Unassociated Document


     

    Exhibit
4.18

     

    
      PREFERRED
STOCK PURCHASE AGREEMENT

       

      This
Preferred Stock Purchase Agreement (“Agreement”) is
entered into and effective as of August 17, 2009 (“Effective Date”), by
and among Drinks Americas Holdings, Ltd., a Delaware corporation (“Company”), and
Optimus Capital Partners, LLC, a Delaware limited liability company, dba Optimus
Special Situations Capital Partners, LLC (including its designees, successors
and assigns, “Investor”).

       

      RECITALS

       

      A.  The parties desire that,
upon the terms and subject to the conditions contained herein, the Company shall
issue to Investor, and Investor shall purchase from the Company, from time to
time as provided herein, up to $5,000,000.00 of shares of Series B Preferred
Stock; and

       

      B.  The offer and sale of the
Securities provided for herein are being made without registration under the
Act, in reliance upon the provisions of Section 4(2) of the Act, Regulation D
promulgated under the Act, and such other exemptions from the registration
requirements of the Act as may be available with respect to any or all of the
purchases of Securities to be made hereunder.

       

      AGREEMENT

       

      In
consideration of the premises, the mutual provisions of this Agreement, and
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, Company and Investor agree as follows:

       

      ARTICLE 1

      DEFINITIONS

       

      1.1  Definitions.  In
addition to the terms defined elsewhere in this Agreement:  (a)
capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Certificate of Designations, and (b) the following terms
have the meanings indicated in this Section
1.1:

       

      “Act” means the
Securities Act of 1933, as amended.

       

      “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Act.  With
respect to Investor, without limitation, any Person owning, owned by, or under
common ownership with Investor, and any investment fund or managed account that
is managed on a discretionary basis by the same investment manager as Investor
will  be deemed to be an Affiliate.

       

      “Agreement” means this
Preferred Stock Purchase Agreement.

       

      “Automatic
Termination” has the meaning set forth in Section
3.1.

       

      
        
          
          

        

        
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      “Change in Control”
has the meaning set forth within the definition of Fundamental Transaction,
below.

       

      “Certificate of
Designations” means the certificate to be filed with the Secretary of
State of the State of Delaware, in the form attached hereto as Exhibit
B.

       

      “Closing” means any
one of (i) the Commitment Closing and (ii) each Tranche Closing.

       

      “Commitment Closing”
has the meaning set forth in Section
2.2(a).

       

      “Commitment Fee” means
a non-refundable fee of $250,000.00, payable by the Company to Investor as
follows: $175,000.00 upon the initial Tranche Closing and $75,000 upon the first
Tranche Closing which occurs (a) after 130 Preferred Shares have previously been
purchased, or (b) on any date after September 28, 2009 (regardless of the number
of Preferred Shares); provided, however, that the
full $250,000.00 shall be paid in full within six months after the Effective
Date regardless of whether any Tranche Closings have occurred.

       

      “Common Shares”
includes the Warrant Shares and any shares of Common Stock issued as the
Commitment Fee.

       

      “Common Stock” means
the common stock, par value $0.001 per share, of the Company, and any
replacement or substitute thereof, or any share capital into which such Common
Stock shall have been changed or any share capital resulting from a
reclassification of such Common Stock.

       

      “Company Termination”
has the meaning set forth in Section
3.2.

       

      “Delisting Event”
means any time during the term of this Agreement, that the Common Stock is not
listed for and actively trading on a Trading Market, or is suspended or delisted
with respect to the trading of shares of Common Stock on a Trading
Market.

       

      “Disclosure Schedules”
means the disclosure schedules of the Company delivered concurrently herewith
and attached hereto and all disclosures contained in the SEC
Reports.

       

      “DTC” means The
Depository Trust Company, or any successor performing substantially the same
function for Company.

       

      “DTC Shares” means all
Common Shares or other shares of Common Stock issued or issuable to Investor or
any Affiliate, successor or assign of Investor pursuant to any of the
Transaction Documents, including without limitation any Warrant Shares, if any,
that are issued or converted into electronic form, freely tradable and without
restriction on resale, and timely credited to the account with DTC specified by
the recipient of such shares.

       

      “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

       

      “Fundamental
Transaction” means and shall be deemed to have occurred at such time upon
any of the following events:

       

      
        
          
          

        

        
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      (i)           a
consolidation, merger or other business combination or event or transaction
following which the holders of Common Stock immediately preceding such
consolidation, merger, combination or event either (i) no longer hold a majority
of the shares of Common Stock or (ii) no longer have the ability to elect a
majority the board of directors of the Company (a “Change in
Control”);

       

      (ii)           the
sale or transfer of all or substantially all of the Company’s assets, other than
in the ordinary course of business; or

       

      (iii)           a
purchase, tender or exchange offer made to the holders of the outstanding shares
of Common Stock.

       

      “GAAP” means United
States generally accepted accounting principles applied on a consistent basis
during the periods involved.

       

      “Indebtedness” means
(a) any liabilities for borrowed money or amounts owed in excess of $100,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP.

       

      “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

       

      “Lock-Up Agreements”
means an agreement in the form attached as Exhibit D, executed by each of the
Company’s officers, directors and beneficial owners of 10% or more of the Common
Stock, precluding each such Person from participating in any sale of the Common
Stock from the Tranche Notice Date through the Tranche Closing
Date.

       

      “Material Adverse
Effect” includes any material adverse effect on (i) the legality,
validity or enforceability of any Transaction Document, (ii) the results of
operations, assets, business, prospects or financial condition of the Company
and the Subsidiaries, taken as a whole, or (iii) a the Company’s ability to
perform in any material respect on a timely basis its obligations under any
Transaction Document.

       

      “Material Agreement”
includes any loan agreement, financing agreement, equity investment agreement or
securities instrument to which Company is a party, any agreement or instrument
to which Company and Investor or any Affiliate of Investor is a party, and any
other material agreement listed, or required to be listed, on any of Company’s
reports filed or required to be filed with the SEC, including without limitation
Forms 10-K, 10-Q or 8-K.

       

      “Maximum Placement”
means $5,000,000.00.

       

      
        
          
          

        

        
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      “Maximum Tranche
Amount” means, subject to any other applicable limitations set forth in
this Agreement, the Maximum Placement less the amount of any previously noticed
and funded Tranches.

       

      “Officer’s Closing
Certificate” means a certificate in customary form reasonably acceptable
to the Investor, executed by an authorized officer of the Company.

       

      “Opinion” means an
opinion from Company’s independent legal counsel, in the form attached as Exhibit E, to be
delivered in connection with the Commitment Closing and any Tranche
Closing.

       

      “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

       

      “Preferred Shares”
means shares of Series B Preferred Stock of the Company provided for in the
Certificate of Designations, to be issued to Investor pursuant to this
Agreement.

       

      “Pricing Period” means
the 5 Trading Days immediately prior to a Tranche Notice Date.

       

      “Prospectus” includes
each prospectus (within the meaning of the Act) related to the sale or offering
of any Common Shares, including without limitation any prospectus contained
within the Registration Statement.

       

      “Registration
Statement” means a valid, current and effective registration statement
registering for sale the Common Shares, and except where the context otherwise
requires, means the registration statement, as amended, including (i) all
documents filed as a part thereof or incorporated by reference therein, and (ii)
any information contained or incorporated by reference in a prospectus filed
with the SEC in connection with such registration statement, to the extent such
information is deemed under the Act to be part of the registration
statement.

       

      “Regulation D” means
Regulation D promulgated under the Act.

       

      “Required Approval”
means any approval of the Trading Market or the Company’s stockholders required
to be obtained by Company prior to issuing the Securities pursuant to any
applicable rules of the Trading Market.

       

      “Required Tranche
Documents” has the meaning set forth in Section
2.3(e).

       

      “Rule 144” means Rule
144 promulgated by the SEC pursuant to the Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the SEC
having substantially the same effect.

       

      “SEC” means the United
States Securities and Exchange Commission.

       

      “SEC Reports” includes
all reports required to be filed by the Company under the Act and the Exchange
Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the Effective Date (or such shorter
period as the Company was required by law to file such material).

       

      
        
          
          

        

        
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      “Securities” includes
the Warrants, Common Shares and Preferred Shares issuable pursuant to this
Agreement.

       

      “Subsidiary” means any
Person the Company owns or controls, or in which the Company, directly or
indirectly, owns a majority of the capital stock or similar interest that would
be disclosable pursuant to Regulation S-K, Item 601(b)(21).

       

      “Termination Date”
means the earlier of (i) the date that is two years after the Effective Date, or
(ii) the Tranche Closing Date on which the sum of the aggregate Tranche Purchase
Price for all Tranche Shares equals the Maximum Placement.

       

      “Termination Notice”
has the meaning as set forth in Section
3.2.

       

      “Trading Day” means
any day on which the Common Stock is traded on the Trading Market; provided that
it shall not include any day on which the Common Stock is (a) scheduled to trade
for less than 5 hours, or (b) suspended from trading.

       

      “Trading Market” means
the OTC Bulletin Board, the NASDAQ Capital Market, the NASDAQ Global Market, the
NASDAQ Global Select Market, the NYSE Amex, or the New York Stock Exchange,
whichever is at the time the principal trading exchange or market for the Common
Stock, but does not include the Pink Sheets inter-dealer electronic quotation
and trading system.

       

      “Tranche” has the
meaning set forth in Section
2.3.

       

      “Tranche Amount” means
the amount of any individual put purchase, as specified by the Company, and
shall not exceed the Maximum Tranche Amount.

       

      “Tranche Closing” has
the meaning set forth in Section
2.3(f).

       

      “Tranche Closing Date”
has the meaning set forth in Section
2.3(f).

       

      “Tranche Notice” has
the meaning set forth in Section
2.3(b).

       

      “Tranche Notice Date”
has the meaning set forth in Section
2.3(b).

       

      “Tranche Purchase
Price” has the meaning set forth in Section 2.3(b), and
shall be specified in writing by the Company.

       

      “Tranche Share Price”
means $10,000.00 per Preferred Share. Company may not put fractional Preferred
Shares.

       

      “Tranche Shares” means
the Preferred Shares that are purchased by Investor pursuant to a
Tranche.  For the Maximum Placement, the Company shall issue 500
Preferred Shares to Investor.

       

      
        
          
          

        

        
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      “Transaction
Documents” include this Agreement and the Exhibits hereto and
thereto.

       

      “Transfer Agent” means
National Stock Transfer, Inc., or any successor transfer agent for the Common
Stock.

       

      “VWAP” means, for any
date, the volume-weighted average price, calculated by dividing the aggregate
value of Common Stock traded on the Trading Market (price multiplied by number
of shares traded) by the total volume (number of shares) of Common Stock traded
on the Trading Market for such date, or the nearest preceding Trading
Day.

       

      “Warrant Shares” means
the shares of Common Stock issuable upon exercise of the Warrants.

       

      “Warrants” means the
warrants issuable under this Agreement, in the form attached hereto as Exhibit
A, to purchase shares of Common Stock equal in value to
$6,750,000.00.

       

      ARTICLE 2

      PURCHASE AND
SALE

       

      2.1  Agreement
to Purchase.  Subject to the terms and conditions herein and
the satisfaction of the conditions to closing set forth in this ARTICLE
2:

       

      (a)  Investor
hereby agrees to purchase such amounts of Preferred Shares as the Company may,
in its sole and absolute discretion, from time to time elect to issue and sell
to Investor according to one or more Tranches pursuant to Section 2.3 below;
and

       

      (b)  The
Company agrees to issue the Commitment Fee and the Warrants to Investor as
provided below.

       

      2.2  Investment
Commitment

       

      (a)  Investment
Commitment. The closing of this Agreement (the “Commitment Closing”)
shall be deemed to occur when this Agreement has been duly executed by both
Investor and the Company, and the other Conditions to the Commitment Closing set
forth in Section
2.2(b) have been met.

