Document:

SECURITIES
      PURCHASE AGREEMENT 

     

    THIS
      SECURITIES PURCHASE AGREEMENT (this “Agreement”)
      is
      dated as of January 9, 2008, among China Clean Energy Inc., a Delaware
      corporation (the “Company”),
      and
      each purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”),
      and
      Rule 506 promulgated thereunder, the Company desires to issue and sell to each
      Purchaser, and each Purchaser, severally and not jointly, desires to purchase
      from the Company, securities of the Company as more fully described in this
      Agreement. 

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and each Purchaser agree as follows:

     

    ARTICLE
      I.

    DEFINITIONS
      

     

    Section
      1.01 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
      1.01: 

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.01(j). 

     

    “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 such
      terms are used in and construed under Rule 144 under the Securities Act. With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser. 

     

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

     

    “Class
      A Warrants”
shall
      have the meaning set forth in Section 2.02(a)(iii).

     

    “Closing”
means
      a
      closing of the purchase and sale of the Warrants and Shares pursuant to Section
      2.01. 

     

    “Closing
      Date”
means
      a
      Trading Day when all of the Transaction Documents have been executed and
      delivered by the Company and each of the Purchasers purchasing Securities at
      the
      relevant Closing, and all conditions precedent to (i) the Purchasers’
obligations to pay the Subscription Amount for the Securities being purchased
      and (ii) the Company’s obligations to deliver the Securities being purchased
      have been satisfied or waived.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Closing
      Price”
means
      on any particular date (a) the last reported closing bid price per share of
      Common Stock on such date on the Trading Market (as reported by Bloomberg L.P.
      at 4:15 PM (New York time)), or (b) if there is no such price on such date,
      then
      the closing bid price on the Trading Market on the date nearest preceding such
      date (as reported by Bloomberg L.P. at 4:15 PM (New York time)), or (c) if
      the
      Common Stock is not then listed or quoted on the Trading Market and if prices
      for the Common Stock are then reported in the “pink sheets” published by Pink
      Sheets LLC (or a similar organization or agency succeeding to its functions
      of
      reporting prices), the most recent bid price per share of the Common Stock
      so
      reported, or (d) if the shares of Common Stock are not then publicly traded
      the
      fair market value of a share of Common Stock as determined by an appraiser
      selected in good faith by the Purchasers of a majority in interest of the Shares
      then outstanding.

     

    “Commission”
means
      the U.S. Securities and Exchange Commission. 

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any other
      class
      of securities into which such securities may hereafter be reclassified or
      changed into. 

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries that 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 exercisable or exchangeable for, or otherwise
      entitles the holder thereof to receive, Common Stock. 

     

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

     

    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission. 

     

    “Escrow
      Agreement”
means
      the Escrow Agreement between the Company, Westminster and the Escrow Agent,
      pursuant to which each Purchaser shall deposit its Subscription Amount with
      the
      Escrow Agent pursuant to Section 2.01(a) below. 

     

    “Escrow
      Agent”
means
      Signature Bank, a New York State chartered bank.

     

    “Evaluation
      Date”
shall
      have the meaning ascribed to such term in Section 3.01(r). 

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder. 

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers,
      directors or consultants of the Company pursuant to any stock or option plan
      duly adopted by the Board of Directors of the Company (provided, however, any
      such issuances to consultants shall not exceed 750,000 shares of Common Stock
      and Common Stock Equivalents, in the aggregate, in any 12 month period), (b)
      securities (including shares of Common Stock) upon the exercise or exchange
      of
      or conversion of any Securities issued hereunder and/or other securities
      exercisable or exchangeable for or convertible into shares of Common Stock
      issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to increase
      the number of such securities or to decrease the exercise, exchange or
      conversion price of such securities, (c) shares issuable upon exercise of the
      Company’s Class A Warrants and (d) securities issued pursuant to acquisitions or
      strategic transactions approved by a majority of the disinterested directors
      of
      the Company. 

     

    
      
        
        

      

      
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    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.01(h). 

     

    “Indebtedness”
shall
      have the meaning ascribed to such term in Section 3.01(aa). 

     

    “Initial
      Closing”
shall
      have the meaning ascribed to such term in Section 2.01(a).

     

    “Initial
      Closing Date”
shall
      have the meaning ascribed to such term in Section 2.01(a).

     

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.01(o). 

     

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction. 

     

    “Lock-Up
      Agreements”
means
      those certain lock-up agreements among the Company, Westminster and each of
      the
      Company’s executive officers, directors and holders of 5% or more of the Common
      Stock, in the form of Exhibit
      A
      attached
      hereto. 

     

    “Make
      Good Escrow Agreement”
means
      that certain escrow agreement among the Company and certain stockholders of
      the
      Company pursuant to which such stockholders will deposit into escrow 1,500,000
      shares of Common Stock, in the form of Exhibit
      B
      hereto.

     

    “Make
      Good Shares”
means
      those 1,500,000 shares of Common Stock to be deposited into escrow pursuant
      to
      the Make Good Escrow Agreement.

     

    “Material
      Adverse Effect”
shall
      have the meaning ascribed to such term in Section 3.01(b). 

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.01(m). 

     

    “Participation
      Maximum”
shall
      have the meaning ascribed to such term in Section 4.12.

     

    “Per
      Share Purchase Price”
means
      $1.50. 

     

    “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.
      

     

    “Placement
      Agent”
means
      Westminster. 

     

    “Pre-Notice”
shall
      have the meaning ascribed to such term in Section 4.12.

     

    
      
        
        

      

      
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    “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. 

     

    “Purchaser
      Party”
shall
      have the meaning ascribed to such term in Section 4.08. 

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated the date hereof, among the Company
      and
      the Purchasers, in the form of Exhibit
      C
      attached
      hereto. 

     

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

     

    “Required
      Approvals”
shall
      have the meaning ascribed to such term in Section 3.01(e). 

     

    “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. 

     

    “SEC
      Reports”
shall
      have the meaning ascribed to such term in Section 3.01(h). 

     

    “Securities”
means
      the Shares, the Warrants and the Warrant Shares. 

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder. 

     

    “Shares”
means
      the shares of Common Stock issued or issuable to each Purchaser pursuant to
      this
      Agreement. 

     

    “Short
      Sales”
means
      all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
      Act (but shall not be deemed to include the location and/or reservation of
      borrowable shares of Common Stock). 

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the aggregate amount to be paid for Shares and Warrants
      purchased hereunder as specified below such Purchaser’s name on the signature
      page of this Agreement and next to the heading “Subscription Amount”, in United
      States dollars and in immediately available funds. Except with the consent
      of
      Westminster, in no event shall a Purchaser’s Subscription Amount be less than
      $30,000. 

     

    “Subsequent
      Closing Date”
shall
      have the meaning ascribed to such term in Section 2.01(a).

     

    “Subsequent
      Financing”
shall
      have the meaning ascribed to such term in Section 4.12.

     

    “Subsequent
      Financing Notice”
shall
      have the meaning ascribed to such term in Section 4.12.

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.01(a).
      

     

    
      
        
        

      

      
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    “Termination
      Date”
shall
      have the meaning ascribed to such term in Section 2.01(a).

     

    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market. 

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the Nasdaq
      Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
      the
      New York Stock Exchange or the OTC Bulletin Board. 

     

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

     

    “Transfer
      Agent”
means
      Continental Stock Transfer & Trust Company, with a mailing address of 17
      Battery Place, New York, New York 10004 and a facsimile number of (212)
      509-5150, and any successor transfer agent of the Company. 

     

    “Warrants”
means
      collectively the Common Stock purchase warrants delivered to the Purchasers
      at
      each Closing in accordance with Section 2.02(a) hereof, which Warrants shall
      be
      exercisable immediately and have a term of exercise equal to five years, in
      the
      form of Exhibit
      D
      attached
      hereto. 

     

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

     

    “Westminster”
means
      Westminster Securities Corporation.

     

    ARTICLE
      II.

    PURCHASE
      AND SALE 

     

    Section
      2.01 Closing.
      

     

    (a) On
      the
      initial Closing Date (the “Initial
      Closing Date”),
      upon
      the terms and subject to the conditions set forth herein, substantially
      concurrent with the execution and delivery of this Agreement by the parties
      hereto, the Company agrees to sell, and each Purchaser purchasing Shares and
      Warrants at the initial Closing (the “Initial
      Closing”),
      severally and not jointly, agrees to purchase up to $15,000,000 of Shares and
      Warrants, but in no event less than $8,010,000 of Shares and Warrants in the
      aggregate. Upon satisfaction of the conditions set forth in Sections 2.02 and
      2.03, the Initial Closing shall occur at the offices of Haynes and Boone, LLP,
      153 East 53rd Street, Suite 4900, New York, New York 10022 or such other
      location as the parties shall mutually agree. Thereafter, on any subsequent
      Closing Date (each a “Subsequent
      Closing Date”),
      upon
      the terms and subject to the conditions set forth herein, substantially
      concurrent with the execution and delivery of this Agreement by the Purchasers
      purchasing Shares and Warrants on such Subsequent Closing Date, the Company
      agrees to sell, and each Purchaser purchasing Securities at such subsequent
      Closing, severally and not jointly, agrees to purchase up to $15,000,000 of
      Shares and Warrants, less the amount of Shares and Warrants issued and sold
      at
      all previous closings. Each Purchaser purchasing Shares and Warrants on a
      Closing Date shall deliver to the Escrow Agent, via wire transfer (in accordance
      with the wiring instructions set forth on Exhibit
      E
      attached
      hereto) or a certified check, immediately available funds equal to its
      Subscription Amount and the Company shall deliver to each Purchaser its
      respective Shares and Warrants as determined pursuant to Section 2.02(a), and
      the Company and each Purchaser shall deliver the other items set forth in
      Section 2.02 deliverable at each Closing. Notwithstanding anything herein to
      the
      contrary, each Closing Date shall occur on or before January 15, 2008, or on
      such date as the Placement Agent and the Company may agree upon, but in no
      event
      following January 31, 2008 (such outside date, “Termination
      Date”).

     

    
      
        
        

      

      
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    (b) If
      a
      Closing is not held on or before the Termination Date, the Company shall cause
      all subscription documents and funds to be returned, without interest or
      deduction to each prospective Purchaser. The Company shall also cause any
      subscription documents or funds received following the final Closing to be
      returned, without interest or deduction, to each applicable prospective
      Purchaser. Notwithstanding the foregoing, the Company in its sole discretion
      may
      elect not to sell to any Person any or all of the Shares and Warrants requested
      to be purchased hereunder, provided that the Company causes all corresponding
      subscription documents and funds received from such Person to be promptly
      returned.

     

    Section
      2.02 Deliveries.
      

     

    (a) On
      or
      prior to each Closing Date, the Company shall deliver or cause to be delivered
      to each Purchaser purchasing Shares and Warrants on such Closing Date each
      of
      the following: 

     

    (i) this
      Agreement duly executed by the Company; 

     

    (ii) a
      copy of
      the irrevocable instructions to the Transfer Agent instructing the Transfer
      Agent to deliver, on an expedited basis, a certificate evidencing that number
      of
      Shares equal to such Purchaser’s Subscription Amount divided by the Per Share
      Purchase Price, registered in the name of such Purchaser; provided that in
      the
      event the funds delivered by a Purchaser are not evenly divisible by the Per
      Share Purchase Price, the Company may round down to the nearest whole number
      the
      number of Shares to be sold to such Purchaser and the Company shall be entitled
      to retain any additional funds remaining due to such rounding; 

     

    (iii) a
      Warrant, designated as the Company’s Class A Common Stock Purchase Warrant (a
“Class
      A Warrant(s)”),
      registered in the name of such Purchaser to purchase up to that number of shares
      of Common Stock equal to 50% of the Shares purchased by such Purchaser
      hereunder, with an exercise price equal to $2.00 per share; 

     

    (iv) the
      Registration Rights Agreement duly executed by the Company; and

     

    (v) the
      Lock-Up Agreements, duly executed by each of the Company’s executive officers,
      directors and holders of 5% or more of the Common Stock.

