SECURITIES PURCHASE AGREEMENT
 
THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is made as of the 1st day of
July, 2010, by and among FIRST BLUSH BRANDS, INC., a Delaware corporation, with
an address at 9595 Wilshire Blvd., Suite #900, Beverly Hills, California  90212
(the “Company”), and the Investors set forth on the signature pages affixed
hereto (each an “Investor” and collectively the “Investors”).
 
Recitals:
 
A.           The Company and the Investors are executing and delivering this
Agreement in connection with an offering of securities of the Company (the
“Offering ”) in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D (“Regulation D”), as promulgated by
the United States Securities and Exchange Commission (the “SEC ”) under the
Securities Act of 1933, as amended (the “1933 Act”); and
 
B.           The Investors wish to purchase from the Company, and the Company
wishes to sell and issue to the Investors, securities having a maximum aggregate
purchase price of $1,000,000 (the “Maximum Amount”) upon the terms and
conditions stated in this Agreement; and
 
C.           The securities sold in the Offering shall consist of units (the
“Units”) of (i) two (2) shares of the Company’s Common Stock (the “Shares”),
(ii) a warrant to purchase one (1) share of Common Stock, in substantially the
form attached hereto as Exhibit A (the “Base Warrant”) and (iii) a warrant to
purchase additional shares of Common Stock, in substantially the form attached
hereto as Exhibit B (the “Par Value Warrant” and together with the Base Warrant,
the “Warrants”)
 
D.           The purchase price per Unit shall be $2.00 (the “Purchase Price”)
with a minimum purchase by each Investor of $1,000, or 500 Units; and
 
E.           Contemporaneous with each sale of Units, the Company and Investor
will execute and deliver a Registration Rights Agreement, in substantially the
form attached hereto as Exhibit C (the “Registration Rights Agreement”),
pursuant to which the Company will agree to provide certain piggyback
registration rights under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws; and
 
F.           Each Investor is an “Accredited Investor” as that term is defined
in Regulation D.
 
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
 
1.           Definitions.  For the purposes of this Agreement, the following
terms shall have the meanings set forth below:
 

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“$” means United States dollars.
 
“1933 Act” has the meaning set forth in the Recitals.
 
“1933 Act” has the meaning set forth in the Recitals.
 
“1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
 
“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common control with, such Person.
 
“Agreement” has the meaning set forth in the Preamble.
 
“Base Warrant” has the meaning set forth in the Recitals.
 
“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.
 
“Closing” has the meaning set forth in Section 2.1.
 
“Closing Date” has the meaning set forth in Section  3(c).
 
“Common Stock” means the Company’s common stock, par value $0.001 per share, and
any securities into which the common stock may be reclassified.
 
“Common Stock Equivalents” means any securities of the Company or any Subsidiary
which entitle the holder thereof to acquire Common Stock at any time, including
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.
 
“Company” has the meaning set forth in the Preamble.
 
“Company’s Knowledge,” or words of similar effect, means the actual knowledge of
the executive officers (as defined in Rule 405 under the 1933 Act) of the
Company, after due inquiry.
 
“Confidential Information” means trade secrets, confidential information and
know-how (including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).
 
“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
 
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“Equity Securities” means any stock or similar securities, including, without
limitation, securities containing equity features and securities containing
profit participation features, or any securities convertible into or
exchangeable for, with or without consideration, any stock or similar
securities, or any securities carrying any warrant, right or option to subscribe
to or purchase any shares of capital stock, or any such warrant or right.
 
“Governmental Body” means any federal, national, state, or provincial, municipal
or local government, governmental authority, regulatory or administrative
agency, governmental commission, department, board, bureau, agency or
instrumentality, political subdivision, commission, court, tribunal, official,
arbitrator or arbitral body, in each case whether U.S. or non-U.S.
 
“Initial Closing” has the meaning set forth in Section 3(b).
 
“Insiders” means the Company’s directors and executive officers.
 
“Intellectual Property” means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).
 
“Legal Requirements” means, with respect to any Person, any U.S. or non-U.S.
federal, national, state, provincial, local, municipal, international,
multinational or other law (including common law), constitution, statute, code,
ordinance, rule, regulation or treaty applicable to such Person.
 
“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise), business
of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the
Company to perform its obligations under the Transaction Documents.
 
“Maximum Amount” has the meaning set forth in the Recitals.
 
 “Offering” has the meaning set forth in the Recitals.
 
“Par Value Warrant” has the meaning set forth in the Recitals.
 
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
 
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“Purchase Price” has the meaning set forth in the Recitals.
 
“Qualified Financing” means the next financing of the Company through the
issuance of Equity Securities resulting in gross proceeds to the Company of not
less than $1,000,000..
 
“Registration Statement” has the meaning set forth in the Registration Rights
Agreement.
 
“Regulation D” has the meaning set forth in the Recitals.
 
“Shares” has the meaning set forth in the Recitals.
 
“SEC” has the meaning set forth in the Recitals.
 
“SEC Filings” has the meaning set forth in Section 4.6.
 
“Securities” means the Shares, the Warrants and the Warrant Shares.
 
“Short Sales” include, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the 1934 Act and all types of direct
and indirect stock pledges, forward sale contracts, options, puts, calls, swaps
and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated brokers.
 
“Subscription Instructions” has the meaning set forth in Section 3(b).
 
“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
 
“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not
listed on a Trading Market (other than the OTC Bulletin Board), a day on which
the Common Stock is traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading
Market, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.
 
“Trading Market” means whichever of the New York Stock Exchange, the NYSE AMEX,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or OTC Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.
 
