CONFIDENTIALSUBSCRIPTION AGREEMENT SKINNYNUTRITIONAL CORP. PrivateSale of Securities $250,000Minimum - $1,500,000 Maximum MinimumOffering Consisting of 4,166,667 Shares of Common Stock AndWarrants to Purchase 4,166,667 Shares of Common Stock MaximumOffering Consisting of 25,000,000 Shares of Common Stock AndWarrants to Purchase 25,000,000 Shares of Common Stock ________________________

CONFIDENTIAL SUBSCRIPTION AGREEMENT

SKINNY NUTRITIONAL CORP.

Private Sale of Securities

Minimum Offering Consisting of 4,166,667 Shares of Common Stock

And Warrants to Purchase 4,166,667 Shares of Common Stock

Maximum Offering Consisting of 25,000,000 Shares of Common Stock

And Warrants to Purchase 25,000,000 Shares of Common Stock

________________________

2 Radnor Corporate Center

100 Matsonford Road, Suite 111

Radnor, Pennsylvania 19087

Tel. (610) 975-9990

Items to be delivered by all Investors:

ABA No.: 031908485

Facsimile:   ###-###-####

Telephone:   ###-###-####

Philadelphia Brokerage Corporation

2 Radnor Corporate Center

100 Matsonford Road, Suite 111

Radnor, Pennsylvania 19087

Tel. (610) 975-9990

The undersigned (the “Subscriber” or the “Purchaser”) hereby subscribes to purchase from Skinny Nutritional Corp., a Nevada corporation (the “Company”), certain of the Company’s securities, as described herein, for a total purchase price of $1,500,000. The Company is offering hereby (the “Offering”) a minimum of $250,000 of units of its securities (the “Minimum Offering”) on a “best efforts, all or none” basis and an additional $1,250,000 of units of its securities on a “best efforts” basis (the “Maximum Offering”). Each unit of securities offered hereby consists of one share of common stock, par value $.001 per share (the “Common Shares”) and one warrant to purchase a share of Common Stock (the “Warrants”). The Common Shares and Warrants may collectively be referred to herein as the “Securities”. The Minimum Offering consists of 4,166,667 Common Shares and Warrants and the Maximum Offering consists of 25,000,000 Common Shares and Warrants. The Company has engaged Philadelphia Brokerage Corporation to act as its selling agent for the Offering (the “Selling Agent”)

(a)          Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Company hereby agrees to issue and sell to the Subscriber and the Subscriber agrees to purchase from the Company, upon Closing, the Securities as described herein for the Purchase Price as set forth on the signature page of this Subscription Agreement executed by the Subscriber. The number of Securities purchased hereunder by a Subscriber shall be as specified on the signature page of this Subscription Agreement executed by the Subscriber. The Company may reject any subscription in whole or in part. The Company is selling the Common Shares and Warrants in this Offering at a purchase price of $0.06 per Common Share and Warrant (the “Purchase Price”) for a minimum subscription amount of $20,000 (333,333 Common Shares and 333,333 Warrants), unless waived by the Company and Selling Agent. The Company is offering the Securities on a “best efforts, all or none” basis as to the Minimum Offering of $250,000 and on a “best efforts” basis as the Maximum Offering amount. The Minimum Offering consists of a total of 4,166,667 Common Shares and 4,166,667 Warrants and the Maximum Offering consists of a total of 25,000,000 Common Shares and 25,000,000 Warrants. The Common Shares and Warrants will be issued separately, but can only be purchased together in this Offering. This Offering is only being made to “accredited investors” (as defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) in reliance upon an exemption from registration under Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder, and on similar exemptions under applicable state laws. The Securities may be purchased, in part or their entirety, by officers and directors of the Company or representatives of the Selling Agent and such purchases may be used to satisfy the Minimum Offering.

(b)          Each Subscriber will receive a Warrant to purchase one (1) share of common stock (each a “Warrant Share”) for each Common Share it purchases in this Offering. The warrants are exercisable at an exercise price of $0.10 per share. The Warrants are exercisable commencing on the issue date and expire 24 months from the initial exercise date. The Warrants also include a mandatory redemption feature. See “Description of Warrants” below.

(c)          The Securities are being offered during the offering period commencing on the date set forth on the cover page of this Subscription Agreement and terminating on the earlier of (a) 5:00 p.m. (New York time) on June 30, 2010, unless extended by the Company and Selling Agent for an additional period expiring no later than August 31, 2010 or (b) the date on which all the Securities authorized for sale have been sold (the “Offering Period”).

1.2      High Risk Investment. This investment is speculative and should only be made by investors who can afford the risk of loss of their entire investment. The proceeds from the sale of the Securities will be used to fund short term capital needs to enable the Company to maintain operations until additional funding is received. The Company may sell additional securities after the completion of this transaction to further fund its operations. Unless the Company is successful in completing these additional funding transactions, or is able to generate sufficient revenue from operations, the Company may be forced to significantly curtail its operations and the Subscribers will lose their entire investment.

1.3      Selling Agent. The Company has engaged Philadelphia Brokerage Corporation to serve as its Selling Agent in connection with this Offering for the sale of the Securities and pay commissions of up to 10% of the gross proceeds from the sale of the Securities in this Offering to subscribers procured by such Selling Agent and may pay other compensation to the Selling Agents who procure purchasers of the Securities. We will issue to each Selling Agent a warrant (the “Agent Warrants”) to purchase such number of Common Shares as equals 10% of the total number of Common Shares actually sold in the Offering to Subscribers procured by each Selling Agent (not including any shares of Common Stock issuable upon exercise of the Warrants). Agent Warrants shall be exercisable at the per share price of $0.10 and otherwise be on the same terms and conditions as the Warrants. The Company has to indemnify the Selling Agent against certain liabilities, including liabilities under the Securities Act of 1933, and liabilities arising from breaches of representations and warranties contained in the agreement, or to contribute to payments that it may be required to make in respect of such liabilities and will reimburse the Selling Agent for legal expenses incurred by it in connection with this Offering, subject to a cap of $15,000.

