Document:

Exhibit 10.1

This
NOTE AND WARRANT PURCHASE AGREEMENT, dated as of June 15, 2007 (this “Agreement”),
is entered into by and between OPEN ENERGY CORP., a Nevada corporation with
headquarters located at 514 Via de la Valle, Suite 200, Solana Beach, CA  92075 (the “Company”), and John Fife,
an individual with an address at 303 East Wacker Drive, Suite 311, Chicago,
IL  60601 (the “Holder”).

W I T N E S S E T
H:

WHEREAS,
the Company and the Holder are executing and delivering this Agreement in
reliance upon the exemption from securities registration for offers and sales
to accredited investors afforded, inter  alia, by Rule 506 under
Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended (the “1933 Act”), and/or Section 4(2) of the 1933
Act;

WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Holder, as provided herein, and
the Holder shall purchase (i) an Original Issue Discount Note Series 05-01 (the
“Note”) of the Company, upon which the amount of Nine Hundred Fifty
Thousand and 00/100 Dollars ($950,000) shall be due and payable at its initial
maturity, or One Million and 00/100 Dollars ($1,000,000.00) shall be due and
payable if the term of the Note is extended in accordance with its terms or
earlier upon an event of default, in the form attached hereto as “Exhibit A”;

WHEREAS,
the performance of the Note is secured by the pledge of certain shares of the
Common Stock, par value $0.001 (the “Common Stock”) of the Company
identified in a Stock Pledge Agreement (the “Stock Pledge Agreement”),
which Stock Pledge Agreement is in the form attached hereto as “Exhibit D”,
and by the delivery of two affidavits in confession of judgment (the “Affidavits
in Confession of Judgment”), which Affidavits in Confession of Judgment are
in the form attached hereto as “Exhibit B”;

WHEREAS,
the performance of the Note is secured by a deficiency guaranty (the “Deficiency
Guaranty”) made by a stockholder of the Company who si an affiliate
thereof, which Deficiency Guaranty is in the form attached hereto as “Exhibit
B”;

WHEREAS,
contemporaneously with and as part of the purchase by the Holder of the Note,
the Company also is delivering a warrant substantially in the form attached
hereto as “Exhibit E” (the “Warrants”) to acquire up to four
million shares of Common Stock (as exercised, the “Warrant Shares”),
which purchase and sale shall occur within five (5) business days following the
date hereof (the “Closing”), for a total purchase price of Seven Hundred
Fifty Thousand and 00/100 ($750,000.00) (the “Purchase Price”);

WHEREAS,
in the event of a default with respect to the Note, the Holder, at his option,
may enter the Affidavit in Confession of Judgment and may foreclose on the
Common Stock pledged as collateral pursuant to the Stock Pledge Agreement, and
in connection therewith may deliver to the transfer agent of the Company a
notification substantially in the form of the 

notification
attached as an exhibit to the Form of Irrevocable Transfer Agent Instructions
with Legal Opinion Attached attached hereto as “Exhibit C”;

WHEREAS,
in the event of a default, all unpaid amounts due under the Note are
convertible, at the election of the Holder, upon presentation of a Note
Conversion Letter (the “Note Conversion Letter”) in the form attached
hereto as “Exhibit F”, into a Convertible Debenture in the form attached
hereto as “Exhibit G”, which Convertible Debenture is convertible into
shares of Common Stock (“Conversion Shares”) at the option of the
Holder, together with an attached Warrant (the “Default Warrant”)
exercisable for shares of Common Stock (“Default Warrant Shares”), which
Warrant is in the form attached hereto as “Exhibit H”;

WHEREAS,
contemporaneously with the execution and delivery of this agreement, the
parties hereto are executing and delivering a Registration Rights Agreement
(the “Registration Rights Agreement”) pursuant to which the Company has
agreed to provide certain registration rights under the Securities Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws, with respect to the Convertible Debenture and the Default Warrant, which
Registration Rights Agreement is in the form attached hereto as “Exhibit I”;

WHEREAS,
contemporaneously with the execution and delivery of this agreement, the
parties hereto are executing and delivering a Security Agreement to secure the
obligations of the Company to the Holder under the Convertible Debenture in all
of the assets of the Company and each of the Company’s subsidiaries (the “Security
Agreement”), which security agreement is in the form attached hereto as “Exhibit
J”; and

WHEREAS,
the Note, the Warrant, the Warrant Shares, the Convertible Debentures, the
Conversion Shares, the Default Warrant and the Default Warrant Shares
collectively are referred to herein as the “Securities”).

NOW
THEREFORE, in consideration of the mutual covenants and other agreements contained
in this Agreement the Company and the Holder hereby agree as follows:

1.                                       PURCHASE
AND SALE OF NOTE AND WARRANT.

(a)           Purchase of Note and Warrant.  Subject to the satisfaction (or waiver) of
the terms and conditions of this Agreement and the other documents delivered in
connection herewith (the “Transaction Agreements”), the undersigned
Holder agrees to purchase at the Closing and the Company agrees to sell and
issue the Holder at the Closing, an original issue discount note with respect
to which the Company is obligated to pay Nine Hundred and Fifty Thousand and
00/100 Dollars ($950,000.00) if paid on the first maturity date thereof and One
Million and 00/100 Dollars ($1,000,000.00) if paid on the second maturity date
thereof, in accordance with its terms, and the Warrants to acquire four million
(4,000,000) Warrant Shares at an exercise price (as the same may be adjusted)
of fifty cents ($0.50) per Warrant Share exercisable for three (3) years
following the Closing.  The Company’s
obligation to pay the amounts due pursuant to the Note shall be secured by the
pledge of Common Stock by one or more holders thereof pursuant to the terms of
the Stock Pledge Agreement; and, in addition, any 

unpaid amounts
owed following sale of all Pledged Shares (as defined in the Stock Pledge
Agreement) may, at the option of the Holder, be converted into one or more
Convertible Debentures with detachable Default Warrants.

(b)           Closing Date.  The Closing of the purchase and sale of the
Notes and Warrants shall take place at 10:00 a.m. Central Standard Time on the
fifth (5th)
business day following the date hereof, subject to notification of satisfaction
of the conditions to the Closing set forth herein and in Sections 7 and 8
below (or such other date as is mutually agreed to by the Company and the
Holder (the “Closing Date”).  The
Closing shall occur on the Closing Date at the offices of Holder, or such other
place as is mutually agreed to by the Company and the Holder.

(c)           Form of Payment.  Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Date (i) the Holder shall deliver
to the Company the Purchase Price for the Notes and Warrants to be issued and
sold to the Holder at the Closing, minus the fees to be paid directly from the
proceeds of the Closing as set forth herein, and (ii) the Company shall deliver
to the Holder the Note, Warrant, and other Transaction Agreements referred to
herein, duly executed on behalf of the Company.

2.                                       HOLDER
REPRESENTATIONS AND WARRANTIES; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.

The Holder represents and
warrants that:

(a)           Investment Purpose.  The Holder is acquiring the Securities for
his own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act of 1933, as amended (the “Securities
Act”); provided, however, that by making the representations herein, the
Holder reserves the right to dispose of the Securities at any time in
accordance with or pursuant to an effective registration statement covering
such Securities or an available exemption under the Securities Act.  The Holder does not currently have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Securities.

(b)           Accredited Investor Status.  The Holder is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D of the General Rules
and Regulations under the 1933 Act.

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

(d)           Information.  The Holder and his advisors (and his
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information he deemed
material to making an informed investment decision regarding his purchase of
the Securities which have been requested by him.  The Holder and his advisors, if any, have
been afforded the opportunity to ask questions of the Company and its
management.  Neither such inquiries nor
any other due diligence investigations conducted by the Holder or his advisors,
if any, or his representatives shall modify, amend or affect the Holder’s right
to rely on the Company’s representations and warranties contained in Section
3 below.  The Holder understands that
his investment in the Securities involves a high degree of risk.  The Holder is in a position regarding the
Company, which, based upon employment, family relationship or economic
bargaining power, enabled and enables the Holder to obtain information from the
Company in order to evaluate the merits and risks of this investment.  The Holder has sought such accounting, legal
and tax advice as he has considered necessary to make an informed investment
decision with respect to his acquisition of the Securities.

(e)           No Governmental Review.  The Holder 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
Holder understands that except as provided in the Registration Rights Agreement:
(i) the Securities have not been and are not being registered under the
Securities Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (A) subsequently registered thereunder,
(B) the Holder shall have delivered to the Company an opinion of counsel, in a
generally acceptable form, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration requirements, or (C) the Holder provides the
Company with reasonable assurances (in the form of seller and broker
representation letters) that such Securities can be sold, assigned or
transferred pursuant to Rule 144, Rule 144(k), or Rule 144A promulgated under
the Securities Act, as amended (or a successor rule thereto) (collectively, “Rule
144”), in each case following the applicable holding period set forth
therein; (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 Securities Act) may require
compliance with some other exemption under the Securities 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 Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder.

(g)           Legends. 
The Holder agrees to the imprinting, so long as is required by this Section
2(g), of a restrictive legend in substantially the following form:

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 SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE 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 COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.

Certificates
evidencing the Conversion Shares, the Warrant Shares or the Default Warrant
Shares shall not contain any legend (including the legend set forth above) (i)
while a registration statement (including the Registration Statement) covering
the resale of such Security is effective under the Securities Act, (ii)
following any sale of such Warrant Shares, Conversion Shares or Default Warrant
Shares pursuant to Rule 144, (iii) if such Warrant Shares, Conversion Shares or
Default Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the SEC).  The Company shall cause its counsel to issue a legal opinion to
the Company’s transfer agent promptly after the effective date (the “Effective
Date”) of a Registration Statement if required by the Company’s transfer
agent to effect the removal of the legend hereunder.  If the Holder
exercises all or any portion of the Convertible Debentures, Warrants or Default
Warrants at a time when he is not an Affiliate of the Company (a “Non-Affiliated
Holder”) at a time when there is an effective registration statement to
cover the resale of the Conversion Shares, Warrant Shares or the Default
Warrant Shares, such Warrant Shares, Conversion Shares or Default Warrant
Shares shall be issued free of all legends.  The Company agrees that
following the Effective Date or at such time as such legend is no longer
required under this Section 2(g), it will, no later than three (3)
Trading Days following the delivery by a Non-Affiliated Holder to the Company
or the Company’s transfer agent of a certificate representing Warrant Shares,
Conversion Shares or Default Warrant Shares, as the case may be, issued with a
restrictive legend (such third Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to such Non-Affiliated Holder a certificate
representing such shares that is free from all restrictive and other
legends.  The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section 2(g).  The Holder
acknowledges that the Company’s agreement hereunder to remove all legends from
Conversion Shares or Warrant Shares is not an affirmative statement or
representation that such Conversion Shares or Warrant Shares are freely
tradable.  The Holder agrees that the removal of the restrictive legend
from certificates representing Securities as set forth in this Section 2(g) is
predicated upon the Company’s reliance that the Holder will sell any Securities
pursuant to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a 

Registration
Statement, they will be sold in compliance with the plan of distribution set
forth therein.

