Name of Subscriber
 
Agreement No.

CONFIDENTIAL SUBSCRIPTION AGREEMENT

SKINNY NUTRITIONAL CORP.

Private Sale of Securities
$250,000 Minimum - $1,500,000 Maximum

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
________________________

THIS SUBSCRIPTION AGREEMENT CONTAINS MATERIAL NONPUBLIC INFORMATION CONCERNING
SKINNY NUTRITIONAL CORP. AND IS PREPARED SOLELY FOR THE USE OF THE OFFEREE NAMED
ABOVE.  ANY USE OF THIS INFORMATION FOR ANY PURPOSE OTHER THAN IN CONNECTION
WITH THE CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OFFERED HEREBY MAY
SUBJECT THE USER TO CRIMINAL AND CIVIL LIABILITY.

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK AND IMMEDIATE DILUTION AND MAY BE PURCHASED ONLY BY PERSONS WHO QUALIFY
AS “ACCREDITED INVESTORS” UNDER RULE 501 (a) OF REGULATION D UNDER THE
SECURITIES ACT.

THIS DOCUMENT HAS NOT BEEN FILED WITH OR REVIEWED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER COMMISSION OR REGULATORY
AUTHORITY, AND HAS NOT BEEN FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL OF
ANY STATES NOR HAS ANY SUCH COMMISSION, AUTHORITY OR ATTORNEY GENERAL DETERMINED
WHETHER IT IS ACCURATE OR COMPLETE OR PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Selling Agent:

[logo.jpg]

PHILADEPHIA BROKERAGE CORPORATION
2 Radnor Corporate Center
100 Matsonford Road, Suite 111
Radnor, Pennsylvania 19087
Tel. (610) 975-9990

April 7, 2010

 
 

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CONFIDENTIAL SUBSCRIPTION AGREEMENT

INSTRUCTIONS:

Items to be delivered by all Investors:

a.           One (1) completed and executed Subscription Agreement, including
the Investor Questionnaire.

b.          Payment in the amount of subscription, by wire transfer of funds or
check. All checks should be made payable to “The Bryn Mawr Trust Company as
escrow agent for Philadelphia Brokerage Corporation and Skinny Nutritional
Corp.” in the total amount of the Securities subscribed for.

c.          Wired funds should be directed as follows:

The Bryn Mawr Trust Company Escrow Account for Philadelphia Brokerage
Corporation and Skinny Nutritional Corp.

Trust Funds, Account Number 069-6964, for further credit to:
PHL Brokerage/SKNY, Account Number 801525000

The Bryn Mawr Trust Company
10 Bryn Mawr Avenue
Bryn Mawr, PA 19010
Attention: Trust/Escrow Administration
ABA No.: 031908485

Facsimile:  (610) 526-2076
Telephone:  (610) 581-4754

THE SUBSCRIBER IS RESPONSIBLE FOR ALL WIRE TRANSFER FEES IMPOSED BY THE
SUBSCRIBER’S BANK.

ALL DOCUMENTS SHOULD BE RETURNED TO:

Philadelphia Brokerage Corporation
2 Radnor Corporate Center
100 Matsonford Road, Suite 111
Radnor, Pennsylvania 19087
Tel. (610) 975-9990

In the event you decide not to participate in this offering please return this
Confidential Subscription Agreement to the principal office of the Placement
Agent as set forth above.

THE FOLLOWING EXHIBITS ARE ANNEXED TO
AND FORM PART OF THIS SUBSCRIPTION AGREEMENT:

EXHIBIT A:    INVESTOR QUESTIONNAIRE

EXHIBIT B:    FORM OF WARRANT

 
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SUBSCRIPTION AGREEMENT

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”)

Article I
SALE OF SECURITIES

1.1      Sale of Securities; Offering Period

(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.

 
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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.

Summary of Offering

Offering Summary:
 
The Company is offering a minimum of $250,000 of units of Securities and a
maximum of $1,500,000 of units of Securities. The Securities are being offered
on a “best efforts, all or none” basis as to the Minimum Offering and a “best
efforts” basis as to the remaining portion up to the Maximum Offering. Each unit
consists of one Common Share and one Warrant.
     
Offering Period:
 
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.
     
Purchase Price:
 
The Securities are being offered for a Purchase Price of $0.06 per unit of
Securities.
     
