Document:

SERIES
      A CONVERTIBLE DEBENTURE

    

    
      	
              US
                $________________

            	
              Palm
                Springs, California

            
	 	
              December
          _, 2006

            

    

     

    U.S.
      Dry
      Cleaning Corporation, a Delaware corporation (the “Company”),
      for
      value received, hereby promises to pay to the order of ______________
      (the
      “Holder”),
      the
      sum of ____________________ Dollars ($_____________) plus interest thereon
      in
      lawful currency of the United States of America. Payment for all amounts due
      hereunder shall be made by December 3, 2007 (the “Maturity
      Date”).
      

     

    1.  No
      Interest.
      No
      interest shall accrue on the principal balance of this Series A Convertible
      Debenture (this "Note").

     

    2.  Late
      Fee.
      If the
      principal amount of this Note is not paid in full or converted by Holder
      pursuant to Section 5
      below,
      on or before the Maturity Date, then the Company shall pay to Holder, in
      addition to the principal balance hereunder, five percent (5%) of the principal,
      unpaid balance of this Note on the Maturity Date.

     

    3.  Security
      Agreement as Security.
      This
      Note is secured by, among other things, a Security Agreement of even date
      herewith (the “Security
      Agreement”)
      executed by each of Company and its subsidiaries, as debtor, in favor of an
      agent of Holder, as secured party, which encumbers all of the assets of the
      Company (the “Collateral”).
      The
      Company will cause each of its current operating subsidiaries (as defined below)
      to execute the Security Agreements. The “Operating
      Subsidiaries”
are
      USDCC CVR Merger Sub, LLC, a California limited liability company, and Enivel,
      Inc. Once this Note has been paid in full, all of the foregoing security
      interests will be released with respect to the holder hereof.

     

    4.  Prepayment.
      This
      Note may be prepaid at any time without penalty upon delivering at least
      forty-five (45) days advance written notice to Holder.

     

    5.  Conversion
      into Common Stock.

     

    5.1  Voluntary
      Conversion.
      At the
      Holder’s option, any portion of this Note (including the principal and any
      accrued interest) may be converted into fully-paid and nonassessable shares
      of
      Common Stock of the Company at the Conversion Price specified
      below.

     

    5.2  Conversion
      Procedure.
      At any
      time prior to the Maturity Date, the Holder may notify the Company in writing
      that it intends to convert the Note. Such notification shall be accompanied
      by
      the original of the Note. The Company shall, as soon as practicable, issue
      and
      deliver to the Holder of this Note a certificate in the name of the Holder
      for
      the number of shares of the Common Stock to which the Holder of this Note shall
      be entitled. Such conversion shall be deemed to have been made as of the date
      of
      such surrender of the Notes, and the person or persons entitled to receive
      the
      Common Stock issuable upon such conversion shall be treated for all purposes
      as
      the record holder or holders of such Common Stock on such date.

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    5.3  Mechanics
      and Effect of Conversion.
      No
      fractional shares of capital stock shall be issued upon conversion of this
      Note.
      In lieu of the Company issuing any fractional shares to the Holder upon the
      conversion of this Note, the Company shall pay to the Holder the amount of
      outstanding principal and interest that is not so converted. Upon conversion
      of
      this Note, the Company shall be forever released from all its obligations and
      liabilities under this Note, except that the Company shall be obligated to
      pay
      the Holder, within ten (10) days after the date of such conversion, any interest
      accrued and unpaid or unconverted to and including the date of such conversion,
      and no more.

     

    5.4  Conversion
      Price.

     

    5.4.1  Definitions.
      For
      purposes of this Note, the following terms shall have the meanings set forth
      below:

     

    (1)  "Common
      Stock"
      shall
      mean the common stock of the Company.

     

    (2)  "Common
      Stock Equivalents"
      shall
      mean Convertible Securities and rights entitling the holder thereof to receive,
      directly or indirectly, additional shares of Common Stock without the payment
      of
      any consideration by such holder for such additional shares of Common Stock
      or
      Common Stock Equivalents.

     

    (3)  "Conversion
      Price"
      shall
      mean the price, determined pursuant to this Section 5.4,
      at
      which shares of Common Stock shall be deliverable upon conversion of this
      Note.

     

    (4)  "Convertible
      Securities"
      shall
      mean any indebtedness or shares of stock convertible into or exchangeable for
      Common Stock, including this Note.

     

    (5)  "Current
      Conversion Price"
      shall
      mean the Conversion Price immediately before the occurrence of any event, which,
      pursuant to this Section 5.4,
      causes
      an adjustment to the Conversion Price.

     

    (6)  "Options"
      shall
      mean any rights, warrants or options to subscribe for or purchase Common Stock
      or Convertible Securities.

     

    5.4.2  Initial
      Conversion Price.
      The
      initial Conversion Price shall be $3.00 per share of Common Stock. The
      Conversion Price shall be subject to adjustment from time to time in certain
      instances as hereinafter provided.

