Document:

COMMON
      STOCK AND WARRANT PURCHASE AGREEMENT

     

    Common
      Stock And Warrant Purchase Agreement
      (“Agreement”)
      dated
      as of July 31, 2006 by and between Adera Mines Limited, a Nevada corporation
      (the “Company”),
      and
      each purchaser identified on Schedule
      1
      hereto
      (each, including its successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    RECITAL

     

    Subject
      to the terms and conditions set forth in this Agreement and pursuant to Section
      4(2) of the Securities Act (as defined below), the Company desires to issue
      and
      sell to the Purchasers, and the Purchasers desire to purchase from the Company,
      up to 20,000,000 shares of Common Stock and Warrants to purchase up to
      10,000,000 shares of Common Stock (such share numbers not including shares
      of
      Common Stock and Warrants that may be issued upon adjustment pursuant to Article
      VI hereof).

     

    NOW,
      THEREFORE, in consideration of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and sufficiency of
      which are hereby acknowledged, the Company and the Purchasers agree as
      follows:

     

    ARTICLE
      I

     

    DEFINITIONS

     

    1.1 Definitions.
      

     

    In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms have the meanings indicated in this Section
      1.1:

     

    “Action”
shall
      have the meaning ascribed to the term in Section 3.1(j).

     

    “Additional
      Common Stock”
shall
      have the meaning set forth in Section 6.1(i).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as the
      terms are used in and construed under Rule 144. With respect to the Purchasers,
      any investment fund or managed account that is managed on a discretionary basis
      by the same investment manager as a Purchaser will be deemed to be an Affiliate
      of that Purchaser.

     

    “Agreement”
shall
      have the meaning ascribed to the term in the Preamble.

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a federal or state
      legal holiday or a day on which banking institutions in the State of New York
      are authorized or required by law or other governmental action to
      close.

     

    “Closing”
shall
      have the meaning ascribed to the term in Section 2.1(a).

     

    “Closing
      Date”
shall
      have the meaning ascribed to the term in Section 2.1(a).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.00001, and any securities into
      which the common stock may hereafter be reclassified.

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including without limitation,
      any
      debt, preferred stock, rights, options, warrants or other instrument that is
      at
      any time convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

     

    “Company”
shall
      have the meaning ascribed to the term in the Preamble.

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules concurrently delivered herewith.

     

    “Effective
      Date”
means
      the date that the Registration Statement is first declared effective by the
      Commission.

     

    “Environmental
      Laws”
shall
      have the meaning ascribed to the term in Section 3.1(y).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Exempt
      Issuances”
shall
      have the meaning set forth in Section 6.4.

     

    “GAAP”
shall
      have the meaning ascribed to the term in Section 3.1(h).

     

    “Governmental
      Authorizations”
shall
      have the meaning ascribed to the term in Section 3.1(m).

     

    “Hazardous
      Substances”
shall
      have the meaning ascribed to the term in Section 3.1(y).

     

    “Indemnified
      Party”
shall
      have the meaning ascribed to the term in Section 5.3.

     

    “Indemnifying
      Party”
shall
      have the meaning ascribed to the term in Section 5.3.

     

    “Intellectual
      Property”
shall
      have the meaning ascribed to the term in Section 3.1(o).

     

    “Investor
      Rights Agreement”
means
      the Investor Rights Agreement, dated as of the date of this Agreement, among
      the
      Company and the Purchasers, in the form of Exhibit
      A
      hereto.

     

    “Lien”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal or other
      restriction, except for a lien for current taxes not yet due and payable and
      a
      minor imperfection of title, if any, not material in nature or amount and not
      materially detracting from the value or impairing the use of the property
      subject thereto or impairing the operations or proposed operations of the
      Company.

     

    “Material
      Adverse Effect”
shall
      have the meaning ascribed to the term in Section 3.1(b).

     

    
      
         

      

      
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    “Net
      Short Sale”
shall
      have the meaning ascribed to such term in Section 4.13.

     

    “Per
      Share Purchase Price”
equals
      $0.30 subject to adjustment for reverse and forward stock splits, stock
      dividends, stock combinations and other similar transactions of the Common
      Stock
      that occur after the date of this Agreement and prior to Closing.

     

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

     

    “Premises”
shall
      have the meaning ascribed to the term in Section 3.1(y).

     

    “Purchaser”
shall
      have the meaning ascribed to the term in the Preamble.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Investor Rights
      Agreement and covering the resale by the Purchasers of the Shares and the
      Warrant Shares. 

     

    “Rights”
shall
      have the meaning ascribed to the term in Section 3.1(o).

     

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

     

    “SEC
      Reports”
shall
      have the meaning ascribed to the term in Section 3.1(h). 

     

    “Securities”
means
      the Shares, the Warrants and the Warrant Shares (including, without limitation,
      shares of Common Stock and Warrants that may be issued upon adjustment pursuant
      to Article VI hereof). 

     

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

     

    “Shares”
means
      the shares of Common Stock issued to the Purchasers pursuant to this Agreement
      including, without limitation, shares of Common Stock that may be issued upon
      adjustment pursuant to Article VI hereof. 

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the amount set forth next to such Purchaser’s name on
Schedule
      1
      hereto,
      in United States dollars and in immediately available funds.

     

    “Subsidiary”
means,
      with respect to any entity, any corporation or other organization of which
      securities or other ownership interest having ordinary voting power to elect
      a
      majority of the board of directors or other persons performing similar
      functions, are directly or indirectly owned by the entity or of which the entity
      is a partner or is, directly or indirectly, the beneficial owner of 50% or
      more
      of any class of equity securities or equivalent profit participation
      interests.

     

    “Trading
      Day”
means
      (i) a day on which the Common Stock is traded on a Trading Market, or (ii)
      in
      the event that the Common Stock is not listed or quoted as set forth in (i)
      hereof, then Trading Day shall mean a Business Day. 

     

    
      
         

      

      
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    “Trading
      Market”
means
      the American Stock Exchange, the New York Stock Exchange, the NASDAQ National
      Market, the NASDAQ Capital Market or the OTC Bulletin Board, whichever is at
      the
      time the principal trading exchange or market for the Common Stock.

     

    “Transaction
      Documents”
means
      this Agreement, the Investor Rights Agreement, the Warrants and any other
      documents or agreements executed in connection with the transactions
      contemplated hereunder. 

     

    “Warrants”
means
      five year warrants to purchase Common Stock at an exercise price of $0.40 per
      share in the form of Exhibit
      B
      hereto.

     

    “Warrant
      Shares”
means
      the shares of Common Stock issued or issuable upon exercise of the
      Warrants.

     

    ARTICLE
      II

     

    PURCHASE
      AND SALE

     

    2.1 Closing.

     

    (a) The
      closing of the transactions contemplated under this Agreement (the “Closing”)
      will
      take place as promptly as practicable, but no later than five (5) Business
      Days
      following satisfaction or waiver of the conditions set forth in Sections 2.2
      and
      2.3 (other than those conditions which by their terms are not to be satisfied
      or
      waived until the Closing), at the offices of Richardson Patel LLP, 10900
      Wilshire Blvd., Los Angeles, CA 90024 (or remotely via exchange of documents
      and
      signatures) or at the other place or day as may be mutually acceptable to the
      Purchasers and the Company. The date on which the Closing occurs is the
“Closing
      Date”.

     

    (b) On
      the
      Closing Date, each Purchaser shall purchase from the Company, severally and
      not
      jointly with the other Purchasers, and the Company shall issue and sell to
      each
      Purchaser (i) a number of Shares equal to such Purchaser’s Subscription Amount
      divided by the Per Share Purchase Price as set forth on Schedule
      1
      (the
“Share
      Amount”)
      and
      (ii) Warrants to purchase a number of shares of Common Stock equal to 50% of
      such Purchaser’s Share Amount,,
      provided, however,
      if any
      Warrants would result in the purchase of a fractional share, the number of
      shares covered by such Warrants will be rounded up to the nearest whole share.
      The aggregate number of Shares sold hereunder shall be up to 20,000,000
      (excluding shares issuable upon exercise of the Warrants and shares of Common
      Stock and Warrants issuable upon adjustment pursuant to Article VI
      hereof)..
      The
      Subscription Amount paid by each Purchaser in the Closing together with all
      other closing deliverables shall be placed in escrow pending the Closing
      pursuant to a Closing Escrow Agreement among the Company, Vision Capital
      Advisors, LLC (“Vision”)
      and
      Richardson Patel LLP (the “Escrow
      Agent”),
      which
      agreement shall be in the form attached hereto as Exhibit
      C
      (the
“Closing
      Escrow Agreement”).
      

     

    
      
         

      

      
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    2.2 Conditions
      to Obligations of Purchasers to Effect the Closing.

     

    The
      obligation of the Purchasers to effect the Closing and the transactions
      contemplated by this Agreement shall be subject to the satisfaction at or prior
      to the Closing of each of the following conditions, any of which may be waived,
      in writing, by the Purchasers:

     

    (a) At
      the
      Closing (unless otherwise specified below) the Company shall deliver or cause
      to
      be delivered to each of the Purchasers the following: 

     

    (i)  this
      Agreement duly executed by the Company;

     

    (ii)  one
      or
      more original certificates evidencing the aggregate number of Shares duly
      authorized, issued, fully paid and non-assessable, equal to such Purchaser’s
      Subscription Amount divided by the Per Share Purchase Price as set forth on
      Schedule
      1,
      registered in the name of such Purchaser;

     

    (iii)  one
      or
      more original certificates evidencing the Warrants, registered in the name
      of
      such Purchaser and as set forth on Schedule
      1;

     

    (iv)  the
      Investor Rights Agreement duly executed by the Company;

     

    (v)  the
      Closing Escrow Agreement duly executed by the Company; 

     

    (vi)  A
      certificate of the Secretary of the Company (the “Secretary’s
      Certificate”),
      in
      form and substance satisfactory to the Purchasers, certifying as
      follows:

     

    (A) that
      attached to the Secretary’s Certificate is a true and complete copy of the
      Certificate of Incorporation of the Company, as amended to the Closing
      Date;

     

    (B) that
      attached to the Secretary’s Certificate is a true and complete copy of the
      Bylaws of the Company, as amended to the Closing Date;

     

    (C) that
      attached to the Secretary’s Certificate are true and complete copies of the
      resolutions of the Board of Directors of the Company (the “Board
      of Directors”)
      authorizing the execution, delivery and performance of this Agreement and the
      other Transaction Documents, instruments and certificates required to be
      executed by it in connection herewith and approving the consummation of the
      transactions in the manner contemplated hereby and by the other Transaction
      Documents including, but not limited to, the authorization and issuance of
      the
      Shares, Warrants and Warrant Shares; 

     

    
      
         

      

      
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    (E) such
      other matters as the Purchasers may reasonably request;

     

    (vii)  a
      legal
      opinion of Richardson Patel LLP, counsel to the Company in the form attached
      hereto as Exhibit
      D;
      and

     

    (viii)  A
      certificate of good standing of the Company as of a recent date.

     

    (b) All
      representations and warranties of the Company contained herein shall remain
      true
      and correct as of the Closing Date as though the representations and warranties
      were made on the Closing Date (except those representations and warranties
      that
      address matters only as of a particular date will remain true and correct as
      of
      the applicable date).

    

    (c) Effective
      as of the Closing, Slavko Bebek and Maryna Bilynaska shall have duly resigned
      from the Board of Directors of the Company and from all offices of the Company
      held by them and the Company shall have provided written evidence, satisfactory
      to the Purchasers, of the effectiveness of such resignations; provided that
      the
      resignation of Ms. Bilynaska from the Board of Directors shall be effective
      as
      of the date that is 10 days following the filing and transmittal of the Rule
      14f-1 Statement (as defined below). Notwithstanding the foregoing proviso,
      Ms.
      Bilynaska’s resignation from all offices of the Company shall be effective as of
      the Closing.

     

    (d) Effective
      as of the Closing, Sydney L. Anderson, shall
      have been duly elected or appointed to the Board of Directors of the Company,
      Mr. Anderson, Mr. J. Stewart Asbury III and Mr. Clayton Woodrum, shall have
      been
      duly employed as Executive Director, President and Chief Financial Officer,
      respectively of
      the
      Company pursuant to executive employment agreements on terms and conditions
      satisfactory to the Purchasers and the Company shall have provided written
      evidence, satisfactory to the Purchasers, of the effectiveness of such
      appointments and employment.

     

    (e) The
      Board
      of Directors of the Company shall have passed resolutions duly electing or
      appointing Kerry Stirton, Lain Drummond, Greg Nihon and William Moothart to
      the
      Board of Directors of the Company, which election or appointment shall be
      effective as of the date that is 10 days following the filing and transmittal
      of
      the Rule 14f-1 Statement.

     

    (f) Each
      of
      Sydney L. Anderson, Stewart Asbury III, Clayton Woodrum, Francis Mailhot and
      [
      ], together with any person or entity through which such persons beneficially
      own shares of the Company’s Common Stock, shall have entered into a lock-up
      agreement in the form attached as Exhibit
      E
      hereto,
      pursuant to which each such person shall have agreed not to sell securities
      of
      the Company until the registration statement filed pursuant to the Investor
      Rights Agreement has been effective for six months. 

     

    (g) The
      Company shall have presented to Vision and any other Purchaser requesting such
      document, a final draft of the financial statements and pro forma financial
      information required under Item 9.01 of Form 8-K with respect to Chatsworth
      Data
      Corporation, a California corporation (“Chatsworth”)
      and
      such Current Report on Form 8-K (the “Chatsworth
      8-K”)
      shall
      be in compliance with the requirements of the Exchange Act and the rules and
      regulations of the Commission promulgated thereunder and such financial
      statements shall not differ materially from the financial statements of
      Chatsworth provided to the Purchasers.

     

    
      
         

      

      
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    (h) As
      of the
      Closing Date, there shall have been no Material Adverse Effect with respect
      to
      the Company since the date hereof.

     

    (i) From
      the
      date hereof to the Closing Date, trading in the Common Stock shall not have
      been
      suspended by the Commission (except for any suspension of trading of limited
      duration agreed to by the Company, which suspension shall be terminated prior
      to
      the Closing).

     

    2.3. Conditions
      to Obligations of the Company to Effect the Closing.

     

    (a) The
      obligations of the Company to effect the Closing and the transactions
      contemplated by this Agreement shall be subject to the satisfaction at or prior
      to the Closing of each of the following conditions, any of which may be waived,
      in writing, by the Company. At the Closing, each Purchaser shall deliver or
      cause to be delivered to the Company the following:

     

    (i) this
      Agreement duly executed by such Purchaser;

     

    (ii) such
      Purchaser’s Subscription Amount by wire transfer to the Company pursuant to the
      Closing Escrow Agreement; and

     

    (iii) the
      Investor Rights Agreement duly executed by such Purchaser.

     

    (b) All
      representations and warranties of the Purchasers contained herein shall remain
      true and correct as of the Closing Date as though the representations and
      warranties were made on the Closing Date.