Minimum Subscription:
 
The minimum subscription amount for the Securities is $20,000, although the
Company may accept subscriptions in lesser amounts in its sole discretion.
     
Description of Warrants:
 
Each Subscriber will receive one Warrant to purchase one (1) share of common
stock for each Common Share it purchases in this Offering. The Warrants are
exercisable at an exercise price of $0.10 per share during the period commencing
on the issue date of the Warrant and expire 24 months from the initial exercise
date.
     
Warrant Redemption:
 
The Warrants shall provide that if the closing price of the Company’s Common is
at least $0.14 per share for 20 consecutive trading days, the Company may redeem
such Warrants and in such event a Subscriber must exercise such Warrants within
a limited period from the date that a notice of redemption is delivered by the
Company or the Warrants shall be automatically cancelled and only represent the
right to receive a redemption payment of $.001 per share. The description of
terms and conditions of the Warrants set forth herein does not purport to be
complete and is qualified in its entirety by the full text of the form of
Warrant, which is attached hereto as Exhibit B.

 
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Escrow:
 
Until the Minimum Offering is sold and during the remaining Offering Period, all
offering proceeds shall be held in a non-interest bearing escrow account with
The Bryn Mawr Trust Company located in Bryn Mawr, Pennsylvania (the “Escrow
Agent”).  In the event the Minimum Offering is not sold by the end of the
Offering Period, all offering proceeds shall be returned to the investors
without interest thereon or deduction therefrom.
      Piggyback    
Registration Rights:
 
Subscribers shall be entitled to the piggyback registration rights applicable to
the Common Shares and the Warrant Shares, as described in Section 5.1 of this
Agreement.
     
Subscription Procedure:
 
In order to subscribe for the Securities, each prospective subscriber must
complete, execute and deliver to the Company a signature page evidencing such
prospective subscriber’s execution of this Subscription Agreement along with a
completed confidential Purchaser Questionnaire.
     
Use of Proceeds:
 
The Company will use the proceeds for working capital and general corporate
purposes.
     
Restrictions on
   
Transferability:
 
The Securities have not been registered under the Securities Act or under the
securities laws of the United States or of any state or other jurisdiction. As a
result, the Securities may not be transferred without registration under the
Securities Act, or, if applicable, the securities laws of any state or other
jurisdiction, unless in the opinion of counsel to the Company, such registration
is not then required because of the availability of an exemption from
registration.
     
Investment:
 
An investment in the Company is highly speculative, and each investor bears the
risk of losing his, her or its entire investment. All Purchasers must complete
and execute a Subscription Agreement and a confidential Purchaser Questionnaire.
Purchasers must set forth representations in such documents that he, she or it
is purchasing the Securities for investment purposes only and without a view
toward distribution. The Securities are suitable investments only for
sophisticated investors for whom an investment in the Securities does not
constitute a complete investment program and who fully understand, are willing
to assume, and who have the financial resources necessary to withstand, the
risks involved in investing in the Securities and who can bear the potential
loss of their entire investment. The Securities are being offered and sold only
to persons who qualify as “accredited investors,” as defined under Regulation D
of the Securities Act

 
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1.4       Escrow; Minimum Offering Amount; Closings. The Subscriber acknowledges
and agrees that all subscription amounts will be deposited in a non-interest
bearing account established on behalf of the Company at The Bryn Mawr Trust
Company. At each closing of the transactions contemplated herein (the
“Closing”), the Subscribers shall purchase, severally and not jointly, and the
Company shall issue and sell, to the Subscribers the amount of Securities as
indicated on the signature page of each Subscriber’s subscription agreement, up
to the Maximum Offering amount. Once the Minimum Offering amount has been
subscribed for and accepted by the Company and the Selling Agent, an initial
closing (the “Initial Closing”) will be held as soon as practicable. 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. If the Minimum Offering
amount is not received prior to June 30, 2010 (or August 31, 2010, if extended
by the Company and Selling Agent) then all funds held in escrow shall be
returned to Subscribers without interest or deduction.  The Initial Closing
shall occur on the date that subscriptions for at least the Minimum Offering
amount have been received and accepted by the Company and the Selling Agent at
the offices of Becker & Poliakoff, LLP, 45 Broadway, New York, NY 10006, or such
other time and/or location as the parties shall mutually agree. Assuming the
Minimum Offering amount is subscribed for and accepted and a Closing held,
thereafter additional subscription funds will be placed into the escrow account
and additional closings will be held from time to time up to the sale of the
Maximum Offering. Once the Maximum Offering amount has been subscribed for and
accepted by the Company, a final closing will be held (“Final Closing”). The
Final Closing shall be either the date on which this Offering is fully
subscribed or the last date during the Offering Period on which the Company
accepts a subscription, whichever is latest.

