Document:

Filed by Bowne Pure Compliance

	 	 	 	 	 

Exhibit 10.3

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”) is entered into as of the 22nd day of October,
2008, by CleanTechBiofuels, Inc., a Delaware corporation (“Debtor”), in favor of World Waste
Technologies, Inc. (the “Secured Party”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Patent Purchase Agreement between Debtor and the Secured
Party of even date herewith (the “Purchase Agreement”), the Secured Party has agreed to make
certain loans and advances to Debtor which are to be evidenced by that certain Promissory Note of
even date herewith (the “Note”).

WHEREAS, it is a condition precedent to the effectiveness of the Note that Debtor shall grant
the security interest contemplated by this Agreement.

NOW, THEREFORE, in consideration of the premises and in order to induce the Secured Party to
make the loans and advances contemplated by the Note, Debtor hereby agrees with the Secured Party
as follows:

Section 1. Grant of Security. Debtor hereby assigns and pledges to the Secured Party
and grants to the Secured Party a security interest in all of Debtor’s right, title and interest in
and to the U.S. Patent No. 6,306,248 (“Patent”), all the rights associated with such Patent as set
forth in Section 1.1 of the Purchase Agreement, and all collections, receipts and other proceeds
(cash and non-cash) of any of the foregoing (the “Collateral”).

Section 2. Security for Obligations. This Agreement secures the payment of all
obligations of Debtor now or hereafter existing under the Note (all such obligations of Debtor
being the “Obligations”). Without limiting the generality of the foregoing, this Agreement secures
the payment of all amounts that constitute part of the Obligations, including all amounts that
would be owed by Debtor to the Secured Party under the Note but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Debtor.

Section 3. Release of Security. As of the date of the repayment in full of all
indebtedness under the Note, the security interest granted hereby shall terminate and all rights to
the Collateral shall revert to Debtor.

Section 4. Representations and Warranties. Debtor represents and warrants, which
representations and warranties shall survive execution and delivery of this Security Agreement, as
follows: (a) The exact legal name, the type of organization, and the jurisdiction of organization
of the Company is accurately set forth on the first page of this Agreement. (b) This Agreement has
been duly executed and delivered by Debtor and is a valid and binding obligation of Debtor,
enforceable against Debtor in accordance with its terms. (c) The execution and delivery by Debtor
of this Agreement and the performance of its obligations hereunder are within Debtor’s authority
and capacity and do not contravene any law, regulation, order or contractual
restriction binding on or affecting Debtor. (d) The pledge and grant of security interest in
the Collateral pursuant to this Agreement creates a valid and perfected security interest in the
Collateral in favor of the Secured Party, securing the payment of all of the Obligations. (g) The
Company will be the sole, legal and equitable owner of the Collateral, and no financing statement
or other evidence of lien covering or purporting to cover the Collateral will be on file in any
public office other than the financing statements filed in connection with the security interest
granted to the Secured Party hereunder.

 

 

Section 5. Further Assurances.

(a) Debtor agrees that from time to time, at the expense of Debtor, Debtor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Secured Party may reasonably request, in order to perfect and
protect any pledge, assignment or security interest granted or purported to be granted hereby or to
enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, Debtor will: (i) deliver and
pledge to the Secured Party promptly upon receipt thereof all instruments or certificates
representing or evidencing any of the Collateral duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to the Secured Party;
and (ii) execute and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as the Secured Party may
request, in order to perfect and preserve the pledge, assignment and security interest granted or
purported to be granted hereby.

(b) Debtor hereby authorizes the Secured Party to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the Collateral without the
signature of Debtor where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.

(c) Debtor will furnish to the Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other reports in connection with the
Collateral as the Secured Party may reasonably request, all in reasonable detail.

(d) Until payment in full of all of the Obligations, Debtor agrees: (i) to defend the title of
the Collateral and the lien thereon of the Secured Party against the claim of any other person;
(ii) to maintain and preserve such lien until payment; (iii) not use or permit any Collateral to be
used unlawfully or in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral; (iv) to give the
Secured Party at least 30 days’ prior written notice of any change in Debtor’s name, domicile, or
structure; (v) pay promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Collateral except to the extent the
validity thereof is being contested in good faith; provided that such Debtor shall in any event pay
such taxes, assessments, charges, levies or claims not later than five days prior to the date of
any proposed sale under any judgment, writ or warrant of attachment entered or filed against such
Debtor or any of the Collateral as a result of the failure to make such payment; and
(vi) not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Collateral, or create or suffer to exist any lien upon or with
respect to any of the Collateral.

