prior to the
      first
      day of the Planned Outage, agree otherwise), and shall not be scheduled from
      each [***] during the Delivery Period. In the event that Seller has a previously
      Planned Outage that becomes coincident with a CAISO-declared system emergency,
      Seller shall make all reasonable efforts to reschedule such Planned
      Outage.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      8

    OTHER
      BUYER AND SELLER COVENANTS

     

    
      	8.1  	
              Buyer
                and Seller shall, throughout the Delivery Period, take all commercially
                reasonable actions and execute any and all documents or instruments
                reasonably necessary to ensure Buyer's right to the use of the Contract
                Quantity for the sole benefit of Buyer's RAR and LAR if applicable.
                Such
                commercially reasonable actions shall include, without
                limitation:

            

    

     

    
      	(a)  	
              Cooperating
                with and providing, and in the case of Seller causing each Unit’s
                Scheduling Coordinator, owner or operator to cooperate with and provide,
                requested supporting documentation to the CAISO, the CPUC, or any
                other
                Governmental Body responsible for administering RAR and/or LAR under
                Applicable Laws, to certify or qualify the Contract Quantity as RA
                Capacity and Designated RA Capacity. Such actions shall include,
                without
                limitation, providing information requested by the CPUC, or by an
                LRA
                having jurisdiction, to demonstrate for each month of the Delivery
                Period
                the ability to deliver the Contract Quantity from each Unit to the
                CAISO
                Controlled Grid for the minimum hours required to qualify as RA Capacity,
                and providing information requested by the CPUC, CAISO or other
                Governmental Body having jurisdiction to administer RAR or LAR to
                demonstrate that the Contract Quantity can be delivered to the CAISO
                Controlled Grid, pursuant to "deliverability" standards established
                by the
                CAISO, or other Governmental Body having jurisdiction to administer
                RAR
                and/or LAR; and

            

    

     

    
      	(b)  	
              Negotiating
                in good faith to make necessary amendments, if any, to this Confirmation
                to conform this Transaction to subsequent clarifications, revisions
                or
                decisions rendered by the CPUC, FERC, or other Governmental Body
                having
                jurisdiction to administer RAR or LAR, so as to maintain the benefits
                of
                the bargain struck by the Parties.

            

    

     

    
      	8.2  	
              Seller
                represents, warrants and covenants to Buyer that, throughout the
                Delivery
                Period: 

            

    

     

    
      	(a)  	
              Seller
                owns or has the exclusive right to the RA Capacity sold under this
                Confirmation from each Unit, and shall furnish Buyer, CAISO, CPUC
                or other
                jurisdictional LRA, or other Governmental Body with such evidence
                as may
                reasonably be requested to demonstrate such ownership or exclusive
                right;

            

    

     

    
      	(b)  	
              No
                portion of the Contract Quantity has been committed by Seller to
                any third
                party in order to satisfy RAR or LAR or analogous obligations in
                CAISO
                markets, other than pursuant to an RMR Agreement between the CAISO
                and
                either Seller or the Unit’s owner or
                operator;

            

    

     

    
      	(c)  	
              No
                portion of the Contract Quantity has been committed by Seller in
                order to
                satisfy RAR or LAR, or analogous obligations in any non-CAISO
                market;

            

    

     

    
      	(d)  	
              Each
                Unit is connected to the CAISO Controlled Grid, is within the CAISO
                Control Area, and is under the control of CAISO;
                

            

    

     

    
      	(e)  	
              In
                the event Seller has rights to the energy output of any Unit, and
                Seller
                or the Unit’s Scheduling Coordinator schedules energy from the Unit for
                export from the CAISO Control Area, or commits energy to another
                entity in
                a manner that could result in scheduling energy from the Unit for
                export
                from the CAISO Control Area, it shall do so only as allowed by, and
                in
                accordance with, Applicable Laws and such exports may, if allowed
                by the
                Tariff, be curtailed by the CAISO; 

            

    

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	(f)  	
              The
                owner or operator of each Unit is obligated to maintain and operate
                each
                Unit using "Good Utility Practice," as defined in the Tariff, and,
                if
                applicable, General Order 167 as outlined by the CPUC in the Enforcement
                of Maintenance and Operation Standards for Electric Generating Facilities
                Adopted May 6, 2004, and is obligated to abide by all Applicable
                Laws in
                operating such Unit, provided
                that the owner or operator of any Unit is not required to undertake
                capital improvements, facility enhancements, or the construction
                of new
                facilities; 

            

    

     

    
      	(g)  	
              The
                owner or operator of each Unit is obligated to comply with Applicable
                Laws, including the Tariff, relating to RA Capacity, RAR and
                LAR;

            

    

     

    
      	(h)  	
              If
                Seller is the owner of any Unit, the aggregation of all amounts of
                LAR
                Attributes and RAR Attributes that Seller has sold, assigned or
                transferred for any Unit does not exceed that Unit’s RA
                Capacity;

            

    

     

    
      	(i)  	
              With
                respect to the RA Capacity provided under this Confirmation, Seller
                shall,
                and each Unit’s SC is obligated to, comply with Applicable Laws, including
                the Tariff, relating to RA Capacity, RAR and LAR;
                

            

    

     

    
      	(j)  	
              Seller
                has notified the SC of each Unit that Seller has transferred the
                Designated RA Capacity to Buyer, and the SC is obligated to deliver
                the
                Supply Plans in accordance with the Tariff;
                and

            

    

     

    
      	(k)  	
              Seller
                has notified each Unit’s SC that Buyer is entitled to the revenues set
                forth in Section 4.6
                of
                this Confirmation, and such SC is obligated to promptly deliver those
                revenues to Buyer, along with appropriate documentation supporting
                the
                amount of those revenues.

            

    

     

    ARTICLE
      9

    CONFIDENTIALITY

     

    The
      Parties agree that Buyer may disclose the transfer of the Designated RA Capacity
      under this Transaction to any Governmental Body, the CPUC, the CAISO or any
      LRA
      having jurisdiction in order to support its LAR or RAR Showings, if applicable,
      and Seller may disclose the transfer of the Designated RA Capacity under this
      Transaction to the SC of each Unit in order for such SC to timely submit
      accurate Supply Plans; provided, that each disclosing Party shall, to the extent
      reasonable, use reasonable efforts to limit the ability of any such applicable
      Governmental Body, CAISO, LRA or SC to further disclose such information;
      provided further, that the Parties agree and acknowledge that Buyer and Seller
      are parties to a currently effective RA Marketing Services Agreement and,
      pursuant to that RA Marketing Services Agreement, Buyer may make such
      disclosures to effectuate the purposes of that RA Marketing Services Agreement
      as Buyer may deem commercially necessary in the exercise of Buyer’s sole
      discretion. Except as otherwise expressly provided herein, neither Party shall
      disclose the terms or conditions of this Confirmation Agreement to a third
      party
      (other than the Party’s employees, lenders, counsel, accountants or advisors who
      have a need to know such information and have agreed to keep such terms
      confidential) except in order to comply with any applicable law, regulation,
      or
      any exchange, control area or independent system operator rule or in connection
      with any court or regulatory proceeding; provided, however, each Party shall,
      to
      the extent practicable, use reasonable efforts to prevent or limit the
      disclosure. The Parties shall be entitled to all remedies available at law
      or in
      equity to enforce, or seek relief in connection with, this confidentiality
      obligation.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      10

    BUYER’S
      RE-SALE OF PRODUCT

    (a)  Bu

    Buyer
      may
      re-sell all or a portion of the Product delivered to Buyer hereunder without
      Seller’s consent.

     

    ARTICLE
      11

    CALIFORNIA
      CLIMATE ACTION REGISTRY

     

    In
      accordance with CPUC Rulemaking 06-04-009, upon modification of the protocols
      of
      the California Climate Action Registry to allow generation facility-specific
      registration, Seller or Seller’s supplier shall promptly (i) register with the
      California Climate Action Registry and (ii) send Buyer notice of such
      registration.