     

    (b) On
      or
      prior to each Closing Date, each Purchaser purchasing Shares and Warrants on
      such Closing Date shall deliver or cause to be delivered to the Company the
      following: 

     

    (i) this
      Agreement duly executed by such Purchaser; 

     

    
      
        
        

      

      
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    (ii) such
      Purchaser’s Subscription Amount by wire transfer or certified check to the
      account as specified in writing by the Escrow Agent; and

     

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

     

    Section
      2.03 Closing
      Conditions.
      

     

    (a) The
      obligations of the Company hereunder in connection with each Closing are subject
      to the following conditions being met: 

     

    (i) the
      accuracy in all material respects when made and on such Closing Date of the
      representations and warranties of the Purchasers contained herein; 

     

    (ii) all
      obligations, covenants and agreements of the Purchasers required to be performed
      at or prior to such Closing Date shall have been performed; and 

     

    (iii) the
      delivery by the Purchasers of the items set forth in Section 2.02(b) of this
      Agreement. 

     

    (b) The
      respective obligations of the Purchasers hereunder in connection with each
      Closing are subject to the following conditions being met: 

     

    (i) the
      accuracy in all material respects on such Closing Date of the representations
      and warranties of the Company contained herein; 

     

    
      
        
        

      

      
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    (ii) all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to such Closing Date shall have been performed; 

     

    (iii) at
      least
      $8,010,000 shall have been received by the Escrow Agent from Purchasers in
      connection with the purchase of Shares and Warrants pursuant to this Agreement
      prior to the Initial Closing;

     

    (iv) the
      delivery by the Company of the items set forth in Section 2.02(a) of this
      Agreement; 

     

    (v) the
      delivery by the Company to the Placement Agent of the Make Good Escrow
      Agreement, duly executed by the Company, the escrow agent signatory thereto
      and
      each of the stockholders signatory;

     

    (vi) the
      delivery by the stockholders party to the Make Good Escrow Agreement to the
      escrow agent identified in such agreement of the Make Good Shares, duly endorsed
      in blank with Medallion Guarantee, or its equivalent, affixed to each applicable
      certificate representing the Make Good Shares;

     

    (vii) there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof; and 

     

    (viii) from
      the
      date hereof to such Closing Date, trading in the Common Stock shall not have
      been suspended by the Commission or the Company’s principal Trading Market
      (except for any suspension of trading of limited duration agreed to by the
      Company, which suspension shall be terminated prior to such Closing), and,
      at
      any time prior to such Closing Date, trading in securities generally as reported
      by Bloomberg L.P. shall not have been suspended or limited, or minimum prices
      shall not have been established on securities whose trades are reported by
      such
      service, or on any Trading Market, nor shall a banking moratorium have been
      declared either by the United States or New York State authorities nor shall
      there have occurred any material outbreak or escalation of hostilities or other
      national or international calamity of such magnitude in its effect on, or any
      material adverse change in, any financial market that, in each case, in the
      reasonable judgment of each Purchaser, makes it impracticable or inadvisable
      to
      purchase the Shares at such Closing. 

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES 

     

    Section
      3.01 Representations
      and Warranties of the Company.
      Except
      as set forth under the corresponding section of the Disclosure Schedules which
      Disclosure Schedules shall be deemed a part hereof and to qualify any
      representation or warranty otherwise made herein to the extent of such
      disclosure, the Company hereby makes the following representations and
      warranties to each Purchaser: 

     

    
      
        
        

      

      
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    (a) Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth on
Schedule
      3.01(a).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all of the issued
      and outstanding shares of capital stock of each Subsidiary are validly issued
      and are fully paid, non-assessable and free of preemptive and similar rights
      to
      subscribe for or purchase securities. 

     

    (b) Organization
      and Qualification.
      The
      Company and each of 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 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 or default 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 such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) 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”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification. 

     

    (c) Authorization;
      Enforcement.
      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 hereunder and thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated hereby and thereby
      have
      been duly authorized by all necessary action on the part of the Company and
      no
      further action is required by the Company, its board of directors or its
      stockholders in connection therewith other than in connection with the Required
      Approvals. 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 and thereof, will constitute the valid and binding obligation of the
      Company enforceable against the Company in accordance with its terms except
      (i)
      as limited by general equitable principles and applicable bankruptcy,
      insolvency, reorganization, moratorium and other laws of general application
      affecting enforcement of creditors’ rights generally, (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies and (iii) insofar as indemnification and contribution
      provisions may be limited by applicable law. 

     

    
      
        
        

      

      
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    (d) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      the issuance and sale of the Shares and the consummation by the Company of
      the
      other transactions contemplated hereby and 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, (ii) conflict with, or constitute a default (or an event
      that
      with notice or lapse of time or both would become a default) under, result
      in
      the creation of any Lien upon any of the properties or assets of the Company
      or
      any Subsidiary, 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) subject to the Required Approvals,
      conflict with or 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 case of each of
      clauses (ii) and (iii), such as could not have or reasonably be expected to
      result in a Material Adverse Effect. 

     

    (e) Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any 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 in connection with the execution, delivery
      and performance by the Company of the Transaction Documents, other than (i)
      filings required pursuant to Section 4.04 of this Agreement, (ii) the filing
      with the Commission of the Registration Statement, (iii) application(s) to
      each
      applicable Trading Market for the listing of the Securities for trading thereon
      in the time and manner required thereby and (iv) the filing of a Form D with
      the
      Commission and such filings as are required to be made under applicable state
      securities laws (collectively, the “Required
      Approvals”).
      

     

    (f) Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be duly and validly issued, fully
      paid and nonassessable, free and clear of all Liens imposed by the Company
      other
      than restrictions on transfer provided for in the Transaction Documents. 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.
      The
      capitalization of the Company is as set forth on Schedule
      3.01(g).
      Except
      as set forth on Schedule
      3.01(g),
      (i) the
      Company has not issued any capital stock since its most recently filed periodic
      report under the Exchange Act, (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, (iii) except as
      a
      result of the purchase and sale of the Securities, there are no outstanding
      options, warrants, script rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities, rights or obligations
      convertible into or exercisable 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
      Common Stock Equivalents and (iv) the issuance 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 of such securities. All of the outstanding shares of
      capital stock of the Company are validly issued, fully paid and nonassessable,
      have been issued in compliance with all federal and state securities laws,
      and
      none of such outstanding shares was issued in violation of any preemptive rights
      or similar rights to subscribe for or purchase securities. No further approval
      or authorization of any stockholder, the Board of Directors of the Company
      or
      others is required for the issuance and sale of the Securities. There are no
      stockholders agreements, voting agreements or other similar agreements with
      respect to the Company’s capital stock to which the Company is a party or, to
      the knowledge of the Company, between or among any of the Company’s
      stockholders. 

     

    
      
        
        

      

      
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    (h) SEC
      Reports; Financial Statements.
      Since
      October 24, 2006, the Company has filed all reports, schedules, forms,
      statements and other documents required to be filed by the Company under the
      Securities Act and the Exchange Act, including pursuant to Section 13(a) or
      15(d) thereof (the foregoing materials, including the exhibits thereto and
      documents incorporated by reference therein, being collectively referred to
      herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act, as applicable,
      and
      none of the SEC Reports, when filed, 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 the light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the Commission with respect thereto as in effect at the time of filing.
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated subsidiaries 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,
      immaterial, year-end audit adjustments. 

     

    (i) Material
      Changes; Undisclosed Events, Liabilities or Developments.
      Since
      the date of the latest audited financial statements included within the SEC
      Reports, except as specifically disclosed in a subsequent SEC Report filed
      prior
      to the date hereof, (i) there has been no event, occurrence or development
      that
      has had or that could reasonably be expected to result in a Material Adverse
      Effect, (ii) the Company has not incurred any liabilities (contingent or
      otherwise) other than (A) trade payables and accrued expenses incurred in the
      ordinary course of business consistent with past practice and (B) liabilities
      not required to be reflected in the Company’s financial statements pursuant to
      GAAP or disclosed in filings made with the Commission, (iii) the Company has
      not
      altered its method of accounting, (iv) the Company has not declared or made
      any
      dividend or distribution of cash or other property to its stockholders or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock and (v) the Company has not issued any equity securities
      to
      any officer, director or Affiliate, except pursuant to existing Company stock
      incentive plans. The Company does not have pending before the Commission any
      request for confidential treatment of information. Except for the issuance
      of
      the Securities contemplated by this Agreement or as set forth on Schedule
      3.01(i),
      no
      event, liability or development has occurred or exists with respect to the
      Company or its Subsidiaries or their respective business, properties, operations
      or financial condition, that would be required to be disclosed by the Company
      under applicable securities laws at the time this representation is made that
      has not been publicly disclosed at least 1 Trading Day prior to the date that
      this representation is made. 

     

    
      
        
        

      

      
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    (j) Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      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”)
      that
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) could, if there
      were
      an unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect. Neither the Company nor any Subsidiary, nor 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. There has not been, and to the knowledge of the
      Company, 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. 

     

    (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 that could reasonably be
      expected to result in a Material Adverse Effect. None of the Company’s or its
      Subsidiaries’ employees is a member of a union that relates to such employee’s
      relationship with the Company, and neither the Company nor any of its
      Subsidiaries is a party to a collective bargaining agreement, and the Company
      and its Subsidiaries believe that their relationships with their employees
      are
      good. No executive officer, to the knowledge of the Company, is, or is now
      expected to be, in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement or
      non-competition agreement, or any other contract or agreement or any restrictive
      covenant, and the continued employment of each such executive officer does
      not
      subject the Company or any of its Subsidiaries to any liability with respect
      to
      any of the foregoing matters. The Company and its Subsidiaries are in compliance
      with all U.S. federal, state, local and foreign laws and regulations relating
      to
      employment and employment practices, terms and conditions of employment and
      wages and hours, except where the failure to be in compliance could not,
      individually or in the aggregate, reasonably be expected to have 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 such 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
      and all such laws that affect the environment, except in each case as could
      not
      have or reasonably be expected to result in a Material Adverse Effect.

     

    
      
        
        

      

      
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    (m) Regulatory
      Permits.
      The
      Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as described in
      the
      SEC Reports, except where the failure to possess such permits could not have
      or
      reasonably be expected to result in a Material Adverse Effect (“Material
      Permits”),
      and
      neither the Company nor any Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any Material Permit. 

     

    (n) Title
      to Assets.
      Except
      as set forth in Schedule
      3.01(n),
      the
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens as do not materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company and the
      Subsidiaries and Liens for the payment of federal, state or other taxes, the
      payment of which is neither delinquent nor subject to penalties. Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases with which the
      Company and the Subsidiaries are in compliance. 