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.

1.6       Use of Proceeds.  The Company intends to use the proceeds derived from
this Offering to satisfy its working capital requirements and general corporate
purposes. Management reserves the right to utilize the net proceeds of the
Offering in a manner in the best interests of the Company. Accordingly,
management will have broad discretion in the application of the proceeds of the
Offering. The amount of the net proceeds that will be invested in particular
areas of the Company’s business will depend upon future economic conditions and
business opportunities. To the extent that the Company continues to incur losses
from operations, such losses will be funded from its general funds, including
the net proceeds of this Offering.

1.7       Certain Reports Filed Under the Securities Exchange Act of 1934.

(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”).

 
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(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.

1.8          Subscriber Information

(a)
 
Name(s) of
SUBSCRIBER(s): ____________________
         
____________________________________
         
____________________________________
     
(b)
Principal Amount of Securities
   
Subscribed for:
$__________
     
(c)
Accredited Investor Status
 

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):

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

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

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

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

 
 
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¨
an investment company registered under the Investment Company Act of 1940, as
amended or a business development company as defined in Section 2(a)(48) of such
act;

 
 
¨
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;

 
¨
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;

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

 
¨
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;

 
¨
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;

 
¨
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;

 
¨
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;

 
¨
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);

 
¨
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

¨
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.

 
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1.9           Risk Factors

Investing in our Securities involves risks and our operating results and
financial condition have varied in the past and may in the future vary
significantly depending on a number of factors. You should consider the
following risk factors in evaluating whether to invest in our Securities.
However, the risks described below are not the only risks facing the Company. In
addition to these risk factors and other risks described elsewhere in this
Agreement, you should carefully consider the risk factors described in our SEC
Reports, each of which has been filed with the Securities and Exchange
Commission and which are all incorporated by reference in this Agreement. These
risks could have a material adverse effect on our business, results of
operations, financial condition or liquidity and cause our actual operating
results to materially differ from those contained in forward-looking statements
made in this Agreement, in our SEC Reports and elsewhere by management. Before
making an investment decision, you should carefully consider these risks as well
as other information contained or incorporated by reference in this Agreement.
Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operating results.

General Risks Related to the Company’s Business

The Warrants include a mandatory redemption provision and will expire if not
exercised in accordance with this provision.
 
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.

The Company has a history of operating losses. If it continues to incur
operating losses, it may have insufficient working capital to maintain
operations and may require additional capital to do so.

     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.

 
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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 relied on capital raised from private placements of its
securities to fund operations and its independent auditors have included a
“going concern” opinion in their report included in the Company’s Annual Report.
 
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.  

 
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The Securities offered hereby are “restricted securities” and may not be
transferred or resold absent registration or an exemption therefrom.

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.

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 assurances that enough Securities will be sold to pursue business strategies.

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.

 
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This Offering is being made on a best efforts basis.
 
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.
 
No independent counsel for Purchasers.

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.

Availability of Securities Act exemption.

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.

The equity interests of Purchasers are subject to substantial dilution.

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.

Exercise or conversion of outstanding options, warrants and shares of
convertible preferred stock will dilute stockholders and could decrease the
market price of our common stock.
 
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.

 
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We do not anticipate paying dividends in the foreseeable future, and the lack of
dividends may have a negative effect on the price of our Common Stock.

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 Stock is traded on the OTC Bulletin Board, which may be detrimental
to investors.

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 restrictions on sales by broker-dealers and
penny stock rules, which may be detrimental to investors.

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.

There are outstanding a significant number of shares available for future sales
under Rule 144.

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.

 
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A substantial number of shares may be sold in the market following this
offering, which will further dilute our common shareholders and may depress the
market price for our common stock.

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.

Preferred Stock as an anti-takeover device.

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.