    

    ARTICLE
      12

    CREDIT
      REQUIREMENTS

     

    
      	12.1.  	
              Credit
                Assurances to Buyer. As of the execution date of this agreement,
                Buyer is
                not requiring Performance Assurance of the Seller. If Buyer has reasonable
                grounds for insecurity regarding the performance of any obligation
                (whether or not then due) by Seller, Buyer will provide Seller with
                written notice requesting Performance Assurance in an amount determined
                by
                Buyer in a commercially reasonable manner that may not exceed [***]
                of the
                remaining Monthly RA Capacity Payments during the Delivery Period.
                Upon
                receipt of such notice, Seller shall have [***] to remedy the situation
                by
                providing such Performance Assurance to Buyer. In the event that
                Seller
                fails to provide such Performance Assurance, or a guaranty or other
                credit
                assurance acceptable to Buyer within ten days of receipt of notice,
                then
                an Event of Default under Article Thirteen of this Confirmation Agreement
                will be deemed to have occurred and Buyer will be entitled to the
                remedies
                set forth in Article Thirteen of this Confirmation
                Agreement.

            

    

     

    
      	12.2.  	
              Downgrade
                Events Affecting Seller. If at any time there shall occur a Downgrade
                Event in respect of Seller, then Buyer may require Seller to provide
                Performance Assurance in an amount determined by Buyer in a commercially
                reasonable manner. In the event Seller shall fail to provide Buyer
                with
                such Performance Assurance or a guaranty or other credit assurance
                acceptable to Buyer within three business days of receipt of notice,
                then
                an Event of Default shall be deemed to have occurred and Buyer will
                be
                entitled to the remedies set forth in Article Thirteen of this
                Confirmation Agreement.

            

    

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	12.3.  	
              Credit
                Assurances to Seller. As of the execution date of this agreement,
                Seller
                is not requiring Performance Assurance of the Buyer. If Seller has
                reasonable grounds for insecurity regarding the performance of any
                obligation (whether or not then due) by Buyer, Seller will provide
                Buyer
                with written notice requesting Performance Assurance in an amount
                determined by Seller in a commercially reasonable manner that may
                not
                exceed [***] of the remaining Monthly RA Capacity Payments during
                the
                Delivery Period. Upon receipt of such notice, Buyer shall have [***]
                to
                remedy the situation by providing such Performance Assurance to Seller.
                In
                the event that Buyer fails to provide such Performance Assurance,
                or a
                guaranty or other credit assurance acceptable to Seller within ten
                days of
                receipt of notice, then an Event of Default under Article Thirteen
                of this
                Confirmation Agreement will be deemed to have occurred and Seller
                will be
                entitled to the remedies set forth in Article Thirteen of this
                Confirmation Agreement.

            

    

     

    
      	12.4.  	
              Downgrade
                Events Affecting Buyer. If at any time there shall occur a Downgrade
                Event
                in respect of Buyer, then Seller may require Buyer to provide Performance
                Assurance in an amount determined by Seller in a commercially reasonable
                manner. In the event Buyer shall fail to provide Seller with such
                Performance Assurance or a guaranty or other credit assurance acceptable
                to Seller within [***] of receipt of notice, then an Event of Default
                shall be deemed to have occurred and Seller will be entitled to the
                remedies set forth in Article Thirteen of this Confirmation
                Agreement.

            

    

     

    ARTICLE
      13

    EARLY
      TERMINATION

     

    
      	13.1  	
              Events
                of Default.

            

    

     

    An
“Event
      of Default” shall mean, with respect to a Party (a “Defaulting Party”), the
      occurrence of any of the following:

     

    
      	(a)  	
              The
                failure to make, when due, any payment required pursuant to this
                Agreement
                if such failure is not remedied within [***] after written
                notice;

            

    

     

    
      	(b)  	
              Any
                representation or warranty made by such Party herein is false or
                misleading in any material respect when made or when deemed made
                or
                repeated;

            

    

     

    
      	(c)  	
              The
                failure to perform any material covenant or obligation set forth
                in this
                Agreement (except to the extent constituting a separate Event of
                Default
                and except for such Party’s obligations to deliver or receive the Product,
                the exclusive remedy for which is provided in Article 5) if such
                failure
                is not remedied within [***] after written
                notice;

            

    

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	(d)  	
              Such
                Party becomes bankrupt;

            

    

     

    
      	(e)  	
              The
                failure of such Party to satisfy the creditworthiness requirements
                of
                Article 12 hereof; or

            

    

     

    
      	(f)  	
              Such
                Party consolidates or amalgamates with, or merges with or into, or
                transfers all or substantially all of its assets to, another entity
                and,
                at the time of such consolidation, amalgamation, merger or transfer,
                the
                resulting, surviving or transferee entity fails to assume all the
                obligations of such Party under this Agreement to which it or its
                predecessor was a party by operation of law or pursuant to an agreement
                reasonably satisfactory to the other
                Party.

            

    

     

    
      	13.2  	
              Declaration
                of an Early Termination Date and Calculation of Settlement
                Amounts.

            

    

     

    If
      an
      Event of Default with respect to a Defaulting Party shall have occurred and
      be
      continuing, the other Party (the “Non-Defaulting Party”) shall have the right
      (i) to designate a day, no earlier than the day such notice is effective and
      no
      later than [***]
      after
      such notice is effective, as an early termination date (“Early Termination
      Date”) to accelerate all amounts owing between the Parties and to liquidate and
      terminate all, but not less than all, Transactions due (each referred to as
      a
“Terminated Transaction”) between the Parties; (ii) withhold any payments due to
      the Defaulting Party under this Agreement and (iii) suspend performance. The
      Non-Defaulting Party shall calculate, in a commercially reasonable manner,
      a
      Settlement Amount for each Terminated Transaction as of the Early Termination
      Date (or, to the extent that in the reasonable opinion of the Non-Defaulting
      Party certain of such Terminated Transactions are commercially impracticable
      to
      liquidate and terminate or may not be liquidated and terminated under applicable
      law on the Early Termination Date, as soon thereafter as is reasonably
      practicable).

     

    
      	13.3  	
              Net
                Out of Settlement Amounts.

            

    

     

    The
      Non-Defaulting Party shall aggregate all Settlement Amounts into a single amount
      by: netting out (a) all Settlement Amounts that are due to the Defaulting Party,
      plus, at the option of the Non-Defaulting Party, any cash or other form of
      security then available to the Non-Defaulting Party pursuant to Article 12,
      plus
      any or all other amounts due to the Non-Defaulting Party under this Agreement
      against (b) all Settlement Amounts that are due to the Non-Defaulting Party,
      plus any or all other amounts due to the Non-Defaulting Party under this
      Agreement, so that all such amounts shall be netted out to a single liquidated
      amount (the “Termination Payment”) payable by one Party to the other. The
      Termination Payment shall be due to or due from the Non-Defaulting Party as
      appropriate.

    

    
      	13.4  	
              Notice
                of Payment of Termination
                Payment.

            

    

     

    As
      soon
      as practicable after a liquidation, notice shall be given by the Non-Defaulting
      Party to the Defaulting Party of the amount of the Termination Payment and
      whether the Termination Payment is due to or due from the Non-Defaulting Party.
      The notice shall include a written statement explaining in reasonable detail
      the
      calculation of such amount. The Termination Payment shall be made by the Party
      that owes it within [***] after such notice is effective.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    
      	13.5  	
              Disputes
                with Respect to Termination
                Payment.

            

    

     

    If
      the
      Defaulting Party disputes the Non-Defaulting Party’s calculation of the
      Termination Payment, in whole or in part, the Defaulting Party shall, within
      [***] of receipt of Non-Defaulting Party’s calculation of the Termination
      Payment, provide to the Non-Defaulting Party a detailed written explanation
      of
      the basis for such dispute; provided, however, that if the Termination Payment
      is due from the Defaulting Party, the Defaulting Party shall first transfer
      Performance Assurance to the Non-Defaulting Party in an amount equal to the
      Termination Payment.

     

    ARTICLE
      14

    PAYMENT
      AND NETTING

     

    
      	14.1  	
              Billing
                Period. 

            

    

     

    The
      calendar month shall be the standard period for all payments under this
      Agreement. As soon as practicable after the end of each month, each Party will
      render to the other Party an invoice for the payment obligations, if any,
      incurred hereunder during the preceding month.