     

    (o) Patents
      and Trademarks.
      The
      Company and the Subsidiaries have, or have rights to use, all patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      trade secrets, inventions, copyrights, licenses and other intellectual property
      rights and similar rights necessary or material for use in connection with
      their
      respective businesses as described in the SEC Reports and that the failure
      to so
      have could result in a Material Adverse Effect (collectively, the “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a notice (written or
      otherwise) that the Intellectual Property Rights used by the Company or any
      Subsidiary violates or infringes upon the rights of any Person. To the knowledge
      of the Company, all such Intellectual Property Rights are enforceable and there
      is no existing infringement by another Person of any of the Intellectual
      Property Rights. The Company and its Subsidiaries have taken reasonable security
      measures to protect the secrecy, confidentiality and value of all of their
      intellectual properties, except where failure to do so could not, individually
      or in the aggregate, reasonably be expected to have a Material Adverse Effect.
      

     

    (p) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are
      customary in the businesses in which the Company and the Subsidiaries are
      engaged. Neither the Company nor any Subsidiary has any reason to believe that
      it will not be able to renew its existing insurance coverage as and when such
      coverage expires or to obtain similar coverage from similar insurers as may
      be
      necessary to continue its business without a significant increase in cost.
      

     

    (q) Transactions
      With Affiliates and Employees.
      Except
      as set forth in the SEC Reports, 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 such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $120,000
      other than (i) for payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      for
      other employee benefits, including stock option agreements under any stock
      option plan of the Company. 

     

    
      
        
        

      

      
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    (r) Sarbanes-Oxley;
      Internal Accounting Controls.
      The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act
      of 2002 that are applicable to it. The Company and the Subsidiaries maintain
      a
      system of internal accounting controls sufficient 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-15(e) and 15d-15(e)) for the Company and
      designed such disclosure controls and procedures to ensure that information
      required to be disclosed by the Company in the reports it files or submits
      under
      the Exchange Act is recorded, processed, summarized and reported, within the
      time periods specified in the Commission’s rules and forms. The Company’s
      certifying officers have evaluated the effectiveness of the Company’s disclosure
      controls and procedures as of the end of the period covered by the Company’s
      most recently filed periodic report under the Exchange Act (such date, the
      “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the Exchange
      Act the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no changes in the
      Company’s internal control over financial reporting (as such term is defined in
      the Exchange Act) that has materially affected, or is reasonably likely to
      materially affect, the Company’s internal control over financial reporting.

     

    (s) Certain
      Fees.
      All
      brokerage or finder’s fees or commissions 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 the
      Transaction Documents are as set forth on Schedule
      3.01(s).
      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 the Transaction Documents. 

     

    (t) Private
      Placement.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.02, 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. 

     

    
      
        
        

      

      
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    (u) Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately after receipt of
      payment for the Securities, will not be or be an Affiliate of, an “investment
      company” within the meaning of the Investment Company Act of 1940, as amended.
      The Company shall conduct its business in a manner so that it will not become
      subject to the Investment Company Act of 1940, as amended. 

     

    (v) Registration
      Rights.
      Except
      as set forth on Schedule
      3.01(v),
      other
      than each of the Purchasers, 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 such 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 such listing and maintenance requirements. 

     

    (x) Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s certificate of
      incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Purchasers as a result
      of the Purchasers and the Company fulfilling their obligations or exercising
      their rights under the Transaction Documents, including, without limitation,
      as
      a result of the Company’s issuance of the Securities and the Purchasers’
ownership of the Securities. 

     

    (y) Disclosure.
      Except
      to a Purchaser who has entered into a non-disclosure agreement with the Company
      and except with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company confirms that neither
      it
      nor any other Person acting on its behalf has provided any of the Purchasers
      or
      their agents or counsel with any information that it believes constitutes or
      might constitute material, non-public information. The Company understands
      and
      confirms that the Purchasers will rely on the foregoing representation in
      effecting transactions in securities of the Company. All disclosure furnished
      by
      or on behalf of the Company to the Purchasers regarding the Company, its
      business and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, is true and correct and does 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. The press releases disseminated by the
      Company during the twelve months preceding the date of this Agreement taken
      as a
      whole do not contain any untrue statement of a material fact or omit to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements, in light of the circumstances under which they were made and when
      made, not misleading.

     

    
      
        
        

      

      
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    (z) No
      Integrated Offering.
      Assuming the accuracy of the Purchasers’ representations and warranties set
      forth in Section 3.02, 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 in a manner that would require the registration under the Securities Act
      of
      the sale of the Securities to the Purchasers or any applicable shareholder
      approval provisions of any Trading Market on which any of the securities of
      the
      Company are listed or designated. 

     

    (aa) Solvency.
      Based
      on the financial condition of the Company, after giving effect to the receipt
      by
      the Company of the proceeds from the sale of the Securities hereunder, (i)
      the
      fair saleable value of the Company’s assets exceeds the amount that will be
      required to be paid on or in respect of the Company’s existing debts and other
      liabilities (including known contingent liabilities) as they mature; (ii) the
      Company’s assets do not constitute unreasonably small capital to carry on its
      business as now conducted and as proposed to be conducted including its capital
      needs taking into account the particular capital requirements of the business
      conducted by the Company, and projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company, together
      with the proceeds the Company would receive, were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would be
      sufficient to pay all amounts on or in respect of its liabilities when such
      amounts are required to be paid. The Company does not intend to incur debts
      beyond its ability to pay such debts as they mature (taking into account the
      timing and amounts of cash to be payable on or in respect of its debt). The
      Company has no knowledge of any facts or circumstances that lead it to believe
      that it will file for reorganization or liquidation under the bankruptcy or
      reorganization laws of any jurisdiction within one year from the Initial Closing
      Date. Schedule
      3.01(aa)
      sets
      forth all outstanding secured and unsecured Indebtedness of the Company or
      any
      Subsidiary, or for which the Company or any Subsidiary has commitments. For
      the
      purposes of this Agreement, “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      Indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments in excess of $50,000 due under leases required to be
      capitalized in accordance with GAAP. Neither the Company nor any Subsidiary
      is
      in default with respect to any Indebtedness. 

     

    (bb) Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary have filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency that has been asserted
      or
      threatened against the Company or any Subsidiary. 

     

    (cc) No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising. The Company has offered the Securities for sale only to the
      Purchasers and certain other “accredited investors” within the meaning of Rule
      501 under the Securities Act. 

     

    
      
        
        

      

      
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    (dd) Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any funds
      for unlawful contributions, gifts, entertainment or other unlawful expenses
      related to foreign or domestic political activity, (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic political parties or campaigns from corporate funds, (iii)
      failed to disclose fully any contribution made by the Company (or made by any
      person acting on its behalf of which the Company is aware) that is in violation
      of law or (iv) violated in any material respect any provision of the Foreign
      Corrupt Practices Act of 1977, as amended. 

     

    (ee) Accountants.
      The
      Company’s accountants are set forth on Schedule
      3.01(ee)
      of the
      Disclosure Schedule. To the knowledge of the Company, such accountants, who
      the
      Company expects will express their opinion with respect to the financial
      statements to be included in the Company’s Annual Report on Form 10-KSB for the
      year ending December 31, 2007, are a registered public accounting firm as
      required by the Exchange Act. 

     

    (ff) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company and the Company is current with
      respect to any fees owed to its accountants and lawyers. 

     

    (gg) Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      To the
      Company’s knowledge, each of the Purchasers is acting solely in the capacity of
      an arm’s length purchaser with respect to the Transaction Documents and the
      transactions contemplated thereby. The Company acknowledges that no Purchaser
      is
      acting as a financial advisor or fiduciary of the Company (or in any similar
      capacity) with respect to the Transaction Documents and the transactions
      contemplated thereby and any advice given by any Purchaser or any of their
      respective representatives or agents in connection with the Transaction
      Documents and the transactions contemplated thereby is merely incidental to
      the
      Purchasers’ purchase of the Securities. The Company further represents to each
      Purchaser that the Company’s decision to enter into this Agreement and the other
      Transaction Documents has been based solely on the independent evaluation of
      the
      transactions contemplated hereby by the Company and its representatives.

     

    (hh) Acknowledgement
      Regarding Purchaser’s Trading Activity.
      Anything in this Agreement or elsewhere herein to the contrary notwithstanding
      (except for Sections 3.02(f) and 4.14), it is understood and acknowledged by
      the
      Company (i) that none of the Purchasers have been asked to agree, nor has any
      Purchaser agreed, to desist from purchasing or selling, long and/or short,
      securities of the Company, or “derivative” securities based on securities issued
      by the Company or to hold the Securities for any specified term; (ii) that
      past
      or future open market or other transactions by any Purchaser, including Short
      Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
      placement transactions, may negatively impact the market price of the Company’s
      publicly-traded securities; (iii) that any Purchaser, and counter-parties in
      “derivative” transactions to which any such Purchaser is a party, directly or
      indirectly, presently may have a “short” position in the Common Stock, and (iv)
      that each Purchaser shall not be deemed to have any affiliation with or control
      over any arm’s length counter-party in any “derivative” transaction. The Company
      further understands and acknowledges that (a) one or more Purchasers may engage
      in hedging activities at various times during the period that the Securities
      are
      outstanding, including, without limitation, during the periods that the value
      of
      the Warrant Shares deliverable with respect to Securities are being determined
      and (b) such hedging activities (if any) could reduce the value of the existing
      stockholders' equity interests in the Company at and after the time that the
      hedging activities are being conducted. The Company acknowledges that such
      aforementioned hedging activities do not constitute a breach of any of the
      Transaction Documents.

     

    
      
        
        

      

      
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    (ii) Regulation
      M Compliance.
      The
      Company has not, and to its knowledge no one acting on its behalf has, (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or, paid any compensation for soliciting purchases of, any of the
      Securities or (iii) paid or agreed to pay to any Person any compensation for
      soliciting another to purchase any other securities of the Company, other than,
      in the case of clauses (ii) and (iii), compensation paid to the Placement Agent
      in connection with the placement of the Securities. 

     

    Section
      3.02 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 on which such Purchaser is
      purchasing Shares and Warrants hereunder to the Company as follows:

     

    (a) Organization;
      Authority.
      If such
      Purchaser is an entity, such Purchaser is an entity duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization with full right, corporate or partnership power and authority
      to
      enter into and to consummate the transactions contemplated by the Transaction
      Documents and otherwise to carry out its obligations hereunder and thereunder.
      The execution, delivery and performance by such Purchaser of the transactions
      contemplated by this Agreement have been duly authorized by any necessary
      corporate or similar action on the part of such Purchaser. Each Transaction
      Document to which it is a party has been duly executed by such Purchaser, and
      when delivered by such Purchaser in accordance with the terms hereof, will
      constitute the valid and legally binding obligation of such Purchaser,
      enforceable against it in accordance with its terms, except (i) as limited
      by
      general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law. 

     

    (b) Own
      Account.
      Such
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof in violation of the Securities Act or any applicable state securities
      law, has no present intention of distributing any of such Securities in
      violation of the Securities Act or any applicable state securities law and
      has
      no direct or indirect arrangement or understandings with any other persons
      to
      distribute or regarding the distribution of such Securities (this representation
      and warranty not limiting such Purchaser’s right to sell the Securities pursuant
      to the Registration Statement or otherwise in compliance with applicable federal
      and state securities laws) in violation of the Securities Act or any applicable
      state securities law. If such Purchaser is not an individual, such Purchaser
      is
      acquiring the Securities hereunder in the ordinary course of its business.
      If
      such Purchaser is an individual, such Purchaser must fill out an individual
      investor questionnaire provided by Westminster and deliver such questionnaire
      if
      requested by Westminster. 