Forward Looking Statements

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.

 
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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.

Article II
REPRESENTATIONS AND WARRANTIES OF COMPANY

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”).
 
(B)       Capitalization. The Company is currently authorized to issue
500,000,000 shares of Common Stock, $0.001 par value per share and 1,000,000
shares of Preferred Stock, $0.001 par value per share. Except as may be
described in this Agreement, no securities of the Company are entitled to
preemptive or similar rights, and no entity or person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by this Agreement unless any such
rights have been waived. The issue and sale of the Securities will not (except
pursuant to their terms thereunder), immediately or with the passage of time,
obligate the Company to issue shares of Common Stock or other securities to any
entity or person and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities.  As of March 25, 2010, there are outstanding 292,668,294 shares
of Common Stock. Except as disclosed in the SEC Reports (as defined above), as
of the date set forth on the cover of this Agreement there are no outstanding
options, warrants or other rights calling for the issuance of any share of stock
of the Company or any of its subsidiaries or any security convertible into, or
exercisable or exchangeable for, such stock.

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(C)       Authorization; Enforceability. The Company has the requisite corporate
power and authority to enter into, deliver and consummate the transactions
contemplated by this Agreement, to issue, sell and deliver the Securities, and
otherwise to carry out its obligations hereunder. The execution and delivery of
this Agreement and the Warrants and the consummation by it of the transactions
contemplated thereby have been duly authorized by the Company and no further
action is required by the Company in connection therewith. When executed and
delivered by the Company, this Agreement and the Warrants will constitute the
legal, valid and binding obligation of the Company, enforceable as to the
Company in accordance with their respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance or transfer, moratorium or other laws or court decisions, now or
hereinafter in effect, relating to or affecting the rights of creditors
generally and as may be limited by general principles of equity and the
discretion of the court having jurisdiction in an enforcement action (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).

(D)       Consents. The Company is not required to obtain any consent, waiver,
authorization, approval or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other person or entity in connection with the
execution, delivery and performance by the Company of this Agreement or the
issuance, sale or delivery of the Securities other than (i) any filings required
by state securities laws, (ii) the filing of a Notice of a Sale of Securities on
Form D with the Commission under Regulation D of the Securities Act, (iii) those
that have been made or obtained prior to or contemporaneously with the Initial
Closing, and (iv) filings pursuant to the Exchange Act.

(E)       No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby in accordance with the terms and conditions described herein
do not and will not: (i) conflict with or violate any provision of the Company’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii)  violate, conflict with, or constitute a default or
breach (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
debt or otherwise) or other understanding to which the Company is a party or by
which any property or asset of the Company is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

(F)       Issuance of Securities. The Common Shares and Warrants have been duly
authorized and, when issued and paid for in accordance with this Agreement, will
be duly and validly issued, fully paid and nonassessable and will be issued free
and clear of all liens and encumbrances, other than restrictions on transfer
under applicable securities laws. The Warrant Shares have been duly authorized
and, when issued and paid for in accordance with this Agreement and the
Warrants, will be duly and validly issued, fully paid and nonassessable and will
be issued free and clear of all liens and encumbrances, other than restrictions
on transfer under applicable securities laws.

            (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.

 
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(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.

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(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.

 
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Article III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS

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:

(A)      The Purchaser acknowledges and agrees that (i) the offering and sale of
the Securities are intended to be exempt from registration under the Securities
Act by virtue of Section 4(2) of the Securities Act and/or Regulation D
promulgated thereunder, (ii) the Securities have not been registered under the
Securities Act and (iii) that the Company has represented to the Purchaser
(assuming the veracity of the representations of the Purchaser made herein and
in the Questionnaire annexed hereto at Exhibit A) that the Securities have been
offered and sold by the Company in reliance upon an exemption from registration
provided in Section 4(2) of the Securities Act and Regulation D thereunder. In
accordance therewith and in furtherance thereof, the Purchaser represents and
warrants to and agrees with the Company that it is an accredited investor (as
defined in Rule 501 promulgated under the Securities Act) for the reason
indicated in Article I of this Subscription Agreement.

