Exhibit 10.2         Subscription Agreement dated March 30, 2009

 
SUBSCRIPTION AGREEMENT
 
 
THIS SUBSCRIPTION AGREEMENT (this "Agreement"), is dated as of March 30, 2009,
by and among Attitude Drinks Inc., a Delaware corporation (the "Company"), and
the subscribers identified on the signature page hereto (each a "Subscriber" and
collectively "Subscribers").
 
WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC" and/or "Commission") under the Securities Act of 1933, as amended (the
"1933 Act").
 
WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Subscriber, as
provided herein, and the Subscribers in the aggregate, shall purchase for
$180,000 (the "Purchase Price") promissory notes of the Company ("Note" or
"Notes") at an original issue discount of 10% for the principal amount of up to
$200,000 (the principal amount of each Subscriber's Note will be determined by
dividing such Subscriber's Purchase Price by .90) ("Note Principal"), in the
form annexed hereto as Exhibit A; and share purchase warrants (the "Warrants"),
in the form annexed hereto as Exhibit B, to purchase shares of Common Stock (the
"Warrant Shares"). The Notes and Shares of the Company's Common Stock, $.001 par
value (the "Common Stock") issuable upon conversion of the Notes ("Shares"), the
Warrants and the Warrant Shares issuable upon exercise of the Warrants are
collectively referred to herein as the "Securities"; and
 
               WHEREAS, the aggregate proceeds of the sale of the Notes
contemplated hereby shall be held in escrow pursuant to the terms of a Funds
Escrow Agreement to be executed by the parties, substantially in the form
annexed hereto as Exhibit C (the "Escrow Agreement").
 
               NOW, THEREFORE, in consideration of the mutual covenants and
other agreements contained in this Agreement the Company and the Subscriber
hereby agree as follows:
 
1.            Closing. Subject to the satisfaction or waiver of the terms and
conditions of this Agreement, on the Closing Date, Subscriber shall purchase and
the Company shall sell to the Subscribers Notes in the principal amount of
$200,000. The "Closing Date" shall be the date that subscriber funds
representing the net amount due the Company from the Purchase Price is
transmitted by wire transfer or otherwise to or for the benefit of the Company.
 
2.            Security Interest. On or about October 23, 2007, certain lenders
were granted a security interest in the assets of the Company, including
ownership of the Subsidiaries (as defined in Section 5(a) of this Agreement) and
in the assets of the Subsidiaries, which security interest was memorialized in a
"Security Agreement" and "Collateral Agent Agreement" dated October 23, 2007, as
amended on or about January 8, 2008, September 29, 2008, and January 27, 2009,
respectively. The Subsidiaries guaranteed the Company's obligations under the
Transaction Documents [as defined in Section 5(c)]. Such guaranties were
memorialized in a "Subsidiary Guaranty". The Security Agreement and Collateral
Agent Agreement are hereby amended to include the Subscribers and the Company
agrees that the Subscribers are hereby made parts to the Security Agreement and
Collateral Agent Agreement as Lenders therein and their interests in the
Obligations (as defined in the Security Agreement) are pari pasu in proportion
to their specific Obligation amounts and of equal priority with each other. The
Company will execute such other agreements, documents and financing statements
reasonably requested by the Subscribers to memorialize and further protect the
security interest described herein, which will be filed at the Company's expense
with the jurisdictions, states and counties designated by the Subscribers. The
Company will also execute all such documents reasonably necessary in the opinion
of Subscribers to memorialize and further protect the security interest
described herein.
 
 
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3.            Warrants. On the Closing Date, the Company will issue and deliver
Class A Warrants to the Subscribers. One Class A Warrant will be issued for
every two Shares which would be issued on the Closing Date assuming the complete
conversion of the Note on the Closing Date at the Conversion Price. The exercise
price to acquire a Warrant Share upon exercise of a Class A Warrant shall be
equal to $0.05, subject to reduction as described in the Class A Warrant. The
Class A Warrants shall be exercisable until five years after the issue date of
the Warrants. Each holder of the Warrants is granted the registration rights set
forth in this Agreement. The Warrant exercise price and number of Warrant Shares
issuable upon exercise of the Warrants shall be equitably adjusted to offset the
effect of stock splits, stock dividends, and similar events, and as otherwise
described in this Agreement and the Warrant.
 
4.             Subscriber Representations and Warranties. Each Subscriber hereby
represents and warrants to and agrees with the Company only as to such
Subscriber that:
 
(a)             Organization and Standing of the Subscribers. If such Subscriber
is an entity, such Subscriber is a corporation, partnership or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization.
 
(b)             Authorization and Power. Such Subscriber has the requisite power
and authority to enter into and perform this Agreement and the other Transaction
Documents and to purchase the Notes being sold to it hereunder. The execution,
delivery and performance of this Agreement and the other Transaction Documents
by such Subscriber and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate or
partnership action, and no further consent or authorization of such Subscriber
or its Board of Directors, stockholders, partners, members, as the case may be,
is required. This Agreement and the other Transaction Documents have been duly
authorized, executed and delivered by such Subscriber and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of such
Subscriber enforceable against such Subscriber in accordance with the terms
thereof.
 
(c)            No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation by such
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Subscriber's
charter documents or bylaws or other organizational documents or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Subscriber is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such Subscriber or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
material adverse effect on such Subscriber). Such Subscriber is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement and the other
Transaction Documents or to purchase the Securities in accordance with the terms
hereof, provided that for purposes of the representation made in this sentence,
such Subscriber is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
 
 
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(d)            Information on Company. Such Subscriber has been furnished with
or has had access at the EDGAR Website of the Commission to the Company's
audited financial statements for the period ended March 31, 2008 filed on July
2, 2008 and unaudited financial statements for the period ended December 31,
2008 filed on March 5, 2009 (hereinafter referred to collectively as the
"Reports"). Such financial statements were prepared pursuant to Generally
Accepted Accounting Principles in the United States and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries, if any, as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject to normal,
immaterial adjustments. In addition, such Subscriber may have received in
writing from the Company such other information concerning its operations,
financial condition and other matters as such Subscriber has requested in
writing, identified thereon as OTHER WRITTEN INFORMATION (such other information
is collectively, the "Other Written Information"), and considered all factors
such Subscriber deems material in deciding on the advisability of investing in
the Securities.
 
(e)           Information on Subscriber. Such Subscriber is, and will be at the
time of the conversion of the Notes, an "accredited investor", as such term is
defined in Regulation D promulgated by the Commission under the 1933 Act, is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable such Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment. Such Subscriber has the authority and is duly and legally qualified
to purchase and own the Securities. Such Subscriber is able to bear the risk of
such investment for an indefinite period and to afford a complete loss thereof.
The information set forth on the signature page hereto regarding such Subscriber
is accurate.
 
(f)            Purchase of Notes and Warrants. On the Closing Date, such
Subscriber will purchase the Notes and Warrants as principal for its own account
for investment only and not with a view toward, or for resale in connection
with, the public sale or any distribution thereof.
 
(g)            Compliance with Securities Act. Such Subscriber understands and
agrees that the Securities have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a transaction
that does not require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of such Subscriber contained
herein), and that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration. Such Subscriber will comply with all
applicable rules and regulations in connection with the sales of the Securities
including laws relating to short sales.
 