       

      (b)  Conditions to Investment
Commitment. As a condition precedent to the Commitment Closing, all of
the following (the “Conditions to Commitment
Closing”) shall have been satisfied prior to or concurrently with the
Company’s execution and delivery of this Agreement:

       

      (i)  the
following documents shall have been delivered to Investor:  (A) this
Agreement, executed by the Company; (B) a Secretary’s Certificate as to (x) the
resolutions of the Company’s board of directors authorizing this Agreement and
the Transaction Documents, and the transactions contemplated hereby and thereby,
(y) a copy of the Company’s current Certificate of Incorporation, and (z) a copy
of the Company’s current Bylaws; (C) the Certificate of Designations executed by
the Company and accepted by the Secretary of State of Delaware; (D) the Opinion;
and (E) a copy of the press release announcing the transactions contemplated by
this Agreement, if any, and Current Report on Form 8-K describing the
transaction contemplated by, and attaching a complete copy of, the Transaction
Documents;

       

      
        
          
          

        

        
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      (ii)  other
than for losses incurred in the ordinary course of business, there have been no
material adverse changes in the Company’s business prospects or financial
condition since the date of the last SEC Report filed by the Company, including
but not limited to incurring material liabilities;

       

      (iii)  the
representations and warranties of the Company in this Agreement shall be true
and correct in all material respects and the Company shall have delivered an
Officer’s Closing Certificate to such effect to Investor, signed by an officer
of the Company;

       

      (iv)  Investor
shall have received the Commitment Fee and the Warrant;

       

      (v)  Investor
shall have entered into Stock Loan Agreements with lending stockholders of the
Company who are parties thereto (each, a “Lending Stockholder,”
and, collectively, the “Lending
Stockholders”) in the form attached hereto as Exhibit G (each, a “Stock Loan
Agreement”), and received the Borrowed Shares (as defined in the Stock
Loan Agreement) pursuant thereto; and

       

      (vi)  any
Required Approval has been obtained.

       

      (c)  Investor’s Obligation to
Purchase. Subject to the prior satisfaction of all conditions set forth
in this Agreement, following the Investor’s receipt of a validly delivered
Tranche Notice, the Investor shall be required to purchase from the Company a
number of Tranche Shares equal to the permitted Tranche Share Amount, in the
manner described below.

       

      2.3  Tranches to
Investor

       

      (a)  Procedure to Elect a
Tranche. Subject to the Maximum Tranche Amount, the Maximum Placement and
the other conditions and limitations set forth in this Agreement, at any time
beginning on the Effective Date, the Company may, in its sole and absolute
discretion, elect to exercise one or more tranches of Preferred Share issuances
(each a “Tranche”) according
to the following procedure, provided that each subsequent Tranche Notice Date
(defined below) after the first Tranche Notice Date shall be no sooner than 5
Trading Days following the preceding Tranche Notice Date.

       

      (b)  Delivery of Tranche
Notice.  The Company shall deliver an irrevocable written
notice (the “Tranche
Notice”), the form of which is attached hereto as Exhibit F, to Investor
stating that the Company shall exercise a Tranche and stating the number of
Preferred Shares which the Company will sell to Investor at the Tranche Share
Price, and the aggregate purchase price for such Tranche (the “Tranche Purchase
Price”).  A Tranche Notice must be delivered by the Company to
Investor by 4:30 p.m. Eastern time on any Trading Day via facsimile or
electronic mail, with confirming copy by overnight carrier, and shall be deemed
delivered on the next Trading Day (the “Tranche Notice
Date”).

       

      
        
          
          

        

        
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      (c)  Issuance of
Warrants.  On each Tranche Notice Date, the Company shall issue
a replacement Warrant, in the form attached hereto as Exhibit A, amending and
replacing a portion of the initial Warrant issued on the Commitment Closing to
acquire that portion of Warrant Shares equal in value to 135.0% of the Tranche
Purchase Price, at an exercise price equal to the closing bid price for the
Common Stock on the Trading Day immediately preceding the Tranche Notice
Date.  Each Warrant shall have a term of 5 years from
issuance.

       

      (d)  Conditions Precedent to
Right to Deliver a Tranche Notice.  The right of the Company to
deliver a Tranche Notice is subject to the satisfaction, on the date of delivery
of such Tranche Notice, of each of the following conditions:

       

      (i)  the
Common Stock shall be listed for and actively trading on the Trading Market, and
to the Company’s knowledge there is no notice of any suspension or delisting
with respect the trading of the shares of Common Stock on such market or
exchange;

       

      (ii)  the
representations and warranties of the Company set forth in this Agreement are
true and correct in all material respects as if made on such date (provided,
however, that any information disclosed by the Company in a filing with the SEC
after the Effective Date but prior to the date of the Tranche Notice shall be
deemed to update the Disclosure Schedules), and no material default shall have
occurred under this Agreement, or any other agreement with Investor, any
Affiliate of Investor, or any other Material Agreement, and the Company shall
deliver an Officer’s Closing Certificate to such effect to Investor, signed by
an officer of the Company;

       

      (iii)  other
than losses incurred in the ordinary course of business, there have been no
material adverse changes in the Company’s business prospects or financial
condition since the Commitment Closing, including but not limited to incurring
material liabilities;

       

      (iv)  the
Company is not, and will not be as a result of the applicable Tranche, in
default of any Material Agreement;

       

      (v)  there is
not then in effect any law, rule or regulation prohibiting or restricting the
transactions contemplated by any of the Transaction Documents, or requiring any
consent or approval which shall not have been obtained, nor is there any pending
or threatened proceeding or investigation which may have the effect of
prohibiting or adversely affecting any of the transactions contemplated by this
Agreement; no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or adopted by any court
or governmental authority of competent jurisdiction that prohibits the
transactions contemplated by this Agreement, and no actions, suits or
proceedings shall be in progress, pending or, to the Company’s knowledge
threatened, by any person (other than Investor or any Affiliate of Investor),
that seek to enjoin or prohibit the transactions contemplated by this
Agreement;

       

      (vi)  all
Common Shares shall have been timely delivered as required pursuant to the
Transaction Documents, including all Warrant Shares issuable pursuant to any
Exercise Notice delivered to Company prior to the Tranche Notice
Date;

       

      
        
          
          

        

        
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      (vii)  with
respect to any Tranche Closing after a Registration Statement is declared
effective or more than six months after the Effective Date, all
previously-issued and issuable Common Shares are DTC Shares,  and have
been converted into electronic form without restriction on resale;

       

      (viii)  Company
is in compliance with all requirements to maintain listing on the Trading
Market;

       

      (ix)  with
respect to any Tranche Closing after a Registration Statement is declared
effective or more than six months after the Effective Date, either (a) such
Registration Statement is current, valid and effective and permits the lawful
resale of all previously-issued and then-exercisable Warrant Shares issuable
upon exercise of the Warrant in connection with such Tranche or (b) Investor
shall have Borrowed Shares pursuant to the terms of the Stock Loan Agreements
equal to at least 135% of the Tranche Purchase Price;

       

      (x)  Company
has a sufficient number of duly authorized shares of Common Stock reserved for
issuance in such amount as may be required to fulfill its obligations pursuant
to the Transaction Documents and any outstanding agreements with Investor and
any Affiliate of Investor, including without limitation all Warrant Shares
issuable upon exercise of the Warrant issued in connection with such
Tranche;

       

      (xi)  Company
has provided notice of its delivery of the Tranche Notice to all signatories of
a Lock-Up Agreement as required under the Lock-Up Agreement;

       

      (xii)  the
aggregate number of Warrant Shares issuable upon exercise of the Warrant at that
Tranche Notice Date, aggregated with all other shares of Common Stock deemed
beneficially owned by the Investor and its Affiliates, would not result in the
Investor owning more than 9.99% of all Common Stock outstanding on the Tranche
Notice Date, as determined in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder; and

       

      (xiii)  with
respect to any Tranche Closing before a Registration Statement is declared
effective, Investor shall have Borrowed Shares pursuant to the terms of the
Stock Loan Agreements equal to at least 135% of the Tranche Purchase
Price.

       

      (e)  Documents to be Delivered at
Tranche Closing. The Closing of any Tranche and Investor’s obligations
hereunder shall additionally be conditioned upon the delivery to Investor of
each of the following (the “Required Tranche
Documents”) on or before the applicable Tranche Closing
Date:

       

      (i)  a number
of Preferred Shares equal to the Tranche Purchase Price divided by the Tranche
Share Price shall have been delivered to Investor or an account specified by
Investor for the Tranche Shares;

       

      (ii)  the
following executed documents:  Opinion, Officer’s Certificate and
Lock-Up Agreements;

       

      
        
          
          

        

        
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      (iii)  a “Use of Proceeds”
certificate, signed by an officer of the Company, and setting forth how the
Tranche Purchase Price will be applied by the Company;

       

      (iv)  all
Warrant Shares shall have been timely delivered in accordance with any Exercise
Notice delivered to Company prior to the Tranche Closing Date;

       

      (v)  all
documents, instruments and other writings required to be delivered by the
Company to Investor on or before the Tranche Closing Date pursuant to any
provision of this Agreement or in order to implement and effect the transactions
contemplated herein; and

       

      (vi)  payment
of a $5,000.00 non-refundable administrative fee to Investor’s counsel, by
offset against the Tranche Amount, or wire transfer of immediately available
funds.

       

      (f)  Mechanics of Tranche
Closing.  Each of the Company and Investor shall deliver all
documents, instruments and writings required to be delivered by either of them
pursuant to Section
2.3(e) of this Agreement at or prior to each Tranche Closing. Subject to
such delivery and the satisfaction of the conditions set forth in Section 2.3(d) as of
the Tranche Closing Date, the closing of the purchase by Investor of Preferred
Shares shall occur by 5:00 p.m. Eastern time, on the date which is 10 Trading
Days following the Tranche Notice Date (each a “Tranche Closing
Date”) at the offices of Investor; provided, however, that if any Warrant
Shares issued or issuable pursuant to the exercise of any Warrants are not DTC
Shares by the Share Delivery Date in accordance with Section 1.1 of any
Warrant exercised before the Tranche Closing Date (whether due to the
non-availability of DWAC shares or otherwise), then the Tranche Closing Date
shall be extended one Trading Day for each Trading Day that such shares are not
issued or converted into DTC Shares.  On or before each Tranche
Closing Date, Investor shall deliver to the Company the Tranche Purchase Price
to be paid for such Tranche Shares.  The closing (each a “Tranche Closing”) for
each Tranche shall occur on the date that both (i) the Company has delivered to
Investor all Required Tranche Documents, and (ii) Investor has delivered to the
Company the Tranche Purchase Price.

       

      (g)  Limitation on Obligations to
Purchase and Sell.  Notwithstanding anything herein to the
contrary, in the event the closing price of the Common Stock during the 9
Trading Days following the Tranche Notice Date falls below 75.0% of the closing
price on the day prior to the Tranche Notice Date:  (i) Investor may,
at its option, and without penalty, decline to purchase the applicable Tranche
Shares on the Tranche Closing Date, and return to the Company all Warrants
issued in connection with such Tranche Notice that remain unexercised; or (ii)
Company may, at its option, and without penalty, terminate the Tranche Notice
and decline to sell the applicable Tranche Shares on the Tranche Closing
Date.

       

      2.4  Maximum
Placement.  Investor shall not be obligated to purchase any
additional Tranche Shares once the aggregate Tranche Purchase Price paid by
Investor equals the Maximum Placement.

       

      
        
          
          

        

        
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      ARTICLE 3

      TERMINATION

       

      3.1  Automatic
Termination.  This Agreement and the Company’s right to
initiate subsequent Tranches to Investor under this Agreement shall terminate
permanently (each, an “Automatic
Termination”) upon the occurrence of any of the following:

       

      (a)  if, at
any time, either the Company or any director or executive officer of the Company
has engaged in a transaction or conduct related to the Company that has resulted
in (i) a SEC enforcement action, or (ii) a civil judgment or criminal conviction
for fraud or misrepresentation, or for any other offense that, if prosecuted
criminally, would constitute a felony under applicable law;

       

      (b)  on any
date after a Delisting Event that lasts for an aggregate of 20 Trading Days
during any calendar year;

       

      (c)  if at any
time the Company has filed for and/or is subject to any bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings for relief under
any bankruptcy law or any law for the relief of debtors instituted by or against
the Company or any subsidiary of the Company;

       

      (d)  the
Company is in breach or default of any Material Agreement, which default could
have a Material Adverse Effect;

       

      (e)  the
Company is in breach or default of this Agreement, any Transaction Document, or
any agreement with Investor or any Affiliate of Investor;

       

      (f)  upon the
occurrence of a Fundamental Transaction;

       

      (g)  so long
as any Preferred Shares are outstanding, the Company effects or publicly
announces its intention to create a security senior to the Series B Preferred
Stock, or substantially altering the capital structure of the Company in a
manner that materially adversely effects the rights or preferences of the Series
B Preferred Stock; and

       

      (h)  on the
Termination Date.

       

      3.2  Company
Termination.  The Company may at any time in its sole
discretion terminate (a “Company Termination”)
this Agreement and its right to initiate future Tranches by providing 30 days
advanced written notice (“Termination Notice”)
to Investor.