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.

     

    Except
      as
      set forth under the corresponding section of the Disclosure Schedules delivered
      concurrently herewith, the Company hereby makes the following representations
      and warranties as of the date hereof and as of the Closing Date to each
      Purchaser. The Company hereby acknowledges and agrees that the following
      representations and warranties are made regarding the Company and its
      Subsidiaries as constituted immediately following the consummation of the
      Chatsworth Acquisition (as defined below).

     

    (a)
       Subsidiaries.
      Except
      as listed in Schedule 3.1(a), the Company has no direct or indirect
      Subsidiaries. 

     

    (b)
       Organization
      and Qualification.
      Each of
      the Company and the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite corporate power and authority to own and use its properties and assets
      and to carry on its business as currently conducted. Neither the Company nor
      any
      Subsidiary is in violation of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes the qualification necessary, except where the failure
      to be so qualified or in good standing, as the case may be, would not have
      or
      result in (i) a material adverse effect on the legality, validity or
      enforceability of any Transaction Document, (ii) a material adverse effect
      on
      the business or financial condition of the Company and the Subsidiaries, taken
      as a whole, or (iii) a material adverse effect on the Company's ability to
      perform in any material respect on a timely basis its obligations under any
      Transaction Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”).

     

    
      
         

      

      
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    (c)
       Authorization;
      Enforceability.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no further
      action is required by the Company in connection therewith. Each Transaction
      Document has been (or upon delivery will have been) duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute the
      valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms, subject to laws of general application relating
      to
      bankruptcy, insolvency, reorganization, moratorium or other similar laws
      affecting creditors’ rights generally and rules of law governing specific
      performance, injunctive relief, or other equitable remedies.

     

    (d)
       No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated thereby
      do
      not and will not (i) conflict with or violate any provision of the Company's
      or
      any Subsidiary's certificate or articles of incorporation, bylaws or other
      organizational or charter documents, or (ii) conflict with, or constitute a
      default (or an event that with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or both)
      of,
      any agreement, credit facility, debt or other instrument (evidencing a Company
      or Subsidiary debt or otherwise) or other understanding to which the Company
      or
      any Subsidiary is a party or by which any property or asset of the Company
      or
      any Subsidiary is bound or affected, or (iii) result in a violation of any
      law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which the Company or a Subsidiary is
      subject (including federal and state securities laws and regulations), or by
      which any property or asset of the Company or a Subsidiary is bound or affected,
      except, in the cases of clause (ii), where the conflict, default or violation
      would not have or result in a Material Adverse Effect.

     

    (e)
       Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (a) the filing with the Commission of the
      Registration Statement, the application(s) to each Trading Market for the
      listing of the Shares and Warrant Shares for trading thereon in the time and
      manner required thereby, Form D and applicable Blue Sky filings and (b) as
      have
      already been obtained or exemptive filings as are required to be made under
      applicable securities laws.

     

    
      
         

      

      
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    (f)
       Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens, other than any Liens created by
      or
      imposed on the holders thereof through no action of the Company. The Company
      has
      reserved from its duly authorized capital stock the maximum number of shares
      of
      Common Stock issuable pursuant to this Agreement and the Warrants.

     

    (g)
       Capitalization.
      

     

    (i) Including
      shares issued in connection with the acquisition of all of the capital stock
      of
      Chatsworth, the entire authorized capital stock of the Company consists of
      100,000,000 shares of Common Stock, 19,250,000 of which are issued and
      outstanding. All shares of the Company’s issued and outstanding capital stock
      have been duly authorized, are validly issued and outstanding, and are fully
      paid and nonassessable. No securities issued by the Company from the date of
      its
      incorporation to the date hereof were issued in violation of any statutory
      or
      common law preemptive rights. There are no dividends which have accrued or
      been
      declared but are unpaid on the capital stock of the Company. All taxes required
      to be paid by the Company in connection with the issuance and any transfers
      of
      the Company’s capital stock have been paid. All securities of the Company have
      been issued in all material respects in accordance with the provisions of all
      applicable securities and other laws.

     

    (ii) No
      Person
      has any right of first refusal, preemptive right, right of participation, or
      any
      similar right to participate in the transactions contemplated by the Transaction
      Documents. Except as set forth on Schedule 3.1(g) and as a result of the
      purchase and sale of the Securities and except for employee and director stock
      options under the Company's equity compensation plans and outstanding warrants
      to purchase shares of Common Stock described in the Chatsworth 8-K, there are
      no
      outstanding options, warrants, rights to subscribe to, calls or commitments
      of
      any character whatsoever relating to, or securities, rights or obligations
      convertible into or exchangeable for, or giving any Person any right to
      subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
      understandings or arrangements by which the Company or any Subsidiary is or
      may
      become bound to issue additional shares of Common Stock, or securities or rights
      convertible or exchangeable into shares of Common Stock. The issue and sale
      of
      the Securities will not obligate the Company to issue shares of Common Stock
      or
      other securities to any Person (other than the Purchasers) and will not result
      in a right of any holder of Company securities to adjust the exercise,
      conversion, exchange or reset price under any Company securities.

     

    (h) SEC
      Reports; Financial Statements; Liabilities.
      

     

    (i) The
      Company has filed all reports required to be filed by it under the Securities
      Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the
      Exchange Act, for the 12 months preceding the date hereof (the foregoing
      materials, including the exhibits thereto and including, without limitation,
      the
      Chatsworth 8-K, being collectively referred to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of the time of filing and has
      filed all SEC Reports prior to the expiration of any extension. As of their
      respective filing dates, the SEC Reports complied in all material respects
      with
      the requirements of the Securities Act and the Exchange Act, as the case may
      be,
      and the rules and regulations of the Commission promulgated thereunder, as
      applicable, and none of the SEC Reports, as of their respective filing dates,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading.

     

    
      
         

      

      
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    (ii) The
      financial statements of the Company included in the SEC Reports comply with
      applicable accounting requirements and the rules and regulations of the
      Commission with respect thereto as in effect at the time of filing. These
      financial statements have been prepared in accordance with generally accepted
      accounting principles in the United States, applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in the financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, subject to normal year-end audit adjustments. These
      financial statements fairly present in all material respects the financial
      position of the Company and its consolidated subsidiaries, if any, as of and
      for
      the dates thereof and the results of operations and cash flows for the periods
      then ended, subject, in the case of unaudited statements, to normal year-end
      audit adjustments.

     

    (iii) Except
      as
      set forth in the SEC Reports, and except for liabilities and obligations
      incurred in the ordinary course of business, consistent with past practice,
      as
      of the date hereof: (i) the Company and its Subsidiaries do not have any
      material liabilities or obligations (absolute, accrued, contingent or otherwise)
      and (ii) there has not been any aspect of the prior or current conduct of the
      business of the Company or its Subsidiaries which may form the basis for any
      material claim by any third party which if asserted could result in a Material
      Adverse Effect.

     

    (i)
       Material
      Changes.
      Except
      for the termination of business relating to the mine exploration business
      immediately prior to the Closing and the amendment to its bylaws included in
      the
      Chatsworth 8-K, since December 31, 2005, the Company has conducted its business
      only in the ordinary course, consistent with past practice, and there has not
      occurred:

     

    (i) any
      event
      that could have a Material Adverse Effect on the Company or any of its
      Subsidiaries;

     

    (ii) any
      amendments or changes in the charter documents of the Company and its
      Subsidiaries;

     

    (iii) any
      damage, destruction or loss, whether or not covered by insurance, that would,
      individually or in the aggregate, have or would be reasonably likely to have,
      a
      Material Adverse Effect on the Company and its Subsidiaries;

     

    (iv) any:

     

    (A)
      incurrence, assumption or guarantee by the Company or its Subsidiaries of any
      debt for borrowed money other than (i) equipment leases made in the ordinary
      course of business, consistent with past practice and (ii) any incurrence,
      assumption or guarantee with respect to an amount of $25,000 or less that has
      been disclosed in the SEC Reports; 

     

    (B)
      issuance or sale of any securities convertible into or exchangeable for
      securities of the Company other than to directors, employees and consultants
      as
      disclosed in the Chatsworth 8-K. 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (C)
      issuance or sale of options or other rights to acquire from the Company or
      its
      Subsidiaries, directly or indirectly, securities of the Company or any
      securities convertible into or exchangeable for any of the foregoing securities,
      other than options issued to directors, employees and consultants as disclosed
      in the Chatsworth 8-K. 

     

    (D)
      issuance or sale of any stock, bond or other corporate security other than
      to
      directors, employees and consultants pursuant to existing equity compensation
      or
      stock purchase plans of the Company and as disclosed in the Chatsworth
      8-K.

     

    (E)
      discharge or satisfaction of any material Lien; 

     

    (F)
      declaration or making any payment or distribution to stockholders or purchase
      or
      redemption of any share of its capital stock or other security other than to
      directors, officers and employees of the Company or its Subsidiaries as
      compensation for services rendered to the Company or its Subsidiary (as
      applicable) or for reimbursement of expenses incurred on behalf of the Company
      or its Subsidiary (as applicable); 

     

    (G)
      sale,
      assignment or transfer of any of its intangible assets except in the ordinary
      course of business, consistent with past practice, or cancellation of any debt
      or claim except in the ordinary course of business, consistent with past
      practice;

     

    (H)
      waiver of any right of substantial value whether or not in the ordinary course
      of business;

     

    (I)
      material change in officer compensation, except in the ordinary course of
      business and consistent with past practice; or 

     

    (J)
      other
      commitment (contingent or otherwise) to do any of the foregoing.

     

    (v) any
      creation, sufferance or assumption by the Company or any of its Subsidiaries
      of
      any Lien on any asset or any making of any loan, advance or capital contribution
      to or investment in any Person, in an aggregate amount which exceeds $25,000
      outstanding at any time;

     

    (vi) any
      entry
      into, amendment of, relinquishment, termination or non-renewal by the Company
      or
      its Subsidiaries of any material contract, license, lease, transaction,
      commitment or other right or obligation, other than in the ordinary course
      of
      business, consistent with past practice; or

     

    (vii)
      any
      transfer or grant of a right with respect to the patents, trademarks, trade
      names, service marks, trade secrets, copyrights or other intellectual property
      rights owned or licensed by the Company or its Subsidiaries, except as among
      the
      Company and its Subsidiaries.

     

    (j)
       Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against the Company,
      any
      Subsidiary or any of their respective properties before or by any court,
      arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      adversely affects or challenges the legality, validity or enforceability of
      any
      of the Transaction Documents or the Securities. Except as disclosed in the
      SEC
      Reports, there is no Action that could, if there were an unfavorable decision,
      have or result in a Material Adverse Effect. Neither the Company nor any
      Subsidiary, nor, to the knowledge of the Company, any director or officer
      thereof, is or has been the subject of any Action involving a claim of violation
      of or liability under federal or state securities laws or a claim of breach
      of
      fiduciary duty. To the knowledge of the Company, there has not been and there
      is
      not pending or contemplated, any investigation by the Commission involving
      the
      Company or any current or former director or officer of the Company. The
      Commission has not issued any stop order or other order suspending the
      effectiveness of any registration statement filed by the Company or any
      Subsidiary under the Exchange Act or the Securities Act.

     

    
      
         

      

      
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    (k)
       Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could have or result
      in a Material Adverse Effect.

     

    (l)
       Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not the default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its
      business, except in the case of clauses (i) and (iii) as would not have or
      reasonably be expected to result in a Material Adverse Effect.

     

    (m)
       Licenses;
      Compliance With Regulatory Requirements.  The
      Company holds all material authorizations, consents, approvals, franchises,
      licenses and permits required under applicable law or regulation for the
      operation of the business of the Company and its Subsidiaries as presently
      operated (the “Governmental
      Authorizations”).
      All
      the Governmental Authorizations have been duly issued or obtained and are in
      full force and effect, and the Company and its Subsidiaries are in material
      compliance with the terms of all the Governmental Authorizations. The Company
      and its Subsidiaries have not engaged in any activity that, to their knowledge,
      would cause revocation or suspension of any of the Governmental Authorizations.
      The Company has no knowledge of any facts which could reasonably be expected
      to
      cause the Company to believe that the Governmental Authorizations will not
      be
      renewed by the appropriate governmental authorities in the ordinary course.
      Neither the execution, delivery nor performance of this Agreement shall
      adversely affect the status of any of the Governmental
      Authorizations.

     

    (n)
       Title
      to Assets.
      The
      Company and the Subsidiaries do not own any real property, and have good and
      marketable title to all personal property owned by them that is material to
      the
      business of the Company and the Subsidiaries, taken as a whole, in each case
      free and clear of all Liens, except those, if any, reflected in the Company’s
      financial statements. Any real property and facilities held under lease by
      the
      Company and the Subsidiaries are held by them under valid, subsisting and
      enforceable leases (subject to laws of general application relating to
      bankruptcy, insolvency, reorganization, moratorium or other similar laws
      affecting creditors’ rights generally and rules of law governing specific
      performance, injunctive relief, or other equitable remedies) with which the
      Company and the Subsidiaries are in material compliance.

     

    
      
         

      

      
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    (o) Intellectual
      Property. 

     

    (i) The
      Company or a Subsidiary thereof has the right to use or is the sole and
      exclusive owner of all right, title and interest in and to all foreign and
      domestic patents, patent rights, trademarks, service marks, trade names, brands
      and copyrights (whether or not registered and, if applicable, including pending
      applications for registration) owned, used or controlled by the Company and
      its
      Subsidiaries (collectively, the “Rights”)
      and in
      and to each material invention, software, trade secret, technology, product,
      composition, formula and method of process used by the Company or its
      Subsidiaries (the Rights and the other items, the “Intellectual
      Property”),
      and,
      to the Company’s knowledge, has the right to use the same, free and clear of any
      claim or conflict with the rights of others; 

     

    (ii) other
      than as set forth in the SEC Reports, no material royalties or fees (license
      or
      otherwise) are payable by the Company or its Subsidiaries to any Person by
      reason of the ownership or use of any of the Intellectual Property;

     

    (iii) there
      have been no claims made against the Company or its Subsidiaries asserting
      the
      invalidity, abuse, misuse, or unenforceability of any of the Intellectual
      Property, and, to the best of the Company’s knowledge, there are no reasonable
      grounds for any of the foregoing claims; 

     

    (iv) neither
      the Company nor its Subsidiaries have made any claim of any violation or
      infringement by others of its rights in the Intellectual Property, and to the
      best of the Company’s knowledge, no reasonable grounds for the foregoing claims
      exist; and 

     

    (v) neither
      the Company nor its Subsidiaries have received notice that it is in conflict
      with or infringing upon the asserted rights of others in connection with the
      Intellectual Property.

     

    (p) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against the losses and risks and in the amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged. All of the insurance policies of the Company and its Subsidiaries
      are
      in full force and effect and are valid and enforceable in accordance with their
      terms, and the Company and its Subsidiaries have complied with all material
      terms and conditions thereof. Neither the Company nor any Subsidiary has any
      reason to believe that it will not be able to renew its existing insurance
      coverage as and when the coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business without a
      significant increase in cost.