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“Transaction Documents” means this Agreement, the Warrants and the Registration
Rights Agreement.
 
“Transfer Agent” means Corporate Stock Transfer, the Company’s transfer agent.
 
“Unit” has the meaning set forth in the Recitals.
 
“Warrants” has the meaning set forth in the Recitals.
 
“Warrant Shares” means the shares of Common Stock issuable upon the exercise of
the Warrants.
 
2.           Purchase and Sale of the Securities.
 
2.1           Subject to the terms and conditions of this Agreement, the
Investors shall severally, and not jointly, purchase, and the Company shall sell
and issue to such Investors, Units having an aggregate Purchase Price of not
more than the Maximum Amount in one or more closings (each, a “Closing”); each
Investor to purchase the number of Units in the respective amounts set forth
opposite the applicable Investor’s name on the signature pages attached hereto
in exchange for each Investor’s Purchase Price payable in full as specified in
Section 3 below; provided, however, that unless waived by the Company, each
Investor must agree to a minimum investment of $1,000, or 500 Units.
 
3.           Closing; Payment and Delivery.  (a) Each Investor shall deliver, or
cause to be delivered, the aggregate Purchase Price for the Units to be
purchased by such Investor to the Company, in immediately available funds, to be
held by the Company in a segregated, non-interest bearing bank account.
 
(b)           At a Closing, each Investor shall subscribe for Units by
executing, completing and delivering its signature pages to this Agreement
indicating such and signature pages to the Registration Rights Agreement all in
accordance with the instructions set forth in the Subscription Instructions
which accompany this Agreement (“Subscription Instructions”), and the Company,
in its discretion, may accept such subscription.  The Closing shall occur at the
offices of Blank Rome LLP, The Chrysler Building, 405 Lexington Avenue, New
York, New York 10174 at 1:00 p.m. Eastern Daylight Time (which time may be
changed by the Company) at which time the Company will execute this Agreement
and the Purchase Price for the Units being sold at the Closing shall be
transferred by the Company to its general banking account against delivery of
the Shares and Warrants comprising the Units being purchased.
 
(c)           The Company shall have the right to conduct multiple Closings;
provided, however, that (i) the Initial Closing shall occur on or about June 7,
2010 and (ii) any additional Closing(s) shall occur on or prior to June 15, 2010
and (iii) the Company shall not sell Units in this Offering in excess of the
Maximum Amount.  Each date on which a Closing occurs is referred to herein as
the “Closing Date”.
 
4.           Representations and Warranties of the Company.  The Company hereby
represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith, including without limitation any supplement,
amendment or update delivered in connection with any Closing occurring after the
Initial Closing (collectively, the “Disclosure Schedules”):
 
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4.1           Organization, Good Standing and Qualification.  Each of the
Company and its Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted and to own its properties. Each of the Company and its Subsidiary is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not had and could not reasonably be expected to have a
Material Adverse Effect. First Blush, Inc., a Delaware corporation, is the
Company’s only Subsidiary.
 
4.2           Authorization.  The Company has full power and authority and has
taken all requisite action on the part of the Company, its officers, directors
and shareholders necessary for (i) the authorization, execution and delivery of
the Transaction Documents, (ii) the authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Securities. The
Transaction Documents constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally.
 
4.3           Capitalization.
 
(a)           Schedule 4.3 sets forth (a) the authorized capital stock of the
Company on the date hereof; (b) the number of shares of capital stock issued and
outstanding; (c) the number of shares of capital stock issuable pursuant to the
Company’s equity compensation plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities (other than the
Securities) exercisable for, or convertible into or exchangeable for any shares
of capital stock of the Company. All of the issued and outstanding shares of the
Company’s capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights and were issued in full
compliance with applicable state and federal securities law and any rights of
third parties. All of the issued and outstanding shares of capital stock of the
Subsidiary have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights, were issued in full compliance
with applicable state and federal securities law and any rights of third parties
and are owned by the Company, beneficially and of record, subject to no lien,
encumbrance or other adverse claim. No Person is entitled to pre-emptive or
similar statutory or contractual rights with respect to any securities of the
Company. There are no outstanding warrants, options, convertible securities or
other rights, agreements or arrangements of any character under which the
Company or any of its Subsidiary is or may be obligated to issue any equity
securities of any kind.  Except as described on Schedule 4.3, and except for the
Registration Rights Agreement, there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among the Company and any of the securityholders of the Company
relating to the securities of the Company held by them. Except as described on
Schedule 4.3 and except as provided in the Registration Rights Agreement, no
Person has the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for the account
of any other Person.
 
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(b)           Except as described on Schedule 4.3, the issuance and sale of the
Securities hereunder will not obligate the Company to issue shares of Common
Stock or other securities to any other Person (other than the Investors) and
will not result in the adjustment of the exercise, conversion, exchange or reset
price of any outstanding security.
 
(c)           The Company does not have outstanding stockholder purchase rights
or “poison pill” or any similar arrangement in effect giving any Person the
right to purchase any equity interest in the Company upon the occurrence of
certain events.
 
4.4           Valid Issuance.  Upon the due exercise of the Warrants, the
Warrant Shares, will be validly issued, fully paid and non-assessable free and
clear of all encumbrances and restrictions, except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities laws
and except for those created by the Investors.  Assuming an Exercise Price of
$1.00, the Company has reserved a sufficient number of shares of Common Stock
for issuance upon the exercise of the Warrants, free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws and except
for those created by the Investors.
 