     

    5.4.3  Adjustments
      to Conversion Price.
      Subject
      to 5.4.1(4)
      below,
      the Conversion Price in effect from time to time shall be subject to adjustment
      in certain cases as follows:

     

    (1)  Stock
      Splits; Dividends; Distributions and Combinations.
      If the
      Company at any time or from time to time after the date of this Note fixes
      a
      record date for the effectuation of a split or subdivision of the outstanding
      shares of Common Stock or the determination of holders of Common Stock entitled
      to receive a dividend or other distribution payable in additional shares of
      Common Stock or Common Stock Equivalents, then, following such record date
      (or
      the date of such dividend, distribution, split or subdivision if no record
      date
      is fixed), the Conversion Price shall be appropriately decreased so that the
      number of shares of Common Stock issuable on conversion of this Note shall
      be
      increased in proportion to such increase in the number of outstanding shares
      of
      Common Stock (including for this purpose, Common Stock Equivalents). If the
      number of shares of Common Stock outstanding at any time after the date of
      this
      Note is decreased by a combination of the outstanding shares of Common Stock,
      then, following the record date of such combination, the Conversion Price shall
      be appropriately increased so that the number of shares of Common Stock issuable
      on conversion of this Note shall be decreased in proportion to such decrease
      in
      the number of outstanding shares of Common Stock.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    (2)  Recapitalizations.
      If at
      any time or from time to time there shall be a recapitalization of the Common
      Stock (other than a subdivision, combination or merger, sale of the voting
      stock
      of the Company or a sale of assets transaction provided for elsewhere in this
      Section 5.4.3),
      provision shall be made so that the holder of this Note shall thereafter be
      entitled to receive upon conversion of this Note the number of shares of stock
      or other securities or property of the Company or otherwise, to which a holder
      of the number of shares of Common Stock of the Company which the Holder is
      then
      entitled to receive upon conversion of this Note would have been entitled to
      on
      such recapitalization. In any such case, appropriate adjustment shall be made
      in
      the application of the provisions of this Section 5.4.3
      with
      respect to the rights of the holder of this Note after the recapitalization
      to
      the end that the provisions of this Section 5.4.3
      (including adjustment of the Conversion Price then in effect and the number
      of
      shares purchasable upon conversion of this Note) shall be applicable after
      that
      event in as nearly an equivalent manner as may be practicable.

     

    (3)  Successive
      Changes.
      The
      provisions of this Section shall similarly apply to successive issuances, sales,
      dividends or other distributions, subdivisions and combinations on or of the
      Common Stock after the date of this Note.

     

    (4)  No
      Impairment.
      The
      Company will not, by amendment of its Certificate of Incorporation or through
      any reorganization, recapitalization, transfer of assets, consolidation, merger,
      dissolution, issue or sale of securities or any other voluntary action, avoid
      or
      seek to avoid the observance or performance of any of the terms to be observed
      or performed hereunder by the Company, but will at all times in good faith
      assist in the carrying out of all the provisions of this Section 5.4.3
      and in
      the taking of all such action as may be necessary or appropriate in order to
      protect the conversion rights of the holder of this Note against
      impairment.

     

    (5)  Excluded
      Events.
      Notwithstanding any other provision in this Section 5.4.3
      which is
      inconsistent with or contrary to the terms of this paragraph (8), the Conversion
      Price shall not be adjusted by virtue of (a) the issuance of securities in
      connection with acquisition transactions, (b) the issuance of securities to
      financial institutions, suppliers or lessors in connection with commercial
      credit arrangements, equipment financings or similar transactions, or
      (c) conversion of the Note.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    (6)  Certificate
      as to Adjustments.
      Upon
      the occurrence of each adjustment or readjustment of the Conversion Price
      pursuant to this Section 5.4.3,
      the
      Company, at its expense and upon request by the holder of this Note, shall
      compute such adjustment or readjustment in accordance with the terms hereof
      and
      prepare and furnish to the holder of this Note a certificate setting forth
      such
      adjustment or readjustment and showing in reasonable detail the facts upon
      which
      such adjustment or readjustment is based. The Company shall, upon the written
      request at any time of the holder of this Note, furnish or cause to be furnished
      to such holder a like certificate setting forth (a) such adjustment and
      readjustment, (b) the Current Conversion Price, and (c) the number of shares
      of
      Common Stock and the amount, if any, of other property which at the time would
      be received upon the conversion of this Note.

     

    5.4.4  Business
      Combination, Merger; Sale of Company.
      After
      the date of this Note, in the event of any proposed business combination,
      consolidation or merger of the Company with or into another corporation (other
      than a business combination, consolidation or merger in which the Company is
      the
      continuing corporation and which does not result in any reclassification of,
      or
      change in, the outstanding shares of Common Stock), in the event of any proposed
      sale or transfer to another corporation of all or substantially all of the
      assets of the Company, or in the event of any proposed sale of more than fifty
      percent (50%) of the voting stock or equity securities of the Company, the
      holder of this Note may, upon delivery of this Note and election pursuant to
      Section 5.2.
      above,
      have this Note treated for all purposes as if it had been converted into Common
      Stock on the earlier of (a) the record date, if any, for voting by holders
      of
      Common Stock on such event, and (b) the date of such event.

