f8k070607ex10i_redrock.htm


    EQUITY
      DISTRIBUTION AGREEMENT

    


    


              THIS
      AGREEMENT dated as of the 6th day of July 2007 (the “Agreement”) between IFG
      Opportunity Fund, LLC., (the “Investor”), and RED ROCK PICTURES HOLDINGS, INC.,
      a corporation organized and existing under the laws of the State of Nevada
      (the
“Company”).

    


              WHEREAS,
      the parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Investor, from time to time
      as
      provided herein, and the Investor shall purchase from the Company up to
      Twenty-five Million Dollars ($25,000,000) of the Company’s common stock, par
      value $0.001 per share (the “Common Stock”); and

    


              WHEREAS,
      such investments will be made in reliance upon the provisions of Regulation
      D
      (“Regulation D”) of the Securities Act of 1933, as amended, and the regulations
      promulgated thereunder (the “Securities Act”), and or upon such other exemption
      from the registration requirements of the Securities Act as may be available
      with respect to any or all of the investments to be made hereunder.

    


              NOW,
      THEREFORE, the parties hereto agree as follows:

     

    ARTICLE
      I.

    Certain
      Definitions

    


    


              Section
      1.1.     “Advance” shall mean the portion of the
      Commitment Amount requested by the Company in the Advance Notice.

    


              Section
      1.2.     “Advance Date” shall mean the first (1st)
      Trading Day after expiration of the applicable Pricing Period for each
      Advance.

    


              Section
      1.3.     “Advance Notice” shall mean a written notice
      in the form of Exhibit A attached hereto to the Investor executed by an officer
      of the Company and setting forth the Advance amount that the Company requests
      from the Investor.

    


              Section
      1.4.     “Advance Notice Date” shall mean each date the
      Company delivers (in accordance with Section 2.2(b) of this Agreement) to the
      Investor an Advance Notice requiring the Investor to advance funds to the
      Company, subject to the terms of this Agreement.  No Advance Notice
      Date shall be less than five (5) Trading Days after the prior Advance Notice
      Date.

    


              Section
      1.5.     “Closing” shall mean one of the closings of a
      purchase and sale of Common Stock pursuant to Section 2.3.

    


              Section
      1.6.     “Commitment Amount” shall mean the aggregate
      amount of up to Twenty-five  Million Dollars ($25,000,000) which the
      Investor has agreed to provide to the Company in order to purchase the Company’s
      Common Stock pursuant to the terms and conditions of this
      Agreement.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

              Section
      1.7.     “Commitment Period” shall mean the period
      commencing on the earlier to occur of (i) the Effective Date, or (ii) such
      earlier date as the Company and the Investor may mutually agree in writing,
      and
      expiring on the earliest to occur of (x) the date on which the Investor shall
      have made payment of Advances pursuant to this Agreement in the aggregate amount
      of the Commitment Amount, (y) the date this Agreement is terminated pursuant
      to
      Section 10.2 or (z) the date occurring thirty (30) months after the Effective
      Date.

    


              Section
      1.8.     “Common Stock” shall mean the Company’s common
      stock, par value $0.001 per share.

    


              Section
      1.9.   “Condition Satisfaction Date” shall have the meaning set
      forth in Section 7.2.

    


              Section
      1.10.   “Damages” shall mean any loss, claim, damage, liability,
      costs and expenses (including, without limitation, reasonable attorney’s fees
      and disbursements and costs and expenses of expert witnesses and
      investigation).

    


              Section
      1.11.   “Effective Date” shall mean the date on which the SEC
      first declares effective a Registration Statement registering the resale of
      the
      Registrable Securities as set forth in Section 7.2(a).

    


              Section
      1.12.   “Exchange Act” shall mean the Securities Exchange Act of
      1934, as amended, and the rules and regulations promulgated
      thereunder.

    


              Section
      1.13.   “Material Adverse Effect” shall mean any condition,
      circumstance, or situation that would prohibit or otherwise materially interfere
      with the ability of the Company to enter into and perform any of its obligations
      under this Agreement or the Registration Rights Agreement in any material
      respect.

    


              Section
      1.14.   “Market Price” shall mean the VWAP of the Common Stock
      during the Pricing Period as defined by Bloomberg.

    


              Section
      1.15.   “Maximum Advance Amount” shall be One Million
      Dollars

    ($1,000,000)
      per Advance Notice, but in no case more than Four Million Dollars ($4,000,000)
      in any thirty-day (30) calendar period.

    


              Section
      1.16.   “NASD” shall mean the National Association of Securities
      Dealers, Inc.

    


              Section
      1.17.   “Person” shall mean an individual, a corporation, a
      partnership, an association, a trust or other entity or organization, including
      a government or political subdivision or an agency or instrumentality
      thereof.

    


              Section
      1.18.   “Pricing Period” shall mean the five (5) consecutive
      Trading Days after the Advance Notice Date subject to any reduction pursuant
      to
      Section 2.2(c).

     

     

    
      
        
        

      

      
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              Section
      1.19.   “Principal Market” shall mean the Nasdaq National Market,
      the Nasdaq Capital Market, the American Stock Exchange, the OTC Bulletin Board
      or the New York Stock Exchange, whichever is at the time the principal trading
      exchange or market for the Common Stock.

    


              Section
      1.20.   “Purchase Price” shall be set at ninety seven percent
      (97%) of the Market Price during the Pricing Period.

    


              Section
      1.21.   “Registrable Securities” shall mean the shares of Common
      Stock to be issued hereunder (i) in respect of which the Registration Statement
      has not been declared effective by the SEC, (ii) which have not been sold under
      circumstances meeting all of the applicable conditions of Rule 144 (or any
      similar provision then in force) under the Securities Act (“Rule 144”) or (iii)
      which have not been otherwise transferred to a holder who may trade such shares
      without restriction under the Securities Act, and the Company has delivered
      a
      new certificate or other evidence of ownership for such securities not bearing
      a
      restrictive legend.

    


              Section
      1.22.   “Registration Rights Agreement” shall mean the
      Registration Rights Agreement dated the date hereof, regarding the filing of
      the
      Registration Statement for the resale of the Registrable Securities, entered
      into between the Company and the Investor.

    


              Section
      1.23.   “Registration Statement” shall mean a registration
      statement on Form S-1 or SB-2 (if use of such form is then available to the
      Company pursuant to the rules of the SEC and, if not, on such other form
      promulgated by the SEC for which the Company then qualifies and which counsel
      for the Company shall deem appropriate, and which form shall be available for
      the resale of the Registrable Securities to be registered thereunder in
      accordance with the provisions of this Agreement and the Registration Rights
      Agreement, and in accordance with the intended method of distribution of such
      securities), for the registration of the resale by the Investor of the
      Registrable Securities under the Securities Act.

    


              Section
      1.24.   “Regulation D” shall have the meaning set forth in the
      recitals of this Agreement.

    


              Section
      1.25.   “SEC” shall mean the United States Securities and
      Exchange Commission.

    


              Section
      1.26.   “Securities Act” shall have the meaning set forth in the
      recitals of this Agreement.

    


              Section
      1.27.   “SEC Documents” shall mean Annual Reports on Form 10-KSB,
      Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K and Proxy
      Statements of the Company as supplemented to the date hereof, filed by the
      Company for a period of at least twelve (12) months immediately preceding the
      date hereof or the Advance Date, as the case may be, until such time as the
      Company no longer has an obligation to maintain the effectiveness of a
      Registration Statement as set forth in the Registration Rights
      Agreement.

     

    
      
        
        

      

      
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              Section
      1.28.   “Trading Day” shall mean any day during which the New
      York Stock Exchange shall be open for business.