(h)           Authorization, Enforcement. 
This Agreement is a valid and binding agreement of the Holder enforceable in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

(i)            Receipt of Documents. 
The Holder and his counsel have received and read in their entirety:  (i)
this Agreement and each representation, warranty and covenant set forth herein
and the Transaction Agreements; (ii) all due diligence and other information
necessary to verify the accuracy and completeness of such representations,
warranties and covenants; (iii) the Company’s Form 10-KSB for the fiscal year
ended May 31, 2006; (iv) the Company’s Forms 10-QSB for the fiscal quarters
ended August 31, 2006, November 30, 2006 February 28, 2007 and (v) answers to
all questions the Holder submitted to the Company regarding an investment in
the Company; and the Holder has relied on the information contained therein and
has not been furnished any other documents, literature, memorandum or
prospectus.

(j)            No Legal Advice From the Company. 
The Holder acknowledges that he had the opportunity to review this Agreement
and the transactions contemplated by this Agreement with his own legal counsel
and investment and tax advisors.  The Holder is relying solely on such
counsel and advisors and not on any statements or representations of the
Company or any of its representatives or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.

3.             COMPANY REPRESENTATIONS.

Except
as set forth under the corresponding sections of the Disclosure Schedules
designated “Exhibit L”, which Disclosure Schedules shall be
deemed a part hereof and to qualify any representation or warranty otherwise
made herein to the extent of such disclosure, or as otherwise provided in the
Company’s SEC Documents, the Company hereby makes the representations and
warranties set forth below to the Holder. 
To the best knowledge of the Company:

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

(b)           Organization and
Qualification.  The Company and its subsidiaries 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 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 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
would not have or reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets, business
or condition (financial or otherwise) of the Company and the subsidiaries,
taken as a whole, or (iii) a material adverse effect on the Company’s ability
to perform in any material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.

(c)           Authorization,
Enforcement, Compliance with Other Instruments.  (i) The Company
has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Note, the Stock Pledge Agreement, the
Irrevocable Transfer Agent Instructions, the Warrant, the Convertible
Debentures, the Default Warrants, the Security Agreement, the Registration
Rights Agreement, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively the “Transaction Agreements”) and to issue the Securities
in accordance with the terms hereof and thereof, (ii) the execution and
delivery of the Transaction Agreements by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Securities, the reservation for issuance and
the issuance of the Conversion Shares, and the reservation for issuance and the
issuance of the Warrant Shares, 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 stockholders, (iii) the Transaction
Agreements have been duly executed and delivered by the Company, (iv) the
Transaction Agreements 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 authorized officer of the Company executing the
Transaction Agreements knows of no reason why the Company cannot file the
Registration Statement as required under the Registration Rights Agreement or
perform any of the Company’s other obligations under the Transaction
Agreements.

(d)           Capitalization. 
The authorized capital stock of the Company consists of 1,125,000,000 shares of
Common Stock, of which, as of May 16, 2007, 
98,161,724 shares of Common Stock are issued and outstanding.  All
of the outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities.  Except as disclosed in Schedule 3(d) and the Company’s
SEC Documents: (i) none of the Company’s capital stock is 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 options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any 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 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, or
exercisable or exchangeable for, any capital stock of the Company or any of its
subsidiaries; (iii) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing indebtedness of the Company or any of its subsidiaries or by which
the Company or any of its subsidiaries is or may become bound; (iv) there are
no financing statements securing obligations in any material amounts, either
singly or in the aggregate, filed in connection with the Company or any of its
subsidiaries; (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; (vii) the
Company does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement; and (viii) the Company and its
subsidiaries have no liabilities or obligations required to be disclosed in the
SEC Documents but not so disclosed in the SEC Documents, other than those
incurred in the ordinary course of the Company’s or its subsidiaries’
respective businesses and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect.   No further approval or
authorization of any stockholder, the Board of Directors of the Company or others
is required for the issuance and sale of the Securities.  There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

(e)           Issuance of Securities. 
The issuance of the Note, the Warrants, the Convertible Debentures and the
Default Warrants is duly authorized and free from all taxes, liens and charges
with respect to the issue thereof.  Upon conversion in accordance with the
terms of the Convertible Debentures or exercise in accordance with the Warrants
or the Default Warrants, as the case may be, the Warrant Shares, the Conversion
Shares and the Default Warrant Shares, respectively, when issued will be
validly issued, fully paid and nonassessable, free from all taxes, liens and
charges with respect to the issue thereof.  The Company has reserved from
its duly authorized capital stock the appropriate number of shares of Common
Stock as set forth in this Agreement.

(f)            No Conflicts.  The
execution, delivery and performance of the Transaction Agreements by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance of the Note,
the Warrant, the Convertible Debentures and the Default Warrants, and
reservation for 

issuance and
issuance of the Warrant Shares, the Conversion Shares and the Default Warrant
Shares) will not (i) result in a violation of any certificate of incorporation,
certificate of formation, any certificate of designations or other constituent
documents of the Company or any of its subsidiaries, any capital stock of the
Company or any of its subsidiaries or bylaws of the Company or any of its
subsidiaries or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) in any respect
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 (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations and the rules and regulations of the
National Association of Securities Dealers Inc.’s OTC Bulletin Board)
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 each of clauses (ii) and (iii), such as could not, individually
or in the aggregate, have or reasonably be expected to result in 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 material law,
ordinance, or regulation of any governmental entity.  Except as
specifically contemplated by this Agreement and as required under the
Securities Act and any 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 in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof.  All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. 
The Company and its subsidiaries are unaware of any facts or circumstance,
which might give rise to any of the foregoing.

(g)           SEC Documents; Financial
Statements.  The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
for the two years preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material) (all of the
foregoing filed prior to the date hereof or amended after 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”) on timely basis or has received a valid
extension of such time of filing and has filed any such SEC Document prior to
the expiration of any such extension.  The Company has delivered to the
Holder or his representatives, or made available through the SEC’s website at
http://www.sec.gov., true and complete copies of the SEC Documents.  As of
their respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange 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, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.  As
of their respective dates, 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).  No
other information provided by or on behalf of the Company to the Holder which
is not included in the SEC Documents, including, without limitation,
information referred to in Section 2(i) of this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made and not misleading.

(h)           10(b)-5.  The SEC Documents
do not include any untrue statements of material fact, nor do they omit to
state any material fact required to be stated therein necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.

(i)            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 against or affecting the Company, the Common Stock or any of the Company’s
subsidiaries, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect.

(j)            Acknowledgment Regarding Holder’s
Purchase of the Note, and Warrant and contingent issuance of Convertible
Debentures and Default Warrants.  The Company acknowledges and agrees
that the Holder is acting solely in the capacity of an arm’s length purchaser
with respect to this Agreement and the transactions contemplated hereby. 
The Company further acknowledges that the Holder is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect
to this Agreement and the transactions contemplated hereby and any advice given
by the Holder or any of his representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to the
Holder’s purchase of the Securities.  The Company further represents to
the Holder that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its
representatives.

(k)           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 Securities Act) in
connection with the offer or sale of the Securities.

(l)            No Integrated Offering. 
Neither the Company, nor any of its affiliates, nor any person acting on its or
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require

registration of
the Securities under the Securities Act or cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
the Securities Act.

(m)                               Employee
Relations.  Neither the Company nor any of its subsidiaries is
involved in any labor dispute or, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened.  None of the Company’s or
its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are good.

(n)                                 Intellectual
Property Rights.  The Company and its subsidiaries own or possess
adequate rights or licenses to use all 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. 
The Company and its subsidiaries do not have any knowledge of any infringement
by the Company or its subsidiaries of 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,
and, to the knowledge of the Company 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; and the
Company and its subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.

(o)                                 Environmental
Laws.  The Company and its subsidiaries are (i) 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.

(p)                                 Title. 
All real property and facilities held under lease by the Company and 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.

(q)                                 Insurance. 
The Company and each of its subsidiaries is 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.

(r)                                    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.

(s)                                  Internal
Accounting Controls.  The Company and each of its subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
and (iii) the recorded amounts for assets are compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.

(t)                                    No
Material Adverse Breaches, etc.  Neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal restriction,
or any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries.  Neither the
Company nor any of its subsidiaries is in breach of any contract or agreement
which breach, in the judgment of the Company’s officers, has or is expected to
have a Material Adverse Effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company or its
subsidiaries.

(u)                                 Tax
Status.  The Company and each of its subsidiaries has made and filed
all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (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) 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.

(v)                                 Certain
Transactions.  Except for arm’s length transactions pursuant to which
the Company makes payments in the ordinary course of business upon terms no
less favorable than the Company could obtain from third parties and other than
the grant of stock options disclosed in the SEC Documents, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (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 a substantial interest or is an officer, director, trustee or
partner.

(w)                               No
Rights of First Refusal.  The Company is not obligated to offer the
securities offered hereunder on a right of first refusal basis or otherwise to
any third parties including, but not limited to, current or former shareholders
of the Company, underwriters, brokers, agents or other third parties.

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

(y)                                 Registration
Rights.  Other than Cornell Capital Partners, LP and the Holder, no
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company.  There are no outstanding
registration statements not yet declared effective and there are no outstanding
comment letters from the SEC or any other regulatory agency.

(z)                                   Private
Placement.  Assuming the accuracy of
the Holder’s representations and warranties set forth in Section 2, no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Holders as contemplated hereby.  The issuance and sale of the Securities hereunder
does not contravene the rules and regulations of the Primary Market (as defined
in Section 4(h)).

(aa)                            Listing
and Maintenance Requirements.  The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company
has taken no action designed to terminate, or which to its knowledge is likely
to have the effect of, terminating the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration.  The Company has not, in the
twelve (12) months preceding the date hereof, received notice from any Primary
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Primary Market.  The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

(bb)                          Manipulation
of Price.  The Company has not, and to its knowledge no one acting on
its behalf has, (i) taken, directly or indirectly, any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or, paid any 

compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

(cc)                            Dilutive
Effect.  The Company understands and acknowledges that the number of
Conversion Shares issuable upon conversion of the Convertible Debentures and
the Default Warrant Shares issuable upon exercise of the Default Warrants will
increase in certain circumstances.  The Company further acknowledges that
its obligation to issue Conversion Shares upon conversion of the Convertible
Debentures in accordance with this Agreement and the Convertible Debentures and
its obligation to issue the Default Warrant Shares upon exercise of the Default
Warrants in accordance with this Agreement and the Warrants, in each case, is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company.

(dd)                          Purpose
of Loan, Plan of Repayment.  The Company
intends to use proceeds for working capital and general business purposes.  The Company has a reasonable, good faith
belief in its ability to repay the loan evidenced by the Note as and when the
same may become due and payable from future sales revenues and, to the extent
necessary, from future financings by the Company.

4.                                       CERTAIN
COVENANTS AND ACKNOWLEDGMENTS.

(a)                                  Best Efforts.  Each party shall use his or its best
efforts to timely satisfy each of the conditions to be satisfied by it as
provided in Sections 7 and 8 of this Agreement.

(b)                                 Form D.  The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to the
Holder promptly after such filing.  The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is necessary
to qualify the Securities, or obtain an exemption for the Securities for sale
to the Holder at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of any such action so taken to the Holder on or prior to the
Closing Date.

(c)                                  Reporting Status.  Until the earlier of (i) the date as
of which the Holder may sell all of the Securities without restriction pursuant
to Rule 144(k) promulgated under the Securities Act (or successor thereto), or
(ii) the date on which (A) the Holder shall have sold all the Securities and
(B) none of the Convertible Debentures or Warrants are outstanding (the “Registration
Period”), the Company shall file when due all reports required to be filed
with the SEC pursuant to the Exchange Act and the regulations of the SEC
thereunder, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would otherwise permit such termination.