     

    5.5  Reservation
      of Stock Issuable Upon Conversion.
      The
      Company shall ensure that it has at all times available out of its authorized
      but unissued shares of capital stock a sufficient number of shares of stock
      so
      that this Note can be converted into Common Stock, if the Holder elects to
      do
      so.

     

    6.  Assignment.
      The
      rights and obligations of the Company and the Holder of this Note shall be
      binding upon and benefit the successors, assigns, heirs, administrators and
      transferees of the parties. The Holder of this Note may transfer or assign
      its
      rights herein, but only in accordance with the Securities Act of 1933, as now
      or
      hereinafter amended, and any applicable state securities laws, and by delivering
      to the Company an opinion of legal counsel, in form and substance reasonably
      acceptable to the Company, stating that such transfer or assignment complies
      with the Securities Act of 1933 and applicable state securities
      laws.

     

    7.  Due
      on
      Sale/Encumbrance.
      The
      Security Agreement provides in part: 

     

    Without
      the prior written consent of Secured Party, Debtor shall not
      (a)
      directly
      or indirectly sell, transfer, convey, mortgage, pledge, or assign any interest
      in the Collateral or any part thereof (including any ownership interest in
      Debtor);
      or
      (b) further
      encumber, alienate, grant a lien or grant any other interest in the Collateral
      or any part thereof, whether voluntarily or involuntarily.

     

    “[T]ransfer”
shall
      include the sale, transfer, conveyance, mortgage, pledge, or assignment of
      a
      legal or beneficial ownership interest in the Collateral. “Transfer” shall not
      include the leasing or subleasing of any portion of the Collateral, or the
      sale
      of Collateral in the ordinary course of business.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    8.  Waiver
      and Amendment.
      The
      provisions of this Note may only be amended, waived or modified upon the written
      consent of the Company and the Holder.

     

    9.  Notices.
      Any
      notice required or permitted to be given under this Note shall be in writing
      and
      either shall be mailed by certified mail, postage prepaid, return receipt
      requested, or sent by overnight courier service, or personally delivered to
      a
      representative of the receiving party, or sent by telecopy. Notices shall
      mailed, sent, delivered, addressed as follows or to such other address as a
      party may designate by proper notice hereunder:

     

    
      	 	If to the Holder:	 	
              _______________________________

               

              _______________________________

               

              _______________________________

               

              Attn.:
                __________________________

               

              Facsimile:
_______________________

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
              with
                a copy to:

            
	 	 	 	
              
                _______________________________

                 

              
                _______________________________

                 

              

              
                _______________________________

                 

              

              Attn.:
                __________________________

               

              Facsimile: _______________________

            
	 	 	 	 
	 	If to the Company:	 	U.S. Dry Cleaning Corporation
              125
                E. Tahquitz Canyon, Suite 203

              Palm
                Springs, CA 92262

              Attn:
                Robbie Y. Lee

              Facsimile:
                (310) 226-8553

            
	 	 	 	 
	 	 	 	With
              a copy to:
	 	 	 	 
	 	 	 	Greenburg
              Traurig
              650
                Town Center Drive

              Suite
                1700

              Costa
                Mesa, CA 92626

              Attn:
                John Giovannone

              Facsimile:
                714-708-6501

            

    

     

    Any
      communication so addressed and mailed shall be deemed to be given on the
      earliest of (a) when actually delivered, (b) on the first business day
      after deposit with an overnight courier service, or (c) on the third business
      day after deposit in the United States mail, postage prepaid, in each case
      to
      the address of the intended addressee, and any communication so delivered in
      person shall be deemed to be given when receipted for by, or actually received
      by, Holder or the Company, as the case may be. If given by telecopy, a notice
      shall be deemed given and received when the telecopy is transmitted to the
      party’s telecopy number and confirmation of complete receipt is received by the
      transmitting party during normal business hours or on the next business day
      if
      not confirmed during normal business hours. Any party may designate a change
      of
      address by written notice to the other by giving at least ten (10) days prior
      written notice of such change of address. 

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    10.  No
      Shareholder Rights.
      Nothing
      contained in this Note shall be construed as conferring upon the Holder or
      any
      other person the right to vote or to consent or to receive notice as a
      shareholder in respect of meetings of shareholders for the election of directors
      of the Company or any other matters or any rights whatsoever as a shareholder
      of
      the Company.

     

    11.  Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of California; provided, however, that if any California law or laws require
      or
      permit the laws of any other jurisdiction to be applied in any proceeding,
      such
      California law or laws shall be disregarded with the effect that the remaining
      laws of the State of California shall nonetheless be applied.

     

    12.  Heading:
      References.
      All
      headings used herein are used for convenience only and shall not be used to
      construe or interpret this Note.