1.5       Closing Matters. At each Closing the following actions shall be taken:

(a)        each Subscriber shall deliver its Purchase Price in immediately available United States funds to the escrow account established for the Offering;

(b)        the Company shall cause its stock transfer agent to deliver certificates representing the Common Shares subscribed for to each Subscriber;

(c)        the Company shall deliver to each Subscriber a certificate representing the Warrants subscribed for; and

(d)        each of the Company and the Subscriber shall deliver to the other signed copies of this Agreement and the Subscriber shall deliver to the Company a completed and executed Purchaser Questionnaire.

(a)        Annual Report on Form 10-K for the year ended December 31, 2009. On April 2, 2010, the Company filed its Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 Annual Report”) with the United States Securities and Exchange Commission (the “SEC”).

(b)       Quarterly Reports on Form 10-Q. On May 15, 2009, the Company filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2009; on August 14, 2009, the Company filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009; and on November 23, 2009 the Company filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (the “2009 Quarterly Reports”) with the SEC.

(c)        Current Reports on Form 8-K. The Company has filed Current Reports on Form 8-K with the SEC on the following dates during its most recent fiscal year and the current fiscal year: January 15, 2009, February 6, 2009, March 31, 2009, May 4, 2009, May 27, 2009, May 28, 2009, July 7, 2009, July 13, 2009, July 22, 2009, October 27, 2009, November 2, 2009, December 1, 2009, December 17, 2009, January 5, 2010, and March 1, 2010 (excluding Current Reports on Form 8-K deemed to have been furnished rather than filed with the SEC, the “Current Reports”).

(e)        Acknowledgement and Confirmation. The undersigned hereby agrees and acknowledges that it has been advised that the Company has filed with the SEC the 2009 Annual Report, the 2009 Quarterly Reports and the Current Reports (collectively, the “SEC Reports”) and that it has either obtained or has access to (through the public website of the SEC or otherwise) the SEC Reports. The SEC Reports comprise an integral part of this Agreement and each Subscriber is urged to read each such report in its entirety. The undersigned further agrees that the SEC Reports are incorporated herein by reference, that it has taken the opportunity to review such reports in their entirety, including the risk factors described therein, and that it has considered all factors that it deems material in deciding on the advisability of investing in the Company’s securities.

The Subscriber acknowledges and agrees that the offering and sale of the Securities are intended to be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder.  In accordance therewith and in furtherance thereof, the Subscriber represents and warrants to and agrees with the Company as follows [Please check statements applicable to the Subscriber]:

The Subscriber is an Accredited Investor because the Subscriber is (check appropriate item):

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a bank as defined in Section 3(a)(2) of the Securities Act;

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a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act;

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a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 as amended (the “Exchange Act”);

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an insurance company as defined in Section 2(13) of the Securities Act;

 

 

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a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;

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an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

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a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;

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an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

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a natural person whose individual net worth or joint net worth with that person's spouse, at the time of his purchase exceeds $l,000,000;

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a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

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a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Exchange Act;

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an entity in which all of the equity owners are accredited investors.  (If this alternative is checked, the Subscriber must identify each equity owner and provide statements signed by each demonstrating how each qualifies as an accredited investor);

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a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; or

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a director or officer of the Company.

(d)

Additional Information.

The Subscriber has completed the signature page to this Subscription Agreement and the Questionnaire annexed at Exhibit A to this Subscription Agreement.

1.9           Risk Factors

 

The Warrants provide that in the event the closing price of the Company’s Common Stock, which is currently traded over on the OTC Bulletin Board, is at least $0.14 for 20 consecutive trading days, then the Company may redeem such Warrant for a redemption price of $.001 per share unless the Warrant holders elect to exercise such Warrants within a limited period immediately following such event. In the event that the Company is able to redeem the Warrants, in the event a holder does not exercise such Warrants within the time period allotted for such exercise, the Warrants will be deemed expired and un-exercisable. In such event, the Warrants will only represent the right to receive the redemption payment. In making such election, a holder must be cognizant of the fact that the Warrants must be exercised for cash, the Company has no obligation to register the resale of the Warrant Shares issuable upon exercise and that following any such exercise of the Warrants, such Warrant Shares will be restricted securities and the Subscriber must hold the Warrant Shares for the duration of the relevant holding period provided for by Rule 144 as adopted by the Commission under the Securities Act.

 

Further, following the exercise of the Warrants in response to a redemption notice, the market price of the Company’s Common Stock may fall and a holder may not be able resell the Warrant Shares. Rule 144 promulgated under the Securities Act requires, among other conditions, a holding period prior to the resale of securities acquired in a non-public offering without having to satisfy the registration requirements of the Securities Act. In addition, there can be no assurance that we will fulfill in the future any reporting requirements under the Exchange Act, or disseminate to the public any current financial or other information concerning the Company, as required by Rule 144 as one of the conditions of its availability. Accordingly, due to these and other factors, the holder of the Warrant Shares bears the risk of losing its entire investment in exercising the Warrants in order to purchase the Warrant Shares.

     As of December 31, 2009, the Company had a net loss of $7,305,831 and an accumulated deficit of $30,912,821, of which $19,652,598 is directly related to the development of Skinny Nutritional products. The Company had a net loss of $6,232,123 for the fiscal year ended December 31, 2008 and an accumulated deficit of $22,229,657 of which $14,234,212 is directly related to the development of Skinny Nutritional products. For the years ended December 31, 2009 and December 31, 2008, the Company incurred a net loss from operations of $7,223,640 and $5,199,536, respectively.

The Company generated revenues of $4,146,066 (net of billbacks of $687,507 and slotting fees of $453,022) for the fiscal year ended December 31, 2009 as compared to revenues of $2,179,055 (after billbacks of $112,717) for the year ended December 31, 2008. If the Company is not able to begin to earn an operating profit at some point in the future, it will eventually have insufficient working capital to maintain its operations as it presently intends to conduct them. In light of the foregoing, the Company presently anticipates that it will require additional funds in order to implement its business plan and sustain its operations.