     

    (q) Transactions
      With Affiliates and Employees.
      None of
      the officers or directors of the Company and, to the knowledge of the Company,
      none of the employees of the Company is presently a party to any transaction
      with the Company or any Subsidiary (other than for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or employee or, to the knowledge of the Company, any entity
      in
      which any officer, director, or any employee has a substantial interest or
      is an
      officer, director, trustee or partner, other than (a) for payment of salary
      or
      consulting fees for services rendered, (b) reimbursement for expenses incurred
      on behalf of the Company and (c) for other employee benefits, including stock
      option agreements and other stock awards under any equity compensation plan
      of
      the Company.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (r)
       Internal
      Accounting Controls.
      The
      Company and each of the Subsidiaries maintains a system of internal accounting
      controls sufficient in the judgment of the Company’s management to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management's general or specific authorizations, (ii) transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      GAAP and to maintain asset accountability, (iii) access to assets is permitted
      only in accordance with management's general or specific authorization, and
      (iv)
      the recorded accountability for assets is compared with the existing assets
      at
      reasonable intervals and appropriate action is taken with respect to any
      differences. The Company has established disclosure controls and procedures
      (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
      the disclosure controls and procedures to ensure that material information
      relating to the Company, including its Subsidiaries, is made known to the
      certifying officers by others within those entities, particularly during the
      period in which the Company's Form 10-K or 10-Q, as the case may be, is being
      prepared. 

     

    (s)
       Certain
      Fees.
      Except
      as set forth on Schedule
      3.1(s),
      no
      brokerage or finder's fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement. The Purchasers shall have no obligation with
      respect to any fees or with respect to any claims made by or on behalf of other
      Persons for fees of a type contemplated in this Section that may be due in
      connection with the transactions contemplated by this Agreement.

     

    (t)
       Private
      Placement; Integrated Offering.
      Assuming the accuracy of the Purchasers’ representations and warranties set
      forth in Section 3.2, no registration under the Securities Act is required
      for
      the offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market. Neither the Company,
      nor any of its Affiliates, nor any Person acting on its or their behalf has,
      directly or indirectly, made any offers or sales of any security or solicited
      any offers to buy any security, under circumstances that would cause this
      offering of the Securities to be integrated with prior offerings by the Company
      for purposes of the Securities Act and would as a result require registration
      under the Securities Act or trigger any applicable shareholder approval
      provisions, including, without limitation, under the rules and regulations
      of
      any exchange or automated quotation system on which any of the securities of
      the
      Company are listed or designated.

     

    (u)
       Charter,
      Bylaws and Corporate Records.
      The
      minute books of the Company and its Subsidiaries contain in all material
      respects complete and accurate records of all meetings and other corporate
      actions of the board of directors, committees of the board of directors,
      incorporators and stockholders of the Company and its Subsidiaries from the
      date
      of incorporation of each entity to the date hereof. All material corporate
      decisions and actions have been validly made or taken. All corporate books,
      including without limitation the share transfer register, comply in all material
      respects with applicable laws and regulations and have been regularly
      updated.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (v)
       Registration
      Rights.
      Except
      as set forth in Schedule 3.1(v), no Person has any right to cause the Company
      to
      effect the registration under the Securities Act of any securities of the
      Company.

     

    (w)
       Listing
      and Maintenance Requirements.
      The
      Company has not, in the 12 months preceding the date hereof, received notice
      from any Trading Market on which the Common Stock is or has been listed or
      quoted to the effect that the Company is not in compliance with the listing
      or
      maintenance requirements of the Trading Market. The Company is, and has no
      reason to believe that it will not in the foreseeable future continue to be,
      in
      compliance with all applicable listing and maintenance
      requirements.

     

    (x)
      Taxes. All
      tax
      returns and tax reports required to be filed with respect to the income,
      operations, business or assets of the Company and its Subsidiaries have been
      timely filed (or appropriate extensions have been obtained) with the appropriate
      governmental agencies in all jurisdictions in which the returns and reports
      are
      required to be filed, and all of the foregoing as filed are, in all material
      respects, correct and complete and, in all material respects, reflect accurately
      all liability for taxes of the Company and its Subsidiaries for the periods
      to
      which the returns relate, and all amounts shown as owing thereon have been
      paid.
      All income, profits, franchise, sales, use, value added, occupancy, property,
      excise, payroll, withholding, FICA, FUTA and other taxes (including interest
      and
      penalties), if any, collectible or payable by the Company and its Subsidiaries
      or relating to or chargeable against any of its material assets, revenues or
      income or relating to any employee, independent contractor, creditor,
      stockholder or other third party through the Closing Date, were fully collected
      and paid by the applicable date if due by the applicable date or provided for
      by
      adequate reserves in the financial statements contained in the SEC Reports
      (other than taxes accruing after the date) and all similar items due through
      the
      Closing Date will have been fully paid by that date or provided for by adequate
      reserves, whether or not any taxes were reported or reflected in any tax returns
      or filings. No taxation authority has sought to audit the records of the Company
      or any of its Subsidiaries for the purpose of verifying or disputing any tax
      returns, reports or related information and disclosures provided to the taxation
      authority, or for the Company’s or any of its Subsidiaries’ alleged failure to
      provide any tax returns, reports or related information and disclosure. No
      material claims or deficiencies have been asserted against or inquiries raised
      with the Company or any of its Subsidiaries with respect to any taxes or other
      governmental charges or levies which have not been paid or otherwise satisfied,
      including claims that, or inquiries whether, the Company or any of its
      Subsidiaries has not filed a tax return that it was required to file, and,
      to
      the best of the Company’s knowledge, there exists no reasonable basis for the
      making of any claims or inquiries. Neither the Company nor any of its
      Subsidiaries has waived any restrictions on assessment or collection of taxes
      or
      consented to the extension of any statute of limitations relating to
      taxation.

     

    (y) Environmental
      Matters. None
      of
      the premises or any properties owned, occupied or leased by the Company or
      its
      Subsidiaries (the “Premises”)
      has
      been used by the Company or the Subsidiaries or, to the Company’s knowledge, by
      any other Person, to manufacture, treat, store, or dispose of any substance
      that
      has been designated to be a “hazardous substance” under applicable Environmental
      Laws (hereinafter defined) (“Hazardous
      Substances”)
      in
      violation of any applicable Environmental Laws. To its knowledge, the Company
      has not disposed of, discharged, emitted or released any Hazardous Substances
      which would require, under applicable Environmental Laws, remediation,
      investigation or similar response activity. No Hazardous Substances are present
      as a result of the actions of the Company or, to the Company’s knowledge, any
      other Person, in, on or under the Premises which would give rise to any
      liability or clean-up obligations of the Company under applicable Environmental
      Laws. The Company and, to the Company’s knowledge, any other Person for whose
      conduct it may be responsible pursuant to an agreement or by operation of law,
      are in compliance with all laws, regulations and other federal, state or local
      governmental requirements, and all applicable judgments, orders, writs, notices,
      decrees, permits, licenses, approvals, consents or injunctions in effect on
      the
      date of this Agreement relating to the generation, management, handling,
      transportation, treatment, disposal, storage, delivery, discharge, release
      or
      emission of any Hazardous Substance (the “Environmental
      Laws”).
      Neither the Company nor, to the Company’s knowledge, any other Person for whose
      conduct it may be responsible pursuant to an agreement or by operation of law
      has received any written complaint, notice, order, or citation of any actual,
      threatened or alleged noncompliance with any of the Environmental Laws, and
      there is no proceeding, suit or investigation pending or, to the Company’s
      knowledge, threatened against the Company or, to the Company’s knowledge, any
      Person with respect to any violation or alleged violation of the Environmental
      Laws, and, to the knowledge of the Company, there is no basis for the
      institution of any proceeding, suit or investigation.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (z) Chatsworth.
      The
      Company has deposited into escrow a fully-executed Stock Acquisition Agreement
      and related agreements with respect to the acquisition of all of the issued
      and
      outstanding capital stock of Chatsworth concurrent with the effective time
      of
      the Closing hereunder (the “Chatsworth
      Acquisition”).
      The
      Company had the requisite corporate power and authority to consummate the
      Chatsworth Acquisition. The Chatsworth Acquisition will be consummated with
      the
      funds invested by the Purchasers hereunder. There is no action, suit, inquiry,
      notice of violation, proceeding or investigation pending or, to the knowledge
      of
      the Company or its Subsidiaries, threatened against the Company, any Subsidiary
      or any of their respective properties before or by any court, arbitrator,
      governmental or administrative agency or regulatory authority (federal, state,
      county, local or foreign) which adversely affects or challenges the legality,
      validity or enforceability of the Chatsworth Acquisition or any agreement or
      contract entered into in connection therewith.

     

    (aa)
       Disclosure.
      The
      Company confirms that neither the Company nor any other Person acting on its
      behalf and at the direction of the Company, has provided any Purchaser or its
      agents or counsel with any information that in the Company’s reasonable
      judgment, at the time the information was furnished, constitutes material,
      non-public information. The Company understands and confirms that the Purchasers
      will rely on the foregoing representations and covenants in effecting
      transactions in securities of the Company. All disclosure provided to the
      Purchasers regarding the Company, its business and the transactions contemplated
      hereby, including the Disclosure Schedules to this Agreement, furnished by
      or on
      behalf of the Company are true and correct and do not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in light of the circumstances under
      which they were made, not misleading.

     

    Each
      Purchaser acknowledges and agrees that the Company does not make or has not
      made
      any representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in this Agreement and the
      Disclosure Schedules hereto and in the other Transaction Documents.

     

    
      
         

      

      
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    3.2
       Representations
      and Warranties of the Purchasers.
      

     

    Each
      Purchaser hereby, for itself and for no other Purchaser, represents and warrants
      as of the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a)
       Organization;
      Authority; Enforceability.
      The
      Purchaser (if other than a natural person) is an entity duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization with full power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations thereunder. The execution, delivery and performance by
      the
      Purchaser of the transactions contemplated by this Agreement has been duly
      authorized by all necessary corporate or similar action on the part of the
      Purchaser. Each Transaction Document to which it is a party has been duly
      executed by the Purchaser, and when delivered by the Purchaser in accordance
      with the terms hereof, will constitute the valid and legally binding obligation
      of the Purchaser, enforceable against it in accordance with its terms, subject
      to laws of general application relating to bankruptcy, insolvency,
      reorganization, moratorium or other similar laws affecting creditors’ rights
      generally and rules of law governing specific performance, injunctive relief,
      or
      other equitable remedies.

     

    (b)
       General
      Solicitation.
      The
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    (c)
       No
      Public Sale or Distribution.
      The
      Purchaser is acquiring the Shares and Warrants for its own account and not
      with
      a view towards, or for resale in connection with, the public sale or
      distribution thereof; provided,
      however,
      that by
      making the representations herein, the Purchaser does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the Securities Act. The Purchaser
      is acquiring the Securities hereunder in the ordinary course of its business.
      The Purchaser does not have any agreement or understanding, directly or
      indirectly, with any Person to distribute any of the Securities.

     

    (d)
       Accredited
      Investor Status.
      The
      Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of
      Regulation D.

     

    (e)
       Reliance
      on Exemptions.
      The
      Purchaser understands that the Shares and Warrants are being offered and sold
      to
      it in reliance on specific exemptions from the registration requirements of
      United States federal and state securities laws and that the Company is relying
      in part upon the truth and accuracy of, and the Purchaser's compliance with,
      the
      representations, warranties, agreements, acknowledgments and understandings
      of
      the Purchaser set forth herein in order to determine the availability of the
      exemptions and the eligibility of the Purchaser to acquire the Common Stock
      and
      Warrants.

     

    (f)
       Information.
      The
      Purchaser and its advisors, if any, have been furnished with all publicly
      available materials relating to the business, finances and operations of the
      Company and the other publicly available materials relating to the offer and
      sale of the Shares and Warrants as have been requested by the Purchaser. The
      Purchaser and its advisors, if any, have been afforded the opportunity to ask
      questions of the Company. Neither the inquiries nor any other due diligence
      investigations conducted by the Purchaser or its advisors, if any, or its
      representatives shall modify, amend or affect the Purchaser's right to rely
      on
      the Company's representations and warranties contained herein. The Purchaser
      understands that its investment in the Shares and Warrants involves a high
      degree of risk.

     

    
      
         

      

      
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    (g)
       No
      Governmental Review.
      The
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Shares and Warrants or the fairness or suitability of the
      investment in the Shares and Warrants, nor have these authorities passed upon
      or
      endorsed the merits of the offering of the Shares and Warrants.

     

    (h)
       Experience
      of The Purchaser.
      The
      Purchaser, either alone or together with its representatives, has the knowledge,
      sophistication and experience in business and financial matters, including
      investing in companies engaged in the business in which the Company is engaged,
      so as to be capable of evaluating the merits and risks of the prospective
      investment in the Shares and Warrants, and has so evaluated the merits and
      risks
      of the investment. The Purchaser is able to bear the economic risk of an
      investment in the Shares and Warrants and, at the present time, is able to
      afford a complete loss of its investment.

     

    The
      Company acknowledges and agrees that the Purchaser does not make or has not
      made
      any representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in this Section 3.2 and in
      Section 4.13.

     

    ARTICLE
      IV

     

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.

     

    (a) The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement, to the Company, to an Affiliate
      of the Purchaser (who is an accredited investor and executes a customary
      representation letter) or in connection with a pledge as contemplated in Section
      4.1(b), the Company may require the transferor thereof to provide to the Company
      an opinion of counsel selected by the transferor, the form and substance of
      which opinion shall be reasonably satisfactory to the Company, to the effect
      that the transfer does not require registration of the transferred Securities
      under the Securities Act,
      provided, however,
      that in
      the case of a transfer pursuant to Rule 144, no opinion shall be required if
      the
      transferor provides the Company with a customary seller’s representation letter,
      and if the sale is not pursuant to subsection (k) of Rule 144, a customary
      broker’s representation letter and a Form 144. 
      Any
      transferee that agrees in writing to be bound by the terms of this Agreement
      and
      the Investor Rights Agreement shall have the rights of a Purchaser under this
      Agreement and the Investor Rights Agreement. Except as required by federal
      securities laws and the securities law of any state or other jurisdiction within
      the United States, the Securities may be transferred, in whole or in part,
      by a
      Purchaser at any time. The Company shall reissue certificates evidencing the
      Securities upon surrender of certificates evidencing the Securities being
      transferred in accordance with this Section 4.1(a).