4.5           Consents.  Except as described in Schedule 4.5, the execution,
delivery and performance by the Company of the Transaction Documents, and the
offer, issuance and sale of the Securities, require no consent of, action by or
in respect of, or filing with, any Person, governmental body, agency, or
official other than (i) filings that have been made pursuant to applicable state
securities laws and post-sale filings pursuant to applicable state and federal
securities laws or any other notices required thereby, all of which the Company
undertakes to file within the applicable time periods, and (ii) those consents
or filings which could not reasonably be expected to have a Material Adverse
Effect.  Subject to the accuracy of the representations and warranties of each
Investor set forth in Section 5 hereof, the Company has taken all action
necessary to exempt (i) the issuance and sale of the Units, (ii) the issuance of
the Shares, (iii) the issuance of the Warrant Shares upon due exercise of the
Warrants, and (iv) the other transactions contemplated by the Transaction
Documents from the provisions of any stockholder rights plan or other “poison
pill” arrangement, any anti-takeover, business combination or control share law
or statute binding on the Company or to which the Company or any of its assets
and properties may be subject and any provision of the Company’s Certificate of
Incorporation or Bylaws that is or could reasonably be expected to become
applicable to the Investors as a result of the transactions contemplated hereby,
including without limitation, the issuance of the Securities and the ownership,
disposition or voting of the Securities by the Investors or the exercise of any
right granted to the Investors pursuant to this Agreement or the other
Transaction Documents.
 
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4.6           Delivery of SEC Filings; Business.  The Company has made available
to the Investors through the EDGAR system, true and complete copies of the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009
(the “10-K”), and all other reports filed by the Company, including without
limitation the Current Report on Form 8-K filed on May 13, 2010, as amended on
May 25, 2010, pursuant to the 1934 Act since the filing of the 10-K and prior to
the date hereof (collectively, the “SEC Filings”). The SEC Filings are the only
filings required of the Company pursuant to the 1934 Act for such period. During
such period, the Company and its Subsidiary engaged in all material respects
only in the business described in the SEC Filings and the SEC Filings contained
a complete and accurate description in all material respects of the business of
the Company and its Subsidiary, taken as a whole, as of the date of each SEC
Filing.
 
4.7           Use of Proceeds.  The net proceeds from this Offering (after
payment of the expenses of this Offering and the other matters contemplated
hereby) will be used primarily for the production of additional inventory in
order to allow the Company to take on new chain customers.
 
4.8           SEC Filings.  At the time of filing thereof, the SEC Filings
complied as to form in all material respects with the requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
 
4.9           No Conflict, Breach, Violation or Default.  The execution,
delivery and performance of the Transaction Documents by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under (i) the Company’s Certificate of Incorporation or the Company’s Bylaws,
both as in effect on the date hereof (true and complete copies of which have
been made available to the Investors), or (ii)(a) any statute, rule, regulation
or order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company, any Subsidiary or any of their respective
assets or properties, or (b) any agreement or instrument to which the Company or
its Subsidiary is a party or by which the Company or its Subsidiary is bound or
to which any of their respective assets or properties is subject, except in the
case of clause (ii) for such breaches, violations or defaults which could not
reasonably be expected to have a Material Adverse Effect.
 
4.10           Tax Matters.  The Company and its Subsidiary has timely prepared
and filed all tax returns required to have been filed by the Company or such
Subsidiary with all appropriate governmental agencies and timely paid all taxes
shown thereon or otherwise owed by it, other than those returns and taxes for
which an extension has been timely filed.  The charges, accruals and reserves on
the books of the Company in respect of taxes for all fiscal periods are adequate
in all material respects, and there are no material unpaid assessments against
the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its Subsidiary, taken as a
whole. All taxes and other assessments and levies that the Company or any
Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or its Subsidiary or any of their
respective assets or property. Except as described on Schedule 4.10, there are
no outstanding tax sharing agreements or other such arrangements between the
Company and any Subsidiary or other corporation or entity.
 
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4.11           Title to Properties.  Except as disclosed in Schedule 4.11, each
of the Company and its Subsidiary has good and marketable title to all real
properties and all other properties and assets owned by it, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in Schedule 4.11, the Company and
its Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
 
4.12           Certificates, Authorities and Permits.  The Company and its
Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
 
4.13           Labor Matters.
 
(a)           The Company is not a party to or bound by any collective
bargaining agreements or other agreements with labor organizations. The Company
has not violated in any material respect any laws, regulations, orders or
contract terms, affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety,
welfare, wages and hours.
 
(b)           (i) There are no labor disputes existing, or to the Company’s
Knowledge, threatened, involving strikes, slow-downs, work stoppages, job
actions, disputes, lockouts or any other disruptions of or by the Company’s
employees, (ii) there are no unfair labor practices or petitions for election
pending or, to the Company’s Knowledge, threatened before any governmental
agency or labor commission relating to the Company’s employees, (iii) no demand
for recognition or certification heretofore made by any labor organization or
group of employees is pending with respect to the Company, and (iv) to the
Company’s Knowledge, the Company enjoys good labor and employee relations with
its employees and labor organizations.
 
(c)           The Company is, and at all times has been, in compliance in all
material respects with all applicable laws respecting employment (including laws
relating to classification of employees and independent contractors) and
employment practices, terms and conditions of employment, wages and hours, and
immigration and naturalization.
 
(d)           Except as disclosed in the SEC Filings or as described on Schedule
4.13, the Company is not a party to, or bound by, any employment or other
contract or agreement that contains any severance, termination pay or change of
control liability or obligation, including, without limitation, any “excess
parachute payment,” as defined in Section 2806(b) of the Internal Revenue Code.
 