(h)            Shares Legend. The Shares, and the Warrant Shares shall bear the
following or similar legend:
 
"THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(H) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES."
 
 
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(i)             Warrants Legend. The Warrants shall bear the following or
similar legend:
 
"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
 
(j)             Note Legend. The Note shall bear the following legend:
 
"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. "
 
(k)             Communication of Offer. The offer to sell the Securities was
directly communicated to such Subscriber by the Company. At no time was such
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.
 
 
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                                                (l)            Authority;
Enforceability. This Agreement and other agreements delivered together with this
Agreement or in connection herewith have been duly authorized, executed and
delivered by such Subscriber and are valid and binding agreements enforceable 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 and to general principles
of equity; and such Subscriber has full power and authority necessary to enter
into this Agreement and such other agreements and to perform its obligations
hereunder and under all other agreements entered into by such Subscriber
relating hereto.
 
(m)           Restricted Securities. Such Subscriber understands that the
Securities have not been registered under the 1933 Act and such Subscriber will
not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any
of the Securities unless pursuant to an effective registration statement under
the 1933 Act, or unless an exemption from registration is available.
Notwithstanding anything to the contrary contained in this Agreement, such
Subscriber may transfer (without restriction and without the need for an opinion
of counsel) the Securities to its Affiliates (as defined below) provided that
each such Affiliate is an "accredited investor" under Regulation D and such
Affiliate agrees to be bound by the terms and conditions of this Agreement. For
the purposes of this Agreement, an "Affiliate" of any person or entity means any
other person or entity directly or indirectly controlling, controlled by or
under direct or indirect common control with such person or entity. Affiliate
includes each Subsidiary of the Company. For purposes of this definition,
"control" means the power to direct the management and policies of such person
or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
 
(n)           No Governmental Review. Such Subscriber understands that no United
States federal or state agency or any other governmental or state agency has
passed on or made recommendations or endorsement of the Securities or the
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
 
(o)           Correctness of Representations. Each Subscriber represents only as
to such Subscriber that the foregoing representations and warranties are true
and correct as of the date hereof and, unless such Subscriber otherwise notifies
the Company prior to the Closing Date shall be true and correct as of the
Closing Date.
 
(p)           Survival. The foregoing representations and warranties shall
survive the Closing Date.
 
5.             Company Representations and Warranties. The Company represents
and warrants to and agrees with each Subscriber that:
 
(a) Due Incorporation. The Company is a corporation or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has the requisite
corporate power to own its properties and to carry on its business as presently
conducted. The Company is duly qualified as a foreign corporation to do business
and is in good standing in each jurisdiction where the nature of the business
conducted or property owned by it makes such qualification necessary, other than
those jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For purposes of this Agreement, a "Material Adverse Effect"
shall mean a material adverse effect on the financial condition, results of
operations, prospects, properties or business of the Company and its
Subsidiaries taken as a whole. For purposes of this Agreement, "Subsidiary"
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which more than 30% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
entity. The Company's Subsidiaries as of the Closing Date are set forth on
Schedule 5(a).
 
 
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(b)            Outstanding Stock. All issued and outstanding shares of capital
stock of the Company and each Subsidiary have been duly authorized and validly
issued and are fully paid and non-assessable.
 
(c)            Authority; Enforceability. This Agreement, the Note, the
Warrants, Escrow Agreement, and any other agreements delivered together with
this Agreement or in connection herewith (collectively "Transaction Documents")
have been duly authorized, executed and delivered by the Company, and
Subsidiaries (as applicable) and are valid and binding agreements of the Company
and Subsidiaries, and are enforceable 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 and to general principles of equity. The Company has full corporate
power and authority necessary to enter into and deliver the Transaction
Documents and to perform its obligations thereunder.
 
(d)            Additional Issuances. There are no outstanding agreements or
preemptive or similar rights affecting the Company's Common Stock or equity and
no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or understandings with
respect to the sale or issuance of any shares of Common Stock or equity of the
Company or Subsidiaries or other equity interest in the Company except as
described on Schedule 5(d). The Common Stock of the Company on a fully diluted
basis outstanding as of the last Business Day preceding the Closing Date is set
forth on Schedule 5(d).
 
(e)            Consents. No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its Affiliates, or the Company's shareholders is required for
the execution by the Company of the Transaction Documents and compliance and
performance by the Company of its obligations under the Transaction Documents,
including, without limitation, the issuance and sale of the Securities. The
Transaction Documents and the Company's performance of its obligations
thereunder has been unanimously approved by the Company's Board of Directors.
 
(f)             No Violation or Conflict. Assuming the representations and
warranties of the Subscribers in Section 4 are true and correct, neither the
issuance and sale of the Securities nor the performance of the Company's
obligations under this Agreement and all other agreements entered into by the
Company relating thereto by the Company will:
 
(i) violate, conflict with, result in a breach of, or constitute a default (or
an event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A) the articles or certificate
of incorporation, charter or bylaws of the Company, (B) to the Company's
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates, (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect; or

 
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(ii) result in the creation or imposition of any lien, charge or encumbrance
upon the Securities or any of the assets of the Company or any of its Affiliates
except as described herein; or
 
(iii) except as described in Schedule 5(d), result in the activation of any
anti-dilution rights or a reset or repricing of any debt or security instrument
of any other creditor or equity holder of the Company, nor result in the
acceleration of the due date of any obligation of the Company; or
 
(iv) will result in the triggering of any piggy-back registration rights of any
 
person or entity holding securities of the Company or having the right to
receive securities of the Company.
 
(g)           The Securities. The Securities upon issuance:
 
(i) are, or will be, free and clear of any security interests, liens, claims or
other encumbrances, subject to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;
 
(ii) have been, or will be, duly and validly authorized, and upon exercise of
the Warrants, the Warrant Shares will be duly and validly issued, fully paid and
non-assessable;
 
(iii) will not have been issued or sold in violation of any preemptive or other
similar rights of the holders of any securities of the Company;
 
(iv) will not subject the holders thereof to personal liability by reason of
being such holders; and
 
(v) assuming the representations warranties of the Subscribers as set forth in
Section 4 hereof are true and correct, will not result in a violation of Section
5 under the 1933 Act.
 
(h)          Litigation. 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 the Transaction Documents.
Except as disclosed in the Reports, there is no pending or, to the best
knowledge of the Company, basis for or 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 would have a Material Adverse Effect.
 
(i)            No Market Manipulation. The Company and its Affiliates have not
taken, and will not take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Securities or affect the price at which the Securities may be issued or
resold.
 
(j)            Information Concerning Company. The Reports and Other Written
Information contain all material information relating to the Company and its
operations and financial condition as of their respective dates which
information is required to be disclosed therein. Since the date of the financial
statements included in the Reports, and except as modified in the Other Written
Information or in the Schedules hereto, there has been no Material Adverse Event
relating to the Company's business, financial condition or affairs not disclosed
in the Reports. The Reports and Other Written Information do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, taken as a whole,
not misleading in light of the circumstances when made.
 
 
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(k)              Stop Transfer. The Company will not issue any stop transfer
order or other order impeding the sale, resale or delivery of any of the
Securities, except as may be required by any applicable federal or state
securities laws and if so required only if contemporaneous notice of such
instruction is given to the Subscriber.
 