 

The Company has been substantially reliant on capital raised from private placements of its securities, in addition to a revolving line of credit, to fund its operations. The Company has an immediate need for cash to fund its working capital requirements and business model objectives. The Company, however, currently has no firm agreements with any third-parties for such transactions and no assurances can be given that it will be successful in raising sufficient capital from any proposed financings. At December 31, 2009, the Company’s cash and cash equivalents were approximately $191,000.

During the 2008 fiscal year, the Company raised approximately $3,500,000 from the sale of securities to accredited investors in private transactions pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as amended. Further, during the 2009 fiscal year, the Company has raised an aggregate amount of approximately $4,900,000 from the sale of securities to accredited investor in previous private placements under Rule 506. However, as the Company has experienced similar trends with respect to its rate of cash used in operations, it will need to satisfy its cash requirements through the offer and sale of additional securities, including those in this Offering. The Company expects the proceeds of this Offering, assuming the sale of the Maximum Offering, together with available cash, will only last for a minimal period of time. Thereafter, the Company expects to require additional capital which it would seek to raise from the sale of additional securities or through a debt financing arrangement. If less than the Maximum Offering is sold, the Company will need to raise a greater amount of capital than presently and to do so sooner than anticipated. Any failure to raise adequate capital in a timely manner would have a material adverse effect on our business, operating results, financial condition and future growth prospects.

Our independent auditors have included a “going concern” explanatory paragraph in their report to our financial statements for the years ended December 31, 2009 and December 31, 2008, citing recurring losses from operations. Our capital needs in the future will depend upon factors such as market acceptance of our products and any other new products we launch, the success of our independent distributors and our production, marketing and sales costs. None of these factors can be predicted with certainty. The Company must satisfy its future cash needs by further developing a market for its products, selling additional securities in private placements or by negotiating for an extension of credit from third party lenders. The Company presently anticipates that it will require additional funds in order to implement its business plan and sustain its operations.

If the Company is unable to achieve sufficient levels of sales, it will need substantial additional debt or equity financing in the future in addition to any funds which it may receive in this Offering and the Company currently has no commitments or arrangement with respect to any additional financings. No assurances can be given that any additional financing, if required, will be available or, even if it is available that it will be on acceptable terms. If the Company raises additional funds by selling common stock or convertible securities, the ownership of our existing shareholders will be diluted. If additional funds are raised though the issuance of equity or debt securities, such additional securities may have powers, designations, preferences or rights senior to our currently outstanding securities. Any inability to obtain required financing on sufficiently favorable terms could have a material adverse effect on our business, results of operations and financial condition. If the Company is unsuccessful in raising additional capital and increasing revenues from operations, it will need to reduce costs and operations substantially. Further, if expenditures required to achieve plans are greater than projected or if revenues are less than, or are generated more slowly than, projected, the Company will need to raise a greater amount of funds than currently expected.  

The Securities offered hereby will be issued pursuant to an exemption from registration under the Securities Act and therefore have not been and will not be registered under that act or any applicable state securities laws. Consequently, the Securities may be sold, transferred, or otherwise disposed of by the Purchasers hereunder only if, among other things, the Common Shares and Warrant Shares registered or, in the opinion of counsel acceptable to us, registration is not required under the Securities Act or any applicable state securities laws. Accordingly, Subscribers will need to rely on exemptions to the registration requirements under the Securities Act and the “blue sky” laws in order to be able to resell the Securities offered hereby.

Purchasers of our Securities must be aware of the long-term nature of their investment and be able to bear the economic risks of their investment for an indefinite period of time. The Securities have not been registered under the Securities Act or the securities or “blue sky” laws of any state. The right of any Subscriber to sell, transfer, pledge or otherwise dispose of the Securities offered herein will be limited by the Securities Act and state securities laws and the regulations promulgated thereunder. Accordingly, under the Securities Act, the Securities offered herein may not be resold unless a registration statement is filed and becomes effective or an exemption from registration is available. The Company is not under any affirmative obligation to file a registration statement covering the Securities and even if the Company did file a registration statement covering the Securities, there can be no assurance that any such registration statement would be declared effective. Further, there can be no assurance that a liquid market for our Common Stock will be sustained. Rule 144 promulgated under the Securities Act requires, among other conditions, a holding period prior to the resale of securities acquired in a non-public offering without having to satisfy the registration requirements of the Securities Act. There can be no assurance that we will fulfill in the future any reporting requirements under the Exchange Act, or disseminate to the public any current financial or other information concerning the Company, as required by Rule 144 as one of the conditions of its availability.

There is no public market for the Warrants being offered hereunder and one will not develop as a result of this Offering. Although the Company’s Common Stock is traded on the Over-the-Counter Bulletin Board, due to the risks of investing in a restricted security, all investors must therefore bear the economic risk of their investment in the Warrants for an indefinite period of time. Investors should be aware of the high risks involved in an investment in the Company.

No person or entity is committed to purchase any of the Securities offered pursuant to this Offering, and no assurance is or can be given that all or any of the Securities offered hereunder will be sold. No escrow account for the subscription amounts from investors is maintained and no minimum amounts of Securities are required to be sold.  Proceeds received from the Offering will be available to the Company upon receipt, which the Company intends to promptly utilize in accordance with the terms of the “Use of Proceeds” section of this Subscription Agreement. In the event that the Company is unable to sell all or a significant portion of the Securities pursuant to the Offering, the Company may have insufficient capital after making the aforesaid payments to proceed with the Company’s business strategies and thus may be forced to seek additional capital sooner than would have been the case had the Offering been fully subscribed. There can be no assurance that such additional funds will be available to the Company when required on terms acceptable to the Company. The Company’s inability to obtain financing on favorable terms could restrict its operations and could materially harm an investment in the Company.