     

    
      
         

      

      
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    (b) Each
      Purchaser agrees to the imprinting, so long as is required by this Section
      4.1(b), of a legend on any of the Securities in substantially the following
      form:

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      AND,
      ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      THIS EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
      INSTITUTION THAT IS AN “ACCREDITED
      INVESTOR”
AS
      DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

     

    The
      Company acknowledges and agrees that each Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and, if required under the terms of the arrangement, each
      Purchaser may transfer pledged or secured Securities to the pledgees or secured
      parties. The a pledge or transfer would not be subject to approval of the
      Company and no legal opinion of legal counsel of the pledgee, secured party
      or
      pledgor shall be required in connection therewith; provided, however, that
      the
      Purchaser shall provide the Company with the documentation as is reasonably
      requested by the Company to ensure that the pledge is pursuant to a bona fide
      margin agreement with a registered broker-dealer or a security interest in
      some
      or all of the Securities to a financial institution that is an “accredited
      investor” as defined in Rule 501(a) under the Securities Act. The Company will
      execute and deliver the documentation as a pledgee or secured party of
      Securities may reasonably request in connection with a pledge or transfer of
      the
      Securities, including the preparation and filing of any required prospectus
      supplement under Rule 424(b)(3) under the Securities Act or other applicable
      provision of the Securities Act to appropriately amend the list of selling
      stockholders thereunder.

     

    (c) Certificates
      evidencing the Shares and Warrant Shares shall not contain any legend (including
      the legend set forth in Section 4.1(b)), (i) following any sale of the Shares
      or
      Warrant Shares pursuant to Rule 144, or (ii) if the Shares or Warrant Shares
      are
      eligible for sale under Rule 144(k), or (iii) if the legend is not required
      under applicable requirements of the Securities Act (including judicial
      interpretations and pronouncements issued by the Staff of the Commission).
      The
      Company shall cause its counsel to issue a legal opinion to the Company's
      transfer agent promptly upon the occurrence of any of the events in clauses
      (i),
      (ii) or (iii) above to effect the removal of the legend hereunder and shall
      also
      cause its counsel to issue a “blanket” legal opinion to the Company's transfer
      agent promptly after the Effective Date, if required by the Company's transfer
      agent, to allow sales pursuant to an effective Registration Statement. The
      Company agrees that at the time as the legend is no longer required under this
      Section 4.1(c), it will, no later than three Trading Days following the delivery
      by the Purchaser to the Company or the Company's transfer agent of a certificate
      representing Shares or Warrant Shares, as the case may be, issued with a
      restrictive legend, deliver or cause to be delivered to the Purchaser a
      certificate representing the Securities that is free from all restrictive and
      other legends. The Company may not make any notation on its records or give
      instructions to any transfer agent of the Company that enlarge the restrictions
      on transfer set forth in this Section.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    (d) Each
      Purchaser agrees that the removal of the restrictive legend from certificates
      representing Securities as set forth in this Section 4.1 is predicated upon
      the
      Company's reliance on, and such Purchaser’s agreement that it will not sell any
      Securities except pursuant to either the registration requirements of the
      Securities Act, including any applicable prospectus delivery requirements,
      or an
      exemption therefrom.

     

    4.2
       Furnishing
      of Information.
      

     

    As
      long
      as any Purchaser owns Securities, the Company covenants to timely file (or
      obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. Upon the request of any holder of Securities,
      the
      Company shall deliver to the holder a written certification of a duly authorized
      officer as to whether it has complied with the preceding sentence. As long
      as
      any Purchaser owns Securities, if the Company is not required to file reports
      pursuant to the Exchange Act, it will prepare and furnish to each Purchaser
      and
      make publicly available in accordance with Rule 144(c), the information as
      is
      required for the Purchaser to sell the Securities under Rule 144. The Company
      further covenants that it will take further action as any holder of Securities
      may reasonably request, all to the extent required from time to time to enable
      the Person to sell the Securities without registration under the Securities
      Act
      within the limitation of the exemptions provided by Rule 144.

     

    4.3 Integration.

     

    The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchasers or that would be integrated with the offer
      or sale of the Securities for purposes of the rules and regulations of any
      Trading Market. 

     

    4.4 Publicity.
      

     

    The
      Company shall, within four Business Days following the Closing Date, file a
      Current Report on Form 8-K, disclosing the transactions contemplated hereby
      and
      make the other filings and notices in the manner and time required by the
      Commission.

     

    4.5 Shareholders
      Rights Plan.
      

     

    No
      claim
      will be made or enforced by the Company or any other Person that a Purchaser
      is
      an “acquiring person” under any shareholders rights plan or similar plan or
      arrangement in effect or hereafter adopted by the Company, or that the Purchaser
      could be deemed to trigger the provisions of any the plan or arrangement, by
      virtue of receiving Securities under the Transaction Documents or under any
      other agreement between the Company and the Purchaser.

     

    
      
         

      

      
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    4.6 Non-Public
      Information.

     

    The
      Company covenants and agrees that neither it nor any other Person acting on
      its
      behalf will provide any Purchaser or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto the Purchaser shall have executed a written agreement regarding
      the confidentiality and use of the information. The Company understands and
      confirms that the Purchasers shall be relying on the foregoing covenant and
      representations in effecting transactions in securities of the
      Company.

     

    4.7 Use
      of Proceeds.

     

    The
      Company covenants and agrees that the proceeds from the sale of the Common
      Stock
      and Warrants shall be used by the Company to consummate the Chatsworth
      Acquisition (including payment of fees and expenses related thereto) and the
      excess shall be used for working capital purposes.

     

    4.8 Reservation
      of Common Stock.

     

    As
      of the
      date hereof, the Company has reserved and the Company shall continue to reserve
      and keep available at all times, free of preemptive rights, a sufficient number
      of shares of Common Stock for the purpose of enabling the Company to issue
      Shares pursuant to this Agreement and Warrant Shares pursuant to the
      Warrants.

     

    4.10 Listing
      of Common Stock.

     

    The
      Company hereby agrees to use commercially reasonable efforts to maintain the
      listing of the Common Stock on any applicable Trading Market, and agrees, as
      soon as reasonably practicable following the Closing to list the applicable
      Shares and Warrant Shares on any applicable Trading Market. The Company further
      agrees, if the Company applies to have the Common Stock traded on any other
      Trading Market, it will include in the application the Shares and the Warrant
      Shares, and will take any other action as is necessary to cause the Shares
      and
      Warrant Shares to be listed on the other Trading Market as promptly as
      possible.

     

    4.11 Business
      Operations.
      For as
      long as any Purchaser holds Securities, the Company shall comply with the
      following covenants:

     

    (a) Insurance.
      The
      Company and its Subsidiaries shall maintain insurance policies so that the
      representations contained in the first sentence of Section 3.1(p) hereof
      continue to be true and correct and shall, from time to time upon the written
      request of any Purchaser, promptly furnish or cause to be furnished to the
      Purchaser evidence, in form and substance reasonably satisfactory to the
      Purchaser, of the maintenance of all insurance maintained by it. 

     

    (b) Corporate
      Existence; Licenses.
      The
      Company shall preserve and maintain and cause its Subsidiaries to preserve
      and
      maintain their corporate existence and good standing in the jurisdiction of
      their incorporation and the rights, privileges and franchises of the Company
      and
      its Subsidiaries (except, in each case, in the event of a merger or
      consolidation in which the Company or its Subsidiaries, as applicable, is not
      the surviving entity) in each case where the failure to so preserve or maintain
      could have a Material Adverse Effect on the financial condition, business or
      operations of the Company and its Subsidiaries taken as a whole. The Company
      shall, and shall cause its Subsidiaries to, maintain at all times all material
      licenses or permits necessary to the conduct of its business and as required
      by
      any governmental agency or instrumentality thereof.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    (c) Taxes
      and Claims.
      The
      Company and its Subsidiaries shall duly pay and discharge (a) all taxes,
      assessments and governmental charges upon or against the Company or its
      properties or assets prior to the date on which penalties attach thereto, unless
      and to the extent that the taxes are being diligently contested in good faith
      and by appropriate proceedings, and appropriate reserves therefor have been
      established, and (b) all lawful claims, whether for labor, materials, supplies,
      services or anything else which might or could, if unpaid, become a lien or
      charge upon the properties or assets of the Company or its Subsidiaries, unless
      and to the extent only that the same are being contested in good faith and
      by
      appropriate proceedings and appropriate reserves therefor have been
      established.

     

    (d) Affiliate
      Transactions.
      Except
      as disclosed in the Chatsworth 8-K and for transactions approved by a majority
      of the disinterested members of the board of directors of the Company, neither
      the Company nor any of its Subsidiaries shall enter into any transaction with
      any (i) director, officer, employee or holder of more than 5% of the outstanding
      capital stock of any class or series of capital stock of the Company or any
      of
      its Subsidiaries, (ii) member of the immediate family of any such person, or
      (iii) corporation, partnership, trust or other entity in which any such person,
      or member of the immediate family of any such person, is a director, officer,
      trustee, partner or holder of more than 5% of the outstanding capital stock
      thereof.

     

    4.12 Securities
      Law Compliance.

     

    (a) Securities
      Act.
      The
      Company shall timely prepare and file with the Securities and Exchange
      Commission the form of notice of the sale of securities pursuant to the
      requirements of Regulation D regarding the sale of the Common Stock and Warrants
      under this Agreement.

     

    (b) State
      Securities Law Compliance -- Sale.
      The
      Company shall timely prepare and file the applications, consents to service
      of
      process (but not including a general consent to service of process) and similar
      documents and take the other steps and perform the further acts as shall be
      required by the state securities law requirements of the jurisdiction where
      each
      Purchaser resides with respect to the sale of the Common Stock and Warrants
      under this Agreement. 

     

    (c) State
      Securities Law Compliance --Resale.
      Beginning no later than 30 days following the Closing Date and continuing until
      either (i) the Purchasers have sold all of their Shares and Warrant Shares
      under
      a registration statement pursuant to the Investor Rights Agreement or (ii)
      the
      Common Stock becomes a “covered security” under Section 18(b)(1)(A) of the
      Securities Act, the Company shall use its best efforts to maintain within either
      Moody’s Industrial Manual or Standard and Poor’s Standard Corporation
      Descriptions (or any successors to these manuals which are similarly qualified
      as “recognized securities manuals” under state Blue Sky laws) an updated listing
      containing (i) the names of the officers and directors of the Company, (ii)
      a
      balance sheet of the Company as of a date that is at no time older than eighteen
      months and (iii) a profit and loss statement of the Company for either the
      preceding fiscal year or the most recent year of operations.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    4.13 Net
      Short Sales by Purchasers.
      Each
      Purchaser represents that it has not, and agrees that it shall not make any
      Net
      Short Sale of the Company’s Common Stock for the period beginning on the
      fifteenth (15th)
      day
      prior to the date of this Agreement and ending on the date that is two (2)
      years
      following the Effective Date. For purposes of this Agreement, a “Net
      Short Sale”
by
      any
      Purchaser shall mean a sale of Common Stock by such Purchaser that is marked
      as
      a short sale and that is made at a time when there is no equivalent offsetting
      long position in Common Stock held by such Purchaser, where an “equivalent
      offsetting long position” includes all shares of Common Stock held by such
      Purchaser and all underlying shares of Common Stock which are issuable upon
      conversion, exercise or exchange of convertible securities, warrants, options
      or
      other rights to subscribe for or to purchase or exchange for shares of Common
      Stock.

     

    4.14 Rule
      14f-1 Statement.
      The
      Company shall, promptly, but in no case later than 10 days following the Closing
      Date, duly file with the Commission and transmit to the Company’s shareholders
      an information statement in accordance with Exchange Act Rule 14f-1 and other
      applicable laws, rules and regulations (the “Rule
      14f-1 Statement”).
      Such
      Rule 14f-1 Statement shall contain all of the information required to permit
      the
      resignation of Ms. Bilynaska from the Board of Directors to become effective
      10
      days following the date of filing and transmittal thereof.

     

    ARTICLE
      V

     

    INDEMNIFICATION,
      TERMINATION AND DAMAGES

     

    5.1 Survival
      of Representations. 

     

    Except
      as
      otherwise provided herein, the representations and warranties of the Company
      and
      each of the Purchasers contained in or made pursuant to this Agreement shall
      survive the execution and delivery of this Agreement and the Closing Date and
      shall continue in full force and effect for a period of two (2) years from
      the
      Closing Date; provided,
      however,
      that
      the Company’s warranties and representations under Sections 3.1(a)
      (Subsidiaries), 3.1(g) (Capitalization), 3,1(x) (Taxes) and 3.1(y)
      (Environmental Matters) shall survive the Closing Date and continue in full
      force and effect until the expiration of all applicable statutes of limitation.
      The Company’s and each of the Purchaser’s warranties and representations shall
      in no way be affected or diminished in any way by any investigation of (or
      failure to investigate) the subject matter thereof made by or on behalf of
      the
      Company or any Purchaser.

     

    5.2 Indemnification.
      

     

    (a) The
      Company agrees to indemnify and hold harmless each Purchaser, its Affiliates,
      each of their officers, directors, employees and agents and their respective
      successors and assigns, from and against any losses, damages, or expenses which
      are caused by or arise out of (i) any breach or default in the performance
      by
      the Company of any covenant or agreement made by the Company in this Agreement
      or in any of the Transaction Documents; (ii) any breach of warranty or
      representation made by the Company in this Agreement or in any of the
      Transaction Documents; and/or (iii) any and all third party actions, suits,
      proceedings, claims, demands, judgments, costs and expenses (including
      reasonable legal fees and expenses) incident to any of the
      foregoing.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    (b) Each
      Purchaser, severally and not jointly with the other Purchasers, agrees to
      indemnify and hold harmless the Company, its Affiliates, each of their officers,
      directors, employees and agents and their respective successors and assigns,
      from and against any losses, damages, or expenses which are caused by or arise
      out of (A) any breach or default in the performance by such Purchaser of any
      covenant or agreement made by the Purchaser in this Agreement or in any of
      the
      Transaction Documents; (B) any breach of warranty or representation made by
      the
      Purchaser in this Agreement or in any of the Transaction Documents; and (C)
      any
      and all third party actions, suits, proceedings, claims, demands, judgments,
      costs and expenses (including reasonable legal fees and expenses) incident
      to
      any of the foregoing; provided,
      however,
      that
      any Purchaser’s liability under this Section 5.2(b) shall not exceed the
      Subscription Amount paid by the Purchaser hereunder.

     

    5.3 Indemnity
      Procedure. 

     

    A
      party
      or parties hereto agreeing to be responsible for or to indemnify against any
      matter pursuant to this Agreement is referred to herein as the “Indemnifying
      Party”
and
      the
      other party or parties claiming indemnity is referred to as the “Indemnified
      Party”.
      An
      Indemnified Party under this Agreement shall, with respect to claims asserted
      against such party by any third party, give written notice to the Indemnifying
      Party of any liability which might give rise to a claim for indemnity under
      this
      Agreement within sixty (60) Business Days of the receipt of any written claim
      from any such third party, but not later than twenty (20) days prior to the
      date
      any answer or responsive pleading is due, and with respect to other matters
      for
      which the Indemnified Party may seek indemnification, give prompt written notice
      to the Indemnifying Party of any liability which might give rise to a claim
      for
      indemnity; provided,
      however,
      that
      any failure to give the notice will not waive any rights of the Indemnified
      Party except to the extent the rights of the Indemnifying Party are materially
      prejudiced.