     

    
      	14.2  	
              Timeliness
                of Payment. 

            

    

     

    All
      invoices under this Confirmation Agreement shall be due and payable in
      accordance with each Party’s invoice instructions on or before the later of the
      [***]. Each Party will make payments by electronic funds transfer, or by other
      mutually agreeable method(s), to the account designated by the other Party.
      Any
      amounts not paid by the due date will be deemed delinquent and will accrue
      interest at the Interest Rate, such interest to be calculated from and including
      the due date to but excluding the date the delinquent amount is paid in full.
      “Interest Rate” means, for any date, the lesser of (a) the per annum rate of
      interest equal to the prime lending rate as may from time to time be published
      in The Wall Street Journal under “Money Rates” on such day (or if not published
      on such day on the most recent preceding day on which published), plus two
      percent (2%) and (b) the maximum rate permitted by applicable law. 

     

    
      	14.3  	
              Disputes
                and Adjustments of Invoices.

            

    

     

    A
      Party
      may, in good faith, dispute the correctness of any invoice or any adjustment
      to
      an invoice, rendered under this Confirmation Agreement (or otherwise) or adjust
      any invoice for any arithmetic or computational error within twelve (12) months
      of the date the invoice, or adjustment to an invoice, was rendered. In the
      event
      an invoice or portion thereof, or any other claim or adjustment arising
      hereunder, is disputed, payment of the undisputed portion of the invoice shall
      be required to be made when due, with notice of the objection given to the
      other
      Party. Any invoice dispute or invoice adjustment shall be in writing and shall
      state the basis for the dispute or adjustment. Payment of the disputed amount
      shall not be required until the dispute is resolved. Upon resolution of the
      dispute, any required payment shall be made within [***] of such resolution
      along with interest accrued at the Interest Rate from and including the due
      date
      to but excluding the date paid. Inadvertent overpayments shall be returned
      upon
      request or deducted by the Party receiving such overpayment from subsequent
      payments, with interest accrued at the Interest Rate from and including the
      date
      of such overpayment to but excluding the date repaid or deducted by the Party
      receiving such overpayment. Any dispute with respect to an invoice is waived
      unless the other Party is notified in accordance with this Section 14(c) within
      twelve (12) months after the invoice is rendered or any specific adjustment
      to
      the invoice is made. If an invoice is not rendered within twelve (12) months
      after the close of the month during which performance of a transaction occurred,
      the right to payment for such performance is waived.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	14.4  	
              Netting
                of Payments. 

            

    

     

    The
      Parties hereby agree that they shall discharge mutual debts and payment
      obligations due and owing to each other on the same date pursuant to all
      transactions through netting, in which case all amounts owed by each Party
      to
      the other Party for the purchase and sale of Products during the monthly billing
      period under this Confirmation Agreement, including but not limited to any
      related damages calculated pursuant Article 5, interest, and payments or
      credits, shall be netted so that only the excess amount remaining due shall
      be
      paid by the Party who owes it. 

     

    
      	14.5  	
              Payment
                Obligation Absent Netting.

            

    

     

    If
      no
      mutual debts or payment obligations exist and only one Party owes a debt or
      obligation to the other during the monthly billing period, including, but not
      limited to, any related damage amounts calculated pursuant to Article 5,
      interest, and payments or credits, that Party shall pay such sum in full when
      due.

     

    ARTICLE
      15

    LIMITATION
      OF REMEDIES, LIABILITY AND DAMAGES

     

    EXCEPT
      AS SET FORTH HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
      A
      PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE
      PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED
      IN
      THIS CONFIRMATION AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH
      OF
      ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED,
      SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE
      REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION
      AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY
      OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY
      SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES
      SHALL
      BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR
      IN
      EQUITY ARE WAIVED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
      PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
      INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY
      PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS
      HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO
      THE
      CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER
      SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE
      EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES
      ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR
      OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES
      CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR
      LOSS.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    ARTICLE
      16

    AUDIT

     

    Each
      Party has the right, at its sole expense and during normal working hours, to
      examine the records of the other Party to the extent reasonably necessary to
      verify the accuracy of any statement, charge or computation made pursuant to
      this Confirmation Agreement. If requested, a Party shall provide to the other
      Party statements evidencing the quantity delivered at the Delivery Point. If
      any
      such examination reveals any inaccuracy in any statement, the necessary
      adjustments in such statement and the payments thereof will be made promptly
      and
      shall bear interest calculated at the Interest Rate from the date the
      overpayment or underpayment was made until paid; provided, however, that no
      adjustment for any statement or payment will be made unless objection to the
      accuracy thereof was made prior to the lapse of twelve (12) months from the
      rendition thereof, and thereafter any objection shall be deemed
      waived.

    

    ARTICLE
      17

    TITLE
      AND RISK OF LOSS

     

    Title
      to
      and risk of loss related to the Product shall transfer from Seller to Buyer
      at
      the Delivery Point. Seller warrants that it will deliver to Buyer the Contract
      Quantity of the Product free and clear of all liens, security interests, claims
      and encumbrances or any interest therein or thereto by any person arising prior
      to the Delivery Point. 

    

    ARTICLE
      18

    ASSIGNMENT

     

    Neither
      Party shall assign this Agreement or its rights hereunder without the prior
      written consent of the other Party, which consent may be withheld in the
      exercise of its sole discretion; provided, however, either Party may, without
      the consent of the other Party (and without relieving itself from liability
      hereunder), (i) transfer, sell, pledge, encumber or assign this Agreement or
      the
      accounts, revenues or proceeds hereof in connection with any financing or other
      financial arrangements, (ii) transfer or assign this Agreement to an affiliate
      of such Party which affiliate’s creditworthiness is equal to or higher than that
      of such Party, or (iii) transfer or assign this Agreement to any person or
      entity succeeding to all or substantially all of the assets whose
      creditworthiness is equal to or higher than that of such Party; provided,
      however, that in each such case, any such assignee shall agree in writing to
      be
      bound by the terms and conditions hereof and so long as the transferring Party
      delivers such tax and enforceability assurance as the non-transferring Party
      may
      reasonably request.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      19

    GOVERNING
      LAW

     

    THIS
      AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED
      BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE
      STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY
      WAIVES ITS RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION
      ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.

    

    ARTICLE
      20

    FORWARD
      CONTRACT

     

    The
      Parties acknowledge and agree that this Confirmation Agreement constitutes
      a
“forward contract” within the meaning of the United States Bankruptcy
      Code.

    

    ARTICLE
      21

    ADDITIONAL
      COVENANTS OF THE SELLER

     

    As
      of the
      Effective Date, Seller makes the warranties and representations set forth
      below:

    

    
      	 	
              a.

            	
              Seller’s
                Specified Resource(s) are duly licensed and certificated by all applicable
                jurisdictional regulatory agencies and bodies. Seller has filed all
                required notices and requests to the applicable agencies to transfer
                ownership of all required licenses and permits to Seller from the
                prior
                owner of the Specific Resources, and as such will hold the necessary
                authorities to participate in the CAISO markets prior to the commencement
                of the Delivery Period. 

            

    

    

    
      	 	
              b.

            	
              Seller
                meets the credit requirements necessary to participate in the CAISO
                markets.

            

    

    

    
      	 	
              c.

            	
              The
                Contract Quantity is owned or controlled by Seller for each Specified
                Resource specified above.

            

    

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	 	
              d.

            	
              The
                Specified Resource(s) has(have) been registered with and/or certified
                by
                the CPUC and/or by the CAISO as deliverable to the Delivery Location(s);
                provided, that if the Specified Resource(s) is(are) are not so registered
                and/or certified, Seller will take all reasonable steps to assure
                that the
                Specified Resource(s) is(are) registered and/or certified prior to
                the
                commencement of the Delivery Period in the amount no less than the
                Contract Quantity of Capacity sold under this Confirmation
                Agreement.

            

    

    

    
      	 	
              e.

            	
              The
                Contract Quantity of RA Capacity sold under this Confirmation Agreement
                shall remain unencumbered by any other sale, any assignment, or any
                rights
                conferred to any party other than the
                Buyer.

            

    

     

    
      	 	
              f. 

            	
              Seller
                shall not commit any portion of the Contract Quantity, including
                but not
                limited to the sale or scheduling of firm energy to any party outside
                the
                CAISO control area, until all obligations to Buyer and/or CAISO under
                the
                contract and/or the CAISO tariffs have been met or are
                extinguished.