(d)                                 Use of Proceeds.  The Company will use the proceeds
from the sale of the Convertible Debentures as provided in Section 3(dd)
of this Agreement.

(e)                                  Reservation of Shares.  On the date hereof, the Company shall
reserve for issuance to the Holder four million (4,000,000) shares for issuance
upon exercise of the Warrant, two million (2,000,000) shares for issuance upon
conversions of the Convertible Dentures and four million (4,000,000) shares for
issuance upon exercise of the Default Warrants (collectively, the “Share
Reserve”).  The Company represents that it has sufficient authorized
and unissued shares of Common Stock available to create the Share Reserve after
considering all other commitments that may require the issuance of Common
Stock.  The Company shall take all action reasonably necessary to at all
times have authorized, and reserved for the purpose of issuance, such number of
shares of Common Stock as shall be necessary to effect the full exercise of the
Warrants, the full conversion of the Convertible Debentures and the full
exercise of the Default Warrants.  If at any time the Share Reserve is
insufficient to effect the full exercise of the Warrants, the full conversion
of the Convertible Debentures or the full exercise of the Default Warrants, the
Company shall increase the Share Reserve accordingly.  If the Company does
not have sufficient authorized and unissued shares of Common Stock available to
increase the Share Reserve, the Company shall call and hold a special meeting
of the shareholders within thirty (30) days of such occurrence, for the sole
purpose of increasing the number of shares authorized.  The Company’s
management shall recommend to the shareholders to vote in favor of increasing
the number of shares of Common Stock authorized.  Management shall also
vote all of its shares in favor of increasing the number of authorized shares
of Common Stock.

(f)              Warrants.  The Company agrees to issue to the Holder on the Closing Date a transferable warrant for the purchase of four million (4,000,000) shares of Common Stock at an exercise price (the “Exercise Price”) equal to fifty cents ($0.50) per share.  Each Warrant shall be exercisable commencing on the Commencement Date specified in the Warrants and shall expire at the close of business on the date which is the last day of the calendar month in which the third annual anniversary of the Effective Date occurs.  Each Warrant shall have cashless exercise rights as provided in the Warrant.  Except as specified above, each Warrant shall generally be in the form annexed hereto as “Exhibit E”.  The Warrant Shares shall be subject to the provisions of the Registration Rights Agreement.
(g)           Convertible Debentures and Default Warrants.  The Company agrees to issue to the Holder on the Closing Date a Convertible Debenture, which shall become a binding obligation of the Company in the event of a default by the Company in its performance of its obligations under the Note, and a transferable warrant for the purchase of shares of Common Stock in the event that the Convertible Debentures become a binding obligation of the Company.

(h)                                 Listings or Quotation.  The Company’s Common Stock shall be
listed or quoted for trading on any of (a) the American Stock Exchange, (b) New
York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital
Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary
Market”).  The Company shall promptly secure the listing 

of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed (subject to official
notice of issuance) and shall maintain such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Agreements.

(i)                                     Fees and Expenses.

(i)                                     Each of the Company and the Holder shall pay
all costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of the
Transaction Agreements.  The Company shall pay J.H.Darbie & Co. a fee
equal to $50,000 which shall be paid directly from the gross proceeds of the
Closing.

(ii)                                  The Company shall pay a structuring and due
diligence fee to the Holder of Five Thousand and 00/100 Dollars ($5,000.00),
which shall be paid directly from the proceeds of the Closing.

(j)                                     Corporate Existence.  So long as any of the Note, the
Convertible Debentures or the Default Warrants remains outstanding, the Company
shall not directly or indirectly consummate any merger, reorganization,
restructuring, reverse stock split consolidation, sale of all or substantially all
of the Company’s assets or any similar transaction or related transactions
(each such transaction, an “Organizational Change”) unless, prior to the
consummation an Organizational Change, the Company obtains the written consent
of the Holder.

(k)                                  Disclosure of Transaction.  Within four (4) Business Day
following the date of this Agreement, the Company shall file a Current Report
on Form 8-K describing the terms of the transactions contemplated by the
Transaction Agreements in the form required by the Exchange Act and attaching
the material Transaction Agreements (including, without limitation, this
Agreement, the form of the Convertible Debenture, the form of Warrant and the
form of the Registration Rights Agreement) as exhibits to such filing.

(l)                                     Registration Rights.  If at any time after the date hereof
the Company shall file a registration statement, the Company shall, at the
Holder’s option, include the Conversion Shares and the Warrant Shares issuable
to the Holder.

(m)                               Payments.  The Company agrees that it shall not fail to
make any payment of the principal of, interest on, or other obligations in
respect of, the Notes, free of any claim of subordination, as and when the same
shall become due and payable (whether on the Maturity Date or by acceleration
or otherwise), for five (5) business days after the same shall be due and
payable.

(n)                                 Observe
Covenants.  The Company agrees that
it shall not fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit, any breach of, the Notes or any
other of the Loan Agreements.

(o)                                 Bankruptcy.  The Company agrees that it shall not commence
a voluntary case under the United States Bankruptcy Code or insolvency laws as
now or hereafter in effect or any successor thereto (the “Bankruptcy Code”);
or suffer to have an involuntary case commenced against it under the Bankruptcy
Code in which the petition is not controverted within thirty (30 days), or is
not dismissed within sixty (60) days, after commencement of such involuntary case;
or suffer to have a “custodian” (as defined in the Bankruptcy Code)
appointed for, or take charge of, all or any substantial part of the property
of the Company, or commence any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company, or suffer to have commenced against it any such
proceeding which remains undismissed for a period of sixty (60) days; or be
adjudicated insolvent or bankrupt; or have or suffer to have any order of
relief or other order approving any such case or proceeding entered; or have or
suffer to have any appointment of any custodian or the like for any thereof or
any substantial part of its property which continues undischarged or unstayed
for a period of sixty (60) days; or make a general assignment for the benefit
of creditors; or fail to pay, or state that it is unable to pay, its debts
generally as they become due; call a meeting of all of its respective creditors
with a view to arranging a composition or adjustment of its debts; or by any
act or failure to act indicate its consent to, approval of or acquiescence in
any of the foregoing; or take any corporate or other action for the purpose of
effecting any of the foregoing.

(p)                                 Cross-Defaults.  The Company agrees that it shall not default
in any of its obligations under any mortgage, credit agreement or other
facility, indenture, agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced any indebtedness thereof
in an amount exceeding fifty thousand dollars ($50,000.00), whether such
indebtedness now exists or shall hereafter be created and such default shall result
in such indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable.

(q)                                 Trading
Suspension, Delisting.  The Company
agrees that it shall not suffer to have its Common Stock suspended or delisted
from trading for in excess of three (3) Trading Days.

(r)                                    Trading
Volume.  The Company agrees that it
shall not suffer to have the average daily trading volume of the Common Stock,
during any consecutive ten (10) trading-day period, be less than fifty thousand
and 00/100 ($50,000.00) dollars in value; provided, that for purposes of
measuring compliance with this covenant, the value of the Common Stock traded
shall be deemed to be equal to the average of the Volume-Weighted Average Price
(the “VWAP”) of Common Stock times the volume, each as reported by
Bloomberg, L.P.

(s)                                  Securities
Law Violation.  The Company agrees
that it shall not suffer a determination by the U.S. Securities and Exchange
Commission or National Association of Securities Dealers, or any applicable
state regulatory authority, that it or the Issuer has violated applicable
Securities Laws.

(t)                                    Dilution.  The Company agrees that it shall not enter
into a transaction or series of transactions that would violate the “Twenty
Percent Rule” if the Common Stock were traded on the NASDAQ market.

(u)                                 Adverse
Judgment.  The Company agrees that it
shall not suffer to have a final judgment in respect of any action, suit or
proceeding commenced against it or the Issuer awarding damages in an amount
exceeding fifty thousand dollars ($50,000.00).

(v)                                 Material
Misstatement or Omission.  The
Company agrees that it shall not make any representation or warranty that is
not true and correct in all material respects as of the date of this Agreement,
except for representations and warranties that are expressly made as of a
particular date, which shall be true and correct in all material respects as of
such date.

5.                                       EVENT
OF DEFAULT.

A
breach by the Company of any covenant hereof shall be deemed to be an Event of
Default.

(a)                                  Upon
the occurrence of an Event of Default, which Event of Default is not cured
within ten (10) business days after its occurrence:  (i) the amount of principal due under the
Note shall be immediately due and payable to the Holder; (ii) default interest
shall begin to accrue at the annual rate of eighteen (18%) percent per annum;
(iii) the Holder may file the Affidavit of Confession of Judgment in a court of
law; and (iv) the Holder shall be entitled to all remedies under law and as set
forth in the Stock Pledge Agreement, and in connection therewith may transfer
the shares of Common Stock pledged as collateral into his name or at his
direction as provided in the Irrevocable Transfer Agent Instructions.

(b)                                 In
the event that (i) an Event of Default shall occur and not be cured as provided
above, (ii) the stock pledged as collateral pursuant to the Stock Pledge
Agreement shall be sold or, alternatively, some or all of the stock pledged as
collateral shall not be delivered in freely-salable form within five (5)
business days following the request therefor, and (iii) a deficiency remains on
the amount due hereunder (the “Remaining Deficiency”), then in such
case, at the option of the Holder pursuant to a Note Conversion Letter in the
form of “Exhibit F” and upon five (5) days’ written notice (the “Contingent
Effective Date”), all or any portion of the unpaid amounts of principal and
interest may be converted into the Convertible Debenture, the Company shall
issue to the Holder a Default Warrant, the Company’s obligation under the
Convertible Debenture shall be secured as provided in the Security Agreement,
and the shares of Common Stock that may be issued upon conversion of the
Convertible Debenture and the Default Warrant shall be subject to registration
rights as provided in the Registration Rights Agreement.

6.                                       TRANSFER
AGENT INSTRUCTIONS

(a)  At the Closing, the Company shall deliver to
the Holder the Irrevocable Transfer Agent Instructions, signed by the Transfer
Agent of the Company’s Common Stock to 

indicate the
Transfer Agent’s consent thereto. At such time as the Note shall be fully paid,
the shares of Common Stock of the Company that are represented by the share
certificate identified in the Irrevocable Transfer Agent Instructions shall
have been sold by the Holder, or the Note shall be converted into the
Convertible Debenture or otherwise satisfied, the Irrevocable Transfer Agent
Instructions shall be cancelled, and shall be of no further force and effect,
and promptly shall be returned to the Company.

(b)                                 The
Company warrants that it will give the Transfer Agent no instructions
inconsistent with instructions to issue Common Stock from time to time upon
exercise of the Warrants, conversion of the Contingent Convertible Debentures
or exercise of the Default Warrants, as may be applicable from time to time, in
such amounts as specified from time to time by the Company to the Transfer
Agent, bearing the restrictive legend specified in Section 2(g) of this
Agreement prior to registration of the Shares under the Securities Act,
registered in the name of the Holder or his nominee and in such denominations
to be specified by the Holder in connection therewith.  Except as so provided, the Securities shall otherwise
be freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the other Transaction Agreements.  Nothing in this Section shall affect in any
way the Holder’s obligations and agreement to comply with all applicable
securities laws upon resale of the Securities.