     

    The
      Indemnifying Party shall have the right, at its election, to take over the
      defense or settlement of the claim by giving written notice to the Indemnified
      Party at least fifteen (15) days prior to the time when an answer or other
      responsive pleading or notice with respect thereto is required. If the
      Indemnifying Party makes the election, it may conduct the defense of the claim
      through counsel of its choosing (subject to the Indemnified Party’s approval of
      the counsel, which approval shall not be unreasonably withheld), shall be solely
      responsible for the expenses of the defense and shall be bound by the results
      of
      its defense or settlement of the claim. The Indemnifying Party shall not settle
      the claim without prior notice to and consultation with the Indemnified Party,
      and no settlement involving any equitable relief or which might have an adverse
      effect on the Indemnified Party may be agreed to without the written consent
      of
      the Indemnified Party (which consent shall not be unreasonably withheld). So
      long as the Indemnifying Party is diligently contesting any the claim in good
      faith, the Indemnified Party may pay or settle the claim only at its own expense
      and the Indemnifying Party will not be responsible for the fees of separate
      legal counsel to the Indemnified Party, unless the named parties to any
      proceeding include both parties or representation of both parties by the same
      counsel would be inappropriate in the reasonable opinion of the Indemnified
      Party, due to conflicts of interest or otherwise. If the Indemnifying Party
      does
      not make the election, or having made the election does not, in the reasonable
      opinion of the Indemnified Party proceed diligently to defend the claim, then
      the Indemnified Party may (after written notice to the Indemnifying Party),
      at
      the expense of the Indemnifying Party, elect to take over the defense of and
      proceed to handle the claim in its discretion and the Indemnifying Party shall
      be bound by any defense or settlement that the Indemnified Party may make in
      good faith with respect to the claim. In connection therewith, the Indemnifying
      Party will fully cooperate with the Indemnified Party should the Indemnified
      Party elect to take over the defense of the claim. The parties agree to
      cooperate in defending the third party claims and the Indemnified Party shall
      provide cooperation and access to its books, records and properties as the
      Indemnifying Party shall reasonably request with respect to any matter for
      which
      indemnification is sought hereunder; and the parties hereto agree to cooperate
      with each other in order to ensure the proper and adequate defense
      thereof.

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    With
      regard to claims of third parties for which indemnification is payable
      hereunder, the indemnification shall be paid by the Indemnifying Party upon
      the
      earlier to occur of: (i) the entry of a judgment against the Indemnified Party
      and the expiration of any applicable appeal period, or if earlier, five (5)
      days
      prior to the date that the judgment creditor has the right to execute the
      judgment; (ii) the entry of an unappealable judgment or final appellate decision
      against the Indemnified Party; or (iii) a settlement of the claim.
      Notwithstanding the foregoing, the reasonable expenses of counsel to the
      Indemnified Party shall be reimbursed on a current basis by the Indemnifying
      Party. With regard to other claims for which indemnification is payable
      hereunder, the indemnification shall be paid promptly by the Indemnifying Party
      upon demand by the Indemnified Party.

     

    ARTICLE
      VI

     

    ANTI-DILUTION

     

    6.1 Issuance
      of Additional Shares of Common Stock.
      

     

    (i) If
      the
      Company shall issue or sell, on or prior to the first anniversary of the Closing
      Date, any additional shares of Common Stock (“Additional
      Common Stock”),
      other
      than in an Exempt Issuance (as defined below), in exchange for consideration
      in
      an amount per additional share of Common Stock less than the Per Share Purchase
      Price at the time the additional shares of Common Stock are issued or sold,
      then:

     

    (A) the
      Per
      Share Purchase Price immediately prior to such issue or sale shall be reduced
      to
      equal the sale price of such Additional Common Stock; and

     

    (B) each
      Purchaser shall receive for no additional consideration a number of shares
      of
      Common Stock determined as follows:

     

    (1) multiplying
      the Per Share Purchase Price in effect immediately prior to such issue or sale
      by the number of shares of Common Stock purchased by such Purchaser pursuant
      to
      this Agreement and 

     

    (2) dividing
      the product thereof by the Per Share Purchase Price resulting from the
      adjustment made pursuant to clause (A) of this Section 6.1(i) and

     

    (3) subtracting
      from such amount the number of shares of Common Stock purchased by such
      Purchaser pursuant to this Agreement.

     

    
      
         

      

      
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    (ii) No
      adjustment of the number of shares of Common Stock acquirable hereunder shall
      be
      made under paragraph 6.1(i) upon the issuance of any additional shares of Common
      Stock which are issued pursuant to the exercise of any warrants or other
      subscription or purchase rights or pursuant to the exercise of any conversion
      or
      exchange rights in any convertible securities, if any such adjustment shall
      previously have been made upon the issuance of such warrants or other rights
      or
      upon the issuance of such convertible securities (or upon the issuance of any
      warrant or other rights therefor) pursuant to Section 6.2. 

     

    (iii) For
      avoidance of doubt, the computations provided in this Section 6.1 shall not
      impact, retroactively or otherwise, the consideration already paid by a
      Purchaser for the Shares. The Per Share Purchase Price adjustment is made solely
      to calculate the number of additional shares of Common Stock to be issued
      pursuant to this Section 6.1.

     

    6.2. Issuance
      of Common Stock Equivalents.
      If the
      Company shall issue or sell, on or prior to the second anniversary of the
      Closing Date, any Common Stock Equivalents, whether or not the rights to
      exchange or convert thereunder are immediately exercisable, and the effective
      price per share for which Common Stock is issuable upon the exercise, exchange
      or conversion of such Common Stock Equivalents shall be less than the Per Share
      Purchase Price in effect immediately prior to the time of such issue or sale,
      then the number of additional shares of Common Stock to be issued and the Per
      Share Purchase Price shall be adjusted as provided in Section 6.1 on the basis
      that the maximum number of additional shares of Common Stock issuable pursuant
      to all such Common Stock Equivalents shall be deemed to have been issued and
      outstanding and the Company shall have received all of the consideration payable
      therefor, if any, as of the date of the actual issuance of such Common Stock
      Equivalents. No further adjustments shall be made under this Section 6.2 upon
      the actual issue of such Common Stock upon the exercise, conversion or exchange
      of such Common Stock Equivalents. 

     

    6.3. Other
      Provisions Applicable to Adjustments.
      The
      following provisions shall be applicable to the making of adjustments provided
      for in Article VI: 

     

    (a)
      When
      Adjustments to Be Made.
      The
      adjustments required by Article VI shall be made whenever and as often as any
      specified event requiring an adjustment shall occur.

     

    (b)
      Fractional
      Interests.
      In
      computing adjustments under this Article VI, fractional interests in Common
      Stock shall be rounded up or down to the nearest whole share. 

     

    6.4 Exempt
      Issuances.
      “Exempt
      Issuances”
means
      the issuance of: (A) Common Stock upon the exercise of the Warrants, (B) Common
      Stock in connection with an adjustment pursuant this Article VI of the Purchase
      Agreement, (C) Common Stock upon the exercise of any warrants or options
      outstanding as of the effective time of the Closing, (D) Common Stock (at
      issuance or exercise prices at or above fair market value), stock awards or
      options under, or the exercise of any options granted pursuant to, any
      stock-based compensation plans of the Company approved by the Board of Directors
      of the Company, (E) securities to financial institutions in connection with
      commercial credit arrangements, equipment financings, service agreements or
      similar transactions approved by the Board of Directors of the Company and
      the
      primary purpose of which is not equity financing, (F) securities or rights
      to
      acquire securities in connection with strategic collaborations, development
      agreements, joint ventures or licensing transactions, the terms of which are
      approved by the Board of Directors of the Company, (G) Common Stock pursuant
      to
      a stock split, combination or subdivision of the outstanding shares of Common
      Stock, or (H) securities issued in connection with services provided to the
      Company.

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    ARTICLE
      VII

     

    MISCELLANEOUS

     

    7.1 Fees
      and Expenses.

     

    The
      Company shall be responsible for the payment of the Purchasers’ reasonable and
      documented legal fees and other third-party expenses relating to the
      preparation, negotiation and execution of this Agreement and the Transaction
      Documents and the consummation of the transactions contemplated herein up to
      $20,000 or such greater amount as may be agreed in writing by the
      Company.

     

    7.2 Entire
      Agreement.

     

    The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to the matters, which the parties acknowledge have been merged
      into
      the documents, exhibits and schedules.

     

    7.3 Notices.

     

    Any
      and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if the notice or communication
      is delivered via facsimile at the facsimile number specified on the signature
      pages attached hereto prior to 5:00 p.m. (New York City time) on a Trading
      Day,
      (b) the next Trading Day after the date of transmission, if the notice or
      communication is delivered via facsimile at the facsimile number on the
      signature pages attached hereto on a day that is not a Trading Day or later
      than
      5:00 p.m. (New York City time) on any Trading Day, (c) the Trading Day following
      the date of mailing, if sent by U.S. nationally recognized overnight courier
      service, or (d) upon actual receipt by the party to whom the notice is required
      to be given. The address for the notices and communications shall be as
      follows:

     

    If
      to the
      Purchasers, at each Purchaser’s address set forth under its name on Schedule
      1
      attached
      hereto and if to the Company, addressed to: 

     

    Adera
      Mines Limited

    20710
      Lassen Street

    Chatsworth,
      CA 91311

    Attention:
      Chief Financial Officer

    Facsimile
      No.: 818-341-3002

    

    Copy
      to:

     

    Richardson
      Patel LLP

    10900
      Wilshire Blvd.

    Los
      Angeles, CA 90024

    Attention:
      Mark Abdou, Esq.

    Facsimile
      No.: 310-208-1154

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

    or
      to the
      other address or addresses or facsimile number or numbers as any the party
      may
      most recently have designated in writing to the other parties hereto by proper
      notice. Copies of notices to any Purchaser shall be sent to the copy addresses,
      if any, listed on Schedule
      1
      attached
      hereto.

    

    7.4 Amendments;
      Waivers.
      

     

    No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each of
      the
      Purchasers or, in the case of a waiver, by the party against whom enforcement
      of
      the waiver is sought. No waiver of any default with respect to any provision,
      condition or requirement of this Agreement shall be deemed to be a continuing
      waiver in the future or a waiver of any subsequent default or a waiver of any
      other provision, condition or requirement hereof, nor shall any delay or
      omission of either party to exercise any right hereunder in any manner impair
      the exercise of any right.

     

    7.5 Construction.

     

    The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party. Any references herein to
“dollars” or use herein of the symbol “$” shall refer to the currency of the
      United States of America.

     

    7.6 Successors
      and Assigns.

     

    This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each of the Purchaser. The Purchasers may assign any or all of its
      rights under this Agreement to any Person, provided the transferee agrees in
      writing to be bound, with respect to the transferred Securities, by the
      provisions hereof that apply to the Purchaser. 

     

    7.7 No
      Third-Party Beneficiaries.

     

    This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Article V. 

     

    7.8 Governing
      Law.

     

    All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of New York, without regard
      to
      the principles of conflicts of law thereof.

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    7.9
       Jurisdiction;
      Venue; Service of Process

     

    This
      Agreement shall be subject to the exclusive jurisdiction of the Federal District
      Court, Southern District of New York and if such court does not have proper
      jurisdiction, the State Courts of New York County, New York. The parties to
      this
      Agreement agree that any breach of any term or condition of this Agreement
      shall
      be deemed to be a breach occurring in the State of New York by virtue of a
      failure to perform an act required to be performed in the State of New York
      and
      irrevocably and expressly agree to submit to the jurisdiction of the Federal
      District Court, Southern District of New York and if such court does not have
      proper jurisdiction, the State Courts of New York County, New York for the
      purpose of resolving any disputes among the parties relating to this Agreement
      or the transactions contemplated hereby. The parties irrevocably waive, to
      the
      fullest extent permitted by law, any objection which they may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      relating to this Agreement, or any judgment entered by any court in respect
      hereof brought in New York County, New York, and further irrevocably waive
      any
      claim that any suit, action or proceeding brought in Federal District Court,
      Southern District of New York and if such court does not have proper
      jurisdiction, the State Courts of New York County, New York has been brought
      in
      an inconvenient forum. Each of the parties hereto consents to process being
      served in any such suit, action or proceeding, by mailing a copy thereof to
      such
      party at the address in effect for notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof. Nothing in this Section 6.9 shall affect or limit any right
      to
      serve process in any other manner permitted by law.

     

    7.10
       Execution.

     

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

     

    7.11
       Severability.

     

    If
      any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate the
      substitute provision in this Agreement.

     

    7.12 Replacement
      of Securities.

     

    If
      any
      certificate or instrument evidencing any Shares or Warrant Shares is mutilated,
      lost, stolen or destroyed, the Company shall issue or cause to be issued in
      exchange and substitution for and upon cancellation thereof, or in lieu of
      and
      substitution therefor, a new certificate or instrument, but only upon receipt
      of
      evidence reasonably satisfactory to the Company of the loss, theft or
      destruction and customary and reasonable indemnity, if requested by the
      Company.

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

     

    7.13
       Remedies.

     

    In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, the Purchasers and the Company will be
      entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any obligation the defense that a remedy at law would be adequate.

     

    7.14 Payment
      Set Aside.

     

    To
      the
      extent that the Company makes a payment or payments to any Purchaser pursuant
      to
      any Transaction Document or any Purchaser enforces or exercises its rights
      thereunder, and the payment or payments or the proceeds of the enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any restoration the obligation or part thereof originally
      intended to be satisfied shall, to the extent permissible under applicable
      law,
      be revived and continued in full force and effect as if the payment had not
      been
      made or the enforcement or setoff had not occurred.

     

    7.15 Waiver
      of Trial by Jury. 

     

    THE
      PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
      RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     

    7.16 Further
      Assurances. 

     

    Each
      party agrees to cooperate fully with the other party and to execute any further
      instruments, documents and agreements and to give any further written assurances
      as may be reasonably requested by any other party to better evidence and reflect
      the transactions described herein and contemplated hereby and to carry into
      effect the intents and purposes of this Agreement, and further agrees to take
      promptly, or cause to be taken, all actions, and to do promptly, or cause to
      be
      done, all things necessary, proper or advisable under applicable law to
      consummate and make effective the transactions contemplated hereby, to obtain
      all necessary waivers, consents and approvals, to effect all necessary
      registrations and filings, and to remove any injunctions or other impediments
      or
      delays, legal or otherwise, in order to consummate and make effective the
      transactions contemplated by this Agreement for the purpose of securing to
      the
      parties hereto the benefits contemplated by this Agreement.