(B)       The Purchaser hereby represents and warrants that the Purchaser is
acquiring the Securities hereunder for its own account for investment and not
with a view to distribution, and with no present intention of distributing the
Securities or selling the Securities for distribution. The Purchaser understands
that the Securities are being sold to the Purchaser in a transaction which is
exempt from the registration requirements of the Securities Act.  Accordingly,
the Purchaser acknowledges that it has been advised that the Securities have not
been registered under the Securities Act and are being sold by the Company in
reliance upon the veracity of the Purchaser’s representations contained herein
and upon the exemption from the registration requirements provided by the
Securities Act and the securities laws of all applicable states. The Purchaser’s
acquisition of the Securities shall constitute a confirmation of the foregoing
representation and warranty and understanding thereof.

(C)       The Purchaser (or its “Purchaser Representative”, if any) has such
knowledge and experience in financial and business matters as is required for
evaluating the merits and risks of making this investment, and the Purchaser or
its Purchaser Representative(s) has received such information requested by the
Purchaser concerning the business, management and financial affairs of the
Company in order to evaluate the merits and risks of making this investment.
Further, the Purchaser acknowledges that the Purchaser has had the opportunity
to ask questions of, and receive answers from, the officers of the Company
concerning the terms and conditions of this investment and to obtain information
relating to the organization, operation and business of the Company and of the
Company's contracts, agreements and obligations or needed to verify the accuracy
of any information contained herein or any other information about the
Company.  Except as set forth in this Agreement, no representation or warranty
is made by the Company to induce the Purchaser to make this investment, and any
representation or warranty not made herein or therein is specifically disclaimed
and no information furnished to the Purchaser or the Purchaser’s advisor(s) in
connection with the sale were in any way inconsistent with the information
stated herein. The Purchaser further understands and acknowledges that no person
has been authorized by the Company to make any representations or warranties
concerning the Company, including as to the accuracy or completeness of the
information contained in this Agreement.

(D)       The Purchaser is making the foregoing representations and warranties
with the intent that they may be relied upon by the Company in determining the
suitability of the sale of the Securities to the Purchaser for purposes of
federal and state securities laws. Accordingly, each Purchaser represents and
warrants that the information stated herein is true, accurate and complete, and
agrees to notify and supply corrective information promptly to the Company as
provided above if any of such information becomes inaccurate or incomplete. The
Purchaser has completed this Agreement and Questionnaire, has delivered it
herewith and represents and warrants that it is accurate and true in all
respects and that it accurately and completely sets forth the financial
condition of the Purchaser on the date hereof. The Purchaser has no reason to
expect there will be any material adverse change in its financial condition and
will advise the Company of any such changes occurring prior to the closing or
termination of the Offering.

 
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(E)       The Purchaser is not subscribing for any of the Securities as a result
of or subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the Purchaser in connection
with investments in Securities generally.

(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.

(H)       The individual signing below on behalf of any entity hereby warrants
and represents that he/she is authorized to execute this Agreement on behalf of
such entity. If an individual, the Purchaser has reached the age of majority in
the state in which the Purchaser resides. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all requisite action, if any, in respect thereof on the part
of Purchasers and no other proceedings on the part of Purchasers are necessary
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchasers and constitutes a valid and
binding obligation of Purchasers, enforceable against Purchasers in accordance
with its terms (subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and subject, as to enforceability, to
general principles of equity (whether applied in a proceeding in equity or at
law)).

(I)        The Purchaser is aware that the offering of the Securities involves
securities for which only a limited trading market exists, thereby requiring any
investment to be maintained for an indefinite period of time.  The purchase of
the Securities involves risks which the Purchaser has evaluated, and the
Purchaser is able to bear the economic risk of the purchase of such Securities
and the loss of its entire investment. The undersigned is able to bear the
substantial economic risk of the investment for an indefinite period of time,
has no need for liquidity in such investment and can afford a complete loss of
such investment. The Purchaser’s overall commitment to investments that are not
readily marketable is not, and his acquisition of the Securities will not cause
such overall commitment to become, disproportionate to his net worth and the
Purchaser has adequate means of providing for its current needs and
contingencies.

 
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(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.

 
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(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.

(N)           It never has been represented, guaranteed or warranted by the
Company, any of the officers, directors, stockholders, partners, employees or
agents of the Company, or any other persons, whether expressly or by
implication, that: (i) the Company or the Purchasers will realize any given
percentage of profits and/or amount or type of consideration, profit or loss as
a result of the Company’s activities or the Purchaser’s investment in the
Company; or (ii) the past performance or experience of the management of the
Company, or of any other person, will in any way indicate the predictable
results of the ownership of the Securities or of the Company’s activities.

