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<SEC-DOCUMENT>0000950124-06-005427.txt : 20060921
<SEC-HEADER>0000950124-06-005427.hdr.sgml : 20060921
<ACCEPTANCE-DATETIME>20060921143748
ACCESSION NUMBER:		0000950124-06-005427
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20060915
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060921
DATE AS OF CHANGE:		20060921

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SAVE THE WORLD AIR INC
		CENTRAL INDEX KEY:			0001103795
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-HARDWARE & PLUMBING & HEATING EQUIPMENT & SUPPLIES [5070]
		IRS NUMBER:				522088326
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-29185
		FILM NUMBER:		061101950

	BUSINESS ADDRESS:	
		STREET 1:		5125 LANKERSHIM BOULEVARD
		CITY:			NORTH HOLLYWOOD
		STATE:			CA
		ZIP:			91601
		BUSINESS PHONE:		818-487-8000

	MAIL ADDRESS:	
		STREET 1:		5125 LANKERSHIM BOULEVARD
		CITY:			NORTH HOLLYWOOD
		STATE:			CA
		ZIP:			91601
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v23768e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>Current Report<BR>
Pursuant to Section&nbsp;13 or 15(d)
of<BR> the Securities Exchange Act of 1934</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 12pt"><B>Date of Report (Date of earliest event reported): September&nbsp;15, 2006</B>

</DIV>
<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>SAVE THE WORLD AIR, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><B>(Exact name of registrant as specified in charter)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Nevada<BR>
(State or other <BR>
jurisdiction of <BR>
incorporation)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>0-29185<BR>
(Commission File<BR>
Number)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>52-2088326<BR>
(IRS Employer<BR>
Identification No.)</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>5125 Lankershim Boulevard, North Hollywood, California 91601<BR>
(Address of principal executive offices) (Zip Code)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Registrant&#146;s telephone number, including area code: (818)&nbsp;487-8000</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Not Applicable<BR>
<B>(Former name or former address, if changed since last report)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>






<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
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	<TD width="3%"></TD>
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	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">Item&nbsp;1.01 Entry Into a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">Item&nbsp;9.01 Financial Statements and Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="v23768exv10w1.htm">EXHIBIT 10.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="v23768exv10w2.htm">EXHIBIT 10.2</A></TD></TR>
</TABLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link1 "Item&nbsp;1.01 Entry Into a Material Definitive Agreement" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01 Entry Into a Material Definitive Agreement</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;15, 2006, Save the World Air, Inc. (the &#147;Company&#148; or &#147;we&#148;) entered into what is
sometimes termed an equity line of credit arrangement with Dutchess Private Equities Fund, LP
(&#147;Dutchess&#148;). Specifically, we entered into an investment agreement, pursuant to which Dutchess is
committed to purchase up to $10,000,000 of our common stock over the 36-month term of the
investment agreement. We are not obligated to request any portion of the $10,000,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the date of this report, we have not drawn down any portion of this commitment, leaving
the entire $10,000,000 available under the equity line of credit, and for which we have agreed,
pursuant to a registration rights agreement, to register 7,000,000 shares, or approximately 17.8%,
of our issued and outstanding common stock, with the Securities and Exchange Commission (the
&#147;SEC&#148;), before any such issuances. The actual number of shares that we may issue pursuant to the
equity line of credit is not determinable as it is based on the market price of our common stock
from time to time and the number of shares we desire to put to Dutchess.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the line of credit we may, but are not obligated to, put shares of our stock to
Dutchess from time to time over a 36-month period, at a purchase price calculated at 97% of the
lowest best closing bid for our common stock for the five trading
days following our put notice to
the investor. Because the price of our common stock fluctuates and the number of shares of our
common stock, if any, that we may issue, should we exercise our put rights under the equity line of
credit, will vary, we do not know how many shares, if any, we will actually issue under the equity
line of credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the 36-month term of the investment agreement, we may request a drawdown on the equity
line of credit by delivering a &#147;put notice&#148; to Dutchess stating the dollar amount of shares we
intend to sell to Dutchess. The purchase price Dutchess is required to pay for the shares is equal
to 97% of the &#147;market price.&#148; The &#147;market price&#148; is equal to the lowest closing best bid price
during the pricing period. The pricing period is the five-trading-day period beginning on the day
Dutchess receives a drawdown request from us, if the request is received by Dutchess before 9:00
a.m. Eastern time. Otherwise, the pricing period begins on the trading day following the date
Dutchess receives a drawdown request from us. The amount we may request in a given drawdown is, at
our sole election, either (i)&nbsp;200% of the average daily U.S. market trading volume of our common
stock for the 10 trading days prior to the request multiplied by the average of the three daily
closing best bid prices immediately preceding our request, or (ii) $250,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not entitled to request a drawdown unless each of the following conditions is
satisfied:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a registration statement is and remains effective for the resale of securities
in connection with the equity line of credit;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at all times during the period between our request for a drawdown and its
subsequent funding, our common stock is listed on its principal market and shall not
have been suspended from trading thereon for a period of two consecutive trading days;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we have complied with our obligations and are otherwise not in breach or
default of any agreement related to the equity line of credit;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>no injunction shall have been issued and remain in force, or action commenced by
a governmental authority which has not been stayed or abandoned, prohibiting the
purchase or the issuance of securities in connection with the equity line of credit;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the issuance of the securities in connection with the equity line of credit will
not violate any shareholder approval requirements of the principal market.</TD>
</TR>