    


              Section
      1.29.   “VWAP” shall mean the volume weighted average price of
      the Company’s Common Stock as quoted by Bloomberg, LP.


    


    ARTICLE
      II.

    Advances

     

              Section
      2.1.     Advances.

    


                   Subject
      to the terms and conditions of this Agreement (including, without limitation,
      the provisions of Article VII hereof), the Company, at its sole and exclusive
      option, may issue and sell to the Investor, and the Investor shall purchase
      from
      the Company, shares of the Company’s Common Stock by the delivery, in the
      Company’s sole discretion, of Advance Notices.  The number of shares
      of Common Stock that the Investor shall purchase pursuant to each Advance shall
      be determined by dividing the amount of the Advance by the Purchase Price.
      No
      fractional shares shall be issued. Fractional shares shall be rounded to the
      next higher whole number of shares.  The aggregate maximum amount of
      all Advances that the Investor shall be obligated to make under this Agreement
      shall not exceed the Commitment Amount.

    


              Section
      2.2.     Mechanics.

    


                        (a)         Advance
      Notice.  At any time during the Commitment Period, the Company may
      require the Investor to purchase shares of Common Stock by delivering an Advance
      Notice to the Investor, subject to the conditions set forth in Section 7.2;
      provided, however, the amount for each Advance as designated by the Company
      in
      the applicable Advance Notice shall not be more than the Maximum Advance Amount
      and the aggregate amount of the Advances pursuant to this Agreement shall not
      exceed the Commitment Amount.  The Company acknowledges that the
      Investor may sell shares of the Company’s Common Stock corresponding with a
      particular Advance Notice after the Advance Notice is received by the
      Investor.  There shall be a minimum of five (5) Trading Days between
      each Advance Notice Date.

    


                        (b)         Date
      of Delivery of Advance Notice.  An Advance Notice shall be deemed
      delivered on (i) the Trading Day it is received by facsimile or otherwise by
      the
      Investor if such notice is received prior to 5:00 pm Eastern Time, or (ii)
      the
      immediately succeeding Trading Day if it is received by facsimile or otherwise
      after 5:00 pm Eastern Time on a Trading Day or at any time on a day which is
      not
      a Trading Day.  No Advance Notice may be deemed delivered on a day
      that is not a Trading Day.

    


                        (c)         Minimum
      Acceptable Price.  The lowest closing Bid Price of the Common Stock
      during the Pricing Period (before taking into account any discount used to
      calculate the Purchase Price) for any particular Advance shall, in connection
      with each Advance Notice delivered by the Company, be equal to seventy five
      percent (75%) of the closing Bid Price on the Trading Day immediately preceding
      the Advance Notice Date for such Advance Notice (the “Minimum Acceptable
      Price”).  

     

     

    
      
        
        

      

      
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    Subject
      to the next sentence, upon the issuance by the Company of an Advance Notice
      with
      a Minimum Acceptable Price, if any of the closing Bid Prices during the Pricing
      Period are below the Minimum Acceptable Price (i) the Company shall
      automatically reduce the amount of the Advance set forth in such Advance Notice
      by twenty percent (20%) for each Trading Day during the Pricing Period that
      the
      closing Bid Price of the Common Stock is below the Minimum Acceptable Price
      (each such day, an “Excluded Day”), and (ii) each Excluded Day shall be excluded
      from the Pricing Period for purposes of determining the Market
      Price.  The number of shares of Common Stock to be delivered to the
      Investor at the Closing (in accordance with Section 2.3 of this Agreement)
      shall
      correspond with the Advance Notice amount as reduced pursuant to clause (i)
      above.  The Company, and only the Company, may waive the Minimum
      Acceptable Price with respect to any particular Advance Notice by providing
      the
      Investor with written notice of waiver on or prior to the Advance
      Date.

     

            (d)                           Floor
      Price.  The Company at its option may select a Floor Price for any
      Put, which the Company will not put shares to Investor under that Floor
      Price.

    


    


              Section
      2.3.     Closings.  Within two (2) Trading
      Days of  each Advance Date (i) the Company shall deliver to the
      Investor such number of shares of the Common Stock registered in the name of
      the
      Investor as shall equal (x) the amount of the Advance specified in such Advance
      Notice pursuant to Section 2.1 herein, divided by (y) the Purchase Price and
      (ii) upon receipt of such shares, the Investor shall deliver to the Company
      the
      amount of the Advance specified in the Advance Notice by wire transfer of
      immediately available funds.  In addition, on or prior to the Advance
      Date, each of the Company and the Investor shall deliver to the other all
      documents, instruments and writings required to be delivered by either of them
      pursuant to this Agreement in order to implement and effect the transactions
      contemplated herein.  To the extent the Company has not paid the fees,
      expenses, and disbursements of the Investor in accordance with Section 12.4,
      the
      amount of such fees, expenses, and disbursements may be deducted by the Investor
      (and shall be paid to the relevant party) directly out of the proceeds of the
      Advance with no reduction in the amount of shares of the Company’s Common Stock
      to be delivered on such Advance Date.

    


                        (a)  Company’s
      Obligations Upon Closing.

    


                                  (i)         The
      Company shall deliver to the Investor the shares of Common Stock applicable
      to
      the Advance in accordance with Section 2.3.  The certificates
      evidencing such shares shall be free of restrictive legends.

    


                                  (ii)         the
      Company’s Registration Statement with respect to the resale of the shares of
      Common Stock delivered in connection with the Advance shall have been declared
      effective by the SEC;

    


                                  (iii)        the
      Company shall have obtained all material permits and qualifications required
      by
      any applicable state for the offer and sale of the Registrable Securities,
      or
      shall have the availability of exemptions therefrom.  The sale and
      issuance of the Registrable Securities shall be legally permitted by all laws
      and regulations to which the Company is subject;

     

    
      
        
        

      

      
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                                  (iv)        the
      Company shall have filed with the SEC in a timely manner all reports, notices
      and other documents required of a “reporting company” under the Exchange Act and
      applicable Commission regulations;

    


                                  
      (v)         the fees as set forth
      in Section 12.4 below shall have been paid or can be withheld as provided in
      Section 2.3; and

     

             
      (vi)        the Company’s
      transfer agent shall be DWAC eligible.

    


                        (b)     Investor’s
      Obligations Upon Closing.     Upon receipt of the
      shares referenced in Section 2.3(a)(i) above and provided the Company is in
      compliance with its obligations in Section 2.3, the Investor shall deliver
      to
      the Company the amount of the Advance specified in the Advance Notice by wire
      transfer of immediately available funds.

    


    


    ARTICLE
      III.

    Representations
      and Warranties of Investor

    


    


              Investor
      hereby represents and warrants to, and agrees with, the Company
      that the following are true and correct as of the date hereof and as of
each
      Advance Date:

    


              Section
      3.1.     Organization and Authorization.  The
      Investor is duly incorporated or organized and validly existing in the
      jurisdiction of its incorporation or organization and has all requisite power
      and authority to purchase and hold the securities issuable
      hereunder.  The decision to invest and the execution and delivery of
      this Agreement by such Investor, the performance by such Investor of its
      obligations hereunder and the consummation by such Investor of the transactions
      contemplated hereby have been duly authorized and requires no other proceedings
      on the part of the Investor.  The undersigned has the right, power and
      authority to execute and deliver this Agreement and all other instruments
      (including, without limitations, the Registration Rights Agreement), on behalf
      of the Investor.  This Agreement has been duly executed and delivered
      by the Investor and, assuming the execution and delivery hereof and acceptance
      thereof by the Company, will constitute the legal, valid and binding obligations
      of the Investor, enforceable against the Investor in accordance with its
      terms.