     

    13.  Compliance
      with Usury Laws.
      It is
      the intention of the parties to conform to applicable laws, and all agreements
      between the Company and Holder, whether now existing or hereafter arising,
      are
      hereby expressly limited so that in no event shall the amount paid or agreed
      to
      be paid to Holder, or collected by Holder, for the use, forbearance or detention
      of the money lent hereunder or otherwise, exceed the maximum amount permissible
      under applicable laws. If under any circumstances fulfillment of any provision
      hereof or of the Security Agreement or any other security document, at the
      time
      performance of such provision shall be due, shall involve exceeding the limit
      of
      validity prescribed by law, then the obligation to be fulfilled shall be reduced
      to the limit of such validity; and if the Holder shall ever receive an amount
      deemed interest, by applicable law, which would exceed the highest lawful rate,
      such amount that would be excessive interest under applicable laws shall be
      applied to the reduction of the principal amount owing hereunder or to other
      indebtedness and not to the payment of interest, or if such excessive interest
      exceeds the unpaid principal amount and other indebtedness, the excess shall
      be
      deemed to have been a payment made by mistake and shall be refunded to the
      Company.

     

    14.  Severability.
      In case
      any provision of this Note shall be invalid, illegal, or unenforceable, it
      shall, to the extent practicable, be modified so as to make it valid, legal
      and
      enforceable and to retain as nearly as practicable the intent of the parties;
      and the validity, legality, and enforceability of the remaining provisions
      shall
      not in any way be affected or impaired thereby.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Note to be issued on the date
      first
      written above.

     

    
      	 	 	 
	 	
              U.S.
                Dry Cleaning Corporation,
a
                Delaware corporation

            
	 
 	 
 	 
 
	 	By:  	 
	 	 	
              
                

              

              Robert Y. Lee

            
	 	Title:	 
	
               

            	
              
                

              

            

    

     

    
      
         

      

      
        -7-REGISTRATION
      RIGHTS AGREEMENT

     

This
  Registration Rights Agreement (“Agreement”)
  is entered into as of December _, 2006 by and among U.S. Dry Cleaning Corporation,
  a Delaware corporation (the “Company”),
  and Craig M. Rankin, as agent for himself and the other Holders (the “Lead
  Investor”)
  of the Company’s Series A Convertible Debentures pursuant to that certain
  Subscription Agreement of even date herewith (the “Subscription
  Agreement”)
  and named in Exhibit A hereto.

     

    WHEREAS,
      in connection with the Company’s issuance of Series A Convertible Debenture
      pursuant to the Subscription Agreement, the Company has agreed to enter into
      this Registration Rights Agreement as a condition to the Closing
      thereunder;

     

    NOW
      THEREFORE, in consideration of the mutual agreements and covenants contained
      herein, the Company and the Lead Investor hereby agree as follows:

     

    1.  Definitions.
      As used
      herein:

     

    1.1  The
      term
“Holder”
means
      any person owning or having the right to acquire Registrable Shares or any
      assignee thereof in accordance with Section 2.8
      hereof.

     

    1.2  The
      terms
“register,”
      “registered,”
and
      “registration”
refer
      to a registration effected by preparing and filing a registration statement
      in
      compliance with the Securities Act (as defined below) and the applicable rules
      and regulations thereunder, and the declaration or ordering of the effectiveness
      of such registration statement.

     

    1.3  For
      the
      purposes hereof, the term “Registrable
      Shares”
means
      and includes (i) the shares of common stock of the Company issued or
      issuable upon conversion of the Series A Convertible Debenture (the
“Series
      A Debentures”),
      (ii)
      the common stock issued to the Holder of the Series A Debentures pursuant to
      the
      subscription of the Series A Debenture, and (iii) any common stock of the
      Company issued, or issuable upon the conversion or exercise of any warrant,
      right or other security which is issued, as a result of a stock split, dividend
      or other distribution with respect to or in exchange for or in replacement
      of
      the shares referenced in (i) above, excluding in all cases, however, any
      Registrable Shares sold by a person in a transaction in which his or her rights
      under Section 2
      are not
      assigned and that any particular shares of Common Stock shall cease to be
      Registrable Shares when: (i) a registration statement with respect to the
      sale of such securities shall have become effective under the Securities Act
      and
      such securities shall have been disposed of in accordance with such registration
      statement, (ii) they shall have been distributed to the public pursuant to
      Rule 144 (or any successor provision) under the Securities Act,
      (iii) they shall have been otherwise transferred, new certificates for them
      shall have been delivered by the Company and subsequent disposition of them
      shall not require registration or qualification of them under the Securities
      Act
      or any similar state law then in force, (iv) they shall have ceased to be
      outstanding, or (v) at such time as all of the Common Stock otherwise
      constituting Registrable Securities of such Holder may be sold within a three
      month period under Securities and Exchange Commission Rule 144.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    1.4  The
      term
“Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    2.  Registration
      Rights.

     

    2.1  Filing.
      The
      Company will use its best efforts to file, on or before two hundred seventy
      days
      (270) following the closing of the initial sale of the Series A Debentures,
      a
      registration statement under the Securities Act covering the registration of
      the
      sale of the Registrable Securities by the Holders. The Holders shall fully
      cooperate with the Company in preparation of the registration statement and
      provide all necessary information regarding the Holders, the underwriters,
      the
      manner of distribution and other material information reasonably requested
      by
      the Company.

     

    2.2  Effectiveness.

     

    (a)  Following
      effectiveness of the registration statement, the Company will use its best
      efforts to maintain the effectiveness for up to three (3) months; provided,
      however, that such three-month period shall be extended for a period of time
      equal to the period the Holder refrains from selling any securities included
      in
      such registration at the request of an underwriter of common stock (or other
      securities) of the Company.

