Document:

Exhibit 10.1

                         COMMON STOCK PURCHASE AGREEMENT

      COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of October 18,
2005, by and between XETHANOL COPORATION, a Delaware corporation (the
"Company"), and FUSION CAPITAL FUND II, LLC, an Illinois limited liability
company (the "Buyer"). Capitalized terms used herein and not otherwise defined
herein are defined in Section 10 hereof.

                                    WHEREAS:

      Subject to the terms and conditions set forth in this Agreement, the
Company wishes to sell to the Buyer, and the Buyer wishes to buy from the
Company, up to Twenty Million Dollars ($20,000,000) of the Company's common
stock, par value $0.001 per share (the "Common Stock"). The shares of Common
Stock to be purchased hereunder are referred to herein as the "Purchase Shares."

        NOW THEREFORE, the Company and the Buyer hereby agree as follows:

      1. PURCHASE OF COMMON STOCK.

      Subject to the terms and conditions set forth in Sections 6, 7 and 9
below, the Company hereby agrees to sell to the Buyer, and the Buyer hereby
agrees to purchase from the Company, Purchase Shares as follows:

      (a) Commencement of Purchases of Common Stock. The purchase and sale of
Purchase Shares hereunder shall commence (the "Commencement") within five (5)
Trading Days following the date of satisfaction of the conditions to the
Commencement set forth in Sections 6 and 7 below (the date of such Commencement,
the "Commencement Date").

      (b) Buyer's Purchase Rights and Obligations. Subject to the Company's
right to suspend purchases under Section 1(d)(ii) hereof, the Buyer shall buy
Purchase Shares ("Daily Purchases") on each Trading Day during each Monthly
Period equal to the Daily Purchase Amount (as defined in Section 1(c)(i)) at the
Purchase Price. From time to time, the Company shall also have the right but not
the obligation, by its delivery to the Buyer of a Block Purchase Notice (as
defined in Section 1(c)(iv)), to require the Buyer to buy Purchase Shares (a
"Block Purchase") equal to the Block Purchase Amount (as defined in Section
1(c)(iv)) at the Block Purchase Price (as defined in Section 1(c)(iv)). The
Buyer shall pay to the Company an amount equal to the Purchase Amount with
respect to such Purchase Shares as full payment for the purchase of the Purchase
Shares so received. The Company shall not issue any fraction of a share of
Common Stock upon any purchase. If the issuance would result in the issuance of
a fraction of a share of Common Stock, the Company shall round such fraction of
a share of Common Stock up or down to the nearest whole share. All payments made
under this Agreement shall be made in lawful money of the United States of
America by check or wire transfer of immediately available funds to such account
as the Company may from time to time designate by written notice in accordance
with the provisions of this Agreement. Whenever any amount expressed to be due
by the terms of this Agreement is due on any day that is not a Trading Day, the
same shall instead be due on the next succeeding day which is a Trading Day.

      (c) The Daily Purchase Amount; Company's Right to Decrease or Increase the
Daily Purchase Amount; the Block Purchase Amount.

            (i) The Daily Purchase Amount. As used herein the term "Original
      Daily Purchase Amount" shall mean Forty Thousand Dollars ($40,000) per
      Trading Day. As used herein, the term "Daily Purchase Amount" shall mean
      initially Forty Thousand Dollars ($40,000) per Trading Day, which amount
      may be increased or decreased from time to time pursuant to this Section
      1(c).

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            (ii) Company's Right to Decrease the Daily Purchase Amount. The
      Company shall always have the right at any time to decrease the amount of
      the Daily Purchase Amount by delivering written notice (a "Daily Purchase
      Amount Decrease Notice") to the Buyer which notice shall specify the new
      Daily Purchase Amount. The decrease in the Daily Purchase Amount shall
      become effective one Trading Day after receipt by the Buyer of the Daily
      Purchase Amount Decrease Notice. Any purchases by the Buyer which have a
      Purchase Date on or prior to the first (1st) Trading Day after receipt by
      the Buyer of a Daily Purchase Amount Decrease Notice must be honored by
      the Company as otherwise provided herein. The decrease in the Daily
      Purchase Amount shall remain in effect until the Company delivers to the
      Buyer a Daily Purchase Amount Increase Notice (as defined below).

            (iii) Company's Right to Increase the Daily Purchase Amount. The
      Company shall have the right (but not the obligation) to increase the
      amount of the Daily Purchase Amount in accordance with the terms and
      conditions set forth in this Section 1(c)(iii) by delivering written
      notice to the Buyer stating the new amount of the Daily Purchase Amount (a
      "Daily Purchase Amount Increase Notice"). A Daily Purchase Amount Increase
      Notice shall be effective five (5) Trading Days after receipt by the
      Buyer. The Company shall always have the right at any time to increase the
      amount of the Daily Purchase Amount up to the Original Daily Purchase
      Amount. With respect to increases in the Daily Purchase Amount above the
      Original Daily Purchase Amount, as the market price for the Common Stock
      increases the Company shall have the right from time to time to increase
      the Daily Purchase Amount as follows. For every $0.25 increase in
      Threshold Price above $5.00 (subject to equitable adjustment for any
      reorganization, recapitalization, non-cash dividend, stock split or other
      similar transaction), the Company shall have the right to increase the
      Daily Purchase Amount by up to an additional $4,000 in excess of the
      Original Daily Purchase Amount. "Threshold Price" for purposes hereof
      means the lowest Sale Price of the Common Stock during the five (5)
      consecutive Trading Days immediately prior to the submission to the Buyer
      of a Daily Purchase Amount Increase Notice (subject to equitable
      adjustment for any reorganization, recapitalization, non-cash dividend,
      stock split or other similar transaction). For example, if the Threshold
      Price is $5.25, the Company shall have the right to increase the Daily
      Purchase Amount to up to $44,000 in the aggregate. If the Threshold Price
      is $6.00, the Company shall have the right to increase the Daily Purchase
      Amount to up to $56,000 in the aggregate. Any increase in the amount of
      the Daily Purchase Amount shall continue in effect until the delivery to
      the Buyer of a Daily Purchase Amount Decrease Notice. However, if at any
      time during any Trading Day the Sale Price of the Common Stock is below
      the applicable Threshold Price, such increase in the Daily Purchase Amount
      shall be void and the Buyer's obligations to buy Purchase Shares hereunder
      in excess of the applicable maximum Daily Purchase Amount shall be
      terminated. Thereafter, the Company shall again have the right to increase
      the amount of the Daily Purchase Amount as set forth herein by delivery of
      a new Daily Purchase Amount Increase Notice only if the Sale Price of the
      Common Stock is above the applicable Threshold Price on each of five (5)
      consecutive Trading Days immediately prior to such new Daily Purchase
      Amount Increase Notice.