 

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If Debtor fails to perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement. Debtor agrees to reimburse the Secured Party on demand for
any payments made or expenses incurred by the Secured Party pursuant to the foregoing authorization
and any unreimbursed amounts shall constitute amounts outstanding under the Note for all purposes
hereof. The powers conferred on the Secured Party by this Agreement are solely to protect the
interests of the Secured Party and shall not impose any duty upon the Secured Party to exercise any
such power, and if the Secured Party shall exercise any such power, such exercise shall not relieve
the Company of any Event of Default (defined below), and the Secured Party shall be accountable
only for amounts actually received as a result thereof. The Secured Party shall be under no
obligation to take steps necessary to preserve the rights in or value of or to collect any sums due
in respect of any Collateral against any other person or entity but may do so at its option.

Section 6. Events of Default.

(a) All of the following are Events of Default under this Agreement: (a) Debtor violates any
provisions of this Agreement, the Note or the Purchase Agreement or any representation or warranty
by Debtor under any such agreement is not true. (b) Debtor fails to make payments as and when due
under the Note. (c) The dissolution, liquidation or termination of the legal existence of Debtor.
(d) The appointment of a receiver, trustee or similar judicial officer or agent to take charge of
or to liquidate any property or assets of Debtor. (e) The commencement of any proceeding against
Debtor under any provision of the Bankruptcy Code of the United States, as amended. (f) The
occurrence of a Change of Control, unless either (X) the Secured Party consents thereto or (Y) all
amounts due hereunder are repaid in full concurrently therewith. A Change of Control shall mean the
sale of all or any substantial portion of Debtor’s assets outside of the ordinary course of
business, or the closing of any transaction pursuant to which any person (other than Debtor’s
existing owners) becomes the holder of more than 50% of Debtor’s outstanding ownership interests.
(h) Debtor ceases any material portion of its business operations as presently conducted.

(b) Debtor shall deliver to the Secured Party, immediately upon becoming aware that an Event
of Default has occurred, a written notice specifying the nature and period of existence.

 

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Section 7. Remedies. If any Event of Default shall have occurred and be continuing:

(a) The Secured Party may exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code in effect in the State of California at
that time (the “UCC”) (whether or not the UCC applies to the affected Collateral), and also may (i)
take possession of the Collateral in accordance with the applicable provisions of the UCC, (ii)
require Debtor to, and Debtor hereby agrees, that it will at its expense
and upon request of the Secured Party forthwith, assemble all or part of the Collateral as
directed by the Secured Party and make it available to the Secured Party at a place to be
designated by the Secured Party which is reasonably convenient to both parties, and/or
(iii) without notice except as specified below, sell or, to the extent permitted by applicable law,
purchase the Collateral or any part thereof in one or more parcels at public or private sale, at
any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially reasonable. Debtor agrees that if
it sells the Collateral, to the extent notice of sale shall be required by law, at least ten days’
notice to Debtor of the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and place to which it was
so adjourned. Debtor hereby waives any claim against the Secured Party arising by reason of the
fact that the Secured Party chose to retain the Collateral or the price at which any Collateral may
have been sold at a private sale was less than the price that might have been obtained at a public
sale, even if the Secured Party accepts the first offer received and does not offer such Collateral
to more than one offeree, and agrees that any such private placement shall, in and of itself, not
be deemed to be commercially unreasonable.

(b) Any cash held by the Secured Party as Collateral and all cash proceeds received by the
Secured Party in respect of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Secured Party, be held by the Secured Party as
collateral for, and then or at any time thereafter be applied (after payment of any amounts payable
to the Secured Party pursuant to this Agreement) in whole or in part by the Secured Party against,
all or any part of the Obligations in such order as the Secured Party shall elect. Any surplus of
such cash or cash proceeds held by the Secured Party and remaining after payment in full of all the
Obligations shall be paid over to Debtor or to whomsoever may be lawfully entitled to receive such
surplus.

(c) The Secured Party may exercise any and all rights and remedies of Debtor under or in
connection with or otherwise in respect of the Collateral, including, without limitation, any and
all rights of Debtor to demand or otherwise require payment of any amount under, or performance of
any provision of, the agreements included within the Collateral.