(c)                                  If
the Holder provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a resale by the Holder of any
of the Securities in accordance with clause (1)(B) of Section 4(a) of this
Agreement is not required under the 1933 Act, 
the Company shall (except as provided in clause (2) of Section 4(a) of
this Agreement) permit the transfer of the Securities.

(d)                                 The
Company understands that a delay in the delivery of certificates evidencing
shares of Common Stock (“Conversion Certificates”), whether on
foreclosure on collateral pledged pursuant to the Note, exercise of the
Warrants, conversion of the Contingent Convertible Debentures, exercise of the
Default Warrants or in payment of accrued interest, beyond the relevant
delivery date therefor could result in economic loss to the Holder.  As compensation to the Holder for such loss,
the Company agrees to pay late payments to the Holder for late issuance of the
Conversion Certificates in accordance with the following schedule:

 

	
   

  	
   

  	
  Late Payment For Each $10,000

  	
   

  
	
  No. of Trading Days Late

  	
   

  	
  of Principal or Interest Being Converted

  	
   

  
	
  1

  	
   

  	
  $100

  	
   

  
	
  2

  	
   

  	
  $200

  	
   

  
	
  3

  	
   

  	
  $300

  	
   

  
	
  4

  	
   

  	
  $400

  	
   

  
	
  5

  	
   

  	
  $500

  	
   

  
	
  6

  	
   

  	
  $600

  	
   

  
	
  7

  	
   

  	
  $700

  	
   

  
	
  8

  	
   

  	
  $800

  	
   

  
	
  9

  	
   

  	
  $900

  	
   

  
	
  10

  	
   

  	
  $1,000

  	
   

  
	
  >10

  	
   

  	
  $1,000 + $200
  for each Business Day Late beyond 10 days

  	
   

  

 

The Company shall
pay any payments incurred under this Section 6(d) in immediately
available funds upon demand.  Nothing
herein shall limit the Holder’s right to pursue actual damages for the Company’s
failure to issue and deliver the Conversion Certificates to the Holder within a
reasonable time.  Furthermore, in
addition to any other remedies that may be available to a Holder, in the event
that the Company fails for any reason to effect delivery of such Conversion
Certificates within ten (10) Trading Days after the required delivery date
therefor, the Converting Holder will be entitled to revoke the relevant Notice
of Conversion by delivering a notice to such effect to the Company prior to the
Converting Holder’s receipt of the relevant Conversion Certificates, whereupon
the Company and the Converting Holder each shall be restored to their
respective positions immediately prior to delivery of such Notice of
Conversion; provided, however, that any payments contemplated by
this Section 6(d) of this Agreement which have accrued through the date
of such revocation notice shall remain due and owing to the Converting Holder
notwithstanding such revocation.

(e)                                  If,
after the Holder has submitted a Notice of Conversion, the Company fails for
any reason to deliver the Conversion Certificates by the relevant delivery date
therefor, and at any time thereafter prior to the actual delivery of the
Conversion Certificates the Converting Holder purchases, in an arm’s-length
open market transaction or otherwise, shares of Common Stock (the “Covering
Shares”) in order to make delivery in satisfaction of a sale of Common
Stock by the Converting Holder (the “Sold Shares”), which delivery such
Converting Holder anticipated to make using the shares to be issued upon such
conversion (a “Buy-In”), the Converting Holder shall have the right to
require the Company to pay to the Converting Holder, in addition to and not in
lieu of the amounts contemplated in other provisions of the Transaction
Agreements, including, but not limited to, the provisions of the immediately
preceding Section 6(d)), the Buy-In Adjustment Amount (as defined
below).  The “Buy-In Adjustment Amount”
is the amount equal to the number of Sold Shares multiplied by the excess, if
any, of (x) the Holder’s total purchase price per share (including brokerage
commissions, if any) for the Covering Shares over (y) the net proceeds per
share (after brokerage commissions, if any) received by the Holder from the
sale of the Sold Shares.  The Company
shall pay the Buy-In Adjustment Amount to the Holder in immediately available
funds immediately upon demand by the Converting Holder.  By way of illustration and not in limitation
of the foregoing, if the

Holder purchases
shares of Common Stock having a total purchase price (including brokerage
commissions) of $11,000 to cover a Buy-In with respect to shares of Common
Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount which
Company will be required to pay to the Holder will be $1,000.

(f)                                    In
lieu of delivering physical certificates representing the Common Stock issuable
upon conversion of the Contingent Convertible Debentures, exercise of a Warrant
or at the request of the Holder with respect to any Shares previously issued,
including the shares of Common Stock pledged pursuant to the Stock Pledge
Agreement, provided the Transfer Agent is participating in the Depository Trust
Company (“DTC”) Fast Automated Securities Transfer program, upon request
of the Holder and the Holder’s compliance with the provisions contained in this
paragraph, so long as the certificates therefor do not bear a legend and the
Holder thereof is not obligated to return such certificate for the placement of
a legend thereon, the Company shall use its best efforts to cause the Transfer
Agent to electronically transmit to the Holder the Common Stock issuable upon
foreclosure on the shares of Common Stock pledged as collateral to secure
performance of the Company’s obligations with respect to the Note, exercise of
the Warrants, conversion of the Convertible Debentures or exercise of a
Contingent Warrant, by crediting the account of the Holder’s Prime Broker with
DTC through its Deposit Withdrawal Agent Commission system.

(g)                                 The
Company will authorize the Transfer Agent to give information relating to the
Company directly to the Holder or the Holder’s representatives upon the request
of the Holder or any such representative, to the extent such information
relates to (i) the status of shares of Common Stock issued or claimed to be
issued to the Holder in connection with a Notice of Conversion or a Notice of
Exercise, or (ii) the aggregate number of outstanding shares of Common Stock of
all shareholders (as a group and not individually) as of a current or other
specified date.  At the request of the
Holder, the Company will provide the Holder with a copy of the authorization so
given to the Transfer Agent.

7.                                       CONDITIONS TO THE COMPANY’S OBLIGATION TO
SELL.  The obligation of the Company
hereunder to issue and sell the Notes and the Warrants to the Holder at the
Closing, and to deliver the other Transaction Agreements to the Holder, is
subject to the satisfaction, at or before the Closing Dates, of each of the
following conditions, 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:

(a)                                  The Holder shall have executed the
Transaction Agreements and delivered them to the Company.

(b)                                 The Holder shall have delivered to the
Company the Purchase Price for the Notes and Warrants, minus any fees to be
paid directly from the proceeds of the Closing as set forth herein, by wire
transfer of immediately available U.S. funds pursuant to the wire instructions provided
by the Company.

(c)                                  The
representations and warranties of the Holder shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and the Holder 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 Holder at or
prior to the Closing Date.

8.                                       CONDITIONS
TO THE HOLDER’S OBLIGATION TO PURCHASE. 
The obligation of the Holder to purchase the Notes and Warrants and to
accept delivery of the other Transaction Agreements at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the following
conditions:

(a)                                  The Company shall have executed the
Transaction Agreements and delivered the same to the Holder.

(b)                                 The Common Stock shall be authorized for
quotation or trading on the Primary Market, trading in the Common Stock shall
not have been suspended for any reason, and all the Conversion Shares issuable
upon the conversion of the Convertible Debentures, as well as the shares of
Common Stock issuable upon exercise of the Warrants or upon exercise of the
Default Warrants, shall be approved for listing or trading on the Primary
Market.

(c)                                  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 already is 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 Closing 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 in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date

(d)                                 The Company shall have executed and delivered
to the Holder the Note and the Warrant.

(e)                                  The Holder shall have
received the Irrevocable Transfer Agent Instructions.(f)                The Holder shall have received an Opinion of
Counsel in form satisfactory to the Holder, in his sole discretion.

(f)                                    The
Company shall have delivered to the Holder a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions
consistent with Section 3(c) as adopted by the Company’s Board of
Directors in a form reasonably acceptable to the Holder, (ii) the Certificate
of Incorporation and (iii) the Bylaws, each as in effect at the Closing.

(g)                                 The Company shall have created the Share
Reserve.

(h)                                 The
Irrevocable Transfer Agent Instructions, in form and substance satisfactory to
the Holder, shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.

9.                                       INDEMNIFICATION.

(a)                                  (i)                                     The
Company agrees to indemnify and hold harmless the Holder and his employees and
agents, and each Holder Control Person from and against any losses, claims,
damages, liabilities or expenses incurred (collectively, “Damages”),
joint or several, and any action in respect thereof to which the Holder, his
partners, Affiliates, employees, and duly authorized agents, and any such
Holder Control Person becomes subject to, resulting from, arising out of or
relating to any misrepresentation, breach of warranty or non-fulfillment of or
failure to perform any covenant or agreement on the part of Company contained
in this Agreement, as such Damages are incurred, except to the extent such
Damages result primarily from a material breach of a material representation by
the Holder or the Holder’s material failure to perform any covenant or
agreement contained in this Agreement (in each case, as determined by a
non-appealable judgment to such effect).

(ii)                                  The
Company hereby agrees that, if the Holder, other than by reason of his gross
negligence or willful misconduct or by reason of his trading of the Common
Stock in a manner that is illegal under the federal securities laws (in each
case, as determined by a non-appealable judgment to such effect), (x) becomes
involved in any capacity in any action, proceeding or investigation brought by
any shareholder of the Company, in connection with or as a result of the
consummation of the transactions contemplated by this Agreement or the other
Transaction Agreements, or if the Holder is impleaded in any such action,
proceeding or investigation by any Person, or (y) becomes involved in any
capacity in any action, proceeding or investigation brought by the SEC, any
self-regulatory organization or other body having jurisdiction, against or
involving the Company or in connection with or as a result of the consummation
of the transactions contemplated by this Agreement or the other Transaction
Agreements, or (z) is impleaded in any such action, proceeding or investigation
by any Person, then in any such case, the Company shall indemnify, defend and
hold harmless the Holder from and against and in respect of all losses, claims,
liabilities, damages or expenses resulting from, imposed upon or incurred by
the Holder, directly or indirectly, and reimburse the Holder for his reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are
incurred.  The indemnification and
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Holder who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and the Holder Control Persons (if any), as the
case may be, of the Holder and any such Affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Holder, any such Affiliate and any such
Person.  The Company also agrees that
neither 

the Holder nor any such Affiliate, partner, director,
agent, employee or the Holder Control Person shall have any liability to the
Company or any Person asserting claims on behalf of or in right of the Company
in connection with or as a result of the consummation of this Agreement or the
other Transaction Agreements, except to the extent such liability is based on a
material misrepresentation made by the Holder in Section 2 hereof or the
Holder’s material failure to perform any material covenant or agreement of the
Holder contained in the Transaction Agreements (in each case, as determined by
a non-appealable judgment to such effect).