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            (iv) The Block Purchase Amount. As used herein the term "Block
      Purchase Amount" shall mean such Purchase Amount as specified by the
      Company in a Block Purchase Notice. As used herein the term "Block
      Purchase Notice" shall mean an irrevocable written notice from the Company
      to the Buyer directing the Buyer to buy the Purchase Amount in Purchase
      Shares as specified by the Company therein at the Block Purchase Price.
      For a Block Purchase Notice to be valid the following conditions must be
      met: (1) the Block Purchase Amount shall not exceed Two Hundred Fifty
      Thousand Dollars ($250,000) per Block Purchase Notice, (2) the Company
      must deliver the Purchase Shares on the same day as the Block Purchase
      Notice is delivered and (3) the Sale Price of the Common Stock must have
      been above $6.00 (subject to equitable adjustment for any reorganization,
      recapitalization, non-cash dividend, stock split or other similar
      transaction) during the ten (10) Trading Days prior to the delivery of the
      Block Purchase Notice. The Block Purchase Amount may be increased to up to
      $500,000 if the Sale Price of the Common Stock is above $9.00 (subject to
      equitable adjustment for any reorganization, recapitalization, non-cash
      dividend, stock split or other similar transaction) during the ten (10)
      Trading Days prior to the delivery of the Block Purchase Notice. The Block
      Purchase Amount may be increased to up to $750,000 if the Sale Price of
      the Common Stock is above $14.00 (subject to equitable adjustment for any
      reorganization, recapitalization, non-cash dividend, stock split or other
      similar transaction) during the ten (10) Trading Days prior to the
      delivery of the Block Purchase Notice. The Block Purchase Amount may be
      increased to up to $1,000,000 if the Sale Price of the Common Stock is
      above $20.00 (subject to equitable adjustment for any reorganization,
      recapitalization, non-cash dividend, stock split or other similar
      transaction) during the ten (10) Trading Days prior to the delivery of the
      Block Purchase Notice. The Company may deliver multiple Block Purchase
      Notices as it shall determine; provided however, at least ten (10) Trading
      Days must have passed since the most recent Block Purchase was completed.
      As used herein, the term "Block Purchase Price" shall mean the lesser of
      (i) the lowest Sale Price of the Common Stock on the Trading Day that a
      Block Purchase Notice was received by the Buyer or (ii) the lowest
      Purchase Price during the previous fifteen (15) Trading Days prior to the
      date that a Block Purchase Notice was received by the Buyer.

      (d) Limitations on Purchases.

            (i) Limitation on Beneficial Ownership. The Buyer shall not have the
      right or the obligation to purchase shares of Common Stock under this
      Agreement to the extent that after giving effect to such purchase the
      Buyer together with its affiliates would beneficially own in excess of
      9.9% of the outstanding shares of the Common Stock following such
      purchase. For purposes hereof, the number of shares of Common Stock
      beneficially owned by the Buyer and its affiliates or acquired by the
      Buyer and its affiliates, as the case may be, shall include the number of
      shares of Common Stock issuable in connection with a purchase under this
      Agreement with respect to which the determination is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon
      (1) a purchase of the remaining Available Amount which has not been
      submitted for purchase, and (2) exercise or conversion of the unexercised
      or unconverted portion of any other securities of the Company (including,
      without limitation, any notes or warrants) subject to a limitation on
      conversion or exercise analogous to the limitation contained herein
      beneficially owned by the Buyer and its affiliates. For purposes of this
      Section, in determining the number of outstanding shares of Common Stock
      the Buyer may rely on the number of outstanding shares of Common Stock as
      reflected in (1) the Company's most recent Form 10-QSB or Form 10-KSB, as
      the case may be, (2) a more recent public announcement by the Company or
      (3) any other written communication by the Company or its Transfer Agent
      setting forth the number of shares of Common Stock outstanding. Upon the
      reasonable written or oral request of the Buyer, the Company shall
      promptly confirm orally and in writing to the Buyer the number of shares
      of Common Stock then outstanding. In any case, the number of outstanding
      shares of Common Stock shall be determined after giving effect to any
      purchases under this Agreement by the Buyer since the date as of which
      such number of outstanding shares of Common Stock was reported. Except as
      otherwise set forth herein, for purposes of this Section 1(d)(i),
      beneficial ownership shall be determined in accordance with Section 13(d)
      of the Securities Exchange Act of 1934, as amended.

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            (ii) Company's Right to Suspend Purchases. The Company may, at any
      time, give written notice (a " Daily Purchase Suspension Notice") to the
      Buyer suspending Daily Purchases of Purchase Shares by the Buyer under
      this Agreement. The Daily Purchase Suspension Notice shall be effective
      only for Daily Purchases that have a Purchase Date later than one (1)
      Trading Day after receipt of the Daily Purchase Suspension Notice by the
      Buyer. Any Daily Purchase by the Buyer that has a Purchase Date on or
      prior to the first (1st) Trading Day after receipt by the Buyer of a Daily
      Purchase Suspension Notice from the Company must be honored by the Company
      as otherwise provided herein. Such Daily Purchase suspension shall
      continue in effect until a revocation in writing by the Company, at its
      sole discretion.

            (iii) Purchase Price Floor. The Company shall not affect any sales
      under this Agreement and the Buyer shall not have the right nor the
      obligation to purchase any Purchase Shares under this Agreement on any
      Trading Day where the Purchase Price for any purchases of Purchase Shares
      would be less than the Floor Price. "Floor Price" means $2.00, which shall
      be appropriately adjusted for any reorganization, recapitalization,
      non-cash dividend, stock split or other similar transaction.

      (e) Records of Purchases. The Buyer and the Company shall each maintain
records showing the remaining Available Amount at any give time and the dates
and Purchase Amounts for each purchase or shall use such other method,
reasonably satisfactory to the Buyer and the Company.

      (f) Taxes. The Company shall pay any and all transfer, stamp or similar
taxes that may be payable with respect to the issuance and delivery of any
shares of Common Stock to the Buyer made under this Agreement.

      2. BUYER'S REPRESENTATIONS AND WARRANTIES.

      The Buyer represents and warrants to the Company that as of the date
hereof and as of the Commencement Date:

      (a) Investment Purpose. The Buyer is entering into this Agreement and
acquiring the Commitment Shares, (as defined in Section 4(f) hereof) (this
Agreement and the Commitment Shares are collectively referred to herein as the
"Securities"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof; provided however, by making the representations herein, the Buyer does
not agree to hold any of the Securities for any minimum or other specific term.

      (b) Accredited Investor Status. The Buyer is an "accredited investor" as
that term is defined in Rule 501(a)(3) of Regulation D.

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

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      (d) Information. The Buyer has been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities that have been reasonably requested by
the Buyer, including, without limitation, the SEC Documents (as defined in
Section 3(f) hereof). The Buyer understands that its investment in the
Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii)
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and
business of the Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its representatives shall modify, amend or affect the
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. The Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.

      (e) No Governmental Review. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

      (f) Transfer or Resale. The Buyer understands that except as provided in
the Registration Rights Agreement (as defined in Section 4(a) hereof): (i) the
Securities have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder or (B) an exemption
exists permitting such Securities to be sold, assigned or transferred without
such registration; (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.

      (g) Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.

      (h) Residency. The Buyer is a resident of the State of Illinois.

      (i) No Prior Short Selling. The Buyer represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Buyer, its agents, representatives or affiliates engaged in or effected, in any
manner whatsoever, directly or indirectly, any (i) "short sale" (as such term is
defined in Rule 3b-3 of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) of the Common Stock or (ii) hedging transaction, which establishes
a net short position with respect to the Common Stock.

      (j) As of the date hereof, the Buyer has no agreements or understandings,
directly or indirectly, with any person to distribute the shares that the Buyer
purchases pursuant to this Agreement.

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      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company represents and warrants to the Buyer that as of the date
hereof and as of the Commencement Date:

      (a) Organization and Qualification. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns 50% or more of the voting stock or capital stock or
other similar equity interests) are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authority to own their
properties and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing could not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means any material
adverse effect on any of: (i) the business, properties, assets, operations,
results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or (ii) the authority or ability of the
Company to perform its obligations under the Transaction Documents (as defined
in Section 3(b) hereof). The Company has no Subsidiaries except as set forth on
Schedule 3(a).