(l)                     Defaults. The Company is not in violation of its
articles of incorporation or bylaws. The Company is (i) not in default under or
in violation of any other material agreement or instrument to which it is a
party or by which it or any of its properties are bound or affected, which
default or violation would have a Material Adverse Effect, (ii) not in default
with respect to any order of any court, arbitrator or governmental body or
subject to or party to any order of any court or governmental authority arising
out of any action, suit or proceeding under any statute or other law respecting
antitrust, monopoly, restraint of trade, unfair competition or similar matters,
or (iii) not in violation of any statute, rule or regulation of any governmental
authority which violation would have a Material Adverse Effect.
 
(m)            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 security or solicited any offers to
buy any security under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations ofthe
OTC Bulletin Board ("Bulletin Board") which would impair the exemptions relied
upon in this Offering or the Company's ability to timely comply with its
obligations hereunder. Neither the Company nor any of its Affiliates will take
any action or steps that would cause the offer or issuance of the Securities to
be integrated with other offerings or issuances which would impair the
exemptions relied upon in this Offering or the Company's ability to timely
comply with its obligations hereunder. The Company will not conduct any offering
other than the transactions contemplated hereby that will be integrated with the
offer or issuance of the Securities that would impair the exemptions relied upon
in this Offering or the Company's ability to timely comply with its obligations
hereunder.
 
(n)            No General Solicitation. Neither the Company, nor any of its
Affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 1933 Act) in connection with the offer or sale
of the Securities.
 
(o)             No Undisclosed Liabilities. The Company has no liabilities or
obligations which are material, individually or in the aggregate, other than
those incurred in the ordinary course of the Company businesses since the date
of the most recent financial statements of the Company contained in the Reports
and which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect, except as disclosed in the Reports or on
Schedule 5(o).
 
(p)             No Undisclosed Events or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or its businesses,
properties, operations or financial condition, that, under applicable law, rule
or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed
in the Reports.
 
(q)            Capitalization. The authorized and outstanding capital stock of
the Company and Subsidiaries as of the date of this Agreement and the Closing
Date (not including the Securities) are set forth in the Reports or on Schedule
5(d). Except as set forth on Schedule 5(d), there are no options, warrants, or
rights to subscribe to, securities, rights or obligations convertible into or
exchangeable for or giving any right to subscribe for any shares of capital
stock of the Company or any of its Subsidiaries.
 
 
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(r)             Dilution. The Company's executive officers and directors
understand the nature of the Securities being sold hereby and recognize that the
issuance of the Securities will have a potential dilutive effect on the equity
holdings of other holders of the Company's equity or rights to receive equity of
the Company. The board of directors of the Company has concluded, in its good
faith business judgment that the issuance of the Securities is in the best
interests of the Company.
 
(s)            No Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise between the Company and the accountants and lawyers
presently employed by the Company, including but not limited to disputes or
conflicts over payment owed to such accountants and lawyers, nor have there been
any such disagreements during the two years prior to the Closing Date.
 
(t)             Investment Company. Neither the Company nor any Affiliate of the
Company is an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
 
(u)             Foreign Corrupt Practices. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
 
(v)             DTC Status. The Company's transfer agent is a participant in,
and the Common Stock is eligible for transfer pursuant to, the Depository Trust
Company Automated Securities Transfer Program. The name, address, telephone
number, fax number, contact person and email address of the Company transfer
agent is set forth on Schedule 5(v) hereto.
 
(w)             Reporting Company. The Company is a publicly-held company
subject to reporting obligations pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and has a class of Common
Stock registered pursuant to Section 12(g) of the 1934 Act. The Company is not a
"shell company" as that term is employed in the 1933 Act.
 
(x)             Solvency. Based on the financial condition of the Company as of
the Closing Date after giving effect to the receipt by the Company of the
proceeds from the sale of the Notes hereunder, (i) the Company's fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company's assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
 
 
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(y)             Company Predecessor and Subsidiaries. The Company makes each of
the representations contained in Sections 5(a), (b), (c), (d), (e), (0, (h),
(j), (1), (o), (p), (q), (s), (t), and (u) of this Agreement, as same relate to
the Subsidiary of the Company. All representations made by or relating to the
Company of a historical or prospective nature and all undertakings described in
Sections 9(g) through 9(1) shall relate, apply and refer to the Company and its
predecessors. The Company represents that it owns 100% of the outstanding equity
of the Subsidiaries and rights to receive equity of the Subsidiaries free and
clear of all liens, encumbrances and claims, except as set forth on Schedule
5(d). No person or entity other than the Company has the right to receive any
equity interest in the Subsidiaries.
 
(z)              Correctness of Representations. The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects, and, unless the Company otherwise notifies the
Subscribers prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date.
 
                                                (AA)         Survival. The
foregoing representations and warranties shall survive the Closing Date.
 
6.            Regulation D Offering/Legal Opinion. The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption from the
registration provisions of the 1933 Act afforded by Section 4(2) or Section 4(6)
of the 1933 Act and/or Rule 506 of Regulation D promulgated thereunder. On the
Closing Date, the Company will provide an opinion reasonably acceptable to the
Subscribers from the Company's legal counsel opining on the availability of an
exemption from registration under the 1933 Act as it relates to the offer and
issuance of the Securities and other matters reasonably requested by
Subscribers. A form of the legal opinion is annexed hereto as Exhibit D. The
Company will provide, at the Company's expense, such other legal opinions, if
any, as are reasonably necessary in each Subscriber's opinion for the issuance
and resale of the Common Stock issuable upon exercise of the Warrants pursuant
to an effective registration statement, Rule 144 under the 1933 Act or an
exemption from registration.
 
7.1.          Conversion of Note.
 
(a) Upon the conversion of a Note or part thereof, the Company shall, at its own
cost and expense, take all necessary action, including obtaining and delivering,
an opinion of counsel to assure that the Company's transfer agent shall issue
stock certificates in the name of Subscriber (or its permitted nominee) or such
other persons as designated by Subscriber and in such denominations to be
specified at conversion representing the number of shares of Common Stock
issuable upon such conversion. The Company warrants that no instructions other
than these instructions have been or will be given to the transfer agent of the
Company's Common Stock and that the certificates representing such shares shall
contain no legend other than the usual 1933 Act restriction from transfer
legend. If and when a Subscriber sells the Shares, assuming (i) a registration
statement including such Shares for registration filed with the Commission is
effective and the prospectus, as supplemented or amended, contained therein is
current and (ii) such Subscriber or its agent confirms in writing to the
transfer agent that such Subscriber has complied with the prospectus delivery
requirements, the Company will reissue the Shares without restrictive legend and
the Shares will be free-trading, and freely transferable. In the event that the
Shares are sold in a manner that complies with an exemption from registration,
the Company will promptly instruct its counsel to issue to the transfer agent an
opinion permitting removal of the legend indefinitely, if pursuant to Rule
144(b)(1Xi) of the 1933 Act, or for 90 days if pursuant to the other provisions
of Rule 144 of the 1933 Act, provided that Subscriber delivers all reasonably
requested representations in support of such opinion.
 
