Document:

ex13.htm

    
      

    

    Exhibit
13

     

    
      REGISTRATION RIGHTS AGREEMENT

      

      REGISTRATION RIGHTS 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:

      

      A.           
In connection with the Standby Equity Distribution Agreement by and between the
parties hereto of even date herewith (the “Standby Equity Distribution
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Standby Equity Distribution Agreement, to issue and sell to
the Investor (i) that number of shares of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”), which
can be purchased pursuant to the terms of the Standby Equity Distribution
Agreement for an aggregate purchase price of up to $5,000,000 and (ii) warrants
(“Warrants”) to
purchase shares of Common Stock as set forth in the Standby Equity Distribution
Agreement.  Capitalized terms not defined herein shall have the
meaning ascribed to them in the Standby Equity Distribution
Agreement.

      

      B.           
To induce the Investor to execute and deliver the Standby Equity Distribution
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “Securities Act”), and
applicable state securities laws.

      

      NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor hereby agree as
follows:

      

      
        	
                 
      

              	
                1.

              	
                DEFINITIONS.

              

      

      

      As used
in this Agreement, the following terms shall have the following
meanings:

      

      a.            “Commitment Period”
has the meaning given thereto in the Standby Equity Distribution
Agreement.

      

      b.            “Person” means a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

      

      c.            “Prospectus” means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      d.            “Registrable
Securities” means (i) the shares of Common Stock that are or may be
purchased by the Investor pursuant to the Standby Equity Distribution Agreement,
(ii) the Commitment Shares, (iii) the shares of Common Stock issuable upon
exercise of the Warrants and (iv) any securities issued or issuable with
respect to any of the foregoing by way of exchange, stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.  As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) the Registration Statement has been declared
effective by the Commission and such Registrable Securities have been disposed
of pursuant to the Registration Statement, (b) such Registrable Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 (or any similar provision then in force) under the Securities Act
(“Rule 144”) are met, or (c) in the opinion of counsel to the Company such
Registrable Securities may permanently be sold without registration and without
any time, volume or manner limitations pursuant to Rule 144.

      

      e.            “Registration
Statement” means the registration statements required to be filed
hereunder and any additional registration statements contemplated by Section 2
hereof, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

      

      f.            “Rule 415” means Rule
415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC  having substantially the same purpose and effect as such
Rule.

      

      g.            “SEC” means the United
States Securities and Exchange Commission.

      

      
        	
                 
      

              	
                2.

              	
                REGISTRATION.

              

      

      

      a.           Filing of a Registration
Statement.  The Company shall prepare and file with the SEC a
Registration Statement, or multiple Registration Statements, on Form S-1 (or if
the Company is then eligible, on Form S-3) for the resale by the Investor of the
Registrable Securities.  The Company in its sole discretion may chose
when to file such Registration Statements, provided however, pursuant to the
Standby Equity Distribution Agreement the Company shall not have the ability to
make any Advances until the effectiveness of a Registration
Statement.  Each Registration Statement shall contain the “Plan of Distribution”
section in substantially the form attached hereto as Exhibit A and contain
all the required disclosures set forth on Exhibit
B.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      b.           Maintaining a Registration
Statement.  The Company shall cause any Registration Statement
that has been declared effective to remain effective at all times until all
Registrable Securities contained in such Registration Statement cease to be
Registrable Securities (the “Registration
Period”).  Each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.

      

      
        	
                 
      

              	
                3.

              	
                RELATED
      OBLIGATIONS.

              

      

      

      a.           The
Company shall, not less than three business days prior to the filing of a
Registration Statement and not less than one business day prior to the filing of
any related amendments and supplements to all Registration Statements (except
for the filing of its reports under the Exchange Act), furnish to the Investor
copies of all such documents proposed to be filed, which documents (other than
those incorporated or deemed to be incorporated by reference) will be subject to
the reasonable and prompt review of the Investor. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Investors shall reasonably object in good faith; provided that, the Company is
notified of such objection in writing no later than two business days after the
Investors have been so furnished copies of a Registration
Statement.

