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AMENDED AND RESTATED STANDBY EQUITY DISTRIBUTION AGREEMENT
 
THIS AMENDED AND RESTATED STANDBY EQUITY DISTRIBUTION AGREEMENT dated as of June
13, 2012 (this “Agreement”) is between YA GLOBAL MASTER SPV LTD., a Cayman
Islands exempt limited partnership (the “Investor”), and AMERICAN POWER CORP., a
corporation organized and existing under the laws of the State of Nevada (the
“Company”).
 
WHEREAS, the parties entered into a Standby Equity Distribution Agreement dated
as of February 17, 2012 (the “Original Agreement”);
 
WHEREAS, the parties have agreed to amend and restate the Original Agreement as
set forth herein;
 
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 up to
$4,000,000 of the Company’s common stock, par value $0.001 per share (the
“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
rules and 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 transactions to be made
hereunder.
 
NOW, THEREFORE, the parties hereto agree as follows:
 
ARTICLE I
CERTAIN DEFINITIONS
 
1.1 “Advance” shall mean the portion of the Commitment Amount requested by the
Company in the Advance Notice.
 
1.2 “Advance Date” shall mean the 1st Trading Day after expiration of the
applicable Pricing Period for each Advance.
 
1.3 “Advance Notice” shall mean a written notice in the form of Exhibit A
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.
 
1.4 “Advance Notice Date” shall mean each date the Company delivers (in
accordance with Section 2.01(c) 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.
 
1.5 “Affiliate” shall have the meaning set forth in Section 3.08.
 
1.6 “By-laws” shall have the meaning set forth in Section 4.03.
 
 
 

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1.7 “Certificate of Incorporation” shall have the meaning set forth in Section
4.03.
 
1.8 “Closing Date” shall mean the date on which a Closing occurs.
 
1.9  “Commitment Amount” shall mean the aggregate amount of up to $4,000,000
which the Investor has agreed to provide to the Company in order to purchase the
Shares pursuant to the terms and conditions of this Agreement.
 
1.10 “Commitment Fee” shall have the meaning set forth in Section 12.04(b).
 
1.11  “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.
 
1.12 “Commitment Shares” shall have the meaning set forth in Section 12.04(b).
 
1.13 “Common Stock” shall have the meaning set forth in the recitals of this
Agreement.
 
1.14 “Company Indemnitees” shall have the meaning set forth in Section 5.02.
 
1.15 “Company Periodic Report Date” shall have the meaning set forth in Section
6.16.
 
1.16 “Condition Satisfaction Date” shall have the meaning set forth in Section
7.01.
 
1.17 “Consolidation Event” shall have the meaning set forth in Section 6.08.
 
1.18 “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).
 
1.19 “Effective Date” shall mean the date on which the SEC first declares
effective a Registration Statement registering the resale of the Shares.
 
1.20 “Environmental Laws” shall have the meaning set forth in Section 4.10.
 
1.21 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
 
1.22 “Indemnified Liabilities” shall have the meaning set forth in Section 5.01.
 
1.23 “Investor Indemnitees” shall have the meaning set forth in Section 5.01.
 
1.24 “Market Price” shall mean the average of the two lowest daily VWAPs of the
Common Stock during the relevant Pricing Period, each of which is greater than
or equal to the Minimum Acceptable Price.
 
1.25 “Material Adverse Effect” shall mean any condition, circumstance, or
situation that may result in, or would 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.
 
 
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1.26 “Maximum Advance Amount” shall be the greater of (1) $250,000 and (2) the
average of the Daily Value Traded for each of the 10 Trading Days prior to the
Advance Notice Date where Daily Value Traded is the product obtained by
multiplying the daily trading volume for such day be the VWAP for such day.
 
1.27 “Minimum Acceptable Price” or “MAP” shall be 90% of the VWAP on the Trading
Day prior to the Advance Notice Date.
 
1.28 “Ownership Limitation” shall have the meaning set forth in Section 2.01(a).
 
1.29 “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.
 
1.30 “Plan of Distribution” shall have the meaning set forth in Section 6.01(a).
 
1.31 “Pricing Period” shall mean the 5 consecutive Trading Days after the
Advance Notice Date, subject to any reduction pursuant to Section 2.01(b)(i).
 
1.32 “Principal Market” shall mean the New York Stock Exchange, the Nasdaq
Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the
OTC Bulletin Board, or the NYSE Euronext, whichever is at the time the principal
trading exchange or market for the Common Stock.
 
1.33 “Purchase Price” shall be set at 95% of the Market Price during the Pricing
Period.
 
1.34 “Registrable Securities” shall mean (i) the Shares, and (ii) any securities
issued or issuable with respect to any of the foregoing by way of exchange,
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.  As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (a) the Registration
Statement has been declared effective by the SEC and such Registrable Securities
have been disposed of pursuant to the Registration Statement, (b) such
Registrable Securities have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities Act (“Rule 144”) are met, or (c) in the opinion of counsel to the
Company such Registrable Securities may permanently be sold without registration
or without any time, volume or manner limitations pursuant to Rule 144.
 