(b) A Subscriber will give notice of its decision to exercise its right to
convert the Note, interest, or part thereof by telecopying, or otherwise
delivering a completed Notice of Conversion (a form of which is annexed as
Exhibit A to the Note) to the Company via confirmed telecopier transmission or
otherwise pursuant to Section 13(a) of this Agreement. Such Subscriber will not
be required to surrender the Note until the Note has been fully converted or
satisfied. Each date on which a Notice of Conversion is telecopied to the
Company in accordance with the provisions hereof by 6 PM Eastern Time ("ET") (or
if received by the Company after 6 PM ET then the next business day) shall be
deemed a "Conversion Date." The Company will itself or cause the Company's
transfer agent to transmit the Company's Common Stock certificates representing
the Shares issuable upon conversion of the Note to such Subscriber via express
courier for receipt by such Subscriber within three (3) business days after
receipt by the Company of the Notice of Conversion (such third day being the
"Delivery Date"). In the event the Shares are electronically transferable, then
delivery of the Shares must be made by electronic transfer provided request for
such electronic transfer has been made by the Subscriber. A Note representing
the balance of the Note not so converted will be provided by the Company to such
Subscriber if requested by Subscriber, provided such Subscriber delivers the
original Note to the Company.
 
 
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(c) The Company understands that a delay in the delivery of the Shares in the
form required pursuant to Section 7.1 hereof, or the Mandatory Redemption Amount
described in Section 7.2 hereof, respectively later than the Delivery Date or
the Mandatory Redemption Payment Date (as hereinafter defined) could result in
economic loss to the Subscriber. As compensation to a Subscriber for such loss,
the Company agrees to pay (as liquidated damages and not as a penalty) to such
Subscriber for late issuance of Shares in the form required pursuant to Section
7.1 hereof upon Conversion of the Note in the amount of $100 per business day
after the Delivery Date for each $10,000 of Note principal amount (and
proportionately for other amounts) being converted of the corresponding Shares
which are not timely delivered. The Company shall pay any payments incurred
under this Section in immediately available funds upon demand. Furthermore, in
addition to any other remedies which may be available to the Subscriber, in the
event that the Company fails for any reason to effect delivery of the Shares
within seven (7) business days after the Delivery Date or make payment within
seven (7) business days after the Mandatory Redemption Payment Date (as defined
in Section 7.2 below), such Subscriber will be entitled to revoke all or part of
the relevant Notice of Conversion or rescind all or part of the notice of
Mandatory Redemption by delivery of a notice to such effect to the Company
whereupon the Company and such Subscriber shall each be restored to their
respective positions immediately prior to the delivery of such notice, except
that the liquidated damages described above shall be payable through the date
notice of revocation or rescission is given to the Company.
 
 7.2.        Mandatory Redemption at Subscriber's Election. In the event (i) the
Company is prohibited from issuing Shares, (ii) upon the occurrence of any other
Event of Default (as defined in the Note or in this Agreement), that continues
for more than twenty (20) business days, (iii) a Change in Control (as defined
below), or (iv) of the liquidation, dissolution or winding up of the Company,
then at the Subscriber's election, the Company must pay to each Subscriber ten
(10) business days after request by each Subscriber ("Calculation Period"), a
sum of money determined by multiplying up to the outstanding principal amount of
the Note designated by each such Subscriber by 120%, plus accrued but unpaid
interest ("Mandatory Redemption Payment"). The Mandatory Redemption Payment must
be received by each Subscriber on the same date as the Shares otherwise
deliverable or within ten (10) business days after request, whichever is sooner
("Mandatory Redemption Payment Date"). Upon receipt of the Mandatory Redemption
Payment, the corresponding Note principal and interest will be deemed paid and
no longer outstanding. Liquidated damages calculated pursuant to Section 7.1(c)
hereof, that have been paid or accrued for the ten day period prior to the
actual receipt of the Mandatory Redemption Payment by a Subscriber shall be
credited against the Mandatory Redemption Payment. For purposes of this Section
7.2, "Change in Control" shall mean (i) the Company no longer having a class of
shares publicly traded or listed on a Principal Market, (ii) the Company
becoming a Subsidiary of another entity (other than a corporation formed by the
Company for purposes of reincorporation in another U.S. jurisdiction), (iii) a
majority of the board of directors of the Company as of the Closing Date, no
longer serving as directors of the Company, except due to natural causes (which
shall include, termination of such directors by the holders of more than 50% of
the equity outstanding as of the Closing Date), and (iv) the sale, lease or
transfer of substantially all the assets of the Company or its Subsidiaries.
 
 
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7.3.       Maximum Conversion. No Subscriber shall be entitled to convert on a
Conversion Date that amount of the Note in connection with that number of shares
of Common Stock which would be in excess of the sum of (i) the number of shares
of Common Stock beneficially owned by such Subscriber and its Affiliates on a
Conversion Date, and (ii) the number of shares of Common Stock issuable upon the
conversion of the Note with respect to which the determination of this provision
is being made on a Conversion Date, which would result in beneficial ownership
by such Subscriber and its Affiliates of more than 9.99% of the outstanding
shares of Common Stock of the Company on such Conversion Date. For the purposes
of the provision to the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Rule 13d-3 thereunder. Subject to the foregoing,
the Subscriber shall not be limited to aggregate conversions of only 9.99% and
aggregate conversions by the Subscriber may exceed 9.99%. The Subscriber may
increase the permitted beneficial ownership amount up to 9.99% upon and
effective after 61 days' prior written notice to the Company. Such Subscriber
may allocate which of the equity of the Company deemed beneficially owned by
such Subscriber shall be included in the 9.99% amount described above and which
shall be allocated to the excess above 9.99%.
 
7.4.          Injunction Posting of Bond. In the event a Subscriber shall elect
to convert a Note or part thereof, the Company may not refuse conversion or
exercise based on any claim that such Subscriber or any one associated or
affiliated with such Subscriber has been engaged in any violation of law, or for
any other reason, unless, an injunction from a court, on notice, restraining and
or enjoining conversion of all or part of such Note shall have been sought and
obtained by the Company or at the Company's request or with the Company's
assistance, and the Company has posted a surety bond for the benefit of such
Subscriber in the amount of 120% of the outstanding principal and interest of
the Note, or aggregate purchase price of the Shares which are sought to be
subject to the injunction, which bond shall remain in effect until the
completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Subscriber to the extent Subscriber obtains judgment in
Subscriber's favor.
 
7.5.           Buy-In. In addition to any other rights available to a
Subscriber, if the Company fails to deliver to a Subscriber such shares issuable
upon conversion of a Note by the Delivery Date and if after seven (7) business
days after the Delivery Date such Subscriber or a broker on such Subscriber's
behalf purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by such Subscriber of the Common
Stock which such Subscriber was entitled to receive upon such conversion (a
"Buy-In"), then the Company shall pay in cash to such Subscriber (in addition to
any remedies available to or elected by the Subscriber) the amount by which (A)
such Subscriber's total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased exceeds (B) the aggregate principal
and/or interest amount of the Note for which such conversion was not timely
honored together with interest thereon at a rate of 15% per annum, accruing
until such amount and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages and not as a penalty. For example, if a
Subscriber purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of $10,000 of
note principal and/or interest, the Company shall be required to pay such
Subscriber $1,000 plus interest. Such Subscriber shall provide the Company
written notice and evidence indicating the amounts payable to such Subscriber in
respect of the Buy-In.
 
7.6           Adjustments. The Conversion Price, Warrant exercise price and
amount of Shares issuable upon conversion of the Notes and exercise of the
Warrants shall be equitably adjusted and as otherwise described in this
Agreement, the Notes and Warrants.
 