(b)                                 All
claims for indemnification by any Indemnified Party (as defined below) under
this Section 9 shall be asserted and resolved as follows:

(i)                                     
In the event that any claim or demand in respect of which any Person claiming
indemnification under any provision of this Section (an “Indemnified Party”)
might seek indemnity under paragraph (a) of this Section is asserted against or
sought to be collected from such Indemnified Party by a Person other than a
party hereto or an Affiliate thereof (a “Third Party Claim”), the
Indemnified Party shall deliver a written notification, enclosing a copy of all
papers served, if any, and specifying the nature of and basis for such Third
Party Claim and for the Indemnified Party’s claim for indemnification that is
being asserted under any provision of this Section against any Person (the “Indemnifying
Party”), together with the amount or, if not then reasonably ascertainable,
the estimated amount, determined in good faith, of such Third Party Claim (a “Claim
Notice”) with reasonable promptness to the Indemnifying Party.  If the Indemnified Party fails to provide the
Claim Notice with reasonable promptness after the Indemnified Party receives
notice of such Third Party Claim, the Indemnifying Party shall not be obligated
to indemnify the Indemnified Party with respect to such Third Party Claim to
the extent that the Indemnifying Party’s ability to defend has been prejudiced
by such failure of the Indemnified Party. 
The Indemnifying Party shall notify the Indemnified Party as soon as
practicable within the period ending thirty (30) calendar days following
receipt by the Indemnifying Party of either a Claim Notice or an Indemnity
Notice (as defined below) (the “Dispute Period”) whether the
Indemnifying Party disputes his or its liability or the amount of his or its
liability to the Indemnified Party under this Section and whether the
Indemnifying Party desires, at his or its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.  The following provisions shall also apply.

(x)                                   If
the Indemnifying Party notifies the Indemnified Party within the Dispute Period
that the Indemnifying Party desires to defend the Indemnified Party with
respect to the Third Party Claim pursuant to this Section 9(b), then the
Indemnifying Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings,
which proceedings shall be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party in the 

case of any settlement that provides for any relief
other than the payment of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party shall not be indemnified in
full pursuant to paragraph (a) of this Section).  The Indemnifying Party shall have full
control of such defense and proceedings, including any compromise or settlement
thereof; provided, however, that the Indemnified Party may, at the sole cost
and expense of the Indemnified Party, at any time prior to the Indemnifying
Party’s delivery of the notice referred to in the first sentence of this subparagraph
(x), file any motion, answer or other pleadings or take any other action that
the Indemnified Party reasonably believes to be necessary or appropriate
protect his or its interests; and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole cost and expense of
the Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the Indemnifying Party elects to
contest.  The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this subparagraph (x), and
except as provided in the preceding sentence, the Indemnified Party shall bear
his or its own costs and expenses with respect to such participation.  Notwithstanding the foregoing, the
Indemnified Party may take over the control of the defense or settlement of a
Third Party Claim at any time if it irrevocably waives his or its right to
indemnity under paragraph (a) of this Section with respect to such Third Party
Claim.

(y)                                 If
the Indemnifying Party fails to notify the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Third Party Claim
pursuant to paragraph (b) of this Section, or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the
Third Party Claim, each in a reasonable manner, or if the Indemnifying Party
fails to give any notice whatsoever within the Dispute Period, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted by the Indemnified Party in
a reasonable manner and in good faith or will be settled at the discretion of
the Indemnified Party (with the consent of the Indemnifying Party, which
consent will not be unreasonably withheld). 
The Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and his or its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting.  Notwithstanding the foregoing provisions of
this subparagraph (y), if the Indemnifying Party has notified the Indemnified
Party within the Dispute Period that the Indemnifying Party disputes his or its
liability or the amount of his or its liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if such dispute is resolved in
favor of the Indemnifying Party in the 

manner provided in subparagraph(z) below, the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party’s defense pursuant to this subparagraph (y) or of the
Indemnifying Party’s participation therein at the Indemnified Party’s request,
and the Indemnified Party shall reimburse the Indemnifying Party in full for
all reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation.  The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this subparagraph
(y), and the Indemnifying Party shall bear his or its own costs and expenses
with respect to such participation.

(z)                                   If
the Indemnifying Party notifies the Indemnified Party that it does not dispute
his or its liability or the amount of his or its liability to the Indemnified
Party with respect to the Third Party Claim under paragraph (a) of this Section
or fails to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes his or its liability or the amount of his or its
liability to the Indemnified Party with respect to such Third Party Claim, the
amount of Damages specified in the Claim Notice shall be conclusively deemed a
liability of the Indemnifying Party under paragraph (a) of this Section and the
Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand.  If the Indemnifying
Party has timely disputed his or its liability or the amount of his or its
liability with respect to such claim, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to negotiate a resolution of such
dispute; provided, however, that it the dispute is not resolved within thirty
(30) days after the Claim Notice, the Indemnifying Party shall be entitled to
institute such legal action as it deems appropriate.

(ii)                                  In
the event that any Indemnified Party should have a claim under Section 9(a)
against the Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver a written notification of a claim for indemnity
under Section 9(a) specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the
estimated amount, determined in good faith, of such claim (an “Indemnity
Notice”) with reasonable promptness to the Indemnifying Party.  The failure by any Indemnified Party to give
the Indemnity Notice shall not impair such party’s rights hereunder except to
the extent that the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby.  If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity Notice or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes the claim or the amount of the claim described in such Indemnity
Notice, the amount of Damages specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 9(a)
and the Indemnifying Party shall pay the amount of such Damages to the
Indemnified Party on demand.  If the
Indemnifying Party has timely disputed his or its liability or the amount of
his or its liability with respect to such claim, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to negotiate a 

resolution of such
dispute; provided, however, that if the dispute is not resolved within thirty
(30) days after the Claim Notice, the Indemnifying Party shall be entitled to
institute such legal action as it deems appropriate.

(c)                                  The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar rights of the indemnified party against the indemnifying
party or others, and (ii) any liabilities to which the indemnifying party may
be subject.

10.                                 GOVERNING LAW: MISCELLANEOUS

(a)                                  Governing
Law.  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Illinois for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws.  Each of
the parties consents to the exclusive jurisdiction of the federal courts whose
districts encompass any part of the County of Cook or the state courts of the
State of Illinois sitting in the County of Cook in connection with any dispute
arising under this Agreement or any of the other Transaction Agreements and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens,
to the bringing of any such proceeding in such jurisdictions.  To the extent determined by such court, the
Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Holder in enforcement of or protection of any of
his rights under any of the Transaction Agreements.

(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.  In the event any signature
page is delivered by facsimile transmission, the party using such means of
delivery shall cause four (4) additional original executed signature pages to
be physically delivered to the other party within five (5) days of the
execution and delivery hereof.

(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.  This Agreement supersedes all other
prior oral or written agreements between the Holder, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement 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 Holder makes any representation, warranty,
covenant or undertaking with respect to such matters.  No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

(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 confirmation of receipt, when sent by
facsimile; (iii) three (3) days after being sent by U.S. certified mail, return
receipt requested, or (iv) one (1) 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:

  	
  Open Energy
  Corporation

  
	
   

  	
  514 Via de la
  Valle, Suite 200

  
	
   

  	
  Solana Beach, CA
  92075

  
	
   

  	
  Attention: David
  Saltman, Chief Executive Officer

  
	
   

  	
  Telephone:  858-794-8800

  
	
   

  	
  Facsimile:  858-794-8811

  
	
   

  	
   

  
	
  With a copy to:

  	
  John Hart, Esq.

  
	
   

  	
  Open Energy
  Corporation

  
	
   

  	
  514 Via de la
  Valle, Suite 200

  
	
   

  	
  Solana Beach, CA
  92075

  
	
   

  	
  Telephone:  858-794-8800

  
	
   

  	
  Facsimile:  858-794-8811

  
	
   

  	
   

  
	
  If to the Holder:

  	
  John M. Fife

  
	
   

  	
  303 East Wacker
  Drive, Suite 311

  
	
   

  	
  Chicago, IL
  60657

  
	
   

  	
  Telephone:  312-565-1569

  
	
   

  	
  Facsimile:  312-819-9701

  
	
   

  	
   

  
	
  With a copy to:

  	
  Merrill E. Weber, Esq.

  
	
   

  	
  303 East Wacker Drive, Suite 311

  
	
   

  	
  Chicago, IL 60657

  
	
   

  	
  Telephone:  773-406-2386

  
	
   

  	
  Facsimile:  312-819-9701

  

 

Each party shall provide five (5) days’ prior written notice
to the other party of any change in address or facsimile number.

(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 other party
hereto.

(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)                                     Survival.  Unless this Agreement is terminated under Section 10(l),
the representations and warranties of the Company and the Holder contained in Sections
2 and 3, the agreements and covenants set forth in Sections 4 and 6,
and the indemnification provisions set forth in Section 9 shall survive
the Closing for a period of two (2) years following the date on which the
Convertible Debentures are converted in full.  The Holder shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.

(j)                                     Publicity.  The Company and the Holder shall have the right to approve,
before issuance any press release or any other public statement with respect to
the transactions contemplated hereby made by any party; provided, however, that
the Company shall be entitled, without the prior approval of the Holder, to
issue any press release or other public disclosure with respect to such
transactions required under applicable securities or other laws or regulations
(the Company shall use its best efforts to consult the Holder in connection
with any such press release or other public disclosure prior to its release and
Holder shall be provided with a copy thereof upon release thereof).

(k)                                  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.

(l)                                     Termination.  In the event that the Closing shall not have occurred on or
before five (5) business days from the date hereof due to the Company’s or the
Holder’s failure to satisfy the conditions set forth in Sections 6 and 7
above (and the non-breaching party’s failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided, however, that
if this Agreement is terminated by the Company pursuant to this Section 9(l),
the Company shall remain obligated to reimburse the Holder for the fees and
expenses of Yorkville Advisors LLC described in Section 4(g) above.

(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)                                 Jury
Trial Waiver.  The Company and the
Holder hereby waive a trial by jury in any action, proceeding or counterclaim
brought by either of the Parties hereto against the other in respect of any
matter arising out or in connection with the Transaction Agreements.

(o)                                 Specific
Performance.  The Company and the
Holder acknowledge and agree that irreparable damage would occur in the event that
any provision of this Agreement or any of the other Transaction Agreements were
not performed in accordance with his or its specific terms or were otherwise
breached.  It is accordingly agreed that
the parties (including 

any Holder) shall
be entitled to an injunction or injunctions, without (except as specified
below) the necessity to post a bond, to prevent or cure breaches of the
provisions of this Agreement or such other Transaction Agreement and to enforce
specifically the terms and provisions hereof or thereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity;
provided, however that the Company, upon receipt of a Notice of Conversion or a
Notice of Exercise, may not fail or refuse to deliver the stock certificates
and the related legal opinions, if any, based on any claim that the Holder has
violated any provision hereof or for any other reason, unless the Company has
first posted a bond for one hundred fifty percent (150%) of the principal
amount and then obtained a court order specifically directing it not to deliver
said stock certificates to the Holder. 
This provision is deemed incorporated by reference into each of the
Transaction Agreements as if set forth therein in full.

(p)                                 No
Waiver by Failure or Delay.  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.

(q)                                 Pronouns.  All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.

(r)                                    Binding
Effect of Facsimile Transmissions.              
A facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto.

[THE REMAINDER OF
THIS PAGE INTENTIONALLY LEFT BLANK]

(s)                                  Survival
of Representations and Warranties. 
The Company’s and the Holder’s representations and warranties herein
shall survive the execution and delivery of this Agreement and the delivery of
the Certificates and the payment of the Purchase Price, for a period of three
(3) years after the Closing Date and shall inure to the benefit of the Holder
and the Company and their respective successors and assigns.

IN
WITNESS WHEREOF, each the undersigned represents that the foregoing statements
made by it above are true and correct and that it has caused this Agreement to
be duly executed on his or its behalf (if an entity, by one of its officers
thereunto duly authorized) as of the date first above written.