(d) Debtor agrees that a breach of any of the covenants contained in Section 5 will cause
irreparable injury to the Secured Party, that the Secured Party has no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant contained in Section 5
shall be specifically enforceable against Debtor, and Debtor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except for a defense that
no default has occurred giving rise to the Obligations becoming due and payable prior to their
stated maturities.

(e) If the proceeds of any sale or other disposition of the Collateral are insufficient to pay
all the Obligations, Debtor shall be liable for the deficiency and the fees of any attorneys
employed by the Secured Party to collect such deficiency. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

 

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(f) Upon the occurrence and during the continuance of an Event of Default, Debtor hereby
constitutes and appoints the Secured Party its true and lawful attorney, with full power, in the
name of the Company or otherwise, at the expense of the Company and without notice to or demand
upon the Company, to grant, sell, convey, assign and transfer the Collateral in accordance with the
UCC, free and clear of all liens. The Company agrees to reimburse the Secured Party on demand for
any payments made or expenses incurred by the Secured Party pursuant to the foregoing authorization
and any unreimbursed amounts shall constitute amounts outstanding under the Note for all purposes
hereof. The above power of attorney is irrevocable and coupled with an interest.

Section 9. Indemnification. The Company shall defend, indemnify and hold harmless the
Secured Party for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements (including reasonable attorneys’ fees) of any
kind whatsoever which may be imposed on, incurred by or asserted against the Secured Party in
connection with or in any way arising out of or relating to the Collateral or this Agreement,
except to the extent the same is finally determined by a court of competent jurisdiction to have
arisen as a result of the willful misconduct or bad faith of the Secured Party.

Section 10. Amendments. No amendment or waiver of any provision of this Agreement,
and no consent to any departure by Debtor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Secured Party. Any waiver, express or implied, of any breach
or default shall not be considered a waiver of any subsequent breach or default.

Section 11. Continuing Security Interest. This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and effect until the payment
in full of the Obligations and all other amounts payable under the Note (b) be binding upon Debtor,
its successors and assigns and (c) inure to the benefit of, and be enforceable by, the Secured
Party and its successors, transferees and assigns.

Section 12. Severability. Whenever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Note shall be or become prohibited or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

Section 13. Notices. Any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served or sent by facsimile or United States
mail or courier service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of facsimile, or three business days after depositing it in the
United States mail with postage prepaid and properly addressed. For the purposes hereof, the
address of each party hereto shall be the address for such party set forth in the Purchase
Agreement or such other address as shall be designated by such party in a written notice delivered
to the other parties hereto.

 

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Section 14. Governing Law. This Agreement was executed in, and the transactions
contemplated by and the provisions of this Agreement shall be governed by and construed in
accordance with, the laws of the State of California, without giving effect to the conflict of laws
provisions thereof; and both parties consent to the jurisdiction of the state and federal courts
sitting in California.

Section 15. Counterparts. This Agreement may be executed in counterparts and shall be
effective when each party has executed at least one of the counterparts even though both parties
have not executed the same counterpart.

* * * * * * *

 

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IN WITNESS WHEREOF, Debtor has duly executed and delivered this Agreement, and the Secured
Party has caused this Agreement to be duly executed and delivered, as of the date first above
written.

	 	 	 	 	 
	 	DEBTOR: CLEANTECH BIOFUELS, INC.

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 	SECURED PARTY: WORLD WASTE TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Title: 	 

 

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EXHIBIT 10.4

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CLEANTECH BIOFUELS, INC., THAT SUCH REGISTRATION IS NOT
REQUIRED.

---------------------------------------- --------------------------------------
OCTOBER 22, 2008                                                WARRANT NO.: 2
---------------------------------------- --------------------------------------

                          COMMON STOCK PURCHASE WARRANT

               Right to Purchase 900,000 Shares of Common Stock of

                            CLEANTECH BIOFUELS, INC.