      

      b.           The
Company shall (i) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
Prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep such Registration Statement effective at all times during
the Registration Period, and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and as so supplemented or amended to be filed pursuant
to Rule 424; (iii) respond as promptly as reasonably possible to any comments
received from the SEC with respect to a Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Investors true and
complete copies of all correspondence from and to the SEC relating to a
Registration Statement (provided that the Company may excise any information
contained therein which would constitute material non-public information as to
any Investor which has not executed a confidentiality agreement with the
Company); and (iv) comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.  In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company’s filing a
report on Form 10-K, Form 10-Q, or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the
Company shall incorporate such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the Exchange Act report is filed which created the
requirement for the Company to amend or supplement the Registration
Statement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      c.           The
Company shall furnish to the Investor without charge, (i) at least one copy of
such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) 10 copies of the final prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as the Investor may reasonably request) and (iii) such other documents as
the Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by the Investor.

      

      d.           The
Company shall use its best efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities or
“blue sky” laws of such jurisdictions in the United States as the Investor
reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its certificate of incorporation or by-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify the Investor of the
receipt by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

      

      e.           As
promptly as practicable after becoming aware of such event or development, the
Company shall notify the Investor in writing of the happening of any event as a
result of which the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
10 copies of such supplement or amendment to the Investor.  The
Company shall also promptly notify the Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to the Investor
by facsimile on the same day of such effectiveness), (ii) of any request by the
SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      f.           
The Company shall use its best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of a Registration Statement, or the
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

      

      g.           If,
after the execution of this Agreement, the Investor reasonably believes, after
consultation with its legal counsel, that it could be deemed to be an
underwriter of Registrable Securities, at the request of the Investor, the
Company shall furnish to the Investor, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as the
Investor may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investor.

      

      h.           If,
after the execution of this Agreement, the Investor reasonably believes, after
consultation with its legal counsel, that it could be deemed to be an
underwriter of Registrable Securities, at the request of the Investor, the
Company shall make available for inspection by (i) the Investor and (ii) 
one firm of accountants or other agents retained by the Investor (collectively,
the “Inspectors”) all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall
be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree, and
the Investor hereby agrees, to hold in strict confidence and shall not make any
disclosure (except to an Investor) or use  any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the Securities Act,
(b) the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other agreement of
which the Inspector and the Investor has knowledge.  The Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.

      

      i.           
The Company shall hold in confidence and not make any disclosure of information
concerning the Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement.  The Company agrees that it shall, upon learning that
disclosure of such information concerning the Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt written notice to the Investor and allow the Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      j.           
The Company shall use its best efforts either to cause all the Registrable
Securities covered by a Registration Statement (i) to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or to secure the
inclusion for quotation on the National Association of Securities Dealers, Inc.
OTC Bulletin Board for such Registrable Securities.  The Company shall
pay all fees and expenses in connection with satisfying its obligation under
this Section 3(j).

      

      k.          
The Company shall cooperate with the Investor, to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investor may reasonably
request and registered in such names as the Investor may request.

      

      l.           
The Company shall use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.

      

      m.         
The Company shall otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC in connection with any registration
hereunder.

      

      n.           Within
2 business days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investor) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
C.

      

      o.           The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Securities pursuant to a
Registration Statement.

      

      
        	
                 
      

              	
                4.

              	
                OBLIGATIONS OF THE
      INVESTOR.

              

      

      

      a.            
The Investor agrees that, upon receipt of any notice from the Company of the (i)
the happening of any event, following which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or (ii) the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction within the United States of America, the Investor will immediately
discontinue disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until the Investor’s receipt
of written notice from the Company indicating that such event has been cured and
confirming that re-sales may be made pursuant to such Registration
Statement.  Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended certificates for shares of
Common Stock to a transferee of the Investor in accordance with the terms of the
Standby Equity Distribution Agreement in connection with any sale of Registrable
Securities with respect to which the Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company described in
this section and for which the Investor has not yet settled.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      b.            
The Investor covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it or an exemption
therefrom in connection with sales of Registrable Securities pursuant to the
Registration Statement.