       

      3.3  Effect of
Termination.  The termination of this Agreement will have no
effect on any Common Shares, Preferred Shares, Warrants or Warrant Shares
previously issued, delivered or credited, or on any rights of any holder
thereof.  Notwithstanding any other provision, all fees paid to
Investor or its counsel are non-refundable.

       

      
        
          
          

        

        
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      ARTICLE 4

      REPRESENTATIONS AND
WARRANTIES

       

      4.1  Representations
and Warranties of the Company.  Except as set forth under the
corresponding section of the Disclosure Schedules, which shall be deemed a part
hereof, the Company hereby represents and warrants to, and as applicable
covenants with, Investor as of each Closing:

       

      (a)  Subsidiaries.  All
of the direct and indirect subsidiaries of the Company are set forth on Schedule
4.1(a).  The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary, and all of such directly or
indirectly owned capital tock or other equity interests are owned free and clear
of any Liens.  All the issued and outstanding shares of capital stock
of each Subsidiary are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.  If the Company has no subsidiaries, then
references in the Transaction Documents to the Subsidiaries will be
disregarded.

       

      (b)  Organization and
Qualification.  Each of the Company and the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, as applicable, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in a Material Adverse Effect and no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

       

      (c)  Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder or thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company other than the filing of the Certificate of
Designations.  Each of the Transaction Documents has been, or upon
delivery will be, duly executed by the Company and, when delivered in accordance
with the terms hereof, will constitute the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.  Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, by-laws or other organizational or
charter documents except where such violation could not, individually or in the
aggregate, constitute a Material Adverse Effect.

       

      
        
          
          

        

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

       

      (e)  Filings, Consents and
Approvals.  Neither the Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than the filing of the Certificate of Designations and required federal
and state securities filings, each of which has been, or (if not yet required to
be filed) shall be, timely filed.

       

      (f)  Issuance of the
Securities.  The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens.  The Company has reserved from its duly authorized capital
stock a number of shares of Common Stock and Preferred Stock for issuance of the
Securities at least equal to the number of Securities which could be issued
pursuant to the terms of the Transaction Documents.

       

      (g)  Capitalization.  Except
as set forth in Section 4.1(g) of the
Disclosure Schedule, the capitalization of the Company is as described in the
Company’s most recently filed SEC Report and the Company has not issued any
capital stock since such filing.  Except as set forth in Section 4.1(g) of the
Disclosure Schedule, no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as a result of the
purchase and sale of the Securities, there are no outstanding options, warrants,
script rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or securities convertible into or
exercisable for shares of Common Stock.  The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than Investor) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange, or reset price under such securities. All of the outstanding shares of
capital stock of the Company are validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities.  No further
approval or authorization of any stockholder, the Board of Directors of the
Company or others is required for the issuance and sale of the shares of the
Securities.  There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company’s stockholders.

       

      
        
          
          

        

        
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      (h)  SEC Reports; Financial
Statements.  Except as set forth in Schedule 4.1(h) of the
Disclosure Schedule, the Company has filed all required SEC Reports for the two
years preceding the Effective Date (or such shorter period as the Company was
required by law to file such material) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension.  Except as set forth in Schedule
4.1(h) of the Disclosure Schedule, as of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Act and the
Exchange Act and the rules and regulations of the SEC promulgated thereunder, as
applicable, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance
with GAAP, except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

       

      (i)  Material
Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or required to be disclosed in filings made with the SEC, (iii) the Company has
not altered its method of accounting, (iv) the Company has not declared or made
any dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) except as set forth in Schedule 4.1(i) of the
Disclosure Schedule, the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company equity
incentive plans.  The Company does not have pending before the SEC any
request for confidential treatment of information.

       

      
        
          
          

        

        
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      (j)  Litigation.  Except
as set forth in Schedule 4.1(j) of the Disclosure Schedule, there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to
the knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”), which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities, or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor any Subsidiary, nor to the
knowledge of the Company any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary
duty.  There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the SEC involving the
Company or any current or former director or officer of the
Company.  The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Act.

       

      (k)  Labor
Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse
Effect.

       

      (l)  Compliance.  Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other similar agreement or instrument to which it is a party or
by which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
except in each case as could not have a Material Adverse Effect.

       

      (m)  Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.

       

      (n)  Title to
Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens set forth in Schedule 4.1(n) of the Disclosure Schedule
or do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries and Liens for the payment of federal, state or
other taxes, the payment of which is neither delinquent nor subject to
penalties.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in
compliance.

       

      
        
          
          

        

        
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      (o)  Patents and
Trademarks.  Except as set forth in Schedule 4.1(o) of the
Disclosure Schedule, the Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar rights that
are necessary or material for use in connection with their respective businesses
as described in the SEC Reports and which the failure to so have could have a
Material Adverse Effect (collectively, the “Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights of the Company or the Subsidiaries.

       

      (p)  Insurance.  The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including but not limited to directors and officers insurance coverage
at least equal to the Maximum Placement.  To the best of Company’s
knowledge, such insurance contracts and policies are accurate and
complete.  Neither the Company nor any 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 without a significant increase in
cost.

       

      (q)  Transactions With Affiliates
and Employees.  Except as set forth in the SEC Reports, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (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
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 $120,000 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
equity incentive plan of the Company.

       

      (r)  Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002, which are applicable to
it as of the date of the Commitment Closing.  The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.  The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s most recently
filed periodic report under the Exchange Act, as the case may be, is being
prepared.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of the date prior to
the filing date of the most recently filed periodic report under the Exchange
Act (such date, the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation
Date, there have been no significant changes in the Company’s internal controls
or, to the Company’s knowledge, in other factors that could materially affect
the Company’s internal controls.

       

      
        
          
          

        

        
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      (s)  Certain
Fees.  Except for the payment of (i) the Commitment Fee, (ii)
any placement agent fees payable to licensed broker/dealers representing the
Company, or (iii) or any fees contemplated by the Transaction Documents, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement.  Investor shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of
any Persons for fees of a type contemplated in this Section 4.1(s) that
may be due in connection with the transactions contemplated by the Transaction
Documents.

       

      (t)  Private Placement.
Assuming the accuracy of Investor representations and warranties set forth in
Section 4.2, no
registration under the Act is required for the offer and sale of the Securities
by the Company to Investor as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of any
Trading Market.

       

      (u)  Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended.  The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.

       

      (v)  Registration
Rights.  Except as set forth in Schedule 4.1(v) of the
Disclosure Schedule, no Person has any right to cause the Company to effect the
registration under the Act of any securities of the Company.

       

      
        
          
          

        

        
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      (w)  Listing and Maintenance
Requirements.  The Common Stock is registered pursuant to
Section 12 of the Exchange Act, and the Company has taken no action designed to,
or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company
received any notification that the SEC is contemplating terminating such
registration.  The Company has not, in the 12 months preceding the
Effective Date, received notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading Market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.

       

      (x)  Application of Takeover
Protections.  The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti takeover provision under the Company’s
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to Investor as a
result of Investor and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation the
Company’s issuance of the Securities and Investor’s ownership of the
Securities.

       

      (y)  Disclosure.  Except
with respect to the information that will be, and to the extent that it actually
is timely publicly disclosed by the Company pursuant to Section 2.2(b)(i)E,
the Company confirms that, neither the Company nor any other Person acting on
its behalf has provided Investor or its agents or counsel with any information
that constitutes or might constitute material, non-public information, including
without limitation this Agreement and the Exhibits and Schedules
hereto.  The Company understands and confirms that Investor will rely
on the foregoing representations and covenants in effecting transactions in
securities of the Company.  All disclosure provided to Investor
regarding the Company, its business and the transactions contemplated hereby,
furnished by or on behalf of the Company with respect to the representations and
warranties made herein are true and correct in all material respects and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.

       

      (z)  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 this offering of the Securities to be integrated
with prior offerings by the Company for purposes of the Act or which could
violate any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of the Trading Market.

       

      (aa)  Financial
Condition.  Based on the financial condition of the Company as
of the date of the Commitment Closing: (i) the fair saleable market value of the
Company’s 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). The
Company has no knowledge of any facts or circumstances, which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the date of the
Commitment Closing.  The SEC Reports set forth as of the dates thereof
all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has
commitments.  Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.

       

      
        
          
          

        

        
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      (bb)  Tax
Status.  The Company and each of its Subsidiaries has made or
filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (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) and 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 provisions 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.  The
Company has not executed a waiver with respect to the statute of limitations
relating to the assessment or collection of any foreign, federal, statue or
local tax.  None of the Company’s tax returns is presently being
audited by any taxing authority.

       

      (cc)  No General Solicitation or
Advertising.  Neither the Company nor, to the knowledge of the
Company, any of its directors or officers (i) has conducted or will conduct any
general solicitation (as that term is used in Rule 502(c) of Regulation D) or
general advertising with respect to the sale of the Securities, or (ii) made any
offers or sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the Securities under
the Act or made any “directed selling efforts” as defined in Rule 902 of
Regulation S.

       

      (dd)  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 corrupt 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.

       

      
        
          
          

        

        
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      (ee)  Acknowledgment Regarding
Investor’s Purchase of Securities.  The Company acknowledges
and agrees that Investor is acting solely in the capacity of arm’s length
purchaser with respect to this Agreement and the transactions contemplated
hereby.  The Company further acknowledges that Investor is not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
statement made by Investor or any of its representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to Investor’s purchase of the
Securities.  The Company further represents to Investor that the
Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

       

      (ff)  Accountants.  The
Company’s accountants are set forth in the SEC Reports.  To the
Company’s knowledge, such accountants are an independent registered public
accounting firm as required by the Act.

       

      (gg)  No Disagreements with
Accountants and Lawyers.  There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the accountants and lawyers formerly or presently employed by the
Company.

       

      (hh)  Registration Statements and
Prospectuses.

       

      (i)  Company
may, in its sole discretion, elect to file a Registration Statement for the sale
of all Common Shares.  If so filed, such Registration Statement shall
comply when it becomes effective, and, as amended or supplemented at the time of
any Tranche Notice Date, Tranche Closing Date, or issuance of any Common Shares,
and at all times during which a prospectus is required by the Act to be
delivered in connection with any sale of Common Shares, will comply, in all
material respects, with the requirements of the Act.

       

      (ii)  Each
Registration Statement, if any, as of its respective effective time, will not,
as applicable, 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 not misleading.

       

      (iii)  Each
Prospectus, if any, will comply, as of its date and the date it  will
be filed with the SEC,  and, at the time of any Tranche Notice Date,
Tranche Closing Date, or issuance of any Common Shares, and at all times during
which a prospectus is required by the Act to be delivered in connection with any
sale of Common Shares, will comply, in all material respects, with the
requirements of the Act.

       

      (iv)  At no
time during the period that begins on the date any Prospectus is filed with the
SEC and ends at the time a prospectus is no longer required by the Act to be
delivered in connection with any sale of Common Shares did or will any such
Prospectus, as then amended or supplemented, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and at no time during such period will such Prospectus, as
then amended or supplemented, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.

       

      
        
          
          

        

        
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      (v)  Each
Registration Statement, if any, will meet, and the offering and sale of the
Common Shares as contemplated hereby complies with, and will comply with, the
requirements of Rule 415 under the Act.

       

      (vi)  The
Company has not, directly or indirectly, used or referred to any “free writing
prospectus” (as defined in Rule 405 under the Act) except in compliance with
Rules 164 and 433 under the Act.

       

      (vii)  The
Company is not an “ineligible issuer” (as defined in Rule 405 under the Act) as
of the eligibility determination date for purposes of Rules 164 and 433 under
the Act with respect to the offering of the Common Shares contemplated by any
Registration Statement, without taking into account any determination by the SEC
pursuant to Rule 405 under the Act that it is not necessary under the
circumstances that the Company be considered an “ineligible
issuer.”

       

      (ii)  Stock Loan
Agreements.  None of the Lending Stockholders are, or within 90
days of the Effective Date have been, (i) officers, directors, representatives
or Affiliates of the Company, (ii) directly or indirectly, through one or more
intermediaries, in control of, controlled by, or under common control with
Company, or (iii) alone or together with any group, in beneficial ownership or
control of more than 9.99% of the total outstanding voting securities of the
Company.  No Lending Stockholder or any Affiliate of any Lending
Stockholder has been, or will be, compensated by the Company, or to the
Company’s knowledge any Person, in any manner, directly or indirectly, for
entering into a Stock Loan Agreement except as expressly set forth
therein.  The execution, delivery and performance of the Stock Loan
Agreements, the consummation the transactions contemplated by the Stock Loan
Agreements, the borrowing and receipt of the Borrowed Shares, and any subsequent
sale of any Borrowed Shares as permitted by the Stock Loan Agreements do not and
will not conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company, or to the Company’s knowledge any
Lending Stockholder or other Person, is subject, including without limitation
Section 5 of the Act and other federal and state securities laws and
regulations.