</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of the events described in clauses (i)&nbsp;through (v)&nbsp;above occurs after we make a
drawdown request, then Dutchess shall have no obligation to fund that drawdown.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The equity line of credit will be suspended if (i)&nbsp;the trading of our common stock is
suspended by the SEC, the primary stock exchange or market on which our common stock is listed or
quoted (currently, the OTC Bulletin Board) or the National Association of Securities Dealers, Inc.
for a period of two consecutive trading days, or (ii)&nbsp;our common stock ceases to be registered
under the Securities Exchange Act of 1934 or listed or traded on the principal market. The equity line of
credit terminates when Dutchess has purchased an aggregate of $10,000,000 of our common stock or
September&nbsp;15, 2009, whichever occurs first.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the investment agreement, Dutchess may not own more than 4.99% of our
issued and outstanding stock at any one time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Spencer Clarke LLC, the Company&#146;s investment bankers, will receive 8% of the gross proceeds of
any drawdown under the equity line of credit, payable in cash.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company intends to use the net proceeds of any drawdowns under the equity line of credit
to fund its business plan, and for working capital and general corporate purposes, including
marketing, sales and product development activities, among other things.
</DIV>
<!-- link1 "Item&nbsp;9.01 Financial Statements and Exhibits" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01 Financial Statements and Exhibits</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">10.1</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Investment Agreement dated as of September&nbsp;15, 2006 between Registrant and Dutchess Private
Equities Fund, LP</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">10.2</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Registration Rights Agreement dated as of September&nbsp;15, 2006 between Registrant and Dutchess
Private Equities Fund, LP</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">Date: September&nbsp;21, 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">SAVE THE WORLD AIR, INC.</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Eugene E. Eichler</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>v23768exv10w1.htm
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INVESTMENT AGREEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">INVESTMENT AGREEMENT (this &#147;AGREEMENT&#148;), dated as of September&nbsp;15, 2006 by and between Save the
World Air, Inc. a Nevada corporation (the &#147;Company&#148;), and Dutchess Private Equities Fund, LP, a
Delaware limited partnership (the &#147;Investor&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein,
the Investor shall invest up to Ten Million dollars ($10,000,000) to purchase the Company&#146;s Common
Stock, $.001 par value per share (the &#147;Common Stock&#148;);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WHEREAS, such investments will be made in reliance upon the provisions of Section&nbsp;4(2) under the
Securities Act of 1933, as amended (the &#147;1933 Act&#148;), Rule&nbsp;506 of Regulation&nbsp;D, and the rules and
regulations promulgated thereunder, and/or upon such other exemption from the registration
requirements of the 1933 Act as may be available with respect to any or all of the investments in
Common Stock to be made hereunder; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto
are executing and delivering a Registration Rights Agreement substantially in the form attached
hereto (the &#147;Registration Rights Agreement&#148;) pursuant to which the Company has agreed to provide
certain registration rights under the 1933 Act, and the rules and regulations promulgated
thereunder, and applicable state securities laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NOW THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral
part of this Agreement, the covenants and agreements set forth hereafter, and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company
and the Investor hereby agree as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SECTION 1. DEFINITIONS.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used in this Agreement, the following terms shall have the following meanings specified or
indicated below, and such meanings shall be equally applicable to the singular and plural forms of
such defined terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>1933
Act</U>&#148; shall have the meaning set forth in the preamble of this agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>1934
Act</U>&#148; shall mean the Securities Exchange Act of 1934, as it may be amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Affiliate</U>&#148; shall have the meaning specified in Section&nbsp;5(H), below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Agreement</U>&#148; shall mean this Investment Agreement.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Best Bid&#148;</U> shall mean the highest posted bid price of the Common Stock during a given
period of time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>By-laws</U>&#148; shall have the meaning specified in Section&nbsp;4(C).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Certificate of Incorporation&#148;</U> shall have the meaning specified in Section&nbsp;4(C).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing</U>&#148; shall have the meaning specified in Section&nbsp;2(G).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Closing Date&#148;</U> shall mean no more than seven (7)&nbsp;Trading Days following the Put
Notice Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Common Stock&#148;</U> shall have the meaning set forth in the preamble of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Control</U>&#148;
or &#147;<U>Controls</U>&#148; shall have the meaning specified in Section&nbsp;5(H).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Effective Date&#148;</U> shall mean the date the SEC declares effective under the 1933 Act
the Registration Statement covering the Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Environmental Laws&#148;</U> shall have the meaning specified in Section&nbsp;4(M).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Equity Line Transaction Documents&#148;</U> shall mean this Agreement, the Registration
Rights Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Execution Date&#148;</U> shall mean the date indicated in the preamble to this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Indemnities&#148;</U> shall have the meaning specified in Section&nbsp;11.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Indemnified
Liabilities&#148;</U> shall have the meaning specified in Section&nbsp;11.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Ineffective Period&#148;</U> shall mean any period of time that the Registration Statement or
any Supplemental Registration Statement (as defined in the Registration Rights Agreement between
the parties) becomes ineffective or unavailable for use for the sale or resale, as applicable, of
any or all of the Registrable Securities (as defined in the Registration Rights Agreement) for any
reason (or in the event the prospectus under either of the above is not current and deliverable)
during any time period required under the Registration Rights Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Investor</U>&#148; shall have the meaning indicated in the preamble of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Material Adverse Effect&#148;</U> shall have the meaning specified in Section&nbsp;4(A).
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Maximum Common Stock Issuance&#148;</U> shall have the meaning specified in Section
2(H).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Minimum Acceptable Price&#148;</U> with respect to any Put Notice Date shall mean
seventy-five percent (75%) of the lowest closing bid prices for the ten (10)&nbsp;Trading Day period
immediately preceding each Put Notice Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Open
Market Adjustment Amount&#148;</U> shall have the meaning specified
in Section&nbsp;2(I).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Open
Market Purchase&#148;</U> shall have the meaning specified in Section&nbsp;2(I)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Open
Market Share Purchase&#148;</U> shall have the meaning specified in Section&nbsp;2(I).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Open Period&#148;</U> shall mean the period beginning on and including the Trading Day
immediately following the Effective Date and ending on the earlier to occur of (i)&nbsp;the date which
is thirty-six (36)&nbsp;months from the Effective Date; or (ii)&nbsp;termination of the Agreement in
accordance with Section&nbsp;9, below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Pricing Period&#148;</U> shall mean the period beginning on the Put Notice Date and ending on
and including the date that is five (5)&nbsp;Trading Days after such Put Notice Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Principal Market&#148;</U> shall mean the American Stock Exchange, Inc., the National
Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board, the NASDAQ National
Market System or the NASDAQ SmallCap Market, whichever is the principal market on which the Common
Stock is listed or quoted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Prospectus&#148;</U> shall mean the prospectus, preliminary prospectus and supplemental
prospectus used in connection with the Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Purchase Amount&#148;</U> shall mean the total amount being paid by the Investor on a
particular Closing Date to purchase the Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Purchase Price&#148;</U> shall mean ninety-seven percent (97%) of the lowest closing Best Bid
price of the Common Stock during the Pricing Period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Put&#148;</U> shall have the meaning set forth in Section&nbsp;2(B)(1) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Put Amount&#148;</U> shall have the meaning set forth in Section&nbsp;2(B)(1) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Put Notice&#148;</U> shall mean a written notice sent to the Investor by the Company stating
the Put Amount in U.S. dollars the Company intends to sell to the Investor pursuant to the terms
of the Agreement and stating the current number of Shares issued and outstanding on such date.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Put Notice Date&#148;</U> shall mean the Trading Day, as set forth below, immediately
following the day on which the Investor receives a Put Notice, however a Put Notice shall be deemed
delivered on <B>(a) </B>the Trading Day it is received by facsimile or otherwise by the Investor if such
notice is received prior to 9:00 am Eastern Time, or <B>(b) </B>the immediately succeeding Trading Day if
it is received by facsimile or otherwise after 9:00 am Eastern Time on a Trading Day. No Put Notice
may be deemed delivered on a day that is not a Trading Day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Put Restriction&#148;</U> shall mean the days between the beginning of the Pricing Period and
Closing Date. During this time, the Company shall not be entitled to deliver another Put Notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Put
Shares Due&#148;</U> shall have the meaning specified in Section&nbsp;2(I).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Registration Period&#148;</U> shall have the meaning specified in Section&nbsp;5(C), below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Registration Rights Agreement&#148;</U> shall have the meaning set forth in the recitals,
above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Registration Statement&#148;</U> means the registration statement of the Company filed under
the 1933 Act covering the Common Stock issuable hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Related Party&#148;</U> shall have the meaning specified in Section&nbsp;5(H).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Resolution&#148;</U> shall have the meaning specified in Section&nbsp;8(E).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>SEC</U>&#148; shall
mean the U.S. Securities &#038; Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;SEC Documents&#148;</U> shall have
the meaning specified in Section&nbsp;4(F).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities</U>&#148; shall mean the shares of Common Stock issued pursuant to the terms of the
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Shares</U>&#148; shall mean the shares of the Company&#146;s Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Subsidiaries&#148;</U>
shall have the meaning specified in Section&nbsp;4(A).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&#147;Trading Day&#148;</U> shall mean any day on which the Principal Market for the Common Stock
is open for trading, from the hours of 9:30 am until 4:00 pm.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SECTION 2. PURCHASE AND SALE OF COMMON STOCK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A)&nbsp;PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions set forth herein, the
Company shall issue and sell to the Investor, and
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the Investor shall purchase from the Company, up to that number of Shares having an aggregate
Purchase Price of Ten Million dollars ($10,000,000).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(B)&nbsp;DELIVERY OF PUT NOTICES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;Subject to the terms and conditions of the Transaction Documents, and from time to time during
the Open Period, the Company may, in its sole discretion, deliver a Put Notice to the Investor
which states the dollar amount (designated in U.S. Dollars) (the &#147;Put Amount&#148;), which the Company
intends to sell to the Investor on a Closing Date (the &#147;Put&#148;). The Put Notice shall be in the form
attached hereto as Exhibit&nbsp;C and incorporated herein by reference. The amount that the Company
shall be entitled to Put to the Investor (the &#147;Put Amount&#148;) shall be equal to, at the Company&#146;s
sole election, either: (A)&nbsp;Two Hundred percent (200%) of the average daily volume (U.S. market
only) of the Common Stock for the Ten (10)&nbsp;Trading Days prior to the applicable Put Notice Date,
multiplied by the average of the three (3)&nbsp;daily closing bid prices immediately preceding the Put
Date, or (B)&nbsp;two hundred fifty thousand dollars ($250,000). During the Open Period, the Company
shall not be entitled to submit a Put Notice until after the previous Closing has been completed.
The Purchase Price for the Common Stock identified in the Put Notice
shall be equal to ninety-seven percent (97%) of the lowest closing Best Bid price of the Common Stock during the Pricing Period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(C)&nbsp;COMPANY&#146;S RIGHT TO WITHRDRAWL. The Company shall reserve the
right, but not the obligation, to withdraw that portion of the Put that is below the
Minimal Acceptable Price, by submitting to the Investor, in writing, a notice to
cancel that portion of the Put. Any shares above the Minimal Acceptable price
due to the Investor shall be carried out by the Company under the terms of this
Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(D)&nbsp;INTENTIONALLY OMITTED
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(E)&nbsp;CONDITIONS TO INVESTOR&#146;S OBLIGATION TO PURCHASE SHARES.
Notwithstanding anything to the contrary in this Agreement, the Company shall
not be entitled to deliver a Put Notice and the Investor shall not be obligated to
purchase any Shares at a Closing (as defined in Section&nbsp;2(G)) unless each of the
following conditions are satisfied:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I)&nbsp;a Registration Statement shall have been declared effective and shall
remain effective and available for the resale of all the Registrable Securities (as
defined in the Registration Rights Agreement) at all times until the Closing with
respect to the subject Put Notice;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II)&nbsp;at all times during the period beginning on the related Put Notice Date
and ending on and including the related Closing Date, the Common Stock shall
have been listed on the Principal Market and shall not have been suspended
from trading thereon for a period of two (2)&nbsp;consecutive Trading Days during the
Open Period and the Company shall not have been notified of any pending or
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">threatened proceeding or other action to suspend the trading of the Common Stock;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(III)&nbsp;the Company has complied with its obligations and is otherwise not in
breach of or in default under, a material provision of this Agreement, the
Registration Rights Agreement or any other agreement executed in connection
herewith which has not been cured prior to delivery of the Investor&#146;s Put Notice
Date;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(IV)&nbsp;no injunction shall have been issued and remain in force, or action
commenced by a governmental authority which has not been stayed or
abandoned, prohibiting the purchase or the issuance of the Securities; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(V)&nbsp;the issuance of the Securities will not violate any shareholder approval
requirements of the Principal Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If any of the events described in clauses (I)&nbsp;through (V)&nbsp;above occurs during a Pricing Period,
then the Investor shall have no obligation to purchase the Put Amount of Common Stock set forth in
the applicable Put Notice.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(F)&nbsp;RESERVED
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(G)&nbsp;MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the
satisfaction of the conditions set forth in Sections&nbsp;2(E), 7 and 8, the closing of the
purchase by the Investor of Shares (a &#147;Closing&#148;) shall occur on the date which is
no later than seven (7)&nbsp;Trading Days following the applicable Put Notice Date
(each a &#147;Closing Date&#148;). Prior to each Closing Date, (I)&nbsp;the Company shall deliver
to the Investor pursuant to this Agreement, certificates representing the Shares
to be issued to the Investor on such date and registered in the name of the
Investor; and (II)&nbsp;the Investor shall deliver to the Company the Purchase Price to
be paid for such Shares, determined as set forth in Sections&nbsp;2(B). In lieu of
delivering physical certificates representing the Securities and provided that the
Company&#146;s transfer agent then is participating in The Depository Trust Company
(&#147;DTC&#148;) Fast Automated Securities Transfer (&#147;FAST&#148;) program, upon request of
the Investor, the Company shall use commercially reasonable efforts to cause its
transfer agent to electronically transmit the Securities by crediting the account of
the Investor&#146;s prime broker (as specified by the Investor within a reasonably in
advance of the Investor&#146;s notice) with DTC through its Deposit Withdrawal Agent
Commission (&#147;DWAC&#148;) system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company understands that a delay in the issuance of Securities beyond the Closing Date could
result in economic damage to the Investor. After the Effective Date, as compensation to the
Investor for such loss, the Company agrees to make late payments to the Investor for late issuance
of Securities (delivery of Securities after the applicable Closing Date) in accordance with the
following schedule (where &#147;No. of Days Late&#148; is defined as the number of trading days beyond the
Closing Date, with the Amounts being cumulative.):
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">LATE PAYMENT FOR EACH</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">NO. OF DAYS LATE</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">$10,000 WORTH OF COMMON STOCK</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">7</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">700</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">8</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">9</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">900</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Over 10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">$1,000 &#043; $200 for each</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Business Day late beyond 10 days</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company shall make any payments incurred under this Section in immediately available
funds upon demand by the Investor. Nothing herein shall limit the Investor&#146;s right to pursue
actual damages for the Company&#146;s failure to issue and deliver the Securities to the Investor,
except that such late payments shall offset any such actual damages incurred by the Investor,
and any Repurchase Adjustment Amount, as set forth below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(H)&nbsp;OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained herein to the
contrary, if during the Open Period the Company becomes listed on an exchange that limits the
number of shares of Common Stock that may be issued without shareholder approval, then the
number of Shares issuable by the Company and purchasable by the Investor, shall not exceed
that number of the shares of Common Stock that may be issuable without shareholder approval
(the &#147;Maximum Common Stock Issuance&#148;). If such issuance of shares of Common Stock could cause
a delisting on the Principal Market, then the Maximum Common Stock Issuance shall first be
approved by the Company&#146;s shareholders in accordance with applicable law and the By-laws and
Amended and Restated Certificate of Incorporation of the Company, if such issuance of shares
of Common Stock could cause a delisting on the Principal Market. The parties understand and
agree that the Company&#146;s failure to seek or obtain such shareholder approval shall in no way
adversely affect the validity and due authorization of the issuance and sale of Securities or
the Investor&#146;s obligation in accordance with the terms and conditions hereof to purchase a
number of Shares in the aggregate up to the Maximum Common Stock Issuance limitation, and
that such approval pertains only to the applicability of the Maximum Common Stock Issuance
limitation provided in this Section&nbsp;2(H).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this
Agreement, in no event shall the Investor be entitled to purchase that number of Shares,
which when added to the sum of the number of shares of Common Stock beneficially owned (as
such term is defined under Section 13(d) and Rule&nbsp;13d-3 of the 1934 Act), by the Investor,
would exceed
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">4.99% of the number of shares of Common Stock outstanding on the Closing Date, as determined in
accordance with Rule&nbsp;13d-1(j) of the 1934 Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(J)&nbsp;If, by the third (3rd) business day after the Closing Date, the Company fails to deliver any
portion of the shares of the Put to the Investor (the &#147;Put Shares Due&#148;) and the Investor purchases,
in an open market transaction or otherwise, shares of Common Stock necessary to make delivery of
shares which would have been delivered if the full amount of the shares to be delivered to the
Investor by the Company (the &#147;Open Market Share Purchase&#148;) , then the Company shall pay to the
Investor, in addition to any other amounts due to Investor pursuant to the Put, and not in lieu
thereof, the Open Market Adjustment Amount (as defined below). The &#147;Open Market Adjustment Amount&#148;
is the amount equal to the excess, if any, of (x)&nbsp;the Investor&#146;s total purchase price (including
brokerage commissions, if any) for the Open Market Share Purchase minus (y)&nbsp;the net proceeds (after
brokerage commissions, if any) received by the Investor from the sale of the Put Shares Due. The
Company shall pay the Open Market Adjustment Amount to the Investor in immediately available funds
within five (5)&nbsp;business days of written demand by the Investor. 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 an Open Market Purchase with respect to
shares of Common Stock it sold for net proceeds of $10,000, the Open Market Purchase Adjustment
Amount which the Company will be required to pay to the Holder will be $1,000.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SECTION 3. INVESTOR&#146;S REPRESENTATIONS, WARRANTIES AND COVENANTS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Investor represents and warrants to the Company, and covenants, that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A)&nbsp;SOPHISTICATED INVESTOR. The Investor has, by reason of its business
and financial experience, such knowledge, sophistication and experience in
financial and business matters and in making investment decisions of this type
that it is capable of (I)&nbsp;evaluating the merits and risks of an investment in the
Securities and making an informed investment decision; (II)&nbsp;protecting its own
interest; and (III)&nbsp;bearing the economic risk of such investment for an indefinite
period of time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(B)&nbsp;AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Investor and is a valid
and binding agreement of the Investor enforceable against the Investor in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors&#146; rights and remedies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(C)&nbsp;SECTION 9 OF THE 1934 ACT. During the term of this Agreement, the
Investor will comply with the provisions of Section&nbsp;9 of the 1934 Act, and the
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">rules promulgated thereunder, with respect to transactions involving the Common Stock. The
Investor agrees not to sell the Company&#146;s stock short, either directly or indirectly through its
affiliates, principals or advisors, the Company&#146;s common stock during the term of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(D)&nbsp;ACCREDITED INVESTOR. Investor is an &#147;Accredited Investor&#148; as that term
is defined in Rule&nbsp;501 (a)&nbsp;of Regulation&nbsp;D of the 1933 Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(E)&nbsp;NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Investor and the consummation by the Investor of
the transactions contemplated hereby and thereby will not result in a violation of
Partnership Agreement or other organizational documents of the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(F)&nbsp;OPPORTUNITY TO DISCUSS. The Investor has received all materials
relating to the Company&#146;s business, finance and operations which it has
requested. The Investor has had an opportunity to discuss the business,
management and financial affairs of the Company with the Company&#146;s
management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(G)&nbsp;INVESTMENT PURPOSES. The Investor is purchasing the Securities for its
own account for investment purposes and not with a view towards distribution
and agrees to resell or otherwise dispose of the Securities solely in accordance
with the registration provisions of the 1933 Act (or pursuant to an exemption from
such registration provisions).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(H)&nbsp;NO REGISTRATION AS A DEALER. The Investor is not and will not be required to be registered as
a &#147;dealer&#148; under the 1934 Act, either as a result of its execution and performance of its
obligations under this Agreement or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;GOOD STANDING. The Investor is a Limited Partnership, duly organized, validly existing and in
good standing in the State of Delaware.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(J)&nbsp;TAX LIABILITIES. The Investor understands that it is liable for its own tax liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(K)&nbsp;REGULATION M. The Investor will comply with Regulation&nbsp;M under the 1934 Act, if applicable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as set forth in the Schedules attached hereto, or as disclosed on the Company&#146;s SEC
Documents, the Company represents and warrants to the Investor that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A)&nbsp;ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Nevada, and has the requisite corporate
power and authorization to own its
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">properties and to carry on its business as now being conducted. Both the Company and the companies
it owns or controls (&#147;Subsidiaries&#148;) are duly qualified to do business and are in good standing in
every jurisdiction in which its ownership of property or the nature of the business conducted by
it makes such qualification necessary, except to the extent that the failure to be so qualified or
be in good standing would not have a Material Adverse Effect. As used in this Agreement, &#147;Material
Adverse Effect&#148; means any material adverse effect on the business, properties, assets, operations,
results of operations, financial condition or prospects of the Company and its Subsidiaries, if
any, taken as a whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority or ability of the
Company to perform its obligations under the Transaction Documents (as defined in Section&nbsp;1 and
4(B), below).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(B)&nbsp;AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER
INSTRUMENTS.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I)&nbsp;The Company has the requisite corporate power and authority to enter
into and perform this 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 &#147;Transaction
Documents&#148;), and to issue the Securities in accordance with the terms hereof
and thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II)&nbsp;The execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby
and thereby, including without limitation the reservation for issuance and the
issuance of the Securities pursuant to this Agreement, have been duly and
validly authorized by the Company&#146;s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors, or its
shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(III)&nbsp;The Transaction Documents have been duly and validly executed and
delivered by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(IV)&nbsp;The Transaction Documents 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&#146; rights and remedies.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(C)&nbsp;CAPITALIZATION. As of the date hereof, the authorized capital stock of the
Company consists of 200,000,000 shares of Common Stock, $.001 par value per
share, of which as of the date hereof, 39,340,119 shares are issued and
outstanding; no shares of Preferred Stock are authorized or issued or
outstanding; 31,536,171 shares of common stock are reserved for issuance
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">pursuant to options, warrants and other convertible securities; and an additional 1,614,000 shares
of common stock will have been reserved for issuance pursuant to options, warrants and other
convertible securities on or before the date of the filing of the Registration Statement with the
SEC. All of such outstanding shares have been, or upon issuance will be, validly issued, fully
paid and non-assessable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as disclosed in the Company&#146;s publicly available filings with the SEC:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;no shares of the Company&#146;s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (II)&nbsp;there are no
outstanding debt securities; (III)&nbsp;there are no outstanding shares of capital stock, options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital stock of the Company or any of
its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, except that the Company may be
obligated to issue a warrant to its distributor in China exercisable for up to 1,000,000 shares of
common stock, with the exact amount depending upon the number of units ordered by the distributor
over a five-year period commencing upon the execution of the related distribution agreement; (IV)
there are no agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement), except that the Company (A)&nbsp;has granted piggyback registration
rights to the Company&#146;s former public relations firm with respect to 41,665 shares of common stock,
(B)&nbsp;is presently negotiating the granting of piggyback registration rights with the bankruptcy
trustee under the Company&#146;s former royalty agreement with respect to its ZEFS technology with
respect to 50,000 shares of common stock, and (C)&nbsp;is presently negotiating the granting of S-8
registration rights to one consultant for 450,000 shares of common stock issuable upon the exercise
of options; (V)&nbsp;there are no outstanding securities 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)&nbsp;there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement; (VII)&nbsp;the Company does not have any
stock appreciation rights or &#147;phantom stock&#148; plans or agreements or any similar plan or agreement;
and (VIII)&nbsp;there is no dispute as to the classification of any shares of the Company&#146;s capital
stock.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has furnished to the Investor, or the Investor has had access through EDGAR
to, true and correct copies of the Company&#146;s Amended and Restated Certificate of Incorporation, as
in effect on the date hereof (the &#147;Certificate of Incorporation&#148;), and the Company&#146;s By-laws, as in
effect on the date hereof (the &#147;By-laws&#148;), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders thereof in respect thereto.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(D)&nbsp;ISSUANCE OF SHARES. The Company has reserved, or will have reserved
on or before the date of the filing of the Registration Statement with the SEC,
7,000,000 Shares for issuance pursuant to this Agreement, which Shares will
have been duly authorized and reserved for issuance (subject to adjustment
pursuant to the Company&#146;s covenant set forth in Section&nbsp;5(F) below) pursuant to
this Agreement. Upon issuance in accordance with this Agreement, the
Securities will be validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof. In the event the
Company cannot register a sufficient number of Shares for issuance pursuant to
this Agreement, the Company will use its best efforts to authorize and reserve for
issuance the number of Shares required for the Company to perform its