 

This Offering is being made on a “best efforts” rather than a firm commitment basis. No commitment exists by anyone, including the Selling Agent, to purchase all or any part of the Securities being offered pursuant to this Offering. There can be no assurance that any Securities offered hereby will be sold.

 

The Company has employed its own legal counsel in connection with this Offering. The Purchasers have not been represented by independent counsel in connection with the preparation of this Subscription Agreement or the terms of this Offering and no investigation of the merits or fairness of this Offering has been conducted on behalf of the Purchasers. Company Counsel has not conducted due diligence on behalf of the Purchasers. Prospective investors should consult with their own legal, tax and financial advisors with respect to the Offering made hereby.

The Securities are being offered pursuant to various available exemptions from registration from U.S. federal and state securities law registration requirements. Compliance with such laws, which must be met in order for such exemptions to be available to us, is highly technical and to some extent involves elements beyond our control. If the proper exemptions do not ultimately prove to be available, we could be subject to the claims of all or only some of our shareholders for violations of federal or state securities laws, which could materially adversely affect our profitability or operations or make an investment in the Securities worthless.

Under its articles of incorporation, the Company is presently authorized to issue up to 500,000,000 shares of Common Stock. As of March 25, 2010, there are outstanding 292,668,294 shares of Common Stock. The Company may, at any time after consummation or termination of this Offering, offer and sell additional securities of the Company upon such terms and conditions as the Board believes to be in the best interests of the Company. The Company may seek to engage in future offerings of its securities so as to sustain the operations and business activities of the Company. The sale of additional equity securities will dilute or reduce the percentage of ownership interests of the Purchasers. Further, the market price of our Common Shares could fall due to an increase in the number of shares available for sale in the public market.

 

As of December 31, 2009, there were issued and outstanding options to purchase 27,637,500 shares of common stock and warrants to purchase an aggregate of 24,152,765 additional shares of common stock To the extent that these securities are exercised or converted, dilution to our shareholders will occur. In addition, the Company sold 20,350 shares of Series A Preferred Stock during fiscal 2009. Under the terms of the Certificate of Designation, Preferences, Rights and Limitations of the Series A Preferred Stock, all shares of Series A Preferred Stock were automatically convertible into 33,916,667 shares of Common Stock upon the filing by the Company of a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada. However, as of December 31, 2009, holders of 2,465 shares of Series A Preferred Stock have not yet surrendered such shares for cancellation and the Company will issue an additional 4,108,333 shares of Common Stock to such holders upon the surrender of their certificates representing shares of Series A Preferred Stock. The exercise and conversion of these securities by the holders may adversely affect the market price of the Company’s Common Shares and the terms under which we could obtain additional equity capital.

We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore, we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future.

Our Common Shares are currently traded on the OTC Bulletin Board. Stocks traded on the OTC Bulletin Board generally have limited trading volume and exhibit a wide spread between the bid/ask quotations. We cannot predict whether a more active market for our Common Shares will develop in the future. In the absence of an active trading market investors may have difficulty buying and selling our Common Shares or obtaining market quotations; market visibility for our Common Shares may be limited; and a lack of visibility for our Common Shares may have a depressive effect on the market price for our Common Shares.

Our Common Shares are subject to Rules 15g-1 through 15g-9 under the Exchange Act, which imposes certain sales practice requirements on broker-dealers who sell our Common Shares to persons other than established customers and “accredited investors” (as defined in Rule 501(c) of the Securities Act). For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale. This rule adversely affects the ability of broker-dealers to sell our Common Shares and purchasers of our Common Shares to sell their shares of our Common Shares.

Additionally, our Common Shares are subject to SEC regulations applicable to “penny stocks.” Penny stocks include any non-Nasdaq equity security that has a market price of less than $5.00 per share, subject to certain exceptions. The regulations require that prior to any non-exempt buy/sell transaction in a penny stock, a disclosure schedule proscribed by the SEC relating to the penny stock market must be delivered by a broker-dealer to the purchaser of such penny stock. This disclosure must include the amount of commissions payable to both the broker-dealer and the registered representative and current price quotations for our Common Shares. The regulations also require that monthly statements be sent to holders of a penny stock that disclose recent price information for the penny stock and information of the limited market for penny stocks. These requirements adversely affect the market liquidity of our Common Shares.

As of December 31, 2009, of the 289,921,081 issued and outstanding shares of our Common Stock, approximately135,036,334 shares may be deemed “restricted shares” and, in the future, may be sold in compliance with Rule 144 under the securities Act of 1933, as amended. Rule 144 provides that a person holding restricted securities for a period of six months may sell in brokerage transactions an amount equal to 1% of our outstanding Common Stock every three months. A person who is a “non-affiliate” of our Company and who has held restricted securities for over one year is not subject to the aforesaid volume limitations as long as the other conditions of the Rule are met. Possible or actual sales of our Common Stock by certain of our present shareholders under Rule 144 may, in the future, have a depressive effect on the price of our Common Stock in any market which may develop for such shares. Such sales at that time may have a depressive effect on the price of our Common Stock in the open market.

Sales of a substantial number of shares of our common stock in the public market following this offering could cause the market price of our common stock to decline. If the Maximum Offering is completed, we will issue an aggregate of 25,000,000 additional Common Shares and 25,000,000 additional Warrants. This would increase the total number of outstanding shares of Common Stock at March 25, 2010, to 317,668,294 shares, assuming no exercise of outstanding options or warrants and no exercise of the Warrants. The issuance of a substantial number of our Common Shares will dilute the equity interests of the Company’s current stockholders. Further, as a substantial majority of the outstanding shares of our common stock are, tradable without restriction or further registration under the Securities Act of 1933 unless these shares are purchased by affiliates, the issuance of the Common Shares offered hereby may further depress the market price of our Common Stock.

Our management will have broad discretion with respect to the use of the proceeds of this offering.