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

    7.17 Independent
      Nature of Purchasers' Obligations and Rights.
      

     

    The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      Transaction Document, and no action taken by any Purchaser pursuant thereto,
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Document. Each
      Purchaser shall be entitled to independently protect and enforce its rights,
      including without limitation, the rights arising out of this Agreement or out
      of
      the other Transaction Documents, and it shall not be necessary for any other
      Purchaser to be joined as an additional party in any proceeding for such
      purpose. Each Purchaser has been represented by its own separate legal counsel
      in their review and negotiation of the Transaction Documents. For reasons of
      administrative convenience only, Purchasers and their respective counsel have
      chosen to communicate with the Company through Wiggin and Dana LLP, but such
      counsel does not represent any of the Purchasers in this transaction other
      than
      Vision Opportunity Master Fund, Ltd. The Company has elected to provide all
      Purchasers with the same terms and Transaction Documents for the convenience
      of
      the Company and not because it was required or requested to do so by the
      Purchasers.

     

    

     

    [Signature
      Page Follows]

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      first above written.

     

    COMPANY:

     

    ADERA
      MINES LIMITED

    

    

    By:________________________________

    Name: J.
      Stewart Asbury III

    Title: President

    

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    PURCHASERS:

     

    

     

    Print
      Exact Name:________________________________

     

    

     

    By:____________________________________________

     

    Name:

     

    Title:

     

    

     

    Address:________________________________________

     

    _______________________________________________

     

    _______________________________________________

     

    Telephone:______________________________________

     

    Facsimile:_______________________________________

     

    Email:__________________________________________

     

    SSN/EIN:_______________________________________

     

    Amount
      of
      Investment:$___________________________

     

    

     

    [Omnibus
      Adera Mines Limited Common Stock and Warrant Purchase Agreement Signature
      Page]

    

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

    Schedule
      1

    to
      Common Stock and Warrant Purchase Agreement

    Adera
      Mines Limited

    

    Purchasers
      and Shares of Common Stock and Warrants

    

     

    
      

        
          	
                  Name,
                    Address and Fax Number of Purchaser

                	 	
                  Copies
                    of Notices to

                	 	
                  Shares
                    of Common Stock Purchased

                	 	
                  Common
                    Stock Underlying Warrants

                	 	
                  Purchase
                    Price

                
	
                  [Purchaser
                    Name]

                	 	 	 	 	 	 	 	
                  $

                
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
                  Totals:

                   

                	 	 	 	 	 	 	 	
                  $6,000,000INVESTOR
      RIGHTS AGREEMENT

     

    This
      Investor Rights Agreement is made and entered into as of July 31, 2006 (this
      “Agreement”),
      among
      Adera Mines Limited, a Nevada corporation (the “Company”),
      and
      each of the purchasers executing this Agreement and listed on Schedule
      1
      attached
      hereto (collectively, the “Purchasers”).
      

     

    This
      Agreement is being entered into pursuant to the Common Stock and Warrant
      Purchase Agreement dated as of the date hereof, by and among the Company and
      the
      Purchasers (the “Purchase
      Agreement”).

     

    The
      Company and the Purchasers hereby agree as follows: 

     

    1. Certain
      Definitions.

     

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

     

    “Advice”
shall
      have the meaning set forth in Section 3(m). 

     

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

     

    “Blackout
      Period”
shall
      have the meaning set forth in Section 3(n).

     

    “Board”
shall
      have the meaning set forth in Section 3(n). 

     

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

     

    “Commission”
means
      the Securities and Exchange Commission. 

     

    “Common
      Stock”
means
      the Company's Common Stock, par value $0.00001.

     

    “Effectiveness
      Date”
shall
      have the meaning set forth in Section 2.

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Filing
      Date”
means
      the 60th day following the Closing Date.

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities, including without limitation the Purchasers and their assignees.
      

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Purchased
      Shares”
means
      the shares of Common Stock purchased by the Purchasers pursuant to the Purchase
      Agreement and includes, without limitation, shares of Common Stock issued upon
      an adjustment pursuant to Article VI of the Purchase Agreement.

     

    “Registrable
      Securities”
means
      (a) the Purchased Shares and the Warrant Shares (without regard to any
      limitations on beneficial ownership contained in the Purchase Agreement or
      Warrants) or other securities issued or issuable to each Purchaser or its
      transferee or designee (i) upon exercise of the Warrants, or (ii) upon any
      distribution with respect to, any exchange for or any replacement of such
      Purchased Shares or Warrants or (iii) upon any conversion, exercise or exchange
      of any securities issued in connection with any such distribution, exchange
      or
      replacement; (b) securities issued or issuable upon any stock split, stock
      dividend, recapitalization or similar event with respect to the foregoing;
      and
      (c) any other security issued as a dividend or other distribution with respect
      to, in exchange for, in replacement or redemption of, or in reduction of the
      liquidation value of, any of the securities referred to in the preceding
      clauses; provided, however, that such securities shall cease to be Registrable
      Securities when such securities have been sold to or through a broker or dealer
      or underwriter in a public distribution or a public securities transaction
      or
      when such securities may be sold without any restriction pursuant to Rule 144(k)
      as determined by the counsel to the Company pursuant to a written opinion
      letter, addressed to the Company's transfer agent to such effect as described
      in
      Section 2 of this Agreement.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

    “Special
      Counsel”
means
      Wiggin and Dana LLP. 

     

    “Warrant
      Shares”
means
      the shares of Common Stock issued or issuable upon the exercise of the Warrants
      issued or to be issued to the Purchasers or their assignees or designees in
      connection with the offering consummated under the Purchase Agreement.

     

    2. Registration.
      As soon
      as possible following the Closing Date (but not later than the Filing Date),
      the
      Company shall prepare and file with the Commission a “shelf” Registration
      Statement covering all Registrable Securities for a secondary or resale offering
      to be made on a continuous basis pursuant to Rule 415. The Registration
      Statement shall be on Form S-3 (or if such form is not available to the Company
      on Form S-1 or another form appropriate for such registration in accordance
      herewith). The Company shall use its best efforts to cause the Registration
      Statement to be declared effective under the Securities Act not later than
      the
      date that is sixty (60) days, or, if the Registration Statement is reviewed
      by
      the Commission, ninety (90) days, after the date on which the Registration
      Statement is filed with the Commission (as applicable, the “Effectiveness
      Date”)
      and to
      keep such Registration Statement continuously effective under the Securities
      Act, subject to Section 3(n) hereof, until such date as is the earlier of (x)
      the date when all Registrable Securities covered by such Registration Statement
      have been sold or (y) with respect to any Holder, such time as all Registrable
      Securities held by such Holder may be sold without any restriction pursuant
      to
      Rule 144(k) as determined by the counsel to the Company pursuant to a written
      opinion letter addressed to the Company's transfer agent to such effect (the
      “Effectiveness
      Period”).
      For
      purposes of the obligations of the Company under this Agreement, no Registration
      Statement shall be considered “effective” with respect to any Registrable
      Securities unless such Registration Statement lists the Holders of such
      Registrable Securities as “Selling Stockholders” and includes such other
      information as is required to be disclosed with respect to such Holders to
      permit them to sell their Registrable Securities pursuant to such Registration
      Statement, unless any such Holder is not included as a “Selling Stockholder”
pursuant to Section 3(m). Such Registration Statement also shall cover, to
      the
      extent allowable under the Securities Act and the Rules promulgated thereunder
      (including Securities Act Rule 416), such indeterminate number of additional
      shares of Common Stock resulting from stock splits, stock dividends or similar
      transactions with respect to the Registrable Securities. Whether or not the
      Effectiveness Date has occurred, if the Company is notified (orally or in
      writing, whichever is earlier) by the Commission that a Registration Statement
      will not be “reviewed,” or not be subject to further review, then the Company
      shall file with the Commission a request for acceleration of effectiveness
      in
      accordance with Rule 461 promulgated under the Securities Act within three
      (3)
      Business Days following receipt of such notice from the Commission.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    3. Registration
      Procedures.

     

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

     

    (a)
      Prepare and file with the Commission on or prior to the Filing Date, a
      Registration Statement on Form S-3 (or if such form is not available to the
      Company on Form S-1 or another form appropriate for such registration in
      accordance herewith) (which shall include a Plan of Distribution substantially
      in the form of Exhibit
      A
      attached
      hereto), and cause the Registration Statement to become effective and remain
      effective as provided herein; provided, however, that not less than three (3)
      Business Days prior to the filing of the Registration Statement or any related
      Prospectus or any amendment or supplement thereto, the Company shall (i) furnish
      to the Special Counsel, copies of all such documents proposed to be filed,
      which
      documents (other than those incorporated by reference) will be subject to the
      review of such Special Counsel, and (ii) at the request of any Holder cause
      its
      officers and directors, counsel and independent certified public accountants
      to
      respond to such inquiries as shall be necessary, in the reasonable opinion
      of
      counsel to such Holders, to conduct a reasonable investigation within the
      meaning of the Securities Act. The Company shall not file the Registration
      Statement or any such Prospectus or any amendments or supplements thereto to
      which the Holders of a majority of the Registrable Securities or the Special
      Counsel shall reasonably object within three (3) Business Days after their
      receipt thereof; provided, however, that if the Registration Statement is
      provided to the Special Counsel and in the reasonable opinion of counsel to
      the
      Company complies with the requirements of this Agreement and is ready to be
      filed with the Commission, then no liquidated damages shall accrue with respect
      to any delay in filing after the Filing Date that results from such objection
      and the Effectiveness Date will be correspondingly extended by the number of
      days of delay after the Filing Date resulting from such objection. In the event
      of any such objection, the Holders shall provide the Company with any and all
      requested revisions to such prospectus or supplement within two (2) Business
      Days of such objection.

     

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to the Registration Statement as may be necessary to keep the
      Registration Statement continuously effective as to all of the Registrable
      Securities for the Effectiveness Period and to the extent any Registrable
      Securities are not included in such Registration Statement for reasons other
      than the failure of the Holder to comply with Section 3(m) hereof (including,
      without limitation, Registrable Securities issued or issuable upon adjustment
      pursuant to Article VI of the Purchase Agreement), shall prepare and file with
      the Commission such amendments to the Registration Statement or such additional
      Registration Statements in order to register for resale under the Securities
      Act
      all Registrable Securities and cause such amendments or additional Registration
      Statements to be declared effective as soon as practicable following the time
      at
      which the Company would be permitted by applicable law and by the rules and
      regulations of the Commission to register such Registrable Securities; (ii)
      cause the related Prospectus to be amended or supplemented by any required
      Prospectus supplement, and as so supplemented or amended to be filed pursuant
      to
      Rule 424 (or any similar provisions then in force) promulgated under the
      Securities Act; (iii) respond as promptly as possible, and in no event later
      than ten (10) Business Days (or 15 Business Days if the comments relate to
      accounting matters), to any comments received from the Commission with respect
      to the Registration Statement or any amendment thereto and as promptly as
      reasonably possible provide the Holders true and complete copies of all
      correspondence from and to the Commission relating to the Registration
      Statement; and (iv) comply in all material respects with the provisions of
      the
      Securities Act and the Exchange Act with respect to the disposition of all
      Registrable Securities covered by the Registration Statement during the
      applicable period in accordance with the intended methods of disposition by
      the
      Holders thereof set forth in the Registration Statement as so amended or in
      such
      Prospectus as so supplemented.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (c) Notify
      Holders of Registrable Securities to be sold and the Special Counsel as promptly
      as possible (A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to the Registration Statement is proposed to be filed (but in no
      event
      in the case of this subparagraph (A), less than three (3) Business Days prior
      to
      date of such filing); (B) when the Commission notifies the Company whether
      there
      will be a “review” of such Registration Statement and whenever the Commission
      comments in writing on such Registration Statement; and (C) with respect to
      the
      Registration Statement or any post-effective amendment, when the same has become
      effective, and after the effectiveness thereof: (i) of any request by the
      Commission or any other Federal or state governmental authority for amendments
      or supplements to the Registration Statement or Prospectus or for additional
      information; (ii) of the issuance by the Commission of any stop order suspending
      the effectiveness of the Registration Statement covering any or all of the
      Registrable Securities or the initiation of any Proceedings for that purpose;
      (iii) of the receipt by the Company of any notification with respect to the
      suspension of the qualification or exemption from qualification of any of the
      Registrable Securities for sale in any jurisdiction, or the initiation or
      threatening of any Proceeding for such purpose; and (iv) if the financial
      statements included in the Registration Statement become ineligible for
      inclusion therein or of the occurrence of any event that makes any statement
      made in the Registration Statement or Prospectus or any document incorporated
      or
      deemed to be incorporated therein by reference untrue in any material respect
      or
      that requires any revisions to the Registration Statement, Prospectus or other
      documents so that, in the case of the Registration Statement or the Prospectus,
      as the case may be, it will not contain any untrue statement of a material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading. Without limitation to any remedies to which the
      Holders may be entitled under this Agreement, if any of the events described
      in
      Section 3(c)(C)(i), 3(c)(C)(ii) and 3(c)(C)(iii) occur, the Company shall use
      its best efforts to respond to and correct the event.

     

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

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    (i) Cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be sold pursuant to a
      Registration Statement, which certificates shall be free, to the extent
      permitted by applicable law and the Purchase Agreement, of all restrictive
      legends, and to enable such Registrable Securities to be in such denominations
      and registered in such names as any Holder may request at least two (2) Business
      Days prior to any sale of Registrable Securities. In connection therewith,
      the
      Company shall promptly after the effectiveness of the Registration Statement
      cause an opinion of counsel to be delivered to and maintained with its transfer
      agent, together with any other authorizations, certificates and directions
      required by the transfer agent, which authorize and direct the transfer agent
      to
      issue such Registrable Securities without legend upon sale by the Holder of
      such
      shares of Registrable Securities under the Registration Statement.

     

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

     

    (k) Cause
      all
      Registrable Securities relating to such Registration Statement to be listed
      on
      any United States securities exchange, quotation system, market or
      over-the-counter bulletin board, if any, on which similar securities issued
      by
      the Company are then listed. 

     

    (l) Comply
      in
      all material respects with all applicable rules and regulations of the
      Commission and make generally available to its security holders earnings
      statements satisfying the provisions of Section 11(a) of the Securities Act
      and
      Rule 158 not later than 45 days after the end of any 3-month period (or 90
      days
      after the end of any 12-month period if such period is a fiscal year) commencing
      on the first day of the first fiscal quarter of the Company after the effective
      date of the Registration Statement, which statement shall conform to the
      requirements of Rule 158.

     

    (m) Request
      each selling Holder to furnish to the Company information regarding such Holder
      and the distribution of such Registrable Securities as is required by law or
      the
      Commission to be disclosed in the Registration Statement, and the Company may
      exclude from such registration the Registrable Securities of any such Holder
      who
      fails to furnish such information within a reasonable time prior to the filing
      of each Registration Statement, supplemented Prospectus and/or amended
      Registration Statement.