      

      
        	
                 
      

              	
                5.

              	
                EXPENSES OF
      REGISTRATION.

              

      

      

      All of
the Company’s expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees shall be paid by the Company.

      

      
        	
                 
      

              	
                6.

              	
                INDEMNIFICATION.

              

      

      

      With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:

      

      a.           To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Investor, the directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls the Investor within the meaning of the Securities Act or the Exchange
Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”).  The
Company shall reimburse the Investor and each such controlling person promptly
as such expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim.  Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 6(a): (x) shall not apply to a Claim by an Indemnified Person
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto; (y)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company, if such prospectus was timely made available by the Company
pursuant to Section 3(e); and (z) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investor.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      b.           In
connection with a Registration Statement, the Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act (each an
“Indemnified
Party”), against any Claim or Indemnified Damages to which any of them
may become subject, under the Securities Act, the Exchange Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or is based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by the Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(d), the Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to the Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investor.  Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained in
this Section 6(b) with respect to any prospectus shall not inure to the benefit
of any Indemnified Party if the untrue statement or omission of material fact
contained in the prospectus was corrected and such new prospectus was delivered
to the Investor prior to the Investor’s use of the prospectus to which the Claim
relates.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      c.           Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for such Indemnified Person or 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 Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing  interests between
such Indemnified Person or Indemnified Party and any other party represented by
such counsel in such proceeding. The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
claim.  The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto.  No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its 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 or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation.  Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person 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 Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

      

      d.           The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

      

      e.           The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                7.

              	
                CONTRIBUTION.

              

      

      

      To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

      

      
        	
                 
      

              	
                8.

              	
                REPORTS UNDER THE
      EXCHANGE ACT.

              

      

      

      With a
view to making available to the Investor the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that may
at any time permit the Investor to sell securities of the Company to the public
without registration (“Rule 144”) the
Company agrees to:

      

      a.           make
and keep public information available, as those terms are understood and defined
in Rule 144;

      

      b.           file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements (it being understood that nothing herein
shall limit the Company’s obligations under Section 6.3 of the Standby Equity
Distribution Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and

      

      c.           furnish
to the Investor so long as the Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such
securities pursuant to Rule 144 without registration.

      

      
        	
                 
      

              	
                9.

              	
                AMENDMENT OF
      REGISTRATION RIGHTS.

              

      

      

      Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a written agreement between the Company and the
Investor.  Any amendment or waiver effected in accordance with this
Section 9 shall be binding upon the Investor and the Company.  No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this
Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                10.

              	
                MISCELLANEOUS.

              

      

      

      a.           A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

      

      b.           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 confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same.  The addresses and facsimile numbers for such
communications shall be:

      

      
        
          	
                  If
      to 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, New York 10154

                
	 
      	
                  Attention:
      Lloyd L. Rothenberg, Esq.

                
	 
      	
                  Telephone:
      (212) 407-4937

                
	 
      	
                  Facsimile:   
      (212) 656-1076

                
	 
      	 
      
	
                  If
      to the Investor, to:

                	
                  YA
      Global Investments, LP

                
	 
      	
                  101
      Hudson Street – Suite 3700

                
	 
      	
                  Jersey
      City, New Jersey 07302

                
	 
      	
                  Attention:              Mark
      Angelo

                
	 
      	
                  Portfolio
  Manager

                
	 
      	
                  Telephone:            (201)
      985-8300

                
	 
      	
                  Facsimile:              
      (201) 985-8266

                
	 
      	 
      
	
                  With
      a copy to:

                	
                  YA
      Global Investments, LP

                
	 
      	
                  101
      Hudson Street – Suite 3700

                
	 
      	
                  Jersey
      City, NJ  07302

                
	 
      	
                  Attention:              David
      Gonzalez, Esq.