    


              Section
      3.2.     Evaluation of Risks.  The Investor
      has such knowledge and experience in financial, tax and business matters as
      to
      be capable of evaluating the merits and risks of, and bearing the economic
      risks
      entailed by, an investment in the Company and of protecting its interests in
      connection with this transaction.  It recognizes that its investment
      in the Company involves a high degree of risk.

    


              Section
      3.3.     No Legal Advice From the
      Company.  The Investor acknowledges that it had the opportunity to
      review this Agreement and the transactions contemplated by this Agreement with
      his or its own legal counsel and investment and tax advisors.  The
      Investor is relying solely on such counsel and advisors and not on any
      statements or representations of the Company or any of its representatives
      or
      agents for legal, tax or investment advice with respect to this investment,
      the
      transactions contemplated by this Agreement or the securities laws of any
      jurisdiction.

     

    
      
        
        

      

      
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              Section
      3.4.     Investment Purpose. The securities are being
      purchased by the Investor for its own account, and for investment
      purposes.  The Investor agrees not to assign or in any way transfer
      the Investor’s rights to the securities or any interest therein and acknowledges
      that the Company will not recognize any purported assignment or transfer except
      in accordance with applicable Federal and state securities laws.  No
      other person has or will have a direct or indirect beneficial interest in the
      securities.  The Investor agrees not to sell, hypothecate or otherwise
      transfer the Investor’s securities unless the securities are registered under
      Federal and applicable state securities laws or unless, in the opinion of
      counsel satisfactory to the Company, an exemption from such laws is
      available.

    


              Section
      3.5.     Accredited Investor.  The Investor
      is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of
      Regulation D of the Securities Act.

    


              Section
      3.6.     Information.  The Investor and its
      advisors (and its counsel), if any, have been furnished with all materials
      relating to the business, finances and operations of the Company and information
      it deemed material to making an informed investment decision.  The
      Investor and its advisors, if any, have been afforded the opportunity to ask
      questions of the Company and its management.  Neither such inquiries
      nor any other due diligence investigations conducted by such Investor or its
      advisors, if any, or its representatives shall modify, amend or affect the
      Investor’s right to rely on the Company’s representations and warranties
      contained in this Agreement.  The Investor understands that its
      investment involves a high degree of risk.  The Investor is in a
      position regarding the Company, which, based upon employment, family
      relationship or economic bargaining power, enabled and enables such Investor
      to
      obtain information from the Company in order to evaluate the merits and risks
      of
      this investment.  The Investor has sought such accounting, legal and
      tax advice, as it has considered necessary to make an informed investment
      decision with respect to this transaction.

    


              Section
      3.7.     Receipt of Documents. The Investor and its
      counsel have received and read in their entirety:  (i) this Agreement
      and the Exhibits annexed hereto; (ii) all due diligence and other information
      necessary to verify the accuracy and completeness of such representations,
      warranties and covenants; (iii) the Company’s Form 10-KSB for the year ended
      August  31, 2006 and Form 10-QSB for the period ended November 30,
      2006; and (iv) answers to all questions the Investor submitted to the Company
      regarding an investment in the Company; and the Investor has relied on the
      information contained therein and has not been furnished any other documents,
      literature, memorandum or prospectus.

    


              Section
      3.8.     Registration Rights Agreement.  The
      parties have entered into the Registration Rights Agreement dated the date
      hereof.

    


              Section
      3.9.     No General Solicitation.  Neither
      the Company, nor any of its affiliates, nor 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 Securities Act) in connection
      with
      the offer or sale of the shares of Common Stock offered hereby.

     

    
      
        
        

      

      
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              Section
      3.10.   Not an Affiliate.  The Investor is not an
      officer, director or a person that directly, or indirectly through one or more
      intermediaries, controls or is controlled by, or is under common control with
      the Company or any “Affiliate” of the Company (as that term is defined in Rule
      405 of the Securities Act).

    


              Section
      3.11.   Trading Activities.  The Investor’s trading
      activities with respect to the Company’s Common Stock shall be in compliance
      with all applicable federal and state securities laws, rules and regulations
      and
      the rules and regulations of the Principal Market on which the Company’s Common
      Stock is listed or traded. Neither the Investor nor its affiliates has an open
      short position in the Common Stock of the Company, the Investor agrees that
      it
      shall not, and that it will cause its affiliates not to, engage in any short
      sales of or hedging transactions with respect to the Common Stock.

    


    


    ARTICLE
      IV.

    Representations
      and Warranties of the Company

    


    


              Except
      as stated below, on the disclosure schedules attached hereto or in the SEC
      Documents (as defined herein), the Company hereby represents and warrants to,
      and covenants with, the Investor that the following are true and correct as
      of
      the date hereof:

    


              Section
      4.1.     Organization and Qualification.  The
      Company is duly incorporated or organized and validly existing in the
      jurisdiction of its incorporation or organization and has all requisite
      corporate power to own its properties and to carry on its business as now being
      conducted.  Each of the Company and its subsidiaries is duly qualified
      as a foreign corporation to do business and is in good standing in every
      jurisdiction in which the nature of the business conducted by it makes such
      qualification necessary, except to the extent that the failure to be so
      qualified or be in good standing would not have a Material Adverse Effect on
      the
      Company and its subsidiaries taken as a whole.

    


              Section
      4.2.     Authorization, Enforcement, Compliance with
      Other Instruments.  (i) The Company has the requisite corporate power
      and authority to enter into and perform this Agreement, the Registration Rights
      Agreement, the Placement Agent Agreement and any related agreements, in
      accordance with the terms hereof and thereof, (ii) the execution and delivery
      of
      this Agreement, the Registration Rights Agreement, the Placement Agent Agreement
      and any related agreements by the Company and the consummation by it of the
      transactions contemplated hereby and thereby, have been duly authorized by
      the
      Company’s Board of Directors and no further consent or authorization is required
      by the Company, its Board of Directors or its stockholders, (iii) this
      Agreement, the Registration Rights Agreement, the Placement Agent Agreement
      and
      any related agreements have been duly executed and delivered by the Company,
      (iv) this Agreement, the Registration Rights Agreement, the Placement Agent
      Agreement and assuming the execution and delivery thereof and acceptance by
      the
      Investor and any related agreements constitute the valid and binding obligations
      of the Company enforceable against the Company in accordance with their terms,
      except as such enforceability may be limited by general principles of equity
      or
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
      or
      similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.

     

    
      
        
        

      

      
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              Section
      4.3.     Capitalization.  The authorized
      capital stock of the Company consists of 75,000,000 shares of Common Stock
      and
      5,000,000 shares of Preferred Stock, $0.001 par value per share (“Preferred
      Stock”), of which 61,910,000 shares of Common Stock and no shares of Preferred
      Stock are issued and outstanding.  All of such outstanding shares have
      been validly issued and are fully paid and nonassessable.  Except as
      disclosed in the SEC Documents, no shares of Common Stock are subject to
      preemptive rights or any other similar rights or any liens or encumbrances
      suffered or permitted by the Company.  Except as disclosed in the SEC
      Documents, as of the date hereof, (i) there are no outstanding options,
      warrants, scrip, rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into, any shares
      of
      capital stock of the Company or any of its subsidiaries, or contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      subsidiaries is or may become bound to issue additional shares of capital stock
      of the Company or any of its subsidiaries or options, warrants, scrip, rights
      to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, (ii) there are no outstanding debt
      securities (iii) there are no outstanding registration statements other than
      on
      Form S-8 and (iv) there are no agreements or arrangements under which the
      Company or any of its subsidiaries is obligated to register the sale of any
      of
      their securities under the Securities Act (except pursuant to the Registration
      Rights Agreement).  There are no securities or instruments containing
      anti-dilution or similar provisions that will be triggered by this Agreement
      or
      any related agreement or the consummation of the transactions described herein
      or therein.  The Company has furnished to the Investor true and
      correct copies of the Company’s Certificate of Incorporation, as amended and as
      in effect on the date hereof (the “Certificate of Incorporation”), and the
      Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the
      terms of all securities convertible into or exercisable for Common Stock and
      the
      material rights of the holders thereof in respect thereto.

