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STANDBY EQUITY DISTRIBUTION AGREEMENT

THIS AGREEMENT dated as of the 8th day of October 2008 (this “Agreement”)
between YA GLOBAL INVESTMENTS, L.P., a Cayman Islands exempt limited partnership
(the “Investor”), and POWER OF THE DREAM VENTURES, INC., a corporation organized
and existing under the laws of the State of Delaware (the “Company”).

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investor, from time to
time as provided herein, and the Investor shall purchase from the Company (i) up
to $5,000,000 of the Company’s common stock, par value $0.0001 per share (the
“Common Stock”) and (ii) warrants substantially in the form attached hereto as
Exhibit A (the “Warrant”) to purchase 4,027,386 shares of Common Stock; and

WHEREAS, such investments will be made in reliance upon the provisions of
Regulation D (“Regulation D”) of the Securities Act of 1933, as amended, and the
regulations promulgated thereunder (the “Securities Act”), and or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.

NOW, THEREFORE, the parties hereto agree as follows:

Article I. Certain Definitions

Section 1.01           “Advance” shall mean the portion of the Commitment Amount
requested by the Company in the Advance Notice.

Section 1.02           “Advance Date” shall mean the 1st Trading Day after
expiration of the applicable Pricing Period for each Advance.

Section 1.03           “Advance Notice” shall mean a written notice in the form
of Exhibit B attached hereto to the Investor executed by an officer of the
Company and setting forth the Advance amount that the Company requests from the
Investor.

Section 1.04           “Advance Notice Date” shall mean each date the Company
delivers (in accordance with Section 2.02(b) of this Agreement) to the Investor
an Advance Notice requiring the Investor to advance funds to the Company,
subject to the terms of this Agreement.  No Advance Notice Date shall be less
than 5 Trading Days after the prior Advance Notice Date.

Section 1.05           “Bid Price” shall mean, on any date, the closing bid
price (as reported by Bloomberg L.P.) of the Common Stock on the Principal
Market or if the Common Stock is not traded on a Principal Market, the highest
reported bid price for the Common Stock, as furnished by the Financial Industry
Regulatory Authority.

Section 1.06           “Closing” shall mean one of the closings of a purchase
and sale of Common Stock pursuant to Section 2.03.

 
 

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Section 1.07           “Commitment Amount” shall mean the aggregate amount of up
to $5,000,000 which the Investor has agreed to provide to the Company in order
to purchase the Company’s Common Stock pursuant to the terms and conditions of
this Agreement.

Section 1.08           “Commitment Period” shall mean the period commencing on
the Effective Date, and expiring upon the termination of this Agreement in
accordance with Section 10.02.

Section 1.09           “Common Stock” shall mean the Company’s common stock, par
value $0.0001 per share.

Section 1.10           “Condition Satisfaction Date” shall have the meaning set
forth in Section 7.02.

Section 1.11           “Damages” shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorney’s fees
and disbursements and costs and expenses of expert witnesses and investigation).

Section 1.12           “Effective Date” shall mean the date on which the SEC
first declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 7.02(a).

Section 1.13           “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

Section 1.14           “Material Adverse Effect” shall mean any condition,
circumstance, or situation that may result in, or reasonably be expected to
result in (i) a material adverse effect on the legality, validity or
enforceability of this Agreement or the transactions contemplated herein, (ii) a
material adverse effect on the results of operations, assets, business or
condition (financial or otherwise) of the Company, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under this Agreement.

Section 1.15           “Market Price” shall mean the lowest daily VWAP of the
Common Stock during the Pricing Period.

Section 1.16           “Maximum Advance Amount” shall be the lower of (i)
$500,000 per Advance Notice, (ii) 75% of the average daily dollar trading value
as reported by Bloomberg LP during the 20 Trading Days prior to the date the
Company sends an Advance Notice, (iii) 75% of the average daily dollar trading
value as reported by Bloomberg LP during the 10 Trading Days prior to the date
the Company sends an Advance Notice, and (iv) the difference obtained by
subtracting the sum of all Advances from the Commitment Amount.

Section 1.17           “Person” shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.

Section 1.18           “Pricing Period” shall mean the 5 consecutive Trading
Days after the Advance Notice Date.

Section 1.19           “Principal Market” shall mean the Nasdaq Global Select
Market, the Nasdaq Global Market, the Nasdaq Capital Market, the American Stock
Exchange, the OTC Bulletin Board or the New York Stock Exchange, whichever is at
the time the principal trading exchange or market for the Common Stock.

 
 

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Section 1.20           “Purchase Price” shall be set at 93% of the Market Price
during the Pricing Period.

Section 1.21           “Registrable Securities” shall mean the shares of Common
Stock to be issued hereunder (i) in respect of which the Registration Statement
has not been declared effective by the SEC, (ii) which have not been sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act (“Rule 144”) or (iii)
which have not been otherwise transferred to a holder who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

Section 1.22           “Registration Rights Agreement” shall mean the
Registration Rights Agreement dated the date hereof, regarding the filing of the
Registration Statement for the resale of the Registrable Securities, entered
into between the Company and the Investor.

Section 1.23           “Registration Statement” shall mean a registration
statement on Form S-3 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, Form S-1 or on such other form
promulgated by the SEC for which the Company then qualifies and which counsel
for the Company shall deem appropriate, and which form shall be available for
the resale of the Registrable Securities to be registered thereunder in
accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.

Section 1.24           “Regulation D” shall have the meaning set forth in the
recitals of this Agreement.

Section 1.25           “SEC” shall mean the United States Securities and
Exchange Commission.