       

      (jj)  No
representation or warranty or other statement made by Company, or to Company’s
knowledge the Lending Stockholders, in the Transaction Documents contains any
untrue statement or omits to state a material fact necessary to make any of
them, in light of the circumstances in which it was made, not
misleading.  The Company is not aware of any facts or circumstances
that would cause the transactions contemplated by the Transaction Documents,
when consummated, to violate Section 5 of the Act or other federal or state
securities laws or regulations.

       

      4.2  Representations
and Warranties of Investor. Investor hereby represents and warrants as of
the Effective Date as follows:

       

      
        
          
          

        

        
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      (a)  Organization;
Authority.  Investor is an entity validly existing and in good
standing under the laws of the jurisdiction of its organization with full right,
company power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder.  The execution, delivery and performance by
Investor of the transactions contemplated by this Agreement have been duly
authorized by all necessary company or similar action on the part of
Investor.  Each Transaction Document to which it is a party has been
(or will be) duly executed by Investor, and when delivered by Investor in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of Investor, enforceable against it in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

       

      (b)  Investor
Status.  At the time Investor was offered the Securities, it
was, and at the Effective Date it is:  (i) an “accredited investor” as
defined in Rule 501(a) under the Act.

       

      (c)  Experience of
Investor.  Investor, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Investor is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

       

      (d)  General
Solicitation.  Investor is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

       

      The
Company acknowledges and agrees that Investor does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section
4.2.

       

      ARTICLE 5

      OTHER AGREEMENTS OF THE
PARTIES

       

      5.1  Transfer
Restrictions

       

      (a)  The
Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any transfer of Securities other
than (i) pursuant to an effective Registration Statement or Rule 144, (ii) to
the Company, (iii) to an Affiliate of Investor, or (iv) in connection with a
pledge as contemplated in Section 5.1(b), the
Company may require the transferor thereof to provide to the Company an opinion
of Luce Forward Hamilton & Scripps LLP (“Luce Forward”), or
other counsel selected by the transferor and reasonably acceptable to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Act.

       

      
        
          
          

        

        
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      (b)  Investor
agrees to the imprinting, so long as is required by this Section 5.1, of the
following legend, or substantially similar legend, on any certificate evidencing
Securities other than DWC Shares:

       

      NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

       

      The
Company agrees to cause such legend to be removed immediately upon effectiveness
of a Registration Statement, or when any Common Shares are eligible for sale
under Rule 144.  Company further acknowledges and agrees that Investor
may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the
Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Act and who agrees to be bound by the
provisions of this Agreement and, if required under the terms of such
arrangement, Investor may transfer pledged or secured Securities to the pledgees
or secured parties.  Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection
therewith.  Further, no notice shall be required of such
pledge.  At Investor’s reasonable expense, the Company will execute
and deliver such documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the
Securities.

       

      5.2  Furnishing
of Information.  As long as Investor owns Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the Effective Date pursuant to the Exchange Act.  Upon
the request of Investor, the Company shall deliver to Investor a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. As long as Investor owns Securities, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to Investor and make publicly available in accordance with Rule 144(c) such
information as is required for Investor to sell the Securities under Rule
144.  The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Act within the limitation of the exemptions provided by
Rule 144.

       

      
        
          
          

        

        
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      5.3  Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Act) that
would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Act of the sale of the Securities to
Investor or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market such that it
would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such
subsequent transaction.

       

      5.4  Securities
Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the Effective Date, issue a press
release or if required file a Current Report on Form 8-K, in each case
reasonably acceptable to Investor, disclosing the material terms of the
transactions contemplated hereby.  The Company and Investor shall
consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor Investor shall
issue any such press release or otherwise make any such public statement without
the prior consent of the Company, with respect to any such press release of
Investor, or without the prior consent of Investor, with respect to any such
press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law or Trading Market
regulations, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or
communication.  Notwithstanding the foregoing, the Company shall not
publicly disclose the name of Investor, or include the name of Investor in any
filing with the SEC or any regulatory agency or Trading Market, without the
prior written consent of Investor, except (i) as required by federal securities
law in connection with any registration statement under which the Common Shares
are registered, and (ii) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide Investor
with prior notice of such disclosure permitted under subclause (i) or
(ii).

       

      5.5  Shareholders
Rights Plan.  No claim will be made or enforced by the Company
or, to the knowledge of the Company, any other Person that Investor is an
“Acquiring Person” under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that Investor
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and Investor. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1940, as amended.

       

      5.6  Non-Public
Information.  The Company represents and warrants that neither
it nor any Person acting on its behalf has, and covenants and agrees that
neither it nor any other Person acting on its behalf will, provide Investor or
its agents or counsel with any information that the Company believes or
reasonably should believe constitutes material non-public information, unless
prior thereto Investor shall have executed a written agreement regarding the
confidentiality and use of such information.  On and after the
Effective Date, neither Investor nor any Affiliate Investor shall have any duty
of trust or confidence that is owed directly, indirectly, or derivatively, to
the Company or the shareholders of the Company, or to any other Person who is
the source of material non-public information regarding the
Company.  The Company understands and confirms that Investor shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

       

      
        
          
          

        

        
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      5.7  Reimbursement.  If
Investor becomes involved in any capacity in any proceeding by or against any
Person who is a stockholder of the Company (except as a result of sales,
pledges, margin sales and similar transactions by Investor to or with any
current stockholder), solely as a result of Investor’s acquisition of the
Securities under this Agreement, the Company will reimburse Investor for its
reasonable legal and other expenses (including the cost of any investigation
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred, or will assume the defense of Investor
in such matter.  The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
Affiliates of Investor who are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and controlling
persons (if any), as the case may be, of Investor and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company, Investor and any such Affiliate and
any such Person.  The Company also agrees that neither Investor nor
any such Affiliates, partners, directors, agents, employees or controlling
persons shall have any liability to the Company or any Person asserting claims
on behalf of or in right of the Company solely as a result of acquiring the
Securities under this Agreement, except with respect to information provided to
the Company in writing by Investor or its representatives for use in preparing
the Registration Statement.

       

      5.8  Indemnification
of Investor.  Subject to the provisions of this section, the
Company will indemnify and hold Investor and any Warrant holder, their
Affiliates and attorneys, and each of their directors, officers, shareholders,
partners, employees, agents, and any person who controls Investor within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act
(collectively, the “Investor Parties” and
each an “Investor
Party”), harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation (collectively, “Losses”) that any
Investor Party may suffer or incur as a result of or relating to (a) any breach
of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents, (b) any action
instituted against any Investor Party, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of an
Investor Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of Investor’s
representation, warranties or covenants under the Transaction Documents or any
agreements or understandings Investor may have with any such stockholder or any
violations by Investor of state or federal securities laws or any conduct by
Investor which constitutes fraud, gross negligence, willful misconduct or
malfeasance), (c)  any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement (or in a Registration
Statement as amended by any post-effective amendment thereof by the Company) or
arising out of or based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and/or (d) any untrue statement or alleged untrue
statement of a material fact included in any Prospectus ( or any amendments or
supplements to any Prospectus ), in any free writing prospectus, in any “issuer
information” (as defined in Rule 433 under the Act) of the Company, or in any
Prospectus together with any combination of one or more of the  free
writing prospectuses, if any, or arising out of or based upon any omission or
alleged omission to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that Company shall not be obligated to
indemnify any Investor Party for any Losses finally adjudicated to be caused
solely by a false statement of material fact contained within written
information provided by such Person expressly for the purpose of including it in
the Registration Statement.

       

      
        
          
          

        

        
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      If any
action shall be brought against an Investor Party in respect of which indemnity
may be sought pursuant to this Agreement, such Investor Party shall promptly
notify the Company in writing, and the Company shall have the right to assume
the defense thereof with counsel of its own choosing.  The Investor
Parties shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Investor Parties except to the extent that (i)
the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict with respect to
the dispute in question on any material issue between the position of the
Company and the position of the Investor Parties such that it would be
inappropriate for one counsel to represent the Company and the Investor
Parties.  The Company will not be liable to the Investor Parties under
this Agreement (i) for any settlement by an Investor Party effected without the
Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is either attributable to Investor’s breach of any of the
representations, warranties, covenants or agreements made by Investor in this
Agreement or in the other Transaction Documents or is a result of any
information provided by Investor or its representatives to Company in writing
for inclusion in the Registration Statement.

       

      5.9  Reservation
of Securities.  The Company shall maintain a reserve from its
duly authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may be required to fulfill its obligations in full
under the Transaction Documents.

       

      5.10  Limited
Standstill.  The Company will deliver to Investor on or before
the each Tranche Closing Date, and will honor and enforce the provisions of, the
Lock-Up Agreements with the Company’s officers, directors and beneficial owners
of 10% or more of the Common Stock.

       

      5.11  Prospectus
Availability and Changes.  The Company will make available to
Investor upon request, and thereafter from time to time will furnish Investor,
as many copies of any Prospectus (or of any Prospectus as amended or
supplemented if the Company shall have made any amendments or supplements
thereto after the effective date of the applicable Registration Statement, if
any) as Investor may request for the purposes contemplated by the Act; and in
case Investor is required to deliver  a Prospectus after the
nine-month period referred to in Section 10(a)(3) of the Act in connection with
the sale of the Common Shares, or after the time a post-effective amendment to
the applicable Registration Statement, if any, is required pursuant to Item
512(a) of Regulation S-K under the Act, the Company will prepare, at its
expense, promptly upon request such amendment or amendments to such Registration
Statement and such Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act or Item 512(a) of Regulation S-K
under the Act, as the case may be.

       

      
        
          
          

        

        
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      If a
Prospectus has been filed with respect to the Warrant Shares, the Company will
advise Investor promptly of the happening of any event within the time during
which a Prospectus is required to be delivered under the Act which could require
the making of any change in the Prospectus then being used so that the
Prospectus would not include an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading, and to
advise Investor promptly if, during such period, it shall become necessary to
amend or supplement any Prospectus to cause such Prospectus to comply with the
requirements of the Act, and in each case, during such time, to prepare and
furnish, at the Company’s expense, to Investor promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such change or
to effect such compliance.

       

      5.12  Required
Approval.  No transactions contemplated under this Agreement or
the Transaction Documents shall be consummated for an amount that would require
approval by any Trading Market or Company stockholders under any approval
provisions, rules or regulations of any Trading Market applicable to the
Company, unless and until such approval is obtained.  Company shall
use best efforts to obtain any required approval as soon as
possible.

       

      5.13  Activity
Restrictions.  For so long as Investor or any of its Affiliates
holds any Preferred Shares, Warrants or Warrant Shares, neither Investor nor any
Affiliate will:  (i) vote any shares of Common Stock owned or
controlled by it, solicit any proxies, or seek to advise or influence any Person
with respect to any voting securities of the Company; (ii) engage or participate
in any actions, plans or proposals which relate to or would result in (a)
acquiring additional securities of the Company, alone or together with any other
Person, which would result in beneficially owning or controlling more than 9.99%
of the total outstanding Common Stock or other voting securities of the Company,
(b) an extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving Company or any of its subsidiaries, (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board, (e) any material
change in the present capitalization or dividend policy of the Company, (f) any
other material change in the Company’s business or corporate structure,
including but not limited to, if the Company is a registered closed-end
investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940, (g) changes in the Company’s charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any Person, (h) causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant  to Section
12(g)(4) of the Act, or (j) any action, intention, plan or arrangement similar
to any of those enumerated above; or (iii) request the Company or its directors,
officers, employees, agents or representatives to amend or waive any provision
of this Section
5.13.

       

      
        
          
          

        

        
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      5.14  Registration.  In
the event that all Warrant Shares that Company is required to make available to
Investor upon the exercise of Warrants, are not, by the one year anniversary of
the Effective Date, made available to Investor as DTC Shares without restriction
on resale pursuant to (i) an effective Registration Statement, or (ii) Rule 144,
without requiring discharge by payment in full of any notes given in exchange
for any Warrant Shares prior to the sale thereof or limiting the amount of
securities that may be sold, Company shall, at Investor’s election in Investor’s
sole discretion, exercise the Company’s Redemption Option provided for in
Section 6 of the Certificate of Designations to effectuate the repurchase of any
outstanding Preferred Shares.