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4.14           Contracts.
 
(a)           Except as set forth in the SEC Filings or as described on Schedule
4.14, neither the Company nor any of its Subsidiaries is party or subject to, or
bound by:
 
(i)           any agreements, contracts or commitments that call for prospective
fixed and/or contingent payments or expenditures by or to the Company or its
Subsidiary of more than $500,000, or which is otherwise material and not entered
into in the ordinary course of business;
 
(ii)           any contract, lease or agreement involving payments in excess of
$500,000, which is not cancelable by the Company or its Subsidiary, as
applicable, without penalty on not less than 60 days notice;
 
(iii)           any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money or pledging
or granting a security interest in any assets with a value in excess of
$500,000;
 
(iv)           any employment contracts, non-competition agreements, invention
assignments, severance or other agreements with officers, directors, 5% or
greater stockholders, consultants (which, in the case of any consultant,
involves payments in excess of $120,000) of the Company or its Subsidiary or
Persons related to or affiliated with such Persons;
 
(v)           any stock redemption or purchase agreements or other agreements
affecting or relating to the capital stock of the Company or its Subsidiary,
including, without limitation, any agreement with any stockholder of the Company
or its Subsidiary which includes, without limitation, antidilution rights,
voting arrangements or operating covenants;
 
(vi)           any pension, profit sharing, retirement, stock option or stock
ownership plans;
 
(vii)           any royalty, dividend or similar arrangement based on the
revenues or profits of the Company or of its Subsidiary or based on the revenues
or profits derived from any material contract;
 
(viii)          any acquisition, merger, asset purchase or other similar
agreement entered into in the past five years; or
 
(ix)           any agreement under which the Company or its Subsidiary has
granted any Person registration rights for its securities (all such agreements,
contracts or instruments, collectively, the “Material Contracts”).
 
Each of the Material Contracts is valid and in full force and effect, is
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or similar laws
affecting creditors’ rights generally and general principles of equity, and will
continue to be so immediately following the Closing Date.
 
4.15           Intellectual Property.  Except as specified in Schedule 4.15:
 
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(a)           All Intellectual Property of the Company and its Subsidiary is
currently in compliance with all legal requirements (including timely filings,
proofs and payments of fees) and is valid and enforceable.
 
(b)           The Company and its Subsidiary own or have the valid right to use
all of the Intellectual Property that is necessary for the conduct of the
Company’s and its Subsidiary’s respective businesses as currently conducted and
for the ownership, maintenance and operation of the Company’s and its
Subsidiary’s properties and assets, free and clear of all liens, encumbrances,
adverse claims or obligations to license all such owned Intellectual Property
and Confidential Information, other than licenses entered into in the ordinary
course of the Company’s and its Subsidiary’s businesses.  To the Company’s
Knowledge, the Company and its Subsidiary have a valid and enforceable right to
use all third party Intellectual Property and Confidential Information used or
held for use in the respective businesses of the Company and its Subsidiaries.
 
(c)           The consummation of the transactions contemplated hereby and by
the other Transaction Documents will not result in the alteration, loss,
impairment of or restriction on the Company’s or its Subsidiary’s ownership or
right to use any of the Intellectual Property or Confidential Information which
is necessary for the conduct of Company’s and its Subsidiary’s respective
businesses as currently conducted.
 
4.16           Environmental Matters.  Except as specified in Schedule 4.16, to
the Company’s Knowledge, neither the Company nor its Subsidiary (i) is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), (ii) owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, (iii) is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or (iv) is subject to any claim relating to
any Environmental Laws, which violation, contamination, liability or claim has
had or could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate; and there is no pending or, to the Company’s
Knowledge, threatened investigation that might lead to such a claim.
 
4.17           Litigation.  Except as described on Schedule 4.17, there are no
pending actions, suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties; and to the Company’s Knowledge,
no such actions, suits or proceedings are threatened or contemplated.
 
4.18           Financial Statements.  The financial statements included in each
SEC Filing made after January 1, 2010, present fairly, in all material respects,
the consolidated financial position of the Company as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis (“GAAP”)
(except as may be disclosed therein or in the notes thereto, and, in the case of
quarterly financial statements, as permitted by Form 10-Q under the 1934 Act).
Except as set forth in the financial statements of the Company included in the
SEC Filings filed prior to the date hereof or as described on Schedule 4.18,
neither the Company nor its Subsidiary has incurred any liabilities, contingent
or otherwise, except those incurred in the ordinary course of business,
consistent (as to amount and nature) with past practices since the date of such
financial statements, none of which, individually or in the aggregate, have had
or could reasonably be expected to have a Material Adverse Effect.
 
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4.19           Insurance Coverage.  Except as set forth on Schedule 4.19, the
Company and its Subsidiary maintains in full force and effect insurance coverage
that is customary for comparably situated companies for the business being
conducted and properties owned or leased by the Company and each Subsidiary, and
the Company reasonably believes such insurance coverage to be adequate against
all liabilities, claims and risks against which it is customary for comparably
situated companies to insure.
 
4.20           Brokers and Finders.  No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, its Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Company, other than as
described in Schedule 4.20.
 
4.21           No Directed Selling Efforts or General Solicitation.  Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Securities.
 
4.22           No Integrated Offering.  Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.
 
4.23           Private Placement.  Assuming the truth and accuracy of the
representation and warranties set forth in Sections 5.1 through 5.13, the offer
and sale of the Securities to the Investors as contemplated hereby is exempt
from the registration requirements of the 1933 Act.
 