     

    
      
        
        

      

      
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    (c) Purchaser
      Status.
      At the
      time such Purchaser was offered the Securities, it was, and at the date hereof
      it is, and on each date on which it exercises any Warrants, it will be an
“accredited investor” as defined in Rule 501(a) under the Securities Act. All
      information provided by such Purchaser in the Accredited Investor Questionnaire,
      attached hereto as Exhibit
      F
      and made
      a part hereof, is true and accurate in all respects, and such Purchaser
      acknowledges that the Company will be relying on such information to its
      possible detriment in deciding whether the Company can sell the Securities
      to
      such Purchaser without giving rise to the loss of the exemption from
      registration under applicable securities laws. Such Purchaser is not required
      to
      be registered as a broker-dealer under Section 15 of the Exchange Act.

     

    (d) Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment. 

     

    (e) General
      Solicitation.
      Such
      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. 

     

    (f) Short
      Sales and Confidentiality Prior To The Date Hereof.
      Other
      than the transaction contemplated hereunder, such Purchaser has not, nor has
      any
      Person acting on behalf of or pursuant to any understanding with such Purchaser,
      directly or indirectly executed any transaction, including Short Sales, in
      the
      securities of the Company during the period commencing from the time that such
      Purchaser first received a term sheet (written or oral) from the Company or
      any
      other Person setting forth the material terms of the transactions contemplated
      hereunder until the date hereof (“Discussion
      Time”).
      Notwithstanding the foregoing, in the case of a Purchaser that is a
      multi-managed investment vehicle whereby separate portfolio managers manage
      separate portions of such Purchaser’s assets and the portfolio managers have no
      direct knowledge of the investment decisions made by the portfolio managers
      managing other portions of such Purchaser’s assets, the representation set forth
      above shall only apply with respect to the portion of assets managed by the
      portfolio manager that made the investment decision to purchase the Securities
      covered by this Agreement. Other than to other Persons party to this Agreement,
      such Purchaser has maintained the confidentiality of all disclosures made to
      it
      in connection with this transaction (including the existence and terms of this
      transaction).

     

    
      
        
        

      

      
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    (g) Information
      on Company.
      Such
      Purchaser has been furnished with or has had access at the EDGAR Website of
      the
      Commission to the Company’s periodic reports filed with the Commission. In
      addition, such Purchaser has received in writing from the Company such other
      information concerning its operations, financial condition and other matters
      as
      the Purchaser has requested, and considered all factors such Purchaser deems
      material in deciding on the advisability of investing in the Securities.

     

    (h) Fees.
      Such
      Purchaser is not required to pay fees to any broker or finder with respect
      to
      the transactions contemplated by the Transaction Documents.

     

    (i) Lock-Up
      Acknowledgement.
      Such
      Purchaser acknowledges that the Lock-Up Agreements are being entered into for
      the benefit of the Company and such Purchaser has no rights thereunder as a
      third-party beneficiary or otherwise. Such Purchaser further acknowledges that
      the provisions of any Lock-Up Agreement may be waived by the Placement Agent,
      in
      its sole discretion.

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES 

     

    Section
      4.01 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 or Rule 144, to the Company
      or
      to an Affiliate of a Purchaser or in connection with a pledge as contemplated
      in
      Section 4.01(b), the Company may require the transferor thereof to provide
      to
      the Company an opinion of counsel selected by the transferor and reasonably
      acceptable to the Company, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Securities under the Securities
      Act. As a condition of transfer, any such transferee shall agree in writing
      to
      be bound by the terms of this Agreement and shall have the rights of a Purchaser
      under this Agreement and the Registration Rights Agreement. 

     

    (b) The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.01,
      of a legend on any of the Securities in the following form: 

     

    THIS
      SECURITY HAS 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
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THIS SECURITY 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 OR OTHER LOAN SECURED BY SUCH SECURITIES. 

     

    
      
        
        

      

      
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    The
      Company acknowledges and agrees that a 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 who agrees to be bound by the provisions of this Agreement
      and the Registration Rights Agreement and, if required under the terms of such
      arrangement, such Purchaser may transfer pledged or secured Securities to the
      pledgees or secured parties. Such 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. Further,
      no
      notice shall be required of such pledge. At the appropriate Purchaser’s expense,
      the Company will execute and deliver such reasonable documentation as a pledgee
      or secured party of Securities may reasonably request in connection with a
      pledge or transfer of the Securities, including, if the Securities are subject
      to registration pursuant to the Registration Rights Agreement, 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 4.01(b)), (i) following any sale of such Shares
      or Warrant Shares pursuant to a registration statement (including the
      Registration Statement) covering the resale of such Shares and Warrant Shares
      that is effective under the Securities Act, (ii) following any sale of such
      Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or
      Warrant Shares are eligible for sale under Rule 144 without volume limitations,
      provided that the Company is current in its public reporting obligations, if
      applicable, or (iv) if such 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 agrees that at such time
      as
      such legend is no longer required under this Section 4.01(c), it will, no later
      than three Trading Days following the delivery by a Purchaser to the Company
      or
      the Transfer Agent of a certificate representing Shares or Warrant Shares,
      as
      the case may be, issued with a restrictive legend (such third Trading Day,
      the
“Share
      Delivery Date”),
      deliver or cause to be delivered to such Purchaser a certificate representing
      such shares 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. Certificates for Securities subject to legend removal hereunder shall
      be transmitted by the Transfer Agent of the Company to the Purchasers by
      crediting the account of the Purchaser or Purchaser’s prime broker with the
      Depository Trust Company System.

     

    
      
        
        

      

      
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    (d) In
      addition to such Purchaser’s other available remedies, the Company shall pay to
      a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
      each $1,000 of Shares or Warrant Shares (based on the Closing Price of the
      Common Stock on the date such Securities are submitted to the Transfer Agent)
      delivered for removal of the restrictive legend and subject to Section 4.01(c),
      $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days
      after such damages have begun to accrue) for each Trading Day after the Legend
      Removal Date until such certificate is delivered without a legend. Nothing
      herein shall limit such Purchaser’s right to pursue actual damages for the
      Company’s failure to deliver certificates representing any Securities as
      required by the Transaction Documents, and such Purchaser shall have the right
      to pursue all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive
      relief.

     

    (e) Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      the
      removal of the restrictive legend from certificates representing Securities
      as
      set forth in this Section 4.01 is predicated upon the Purchaser selling its
      Securities pursuant to either the registration requirements of the Securities
      Act, including any applicable prospectus delivery requirements, or an exemption
      therefrom, and that if Securities are sold pursuant to a Registration Statement,
      that such Securities were sold in compliance with the plan of distribution
      set
      forth therein. 

     

    Section
      4.02 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. 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 the Purchasers and make publicly available in accordance
      with Rule 144(c) such information as is required for the Purchasers to sell
      the
      Securities under Rule 144. The Company further covenants that it will take
      such
      further action as any holder of Securities may reasonably request, to the extent
      required from time to time to enable such Person to sell such Securities without
      registration under the Securities Act within the requirements of the exemption
      provided by Rule 144. 

     

    Section
      4.03 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 such that it would require shareholder approval prior to the
      closing of such other transaction unless shareholder approval is obtained before
      the closing of such subsequent transaction. 

     

    
      
        
        

      

      
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    Section
      4.04 Securities
      Laws Disclosure; Publicity.
      The
      Company shall, by 5:30 p.m. New York City time on the fourth Business Day
      immediately following the date hereof, issue a press release disclosing the
      material terms of the transactions contemplated hereby, and file a Current
      Report on Form 8-K disclosing the same and filing the Transaction Documents
      as
      exhibits thereto within the time period required by law. Each Purchaser shall
      consult with the Company prior to issuing any press releases with respect to
      the
      transactions contemplated hereby, and no Purchaser shall issue any such press
      release or otherwise make any such public statement without the prior consent
      of
      the Company, which consent shall not unreasonably be withheld or delayed, except
      if such disclosure is required by law, in which case such Purchaser shall
      promptly provide the Company with prior notice of such public statement or
      communication. The Company shall not publicly disclose the name of any
      Purchaser, or include the name of any Purchaser in any press release or filing
      with the Commission or any regulatory agency or Trading Market, without the
      prior written consent of such Purchaser, except (i) as required by federal
      securities law in connection with (A) any registration statement contemplated
      by
      the Registration Rights Agreement and (B) the filing of final Transaction
      Documents (including signature pages thereto) with the Commission and (ii)
      to
      the extent such disclosure is required by law or Trading Market regulations,
      in
      which case the Company shall provide the Purchasers with prior notice of such
      disclosure permitted under this subclause (ii). 

     

    Section
      4.05 Shareholder
      Rights Plan.
      No
      claim will be made or enforced by the Company or, with the consent of the
      Company, any other Person, that any Purchaser is an “Acquiring Person” under any
      control share acquisition, business combination, poison pill (including any
      distribution under a rights agreement) or similar anti-takeover plan or
      arrangement in effect or hereafter adopted by the Company, or that any Purchaser
      could be deemed to trigger the provisions of any such plan or arrangement,
      by
      virtue of receiving Securities under the Transaction Documents or under any
      other agreement between the Company and the Purchasers. 

     

    Section
      4.06 Non-Public
      Information.
      Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, 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 such Purchaser
      shall have executed a written agreement regarding the confidentiality and use
      of
      such information. The Company understands and confirms that each Purchaser
      shall
      be relying on the foregoing representations in effecting transactions in
      securities of the Company. 

     

    Section
      4.07 Use
      of
      Proceeds.
      The use
      of proceeds is set forth on Schedule
      4.07
      attached
      hereto. Except as set forth on Schedule
      4.07
      attached
      hereto, the Company shall use the net proceeds from the sale of the Securities
      hereunder for working capital purposes and not for the satisfaction of any
      portion of the Company’s debt (other than payment of trade payables in the
      ordinary course of the Company’s business and prior practices), to redeem any
      Common Stock or Common Stock Equivalents or to settle any outstanding
      litigation. 

     

    
      
        
        

      

      
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    Section
      4.08 Indemnification
      of Purchasers.
      Subject
      to the provisions of this Section 4.08, the Company will indemnify and hold
      each
      Purchaser and its directors, officers, shareholders, members, partners,
      employees and agents (and any other Persons with a functionally equivalent
      role
      of a Person holding such titles notwithstanding a lack of such title or any
      other title), each Person who controls such Purchaser (within the meaning of
      Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
      directors, officers, shareholders, agents, members, partners or employees (and
      any other Persons with a functionally equivalent role of a Person holding such
      titles notwithstanding a lack of such title or any other title) of such
      controlling persons (each, a “Purchaser
      Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any such Purchaser Party may suffer or incur as a result
      of
      or relating to (a) any breach of any of the representations, warranties,
      covenants or agreements made by the Company in this Agreement or in the other
      Transaction Documents or (b) any action instituted against a Purchaser, or
      any
      of them or their respective Affiliates, by any stockholder of the Company who
      is
      not an Affiliate of such Purchaser, with respect to any of the transactions
      contemplated by the Transaction Documents (unless such action is based upon
      a
      breach of such Purchaser’s representations, warranties or covenants under the
      Transaction Documents or any agreements or understandings such Purchaser may
      have with any such stockholder or any violations by the Purchaser of state
      or
      federal securities laws or any conduct by such Purchaser which constitutes
      fraud, gross negligence, willful misconduct or malfeasance). If any action
      shall
      be brought against any Purchaser Party in respect of which indemnity may be
      sought pursuant to this Agreement, such Purchaser Party shall promptly notify
      the Company in writing, and the Company shall have the right to assume the
      defense thereof with counsel of its own choosing reasonably acceptable to the
      Purchaser Party. Any Purchaser Party shall have the right to employ separate
      counsel in any such action and participate in the defense thereof, but the
      fees
      and expenses of such counsel shall be at the expense of such Purchaser Party
      except to the extent that (i) the employment thereof has been specifically
      authorized by the Company in writing, (ii) the Company has failed after a
      reasonable period of time to assume such defense and to employ counsel or (iii)
      in such action there is, in the reasonable opinion of such separate counsel,
      a
      material conflict on any material issue between the position of the Company
      and
      the position of such Purchaser Party, in which case the Company shall be
      responsible for the reasonable fees and expenses of no more than one such
      separate counsel. The Company will not be liable to any Purchaser Party under
      this Agreement (i) for any settlement by a Purchaser Party effected without
      the
      Company’s prior written consent, which shall not be unreasonably withheld or
      delayed; or (ii) to the extent, but only to the extent that a loss, claim,
      damage or liability is attributable to any Purchaser Party’s breach of any of
      the representations, warranties, covenants or agreements made by such Purchaser
      Party in this Agreement or in the other Transaction Documents. 