      (b) Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement and each of
the other agreements entered into by the parties on the Commencement Date and
attached hereto as exhibits to this Agreement (collectively, the "Transaction
Documents"), and to issue the Securities in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation, the issuance of the Commitment Shares and
the reservation for issuance and the issuance of the Purchase Shares issuable
under this Agreement, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its shareholders, (iii) this Agreement has been, and
each other Transaction Document shall be on the Commencement Date, duly executed
and delivered by the Company and (iv) this Agreement constitutes, and each other
Transaction Document upon its execution on behalf of the Company, shall
constitute, the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Board of Directors of the Company has approved the resolutions (the "Signing
Resolutions") substantially in the form as set forth as Exhibit C-1 attached
hereto to authorize this Agreement and the transactions contemplated hereby. The
Signing Resolutions are valid, in full force and effect and have not been
modified or supplemented in any respect other than by the resolutions set forth
in Exhibit C-2 attached hereto regarding the registration statement referred to
in Section 4 hereof. The Company has delivered to the Buyer a true and correct
copy of a unanimous written consent adopting the Signing Resolutions executed by
all of the members of the Board of Directors of the Company. No other approvals
or consents of the Company's Board of Directors and/or shareholders is necessary
under applicable laws and the Company's Certificate of Incorporation and/or
Bylaws to authorize the execution and delivery of this Agreement or any of the
transactions contemplated hereby, including, but not limited to, the issuance of
the Commitment Shares and the issuance of the Purchase Shares.

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      (c) Capitalization. As of the date hereof, and excluding the issuance of
the Commitment Shares, the authorized capital stock of the Company consists of
(i) 50,000,000 shares of Common Stock, of which as of the date hereof,
14,772,663 shares are issued and outstanding, none are held as treasury shares,
2,000,000 shares are reserved for issuance pursuant to the Company's incentive
compensation plans of which only approximately 1,202,930 shares remain available
for future grants and 480,000 shares are issuable and reserved for issuance
pursuant to securities (other than stock options issued pursuant to the
Company's incentive compensation plans) exercisable or exchangeable for, or
convertible into, shares of Common Stock and (ii) 1,000,000 shares of Preferred
Stock, $0.001 par value of which as of the date hereof no shares are issued and
outstanding. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c), (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company, (ii) there are no outstanding debt
securities, (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement),
(v) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries, (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this Agreement and
(vii) the Company does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement. The Company has furnished
to the Buyer true and correct copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "Certificate
of Incorporation"), and the Company's By-laws, as amended and as in effect on
the date hereof (the "By-laws"), and summaries of the terms of all securities
convertible into or exercisable for Common Stock, if any, and copies of any
documents containing the material rights of the holders thereof in respect
thereto.

      (d) Issuance of Securities. The Commitment Shares have been duly
authorized and, upon issuance in accordance with the terms hereof, the
Commitment Shares shall be (i) validly issued, fully paid and non-assessable and
(ii) free from all taxes, liens and charges with respect to the issue thereof.
5,000,000 shares of Common Stock have been duly authorized and reserved for
issuance upon purchase under this Agreement. Upon issuance and payment therefor
in accordance with the terms and conditions of this Agreement, the Purchase
Shares shall be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock.

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      (e) No Conflicts. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance of the
Purchase Shares) will not (i) result in a violation of the Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market applicable to the Company or any
of its Subsidiaries) or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected, except in the case of conflicts, defaults
and violations under clause (ii), which could not reasonably be expected to
result in a Material Adverse Effect. Except as disclosed in Schedule 3(e),
neither the Company nor its Subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or By-laws or their organizational charter or by-laws, respectively.
Except as disclosed in Schedule 3(e), neither the Company nor any of its
Subsidiaries is in violation of any term of or is in default under any material
contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company or
its Subsidiaries, except for possible conflicts, defaults, terminations or
amendments which could not reasonably be expected to have a Material Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted, in violation of any law, ordinance, regulation of
any governmental entity, except for possible violations, the sanctions for which
either individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act or applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents in accordance with the terms hereof or thereof. Except as disclosed in
Schedule 3(e), all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence shall
be obtained or effected on or prior to the Commencement Date. Except as listed
in Schedule 3(e), since January 1, 2005, the Company has not received nor
delivered any notices or correspondence from or to the Principal Market. The
Principal Market has not commenced any delisting proceedings against the
Company.

      (f) SEC Documents; Financial Statements. Except as disclosed in Schedule
3(f), since January 1, 2005, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates (except as they have been correctly amended), the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC (except as they may have been properly amended), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of
their respective dates (except as they have been properly amended), the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as listed in Schedule 3(f), the Company has received no
notices or correspondence from the SEC since January 1, 2005. The SEC has not
commenced any enforcement proceedings against the Company or any of its
subsidiaries.

      (g) Absence of Certain Changes. Except as disclosed in Schedule 3(g),
since June 30, 2005, there has been no material adverse change in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

                                       8
<PAGE>

      (h) Absence of Litigation. There is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company, the
Common Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such, which
could reasonably be expected to have a Material Adverse Effect. A description of
each action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body which, as
of the date of this Agreement, is pending or threatened in writing against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, is set forth in Schedule 3(h).

      (i) Acknowledgment Regarding Buyer's Status. The Company acknowledges and
agrees that the Buyer is acting solely in the capacity of arm's length purchaser
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby. The Company further acknowledges that the Buyer is not
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 hereby and thereby and any advice given by the Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer's
purchase of the Securities. The Company further represents to the Buyer that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives and
advisors.

      (j) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

      (k) Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all material trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(k), none of the
Company's material trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or, by the terms and
conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any material trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on
Schedule 3(k), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.

                                       9
<PAGE>

      (l) Environmental Laws. To the best of the Company's knowledge, the
Company and its Subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval, except where, in each of the three foregoing clauses, the failure to
so comply could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

      (m) Title. The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in Schedule 3(m) or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries.
Any real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.

      (n) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
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 at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.

      (o) Regulatory Permits. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

      (p) Tax Status. The Company and each of its Subsidiaries has made or filed
all federal and state income and all other material tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

      (q) Transactions With Affiliates. Except as set forth on Schedule 3(q) and
other than the grant or exercise of stock options disclosed on Schedule 3(c),
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries (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 corporation, partnership, trust or other entity in
which any officer, director, or any such employee has an interest or is an
officer, director, trustee or partner.

                                       10
<PAGE>

      (r) Application of Takeover Protections. The Company and its board of
directors have taken or will take prior to the Commencement Date 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 Certificate of
Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.

      (s) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

      4. COVENANTS.

      (a) Filing of Form 8-K and Registration Statement. The Company agrees that
it shall, within the time required under the 1934 Act file a Report on Form 8-K
disclosing this Agreement and the transaction contemplated hereby. The Company
shall also file within ten (10) Trading Days from the date hereof a new
registration statement covering the sale of the Commitment Shares and at least
5,000,000 Purchase Shares in accordance with the terms of the Registration
Rights Agreement between the Company and the Buyer, dated as of the date hereof
("Registration Rights Agreement") and up to 14,462,047 additional shares
(including 1,431,032 shares issuable upon the exercise of outstanding warrants
and 1,650,000 shares issuable upon the conversion of outstanding senior secured
royalty income notes) on behalf of certain other selling stockholders. After
such registration statement is declared effective by the SEC, the Company agrees
and acknowledges that any sales by the Company to the Buyer pursuant to this
Agreement are sales of the Company's equity securities in a transaction that is
registered under the 1933 Act.

      (b) Blue Sky. The Company shall take such action, if any, as is reasonably
necessary in order to obtain an exemption for or to qualify (i) the initial sale
of the Commitment Shares and any Purchase Shares to the Buyer under this
Agreement and (ii) any subsequent resale of the Commitment Shares and any
Purchase Shares by the Buyer, in each case, under applicable securities or "Blue
Sky" laws of the states of the United States in such states as is reasonably
requested by the Buyer from time to time, and shall provide evidence of any such
action so taken to the Buyer.

      (c) No Variable Priced Financing. Other than pursuant to this Agreement,
the Company agrees that beginning on the date of this Agreement and ending on
the date of termination of this Agreement (as provided in Section 11(k) hereof),
neither the Company nor any of its Subsidiaries shall, without the prior written
consent of the Buyer, contract for any equity financing (including any debt
financing with an equity component) or issue any equity securities of the
Company or any Subsidiary or securities convertible or exchangeable into or for
equity securities of the Company or any Subsidiary (including debt securities
with an equity component) which, in any case (i) are convertible into or
exchangeable for an indeterminate number of shares of common stock, (ii) are
convertible into or exchangeable for Common Stock at a price which varies with
the market price of the Common Stock, (iii) directly or indirectly provide for
any "re-set" or adjustment of the purchase price, conversion rate or exercise
price after the issuance of the security, or (iv) contain any "make-whole"
provision based upon, directly or indirectly, the market price of the Common
Stock after the issuance of the security, in each case, other than reasonable
and customary anti-dilution adjustments for issuance of shares of Common Stock
at a price which is below the market price of the Common Stock.