	
  HOLDER:

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
  COMPANY:

  
	
   

  
	
  OPEN ENERGY
  CORP.

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
			

 

 

	
  EXHIBIT A

  	
   

  	
  FORM OF NOTE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
   

  	
  AFFIDAVIT OF CONFESSION OF JUDGMENT

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
   

  	
  FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS WITH
  LEGAL OPINION ATTACHED

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
   

  	
  FORM OF STOCK PLEDGE AGREEMENT

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
   

  	
  FORM OF WARRANT

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
   

  	
  FORM OF NOTE CONVERSION LETTER

  
	
   

  	
   

  	
   

  
	
  EXHIBIT G

  	
   

  	
  CONVERTIBLE DEBENTURE

  
	
   

  	
   

  	
   

  
	
  EXHIBIT H

  	
   

  	
  FORM OF DEFAULT WARRANT

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I

  	
   

  	
  FORM OF REGISTRATION RIGHTS AGREEMENT

  
	
   

  	
   

  	
   

  
	
  EXHIBIT J

  	
   

  	
  FORM OF SECURITY AGREEMENT

  
	
   

  	
   

  	
   

  
	
  EXHIBIT K

  	
   

  	
  FORM OF OPINION OF COUNSEL

  
	
   

  	
   

  	
   

  
	
  EXHIBIT L

  	
   

  	
  COMPANY DISCLOSURE SCHEDULESExhibit
10.2

WARRANT

THE SECURITIES REPRESENTED BY THIS WARRANT 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
COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THIS
WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.

OPEN ENERGY CORPORATION

Warrant to Purchase Common Stock

	
  Warrant No.:

  	
   

  	
  OEGY-FIFE-1

  
	
   

  	
   

  	
   

  
	
  Number of Shares of Common Stock:

  	
   

  	
  Four Million (4,000,000).

  
	
   

  	
   

  	
   

  
	
  Warrant Exercise Price:

  	
   

  	
  $0.50 per share of Common Stock (as defined below)

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  The date that is three (3) years from the date of
  issuance.

  
	
   

  	
   

  	
   

  
	
  Date of Issuance:

  	
   

  	
  June 15, 2007.

  

 

Open
Energy Corporation, a Nevada corporation (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, John Fife (the
“Holder”), the registered Holder hereof, or his permitted assigns, is
entitled, subject to the terms set forth below, to purchase from the Company
upon surrender of this Warrant, at any time or times on or after the date
hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as
defined herein) Four Million (4,000,000) fully paid and nonassessable shares of
Common Stock (as defined herein) of the Company at the exercise price per share
provided in Section 1(b) below or as subsequently adjusted; provided,
however, that in no event shall the Holder be entitled to exercise this Warrant
for a number of Warrant Shares in excess of that number of Warrant Shares
which, upon giving effect to such exercise, would cause the aggregate number of
shares of Common Stock beneficially owned by the Holder and his affiliates to
exceed 4.99% of the outstanding shares of the Common Stock following such
exercise, except within sixty (60) days of the Expiration Date (however, such
restriction may be waived by Holder (but only as to himself and not to any
other Holder) upon not less than 65 days prior notice to the Company). 
For purposes of the foregoing proviso, the aggregate number of shares of Common
Stock beneficially owned by the Holder and his affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such proviso is being made, but shall
exclude shares of Common Stock which would be issuable upon (i) exercise
of the remaining, unexercised Warrants beneficially owned by the Holder and his
affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned
by the Holder and his affiliates (including, without limitation, any
convertible notes or preferred stock) subject to a limitation on conversion or
exercise analogous to the limitation contained herein.  Except as set
forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended.  For purposes of this
Warrant, in determining the number of outstanding shares of Common Stock a Holder
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 notice by
the Company or its transfer agent setting forth the number of shares of Common
Stock 

outstanding. 
Upon the written request of any Holder, the Company shall promptly, but in no
event later than one (1) Business Day following the receipt of such notice,
confirm in writing to any such Holder 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 the exercise of Warrants (as
defined below) by such Holder and his affiliates since the date as of which
such number of outstanding shares of Common Stock was reported.

Section
1.

(a)  
This Warrant is one of the Warrants issued pursuant to the Note and Warrant
Purchase Agreement (“Note and Warrant Purchase Agreement”) dated the
date hereof between the Company and the Holder or issued in exchange or
substitution thereafter or replacement thereof.  Each Capitalized term
used, and not otherwise defined herein, shall have the meaning ascribed thereto
in the Note and Warrant Purchase Agreement.

(b)  
Definitions.  The following words and terms as used in this Warrant
shall have the following meanings:

(i)            “Approved
Stock Plan” means a stock option plan that has been approved by the Board
of Directors of the Company prior to the date of the Note and Warrant Purchase
Agreement, pursuant to which the Company’s securities may be issued only to any
employee, officer or director for services provided to the Company.

(ii)           “Business
Day” means any day other than Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required by law to
remain closed.

(iii)          “Closing
Bid Price” means the closing bid price of Common Stock as quoted on the
Principal Market (as reported by Bloomberg Financial Markets (“Bloomberg”)
through its “Volume at Price” function).

(iv)          “Common
Stock” means (i) the Company’s common stock, par value $0.001 per
share, and (ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification of such
Common Stock.

(v)           “Event
of Default” means an event of default under the Note and Warrant Purchase
Agreement or the Note issued in connection therewith.

(vi)          “Excluded
Securities” means (a) shares issued or deemed to have been issued by the
Company pursuant to an Approved Stock Plan, (b) shares of Common Stock issued
or deemed to be issued by the Company upon the conversion, exchange or exercise
of any right, option, obligation or security outstanding on the date prior to
date of the Note and Warrant Purchase Agreement, provided that the terms of
such right, option, obligation or security are not amended or otherwise
modified on or after the date of the Note and Warrant Purchase Agreement, and
provided that the conversion price, exchange price, exercise price or other
purchase price is not reduced, adjusted or otherwise modified and the number of
shares of Common Stock issued or issuable is not increased (whether by
operation of, or in accordance with, the relevant governing documents or
otherwise) on or after the date of the Note and Warrant Purchase
Agreement,  and (c) the shares of Common Stock issued or deemed to be
issued by the Company upon conversion of the Convertible Debentures or exercise
of the Default Warrants (as defined in the Note and Warrant Purchase
Agreement).

(vii)         “Expiration
Date” means the date that is the third (3d) anniversary date of the
Issuance Date.

(viii)        “Issuance Date”
means June 15, 2007.

(ix)           “Options”
means any rights, warrants or options to subscribe for or purchase Common Stock
or other securities convertible into, or exercisable or exchangeable for,
Common Stock.

(x)            “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

(xi)           “Primary
Market” means on any of (a) the American Stock Exchange, (b) New York Stock
Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e)
the Nasdaq OTC Bulletin Board (“OTCBB”)

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

(xiii)         “Warrant”
means this Warrant and all Warrants issued in exchange, transfer or replacement
thereof.

(xiv)        “Warrant Exercise
Price” shall be $0.50 or as subsequently adjusted as provided in
Section 8 hereof.

(xv)                            “Warrant Share” means a share of Common Stock issuable upon
exercise of this Warrant.

(c)  
Other Definitional Provisions.

(i)           
Except as otherwise specified herein, all references herein (A) to the
Company shall be deemed to include the Company’s successors and (B) to any
applicable law defined or referred to herein shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.

(ii)           When
used in this Warrant, the words “herein”, “hereof”, and “hereunder” and words of similar import, shall refer
to this Warrant as a whole and not to any provision of this Warrant, and the
words “Section”, “Schedule”, and “Exhibit” shall refer to
Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.

(iii)          Whenever
the context so requires, the neuter gender includes the masculine or feminine,
and the singular number includes the plural, and vice versa.

Section
2.              
Exercise of Warrant.

(a)  
Subject to the terms and conditions hereof, this Warrant may be exercised by
the Holder hereof then registered on the books of the Company, pro rata as
hereinafter provided, at any time on any Business Day on or after the opening
of business on such Business Day, commencing with the first day after the date
hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date (i) by
delivery of a written notice, in the form of the subscription notice attached
as Exhibit A hereto (the “Exercise Notice”), of such Holder’s
election to exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, payment to the Company of an amount equal
to the Warrant Exercise Price(s) applicable to the Warrant Shares being
purchased, multiplied by the number of Warrant Shares (at the applicable
Warrant Exercise Price) as to which this Warrant is being exercised (plus
any applicable issue or transfer taxes) (the “Aggregate Exercise Price”)
in cash or wire transfer of immediately available funds and the surrender of
this Warrant (or an indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction) to a common carrier for overnight
delivery to the Company as soon as practicable following such date (“Cash
Basis”) or (ii) if at the time of exercise, the Warrant Shares are not
subject to an effective registration statement or if an Event of Default has
occurred, by delivering an Exercise Notice and in lieu of making payment of the
Aggregate Exercise Price in cash or wire transfer, elect instead to receive 

upon such exercise the “Net Number” of shares
of Common Stock determined according to the following formula (the “Cashless
Exercise”):

	
  Net Number =

  	
  (A x B) — (A x C)

  	
   

  
	
   

  	
               B

  	
   

  

 

For purposes of the
foregoing formula:

A = the total number of
Warrant Shares with respect to which this Warrant is then being exercised.

B = the Closing Bid Price
of the Common Stock on the date of exercise of the Warrant.

C = the Warrant Exercise
Price then in effect for the applicable Warrant Shares at the time of such
exercise.

In the event of any exercise of the rights
represented by this Warrant in compliance with this Section 2, the Company
shall on or before the fifth (5th) Business Day
following the date of receipt of the Exercise Notice, the Aggregate Exercise
Price and this Warrant (or an indemnification undertaking with respect to this
Warrant in the case of its loss, theft or destruction) and the receipt of the
representations of the Holder specified in Section 6 hereof, if requested by
the Company (the “Exercise Delivery Documents”), and if the Common Stock
is DTC eligible, credit such aggregate number of shares of Common Stock to
which the Holder shall be entitled to the Holder’s or its designee’s balance
account with The Depository Trust Company; provided, however, if the Holder who
submitted the Exercise Notice requested physical delivery of any or all of the
Warrant Shares, or, if the Common Stock is not DTC eligible  then the
Company shall, on or before the fifth (5th) Business Day following receipt of the
Exercise Delivery Documents, issue and surrender to a common carrier for
overnight delivery to the address specified in the Exercise Notice, a
certificate, registered in the name of the Holder, for the number of shares of
Common Stock to which the Holder shall be entitled pursuant to such
request.  Upon delivery of the Exercise Notice and Aggregate Exercise
Price referred to in clause (i) or (ii) above the Holder of this Warrant
shall be deemed for all corporate purposes to have become the Holder of record
of the Warrant Shares with respect to which this Warrant has been
exercised.  In the case of a dispute as to the determination of the
Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of
the Warrant Shares, the Company shall promptly issue to the Holder the number
of Warrant Shares that is not disputed and shall submit the disputed
determinations or arithmetic calculations to the Holder via facsimile within
one (1) Business Day of receipt of the Holder’s Exercise Notice.