    


              Section
      4.4.     No Conflict.  The execution,
      delivery and performance of this Agreement by the Company and the consummation
      by the Company of the transactions contemplated hereby will not (i) result
      in a
      violation of the Certificate of Incorporation, any certificate of designations
      of any outstanding series of preferred stock of the Company or By-laws 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 to which the Company or any of its subsidiaries is
      a
      party, or result in a violation of any law, rule, regulation, order, judgment
      or
      decree (including federal and state securities laws and regulations and the
      rules and regulations of the Principal Market on which the Common Stock is
      quoted) applicable to the Company or any of its subsidiaries or by which any
      material property or asset of the Company or any of its subsidiaries is bound
      or
      affected and which would cause a Material Adverse Effect.  Except as
      disclosed in the SEC Documents, neither the Company nor its subsidiaries is
      in
      violation of any term of or in default under its Articles of Incorporation
      or
      By-laws or their organizational charter or by-laws, respectively, or any
      material contract, agreement, mortgage, indebtedness, indenture, instrument,
      judgment, decree or order or any statute, rule or regulation applicable to
      the
      Company or its subsidiaries.  

     

    
      
        
        

      

      
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    The
      business of the Company and its subsidiaries is not being conducted in violation
      of any material law, ordinance, regulation of any governmental
      entity.  Except as specifically contemplated by this Agreement and as
      required under the Securities Act and any applicable state securities laws,
      the
      Company 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 or
      contemplated by this Agreement or the Registration Rights Agreement in
      accordance with the terms hereof or thereof.  All consents,
      authorizations, orders, filings and registrations which the Company is required
      to obtain pursuant to the preceding sentence have been obtained or effected
      on
      or prior to the date hereof.  The Company and its subsidiaries are
      unaware of any fact or circumstance which might give rise to any of the
      foregoing.

    


              Section
      4.5.     SEC Documents; Financial
      Statements.  The Company has filed all reports, schedules, forms,
      statements and other documents required to be filed by it with the SEC under
      the
      Exchange Act since November 5, 2005.  The Company has delivered to the
      Investor or its representatives, or made available through the SEC’s website at
      http://www.sec.gov, true and complete copies of the SEC Documents.  As
      of their respective dates, the financial statements of the Company disclosed
      in
      the SEC Documents (the “Financial Statements”) complied as to form in all
      material respects with applicable accounting requirements and the published
      rules and regulations of the SEC with respect thereto.  Such financial
      statements have been prepared in accordance with generally accepted accounting
      principles, consistently applied, during the periods involved (except (i) as
      may
      be otherwise indicated in such financial statements or the notes thereto, or
      (ii) in the case of unaudited interim statements, to the extent they may exclude
      footnotes or may be condensed or summary statements) and, fairly present in
      all
      material respects the financial position of the Company as of the dates thereof
      and the results of its operations and cash flows for the periods then ended
      (subject, in the case of unaudited statements, to normal year-end audit
      adjustments).  No other information provided by or on behalf of the
      Company to the Investor which is not included in the SEC Documents contains
      any
      untrue statement of a material fact or omits to state any material fact
      necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading.

    


              Section
      4.6.     10b-5.  The SEC Documents do not
      include any untrue statements of material fact, nor do they omit to state any
      material fact required to be stated therein necessary to make the statements
      made, in light of the circumstances under which they were made, not
      misleading.

    


              Section
      4.7.     No Default.  Except as disclosed in
      the SEC Documents, the Company is not in default in the performance or
      observance of any material obligation, agreement, covenant or condition
      contained in any indenture, mortgage, deed of trust or other material instrument
      or agreement to which it is a party or by which it is or its property is bound
      and neither the execution, nor the delivery by the Company, nor the performance
      by the Company of its obligations under this Agreement or any of the exhibits
      or
      attachments hereto will conflict with or result in the breach or violation
      of
      any of the terms or provisions of, or constitute a default or result in the
      creation or imposition of any lien or charge on any assets or properties of
      the
      Company under its Certificate of Incorporation, By-Laws, any material indenture,
      mortgage, deed of trust or other material agreement applicable to the Company
      or
      instrument to which the Company is a party or by which it is bound, or any
      statute, or any decree, judgment, order, rules or regulation of any court or
      governmental agency or body having jurisdiction over the Company or its
      properties, in each case which default, lien or charge is likely to cause a
      Material Adverse Effect on the Company’s business or financial
      condition.

     

    
      
        
        

      

      
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              Section
      4.8.     Absence of Events of
      Default.  Except for matters described in the SEC Documents and/or
      this Agreement, no Event of Default, as defined in the respective agreement
      to
      which the Company is a party, and no event which, with the giving of notice
      or
      the passage of time or both, would become an Event of Default (as so defined),
      has occurred and is continuing, which would have a Material Adverse Effect
      on
      the Company’s business, properties, prospects, financial condition or results of
      operations.

    


              Section
      4.9.     Intellectual Property Rights.  The
      Company and its subsidiaries own or possess adequate rights or licenses to
      use
      all material trademarks, trade names, service marks, service mark registrations,
      service names, patents, patent rights, copyrights, inventions, licenses,
      approvals, governmental authorizations, trade secrets and rights necessary
      to
      conduct their respective businesses as now conducted.   The
      Company and its subsidiaries do not have any knowledge of any infringement
      by
      the Company or its subsidiaries of trademark, trade name rights, patents, patent
      rights, copyrights, inventions, licenses, service names, service marks, service
      mark registrations, trade secret or other similar rights of others, and, to
      the
      knowledge of the Company, there is no claim, action or proceeding being made
      or
      brought against, or to the Company’s knowledge, being threatened against, the
      Company or its subsidiaries regarding trademark, trade name, patents, patent
      rights, invention, copyright, license, service names, service marks, service
      mark registrations, trade secret or other infringement; and the Company and
      its
      subsidiaries are unaware of any facts or circumstances which might give rise
      to
      any of the foregoing.

    


              Section
      4.10.     Employee Relations.  Neither the
      Company nor any of its subsidiaries is involved in any labor dispute nor, to
      the
      knowledge of the Company or any of its subsidiaries, is any such dispute
      threatened.  None of the Company’s or its subsidiaries’ employees is a
      member of a union and the Company and its subsidiaries believe that their
      relations with their employees are good.

    


              Section
      4.11.     Environmental Laws.  The Company
      and its subsidiaries are (i) in compliance with any and all applicable material
      foreign, federal, state and local laws and regulations relating to the
      protection of human health and safety, the environment or hazardous or toxic
      substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
      have received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and (iii)
      are in compliance with all terms and conditions of any such permit, license
      or
      approval.

    


              Section
      4.12.     Title.  Except as set forth in the
      SEC Documents, the Company has good and marketable title to its properties
      and
      material assets owned by it, free and clear of any pledge, lien, security
      interest, encumbrance, claim or equitable interest other than such as are not
      material to the business of the Company.  Any real property and
      facilities held under lease by the Company and its subsidiaries are held by
      them
      under valid, subsisting and enforceable leases with such exceptions as are
      not
      material and do not interfere with the use made and proposed to be made of
      such
      property and buildings by the Company and its subsidiaries.