obligations hereunder as soon as reasonably practicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(E)&nbsp;NO CONFLICTS. The execution, delivery and performance of the Equity Line
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not (I)&nbsp;result
in a violation of the Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Company or the By-laws; or (II)&nbsp;conflict with, or constitute a material default (or
an event which with notice or lapse of time or both would become a material
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, contract, indenture
mortgage, indebtedness or instrument to which the Company or any of its
Subsidiaries is a party, or to the Company&#146;s knowledge result in a violation of any
law, rule, regulation, order, judgment or decree (including United States federal
and state securities laws and regulations and the rules and regulations of the
Principal Market or principal securities exchange or trading market on which the
Common Stock is traded or listed) 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 as disclosed in Schedule&nbsp;4(e), neither
the Company nor its Subsidiaries is in violation of any term of, or in default under,
the Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or
the By-laws or their organizational charter or by-laws, respectively, or any contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
Subsidiaries, except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not individually or in the
aggregate have or constitute a Material Adverse Effect. The business of the
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company and its Subsidiaries is not being conducted, and shall not be conducted, in
violation of any law, statute, ordinance, rule, order or regulation of any governmental authority
or agency, regulatory or self-regulatory agency, or court, except for possible violations the
sanctions for which either individually or in the aggregate would not have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act or
any securities laws of any states, to the Company&#146;s knowledge, the Company is not required to
obtain any consent, authorization, permit or order of, or make any filing or registration (except
the filing of a registration statement as outlined in the Registration Rights Agreement between the
Parties) with, any court, governmental authority or agency, regulatory or self-regulatory agency or
other third party in order for it to execute, deliver or perform any of its obligations under, or
contemplated by, the Transaction Documents in accordance with the terms hereof or thereof. All
consents, authorizations, permits, 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 and are in full force and effect as of the date hereof. Except as disclosed in Schedule
4(e), the Company and its Subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing. The Company is not, and will not be, in violation of the listing
requirements of the Principal Market as in effect on the date hereof and on each of the Closing
Dates and is not aware of any facts which would reasonably lead to delisting of the Common Stock by
the Principal Market in the foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(F)&nbsp;SEC DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the &#147;SEC Documents&#148;). The
Company has delivered to the Investor or its representatives, or they have had access through EDGAR
to, true and complete copies of the SEC Documents. As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading. 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, by a firm that is a
member of the Public Companies Accounting Oversight Board (&#147;PCAOB&#148;) consistently applied, during
the periods involved (except (I)&nbsp;as may be otherwise indicated in such financial statements or the
notes thereto, or (II)&nbsp;in
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 written information provided by or on behalf of the Company to the Investor
which is not included in the SEC Documents, including, without limitation, information referred to
in Section&nbsp;4(D) of this Agreement, contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements therein, in the light of the circumstance
under which they are or were made, not misleading. Neither the Company nor any of its Subsidiaries
or any of their officers, directors, employees or agents have provided the Investor with any
material, nonpublic information which was not publicly disclosed prior to the date hereof and any
material, nonpublic information provided to the Investor by the Company or its Subsidiaries or any
of their officers, directors, employees or agents prior to any Closing Date shall be publicly
disclosed by the Company prior to such Closing Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(G)&nbsp;ABSENCE OF CERTAIN CHANGES. Except as otherwise set forth in the SEC Documents, the Company
does not intend to change the business operations of the Company in any material way. The Company
has not taken any steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge or
reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(H)&nbsp;ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the
executive officers of Company or any of its Subsidiaries, threatened against or affecting the
Company, the Common Stock or any of the Company&#146;s Subsidiaries or any of the Company&#146;s or the
Company&#146;s Subsidiaries&#146; officers or directors in their capacities as such, in which an adverse
decision could have a Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;ACKNOWLEDGMENT REGARDING INVESTOR&#146;S PURCHASE OF SHARES. The Company acknowledges and agrees
that the Investor is acting solely in the capacity of an arm&#146;s length purchaser with respect to
the Transaction Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Equity Line Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by the Investor or any of its
respective representatives or agents in connection with the Equity Line Transaction Documents and
the transactions contemplated hereby and thereby is merely incidental to the Investor&#146;s purchase
of the Securities, and is not being relied on
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">by the Company. The Company further represents to the Investor that the Company&#146;s decision
to enter into the Equity Line Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(J)&nbsp;NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as set forth in the
SEC Documents, as of the date hereof, no event, liability, development or circumstance has occurred
or exists, or to the Company&#146;s knowledge is contemplated to occur, with respect to the Company or
its Subsidiaries or their respective business, properties, assets, prospects, operations or
financial condition, that would be required to be disclosed by the Company under applicable
securities laws on a registration statement filed with the SEC relating to an issuance and sale by
the Company of its Common Stock and which has not been publicly announced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(K)&nbsp;EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries is involved in any union
labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, is any such dispute
threatened. Neither the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that relations with their employees are
good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company
that such officer intends to leave the Company&#146;s employ or otherwise terminate such officer&#146;s
employment with the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(L)&nbsp;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. Except as set forth in the SEC Documents, none of the Company&#146;s trademarks, trade names,
service marks, service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or other intellectual
property rights necessary to conduct its business as now or as proposed to be conducted have
expired or terminated, or are expected to expire or terminate within two (2)&nbsp;years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service mark registrations, trade
secret or other similar rights of others, or of any such development of similar or identical trade
secrets or technical information by others and, except as set forth in the SEC Documents, there is
no claim, action or proceeding being made or brought against, or to the Company&#146;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
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">any of the foregoing. The Company and its Subsidiaries have taken commercially reasonable
security measures to protect the secrecy, confidentiality and value of all of their intellectual
properties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(M)&nbsp;ENVIRONMENTAL LAWS. The Company (I)&nbsp;is, to the knowledge of the management and directors of
the Company, 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 (&#147;Environmental Laws&#148;); (II)&nbsp;has, to the
knowledge of the management and directors of the Company, received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its business; and (III)&nbsp;is
in compliance, to the knowledge of the management and directors of the Company, with all terms and
conditions of any such permit, license or approval where, in each of the three (3)&nbsp;foregoing
cases, the failure to so comply would have, individually or in the aggregate, a Material Adverse
Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(N)&nbsp;TITLE. The Company and its Subsidiaries have good and marketable title to all personal
property owned by them which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects except such as are described in
the SEC Documents or such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the Company or any of its
Subsidiaries. Any real property and facilities held under lease by the Company or any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(O)&nbsp;INSURANCE. Each of the Company&#146;s Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management of the Company
reasonably believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any
insurance coverage sought or applied for and neither the Company nor its Subsidiaries 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 have a Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(P)&nbsp;REGULATORY PERMITS. The Company and its Subsidiaries have in full force and effect all
certificates, approvals, authorizations and permits from the appropriate federal, state, local or
foreign regulatory authorities and comparable foreign regulatory agencies, necessary to own, lease
or operate their respective properties and assets and 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, approval,
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">authorization or permit, except for such certificates, approvals, authorizations or permits which
if not obtained, or such revocations or modifications which, would not have a Material Adverse
Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(Q)&nbsp;INTERNAL ACCOUNTING CONTROLS. The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (I)&nbsp;transactions are
executed in accordance with management&#146;s general or specific authorizations; (II)&nbsp;transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles by a firm with membership to the PCAOB and to maintain asset
accountability; (III)&nbsp;access to assets is permitted only in accordance with management&#146;s general
or specific authorization; and (IV)&nbsp;the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(R)&nbsp;NO MATERIALLY ADVERSE CONTRACTS, 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&#146;s officers has or is expected in the future to
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company&#146;s officers has or is expected to have a
Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(S)&nbsp;TAX STATUS. The Company and each of its Subsidiaries has made or filed all United States
federal and state income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(T)&nbsp;CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents filed at least ten (10)&nbsp;days
prior to the date hereof and except for arm&#146;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 disinterested 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 or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other arrangement
providing for the
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(U)&nbsp;DILUTIVE EFFECT. The Company understands and acknowledges that the number of shares of Common
Stock issuable upon purchases pursuant to this Agreement will increase in certain circumstances
including, but not necessarily limited to, the circumstance wherein the trading price of the Common
Stock declines during the period between the Effective Date and the end of the Open Period. The
Company&#146;s executive officers and directors have studied and fully understand the nature of the
transactions contemplated by this Agreement and recognize that they have a potential dilutive
effect on the shareholders of the Company. The Board of Directors of the Company has concluded, in
its good faith business judgment, and with full understanding of the implications, that such
issuance is in the best interests of the Company. The Company specifically acknowledges that,
subject to such limitations as are expressly set forth in the Equity Line Transaction Documents,
its obligation to issue shares of Common Stock upon purchases pursuant to this Agreement is
absolute and unconditional regardless of the dilutive effect that such issuance may have on the
ownership interests of other shareholders of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(V)&nbsp;LOCK-UP. The Company shall cause its officers, insiders, directors, and affiliates or other
related parties under control of the Company, to refrain from selling Common Stock during each
Pricing Period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(W)&nbsp;NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any person acting
on its behalf, has engaged in any form of general solicitation or general advertising (within the
meaning of Regulation&nbsp;D) in connection with the offer or sale of the Common Stock to be offered as
set forth in this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(X)&nbsp;NO BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders or financial
advisory fees or commissions will be payable by the Company, it&#146;s agents or Subsidiaries, with
respect to the transactions contemplated by this Agreement, except as otherwise provided for in
Section&nbsp;12(M) of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 5. COVENANTS OF THE COMPANY
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A)&nbsp;BEST EFFORTS. The Company shall use commercially reasonable efforts to
timely satisfy each of the conditions set forth in Section&nbsp;7 of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(B)&nbsp;BLUE SKY. The Company shall, at its sole cost and expense, on or before
each of the Closing Dates, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption for the
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities for, sale to the Investor at each of the Closings pursuant to this Agreement under
applicable securities or &#147;Blue Sky&#148; laws of such states of the United States, as reasonably
specified by the Investor, and shall provide evidence of any such action so taken to the Investor
on or prior to the Closing Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(C)&nbsp;REPORTING STATUS. Until the first of the following occurs, the Company
shall file all reports required to be filed with the SEC pursuant to the 1934 Act,
and the Company shall not terminate its status, or take an action or fail to take
any action, which would terminate its status as a reporting company under the
1934 Act: (i)&nbsp;this Agreement terminates pursuant to Section&nbsp;9 and the Investor
has the right to sell all of the Securities without restrictions pursuant to Rule
144(k) promulgated under the 1933 Act, or such other exemption; or (ii)&nbsp;the date
on which the Investor has sold all the Securities and this Agreement has been
terminated pursuant to Section&nbsp;9.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(D)&nbsp;USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Shares (excluding amounts paid by the Company for fees as set forth in the
Transaction Documents) for general corporate and working capital purposes and
acquisitions or assets, businesses or operations or for other purposes that the
Board of Directors, in its good faith deem to be in the best interest of the
Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(E)&nbsp;FINANCIAL INFORMATION. During the Registration Period, the Company
agrees to make available to the Investor via EDGAR or other electronic means
the following documents and information on the forms set forth: (I)&nbsp;within five (5)
Trading Days after the filing thereof with the SEC, a copy of its Annual Reports
on Form 10-KSB, its Quarterly Reports on Form 10-QSB, any Current Reports on
Form 8-K and any Registration Statements or amendments filed pursuant to the
1933 Act; (II)&nbsp;copies of any notices and other information made available or given
to the shareholders of the Company generally, contemporaneously with the
making available or giving thereof to the shareholders; and (III)&nbsp;within two (2)
calendar days of filing or delivery thereof, copies of all documents filed with, and
all correspondence sent to, the Principal Market, any securities exchange or
market, or the National Association of Securities Dealers, Inc., unless such
information is material nonpublic information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(F)&nbsp;RESERVATION OF SHARES. Subject to the following sentence, the
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of shares of Common
Stock to provide for the issuance of the Securities to the Investor as required
hereunder. In the event that the Company determines that it does not have a
sufficient number of authorized shares of Common Stock to reserve and keep
available for issuance as described in this Section&nbsp;5(F), the Company shall use
commercially reasonable efforts to increase the number of authorized shares of
Common Stock by seeking shareholder approval for the authorization of such
additional shares.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(G)&nbsp;LISTING. The Company shall promptly secure and maintain the listing of all of the
Registrable Securities (as defined in the Registration Rights Agreement) on the Principal Market
and each other national securities exchange and automated quotation system, if any, upon which
shares of Common Stock are then listed or quoted (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 Equity Line Transaction Documents. Neither the Company nor any of its Subsidiaries
shall take any action which would be reasonably expected to result in the delisting or suspension
of the Common Stock on the Principal Market (excluding suspensions of not more than one (1)
trading day resulting from business announcements by the Company). The Company shall promptly
provide to the Investor copies of any notices it receives from the Principal Market regarding the
continued eligibility of the Common Stock for listing on such automated quotation system or
securities exchange. The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section&nbsp;5(G).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(H)&nbsp;TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall cause each of its Subsidiaries
not to, enter into, amend, modify or supplement, or permit any Subsidiary to enter into, amend,
modify or supplement, any agreement, transaction, commitment or arrangement with any of its or any
Subsidiary&#146;s officers, directors, persons who were officers or directors at any time during the
previous two (2)&nbsp;years, shareholders who beneficially own 5% or more of the Common Stock, or
Affiliates or with any individual related by blood, marriage or adoption to any such individual or
with any entity in which any such entity or individual owns a 5% or more beneficial interest (each
a &#147;Related Party&#148;), except for (I)&nbsp;customary employment arrangements and benefit programs on
reasonable terms, (II)&nbsp;any agreement, transaction, commitment or arrangement on an arms-length
basis on terms no less favorable than terms which would have been obtainable from a disinterested
third party other than such Related Party, or (III)&nbsp;any agreement, transaction, commitment or
arrangement which is approved by a majority of the disinterested directors of the Company. For
purposes hereof, any director who is also an officer of the Company or any Subsidiary of the
Company shall not be a disinterested director with respect to any such agreement, transaction,
commitment or arrangement. &#147;Affiliate&#148; for purposes hereof means, with respect to any person or
entity, another person or entity that, directly or indirectly, (I)&nbsp;has a 5% or more equity interest
in that person or entity, (II)&nbsp;has 5% or more common ownership with that person or entity, (III)
controls that person or entity, or (IV)&nbsp;is under common control with that person or entity.
&#147;Control&#148; or &#147;Controls&#148; for purposes hereof means that a person or entity has the power, directly
or indirectly, to conduct or govern the policies of another person or entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;FILING OF FORM 8-K. On or before the date which is four (4)&nbsp;Trading Days after the Execution
Date, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the
transaction contemplated by the Equity
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Line Transaction Documents in the form required by the 1934 Act, if such filing is required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(J)&nbsp;CORPORATE EXISTENCE. The Company shall use commercially reasonable efforts to preserve and
continue the corporate existence of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(K)&nbsp;NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE A PUT. The Company
shall promptly notify the Investor upon the occurrence of any of the following events in respect of
a Registration Statement or related prospectus in respect of an offering of the Securities: (I)
receipt of any request for additional information by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration Statement for
amendments or supplements to the Registration Statement or related prospectus; (II)&nbsp;the issuance by
the SEC or any other federal or state governmental authority of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings for that purpose;
(III)&nbsp;receipt of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Securities for sale in any jurisdiction or the initiation or
notice of any proceeding for such purpose; (IV)&nbsp;the happening of any event that makes any statement
made in such Registration Statement or related prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that requires the making of
any changes in the Registration Statement, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; and (V)&nbsp;the Company&#146;s reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate, and the Company shall promptly make
available to Investor any such supplement or amendment to the related prospectus. The Company shall
not deliver to Investor any Put Notice during the continuation of any of the foregoing events in
this Section&nbsp;5(K).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(L)&nbsp;REIMBURSEMENT. If (I)&nbsp;the Investor 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 the Equity Line Transaction Documents, or if
the Investor is impleaded in any such action, proceeding or investigation by any person (other
than as a result of a breach of the Investor&#146;s representations and warranties set forth in this
Agreement); or (II)&nbsp;the Investor becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC against or involving the Company or in connection with or as a
result of the consummation of the transactions contemplated by the Equity Line Transaction
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Documents (other than as a result of a breach of the Investor&#146;s representations and warranties
set forth in this Agreement), or if this Investor is impleaded in any such action, proceeding or
investigation by any person, then in any such case, the Company will reimburse the Investor for its
reasonable legal and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. In addition, other than with
respect to any matter in which the Investor is a named party, the Company will pay to the Investor
the charges, as reasonably determined by the Investor, for the time of any officers or employees of
the Investor devoted to appearing and preparing to appear as witnesses, assisting in preparation
for hearings, trials or pretrial matters, or otherwise with respect to inquiries, hearing, trials,
and other proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this section 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 Investor that are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees, attorneys, accountants, auditors and controlling persons (if any), as
the case may be, of Investor and any such affiliate, and shall be binding upon and inure to the
benefit of any successors of the Company, the Investor and any such affiliate and any such person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(M)&nbsp;TRANSFER AGENT. Upon effectiveness of the Registration Statement, and for so long as the
Registration Statement is effective, the Company shall deliver instructions to its transfer agent
to issue Shares to the Investor that are covered for resale by the Registration Statement free of
restrictive legends.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 6. INTENTIONALLY OMITTED
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 7. CONDITIONS OF THE COMPANY&#146;S OBLIGATION TO SELL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The obligation hereunder of the Company to issue and sell the Securities to the Investor is
further subject to the satisfaction, at or before each Closing Date, of each of the following
conditions set forth below. These conditions are for the Company&#146;s sole benefit and may be waived
by the Company at any time in its sole discretion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A)&nbsp;The Investor shall have executed this Agreement and the Registration Rights
Agreement and delivered the same to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(B)&nbsp;The Investor shall have delivered to the Company the Purchase Price for the
Securities being purchased by the Investor between the end of the Pricing Period
and the Closing Date via a Put Settlement Sheet (hereto attached as Exhibit&nbsp;D).
After receipt of confirmation of delivery of such Securities to the Investor, the
Investor, by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company will disburse the funds constituting the
Purchase Amount.
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(C)&nbsp;No statute, rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions contemplated by this
Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 8. FURTHER CONDITIONS OF THE INVESTOR&#146;S OBLIGATION TO PURCHASE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The obligation of the Investor hereunder to purchase Shares is subject to the satisfaction, on or
before each Closing Date, of each of the following conditions set forth below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A)&nbsp;The Company shall have executed the Equity Line Transaction Documents
and delivered the same to the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(B)&nbsp;The Common Stock shall be authorized for quotation on the Principal Market
and trading in the Common Stock shall not have been suspended by the
Principal Market or the SEC, at any time beginning on the date hereof and
through and including the respective Closing Date (excluding suspensions of not
more than one (1)&nbsp;Trading Day resulting from business announcements by the
Company, provided that such suspensions occur prior to the Company&#146;s delivery
of the Put Notice related to such Closing).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(C)&nbsp;The representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the applicable
Closing Date as though made at that time (except for (I)&nbsp;representations and
warranties that speak as of a specific date and (II)&nbsp;with respect to the
representations made in Sections&nbsp;4(g), (h)&nbsp;and (j)&nbsp;and the third sentence of
Section 4(k) hereof, events which occur on or after the date of this Agreement
and are disclosed in SEC filings made by the Company at least ten (10)&nbsp;Trading
Days prior to the applicable Put Notice Date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and
conditions required by the Equity Line Transaction Documents to be performed,
satisfied or complied with by the Company on or before such Closing Date,
except where the failure to do so would not constitute a Material Adverse Effect.
The Investor may request an update as of such Closing Date regarding the
representation contained in Section&nbsp;4(C) above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(D)&nbsp;The Company shall have executed and delivered to the Investor the
certificates representing, or have executed electronic book-entry transfer of, the
Securities (in such denominations as the Investor shall request) being purchased
by the Investor at such Closing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(E)&nbsp;The Board of Directors of the Company shall have adopted resolutions
consistent with Section&nbsp;4(B)(II) above (the &#147;Resolutions&#148;) and such Resolutions
shall not have been amended or rescinded prior to such Closing Date.
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(F)&nbsp;Reserved
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(G)&nbsp;No statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(H)&nbsp;The Registration Statement shall be effective on each Closing Date and no stop order
suspending the effectiveness of the Registration statement shall be in effect or to the Company&#146;s
knowledge shall be pending or threatened. Furthermore, on each Closing Date (I)&nbsp;neither the
Company nor the Investor shall have received notice that the SEC has issued or intends to issue a
stop order with respect to such Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or
intends or has threatened to do so (unless the SEC&#146;s concerns have been addressed and Investor is
reasonably satisfied that the SEC no longer is considering or intends to take such action), and
(II)&nbsp;no other suspension of the use or withdrawal of the effectiveness of such Registration
Statement or related prospectus shall exist.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;At the time of each Closing, the Registration Statement (including information or documents
incorporated by reference therein) and any amendments or supplements thereto shall not contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or which would require public
disclosure or an update supplement to the prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(J)&nbsp;If applicable, the shareholders of the Company shall have approved the issuance of any Shares
in excess of the Maximum Common Stock Issuance in accordance with Section&nbsp;2(H) or the Company
shall have obtained appropriate approval pursuant to the requirements of Nevada law and the
Company&#146;s Articles of Incorporation and By-laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(K)&nbsp;The conditions to such Closing set forth in Section&nbsp;2(E) shall have been satisfied on or
before such Closing Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(L)&nbsp;The Company shall have certified to the Investor the number of Shares of Common Stock
outstanding when a Put Notice is given to the Investor. The Company&#146;s delivery of a Put Notice to
the Investor constitutes the Company&#146;s certification of the existence of the necessary number of
shares of Common Stock reserved for issuance of such Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 9. TERMINATION. This Agreement shall terminate upon any of the following events:
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;when the Investor has purchased an aggregate of Ten Million dollars
($10,000,000) in the Common Stock of the Company pursuant to this Agreement;
or,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(II)&nbsp;on the date which is thirty-six (36)&nbsp;months after the Effective Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 10. SUSPENSION
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement shall be suspended upon any of the following events, and shall remain suspended
until such event is rectified:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I)&nbsp;the trading of the Common Stock is suspended by the SEC, the
Principal Market or the NASD for a period of two (2)&nbsp;consecutive Trading Days
during the Open Period; or,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II)&nbsp;The Common Stock ceases to be registered under the 1934 Act or
listed, quoted or traded on the Principal Market. Immediately upon the
occurrence of one of the above-described events, the Company shall send
written notice of such event to the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 11. INDEMNIFICATION.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In consideration of the parties mutual obligations set forth in the Transaction Documents,
each of the parties (in such capacity, an &#147;Indemnitor&#148;) shall defend, protect, indemnify and hold
harmless the other and all of the other party&#146;s shareholders, officers, directors, employees,
counsel, and direct or indirect investors and any of the foregoing person&#146;s agents or other
representatives (including, without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the &#147;Indemnitees&#148;) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and reasonable expenses in connection therewith (irrespective of whether any such Indemnitee is a
party to the action for which indemnification hereunder is sought), and including reasonable
attorneys&#146; fees and disbursements (the &#147;Indemnified Liabilities&#148;), incurred by any Indemnitee as a
result of, or arising out of, or relating to (I)&nbsp;any misrepresentation or breach of any
representation or warranty made by the Indemnitor or any other certificate, instrument or document
contemplated hereby or thereby; (II)&nbsp;any breach of any covenant, agreement or obligation of the
Indemnitor contained in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby; or (III)&nbsp;any cause of action, suit or claim brought or made against
such Indemnitee by a third party and arising out of or resulting from the execution, delivery,
performance or enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, except insofar as any such misrepresentation, breach or
any untrue statement, alleged untrue statement, omission or alleged omission is made in reliance
upon and in conformity with information furnished to Indemnitor which is specifically intended for
use in the preparation of any such Registration
</DIV>