1.35 “Registration Limitation” shall have the meaning set forth in Section
2.01(a)
 
1.36 “Registration Period” shall have the meaning set forth in Section 6.01(b).
 
 
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1.37 “Registration Statement” shall mean a registration statement on Form S-1 or
Form S-3 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 registration of the resale by the Investor of
the Registrable Securities under the Securities Act.
 
1.38 “Regulation D” shall have the meaning set forth in the recitals of this
Agreement.
 
1.39 “SEC” shall have the meaning set forth in the recitals of this Agreement.
 
1.40 “SEC Documents” shall have the meaning set forth in Section 4.05.
 
1.41 “Securities Act” shall have the meaning set forth in the recitals of this
Agreement.
 
1.42 “Settlement Document” shall have the meaning set forth in Section 2.02(a).
 
1.43 “Shares” shall mean the shares of Common Stock to be issued from time to
time hereunder pursuant to Advances and the Commitment Shares.
 
1.44 “Trading Day” shall mean any day during which the Principal Market shall be
open for business.
 
1.45 “VWAP” means, for any Trading Day, the daily volume weighted average price
of the Common Stock for such date on the Principal Market as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to
4:00 p.m. (New York City time)).
 
ARTICLE II
ADVANCES
 
2.1 Advances; Mechanics. 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 Common Stock on the
following terms:
 
(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 7.01;
provided, however, that (i) the amount for each Advance as designated by the
Company in the applicable Advance Notice shall not be more than the Maximum
Advance Amount, (ii) the aggregate amount of the Advances  pursuant to this
Agreement shall not exceed the Commitment Amount, (iii) in no event shall the
number of shares of Common Stock issuable to the Investor pursuant to an Advance
cause the aggregate number of shares of Common Stock beneficially owned (as
calculated pursuant to Section 13(d) of the Exchange Act) by the Investor and
its affiliates to exceed 4.99% of the then outstanding Common Stock (the
“Ownership Limitation”) and (iv) under no circumstances shall the aggregate
offering price or number of Shares, as the case may be, exceed the aggregate
offering price or number of Shares available for issuance under the Registration
Statement (the “Registration Limitation”).  Notwithstanding any other provision
in this Agreement, the Company and the Investor acknowledge and agree that upon
the Investor’s receipt of a valid Advance Notice, the parties shall be deemed to
have entered into an unconditional contract binding on both parties for the
purchase and sale of the specific Shares covered by such Advance Notice for the
Purchase Price and in accordance with the terms of this Agreement and the
Investor may sell shares that it is unconditionally obligated to purchase under
such Advance Notice prior to taking possession of such shares.
 
 
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(b) Minimum Acceptable Price.
 
(i) With respect to each Advance Notice (A) the amount of the Advance set forth
in such Advance Notice shall automatically be reduced by 20% for each Trading
Day during the Pricing Period that the VWAP of the Common Stock is below the MAP
in effect on such Trading Day (each such day, an “Excluded Day”), and (B) each
Excluded Day shall be excluded from the Pricing Period for purposes of
determining the Market Price.
 
(ii) The number of Shares to be issued and delivered to the Investor at each
Closing (in accordance with Section 2.02 of this Agreement) with respect to an
Advance Notice with a MAP shall be determined based on the Advance Notice amount
as reduced pursuant to Section 2.01(b)(i)(A) above, provided however, with
respect to each Excluded Day the Investor shall purchase and the Company shall
sell Shares (in a total amount for each Excluded Day not to exceed 20% of the
amount of the Advance set forth in such Advance Notice) in an amount equal to
the number of Shares sold by the Investor on such Excluded Day at a price per
share equal to the MAP in effect on such Excluded Day (without any further
discount).
 
(c) Date of Delivery of Advance Notice.  Advance Notices shall be delivered in
accordance with the instructions set forth on the bottom of Exhibit A.  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.
 
(d) Ownership Limitation; Commitment Amount.  In connection with each Advance
Notice delivered by the Company, any portion of an Advance that would (i) cause
the Investor to exceed the Ownership Limitation or (ii) cause the aggregate
amount of Advances to exceed the Commitment Amount shall automatically be
withdrawn.
 
(e) Registration Limitation.  In connection with each Advance Notice, any
portion of an Advance that would exceed the Registration Limitation shall
automatically be deemed to be withdrawn by the Company with no further action
required by the Company.
 