     

    (b)  The
      Company will from time to time amend or supplement such registration statement
      and the prospectus contained therein as and to the extent necessary to comply
      with the Securities Act and any applicable state securities statute or
      regulation.

     

    (c)  Each
      Holder selling Registrable Shares agrees that, upon receipt of any notice from
      Company of the happening of any event of the kind described in
      Section 2.6(c),
      such
      Holder will immediately discontinue disposition of Registrable Shares pursuant
      to the Registration Statement until such Holder’s receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 2.6(c),
      and, if
      so directed by Company, each such Holder will deliver to Company (at Company’s
      expense) all copies, other than permanent file copies then in such Holder’s
      possession, of the prospectus covering such Registrable Shares current at the
      time of receipt of such notice.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
       

      2.3  Indemnification.

    

    (a)  Indemnification
      of Holders.
      In the
      event that the Company registers any of the Registrable Shares under the
      Securities Act, the Company will indemnify and hold harmless each Holder and
      each underwriter of the Registrable Shares so registered (including any broker
      or dealer through which such shares may be sold) and each person, if any, who
      controls such Holder or any such underwriter within the meaning of
      Section 15 of the Securities Act from and against any and all losses,
      claims, damages, expenses or liabilities (or any action in respect thereof),
      joint or several, to which they or any of them become subject under the
      Securities Act or under any other statute or at common law or otherwise, and,
      except as hereinafter provided, will reimburse each such Holder, each such
      underwriter and each such controlling person, if any, for any legal or other
      expenses reasonably incurred by them or any of them, as such expenses are
      incurred, in connection with investigating or defending any actions whether
      or
      not resulting in any liability, insofar as such losses, claims, damages,
      expenses, liabilities or actions arise out of or are based upon (i) any
      untrue statement of a material fact contained in the registration statement,
      in
      any preliminary or amended preliminary prospectus or in the prospectus (or
      the
      registration statement or prospectus as from time to time amended or
      supplemented by the Company); (ii) any omission to state therein a material
      fact required to be stated therein or necessary in order to make the statements
      therein not misleading; or (iii) any violation by the Company of the
      Securities Act, the Securities Exchange Act of 1934, as amended (the
“Exchange
      Act”),
      a
      state securities law or any rule or regulation under the Securities Act, the
      Exchange Act or any state securities law; provided, however, that the indemnity
      contained in this Section 2.3(a)
      will not
      apply where such untrue statement or omission was made in such registration
      statement, preliminary or amended, preliminary prospectus or prospectus in
      reliance upon and in conformity with information furnished in writing to the
      Company in connection therewith by such Holder of Registrable Shares, any such
      underwriter or any such controlling person expressly for use therein or arises
      from such Holder’s breach of its obligations under this Agreement. Promptly
      after receipt by any Holder of Registrable Shares, any underwriter or any
      controlling person of notice of the commencement of any action in respect of
      which indemnity may be sought against the Company, such Holder of Registrable
      Shares, or such underwriter or such controlling person, as the case may be,
      will
      notify the Company in writing of the commencement thereof, and, subject to
      the
      provisions hereinafter stated, the Company shall assume the defense of such
      action (including the employment of counsel, who shall be counsel reasonably
      satisfactory to such Holder of Registrable Shares, such underwriter or such
      controlling person, as the case may be), and the payment of expenses insofar
      as
      such action shall relate to any liability in respect of which indemnity may
      be
      sought against the Company. Such Holder of Registrable Shares, any such
      underwriter or any such controlling person shall have the right to employ
      separate counsel in any such action and to participate in the defense thereof
      in
      the event the representation of such Holder, underwriter or controlling person
      by counsel retained by or on the behalf of the Company would be inappropriate
      due to conflicts of interest between any such person and any other party
      represented by such counsel in such proceeding or action, in which case the
      Company shall pay, as incurred, the reasonable fees and expenses of such
      separate counsel. The Company shall not be liable to indemnify any person under
      this Section 2.3(a)
      for any
      settlement of any such action effected without the Company’s consent (which
      consent shall not be unreasonably withheld). The Company shall not, except
      with
      the approval of each party being indemnified under this
      Section 2.3(a)
      (which
      approval will not be unreasonably withheld), consent to entry of any judgment
      or
      enter into any settlement that does not include as an unconditional term thereof
      the giving by the claimant or plaintiff to the parties being so indemnified
      of a
      release from all liability in respect to such claim or litigation.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b)  Indemnification
      of Company.
      In the
      event that the Company registers any of the Registrable Shares under the
      Securities Act, each Holder of the Registrable Shares so registered will
      indemnify and hold harmless the Company, each of its directors, each of its
      officers who have signed the registration statement, each underwriter of the
      Registrable Shares so registered (including any broker or dealer through which
      any of such shares may be sold) and each person, if any, who controls the
      Company within the meaning of Section 15 of the Securities Act and all
      other Holders and their respective officers, directors and controlling persons
      from and against any and all losses, claims, damages, expenses or liabilities
      (or any action in respect thereof), joint or several, to which they or any
      of
      them may become subject under the Securities Act or under any other statute
      or
      at common law or otherwise, and, except as hereinafter provided, will reimburse
      the Company and each such director, officer, underwriter or controlling person
      for any legal or other expenses reasonably incurred by them or any of them,
      as
      such expenses are incurred, in connection with investigating or defending any
      actions whether or not resulting in any liability, insofar as such losses,
      claims, damages, expenses, liabilities or actions arise out of or are based
      upon
      any untrue statement of a material fact contained in the registration statement,
      in any preliminary or amended preliminary prospectus or in the prospectus (or
      the registration statement or prospectus as from time to time amended or
      supplemented) or arise out of or are based upon the omission to state therein
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein not misleading, but only insofar as any such statement or
      omission was made in reliance upon and in conformity with information furnished
      in writing to the Company in connection therewith by such Holder, expressly
      for
      use therein; provided, however, that such Holder’s obligations hereunder shall
      be limited to an amount equal to the proceeds to such Holder of the Registrable
      Shares sold in such registration. Promptly after receipt of notice of the
      commencement of any action in respect of which indemnity may be sought against
      such Holder of Registrable Shares, the Company will notify such Holder of
      Registrable Shares in writing of the commencement thereof, and such Holder
      of
      Registrable Shares shall, subject to the provisions hereinafter stated, assume
      the defense of such action (including the employment of counsel, who shall
      be
      counsel reasonably satisfactory to the Company) and the payment of expenses
      insofar as such action shall relate to the liability in respect of which
      indemnity may be sought against such Holder of Registrable Shares. The Company
      and each such director, officer, underwriter or controlling person shall have
      the right to employ separate counsel in any such action and to participate
      in
      the defense thereof in the event the representation of the Company, any of
      its
      officers or directors or any underwriter or controlling person by counsel
      retained by or on the behalf of such Holder would be inappropriate due to
      conflicts of interest between any such person and any other party represented
      by
      such counsel in such proceeding or action, in which case such Holder shall
      pay,
      as incurred, the reasonable fees and expenses of such separate counsel. Such
      Holder shall not be liable to indemnify any person for any settlement of any
      such action effected without such Holder’s consent (which consent shall not be
      unreasonably withheld). Such Holder shall not, except with the approval of
      the
      person being indemnified (which approval shall not be unreasonably withheld),
      consent to entry of any judgment or enter into any settlement that does not
      include as an unconditional term thereof the giving by the claimant or plaintiff
      to the party being so indemnified of a release from all liability in respect
      to
      such claim or litigation.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.4  Contribution.
      If the
      indemnification provided for in Section 2.3
      is held
      by a court of competent jurisdiction to be unavailable to an indemnified party
      with respect to any loss, liability, claim, damage, or expense referred to
      therein, then the indemnifying party, in lieu of indemnifying such indemnified
      party hereunder, shall contribute to the amount paid or payable by such
      indemnified party as a result of such loss, liability, claim, damage, or expense
      in such proportion as is appropriate to reflect the relative fault of the
      indemnifying party on the one hand and of the indemnified party on the other
      in
      connection with the statements or omissions that resulted in such loss,
      liability, claim, damage, or expense as well as any other relevant equitable
      considerations. The relative fault of the indemnifying party and of the
      indemnified party shall be determined by reference to, among other things,
      whether the untrue statement of a material fact or the omission to state a
      material fact relates to information supplied by the indemnifying party or
      by
      the indemnified party and the parties’ relative intent, knowledge, access to
      information, and opportunity to correct or prevent such statement or
      omission.