     

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

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

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

     

    (n) If
      (i)
      there is material non-public information regarding the Company which the
      Company's Board of Directors (the “Board”)
      reasonably determines not to be in the Company's best interest to disclose
      and
      which the Company is not otherwise required to disclose, or (ii) there is a
      significant business opportunity (including, but not limited to, the acquisition
      or disposition of assets (other than in the ordinary course of business) or
      any
      merger, consolidation, tender offer or other similar transaction) available
      to
      the Company which the Board reasonably determines not to be in the Company's
      best interest to disclose and which the Company would be required to disclose
      under the Registration Statement, then the Company may postpone or suspend
      filing or effectiveness of a registration statement for a period not to exceed
      20 consecutive days, provided that the Company may not postpone or suspend
      its
      obligation under this Section 3(n) for more than 40 days in the aggregate during
      any 12 month period (each, a “Blackout
      Period”).

     

    4. Registration
      Expenses.

     

    All
      fees
      and expenses incident to the performance of or compliance with this Agreement
      by
      the Company shall be borne by the Company whether or not the Registration
      Statement is filed or becomes effective and whether or not any Registrable
      Securities are sold pursuant to the Registration Statement. The fees and
      expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses (A) with respect to filings required to be made with any
      securities exchange, quotation system, market or over-the-counter bulletin
      board
      on which Registrable Securities are required hereunder to be listed, (B) with
      respect to filings required to be made with the Commission, and (C) in
      compliance with state securities or Blue Sky laws (including, without
      limitation, reasonable and documented fees and disbursements of Special Counsel
      in connection with Blue Sky qualifications of the Registrable Securities and
      determination of the eligibility of the Registrable Securities for investment
      under the laws of such jurisdictions as the Holders of a majority of Registrable
      Securities may designate)), (ii) printing expenses (including, without
      limitation, expenses of printing certificates for Registrable Securities and
      of
      printing or photocopying prospectuses), (iii) messenger, telephone and delivery
      expenses, (iv) Securities Act liability insurance, if the Company so desires
      such insurance, (v) fees and expenses of all other Persons retained by the
      Company in connection with the consummation of the transactions contemplated
      by
      this Agreement, including, without limitation, the Company's independent public
      accountants (including, in the case of an underwritten offering, the expenses
      of
      any comfort letters or costs associated with the delivery by independent public
      accountants of a comfort letter or comfort letters) and legal counsel, and
      (vi)
      reasonable and documented fees and expenses of the Special Counsel (not to
      exceed $7,500) in connection with any Registration Statement hereunder. In
      addition, the Company shall be responsible for all of its internal expenses
      incurred in connection with the consummation of the transactions contemplated
      by
      this Agreement (including, without limitation, all salaries and expenses of
      its
      officers and employees performing legal or accounting duties), the expense
      of
      any annual audit, the fees and expenses incurred in connection with the listing
      of the Registrable Securities on any securities exchange as required
      hereunder.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    5. Indemnification.

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, agents, brokers (including
      brokers who offer and sell Registrable Securities as principal as a result
      of a
      pledge or any failure to perform under a margin call of Common Stock),
      investment advisors and employees of each of them, each Person who controls
      any
      such Holder (within the meaning of Section 15 of the Securities Act or Section
      20 of the Exchange Act) and the officers, directors, agents and employees of
      each such controlling Person, to the fullest extent permitted by applicable
      law,
      from and against any and all losses, claims, damages, liabilities, costs
      (including, without limitation, costs of preparation and reasonable attorneys'
      fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to any untrue or alleged untrue statement
      of a material fact contained or incorporated by reference in the Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or form of prospectus or amendment or supplement thereto, in the
      light of the circumstances under which they were made) not misleading, except
      to
      the extent, but only to the extent, that (i) such untrue statements or omissions
      are based solely upon information regarding such Holder furnished in writing
      to
      the Company by such Holder expressly for use therein, which information was
      reasonably relied on by the Company for use therein or to the extent that such
      information relates to (x) such Holder and was reviewed and expressly approved
      in writing by such Holder expressly for use in the Registration Statement,
      such
      Prospectus or such form of prospectus or in any amendment or supplement thereto
      or (y) such Holder's proposed method of distribution of Registrable Securities
      as set forth in Exhibit
      A
      (or as
      such Holder otherwise informs the Company in writing); or (ii) in the case
      of an
      occurrence of an event of the type described in Section 3(c)(C)(ii),
      3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use by a Holder of an outdated or
      defective Prospectus after the delivery to the Holder of written notice from
      the
      Company that the Prospectus is outdated or defective and prior to the receipt
      by
      such Holder of the Advice contemplated in Section 3(m); provided, however,
      that
      the indemnity agreement contained in this Section 5(a) shall not apply to
      amounts paid in settlement of any Losses if such settlement is effected without
      the prior written consent of the Company, which consent shall not be
      unreasonably withheld. The Company shall notify the Holders promptly of the
      institution, threat or assertion of any Proceeding of which the Company is
      aware
      in connection with the transactions contemplated by this Agreement. Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of an Indemnified Party (as defined in Section 5(c) to
      this
      Agreement) and shall survive the transfer of the Registrable Securities by
      the
      Holders.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents and employees
      of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, arising solely out of or based solely
      upon any untrue statement of a material fact contained in the Registration
      Statement, any Prospectus, or any form of prospectus, or in any amendment or
      supplement thereto, or arising solely out of or based solely upon any omission
      of a material fact required to be stated therein or necessary to make the
      statements therein (in the case of any Prospectus or form of prospectus or
      supplement thereto, in the light of the circumstances under which they were
      made) not misleading, to the extent, but only to the extent, that (i) such
      untrue statement or omission is contained in or omitted from any information
      so
      furnished in writing by such Holder to the Company specifically for inclusion
      in
      the Registration Statement or such Prospectus and that such information was
      reasonably relied upon by the Company for use in the Registration Statement,
      such Prospectus, or in any amendment or supplement thereto, or to the extent
      that such information relates to (x) such Holder and was reviewed and expressly
      approved in writing by such Holder expressly for use in the Registration
      Statement, such Prospectus, or such form of prospectus or in any amendment
      or
      supplement thereto or (y) such Holder's proposed method of distribution of
      Registrable Securities as set forth in Exhibit
      A
      (or as
      such Holder otherwise informs the Company in writing) or (ii) in the case of
      an
      occurrence of an event of the type described in Section 3(c)(C)(ii),
      3(c)(C)(iii), 3(c)(C)(iv) or 3(n), the use by a Holder of an outdated or
      defective Prospectus after the delivery to the Holder of written notice from
      the
      Company that the Prospectus is outdated or defective and prior to the receipt
      by
      such Holder of the Advice contemplated in Section 3(m); provided, however,
      that
      the indemnity agreement contained in this Section 5(b) shall not apply to
      amounts paid in settlement of any Losses if such settlement is effected without
      the prior written consent of the Holder, which consent shall not be unreasonably
      withheld. Notwithstanding anything to the contrary contained herein, the Holder
      shall be liable under this Section 5(b) for only that amount as does not exceed
      the net proceeds to such Holder as a result of the sale of Registrable
      Securities pursuant to such Registration Statement. 

     

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

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

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

     

    All
      reasonable fees and expenses of the Indemnified Party (including reasonable
      fees
      and expenses to the extent incurred in connection with investigating or
      preparing to defend such Proceeding in a manner not inconsistent with this
      Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
      Business Days of written notice thereof to the Indemnifying Party, which notice
      shall be delivered no more frequently than on a monthly basis (regardless of
      whether it is ultimately determined that an Indemnified Party is not entitled
      to
      indemnification hereunder; provided, that the Indemnifying Party may require
      such Indemnified Party to undertake to reimburse all such fees and expenses
      to
      the extent it is finally judicially determined that such Indemnified Party
      is
      not entitled to indemnification hereunder).

     

    (d) Contribution.
      If a
      claim for indemnification under Section 5(a) or 5(b) is unavailable to an
      Indemnified Party because of a failure or refusal of a governmental authority
      to
      enforce such indemnification in accordance with its terms (by reason of public
      policy or otherwise), then each Indemnifying Party, in lieu of indemnifying
      such
      Indemnified Party, shall contribute to the amount paid or payable by such
      Indemnified Party as a result of such Losses, in such proportion as is
      appropriate to reflect the relative fault of the Indemnifying Party and
      Indemnified Party in connection with the actions, statements or omissions that
      resulted in such Losses as well as any other relevant equitable considerations.
      The relative fault of such Indemnifying Party and Indemnified Party shall be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact or omission
      or alleged omission of a material fact, has been taken or made by, or relates
      to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the
      parties' relative intent, knowledge, access to information and opportunity
      to
      correct or prevent such action, statement or omission. The amount paid or
      payable by a party as a result of any Losses shall be deemed to include, subject
      to the limitations set forth in Section 5(c), any reasonable attorneys' or
      other
      reasonable fees or expenses incurred by such party in connection with any
      Proceeding to the extent such party would have been indemnified for such fees
      or
      expenses if the indemnification provided for in this Section was available
      to
      such party in accordance with its terms. Notwithstanding anything to the
      contrary contained herein, the Holder shall be required to contribute under
      this
      Section 5(d) for only that amount as does not exceed the net proceeds to such
      Holder as a result of the sale of Registrable Securities pursuant to such
      Registration Statement. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

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

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties. The indemnity and contribution agreements herein are in addition to
      and
      not in diminution or limitation of any indemnification provisions under the
      Purchase Agreement.

     

    6. Rule
      144.

     

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

     

    
      
         

      

      
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    7. Miscellaneous.

     

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

     

    (b) No
      Inconsistent Agreements.
      Except
      as otherwise disclosed in the Purchase Agreement, neither the Company nor any
      of
      its subsidiaries is a party to an agreement currently in effect, nor shall
      the
      Company or any of its subsidiaries, on or after the date of this Agreement,
      enter into any agreement with respect to its securities that is inconsistent
      with the rights granted to the Holders in this Agreement or otherwise conflicts
      with the provisions hereof. Without limiting the generality of the foregoing,
      without the written consent of the Holders of a majority of the then outstanding
      Registrable Securities, the Company shall not grant to any Person the right
      to
      request the Company to register any securities of the Company under the
      Securities Act unless the rights so granted are subject in all respects to
      the
      rights of the Holders set forth herein, and are not otherwise in conflict with
      the provisions of this Agreement. Except for a registration statement on Form
      S-8, in no case shall the Company file any registration statement with the
      Commission until the date which is the number of days after the date on which
      the Registration Statement is declared effective (the “Effective
      Date”)
      equal
      to the sum of (X) one hundred eighty (180) days, plus (Y) the number of days,
      if
      any, during which the sale of Registrable Securities was suspended after the
      Effective Date (including, without limitation, pursuant to Section
      3(n)).

     

    (c) Notice
      of Effectiveness.
      Within
      two (2) Business Days after the Registration Statement which includes the
      Registrable Securities is ordered effective by the Commission, the Company
      shall
      deliver, and shall cause legal counsel for the Company to deliver, to the
      transfer agent for such Registrable Securities (with copies to the Holders
      whose
      Registrable Securities are included in such Registration Statement) confirmation
      that the Registration Statement has been declared effective by the Commission
      in
      the form attached hereto as Exhibit
      B.

     

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

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (e) Failure
      to File Registration Statement; Failure to Get Effective and Other
      Events.
      The
      Company and the Holders agree that the Holders will suffer damages if the
      Registration Statement is not filed on or prior to the Filing Date, declared
      effective on or prior to the Effectiveness Date and maintained in the manner
      contemplated herein during the Effectiveness Period or if another Event (as
      defined below) shall occur. The Company and the Holders further agree that
      it
      would not be feasible to ascertain the extent of such damages with precision.
      Accordingly, if (i) the Registration Statement is not filed on or prior to
      the
      Filing Date, or (ii) the Company fails to file with the Commission a request
      for
      acceleration in accordance with Rule 461 promulgated under the Securities Act
      within three (3) Business Days following the date that the Company is notified
      (orally or in writing, whichever is earlier) by the Commission that a
      Registration Statement will not be “reviewed,” or not subject to further review,
      or, (iii) the Registration Statement is not declared effective by the Commission
      on or prior to the Effectiveness Date, or (iv) the Registration Statement is
      filed with and declared effective by the Commission but thereafter ceases to
      be
      effective as to all Registrable Securities at any time prior to the expiration
      of the Effectiveness Period, without being succeeded immediately by a subsequent
      Registration Statement filed with the Commission, except as otherwise permitted
      by this Agreement, including pursuant to Section 3(n), or (v) an amendment
      or
      additional Registration Statement required to be filed pursuant to Section
      3(b)
      is either (A) not filed within 30 days following the date that the Company
      would
      first be permitted pursuant to applicable law and the rules and regulations
      of
      the Commission to register the applicable Registrable Securities or (B) is
      not
      declared effective within 30 days following the date on which it is filed,
      or
      (vi) trading in the Common Stock shall be suspended or if the Common Stock
      is
      delisted from any securities exchange, quotation system, market or
      over-the-counter bulletin board on which Registrable Securities are required
      hereunder to be listed (each an “Exchange”),
      without immediately being listed on any other Exchange, for any reason for
      more
      than one (1) Business Day, other than pursuant to Section 3(n), or (vii) the
      rights of any Holder to exercise into Warrant Shares are suspended for any
      reason without the consent of the particular Holder (any such failure or breach
      being referred to as an “Event”),
      the
      Company shall pay as liquidated damages for such failure and not as a penalty
      to
      each Holder an amount equal to one percent (1%) of such Holder's Subscription
      Amount for each thirty (30) day period until the applicable Event has been
      cured, which shall be pro rated for such periods less than thirty (30) days
      (the
“Periodic
      Amount”).
      Payments to be made pursuant to this Section 7(e) shall be due and payable
      immediately upon demand in immediately available cash funds; provided that
      if
      the Common Stock is then listed on a Trading Market (as defined in the Purchase
      Agreement) payments with respect to an Event described in clause (iii) of the
      foregoing sentence shall be payable at the option of the Company in either
      cash
      or Common Stock valued at the closing price of the Common Stock (or if there
      is
      no closing price, then the closing bid price) on the date the applicable
      Periodic Amount became due (or if such date is not a Business Day then on the
      immediately preceding Business Day). The parties agree that the Periodic Amount
      represents a reasonable estimate on the part of the parties, as of the date
      of
      this Agreement, of the amount of damages that may be incurred by the Holders
      if
      the Registration Statement is not filed on or prior to the Filing Date, declared
      effective on or prior to the Effectiveness Date and maintained in the manner
      contemplated herein during the Effectiveness Period or if any other Event as
      described herein has occurred. Notwithstanding the foregoing, the Company shall
      remain obligated to cure the breach or correct the condition that caused the
      Event, and the Holder shall have the right to take any action necessary or
      desirable to enforce such obligation.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (f) Specific
      Enforcement, Consent to Jurisdiction.
      