Section 1.26           “Securities Act” shall have the meaning set forth in the
recitals of this Agreement.

Section 1.27           “Trading Day” shall mean any day during which the New
York Stock Exchange shall be open for business.

Section 1.28           “VWAP” means, as of any date, the daily dollar
volume-weighted average price for such security as reported by Bloomberg, LP
through its “Historical Price Table Screen (HP)” with Market: Weighted Ave
function selected, or, if no dollar volume-weighted average price is reported
for such security, then the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security.

 
 

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Article II. Advances

Section 2.01          Advances. Subject to the terms and conditions of this
Agreement (including, without limitation, the provisions of Article VII hereof),
the Company, at its sole and exclusive option, may issue and sell to the
Investor, and the Investor shall purchase from the Company, shares of the
Company’s Common Stock by the delivery, in the Company’s sole discretion, of
Advance Notices.  The number of shares of Common Stock that the Investor shall
purchase pursuant to each Advance shall be determined by dividing the amount of
the Advance by the Purchase Price.  No fractional shares shall be issued.
Fractional shares shall be rounded to the next higher whole number of
shares.  The aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the Commitment Amount.

Section 2.02
Mechanics.

(a)
Advance Notice.  At any time during the Commitment Period, the Company may
require the Investor to purchase shares of Common Stock by delivering an Advance
Notice to the Investor, subject to the conditions set forth in Section 7.02;
provided, however, the amount for each Advance as designated by the Company in
the applicable Advance Notice shall not be more than the Maximum Advance Amount
and the aggregate amount of the Advances pursuant to this Agreement shall not
exceed the Commitment Amount.  The Company acknowledges that the Investor may
sell shares of the Company’s Common Stock corresponding with a particular
Advance Notice after the Advance Notice is received by the Investor.  There
shall be a minimum of 5 Trading Days between each Advance Notice Date.

 
 

(b)
Date of Delivery of Advance Notice.  Advance Notices shall be delivered in
accordance with the instructions set forth on the bottom of Exhibit B.  An
Advance Notice shall be deemed delivered on (i) the Trading Day it is received
by facsimile or otherwise by the Investor if such notice is received prior to
5:00 pm Eastern Time, or (ii) the immediately succeeding Trading Day if it is
received by facsimile or otherwise after 5:00 pm Eastern Time on a Trading Day
or at any time on a day which is not a Trading Day.  No Advance Notice may be
deemed delivered on a day that is not a Trading Day.

Section 2.03           Closings.  On each Advance Date (i) the Company shall
deliver to the Investor such number of shares of Common Stock registered in the
name of the Investor as shall equal (x) the amount of the Advance specified in
such Advance Notice pursuant to Section 2.01 herein, divided by (y) the Purchase
Price and (ii) upon receipt of such shares, the Investor shall deliver to the
Company the amount of the Advance specified in the Advance Notice by wire
transfer of immediately available funds.  In addition, on or prior to the
Advance Date, each of the Company and the Investor shall deliver to the other
all documents, instruments and writings required to be delivered by either of
them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein.  To the extent the Company has not paid the
fees, expenses, and disbursements of the Investor in accordance with Section
12.04, the amount of such fees, expenses, and disbursements may be deducted by
the Investor (and shall be paid to the relevant party) directly out of the
proceeds of the Advance with no reduction in the amount of shares of the
Company’s Common Stock to be delivered on such Advance Date.

 
 

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(a)
Company’s Obligations Upon Closing.

 
(i)
The Company shall deliver to the Investor the shares of Common Stock applicable
to the Advance in accordance with Section 2.03.  The certificates evidencing
such shares shall be free of restrictive legends.

 
(ii)
The Registration Statement shall be effective and available for the resale of
all applicable shares of Common Stock to be issued in connection with the
Advance and certificates evidencing such shares shall be free of restrictive
legends.

 
(iii)
The Company shall have obtained all material permits and qualifications required
by any applicable state for the offer and sale of the Registrable Securities, or
shall have the availability of exemptions therefrom.  The sale and issuance of
the Registrable Securities shall be legally permitted by all laws and
regulations to which the Company is subject.

 
(iv)
The Company shall have filed with the SEC in a timely manner all reports,
notices and other documents required of a “reporting company” under the Exchange
Act and applicable Commission regulations.

 
(v)
The Company shall pay any unpaid fees as set forth in Section 12.04 or withhold
such amounts as provided in Section 2.03.

 
(vi)
The Company’s transfer agent shall be DWAC eligible.

(b) 
Investor’s Obligations Upon Closing. Within one Business Day of receipt of the
shares referenced in Section 2.03(a)(i) above and provided the Company is in
compliance with its obligations in Section 2.03, the Investor shall deliver to
the Company the amount of the Advance specified in the Advance Notice by wire
transfer of immediately available funds.

Section 2.04           Lock Up Period.  On the date hereof, the Company shall
obtain from each officer and director a lock-up agreement, as defined below, in
the form annexed hereto as Schedule 2.4.

Section 2.05           Hardship.  In the event the Investor sells shares of the
Company’s Common Stock after receipt of an Advance Notice and the Company fails
to perform its obligations as mandated in Section 2.03, and specifically the
Company fails to deliver to the Investor on the Advance Date the shares of
Common Stock corresponding to the applicable Advance pursuant to Section
2.03(a)(i), the Company acknowledges that the Investor shall suffer financial
hardship and therefore shall be liable for any and all losses, commissions,
fees, or financial hardship caused to the Investor.

