ex12.htm


    
      

    

    Exhibit
12

     

    STANDBY
EQUITY DISTRIBUTION AGREEMENT

    


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

    


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

    


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

    


    NOW, THEREFORE, the parties hereto
agree as follows:

    


    Article
I. Certain Definitions

    


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

    


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

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    Article
II. Advances

    


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

    


    
      	
              Section
      2.02

            	
              Mechanics.

            


    

    


    
      	
              
              

            	
              (a)

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

            


    

    
      	
               
      

            	 


    

    
      	
            	
              (b)

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

            


    

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    
      	
            	
              (a)

            	
              Company’s Obligations
      Upon Closing.

            


    

    


    
      	
               
      

            	
              (i)

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

            


    

    


    
      	
               
      

            	
              (ii)

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

            


    

    


    
      	
               
      

            	
              (iii)

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

            


    

    


    
      	
               
      

            	
              (iv)

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

            


    

    


    
      	
               
      

            	
              (v)

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

            


    

    


    
      	
               
      

            	
              (vi)

            	
              The
      Company’s transfer agent shall be DWAC
eligible.

            


    

    


    
      
        	
              	
                (b) 

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

              


      

    

    


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

    


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

    


    Article
III. Representations and Warranties of Investor

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

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

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

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

    


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

    


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

    


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

    


    Article
IV. Representations and Warranties of the Company

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


    Section
4.17           Absence of
Litigation.  Except as set forth in the SEC Documents, there is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, the Common Stock or any of the Company’s
subsidiaries, wherein an unfavorable decision, ruling or finding would (i) have
a material adverse effect on the transactions contemplated hereby (ii) adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of the documents
contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a Material Adverse Effect.

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


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

    


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

    


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

    


    Article
V.   Indemnification

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


    Article
VI.

    Covenants
of the Company

    


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

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Section
6.06           Notice of Certain Events
Affecting Registration; Suspension of Right to Make an
Advance.  The Company will immediately notify the Investor upon
its becoming aware of the occurrence of any of the following events in respect
of a registration statement or related prospectus relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
the registration statement or related prospectus; (ii) the issuance by the SEC
or any other Federal or state governmental authority of  any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus of any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company’s reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate; and the Company
will promptly make available to the Investor any such supplement or amendment to
the related prospectus.  The Company shall not deliver to the Investor
any Advance Notice during the continuation of any of the foregoing
events.

    


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

    


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

    


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

    


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

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


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

    


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

    


    Article
VII.

    Conditions
for Advance and Conditions to Closing

    


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

    


    
      	
            	
              (a)

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

            


    

    


    
      	
            	
              (b)

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

            


    

    


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

    
      	
               
      

            	 


    

    
      	
            	
              (a)

            	
              Registration of the
      Common Stock with the SEC.  There is an effective
      Registration Statement pursuant to which the Investor is permitted to
      utilize the prospectus thereunder to resell all of the shares of Common
      Stock issuable pursuant to such Advance Notice, and the Company believes,
      in good faith, that such effectiveness will continue uninterrupted for the
      foreseeable future.  Neither the Company nor the Investor shall
      have received notice that the SEC has issued or intends to issue a stop
      order with respect to the Registration Statement or that the SEC otherwise
      has suspended or withdrawn the effectiveness of the Registration
      Statement, either temporarily or permanently, or intends or has threatened
      to do so (unless the SEC’s concerns have been addressed and the Investor
      is reasonably satisfied that the SEC no longer is considering or intends
      to take such action), and (ii) no other suspension of the use or
      withdrawal of the effectiveness of the Registration Statement or related
      prospectus shall exist.

            


    

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    
      	
            	
              (b)

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

            


    

    


    
      	
            	
              (c)

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

            


    

    


    
      	
            	
              (d)

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

            


    

    


    
      	
            	
              (e)

            	
              No
      Injunction.  No statute, rule, regulation, executive
      order, decree, ruling or injunction shall have been enacted, entered,
      promulgated or endorsed by any court or governmental authority of
      competent jurisdiction that prohibits or directly and adversely affects
      any of the transactions contemplated by this Agreement, and no proceeding
      shall have been commenced that may have the effect of prohibiting or
      adversely affecting any of the transactions contemplated by this
      Agreement.

            


    

    


    
      	
            	
              (f)

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

            


    

    


    
      	
            	
              (g)

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

            


    

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    
      	
            	
              (h)

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

            


    

    


    
      
        	
                
                

              	
                (i)

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

              


      

    

    


    Article
VIII.

    Due
Diligence Review; Non-Disclosure of Non-Public Information

    


    
      	
              Section
      8.01

            	
              Non-Disclosure of
      Non-Public Information.

            


    

    


    
      	
            	
              (a)

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

            


    

    


    
      	
            	
              (b)

            	
              Nothing
      herein shall require the Company to disclose non-public information to the
      Investor or its advisors or representatives, and the Company represents
      that it does not disseminate non-public information to any investors who
      purchase stock in the Company in a public offering, to money managers or
      to securities analysts, provided, however, that notwithstanding anything
      herein to the contrary, the Company will, as hereinabove provided,
      immediately notify the advisors and representatives of the Investor and,
      if any, underwriters, of any event or the existence of any circumstance
      (without any obligation to disclose the specific event or circumstance) of
      which it becomes aware, constituting non-public information (whether or
      not requested of the Company specifically or generally during the course
      of due diligence by such persons or entities), which, if not disclosed in
      the prospectus included in the Registration Statement would cause such
      prospectus to include a material misstatement or to omit a material fact
      required to be stated therein in order to make the statements, therein, in
      light of the circumstances in which they were made, not
      misleading.  Nothing contained in this Section 8.01 shall be
      construed to mean that such persons or entities other than the Investor
      (without the written consent of the Investor prior to disclosure of such
      information) may not obtain non-public information in the course of
      conducting due diligence in accordance with the terms of this Agreement
      and nothing herein shall prevent any such persons or entities from
      notifying the Company of their opinion that based on such due diligence by
      such persons or entities, that the Registration Statement contains an
      untrue statement of material fact or omits a material fact required to be
      stated in the Registration Statement or necessary to make the statements
      contained therein, in light of the circumstances in which they were made,
      not misleading.