Although we have highlighted the intended use of proceeds for this Offering, our management will have broad discretion as to the application of these net proceeds and could use them for purposes other than those contemplated at the time of this Offering. Our stockholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds.

The Company is authorized to issue 1,000,000 shares of preferred stock, $0.001 par value. Presently, the Company does not have any shares of preferred stock outstanding.  The preferred stock may be issued in series from time to time with such designation, voting and other rights, preferences and limitations as our Board of Directors may determine by resolution. Unless the nature of a particular transaction and applicable statutes require such approval, the Board of Directors has the authority to issue these shares without stockholder approval subject to approval of the holders of our preferred stock. The issuance of preferred stock may have the effect of delaying or preventing a change in control of the Company without any further action by our stockholders.

This Agreement and the exhibits annexed hereto contain certain forward looking information within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These statements relate to future events or future predictions, including events or predictions relating to our future financial performance, and are generally identifiable by use of the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “should”, “plan”, “intend”, or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussion of strategy that involve risks an uncertainties. Management wishes to caution each Subscriber that these forward-looking statements and other statements contained herein regarding matters that are not historical facts, are only predictions and estimates regarding future events and circumstances and involve known and unknown risks, uncertainties and other factors, including the risks described under “Risk Factors” that may cause the Company’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. This information is based on various assumptions by the management which may not prove to be correct.

In addition to the risks described in Risk Factors, important factors to consider and evaluate in such forward-looking statements include: (i) changes in the external competitive market factors which might impact the Company’s results of operations; (ii) unanticipated working capital or other cash requirements including those created by the failure of the Company to adequately anticipate the costs associated with clinical trials, manufacturing and other critical activities; (iii) changes in the Company’s business strategy or an inability to execute its strategy due to the occurrence of unanticipated events; (iv) the inability or failure of the Company’s management to devote sufficient time and energy to the Company’s business; and (v) the failure of the Company to complete any or all of the transactions described herein on the terms currently contemplated. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained or incorporated by reference in this Agreement will in fact transpire.

All of these assumptions are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of our Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Accordingly, there can be no assurance that actual results will meet expectations or will not be materially lower than the results contemplated in this Agreement. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document or, in the case of documents referred to or incorporated by reference, the dates of those documents. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law.

The Company hereby represents and warrants to the Purchasers as of the date of this Agreement as follows:

(A)      Organization. The Company is duly organized, validly existing and in good standing under the laws of its state of incorporation, with all requisite power and authority to own, lease, license, and use its properties and assets and to carry out the business in which it is engaged, except where the failure to have or be any of the foregoing may not be expected to have a material adverse effect on the Company’s presently conducted businesses.  The Company is not in violation of any of the provisions of its articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to transact the business in which it is engaged and is in good standing as a foreign corporation in every jurisdiction in which its ownership, leasing, licensing or use of property or assets or the conduct of its business make such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, have or reasonably be expected to result in (i) a material and adverse effect on the legality, validity or enforceability of this Agreement, (ii) a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company, taken as a whole, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations hereunder (any of (i), (ii) or (iii), a “Material Adverse Effect”).

 

            (G)      SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports (as defined in Section 1.7 above) complied in all material respects with the requirements of the Exchange Act and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  Except as may be stated in the SEC Reports, the financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(H)       Litigation. Except as disclosed in the SEC Reports, there is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates that would affect the execution by the Company or the performance by the Company of its obligations under this Agreement, and all other agreements entered into by the Company relating hereto. Except as disclosed in the SEC Reports, there is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates which litigation if adversely determined could result in a Material Adverse Effect.

 

(I)        Liabilities. The Company has no liabilities or obligations which are material, individually or in the aggregate, which are not disclosed in the SEC Reports, other than those incurred in the ordinary course of the Company’s businesses and which, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the Company’s financial condition. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect.

 (J)       Compliance.  The Company is not: (i) in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(K)       Intellectual Property.   To the Company’s knowledge, the Company owns, possesses, licenses or has other rights to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of the Company’s business as now conducted.  Except as set forth in the SEC Reports or for such matters which would not be expected to have a Material Adverse Effect, (a) no party has been granted an exclusive license to use any portion of such Intellectual Property owned by the Company; (b) to the Company’s knowledge, there is no material infringement by third parties of any such Intellectual Property owned by or exclusively licensed to the Company; (c) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s or any subsidiary’s rights in or to any material Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (d) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; and (e) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company’s business as now conducted infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any other fact which would form a reasonable basis for any such claim.

 

(L)       Tax Matters. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company (i) has made or filed all United States federal and state income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply except for any such amounts that is currently being contested in good faith.  There are no tax audits or investigations pending, which if adversely determined would have a Material Adverse Effect; nor are there any material proposed additional tax assessments against the Company.

(M)      Private Placement; Integration. Neither the Company nor its affiliates (i) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Shares, or (ii) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Securities under the Securities Act. Assuming the accuracy of the representations and warranties of Purchasers, the offer and sale of the Securities by the Company to the Purchasers pursuant to this Agreement will be exempt from the registration requirements of the Securities Act.  Neither the Company nor, to the knowledge of the Company, any of its affiliates has, directly or through any agent, sold, offered for sale or solicited offers to buy, which is or will be integrated with the sale of the Securities hereunder, in a manner that would require the registration, pursuant to the Securities Act, of the Offering.

(N)       Broker Fees. No broker, investment banker, financial advisor or other individual, corporation, general or limited partnership, limited liability company, firm, joint venture, association, enterprise, joint securities company, trust, unincorporated organization or other entity (each a “Person”), other than the Selling Agent, is entitled to any broker’s, finder’s, financial advisor’s financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.

(O)       Accountants. To the knowledge and belief of the Company, the Company’s independent registered public accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) is an independent public or certified public accountants as required by the Securities Act and the Exchange Act.

(P)       Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in this Agreement or as will be included in a periodic report to be filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act.