2.2 Closings.  Each Closing shall take place as soon as practicable after each
Advance Date in accordance with the procedures set forth below.  In connection
with each Closing the Company and the Investor shall fulfill each of its
obligations as set forth below:
 
 
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(a) On each Advance Date, the Investor shall deliver to the Company a written
document (each a “Settlement Document”) confirming the amount of the Advance
(taking into account any adjustments pursuant to Section 2.01), the Purchase
Price, the number of shares of Common Stock to be issued and subscribed for
(which in no event will be greater than the Ownership Limitation or any other
limitation set forth in this Agreement), and a report by Bloomberg, LP
indicating the VWAP for each of the Trading Days during the Pricing Period, in
each case taking into account the terms and conditions of this Agreement.  The
Settlement Document shall be in the form attached hereto as Exhibit B.
 
(b) Promptly after receipt of the Settlement Document with respect to each
Advance (and, in any event, not later than two Trading Days after such receipt),
the Company will, or will cause its transfer agent to, transfer 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 (as may be reduced
according to the terms of this Agreement, divided by (y) the Purchase Price, by
such means of delivery as may be mutually agreed upon by the parties hereto
against payment of the Purchase Price in same day funds to an account designated
by the Company.  No fractional shares shall be issued, and any fractional
amounts shall be rounded to the next higher whole number of shares.  All
certificates evidencing shares of Common Stock delivered pursuant hereto shall
bear the following legend:
 
THIS COMMON STOCK NOTE HAS BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
 
(c) On or prior to the Closing 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.
 
2.3 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 2.02, the Company agrees that in addition to
and in no way limiting the rights and obligations set forth in Article V hereto
and in addition to any other remedy to which the Investor is entitled at law or
in equity, including, without limitation, specific performance, it will hold the
Investor harmless against any loss, claim, damage, or expense (including
reasonable legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company and acknowledges that irreparable
damage would occur in the event of any such default.  It is accordingly agreed
that the Investor shall be entitled to an injunction or injunctions to prevent
such breaches of this Agreement and to specifically enforce, without the posting
of a bond or other security, the terms and provisions of this Agreement.
 
 
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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:
 
3.1 Organization and Authorization.  The Investor is duly organized, validly
existing and in good standing under the laws of the Cayman Islands and has all
requisite power and authority to purchase and hold the Shares.  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 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.
 
3.2 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.
 
3.3 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 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 the Company’s
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
 
3.4 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.
 
3.5 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.
 
 
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3.6 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.
 
3.7 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.
 
3.8 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).
 
3.9 Trading Activities.  The Investor’s trading activities with respect to the
Company’s 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 Common Stock is listed or traded.  Neither the
Investor nor its affiliates, officers, directors, partners, and employees
(collectively, the “Investor Affiliates”) has an open short position in the
Common Stock, the Investor agrees that it shall not, and that it will cause its
Investor Affiliates not to, engage in any short sales of the Common Stock.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
Except as stated below, on the disclosure schedules attached hereto or in the
SEC Documents, the Company hereby represents and warrants to, the Investor that
the following are true and correct as of the date hereof:
 
4.1 Organization and Qualification.  The Company is duly incorporated, validly
existing and in good standing under the laws of the State of Nevada 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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4.2 Authorization, Enforcement, Compliance with Other Instruments.  (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement and any related agreements, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this 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 and
any related agreements have been duly executed and delivered by the Company,
(iv) this Agreement and assuming the execution and delivery thereof and
acceptance by the Investor, 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.
 
4.3 Capitalization.  The authorized capital stock of the Company consists of
500,000,000 shares of Common Stock $0.001 par value per share a, of which
96,429,359 shares of Common Stock are issued and outstanding, as of the date
hereof.  All of such outstanding shares have been validly issued and are fully
paid and non-assessable.  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 contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company 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, (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 is obligated to
register the sale of any of its securities under the Securities Act (except
pursuant to this 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 or made available to the Investor true
and correct copies of the Company’s Articles of Incorporation, as amended and as
in effect on the date hereof (the “Articles 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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4.4 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 Articles 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 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 that would cause a Material Adverse Effect.  The
business of the Company and its subsidiaries is not being conducted in violation
of any material law, ordinance or regulation of any governmental entity.  Except
as specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws and as required by the
rules of the Principal Market, 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 in accordance with
the terms hereof or thereof except as such consent, authorization or order has
been obtained as of the date hereof.  The Company and its subsidiaries are not
aware of any fact or circumstance which is reasonably expected to give rise to
any of the foregoing.
 
4.5 SEC Documents; Financial Statements. The Common Stock is registered pursuant
to Section 12(g) of the Exchange Act and the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC under the Exchange Act for the two years preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) (all of the foregoing filed within the two years preceding 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.  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.  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 Investor 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, not
misleading.
 
 
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4.6 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 Articles 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 would cause a Material Adverse Effect.
 
4.7 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.
 
4.8 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 is not aware of any facts or circumstances which
might give rise to any of the foregoing.
 
4.9 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, in each case which is reasonably
likely to cause a Material Adverse Effect.
 
4.10 Environmental Laws.  The Company and its subsidiaries (i) are in material
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 material permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance with all
material terms and conditions of any such permit, license or approval.
 