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</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Statement, preliminary prospectus, prospectus or amendments to the prospectus. To the extent that
the foregoing undertaking by the Indemnitor may be unenforceable for any reason, the Indemnitor
shall make the maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The indemnity provisions contained herein
shall be in addition to any cause of action or similar rights Indemnitor may have, and any
liabilities to which the Indemnitor or the Indemnitees may be subject.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 12. GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A)&nbsp;ARBITRATION. All disputes arising under this agreement shall be governed
by and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, without regard to principles of conflict of laws. The parties to this
agreement will submit all disputes arising under this agreement to arbitration in
Boston, Massachusetts before a single arbitrator of the American Arbitration
Association (&#147;AAA&#148;). The arbitrator shall be selected by application of the rules
of the AAA, or by mutual agreement of the parties, except that such arbitrator
shall be an attorney admitted to practice law in the Commonwealth of
Massachusetts. No party to this agreement will challenge the jurisdiction or
venue provisions as provided in this section. No party to this agreement will
challenge the jurisdiction or venue provisions as provided in this section. Nothing
contained herein shall prevent the party from obtaining an injunction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(B)&nbsp;LEGAL FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth
in the Transaction Documents, each party shall pay the fees and expenses of its
advisers, counsel, the accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. Any attorneys&#146; fees and
expenses incurred by either the Company or the Investor in connection with the
preparation, negotiation, execution and delivery of any amendments to this
Agreement or relating to the enforcement of the rights of any party, after the
occurrence of any breach of the terms of this Agreement by another party or any
default by another party in respect of the transactions contemplated hereunder,
shall be paid on demand by the party which is determined, pursuant to Section
12(A), to have breached the Agreement and/or defaulted, as the case may be.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of any Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(C)&nbsp;COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original
signature.
</DIV>