By signing this Agreement, each undersigned Purchaser hereby represents and warrants to the Company as follows as an inducement to the Company to accept the subscription of the Purchaser:

(F)       The Purchaser has received or obtained access to certain information regarding the Company, including this Agreement, the SEC Reports and other accompanying documents of the Company receipt of which is hereby acknowledged. The Purchaser has carefully reviewed all information provided to it and has carefully evaluated and understands the risks described therein related to the Company and an investment in the Company, and understands and has relied only on the information provided to it in writing by the Company relating to this investment. No agent prepared any of the information to be delivered to prospective investors in connection with this transaction. Prospective investors are advised to conduct their own review of the business, properties and affairs of the Company before subscribing to purchase the Securities.

(G)       The Purchaser also understands and agrees that, although the Company will use its best efforts to keep the information provided in this Agreement strictly confidential, the Company or its counsel may present this Agreement and the information provided in answer to it to such parties as they may deem advisable if called upon to establish the availability under any federal or state securities laws of an exemption from registration of the private placement or if the contents thereof are relevant to any issue in any action, suit or proceeding to which the Company or its affiliates is a party, or by which they are or may be bound or as otherwise required by law or regulatory authority. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission without the prior written consent of such Purchaser, except as required by federal securities law in connection with the disclosure of the transactions contemplated by this Agreement and otherwise to the extent such disclosure is required by law or regulation, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause.

(J)           In entering into this Agreement and in purchasing the Securities, the Purchaser further acknowledges that:

(i)  The Company has informed the Purchaser that the Securities have not been offered for sale by means of general advertising or solicitation and the Purchaser acknowledges that it has either a pre-existing personal or business relationship with either the Company or any of its officers, directors or controlling person, of a nature and duration such as would enable a reasonable prudent investor to be aware of the character, business acumen, and general business and financial circumstances of the Company and an investment in the Securities.

(ii)  Neither the Securities nor any interest therein may be resold by the Purchaser in the absence of a registration under the Securities Act or an exemption from registration. In particular, the Purchaser is aware that all of the foregoing described Securities will be “restricted securities”, as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144, unless the conditions thereof are met. Other than set forth in this Agreement, the Company has no obligation to register any securities purchased or issuable hereunder.

(iii)  The following legend (or substantially similar language) shall be placed on the certificate(s) or other instruments evidencing the Securities:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH NOTES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH NOTES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH NOTES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

(iv)  The Company may at any time place a stop transfer order on its transfer books against the Securities. Such stop order will be removed, and further transfer of the Securities will be permitted, upon an effective registration of the respective Securities, or the receipt by the Company of an opinion of counsel satisfactory to the Company that such further transfer may be effected pursuant to an applicable exemption from registration.

(K)          The Company has employed its own legal counsel in connection with the Offering. The Purchasers have not been represented by independent counsel in connection with the preparation of this Agreement or the terms of this Offering and no investigation of the merits or fairness of the Offering has been conducted on behalf of the Purchasers. Each Purchaser has had the opportunity to consult with its own legal, tax and financial advisors with respect to the Offering made pursuant to this Agreement.

(L)          ___________ (insert name of Purchaser Representative: if none leave blank) has acted as the Purchaser’s Purchaser Representative for purposes of the private placement exemption under the Act.  If the Purchaser has appointed a Purchaser Representative (which term is used herein with the same meaning as given in Rule 501(h) of Regulation D), the Purchaser has been advised by his Purchaser Representative as to the merits and risks of an investment in the Company in general and the suitability of an investment in the Securities for the Purchaser in particular.

(M)          The undersigned hereby acknowledges that officers, affiliates, employees and directors of the Company and/or the Selling Agents may purchase Securities in the Offering on the same terms and conditions as the Purchasers.

(O)           The Purchaser acknowledges that any delivery to it of this Agreement relating to the Securities prior to the determination by the Company of its suitability as a Purchaser shall not constitute an offer of the Securities until such determination of suitability shall be made, and the Purchaser hereby agrees that it shall promptly return this Agreement and the other Offering documents to the Company upon request. The Purchaser understands that the Company shall have the right to accept or reject this subscription in whole or in part. Unless this subscription is accepted in whole or in part by the Company this subscription shall be deemed rejected in whole.

4.1          Indemnification by the Company. The Company agrees to defend, indemnify and hold harmless the Purchasers and shall reimburse Purchasers for, from and against each claim, loss, liability, cost and expense (including without limitation, interest, penalties, costs of preparation and investigation, and the reasonable fees, disbursements and expenses of attorneys, accountants and other professional advisors) (collectively, “Losses”) directly or indirectly relating to, resulting from or arising out of any untrue representation, misrepresentation, breach of warranty or non-fulfillment of any covenant, agreement or other obligation by or of the Company contained herein or in any certificate, document, or instrument delivered to Purchasers pursuant hereto.

4.2          Indemnification by Purchasers. Purchasers agrees to defend, indemnify and hold harmless the Company and shall reimburse the Company for, from and against all Losses directly or indirectly relating to, resulting from or arising out of any untrue representation, misrepresentation, breach of warranty or non-fulfillment of any covenant, agreement or other obligation of the Purchasers contained herein or in any certificate, document or instrument delivered to the Company pursuant hereto.