                
	 
      	
                  Telephone:            (201)
      985-8300

                
	 
      	
                  Facsimile:               (201)
      985-8266

                

        

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      Any party
may change its address by providing written notice to the other parties hereto
at least five days prior to the effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

      

      c.           Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

      

      d.           The
corporate laws of the State of New Jersey shall govern all issues concerning the
relative rights of the Company and the Investor.  All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New Jersey,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
Jersey.  Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the Superior Courts of the State of New Jersey, sitting in
Hudson County, New Jersey and the Federal District Court for the District of New
Jersey sitting in Newark, New Jersey, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.

      

      e.           This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

      

      f.           The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      g.           This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

      

      h.           Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

      

      i.           The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.

      

      j.           This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

      

      

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      IN WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be duly executed as of
day and year first above written.

      

      
        
          
            
              	 
      	
                      Power
      of the Dream Ventures, Inc.

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	
                      /s/ Viktor Rozsnyay

                    
	 
      	
                      Name:

                    	
                      Viktor
      Rozsnyay

                    
	 
      	
                      Title:

                    	
                      President
      & CEO

                    
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                      YA
      GLOBAL INVESTMENTS,  L.P.

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	
                      Yorkville
      Advisors, LLC

                    
	 
      	
                      Its:

                    	
                      Investment
      Manager

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	
                      /s/ Mark Angelo

                    
	 
      	
                      Name:

                    	
                      Mark
      Angelo

                    
	 
      	
                      Title:

                    	
                      Portfolio
      Manager

                    

            

          

        

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      

      EXHIBIT
A

      

      PLAN OF
DISTRIBUTION

      

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

      

      
        	
                 
      

              	
                ●

              	
                ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

              

      

      

      
        	
                 
      

              	
                ●

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

              

      

      

      
        	
                 
      

              	
                ●

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

              

      

      

      
        	
                 
      

              	
                ●

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

              

      

      

      
        	
                 
      

              	
                ●

              	
                privately
      negotiated transactions;

              

      

      

      
        	
                 
      

              	
                ●

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

              

      

      

      
        	
                 
      

              	
                ●

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

              

      

      

      
        	
                 
      

              	
                ●

              	
                a
      combination of any such methods of sale;
or

              

      

      

      
        	
                 
      

              	
                ●

              	
                any
      other method permitted pursuant to applicable
  law.

              

      

      

      The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus.

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume.  The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).

      

      The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  Each Selling
Stockholder has informed the Company that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to
distribute the Common Stock. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would exceed eight percent
(8%).

      

      The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

      

      Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder.  In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 under the Securities Act may be sold under Rule 144 rather than under this
prospectus.  There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholders.

      

      We agreed
to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144 under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities Act
or any other rule of similar effect.  The resale shares will be sold
only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

      

      Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution.  In addition, the Selling Stockholders will be subject
to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person.  We will make copies of this prospectus available to the
Selling Stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
B

      

      OTHER
DISCLOSURES

      

      See
attachment provided separately.

       

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

      

      EXHIBIT
C

      FORM
OF NOTICE OF EFFECTIVENESS

      OF
REGISTRATION STATEMENT

      

      

      Attention:

      

      
        	
                 
      

              	
                Re:

              	
                POWER
      OF THE DREAM VENTURES, INC.

              

      

      

      Ladies
and Gentlemen:

      

      We are
counsel to Power of the Dream Ventures, Inc. (the “Company”), and have
represented the Company in connection with that certain Standby Equity
Distribution Agreement (the “Standby Equity Distribution
Agreement”) entered into by and between the Company and YA Global
Investments, LP (the “Investor”) pursuant
to which the Company issued to the Investor shares of its Common Stock, par
value $0.0001 per share (the “Common
Stock”).  Pursuant to the Standby Equity Distribution
Agreement, the Company also has entered into a Registration Rights Agreement
with the Investor (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the “Securities
Act”).  In connection with the Company’s obligations under the
Registration Rights Agreement, on ____________ ____, the Company filed a
Registration Statement on Form ________ (File No. 333-_____________) (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names the Investor as a selling stockholder
thereunder.