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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(D)&nbsp;HEADINGS; SINGULAR/PLURAL. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the interpretation of,
this Agreement. Whenever required by the context of this Agreement, the
singular shall include the plural and masculine shall include the feminine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(E)&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(F)&nbsp;ENTIRE AGREEMENT; AMENDMENTS. This Agreement is the FINAL
AGREEMENT between the Company and the Investor with respect to the terms
and conditions set forth herein, and, the terms of this Agreement may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the Parties. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and the Investor,
and no provision hereof may be waived other than by an instrument in writing
signed by the party against whom enforcement is sought. The execution and
delivery of the Equity Line Transaction Documents shall not alter the force and
effect of any other agreements between the Parties, and the obligations under
those agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(G)&nbsp;NOTICES. Any notices 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)&nbsp;upon receipt, when delivered personally; (II)&nbsp;upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (III)&nbsp;one (1)&nbsp;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:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If to the Company:</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Save the World Air, Inc. <BR>
5125 Lankershim Blvd. North Hollywood, CA 91601<BR>
Telephone: (818)&nbsp;487-8000<BR>
Facsimile: (818)&nbsp;487-8003

</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>with a copy to:</I>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Lance Jon Kimmel, Esq.<BR>
SEC Law Firm<BR>
11693 San Vicente Boulevard<BR>
Suite&nbsp;357<BR>
Los Angeles, CA 90049<BR>
Telephone: (310)557-3059<BR>
Facsimile: (310)388-1320

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>If to the Investor:</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dutchess Private Equities Fund, LP,<BR>
50 Commonwealth Avenue, Suite&nbsp;2<BR>
Boston, MA 02116<BR>
Telephone: (617)&nbsp;301-4700<BR>
Facsimile: (617)&nbsp;249-0947