     

    
      
        
        

      

      
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              Section
      4.13.     Insurance.  The Company and each of
      its subsidiaries are insured by insurers of recognized financial responsibility
      against such losses and risks and in such amounts as management of the Company
      believes to be prudent and customary in the businesses in which the Company
      and
      its subsidiaries are engaged.  Neither the Company nor any such
      subsidiary has been refused any insurance coverage sought or applied for and
      neither the Company nor any such subsidiary has any reason to believe that
      it
      will not be able to renew its existing insurance coverage as and when such
      coverage expires or to obtain similar coverage from similar insurers as may
      be
      necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

    


              Section
      4.14.     Regulatory Permits.  The Company
      and its subsidiaries possess all material certificates, authorizations and
      permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

    


              Section
      4.15.     Internal Accounting Controls.  The
      Company and each of its subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management’s general or specific authorization and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences.

    


              Section
      4.16.     No Material Adverse Breaches,
      etc.  Except as set forth in the SEC Documents, neither the Company
      nor any of its subsidiaries is subject to any charter, corporate or other legal
      restriction, or any judgment, decree, order, rule or regulation which in the
      judgment of the Company’s officers has or is expected in the future to have a
      Material Adverse Effect on the business, properties, operations, financial
      condition, results of operations or prospects of the Company or its
      subsidiaries.  Except as set forth in the SEC Documents, neither the
      Company nor any of its subsidiaries is in breach of any contract or agreement
      which breach, in the judgment of the Company’s officers, has or is expected to
      have a Material Adverse Effect on the business, properties, operations,
      financial condition, results of operations or prospects of the Company or its
      subsidiaries.

    


              Section
      4.17.     Absence of Litigation.  Except as
      set forth in the SEC Documents, there is no action, suit, proceeding, inquiry
      or
      investigation before or by any court, public board, government agency,
      self-regulatory organization or body pending against or affecting the Company,
      the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
      decision, ruling or finding would (i) have a Material Adverse Effect on the
      transactions contemplated hereby (ii) adversely affect the validity or
      enforceability of, or the authority or ability of the Company to perform its
      obligations under, this Agreement or any of the documents contemplated herein,
      or (iii) except as expressly disclosed in the SEC Documents, have a Material
      Adverse Effect on the business, operations, properties, financial condition
      or
      results of operation of the Company and its subsidiaries taken as a
      whole.

     

    
      
        
        

      

      
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              Section
      4.18.     Subsidiaries.  Except as disclosed
      in the SEC Documents, the Company does not presently own or control, directly
      or
      indirectly, any interest in any other corporation, partnership, association
      or
      other business entity.

    


              Section
      4.19.     Tax Status.  Except as disclosed in
      the SEC Documents, the Company and each of its subsidiaries has made or filed
      all federal and state income and all other tax returns, reports and declarations
      required by any jurisdiction to which it is subject and (unless and only to
      the
      extent that the Company and each of its subsidiaries has set aside on its books
      provisions reasonably adequate for the payment of all unpaid and unreported
      taxes) has paid all taxes and other governmental assessments and charges that
      are material in amount, shown or determined to be due on such returns, reports
      and declarations, except those being contested in good faith and has set aside
      on its books provision reasonably adequate for the payment of all taxes for
      periods subsequent to the periods to which such returns, reports or declarations
      apply.  There are no unpaid taxes in any material amount claimed to be
      due by the taxing authority of any jurisdiction, and the officers of the Company
      know of no basis for any such claim.

    


              Section
      4.20.     Certain Transactions.  Except as
      set forth in the SEC Documents none of the officers, directors, or employees
      of
      the Company is presently a party to any transaction with the Company (other
      than
      for services as employees, officers and directors), 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 corporation, partnership, trust or other entity
      in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

    


              Section
      4.21.     Fees and Rights of First
      Refusal.  The Company is not obligated to offer the securities offered
      hereunder on a right of first refusal basis or otherwise to any third parties
      including, but not limited to, current or former shareholders of the Company,
      underwriters, brokers, agents or other third parties.

    


              Section
      4.22.     Use of Proceeds.  The Company shall
      use the net proceeds from this offering for general corporate purposes,
      including, without limitation, the payment of loans incurred by the
      Company.  However, in no event shall the Company use the net proceeds
      from this offering for the payment (or loan to any such person for the payment)
      of any judgment, or other liability, incurred by any executive officer, officer,
      director or employee of the Company, except for any liability owed to such
      person for services rendered, or if any judgment or other liability is incurred
      by such person originating from services rendered to the Company, or the Company
      has indemnified such person from liability.

    


              Section
      4.23.    Further Representation and Warranties of the
      Company.  For so long as any securities issuable hereunder held by the
      Investor remain outstanding, the Company acknowledges, represents, warrants
      and
      agrees that it will maintain the listing of its Common Stock on the Principal
      Market.

     

    
      
        
        

      

      
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              Section
      4.24.    Opinion of Counsel.  Investor shall
      receive an opinion letter from counsel to the Company on the date
      hereof.

    


              Section
      4.25.     Opinion of Counsel.  The Company
      will obtain for the Investor, at the Company’s expense, any and all opinions of
      counsel which may be reasonably required in order to sell the securities
      issuable hereunder without restriction.

    


              Section
      4.26.     Dilution.  The Company is aware and
      acknowledges that issuance of shares of the Company’s Common Stock could cause
      dilution to existing shareholders and could significantly increase the
      outstanding number of shares of Common Stock.

     

    ARTICLE
      V.

    Indemnification

    


    


              The
      Investor and the Company represent to the other the following with respect
      to
      itself:

    


              Section
      5.1.     Indemnification.

    


                        (a)         In
      consideration of the Investor’s execution and delivery of this Agreement, and in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Investor, and
      all
      of its officers, directors, partners, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Investor Indemnitees”) from and against any
      and all actions, causes of action, suits, claims, losses, costs, penalties,
      fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Investor Indemnitee is a party to the action
      for which indemnification hereunder is sought), and including reasonable
      attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
      the Investor Indemnitees or any of them as a result of, or arising out of,
      or
      relating to (a) any misrepresentation or breach of any representation or
      warranty made by the Company in this Agreement or the Registration Rights
      Agreement or any other certificate, instrument or document contemplated hereby
      or thereby, (b) any breach of any covenant, agreement or obligation of the
      Company contained in this Agreement or the Registration Rights Agreement or
      any
      other certificate, instrument or document contemplated  hereby or
      thereby, or (c) any cause of action, suit or claim brought or made against
      such
      Investor Indemnitee not arising out of any action or inaction of an Investor
      Indemnitee, and arising out of or resulting from the execution, delivery,
      performance or enforcement of this Agreement or any other instrument, document
      or agreement executed pursuant hereto by any of the Investor
      Indemnitees.  To the extent that the foregoing undertaking by the
      Company may be unenforceable for any reason, the Company shall make the maximum
      contribution to the payment and satisfaction of each of the Indemnified
      Liabilities, which is permissible under applicable law.

     

    
      
        
        

      

      
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                        (b)         In
      consideration of the Company’s execution and delivery of this Agreement, and in
      addition to all of the Investor’s other obligations under this Agreement, the
      Investor shall defend, protect, indemnify and hold harmless the Company and
      all
      of its officers, directors, shareholders, employees and agents (including,
      without limitation, those retained in connection with the transactions
      contemplated by this Agreement) (collectively, the “Company Indemnitees”) from
      and against any and all Indemnified Liabilities incurred by the Company
      Indemnitees or any of them as a result of, or arising out of, or relating to
      (a)
      any misrepresentation or breach of any representation or warranty made by the
      Investor in this Agreement, the Registration Rights Agreement, or any instrument
      or document contemplated hereby or thereby executed by the Investor, (b) any
      breach of any covenant, agreement or obligation of the Investor(s) contained
      in
      this Agreement,  the Registration Rights Agreement or any other
      certificate, instrument or document contemplated hereby or thereby executed
      by
      the Investor, or (c) any cause of action, suit or claim brought or made against
      such Company Indemnitee based on  misrepresentations or due to
      a  breach by the Investor and arising out of or resulting from the
      execution, delivery, performance or enforcement of this Agreement or any other
      instrument, document or agreement executed pursuant hereto by any of the Company
      Indemnitees.  To the extent that the foregoing undertaking by the
      Investor may be unenforceable for any reason, the Investor shall make the
      maximum contribution to the payment and satisfaction of each of the Indemnified
      Liabilities, which is permissible under applicable law.