            


    

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    Article
IX.

    Choice
of Law/Jurisdiction

    


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

    


    Article
X. Assignment; Termination

    


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

    


    Section
10.02         Termination.

    


    
      	
            	
              (a)

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

            


    

    


    
      	
            	
              (b)

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

            


    

    


    
      	
            	
              (c)

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

            


    

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    
      	
            	
              (d)

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

            


    

    


    Article
XI. Notices

    


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

    


    
      
        	
                If
      to the Company, to:

              	
                Power
      of the Dream Ventures, Inc.

              
	 
      	
                1095
      Budapest

                Soroksari
      ut 94-96

                Hungary

                Attention:
      Viktor Rozsnyay

                Phone:
      +36-1-456-6061

                Fax:
      +36-1-456-6062

              
	 
      	 
      
	
                With
      a copy to:

              	
                Loeb
      & Loeb LLP

              
	 
      	
                345
      Park Avenue

              
	 
      	
                New
      York, NY 10154

              
	 
      	
                Attention:
      Lloyd L. Rothenberg, Esq.

              
	 
      	
                Phone:
      (212) 407-4937

              
	 
      	
                Fax:
      (212) 656-1076

              
	 
      	 
      
	
                If
      to the Investor(s):

              	
                YA
      Global Investments, LP

              
	 
      	
                101
      Hudson Street –Suite 3700

              
	 
      	
                Jersey
      City, NJ 07302

              
	 
      	
                Attention:             
      Mark Angelo

              
	 
      	
                Portfolio
  Manager

              
	 
      	
                Telephone:            (201)
      985-8300

              
	 
      	
                Facsimile:               (201)
      985-8266

              


      

    

    

      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    
      
        	
                With
      a Copy to:

              	
                David
      Gonzalez, Esq.

              
	 
      	
                101
      Hudson Street – Suite 3700

              
	 
      	
                Jersey
      City, NJ 07302

              
	 
      	
                Telephone:            (201)
      985-8300

              
	 
      	
                Facsimile:              
      (201) 985-8266

              


      

    

    


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

    


    Article
XII. Miscellaneous

    


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

    


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

    


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

    


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

    


    
      	
            	
              (a)

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

            


    

    
      	
               
      

            	 


    

    
      	
            	
              (b)

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

            


    

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    
      	
            	
              (c)

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

            


    

    


    
      	
            	
              (d)

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

            


    

    


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

    


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

    


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

    


    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    

      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

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

    


    
      
        
          
            
              
                	 
      	
                        COMPANY:

                      
	 
      	
                        Power
      of the Dream Ventures, Inc.

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/ Viktor Rozsnyay

                      
	 
      	
                        Name:

                      	
                        Viktor
      Rozsnyay

                      
	 
      	
                        Title:

                      	
                        President
      & CEO

                      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                        INVESTOR:

                      
	 
      	
                        YA
      Global Investments, L.P.

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        Yorkville
      Advisors, LLC

                      
	 
      	
                        Its:

                      	
                        Investment
      Manager

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/ Mark Angelo

                      
	 
      	
                        Name:

                      	
                        Mark
      Angelo

                      
	 
      	
                        Title:

                      	
                        Portfolio
      Manager

                      


              

            

          

        

      

    

    

      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    EXHIBIT
A

    


    FORM
OF WARRANT

     

    [Omitted]

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    EXHIBIT
B

    


    ADVANCE
NOTICE

    


    POWER
OF THE DREAM VENTURES, INC.

    


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

    


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

    


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

    


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

    


    4.            
 The undersigned hereby represents, warrants and covenants that it has made
all filings (“SEC
Filings”) required to be made by it pursuant to applicable securities
laws (including, without limitation, all filings required under the Securities
Exchange Act of 1934, which include Forms 10-Q or 10-QSB, 10-K or 10-KSB, 8-K,
etc.).  All SEC Filings and other public disclosures made by the
Company, including, without limitation, all press releases, analysts meetings
and calls, etc. (collectively, the “Public Disclosures”),
have been reviewed and approved for release by the Company’s attorneys and, if
containing financial information, the Company’s independent certified public
accountants.  None of the Company’s Public Disclosures contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

    


    5.            
 The Advance requested is _____________________.

    


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

    


    
      
        
          
            	 
      	
                    POWER
      OF THE DREAM VENTURES, INC.

                  
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                    By:

                  	 
      
	 
      	
                    Name:

                  	 
      
	 
      	
                    Title:

                  	 
      


          

        

      

    

     

    Please
deliver this advance notice by mail or facsimile to:

    
      


      YA Global
Investments, L.P.

      101
Hudson Street, Suite 3700, Jersey City, NJ 07302

      Fax:  (201)
946-0851

    

     

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    SCHEDULE
2.4

    


    POWER OF THE DREAM VENTURES,
INC.

    


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

    


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

    


    Dated:
_______________, 2008

    


    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 
      	
                                      Signature

                                    	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                                      Name:

                                    	 
      
	 
      	
                                      Address:

                                    	 
      
	 
      	
                                      City,
      State, Zip Code:

                                    	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                                      Print
      Social Security Number

                                    
	 
      	
                                      or
      Taxpayer I.D.
Number