7.7.          Redemption. The Notes shall not be redeemable or callable by the
Company except as described in the Note and Warrants.
 
 
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8.             Due Diligence Fee/Legal Fees.
 
(a)             Due Diligence Fee. The Company will pay a due diligence fee
("Due Diligence Fee") to each investor or its designees (each a "Due Diligence
Fee Recipient") as described on Schedule 8(a). The aggregate Due Diligence Fee
shall be equal to eight percent (8%) of the Purchase Price. The Due Diligence
Fee will be payable in cash.
 
(b)             Subscriber's Legal Fees. The Company shall pay to Grushko &
Mittman, P.C., a cash fee of $7,500 ("Cash Legal Fees") as reimbursement for
services rendered to the Subscribers in connection with this Agreement and the
purchase and sale of the Notes (the "Offering"). The Subscribers' Legal Fees and
expenses will be payable out of funds held pursuant to the Escrow Agreement on
the Closing Date. Grushko & Mittman, P.C. will be reimbursed on the Closing Date
for all lien searches, filing fees, and printing and shipping costs for the
closing statements to be delivered to Subscribers.
 
                                9.             Covenants of the Company. The
Company covenants and agrees with the Subscribers as follows:
 
(a)            Stop Orders. The Company will advise the Subscribers, within
twenty-four hours after it receives notice of issuance by the Commission, any
state securities commission or any other regulatory authority of any stop order
or of any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.
 
(b)            Listing/Quotation. The Company shall promptly secure the
quotation or listing of the Shares and Warrant Shares upon the Principal Market
each national securities exchange, or automated quotation system upon which they
are or become eligible for quotation or listing (subject to official notice of
issuance) and shall maintain same so long as any Securities are outstanding. The
Company will maintain the quotation or listing of its Common Stock on the
American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Select Market,
Nasdaq Global Market, the Bulletin Board, or New York Stock Exchange (whichever
of the foregoing is at the time the principal trading exchange or market for the
Common Stock (the "Principal Market")), and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the Principal Market, as applicable. The Company will provide the Subscribers
copies of all notices it receives notifying the Company of the threatened and
actual delisting of the Common Stock from any Principal Market. As of the date
of this Agreement and the Closing Date, the Bulletin Board is and will be the
Principal Market.
 
(c)            Market Regulations. The Company shall notify the Commission, the
Principal Market and applicable state authorities, in accordance with their
requirements, of the transactions contemplated by this Agreement, and shall take
all other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Securities to the Subscribers and promptly provide copies thereof to the
Subscribers.
 
(d)            Filing Requirements. From the date of this Agreement and until
the last to occur of (i) two (2) years after the Closing Date, (ii) until all
the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to a registration statement or pursuant to Rule 144(b)(1),
or (iii) the Notes are no longer outstanding (the date of occurrence of the last
such event being the "End Date"), the Company will (A) cause its Common Stock to
be registered under Section 12(b) or 12(g) of the 1934 Act, (B) comply in all
respects with its reporting and filing obligations under the 1934 Act, and (C)
voluntarily comply with all reporting requirements that are applicable to an
issuer with a class of shares registered pursuant to Section 12(g) of the 1934
Act, if Company is not subject to such reporting requirements. The Company will
not take any action or file any document (whether or not permitted by the 1933
Act or the 1934 Act or the rules thereunder) to terminate or suspend its
reporting and filing obligations under said acts until the End Date. Until the
End Date, the Company will continue the listing or quotation of the Common Stock
on a Principal Market and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Principal Market. The Company agrees to timely file a Form D with respect to the
Securities if required under Regulation D and to provide a copy thereof to each
Subscriber promptly after such filing.
 
 
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(e)            Use of Proceeds. The proceeds of the Offering will be employed by
the Company as described on Schedule 9(e). Except as described on Schedule 9(e),
the Purchase Price may not and will not be used for accrued and unpaid officer
and director salaries, payment of financing related debt, redemption of
outstanding notes or equity instruments of the Company nor non-trade obligations
outstanding on a Closing Date. For so long as any Notes are outstanding, the
Company will not prepay any financing related debt obligations nor redeem any
equity instruments of the Company.
 
(f)            Reservation. On or before May 30, 2009, and at all times
thereafter, the Company shall have reserved, pro rata, on behalf of each holder
of a Note, Common Stock or Warrant, from its authorized but unissued Common
Stock, a number of common shares equal to 150% of the amount of Common Stock
necessary to allow each holder of a Note to be able to convert all such
outstanding Notes, Common Stock and interest and 100% of the Warrant Shares
issuable upon exercise of the Warrants.
 
(g)            DTC Program. At all times that Notes and Warrants are
outstanding, the Company will employ as the transfer agent for the Common Stock
a participant in the Depository Trust Company Automated Securities Transfer
Program.
 
(h)            Taxes. From the date of this Agreement and until the End Date,
the Company will promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of the Company;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefore.
 
(i)            Insurance. From the date of this Agreement and until the End
Date, the Company will keep its assets which are of an insurable character
insured by financially sound and reputable insurers against loss or damage by
fire, explosion and other risks customarily insured against by companies in the
Company's line of business, in amounts sufficient to prevent the Company from
becoming a co-insurer and not in any event less than one hundred percent (100%)
of the insurable value of the property insured less reasonable deductible
amounts; and the Company will maintain, with financially sound and reputable
insurers, insurance against other hazards and risks and liability to persons and
property to the extent and in the manner customary for companies in similar
businesses similarly situated and to the extent available on commercially
reasonable terms.
 
                                               (j)             Books and
Records. From the date of this Agreement and until the End Date, the Company
will keep true records and books of account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and affairs in accordance with generally accepted accounting principles applied
on a consistent basis.
 
(k)            Governmental Authorities. From the date of this Agreement and
until the End Date, the Company shall duly observe and conform in all material
respects to all valid requirements of governmental authorities relating to the
conduct of its business or to its properties or assets.

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(1)           Intellectual Property. From the date of this Agreement and until
the End Date, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business, unless it is sold for value.
 
(m)           Properties. From the date of this Agreement and until the End
Date, the Company will keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company will at all times comply with each provision of all
leases to which it is a party or under which it occupies property if the breach
of such provision could reasonably be expected to have a Material Adverse
Effect.
 
(n)           Confidentiality/Public Announcement. From the date of this
Agreement and until the End Date, the Company agrees that except in connection
with a Form 8-K and the registration statement or statements regarding the
Subscribers' securities or in correspondence with the SEC regarding same, it
will not disclose publicly or privately the identity of the Subscribers unless
expressly agreed to in writing by a Subscriber or only to the extent required by
law and then only upon five days prior notice to Subscriber. In any event and
subject to the foregoing, the Company undertakes to file a Form 10-SB, Form 8-K
or make a public announcement describing the Offering not later than the
business day after the Closing Date. Prior to filing or announcement, such Form
10-SB, Form 8-K or public announcement will be provided to Subscribers for their
review and approval. In the Form 10-SB, Form 8-K or public announcement, the
Company will specifically disclose the amount of Common Stock outstanding
immediately after the Closing. Upon delivery by the Company to the Subscribers
after the Closing Date of any notice or information, in writing, electronically
or otherwise, and while a Note is held by such Subscribers, unless the Company
has in good faith determined that the matters relating to such notice do not
constitute material, nonpublic information relating to the Company or
Subsidiaries, the Company shall within one business day after any such delivery
publicly disclose such material, nonpublic information on a Report on Form
10-SB, Form 8-K or otherwise. In the event that the Company believes that a
notice or communication to a Subscriber contains material, nonpublic
information, relating to the Company or Subsidiaries, the Company shall so
indicate to such Subscriber contemporaneously with delivery of such notice or
information. In the absence of any such indication, such Subscriber shall be
allowed to presume that all matters relating to such notice and information do
not constitute material, nonpublic information relating to the Company or its
Subsidiaries.
 