     

    Section
      4.09 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 any
      exercise of the Warrants. 

     

    Section
      4.10 Listing
      of Common Stock.
      The
      Company hereby agrees to use best efforts to maintain the listing of the Common
      Stock on a Trading Market (or, if the Common Stock is then quoted for trading
      on
      the OTC Bulletin Board, the eligibility for such quotation), and as soon as
      reasonably practicable following the Initial Closing (but not later than the
      earlier of the Effective Date and the first anniversary of the Initial Closing
      Date) to list (or to have included for quotation on the OTC Bulletin Board)
      all
      of the Shares and Warrant Shares on such 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 such application all of the Shares and
      Warrant Shares, and will take such other action as is necessary to cause all
      of
      the Shares and Warrant Shares to be listed on such other Trading Market as
      promptly as possible. The Company will take all action reasonably necessary
      to
      continue the listing and trading of its Common Stock on a Trading Market (or,
      if
      the Common Stock is then quoted for trading on the OTC Bulletin Board, the
      eligibility for such quotation) and will comply in all respects with the
      Company’s reporting, filing and other obligations under the bylaws or rules of
      the Trading Market. 

     

    
      
        
        

      

      
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    Section
      4.11 Equal
      Treatment of Purchasers.
      No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. For clarification purposes, this provision constitutes
      a
      separate right granted to each Purchaser by the Company and negotiated
      separately by each Purchaser, and is intended to treat for the Company the
      Purchasers as a class and shall not in any way be construed as the Purchasers
      acting in concert or as a group with respect to the purchase, disposition or
      voting of Securities or otherwise. 

     

    Section
      4.12 Participation
      in Future Financing.
      

     

    (a) From
      the
      date hereof until the date that is the twenty four (24) month anniversary of
      the
      Initial Closing Date, upon any issuance by the Company or any of its
      Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration
      (a “Subsequent
      Financing”),
      the
      Purchasers shall have the right to participate in an aggregate of up to 50%
      of
      the Subsequent Financing (the “Participation
      Maximum”)
      on the
      same terms, conditions and price provided for in the Subsequent Financing.
      

     

    (b) At
      least
      5 Trading Days prior to the closing of the Subsequent Financing, the Company
      shall deliver to each Purchaser a written notice of its intention to effect
      a
      Subsequent Financing (“Pre-Notice”),
      which
      Pre-Notice shall ask such Purchaser if it wants to review the details of such
      financing (such additional notice, a “Subsequent
      Financing Notice”).
      Upon
      the request of a Purchaser, and only upon a request by such Purchaser, for
      a
      Subsequent Financing Notice, the Company shall promptly, but no later than
      1
      Trading Day after such request, deliver a Subsequent Financing Notice to such
      Purchaser. The Subsequent Financing Notice shall describe in reasonable detail
      the proposed terms of such Subsequent Financing, the amount of proceeds intended
      to be raised thereunder, the Person or Persons through or with whom such
      Subsequent Financing is proposed to be effected, and attached to which shall
      be
      a term sheet or similar document relating thereto. 

     

    (c) Any
      Purchaser desiring to participate in such Subsequent Financing must provide
      written notice to the Company by not later than 5:30 p.m. (New York City time)
      on the 5th Trading Day after all of the Purchasers have received the Pre-Notice
      that the Purchaser is willing to participate in the Subsequent Financing, the
      amount of the Purchaser’s participation, and that the Purchaser has such funds
      ready, willing, and available for investment on the terms set forth in the
      Subsequent Financing Notice. If the Company receives no notice from a Purchaser
      as of such 5th Trading Day, such Purchaser shall be deemed to have notified
      the
      Company that it does not elect to participate. 

     

    (d) If
      by
      5:30 p.m. (New York City time) on the 5th Trading Day after all of the
      Purchasers have received the Pre-Notice, notifications by the Purchasers of
      their willingness to participate in the Subsequent Financing (or to cause their
      designees to participate) is, in the aggregate, less than the total amount
      of
      the Subsequent Financing, each Purchasers shall be deemed to have notified
      the
      Company that it does not elect to participate and the Company may effect the
      Subsequent Financing on the terms and with the Persons set forth in the
      Subsequent Financing Notice. 

     

    
      
        
        

      

      
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    (e) If
      by
      5:30 p.m. (New York City time) on the 5th Trading Day after all of the
      Purchasers have received the Pre-Notice, the Company receives responses to
      a
      Subsequent Financing Notice from Purchasers seeking to purchase more than the
      aggregate amount of the Participation Maximum, each such Purchaser shall have
      the right to purchase the greater of (a) their Pro Rata Portion (as defined
      below) of the Participation Maximum and (b) the difference between the
      Participation Maximum and the aggregate amount of participation by all other
      Purchasers. “Pro
      Rata Portion”
is
      the
      ratio of (x) the Subscription Amount of Securities purchased hereunder by a
      Purchaser participating under this Section 4.12 and (y) the sum of the aggregate
      Subscription Amounts of Securities purchased hereunder by all Purchasers
      participating under this Section 4.12.

     

    (f) The
      Company must provide the Purchasers with a second Subsequent Financing Notice,
      and the Purchasers will again have the right of participation set forth above
      in
      this Section 4.12, if the Subsequent Financing subject to the initial Subsequent
      Financing Notice is not consummated for any reason on the terms set forth in
      such Subsequent Financing Notice within 60 Trading Days after the date of the
      initial Subsequent Financing Notice.

     

    (g) Notwithstanding
      the foregoing, this Section 4.12 shall not apply in respect of (i) an Exempt
      Issuance or (ii) a underwritten or “best efforts” registered public offering of
      Common Stock.

     

    Section
      4.13 Subsequent
      Equity Sales.
      

     

    (a) Until
      the
      earlier of (i) twenty-four (24) months following the Initial Closing Date or
      (ii) such date that there is an effective registration statement (including
      the
      Registration Statement) on file with the Commission covering the resale of
      all
      of the Shares and Warrant Shares, in the event that the Company issues or sells
      any shares of Common Stock or any Common Stock Equivalent pursuant to which
      shares of Common Stock may be acquired at a price less than $1.50 per share,
      then the Company shall promptly issue additional shares of Common Stock to
      the
      Purchasers in an amount sufficient that the Per Share Purchase Price paid
      hereunder, when divided by the total number of shares issued will result in
      an
      actual Per Share Purchase Price paid by the Purchasers hereunder equal to such
      lower price (this is intended to be a “full ratchet” adjustment). Such
      adjustment shall be made successively whenever such an issuance is made.
      Notwithstanding the foregoing, this Section 4.13 shall not apply in respect
      of
      an Exempt Issuance. 

     

    
      
        
        

      

      
        -
          26 -

        
          

        

      

      
        
        

      

    

     

    (b) From
      the
      date hereof until 90 days following the Effective Date, the Company shall be
      prohibited from effecting or entering into an agreement to effect any Subsequent
      Financing involving a “Variable Rate Transaction”. The term “Variable
      Rate Transaction”
shall
      mean a transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock or
      (ii) enters into any agreement, including, but not limited to, an equity line
      of
      credit, whereby the Company may sell securities at a future determined price.
      Any Purchaser shall be entitled to obtain injunctive relief against the Company
      to preclude any such issuance, which remedy shall be in addition to any right
      to
      collect damages.

     

    (c) Notwithstanding
      anything to the contrary contained herein, the Company shall not, until such
      time as the Company completes construction of a second plant that produces
      biodiesel, without the prior written consent of the Purchasers then holding
      at
      least a majority of the Securities, directly or indirectly offer, sell, assign,
      transfer, pledge, contract to sell, or otherwise dispose of, any shares of
      Common Stock or any securities convertible into or exercisable or exchangeable
      for Common Stock, other than an Exempt Issuance.

     

    Section
      4.14 Short
      Sales and Confidentiality After The Date Hereof.
      Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      until such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company as described in Section 4.04, such Purchaser will
      maintain the confidentiality of all disclosures made to it in connection with
      this transaction (including the existence and terms of this transaction). Each
      Purchaser understands and acknowledges, severally and not jointly with any
      other
      Purchaser, that the Commission currently takes the position that coverage of
      short sales of shares of the Common Stock “against the box” prior to the
      Effective Date of the Registration Statement with the Securities is a violation
      of Section 5 of the Securities Act, as set forth in Item 65, Section A, of
      the
      Manual of Publicly Available Telephone Interpretations, dated July 1997,
      compiled by the Office of Chief Counsel, Division of Corporation
      Finance.

     

    Section
      4.15 Form
      D; Blue Sky Filings.
      The
      Company agrees to timely file a Form D with respect to the Securities as
      required under Regulation D and to provide a copy thereof, promptly upon request
      of any Purchaser. The Company shall take such action as the Company shall
      reasonably determine is necessary in order to obtain an exemption for, or to
      qualify the Securities for, sale to the Purchasers at each Closing under
      applicable securities or “Blue Sky” laws of the states of the United States, and
      shall provide evidence of such actions promptly upon request of any
      Purchaser.

     

    Section
      4.16 Make
      Good Escrow Shares.
      On the
      Initial Closing Date, the Company shall cause certain stockholders of the
      Company to enter into the Make Good Escrow Agreement hereto and to deposit
      with
      the escrow agent thereunder the Make Good Shares to be held for return to the
      depositors or distribution to the Purchasers, as provided therein.

     

    ARTICLE
      V.

    MISCELLANEOUS
      

     

    Section
      5.01 Fees
      and Expenses.
      Except
      as expressly set forth in the Transaction Documents to the contrary, each party
      shall pay the fees and expenses of its advisers, counsel, accountants and other
      experts, if any, and all other expenses incurred by such party incident to
      the
      negotiation, preparation, execution, delivery and performance of this Agreement.
      The Company shall pay all Escrow Agent fees, Transfer Agent fees, stamp taxes
      and other taxes and duties levied in connection with the delivery of any
      Securities to the Purchasers. 

     

    
      
        
        

      

      
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          27 -

        
          

        

      

      
        
        

      

    

     

    Section
      5.02 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 such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules. 