 
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4.11 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.
 
4.12 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 for similarly situated companies in the businesses in which the
Company and its subsidiaries are engaged.  The Company has not been refused any
insurance coverage sought or applied for and the Company does not have 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.
 
4.13 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.
 
4.14 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.
 
4.15 No Material Adverse Breaches, etc.  Except as set forth in the SEC
Documents, the Company is not 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 would in the future have a Material
Adverse Effect.
 
4.16 Absence of Litigation.  Except as set forth in the SEC Documents or as
disclosed to the Investor, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect.
 
4.17 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.
 
 
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4.18 Tax Status.  Except as disclosed in the SEC Documents or except as would
not reasonably be expected to have a Material Adverse Effect, the Company and
each of its subsidiaries has made or filed all federal and state income and all
other material tax returns, reports and declarations required by any
jurisdiction to which it is subject 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).  The
Company 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.
 
4.19 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.
 
4.20 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.
 
4.21 Use of Proceeds.  The Company shall use the net proceeds from this offering
for working capital and other general corporate purposes.
 
4.22 Dilution.  The Company is aware and acknowledges that issuance of shares of
Common Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common Stock.
 
4.23 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 Shares
hereunder.  The Company is aware and acknowledges that it may not be able to
request Advances under this Agreement if the Registration Statement is not
declared effective 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 or shares issued pursuant to Section 12.04
hereunder or shall be earned on the date hereof and not refundable or returnable
under any circumstances.
 
 
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ARTICLE V
INDEMNIFICATION
 
The Investor and the Company represent to the other the following with respect
to itself:
 
5.1 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) and
each person who controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act  (collectively, the “Investor
Indemnitees”) 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 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 untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Shares as originally filed or in any
amendment thereof, or in any related prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Investor specifically for inclusion therein;
(b) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement or any other certificate, instrument or document
contemplated hereby or thereby; (c) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby; and (d) 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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5.2 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 untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Shares as originally filed or in any
amendment thereof, or in any related prospectus, or in any amendment thereof or
supplement thereto, or arising out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Investor will only be liable for written information relating to the
Investor furnished to the Company by or on behalf of the Investor specifically
for inclusion in the documents referred to in the foregoing indemnity, and will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Investor by or on
behalf of the Company specifically for inclusion therein; (b) any
misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement or any instrument or document contemplated hereby or
thereby executed by the Investor; (c) any breach of any covenant, agreement or
obligation of the Investor(s) contained in this Agreement or any other
certificate, instrument or document contemplated hereby or thereby executed by
the Investor; or (d) any cause of action, suit or claim brought or made against
such Company Indemnitee not arising out of any action or inaction of a Company
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 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.
 
5.3 Notice of Claim.  Promptly after receipt by an Investor Indemnitee or
Company Indemnitee under this Article V of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
an Indemnified Liability, such Investor Indemnitee or Company Indemnitee shall,
if an Indemnified Liability 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; but the failure to so notify the
indemnifying party will not relieve it of liability under this Article V unless
and to the extent the indemnifying party did not otherwise learn of such action
and such failure result in the forfeiture by the indemnifying party of
substantial rights and defenses and will not, in any event, relieve the
indemnifying party from any obligations provided in this Article V.  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 Investor Indemnitee or
Company Indemnitee, as the case may be; provided, however, that an Investor
Indemnitee or Company Indemnitee shall have the right to retain its own counsel
with the reasonable fees and expenses of not more than one counsel for such
Investor Indemnitee or Company Indemnitee 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 Investor Indemnitee or Company Indemnitee
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Investor Indemnitee or Company Indemnitee and
any other party represented by such counsel in such proceeding. The Investor
Indemnitee or Company Indemnitee 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 Investor Indemnitee or Company
Indemnitee which relates to such action or claim.  The indemnifying party shall
keep the Investor Indemnitee or Company Indemnitee 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 Investor Indemnitee or Company Indemnitee, 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 Investor Indemnitee or Company Indemnitee 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 Investor Indemnitee or Company Indemnitee with respect to all
third parties, firms or corporations relating to the matter for which
indemnification has been made.  The indemnification required by this Article V
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received.
 
 
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5.4 Contribution.  In the event that the indemnity provided in Section 5.01 or
Section 5.02 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Investor severally agree to contribute
to the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or defending
the same) (collectively “Losses”) to which the Company and the Investor may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and by the Investor on the other from
transactions contemplated by this Agreement. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Investor severally shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Investor on the other in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations.  Benefits received by the Company shall be
deemed to be equal to the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by it, and
benefits received by the Investor shall be deemed to be equal to the total
discounts received by the Investor.  Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one hand or
the Investor on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.  The Company and the Investor agree that it would
not be just and equitable if contribution were determined by pro rata allocation
or any other method of allocation which does not take account of the equitable
considerations referred to above.  The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Article V shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.  Notwithstanding the provisions of this Section 5.04, the Investor
shall not be required to contribute any amount in excess of the amount by which
the Purchase Price for Shares actually purchased pursuant to this Agreement
exceeds the amount of any damages which the Investor has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Article V, each person who controls the
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and each director, officer, employee and agent of the Investor
shall have the same rights to contribution as the Investor, and each person who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this Section 5.04.
 