4.3          Procedure. The party to be indemnified hereunder (the “Indemnified Party”) shall promptly notify the party providing indemnification hereunder (the “Indemnifying Party”) of any claim, demand, action or proceeding for which indemnification may be sought under Sections 4.1 or 4.2 of this Agreement, and, if such claim, demand, action or proceeding is a third party claim, demand, action or proceeding (collectively, an “Action”), the Indemnifying Party will have the right at its expense to assume the defense thereof using counsel reasonably acceptable to the Indemnified Party; provided, however any failure or delay to so notify the Indemnifying Party will not relieve it from its obligation to indemnify any  Indemnified Party, unless and only to the extent that such failure or delay results in the forfeiture by the Indemnifying Party of substantial rights and defenses or the Indemnifying Party is otherwise materially prejudiced by such failure or delay. Any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party except to the extent that (i) the employment thereof has been specifically authorized by the Indemnifying Party in writing, (ii) the Indemnifying Party has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Indemnifying Party and the position of such Indemnified Party, in which case the Indemnifying Party shall be responsible for the reasonable fees and expenses of no more than one such separate counsel for the Indemnified Party.  In connection with any such third party Action, Purchasers and the Company shall cooperate with each other and provide each other with access to relevant books and records in their possession. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, which shall not be unreasonably withheld, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened Action in respect of which any Indemnified Party is or could have been a party and indemnity was or could have been sought hereunder by such Indemnified Party, unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Action. Further, no Indemnified Party seeking indemnification hereunder will, without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any Action. The Indemnifying Party shall not be liable for settlement of any Action effected without its written consent.

 

Each Purchaser and the Company agree that the Purchasers shall be entitled to the registration rights with respect to the Securities as set forth in this Section 5.1

(a)           Definition of Registrable Securities. As used in this Section 5.1, the term “Registrable Security” means (i) each of the Common Shares issued under this Agreement; (ii) each of the Warrant Shares issuable upon exercise of the Warrants issued under this Agreement; and (iii) any securities issued upon any stock split or stock dividend in respect thereof; provided, however, that with respect to any particular Registrable Security, such security shall cease to be a Registrable Security when, as of the date of determination; (A) it has been and remains effectively registered under the Securities Act and disposed of pursuant thereto; (B) in the opinion of counsel to the Company, registration under the Securities Act is no longer required for subsequent public distribution of such security pursuant to Rule 144 promulgated under the Securities Act, or otherwise; or (C) it has ceased to be outstanding. The term “Registrable Securities” means any and all of the securities falling within the foregoing definition of “Registrable Security.” In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be made in the definition of “Registrable Security” as is appropriate to prevent any dilution or increase of the rights granted pursuant to this Clause (a) as determined in good faith by the Board of Directors.

(b)           Registration by the Company. Commencing on the Closing Date and for a period of three years thereafter, in the event that the Company intends to file a registration statement with the Securities and Exchange Commission under the Securities Act, other than registration statement on Form S-4 or S-8, or successor forms thereto, and registration statements filed but not effective prior to the termination of this Offering, to register for sale any of its shares of Common Stock, the Company will include for resale under the Securities Act in the registration statement the Registrable Securities of the Holder in accordance with this Section 5.1. The Company shall advise the Holder of the Registrable Securities (such persons being collectively referred to herein as “Holders”) by written notice at least 20 days prior to the filing by the Company with the Securities and Exchange Commission of any other registration statement under the Act covering shares of Common Stock of the Company, except on Forms S-4 or S-8 (or similar successor form) or registration statements filed but not effective prior to the termination of this Offering, and upon the request of any such Holder within ten days after the date of such notice, include in any such registration statement such information as may be required to permit a public offering of the Holder’s Registrable Securities. Such Holders shall furnish information and indemnification as set forth in elsewhere in this Section 5.1. The Company may withdraw the registration at any time. Notwithstanding the foregoing, if the registration statement filed by the Company is pursuant to an underwritten offering of securities sold by the Company or on its behalf:

(A)           if the underwriter determines in good faith that marketing factors require the exclusion of some or all of the Registrable Securities, then the Holders may include in the registration statement no more than the maximum amount, if any, of such  Registrable Securities that the underwriter believes will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the Holders according to the total amount of securities requested to be included therein owned by the Holders or in such other proportions as shall mutually be agreed upon by such parties). The Holders’ right to have Registrable Securities included in the first registration statement filed by the Company shall be deferred to the second registration statement filed by the Company, which deferral may be continued to the third or subsequent registration statement so long as the registration statements are pursuant to underwritten offerings and the underwriter determines in good faith that marketing factors require exclusion of some or all of the Registrable Securities held by the Holders; and

(B)           each Holder of Registrable Securities shall enter into an underwriting agreement in customary form with the underwriter and provide such information regarding Holder that the underwriter shall reasonably request in connection with the preparation of the prospectus describing such offering, including completion of FINRA Questionnaires.

    (c)           Covenants with Respect to Registration. In connection with the registration in which the Registrable Securities are included, the Company covenants and agrees as follows:

(A)           The Company shall use commercially reasonable efforts to have the registration statement declared effective as soon as possible after filing, and shall furnish each Holder of Registrable Securities such number of prospectuses as shall reasonably be requested. In addition, the Company shall file such amendments as may be required from time to time, in order to keep any registration statement filed under this section effective as provided herein. The Company shall use commercially reasonable efforts to maintain the effectiveness of the registration statement filed by the Company hereunder until the date that the Registrable Securities may be sold without volume limitation under SEC Rule 144.

(B)           The Company shall pay all costs (excluding fees and expenses of Holder(s) counsel and any underwriting or selling commissions), fees and expenses in connection with the registration statement filed pursuant hereto including, without limitation, the Company’s legal and accounting fees, printing expenses, blue sky fees and expenses.

(C)           The Company will take all necessary action which may be required in qualifying or registering the Registrable Securities included in the registration statement, for offering and sale under the securities or blue sky laws of such states as reasonably are requested by the Holder(s), provided that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction.

(D)           The Company shall indemnify each Holder of Registrable Securities to be sold pursuant to the registration statement and each person, if any, who controls such Holder within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including reasonable expenses reasonably incurred in investigating, preparing or defending against any claim) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising from such registration statement, except to the extent arising under paragraph (E) below.