      

      In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF
EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a
member of the SEC’s staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Registrable Securities are available for resale
under the Securities Act pursuant to the Registration Statement.

      

      
        
          
            
              	 
      	
                      Very
      truly yours,

                    
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                      By:

                    	 
      

            

          

        

      

      

      
        	
                cc:

              	
                YA Global Investments,
      L.P.ex14.htm

    
      

    

    
      Exhibit 14

       

      WARRANT

      

      THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.

      

      POWER
OF THE DREAM VENTURES, INC.

      

      Warrant
To Purchase Common Stock

      

      
        
          	
                  Warrant
      No.: PWRV-1-1

                	
                  Number
      of Shares:

                	
                  4,027,386

                
	 
      	
                  Warrant
      Exercise Price:

                	
                  $0.29

                
	 
      	
                  Expiration
      Date:

                	
                  October
      8, 2013

                

        

      

      

      Date of
Issuance: October 8, 2008

      

      Power of the Dream Ventures,
Inc., a Delaware corporation (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, YA Global Investments, L.P.
(the “Holder”),
the registered holder hereof or its permitted assigns, is entitled, subject to
the terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after
11:59 P.M. Eastern Time on the Expiration Date (as defined herein) up to
4,027,386 fully paid and nonassessable shares of Common Stock (as defined
herein) of the Company (the “Warrant Shares”) at
the exercise price per share provided in Section 1(b) below or as
subsequently adjusted; provided, however, that in no event shall the holder be
entitled to exercise this Warrant for a number of Warrant Shares in excess of
that number of Warrant Shares which, upon giving effect to such exercise, would
cause the aggregate number of shares of Common Stock beneficially owned by the
holder and its affiliates to exceed 4.99% of the outstanding shares of the
Common Stock following such exercise, except within 60 days of the Expiration
Date (however, such restriction may be waived by Holder (but only as to itself
and not to any other holder) upon not less than 65 days prior notice to the
Company).  For purposes of the foregoing proviso, the aggregate number
of shares of Common Stock beneficially owned by the holder and its affiliates
shall include the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such proviso is being
made, but shall exclude shares of Common Stock which would be issuable upon
(i) exercise of the remaining, unexercised Warrants beneficially owned by
the holder and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
beneficially owned by the holder and its affiliates (including, without
limitation, any convertible notes or preferred stock) subject to a limitation on
conversion or exercise analogous to the limitation contained
herein.  Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended.  For
purposes of this Warrant, in determining the number of outstanding shares of
Common Stock a holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-QSB or Form 10-KSB,
as the case may be, (2) a more recent public announcement by the Company or (3)
any other notice by the Company or its transfer agent setting forth the number
of shares of Common Stock outstanding.  Upon the written request of
any holder, the Company shall promptly, but in no event later than one Business
Day following the receipt of such notice, confirm in writing to any such holder
the number of shares of Common Stock then outstanding.  In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the exercise of Warrants (as defined below) by such holder and
its affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Section
1.

      

      (a) This
Warrant is issued pursuant to the Standby Equity Distribution Agreement (“SEDA”) dated the date
hereof between the Company and the Holder or issued in exchange or substitution
thereafter or replacement thereof.  Each capitalized term used, and
not otherwise defined herein, shall have the meaning ascribed thereto in the
SEDA.

      

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

      

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

      

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

      

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

      

      (iv)           “Common Stock” means
(i) the Company’s common stock, par value $0.0001 per share, and
(ii) any capital stock into which such Common Stock shall have been changed
or any capital stock resulting from a reclassification of such Common
Stock.

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (vi)           “Expiration Date”
means the date set forth on the first page of this Warrant.

      

      (vii)          “Issuance Date” means
the date hereof.

      

      (viii)         “Options” means any
rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities.

      

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

      

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

      

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

      

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

      

      (xiii)          “Warrant Exercise
Price” shall be $0.29 or as subsequently adjusted as provided in
Section 8 hereof.

      

      (c) Other
Definitional Provisions.

      

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

      

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

      

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

      

      
        	
                 
      

              	
                Section
      2.