(o)            Non-Public Information. The Company covenants and agrees that
except for the Reports, Other Written Information and schedules and exhibits to
this Agreement, neither it nor any other person acting on its behalf will at any
time provide any Subscriber or its agents or counsel with any information that
the Company believes constitutes material non-public information, unless prior
thereto such Subscriber shall have agreed in writing to keep such information in
confidence. The Company understands and confirms that each Subscriber shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
 
(p)            Negative Covenants. So long as a Note is outstanding, without the
consent of the Subscribers, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly:
 
 
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(i) create, incur, assume or suffer to exist any pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
security title, mortgage, security deed or deed of trust, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Uniform Commercial
Code or comparable law of any jurisdiction) (each, a "Lien") upon any of its
property, whether now owned or hereafter acquired except for: (A) the Excepted
Issuances (as defined in Section 12 hereof), and (B) (a) Liens imposed by law
for taxes that are not yet due or are being contested in good faith and for
which adequate reserves have been established in accordance with generally
accepted accounting principles; (b) carriers', warehousemen's, mechanics',
material men's, repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations; (d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business; (e) Liens created with respect to the financing of
the purchase of new property in the ordinary course of the Company's business up
to the amount of the purchase price of such property; and (f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property (each of (a) through (f), a "Permitted Lien");
 
(ii) amend its certificate of incorporation, bylaws or its charter documents so
 
as to materially and adversely affect any rights of the Subscriber;
 
(iii) repay, repurchase or offer to repay, repurchase or otherwise acquire or
make any dividend or distribution in respect of any of its Common Stock,
preferred stock, or other equity securities other than to the extent permitted
or required under the Transaction Documents.
 
(iv) engage in any transactions with any officer, director, employee or any
Affiliate of the Company, including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $100,000 other than (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company, and
(iii) for other employee benefits, including stock option agreements under any
stock option plan of the Company; or
 
(v) prepay or redeem any financing related debt or past due obligations
 
outstanding as of the Closing Date.
 
(q)           Seniority. Except for Permitted Liens and as otherwise provided
for herein, until the Notes are fully satisfied or converted, the Company shall
not grant nor allow any security interest to be taken in the assets of the
Company or any Subsidiary; nor issue any debt, equity or other instrument which
would give the holder thereof directly or indirectly, a right in any assets of
the Company or any Subsidiary, superior to any right of the holder of a Note in
or to such assets.
 
(r)            Notices. For so long as the Subscribers hold any Securities, the
Company will maintain as United States address and United States fax number for
notices purposes under the Transaction Documents.
 
10.          Covenants of the Company Regarding Indemnification. The Company
agrees to indemnify, hold harmless, reimburse and defend the Subscribers, the
Subscribers' officers, directors, agents, Affiliates, members, managers, control
persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Subscriber or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
Company or breach of any representation or warranty by Company in this Agreement
or in any Exhibits or Schedules attached hereto, or other agreement delivered
pursuant hereto; or (ii) after any applicable notice and/or cure periods, any
breach or default in performance by the Company of any covenant or undertaking
to be performed by the Company hereunder, or any other agreement entered into by
the Company and Subscriber relating hereto.
 
 
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11.1.        Delivery of Unlegended Shares.
 
(a) Within seven business days (such seventh business day being the "Unlegended
Shares Delivery Date") after the business day on which the Company has received
(i) a notice that Shares or Warrant Shares, or any other Common Stock held by a
Subscriber have been sold pursuant to a registration statement, if any, or Rule
144, (ii) a representation that the prospectus delivery requirements, or the
requirements of Rule 144, as applicable and if required, have been satisfied,
(iii) the original share certificates representing the shares of Common Stock
that have been sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the Subscriber and/or a Subscriber's broker regarding
compliance with the requirements of Rule 144, the Company at its expense, (y)
shall deliver, and shall cause legal counsel selected by the Company to deliver
to its transfer agent (with copies to Subscriber) an appropriate instruction and
opinion of such counsel, directing the delivery of shares of Common Stock
without any legends including the legend set forth in Section 4(i) above (the
"Unlegended Shares"); and (z) cause the transmission of the certificates
representing the Unlegended Shares together with a legended certificate
representing the balance of the submitted certificate, if any, to the Subscriber
at the address specified in the notice of sale, via express courier, by
electronic transfer or otherwise on or before the Unlegended Shares Delivery
Date. In the event that the Shares are sold in a manner that complies with an
exemption from registration, the Company will promptly instruct its counsel to
issue to the Company's transfer agent an opinion permitting removal of the
legend indefinitely if pursuant to Rule 144(b)(1).
 
(b) In lieu of delivering physical certificates representing the Unlegended
Shares, upon request of a Subscriber, so long as the certificates therefor do
not bear a legend and the Subscriber is not obligated to return such certificate
for the placement of a legend thereon, the Company will cause its transfer agent
to electronically transmit the Unlegended Shares by crediting the account of
Subscriber's prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system. Such delivery must be made on or before the Unlegended Shares
Delivery Date.
 
(c) The Company understands that a delay in the delivery of the Unlegended
Shares pursuant to Section 11 hereof later than the Unlegended Shares Delivery
Date could result in economic loss to a Subscriber. As compensation to a
Subscriber for such loss, the Company agrees to pay late payment fees (as
liquidated damages and not as a penalty) to the Subscriber for late delivery of
Unlegended Shares in the amount of $100 per business day after the Delivery Date
for each $10,000 of purchase price of the Unlegended Shares subject to the
delivery default. In the event damages are payable pursuant to the foregoing
sentence, then the Subscriber may elect to receive liquidated damages under this
Section 11.1(c) or Section 12(g) below. If during any 360 day period, the
Company fails to deliver Unlegended Shares as required by this Section 11.1 for
an aggregate of 30 days, then each Subscriber or assignee holding Securities
subject to such default may, at its option, require the Company to redeem all or
any portion of the Shares and Warrant Shares subject to such default at a price
per share equal to the greater of (i) 120%, or (ii) a fraction in which the
numerator is the highest closing price of the Common Stock during the
aforedescribed 30 day period and the denominator of which is the purchase price
of the Shares or exercise price of such Warrant Shares during such 30 day
period, multiplied by the purchase price of the Shares or exercise price of such
Warrant Shares ("Unlegended Redemption Amount"). The Company shall pay any
payments incurred under this Section in immediately available funds upon demand.
 