       

      ARTICLE 6

      MISCELLANEOUS

       

      6.1  Fees and
Expenses.  A non-refundable document preparation fee, in the
amount of $35,000.00 shall be paid by the Company to counsel for Investor out of
the proceeds from the first Tranche closing in cash or by wire transfer to an
account designated by such counsel.  Except for the non-refundable
document preparation fee and the $5,000.00 non-refundable administrative fee
payable to counsel for Investor at each Tranche closing, or as may be otherwise
provided in this Agreement, each party shall pay the fees and expenses of its
own advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of the Transaction Documents.  The
Company acknowledges and agrees that Luce Forward solely represents Investor,
and does not represent the Company or its interests in connection with the
Transaction Documents or the transactions contemplated thereby.  The
Company shall pay all stamp and other taxes and duties levied in connection with
the sale of the Securities, if any.

       

      6.2  Notices.  Unless
a different time of day or method of delivery is set forth in the Transaction
Documents, any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the date after the day of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified on the signature page hereto prior to 5:30 p.m. Eastern time on a
Trading Day and an electronic confirmation of delivery is received by the
sender, (b) two Trading Days after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section
6.2 on a day that is not a Trading Day or later than 5:30 p.m. (Eastern
time) on any Trading Day, (c) three Trading Days following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be
given.  The addresses for such notices and communications are those
set forth following the signature page hereof, or such other address as may be
designated in writing hereafter, in the same manner, by such
Person.

       

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

       

      
        
          
          

        

        
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      6.4  Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof

       

      6.5  Successors
and Assigns.  This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of
Investor.  Investor may assign any or all of its rights under this
Agreement to any Affiliate or to any Person to whom Investor assigns or
transfers any Securities.

       

      6.6  No
Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section
5.8.

       

      6.7  Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by
law.  The parties hereby waive all rights to a trial by
jury.  If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses reasonably incurred in connection
with the investigation, preparation and prosecution of such action or
proceeding.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      6.8  Survival.  The
representations and warranties contained herein shall survive the Closing and
the delivery, exercise and/or conversion of the Securities, as
applicable.

       

      6.9  Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together 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, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

       

      6.10  Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

       

      6.11  Replacement
of Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.

       

      6.12  Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of Investor and the Company will be
entitled to specific performance under the Transaction Documents.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be
adequate.

       

      6.13  Payment
Set Aside.  To the extent that the Company makes a payment or
payments to Investor pursuant to any Transaction Document or Investor enforces
or exercises its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

       

      6.14  Liquidated
Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been
canceled.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      6.15  Time of
the Essence.  Time is of the essence with respect to all
provisions of this Agreement that specify a time for performance.

       

      6.16  Construction.  The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.

       

      6.17  Entire
Agreement.  This Agreement, together with the exhibits hereto,
contains the entire agreement and understanding of the parties, and supersedes
all prior and contemporaneous agreements, term sheets, letters, discussions,
communications and understandings, both oral and written, which the parties
acknowledge have been merged into this Agreement.  No party,
representative, attorney or agent has relied upon any collateral contract,
agreement, assurance, promise, understanding or representation not expressly set
forth hereinabove.  The parties hereby expressly waive all rights and
remedies, at law and in equity, directly or indirectly arising out of or
relating to, or which may arise as a result of, any Person’s reliance on any
such assurance.

       

      6.18  Disbursements.  From
the proceeds of the initial Tranche Closing, the Investor shall, on the
Company’s behalf, make the disbursements set forth on the Disbursement Schedule
attached hereto, with the remaining funds to be paid to the
Company.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

       

      DRINKS
AMERICAS HOLDINGS, LTD.

       

      By:                        

      Name:                        

      Title:                        

       

      By:                        

      Name:                        

      Title:                        

       

      OPTIMUS
SPECIAL SITUATIONS CAPITAL PARTNERS, LLC

       

      


      


      By:                        

      Name:  Terry
Peizer

      Title:    Managing
Director

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      Addresses
for Notice

       

      To
Company:

       

      Drinks
Americas Holdings, Ltd.

      372
Danbury Road

      Wilton,
CT 06897

      Fax
No.:  (203) 762-8992

      Email:  jpkenny@gmail.com

       

      with a
copy to:

       

      Eaton
& Van Winkle LLP

      3 Park
Avenue, 16th Floor

      New York,
New York 10016

      Attention:
Joseph Cannella, Esq.

      Fax
No.:  (212) 779-9928

      Email:  jcannella@evw.com

       

      
        
          	 
      	
                  To
      Investor:

                
	 	 
	 
      	
                  Optimus
      Special Situations Capital Partners, LLC

                
	 
      	
                  11150
      Santa Monica Boulevard, Suite 1500

                
	 
      	
                  Los
      Angeles, CA 90025

                
	 
      	
                  Fax
      No.:  (310) 444-5300

                
	 
      	
                  Email:  info@optimuscg.com

                
	 	 
	 
      	
                  with
      a copy to:

                
	 	 
	 
      	
                  Luce
      Forward Hamilton & Scripps LLP

                
	 
      	
                  601
      South Figueroa Street, Suite 3900

                
	 
      	
                  Los
      Angeles, CA 90017

                
	 
      	
                  Attention:  John
      C. Kirkland, Esq.

                
	 
      	
                  Fax
      No.:  (213) 452-8035

                
	 
      	
                  Email:  jkirkland@luce.com

                


        

      

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      Exhibit
A

       

      Form
of Warrant

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      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.

       

      Drinks
Americas Holdings, Ltd.

       

      Warrant
To Purchase Common Stock

       

      
        
          	
                  Warrant
      No.: 2009-[_____]

                	
                  Issuance
      Date:  August 17, 2009

                
	 	 
	
                  Number
      of Warrant Shares:  [_______________]

                	
                  Initial
      Exercise Price:  [$_____]

                


        

      

       

      Drinks
Americas Holdings, Ltd., a Delaware corporation (“Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [_______________], the
holder hereof or its designees or assigns (“Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the Exercise Price (as defined below) then in effect, upon surrender of this
Warrant to Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any
time or times on or after the earlier of (a) the six-month anniversary of the
Issuance Date, or (b) the date a registration statement covering the Warrant
Shares is declared effective, but not after 11:59 p.m. Eastern time on the fifth
anniversary of the Issuance Date (the “Exercise Period”),
that number of duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock set forth above (the “Warrant Shares”);
provided, however, that this Warrant may only be exercised for Warrant Shares
equal in value to not more than 135.0% of the aggregate Tranche Purchase Prices
indicated in one or more Tranche Notices, if any, delivered by the Company
pursuant to the Purchase Agreement.

       

      ARTICLE 1

      EXERCISE OF
WARRANT.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      1.1  Mechanics
of Exercise.  Subject to the terms and conditions hereof, this
Warrant may be exercised by the Holder on any day during the Exercise Period, in
whole or in part, by (i) delivery of a written notice to the Company, in the
form attached hereto as Appendix 1 (the “Exercise Notice”), of
the Holder’s election to exercise this Warrant and (ii) payment to the Company
of an amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise
Price”) in cash or by wire transfer of immediately available funds, by
the issuance and delivery of a recourse promissory note substantially in the
form attached hereto as Appendix 2 (each, a “Recourse Note”), or,
if applicable, by cashless exercise pursuant to Section
1.3.  The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder.  Execution and
delivery of the Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original Warrant and
issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares.  On the same Trading Day on which the Company has
received each of the Exercise Notice and the Aggregate Exercise Price (the
“Exercise Delivery
Documents”) by 10:30 a.m. Eastern time, or the following Trading Day if
received after such time or on a non-Trading Day, the Company shall transmit by
facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery
Documents to the Holder and the Company’s transfer agent (the “Transfer Agent”) and
(i) provided that the Transfer Agent is participating in The Depository Trust
Company (DTC) Fast Automated Securities Transfer (FAST) Program, upon the
request of the Holder, credit such aggregate number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit/Withdrawal at Custodian
(DWAC) system, or (ii) (A) if the Transfer Agent is not participating in the DTC
FAST Program issue and deliver to the Holder or, at the Holder’s instruction
pursuant to the Exercise Notice, the Holder’s agent or designee, in each case,
sent by reputable overnight courier to the address as specified in the
applicable Exercise Notice, a certificate, registered in the Company’s share
register in the name of the Holder or its designee (as indicated in the
applicable Exercise Notice), for the number of Warrant Shares to which the
Holder is entitled pursuant to such exercise, which certificate shall not be
imprinted with any restrictive legends and no stop transfer order shall be
placed against the transfer thereof.  Upon delivery of the Exercise
Delivery Documents, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date such Warrant Shares
are credited to the Holder’s DTC account or the date of delivery of the
certificate(s) evidencing the Warrant Shares (as the case may be).  If
this Warrant is submitted in connection with any exercise pursuant to this Section 1.1 and the
number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then
the Company shall as soon as practicable and in no event later than three
Trading Days after any exercise and return of the previously issued Warrant, at
its own expense, issue a new Warrant representing the right to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised.  No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but rather the number of shares of
Common Stock to be issued shall be rounded up to the nearest whole
number.  The Company shall pay any and all taxes which may be payable
with respect to the issuance and delivery of Warrant Shares upon exercise of
this Warrant.

       

      1.2  Exercise
Price.  For purposes of this Warrant, “Exercise Price” means
an amount per Warrant Share equal to the Closing Sale Price of a Share of Common
Stock on the Trading Day immediately preceding the Issuance Date, subject to
adjustment as provided herein.

       

      1.3  Cashless
Exercise.  Notwithstanding anything contained herein to the
contrary, if at any time there is not a current, valid and effective
registration statement covering the Warrant Shares that are the subject of the
Exercise Notice (the “Unavailable Warrant
Shares”), the Holder may, in its sole discretion, exercise this Warrant
in whole or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the
Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares
of Common Stock determined according to the following formula (a “Cashless
Exercise”):

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Net
Number = (B-C) x
A

                                       B

      


      For
purposes of the foregoing formula:

      


      A = the
total number of shares with respect to which this Warrant is then being
exercised.

       

      B = the
average of the Closing Sale Prices of the shares of Common Stock (as reported by
Bloomberg) for the five (5) consecutive Trading Days ending on the date
immediately preceding the date of the Exercise Notice.

       

      C = the
Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.

       

      1.4  Company’s
Failure to Timely Deliver Securities.  If the Company shall
fail for any reason or for no reason to timely deliver any of the Warrant Shares
to the Holder pursuant to Section 1.1 then, in
addition to all other remedies available to the Holder, the Company shall pay in
cash to the Holder on each day that the issuance of such shares of Common Stock
is not timely effected an amount equal to 1.5% of the product of (A) the sum of
the number of shares of Common Stock not issued to the Holder on a timely basis
and to which the Holder is entitled and (B) the Closing Sale Price of the shares
of Common Stock on the Trading Day immediately preceding the last possible date
which the Company could have issued such shares of Common Stock to the Holder
without violating Section
1.1.  In addition to the foregoing, if after the Company’s
receipt of the facsimile copy of a Exercise Notice the Company shall fail to
timely deliver to the Holder pursuant to Section 1.1 the
number of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise hereunder, and the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company (a “Buy-In”), then the
Company shall, within one Trading Day after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “Buy-In Price”), at
which point the Company’s obligation to credit such Holder’s balance account
with DTC shall terminate, or (ii) promptly honor its obligation to credit such
Holder’s balance account with DTC and, if the Transfer Agent is not
participating in the DTC Fast Program, issue and deliver such shares in the
manner described in Section 1.1 and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock sold by Holder in satisfaction of its obligations, times
(B) the Closing Bid Price on the date of exercise.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      1.5  Exercise
Limitation.  Notwithstanding any other provision, at no time
may the Holder exercise this Warrant such that the number of Warrant Shares to
be received pursuant to such exercise aggregated with all other shares of Common
Stock then owned by the Holder beneficially or deemed beneficially owned by the
Holder would result in the Holder owning more than 4.99% of all of such Common
Stock as would be outstanding on such Exercise Date, as determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  In addition, as of any date, the aggregate number of
shares of Common Stock into which this Warrant is exercisable within 61 days,
together with all other shares of Common Stock then beneficially owned (as such
term is defined in Rule 13(d) under the Exchange Act) by Holder and its
affiliates, shall not exceed 9.99% of the total outstanding shares of Common
Stock as of such date.