4.24           Internal Controls.  The Company is in material compliance with
the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the
Company. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.  The
Company has established disclosure controls and procedures (as defined in 1934
Act Rules 13a-15(e) and 15d-15(e) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company, including the Subsidiaries, is made known to the certifying officers by
others within those entities, particularly during the period in which the
Company’s most recently filed periodic report under the 1934 Act, as the case
may be, is being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of the end of the
period covered by the most recently filed periodic report under the 1934 Act
(such date, the “Evaluation Date”). The Company presented in its most recently
filed periodic report under the 1934 Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Except as set forth on Schedule
4.24, since the Evaluation Date, there have been no significant changes in the
Company’s internal control over financial reporting (as such term is defined in
the 1934 Act) that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
 
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4.25           Solvency.  The Company has not (a) made a general assignment for
the benefit of creditors; (b) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by its creditors; (c) suffered
the appointment of a receiver to take possession of all, or substantially all,
of its assets; (d) suffered the attachment or other judicial seizure of all, or
substantially all, of its assets; or (e) made an offer of settlement, extension
or composition to its creditors generally.
 
4.26            Related Party Transactions.  Except as set forth in the SEC
Reports or Schedule 4.26: (a) none of the Company or any of its Affiliates,
officers, directors, holders of 5% or more of the outstanding common stock of
the Company or employees, or any Affiliate of any of such Person, has any
material interest in any property, real or personal, tangible or intangible,
including the Company’s Intellectual Property, used in or pertaining to the
business of the Company, except for the normal rights of a stockholder, or, to
the Knowledge of the Company, any supplier, distributor or customer of the
Company; (b) there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, employees, Affiliates,
or, to the Company's Knowledge, any Affiliate thereof; (c) to the Company’s
knowledge, no employee, officer or director of the Company or any of its
Subsidiaries has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company; (d) to the Company’s Knowledge, no member of the immediate family of
any officer or director of the Company is directly or indirectly interested in
any Material Contract; or (e) there are no amounts owed (cash and stock) to
officers, directors and consultants (salary, bonuses or other forms of
compensation in excess of $250,000 in the aggregate).
 
5.           Representations and Warranties of the Investors.  Each Investor
hereby severally, and not jointly, represents and warrants to the Company that:
 
5.1           Organization and Existence.  Such Investor is an individual or a
validly existing corporation, limited partnership, limited liability company or
other entity identified in the Subscription Documents and has all requisite
individual, corporate, partnership or limited liability company power or other
entity and authority, as applicable, to invest in the Securities pursuant to
this Agreement.
 
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5.2           Authorization.  The execution, delivery and performance by such
Investor of the Transaction Documents to which such Investor is a party have
been duly authorized and will each constitute the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.
 
5.3           Purchase Entirely for Own Account.  The Securities to be received
by such Investor hereunder will be acquired for such Investor’s own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof in violation of the 1933 Act, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the 1933 Act without prejudice, however, to such
Investor’s right at all times to sell or otherwise dispose of all or any part of
such Securities in compliance with applicable federal and state securities
laws.  Nothing contained herein shall be deemed a representation or warranty by
such Investor to hold the Securities for any period of time. Such Investor is
not a broker-dealer registered with the SEC under the 1934 Act or an entity
engaged in a business that would require it to be so registered.
 
5.4           Investment Experience.  Such Investor acknowledges that it can
bear the economic risk and complete loss of its investment in the Securities and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
 
5.5           Disclosure of Information.  Such Investor has had an opportunity
to receive all information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the Offering. Such Investor
acknowledges receipt of and/or access to copies of the SEC Filings. Neither such
inquiries nor any other due diligence investigation conducted by such Investor
shall modify, amend or affect such Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.
 
5.6           Restricted Securities.  Such Investor understands that the
Securities are characterized as “restricted securities” under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.  Such Investor also
acknowledges that the Company was a shell company under the federal securities
laws and as such, the ability of the Investor to transfer any of the Securities
may be subject to more limitation than securities of a company that was never a
shell company.
 
5.7           Legends.  It is understood that, except as provided below, any
certificates evidencing the Securities may bear the following or any similar
legend:
 
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(a)           THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
 
(b)           If required by the authorities of any state in connection with the
issuance or sale of the Securities, the legend required by such state authority.
 
5.8           Accredited Investor.  Such Investor is an “accredited investor”
within the meaning of Rule 501(a) of Regulation D for the reasons checked in the
Subscription Documents.
 
5.9           No General Solicitation.  Such Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
 
5.10           Brokers and Finders.  No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, its Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of such Investor.
 
5.11           Certain Trading Activities.  Such Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Investor, engaged in any transactions in the securities
of the Company (including, without limitations, any Short Sales involving the
Company’s securities) since the time that such Investor was first contacted by
the Company regarding an investment in the Company.  Such Investor covenants
that neither it nor any Person acting on its behalf or pursuant to any
understanding with it will engage in any transactions in the securities of the
Company (including Short Sales) prior to the time that the transactions
contemplated by this Agreement are publicly disclosed.
 
5.12           Reliance on Exemptions.  Such Investor understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and such
Investor’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of such
Investor to acquire the Securities.
 
5.13           Address.  Investor’s address set forth on Investor’s counterpart
signature page is the address of Investor’s principal place of business.
 
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6.           Conditions to Closing.
 