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each party shall provide five (5)&nbsp;days prior written notice to the other party of any change in
address or facsimile number.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(H)&nbsp;NO ASSIGNMENT. This Agreement may not be assigned.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(I)&nbsp;&nbsp;&nbsp;NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto
and is not for the benefit of, nor may any provision hereof be enforced by, any other person,
except that the Company acknowledges that the rights of the Investor may be enforced by its
general partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(J)&nbsp;&nbsp;&nbsp;SURVIVAL. The representations and warranties of the Company and the Investor contained in
Sections&nbsp;2 and 3, the agreements and covenants set forth in Sections&nbsp;4 and 5, the indemnification
provisions set forth in Section&nbsp;11 and the nondisclosure provisions set forth in Section&nbsp;13, shall
survive each of the Closings and the termination of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(K)&nbsp;&nbsp;&nbsp;PUBLICITY. The Company and the Investor shall consult with each other in issuing any press
releases or otherwise making public statements with respect to the transactions contemplated hereby
and no party shall issue any such press release or otherwise make any such public statement without
the prior consent of the other party, which consent shall not be unreasonably withheld or delayed,
except that no prior consent shall be required if such disclosure is required by law, in which such
case the disclosing party shall provide the other party with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Investor
without the prior consent of the Investor, except to the extent required by law. The Investor
acknowledges that this Agreement and all or part of the Transaction Documents may be deemed to be
&#147;material contracts&#148; as that term is defined by Item
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">601(b)(10) of Regulation&nbsp;S-B, and that the Company may therefore be required to file such
documents as exhibits to reports or registration statements filed under the 1933 Act or the 1934
Act. The Investor further agrees that the status of such documents and materials as material
contracts shall be determined solely by the Company, in consultation with its counsel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(L)&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(M)&nbsp;PLACEMENT AGENT. The Company agrees to pay Spencer Clarke LLC, a registered broker dealer eight
percent (8%) of the Put Amount on each draw toward the fee. The Investor shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other persons or
entities for fees of a type contemplated in this Section that may be due in connection with the
transactions contemplated by the Transaction Documents. The Company shall indemnify and hold
harmless the Investor, their employees, officers, directors, agents, and partners, and their
respective affiliates, from and against all claims, losses, damages, costs (including the costs of
preparation and attorney&#146;s fees) and expenses incurred in respect of any such claimed or existing
fees, as such fees and expenses are incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(N)&nbsp;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, as the parties mutually agree that each has had a full and fair
opportunity to review this Agreement and seek the advice of counsel on it.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(O)&nbsp;REMEDIES. The Investor shall have all rights and remedies set forth in this Agreement and the
Registration Rights Agreement and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which the Investor has by law.
Any person having any rights under any provision of this Agreement shall be entitled to enforce
such rights specifically (without posting a bond or other security), to recover damages by reason
of any default or breach of any provision of this Agreement, including the recovery of reasonable
attorneys fees and costs, and to exercise all other rights granted by law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(P)&nbsp;PAYMENT SET ASIDE. To the extent that the Company makes a payment or payments to the Investor
hereunder or under the Registration Rights Agreement or the Investor enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other
person under any law (including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(Q)&nbsp;PRICING OF COMMON STOCK. For purposes of this Agreement, the bid price of the Common Stock
shall be as reported on Bloomberg.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SECTION 13. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(a)&nbsp;The Company shall not disclose non-public information to the Investor, its
advisors, or its representatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(b)&nbsp;Nothing herein shall require the Company to disclose non-public information
to the Investor or its advisors or representatives, and the Company represents
that it does not disseminate non-public information to any investors who
purchase stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding anything herein to
the contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose the
specific event or circumstance) of which it becomes aware, constituting non-
public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities), which,
if not disclosed in the prospectus included in the Registration Statement would
cause such prospectus to include a material misstatement or to omit a material
fact required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading. Nothing
contained in this Section&nbsp;13 shall be construed to mean that such persons or
entities other than the Investor (without the written consent of the Investor prior to
disclosure of such information) may not obtain non-public information in the
course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Registration Statement contains an untrue statement
of material fact or omits a material fact required to be stated in the Registration
Statement or necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">* * *
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>SIGNATURE PAGE OF INVESTMENT AGREEMENT</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Your signature on this Signature Page evidences your agreement to be bound by the terms and
conditions of the Investment Agreement and the Registration Rights Agreement as of the date first
written above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The undersigned signatory hereby certifies that he has read and understands the Investment
Agreement, and the representations made by the undersigned in this Investment Agreement are true
and accurate, and agrees to be bound by its terms.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>DUTCHESS PRIVATE EQUITIES FUND, L.P.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>BY ITS GENERAL PARTNER,</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>DUTCHESS CAPITAL MANAGEMENT, LLC</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Douglas H. Leighton, Managing Member</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>,</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eugene E. Eichler, Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>LIST OF EXHIBITS</B></U>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EXHIBIT A
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Registration Rights Agreement</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EXHIBIT B
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opinion of Company&#146;s Counsel</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EXHIBIT C
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Put Notice</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EXHIBIT D
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Put Settlement Sheet</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->32<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT A</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Registration Rights Agreement

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->33<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT B</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">FORM OF NOTICE OF EFFECTIVENESS<BR>
OF REGISTRATION STATEMENT

</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Date: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#091;TRANSFER AGENT&#093;

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Re: <U>Save the World Air, Inc. </U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ladies and Gentlemen:

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are counsel to <U>Save the World Air, Inc.,</U> a Nevada corporation (the &#147;Company&#148;), and
have represented the Company in connection with that certain Investment Agreement (the &#147;Investment
Agreement&#148;) entered into by and among the Company and Duchess Private Equities Fund, LP (the
&#147;Holder&#148;), pursuant to which the Company has agreed to issue to the Holder shares of the Company&#146;s
common stock, $.001 par value per share (the &#147;Common Stock&#148;) on the terms and conditions set forth
in the Investment Agreement. Pursuant to the Investment Agreement, the Company also has entered
into a Registration Rights Agreement with the Holder (the &#147;Registration Rights Agreement&#148;)
pursuant to which the Company agreed, among other things, to register the Registrable Securities
(as defined in the Registration Rights Agreement), including the shares of Common Stock issued or
issuable under the Investment Agreement under the Securities Act of 1933, as amended (the &#147;1933
Act&#148;). In connection with the Company&#146;s
obligations under the Registration Rights Agreement,
on
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2006, the
Company filed a Registration Statement on Form SB-2 (File
No.&nbsp;333- <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>) (the
&#147;Registration Statement&#148;) with the Securities and Exchange Commission (the &#147;SEC&#148;) relating to the
Registrable Securities which names the Holder as a selling shareholder thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the foregoing, we advise you that
[a member of the SEC&#146;s staff has advised
us by telephone that the SEC has entered an order declaring the Registration Statement effective]
&#091;<U>the Registration Statement has become effective</U>] under the
1933 Act at <U>&#091;enter the time of
effectiveness&#093;</U> on <U>&#091;enter the date of effectiveness&#093;</U> and to the best of our knowledge,
after telephonic inquiry of a member of the SEC&#146;s staff, no stop order suspending its effectiveness
has been issued and no proceedings for that purpose are pending before, or threatened by, the SEC
and the Registrable Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Very truly yours,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;Company Counsel&#093;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->34<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>EXHIBIT C</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date:

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">RE: Put
Notice Number <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Leighton,

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This is to inform you that as of today, Save the World Air, Inc., a Nevada corporation (the
&#147;Company&#148;), hereby elects to exercise its right pursuant to the Investment Agreement to require
Dutchess Private Equities Fund, LP to purchase shares of its common stock. The Company hereby
certifies that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The amount of this put is $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Pricing Period runs from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> until <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The current number of shares issued and outstanding as of the Company are:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="29%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The number of shares currently available for issuance on the SB-2 for the Equity Line are:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="29%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Regards,
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eugene E. Eichler, Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Save the World Air, Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio -->35<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>EXHIBIT D<BR>
PUT SETTLEMENT SHEET</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Eichler,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the Put given by Save the World Air, Inc. to Dutchess Private
Equities Fund, L.P. on <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> 200<U>&nbsp;&nbsp;</U>_, we are now submitting the
amount of common shares for you to issue to Dutchess.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please have a certificate bearing no restrictive legend totaling <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
shares issued to Dutchess Private Equities Fund, LP immediately and send via DWAC to the following
account:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>xxxxxx</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If not
DWAC eligible, please send FedEx Priority Overnight to:<BR> <B>XXXXXX</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Once these shares are received by us, we will have the funds wired to the Company.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Regards,

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Douglas H. Leighton, Managing Member

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">DUTCHESS PRIVATE EQUITIES FUND, L.P.<BR>
BY ITS GENERAL PARTNER,<BR>
DUTCHESS CAPITAL MANAGEMENT, LLC