              	
                Exercise of
      Warrant.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

      

      Net
Number = (A x B) – (A
x C)

                                            B

      

      For
purposes of the foregoing formula:

      

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

      

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

      

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

      

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

      

      (e) If
the Company or its Transfer Agent shall fail for any reason or for no reason to
issue to the holder within 10 days of receipt of the Exercise Delivery
Documents, a certificate for the number of Warrant Shares to which the holder is
entitled or to credit the holder’s balance account with The Depository Trust
Company for such number of Warrant Shares to which the holder is entitled upon
the holder’s exercise of this Warrant, the Company shall, in addition to any
other remedies under this Warrant or otherwise available to such holder, pay as
additional damages in cash to such holder on each day the issuance of such
certificate for Warrant Shares is not timely effected an amount equal to 0.025%
of the product of (A) the sum of the number of Warrant Shares not issued to the
holder on a timely basis and to which the holder is entitled, and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Common Stock to
the holder without violating this Section 2.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (f) If
within 10 days after the Company’s receipt of the Exercise Delivery Documents,
the Company fails to deliver a new Warrant to the holder for the number of
Warrant Shares to which such holder is entitled pursuant to Section 2 hereof,
then, in addition to any other available remedies under this Warrant, or
otherwise available to such holder, the Company shall pay as additional damages
in cash to such holder on each day after such 10th day
that such delivery of such new Warrant is not timely effected in an amount equal
to 0.25% of the product of (A) the number of Warrant Shares represented by
the portion of this Warrant which is not being exercised and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Warrant to the
holder without violating this Section 2.

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

      

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Section
7.              
Ownership and
Transfer.  The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each
transferee.  The Company may treat the person in whose name any
Warrant is registered on the register as the owner and holder thereof for all
purposes, notwithstanding any notice to the contrary, but in all events
recognizing any transfers made in accordance with the terms of this
Warrant.

      

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

      

      (a) Adjustment of Warrant
Exercise Price and Number of Shares upon Issuance of Common
Stock.  If and whenever on or after the Issuance Date of this
Warrant, the Company issues or sells, or is deemed to have issued or sold, any
shares of Common Stock (other than Excluded Securities) for a consideration
per share less than a price (the “Applicable Price”)
equal to the Warrant Exercise Price in effect immediately prior to such issuance
or sale, then immediately after such issue or sale the Warrant Exercise Price
then in effect shall be reduced to an amount equal to such consideration per
share.  Upon each such adjustment of the Warrant Exercise Price
hereunder, the number of Warrant Shares issuable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Warrant
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price
resulting from such adjustment.

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

      

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

      

      (i)            
any Warrant Exercise Price in effect immediately prior to the close of business
on the record date fixed for the determination of holders of Common Stock
entitled to receive the
Distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant Exercise Price by
a fraction of which (A) the numerator shall be the Closing Sale Price of the
Common Stock on the trading day immediately preceding such record date minus the
value of the Distribution (as determined in good faith by the Company’s Board of
Directors) applicable to one share of Common Stock, and (B) the denominator
shall be the Closing Sale Price of the Common Stock on the trading day
immediately preceding such record date; and

      

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

      

      (e) Certain
Events.  If any event occurs of the type contemplated by the
provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the Warrant
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided, except as set forth in section 8(c),that no such adjustment pursuant
to this Section 8(e) will increase the Warrant Exercise Price or decrease the
number of shares of Common Stock obtainable as otherwise determined pursuant to
this Section 8.

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (g) Notices.

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

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

      

      Section
11.            
Notice.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Warrant must be in writing and will be deemed to
have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same.  The addresses and facsimile numbers for such
communications shall be:

      

      
        
          	
                  If
      to Holder:

                	
                  YA
      Global Investments, L.P.

                
	 
      	
                  101
      Hudson Street – Suite 3700

                
	 
      	
                  Jersey
      City, NJ  07302

                
	 
      	
                  Attention:                      Mark
      A. Angelo

                
	 
      	
                  Telephone:                    (201)
      985-8300

                
	 
      	
                  Facsimile:                      
      (201) 985-8266

                
	 
      	 
      
	
                  With
      Copy to:

                	
                  David
      Gonzalez, Esq.