                                       11
<PAGE>

      (d) Listing. The Company shall promptly secure the listing of all of the
Purchase Shares and Commitment Shares upon each national securities exchange and
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's authorization for
quotation on the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action that would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall promptly, and in no event later than the following Trading Day,
provide to the Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section.

      (e) Limitation on Short Sales and Hedging Transactions. The Buyer agrees
that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11(k), the Buyer and its
agents, representatives and affiliates shall not in any manner whatsoever enter
into or effect, directly or indirectly, any (i) "short sale" (as such term is
defined in Rule 3b-3 of the 1934 Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.

      (f) Issuance of Commitment Shares; Limitation on Sales of Commitment
Shares. Immediately upon the execution of this Agreement, the Company shall
issue to the Buyer 303,556 shares of Common Stock (the "Commitment Shares"). The
Commitment Shares shall be issued in certificated form and (subject to Section 5
hereof) shall bear the following restrictive legend:

      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
      APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
      FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
      ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
      THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
      APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF HOLDER'S COUNSEL,
      IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
      ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
      RULE 144 UNDER SAID ACT.

      The Buyer agrees that the Buyer shall not transfer or sell the Commitment
Shares until the earlier of 500 Trading Days (25 Monthly Periods) from the date
hereof or the date on which this Agreement has been terminated, provided,
however, that such restrictions shall not apply: (i) in connection with any
transfers to or among affiliates (as defined in the 1934 Act), (ii) in
connection with any pledge in connection with a bona fide loan or margin
account, (iii) in the event that the Commencement does not occur on or before
February 28, 2006, due to the failure of the Company to satisfy the conditions
set forth in Section 7 or (iv) if an Event of Default has occurred, or any event
which, after notice and/or lapse of time, would become an Event of Default,
including any failure by the Company to timely issue Purchase Shares under this
Agreement. Notwithstanding the forgoing, the Buyer may transfer Commitment
Shares to a third party in order to settle a sale made by the Buyer where the
Buyer reasonably expects the Company to deliver Purchase Shares to the Buyer
under this Agreement so long as the Buyer maintains ownership of the same
overall number of shares of Common Stock by "replacing" the Commitment Shares so
transferred with Purchase Shares when the Purchase Shares are actually issued by
the Company to the Buyer.

                                       12
<PAGE>

      (g) Due Diligence. The Buyer shall have the right, from time to time as
the Buyer may reasonably deem appropriate, to perform reasonable due diligence
on the Company during normal business hours. The Company and its officers and
employees shall provide information and reasonably cooperate with the Buyer in
connection with any reasonable request by the Buyer related to the Buyer's due
diligence of the Company, including, but not limited to, any such request made
by the Buyer in connection with (i) the filing of the registration statement
described in Section 4(a) hereof and (ii) the Commencement. Each party hereto
agrees not to disclose any Confidential Information of the other party to any
third party and shall not use the Confidential Information for any purpose other
than in connection with, or in furtherance of, the transactions contemplated
hereby. Each party hereto acknowledges that the Confidential Information shall
remain the property of the disclosing party and agrees that it shall take all
reasonable measures to protect the secrecy of any Confidential Information
disclosed by the other party.

      (h) Participation Rights. For a period of 25 months from the Commencement
Date (unless sooner terminated) and except as provided below in this Section
4(h), the Company hereby grants to the Buyer a right to participate in the
purchase of any New Securities (as defined below) that the Company may, from
time to time, propose to issue and sell in connection with any financing
transaction, as follows. Not later than 5 Trading Days prior to the execution of
any definitive documentation relating to the sale of any New Securities to any
persons or entities other than the Buyer or an Affiliate of the Buyer (a "New
Person"), the Company shall deliver written notice to Buyer of its intent to
enter into any such transaction, describing each of the New Persons and the type
of New Securities in reasonable detail, and attaching to such notice copies of
such definitive documentation. The Buyer shall have 15 Trading Days after
receipt of such notice to purchase up to 25% of such New Securities or any
portion thereof, at the price and on the terms specified in such notice by
giving written notice to the Company specifying the amount of New Securities to
be purchased by the Buyer, provided, however, that the Buyer shall not have the
right to purchase any such New Securities or portion thereof, if the number of
New Persons purchasing 100% of such New Securities as specified on such notice,
consists of two (2) or fewer entities. In the event the Company has not sold
such New Securities to the New Persons within 10 Trading Days after notice
thereof to the Buyer, the Company shall not thereafter issue or sell any New
Securities to any New Persons without first again complying with this Section.
"New Securities" shall mean any shares of Common Stock, preferred stock or any
other equity securities of the Company or securities convertible or exchangeable
for equity securities of the Company, provided, however, that New Securities
shall not include, (i) shares of Common Stock issuable upon conversion or
exercise of any securities outstanding as of the date hereof, (ii) shares,
options or warrants for Common Stock granted to officers, directors and
employees and consultants of the Company pursuant to incentive compensation
plans approved by the Board of Directors of the Company, (iii) shares of Common
Stock or securities convertible or exchangeable for Common Stock issued pursuant
to the acquisition of another company by consolidation, merger, or purchase of
all or substantially all of the assets of such company and pursuant to any
related acquisition financing or (iv) shares of Common Stock or securities
convertible or exchangeable into shares of Common Stock issued in connection
with a strategic transaction involving the Company and issued to an entity or an
affiliate of such entity that is engaged in the same or substantially related
business as the Company. The Buyer rights hereunder shall not prohibit or limit
the Company from selling any New Securities so long as the Company makes the
same offer to the Buyer as provided herein. Otherwise the Company shall be
prohibited from selling any New Securities to any New Person until it fully
complies herewith.

                                       13
<PAGE>

      5. TRANSFER AGENT INSTRUCTIONS.

      Immediately upon the execution of this Agreement, the Company shall
deliver to the Transfer Agent a letter in the form as set forth as Exhibit E
attached hereto with respect to the issuance of the Commitment Shares. On the
Commencement Date, the Company shall cause any restrictive legend on the
Commitment Shares to be removed and all of the Purchase Shares to be issued
under this Agreement shall be issued without any restrictive legend unless the
Buyer expressly consents otherwise. The Company shall issue irrevocable
instructions to the Transfer Agent, and any subsequent transfer agent, to issue
Purchase Shares in the name of the Buyer for the Purchase Shares (the
"Irrevocable Transfer Agent Instructions"). The Company warrants to the Buyer
that no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5, will be given by the Company to the Transfer
Agent with respect to the Purchase Shares and that the Commitment Shares and the
Purchase Shares shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement subject to the provisions of Section 4(f) in the
case of the Commitment Shares.

      6. CONDITIONS TO THE COMPANY'S OBLIGATION TO COMMENCE SALES OF SHARES OF
         COMMON STOCK.

      The obligation of the Company hereunder to commence sales of the Purchase
Shares is subject to the satisfaction of each of the following conditions on or
before the Commencement Date (the date that sales begin) and once such
conditions have been initially satisfied, there shall not be any ongoing
obligation to satisfy such conditions after the Commencement has occurred;
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing the Buyer
with prior written notice thereof:

      (a) The Buyer shall have executed each of the Transaction Documents and
delivered the same to the Company.

      (b) Subject to the Company's compliance with Section 4(a), a registration
statement covering the sale of all of the Commitment Shares and at least
5,000,000 Purchase Shares shall have been declared effective under the 1933 Act
by the SEC and no stop order with respect to the Registration Statement shall be
pending or threatened by the SEC.