         CLEANTECH BIOFUELS, INC., a corporation organized under the laws of the
State of Delaware (the "Company"), hereby certifies that, for value received,
World Waste Technologies, Inc. or its successors or assigns (the "Holder") is
entitled to purchase from the Company upon the due exercise hereof, and subject
to the terms and conditions herein, from the date of issue of this warrant (the
"Warrant") until the fifth (5th) anniversary of the issuance hereof (the
"Expiration Date"), all or any part of 900,000 fully paid and non-assessable
shares of common stock, par value $0.001 per share (the "Common Stock") of the
Company, upon surrender hereof, with the exercise form annexed hereto duly
completed and executed, at the office of the Company and upon simultaneous
payment therefore in cash or by certified or official bank check, payable to the
order of the Company, at a per share exercise price ("Exercise Price") of $0.45,
subject to adjustment as provided herein.

         1. RESTRICTION ON TRANSFER. No resale of the Warrant or of any of the
shares of Common Stock underlying the exercise of the Warrant (the "Underlying
Stock") will be made unless such resale is registered pursuant to a registration
statement filed by the Company with the Securities and Exchange Commission (the
"Commission") or an exemption from registration under the Securities Act of
1933, as amended (the "Securities Act"). By acceptance of this agreement, the
Holder agrees, for itself and all subsequent holders, that prior to making any
disposition of the Warrant or of any Underlying Stock, the Holder shall give
written notice to the Company describing briefly the proposed disposition; and
no such disposition shall be made unless and until (i) the Company has notified
the Holder that, in the opinion of counsel satisfactory to it, no registration
or other action under the Securities Act is required with respect to such
disposition (which opinion may be conditioned upon the transferee's assuming the
Holder's obligation hereunder); or (ii) a registration statement under the
Securities Act has been filed by the Company and declared effective by the
Commission or other such similar action has been taken.

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<PAGE>

         2. EXPIRATION OF WARRANT. Unless this Warrant and the Exercise Price
are tendered as herein provided before the close of business on the Expiration
Date, this Warrant will become wholly void and all rights and obligations set
forth herein shall expire and terminate.

         3. PARTIAL EXERCISE. If this Warrant is exercised for less than all the
shares that may be purchased upon the exercise hereof, this Warrant shall be
surrendered by the Holder and replaced with a new warrant of like tender in the
name of the Holder providing for the right to purchase the number of shares of
Underlying Stock as to which this Warrant has not yet been exercised.

         4. CASHLESS EXERCISE. The Holder may exercise the Warrant, in whole or
in part, without payment of the exercise price in cash by surrendering such
Warrant and, in exchange therefor, receiving such number of Underlying Shares
multiplied by the Cashless Exercise Ratio (as defined below). The "Cashless
Exercise Ratio" shall equal a fraction, the numerator of which is the excess of
the "Fair Market Value" (Fair Market Value on a given date means the average of
the high and low price of a share of Common Stock, as reported by the principal
national securities exchange or other trading system on which the Common Stock
is traded, or, if no such prices are available, as mutually agreed upon by the
Holder and the Company) per share of Common Stock on the date of exercise over
the exercise price per share of Common Stock as of the date of exercise and the
denominator of which is the Fair Market Value per share of Common Stock on the
date of exercise. All provisions of this Agreement shall be applicable with
respect to a Cashless Exercise of a Warrant for less than the full number of
Underlying Stock represented thereby. In the event of an exercise of a Warrant
for less than all the Underlying Stock (after giving effort to the Cashless
Exercise) the Company shall promptly issue a Warrant representing the right to
purchase the balance of such Underlying Shares containing the same terms and
provisions as are contained in this Warrant.

         5. ADJUSTMENTS. The Exercise Price and the number of shares of
Underlying Stock of the Company issuable pursuant to such exercise is subject to
adjustment as follows:

                  (a) In case the Company shall at any time declare a stock
dividend or stock split on the outstanding shares of Common Stock in shares of
its Common Stock, then the Exercise Price and number of shares of Underlying
Stock shall be proportionately adjusted so that the Holder shall be entitled to
receive the aggregate number and kind of shares which it would have been
entitled to receive by virtue of such dividend if such Warrant had been
exercised immediately prior to such time.

                  (b) In case the Company shall at any time subdivide or combine
the outstanding shares of the Common Stock, the Exercise Price, initial or
adjusted, in effect immediately prior to such subdivision or combination shall
forthwith be proportionately decreased in the case of subdivision or increased
in the case of combination.