     

    Section
      5.03 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 such notice or communication
      is delivered via facsimile at the facsimile number set forth on the signature
      pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading
      Day,
      (b) the next Trading Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto on a day that is not a Trading Day or later
      than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd 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 such notice
      is
      required to be given. The address for such notices and communications shall
      be
      as set forth on the signature pages attached hereto. 

     

    Section
      5.04 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 Purchasers
      then holding at least a majority of the Securities or, in the case of a waiver,
      by the party against whom enforcement of any such waived provision 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 any party to exercise
      any right hereunder in any manner impair the exercise of any such right.

     

    Section
      5.05 Headings.
      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. 

     

    Section
      5.06 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 Purchaser (other than by merger). Any Purchaser may assign
      any
      or all of its rights under this Agreement to any Person to whom such Purchaser
      assigns or transfers any Securities, provided such transferee agrees in writing
      to be bound, with respect to the transferred Securities, by the provisions
      of
      the Transaction Documents that apply to the “Purchasers.” 

     

    Section
      5.07 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 Section 4.08. 

     

    
      
        
        

      

      
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          28 -

        
          

        

      

      
        
        

      

    

     

    Section
      5.08 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. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and federal courts sitting in the City of New York. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of New York, borough of Manhattan for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or is an inconvenient venue for
      such
      proceeding. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any other
      manner permitted by law. THE
      PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
      If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
      and prosecution of such action or proceeding. 

     

    Section
      5.09 Survival.
      The
      representations and warranties contained herein shall survive the final Closing
      and the delivery of the Shares and Warrant Shares for the applicable statute
      of
      limitations period. 

     

    Section
      5.10 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 or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof. 

     

    Section
      5.11 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, 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 commercially 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. 

     

    
      
        
        

      

      
        -
          29 -

        
          

        

      

      
        
        

      

    

     

    Section
      5.12 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of 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 contained in the Transaction
      Documents and hereby agrees to waive and not to assert in any action for
      specific performance of any such obligation the defense that a remedy at law
      would be adequate. 

     

    Section
      5.13 Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to any Purchaser pursuant
      to
      any Transaction Document or a Purchaser enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such 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 such restoration the obligation or part thereof
      originally intended to be satisfied shall be revived and continued in full
      force
      and effect as if such payment had not been made or such enforcement or setoff
      had not occurred.

     

    Section
      5.14 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 or non-performance of the obligations
      of any other Purchaser under any Transaction Document. Nothing contained herein
      or in any other 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 Documents. 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. 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. 

     

    Section
      5.15 Construction.
      The
      parties agree that each of them and/or their respective counsel has reviewed
      and
      had an opportunity to revise the Transaction Documents and, therefore, the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto. 

     

    [Signature
      Pages Follow]

     

    
      
        
        

      

      
        -
          30 -

        
          

        

      

      
        
        

      

    

     

    [COMPANY
      SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

     

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

     

    
      	
              CHINA
                CLEAN ENERGY INC.

               

              By:
                                                                                   
                

              Name:
                Gary Zhao

              Title:
                Chief Financial Officer

               

              With
                a copy to (which shall not constitute notice):

               

              Haynes
                and Boone, LLP

              153
                East 53rd Street, Suite 4900

              New
                York, New York 10022

              Attention:
                Harvey J. Kesner, Esq.

              Tel.
                No.: (212) 659-7300

              Fax
                No.: (212) 918-8989

            	 	
              Address
                for Notice:

               

              China
                Clean Energy Inc. 

              c/o
                Fujian Zhongde Technology Co., Ltd.

              Fulong
                Industrial Zone

              Longtian
                Town Fuqing City

              Fujian,
                People’s Republic of China 35013

              Tel.
                No.: +86-591-85773387

              Fax
                No.: +86-591-28397168

            

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS] 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [PURCHASER
      SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT] 

     

    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above. 

     

    
      
        	Subscription
                Amount: 	$	 	 	 	 

      

       

      
        	#
                Shares
                (20,000 per $30,000): 	 	 	#
                Class
                A Warrants	 
	 	($1.50 / Share)	 	 	(50% of # Shares; 10,000
                per $30,000)

      

    

     

    
      	 	 	 
	Name of Investor (Print)  	 	Name of Joint Investor (if any)
              (Print)   
	 	 	 
	 	 	 
	 	 	 
	
              Signature
                of Investor

            	 	Signature of Joint Investor (if
              any)   
	 	 	 
	 	 	 
	 	 	  
	Capacity of Signatory (for entities)
              	 	
            
	 	 	 
	 	 	 
	 	 	 
	Social Security or Taxpayer Identification
              Number
              	 	 

    

     

    Investor Contact Information:

     

    
      	 	 	 	 	 
	Street Address 	 	Telephone 	 	Fax 

    

     

    
      	 	 	 	 	 
	City 	State 	Zip Code 	 	Email

    

     

    Instructions
      for Delivery of Securities:

    
       

      
        
          	o
                  Deposit to my Westminster brokerage account	 	o
Deliver
                  to an alternate
                  address:
	 	 	 
	o
Deliver
                  to the address above	 	 
	 	 	 
	 	 	 

        

         

        Broker:

         

        
          	o
Westminster
                  Rep:	 	 	o
Other
                  Rep:	 

        

          

      

    

    

    [SIGNATURE
      PAGES CONTINUE]REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of January 9, 2008, among China Clean Energy Inc.,
      a
      Delaware corporation (the “Company”),
      and
      the several purchasers signatory hereto (each such purchaser, a “Purchaser”
and
      collectively, the “Purchasers”).

     

    This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof, between the Company and the Purchasers signatory thereto (the
      “Purchase
      Agreement”)
      entered into in connection with the private placement offering described in
      the
      Confidential Offering Memorandum dated December 26, 2007, as such may be amended
      and supplemented from time to time.

     

    The
      Company and each Purchaser hereby agrees as follows:

     

    1. Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement 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 6(d).

     

    “Effectiveness
      Date”
means,
      with respect to the initial Registration Statement required to be filed
      hereunder, the 120th
      calendar
      day following the Initial Closing Date (as defined in the Purchase Agreement)
      and, with respect to any additional Registration Statements which may be
      required pursuant to Section 3(c), the 120th
      calendar
      day following the date on which the Company first knows, or reasonably should
      have known, that such additional Registration Statement is required hereunder;
      provided,
      however,
      that in
      the event the Company is notified by the Commission that one of the above
      Registration Statements will not be reviewed or is no longer subject to further
      review and comments, the Effectiveness Date as to such Registration Statement
      shall be the fifth Trading Day following the date on which the Company is so
      notified if such date precedes the dates required above (unless the Company
      determines that events affecting the Company will require the filing of an
      amendment to the Registration Statement).

     

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

     

    “Event”
shall
      have the meaning set forth in Section 2(b).

     

    “Event
      Date”
shall
      have the meaning set forth in Section 2(b).

     

    “Filing
      Date”
means,
      with respect to the initial Registration Statement required hereunder, the
      45th
      calendar
      day following the Initial Closing Date and, with respect to any additional
      Registration Statements that may be required pursuant to Section 3(c), the
      30th
      calendar
      day following the date on which the Company first knows, or reasonably should
      have known, that such additional Registration Statement is required
      hereunder.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

     

    “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).

     

    “Placement
      Agent”
means
      Westminster Securities Corporation.

     

    “Plan
      of Distribution”
shall
      have the meaning set forth in Section 2(a). 

     

    “Prospectus”
means
      the prospectus included in a 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 a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    “Registrable
      Securities”
means
      all of (i) the Shares, including any additional Shares issued pursuant to any
      anti-dilution provisions contained in the Purchase Agreement (ii) the Warrant
      Shares, including any additional Warrant Shares issuable pursuant to any
      anti-dilution provisions contained in the Warrants (without giving effect to
      any
      limitations on exercise set forth in the Warrant); (iii) shares of Common Stock
      issuable to the Placement Agent pursuant to the transactions contemplated under
      the Purchase Agreement upon the exercise of warrants; and (iv) any shares of
      Common Stock issued or issuable upon any stock split, dividend or other
      distribution, recapitalization or similar event with respect to the foregoing.
      

     

    “Registration
      Statement”
means
      the registration statements required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), 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 or deemed to be incorporated by
      reference in such registration statement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “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 purpose and
      effect as such Rule.

     

    “Rule
      424”
means
      Rule 424 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 purpose and
      effect as such Rule.

     

    “Selling
      Shareholder Questionnaire”
shall
      have the meaning set forth in Section 3(a).

     

    2. Shelf
      Registration.

     

    (a) On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a “Shelf” Registration Statement covering the resale of 100% of the
      Registrable Securities on such Filing Date for an offering to be made on a
      continuous basis pursuant to Rule 415. The Registration Statement shall be
      on
      Form SB-2 (except if the Company is not then eligible to register for resale
      the
      Registrable Securities on Form SB-2, in which case such registration shall
      be on
      another appropriate form in accordance herewith) and shall contain (unless
      otherwise directed by at least an 85% majority in interest of the Holders)
      substantially the “Plan
      of Distribution”
      attached hereto as Annex
      A.
      Subject
      to the terms of this Agreement, the Company shall use its best efforts to cause
      a Registration Statement to be declared effective under the Securities Act
      as
      promptly as possible after the filing thereof, but in any event prior to the
      applicable Effectiveness Date, and shall use its best efforts to keep such
      Registration Statement continuously effective under the Securities Act until
      all
      Registrable Securities covered by such Registration Statement have been sold,
      or
      may be sold without volume restrictions pursuant to Rule 144, as determined
      by
      the counsel to the Company pursuant to a written opinion letter to such effect,
      addressed and acceptable to the Company’s transfer agent and the affected
      Holders (the “Effectiveness
      Period”).
      The
      Company shall request effectiveness of a Registration Statement as of 5:00
      p.m.
      New York City time on a Trading Day. The Company shall immediately notify the
      Holders via facsimile of the effectiveness of a Registration Statement on the
      same Trading Day that the Company telephonically confirms effectiveness with
      the
      Commission, which shall be the date requested for effectiveness of a
      Registration Statement. Failure to so notify the Holder within 1 Trading Day
      of
      such notification of effectiveness as aforesaid shall be deemed an Event under
      Section 2(b). The Company shall use its commercially reasonable efforts to
      file
      a final Prospectus with the Commission as required by Rule 424 by 5:30 p.m.
      New
      York City time on the second Trading Day after the Effective Date (as defined
      in
      the Purchase Agreement). 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b) If:
      (i) a
      Registration Statement is not filed on or prior to its 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 five
      Trading Days of 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 (unless the failure to make such
      request for acceleration is the result of the Company’s determination that
      events affecting the Company will require the filing of an amendment to the
      Registration Statement), or (iii) a Registration Statement filed or required
      to
      be filed hereunder is not declared effective by the Commission by its
      Effectiveness Date, or (iv) after the Effectiveness Date, a Registration
      Statement ceases for any reason to remain continuously effective as to all
      Registrable Securities for which it is required to be effective, or the Holders
      are otherwise not permitted to utilize the Prospectus therein to resell such
      Registrable Securities for more than 15 consecutive calendar days or more than
      an aggregate of 20 calendar days during any 12-month period (which need not
      be
      consecutive calendar days) (any such failure or breach being referred to as
      an
“Event”,
      and
      for purposes of clause (i) or (iii) the date on which such Event occurs, or
      for
      purposes of clause (ii) the date on which such five Trading Day period is
      exceeded, or for purposes of clause (iv) the date on which such 15 or 20
      calendar day period, as applicable, is exceeded being referred to as
“Event
      Date”),
      then
      in addition to any other rights the Holders may have hereunder or under
      applicable law, on each monthly anniversary of each such Event Date (if the
      applicable Event shall not have been cured by such date) until the applicable
      Event is cured, the Company shall pay to each Holder an amount in cash or in
      shares of Common Stock (at Holder’s option), as partial liquidated damages and
      not as a penalty, equal to 1% of the aggregate purchase price paid or aggregate
      shares of Common Stock initially purchased, as applicable, by such Holder
      pursuant to the Purchase Agreement for any Registrable Securities then held
      by
      such Holder. The parties agree that (1) the Company will not be liable for
      liquidated damages under this Agreement with respect to any Warrants or Warrant
      Shares, (2) in no event will the Company be liable in any 30-day period for
      liquidated damages under this Agreement in excess of 1% of the aggregate
      Subscription Amount paid or aggregate number of Shares purchased (or combination
      thereof) by the Holders and (3) the maximum aggregate liquidated damages payable
      to a Holder under this Agreement shall be six percent (6%) of the aggregate
      Subscription Amount paid or aggregate number of Shares purchased (or combination
      thereof) by such Holder pursuant to the Purchase Agreement. If the Company
      fails
      to pay any partial liquidated damages pursuant to this Section in full within
      seven days after the date payable, the Company will pay interest thereon at
      a
      rate of 18% per annum (or such lesser maximum amount that is permitted to be
      paid by applicable law) to the Holder, accruing daily from the date such partial
      liquidated damages are due until such amounts, plus all such interest thereon,
      are paid in full. The partial liquidated damages pursuant to the terms hereof
      shall apply on a daily pro-rata basis for any portion of a month prior to the
      cure of an Event. 