Article III. Representations and Warranties of Investor

Investor hereby represents and warrants to, and agrees with, the Company that
the following are true and correct as of the date hereof and as of each Advance
Date:

Section 3.01           Organization and Authorization.  The Investor is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the execution and delivery of this Agreement by such Investor, the performance
by such Investor of its obligations hereunder and the consummation by such
Investor of the transactions contemplated hereby have been duly authorized and
requires no other proceedings on the part of the Investor.  The undersigned has
the right, power and authority to execute and deliver this Agreement and all
other instruments (including, without limitations, the Registration Rights
Agreement), on behalf of the Investor.  This Agreement has been duly executed
and delivered by the Investor and, assuming the execution and delivery hereof
and acceptance thereof by the Company, will constitute the legal, valid and
binding obligations of the Investor, enforceable against the Investor in
accordance with its terms.

 
 

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Section 3.02           Evaluation of Risks.  The Investor has such knowledge and
experience in financial, tax and business matters as to be capable of evaluating
the merits and risks of, and bearing the economic risks entailed by, an
investment in the Company and of protecting its interests in connection with
this transaction.  It recognizes that its investment in the Company involves a
high degree of risk.

Section 3.03           No Legal Advice From the Company.  The Investor
acknowledges that it had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or its own legal counsel
and investment and tax advisors.  The Investor is relying solely on such counsel
and advisors and not on any statements or representations of the Company or any
of its representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement or
the securities laws of any jurisdiction.

Section 3.04           Investment Purpose. The securities are being purchased by
the Investor for its own account, and for investment purposes.  The Investor
agrees not to assign or in any way transfer the Investor’s rights to the
securities or any interest therein and acknowledges that the Company will not
recognize any purported assignment or transfer except in accordance with
applicable Federal and state securities laws.  No other person has or will have
a direct or indirect beneficial interest in the securities.  The Investor agrees
not to sell, hypothecate or otherwise transfer the Investor’s securities unless
the securities are registered under Federal and applicable state securities laws
or unless, in the opinion of counsel satisfactory to the Company, an exemption
from such laws is available.

Section 3.05           Accredited Investor.  The Investor is an “Accredited
Investor” as that term is defined in Rule 501(a)(3) of Regulation D of the
Securities Act.

Section 3.06           Information.  The Investor and its advisors (and its
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information it deemed
material to making an informed investment decision.  The Investor and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its management.  Neither such inquiries nor any other due diligence
investigations conducted by such Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor’s right to rely on
the Company’s representations and warranties contained in this Agreement.  The
Investor understands that its investment involves a high degree of risk.  The
Investor is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such
Investor to obtain information from the Company in order to evaluate the merits
and risks of this investment.  The Investor has sought such accounting, legal
and tax advice, as it has considered necessary to make an informed investment
decision with respect to this transaction.

 
 

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Section 3.07           Receipt of Documents. The Investor and its counsel have
received and read in their entirety:  (i) this Agreement and the Exhibits
annexed hereto; (ii) all due diligence and other information necessary to verify
the accuracy and completeness of such representations, warranties and covenants;
(iii) the Company’s Form 10-K for the year ended December 31, 2007 and Forms
10-Q for the periods ended March 31, 2008 and June 30, 2008; and (iv) answers to
all questions the Investor submitted to the Company regarding an investment in
the Company; and the Investor has relied on the information contained therein
and has not been furnished any other documents, literature, memorandum or
prospectus.

Section 3.08           No General Solicitation.  Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the shares of Common Stock offered hereby.

Section 3.09           Not an Affiliate.  The Investor is not an officer,
director or a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with
the Company or any “Affiliate” of the Company (as that term is defined in Rule
405 of the Securities Act).

Section 3.10           Trading Activities.  The Investor’s trading activities
with respect to the  Common Stock shall be in compliance with all applicable
federal and state securities laws, rules and regulations and the rules and
regulations of the Principal Market on which the Company’s Common Stock is
listed or traded. Neither the Investor nor its affiliates has an open short
position in the Common Stock of the Company, the Investor agrees that it shall
not, and that it will cause its affiliates not to, engage in any short sales of
or hedging transactions with respect to the Common Stock, provided that the
Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor has the right to sell the shares to be issued to the Investor pursuant
to the Advance Notice during the applicable Pricing Period.

Article IV. Representations and Warranties of the Company

Except as stated below, on the disclosure schedules attached hereto or in the
SEC Documents (as defined herein), the Company hereby represents and warrants
to, and covenants with, the Investor that the following are true and correct as
of the date hereof:

Section 4.01           Organization and Qualification.  The Company is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite corporate power to own its
properties and to carry on its business as now being conducted.  Each of the
Company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect.

 
 

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Section 4.02           Authorization, Enforcement, Compliance with Other
Instruments.  (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement and any
related agreements, in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Registration Rights Agreement and
any related agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by the
Company’s Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders, (iii) this
Agreement, the Registration Rights Agreement and any related agreements have
been duly executed and delivered by the Company, (iv) this Agreement, the
Registration Rights Agreement and assuming the execution and delivery thereof
and acceptance by the Investor and any related agreements constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies.

Section 4.03           Capitalization.  The authorized capital stock of the
Company consists of 250,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock, $0.0001 par value per share (“Preferred Stock”), of which
43,115,181 shares of Common Stock and zero shares of Preferred Stock are issued
and outstanding.  All of such outstanding shares have been validly issued and
are fully paid and nonassessable.  Except as disclosed in the SEC Documents, no
shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company.  Except as disclosed in the SEC Documents, as of the date hereof,
(i) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or any of
its subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities (iii) there are no outstanding registration
statements other than on Form S-8 and (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 Securities Act (except
pursuant to the Registration Rights Agreement).  There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by this Agreement or any related agreement or the consummation of the
transactions described herein or therein.  The Company has furnished to the
Investor true and correct copies of the Company’s Certificate of Incorporation,
as amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s By-laws, as in effect on the date hereof (the
“By-laws”), and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto.