            

    

    

    ARTICLE
      22

    MUTUAL
      COOPERATION TO PRESERVE THE BENEFITS OF THE BARGAIN

     

    Where
      necessary to modify this Confirmation Agreement to conform its terms and
      conditions to changes in circumstances or regulations affecting the benefits
      of
      the bargain struck by the Parties, the Parties agree to negotiate in good faith
      to modify this Confirmation Agreement so as to address such circumstances or
      regulations while preserving the benefits of the bargain struck by the
      Parties.

    

    ARTICLE
      23

    MOBILE-SIERRA

     

    Absent
      the agreement of all Parties to the proposed change, the standard of review
      for
      changes to any portion of this Confirmation Agreement entered into hereunder
      proposed by a Party, a non-party, or the Federal Energy Regulatory Commission
      acting sua sponte, shall be the “public interest” standard of review set forth
      in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956)
      and
      Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the
      “Mobile-Sierra” doctrine). 

    

    The
      Parties further agree that, if and to the extent that FERC should after the
      Effective Date adopt any law, rule or regulation which requires that, in order
      to exclude application of the “just and reasonable” standard under Sections 205
      and 206 of the Federal Power Act, the Parties must agree to language which
      varies from that set forth in clause (a) immediately above, then, without
      further action of either Party, such Section shall be deemed amended to
      incorporate the specific language adopted by FERC that requires the “public
      interest” standard of review.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      24

    ARBITRATION

     

    Any
      claim, counterclaim, demand, cause of action, dispute, or controversy arising
      out of or relating to this Agreement or the relationship established by this
      Agreement, any provision hereof, the alleged breach thereof, or in any way
      relating to the subject matter of this Agreement, involving the Parties and/or
      their respective representatives (for purposes of this Section 22 only,
      collectively the "Claims"), even though some or all of such Claims allegedly
      are
      extra-contractual in nature, whether such Claims sound in contract, tort, or
      otherwise, at law or in equity, under state or federal law, whether provided
      by
      statute or the common law, for damages or any other relief, shall be resolved
      by
      binding arbitration. Arbitration shall be conducted in accordance with the
      rules
      of the Commercial Arbitration Rules of the American Arbitration Association.
      The
      validity, construction, and interpretation of this agreement to arbitrate,
      and
      all procedural aspects of the arbitration conducted pursuant hereto shall be
      decided by the arbitrators. In deciding the substance of the Parties' Claims,
      the arbitrators shall refer to the governing law identified in this Confirmation
      Agreement. It is agreed that the arbitrators shall have no authority to award
      treble, exemplary or punitive damages of any type under any circumstances
      whether or not such damages may be available under state or federal law, or
      under the Federal Arbitration Act, or under the Commercial Arbitration Rules
      of
      the American Arbitration Association, the Parties hereby waiving their right,
      if
      any, to recover any such damages. The arbitrators may award only direct
      compensatory damages. The arbitration proceeding shall be conducted in New
      York,
      New York. Within twenty (20) days of the notice of initiation of the arbitration
      procedure, the respondent shall file a response in writing. Within thirty (30)
      days after the response, each party shall select one arbitrator. Within twenty
      (20) days thereafter, the two (2) arbitrators shall select a third arbitrator.
      All three arbitrators are required to be neutral and impartial and shall take
      an
      oath at the first session of the arbitration affirming same. None of the three
      arbitrators shall have business, professional or social relationships with
      any
      of the Parties. However, upon full disclosure of such relationships, all parties
      may agree that the arbitrator may serve as an arbitrator. The arbitration shall
      proceed within sixty (60) days after the appointment of the last of the three
      arbitrators. The arbitrators shall render their decision (by majority rule)
      within twenty (20) days after the conclusion of the arbitration. New York law
      shall apply to the subject matter of the arbitration. To the fullest extent
      permitted by law, the arbitration and the award resulting from the arbitration
      shall be maintained in confidence by the Parties and the
      arbitrators.

    

    This
      Confirmation Agreement shall only be effective when executed by both
      Parties.

     

    
      [***]
        Confidential information has been omitted and filed separately with the
        Securities and Exchange Commission pursuant to a confidential treatment
        request.

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Parties have caused this Confirmation Agreement to be
      fully
      executed as of the date first written above.

    
      	 	 	 	 
	MMC
              Energy
              North America, LLC. 	 	 	Occidental
              Power Services, Inc.
	 	 	 	 
	Per:  /s
              /Denis Gagnon	 	 	Per: /s/
              Frank Eckhart, Jr.
	
              
                

              

              Name/Title: Denis
                Gagnon, Chief Financial Officer

            	 	 	
              
                

              
Name/Title: Frank
              Eckhart, Jr. - VP
	 	 	 	 
	Date: January
              26, 2007	 	 	Date: January
              26, 2007 

    

     

    [***]
      Confidential information has been omitted and
      filed separately with the Securities and Exchange Commission pursuant to a
      confidential treatment request.

    
      
        
        

      

      
        23[FORM
      OF WARRANT]

     

    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,
      IN A
      FORM REASONABLY ACCEPTABLE TO THE COMPANY, 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.

     

    VERUTEK
      TECHNOLOGIES, INC.

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    Warrant
      No.: 

    Number
      of
      Shares of Common Stock:_____________

    Date
      of
      Issuance: May [__], 2007 (“Issuance
      Date”)

     

    VeruTEK
      Technologies, Inc., a Nevada corporation (the “Company”),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [__________], the registered
      holder hereof or its permitted assigns (the “Holder”),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon surrender of this
      Warrant to Purchase Common Stock (including any Warrants to Purchase Common
      Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
      at
      any time or times on or after the date hereof (the “Exercise
      Date”),
      but
      not after 11:59 p.m., New York time, on the Expiration Date (as defined below),
      ______________ (_____________)1 fully
      paid nonassessable shares of Common Stock (as defined below) (the “Warrant
      Shares”).
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section
      15.
      This
      Warrant is one of the Warrants to purchase Common Stock (the “SPA
      Warrants”)
      issued
      pursuant to that certain Securities Purchase Agreement, dated as of May [__],
      2007 (the “Subscription
      Date”),
      by
      and among the Company and the purchasers (the “Purchasers”)
      referred to therein (the “Securities
      Purchase Agreement”).

     

    
      
        

      

    

    
      1
        Insert
        an amount equal to 50% of the number of shares of common stock which the
        Note
        purchased by the Holder is convertible.

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1. EXERCISE
      OF WARRANT.

     

    (a) Mechanics
      of Exercise.
      Subject
      to the terms and conditions hereof (including, without limitation, the
      limitations set forth in Section
      1(f)),
      this
      Warrant may be exercised by the Holder on any day on or after the Exercise
      Date,
      in whole or in part, by (i) delivery of a written notice, in the form attached
      hereto as Exhibit
      A
      (the
“Exercise
      Notice”),
      of
      the Holder’s election to exercise this Warrant and (ii) (A) payment to the
      Company of an amount equal to the applicable Exercise Price multiplied by the
      number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate
      Exercise Price”)
      in
      cash or by wire transfer of immediately available funds or (B) by notifying
      the
      Company that this Warrant is being exercised pursuant to a Cashless Exercise
      (as
      defined in Section
      1(d)).
      The
      Holder shall not be required to deliver the original Warrant in order to effect
      an exercise hereunder. Execution and delivery of the Exercise Notice with
      respect to less than all of the Warrant Shares shall have the same effect as
      cancellation of the original Warrant and issuance of a new Warrant evidencing
      the right to purchase the remaining number of Warrant Shares. On or before
      the
      first (1st) Business Day following the date on which the Company has received
      each of the Exercise Notice and the Aggregate Exercise Price (or notice of
      a
      Cashless Exercise) (the “Exercise
      Delivery Documents”),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder and the Company’s transfer
      agent (the “Transfer
      Agent”).
      On or
      before the third (3rd) Business Day following the date on which the Company
      has
      received all of the Exercise Delivery Documents (the “Share
      Delivery Date”),
      the
      Company shall (X) provided that the Transfer Agent is participating in The
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer Program, upon the request of the Holder, credit
      such aggregate number of shares of Common Stock to which the Holder is entitled
      pursuant to such exercise to the Holder’s or its designee’s balance account with
      DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
      Transfer Agent is not participating in the DTC Fast Automated Securities
      Transfer Program, issue and dispatch by overnight courier to the address as
      specified in the Exercise Notice, a certificate, registered in the Company’s
      share register in the name of the Holder or its designee, for the number of
      shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery of the Exercise Notice and Aggregate Exercise Price
      referred to in clause (ii)(A) above or notification to the Company of a Cashless
      Exercise referred to in Section
      1(d),
      the
      Holder shall be deemed for all corporate purposes to have become the holder
      of
      record of the Warrant Shares with respect to which this Warrant has been
      exercised, irrespective of the date of delivery of the certificates evidencing
      such Warrant Shares. If this Warrant is submitted in connection with any
      exercise pursuant to this Section
      1(a)
      and the
      number of Warrant Shares represented by this Warrant submitted for exercise
      is
      greater than the number of Warrant Shares being acquired upon an exercise,
      then
      the Company shall as soon as practicable and in no event later than three
      Business Days after any exercise and at its own expense, issue a new Warrant
      (in
      accordance with Section
      7(d))
      representing the right to purchase the number of Warrant Shares purchasable
      immediately prior to such exercise under this Warrant, less the number of
      Warrant Shares with respect to which this Warrant is exercised. No fractional
      shares of Common Stock are to be issued upon the exercise of this Warrant,
      but
      rather the number of shares of Common Stock to be issued shall be rounded up
      to
      the nearest whole number. The Company shall pay any and all taxes which may
      be
      payable with respect to the issuance and delivery of Warrant Shares upon
      exercise of this Warrant. 