                  (c) In case of any capital reorganization, sale of
substantially all the assets of the Company, or any reclassification of the
shares of Common Stock of the Company, or in case of any consolidation with or
merger of the Company into or with another corporation, then as a part of such
reorganization sale reclassification, consolidation or merger, as the case may
be, provision shall be made so that the registered owner of the Warrant

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<PAGE>

evidenced hereby shall have the right thereafter to receive upon the exercise
thereof the kind and amount of shares of stock or other securities or property
which it would have been entitled to receive if immediately prior to such
reorganization, reclassification, consolidation or merger, it had held the
number of shares of Underlying Stock which were then issuable upon the exercise
of the Warrant evidenced hereby, to the end that the provisions set forth herein
(including provisions with respect to adjustments of the Exercise Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
this Warrant.

                  (d) If the Company at any time makes any spin-off, split-off,
or distribution of assets upon or with respect to its Common Stock, as a
liquidating or partial liquidating dividend, spin-off, or by way of return of
capital, or other than as dividend payable out of earnings or any surplus
legally available for dividends, the Holder then outstanding shall, upon the
exercise of this Warrant, receive, in addition to the shares of Common Stock
then issuable on exercise of this Warrant, the amount of such assets (or, at the
option of the Company, a sum equal to the value thereof at the time of the
distributions) which would have been payable to the Holder had it exercised this
Warrant immediately prior to the record date for such distribution.

                  (e) When any adjustment is required to be made to the Exercise
Price, the number of shares of Common Stock issuable shall be determined as
provided for in paragraph (f) hereof. No fractional shares of Common Stock shall
be issued upon the exercise of this Warrant. The Company shall round all
fractional shares up to the next whole share.

                  (f) Whenever the Exercise Price is adjusted as provided above,
the number of shares of Underlying Stock immediately prior to such adjustment
shall be increased, effective simultaneously with such adjustment, by a number
of shares of Common Stock computed by multiplying such number of shares of
Common Stock by a fraction, the numerator of which is the Exercise Price in
effect immediately prior to such adjustment and the denominator of which is the
Exercise Price in effect upon such adjustment, and the number of shares of
Underlying Stock arrived at by making said computation shall be added to the
number of shares of Underlying Stock immediately prior to such adjustment. The
total number of shares arrived at by making the computation provided for in the
immediately preceding sentence shall thereupon be the number of shares of Common
Stock issuable upon exercise or the Warrant and the Company shall forthwith
determine the new Exercise Price.

         6. DELIVERY OF UNDERLYING STOCK. As soon as practicable after the
exercise hereof, but not more than five (5) days thereafter, the Company shall
deliver a certificate or certificates for the number of full shares of
Underlying Stock, all of which shall be fully paid and nonassessable, to the
person or persons entitled to receive the same provided no sale, offer to sell
or transfer of the Underlying Stock or of this Warrant, or of any shares or
other securities issued in exchange for or in respect of such shares, shall be
made unless a registration statement under the Act, with respect to such shares,
is in effect or an exemption from the registration requirements of such Act is
applicable to such shares.

         7. CONDITION OF EXERCISE OF WARRANT.

                  (a) Unless exercised pursuant to an effective registration
statement under the Securities Act which includes the Underlying Stock, it shall
be a condition to any exercise of this Warrant that the Company shall have

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<PAGE>

received, at the time of such exercise, a representation in writing from the
recipient in the form attached hereto as Exhibit A-1, that the Shares being
issued upon exercise, are being acquired for investment and not with a view to
any sale or distribution thereof.

                  (b) Each certificate evidencing the Underlying Stock issued
upon exercise of this Warrant, shall be stamped or imprinted with a legend
substantially in the following form:

                  "The securities represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended. The
                  securities have been acquired for investment and may not be
                  sold, transferred or assigned in the absence of an effective
                  registration statement for the securities under said Act, or
                  an opinion of counsel, in form, substance and scope reasonably
                  acceptable to the Company, that registration is not required
                  under said Act or unless sold pursuant to Rule 144 under said
                  Act."

         Subject to this Section 7, the Company may instruct its transfer agent
not to register the transfer of all or a part of this Warrant, or any of the
Shares, unless one of the conditions specified in the above legend is satisfied.

         8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Holder as follows:

                  (a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms;

                  (b) The Underlying Stock has been duly authorized and reserved
for issuance by the Company and, when issued in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable;

                  (c) The execution and delivery of this Warrant are not, and
the issuance of the Underlying Stock upon exercise of this Warrant in accordance
with the terms hereof will not be, inconsistent with the Company's Articles of
Incorporation or By-laws, as amended.