      (c) The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Commencement Date.

      7. CONDITIONS TO THE BUYER'S OBLIGATION TO COMMENCE PURCHASES OF SHARES OF
         COMMON STOCK.

      The obligation of the Buyer to commence purchases of Purchase Shares under
this Agreement is subject to the satisfaction of each of the following
conditions on or before the Commencement Date (the date that sales begin) and
once such conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the Commencement has
occurred:

                                       14
<PAGE>

      (a) The Company shall have executed each of the Transaction Documents and
delivered the same to the Buyer.

      (b) The Company shall have issued to the Buyer the Commitment Shares and
shall have removed the restrictive transfer legend from the certificate
representing the Commitment Shares.

      (c) The Common Stock shall be authorized for quotation on the Principal
Market, trading in the Common Stock shall not have been within the last 365 days
suspended by the SEC or the Principal Market and the Purchase Shares and the
Commitment Shares shall be approved for listing upon the Principal Market, as
required by applicable exchange or market rules.

      (d) The Buyer shall have received the opinions of the Company's legal
counsel dated as of the Commencement Date substantially in the form of EXHIBIT A
attached hereto.

      (e) The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Commencement Date. The Buyer shall have
received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Commencement Date, to the foregoing effect in the form attached
hereto as EXHIBIT B.

      (f) The Board of Directors of the Company shall have adopted resolutions
in the form attached hereto as EXHIBIT C which shall be in full force and effect
without any amendment or supplement thereto as of the Commencement Date.

      (g) As of the Commencement Date, the Company shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose of effecting
purchases of Purchase Shares hereunder, at least 5,000,000 shares of Common
Stock.

      (h) The Irrevocable Transfer Agent Instructions, in form acceptable to the
Buyer shall have been delivered to and acknowledged in writing by the Company
and the Company's Transfer Agent.

      (i) The Company shall have delivered to the Buyer a certificate evidencing
the incorporation and good standing of the Company in the State of Delaware
issued by the Secretary of State of the State of Delaware as of a date within
ten (10) Trading Days of the Commencement Date.

      (j) The Company shall have delivered to the Buyer a certified copy of the
Certificate of Incorporation as certified by the Secretary of State of the State
of Delaware within ten (10) Trading Days of the Commencement Date.

      (k) The Company shall have delivered to the Buyer a secretary's
certificate executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as EXHIBIT D.

                                       15
<PAGE>

      (l) A registration statement covering the sale of all of the Commitment
Shares and at least 5,000,000 Purchase Shares shall have been declared effective
under the 1933 Act by the SEC and no stop order with respect to the registration
statement shall be pending or threatened by the SEC. The Company shall have
prepared and delivered to the Buyer a final form of prospectus to be used by the
Buyer in connection with any sales of any Commitment Shares or any Purchase
Shares. The Company shall have made all filings under all applicable federal and
state securities laws necessary to consummate the issuance of the Commitment
Shares and the Purchase Shares pursuant to this Agreement in compliance with
such laws.

      (m) No Event of Default has occurred, or any event which, after notice
and/or lapse of time, would become an Event of Default has occurred.

      (n) On or prior to the Commencement Date, the Company shall take all
necessary action, if any, and such actions as reasonably requested by the Buyer,
in order to render inapplicable any control share acquisition, business
combination, shareholder rights plan or poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyer's ownership of the Securities.

      (o) The Company shall have provided the Buyer with the information
requested by the Buyer in connection with its due diligence requests made prior
to, or in connection with, the Commencement, in accordance with the terms of
Section 4(g) hereof.

      8. INDEMNIFICATION.

      In consideration of the Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Buyer and all of its
affiliates, shareholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, other than with respect to Indemnified
Liabilities which directly and primarily result from the gross negligence or
willful misconduct of the Indemnitee. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

                                       16
<PAGE>

      9. EVENTS OF DEFAULT.

      An "Event of Default" shall be deemed to have occurred at any time as any
of the following events occurs:

      (a) while any registration statement is required to be maintained
effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of such registration statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the Buyer
for sale of all of the Registrable Securities (as defined in the Registration
Rights Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of ten (10)
consecutive Trading Days or for more than an aggregate of thirty (30) Trading
Days in any 365-day period;

      (b) the suspension from trading or failure of the Common Stock to be
listed on the Principal Market for a period of three (3) consecutive Trading
Days;

      (c) the delisting of the Company's Common Stock from the Principal Market,
provided, however, that the Common Stock is not immediately thereafter trading
on the New York Stock Exchange, the Nasdaq National Market, the Nasdaq Capital
Market, or the American Stock Exchange;

      (d) the failure for any reason by the Transfer Agent to issue Purchase
Shares to the Buyer within five (5) Trading Days after the applicable Purchase
Date which the Buyer is entitled to receive;

      (e) the Company breaches any representation, warranty, covenant or other
term or condition under any Transaction Document if such breach could have a
Material Adverse Effect and except, in the case of a breach of a covenant which
is reasonably curable, only if such breach continues for a period of at least
ten (10) Trading Days;

      (f) if any Person commences a proceeding against the Company pursuant to
or within the meaning of any Bankruptcy Law ;

      (g) if the Company pursuant to or within the meaning of any Bankruptcy
Law; (A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, (E) becomes insolvent, or
(F) is generally unable to pay its debts as the same become due;

      (h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or for all or substantially all of
its property, or (C) orders the liquidation of the Company or any Subsidiary; or

      (i) a material adverse change in the business, properties, operations,
financial condition or results of operations of the Company or its Subsidiaries;

                                       17
<PAGE>

In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Purchase Price is below the
Purchase Price Floor, the Buyer shall not be obligated to purchase any shares of
Common Stock under this Agreement. If pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
proceeding against the Company, a Custodian is appointed for the Company or for
all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an Event of
Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement
shall automatically terminate without any liability or payment to the Company
without further action or notice by any Person. No such termination of this
Agreement under Section 11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.

      10. CERTAIN DEFINED TERMS.

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

      (a) "1933 Act" means the Securities Act of 1933, as amended.

      (b) "Available Amount" means initially Twenty Million Dollars
($20,000,000) in the aggregate which amount shall be reduced by the Purchase
Amount each time the Buyer purchases shares of Common Stock pursuant to Section
1 hereof.

      (c) "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.

      (d) "Closing Sale Price" means, for any security as of any date, the last
closing trade price for such security on the Principal Market as reported by the
Principal Market, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing trade price of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by the Principal Market.

      (e) "Confidential Information" means any information disclosed by either
party to the other party, either directly or indirectly, in writing, orally or
by inspection of tangible objects (including, without limitation, documents,
prototypes, samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within ten
(10) business days after the initial disclosure. Confidential Information may
also include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any information which (i)
was publicly known and made generally available in the public domain prior to
the time of disclosure by the disclosing party; (ii) becomes publicly known and
made generally available after disclosure by the disclosing party to the
receiving party through no action or inaction of the receiving party; (iii) is
already in the possession of the receiving party at the time of disclosure by
the disclosing party as shown by the receiving party's files and records
immediately prior to the time of disclosure; (iv) is obtained by the receiving
party from a third party without a breach of such third party's obligations of
confidentiality; (v) is independently developed by the receiving party without
use of or reference to the disclosing party's Confidential Information, as shown
by documents and other competent evidence in the receiving party's possession;
or (vi) is required by law to be disclosed by the receiving party, provided that
the receiving party gives the disclosing party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure.

                                       18
<PAGE>

      (f) "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

      (g) "Maturity Date" means the date that is 500 Trading Days (25 Monthly
Periods) from the Commencement Date.

      (h) "Monthly Period" means each successive 20 Trading Day period
commencing with the Commencement Date.