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    (b) Exercise
      Price.
      For
      purposes of this Warrant, “Exercise
      Price”
means
      $1.20, subject to adjustment as provided herein.

     

    (c) Company’s
      Failure to Timely Deliver Securities.
      If
      within three (3) Business Days after the Company’s receipt of the facsimile copy
      of a Exercise Notice the Company shall fail to issue and deliver a certificate
      to the Holder and register such shares of Common Stock on the Company’s share
      register or , if applicable, credit the Holder’s balance account with DTC for
      the number of shares of Common Stock to which the Holder is entitled upon the
      Holder’s exercise hereunder, and if on or after such Business Day the Holder
      purchases (in an open market transaction or otherwise) shares of Common Stock
      to
      deliver in satisfaction of a sale by the Holder of shares of Common Stock
      issuable upon such exercise that the Holder anticipated receiving from the
      Company (a “Buy-In”
),
      then
      the Company shall, within three (3) Business Days after the Holder’s request and
      in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
      to the Holder’s total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased (the “Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such shares of Common Stock) shall terminate, or (ii) promptly honor its
      obligation to deliver to the Holder a certificate or certificates representing
      such shares of Common Stock and pay cash to the Holder in an amount equal to
      the
      excess (if any) of the Buy-In Price over the product of (A) such number of
      shares of Common Stock, times (B) the closing sales price of the Common Stock
      on
      the date of exercise.

     

    (d) Cashless
      Exercise.
      Notwithstanding anything contained herein to the contrary, if at any time after
      the twelve (12) month anniversary of the Issuance Date, a Registration Statement
      (as defined in the Registration Rights Agreement) covering the Warrant Shares
      that are the subject of an Exercise Notice (the “Unavailable
      Warrant Shares”)
      is not
      available for the resale of such Unavailable Warrant Shares, the Holder may,
      in
      its sole discretion, exercise this Warrant in whole or in part and, in lieu
      of
      making the cash payment otherwise contemplated to be made to the Company upon
      such exercise in payment of the Aggregate Exercise Price, elect instead to
      receive upon such exercise the “Net
      Number”
of
      shares of Common Stock determined according to the following formula (a
“Cashless
      Exercise”):

     

    
      
        X
          = Y
          [(A-B)/A] 

      

    

     

    where:
      

     

    X
      = the
      number of Warrant Shares to be issued to the Holder. 

     

    Y
      = the
      number of Warrant Shares with respect to which this Warrant is being exercised.
      

     

    A
      = the
      closing price on the Business Day immediately prior to the Exercise Date.

     

    B
      = the
      Exercise Price then in effect.

     

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section
      12.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    (f) Limitations
      on Exercises.

     

    (1) Beneficial
      Ownership.
      The
      Company shall not effect the exercise of this Warrant, and the Holder shall
      not
      have the right to exercise this Warrant, to the extent that after giving effect
      to such exercise, such Person (together with such Person’s affiliates) would
      beneficially own in excess of 9.99% (the “Maximum
      Percentage”)
      of the
      shares of Common Stock outstanding immediately after giving effect to such
      exercise. For purposes of the foregoing sentence, the aggregate number of shares
      of Common Stock beneficially owned by such Person and its affiliates shall
      include the number of shares of Common Stock issuable upon exercise of this
      Warrant with respect to which the determination of such sentence is being made,
      but shall exclude shares of Common Stock which would be issuable upon (i)
      exercise of the remaining, unexercised portion of this Warrant beneficially
      owned by such Person and its affiliates and (ii) exercise or conversion of
      the
      unexercised or unconverted portion of any other securities of the Company
      beneficially owned by such Person and its affiliates (including, without
      limitation, any convertible notes or convertible preferred stock or warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein. Except as set forth in the preceding sentence, for purposes
      of
      this paragraph, beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes
      of this Warrant, in determining the number of outstanding shares of Common
      Stock, the Holder may rely on the number of outstanding shares of Common Stock
      as reflected in (1) the Company’s most recent Form 10-K, Form 10-KSB, Form 10-Q,
      Form 10-QSB, Current Report on Form 8-K or other public filing with the
      Securities and Exchange Commission, as the case may be, (2) a more recent public
      announcement by the Company or (3) any other notice by the Company or the
      Transfer Agent setting forth the number of shares of Common Stock outstanding.
      For any reason at any time, upon the written or oral request of the Holder,
      the
      Company shall within one Business Day confirm orally and in writing to the
      Holder the number of shares of Common Stock then outstanding. In any case,
      the
      number of outstanding shares of Common Stock shall be determined after giving
      effect to the conversion or exercise of securities of the Company, including
      the
      SPA Notes and the SPA Warrants, by the Holder and its affiliates since the
      date
      as of which such number of outstanding shares of Common Stock was reported.
      By
      written notice to the Company, the Holder may from time to time decrease the
      Maximum Percentage to 4.99%; provided that (I) any such decrease will not be
      effective until the sixty-first (61st) day after such notice is delivered to
      the
      Company, and (II) such decrease will apply only to the Holder and not to any
      other holder of SPA Warrants.

     