     

    2.5  Exchange
      Act Registration.
      With a
      view to making available to the Holders the benefits of Rule 144
      promulgated under the Act and any other rule or regulation of the Securities
      Exchange Commission (the “SEC”)
      that
      may at any time permit a Holder to sell securities of the Company to the public
      without registration, the Company agrees to:

     

    (a)  make
      and
      keep public information available, as those terms are understood and defined
      in
      SEC Rule 144, at all times after ninety (90) days after the effective date
      of the first registration statement filed by the Company for the offering of
      its
      securities to the general public until termination of this
      Agreement;

     

    (b)  file
      on a
      timely basis with the Securities and Exchange Commission all information that
      the Commission may require under either of Section 13 or Section 15(d)
      of the Exchange Act and, so long as it is required to file such information,
      take all action that may be required as a condition to the availability of
      Rule 144 under the Securities Act (or any successor exemptive rule
      hereinafter in effect) with respect to the Company’s common stock;
      and

     

    (c)  furnish
      to any Holder forthwith upon request (i) a written statement by the Company
      as to its compliance with the reporting requirements of Rule 144,
      (ii) a copy of the most recent annual or quarterly report of the Company as
      filed with the Securities and Exchange Commission, and (iii) any other
      reports and documents that a Holder may reasonably request in order to avail
      itself of any rule or regulation of the Securities and Exchange Commission
      allowing a Holder to sell any such Registrable Shares without
      registration.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    2.6  Further
      Obligations of the Company.
      Whenever the Company is required hereunder to register Registrable Shares,
      it
      agrees that it shall also do the following:

     

    (a)  Furnish
      to each selling Holder such copies of each preliminary and final prospectus
      and
      any other documents that such Holder may reasonably request to facilitate the
      public offering of its Registrable Shares;

     

    (b)  Use
      its
      best efforts to register or qualify the Registrable Shares to be registered
      pursuant to this Agreement under the applicable securities or “blue sky” laws of
      such jurisdictions as any selling Holder may reasonably request; provided,
      however, that the Company shall not be obligated to qualify to do business
      in
      any jurisdiction where it is not then so qualified or to take any action that
      would subject it to the service of process in suits other than those arising
      out
      of the offer or sale of the securities covered by the registration statement
      in
      any jurisdiction where it is not then so subject;

     

    (c)  Notify
      each Holder of Registrable Shares covered by such registration statement at
      any
      time when a prospectus relating thereto is required to be delivered under the
      Act of the happening of any event as a result of which the prospectus included
      in such registration statement, as then in effect, includes an untrue statement
      of a material fact or omits to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading in the light
      of the circumstances then existing;

     

    (d)  Cause
      all
      such Registrable Shares registered hereunder to be listed on each securities
      exchange on which similar securities issued by the Company are then listed
      if
      such listing is then permitted under the rules of the exchange;

     

    (e)  Provide
      a
      transfer agent and registrar for all Registrable Shares registered pursuant
      hereunder and a CUSIP number for all such Registrable Shares, in each case
      not
      later than the effective date of such registration;

     

    (f)  In
      the
      event of any underwritten public offering, enter into and perform its
      obligations under an underwriting agreement, in usual and customary form, with
      the managing underwriter of such offering. Each Holder participating in such
      underwriting shall also enter into and perform its obligations under such an
      agreement;

     

    (g)  Furnish,
      at the request of any Holder requesting registration of Registrable Shares
      pursuant to this Section 2,
      on the
      date that such Registrable Shares are delivered to the underwriters for sale
      in
      connection with a registration pursuant to this Section 2,
      if such
      securities are being sold through underwriters, or, if such securities are
      not
      being sold through underwriters, on the date that the registration statement
      with respect to such securities becomes effective:

     

    (i)  an
      opinion, dated such date, of the counsel representing the Company for the
      purposes of such registration, in form and substance as is customarily given
      to
      underwriters in an underwritten public offering, addressed to the underwriters,
      if any, and to the Holders requesting registration of Registrable Shares;
      and

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (ii)  “comfort”
      letters signed by the Company’s independent public accountants who have examined
      and reported on the Company’s financial statements included in the registration
      statement, to the extent permitted by the standards of the American Institute
      of
      Certified Public Accountants, covering substantially the same matters with
      respect to the registration statement (and the prospectus included therein)
      and
      (in the case of the accountants’ comfort letters) with respect to events
      subsequent to the date of the financial statements, as are customarily covered
      in opinions of issuer’s counsel and in accountants’ comfort letters delivered to
      the underwriters in underwritten public offerings of securities, but only if
      and
      to the extent that the Company is required to deliver or cause the delivery
      of
      such opinion or comfort letters to the underwriters in an underwritten public
      offering of securities;

     

    (h)  Permit
      each selling Holder or his counsel or other representatives upon the receipt
      of
      commercially reasonable confidentiality agreements, to inspect and copy such
      corporate documents and records as may reasonably be requested by them;
      and

     

    (i)  Furnish
      to each selling Holder, upon request, a copy of all documents filed and all
      correspondence from or to the Securities and Exchange Commission in connection
      with any such offering unless confidential treatment of such information has
      been requested of the Securities and Exchange Commission.

     

    2.7  Expenses.
      The
      Company shall bear all costs and expenses of the registration, including, but
      not limited to, printing, legal and accounting expenses, Securities and Exchange
      Commission filing fees and “blue sky” fees and expenses; provided, however, that
      the Company shall have no obligation to pay or otherwise bear (i) any
      portion of the fees or disbursements of more than one counsel for the Holders
      in
      connection with the registration of their Registrable Shares, which in no event
      shall exceed a reasonable fee, (ii) any portion of the underwriter’s
      commissions or discounts attributable to the Registrable Shares being offered
      and sold by the Holders of Registrable Shares, or (iii) any of such
      expenses if the payment of such expenses by the Company is prohibited by the
      laws of a state in which such offering is qualified and only to the extent
      so
      prohibited.

     

    2.8  Transfer
      of Registration Rights.
      The
      registration rights of a Holder of Registrable Shares under this Agreement
      may
      be transferred as set forth below (provided (1) the transfer accompanies
      the transfer of Series A Preferred or Common Stock in the Company, (2) the
      transferee is bound by the terms of this Agreement and (3) the Company is
      given reasonable advance written notice prior to such transfer) to any other
      transferee of the Registrable Shares.