      (i) "Person" means an individual or entity including any limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

      (j) "Principal Market" means the Nasdaq OTC Bulletin Board; provided
however, that in the event the Company's Common Stock is ever listed or traded
on the Nasdaq National Market, the Nasdaq Capital Market, the New York Stock
Exchange or the American Stock Exchange, then the "Principal Market" shall mean
such other market or exchange on which the Company's Common Stock is then listed
or traded.

      (k) "Purchase Amount" means the portion of the Available Amount to be
purchased by the Buyer pursuant to Section 1 hereof.

      (l) "Purchase Date" means the actual date that the Buyer is to buy
Purchase Shares pursuant to Section 1 hereof.

      (m) "Purchase Price" means, as of any Trading Day the lower of the (A) the
lowest Sale Price of the Common Stock on such Trading Day and (B) the arithmetic
average of the three (3) lowest Closing Sale Prices for the Common Stock during
the twelve (12) consecutive Trading Days ending on the Trading Day immediately
preceding such date of determination (to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction).

      (n) "Sale Price" means, for any security as of any date, any trade price
for such security on the Principal Market as reported by the Principal Market,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as
reported by the Principal Market.

      (o) "SEC" means the United States Securities and Exchange Commission.

      (q) "Transfer Agent" means the transfer agent of the Company as set forth
in Section 11(f) hereof or such other person who is then serving as the transfer
agent for the Company in respect of the Common Stock.

      (r) "Trading Day" means any day on which the Principal Market is open for
trading including any day on which the Principal Market is open for trading for
a period of time less than the customary time.

                                       19
<PAGE>

      11. MISCELLANEOUS.

      (a) Governing Law; Jurisdiction; Jury Trial. The corporate laws of the
State of Delaware shall govern all issues concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other
Transaction Documents shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, 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 brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. 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 to such party at the
address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

      (b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which 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; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

      (c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

      (d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

      (e) Entire Agreement; Amendments. With the exception of the Mutual
Nondisclosure Agreement between the parties dated as of September 15, 2005, this
Agreement supersedes all other prior oral or written agreements between the
Buyer, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. Any provision of this Agreement may be
amended or modified by mutual agreement of the Company and the Buyer, and any
provision hereof may be waived only by the party against whom enforcement is
sought. Each of the Company and Buyer acknowledges and agrees that it has not
relied on, in any manner whatsoever, any representations or statements, written
or oral, other than as expressly set forth in this Agreement.

      (f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Trading Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

                                       20
<PAGE>

      If to the Company:
               Xethanol Corporation
               1185 Avenue of the Americas, 20th Floor
               New York, NY 10036
               Telephone:        646-723-4000
               Facsimile:        646-723-4001
               Attention:        Mr. Christopher d'Arnaud-Taylor
                                 Chairman, President and Chief Executive Officer

      With a copy to:
               Greenberg Traurig, LLP
               The MetLife Building
               200 Park Avenue, 15th Floor
               New York, New York 10166
               Telephone:        212-801-9200
               Facsimile:        212-801-6400
               Attention:        Spencer G. Feldman, Esq.

      If to the Buyer:
               Fusion Capital Fund II, LLC
               222 Merchandise Mart Plaza, Suite 9-112
               Chicago, IL 60654
               Telephone:        312-644-6644
               Facsimile:        312-644-6244
               Attention:        Steven G. Martin

      If to the Transfer Agent:
               Corporate Stock Transfer, Inc.
               3200 Cherry Creek South Drive, Suite 430
               Denver, Colorado 80209
               Telephone:        303-282-4800
               Facsimile:        303-282-5800
               Attention:        Ms. Carylyn Bell

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, and recipient facsimile number or (C) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

      (g) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Buyer, including by merger or
consolidation. The Buyer may not assign its rights or obligations under this
Agreement.

                                       21
<PAGE>

      (h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

      (i) Publicity. The Buyer shall have the right to approve before issuance
any press release, SEC filing or any other public disclosure made by or on
behalf of the Company whatsoever with respect to, in any manner, the Buyer, its
purchases hereunder or any aspect of this Agreement or the transactions
contemplated hereby. The Company agrees and acknowledges that its failure to
fully comply with this provision constitutes a material adverse effect on its
ability to perform its obligations under this Agreement, provided, however, that
the Company shall be entitled, without the prior approval of the Buyer, to make
any press release or other public disclosure (including any filings with the
SEC) with respect to such transactions as is required by applicable law and
regulations; provided further, however, the Company and its counsel must consult
with the Buyer in connection with any such press release or other public
disclosure at least two (2) Trading Days prior to its release. The Buyer must be
provided with a copy thereof at least two (2) Trading Days prior to any release
or use by the Company thereof.

      (j) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

      (k) Termination. This Agreement may be terminated only as follows:

            (i) By the Buyer any time an Event of Default exists without any
      liability or payment to the Company. However, if pursuant to or within the
      meaning of any Bankruptcy Law, the Company commences a voluntary case or
      any Person commences a proceeding against the Company, a Custodian is
      appointed for the Company or for all or substantially all of its property,
      or the Company makes a general assignment for the benefit of its
      creditors, (any of which would be an Event of Default as described in
      Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall automatically
      terminate without any liability or payment to the Company without further
      action or notice by any Person. No such termination of this Agreement
      under this Section 11(k)(i) shall affect the Company's or the Buyer's
      obligations under this Agreement with respect to pending purchases and the
      Company and the Buyer shall complete their respective obligations with
      respect to any pending purchases under this Agreement.

            (ii) In the event that the Commencement shall not have occurred, the
      Company shall have the option to terminate this Agreement for any reason
      or for no reason without liability of any party to any other party.

            (iii) In the event that the Commencement shall not have occurred on
      or before February 28, 2006, due to the failure to satisfy the conditions
      set forth in Sections 6 and 7 above with respect to the Commencement (and
      the nonbreaching party's failure to waive such unsatisfied condition(s)),
      the nonbreaching party shall have the option to terminate this Agreement
      at the close of business on such date or thereafter without liability of
      any party to any other party.

            (iv) If by the Maturity Date, for any reason or for no reason the
      full Available Amount under this Agreement has not been purchased as
      provided for in Section 1 of this Agreement, by the Buyer without any
      liability or payment to the Company.

                                       22
<PAGE>

            (v) At any time after the Commencement Date, the Company shall have
      the option to terminate this Agreement for any reason or for no reason by
      delivering notice (a "Company Termination Notice") to the Buyer electing
      to terminate this Agreement without any liability or payment to the Buyer.
      The Company Termination Notice shall not be effective until one (1)
      Trading Day after it has been received by the Buyer.

            (vi) This Agreement shall automatically terminate on the date that
      the Company sells and the Buyer purchases the full Available Amount as
      provided herein, without any action or notice on the part of any party.

Except as set forth in Sections 11(k)(i) (in respect of an Event of Default
under Sections 9(f), 9(g) and 9(h)) and 11(k)(vi), any termination of this
Agreement pursuant to this Section 11(k) shall be effected by written notice
from the Company to the Buyer, or the Buyer to the Company, as the case may be,
setting forth the basis for the termination hereof. The representations and
warranties of the Company and the Buyer contained in Sections 2 and 3 hereof,
the indemnification provisions set forth in Section 8 hereof and the agreements
and covenants set forth in Sections 4(h) and 11, shall survive the Commencement
and any termination of this Agreement. No termination of this Agreement shall
affect the Company's or the Buyer's rights or obligations (i) under the
Registration Rights Agreement which shall survive any such termination or (ii)
under this Agreement with respect to pending purchases and the Company and the
Buyer shall complete their respective obligations with respect to any pending
purchases under this Agreement.

      (l) No Financial Advisor, Placement Agent, Broker or Finder. The Company
represents and warrants to the Buyer that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the transactions
contemplated hereby. The Buyer represents and warrants to the Company that it
has not engaged any financial advisor, placement agent, broker or finder in
connection with the transactions contemplated hereby. The Company shall be
responsible for the payment of any fees or commissions, if any, of any financial
advisor, placement agent, broker or finder relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold the Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.