    (2) Eligible
      Market Regulation.
      The
      Company shall not be obligated to issue any shares of Common Stock upon exercise
      of this Warrant or conversion of SPA Notes and no Purchaser shall be entitled
      to
      receive any shares of Common Stock if the issuance of such shares of Common
      Stock would exceed that number of shares of Common Stock which the Company
      may
      issue upon exercise or conversion, as applicable, of the SPA Warrants and SPA
      Notes or otherwise without breaching the Company’s obligations under the rules
      or regulations of any applicable Eligible Market (the “Exchange
      Cap”),
      except that such limitation shall not apply in the event that the Company (A)
      obtains the approval of its stockholders as required by the applicable rules
      of
      the Eligible Market for issuances of shares of Common Stock in excess of such
      amount or (B) obtains a written opinion from outside counsel to the Company
      that
      such approval is not required, which opinion shall be reasonably satisfactory
      to
      the Required Holders. Until such approval or written opinion is obtained, no
      Purchaser shall be issued in the aggregate, upon exercise or conversion, as
      applicable, of any SPA Warrants or SPA Notes, shares of Common Stock in an
      amount greater than the product of the Exchange Cap multiplied by a fraction,
      the numerator of which is the total number of shares of Common Stock underlying
      the SPA Warrants issued to such Purchaser pursuant to the Securities Purchase
      Agreement on the Issuance Date and the denominator of which is the aggregate
      number of shares of Common Stock underlying the SPA Warrants issued to the
      Purchasers pursuant to the Securities Purchase Agreement on the Issuance Date
      (with respect to each Purchaser, the “Exchange
      Cap Allocation”).
      In
      the event that any Purchaser shall sell or otherwise transfer any of such
      Purchaser’s SPA Warrants, the transferee shall be allocated a pro rata portion
      of such Purchaser’s Exchange Cap Allocation, and the restrictions of the prior
      sentence shall apply to such transferee with respect to the portion of the
      Exchange Cap Allocation allocated to such transferee. In the event that any
      holder of SPA Warrants shall exercise all of such holder’s SPA Warrants into a
      number of shares of Common Stock which, in the aggregate, is less than such
      holder’s Exchange Cap Allocation, then the difference between such holder’s
      Exchange Cap Allocation and the number of shares of Common Stock actually issued
      to such holder shall be allocated to the respective Exchange Cap Allocations
      of
      the remaining holders of SPA Warrants on a pro rata basis in proportion to
      the
      shares of Common Stock underlying the SPA Warrants then held by each such
      holder. In the event that the Company is prohibited from issuing any Warrant
      Shares for which an Exercise Notice has been received as a result of the
      operation of this Section
      1(f)(2),
      the
      Company shall pay cash in exchange for cancellation of such Warrant Shares,
      at a
      price per Warrant Share equal to the difference between the Weighted Average
      Price and the Exercise Price as of the date of the attempted
      exercise.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    (g) Insufficient
      Authorized Shares.
      If at
      any time while any of the Warrants remain outstanding the Company does not
      have
      a sufficient number of authorized and unreserved shares of Common Stock to
      satisfy its obligation to reserve for issuance upon exercise of the Warrants
      no
      less than 150% of the number of shares of Common Stock as shall from time to
      time be necessary to effect the exercise of all of the Warrants then outstanding
      (the “Required
      Reserve Amount”)
      (an
“Authorized
      Share Failure”),
      then
      the Company shall immediately take all action necessary to increase the
      Company’s authorized shares of Common Stock to an amount sufficient to allow the
      Company to reserve the Required Reserve Amount for the Warrants then
      outstanding. Without limiting the generality of the foregoing sentence, as
      soon
      as practicable after the date of the occurrence of an Authorized Share Failure,
      but in no event later than sixty (60) days after the occurrence of such
      Authorized Share Failure, the Company shall hold a meeting of its stockholders
      for the approval of an increase in the number of authorized shares of Common
      Stock. In connection with such meeting, the Company shall provide each
      stockholder with a proxy statement and shall use its best efforts to solicit
      its
      stockholders’ approval of such increase in authorized shares of Common Stock and
      to cause its board of directors to recommend to the stockholders that they
      approve such proposal.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    2. ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.:

     

    The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a) Adjustment
      upon Subdivision or Combination of Common Stock.
      If the
      Company at any time on or after the Subscription Date subdivides (by any stock
      split, stock dividend, recapitalization or otherwise) one or more classes of
      its
      outstanding shares of Common Stock into a greater number of shares, the Exercise
      Price in effect immediately prior to such subdivision will be proportionately
      reduced and the number of Warrant Shares will be proportionately increased.
      If
      the Company at any time on or after the Subscription Date combines (by
      combination, reverse stock split or otherwise) one or more classes of its
      outstanding shares of Common Stock into a smaller number of shares, the Exercise
      Price in effect immediately prior to such combination will be proportionately
      increased and the number of Warrant Shares will be proportionately decreased.
      Any adjustment under this Section
      2(a)
      shall
      become effective at the close of business on the date the subdivision or
      combination becomes effective.

     

    (b) Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section
      2
      but not
      expressly provided for by such provisions (including, without limitation, the
      granting of stock appreciation rights, phantom stock rights or other rights
      with
      equity features), then the Company’s Board of Directors will make an appropriate
      adjustment in the Exercise Price and the number of Warrant Shares so as to
      protect the rights of the Holder; provided that no such adjustment pursuant
      to
      this Section
      2(b)
      will
      increase the Exercise Price or decrease the number of Warrant Shares as
      otherwise determined pursuant to this Section
      2.

     

    3. RIGHTS
      UPON DISTRIBUTION OF ASSETS. 

     

    If
      the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of shares of Common Stock, by
      way
      of return of capital or otherwise (including, without limitation, any
      distribution of cash, stock or other securities, property or options by way
      of a
      dividend, spin off, reclassification, corporate rearrangement, scheme of
      arrangement or other similar transaction) (a “Distribution”),
      at
      any time after the issuance of this Warrant, then, in each such
      case:

     

    (a) any
      Exercise Price in effect immediately prior to the close of business on the
      record date fixed for the determination of holders of shares of Common Stock
      entitled to receive the Distribution shall be reduced, effective as of the
      close
      of business on such record date, to a price determined by multiplying such
      Exercise Price by a fraction of which (i) the numerator shall be the Weighted
      Average Price of the shares of Common Stock on the Business Day immediately
      preceding such record date minus the value of the Distribution (as determined
      in
      good faith by the Company’s Board of Directors) applicable to one share of
      shares of Common Stock, and (ii) the denominator shall be the Weighted Average
      Price of the shares of Common Stock on the Business Day immediately preceding
      such record date; and

     

    (b) the
      number of Warrant Shares shall be increased to a number of shares equal to
      the
      number of shares of Common Stock obtainable immediately prior to the close
      of
      business on the record date fixed for the determination of holders of shares
      of
      Common Stock entitled to receive the Distribution multiplied by the reciprocal
      of the fraction set forth in the immediately preceding paragraph (a); provided
      that in the event that the Distribution is of shares of Common Stock (or common
      stock) (“Other
      Shares of Common Stock”)
      of a
      company whose common shares are traded on a national securities exchange or
      a
      national automated quotation system, then the Holder may elect to receive a
      warrant to purchase Other Shares of Common Stock in lieu of an increase in
      the
      number of Warrant Shares, the terms of which shall be identical to those of
      this
      Warrant, except that such warrant shall be exercisable into the number of shares
      of Other Shares of Common Stock that would have been payable to the Holder
      pursuant to the Distribution had the Holder exercised this Warrant immediately
      prior to such record date and with an aggregate exercise price equal to the
      product of the amount by which the exercise price of this Warrant was decreased
      with respect to the Distribution pursuant to the terms of the immediately
      preceding paragraph (a) and the number of Warrant Shares calculated in
      accordance with the first part of this paragraph (b).

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    4. PURCHASE
      RIGHTS; FUNDAMENTAL TRANSACTIONS.

     

    (a) Purchase
      Rights.
      In
      addition to any adjustments pursuant to Section
      2
      above,
      if at any time the Company grants, issues or sells any Options, Convertible
      Securities or rights to purchase stock, warrants, securities or other property
      pro rata to the record holders of any class of shares of Common Stock (the
      “Purchase
      Rights”),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete exercise of this Warrant (without regard to any limitations on
      the
      exercise of this Warrant) 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 shares of Common Stock
      are
      to be determined for the grant, issue or sale of such Purchase
      Rights.

     