    


                        (c)         The
      obligations of the parties to indemnify or make contribution under this Section
      5.1 shall survive termination.

    


    


    ARTICLE
      VI.

    Covenants
      of the Company

    


    


              Section
      6.1.     Registration Rights.  The Company
      shall cause the Registration
      Rights Agreement to remain in full force and effect and the Company shall
      comply in all material respects with the terms thereof.

    


              Section
      6.2.     Listing of Common Stock.  The
      Company shall maintain the
      Common Stock’s authorization for quotation on the Principal Market.

    


              Section
      6.3.     Exchange Act Registration.  The
      Company will cause its Common Stock to continue to be registered under Section
      12(g) of the Exchange Act, will file in a timely manner all reports and other
      documents required of it as a reporting company under the Exchange Act and
      will
      not take any action or file any document (whether or not permitted by Exchange
      Act or the rules thereunder) to terminate or suspend such registration or to
      terminate or suspend its reporting and filing obligations under said Exchange
      Act.

    


              Section
      6.4.    Transfer Agent Instructions.  Upon
      effectiveness of the Registration Statement the Company shall deliver
      instructions to its transfer agent to issue shares of Common Stock to the
      Investor free of restrictive legends on or before each Advance
      Date.

     

    
      
        
        

      

      
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              Section
      6.5.     Corporate Existence.  The Company
      will take all steps necessary to preserve and continue the corporate existence
      of the Company.

    


              Section
      6.6.     Notice of Certain Events Affecting
      Registration; Suspension of Right to Make an Advance.  The Company
      will immediately notify the Investor upon its becoming aware of the occurrence
      of any of the following events in respect of a registration statement or related
      prospectus relating to an offering of Registrable Securities: (i) receipt of
      any
      request for additional information by the SEC or any other Federal or state
      governmental authority during the period of effectiveness of the Registration
      Statement for amendments or supplements to the registration statement or related
      prospectus; (ii) the issuance by the SEC or any other Federal or state
      governmental authority of  any stop order suspending the effectiveness
      of the Registration Statement or the initiation of any proceedings for that
      purpose; (iii) receipt of any notification with respect to the suspension of
      the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction or the initiation or threatening of
      any
      proceeding for such purpose; (iv) the happening of any event that makes any
      statement made in the Registration Statement or related prospectus of any
      document incorporated or deemed to be incorporated therein by reference untrue
      in any material respect or that requires the making of any changes in the
      Registration Statement, related prospectus or documents so that, in the case
      of
      the Registration Statement, it will not contain any untrue statement of a
      material fact or omit to state any material fact required to be stated therein
      or necessary to make the statements therein not misleading, and that in the
      case
      of the related prospectus, it will not contain any untrue statement of a
      material fact or omit to state any material fact required to be stated therein
      or necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading; and (v) the Company’s reasonable
      determination that a post-effective amendment to the Registration Statement
      would be appropriate; and the Company will promptly make available to the
      Investor any such supplement or amendment to the related
      prospectus.  The Company shall not deliver to the Investor any Advance
      Notice during the continuation of any of the foregoing events.

    


              Section
      6.7.     Issuance of the Company’s Common
      Stock.  The sale of the shares of Common Stock shall be made in
      accordance with the provisions and requirements of Regulation D and any
      applicable state securities law.

    


              Section
      6.8.    Review of Public Disclosures.  All SEC
      filings (including, without limitation, all filings required under the Exchange
      Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other
      public disclosures made by the Company, including, without limitation, all
      press
      releases, investor relations materials, and scripts of analysts meetings and
      calls, shall be reviewed and approved for release by the Company’s attorneys
      and, if containing financial information, the Company’s independent certified
      public accountants.

    


              Section
      6.9.    Market Activities.  The Company will not,
      directly or indirectly, (i) take any action designed to cause or result in,
      or
      that constitutes or might reasonably be expected to constitute, the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of the Common Stock or (ii) sell, bid for or
      purchase the Common Stock, or pay anyone any compensation for soliciting
      purchases of the Common Stock, except for Red Rock Trading Partners, LLC in
      connection herewith.

    
 

    
      
        
        

      

      
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    ARTICLE
      VII.

    Conditions
      for Advance and Conditions to Closing

     

              Section
      7.1.     Conditions Precedent to the Obligations of the
      Company.  The obligation hereunder of the Company to issue and sell
      the shares of Common Stock to the Investor incident to each Closing is subject
      to the satisfaction, or waiver by the Company, at or before each such Closing,
      of each of the conditions set forth below.

    


                        (a)         Accuracy
      of the Investor’s Representations and Warranties.  The representations
      and warranties of the Investor shall be true and correct in all material
      respects.

    


                        (b)         Performance
      by the Investor.  The Investor shall have performed, satisfied and
      complied in all respects with all covenants, agreements and conditions required
      by this Agreement and the Registration Rights Agreement to be performed,
      satisfied or complied with by the Investor at or prior to such
      Closing.

    


              Section
      7.2.     Conditions Precedent to the Right of the
      Company to Deliver an Advance Notice.  The right of the Company to
      deliver an Advance Notice is subject to the fulfillment by the Company, on
      such
      Advance Notice (a “Condition Satisfaction Date”), of each of the following
      conditions:

    


                        (a)         Registration
      of the Common Stock with the SEC.  The Company shall have filed with
      the SEC a Registration Statement with respect to the resale of the Registrable
      Securities in accordance with the terms of the Registration Rights
      Agreement.  As set forth in the Registration Rights Agreement, the
      Registration Statement shall have previously become effective and shall remain
      effective on each Condition Satisfaction Date and (i) neither the Company nor
      the Investor shall have received notice that the SEC has issued or intends
      to
      issue a stop order with respect to the Registration Statement or that the SEC
      otherwise has suspended or withdrawn the effectiveness of the Registration
      Statement, either temporarily or permanently, or intends or has threatened
      to do
      so (unless the SEC’s concerns have been addressed and the Investor is reasonably
      satisfied that the SEC no longer is considering or intends to take such action),
      and (ii) no other suspension of the use or withdrawal of the effectiveness
      of
      the Registration Statement or related prospectus shall exist.  The
      Registration Statement must have been declared effective by the SEC prior to
      the
      first Advance Notice Date.

    


                        (b)         Authority.  The
      Company shall have obtained all permits and qualifications required by any
      applicable state in accordance with the Registration Rights Agreement for the
      offer and sale of the shares of Common Stock, or shall have the availability
      of
      exemptions therefrom.  The sale and issuance of the shares of Common
      Stock shall be legally permitted by all laws and regulations to which the
      Company is subject.

     

    
      
        
        

      

      
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                        (c)         Fundamental
      Changes. There shall not exist any fundamental changes to the information set
      forth in the Registration Statement which would require the Company to file
      a
      post-effective amendment to the Registration Statement.

    


                        (d)         Performance
      by the Company.  The Company shall have performed, satisfied and
      complied in all material respects with all covenants, agreements and conditions
      required by this Agreement and the Registration Rights Agreement to be
      performed, satisfied or complied with by the Company at or prior to each
      Condition Satisfaction Date.