6.1           Conditions to the Investors’ Obligations.  The obligation of an
Investor to purchase the Units at a Closing is subject to the fulfillment to
such Investor’s satisfaction, on or prior to the applicable Closing Date, of the
following conditions, any of which may be waived by an Investor:
 
(a)           The representations and warranties made by the Company in Section
4 hereof qualified as to materiality shall be true and correct at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of a specific date, in which case such
representation or warranty shall be true and correct as of such date, and, the
representations and warranties made by the Company in Section 4 hereof not
qualified as to materiality shall be true and correct in all material respects
at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of a specific date, in which case
such representation or warranty shall be true and correct in all material
respects as of such specific date.
 
(b)           The Company shall have performed in all material respects all
obligations and covenants herein required to be performed by it on or prior to
the Closing Date.
 
(c)           The Company shall have obtained any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Shares and Warrants and the consummation of the
other transactions contemplated by the Transaction Documents to be consummated
on or prior to the Closing Date, all of which shall be in full force and effect.
 
(d)           The Company shall have executed and delivered the Shares, Warrants
and the Registration Rights Agreement.
 
(e)           No judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy court or judge,
or any order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.
 
(f)           The Company shall have delivered a Certificate, executed on behalf
of the Company by its Chief Executive Officer or its Chief Financial Officer,
dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b) and (c) of this Section 6.1.
 
(g)           The Company shall have delivered a Certificate, executed on behalf
of the Company by its Secretary or Assistant Secretary, dated as of the Closing
Date, certifying the resolutions adopted by the Board of Directors of the
Company approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities, certifying the current
versions of the Certificate of Incorporation and Bylaws of the Company and
certifying as to the signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the Company.
 
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(h)           The Investors shall have received an opinion of Blank Rome LLP, in
form and substance reasonably acceptable to the Investors as to the corporate
organization and good standing of the Company, due authorization of the
transactions contemplated hereby and the enforceability of this Agreement.
 
(i)           No stop order or suspension of trading shall have been imposed by
the SEC or any other governmental or regulatory body with respect to public
trading in the Common Stock.
 
(j)           Since the date of execution of this Agreement, no event or series
of events shall have occurred that reasonably could have or result in a Material
Adverse Effect.
 
6.2           Conditions to Obligations of the Company.  The Company’s
obligation to sell and issue the Units at a Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the applicable
Closing Date of the following conditions, any of which may be waived by the
Company:
 
(a)           The representations and warranties made by the Investors in
Section 5 hereof and in the Subscription Documents shall be true and correct in
all material respects when made and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.  The Investors shall have performed in all material
respects all obligations and covenants herein required to be performed by them
on or prior to the Closing Date.
 
(b)           The Investors shall have executed and delivered the Registration
Rights Agreement.
 
(c)           No judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy court or judge,
or any order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents
 
(d)           The Company shall have received the Purchase Price for the Units
to be sold at the Closing.
 
6.3           Termination of Obligations to Effect Closing; Effects.
 
(a)           The outstanding obligations of the Company, on the one hand, and
each Investor, on the other hand, to effect a Closing shall terminate as
follows:
 
(i)           By the Company if any of the conditions set forth in Section 6.2
shall have become incapable of fulfillment, and shall not have been waived by
the Company;
 
(ii)           By an Investor if any of the conditions set forth in Section 6.1
shall have become incapable of fulfillment, and shall not have been waived by
such Investor; and
 
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(iii)           By the Company, if the Closing has not occurred on or prior to
June 15, 2010;
 
provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.
 
7.           Covenants and Agreements of the Company.
 
7.1           Reservation of Common Stock.  The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of providing for the exercise of the Warrants,
such number of shares of Common Stock as shall from time to time equal a good
faith estimate of the Warrant Shares issuable from time to time.
 
7.2           Compliance with Laws.  The Company will comply in all material
respects with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.
 
7.3           Listing of Underlying Shares and Related Matters.  If the Company
applies to have its Common Stock or other securities traded on any stock
exchange or market, it shall include in such application the Shares and the
Warrant Shares and will take such other action as is necessary to cause such
Common Stock to be so listed. Thereafter, the Company will use commercially
reasonable efforts to continue the listing and trading of its Common Stock on
such exchange or market and, in accordance, therewith, will use commercially
reasonable efforts to comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of such exchange or
market, as applicable.
 
7.4           Removal of Legends.  Certificates evidencing Securities shall not
be required to contain any legend (including the legend set forth in Section
5.7): (i) following a sale or transfer of such Securities pursuant to an
effective registration statement under the 1933 Act, or (ii) following a sale or
transfer of such Securities pursuant to Rule 144 (assuming the transferee is not
an Affiliate of the Company).
 
7.5           Furnishing of Information.  As long as any Investor owns the
Securities, the Company covenants to use commercially reasonable efforts to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the 1934 Act.  As long as any Investor owns
Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Investors and make publicly available
in accordance with Rule 144 such information as is required to satisfy the
“public information” requirements of Rule 144.
 
7.6           Integration.  The Company shall not, and shall use its best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the 1933 Act) that would be integrated with the offer or
sale of the Securities in a manner that would require the registration under the
1933 Act of the sale of the Securities to the Investors, or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market in a manner that would require stockholder
approval of the sale of the Securities to the Investors.
 
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8.           Survival and Indemnification.
 
8.1           Survival.  The representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing of the
transactions contemplated by this Agreement.
 