 
 

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Section 4.04           No Conflict.  The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations of any outstanding
series of preferred stock of the Company or By-laws or (ii) conflict with or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market on which the Common Stock is quoted)
applicable to the Company or any of its subsidiaries or by which any material
property or asset of the Company or any of its subsidiaries is bound or affected
and which would cause a Material Adverse Effect.  Except as disclosed in the SEC
Documents, neither the Company nor its subsidiaries is in violation of any term
of or in default under its Articles of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries.  The business of the Company and its subsidiaries is not being
conducted in violation of any material law, ordinance, regulation of any
governmental entity.  Except as specifically contemplated by this Agreement and
as required under the Securities Act and any applicable state securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof.  All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof.  The Company and its subsidiaries are unaware of any fact or
circumstance which might give rise to any of the foregoing.

Section 4.05           SEC Documents; Financial Statements.  The Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC under the Securities Exchange Act for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (all of the foregoing filed prior to
the date hereof or amended after the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the “SEC
Documents”) on timely basis or has received a valid extension of such time of
filing and has filed any such SEC Document prior to the expiration of any such
extension.  The Company has delivered to the Investors or their representatives,
or made available through the SEC’s website at http://www.sec.gov, true and
complete copies of the SEC Documents.  As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.  As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).  No other information provided by or on behalf of the Company to
the Investors which is not included in the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made and not misleading.

 
 

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Section 4.06           10b-5.  The SEC Documents do not include any untrue
statements of material fact, nor do they omit to state any material fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

Section 4.07           No Default.  Except as disclosed in the SEC Documents,
the Company is not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a party or by which it is or its property is bound and neither the execution,
nor the delivery by the Company, nor the performance by the Company of its
obligations under this Agreement or any of the exhibits or attachments hereto
will conflict with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or imposition
of any lien or charge on any assets or properties of the Company under its
Certificate of Incorporation, By-Laws, any material indenture, mortgage, deed of
trust or other material agreement applicable to the Company or instrument to
which the Company is a party or by which it is bound, or any statute, or any
decree, judgment, order, rules or regulation of any court or governmental agency
or body having jurisdiction over the Company or its properties, in each case
which default, lien or charge is likely to cause a Material Adverse Effect.

Section 4.08           Absence of Events of Default.  Except for matters
described in the SEC Documents and/or this Agreement, no Event of Default, as
defined in the respective agreement to which the Company is a party, and no
event which, with the giving of notice or the passage of time or both, would
become an Event of Default (as so defined), has occurred and is continuing,
which would have a Material Adverse Effect.

Section 4.09           Intellectual Property Rights.  The Company and its
subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted.   The Company and its subsidiaries do
not have any knowledge of any infringement by the Company or its subsidiaries of
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others, and, to the knowledge of the Company, there
is no claim, action or proceeding being made or brought against, or to the
Company’s knowledge, being threatened against, the Company or its subsidiaries
regarding trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service mark registrations, trade secret
or other infringement; and the Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.

 
 

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Section 4.10           Employee Relations.  Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened.  None of the
Company’s or its subsidiaries’ employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

Section 4.11           Environmental Laws.  The Company and its subsidiaries are
(i) in compliance with any and all applicable material foreign, federal, state
and local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“Environmental Laws”), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

Section 4.12           Title.  Except as set forth in the SEC Documents, the
Company has good and marketable title to its properties and material assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest other than such as are not material to the business
of the Company.  Any real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries.

Section 4.13           Insurance.  The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
subsidiaries are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Materially Adverse Effect.

Section 4.14           Regulatory Permits.  The Company and its subsidiaries
possess all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.

Section 4.15           Internal Accounting Controls.  The Company and each of
its subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

 
 

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Section 4.16           No Material Adverse Breaches, etc.  Except as set forth
in the SEC Documents, neither the Company nor any of its subsidiaries is subject
to any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company’s officers has or
is expected in the future to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries.  Except as set forth in the SEC Documents,
neither the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.

Section 4.17           Absence of Litigation.  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 against or affecting the Company, the Common Stock or any of the
Company’s subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a material adverse effect on the transactions contemplated hereby (ii)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a Material Adverse Effect.

Section 4.18           Subsidiaries.  Except as disclosed in the SEC Documents,
the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, association or other business
entity.

Section 4.19           Tax Status.  Except as disclosed in the SEC Documents,
the Company and each of its subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply.  There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.

Section 4.20           Certain Transactions.  Except as set forth in the SEC
Documents none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.

 
 

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Section 4.21           Fees and Rights of First Refusal.  The Company is not
obligated to offer the securities offered hereunder on a right of first refusal
basis or otherwise to any third parties including, but not limited to, current
or former shareholders of the Company, underwriters, brokers, agents or other
third parties.

Section 4.22           Use of Proceeds.  The Company shall use the net proceeds
from this offering for working capital and other general corporate purposes.

Section 4.23           Opinion of Counsel at Closing.  Investor shall receive an
opinion letter from counsel to the Company on the date hereof.

Section 4.24           Dilution.  The Company is aware and acknowledges that
issuance of shares of the Company’s Common Stock could cause dilution to
existing shareholders and could significantly increase the outstanding number of
shares of Common Stock.