       

      1.6  Restrictions.  For
so long as Holder holds any Warrant Shares, Holder will not:  (i) vote
any shares of Common Stock owned or controlled by it, solicit any proxies, or
seek to advise or influence any Person with respect to any voting securities of
the Company; (ii) engage or participate in any actions, plans or proposals which
relate to or would result in (a) acquiring additional securities of the Company,
alone or together with any other Person, which would result in beneficially
owning or controlling more than 9.99% of the total outstanding Common Stock or
other voting securities of the Company, (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving Company
or any of its subsidiaries, (c) a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries, (d) any change in the present
board of directors or management of the Company, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the board, (e) any material change in the present capitalization or
dividend policy of the Company, (f) any other material change in the Company’s
business or corporate structure, including but not limited to, if the Company is
a registered closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by Section 13 of
the Investment Company Act of 1940, (g) changes in the Company’s charter, bylaws
or instruments corresponding thereto or other actions which may impede the
acquisition of control of the Company by any Person, (h) causing a class of
securities of the Company to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association, (i) a class of equity securities of
the Company becoming eligible for termination of registration
pursuant  to Section 12(g)(4) of the Act, or (j) any action,
intention, plan or arrangement similar to any of those enumerated above; or
(iii) request the Company or its directors, officers, employees, agents or
representatives to amend or waive any provision of this Section
1.6.

       

      1.7  Disputes.  In
the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue
to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section
12.

       

      1.8  Insufficient
Authorized Shares.  If at any time while any of the Warrants
remain outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon exercise of the Warrants at least a number of shares of Common
Stock equal to 110% of the number of shares of Common Stock as shall from time
to time be necessary to effect the exercise of all of the Warrants then
outstanding (the “Required Reserve
Amount”) (an “Authorized Share
Failure”), then the Company shall immediately take all action necessary
to increase the Company’s authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for the
Warrants then outstanding.  Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the occurrence of
an Authorized Share Failure, but in no event later than 90 days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized
shares of Common Stock.  In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best
efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      ARTICLE 2

      ADJUSTMENT UPON SUBDIVISION
OR COMBINATION OF COMMON STOCK.

       

      If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately
increased.  If the Company at any time on or after the Subscription
Date combines (by combination, reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination will
be proportionately increased and the number of Warrant Shares will be
proportionately decreased.  Any adjustment under this ARTICLE 2 shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

       

      ARTICLE 3

      PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS

       

      3.1  Purchase
Rights.  In addition to any adjustments pursuant to ARTICLE 2
above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      3.2  Fundamental
Transactions.  The Company shall not enter into or be party to
a Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance with the
provisions of this Section 3.2 pursuant
to written agreements in form and substance satisfactory to the Required Holders
and approved by the Required Holders (such approval not to be unreasonably
withheld) prior to such Fundamental Transaction, including agreements to deliver
to each holder of Warrants in exchange for such Warrants a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by
the terms of such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and satisfactory to the Required Holders.  Upon the
occurrence of any Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein.  Upon consummation of the Fundamental Transaction, the
Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon exercise of this Warrant at any time after the consummation of the
Fundamental Transaction, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property) purchasable upon the exercise of
this Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights) which the Holder would have been entitled
to receive upon the happening of such Fundamental Transaction had this Warrant
been converted immediately prior to such Fundamental Transaction, as adjusted in
accordance with the provisions of this Warrant.  In addition to and
not in substitution for any other rights hereunder, prior to the consummation of
any Fundamental Transaction pursuant to which holders of shares of Common Stock
are entitled to receive securities or other assets with respect to or in
exchange for shares of Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the Fundamental Transaction, in lieu of the
shares of the Common Stock (or other securities, cash, assets or other property)
purchasable upon the exercise of this Warrant prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had this Warrant been exercised immediately
prior to such Fundamental Transaction.  Provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Required Holders.  The provisions of this Section 3.2 shall
apply similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the exercise of
this Warrant.

       

      3.3  Notwithstanding
the foregoing, in the event of a Fundamental Transaction other than one in which
the Successor Entity is a Public Successor Entity that assumes this Warrant such
that this Warrant shall be exercisable for the publicly traded common stock of
such Public Successor Entity, at the request of the Holder delivered before the
90th day after such Fundamental Transaction, the Company (or the Successor
Entity) shall purchase this Warrant from the Holder by paying to the Holder,
within five (5) Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), cash in an amount equal to the value of
the remaining unexercised portion of this Warrant on the date of such
consummation, which value shall be determined by use of the Black Scholes Option
Pricing Model using a volatility equal to the 100 day average historical price
volatility prior to the date of the public announcement of such Fundamental
Transaction.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      ARTICLE 4

      NONCIRCUMVENTION

       

      The
Company hereby covenants and agrees that the Company will not, by amendment of
its Certificate of Incorporation, Bylaws or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all
action as may be required to protect the rights of the
Holder.  Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, (ii)
shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (iii) shall, so long as this
Warrant is outstanding, take all action necessary to reserve and keep available
out of its authorized and unissued shares of Common Stock, solely for the
purpose of effecting the exercise of this Warrant, 110% of the number of shares
of Common Stock as shall from time to time be necessary to effect the exercise
of this Warrant then outstanding (without regard to any limitations on
exercise).

       

      ARTICLE 5

      WARRANT HOLDER NOT DEEMED A
STOCKHOLDER

       

      Except as
otherwise specifically provided herein, the Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant.  In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on the Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company.  Notwithstanding this ARTICLE 5, the Company shall provide
the Holder with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.

       

      ARTICLE 6

      REISSUANCE OF
WARRANTS

       

      6.1  Transfer
of Warrant.  The Holder may sell, transfer or assign this
Warrant only: (i) to any accredited investor who agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of this Warrant;
(ii) to any Affiliate of Holder; or (iii) with the prior written consent of
Company, which consent will not be unreasonably withheld or
delayed.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      6.2  Lost,
Stolen or Mutilated Warrant.  Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant
representing the right to purchase the Warrant Shares then underlying this
Warrant.

       

      6.3  Exchangeable
for Multiple Warrants.  This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant
will represent the right to purchase such portion of such Warrant Shares as is
designated by the Holder at the time of such surrender; provided, however, that
no Warrants for fractional shares of Common Stock shall be given.

       

      6.4  Issuance
of New Warrants.  Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be
of like tenor with this Warrant, (ii) shall represent, as indicated on the face
of such new Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant to Section 6.1 or Section 6.3, the
Warrant Shares designated by the Holder which, when added to the number of
shares of Common Stock underlying the other new Warrants issued in connection
with such issuance, does not exceed the number of Warrant Shares then underlying
this Warrant), (iii) shall have an issuance date, as indicated on the face of
such new Warrant which is the same as the Issuance Date, and (iv) shall have the
same rights and conditions as this Warrant.

       

      ARTICLE 7

      NOTICES

       

      Whenever
notice is required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with Section 6.2 of the
Purchase Agreement.  The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant, including in
reasonable detail a description of such action and the reason
therefore.  Without limiting the generality of the foregoing, the
Company will give written notice to the Holder (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least fifteen days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the shares of Common Stock,
(B) with respect to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
to holders of shares of Common Stock as such or (C) for determining rights to
vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the
Holder.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      ARTICLE 8

      AMENDMENT AND
WAIVER

       

      Except as
otherwise provided herein, the provisions of this Warrant may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the Required Holders; provided that no such action may increase the
exercise price of any Warrant or decrease the number of shares or class of stock
obtainable upon exercise of any Warrant without the written consent of the
Holder.  No such amendment shall be effective to the extent that it
applies to less than all of the holders of any Warrants then
outstanding.

       

      ARTICLE 9

      GOVERNING
LAW

       

      This
Warrant shall be governed by and construed and enforced in accordance with, and
all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.

       

      ARTICLE 10

      CONSTRUCTION;
HEADINGS

       

      This
Warrant shall be deemed to be jointly drafted by the Company and the Holder and
shall not be construed against any person as the drafter hereof.  The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.

       

      ARTICLE 11

      DISPUTE
RESOLUTION

       

      In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within 2
Trading Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder.  If the Holder and the Company are
unable to agree upon such determination or calculation of the Exercise Price or
the Warrant Shares within three Trading Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within 2 Trading Days submit via facsimile (a) the disputed determination of the
Exercise Price or arithmetic calculation to an independent, reputable investment
bank or independent registered public accounting firm selected by Holder subject
to Company’s approval, which may not be unreasonably withheld or delayed, or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s
independent registered public accounting firm.  The Company shall
cause at its expense the investment bank or the accountant, as the case may be,
to perform the determinations or calculations and notify the Company and the
Holder of the results no later than 3 Trading Days from the time it receives the
disputed determinations or calculations.  Such investment bank’s or
accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      ARTICLE 12

      REMEDIES, OTHER OBLIGATIONS,
BREACHES AND INJUNCTIVE RELIEF

       

      The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder right to pursue actual damages for
any failure by the Company to comply with the terms of this
Warrant.  The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate.  The Company
therefore agrees that, in the event of any such breach or threatened breach, the
holder of this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being
required.

       

      ARTICLE 13

      DEFINITIONS

       

      For
purposes of this Warrant, the following terms shall have the following
meanings:

       

      13.1  “Approved Stock Plan”
means any employee benefit plan now existing or hereafter adopted which has been
approved by the Board of Directors of the Company, pursuant to which the
Company’s securities may be issued to any employee, officer, director or
consultant for services provided to the Company.

       

      13.2  “Bloomberg” means
Bloomberg Financial Markets.

       

      13.3  “Closing Bid Price”
and “Closing Sale
Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Trading
Market, as reported by Bloomberg, or, if the Trading Market begins to operate on
an extended hours basis and does not designate the closing bid price or the
closing trade price, as the case may be, then the last bid price or last trade
price, respectively, of such security prior to 4:30 p.m., Eastern time, as
reported by Bloomberg, or, if the Trading Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau,
Inc.).  If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Bid Price or the Closing Sale Price, as the case may be, of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder.  If the Company and the Holder are unable
to agree upon the fair market value of such security, then such dispute shall be
resolved pursuant to ARTICLE 11.  All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      13.4  “Common Stock” means
(i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii)
any share capital into which such Common Stock shall have been changed or any
share capital resulting from a reclassification of such Common
Stock.

       

      13.5  “Common Stock Deemed
Outstanding” means, at any given time, the number of shares of Common
Stock actually outstanding at such time, plus the number of shares of Common
Stock deemed to be outstanding pursuant to Section 3.1 hereof
regardless of whether the Options or Convertible Securities are actually
exercisable at such time, but excluding any shares of Common Stock owned or held
by or for the account of the Company or issuable upon exercise of the
Warrant.

       

      13.6  “Convertible
Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for shares of
Common Stock.

       

      13.7  “Eligible Market”
means the Trading Market, The New York Stock Exchange, Inc., The NASDAQ Global
Select Market, The NASDAQ Global Market, The NASDAQ Capital Market, the NYSE
Amex Stock Exchange or the OTC Bulletin Board, but does not include the Pink
Sheets.

       

      13.8  “Fundamental
Transaction” means that the (A) Company shall, directly or indirectly, in
one or more related transactions, (i) consolidate or merge with or into (whether
or not the Company is the surviving corporation) another Person or Persons, or
(ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company to another Person, or (iii) allow
another Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), (iv) consummate a stock purchase agreement
or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock purchase agreement or other business
combination), or (v) any “person” or “group” (as these terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 50% of the aggregate Common Stock of the Company, other than
persons or groups who exceed such ownership level as of the date of issuance of
this Warrant.

       

      13.9  “Options” means any
rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      13.10  “Parent Entity” of a
Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed
on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.

       

      13.11  “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.

       

      13.12  “Public Successor
Entity” means a Successor Entity that is a publicly traded corporation
whose stock is quoted or listed for trading on an Eligible Market.

       

      13.13  “Purchase Agreement”
means the Preferred Stock Purchase Agreement dated August 17, 2009, by and among
the Company and the investors referred to therein.

       

      13.14  “Required Holders”
means the Holders of Warrants representing at least a majority of shares of
Common Stock underlying the Warrants then outstanding.

       

      13.15  “Securities” means the
Warrant and the Warrant Shares.

       

      13.16  “Successor Entity”
means the Person (or, if so elected by the Required Holders, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or the Person
(or, if so elected by the Required Holders, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.

       

      13.17  “Trading Day” means
any day on which the Common Stock is traded on an Eligible Market; provided that
it shall not include any day on which the Common Stock (a) is suspended from
trading, or (b) is scheduled to trade on such exchange or market for less than 5
hours.

       

      13.18  “Trading Market” means
the OTC Bulletin Board, the NASDAQ Capital Market, the NASDAQ Global Market, the
NASDAQ Global Select Market, the NYSE Amex, or the New York Stock Exchange,
whichever is at the time the principal trading exchange or market for the Common
Stock, but does not include the Pink Sheets inter-dealer electronic quotation
and trading system.