     

    (c) Notwithstanding
      anything herein to the contrary, to the extent that the Commission requires
      the
      Company to reduce the number of shares of Common Stock registered for resale
      pursuant to a Registration Statement, including the initial Registration
      Statement pursuant to Section 2(a) hereof, under its authority with respect
      to
      Rule 415, then the Company shall be obligated to include in such Registration
      Statement, in the aggregate, only such limited portion of the Registrable
      Securities as the Commission shall permit or that the Company, in its reasonable
      discretion, determines should be included therein in order to not contravene
      any
      position stated by the Commission (which shares to be included shall be
      determined on a pro rata basis for each Holder based on the initial number
      of
      Registrable Securities issued or issuable to each Holder pursuant to the
      Purchase Agreement, in proportion to the total number of Registrable Securities
      issued or issuable pursuant to the Purchase Agreement, and further provided
      that
      any Registrable Securities issued or issuable as compensation to the Placement
      Agent or its designees shall be excluded in full before any Registrable
      Securities of Purchasers). Any Registrable Securities that are excluded in
      accordance with the foregoing terms are hereinafter referred to as “Cut
      Back Securities.”
To
      the
      extent Cut Back Securities exist, on the later of (a) sixty (60) days after
      the
      last of the securities registered on the previous Registration Statement are
      sold, or (b) six (6) months following the previous Registration Statement’s
      effective date, or such other time as the Company reasonably determines that
      registration of the Cut Back Securities may be permitted by the Commission,
      the
      Company shall file a Registration Statement covering the resale of the Cut
      Back
      Securities and shall use its best efforts to cause such Registration Statement
      to be declared effective as promptly as practicable thereafter. No liquidated
      damages, penalties, or rights shall inure to the benefit of the Holders under
      this Agreement with respect
      to Cut Back Securities. 

     

    
      
        
        

      

      
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    3. Registration
      Procedures

     

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

     

    (a) Not
      less
      than five Trading Days prior to the filing of each Registration Statement and
      not less than 1 Trading Day prior to the filing of any related Prospectus or
      any
      amendment or supplement thereto (including any document that would be
      incorporated or deemed to be incorporated therein by reference), the Company
      shall, upon request of any Holder (i) furnish to such Holder drafts of all
      such
      documents proposed to be filed, which documents (other than those incorporated
      or deemed to be incorporated by reference) will be subject to the review of
      such
      Holder, and (ii) 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 respective counsel to each Holder to conduct a
      reasonable investigation within the meaning of the Securities Act. The Company
      shall not file a Registration Statement or any such Prospectus or any amendments
      or supplements thereto to which the Holders of a majority of the Registrable
      Securities shall reasonably object in good faith, provided that, the Company
      is
      notified of such objection in writing no later than 3 Trading Days after the
      Holders have been so furnished copies of a Registration Statement or 1 Trading
      Day after the Holders have been so furnished copies of any related Prospectus
      or
      amendments or supplements thereto. Each Holder agrees to furnish to the Company
      a completed questionnaire in the form attached to this Agreement as Annex B
      (a
“Selling
      Shareholder Questionnaire”)
      not
      less than two Trading Days prior to the Filing Date or by the end of the tenth
      Trading Day following the date on which the Company requests such questionnaire
      from each Holder.

     

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and as so supplemented or amended to be filed pursuant to Rule
      424;
      (iii) respond as promptly as reasonably possible to any comments received from
      the Commission with respect to a Registration Statement or any amendment thereto
      and provide as promptly as reasonably possible to any Holder, upon request,
      true
      and complete copies of all correspondence from and to the Commission relating
      to
      a Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Holder which has not executed a confidentiality agreement with the Company);
      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 a Registration Statement during the applicable period
      in
      accordance (subject to the terms of this Agreement) with the intended methods
      of
      disposition by the Holders thereof set forth in such Registration Statement
      as
      so amended or in such Prospectus as so supplemented.

     

    
      
        
        

      

      
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    (c) If
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Holders of not less than
      100%
      of the number of such Registrable Securities. 

     

    (d) Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      1 Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a post-effective amendment to a Registration Statement is proposed
      to be filed; (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 a
      Registration Statement or any post-effective amendment, when the same has become
      effective; (ii) of any request by the Commission or any other federal or state
      governmental authority for amendments or supplements to a Registration Statement
      or Prospectus or for additional information; (iii) of the issuance by the
      Commission or any other federal or state governmental authority of any stop
      order suspending the effectiveness of a Registration Statement covering any
      or
      all of the Registrable Securities or the initiation of any Proceedings for
      that
      purpose; (iv) 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; (v) of the occurrence of any
      event or passage of time that makes the financial statements included in a
      Registration Statement ineligible for inclusion therein or any statement made
      in
      a 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 a Registration Statement, Prospectus or other
      documents so that, in the case of a 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 light of the circumstances under which they
      were
      made, not misleading; and (vi) the occurrence or existence of any pending
      corporate development with respect to the Company that the Company believes
      may
      be material and that, in the determination of the Company, makes it not in
      the
      best interest of the Company to allow continued availability of a Registration
      Statement or Prospectus, provided that any and all of such information shall
      remain confidential to each Holder until such information otherwise becomes
      public, unless disclosure by a Holder is required by law; provided,
      further,
      notwithstanding each Holder’s agreement to keep such information confidential,
      the Holders make no acknowledgement that any such information is material,
      non-public information.

     

    
      
        
        

      

      
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    (e) Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order suspending the effectiveness of a 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 moment.

     

    (f) Furnish
      to each Holder, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by such Person, 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 (provided that, unless otherwise requested by
      a
      Holder, the Company would not be required to print such prospectuses if readily
      available to Holders from any electronic service such as the EDGAR filing
      database maintained at www.sec.gov).

     

    (g) Subject
      to the terms of this Agreement, 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, except
      after
      the giving of any notice pursuant to Section 3(d).

     

    (h) If
      FINRA
      Rule 2710 requires any broker-dealer to make a filing prior to executing a
      sale
      by a Holder, upon notification, the Company shall (i) make an Issuer Filing
      with
      the Financial Industry Regulatory Authority pursuant to proposed FINRA Rule
      2710(b)(10)(A)(i) and (ii) pay the filing fee required in connection
      therewith.

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (j) If
      requested by the Holders, cooperate with the Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free, to the extent permitted by law, of all restrictive
      legends, and to enable such Registrable Securities to be in such denominations
      and registered in such names as any such Holders may request.

     

    (k) Upon
      the
      occurrence of any event contemplated by this Section 3, as promptly as
      reasonably possible under the circumstances taking into account the Company’s
      good faith assessment of any adverse consequences to the Company and its
      stockholders of the premature disclosure of such event, prepare a supplement
      or
      amendment, including a post-effective amendment, to a 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 a 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 light of the circumstances under which they were made,
      not misleading. If the Company notifies the Holders in accordance with clauses
      (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus
      until the requisite changes to such Prospectus have been made, then the Holders
      shall suspend use of such Prospectus. The Company will use its best efforts
      to
      ensure that the use of the Prospectus may be resumed as promptly as is
      practicable. The Company shall be entitled to exercise its right under this
      Section 3(k) to suspend the availability of a Registration Statement and
      Prospectus, subject to the payment of partial liquidated damages pursuant to
      Section 2(b), for a period not to exceed 60 calendar days (which need not be
      consecutive days) in any 12 month period.

     

    (l) Comply
      with all applicable rules and regulations of the Commission.

     

    (m) The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the natural persons thereof that
      have
      voting and dispositive control over the Registrable Securities. During any
      periods that the Company is unable to meet its obligations hereunder with
      respect to the registration of the Registrable Securities solely because any
      Holder fails to furnish such information within three Trading Days of the
      Company’s request, any liquidated damages that are accruing at such time as to
      such Holder only shall be tolled and any Event that may otherwise occur solely
      because of such delay shall be suspended as to such Holder only, until such
      information is delivered to the Company.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    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 any
      Registrable Securities are sold pursuant to a 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
      Trading Market on which the Common Stock is then listed for trading, (B) in
      compliance with applicable state securities or Blue Sky laws reasonably agreed
      to by the Company in writing (including, without limitation, fees and
      disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (C) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the Financial
      Industry Regulatory Authority pursuant to the NASDR Rule 2710, so long as the
      broker is receiving no more than a customary brokerage commission in connection
      with such sale, (ii) printing expenses (including, without limitation, expenses
      of printing certificates for Registrable Securities), (iii) messenger, telephone
      and delivery expenses, (iv) fees and disbursements of counsel for the Company,
      (v) Securities Act liability insurance, if the Company so desires such
      insurance, and (vi) fees and expenses of all other Persons retained by the
      Company in connection with the consummation of the transactions contemplated
      by
      this Agreement. 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 and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder. In no event shall the Company be
      responsible for any broker or similar commissions of any Holder or, except
      to
      the extent provided for in the Transaction Documents, any legal fees or other
      costs of the Holders.

     

    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, members, partners, 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 (and any other Persons
      with
      a functionally equivalent role of a Person holding such titles, notwithstanding
      a lack of such title or any other title) 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, members,
      shareholders, partners, agents and employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles, notwithstanding
      a
      lack of such title or any other title) 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, reasonable
      attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to (1) any untrue or alleged untrue
      statement of a material fact contained in a 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 supplement thereto, in light of the circumstances under which
      they were made) not misleading, or (2) any violation or alleged violation by
      the
      Company of the Securities Act, Exchange Act or any state securities law, or
      any
      rule or regulation thereunder, in connection with the performance of its
      obligations under this Agreement, 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, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      expressly for use in a Registration Statement, such Prospectus or such form
      of
      Prospectus or in any amendment or supplement thereto (it being understood that
      the Holder has approved Annex A hereto for this purpose) or (ii) in the case
      of
      an occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
      the
      use by such Holder of an outdated or defective Prospectus after the Company
      has
      notified such Holder in writing that the Prospectus is outdated or defective
      and
      prior to the receipt by such Holder of the Advice contemplated in Section 6(d).
      The Company shall notify the Holders promptly of the institution, threat or
      assertion of any Proceeding arising from or in connection with the transactions
      contemplated by this Agreement of which the Company is aware.