8.2           Indemnification.  The Company agrees to indemnify and hold
harmless each Investor and its Affiliates and their respective directors,
officers, employees and agents from and against any and all losses, claims,
damages, liabilities and expenses (including without limitation reasonable
attorney fees and disbursements and other expenses incurred in connection with
investigating, preparing or defending any action, claim or proceeding, pending
or threatened and the costs of enforcement thereof) (collectively, “Losses”) to
which such Person may become subject as a result of any material breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents, and will reimburse any
such Person for all such amounts as they are incurred by such Person; provided
that any reimbursement under this Article 8 to an Investor, its affiliates,
directors, officers, employees and agents shall be limited to the total purchase
price paid by the Investor for the Units purchased by such Investor hereunder.
 
8.3           Conduct of Indemnification Proceedings.  Promptly after receipt by
any Person (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however,  that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the reasonable
judgment of counsel to the Company representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.
 
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9.           Dispute Resolution.
 
9.1           Any controversy or claim that arises out of or relating to any
Transaction Document, or the breach thereof, shall be finally settled by
arbitration administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules, and judgment on any award rendered by the
arbitrator may be entered by any court having jurisdiction thereof.
 
9.2           Any arbitration conducted pursuant to this Section 9 shall be
conducted before a single neutral arbitrator who shall be a member of the Bar of
the State of Delaware actively engaged in the practice of law for at least ten
years and experienced in the area of corporate law.
 
9.3           The place of arbitration shall be Wilmington, Delaware.
 
9.4           Any arbitration conducted pursuant to this Section 9 shall be
conducted under the laws of the State of Delaware.  The parties acknowledge that
the Transaction Documents evidence a transaction involving interstate
commerce.  The Federal Arbitration Act and the Commercial Arbitration Rules of
the American Arbitration Association shall govern the interpretation,
enforcement, and proceedings pursuant to the arbitration clause in this Section
9.
 
9.5           If more than one arbitration is at any time pending under this
Section 9 and any party contends that two or more arbitrations are substantially
related and that the issue should be heard in one proceeding, the arbitrator
selected in the first-filed of such proceedings shall determine whether, in the
interests of justice and efficiency, the proceedings should be consolidated
before that arbitrator.
 
9.6           Consistent with the expedited nature of arbitration, each party
will, upon the written request of any other party, promptly provide such other
party with copies of documents relevant to the issues raised by any claim or
counterclaim.  Any dispute regarding discovery, or the relevance or scope
thereof, shall be determined by the arbitrator in such arbitration, which
determination shall be conclusive.  All discovery shall be completed within
forty-five days following the appointment of the arbitrator.
 
9.7           The award in any arbitration commenced under this Section 9 shall
be made within nine (9) months of the filing of the related demand for
arbitration, and the arbitrator in such arbitration shall agree to comply with
such schedule before accepting appointment, provided that such time limit may be
extended by agreement of the parties or by the arbitrator if the arbitrator
determines that the same is necessary.
 
9.8           No arbitrator appointed pursuant to this Section 9 shall have any
authority to award punitive or other damages not measured by the prevailing
party’s actual damages, except as may be required by statute.
 
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9.9           The arbitrator in any arbitration pursuant to this Section 9 shall
award to the prevailing party, if any as determined by the arbitrator, all of
its costs and fees.  For such purposes, “costs and fees” shall mean all
reasonable pre-award expenses of the arbitration and the mediation, if any,
including the arbitrator’s fees, the mediator’s fees, administrative fees,
travel expenses, out-of-pocket expenses such as copying and telephone, court
costs, witness fees, reasonable attorney’s fees and all other costs reasonably
incurred by the prevailing party in enforcing its rights under any Transaction
Document.
 
9.10           The finding of the arbitrator in any arbitration under this
Section 9 will be final and binding. Judgment on any award rendered by the
arbitrator may be entered in any court having jurisdiction thereover; provided,
that any award of specific performance shall (a) be documented in a detailed
written opinion containing findings of fact and law, and (b) be subject to
review by any court to which such award is submitted for entry to the same
extent that a similar award by the Delaware Court of Chancery would be subject
to review by the Delaware Supreme Court.
 
10.           Miscellaneous.
 
10.1           Confidentiality.
 
(a)           All information furnished by the Company or its Representatives
(as defined below), whether furnished before or after the date hereof, and
regardless of the manner in which it is furnished, is referred to in this
Agreement as “Proprietary Information”.  Proprietary Information does not
include, however, information which (a) is or becomes generally available to the
public other than as a result of a disclosure by an Investor or its
Representatives, (b) was available to an Investor on a nonconfidential basis
prior to its disclosure to an Investor by the Company or its Representatives, or
(c) becomes available to an Investor on a nonconfidential basis from a person,
other than the Company or any of its Representatives, who is not bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation to the Company.  As used in this Agreement, the term “Representative”
means, as to any person, such person's affiliates and its and their directors,
officers, employees, agents, advisors (including, without limitation, financial
advisors, counsel and accountants) and controlling persons.  As used in this
letter agreement, the term "person" shall be broadly interpreted to include,
without limitation, any corporation, company, partnership, other entity or
individual.
 
(b)           Each Investor shall keep strictly confidential all Proprietary
Information and will not, without express written authorization signed by an
authorized officer of the Company, use, sell, market or disclose any
Confidential Information to any person for any purpose.  Each Investor shall be
responsible for any breach of this Agreement by any of its Representatives and
shall, at its sole expense, take all reasonable measures (including but not
limited to court proceedings) to restrain its Representatives from prohibited or
unauthorized disclosure of use of the Proprietary Information. Each Investor
shall immediately notify the Company of any unauthorized disclosure and, without
affecting the Company’s rights as a result thereof, take all steps necessary to
prevent further disclosure.
 