       

      13.19  “Tranche Closing” has
the meaning set forth in the Purchase Agreement.

       

      13.20  “Tranche Notice” has
the meaning set forth in the Purchase Agreement.

       

      13.21  “Tranche Purchase
Price” has the meaning set forth in the Purchase Agreement.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to
be duly executed as of the Issuance Date set out above.

       

      
        
          	 
      	
                  DRINKS
      AMERICAS HOLDINGS, LTD.

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:                        

                
	 
      	
                  Name:                        

                
	 
      	
                  Title:                        

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:                        

                
	 
      	
                  Name:                        

                
	 
      	
                  Title:                        

                


        

      

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      APPENDIX
1

      


      EXERCISE
NOTICE

       

      


       

      DRINKS
AMERICAS HOLDINGS, LTD.

       

      The
undersigned hereby exercises the right to purchase ________________ shares of
Common Stock (“Warrant
Shares”) of Drinks Americas Holdings, Ltd., a Delaware corporation
(“Company”),
evidenced by the attached Warrant to Purchase Common Stock (“Warrant”).  Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.  The Holder intends that payment of the
Exercise Price shall be made as:

       

      
        
          	
                	
                  ___ 

                	
                  Cash
      Exercise with respect to ____________ Warrant
  Shares

                


        

      

       

      
        
          	
                	
                  ___ 

                	
                  Cashless
      Exercise with respect to ____________ Warrant
  Shares

                


        

      

       

      
        	
              	
                ___ 

              	
                Recourse
      Note Exercise with respect to ____________ Warrant SharesPlease
      issue

              


      

       

      
        	
              	
                ___ 

              	
                A
      certificate or certificates representing said shares of Common Stock in
      the namespecified below

              


      

       

      
        
          	
                	
                  ___ 

                	
                  Said
      shares in electronic form to the Deposit/Withdrawal at Custodian (DWAC)
      account with Depository Trust Company (DTC) specified below (provided that
      the Transfer Agent is capable of issuing DWAC shares, otherwise
      certificated shares will be issued as set forth
    above).

                


        

         

      

       

      


       

      _______________________

       

      


      By:                         

      Name:                          

      Title:                         

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ACKNOWLEDGMENT

       

      The
Company hereby acknowledges the foregoing Exercise Notice and hereby directs
National Stock Transfer, Inc. to issue the above indicated number of shares of
Common Stock as specified above, in accordance with the Transfer Agent
Instructions dated August 17, 2009 from the Company, and acknowledged and agreed
to by the transfer agent.

       

      
         

        
          
            	 
      	
                    DRINKS
      AMERICAS HOLDINGS, LTD.

                  
	 
      	 
      
	 
      	 
      
	 
      	
                    By:                        

                  
	 
      	
                    Name:                        

                  
	 
      	
                    Title:                        

                  


          

        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      APPENDIX
2

       

      FORM
OF NOTE

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SECURED
PROMISSORY NOTE

       

      
        
          	
                  $[_____________]

                	
                  Date:                      [________],
      20[  ]    

                


        

      

       

      FOR VALUE
RECEIVED, [_____________]
(“Borrower”)
promises to pay to the order of Drinks Americas Holdings, Ltd. (“Lender”), at [________], or at such
other place as Lender may from time to time designate in writing, the principal
sum of $[________], with
interest, as follows:

       

      1.  Interest.  The
principal balance outstanding, from time to time, shall bear interest from and
after the date hereof at the rate of 2.0% per year.  Interest shall be
calculated on a simple interest basis and the number of days elapsed during the
period for which interest is being calculated.  Interest not paid when
due shall be added to the principal.

       

      2.  Payments.  If
not sooner paid, the entire unpaid principal balance, interest thereon and any
other charges due and payable under this Note shall be due and payable on the
fourth anniversary of the date of this Note (“Maturity Date”);
provided, however, that in no event shall this Note be due or payable at any
time that (a) Lender is in default of any preferred stock purchase agreement for
Series B Preferred Stock or any Warrant issued pursuant thereto, any loan
agreement or other material agreement, or (b) there are any shares of Series B
Preferred Stock of Lender issued or outstanding.  Borrower shall have
the right to prepay all or any part of the principal balance of this Note at any
time without penalty or premium.  In the event that Lender redeems all
or a portion of any shares of Series B Preferred Stock then held by Borrower,
Borrower shall apply, and Lender may offset, the proceeds of any such redemption
to pay down the accrued interest and outstanding principal of this
Note.  All payments shall be first be applied to interest, then to
reduce the outstanding principal.

       

      3.  Full Recourse
Note.  THIS IS A FULL RECOURSE PROMISSORY
NOTE.  Accordingly, notwithstanding that Borrower’s obligations under
this Note are secured by the Collateral, in the event of a material default
hereunder, Lender shall have full recourse to all the other assets of
Borrower.  Moreover, Lender shall not be required to proceed against
or exhaust any Collateral, or to pursue any Collateral in any particular order,
before Lender pursues any other remedies against Borrower or against any of
Borrower’s assets.

       

      4.  Security

       

      a.  Pledge.  As
security for the due and prompt payment and performance of all payment
obligations under this Note and any modifications, replacements and extensions
hereof (collectively, “Secured
Obligations”), Borrower hereby pledges and grants a security interest to
Lender in all of Borrower’s right, title, and interest in and to all of the
following, now owned or hereafter acquired or arising (together the “Collateral”):

       

      i.  Publicly
traded shares of common stock, preferred stock, bonds, notes and/or debentures
(collectively, “Pledged Securities”)
with a fair market value on the date hereof at least equal to the principal
amount of this Note, based upon the trading price of such securities on the Pink
Sheets, OTC Bulletin Board, NASDAQ Capital Market, NASDAQ Global Market, NASDAQ
Global Select Market, NYSE Amex, or New York Stock Exchange;

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      ii.  all
rights of Borrower with respect to or arising out of the Pledged Securities,
including voting rights, and all equity and debt securities and other property
distributed or distributable with respect thereto as a result of merger,
consolidation, dissolution, reorganization, recapitalization, stock split, stock
dividend, reclassification, exchange, redemption, or other change in capital
structure; and

       

      iii.  all
proceeds, replacements, substitutions, accessions and increases in any of the
Collateral.

       

      b.  Replacement
Securities.  So long as any Secured Obligations remain
outstanding, in the event that Borrower sells or disposes of any Pledged
Securities, Borrower shall promptly provide replacement securities of equal or
greater value.

       

      c.  Rights With Respect to
Distributions.  So long as no default shall have occurred and
be continuing under this Note, Borrower shall be entitled to receive any and all
dividends and distributions made with respect to the Pledged Securities and any
other Collateral.  However, upon the occurrence and during the
continuance of any default, Lender shall have the sole right (unless otherwise
agreed by Lender) to receive and retain dividends and distributions and apply
them to the outstanding balance of this Note or hold them as Collateral, at
Lender’s election.

       

      d.  Voting
Rights.  So long as no default shall have occurred and be
continuing under this Note, Borrower shall be entitled to exercise all voting
rights pertaining to the Pledged Securities and any other
Collateral.  However, upon the occurrence and during the continuance
of any default, all rights of Borrower to exercise the voting rights that
Borrower would otherwise be entitled to exercise with respect to the Collateral
shall cease and (unless otherwise agreed by Lender) all such rights shall
thereupon become vested in Lender, which shall thereupon have the sole right to
exercise such rights.

       

      e.  Financing Statement; Further
Assurances.  Borrower agrees, concurrently with executing this
Note, that Lender may file a UCC-1 financing statement relating to the
Collateral in favor of Lender, and any similar financing statements in any
jurisdiction in which Lender reasonably determines such filing to be
necessary.  Borrower further agrees that at any time and from time to
time Borrower shall promptly execute and deliver all further instruments and
documents that Lender may request in order to perfect and protect the security
interest granted hereby, or to enable Lender to exercise and enforce its rights
and remedies with respect to any Collateral following an event of
default.  In addition, following an event of default, Borrower shall
deliver the Collateral, including original certificates or other instruments
representing the Pledged Securities, to Lender to hold as secured party, and
execute a securities account control agreement.

       

      f.  Powers of
Lender.  Borrower hereby appoints Lender as Borrower’s true and
lawful attorney-in-fact to perform any and all of the following acts, which
power is coupled with an interest, is irrevocable until the Secured Obligations
are paid and performed in full, and may be exercised from time to time by Lender
in its discretion:  To take any action and to execute any instrument
which Lender may deem reasonably necessary or desirable to accomplish the
purposes of this Section 4f and, more
broadly, this Note including, without limitation:  (i) to exercise
voting and consent rights with respect to Collateral in accordance with this
Note, (ii) to receive, endorse and collect all instruments or other forms of
payment made payable to Borrower representing any dividend, interest payment or
other distribution in respect of the Collateral or any part thereof and to give
full discharge for the same, when and to the extent permitted by this Note,
(iii) to perform or cause the performance of any obligation of Borrower
hereunder in Borrower’s name or otherwise, (iv) during the continuance of any
default hereunder, to liquidate any Collateral pledged to Lender hereunder and
to apply proceeds thereof to the payment of the Secured Obligations or to place
such proceeds into a cash collateral account or to transfer the Collateral into
the name of Lender, all at Lender’s sole discretion, (v)  to enter
into any extension, reorganization or other agreement relating to or affecting
the Collateral, and, in connection therewith, to deposit or surrender control of
the Collateral, (vi) to accept other property in exchange for the Collateral,
(vii) to make any compromise or settlement Lender deems desirable or proper, and
(viii) to execute on Borrower’s behalf and in Borrower’s name any documents
required in order to give Lender a continuing first lien upon the Collateral or
any part thereof.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      5.  Additional
Terms

       

      a.  No
Waiver.  The acceptance by Lender of payment of a portion of
any installment when due or an entire installment but after it is due shall
neither cure nor excuse the default caused by the failure of Borrower timely to
pay the whole of such installment and shall not constitute a waiver of Lender’s
right to require full payment when due of any future or succeeding
installments.

       

      b.  Default.  Any
one or more of the following shall constitute a “default” under this
Note:  (i) a default in the payment when due of any amount hereunder,
(ii) Borrower’s refusal to perform any material term, provision or covenant
under this Note, (iii) the commencement of any liquidation, receivership,
bankruptcy, assignment for the benefit of creditors or other debtor-relief
proceeding by or against Borrower, or subject to Section 4(b), the
Collateral is transferred by Borrower without being replaced by Pledged
Securities of equal or greater fair market value on the date of transfer, and
(iv) the levying of any attachment, execution or other process against Borrower,
or subject to Section
4(b) the Collateral or any material portion thereof.

       

      c.  Default
Rights

       

      i.  Upon the
occurrence of any payment default Lender may, at its election, declare the
entire balance of principal and interest under this Note immediately due and
payable.  A delay by Lender in exercising any right of acceleration
after a default shall not constitute a waiver of the default or the right of
acceleration or any other right or remedy for such default.  The
failure by Lender to exercise any right of acceleration as a result of a default
shall not constitute a waiver of the right of acceleration or any other right or
remedy with respect to any other default, whenever occurring.

       

      ii.  Further,
upon the occurrence of any material non-monetary default, following 30 days
notice from Lender to Borrower specifying the default and demanded manner of
cure for any non-monetary default, Lender shall thereupon and thereafter have
any and all of the rights and remedies to which a secured party is entitled
after a default under the applicable Uniform Commercial Code, as then in
effect.  In addition to its other rights and remedies, Borrower agrees
that, upon the occurrence of default, Lender may in its sole discretion do or
cause to be done any one or more of the following:

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (a)  Proceed
to realize upon the Collateral or any portion thereof as provided by law, and
without liability for any diminution in price which may have occurred, sell the
Collateral or any part thereof, in such manner, whether at any public or private
sale, and whether in one lot as an entirety, or in separate portions, and for
such price and other terms and conditions as is commercially reasonable given
the nature of the Collateral.

       

      (b)  If notice
to Borrower is required, give written notice to Borrower at least ten days
before the date of sale of the Collateral or any portion thereof.

       

      (c)  Transfer
all or any part of the Collateral into Lender’s name or in the name of its
nominee or nominees.

       

      (d)  Vote all
or any part of the Collateral (whether or not transferred into the name of
Lender) and give all consents, waivers and ratifications in respect of the
Collateral and otherwise act with respect thereto, as though Lender were the
outright owner thereof.