(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.

Article IV
INDEMNIFICATION

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.

 
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ARTICLE V
ADDITIONAL AGREEMENTS BY THE PARTIES

5.1           Registration Rights

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:

 
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(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.

 
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(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.

ARTICLE VI
MISCELLANEOUS

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.

 
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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.

6.7           Notices.  Any notice, demand or other communication which any
party hereto may be required, or may elect, to give to anyone interested
hereunder shall be sufficiently given if (a) deposited, postage prepaid, in a
United States mail box, stamped, registered or certified mail, return receipt
requested, addressed to such address as may be listed on the books of the
Company, or, if to the Company, the Company’s executive office, or (b) delivered
personally at such address.

6.8           Execution.  This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, or all purposes, constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.

6.9           Severability; Assignment.  Each provision of this Agreement is
intended to be severable from every other provisions, and the invalidity or
illegality of any portion hereof, shall not affect the validity or legality of
the remainder hereof. This Agreement is not transferable or assignable by the
Purchaser except as may be provided herein. This Agreement shall be binding upon
and inure to the benefit of the Company, the Purchasers and their respective
successors and permitted assigns.

6.10         Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Pennsylvania, without regard to the principles of conflicts of law
thereof.  Each party agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the state and federal courts
sitting in the State of Pennsylvania (the “Pennsylvania Courts”). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the
Pennsylvania Courts 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
proceeding, any claim that it is not personally subject to the jurisdiction of
any Pennsylvania Court, or that such proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for 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.  Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a proceeding to
enforce any provisions of this Agreement, then the prevailing party in such
proceeding shall be reimbursed by the other party for its reasonable attorney’s
fees and other reasonable costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.

 
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Signature pages to Subscription Agreement Follows

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

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.

THE COMPANY:
 
SKINNY NUTRITIONAL CORP.:
 
   
Ronald D. Wilson,
Chief Executive Officer

 
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EXECUTION BY AN INDIVIDUAL
(Not applicable to entities)
 
IF YOU ARE PURCHASING SECURITIES WITH YOUR SPOUSE, YOU MUST BOTH SIGN THIS
SIGNATURE PAGE.

 
 PLEASE INDICATE DESIRED TYPE OF OWNERSHIP OF SECURITIES:
 
¨           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: _______________

   
(Name of Investor - Please Print)
 
   
(Signature)
 
   
(Name of co-Investor - Please Print)
 
   
(Signature of Co-Investor)

 
Exact name Securities are to be issued under:
   
   
Address for Delivery of Certificates
   
(if not the same as in Questionnaire):
   
   
     
   

 
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PARTNERSHIP SIGNATURE PAGE
 
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: _______________

   
Name of Partnership
(Please Type or Print)
 
By:
   
 
(Signature)
   
Name:
   
 
(Please Type or Print)
   
Title:
   
 
(Please Type or Print)

 
Exact name Securities are to be issued under:
   
   
Address for Delivery of Certificates
   
(if not the same as in Questionnaire):
   
   
     
   

 
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CORPORATION/LIMITED LIABILITY COMPANY SIGNATURE PAGE

 
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: _______________

   
Name of Corporation
Or Limited Liability Company
(Please Type or Print)
 
By:
   
 
Signature
   
Name:
   
 
(Please Type or Print)
   
Title:
   
 
(Please Type or Print)

 
Exact name Securities are to be issued under:
   
   
Address for Delivery of Certificates
   
(if not the same as in Questionnaire):
   
   
     
   

 
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TRUST/RETIREMENT PLAN SIGNATURE PAGE
 
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: _______________

   
Title of Trust or Retirement Plan
(Please Type or Print)
  By:
 
   
 
Signature of Trustee or
 
Authorized Signatory
   
Name of Trustee:
   
(Please Type or Print)
    By:
 
   
 
Signature of Co-Trustee if
applicable
   
Name of Co-Trustee:
   
 
(Please Type or Print)

 
Exact name Securities are to be issued under:
   
   
Address for Delivery of Certificates
   
(if not the same as in Questionnaire):
   
   
     
   

 
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