 
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5.5 Remedies.  The remedies provided for in this Article V are not exclusive and
shall not limit any right or remedies which may otherwise be available to any
indemnified person at law or in equity.  The obligations of the parties to
indemnify or make contribution under this Article V Article Vshall survive
expiration or termination of this Agreement.
 
ARTICLE VI
COVENANTS OF THE COMPANY
 
6.1 Registration Statement.
 
(a) Filing of a Registration Statement.  The Company shall prepare and file with
the SEC a Registration Statement or multiple Registration Statements for the
resale by the Investor of the Registrable Securities.  The Company in its sole
discretion may chose when to file such Registration Statements; provided,
however, that the Company shall not have the ability to request any Advances
until the effectiveness of a Registration Statement.  Each Registration
Statement shall contain the “Plan of Distribution” section in substantially the
form attached hereto as Exhibit D.
 
(b) Maintaining a Registration Statement.  The Company shall cause any
Registration Statement that has been declared effective to remain effective at
all times until all Registrable Securities contained in such Registration
Statement cease to be Registrable Securities (the “Registration Period”).  Each
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.
 
(c) Filing Procedures.  Not less than three business days prior to the filing of
a Registration Statement and not less than one business day prior to the filing
of any related amendments and supplements to any Registration Statement (except
for any amendments or supplements caused by the filing of any annual reports on
Form 10-K, quarterly reports on Form 10-Q and periodic reports on Form 8-K), the
Company shall furnish to the Investor copies of all such documents proposed to
be filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the reasonable and prompt review
of the Investor.  The Investor shall furnish comments on a Registration
Statement or an amendment or supplement to a Registration Statement to the
Company within 24 hours of the receipt thereof.
 
 
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(d) Delivery of Final Documents.  The Company shall furnish to the Investor
without charge, (i) at least one copy of such Registration Statement as declared
effective by the SEC and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, all
exhibits and each preliminary prospectus, (ii) at the request of the Investor,
10 copies of the final prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies as the
Investor may reasonably request) and (iii) such other documents as the Investor
may reasonably request from time to time in order to facilitate the disposition
of the Registrable Securities owned by the Investor.
 
(e) Amendments and Other Filings.  The Company shall (i) prepare and file with
the SEC such amendments (including post-effective amendments) and supplements to
a Registration Statement and the related prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and prepare and file with the SEC such additional Registration Statements in
order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related prospectus to be amended or supplemented by
any required prospectus supplement (subject to the terms of this Agreement), and
as so supplemented or amended to be filed pursuant to Rule 424; (iii) provide
the Investor copies of all correspondence from and to the SEC relating to a
Registration Statement (provided that the Company may excise any information
contained therein which would constitute material non-public information, and
(iv) comply with the provisions of the Securities 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 seller or sellers thereof as set forth in such Registration
Statement.  In the case of amendments and supplements to a Registration
Statement which are required to be filed pursuant to this Agreement (including
pursuant to this Section 6.01(e)) by reason of the Company’s filing a report on
Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange Act,
the Company shall incorporate such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC either on the day on which the Exchange Act report is filed which created
the requirement for the Company to amend or supplement the Registration
Statement, if feasible, or otherwise promptly thereafter.
 
(f) Blue-Sky.  The Company shall use its reasonable best efforts to assist
Investor in complying with the securities or “blue sky” laws of the
jurisdictions in the United States as the Investor reasonably requests in
connection with the resale of the Shares covered by a Registration Statement;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (w) make any change to its certificate of
incorporation or by-laws, (x) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 6.01(f), (y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction.  The Company
shall promptly notify the Investor of the receipt by the Company of any
notification with respect to the initiation or threat of any proceeding by a
securities regulator in any of the above jurisdictions related to the resale of
Shares.
 
 
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6.2 Listing of Common Stock.  The Company shall use its commercially reasonable
efforts to maintain the Common Stock’s authorization for quotation on the
Principal Market and shall notify the Investor promptly if the Common Stock
shall cease to be authorized for listing on the Principal Market.
 
6.3 Opinion of Counsel.  The Company shall cause the Investor to have received
an opinion from counsel to the Company in the form attached hereto as Exhibit C
prior to the first Advance Notice.
 
6.4 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.
 
6.5 Transfer Agent Instructions.  Upon effectiveness of the Registration
Statement the Company shall deliver a legal opinion to its transfer agent to the
effect that the Investor may transfer the shares of Common Stock subject to the
Registration Statement free of restrictive legend.
 
6.6 Corporate Existence.  The Company will take all steps necessary to preserve
and continue the corporate existence of the Company.
 