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->36<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">DATE</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">PRICE</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date of Day 1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Closing Bid of Day 1</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date of Day 2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Closing Bid of Day 2</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date of Day 3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Closing Bid of Day 3</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date of Day 4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Closing Bid of Day 4</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date of Day 5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Closing Bid of Day 5</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="78%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">LOWEST 1 (ONE)&nbsp;CLOSING BID IN PRICING PERIOD</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PUT AMOUNT</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AMOUNT WIRED TO COMPANY</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PURCHASE PRICE (97)% (NINETY-SEVEN PERCENT))</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AMOUNT OF SHARES DUE</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The undersigned has completed this Put as of this <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>day of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>,
200<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>SAVE THE WORLD AIR, INC.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Eugene E. Eichler, Chief Executive Officer</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->37<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>SCHEDULE 4(e) CONFLICTS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->38<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>v23768exv10w2.htm
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>REGISTRATION RIGHTS AGREEMENT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registration
Rights Agreement (the &#147;<U>Agreement</U>&#148;), dated as of September&nbsp;15, 2006, by
and between Save the World Air, Inc., a corporation organized under the laws of the state of
Nevada, with its principal executive office at 5125 Lankershim Blvd., North Hollywood, CA 91601
(the &#147;Company&#148;), and Dutchess Private Equities Fund, L.P., a Delaware limited partnership with its
principal office at 50 Commonwealth Avenue, Suite&nbsp;2, Boston, MA 02116 (the &#147;Holder&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Whereas, </I>in connection with the Investment Agreement by and between the Company and the
Investor of this date (the &#147;<U>Investment Agreement</U>&#148;), the Company has agreed to issue and
sell to the Investor an indeterminate number of shares of the Company&#146;s Common Stock, $.001 par
value per share (the &#147;<U>Common Stock</U>&#148;), to be purchased pursuant to the terms and subject to the
conditions set forth in the Investment Agreement; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Whereas, </I>to induce the Investor to execute and deliver the Investment Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor statute (collectively, the
&#147;<U>1933 Act</U>&#148;), and applicable state securities laws, with respect to the shares of Common Stock
issuable pursuant to the Investment Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Now therefore, in consideration of the foregoing promises and the mutual covenants contained
hereinafter and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor hereby agree as follows:</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;1.
</B><U><B>DEFINITIONS</B></U>.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used in this Agreement, the following terms shall have the following meanings:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Execution Date</U>&#148; means the date of this Agreement set forth above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Investor</U>&#148; means Dutchess Private Equities Fund, L.P., a Delaware limited partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Person</U>&#148; means a corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision thereof or a
governmental agency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Potential Material Event</U>&#148; means any of the following: <B>(i) </B>the possession by the
Company of material information not ripe for disclosure in the Registration Statement, which shall
be evidenced by determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the Registration Statement would be
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">detrimental to the business and affairs of the Company, or <B>(ii) </B>any material engagement or activity
by the Company which would, in the good faith determination of the Board of Directors of the
Company, be adversely affected by disclosure in the Registration Statement at such time, which
determination shall be accompanied by a good faith determination by the Board of Directors of the
Company that the Registration Statement would be materially misleading absent the inclusion of such
information.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Principal Market</U>&#148; shall mean The American Stock Exchange, National Association of
Securities Dealer&#146;s, Inc., Over-the-Counter electronic bulletin board, the Nasdaq National Market
or The Nasdaq SmallCap Market whichever is the principal market on which the Common Stock of the
Company is listed or quoted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Register</U>.&#148; &#147;<U>Registered</U>.&#148; and &#147;<U>Registration</U>&#148; refer to the Registration effected by
preparing and filing one (1)&nbsp;or more Registration Statements in compliance with the 1933 Act and
pursuant to Rule&nbsp;415 under the 1933 Act or any successor rule providing for offering securities on
a continuous basis (&#147;<U>Rule&nbsp;415</U>&#148;), and the declaration or ordering of effectiveness of such
Registration Statement(s) by the United States Securities and Exchange Commission (the &#147;SEC&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registrable Securities</U>&#148; means <B>(i) </B>the shares of Common Stock issued or issuable
pursuant to the Investment Agreement, and <B>(ii) </B>any shares of capital stock issued or issuable with
respect to such shares of Common Stock, if any, as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, which have not been <B>(x) </B>included in the
Registration Statement that has been declared effective by the SEC, or <B>(y) </B>sold under circumstances
meeting all of the applicable conditions of Rule&nbsp;144 (or any similar provision then in force) under
the 1933 Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration Statement</U>&#148; means the registration statement of the Company filed under
the 1933 Act covering the Registrable Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All capitalized terms used in this Agreement and not otherwise defined herein shall have the
same meaning ascribed to them as in the Investment Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;2.
</B><U><B>REGISTRATION</B></U>.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;</B>The Company shall, within thirty (30)&nbsp;days of the date of this Agreement, file with the
SEC the Registration Statement or Registration Statements (as is necessary) on Form SB-2 (or, if
such form is unavailable for such a registration, on such other form as is available for such
registration), covering the resale of all of the Registrable Securities, which Registration
Statement(s) shall state that, in accordance with Rule&nbsp;416 promulgated under the 1933 Act, such
Registration Statement also covers such indeterminate number of additional shares of Common Stock
as may become issuable upon stock splits, stock dividends or similar transactions. The Company
shall initially register for resale 7,000,000 shares of Common Stock which would be issuable on the
date preceding the filing of the Registration Statement based on the closing bid price of the
Company&#146;s Common Stock on such date and the amount reasonably calculated that
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">represents Common Stock issuable to other parties as set forth in the Investment Agreement except
to the extent that the SEC requires the share amount to be reduced as a condition of
effectiveness.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;</B>The Company shall use commercially reasonable efforts to have the
Registration Statement(s) declared effective by the SEC within ninety (90)&nbsp;calendar
days after the Execution Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;</B>The Company agrees not to include any other securities in the Registration
Statement covering the Registrable Securities without Investor&#146;s prior written consent
which Investor may withhold in its sole discretion; provided, however, that Investor
consents to the inclusion in the Registration Statement of up to 50,000 shares of the
Company&#146;s Common Stock to be registered on behalf of the bankruptcy trustee in
Australia pursuant to a settlement agreement entered into between the Company and
said trustee in connection with royalty payments to be made in connection with the sale
of the Company&#146;s ZEFS products. Furthermore, the Company agrees that it will not file
any other Registration Statement for other securities until thirty (30)&nbsp;calendar days after
the Registration Statement for the Registrable Securities is declared effective by the
SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Sections&nbsp;3. </B><B><U>RELATED OBLIGATIONS</U>.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At such time as the Company is obligated to prepare and file the Registration Statement with
the SEC pursuant to Section&nbsp;2(a), the Company will effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and, with respect thereto,
the Company shall have the following obligations:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;</B>The Company shall use commercially reasonable efforts to cause such Registration Statement
relating to the Registrable Securities to become effective within ninety (90)&nbsp;days after the
Execution Date and shall keep such Registration Statement effective until the earlier to occur of
the date on which <B>(A)</B>&nbsp;the Investor shall have sold all the Registrable Securities; or <B>(B)</B>&nbsp;the
Investor has no right to acquire any additional shares of Common Stock under the Investment
Agreement (the &#147;<U>Registration Period</U>&#148;). The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or necessary to make
the statements therein, in light of the circumstances in which they were made, not misleading. The
Company shall use all commercially reasonable efforts to respond to all SEC comments within seven
(7)&nbsp;business days from receipt of such comments by the Company. The Company shall use all
commercially reasonable efforts to cause the Registration Statement relating to the Registrable
Securities to become effective no later than five (5)&nbsp;business days after notice from the SEC that
the Registration Statement may be declared effective. The Investor agrees to provide all
information which it is required by law to provide to the Company, including the intended method of
disposition of the Registrable Securities, and the Company&#146;s obligations set forth above
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shall be conditioned on the receipt of such information.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;</B>The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration Statement
and the prospectus used in connection with such Registration Statement, which
prospectus is to be filed pursuant to Rule&nbsp;424 promulgated under the 1933 Act, as may
be necessary to keep such Registration Statement effective during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act with respect
to the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities shall have
been disposed of in accordance with the intended methods of disposition by the
Investor thereof as set forth in such Registration Statement. In the event the number of
shares of Common Stock covered by the Registration Statement filed pursuant to this
Agreement is at any time insufficient to cover all of the Registrable Securities, the
Company shall amend such Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as to cover all
of the Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30)&nbsp;calendar days after the necessity therefor arises (based on the then
Purchase Price of the Common Stock and other relevant factors on which the Company
reasonably elects to rely), assuming the Company has sufficient authorized shares at
that time, and if it does not, within thirty (30)&nbsp;calendar days after such shares are
authorized. The Company shall use commercially reasonable efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;</B>The Company shall make available to the Investor whose Registrable
Securities are included in any Registration Statement and its legal counsel without
charge <B>(i) </B>promptly after the same is prepared and filed with the SEC at least one (1)
copy of such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and all
exhibits, the prospectus included in such Registration Statement (including each
preliminary prospectus) and, with regards to such Registration Statement(s), any
correspondence by or on behalf of the Company to the SEC or the staff of the SEC and
any correspondence from the SEC or the staff of the SEC to the Company or its
representatives; <B>(ii) </B>upon the effectiveness of any Registration Statement, the Company
shall make available copies of the prospectus, via EDGAR, included in such
Registration Statement and all amendments and supplements thereto; and <B>(iii) </B>such
other documents, including copies of any preliminary or final prospectus, as the Investor
may reasonably request from time to time in order to facilitate the disposition of the
Registrable Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(d)&nbsp;</B>The Company shall use commercially reasonable efforts to <B>(i) </B>register and
qualify the Registrable Securities covered by the Registration Statement under such
other securities or &#147;blue sky&#148; laws of such states in the United States as the Investor
reasonably requests; <B>(ii) </B>prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">qualifications as may be necessary to maintain the effectiveness thereof during the
Registration Period; <B>(iii) </B>take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration Period, and <B>(iv)</B>
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; <I>provided, however, </I>that the Company shall not be required in connection
therewith or as a condition thereto to <B>(x) </B>qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section&nbsp;3(d), or <B>(y) </B>subject itself to
general taxation in any such jurisdiction. The Company shall promptly notify the Investor who holds
Registrable Securities of the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the Registrable Securities for sale under
the securities or &#147;blue sky&#148; laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such purpose.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(e)&nbsp;</B>As promptly as practicable after becoming aware of such event, the Company shall notify
Investor in writing of the happening of any event as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading (&#147;<U>Registration
Default</U>&#148;) and use all diligent efforts to promptly prepare a supplement or amendment to such
Registration Statement and take any other necessary steps to cure the Registration Default (which,
if such Registration Statement is on Form S-3, may consist of a document to be filed by the Company
with the SEC pursuant to Section&nbsp;13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below) and
to be incorporated by reference in the prospectus) to correct such untrue statement or omission,
and make available copies of such supplement or amendment to the Investor. The Company shall also
promptly notify the Investor <B>(i) </B>when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when the Registration Statement or any post-effective amendment has
become effective (the Company will prepare notification of such effectiveness which shall be
delivered to the Investor on the same day of such effectiveness and by overnight mail),
additionally, the Company will promptly provide to the Investor, a copy of the effectiveness order
prepared by the SEC once it is received by the Company; <B>(ii) </B>of any request by the SEC for
amendments or supplements to the Registration Statement or related prospectus or related
information, <B>(iii) </B>of the Company&#146;s reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate, <B>(iv) </B>in the event the Registration Statement is no
longer effective, or <B>(v) </B>if the Registration Statement is stale as a result of the Company&#146;s
failure to timely file its financials or otherwise. The Company acknowledges that its failure to
cure the Registration Default within ten (10)&nbsp;business days will cause the Investor to suffer
damages in an amount that will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include a provision for liquidated damages. The parties acknowledge and agree that
the liquidated damages provision set forth in this section represents the parties&#146; good faith
effort to quantify such damages and, as such, agree that the form and amount of such liquidated
damages are reasonable and will not constitute a penalty. It is the intention of the parties that
interest payable under
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">any of the terms of this Agreement shall not exceed the maximum amount permitted under any
applicable law. If a law, which applies to this Agreement, which sets the maximum interest amount,
is finally interpreted so that the interest in connection with this Agreement exceeds the
permitted limits, then: <B>(1) </B>any such interest shall be reduced by the amount necessary to reduce
the interest to the permitted limit; and <B>(2) </B>any sums already collected (if any) from the Company
which exceed the permitted limits will be refunded to the Company. The Investor may choose to make
this refund by reducing the amount that the Company owes under this Agreement or by making a
direct payment to the Company. If a refund reduces the amount that the Company owes the Investor,
the reduction will be treated as a partial payment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(f)&nbsp;</B>The Company shall use commercially reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of the Registration
Statement, or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and to notify the
Investor holding Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat of any
proceeding concerning the effectiveness of the registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(g)&nbsp;</B>The Company shall permit the Investor and one (1)&nbsp;legal counsel, designated
by the Investor, to review and comment upon the Registration Statement and all
amendments and supplements thereto at least one (1)&nbsp;calendar day prior to their filing
with the SEC. However, any postponement of a filing of a Registration Statement or
any postponement of a request for acceleration or any postponement of the effective
date or effectiveness of a Registration Statement by written request of the Investor
(collectively, the &#147;Investor&#146;s Delay&#148;) shall not act to trigger any penalty of any kind, or
any cash amount due or any in-kind amount due the Investor from the Company under
any and all agreements of any nature or kind between the Company and the Investor.
The event(s) of an Investor&#146;s Delay shall act to suspend all obligations of any kind or
nature of the Company under any and all agreements of any nature or kind between the
Company and the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(h)&nbsp;</B>At the request of the Investor, the Company&#146;s counsel shall furnish to the Investor an
opinion letter confirming the effectiveness of the registration statement. Such opinion letter
shall be issued as of the date of the effectiveness of the registration statement and be in the
form attached as Exhibit&nbsp;B to the Investment Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(i)&nbsp;</B>The Company shall hold in confidence and not make any disclosure of information concerning
the Investor unless <B>(i) </B>disclosure of such information is necessary to comply with federal or state
securities laws, <B>(ii) </B>the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, <B>(iii) </B>the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental
body of competent jurisdiction, or <B>(iv) </B>such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">agreement. The Company agrees that it shall, upon learning that disclosure of such
information concerning the Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to the Investor and allow the
Investor, at the Investor&#146;s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order covering such information.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(j)&nbsp;</B>The Company shall use commercially reasonable efforts to maintain designation and
quotation of all the Registrable Securities covered by any Registration Statement on the Principal
Market. If, despite the Company&#146;s commercially reasonable efforts, the Company is unsuccessful in
satisfying the preceding sentence, it shall use commercially reasonable efforts to cause all the
Registrable Securities covered by any Registration Statement to be listed on each other national
securities exchange and automated quotation system, if any, on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or system. The Company shall pay all
fees and expenses in connection with satisfying its obligation under
this Section&nbsp;3(j).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(k)&nbsp;</B>The Company shall cooperate with the Investor to facilitate the prompt preparation and
delivery of certificates representing the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates to be in such denominations or amounts, as the
case may be, as the Investor may reasonably request (and after any sales of such Registrable
Securities by the Investor, such certificates not bearing any restrictive legend).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(l)&nbsp;</B>The Company shall provide a transfer agent for all the Registrable Securities not later
than the effective date of the first Registration Statement filed pursuant hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(m)&nbsp;</B>If requested by the Investor, the Company shall <B>(i)</B>&nbsp;as soon as reasonably practical
incorporate in a prospectus supplement or post-effective amendment such information as the
Investor reasonably determines should be included therein relating to the sale and distribution of
Registrable Securities, including, without limitation, information with respect to the offering of
the Registrable Securities to be sold in such offering; <B>(ii) </B>make all required filings of such
prospectus supplement or post-effective amendment as soon as reasonably possible after being
notified of the matters to be incorporated in such prospectus supplement or post-effective
amendment; and <B>(iii) </B>supplement or make amendments to any Registration Statement if reasonably
requested by the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(n)&nbsp;</B>The Company shall use commercially reasonable efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to facilitate the disposition of such
Registrable Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(o)&nbsp;</B>The Company shall otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC in connection with any
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">registration hereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(p)&nbsp;</B>Within one (1)&nbsp;business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver to the transfer agent for
such Registrable Securities, with copies to the Investor, confirmation that such Registration
Statement has been declared effective by the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(q)&nbsp;</B>The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of Registrable Securities pursuant to the Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section 4. </B><U><B>OBLIGATIONS OF THE INVESTOR</B></U>.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;</B>At least five (5)&nbsp;calendar days prior to the first anticipated filing date of the
Registration Statement the Company shall notify the Investor in writing of the
information the Company requires from the Investor for the Registration Statement. It
shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities and
the Investor agrees to furnish to the Company that information regarding itself, the
Registrable Securities and the intended method of disposition of the Registrable
Securities as shall reasonably be required to effect the registration of such Registrable
Securities and the Investor shall execute such documents in connection with such
registration as the Company may reasonably request. The Investor covenants and
agrees that, in connection with any sale of Registrable Securities by it pursuant to the
Registration Statement, it shall comply with the &#147;Plan of Distribution&#148; section of the then
current prospectus relating to such Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;</B>The Investor, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless the
Investor has notified the Company in writing of an election to exclude all of the
Investor&#146;s Registrable Securities from such Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;</B>The Investor agrees that, upon receipt of written notice from the Company of
the happening of any event of the kind described in Section 3(f) or the first sentence of
3(e), the Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities until the
Investor&#146;s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of 3(e).
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;5.
</B><U><B>EXPENSES OF REGISTRATION</B></U>.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All expenses, other than underwriting discounts and commissions and other than as set forth
in the Investment Agreement, incurred in connection with registrations including comments, filings
or qualifications pursuant to Sections&nbsp;2 and 3, including, without limitation, all registration,
listing and qualifications fees, printing and accounting fees, and fees and disbursements of
counsel for the Company or for the Investor shall be paid by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;6. </B><U><B>INDEMNIFICATION</B></U>.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event any Registrable Securities are included in the Registration Statement under this
Agreement:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;</B>To the fullest extent permitted by law, the Company, under this Agreement, will, and
hereby does, indemnify, hold harmless and defend the Investor who holds Registrable Securities, the
directors, officers, partners, employees, counsel, agents, representatives of, and each Person, if
any, who controls, any Investor within the meaning of the 1933 Act or the Securities Exchange Act
of 1934, as amended (the &#147;<U>1934 Act</U>&#148;) (each, an
&#147;<U>Indemnified Person</U>&#148;), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, attorneys&#146; fees, amounts paid in
settlement or expenses, joint or several (collectively,
&#147;<U>Claims</U>&#148;), incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or other regulatory
agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (&#147;<U>Indemnified Damages</U>&#148;), to which any of them may become subject insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon: <B>(i)</B>&nbsp;any untrue statement or alleged untrue statement of a material fact
in the Registration Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other &#147;blue sky&#148; laws of
any jurisdiction in which the Investor has requested in writing that the Company register or
qualify the Shares (&#147;<U>Blue Sky Filing</U>&#148;), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which the statements therein were made, not misleading, <B>(ii) </B>any untrue
statement or alleged untrue statement of a material fact contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the statements therein were
made, not misleading, or <B>(iii) </B>any violation or alleged violation by the Company of the 1933 Act,
the 1934 Act, any other law, including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to
the Registration Statement (the matters in the foregoing clauses (i)&nbsp;through (iii)&nbsp;being,
collectively, &#147;<u>Violations</U>&#148;). Subject to the
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">restrictions set forth in Section 6(c) the Company shall reimburse the Investor and each
such controlling person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section&nbsp;6(a): <B>(i) </B>shall not apply to a
Claim arising out of or based upon a Violation which is due to the inclusion in the Registration
Statement of the information furnished to the Company by any Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such amendment thereof or
supplement thereto; <B>(ii) </B>shall not be available to the extent
such Claim is based on <B>(a)</B>&nbsp;a failure
of the Investor to deliver or to cause to be delivered the prospectus made available by the Company
or <B>(b) </B>the Indemnified Person&#146;s use of an incorrect prospectus despite being promptly advised in
advance by the Company in writing not to use such incorrect prospectus; <B>(iii) </B>any claims based on
the manner of sale of the Registrable Securities by the Investor or of the Investor&#146;s failure to
register as a dealer under applicable securities laws; <B>(iv) </B>any omission of the Investor to notify
the Company of any material fact that should be stated in the Registration Statement or prospectus
relating to the Investor or the manner of sale; and <B>(v) </B>any amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall survive the resale of
the Registrable Securities by the Investor pursuant to the Registration Statement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;</B>In connection with any Registration Statement in which Investor is participating, the
Investor agrees to severally and jointly indemnify, hold harmless and defend, to the same extent
and in the same manner as is set forth in Section&nbsp;6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act and the Company&#146;s agents (collectively
and together with an Indemnified Person, an &#147;<U>Indemnified
Party</U>&#148;), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each
case to the extent, and only to the extent, that such Violation is due to the inclusion in the
Registration Statement of the written information furnished to the Company by the Investor
expressly for use in connection with such Registration Statement; and, subject to Section&nbsp;6(c),
the Investor will reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; <I>provided, however, </I>that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall only be liable under this Section
6(b) for that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">force and effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the resale of the Registrable Securities by the Investor pursuant to the
Registration Statement. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus were corrected on a timely basis
in the prospectus, as then amended or supplemented. This indemnification provision shall apply
separately to each Investor and liability hereunder shall not be joint and several.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;</B>Promptly after receipt by an Indemnified Person or Indemnified Party under this Section&nbsp;6
of notice of the commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section&nbsp;6, deliver to the
indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, the representation by counsel of the Indemnified Person or Indemnified Party and
the indemnifying party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The indemnifying party shall pay for only one (1)&nbsp;separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such counsel
shall be selected by the Investor, if the Investor are entitled to indemnification hereunder, or
the Company, if the Company is entitled to indemnification hereunder, as applicable. The
Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall
keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of
the defense or any settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without its written consent,
provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition
its consent. No indemnifying party shall, without the consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim. Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to all third parties, firms or corporations relating to the matter for which indemnification has
been made. The failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section&nbsp;6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such action.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(d)</B>&nbsp;The
indemnity agreements contained herein shall be in addition to <B>(i)</B>&nbsp;any cause of action
or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or
others, and <B>(ii) </B>any liabilities the indemnifying party may be subject to pursuant to the law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;7. </B><U><B>CONTRIBUTION.</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section&nbsp;6 to the fullest extent permitted by law;
<I>provided, however, </I>that: <B>(i)</B>&nbsp;no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set forth in Section&nbsp;6;
<B>(ii) </B>no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation; and <B>(iii) </B>contribution by any seller
of Registrable Securities shall be limited in amount to the net amount of proceeds received by such
seller from the sale of such Registrable Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;8. </B><U><B>REPORTS UNDER THE 1934 ACT.</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With a view to making available to the Investor the benefits of Rule&nbsp;144 promulgated under
the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the
Investor to sell securities of the Company to the public without
registration (&#147;<U>Rule&nbsp;144</U>&#148;).
provided that the Investor holds any Registrable Securities are eligible for resale under Rule&nbsp;144
(k), the Company agrees to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;</B>make and keep public information available, as those terms are
understood and defined in Rule&nbsp;144;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;</B>file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the Company
remains subject to such requirements (it being understood that nothing herein shall limit
the Company&#146;s obligations under Section 5(c) of the Investment Agreement) and the
filing of such reports and other documents is required for the applicable provisions of
Rule&nbsp;144; and
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;</B>furnish
to the Investor, promptly upon request, <b>(i)</B>&nbsp;a written statement by the Company
that it has complied with the reporting requirements of Rule&nbsp;144, the 1933 Act and the 1934 Act,
<B>(ii) </B>a copy of the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and <B>(iii) </B>such other information as may be reasonably
requested to permit the Investor to sell such securities pursuant to Rule&nbsp;144 without
registration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;9. </B><U><B>NO ASSIGNMENT OF REGISTRATION RIGHTS.</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rights and obligations under this Agreement shall not be assignable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;10. </B><U><B>AMENDMENT OF REGISTRATION RIGHTS.</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provisions of this Agreement may be amended only with the written consent of the Company
and Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;11. </B><U><B>MISCELLANEOUS.</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)</B>&nbsp;Any notices or other communications required or permitted to be given under the terms of
this Agreement that must be in writing will be deemed to have been
delivered <b>(i)</B>&nbsp;upon receipt, when
delivered personally; <B>(ii) </B>upon receipt, when sent by facsimile (provided a confirmation of
transmission is mechanically or electronically generated and kept on file by the sending party); or
<B>(iii) </B>one (1)&nbsp;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:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 6%; margin-top: 6pt">If to the Company:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">Save the World Air, Inc.<BR> 5125
Lankershim Blvd.<BR> North
Hollywood, CA 91601<BR> Telephone:
(818)&nbsp;487-8000<BR> Facsimile: (818)
487-8003
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt"><I>with a copy to:</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">Lance Jon Kimmel, Esq.<BR>
SEC Law Firm<BR>
11693 San Vicente Boulevard, Suite&nbsp;357<BR>
Los Angeles, CA 90049<BR>
Telephone: (310) 557-3059<BR>
Facsimile: (310) 388-1320
</DIV>