      (m) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

      (n) Remedies, Other Obligations, Breaches and Injunctive Relief. The
Buyer's remedies provided in this Agreement shall be cumulative and in addition
to all other remedies available to the Buyer under this Agreement, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy of the Buyer contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit the Buyer's right to pursue actual damages for any failure by the
Company to comply with the terms of this Agreement. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

      (o) Changes to the Terms of this Agreement. This Agreement and any
provision hereof may only be amended by an instrument in writing signed by the
Company and the Buyer. The term "Agreement" and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.

                                       23
<PAGE>

      (p) Enforcement Costs. If: (i) this Agreement is placed by the Buyer in
the hands of an attorney for enforcement or is enforced by the Buyer through any
legal proceeding; or (ii) an attorney is retained to represent the Buyer in any
bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Buyer in any other proceedings whatsoever
in connection with this Agreement, then the Company shall pay to the Buyer, as
incurred by the Buyer, all reasonable costs and expenses including attorneys'
fees incurred in connection therewith, in addition to all other amounts due
hereunder. Notwithstanding the foregoing, in the case of clauses (i) and (iii)
above, the Buyer shall not be entitled to such reasonable costs and expenses
unless the Buyer is the prevailing party.

      (q) Failure or Indulgence Not Waiver. No failure or delay in the exercise
of any power, right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.

                                    * * * * *

                                       24
<PAGE>

      IN WITNESS WHEREOF, the Buyer and the Company have caused this Common
Stock Purchase Agreement to be duly executed as of the date first written above.

                                         THE COMPANY:

                                         XETHANOL CORPORATION

                                         By: /s/ Christopher d'Arnaud-Taylor
                                             -----------------------------------
                                         Name:   Christopher d'Arnaud-Taylor
                                         Title:  Chairman, President and
                                                 Chief Executive Officer

                                         BUYER:

                                         FUSION CAPITAL FUND II, LLC
                                         BY: FUSION CAPITAL PARTNERS, LLC
                                         BY: ROCKLEDGE CAPITAL CORPORATION

                                         By: /s/  Josh Scheinfeld
                                             -----------------------------------
                                         Name:    Josh Scheinfeld
                                         Title:   President

                                       28Exhibit 10.2

                          REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of October 18,
2005, by and between XETHANOL CORPORATION, a Delaware corporation, (the
"COMPANY"), and FUSION CAPITAL FUND II, LLC (together with its permitted
assigns, the "BUYER"). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Common Stock Purchase
Agreement by and between the parties hereto, dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
"PURCHASE AGREEMENT").

                                    WHEREAS:

      A. The Company has agreed, upon the terms and subject to the conditions of
the Purchase Agreement, to issue to the Buyer (i) up to Twenty Million Dollars
($20,000,000) of the Company's common stock, par value $0.001 per share (the
"COMMON STOCK") (the "PURCHASE SHARES"), and (ii) such number of shares of
Common Stock as is required pursuant to Section 4(f) of the Purchase Agreement
(the "COMMITMENT SHARES"); and

      B. To induce the Buyer to enter into the Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "1933 ACT"), and applicable state
securities laws.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:

      1.    DEFINITIONS.

            As used in this Agreement, the following terms shall have the
following meanings:

            a. "INVESTOR" means the Buyer, any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

            b. "PERSON" means any person or entity including any corporation, a
limited liability company, an association, a partnership, an organization, a
business, an individual, a governmental or political subdivision thereof or a
governmental agency.

            c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more registration
statements of the Company in compliance with the 1933 Act and pursuant to Rule
415 under the 1933 Act or any successor rule providing for offering securities
on a continuous basis ("RULE 415"), and the declaration or ordering of
effectiveness of such registration statement(s) by the United States Securities
and Exchange Commission (the "SEC").

            d. "REGISTRABLE SECURITIES" means the Purchase Shares which have
been, or which may from time to time be, issued or issuable upon purchases of
the Available Amount under the Purchase Agreement (without regard to any
limitation or restriction on purchases) and the Commitment Shares issued or
issuable to the Investor and any shares of capital stock issued or issuable with
respect to the Purchase Shares, the Commitment Shares or the Purchase Agreement
as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitation on purchases under
the Purchase Agreement.

                                       1
<PAGE>

            e. "REGISTRATION STATEMENT" means the registration statement of the
Company covering the sale of the Registrable Securities and up to 14,462,047
additional shares of Common Stock (including 1,431,032 shares issuable upon the
exercise of outstanding warrants and 1,650,000 shares issuable upon the
conversion of outstanding senior secured royalty income notes) on behalf of
certain other selling stockholders.

      2.    REGISTRATION.

            a. Mandatory Registration. The Company shall within ten (10) Trading
Days from the date hereof file with the SEC the Registration Statement. The
Registration Statement shall register the Registrable Securities and up to
14,462,047 additional shares of Common Stock (including 1,431,032 shares
issuable upon the exercise of outstanding warrants and 1,650,000 shares issuable
upon the conversion of outstanding senior secured royalty income notes) on
behalf of certain other selling stockholders and no other securities of the
Company. The Investor and its counsel shall have a reasonable opportunity to
review and comment upon such registration statement or amendment to such
registration statement and any related prospectus prior to its filing with the
SEC. Investor shall furnish all information reasonably requested by the Company
for inclusion therein. The Company shall use its best efforts to have the
Registration Statement or amendment declared effective by the SEC at the
earliest possible date. The Company shall use reasonable best efforts to keep
the Registration Statement effective pursuant to Rule 415 promulgated under the
1933 Act and available for sales of all of the Registrable Securities at all
times until the earlier of (i) the date as of which the Investor may sell all of
the Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) or (ii) the date on which
(A) the Investor shall have sold all the Registrable Securities and no Available
Amount remains under the Purchase Agreement (the "REGISTRATION PERIOD"). The
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any 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 in which
they were made, not misleading.

            b. Rule 424 Prospectus. The Company shall, as required by applicable
securities regulations, from time to time file with the SEC, pursuant to Rule
424 promulgated under the 1933 Act, the prospectus and prospectus supplements,
if any, to be used in connection with sales of the Registrable Securities under
the Registration Statement. The Investor and its counsel shall have a reasonable
opportunity to review and comment upon such prospectus prior to its filing with
the SEC. The Investor shall use its reasonable best efforts to comment upon such
prospectus within one (1) Trading Day from the date the Investor receives the
final version of such prospectus.

            c. Sufficient Number of Shares Registered. In the event the number
of shares available under the Registration Statement is insufficient to cover
all of the Registrable Securities, the Company shall amend the Registration
Statement or file a new registration statement (a "NEW REGISTRATION STATEMENT"),
so as to cover all of such Registrable Securities as soon as practicable, but in
any event not later than ten (10) Trading Days after the necessity therefor
arises. The Company shall use its reasonable best efforts to cause such
amendment and/or New Registration Statement to become effective as soon as
practicable following the filing thereof.

                                       2
<PAGE>

      3.    RELATED OBLIGATIONS.

With respect to the Registration Statement and whenever any Registrable
Securities are to be registered pursuant to Section 2(b) including on any New
Registration Statement, the Company shall use its reasonable best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

            a. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to any registration
statement and the prospectus used in connection with such registration
statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep the Registration Statement or
any New Registration Statement effective at all times during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of the Company covered
by the Registration Statement or any New Registration Statement until such time
as all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in such registration statement.

            b. The Company shall permit the Investor to review and comment upon
the Registration Statement or any New Registration Statement and all amendments
and supplements thereto at least two (2) Trading Days prior to their filing with
the SEC, and not file any document in a form to which Investor reasonably
objects. The Investor shall use its reasonable best efforts to comment upon the
Registration Statement or any New Registration Statement and any amendments or
supplements thereto within two (2) Trading Days from the date the Investor
receives the final version thereof. The Company shall furnish to the Investor,
without charge any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to the Registration Statement or any New
Registration Statement.

            c. Upon request of the Investor, the Company shall furnish to the
Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one copy of such registration statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, (ii) upon the effectiveness of any registration
statement, a copy of the prospectus included in such registration statement and
all amendments and supplements thereto (or such other number of copies as the
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by the Investor.

            d. The Company shall use reasonable best efforts to (i) register and
qualify the Registrable Securities covered by a registration statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as the Investor reasonably requests, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
the Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.