         9. REPRESENTATIONS AND WARRANTIES BY THE HOLDER. The Holder represents
and warrants to the Company as follows:

                  (a) This Warrant is being acquired for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act. Upon exercise of this Warrant, the Holder shall, if so requested by the
Company, confirm in writing, in a form reasonably satisfactory to the Company,
that the Underlying Stock issuable upon exercise of this Warrant is being
acquired for investment and not with a view toward distribution or resale.

                  (b) The Holder understands that this Warrant and the
Underlying Stock have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2) thereof,
and that they must be held by the Holder indefinitely, and that the Holder must

                                       4
<PAGE>

therefore bear the economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the Securities Act or is
exempted from such registration.

                  (c) The Holder has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the purchase of this Warrant and the Underlying Stock and of protecting its
interests in connection therewith.

                  (d) The Holder is able to bear the economic risk of the
purchase of the Underlying Stock pursuant to the terms of this Warrant.

         10. RIGHTS OF STOCKHOLDERS. No holder of this Warrant shall be
entitled, as a warrant-holder, to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.

         11. MISCELLANEOUS.

                  (a) This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.

                  (b) This Warrant shall be governed by and construed in
accordance with the laws of State of New York without regard to principles of
conflicts of laws.

                  (c) The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.

                  (d) The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof.

                  (e) The terms of this Warrant shall be binding upon and shall
inure to the benefit of any successors or assigns of the Company and of the
holder or holders hereof and of the Underlying Stock.

                  (f) This Warrant and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.

                  (g) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the

                                       5
<PAGE>

case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company at its expense will execute and deliver to the holder of record, in
lieu thereof, a new Warrant of like date and tenor.

                  (h) This Warrant and any provision hereof may be amended,
waived or terminated only by an instrument in writing signed by the Company and
the Holder.

                  (i) Receipt of this Warrant by the Holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.

Dated: October 22, 2008

                            CLEANTECH BIOFUELS, INC.

By:  ________________________________________________
     Name:___________________________________________
     Title: _________________________________________

Warrant Holder: _____________________________________

Address:

_____________________________________________________

_____________________________________________________

_____________________________________________________

                                       6
<PAGE>

                                    EXHIBIT A

                               NOTICE OF EXERCISE

TO:      CLEANTECH BIOFUELS, INC.

         1. The undersigned hereby elects to purchase ________ shares of Common
Stock of CLEANTECH BIOFUELS, INC. pursuant to the terms of this Warrant, and
tenders herewith payment of the purchase price of such shares in full in the
form of cash and/or shares of Common Stock received upon exercise of the
attached Warrant, which shares have the current market value equal to such
payment.

         2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:

           _____________________________________________________
           (Name)

           _____________________________________________________
           (Address)

           _____________________________________________________

         3. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares and all representations and warranties of
the undersigned set forth in Section 9 of the attached Warrant are true and
correct as of the date hereof. In support thereof, the undersigned agrees to
execute an Investment Representation Statement in a form substantially similar
to the form attached to the Warrant as EXHIBIT A-1.

                                            ____________________________________
                                            (Signature)

                                            By:_________________________________

                                            Title:______________________________

                                            Date:_________________, 200__

                                      A - 1
<PAGE>

                                   EXHIBIT A-1

                       INVESTMENT REPRESENTATION STATEMENT

         PURCHASER:                 ______________________

         SELLER:                    ______________________

         COMPANY:                   CLEANTECH BIOFUELS, INC.

         SECURITIES:                COMMON STOCK ISSUED UPON EXERCISE
                                    OF THE WARRANTS ISSUED ON
                                    October 22, 2008

         AMOUNT:                    __________ SHARES

         DATE:                      ____________, 20__

In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Seller and to the Company the following:

         (a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act").

         (b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "Commission"), the statutory basis for
such exemption may be unavailable if my representation was predicated solely
upon a present intention to hold these Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.

         (c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted with
a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.

         (d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.

                                       A-1 - 1
<PAGE>

         The Securities may be resold in certain limited circumstances subject
to the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than six months after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and (3)
such other requirements that apply to holders who are affiliates.

         (e) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk.

                                            ____________________________________
                                            (Signature)

                                            By:_________________________________

                                            Title:______________________________

                                            Date:_________________, 200__

                                    A-1 - 2

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