Section 4.25           Acknowledgment Regarding Investor’s Purchase of Shares.
The Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length investor with respect to this Agreement and the
transactions contemplated hereunder. 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 this Agreement and the transactions
contemplated hereunder and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Investor’s purchase of the
Common Stock hereunder.  The Company is aware and acknowledges that it may not
be able to request Advances under this Agreement if it cannot obtain an
effective Registration Statement or if any issuances of Common Stock pursuant to
any Advances would violate any rules of the Principal Market.  The Company
further is aware and acknowledges that any fees paid pursuant to Section 12.04
hereunder or shares issued pursuant to Section 12.04(b) hereunder shall be
earned on the date hereof and not refundable or returnable under any
circumstances.

Article V.   Indemnification

The Investor and the Company represent to the other the following with respect
to itself:

Section 5.01           Indemnification By the Company.  In consideration of the
Investor’s execution and delivery of this Agreement, and in addition to all of
the Company’s other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Investor, and all of its officers,
directors, partners, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Investor Indemnitees”) from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Investor Indemnitee is a party to the action for which indemnification hereunder
is sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by the Investor Indemnitees or any of them
as a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in this Agreement
or the Registration Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Investor Indemnitee not arising out of any action
or inaction of an Investor Indemnitee, and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the
Investor Indemnitees.  To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

 
 

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Section 5.02           Indemnification by the Investor.  In consideration of the
Company’s execution and delivery of this Agreement, and in addition to all of
the Investor’s other obligations under this Agreement, the Investor shall
defend, protect, indemnify and hold harmless the Company and all of its
officers, directors, shareholders, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Company Indemnitees”) from and against any
and all Indemnified Liabilities incurred by the Company Indemnitees or any of
them as a result of, or arising out of, or relating to (a) any misrepresentation
or breach of any representation or warranty made by the Investor in this
Agreement, the Registration Rights Agreement, or any instrument or document
contemplated hereby or thereby executed by the Investor, (b) any breach of any
covenant, agreement or obligation of the Investor(s) contained in this
Agreement,  the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the Investor,
or (c) any cause of action, suit or claim brought or made against such Company
Indemnitee based on  misrepresentations or due to a  breach by the Investor and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnitees.  To the extent that
the foregoing undertaking by the Investor may be unenforceable for any reason,
the Investor shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.

Section 5.03           Procedure.  Promptly after receipt by an Investor
Indemnitee or a Company Indemnitee (each, an “Indemnified Party”) of notice of
the commencement of any action or proceeding (including any governmental action
or proceeding) involving an Indemnified Liability, such Indemnified Party shall,
if a claim in respect thereof is to be made against any indemnifying party under
this Article V, 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 Party, as the case may be; provided, however, that an
Indemnified Party shall have the right to retain its own counsel with the fees
and expenses of not more than one counsel for such Indemnified Party to be paid
by the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. The Indemnified Party 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 which relates to such action or claim.  The indemnifying party
shall keep the Indemnified Party 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 prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent.  No indemnifying party shall, without the prior written consent of the
Indemnified Party, 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 of a release from
all liability in respect to such claim or litigation.  Following indemnification
as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnified Party with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been
made.  The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Party under this Article
V, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action.

 
 

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Section 5.04           Insurance; Tax Savings.  Any indemnification payments
hereunder shall take into account any insurance proceeds, tax savings or other
third party reimbursement actually received.

Section 5.05           Survival.  The obligations of the parties to indemnify or
make contribution under this Article V shall survive termination.

Article VI.
Covenants of the Company

Section 6.01           Registration Rights.  The Company shall comply in all
material respects with the terms of the Registration Rights Agreement.

Section 6.02           Listing of Common Stock.  The Company shall maintain the
Common Stock’s authorization for quotation on the Principal Market.

Section 6.03           Exchange Act Registration.  The Company will cause its
Common Stock to continue to be registered under Section 12(g) of the Exchange
Act, will file in a timely manner all reports and other documents required of it
as a reporting company under the Exchange Act and will not take any action or
file any document (whether or not permitted by Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Exchange Act.

Section 6.04           Transfer Agent Instructions.  Upon effectiveness of the
Registration Statement the Company shall deliver instructions to its transfer
agent to issue shares of Common Stock to the Investor free of restrictive
legends on or before each Advance Date.

Section 6.05           Corporate Existence.  The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.

 
 

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Section 6.06           Notice of Certain Events Affecting Registration;
Suspension of Right to Make an Advance.  The Company will immediately notify the
Investor upon its becoming aware of the occurrence of any of the following
events in respect of a registration statement or related prospectus relating to
an offering of Registrable 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) the
issuance by the SEC or any other Federal or state governmental authority of  any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus of 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 the 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) the Company’s reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate; and the Company
will promptly make available to the Investor any such supplement or amendment to
the related prospectus.  The Company shall not deliver to the Investor any
Advance Notice during the continuation of any of the foregoing events.

Section 6.07           Restriction on Registration Statement.  During the
Commitment Period, the Company shall not, without the prior written consent of
the Investor, file any registration statement on Form S-8.

Section 6.08           Consolidation; Merger.  The Company shall not, at any
time after the date hereof, effect any merger or consolidation of the Company
with or into, or a transfer of all or substantially all the assets of the
Company to another entity (a “Consolidation Event”) unless the resulting
successor or acquiring entity (if not the Company) assumes by written instrument
the obligation to deliver to the Investor such shares of stock and/or securities
as the Investor is entitled to receive pursuant to this Agreement.

Section 6.09           Issuance of the Company’s Common Stock.  The sale of the
shares of Common Stock shall be made in accordance with the provisions and
requirements of Regulation D and any applicable state securities law.