 
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(d) In addition to any other rights available to a Subscriber, if the Company
fails to deliver to a Subscriber Unlegended Shares as required pursuant to this
Agreement, within three business days after the Unlegended Shares Delivery Date
and the Subscriber or a broker on the Subscriber's behalf, purchases (in an open
market transaction or otherwise) shares of common stock to deliver in
satisfaction of a sale by such Subscriber of the shares of Common Stock which
the Subscriber was entitled to receive from the Company (a "Buy-In"), then the
Company shall pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) the
Subscriber's total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (B) the aggregate purchase price
of the shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares together with interest thereon at a rate of 15% per annum
accruing until such amount and any accrued interest thereon is paid in full
(which amount shall be paid as liquidated damages and not as a penalty). For
example, if a Subscriber purchases shares of Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares, the Company shall be required to pay the Subscriber $1,000,
plus interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the Buy-In.
 
(e) In the event a Subscriber shall request delivery of Unlegended Shares as
described in Section 11.1 or Warrant Shares upon exercise of Warrants and the
Company is required to deliver such Unlegended Shares pursuant to Section 11.1
or the Warrant Shares pursuant to the Warrant, the Company may not refuse to
deliver Unlegended Shares or Warrant Shares based on any claim that such
Subscriber or any one associated or affiliated with such Subscriber has been
engaged in any violation of law, or for any other reason, unless, an injunction
or temporary restraining order from a court, on notice, restraining and or
enjoining delivery of such Unlegended Shares or exercise of all or part of said
Warrant shall have been sought and obtained by the Company or at the Company's
request or with the Company's assistance, and the Company has posted a surety
bond for the benefit of such Subscriber in the amount of 120% of the amount of
the aggregate purchase price of the Shares and Warrant Shares which are subject
to the injunction or temporary restraining order, which bond shall remain in
effect until the final unappealable disposition of the litigation of the dispute
and the proceeds of which shall be payable to such Subscriber to the extent
Subscriber obtains judgment in Subscriber's favor.
 
11.2.       In the event commencing one hundred and eighty-one (181) days after
the Closing Date and ending five years thereafter, the Subscriber is not
permitted to resell any of the Shares or Warrant Shares without any restrictive
legend or if such sales are permitted but subject to volume limitations or
further restrictions on resale as a result of the unavailability to Subscriber
of Rule 144(b)(1) under the 1933 Act or any successor rule (a "144 Default"),
for any reason except for Subscriber's status as an Affiliate or "control
person" of the Company, then the Company shall pay such Subscriber as liquidated
damages ("Liquidated Damages") and not as a penalty an amount equal to one
percent (1%) for the first day of such occurrence and one percent (1%) for each
thirty (30) days (or such lesser pro-rata amount for any period less than thirty
(30) days) thereafter of the purchase price of the Shares or Warrant Shares
owned by the Subscriber during the pendency of the 144 Default.
 
12.           (a)          Right of First Refusal. Until one year after the
Closing Date, the Subscribers shall be given not less than ten business days
prior written notice of any proposed sale by the Company of its common stock or
other securities or equity linked debt obligations, except in connection with
(i) full or partial consideration in connection with a strategic merger,
acquisition, consolidation or purchase of substantially all of the securities or
assets of corporation or other entity which holders of such securities or debt
are not at any time granted registration rights, (ii) the Company's issuance of
securities in connection with strategic license agreements and other partnering
arrangements so long as such issuances are not for the purpose of raising
capital and which holders of such securities or debt are not at any time granted
registration rights, (iii) the Company's issuance of Common Stock or the
issuances or grants of options to purchase Common Stock pursuant to stock option
plans and employee stock purchase plans described on Schedule 5(d) hereto at
prices equal to or higher than the closing price of the Common Stock on the
issue date of any of the foregoing, (iv) as a result of the exercise of Warrants
or conversion of Notes which are granted or issued pursuant to this Agreement,
or that have been issued prior to the Closing Date, the issuance of which has
been disclosed in a registration statement filed not less than five days prior
to the Closing Date, (v) securities issued in payment of outstanding
indebtednesses (for non-financing purposes) or to a vendor for professional
services, and (vi) the payment of any interest on the Notes and Liquidated
Damages pursuant to the Transaction Documents (collectively the foregoing are
"Excepted Issuances"). The Subscribers who exercise their rights pursuant to
this Section 12(a) shall have the right during the ten business days following
receipt of the notice to purchase in the aggregate up to one-half such offered
common stock, debt or other securities in accordance with the terms and
conditions set forth in the notice of sale in the same proportion to each other
as their purchase of Notes in the Offering. In the event such terms and
conditions are modified during the notice period, the Subscribers shall be given
prompt notice of such modification and shall have the right during the ten
business days following the notice of modification to exercise such right.
 
 
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                                               (b)            Favored Nations
Provision. Other than in connection with the Excepted Issuances, if at any time
the Notes or Warrants are outstanding, the Company shall agree to or issue (the
"Lower Price Issuance") any Common Stock or securities convertible into or
exercisable for shares of Common Stock (or modify any of the foregoing which may
be outstanding) to any person or entity at a price per share or conversion or
exercise price per share which shall be less than the price in respect of the
Conversion Price in respect of the Shares, or if less than the Warrant exercise
price in respect of the Warrant Shares, without the consent of each Subscriber,
then the Company shall issue, for each such occasion, additional shares of
Common Stock to each Subscriber respecting those Notes, Warrants, and Shares
that remain outstanding at the time of the Lower Price Issuance so that the
average per share purchase price of the shares of Common Stock issued to each
Subscriber (of only the Common Stock or Warrant Shares still owned by a
Subscriber) is equal to such other lower price per share and the Conversion
Price and Warrant exercise price shall automatically be reduced to such other
lower price. The average Purchase Price of the Shares and average exercise price
in relation to the Warrant Shares shall be calculated separately for the Shares
and Warrant Shares. The foregoing calculation and issuance shall be made
separately for Shares received upon conversion of the Notes and separately for
Warrant Shares. The delivery to a Subscriber of the additional shares of Common
Stock shall be not later than the closing date of the transaction giving rise to
the requirement to issue additional shares of Common Stock. Each Subscriber is
granted the registration rights described in Section 11 hereof in relation to
such additional shares of Common Stock. For purposes of the issuance and
adjustment described in this paragraph, the issuance of any security of the
Company carrying the right to convert such security into shares of Common Stock
or of any warrant, right or option to purchase Common Stock shall result in the
issuance of the additional shares of Common Stock upon the sooner of the
agreement to or actual issuance of such convertible security, warrant, right or
option and again at any time upon any subsequent issuances of shares of Common
Stock upon exercise of such conversion or purchase rights if such issuance is at
a price lower than the Conversion Price or Warrant exercise price in effect upon
such issuance. The rights of each Subscriber set forth in this Section 12 are in
addition to any other rights the Subscriber has pursuant to this Agreement, the
Note, any Transaction Document, and any other agreement referred to or entered
into in connection herewith or to which such Subscriber and Company are parties.
Each Subscriber is also given the right to elect to substitute any term or terms
of any other offering in connection with which such Subscriber has rights as
described in Section 12(a), or any outstanding price protection, anti-dilution
or reset rights granted to any holder of any of the Company's equity or right to
receive such equity, or any such rights which are granted after the Initial
Closing Date for any term or terms of the Offering in connection with Securities
owned by such Subscriber as of the date the notice described in Section 12(a) is
required to be given to such Subscriber.
 