(b)  
If the Holder and the Company are unable to agree upon the determination of the
Warrant Exercise Price or arithmetic calculation of the Warrant Shares within
one (1) day of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall immediately submit via
facsimile (i) the disputed determination of the Warrant Exercise Price or the
Closing Bid Price to an independent, reputable investment banking firm or (ii)
the disputed arithmetic calculation of the Warrant Shares to its independent,
outside accountant.  The Company shall cause the investment banking firm
or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
forty-eight (48) hours from the time it receives the disputed determinations or
calculations.  Such investment banking firm’s or accountant’s
determination or calculation, as the case may be, shall be deemed conclusive
absent manifest error.

(c)  
Unless the rights represented by this Warrant shall have expired or shall have
been fully exercised, the Company shall, as soon as practicable and in no event
later than five (5) Business Days after any exercise and at its own expense,
issue a new Warrant identical in all respects to this Warrant exercised except
it shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the
number of Warrant Shares with respect to which such Warrant is exercised.

(d)  
No fractional Warrant Shares are to be issued upon any pro rata exercise of
this Warrant, but rather the number of Warrant Shares issued upon such exercise
of this Warrant shall be rounded up or down to the nearest whole number.

(e)  
If the Company or its Transfer Agent shall fail for any reason or for no reason
to issue to the Holder within five (5) days of receipt of the Exercise Delivery
Documents, a certificate for the number of Warrant Shares to which the Holder
is entitled or to credit the Holder’s balance account with The Depository Trust
Company for such number of Warrant Shares to which the Holder is entitled upon
the Holder’s exercise of this Warrant, the Company shall, in addition to any
other remedies under this Warrant or otherwise available to such Holder, pay as
additional damages in cash to such Holder on each day the issuance of such
certificate for Warrant Shares is not timely effected an amount equal to one
percent (1%) of the product of (A) the sum of the number of Warrant Shares not
issued to the Holder on a timely basis and to which the Holder is entitled, and
(B) the Closing Bid Price of the Common Stock for the trading day immediately
preceding the last possible date which the Company could have issued such
Common Stock to the Holder without violating this Section 2.

(f)   
If within ten (10) days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the Holder for the
number of Warrant Shares to which such Holder is entitled pursuant to Section 2
hereof, then, in addition to any other available remedies under this Warrant,
or otherwise available to such Holder, the Company shall pay as additional
damages in cash to such Holder on each day after such fifth (5th) day that such delivery
of such new Warrant is not timely effected in an amount equal to one percent
(1%) of the product of (A) the number of Warrant Shares represented by the
portion of this Warrant which is not being exercised and (B) the Closing
Bid Price of the Common Stock for the trading day immediately preceding the
last possible date which the Company could have issued such Warrant to the
Holder without violating this Section 2.

Section
3.              
Covenants as to Common Stock.  The Company hereby covenants and
agrees as follows:

(a)  
This Warrant is, and any Warrants issued in substitution for or replacement of
this Warrant will upon issuance be, duly authorized and validly issued.

(b)  
All Warrant Shares which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

(c)  
During the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved at least
one hundred percent (100%) of the number of shares of Common Stock needed to
provide for the exercise of the rights then represented by this Warrant and the
par value of said shares will at all times be less than or equal to the
applicable Warrant Exercise Price.  If at any time the Company does not
have a sufficient number of shares of Common Stock authorized and available,
then the Company shall call and hold a special meeting of its stockholders
within sixty (60) days of that time for the sole purpose of increasing the
number of authorized shares of Common Stock.

(d)  
If at any time after the date hereof the Company shall file a registration
statement, the Company shall, at the Holder’s option, include the Warrant
Shares issuable to the Holder, pursuant to the terms of this Warrant.  The
Company shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Warrant Shares from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and
shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of this Warrant if and so long as any shares
of the same class shall be listed on such national securities exchange or
automated quotation system.

(e)  
The Company will not, by amendment of its Articles of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other 

voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
by it hereunder, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in the taking of all such action as
may reasonably be requested by the Holder of this Warrant in order to protect
the exercise privilege of the Holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant.  The
Company will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Warrant Exercise Price then
in effect, and (ii) will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant.

(f)   
This Warrant will be binding upon any entity succeeding to the Company by
merger, consolidation or acquisition of all or substantially all of the
Company’s assets.

Section
4.              
Taxes.  The Company shall pay any and all taxes, except any
applicable withholding, which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.

Section
5.              
Warrant Holder Not Deemed a Stockholder.  Except as otherwise
specifically provided herein, no Holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the Holder of shares of
capital stock of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the Holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of
this Warrant.  In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on such Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stock of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company.  Notwithstanding this Section 5, the Company will provide the
Holder of this Warrant with copies of the same notices and other information
given to the stockholders of the Company generally, contemporaneously with the
giving thereof to the stockholders.

Section
6.              
Representations of Holder.  The Holder of this Warrant, by the
acceptance hereof, represents that he is acquiring this Warrant and the Warrant
Shares for his own account for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution of this Warrant
or the Warrant Shares, except pursuant to sales registered or exempted under
the Securities Act; provided, however, that by making the representations
herein, the Holder does not agree to hold this Warrant or any of the Warrant
Shares for any minimum or other specific term and reserves the right to dispose
of this Warrant and the Warrant Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities
Act.  The Holder of this Warrant further represents, by acceptance hereof,
that, as of this date, such Holder is an “accredited investor” as such term is
defined in Rule 501(a)(1) of Regulation D promulgated by the Securities
and Exchange Commission under the Securities Act (an “Accredited Investor”). 
Upon exercise of this Warrant the Holder shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that the
Warrant Shares so purchased are being acquired solely for the Holder’s own
account and not as a nominee for any other party, for investment, and not with
a view toward distribution or resale and that such Holder is an Accredited
Investor.  If such Holder cannot make such representations because they
would be factually incorrect, it shall be a condition to such Holder’s exercise
of this Warrant that the Company receive such other representations as the
Company considers reasonably necessary to assure the Company that the issuance
of its securities upon exercise of this Warrant shall not violate any United
States or state securities laws.

Section
7.              
Ownership and Transfer.

(a)  
The Company shall maintain at its principal executive offices (or such other
office or agency of the Company as it may designate by notice to the Holder
hereof), a register for this Warrant, in 

which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as
the name and address of each transferee.  The Company may treat the person
in whose name any Warrant is registered on the register as the owner and Holder
thereof for all purposes, notwithstanding any notice to the contrary, but in
all events recognizing any transfers made in accordance with the terms of this
Warrant.

Section
8.              
Adjustment of Warrant Exercise Price and Number of Shares.  The
Warrant Exercise Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:

(a)  
Adjustment of Warrant Exercise Price and Number of Shares upon Issuance of
Common Stock.  If and whenever on or after the Issuance Date of this
Warrant, the Company issues or sells, or is deemed to have issued or sold, any
shares of Common Stock (other than Excluded Securities) for a
consideration per share less than a price (the “Applicable Price”) equal
to the Warrant Exercise Price in effect immediately prior to such issuance or
sale, then immediately after such issue or sale the Warrant Exercise Price then
in effect shall be reduced to an amount equal to such consideration per share;
provided that, in no event shall the Warrant Exercise Price be reduced to less
that $.05 per share (pursuant to this Section 8(a).  Upon each such
adjustment of the Warrant Exercise Price hereunder, the number of Warrant
Shares issuable upon exercise of this Warrant shall be adjusted to the number
of shares determined by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Warrant Exercise Price resulting from such
adjustment.

(b)  
Effect on Warrant Exercise Price of Certain Events.  For purposes
of determining the adjusted Warrant Exercise Price under Section 8(a) above,
the following shall be applicable:

(i)            Issuance
of Options.  If after the date hereof, the Company in any manner
grants any Options and the lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion or
exchange of any convertible securities issuable upon exercise of any such
Option is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the granting or sale of such Option for such price per share. 
For purposes of this Section 8(b)(i), the lowest price per share for which one
share of Common Stock is issuable upon exercise of such Options or upon
conversion or exchange of such Convertible Securities shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or sale
of the Option, upon exercise of the Option or upon conversion or exchange of
any convertible security issuable upon exercise of such Option.  No
further adjustment of the Warrant Exercise Price shall be made upon the actual
issuance of such Common Stock or of such convertible securities upon the
exercise of such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such convertible securities.

(ii)           Issuance
of Convertible Securities.  If the Company in any manner issues or
sells any convertible securities and the lowest price per share for which one
share of Common Stock is issuable upon the conversion or exchange thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time
of the issuance or sale of such convertible securities for such price per
share.  For the purposes of this Section 8(b)(ii), the lowest price
per share for which one share of Common Stock is issuable upon such conversion
or exchange shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to one share of
Common Stock upon the issuance or sale of the convertible security and upon
conversion or exchange of such convertible security.  No further
adjustment of the Warrant Exercise Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such convertible
securities, and if any such issue or sale of such convertible securities is
made upon exercise of any Options for which adjustment of the Warrant Exercise
Price had been or are to be made pursuant to other provisions of this Section
8(b), no further adjustment of the Warrant Exercise Price shall be made by
reason of such issue or sale.

(iii)          Change
in Option Price or Rate of Conversion.  If the purchase price provided
for in any Options, the additional consideration, if any, payable upon the
issue, conversion or exchange of any convertible securities, or the rate at
which any convertible securities are convertible into or exchangeable for
Common Stock changes at any time, the Warrant Exercise Price in effect at the
time of such change shall be adjusted to the Warrant Exercise Price which would
have been in effect at such time had such Options or convertible securities
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold and the number of Warrant Shares issuable upon exercise of this Warrant
shall be correspondingly readjusted.  For purposes of this Section
8(b)(iii), if the terms of any Option or convertible security that was
outstanding as of the Issuance Date of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or
convertible security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change.  No adjustment pursuant to this Section 8(b)
shall be made if such adjustment would result in an increase of the Warrant
Exercise Price then in effect.

(iv)          Calculation
of Consideration Received.  If any Common Stock, Options or
convertible securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefore will be deemed to be the net
amount received by the Company therefore.  If any Common Stock, Options or
convertible securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the market price of such securities on the date of receipt of such
securities.  If any Common Stock, Options or convertible securities are
issued to the owners of the non-surviving entity in connection with any merger
in which the Company is the surviving entity, the amount of consideration
therefore will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such Common
Stock, Options or convertible securities, as the case may be.  The fair
value of any consideration other than cash or securities will be determined
jointly by the Company and the Holders of Warrants representing at least
two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants
then outstanding.  If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five
(5) Business Days after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the
Holders of Warrants representing at least two-thirds (b) of the Warrant Shares
issuable upon exercise of the Warrants then outstanding.  The
determination of such appraiser shall be final and binding upon all parties and
the fees and expenses of such appraiser shall be borne jointly by the Company
and the Holders of Warrants.

(v)           Integrated
Transactions.  In case any Option is issued in connection with the
issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $.01.

(vi)          Treasury
Shares.  The number of shares of Common Stock outstanding at any given
time does not include shares owned or held by or for the account of the
Company, and the disposition of any shares so owned or held will be considered
an issue or sale of Common Stock.

(vii)         Record Date. 
If the Company takes a record of the Holders of Common Stock for the purpose of
entitling them (1) to receive a dividend or other distribution payable in
Common Stock, Options or in convertible securities or (2) to subscribe for
or purchase Common Stock, Options or convertible securities, then such record
date will be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.