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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-left: 6%; margin-top: 6pt">If to the Investor:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">Dutchess Private Equities Fund, LP<BR>
50 Commonwealth Ave, Suite&nbsp;2<BR>
Boston, MA 02116<BR>
Telephone: (617)&nbsp;301-4700<BR>
Facsimile: (617)&nbsp;249-0947
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each party shall provide five (5)&nbsp;business days prior notice to the other party of any change
in address, phone number or facsimile number.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;</B>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;</B>This Agreement and the Transaction Documents constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(d)&nbsp;</B>This Agreement and the Transaction Documents supersede all prior
agreements and understandings among the parties hereto with respect to the subject
matter hereof and thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(e)&nbsp;</B>The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. Whenever required by the context
of this Agreement, the singular shall include the plural and masculine shall include the
feminine. This Agreement shall not be construed as if it had been prepared by one of
the parties, but rather as if all the parties had prepared the same.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(f)&nbsp;</B>This Agreement may be executed in two or more identical counterparts, each
of which shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement bearing the signature
of the party so delivering this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(g)&nbsp;</B>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;In case any provision of this Agreement is held by a court of competent jurisdiction to
be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">maximum extent possible, and the validity and enforceability of the remaining provisions of this
Agreement will not in any way be affected or impaired thereby.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Section&nbsp;12. </B><U><B>DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All disputes arising under this agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts, without regard to principles of
conflict of laws. The parties to this agreement will submit all disputes arising under this
agreement to arbitration in Boston, Massachusetts before a single arbitrator of the American
Arbitration Association (&#147;AAA&#148;). The arbitrator shall be selected by application of the rules of
the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney
admitted to practice law in the Commonwealth of Massachusetts. No party to this agreement will
challenge the jurisdiction or venue provisions as provided in this section. Nothing contained
herein shall prevent the party from obtaining an injunction.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>&#091;remainder of page intentionally left blank&#093;</B>

</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><I>SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Your signature on this Signature Page evidences your agreement to be bound by the terms and
conditions of the Investment Agreement and the Registration Rights Agreement as of the date first
written above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The undersigned signatory hereby certifies that he has read and understands the Registration
Rights Agreement, and the representations made by the undersigned in this Registration Rights
Agreement are true and accurate, and agrees to be bound by its terms.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>DUTCHESS PRIVATE EQUITIES FUND, L.P.,</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">BY ITS GENERAL PARTNER,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">DUTCHESS CAPITAL MANAGEMENT, LLC</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Douglas H. Leighton, Managing Member</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By</DIV></TD>
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    <TD align="left" valign="top">Eugene E. Eichler, Chief Executive Officer</TD>
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