                                               (c)            Maximum Exercise
of Rights. In the event the exercise of the rights described in Sections 12(a)
and 12(b) would or could result in the issuance of an amount of Common Stock of
the Company that would exceed the maximum amount that may be issued to a
Subscriber calculated in the manner described in Section 7.3 of this Agreement,
then the issuance of such additional shares of Common Stock of the Company to
such Subscriber will be deferred in whole or in part until such time as such
Subscriber is able to beneficially own such Common Stock without exceeding the
applicable maximum amount set forth calculated in the manner described in
Section 7.3 of this Agreement. The determination of when such Common Stock may
be issued shall be made by each Subscriber as to only such Subscriber.
 
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                                13.           Miscellaneous
 
(a)            Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Attitude Drinks Inc.,
10415 Riverside Drive, Suite 101, Palm Beach Gardens, FL 33410, Attn: Roy
Warren, CEO and President, telecopier: (561) 799-5039, with a copy by telecopier
only to: Weed & Co., LLP, 4695 MacArthur Court, Suite 1430, Newport Beach, CA
92660, Attn: Rick Weed, Esq., telecopier number: (949) 475-9087, and (ii) if to
the Subscriber, to: the one or more addresses and telecopier numbers indicated
on the signature pages hereto, with an additional copy by telecopier only to:
Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
telecopier: (212) 697-3575.
 
                                                (b)           Entire Agreement;
Assignment. This Agreement and other documents delivered in connection herewith
represent the entire agreement between the parties hereto with respect to the
subject matter hereof and may be amended only by a writing executed by both
parties. Neither the Company nor the Subscribers have relied on any
representations not contained or referred to in this Agreement and the documents
delivered herewith. No right or obligation of the Company shall be assigned
without prior notice to and the written consent of the Subscribers.
 
                                              
(c)            Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
 
                                                (d)            Law Governing
this Agreement. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state
courts of New York or in the federal courts located in the state and county of
New York. The parties to this Agreement hereby irrevocably waive any objection
to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon
forum  non conveniens. The parties executing this Agreement and other agreements
referred to herein or delivered in connection herewith on behalf of the Company
agree to submit to the in personam jurisdiction of such courts and hereby
irrevocably waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement. Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Document 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
other manner permitted by law.
 
 
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(e)             Specific Enforcement, Consent to Jurisdiction. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity.
Subject to Section 13(d) hereof, the Company hereby irrevocably waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction in New York of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
 
(f)             Independent Nature of Subscribers. The Company acknowledges that
the obligations of each Subscriber under the Transaction Documents are several
and not joint with the obligations of any other Subscriber, and no Subscriber
shall be responsible in any way for the performance of the obligations of any
other Subscriber under the Transaction Documents. The Company acknowledges that
each Subscriber has represented that the decision of each Subscriber to purchase
Securities has been made by such Subscriber independently of any other
Subscriber and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges that
nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto shall be deemed to constitute the
Subscribers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Subscribers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. The Company acknowledges that each
Subscriber shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of the Transaction
Documents, and it shall not be necessary for any other Subscriber to be joined
as an additional party in any proceeding for such purpose. The Company
acknowledges that it has elected to provide all Subscribers with the same terms
and Transaction Documents for the convenience of the Company and not because
Company was required or requested to do so by the Subscribers. The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Subscribers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated thereby.
 
(g)            Damages. In the event the Subscriber is entitled to receive any
liquidated damages pursuant to the Transactions, the Subscriber may elect to
receive the greater of actual damages or such liquidated damages.
 
(h)            Consent. As used in the Agreement, "consent of the Subscribers"
or similar language means the consent of holders of not less than 75% of the
total of the Shares issued and issuable upon conversion of outstanding Notes
owned by Subscribers on the date consent is requested.
 
(i)             Limit on Liability. In no event shall the liability of any
Subscriber or permitted successor hereunder or under any Transaction Document or
other agreement delivered in connection herewith be greater in amount than the
dollar amount of the net proceeds actually received by such Subscriber upon the
sale of Shares.

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                                               (j)             Equal
Treatment. No consideration shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of the Transaction
Documents unless the same consideration is also offered and paid to all the
Subscribers and their permitted successors and assigns.
 
(k)           Maximum Payments. Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest or dividends required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Company to the Subscriber and thus refunded
to the Company.
 
                                                (i)            Calendar
Days. All references to "days" in the Transaction Documents shall mean calendar
days unless otherwise stated. The terms "business days" and "trading days" shall
mean days that the New York Stock Exchange is open for trading for three or more
hours. Time periods shall be determined as if the relevant action, calculation
or time period were occurring in New York City. Any deadline that falls on a
non-business day in any of the Transaction Documents shall be automatically
extended to the next business day and interest, if any, shall be calculated and
payable through such extended period.
 
(m)          Successor Laws. References in the Transaction Documents to laws,
rules, regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms. A successor
rule to 144(b)(l)(i) shall include any rule that would be available to a
non-Affiliate of the Company for the sale of Common Stock not subject to volume
restrictions and after a six month holding period.
 
[THIS SPACE INTENTIONALLY LEFT BLANK]
 
 
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (A)

 
    Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
 

ATTITUDE DRINKS INC.
a Delaware corporation
 
By: /s/ Roy G. Warren           
Name: Roy G. Warren
Title: President, CEO
 
Date: March 30, 2009

 
 
SUBSCRIBER
NOTE PRINCIPAL AMOUNT
PURCHASE PRICE
ALPHA CAPITAL ANSTALT
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
Fax: 011-42-32323196
 
 
 
                                                                      
                     
$100,000.00
$90,000.00
(Signature) By:

 
 
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (A)

 
Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
 
 

ATTITUDE DRINKS INC.
a Delaware corporation
 
By: /s/ Konrad Ackerman           
Name: Kondrad Ackerman
Title: Director
 
Date: March 30, 2009

 

 
SUBSCRIBER
NOTE PRINCIPAL AMOUNT
PURCHASE PRICE
ALPHA CAPITAL ANSTALT
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
Fax: 011-42-32323196
 
 
 
/s/ Konrad Ackerman                                        
$100,000.00
$90,000.00
(Signature) Konrad Ackermon
By: Director

 
 
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (B)
 
 
    Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
 

ATTITUDE DRINKS INC.
a Delaware corporation
 
By: /s/ Roy G. Warren           
Name: Roy G. Warren
Title: President, CEO
 
Date: March 30, 2009

 

 
    SUBSCRIBER
NOTE PRINCIPAL AMOUNT
PURCHASE PRICE
WHALEHAVEN CAPITAL FUND LIMITED
560 Sylvan Avenue
Englewood Cliffs, N.J. 07632
Fax: (201) 586-0258
 
 
 
$100,000.00
$90,000.00
(Signature)
By:

 
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (B)
 
 
    Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
 

ATTITUDE DRINKS INC.
a Delaware corporation
 
By: /s/                                       
Name: 
Title: 
 
Date: March 30, 2009

 

 
    SUBSCRIBER
NOTE PRINCIPAL AMOUNT
PURCHASE PRICE
WHALEHAVEN CAPITAL FUND LIMITED
560 Sylvan Avenue
Englewood Cliffs, N.J. 07632
Fax: (201) 586-0258
 
 
/s/ Brian Mazzella                                    
$100,000.00
$90,000.00
(Signature) Brian Mazella  
By: CFO

 
 
 
 
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