(c)  
Adjustment of Warrant Exercise Price upon Subdivision or Combination of
Common Stock.  If the Company at any time after the date of issuance
of this Warrant subdivides (by any 

stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, any Warrant Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced
and the number of shares of Common Stock obtainable upon exercise of this
Warrant will be proportionately increased.  If the Company at any time
after the date of issuance of this Warrant combines (by combination, reverse
stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, any Warrant Exercise Price in
effect immediately prior to such combination will be proportionately increased
and the number of Warrant Shares issuable upon exercise of this Warrant will be
proportionately decreased.  Any adjustment under this Section 8(c)
shall become effective at the close of business on the date the subdivision or
combination becomes effective.

(d)  
Distribution of Assets.  If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets)
to Holders of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case:

(i)           
any Warrant Exercise Price in effect immediately prior to the close of business
on the record date fixed for the determination of Holders of Common Stock
entitled to receive the Distribution shall be reduced, effective as of the
close of business on such record date, to a price determined by multiplying
such Warrant Exercise Price by a fraction of which (A) the numerator shall be
the Closing Sale Price of the Common Stock on the trading day immediately
preceding such record date minus the value of the Distribution (as determined
in good faith by the Company’s Board of Directors) applicable to one share of
Common Stock, and (B) the denominator shall be the Closing Sale Price of the
Common Stock on the trading day immediately preceding such record date;
provided that, in no event shall the Warrant Exercise Price be reduced to less
that $.05 per share (pursuant to this Section 8(d)(i); and

(ii)           either
(A) the number of Warrant Shares obtainable upon exercise of this Warrant shall
be increased to a number of shares equal to the number of shares of Common
Stock obtainable immediately prior to the close of business on the record date
fixed for the determination of Holders of Common Stock entitled to receive the
Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding clause (i), or (B) in the event that the Distribution is
of common stock of a company whose common stock is traded on a national
securities exchange or a national automated quotation system, then the Holder
of this Warrant shall receive an additional Warrant to purchase Common Stock,
the terms of which shall be identical to those of this Warrant, except that
such Warrant shall be exercisable into the amount of the assets that would have
been payable to the Holder of this Warrant pursuant to the Distribution had the
Holder exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (i).

(e)  
Certain Events.  If any event occurs of the type contemplated by
the provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the Warrant
Exercise Price and the number of shares of Common Stock obtainable upon
exercise of this Warrant so as to protect the rights of the Holders of the
Warrants; provided, except as set forth in section 8(c),that no such adjustment
pursuant to this Section 8(e) will increase the Warrant Exercise Price or
decrease the number of shares of Common Stock obtainable as otherwise
determined pursuant to this Section 8.  Notwithstanding anything to the
contrary in this Section 8(e), (i) the Warrant Exercise Price shall not be
reduced to less that $0.05 per share (except as may be adjusted pursuant to
Section 8(c)), and (ii) the number of Warrant Shares obtainable upon exercise
of this Warrant shall not be adjusted to exceed that number of shares
determined by multiplying the Warrant Exercise Price in effect immediately
prior  to the adjustment pursuant to this Section 8(e), by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price
resulting from such adjustment.

(f)   
Voluntary Adjustments By Company.  The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

(g)  
Notices.

(i)           
Immediately upon any adjustment of the Warrant Exercise Price, the Company will
give written notice thereof to the Holder of this Warrant, setting forth in
reasonable detail, and certifying, the calculation of such adjustment.

(ii)           The
Company will give written notice to the Holder of this Warrant at least ten
(10) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to Holders of
Common Stock or (C) for determining rights to vote with respect to any
Organic Change (as defined below), dissolution or liquidation, provided that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to such Holder.

(iii)          The Company
will also give written notice to the Holder of this Warrant at least ten (10)
days prior to the date on which any Organic Change, dissolution or liquidation
will take place, provided that such information shall be made known to the
public prior to or in conjunction with such notice being provided to such
Holder.

Section
9.              
Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or
Sale.

(a)  
In addition to any adjustments pursuant to Section 8 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights
to purchase stock, Warrants, securities or other property pro rata to the
record Holders of any class of Common Stock (the “Purchase Rights”),
then the Holder of this Warrant will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
Holder could have acquired if such Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record Holders of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights.

(b)  
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company’s assets to another Person or
other transaction in each case which is effected in such a way that Holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an “Organic Change.”  Prior
to the consummation of any (i) sale of all or substantially all of the
Company’s assets to an acquiring Person or (ii) other Organic Change following
which the Company is not a surviving entity, the Company will secure from the
Person purchasing such assets or the successor resulting from such Organic
Change (in each case, the “Acquiring Entity”) a written agreement (in
form and substance satisfactory to the Holders of Warrants representing at
least two-thirds (iii) of the Warrant Shares issuable upon exercise of the
Warrants then outstanding) to deliver to each Holder of Warrants in exchange
for such Warrants, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant and
satisfactory to the Holders of the Warrants (including an adjusted Warrant
exercise price equal to the value for the Common Stock reflected by the terms
of such consolidation, merger or sale, and exercisable for a corresponding
number of shares of Common Stock acquirable and receivable upon exercise of the
Warrants without regard to any limitations on exercise, if the value so
reflected is less than any Applicable Warrant Exercise Price immediately prior
to such consolidation, merger or sale).  Prior to the consummation of any
other Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the Holders of Warrants representing a majority of the Warrant Shares issuable upon exercise of
the Warrants then outstanding) to insure that each of the Holders of the
Warrants will thereafter have the right to acquire and receive in lieu of or in
addition to (as the case may be) the Warrant Shares immediately theretofore
issuable and receivable 

upon the exercise of such Holder’s
Warrants (without regard to any limitations on exercise), such shares of
stock, securities or assets that would have been issued or payable in such
Organic Change with respect to or in exchange for the number of Warrant Shares
which would have been issuable and receivable upon the exercise of such
Holder’s Warrant as of the date of such Organic Change (without taking into
account any limitations or restrictions on the exercisability of this Warrant).

Section
10.             Lost,
Stolen, Mutilated or Destroyed Warrant.  If this Warrant is lost,
stolen, mutilated or destroyed, the Company shall promptly, on receipt of an
indemnification undertaking (or, in the case of a mutilated Warrant, the
Warrant), issue a new Warrant of like denomination and tenor as this Warrant so
lost, stolen, mutilated or destroyed.

Section
11.             Notice. 
Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Warrant 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
receipt is received by the sending party transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business
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 Holder:

  	
   

  	
  John Fife

  
	
   

  	
   

  	
  303 East Wacker Drive, Suite 311

  
	
   

  	
   

  	
  Chicago, IL 60601

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:       (312)565-1569

  
	
   

  	
   

  	
  Facsimile:        (312)819-9701

  
	
   

  	
   

  	
   

  
	
  With Copy to:

  	
   

  	
  Merrill E. Weber, Esq.

  
	
   

  	
   

  	
  303 East Wacker Drive, Suite 311

  
	
   

  	
   

  	
  Chicago, IL 60601

  
	
   

  	
   

  	
  Telephone:       (312)565-1569

  
	
   

  	
   

  	
  Facsimile:        (312)819-9701

  
	
   

  	
   

  	
   

  
	
  If to the Company, to:

  	
   

  	
  Open Energy Corporation

  
	
   

  	
   

  	
  514 Via de la Valle, Suite 200

  
	
   

  	
   

  	
  Solana Beach, CA 92075

  
	
   

  	
   

  	
  Attention: David Saltman, Chief Executive Officer

  
	
   

  	
   

  	
  Telephone: 858-794-8800

  
	
   

  	
   

  	
  Facsimile: 858-794-8811

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  John Hart, Esq.

  
	
   

  	
   

  	
  514 Via de la Valle, Suite 200

  
	
   

  	
   

  	
  Solana Beach, CA 92075

  
	
   

  	
   

  	
  Telephone: 858-794-8800

  
	
   

  	
   

  	
  Facsimile: 858-794-8811

  

 

If to a Holder of this Warrant, to him at the address
and facsimile number set forth on Exhibit C hereto, with copies to
such Holder’s representatives as set forth on Exhibit C, or at such
other address and facsimile as shall be delivered to the Company upon the
issuance or transfer of this Warrant.  Each party shall provide five days’
prior written notice to the other party of any change in address or facsimile
number.  Written confirmation of receipt (A) given by the recipient
of such notice, consent, facsimile, waiver or other communication, (or
(B) 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.

Section
12.             Date. 
The date of this Warrant is set forth on page 1 hereof.  This Warrant,
in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8(b) shall continue in full
force and effect after such date as to any Warrant Shares or other securities
issued upon the exercise of this Warrant.

Section
13.             Amendment
and Waiver.  Except as otherwise provided herein, the provisions of
the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Holders of Warrants
representing at least two-thirds of the Warrant Shares issuable upon exercise
of the Warrants then outstanding; provided that, except for Section 8(d), no
such action may increase the Warrant Exercise Price or decrease the number of
shares or class of stock obtainable upon exercise of any Warrant without the
written consent of the Holder of such Warrant.

Section
14.             Descriptive
Headings; Governing Law.  The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant.  The corporate laws of the State
of Nevada 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 New Jersey, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
Jersey or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New Jersey.  Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in Hudson County and the United States District Court
for the District of New Jersey, for the adjudication of any dispute hereunder
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.

Section 15.           
Waiver
of Jury Trial.  AS A MATERIAL INDUCEMENT FOR
EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS
TRANSACTION.

IN
WITNESS WHEREOF, the Company has caused this Warrant to be
signed as of the date first set forth above.

	
  

  	
   

  	
  OPEN ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Saltman

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

EXHIBIT A TO WARRANT

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED
HOLDER TO EXERCISE THIS WARRANT

OPEN ENERGY CORPORATION

The undersigned Holder hereby exercises the right to
purchase
                          
of the shares of Common Stock (“Warrant Shares”) of Open Energy
Corporation (the “Company”), evidenced by the Warrant of the Company
designated Warrant No. OEGY-FIFE-1 originally issued June 15, 2007 (the “Warrant”). 
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.

Specify Method of exercise by check mark:

1.   o    
Cash Exercise

(a) Payment of Warrant Exercise Price. The
Holder shall pay the Aggregate Exercise Price of
$                          
to the Company in accordance with the terms of the Warrant.

(b) Delivery of Warrant Shares.  The
Company shall deliver to the Holder Warrant Shares in accordance with the terms
of the Warrant.

2.   o    
Cashless Exercise

(a) Payment of Warrant Exercise Price.  In
lieu of making payment of the Aggregate Exercise Price, the Holder elects to
receive upon such exercise the Net Number of shares of Common Stock determined
in accordance with the terms of the Warrant.

(b) Delivery of Warrant Shares.  The
Company shall deliver to the Holder Warrant Shares in accordance with the terms
of the Warrant.

Date:
                                     
    ,
            

	
  Name of Registered Holder

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

EXHIBIT B TO WARRANT

FORM OF WARRANT POWER

FOR
VALUE RECEIVED, the undersigned does hereby assign and
transfer to
                              ,
Federal Identification
No.                   ,
a Warrant to purchase
                       
shares of the capital stock of Open Energy Corporation represented by Warrant
certificate no. OEGY-FIFE-1, standing in the name of the undersigned on
the books of said corporation.  The undersigned does hereby irrevocably
constitute and appoint                            ,
attorney to transfer the Warrants of said corporation, with full power of
substitution in the premises.

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

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