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(c)           In the event that an Investor is required by, law, regulation,
legal process or regulatory authority to disclose any Proprietary Information or
any other information concerning the Company, such Investor shall provide the
Company with prompt written notice of such request or requirement (to the extent
not prohibited by law or legal process) in order to enable the Company to seek
an appropriate protective order or other remedy, to not object to the Company's
taking steps (at its sole expense) to resist or narrow the scope of such request
or legal process, or to waive compliance, in whole or in part, with the terms of
this Agreement.  If, in the absence of a protective order or other remedy or
waiver of the terms of this letter agreement, an Investor determines upon the
opinion of its legal counsel that such Investor or any Representative is
required by, law, regulation, legal process or regulatory authority to disclose
any Proprietary Information or other information concerning the Company, such
Investor or such Representative may disclose only such Proprietary Information
or other information as must be disclosed by law, regulation, legal process or
regulatory authority and shall exercise reasonable efforts to obtain assurances
that such Proprietary Information or other information will be accorded
confidential treatment.
 
10.2           Successors and Assigns.  This Agreement may not be assigned by a
party hereto without the prior written consent of the Company or the Investors,
as applicable, provided, however, that an Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Securities in a private transaction without
the prior written consent of the Company or the other Investors, after notice
duly given by such Investor to the Company provided, that no such assignment or
obligation shall affect the obligations of such Investor hereunder. The
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
 
10.3           Counterparts; Faxes.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
 
10.4           Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
 
10.5           Notices.  Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one Business Day after delivery
to such carrier, and (v) if given by electronic mail, then such notice shall be
deemed given upon transmission thereof. All notices shall be addressed to the
party to be notified at the address as follows, or at such other address as such
party may designate by ten days’ advance written notice to the other party:
 
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If to the Company:
 
AFH Holding II, Inc./First Blush Brands, Inc.
9595 Wilshire Blvd., Suite #900
Beverly Hills, CA 90212
Attn:  Barrett A. Carrere
Fax:
E-mail: barrett@firstblush.com
 
With a copy to:
 
Blank Rome LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Attn: Pamela E. Flaherty, Esq.
Fax:  917-332-3733
E-mail: pflaherty@blankrome.com
 
If to the Investors:
 
to the addresses set forth on the signature pages hereto.
 

10.6           Expenses.  Except as set forth under Section 8 hereof, each party
shall pay, or make provision for the payment of, their own fees and expenses in
connection with this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby.
 
10.7           Amendments and Waivers.  Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors
holding a majority of the Shares outstanding.  Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
Securities purchased under this Agreement at the time outstanding, each future
holder of all such Securities, and the Company.  Notwithstanding the foregoing,
no consideration shall be offered or paid by the Company to any Investor to
amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the holders of
the Shares and/or Warrants.
 
10.8           Publicity.  No public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or
announcement by the Investors) or the Investor Agent (in the case of a release
or announcement by the Company) (which consents shall not be unreasonably
withheld), except as such release or announcement may be required by law or the
applicable rules or regulations of any securities exchange or securities market,
in which case the Company or the Investors, as the case may be, shall allow the
Investors or the Company, as applicable, to the extent reasonably practicable in
the circumstances, reasonable time to comment on such release or announcement in
advance of such issuance.
 
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10.9           Severability.  Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
 
10.10           Entire Agreement.  This Agreement, including the Exhibits and
the Disclosure Schedules, and the other Transaction Documents constitute the
entire agreement among the parties hereof with respect to the subject matter
hereof and thereof and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter hereof
and thereof.
 
10.11           Further Assurances.  The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
 
10.12           Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial.  This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of Delaware without regard to the choice of law
principles thereof.
 
10.13           Independent Nature of Investors’ Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.
 
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10.14           No Third-Party Beneficiaries.  This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
 
10.15           Rescission and Withdrawal Right.  Notwithstanding anything to
the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Investor exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform
its related obligations within the periods therein provided, then, prior to such
time as the Company timely performs such related obligation, such Investor may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.
 
10.16           Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.  If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
 
10.17           Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
 
10.18           Payment Set Aside.  To the extent that the Company makes a
payment or payments to any Investor pursuant to any Transaction Document or an
Investor enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
 
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10.19           Limitation of Liability.  Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of an Investor
arising directly or indirectly, under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other Affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such an Investor shall be personally liable for any liabilities of
such Investor.
 
[signature page follows]
 
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IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement
or caused their duly authorized officers to execute this Agreement as of the
date first above written.
 

 
FIRST BLUSH BRANDS, INC.
               
 
By:
/s/ Anthony G. Roth       Name: Anthony G. Roth       Title: President and CEO  
       

 
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SECURITIES PURCHASE AGREEMENT
 
COUNTERPART SIGNATURE PAGE
 
By signing below, the undersigned agrees to the terms of the Securities Purchase
Agreement and to purchase the number of Units set forth below.
 
Number of Units: ______________________
 
Aggregate Purchase Price: _______________
INVESTOR:
_______________________________
 
 
By:_________________________________
Name:
Title:
 
Address:____________________________
              ____________________________
 
 
Facsimile:____________________________
E-mail: ______________________________
 
With a copy to:

Please complete the following:
     
1.
The exact name that your Shares and Warrants are to be registered in (this is
the name that will appear on any Share and Warrant certificates). You may use a
nominee name if appropriate:
       
2.
The relationship between the Investors of the Shares and Warrants and the
Registered Holder listed in response to item 1 above:
       
3.
The mailing address and facsimile number of the Registered Holder listed in
response to item 1 above (if different from above):
 
_______________________________
_______________________________
Facsimile:  ___________________________
E-mail: ______________________________
 
     

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