     

    
      
        
        

      

      
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    (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 or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder’s failure to comply with the prospectus delivery
      requirements of the Securities Act or (y) any untrue or alleged untrue statement
      of a material fact contained in any 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 not misleading (i) to the extent, but only to the extent,
      that such untrue statement or omission is contained in any information so
      furnished in writing by such Holder to the Company specifically for inclusion
      in
      such Registration Statement or such Prospectus or (ii) to the extent that such
      information relates to such Holder’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      such Holder expressly for use in a Registration Statement (it being understood
      that the Holder has approved Annex
      A
      hereto
      for this purpose), such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto or (iii) in the case of an occurrence of an
      event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder
      of
      an outdated or defective Prospectus after the Company has notified such Holder
      in writing that the Prospectus is outdated or defective and prior to the receipt
      by such Holder of the Advice contemplated in Section 6(d). In no event shall
      the
      liability of any selling Holder hereunder be greater in amount than the dollar
      amount of the net proceeds received by such Holder upon the sale of the
      Registrable Securities giving rise to such indemnification
      obligation.

     

    (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 shall promptly 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 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 prejudiced the Indemnifying Party.

     

    
      
        
        

      

      
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    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; (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 counsel to the Indemnified Party shall
      reasonably believe that a material 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 reasonable fees and expenses of no more than one
      separate counsel shall be at the 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 or delayed. 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.

     

    Subject
      to the terms of this Agreement, 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 Trading Days of written notice thereof to the
      Indemnifying Party, provided that the Indemnified Party shall promptly reimburse
      the Indemnifying Party for that portion of such fees and expenses applicable
      to
      such actions for which such Indemnified Party is judicially determined to be
      not
      entitled to indemnification hereunder.

     

    (d) Contribution.
      If the
      indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
      Party or insufficient to hold an Indemnified Party harmless for any Losses,
      then
      each Indemnifying Party shall contribute to the amount paid or payable by such
      Indemnified Party, 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 this Agreement, any reasonable attorneys’ or other 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.
      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. 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.

     

    
      
        
        

      

      
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    6. Miscellaneous

     

    (a) Remedies.
      In the
      event of a breach by the Company or by a Holder of any of their respective
      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, shall 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 not assert or shall
      waive the defense that a remedy at law would be adequate

     

    (b) No
      Piggyback on Registrations.
      Except
      as set forth on Schedule
      6(b)
      attached
      hereto, neither the Company nor any of its security holders (other than the
      Holders in such capacity pursuant hereto) may include securities of the Company
      in the initial Registration Statement other than the Registrable Securities.
      The
      Company shall not file any other registration statements until the initial
      Registration Statement required hereunder is declared effective by the
      Commission, provided that this Section 6(b) shall not prohibit the Company
      from
      filing amendments to registration statements filed prior to the date of this
      Agreement. 

     

    (c) Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to a Registration Statement.

     

    (d) Discontinued
      Disposition.
      By its
      acquisition of Registrable Securities, each Holder agrees that, upon receipt
      of
      a notice from the Company of the occurrence of any event of the kind described
      in Section 3(d), such Holder will forthwith discontinue disposition of such
      Registrable Securities under a Registration Statement until it is advised in
      writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus (as it may have been
      supplemented or amended) may be resumed. The Company will use its best efforts
      to ensure that the use of the Prospectus may be resumed as promptly as is
      practicable. The
      Company agrees and acknowledges that any periods during which the Holder is
      required to discontinue the disposition of the Registrable Securities hereunder
      shall be subject to the provisions of Section 2(b).

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (e) Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities and 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 their 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 the stock option or other employee benefit plans, then the
      Company shall send to each Holder a written notice of such determination and,
      if
      within fifteen days after the date of such notice, any such Holder shall so
      request in writing, the Company shall include in such registration statement
      all
      or any part of such Registrable Securities such Holder requests to be
      registered; provided,
      however,
      that,
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 6(e) that are eligible for resale pursuant to Rule
      144
      promulgated under the Securities Act (provided, to the extent so required,
      the
      Company is current in its public reporting obligations) or that are the subject
      of a then effective Registration Statement.

     

    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement 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 Holders
      holding a majority of the then outstanding 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 all of the Registrable Securities to which
      such waiver or consent relates.

     

    (g) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be delivered as set forth in the Purchase
      Agreement.

     

    (h) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign its rights (except by merger) or obligations
      hereunder without the prior written consent of all of the Holders of the
      then-outstanding Registrable Securities. Each Holder may assign their respective
      rights hereunder in the manner and to the Persons as permitted under the
      Purchase Agreement.

     

    (i) No
      Inconsistent Agreements.
      Neither
      the Company nor any of its Subsidiaries has entered, as of the date hereof,
      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 would
      have the effect of impairing the rights granted to the Holders in this Agreement
      or otherwise conflicts with the provisions hereof.

     

    (j) Execution
      and Counterparts.
      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 or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (k) Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without giving effect (to the extent permitted by law) to
      any
      choice or conflict of law provision or rule (whether of the State of New York
      or
      any other jurisdiction) that would cause the application of the laws of any
      jurisdiction other than the State of New York.

     

    (l) Construction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be determined in accordance with the provisions of
      the
      Purchase Agreement.

     

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

     

    (n) 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, 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 commercially 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.

     

    (o) Headings.
      The
      headings in this Agreement 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.

     

    (p) Independent
      Nature of Holders’ Obligations and Rights.
      The
      obligations of each Holder hereunder are several and not joint with the
      obligations of any other Holder hereunder, and no Holder shall be responsible
      in
      any way for the performance of the obligations of any other Holder hereunder.
      Nothing contained herein or in any other agreement or document delivered at
      any
      closing, and no action taken by any Holder pursuant hereto or thereto, shall
      be
      deemed to constitute the Holders as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Holders
      are in any way acting in concert with respect to such obligations or the
      transactions contemplated by this Agreement. Each Holder shall be entitled
      to
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement, and it shall not be necessary for any other Holder to
      be
      joined as an additional party in any proceeding for such purpose.

     

    *************************

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	 	 
	 	
              CHINA
                CLEAN ENERGY INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
                Gary Zhao

              Title:
                Chief Financial Officer

            
	 	 

 

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
      PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT]

     

    
      	Name
              of
              Holder: 	 

    

    
       

      
        	Signature
                of Authorized Signatory of Holder:
                	 

      

      
         

        
          	Name
                  and
                  Title of Authorized Signatory: 	 

        

        
          
            
               

              
                	Name
                        of
                        Joint Investor (if any): 	 

              

              
                
                  
                     

                    
                      	Signature
                              of Joint Investor (if any):
                              	 

                    

                    
                       

                    

                  

                

              

            

          

        

      

    

    

    [SIGNATURE
      PAGES CONTINUE]

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A

     

    Plan
      of Distribution

     

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      [principal Trading Market] or any other stock exchange, market or trading
      facility on which the shares are traded or in private transactions. These sales
      may be at fixed or negotiated prices. A Selling Stockholder may use any one
      or
      more of the following methods when selling shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	 	
              ·

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a
                part;

            

    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	 	
              ·

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or otherwise;
                

            

    

     

    
      	 	
              ·

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
      in compliance with NASDR IM-2440. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    In
      connection with the sale of the Common Stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the Common
      Stock in the course of hedging the positions they assume. The Selling
      Stockholders may also sell shares of the Common Stock short and deliver these
      securities to close out their short positions, or loan or pledge the Common
      Stock to broker-dealers that in turn may sell these securities. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144 under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the Common Stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person. We will make copies of this prospectus available to the Selling
      Stockholders and have informed them of the need to deliver a copy of this
      prospectus to each purchaser at or prior to the time of the sale (including
      by
      compliance with Rule 172 under the Securities Act).

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Annex
      B

     

    CHINA
      CLEAN ENERGY INC.

     

    Selling
      Stockholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”)
      of
 China
      Clean Energy Inc., a Delaware corporation (the “Company”),
      understands that the Company has filed or intends to file with the Securities
      and Exchange Commission (the “Commission”)
      a
      registration statement (the “Registration
      Statement”)
      for
      the registration and resale under Rule 415 of the Securities Act of 1933, as
      amended (the “Securities
      Act”),
      of
      the Registrable Securities, in accordance with the terms of the Registration
      Rights Agreement (the “Registration
      Rights Agreement”)
      to
      which this document is annexed. A copy of the Registration Rights Agreement
      is
      available from the Company upon request at the address set forth below. All
      capitalized terms not otherwise defined herein shall have the meanings ascribed
      thereto in the Registration Rights Agreement.

     

    Certain
      legal consequences arise from being named as a selling stockholder in the
      Registration Statement and the related prospectus. Accordingly, holders and
      beneficial owners of Registrable Securities are advised to consult their own
      securities law counsel regarding the consequences of being named or not being
      named as a selling stockholder in the Registration Statement and the related
      prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling
      Stockholder”)
      of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	1.	
              Name.

            

    

     

    
      	 	
              (a)

            	
              Full
                Legal Name of Selling Stockholder:

            

    

     

    
      	 
	 

    

    

    
      	 	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are
                held:

            

    

    
       

      
        	 
	 

      

       

    

    
      	 	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by the
                questionnaire):

            

    

    
       

      
        	 
	 

      

       

    

    
      	
              2.

            	
              Address
                for Notices to Selling
                Stockholder:

            

    

     

    
      	 
	 
	 

    

    
      	
              Telephone: 

            	 

    

    
      	
              Fax: 

            	 
              

    

    
      	
              Email: 

            	 
              

    

    
      	
              Contact
                Person (if different from Selling Stockholder): 

            	 

    

     

    
      	3.	
              Broker-Dealer
                Status:

            

    

     

    
      	 	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    
      	
              Yes
o

            	
              No
o

            

     

    
      	 	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company.

            

    

    
       

      
        	
                Yes
o

              	
                No
o

              

      

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

     

    
      	 	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

    
       

      
        	
                Yes
o

              	
                No
o

              

      

    

     

    
      	 	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                bought
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

    
       

      
        	
                Yes
o

              	
                No
o

              

      

       

    

    
      	 	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

     

    
      	4.	
              Beneficial
                Ownership of Other Securities of the Company Owned by the Selling
                Stockholder.

            

    

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	 	 	
              Type
                and Amount of other securities beneficially owned by the Selling
                Stockholder:

            

    

     

      
        
          	 
	 

        

         

      

    

    
      	5.	
              Relationships
                with the Company:

            

    

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    State
      any
      exceptions here:

     

    
      
        
          	 
	 

        

         

        
          
            
            

          

          
            21

            
              

            

          

          
            
            

          

        

         

      

    

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus and any
      amendments or supplements thereto. The undersigned understands that such
      information will be relied upon by the Company in connection with the
      preparation or amendment of the Registration Statement and the related
      prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    
      	Dated:   	 	 Beneficial
              Owner:	 

    

     

    
      	 	 	 
	 	By:  	 
	 	
              

              Name:

              Title: 

            
	 	 

    

     

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

    
      
        
        

      

      
        22

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