Section 6.10           Review of Public Disclosures.  The Company shall submit
for review and approval by its attorneys and, if containing financial
information, its independent certified public accountants (i) all SEC filings
(including, without limitation, all filings required under the Exchange Act,
which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc.) and (ii)  all
press releases, investor relations materials, and scripts of analysts meetings
and calls that the Company in its reasonable determination deems necessary for
review and approval by its attorneys and independent certified public
accountants, as applicable.

 
 

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Section 6.11           Market Activities.  The Company will not, directly or
indirectly, (i) take any action designed to cause or result in, or that
constitutes or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Stock or (ii) sell, bid for or purchase the Common
Stock, or pay anyone any compensation for soliciting purchases of the Common
Stock.

Section 6.12           Opinions of Counsel Concerning Resales.  Provided that
the Investor’s resale of Common Stock received pursuant to this Agreement may be
freely sold by the Investor either pursuant to an effective Registration
Statement, in accordance with Rule 144, or otherwise, the Company shall obtain
for the Investor, at the Company’s expense, any and all opinions of counsel
which may be required by the Company’s transfer agent to issue shares free of
restrictive legends.

Article VII.
Conditions for Advance and Conditions to Closing

Section 7.01           Conditions Precedent to the Obligations of the
Company.  The obligation hereunder of the Company to issue and sell the shares
of Common Stock to the Investor incident to each Closing is subject to the
satisfaction, or waiver by the Company, at or before each such Closing, of each
of the conditions set forth below.

(a)
Accuracy of the Investor’s Representations and Warranties.  The representations
and warranties of the Investor shall be true and correct in all material
respects.

(b)
Performance by the Investor.  The Investor shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required
by this Agreement and the Registration Rights Agreement to be performed,
satisfied or complied with by the Investor at or prior to such Closing.

Section 7.02           Conditions Precedent to the Right of the Company to
Deliver an Advance Notice.  The right of the Company to deliver an Advance
Notice is subject to the fulfillment by the Company, on such Advance Notice Date
(a “Condition Satisfaction Date”), of each of the following conditions:
 
 

(a)
Registration of the Common Stock with the SEC.  There is an effective
Registration Statement pursuant to which the Investor is permitted to utilize
the prospectus thereunder to resell all of the shares of Common Stock issuable
pursuant to such Advance Notice, and the Company believes, in good faith, that
such effectiveness will continue uninterrupted for the foreseeable
future.  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 the
Registration Statement or that the SEC otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently,
or intends or has threatened to do so (unless the SEC’s concerns have been
addressed and the Investor is reasonably satisfied that the SEC no longer is
considering or intends to take such action), and (ii) no other suspension of the
use or withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist.

 
 

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(b)
Authority.  The Company shall have obtained all permits and qualifications
required by any applicable state in accordance with the Registration Rights
Agreement for the offer and sale of the shares of Common Stock, or shall have
the availability of exemptions therefrom.  The sale and issuance of the shares
of Common Stock shall be legally permitted by all laws and regulations to which
the Company is subject.

(c)
Fundamental Changes. There shall not exist any fundamental changes to the
information set forth in the Registration Statement which would require the
Company to file a post-effective amendment to the Registration Statement.

(d)
Performance by the Company.  The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement and the Registration Rights Agreement to be
performed, satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.

(e)
No Injunction.  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 that prohibits or
directly and adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced that may have the effect
of prohibiting or adversely affecting any of the transactions contemplated by
this Agreement.

(f)
No Suspension of Trading in or Delisting of Common Stock.  The Common Stock is
trading on a Principal Market and all of the shares issuable pursuant to such
Advance Notice will be listed or quoted for trading on such Principal Market
(and the Company believes, in good faith, that trading of the Common Stock on a
Principal Market will continue uninterrupted for the foreseeable future.  The
issuance of shares of Common Stock with respect to the applicable Advance Notice
will not violate the shareholder approval requirements of the Principal
Market.  The Company shall not have received any notice threatening the
continued listing of the Common Stock on the Principal Market.

(g)
Maximum Advance Amount.  The amount of an Advance requested by the Company shall
not exceed the Maximum Advance Amount.  In addition, in no event shall the
number of shares issuable to the Investor pursuant to an Advance cause the
aggregate number of shares of Common Stock beneficially owned by the Investor
and its affiliates to exceed 9.99% of the then outstanding Common Stock of the
Company (“Ownership Limitation”).  Any portion of an Advance that would cause
the Investor to exceed the Ownership Limitation shall automatically be
withdrawn.  For the purposes of this section beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act.

 
 

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(h)
Authorized.  There shall be a sufficient number of authorized but unissued and
otherwise unreserved shares of Common Stock for the issuance of all of the
shares issuable pursuant to such Advance Notice.

(i)
Executed Advance Notice.  The Investor shall have received the Advance Notice
executed by an officer of the Company and the representations contained in such
Advance Notice shall be true and correct as of each Condition Satisfaction Date.

Article VIII.
Due Diligence Review; Non-Disclosure of Non-Public Information

Section 8.01
Non-Disclosure of Non-Public Information.

(a)
The Company covenants and agrees that it shall refrain from disclosing, and
shall cause its officers, directors, employees and agents to refrain from
disclosing, any material non-public information to the Investor without also
disseminating such information to the public, unless prior to disclosure of such
information the Company identifies such information as being material non-public
information and provides the Investor with the opportunity to accept or refuse
to accept such material non-public information for review.

(b)
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 8.01 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.