    (b) Fundamental
      Transactions.
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      (i)
      the Successor Entity assumes in writing all of the obligations of the Company
      under this Warrant and the other Transaction Documents in accordance with the
      provisions of this Section (4)(b) pursuant to written agreements in form and
      substance satisfactory to the Required Holders and approved by the Required
      Holders prior to such Fundamental Transaction, including agreements to deliver
      to each holder of Warrants in exchange for such Warrants a security of the
      Successor Entity evidenced by a written instrument substantially similar in
      form
      and substance to this Warrant, including, without limitation, an adjusted
      exercise price equal to the value for the shares of Common Stock reflected
      by
      the terms of such Fundamental Transaction, and exercisable for a corresponding
      number of shares of capital stock equivalent to the shares of Common Stock
      acquirable and receivable upon exercise of this Warrant (without regard to
      any
      limitations on the exercise of this Warrant) prior to such Fundamental
      Transaction, and satisfactory to the Required Holders. Upon the occurrence
      of
      any Fundamental Transaction, the Successor Entity shall succeed to, and be
      substituted for (so that from and after the date of such Fundamental
      Transaction, the provisions of this Warrant referring to the “Company” shall
      refer instead to the Successor Entity), and may exercise every right and power
      of the Company and shall assume all of the obligations of the Company under
      this
      Warrant with the same effect as if such Successor Entity had been named as
      the
      Company herein. Upon consummation of the Fundamental Transaction, the Successor
      Entity shall deliver to the Holder confirmation that there shall be issued
      upon
      exercise of this Warrant at any time after the consummation of the Fundamental
      Transaction, in lieu of the shares of the Common Stock (or other securities,
      cash, assets or other property) issuable upon the exercise of the Warrant prior
      to such Fundamental Transaction, such shares of stock, securities, cash, assets
      or any other property whatsoever (including warrants or other purchase or
      subscription rights) which the Holder would have been entitled to receive upon
      the happening of such Fundamental Transaction had this Warrant been converted
      immediately prior to such Fundamental Transaction, as adjusted in accordance
      with the provisions of this Warrant. In addition to and not in substitution
      for
      any other rights hereunder, prior to the consummation of any Fundamental
      Transaction pursuant to which holders of shares of Common Stock are entitled
      to
      receive securities or other assets with respect to or in exchange for shares
      of
      Common Stock (a “Corporate
      Event”),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant at any
      time after the consummation of the Fundamental Transaction but prior to the
      Expiration Date, in lieu of the shares of the Common Stock (or other securities,
      cash, assets or other property) issuable upon the exercise of this Warrant
      prior
      to such Fundamental Transaction, such shares of stock, securities, cash, assets
      or any other property whatsoever (including warrants or other purchase or
      subscription rights) which the Holder would have been entitled to receive upon
      the happening of such Fundamental Transaction had this Warrant been exercised
      immediately prior to such Fundamental Transaction. Provision made pursuant
      to
      the preceding sentence shall be in a form and substance reasonably satisfactory
      to the Required Holders. The provisions of this Section
      4(b)
      shall
      apply similarly and equally to successive Fundamental Transactions and Corporate
      Events and shall be applied without regard to any limitations on the exercise
      of
      this Warrant.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    (c) Notwithstanding
      the foregoing, in the event of a Fundamental Transaction other than one in
      which
      a Successor Entity that is a publicly traded corporation whose stock is quoted
      or listed for trading on the Eligible Market assumes this Warrant such that
      the
      Warrant shall be exercisable for the publicly traded Common Stock of such
      Successor Entity, at the request of the Holder delivered before the ninetieth
      (90th)
      day
      after such Fundamental Transaction, the Company (or the Successor Entity) shall
      purchase this Warrant from the Holder by paying to the Holder, within five
      Business Days after such request (or, if later, on the effective date of the
      Fundamental Transaction), cash in an amount equal to the Black Scholes Value
      of
      the remaining unexercised portion of this Warrant on the date of such
      Fundamental Transaction.

     

    5. NONCIRCUMVENTION.

     

    The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Articles of Incorporation, 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 Warrant, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      action as may be required to protect the rights of the Holder. Without limiting
      the generality of the foregoing, the Company (i) shall not increase the par
      value of any shares of Common Stock receivable upon the exercise of this Warrant
      above the Exercise Price then in effect, (ii) shall take all such actions as
      may
      be necessary or appropriate in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock upon the exercise
      of
      this Warrant, and (iii) shall, so long as any of the SPA Warrants are
      outstanding, take all action necessary to reserve and keep available out of
      its
      authorized and unissued shares of Common Stock, solely for the purpose of
      effecting the exercise of the SPA Warrants, 150% of the number of shares of
      Common Stock as shall from time to time be necessary to effect the exercise
      of
      the SPA Warrants then outstanding (without regard to any limitations on
      exercise).

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    6. WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.

     

    Except
      as
      otherwise specifically provided herein, the Holder, solely in such Person’s
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
      any of the rights of a stockholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a stockholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section
      6,
      the
      Company shall provide the Holder with copies of the same notices and other
      information given to the stockholders of the Company generally,
      contemporaneously with the giving thereof to the stockholders.

     

    7. REISSUANCE
      OF WARRANTS.

     

    (a) Transfer
      of Warrant.
      If this
      Warrant is to be transferred, the Holder shall surrender this Warrant to the
      Company, whereupon the Company will forthwith issue and deliver upon the order
      of the Holder a new Warrant (in accordance with Section
      7(d)),
      registered as the Holder may request, representing the right to purchase the
      number of Warrant Shares being transferred by the Holder and, if less then
      the
      total number of Warrant Shares then underlying this Warrant is being
      transferred, a new Warrant (in accordance with Section
      7(d))
      to the
      Holder representing the right to purchase the number of Warrant Shares not
      being
      transferred.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    (b) Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the Holder
      to
      the Company in customary form and, in the case of mutilation, upon surrender
      and
      cancellation of this Warrant, the Company shall execute and deliver to the
      Holder a new Warrant (in accordance with Section
      7(d))
      representing the right to purchase the Warrant Shares then underlying this
      Warrant.

     

    (c) Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section
      7(d))
      representing in the aggregate the right to purchase the number of Warrant Shares
      then underlying this Warrant, and each such new Warrant will represent the
      right
      to purchase such portion of such Warrant Shares as is designated by the Holder
      at the time of such surrender; provided, however, that no Warrants for
      fractional shares of Common Stock shall be given.

     

    (d) Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section
      7(a)
      or
Section
      7(c),
      the
      Warrant Shares designated by the Holder which, when added to the number of
      shares of Common Stock underlying the other new Warrants issued in connection
      with such issuance, does not exceed the number of Warrant Shares then underlying
      this Warrant), (iii) shall have an issuance date, as indicated on the face
      of
      such new Warrant which is the same as the Issuance Date, and (iv) shall have
      the
      same rights and conditions as this Warrant.

     

    8. NOTICES.
      

     

    Whenever
      notice is required to be given under this Warrant, unless otherwise provided
      herein, such notice shall be given in accordance with Section 12.6 of the
      Securities Purchase Agreement. The Company shall provide the Holder with prompt
      written notice of all actions taken pursuant to this Warrant, including in
      reasonable detail a description of such action and the reason therefore. Without
      limiting the generality of the foregoing, the Company will give written notice
      to the Holder (i) immediately upon any adjustment of the Exercise Price, setting
      forth in reasonable detail, and certifying, the calculation of such adjustment
      and (ii) at least fifteen days prior to the date on which the Company closes
      its
      books or takes a record (A) with respect to any dividend or distribution upon
      the shares of Common Stock, (B) with respect to any grants, issuances or sales
      of any Options, Convertible Securities or rights to purchase stock, warrants,
      securities or other property to holders of shares of Common Stock or (C) for
      determining rights to vote with respect to any Fundamental Transaction,
      dissolution or liquidation, provided in each case that such information shall
      be
      made known to the public prior to or in conjunction with such notice being
      provided to the Holder.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    9. AMENDMENT
      AND WAIVER.

     

    Except
      as
      otherwise provided herein, the provisions of this Warrant may be amended and
      the
      Company may take any action herein prohibited, or omit to perform any act herein
      required to be performed by it, only if the Company has obtained the written
      consent of the Required Holders; provided that no such action may increase
      the
      exercise price of any SPA Warrant or decrease the number of shares or class
      of
      stock obtainable upon exercise of any SPA Warrant without the written consent
      of
      the Holder. No such amendment shall be effective to the extent that it applies
      to less than all of the holders of the SPA Warrants then
      outstanding.

     

    10. GOVERNING
      LAW.

     

    This
      Warrant shall be governed by and construed and enforced in accordance with,
      and
      all questions concerning the construction, validity, interpretation and
      performance of this Warrant shall be governed by, the internal laws of the
      State
      of New York, without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of New York or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of New York.

     

    11. CONSTRUCTION;
      HEADINGS.

     

    This
      Warrant shall be deemed to be jointly drafted by the Company and all the
      Purchasers and shall not be construed against any person as the drafter hereof.
      The headings of this Warrant are for convenience of reference and shall not
      form
      part of, or affect the interpretation of, this Warrant.