                                       3
<PAGE>

            e. As promptly as practicable after becoming aware of such event or
facts, the Company shall notify the Investor in writing of the happening of any
event or existence of such facts as a result of which the prospectus included in
any registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and promptly prepare a supplement or
amendment to such registration statement to correct such untrue statement or
omission, and deliver a copy of such supplement or amendment to the Investor (or
such other number of copies as the Investor may reasonably request). The Company
shall also promptly notify the Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
registration statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investor by
facsimile on the same day of such effectiveness and by overnight mail), (ii) of
any request by the SEC for amendments or supplements to any registration
statement or related prospectus or related information, and (iii) of the
Company's reasonable determination that a post-effective amendment to a
registration statement would be appropriate.

            f. The Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of any
registration statement, or the suspension of the qualification of any
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

            g. The Company shall (i) cause all the Registrable Securities to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.

            h. The Company shall cooperate with the Investor to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to any
registration statement and enable such certificates to be in such denominations
or amounts as the Investor may reasonably request and registered in such names
as the Investor may request.

            i. The Company shall at all times provide a transfer agent and
registrar with respect to its Common Stock.

            j. If reasonably requested by the Investor, the Company shall (i)
immediately incorporate in a prospectus supplement or post-effective amendment
such information as the Investor believes should be included therein relating to
the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any registration
statement.

            k. The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by the any registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.

                                       4
<PAGE>

            l. Within one (1) Trading Day after any registration statement which
includes the Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investor)
confirmation that such registration statement has been declared effective by the
SEC in the form attached hereto as Exhibit A. Thereafter, if requested by the
Buyer at any time, the Company shall require its counsel to deliver to the Buyer
a written confirmation as to whether or not the effectiveness of such
registration statement has lapsed at any time for any reason (including, without
limitation, by reason of the issuance of a stop order) and whether or not the
registration statement is current and available to the Buyer for sale of all of
the Registrable Securities.

            m. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to any registration statement.

      4.    OBLIGATIONS OF THE INVESTOR.

            a. The Company shall notify the Investor in writing of the
information the Company reasonably requires from the Investor in connection with
any registration statement hereunder. The Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.

            b. The Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
registration statement hereunder.

            c. The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event or existence of facts of the kind
described in Section 3(f) or the first sentence of 3(e), the Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
registration statement(s) covering such Registrable Securities until the
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of 3(e). Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to promptly
deliver shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale prior to the Investor's receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e) and for which the Investor has not yet settled.

      5.    EXPENSES OF REGISTRATION.

            All reasonable expenses, other than sales or brokerage commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company, shall be paid by the Company.

                                       5
<PAGE>

      6.    INDEMNIFICATION.

            a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Investor, each Person, if
any, who controls the Investor, the members, the directors, officers, partners,
employees, agents, representatives of the Investor and each Person, if any, who
controls the Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 ACT") (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys' fees, amounts paid in settlement or
expenses, joint or several, (collectively, "CLAIMS") incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in the Registration
Statement, any New Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("BLUE SKY FILING"), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to the Registration Statement or
any New Registration Statement or (iv) any material violation by the Company of
this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "VIOLATIONS"). The Company shall reimburse each Indemnified Person
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement, any New Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superseded
prospectus, shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable Securities that are
the subject thereof (or to the benefit of any person controlling such person) if
the untrue statement or omission of material fact contained in the superceded
prospectus was corrected in the revised prospectus, as then amended or
supplemented, if such revised prospectus was timely made available by the
Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the use
giving rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e); and (iv)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.

            b. In connection with the Registration Statement or any New
Registration Statement, the Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement or any New Registration Statement,
each Person, if any, who controls the Company within the meaning of the 1933 Act
or the 1934 Act (collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any

                                       6
<PAGE>

Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
about the Investor set forth on Exhibit B attached hereto and furnished to the
Company by the Investor expressly for use in connection with such registration
statement; and, subject to Section 6(d), the Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
the Investor as a result of the sale of Registrable Securities pursuant to such
registration statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9.

            c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

            d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

                                       7
<PAGE>

            e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

      7.    CONTRIBUTION.

            To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

      8.    REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

            With a view to making available to the Investor the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Investor to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees, at
the Company's sole expense, to:

            a. make and keep public information available, as those terms are
understood and defined in Rule 144;

            b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

            c. furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting and or disclosure provisions of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investor to sell such securities pursuant to Rule 144 without
registration.

            d. take such additional action as is requested by the Investor to
enable the Investor to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents,
certificates, resolutions and instructions to the Company's Transfer Agent as
may be requested from time to time by the Investor and otherwise fully cooperate
with Investor and Investor's broker to effect such sale of securities pursuant
to Rule 144.

            The Company agrees that damages may be an inadequate remedy for any
breach of the terms and provisions of this Section 8 and that Investor shall,
whether or not it is pursuing any remedies at law, be entitled to equitable
relief in the form of a preliminary or permanent injunctions, without having to
post any bond or other security, upon any breach or threatened breach of any
such terms or provisions.

                                       8
<PAGE>

      9.    ASSIGNMENT OF REGISTRATION RIGHTS.

            The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor,
including by merger or consolidation. The Investor may not assign its rights
under this Agreement without the written consent of the Company, other than to
an affiliate of the Investor controlled by Steven G. Martin or Joshua B.
Scheinfeld.

      10.   AMENDMENT OF REGISTRATION RIGHTS.

            Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investor.

      11.   MISCELLANEOUS.

            a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

            b. Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Trading Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

     If to the Company:
              Xethanol Corporation
              1185 Avenue of the Americas, 20th Floor
              New York, NY 10036
              Telephone:        646-723-4000
              Facsimile:        646-723-4001
              Attention:        Mr. Christopher d'Arnaud-Taylor
                                Chairman, President and Chief Executive Officer

     With a copy to:
              Greenberg Traurig, LLP
              The MetLife Building
              200 Park Avenue,
              15th Floor
              New York, New York 10166
              Telephone:        212-801-9200
              Facsimile:        212-801-6400
              Attention:        Spencer G. Feldman, Esq.

     If to the Investor:
              Fusion Capital Fund II, LLC
              222 Merchandise Mart Plaza, Suite 9-112
              Chicago, IL 60654
              Telephone:        312-644-6644
              Facsimile:        312-644-6244
              Attention:        Steven G. Martin

                                       9
<PAGE>

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

            c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

            d. The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting the City of Chicago, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, 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 brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. 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 to such
party at the address for such 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 manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

            e. This Agreement, and the Purchase Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement and the
Purchase Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.

            f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

            g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

            h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

                                       10
<PAGE>

            i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

            j. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

            k. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                                   * * * * * *

      IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                         THE COMPANY:

                                         XETHANOL CORPORATION

                                         By: /s/ Christopher d'Arnaud-Taylor
                                             -----------------------------------
                                         Name:   Christopher d'Arnaud-Taylor
                                         Title:  Chairman, President and
                                                 Chief Executive

                                         BUYER:

                                         FUSION CAPITAL FUND II, LLC
                                         BY: FUSION CAPITAL PARTNERS, LLC
                                         BY: ROCKLEDGE CAPITAL CORPORATION

                                         By: /s/ Josh Scheinfeld
                                             -----------------------------------
                                         Name:   Josh Scheinfeld
                                         Title:  President

                                       11

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