 
 

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Article IX.
Choice of Law/Jurisdiction

This Agreement shall be governed by and interpreted in accordance with the laws
of the State of New Jersey without regard to the principles of conflict of
laws.  The parties further agree that any action between them shall be heard in
Hudson County, New Jersey, and expressly consent to the jurisdiction and venue
of the Superior Court of New Jersey, sitting in Hudson County, New Jersey and
the United States District Court of New Jersey, sitting in Newark, New Jersey,
for the adjudication of any civil action asserted pursuant to this paragraph.

Article X. Assignment; Termination

Section 10.01         Assignment.  Neither this Agreement nor any rights or
obligations of either party hereunder may be assigned to any other Person.

Section 10.02         Termination.

(a)
Unless earlier terminated as provided hereunder, this Agreement shall terminate
automatically on the earliest of (i) the first day of the month next following
the 36-month anniversary of the Effective Date, or (ii) the date on which the
Investor shall have made payment of Advances pursuant to this Agreement in the
aggregate amount of the Commitment Amount.

(b)
The Company may terminate this Agreement effective upon fifteen Trading Days’
prior written notice to the Investor; provided that (i) the Company has
delivered all shares of Common Stock associated with Advance Notices that have
been delivered to the Investor, and (ii) the Company has paid all amounts owed
to the Investor pursuant to this Agreement.  This Agreement may be terminated at
any time by the mutual written consent of the parties, effective as of the date
of such mutual written consent unless otherwise provided in such written
consent.  In the event of any termination of this Agreement by the Company
hereunder, so long as the Investor owns any shares of Common Stock issued
hereunder, unless all of such shares of Common Stock may be resold by the
Investor without registration and without any time, volume or manner limitations
pursuant to Rule 144, the Company shall not suspend (except as provided for in
the Registration Rights Agreement) or withdraw the Registration Statement or
otherwise cause the Registration Statement to become ineffective, or voluntarily
delist the Common Stock from, the Principal Market without listing the Common
Stock on another Principal Market.

(c)
The obligation of the Investor to make an Advance to the Company pursuant to
this Agreement shall terminate permanently (including with respect to an Advance
Date that has not yet occurred) in the event that (i) there shall occur any stop
order or suspension of the effectiveness of the Registration Statement for an
aggregate of 50 Trading Days, other than due to the acts of the Investor, during
the Commitment Period, or (ii) the Company shall at any time fail materially to
comply with the requirements of Article VI and such failure is not cured within
30 days after receipt of written notice from the Investor, provided, however,
that this termination provision shall not apply to any period commencing upon
the filing of a post-effective amendment to such Registration Statement and
ending upon the date on which such post effective amendment is declared
effective by the SEC

 
 

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(d)
Nothing in this Section 10.02 shall be deemed to release the Company or the
Investor from any liability for any breach under this Agreement, or to impair
the rights of the Company and the Investor to compel specific performance by the
other party of its obligations under this Agreement.  The indemnification
provisions contained in Sections 5.01 and 5.02 shall survive termination
hereunder.

Article XI. Notices

Any notices, consents, waivers, or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) 3 days after being sent by U.S. certified
mail, return receipt requested, or (iv) 1 day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same.  The addresses and facsimile numbers for such
communications, except for Advance Notices which shall be delivered in
accordance with Section 2.02 hereof, shall be:

If to the Company, to:
Power of the Dream Ventures, Inc.
 
1095 Budapest
Soroksari ut 94-96
Hungary
Attention: Viktor Rozsnyay
Phone: +36-1-456-6061
Fax: +36-1-456-6062
   
With a copy to:
Loeb & Loeb LLP
 
345 Park Avenue
 
New York, NY 10154
 
Attention: Lloyd L. Rothenberg, Esq.
 
Phone: (212) 407-4937
 
Fax: (212) 656-1076
   
If to the Investor(s):
YA Global Investments, LP
 
101 Hudson Street –Suite 3700
 
Jersey City, NJ 07302
 
Attention:              Mark Angelo
 
Portfolio Manager
 
Telephone:            (201) 985-8300
 
Facsimile:               (201) 985-8266

 
 

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With a Copy to:
David Gonzalez, Esq.
 
101 Hudson Street – Suite 3700
 
Jersey City, NJ 07302
 
Telephone:            (201) 985-8300
 
Facsimile:               (201) 985-8266

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

Article XII. Miscellaneous

Section 12.01         Counterparts.  This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party.  In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause 4 additional original executed signature pages to be physically
delivered to the other party within 5 days of the execution and delivery hereof,
though failure to deliver such copies shall not affect the validity of this
Agreement.

Section 12.02         Entire Agreement; Amendments.  This Agreement supersedes
all other prior oral or written agreements between the Investor, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters.  No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

Section 12.03         Reporting Entity for the Common Stock.  The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
shall be Bloomberg, L.P. or any successor thereto.  The written mutual consent
of the Investor and the Company shall be required to employ any other reporting
entity.

Section 12.04         Fees and Expenses.  The Company hereby agrees to pay the
following fees:

(a)
Structuring Fees.  Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby, except that on the date hereof the Company shall pay a
structuring fee of $15,000 to Yorkville Advisors, LLC.

 
 

(b)
Due Diligence Fee. Company shall pay the Investor a non-refundable due diligence
fee of $5,000 upon submission of the due diligence documents to the Investor.

 
 

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(c)
Commitment Fees.  Upon the execution of this Agreement the Company shall issue
to the Investor 2,000,000 shares of Common Stock (the “Investor’s Shares”). The
Investor’s Shares shall be deemed fully earned as of the date hereof regardless
of the amount of Advances, if any, that the Company is able to, or choices to,
request hereunder.  The Investor’s Shares shall be included on any registration
statement filed by the Company after the date hereof, unless such shares may be
resold without any limitation pursuant to Rule 144 and will have “piggy-back”
registration rights.