     

    2.9  Market
      Stand-Off Agreement.
      No
      Holder shall, to the extent requested by any managing underwriter of the
      Company, sell or otherwise transfer or dispose of (other than to donees who
      agree to be similarly bound) any Registrable Shares during a period (the
“Stand-Off
      Period”)
      beginning ten (10) days prior to and ending 120 days following the effective
      date of a registration statement of any direct offering of the Company under
      the
      Securities Act (or in each case such shorter period as the Company or managing
      underwriter may authorize), and except in each case, for securities sold as
      part
      of the offering covered by such registration statement in accordance with the
      provisions of this Agreement. In order to enforce the foregoing covenant, the
      Company may impose stock transfer restrictions with respect to the Registrable
      Shares of each Holder until the end of the Stand-Off Period. Notwithstanding
      the
      foregoing, the obligations described in this Section 2.9
      shall
      not apply to a registration relating solely to employee benefit plans on Form
      S-1 or Form S-8 or similar forms which may be promulgated in the future, or
      a
      registration relating solely to an SEC Rule 145 transaction on Form S-4 or
      similar forms which may be promulgated in the future.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    2.10  Termination
      of Registration Rights.
      The
      obligations of the Company to register any Holder’s Registrable Shares pursuant
      to this Section 2
      shall
      terminate at such time as all of the Registrable Securities of such Holder
      may
      be sold within a three month period under Securities and Exchange Commission
      Rule 144.

     

    3.  Assignability.
      Subject
      to the restrictions on transfer set forth in Section 2.8,
      this
      Agreement shall be binding upon and inure to the benefit of the respective
      heirs, successors and assigns of the parties hereto.

     

    4.  Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of California; provided, however, that if any California law or laws
      require or permit the application of the laws of any other jurisdiction to
      this
      Agreement, such California law or laws shall be disregarded with the effect
      that
      the remaining laws of the State of California shall nonetheless
      apply.

     

    5.  Amendment.
      Any
      modification, amendment, or waiver of this Agreement or any provision hereof,
      either retroactively or prospectively, shall be in writing and executed by
      the
      Company and the Holders of not less than a majority of the Registrable Shares
      which shall be binding upon all of the parties hereto.

     

    6.  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which together shall constitute one
      instrument.

     

    7.  Notice.
      Any
      notices and other communications required or permitted under this Agreement
      shall be effective if in writing and delivered personally or sent by telecopier,
      a well-recognized overnight courier service or registered or certified mail,
      postage prepaid, addressed as follows:

     

    
      	
            	If
              to the Lead Investor, to:	
              
                Craig
                  M. Rankin

              

            

    

    
      	
            	 	
              10250
                Constellation Blvd.

            

    

    
      	
            	 	
              Ste.
                1700

            

    

    
      	
            	 	
              Los
                Angeles, CA 90067

            

    

    
      	
            	 	
              Fax: (310)
                229-1244

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              If
                to the Company, to:

            	
              U.S.
                Dry Cleaning Corporation

            

    

    
      	
            	 	
              125
                E. Tahquitz Canyon, Suite 203

            

    

    
      	
            	 	
              Palm
                Springs, CA 92262

            

    

    
      	
            	 	
              Attn: Robbie
                Y. Lee

            

    

    
      	
            	 	
              Facsimile: (310)
                226-8553

            

    

    

    
      	
            	with
              a copy to:	
              Greenburg
                Traurig

            

    

    
      	
            	 	
              650
                Town Center Drive

            

    

    
      	
            	 	
              Suite
                1700

            

    

    
      	
            	 	
              Costa Mesa,
                CA 92626

            

    

    
      	
            	 	
              Attn:
                John J. Giovannone, Esq.

            

    

    
      	
            	
            	
              Facsimile:
                (714) 708-6501

            

    

     

    Unless
      otherwise specified herein, such notices or other communications shall be deemed
      effective (a)  on the date delivered, if delivered personally, (b) two
      business days after being sent, if sent by a well-recognized overnight courier
      service, (c) one business day after being sent, if sent by telecopier with
      confirmation of good transmission and receipt, and (d) three business days
      after being sent, if sent by registered or certified mail, postage prepaid.
      Each
      of the parties herewith shall be entitled to specify another address by giving
      notice as aforesaid to each of the other parties hereto.

     

    7.1  Severability.
      In case
      any provision of this Agreement shall be invalid, illegal, or unenforceable,
      it
      shall, to the extent practicable, be modified so as to make it valid, legal
      and
      enforceable and to retain as nearly as practicable the intent of the parties;
      and the validity, legality, and enforceability of the remaining provisions
      shall
      not in any way be affected or impaired thereby.

     

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

    
      	 	 	 
	 	COMPANY:
	 	 
	 	U.S.
              Dry Cleaning Corporation,
              a
                Delaware corporation

            
	 
 	 
 	 
 
	 	By:  
	 	
              
                

              
Name:
	 	
              
                

              
Title: 
	 	
              
                

              

            

    

     

    
      	 	 
	 	 	LEAD INVESTOR:
	 
 	 
 	 
 
	 	
              
Name:
              Craig M. Rankin 
	 	 
	 	
              Address:
                10250 Constellation Blvd.

                           Ste
                1700

                               Los
                Angeles, CA 90067

            
	 	
              Fax:          
                (310) 229-1244

            

    

    

    
      
        
        

      

      
        9

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