6.7 Notice of Certain Events Affecting Registration; Suspension of Right to Make
an Advance.  The Company will immediately notify the Investor, and confirm in
writing, 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, or of the necessity to amend the Registration Statement or
supplement a related prospectus to comply with the Securities Act or any other
law; 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, and the Investor shall not sell any Shares pursuant to a
Registration Statement, during the continuation of any of the foregoing events.
 
 
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6.8 Consolidation; Merger.  If an Advance Notice has been delivered to the
Investor and the transaction contemplated in such Advance Notice has not yet
been closed in accordance with Section 2.02 hereof, then the Company shall not
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”).
 
6.9 Issuance of the Company’s Common Stock.  The sale of the shares of Common
Stock hereunder shall be made in accordance with the provisions and requirements
of Regulation D and any applicable state securities law.
 
6.10 Market Activities.  The Company will not, directly or indirectly, 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 under Regulation M of the Exchange Act.
 
6.11 Opinion 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 such shares free of restrictive legends, or to
remove legends from such shares.
 
6.12 Expenses.  The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay all expenses
incident to the performance of its obligations hereunder, including but not
limited to (i) the preparation, printing and filing of the Registration
Statement and each amendment and supplement thereto, of each prospectus and of
each amendment and supplement thereto; (ii) the preparation, issuance and
delivery of any Shares issued pursuant to this Agreement, (iii) all fees and
disbursements of the Company’s counsel, accountants and other advisors, (iv) the
qualification of the Shares under securities laws in accordance with the
provisions of this Agreement, including filing fees in connection therewith, (v)
the printing and delivery of copies of any prospectus and any amendments or
supplements thereto, (vi) the fees and expenses incurred in connection with the
listing or qualification of the Shares for trading on the Principal Market, or
(vii) filing fees of the SEC and the Principal Market.
 
6.13 Sales.  Without the written consent of the Investor, the Company will not,
directly or indirectly, offer to sell, sell, contract to sell, grant any option
to sell or otherwise dispose of any shares of Common Stock (other than the
Shares offered pursuant to the provisions of this Agreement) or securities
convertible into or exchangeable for Common Stock, warrants or any rights to
purchase or acquire, Common Stock during the period beginning on the 5th Trading
Day immediately prior to an Advance Notice Date and ending on the 5th Trading
Day immediately following the corresponding Advance Date.
 
 
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6.14 Current Report.  Promptly after the date hereof (and prior to the Company
delivering an Advance Notice to the Investor hereunder), the Company shall file
with the SEC a report on Form 8-K or such other appropriate form as determined
by counsel to the Company, relating to the transactions contemplated by this
Agreement and shall provide the Investor with a reasonable opportunity to review
such report prior to its filing.
 
6.15 Compliance With Laws.  The Company will not, directly or indirectly, 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 or which caused or resulted in, or which
would in the future reasonably be expected to cause or result in, stabilization
or manipulation of the price of any security of the Company.
 
6.16 Black-out Periods.  Notwithstanding any other provision of this Agreement,
the Company shall not deliver an Advance Notice during any Company black-out
periods or during any other period in which the Company is, or could be deemed
to be, in possession of material non-public information.
 
ARTICLE VII
CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING
 
7.1 Conditions Precedent to the Right of the Company to Deliver an Advance
Notice.  The right of the Company to deliver an Advance Notice and the
obligations of the Investor hereunder with respect to an Advance is subject to
the satisfaction by the Company, on  each Advance Notice Date and Advance Date
(a “Condition Satisfaction Date”), of each of the following conditions:
 
(a) No Material Adverse Effect.  No Material Averse Effect shall have occurred
and be continuing.
 
(b) 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 Registration Statement does 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 does 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 and as of the date which they were made,
not misleading.  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.
 
 
21

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(c) 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.
 
(d) 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.
 
(e)  Consecutive Advance Notices.  Except with respect to the first Advance
Notice, the Company shall have delivered all Shares relating to all prior
Advances.
 
ARTICLE VIII
NON-DISCLOSURE OF NON-PUBLIC INFORMATION
 
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.
 
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 Count, 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
 
10.1 Assignment.  Neither this Agreement nor any rights of the parties hereto
may be assigned to any other Person.
 
10.2 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 24-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.
 
 
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(b) The Company may terminate this Agreement effective upon fifteen Trading
Days’ prior written notice to the Investor; provided that (i) there are no
Advances outstanding, 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 or withdraw the Registration
Statement or otherwise voluntarily cause the Registration Statement to become
ineffective, or voluntarily delist the Common Stock from the Principal Markets.
 
(c) The obligation of the Investor to make an Advance to the Company pursuant to
an Advance Notice and this Agreement shall terminate  in the event that (i) the
Company delivers an Advance Notice to the Investor without satisfying the
conditions set forth in Section 7.01, (ii) 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 (iii) 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 with respect to (ii) and (iii), 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.
 