    


                        (e)         No
      Injunction.  No statute, rule, regulation, executive order, decree,
      ruling or injunction shall have been enacted, entered, promulgated or endorsed
      by any court or governmental authority of competent jurisdiction that prohibits
      or directly and adversely affects any of the transactions contemplated by this
      Agreement, and no proceeding shall have been commenced that may have the effect
      of prohibiting or adversely affecting any of the transactions contemplated
      by
      this Agreement.

    


                        (f)         No
      Suspension of Trading in or Delisting of Common Stock.  The trading of
      the Common Stock is not suspended by the SEC or the Principal Market (if the
      Common Stock is traded on a Principal Market).  The issuance of shares
      of Common Stock with respect to the applicable Closing, if any, shall not
      violate the shareholder approval requirements of the Principal Market (if the
      Common Stock is traded on a Principal Market).  The Company shall not
      have received any notice threatening the continued listing of the Common Stock
      on the Principal Market (if the Common Stock is traded on a Principal
      Market).

     

              
      (g)          Not used

     

                        (h)         No
      Knowledge.  The Company has no knowledge of any event which would be
      more likely than not to have the effect of causing such Registration Statement
      to be suspended or otherwise ineffective.

    


                        (i)         Executed
      Advance Notice.  The Investor shall have received the Advance Notice
      executed by an officer of the Company and the representations contained in
      such
      Advance Notice shall be true and correct as of each Condition Satisfaction
      Date.

    


    ARTICLE
      VIII.

    Due
      Diligence Review; Non-Disclosure of Non-Public Information


    


              Section
      8.1.     Non-Disclosure of Non-Public
      Information.

    


                        (a)         The
      Company covenants and agrees that it shall refrain from disclosing, and shall
      cause its officers, directors, employees and agents to refrain from disclosing,
      any material non-public information to the Investor without also disseminating
      such information to the public, unless prior to disclosure of such information
      the Company identifies such information as being material non-public information
      and provides the Investor with the opportunity to accept or refuse to accept
      such material non-public information for review.

     

    
      
        
        

      

      
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                        (b)         Nothing
      herein shall require the Company to disclose non-public information to the
      Investor or its advisors or representatives, and the Company represents that
      it
      does not disseminate non-public information to any investors who purchase stock
      in the Company in a public offering, to money managers or to securities
      analysts, provided, however, that notwithstanding anything herein to the
      contrary, the Company will, as hereinabove provided, immediately notify the
      advisors and representatives of the Investor and, if any, underwriters, of
      any
      event or the existence of any circumstance (without any obligation to disclose
      the specific event or circumstance) of which it becomes aware, constituting
      non-public information (whether or not requested of the Company specifically
      or
      generally during the course of due diligence by such persons or entities),
      which, if not disclosed in the prospectus included in the Registration Statement
      would cause such prospectus to include a material misstatement or to omit a
      material fact required to be stated therein in order to make the statements,
      therein, in light of the circumstances in which they were made, not
      misleading.  Nothing contained in this Section 8.2 shall be construed
      to mean that such persons or entities other than the Investor (without the
      written consent of the Investor prior to disclosure of such information) may
      not
      obtain non-public information in the course of conducting due diligence in
      accordance with the terms of this Agreement and nothing herein shall prevent
      any
      such persons or entities from notifying the Company of their opinion that based
      on such due diligence by such persons or entities, that the Registration
      Statement contains an untrue statement of material fact or omits a material
      fact
      required to be stated in the Registration Statement or necessary to make the
      statements contained therein, in light of the circumstances in which they were
      made, not misleading.

    


    ARTICLE
      IX.

    Choice
      of
      Law/Jurisdiction

     

              Section
      9.1.     Governing Law.  This Agreement shall
      be governed by and interpreted in accordance with the laws of the State
      of  California without regard to the principles of conflict of
      laws.  The parties further agree that any action between them shall be
      heard in Los Angeles, California, and expressly consent to the jurisdiction
      and
      venue of the Superior Court of Los Angeles County, sitting in  Los
      Angeles, California, and the United States District Court of Los Angeles County,
      sitting in  Los Angeles, California,  for the adjudication
      of any civil action asserted pursuant to this paragraph.

     

    ARTICLE
      X.

    Assignment;
      Termination

     

              Section
      10.1.   Assignment.  Neither this Agreement nor any
      rights of the Company hereunder may be assigned to any other
      Person.

    


              Section
      10.2.   Termination.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    
 

                        (a)         The
      obligations of the Investor to make Advances under Article II hereof shall
      terminate thirty (30) months after the Effective Date.

    


                        (b)         The
      obligation of the Investor to make an Advance to the Company pursuant to this
      Agreement shall terminate permanently (including with respect to an Advance
      Date
      that has not yet occurred) in the event that (i) there shall occur any stop
      order or suspension of the effectiveness of the Registration Statement for
      an
      aggregate of fifty (50) Trading Days, other than due to the acts of the
      Investor, during the Commitment Period, or (ii) the Company shall at any time
      fail materially to comply with the requirements of Article VI and such failure
      is not cured within thirty (30) days after receipt of written notice from the
      Investor, provided, however, that this termination provision shall not apply
      to
      any period commencing upon the filing of a post-effective amendment to such
      Registration Statement and ending upon the date on which such post effective
      amendment is declared effective by the SEC.

    


                        (c)         The
      Company may terminate this Agreement by providing the Investor thirty (30)
      days
      (the “Notice Period”) advance written notice.   The Investor
      shall not be obligated to accept any Advance Notices during the Notice
      Period.   Upon termination of this Agreement the Company shall
      have no further obligations to the Investor under this Agreement or the
      Registration Rights Agreement, provided however the Company shall remain
      obligated to Comply with its obligations under Section 3 of the Registration
      Rights Agreement and any and all related obligations during such time as the
      Investor has sold all of the Registrable Securities, as this term is defined
      in
      the Registration Rights Agreement.

    


    ARTICLE
      XI.

    Notices

     

              Section
      11.1.    Notices.  Any notices, consents, waivers,
      or other communications required or permitted to be given under the terms of
      this Agreement must be in writing and will be deemed to have been delivered
      (i)
      upon receipt, when delivered personally; (ii) upon receipt, when sent by
      facsimile, provided a copy is mailed by U.S. certified mail, return receipt
      requested; (iii) three (3) days after being sent by U.S. certified mail, return
      receipt requested, or (iv) one (1) day after deposit with a nationally
      recognized overnight delivery service, in each case properly addressed to the
      party to receive the same.  The addresses and facsimile numbers for
      such communications shall be:

     

    
      
        	
                If
                  to the Company, to:

              	
                Red
                  Rock Pictures Holdings, Inc.

              
	 	
                8228
                  Sunset Blvd. – First Floor

              
	 	
                Los
                  Angeles, CA 90046

              
	 	
                Attention:     Robert
                  Levy

              
	 	
                Telephone:   310-474-5252

              
	 	
                Facsimile:    310-
                  474-1219

                 

              


      

    

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    


    
      
        	
                With
                  a copy to:

              	
                Anslow
                  & Jaclin, LLP

              
	 	
                195
                  Route 9 South, Suite 204

              
	 	
                Manalapan,
                  NJ 07725

              
	 	
                Attention:      Gregg
                  Jaclin, Esq.