     

    (i) The
      Company and the Holders acknowledge and agree that irreparable damage would
      occur in the event that any of the provisions of this Agreement were not
      performed in accordance with their specific terms or were otherwise breached.
      It
      is accordingly agreed that the parties shall be entitled to an injunction or
      injunctions to prevent or cure breaches of the provisions of this Agreement
      and
      to enforce specifically the terms and provisions hereof, this being in addition
      to any other remedy to which any of them may be entitled by law or
      equity.

     

    (ii) Each
      of
      the Company and the Holders (i) hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts located in New York City, New
      York
      for the purposes of any suit, action or proceeding arising out of or relating
      to
      this Agreement and (ii) hereby waives, and agrees not to assert in any such
      suit, action or proceeding, any claim that it is not personally subject to
      the
      jurisdiction of such court, that the suit, action or proceeding is brought
      in an
      inconvenient forum or that the venue of the suit, action or proceeding is
      improper. Each of the Company and the Holders consents to process being served
      in any such suit, action or proceeding by mailing a copy thereof to such party
      at the address in effect for notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing in this Section 7(g) shall affect or limit any right to serve
      process in any other manner permitted by law. 

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (g) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of at least a majority of the Registrable
      Securities. Notwithstanding the foregoing, a waiver or consent to depart from
      the provisions hereof with respect to a matter that relates exclusively to
      the
      rights of Holders and that does not directly or indirectly affect the rights
      of
      other Holders may be given by Holders of the Registrable Securities to which
      such waiver or consent relates; provided, however, that the provisions of this
      sentence may not be amended, modified, or supplemented except in accordance
      with
      the provisions of the immediately preceding sentence.

     

    (i) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earlier of (i) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile telephone number specified for
      notice prior to 5:00 p.m., New York City time, on a Business Day, (ii) the
      next
      Business Day after the date of transmission, if such notice or communication
      is
      delivered via facsimile at the facsimile number specified in this Section on
      a
      day that is not a Business Day or later than 5:00 p.m., New York City time,
      on
      any date and earlier than 11:59 p.m., New York City time, on such date, (iii)
      the Business Day following the date of mailing, if sent by nationally recognized
      overnight courier service such as Federal Express or (iv) actual receipt by
      the
      party to whom such notice is required to be given. The addresses for such
      communications shall be with respect to each Holder at its address set forth
      under its name on Schedule
      1
      attached
      hereto, or with respect to the Company, addressed to: 

     

    Adera
      Mines Limited

    20710
      Lassen Street

    Chatsworth,
      CA 91311

    Attention:
      Chief Financial Officer

    Facsimile
      No.: 818-341-3002

    

    or
      to
      such other address or addresses or facsimile number or numbers as any such
      party
      may most recently have designated in writing to the other parties hereto by
      such
      notice. Copies of notices to the Company shall be sent to: 

     

    Richardson
      Patel LLP

    10900
      Wilshire Blvd.

    Los
      Angeles, CA 90024

    Attention:
      Mark Abdou, Esq.

    Facsimile
      No.: 310-208-1154

    

    

    Copies
      of
      notices to any Holder shall be sent to the addresses, if any, listed on
Schedule
      1
      attached
      hereto. 

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (j) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns and shall inure to the benefit of each
      Holder and its successors and assigns; provided, that the Company may not assign
      this Agreement or any of its rights or obligations hereunder without the prior
      written consent of each Holder; and provided, further, that each Holder may
      assign its rights hereunder in the manner and to the Persons as permitted under
      the Purchase Agreement.

     

    (k) Assignment
      of Registration Rights.
      The
      rights of each Holder hereunder, including the right to have the Company
      register for resale Registrable Securities in accordance with the terms of
      this
      Agreement, shall be automatically assignable by each Holder to any transferee
      of
      such Holder of all or a portion of the Purchased Shares, the Warrants or the
      Registrable Securities if: (i) the Holder agrees in writing with the transferee
      or assignee to assign such rights, and a copy of such agreement is furnished
      to
      the Company within a reasonable time after such assignment, (ii) the Company
      is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned, (iii) following such transfer or assignment the further
      disposition of such securities by the transferee or assignees is restricted
      under the Securities Act and applicable state securities laws, (iv) at or before
      the time the Company receives the written notice contemplated by clause (ii)
      of
      this Section 7(k), the transferee or assignee agrees in writing with the Company
      to be bound by all of the provisions of this Agreement, and (v) such transfer
      shall have been made in accordance with the applicable requirements of the
      Purchase Agreement. The rights to assignment shall apply to the Holders (and
      to
      subsequent) successors and assigns.

     

    The
      Company may require, as a condition of allowing such assignment in connection
      with a transfer of Purchased Shares, Warrants or Registrable Securities (i)
      that
      the Holder or transferee of all or a portion of the Purchased Shares, the
      Warrants or the Registrable Securities as the case may be, furnish to the
      Company a written opinion of counsel that is reasonably acceptable to the
      Company to the effect that such transfer may be made without registration under
      the Securities Act, (ii) that the Holder or transferee execute and deliver
      to
      the Company an investment letter in form and substance acceptable to the Company
      and (iii) that the transferee be an “accredited investor” as defined in Rule
      501(a) promulgated under the Securities Act.

     

    (l) Counterparts;
      Facsimile.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by electronic means or facsimile transmission, such signature shall
      create a valid binding obligation of the party executing (or on whose behalf
      such signature is executed) the same with the same force and effect as if such
      facsimile signature were the original thereof.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (m) Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York, without regard to principles of conflicts of law
      thereof.

     

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

     

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

     

    (p) Headings;
      Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. Any references herein to “dollars” or use herein of the symbol “$” shall
      refer to the currency of the United States of America.

     

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

     

    (r) Obligations
      of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under this
      Agreement, are several and not joint with the obligations of any other
      Purchaser, and no Purchaser shall be responsible in any way for the performance
      of the obligations of any other Purchaser under this Agreement. The decision
      of
      each Purchaser to enter into to this Agreement has been made by such Purchaser
      independently of any other Purchaser. The Company further acknowledges that
      nothing contained in this Agreement, and no action taken by any Purchaser
      pursuant hereto, shall be deemed to constitute the Purchasers as a partnership,
      an association, a joint venture or any other kind of entity, or create a
      presumption that the Purchasers are in any way acting in concert or as a group
      with respect to such obligations or the transactions contemplated hereby. Each
      Purchaser shall be entitled to independently protect and enforce its rights,
      including without limitation, the rights arising out of this Agreement, and
      it
      shall not be necessary for any other Purchaser to be joined as an additional
      party in any proceeding for such purpose.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    Each
      Purchaser has been represented by its own separate legal counsel in their review
      and negotiation of this Agreement and with respect to the transactions
      contemplated hereby. For reasons of administrative convenience only, this
      Agreement has been prepared by Special Counsel (counsel for Vision Opportunity
      Master Fund, Ltd.) and the Special Counsel will perform certain duties under
      this Agreement. Such counsel does not represent all of the Purchasers but only
      Vision Opportunity Master Fund, Ltd. The Company has elected to provide all
      Purchasers with the same terms and Agreement for the convenience of the Company
      and not because it was required or requested to do so by the Purchasers. The
      Company acknowledges that such procedure with respect to this Agreement in
      no
      way creates a presumption that the Purchasers are in any way acting in concert
      or as a group with respect to this Agreement or the transactions contemplated
      hereby or thereby.

     

    [signature
      page follows]

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

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

     

    COMPANY:

    

    ADERA
      MINES LIMITED

    

    

    By:______________________________

    Name:
      J.
      Stewart Asbury III

    Title: President

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    PURCHASERS:

    

    Print
      Exact Name:_________________________________

    

    

    

    By:_____________________________________________

    Name:

    Title:

    

    
 

    

    

    [Omnibus
      Adera Mines Limited Investor Rights Agreement Signature Page]

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    

    SCHEDULE
      1

    

    PURCHASERS

    

    

     

      
        	
                Name
                  and Address

              	 	
                Copy
                  of Notice to:

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      A

    

    PLAN
      OF
      DISTRIBUTION

    

    

    We
      are
      registering the shares of common stock on behalf of the selling security
      holders. Sales of shares may be made by selling security holders, including
      their respective donees, transferees, pledgees or other successors-in-interest
      directly to purchasers or to or through underwriters, broker-dealers or through
      agents. Sales may be made from time to time on the OTC Bulletin Board, any
      other
      exchange or market upon which our shares may trade in the future, in the
      over-the-counter market or otherwise, at market prices prevailing at the time
      of
      sale, at prices related to market prices, or at negotiated or fixed prices.
      The
      shares may be sold by one or more of, or a combination of, the
      following:

     

    
      	
              -

            	
              a
                block trade in which the broker-dealer so engaged will attempt to
                sell the
                shares as agent but may position and resell a portion of the block
                as
                principal to facilitate the transaction (including crosses in which
                the
                same broker acts as agent for both sides of the
                transaction);

            

    

     

    
      	
              -

            	
              purchases
                by a broker-dealer as principal and resale by such broker-dealer,
                including resales for its account, pursuant to this
                prospectus;

            

    

     

    
      	
              -

            	
              ordinary
                brokerage transactions and transactions in which the broker solicits
                purchases;

            

    

     

    
      	
              -

            	
              through
                options, swaps or derivatives;

            

    

     

    
      	
              -

            	
              in
                privately negotiated transactions;

            

    

     

    
      	
              -

            	
              in
                making short sales or in transactions to cover short sales; and
                

            

    

     

    
      	
              -

            	
              put
                or call option transactions relating to the shares.
                

            

    

     

    The
      selling security holders may effect these transactions by selling shares
      directly to purchasers or to or through broker-dealers, which may act as agents
      or principals. These broker-dealers may receive compensation in the form of
      discounts, concessions or commissions from the selling security holders and/or
      the purchasers of shares for whom such broker-dealers may act as agents or
      to
      whom they sell as principals, or both (which compensation as to a particular
      broker-dealer might be in excess of customary commissions). The selling security
      holders have advised us that they have not entered into any agreements,
      understandings or arrangements with any underwriters or broker-dealers regarding
      the sale of their securities.

     

    The
      selling security holders may enter into hedging transactions with broker-dealers
      or other financial institutions. In connection with those transactions, the
      broker-dealers or other financial institutions may engage in short sales of
      the
      shares or of securities convertible into or exchangeable for the shares in
      the
      course of hedging positions they assume with the selling security holders.
      The
      selling security holders may also enter into options or other transactions
      with
      broker-dealers or other financial institutions which require the delivery of
      shares offered by this prospectus to those broker-dealers or other financial
      institutions. The broker-dealer or other financial institution may then resell
      the shares pursuant to this prospectus (as amended or supplemented, if required
      by applicable law, to reflect those transactions).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    The
      selling security holders and any broker-dealers that act in connection with
      the
      sale of shares may be deemed to be “underwriters” within the meaning of Section
      2(11) of the Securities Act of 1933, and any commissions received by
      broker-dealers or any profit on the resale of the shares sold by them while
      acting as principals may be deemed to be underwriting discounts or commissions
      under the Securities Act. The selling security holders may agree to indemnify
      any agent, dealer or broker-dealer that participates in transactions involving
      sales of the shares against liabilities, including liabilities arising under
      the
      Securities Act. We have agreed to indemnify each of the selling security holders
      and each selling security holder has agreed, severally and not jointly, to
      indemnify us against some liabilities in connection with the offering of the
      shares, including liabilities arising under the Securities Act. 

     

    The
      selling security holders will be subject to the prospectus delivery requirements
      of the Securities Act. We have informed the selling security holders that the
      anti-manipulative provisions of Regulation M promulgated under the Securities
      Exchange Act of 1934 may apply to their sales in the market. 

     

    Selling
      security holders also may resell all or a portion of the shares in open market
      transactions in reliance upon Rule 144 under the Securities Act, provided they
      meet the criteria and conform to the requirements of Rule 144. 

     

    Upon
      being notified by a selling security holder that a material arrangement has
      been
      entered into with a broker-dealer for the sale of shares through a block trade,
      special offering, exchange distribution or secondary distribution or a purchase
      by a broker or dealer, we will file a supplement to this prospectus, if required
      pursuant to Rule 424(b) under the Securities Act, disclosing:

     

    
      	
              -

            	
              the
                name of each such selling security holder and of the participating
                broker-dealer(s);

            

    

     

    
      	
              -

            	
              the
                number of shares involved;

            

    

     

    
      	
              -

            	
              the
                initial price at which the shares were
                sold;

            

    

     

    
      	
              -

            	
              the
                commissions paid or discounts or concessions allowed to the
                broker-dealer(s), where applicable;

            

    

     

    
      	
              -

            	
              that
                such broker-dealer(s) did not conduct any investigation to verify
                the
                information set out or incorporated by reference in this prospectus;
                and

            

    

     

    
      	
              -

            	
              other
                facts material to the transactions.

            

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    In
      addition, if required under applicable law or the rules or regulations of the
      Commission, we will file a supplement to this prospectus when a selling security
      holder notifies us that a donee or pledgee intends to sell more than 500 shares
      of common stock.

     

    We
      are
      paying all expenses and fees customarily paid by the issuer in connection with
      the registration of the shares. The selling security holders will bear all
      brokerage or underwriting discounts or commissions paid to broker-dealers in
      connection with the sale of the shares.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
      B

     

    FORM
      OF
      NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

     

    

    [Name
      and
      Address of Transfer Agent]

    

    Re:
      Adera
      Mines Limited

    

    Dear
      [______]:

    

    We
      are
      counsel to Adera Mines Limited, a Nevada corporation (the “Company”),
      and
      have represented the Company in connection with that certain Common Stock and
      Warrant Purchase Agreement (the “Purchase
      Agreement”)
      dated
      as of July __, 2006 by and among the Company and the buyers named therein
      (collectively, the “Holders”)
      pursuant to which the Company issued to the Holders shares of its Common Stock,
      par value $0.00001 (the
      “Common
      Stock”),
      and
      warrants to purchase shares of the Common Stock (the “Warrants”).
      Pursuant to the Purchase Agreement, the Company has also entered into an
      Investor Rights Agreement with the Holders (the “Investor
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the shares
      of Common Stock issued pursuant to the Purchase Agreement and the Common Stock
      issuable upon exercise of the Warrants, under the Securities Act of 1933, as
      amended (the “1933
      Act”).
      In
      connection with the Company's obligations under the Investor Rights Agreement,
      on ____________ ___, 2005, the Company filed a Registration Statement on Form
      S-__ (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the Registrable Securities which names each of the Holders as a
      selling securityholder thereunder.

     

    In
      connection with the foregoing, we advise you that a member of the SEC's staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the 1933 Act at [ENTER TIME OF
      EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
      telephonic inquiry of a member of the SEC's staff, that any stop order
      suspending its effectiveness has been issued or that any proceedings for that
      purpose are pending before, or threatened by, the SEC and the Registrable
      Securities are available for resale under the 1933 Act pursuant to the
      Registration Statement.

     

    Very
      truly yours,

    

    By:__________________________________
      

    cc:
      [LIST
      NAMES OF HOLDERS]

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