(E)            Each Holder of Registrable Securities to be sold pursuant to a registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, its officers and directors and any underwriter, and each person, if any, who controls the Company or such underwriter within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage or reasonable expense or liability (including expenses reasonably incurred in investigating, preparing or defending against any claim) to which they may become subject under the Securities Act, the Exchange Act or otherwise, arising (I) from information furnished by or on behalf of such Holder, or their successors or assigns, for inclusion in such registration statement, or (II) as a result of use by the Holder of a registration statement that the Holder was advised to discontinue; provided, however, that in no event shall any indemnity hereunder exceed the net proceeds from the offering received by such Holder.

 

(F)         The foregoing registration rights shall be contingent on the Holders furnishing the Company with such appropriate information (relating to the intended means of distribution of the Registrable Securities of such Holders) as the Company shall reasonably request.

5.2           Disclosure of Closing.  The Company shall, by 5:30 p.m. (New York City time) on the fourth business day immediately following the date of the Initial Closing, file a Current Report on Form 8-K with the SEC containing such information regarding the Offering as is required pursuant to the requirements of Form 8-K.

 

5.3           Future Periodic Reports. Until the earlier of the resale of the Common Shares, and shares of Common Stock underlying the Warrants by each Subscriber or at least twelve months after the Warrants have been exercised or have expired, the Company will (a) use best efforts to continue the listing or quotation of the Common Stock on the OTC Bulletin Board or such other trading market for the Common Stock as it may be listed for trading on and (b) file all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act in accordance with the terms and conditions applicable to such Exchange Act filings.

5.4           Transfer Agent and Certain Legal Fees. The Company shall continue to engage and maintain, at its expense, a registrar and transfer agent for its shares of Common Stock for at least such time as it is required to comply with the covenants set forth in Section 5.3 of this Agreement. Further, in connection with the request of a Purchaser to sell Shares or Warrant Shares in compliance with Rule 144 or for the removal of the restrictive legends which may be imprinted on the certificates representing the Shares and Warrant Shares held by a Purchaser in accordance with Rule 144, the Company shall bear the fees and expenses of its securities transfer agent and its counsel in connection with rendering opinions required by the Company’s securities transfer agent to the extent that such issuance or transfer is permissible in accordance with the applicable provisions of Rule 144.

6.1            Survival.  The representations and warranties set forth in Articles II and III hereof shall survive the Closing.  No investigation made by or on behalf of either party shall affect the representations and warranties made pursuant to this Agreement. No party makes any additional or implied representations other than those set forth herein.

6.2            Expenses.  Each party hereto shall bear and pay all costs and expenses incurred by it in connection with the transactions contemplated hereby, including fees and expenses of its own brokers, finders, financial consultants, accountants and counsel.

6.3           Entire Agreement. This Agreement, including the Exhibits, contains the entire agreement and understanding of the parties with respect to its subject matter. This Agreement supersedes all prior arrangements and understandings between the parties, either written or oral, with respect to its subject matter.

6.4           Binding Effect of Subscription. The Purchaser hereby acknowledges and agrees, subject to any applicable state securities laws that the subscription and application hereunder are irrevocable, that the Purchaser is not entitled to cancel, terminate or revoke this Agreement and that this Agreement shall survive the death or disability of the Purchaser and shall be binding upon and inure to the benefit of the Purchaser and his heirs, executors, administrators, successors, legal representatives, and assigns.  If the Purchaser is more than one person, the obligations of the Purchaser hereunder shall be joint and several, and the agreements, representations, warranties, and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators, successors, legal representatives, and assigns.

 

6.5           Captions. The table of contents and captions contained in this Agreement are for reference purposes only and are not part of this Agreement.

6.6           Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding a majority of the Securities subscribed for in the Offering or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought (in the case of the Purchasers, such waiver shall be in writing and approved by a majority of the Purchasers). No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed by their signature as natural persons or by individuals by their duly authorized officers as of the __ day of ____________, 2010.

(Not applicable to entities)

 

¨           Individual

 

¨           Joint Tenants (rights of survivorship)

 

¨           Tenants in Common (no rights of survivorship)

I represent that the foregoing information is true and correct.

IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the terms hereof.

Dated: __________________ ___, 2010

Subscription Amount:  $_____________

Number of Securities to be purchased: _______________

 

 

 

The undersigned PARTNERSHIP hereby represents and warrants that the person signing this Subscription Agreement on behalf of the PARTNERSHIP is a general partner of the PARTNERSHIP, has been duly authorized by the PARTNERSHIP to acquire the Securities and sign this Subscription Agreement on behalf of the PARTNERSHIP and, further, that the undersigned PARTNERSHIP has all requisite authority to purchase such Securities and enter into the Subscription Agreement.

 

IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the terms hereof.

Dated: __________________ _____, 2010

Subscription Amount:  $_____________

Number of Shares of Securities to be purchased: _______________

 

 

 

The undersigned CORPORATION or LIMITED LIABILITY COMPANY hereby represents and warrants that the person signing this Subscription Agreement on behalf of the CORPORATION or LIMITED LIABILITY COMPANY has been duly authorized by all requisite action on the part of the CORPORATION or LIMITED LIABILITY COMPANY to acquire the Securities and sign this Subscription Agreement on behalf of the CORPORATION or LIMITED LIABILITY COMPANY and, further, that the undersigned CORPORATION or LIMITED LIABILITY COMPANY has all requisite authority to purchase the Securities and enter into this Subscription Agreement.

 

IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the terms hereof.

Dated: __________________ _____, 2010

Subscription Amount:  $_____________

Number of Shares of Securities to be purchased: _______________

 

 

 

The undersigned TRUST or RETIREMENT PLAN hereby represents and warrants that the persons signing this Subscription Agreement on behalf of the TRUST or RETIREMENT PLAN are duly authorized to acquire the Securities and sign this Subscription Agreement on behalf of the TRUST or RETIREMENT PLAN and, further, that the undersigned TRUST or RETIREMENT PLAN has all requisite authority to purchase such Securities and enter into the Subscription Agreement.

IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement and agrees to the terms hereof.

Dated: __________________ _____, 2010

Subscription Amount:  $_____________

Number of Shares of Securities to be purchased: _______________