(d)
Monitoring Fee.  The Company shall pay Yorkville, upon the receipt of notice
therefore, a monthly monitoring fee (“Monitoring Fee”) for its continuing due
diligence, structuring, monitoring and managing of the SEDA commitment for the
Investor pursuant to Yorkville’s existing advisory obligations to the
Investor.  The Monitoring Fee shall be charged as follows: (a) $1,000 shall be
due on the first business day of the first month following the effective date of
the Registration Statement, and (b) $1,000 each month during the Commitment
Period beginning on the month following the month of the payment in clause (a)
is due until termination in accordance with Section 10.02.

Section 12.05          Warrants.  Upon the execution of this Agreement the
Company shall issue the Warrants to the Investor.

Section 12.06         Brokerage.  Each of the parties hereto represents that it
has had no dealings in connection with this transaction with any finder or
broker, including, without limitation, the Wakabayshi fund, who will demand
payment of any fee or commission from the other party.  The Company on the one
hand, and the Investor, on the other hand, agree to indemnify the other against
and hold the other harmless from any and all liabilities to any person claiming
brokerage commissions or finder’s fees on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.

Section 12.07         Confidentiality.  If for any reason the transactions
contemplated by this Agreement are not consummated, each of the parties hereto
shall keep confidential any information obtained from any other party (except
information publicly available or in such party’s domain prior to the date
hereof, and except as required by court order) and shall promptly return to the
other parties all schedules, documents, instruments, work papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Standby Equity
Distribution Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.

 
COMPANY:
 
Power of the Dream Ventures, Inc.
       
By:
/s/ Viktor Rozsnyay
 
Name:
Viktor Rozsnyay
 
Title:
President & CEO
             
INVESTOR:
 
YA Global Investments, L.P.
       
By:
Yorkville Advisors, LLC
 
Its:
Investment Manager
       
By:
/s/ Mark Angelo
 
Name:
Mark Angelo
 
Title:
Portfolio Manager

 
 

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EXHIBIT A

FORM OF WARRANT
 
[Omitted]

 
 

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EXHIBIT B

ADVANCE NOTICE

POWER OF THE DREAM VENTURES, INC.

The undersigned, _______________________ hereby certifies, with respect to the
sale of shares of Common Stock of POWER OF THE DREAM VENTURES, INC. (the
“Company”) issuable in connection with this Advance Notice, delivered pursuant
to the Standby Equity Distribution Agreement (the “Agreement”), as follows:

1.              The undersigned is the duly elected ______________ of the
Company.

2.              There are no fundamental changes to the information set forth in
the Registration Statement which would require the Company to file a post
effective amendment to the Registration Statement.

3.              The Company has performed in all material respects all covenants
and agreements to be performed by the Company and has complied in all material
respects with all obligations and conditions contained in this Agreement on or
prior to the Advance Notice Date, and shall continue to perform in all material
respects all covenants and agreements to be performed by the Company through the
applicable Advance Date.  All conditions to the delivery of this Advance Notice
are satisfied as of the date hereof.

4.              The undersigned hereby represents, warrants and covenants that
it has made all filings (“SEC Filings”) required to be made by it pursuant to
applicable securities laws (including, without limitation, all filings required
under the Securities Exchange Act of 1934, which include Forms 10-Q or 10-QSB,
10-K or 10-KSB, 8-K, etc.).  All SEC Filings and other public disclosures made
by the Company, including, without limitation, all press releases, analysts
meetings and calls, etc. (collectively, the “Public Disclosures”), have been
reviewed and approved for release by the Company’s attorneys and, if containing
financial information, the Company’s independent certified public
accountants.  None of the Company’s Public Disclosures 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.

5.              The Advance requested is _____________________.

The undersigned has executed this Certificate this ____ day of
_________________.

 
POWER OF THE DREAM VENTURES, INC.
             
By:
   
Name:
   
Title:
 

 
Please deliver this advance notice by mail or facsimile to:

YA Global Investments, L.P.
101 Hudson Street, Suite 3700, Jersey City, NJ 07302
Fax:  (201) 946-0851
 
 
 

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SCHEDULE 2.4

POWER OF THE DREAM VENTURES, INC.

The undersigned hereby agrees that for a period commencing on _________ ___,
2008 and expiring upon termination of this Standby Equity Distribution Agreement
(the “Lock-up Period”), he, she or it will not, directly or indirectly, without
the prior written consent of the Investor, issue, offer, agree or offer to sell,
sell, grant an option for the purchase or sale of, transfer, pledge, assign,
hypothecate, distribute or otherwise encumber or dispose of any securities of
the Company, including common stock or options, rights, warrants or other
securities underlying, convertible into, exchangeable or exercisable for or
evidencing any right to purchase or subscribe for any common stock (whether or
not beneficially owned by the undersigned), or any beneficial interest therein
(collectively, the “Securities”) except in accordance with the volume
limitations set forth in Rule 144(e) of the General Rules and Regulations under
the Securities Act of 1933, as amended.

In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
transfer agent of the Company’s securities with respect to any of the Securities
registered in the name of the undersigned or beneficially owned by the
undersigned, and the undersigned hereby confirms the undersigned’s investment in
the Company.

Dated: _______________, 2008

 
Signature
               
Name:
   
Address:
   
City, State, Zip Code:
                     
Print Social Security Number
 
or Taxpayer I.D. Number

 
 

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