              
	 	
                Telephone:     (732)
                  409-1212

              
	 	
                Facsimile:        (732)
                  577-1188

              
	 	 
	
                If
                  to the Investor(s):

              	 
	 	
                IFG
                  Opportunity Fund, LLC

              
	 	
                PO
                  Box 1142

              
	 	
                Roswell,
                  GA 30077

              
	 	
                Attention:  Anthony
                  Gentile

              
	 	
                Portfolio
                  Manager

              
	 	
                Telephone:  (770)
                  587-5969

              
	 	
                Facsimile:    
                  (770) 518-7432

              
	 	 
	
                With
                  a Copy to:

              	
                Feldman
                  Weinstein & Smith LLP

              
	 	
                420
                  Lexington Avenue

              
	 	
                New
                  York, NY 10170

              
	 	
                Attention:     Joseph
                  A. Smith

              
	 	
                Telephone:    (212)
                  869-7000

              
	 	
                Facsimile:       (212)
                  997-4242

              


      

    

     

    Each
      party shall provide five (5) days’ prior written notice to the other party
of
      any
      change in address or facsimile number.

     

    ARTICLE
      XII.

    Miscellaneous

     

              Section
      12.1.    Counterparts.  This Agreement may be
      executed in two or more identical counterparts, all of which shall be considered
      one and the same agreement and shall become effective when counterparts have
      been signed by each party and delivered to the other party.  In the
      event any signature page is delivered by facsimile transmission, the party
      using
      such means of delivery shall cause four (4) additional original executed
      signature pages to be physically delivered to the other party within five (5)
      days of the execution and delivery hereof, though failure to deliver such copies
      shall not affect the validity of this Agreement.

    


              Section
      12.2.    Entire Agreement; Amendments.  This
      Agreement supersedes all other prior oral or written agreements between the
      Investor, the Company, their affiliates and persons acting on their behalf
      with
      respect to the matters discussed herein, and this Agreement and the instruments
      referenced herein contain the entire understanding of the parties with respect
      to the matters covered herein and therein and, except as specifically set forth
      herein or therein, neither the Company nor the Investor makes any
      representation, warranty, covenant or undertaking with respect to such
      matters.  No provision of this Agreement may be waived or amended
      other than by an instrument in writing signed by the party to be charged with
      enforcement.

    


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

        Section
      12.3.    PLACEMENT AGENT. The Company agrees to retain a
      registered broker-dealer prior to the filing of the registration statement
      as
      required pursuant to the Transaction Documents and agrees to pay all fees of
      such broker-dealer in connection with the registration of the common stock
      hereunder. Investor shall have no obligation with respect to any fees or with
      respect to any claims made by or on behalf of other persons or entities for
      fees
      of a type contemplated in this Section that may be due in connection with the
      transactions contemplated by the Transaction Documents. The Company shall
      indemnify and hold harmless the Investor, their employees, officers, directors,
      agents, and partners, and their respective affiliates, from and against all
      claims, losses, damages, costs (including the costs of preparation and
      attorney's fees) and expenses incurred in respect of any such claimed or
      existing fees, as such fees and expenses are incurred.

     

              Section
      12.3.    Reporting Entity for the Common
      Stock.  The reporting entity relied upon for the determination of the
      trading price or trading volume of the Common Stock on any given Trading Day
      for
      the purposes of this Agreement shall be Bloomberg, L.P. or any successor
      thereto.  The written mutual consent of the Investor and the Company
      shall be required to employ any other reporting entity.

    


              Section
      12.4.    Fees and Expenses.  The Company hereby
      agrees to pay the following fees:

     

    
      
        	
                (a)  

              	
                Expense
                  Reimbursement Fee.  Each of the parties shall pay its own fees
                  and expenses (including the fees of any attorneys, accountants,
                  appraisers
                  or others engaged by such party) in connection with this Agreement
                  and the
                  transactions contemplated hereby, except that the Company shall
                  pay an
                  Expense Reimbursement Fee of Ten Thousand Dollars ($10,000) to
                  the
                  Investor.

              


      

      
        	
                (b)  

              	
                Company
                  shall issue to Investor One hundred Thousand shares of Common Stock
                  on the
                  day of closing. Common stock referenced herein shall have piggyback
                  registration rights.

              


        	(c)  	Commitment
                Fees.

     

    

                                                  (i)         On
      each Advance Date the Company shall pay to the Investor, directly out of the
      gross proceeds of each Advance, an amount equal to three percent (3%) of the
      amount of each Advance.  The Company hereby agrees that if such
      payment, as is described above, is not made by the Company on the Advance Date,
      such payment shall be made as outlined and mandated by Section 2.3 of this
      Agreement.

    


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    


              Section
      12.5.    Confidentiality.  If for any reason the
      transactions contemplated by this Agreement are not consummated, each of the
      parties hereto shall keep confidential any information obtained from any other
      party (except information publicly available or in such party’s domain prior to
      the date hereof, and except as required by court order) and shall promptly
      return to the other parties all schedules, documents, instruments, work papers
      or other written information without retaining copies thereof, previously
      furnished by it as a result of this Agreement or in connection
      herein.

    


    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    


    


    


    


    


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    


     

    


    


              IN
      WITNESS WHEREOF, the parties hereto have caused this Standby Equity Distribution
      Agreement to be executed by the undersigned, thereunto duly authorized,
      as of the date first set forth above.

    


              COMPANY:

              Red
      Rock
      Pictures Holdings, Inc.

    


              By:

    


              Name:      Robert
      Levy

              Title:     CEO

    


    


              INVESTOR:  IFG
      Opportunity Fund, LLC

     

          
By:

    


    Name:   Anthony
      Gentile

    Title:     Portfolio
      Manager

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    
 

    EXHIBIT
      A

    ADVANCE
      NOTICE

    RED
      ROCK
      PICTURES HOLDINGS, INC.

    


    


              The
      undersigned, _______________________ hereby certifies, with respect to the
      sale
      of shares of Common Stock of RED ROCK PICTURES HOLDINGS, INC. (the “Company”)
      issuable in connection with this Advance Notice, delivered pursuant to the
      Standby Equity Distribution Agreement (the “Agreement”), as
      follows:

    


              1.         The
      undersigned is the duly elected ______________ of the Company.

    


              2.         There
      are no fundamental changes to the information set forth in the Registration
      Statement which would require the Company to file a post effective amendment
      to
      the Registration Statement.

    


              3.         The
      Company has performed in all material respects all covenants and agreements
      to
      be performed by the Company and has complied in all material respects with
      all
      obligations and conditions contained in the Agreement on or prior to the Advance
      Notice Date, and shall continue to perform in all material respects all
      covenants and agreements to be performed by the Company through the applicable
      Advance Date.  All conditions to the delivery of this Advance Notice
      are satisfied as of the date hereof.

    


              4.         The
      undersigned hereby represents, warrants and covenants that it has made all
      filings (“SEC Filings”) required to be made by it pursuant to applicable
      securities laws (including, without limitation, all filings required under
      the
      Securities Exchange Act of 1934, which include Forms 10-Q or 10-QSB, 10-K or
      10-KSB, 8-K, etc.).  All SEC Filings and other public disclosures made
      by the Company, including, without limitation, all press releases, analysts
      meetings and calls, etc. (collectively, the “Public Disclosures”), have been
      reviewed and approved for release by the Company’s attorneys and, if containing
      financial information, the Company’s independent certified public
      accountants.  None of the Company’s Public Disclosures contain any
      untrue statement of a material fact or omit to state any material fact required
      to be stated therein or necessary to make the statements therein, in the light
      of the circumstances under which they were made, not misleading.

    


              5.         The
      Advance requested is _____________________.

    


              The
      undersigned has executed this Certificate this ____ day of  _________________.

    


    


             RED
      ROCK PICTURES HOLDINGS, INC.

    


    


             By:

    


             Name:

    


             Title:

     

    If
      Returning This Advance Notice via Facsimile Please Send To:  (___)
      ___-____

    


    If
      by
      Mail, via Federal Express To:

    


            ______________________________________