     

    12. DISPUTE
      RESOLUTION.

     

    In
      the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      (2)
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two Business Days submit via facsimile (a) the disputed determination
      of
      the Exercise Price to an independent, reputable investment bank selected by
      the
      Company and approved by the Holder or (b) the disputed arithmetic calculation
      of
      the Warrant Shares to the Company’s independent, outside accountant. The Company
      shall cause at its expense the investment bank or the accountant, as the case
      may be, to perform the determinations or calculations and notify the Company
      and
      the Holder of the results no later than ten Business Days from the time it
      receives the disputed determinations or calculations. Such investment bank’s or
      accountant’s determination or calculation, as the case may be, shall be binding
      upon all parties absent demonstrable error.

     

    13. REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.

     

    The
      remedies provided in this Warrant shall be cumulative and in addition to all
      other remedies available under this Warrant and the other Transaction Documents,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      right
      to pursue actual damages for any failure by the Company to comply with the
      terms
      of this Warrant. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the holder of this Warrant shall
      be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    14. TRANSFER.

     

    This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by Section 2.6
      of
      the Securities Purchase Agreement.

     

    15. CERTAIN
      DEFINITIONS.

     

    For
      purposes of this Warrant, the following terms shall have the following
      meanings:

     

    (a) “Black
      Scholes Value”
means
      the value of this Warrant based on the Black and Scholes Option Pricing Model
      obtained from the “OV” function on Bloomberg determined as of the day
      immediately following the public announcement of the applicable Fundamental
      Transaction and reflecting (i) a risk-free interest rate corresponding to the
      U.S. Treasury rate for a period equal to the remaining term of this Warrant
      as
      of such date of request and (ii) an expected volatility equal to the greater
      of
      60% and the 100 day volatility obtained from the HVT function on
      Bloomberg.

     

    (b) “Bloomberg”
means
      Bloomberg Financial Markets.

     

    (c) “Business
      Day”
means
      any day other than a Saturday, a Sunday or a day on which the New York Stock
      Exchange is closed or on which banks are authorized by law to close in New
      York,
      New York.

     

    (d) “Common
      Stock”
means
      (i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii)
      any share capital into which such Common Stock shall have been changed or any
      share capital resulting from a reclassification of such Common
      Stock.

     

    (e) “Common
      Stock Deemed Outstanding”
means,
      at any given time, the number of shares of Common Stock actually outstanding
      at
      such time, plus the number of shares of Common Stock deemed to be outstanding
      pursuant to Sections
      2(a)(i)
      and
2(a)(ii)
      hereof
      regardless of whether the Options or Convertible Securities are actually
      exercisable at such time, but excluding any shares of Common Stock owned or
      held
      by or for the account of the Company or issuable upon exercise of the SPA
      Warrants.

     

    (f) “Convertible
      Securities”
means
      any stock or securities (other than Options) of the Company convertible into
      or
      exercisable or exchangeable for Common Stock.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    (g) “Eligible
      Market”
means
      whichever of the New York Stock Exchange, Inc., the American Stock Exchange,
      the
      Nasdaq Global Select Market , the Nasdaq Global Market, the Nasdaq Capital
      Market or the OTC Bulletin Board on which the Common Stock is listed or quoted
      for the trading on the date in question.

     

    (h) “Expiration
      Date”
means
      May [__, 2012; provided that if such date falls on a day other than a Business
      Day or on which trading does not take place on the Eligible Market (a
“Holiday”),
      the
      next date that is not a Holiday.

     

    (i) “Fundamental
      Transaction”
means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person, or (iii) allow another Person to make
      a
      purchase, tender or exchange offer that is accepted by the holders of more
      than
      the 50% of the outstanding shares of Common Stock (not including any shares
      of
      Common Stock held by the Person or Persons making or party to, or associated
      or
      affiliated with the Persons making or party to, such purchase, tender or
      exchange offer), or (iv) consummate a stock purchase agreement or other business
      combination (including, without limitation, a reorganization, recapitalization,
      spin-off or scheme of arrangement) with another Person whereby such other Person
      acquires more than the 50% of the outstanding shares of Common Stock (not
      including any shares of Common Stock held by the other Person or other Persons
      making or party to, or associated or affiliated with the other Persons making
      or
      party to, such stock purchase agreement or other business combination), (v)
      reorganize, recapitalize or reclassify its Common Stock, or (vi) any “person” or
“group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
      Exchange Act) is or shall become the “beneficial owner” (as defined in Rule
      13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
      ordinary voting power represented by issued and outstanding Common
      Stock.

     

    (j) “Options”
means
      any rights, warrants or options to subscribe for, purchase or receive Common
      Stock or Convertible Securities.

     

    (k) “Parent
      Entity”
of
      a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on the Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

    (l) “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof.

     

    (m) “Registration
      Rights Agreement”
means
      that certain registration rights agreement by and among the Company and the
      Purchasers.

     

    (n) “Required
      Holders”
means
      the holders of the SPA Warrants representing at least two-thirds (2/3rd) of
      the
      shares of Common Stock underlying the SPA Warrants then
      outstanding.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    (o) “SPA
      Notes”
means
      the Notes (as defined in the Securities Purchase Agreement).

     

    (p) “Successor
      Entity”
means
      the Person (or, if so elected by the Required Holders, the Parent Entity) formed
      by, resulting from or surviving any Fundamental Transaction or the Person (or,
      if so elected by the Required Holders, the Parent Entity) with which such
      Fundamental Transaction shall have been entered into.

     

    (q) “Weighted
      Average Price”
means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Eligible Market during the period beginning at 9:30:01
      a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as
      reported by Bloomberg through its “Volume at Price” function or, if the
      foregoing does not apply, the dollar volume-weighted average price of such
      security in the over-the-counter market on the electronic bulletin board for
      such security during the period beginning at 9:30:01 a.m., New York City time,
      and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or,
      if
      no dollar volume-weighted average price is reported for such security by
      Bloomberg for such hours, the average of the highest closing bid price and
      the
      lowest closing ask price of any of the market makers for such security as
      reported in the “pink sheets” by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
      for
      such security on such date on any of the foregoing bases, the Weighted Average
      Price of such security on such date shall be the fair market value as mutually
      determined by the Company and the Required Holders. If the Company and the
      Required Holders are unable to agree upon the fair market value of the such
      security, then such dispute shall be resolved pursuant to Section
      12
      with the
      term “Weighted Average Price” being substituted for the term “Exercise Price.”
All such determinations shall be appropriately adjusted for any share dividend,
      share split or other similar transaction during such period.

     

    [Signature
      Page to Follow]

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
      of
      the Issuance Date set out above.

    
      	 	 	 
	 	VERUTEK TECHNOLOGIES, INC.
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:

	 	Title: 

    

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      A

    

    EXERCISE
      NOTICE

     

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

    

    VERUTEK
      TECHNOLOGIES, INC.

     

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock ("Warrant
      Shares")
      of
      VeruTEK Technologies, Inc., a Nevada corporation (the "Company"),
      evidenced by the attached Warrant to Purchase Common Stock (the "Warrant").
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

    

    1.
      Form
      of Exercise Price.
      The
      Holder intends that payment of the Exercise Price shall be made as:

    

    ____a
      "Cash
      Exercise"
      with
      respect to _________________ Warrant Shares; and/or

    

    ____a
      "Cashless
      Exercise"
      with
      respect to _______________ Warrant Shares.

    

    2.
      Payment
      of Exercise Price.
      In the
      event that the holder has elected a Cash Exercise with respect to some or all
      of
      the Warrant Shares to be issued pursuant hereto, the holder shall pay the
      Aggregate Exercise Price in the sum of $___________________ to the Company
      in
      accordance with the terms of the Warrant.

    

    3.
      Delivery of Warrant Shares. The Company shall deliver to the holder __________
      Warrant Shares in accordance with the terms of the Warrant.

    

    Date:
      _______________ __, ______

    

     

    
      	
              
Name
              of Registered Holder	 	 	 
	 	 	 	 
	 	 	 	 
	By: 	 	 	
            
	
              
                

              

              Name: 

            	 	 	
            
	Title:   	 	 	
            

          

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ACKNOWLEDGMENT

    

    The
      Company hereby acknowledges this Exercise Notice and hereby directs
      [_________]
      to issue
      the above indicated number of shares of Common Stock in accordance with the
      Transfer Agent Instructions dated [________], 2007 from the Company and
      acknowledged and agreed to by
      [___________].

    
      	 	 	 
	 	
              VERUTEK
                TECHNOLOGIES, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name: 

            
	 	
              Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]