(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 Article VArticle V 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 2.01(b) hereof, shall be:
 
 
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If to the Company, to:
American Power Corp.
 
16 Market Square Centre
 
1400 16th Street, Suite 400
 
Denver, CO 80202
 
Attention: Johannes Petersen
 
Telephone: (720) 932-8389
 
Facsimile: (720) 932-8189
   
With a copy to:
Davis Graham & Stubbs LLP
 
1550 17th Street, Suite 500
 
Denver, CO 80202
 
Attention:  Michelle Shepston
 
Telephone: (303)892-7344
 
Facsimile: (303) 893-1379
   
If to the Investor(s):
YA Global Master SPV Ltd.
 
101 Hudson Street –Suite 3700
 
Jersey City, NJ 07302
 
Attention: Mark Angelo
 
                   Portfolio Manager
 
Telephone: (201) 985-8300
 
Facsimile: (201) 985-8266
   
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
 
12.1 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.
 
12.2 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.
 
 
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12.3 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.
 
12.4  Fees.
 
(a) Structuring and Due Diligence 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 the Company agrees to pay a
structuring fee of $10,000 to Yorkville Advisors, LLC of which $5,000 has been
received.
 
(b) Commitment Fee.  On the date hereof, the Company shall pay to the Investor a
commitment fee (the “Commitment Fee”) of $120,000.  The Commitment Fee may be
paid in cash, in shares of Common Stock or some combination thereof.  If any
portion of the Commitment Fee is to be paid in shares of Common Stock (such
shares, the “Commitment Shares”), the Company will issue to the Investor shares
of Common Stock within five days of the date hereof in an amount equal to the
portion of the Commitment Fee to be paid in shares of Common Stock divided by
the average of the VWAPs for each of the 5 Trading Days immediately prior to the
date hereof.
 
(c) Commitment Shares. Commitment Shares shall be deemed fully earned as of the
date they are issued regardless of the amount of Advances, if any, that the
Company is able to, or chooses to, request hereunder.  The Commitment 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.
 
12.5 Brokerage.  Each of the parties hereto represents that it has had no
dealings in connection with this transaction with any finder or broker 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.
 
[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:
 
American Power Corp.
        By:   
/s/ Alvaro
Valencia                                                                
  Name: 
Alvaro Valencia
  Title:
Chief Executive Officer
             
INVESTOR:
 
YA Global  Master SPV Ltd.
        By:     
Yorkville Advisors, LLC
  Its:
Investment Manager
        By: 
/s/ Gerald Eicke                                                                
  Name:
Gerald Eicke
  Title:  
Managing Member
     

 
 
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EXHIBIT A
ADVANCE NOTICE
 
AMERICAN POWER CORP.
 
The undersigned, _______________________ hereby certifies, with respect to the
sale of shares of Common Stock of American Power Corp., (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, 10-K, 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 _____________________.
 
6.           The Minimum Acceptable Price with respect to this Advance Notice is
_________.
 
7.           4.99% of the outstanding Common Stock of the Company as of the date
hereof is  ___________.
 
 
 

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

  AMERICAN POWER CORP.       By:    Name:   Title:        

 
 
 
 
 
 

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EXHIBIT B
FORM OF SETTLEMENT DOCUMENT
 
VIA FACSIMILE & EMAIL

AMERICAN POWER CORP.
Attn:
Fax:
Email:
 

 
Below please find the settlement information with respect to the Advance Notice
Date of:
       
1.
(a) Amount of Advance Notice:
 $
   
(b) Amount of Advance Notice (after taking into account any adjustments pursuant
to Section 2.01):
 $
     
2.
Market Price:
 $
     
3.
Purchase Price (Market Price X 95%) per share:
 $
     
4.
Number of Shares due to Investor:
 

The Investor represents and warrants that it has sold or will sell the Shares
due to the Investor pursuant to the Registration Statement on Form S-1 (File No.
333-_______).  The Investor understands that if for any reason the shares are
not sold pursuant to the Registration Statement, the unsold Shares must be
returned to the Company and reissued in certificated form with the restrictive
legend set forth in Section 2.02(b).
 
Please issue the Shares due to the Investor to the following account:
 
INVESTOR’S DTC PARTICIPANT #:
 
ACCOUNT NAME:
ACCOUNT NUMBER:
ADDRESS:
CITY:
COUNTRY:                                              
CONTACT PERSON:
NUMBER AND/OR EMAIL:
 
 
 

  Sincerely,       YA GLOBAL MASTER SPV, LTD.      
__________________________________   By:           Yorkville Advisors, LLC  
Its:           Investment Manager  
Name:

 
Approved By American Power Corp.:

__________________________________
Name:
 
 
 

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EXHIBIT C
FORM OF OPINION

The Company is a corporation validly existing and in good standing under the
laws of the State of Nevada, with corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Company’s public filings, including reports filed or furnished by the Company
under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and
the rules and regulations of the Commission thereunder (the “Public Filings”)
and to enter into and perform its obligations under the Standby Equity
Distribution Agreement.