                
	 
      	
                  101
      Hudson Street – Suite 3700

                
	 
      	
                  Jersey
      City, NJ 07302

                
	 
      	
                  Telephone:                    (201)
      985-8300

                
	 
      	
                  Facsimile:                      
      (201) 985-8266

                

        

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        
          	
                  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, New York 10154

                
	 
      	
                  Attention:
      Lloyd L. Rothenberg, Esq.

                
	 
      	
                  Phone:
      (212) 407-4937

                
	 
      	
                  Fax:     
      (212) 656-1076

                

        

      

      

      If to a
holder of this Warrant, to it at the address and facsimile number set forth in
this Section 11, or at such other address and facsimile as shall be delivered to
the Company upon the issuance or transfer of this Warrant.  Each party
shall provide five days’ prior written notice to the other party of any change
in address or facsimile number.  Written confirmation of receipt
(A) given by the recipient of such notice, consent, facsimile, waiver or
other communication, (or (B) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Section
14.            
Descriptive Headings;
Governing Law.  The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant.  The corporate laws of the
State of Delaware shall govern all issues concerning the relative rights of the
Company and its stockholders.  All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New Jersey, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New Jersey or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New
Jersey.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Hudson County and the
United States District Court for the District of New Jersey, for the
adjudication of any dispute hereunder or in connection herewith or therewith, or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

      

      Section
15.            
Remedies, Other
Obligations, Breaches and Injunctive Relief.   The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant, in any other agreement between the
Company and the Holder, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant.  The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be
inadequate.  The Company therefore agrees that, in the event of any
such breach or threatened breach, the holder of this Warrant shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.

      

      Section
16.           
Waiver of Jury
Trial.  AS A
MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.

       

       

      REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

      
        
          
            
              	 
      	
                      POWER
      OF THE DREAM VENTURES, INC.

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	
                      Name:

                    	 
      
	 
      	
                      Title:

                    	 
      

            

          

        

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      EXHIBIT A TO
WARRANT

      

      EXERCISE
NOTICE

      

      TO
BE EXECUTED

      BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

      

      POWER
OF THE DREAM VENTURES, INC.

      

      The
undersigned holder hereby exercises the right to purchase ______________ of the
shares of Common Stock (“Warrant Shares”) of
Power of the Dream Ventures, Inc. (the “Company”), evidenced
by the attached Warrant (the “Warrant”).  Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

      Specify
Method of exercise by check mark:

      

      
        	
                 
      

              	
                1.  ___

              	
                Cash
      Exercise

              

      

      

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

      

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

      

      
        	
                 
      

              	
                2.  ___

              	
                Cashless
      Exercise

              

      

      

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

      

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

      

      
        
          
            	
                    Date:

                  	 	 
      

          

        

      

      

      Name of
Registered Holder

      

      
        
          
            
              
                	
                        By:

                      	 	 
      
	
                        Name:

                      	 	 
      
	
                        Title:

                      	 	 
      

              

            

          

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      EXHIBIT B TO
WARRANT

      

      FORM OF WARRANT
POWER

      

      FOR VALUE RECEIVED, the
undersigned does hereby assign and transfer to ________________, Federal
Identification No. __________, a warrant to purchase ____________ shares of
the capital stock of Power of the Dream Ventures, Inc. represented by warrant
certificate no. _____, standing in the name of the undersigned on the books
of said corporation.  The undersigned does hereby irrevocably
constitute and appoint ______________, attorney to transfer the warrants of said
corporation, with full power of substitution in the premises.

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Dated:

                                    	 	 
      	 
      	 
      
	 
      	 	 
      	 
      	 
      
	 
      	 	 
      	
                                      By:

                                    	 
      
	 
      	 	 
      	
                                      Name:

                                    	 
      
	 
      	 	 
      	
                                      Title:

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