2.           The Company has the requisite corporate power and authority to
enter into and perform its obligations under the Standby Equity Distribution
Agreement and to issue the Common Stock in accordance with its terms.  The
execution and delivery of the Standby Equity Distribution Agreement by the
Company and the consummation by it of the transactions contemplated thereby have
been duly authorized by all necessary corporate action, and no further consent
or authorization of the Company or its Board of Directors or stockholders is
required.  The Standby Equity Distribution Agreement has been duly executed and
delivered, and the Standby Equity Distribution Agreement constitutes the valid
and binding obligation of the Company enforceable against the Company in
accordance with its 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.

3.           The Common Stock are duly authorized and, upon issuance in
accordance with the terms of the Standby Equity Distribution Agreement, will be
duly and validly issued, fully paid and non-assessable, free of any liens,
encumbrances and preemptive or similar rights contained in the Company’s
Articles of Incorporation or By-laws or, to our knowledge, in any agreement
filed by the Company as an exhibit to the Company’s Public Filings.

4.           The execution, delivery and performance of the Standby Equity
Distribution Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby (other than performance by the Company of its
obligations under the indemnification sections of such agreements, as to which
no opinion need be rendered) will not (i) result in a violation of the Company’s
Articles of Incorporation or By-Laws; (ii) conflict with, or constitute a
default (or an event that 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 or, indenture filed by the
Company as an exhibit to the Company's Public Filings; or (iii) to our
knowledge, result in a violation of any federal or Nevada law, rule or
regulation, order, judgment or decree applicable to the Company or by which any
property or asset of the Company is bound or affected.

5.           Based upon the representations, warranties and covenants contained
in the Transaction Documents, the Common Stock may be issued to Investor without
registration under the Securities Act of 1933, as amended.
 
 
 

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6.           To our knowledge and other then as set forth in the Public Filings,
there are no legal or governmental proceedings pending to which the Company is a
party or of which any property or assets of the Company is subject which is
required to be disclosed in any Public Filings.
 
 
 

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EXHIBIT D
PLAN OF DISTRIBUTION

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

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

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

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

 
●
 
privately negotiated transactions;

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

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

 
●
 
a combination of any such methods of sale; or

 
●
 
any other method permitted pursuant to applicable law.

 
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”), if available, rather
than under this prospectus.
 
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.
 
 
 

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In connection with the sale of the common stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume.  The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
 
The Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.  Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).
 
Because Selling Stockholders may be deemed to be “underwriters” within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder.  In addition,
any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than under
this prospectus.  There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholders.
 
We have agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule 144
under the Securities Act or any other rule of similar effect or (ii) all of the
shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect.  The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
 
Expenses, Indemnification
 
We will not receive any of the proceeds from the sale of the shares of common
stock sold by the Selling Stockholders and will bear all expenses related to the
registration of this offering but will not pay for any commissions, fees or
discounts, if any, We have agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
 
Supplements
 
In the event of a material change in the plan of distribution disclosed in this
prospectus, the selling stockholders will not be able to effect transactions in
the shares pursuant to this prospectus until such time as a post-effective
amendment to the registration statement is filed with, and declared effective
by, the SEC.
 
Regulation M
 
We have informed the Selling Stockholders that Regulation M promulgated under
the Securities Exchange Act of 1934 may be applicable to them with respect to
any purchase or sale of our common stock. In general, Rule 102 under Regulation
M prohibits any person connected with a distribution of our common stock from
directly or indirectly bidding for, or purchasing for any account in which it
has a beneficial interest, any of the shares or any right to purchase the
shares, for a period of one business day before and after completion of its
participation in the distribution.
 
 
 

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During any distribution period, Regulation M prohibits the Selling Stockholders
and any other persons engaged in the distribution from engaging in any
stabilizing bid or purchasing our common stock except for the purpose of
preventing or retarding a decline in the open market price of the common stock.
None of these persons may effect any stabilizing transaction to facilitate any
offering at the market.
 
We have also advised the Selling Stockholders that they should be aware that the
anti-manipulation provisions of Regulation M under the Exchange Act will apply
to purchases and sales of shares of common stock by the Selling Stockholders,
and that there are restrictions on market-making activities by persons engaged
in the distribution of the shares. Under Regulation M, the Selling Stockholders
or their agents may not bid for, purchase, or attempt to induce any person to
bid for or purchase, shares of our common stock while such Selling Stockholders
are distributing shares covered by this prospectus. Regulation M may prohibit
the Selling Stockholders from covering short sales by purchasing shares while
the distribution is taking place, despite any contractual rights to do so under
the Agreement. We have  advised the Selling Stockholders that they should
consult with their own legal counsel to ensure compliance with Regulation M.
 
 
 
 

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