       

      iii.  Borrower
acknowledges that all or part of foreclosure of the Collateral may be restricted
by state or federal securities laws, Lender may be unable to effect a public
sale of all or part of the Collateral, that a public sale is or may be
impractical and inappropriate and that, in the event of such restrictions,
Lender thus may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Collateral for their own account, for investment and not with a
view to its distribution or resale.  Borrower agrees that if
reasonably necessary Lender may resort to one or more sales to a single
purchaser or a restricted or limited group of purchasers.  Lender
shall not be obligated to make any sale or other disposition, unless the terms
thereof shall be satisfactory to it.

       

      iv.  If, in
the opinion of Lender based upon written advice of counsel, any consent,
approval or authorization of any federal, state or other governmental agency or
authority should be necessary to effectuate any sale or other disposition of any
Collateral, Borrower shall execute all such applications and other instruments
as may reasonably be required in connection with securing any such consent,
approval or authorization, and will otherwise use its commercially reasonable
best efforts to secure the same.

       

      v.  The
rights, privileges, powers and remedies of Lender shall be cumulative, and no
single or partial exercise of any of them shall preclude the further or other
exercise of any of them.  Any waiver, permit, consent or approval of
any kind by Lender of any default hereunder, or any such waiver of any
provisions or conditions hereof, must be in writing and shall be effective only
to the extent set forth in writing.  Any proceeds of any disposition
of the Collateral, or any part thereof, may be applied by Lender to the payment
of expenses incurred by Lender in connection with the foregoing, and the balance
of such proceeds shall be applied by Lender toward the payment of the Secured
Obligations.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      d.  No Oral Waivers or
Modifications.  No provision of this Note may be waived or
modified orally, but only in a writing signed by Lender and
Borrower.

       

      e.  Attorney
Fees.  The prevailing party in any action by Lender to collect
any amounts due under this Note shall be entitled to recover its reasonable
attorneys fees and costs.

       

      f.  Governing
Law.  This Note has been executed and delivered in, and is to
be construed, enforced, and governed according to the internal laws of, the
State of New York without regard to its principles of conflict of
laws.

       

      g.  Severability.  Whenever
possible, each provision of this Note shall be interpreted in such manner as to
be effective and valid under applicable law.  However, if any
provision of this Note shall be held to be prohibited by or invalid under
applicable law, it shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of that provision or the other
provisions of this Note.

       

      h.  Entire
Agreement.  This Note contain the entire understanding of the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such
matters.

       

      ___________________________

      


      


      
        


        By:                         

        Name:                          

        Title:                         

         

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

      

       

      Exhibit
B

       

      Certificate
of Designations

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      DRINKS
AMERICAS HOLDINGS, LTD.

       

      CERTIFICATE
OF DESIGNATIONS OF PREFERENCES,

      RIGHTS
AND LIMITATIONS

      OF

      SERIES B
PREFERRED STOCK

       

      The
undersigned, J. Patrick Kenny and Jeffrey Daub, hereby certify
that:

       

      1.  They are the President
and Chief Financial Officer, respectively, of Drinks Americas Holdings, Ltd., a
Delaware corporation (the “Corporation”).

       

      2.  The Corporation is
authorized to issue 1,000,000 shares of preferred stock, 11,000 shares of which
are issued and outstanding.

       

      3.  The following resolutions
were duly adopted by the Board of Directors:

       

      WHEREAS,
the Articles of Incorporation of the Corporation provide for a class of its
authorized stock known as preferred stock, comprised of 1,000,000 shares, $0.001
par value per share (the “Preferred Stock”),
issuable from time to time in one or more series;

       

      WHEREAS,
the Board of Directors of the Corporation is authorized to fix the dividend
rights, dividend rate, voting rights, conversion rights, rights and terms of
redemption and liquidation preferences of any wholly unissued series of
Preferred Stock and the number of shares constituting any series and the
designation thereof, of any of them; and

       

      WHEREAS,
it is the desire of the Board of Directors of the Corporation, pursuant to its
authority as aforesaid, to fix the rights, preferences, restrictions and other
matters relating to a series of Preferred Stock, which shall consist of up to
10,000 shares of the Preferred Stock which the Corporation has the authority to
issue, as follows:

       

      NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for
the issuance of a series of Preferred Stock for cash or exchange of other
securities, rights or property and does hereby fix and determine the rights,
preferences, restrictions and other matters relating to such series of Preferred
Stock as follows:

       

      TERMS OF
PREFERRED STOCK

       

      1.  Designation, Amount and Par
Value.  The series of Preferred Stock shall be designated as
the Corporation’s Series B Preferred Stock (the “Series B Preferred
Stock”) and the number of shares so designated shall be 10,000 (which
shall not be subject to increase without the consent of all of the holders of
the Series B Preferred Stock (each a “Holder” and
collectively, the “Holders”).  Each
share of Series B Preferred Stock shall have a par value of $0.001 per
share.

       

      2.  Ranking.  The
Series B Preferred Stock shall, with respect to dividend rights and rights upon
liquidation, winding-up or dissolution, rank:

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      a.  senior to
the Corporation’s common stock, par value $0.001 per share (“Common Stock”) and
any other class or series of Preferred Stock of the Corporation (collectively,
together with any warrants, rights, calls or options exercisable for or
convertible into such Preferred Stock, the “Junior Shares”);
and

       

      b.  junior to
all existing and future indebtedness of the Corporation.

       

      3.  Dividends and Other
Distributions.  Commencing on the date of the issuance of any
such shares of Series B Preferred Stock (each respectively an “Issuance Date”),
Holders of Series B Preferred Stock shall be entitled to receive dividends on
each outstanding share of Series B Preferred Stock (“Dividends”), which
shall accrue in shares of Series B Preferred Stock at a rate equal to 10.0% of
the Original Issue Price per annum from the Issuance Date, compounded
annually.  Accrued Dividends shall be payable upon redemption of the
Series B Preferred Stock in accordance with Section
6.

       

      a.  Any
calculation of the amount of such Dividends payable pursuant to the provisions
of this Section
3 shall be made based on a 365-day year and on the number of days
actually elapsed during the applicable calendar quarter, compounded
annually.

       

      b.  So long
as any shares of Series B Preferred Stock are outstanding, no dividends or other
distributions will be paid, declared or set apart with respect to any Junior
Shares.  The Common Stock shall not be redeemed while the Series B
Preferred Stock is outstanding.

       

      4.  Protective
Provision.  So long as any shares of Series B Preferred Stock
are outstanding, the Corporation shall not, without the affirmative approval of
the Holders of a majority of the shares of the Series B Preferred Stock then
outstanding, (a) alter or change adversely the powers, preferences or rights
given to the Series B Preferred Stock or alter or amend this Certificate of
Designations, (b) authorize or create any class of stock ranking as to
distribution of assets upon a liquidation senior to or otherwise pari passu with
the Series B Preferred Stock, (c) amend its articles of incorporation or other
charter documents in breach of any of the provisions hereof, (d) increase the
authorized number of shares of Series B Preferred Stock, (e) liquidate, dissolve
or wind-up the business and affairs of the  Corporation, or effect any
Deemed Liquidation Event (as defined below), or (f) enter into any agreement
with respect to the foregoing.

       

      a.  A “Deemed
Liquidation Event” shall mean:  (i) a merger or consolidation in which
the Corporation is a constituent party or a subsidiary of the Corporation is a
constituent party and the Corporation issues shares of its capital stock
pursuant to such merger or consolidation, except any such merger or
consolidation involving the Corporation or a subsidiary in which the shares of
capital stock of the Corporation outstanding immediately prior to such merger or
consolidation continue to represent, or are converted into or exchanged for
shares of capital stock that represent, immediately following such merger or
consolidation, at least a majority, by voting power, of the capital stock of the
surviving or resulting corporation or, if the surviving or resulting corporation
is a wholly owned subsidiary of another corporation immediately following such
merger or consolidation, the parent corporation of such surviving or resulting
corporation; or (ii) the sale, lease, transfer, exclusive license or other
disposition, in a single transaction or series of related transactions, by the
Corporation or any subsidiary of the Corporation of all or substantially all the
assets of the Corporation and its subsidiaries taken as a whole,  or
the sale or disposition (whether by merger or otherwise) of one or more
subsidiaries of the Corporation if substantially all of the assets of the
Corporation and its subsidiaries taken as a whole are held by such subsidiary or
subsidiaries, except where such sale, lease, transfer, exclusive license or
other disposition is to a wholly owned subsidiary of the
Corporation.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      b.  The
Corporation shall not have the power to effect a Deemed Liquidation Event
referred to in Section
3(a) unless the agreement or plan of merger or consolidation for such
transaction provides that the consideration payable to the stockholders of the
Corporation shall be allocated among the holders of capital stock of the
Corporation in accordance with Section 5
hereof.

       

      5.  Liquidation.

       

      a.  Upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of debts and other
liabilities of the Corporation, before any distribution or payment shall be made
to the holders of any Junior Shares by reason of their ownership thereof, the
Holders of Series B Preferred Stock shall first be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders an
amount with respect to each share of Series B Preferred Stock equal to
$10,000.00 (the “Original Series B Issue
Price”), plus any accrued but unpaid Dividends thereon (collectively, the
“Series B Liquidation
Value”).  If, upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the amounts payable with
respect to the shares of Series B Preferred Stock are not paid in full, the
holders of shares of Series B Preferred Stock shall share equally and ratably in
any distribution of assets of the Corporation in proportion to the liquidation
preference and an amount equal to all accumulated and unpaid Dividends, if any,
to which each such holder is entitled

       

      b.  After
payment has been made to the Holders of the Series B Preferred Stock of the full
amount of the Series B Liquidation Value, any remaining assets of the
Corporation shall be distributed among the holders of the Corporation’s Junior
Shares in accordance with the Corporation’s Certificates of Designation and
Certificate of Incorporation.

       

      c.  If, upon
any liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation shall be insufficient to make payment in full to all Holders, then
such assets shall be distributed among the Holders at the time outstanding,
ratably in proportion to the full amounts to which they would otherwise be
respectively entitled.

       

      6.  Redemption.

       

      a.  Corporation’s Redemption
Option.

       

      i.  Upon or After the Fourth
Anniversary.  Upon or after the fourth anniversary of the
initial Issuance Date, the Corporation shall have the right, at the
Corporation’s option, to redeem all or a portion of the shares of Series B
Preferred Stock, at a price per share of the Series B Preferred Stock equal to
the Series B Liquidation Value (the “Corporation Redemption
Price”).

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      ii.  Prior to the Fourth
Anniversary.  After the first anniversary of the initial
Issuance Date and prior to the fourth anniversary thereof, the Corporation shall
have the right, at the Corporation’s option, to redeem all or a portion of the
shares of Series B Preferred Stock, at a price per share of Series B Preferred
Stock equal to the Series B Liquidation Value, plus an additional amount equal
to the following percentage of the Series B Liquidation Value applicable to the
Series B Preferred Stock being redeemed:  if redeemed prior to the
second anniversary of the initial Issuance Date, twenty-seven percent (27%); and
if prior to the third anniversary, nineteen percent (19%); if prior to the
fourth anniversary, nine percent (9%).

       

      iii.  Offset.  If
there is any interest owing by any Holder of Series B Preferred Stock under any
Secured Promissory Note held by the Corporation, the redemption price per share
which the Corporation shall have the right to redeem from such Holder may be
paid from any principal and accrued but unpaid interest then due and owing under
such Secured Promissory Note.

       

      b.  Mechanics of
Redemption.  If the Corporation elects to redeem any of the
Holders’ Series B Preferred Stock then outstanding, it shall deliver written
notice thereof via facsimile and overnight courier (“Notice of Redemption at
Option of Corporation”) to each Holder, which Notice of Redemption at
Option of Corporation shall indicate (A) the number of shares of Series B
Preferred Stock that the Corporation is electing to redeem and (B) the
Corporation Redemption Price.

       

      c.  Payment of Redemption
Price.  Upon receipt by any Holder of a Notice of Redemption at
Option of Corporation, such Holder shall promptly submit to the Corporation such
Holder’s Series B Preferred Stock certificates.  Upon receipt of such
Holder’s Series B Preferred Stock certificates, the Corporation shall pay the
Corporation Redemption Price, at the Corporation’s option either (A) in cash to
such Holder, or (B) by offsetting payments under a secured promissory note (if
any) due to the Corporation by such Holder.

       

      7.  Transferability. The
Series B Preferred Stock may only be sold, transferred, assigned, pledged or
otherwise disposed of (“Transfer”) in
accordance with state and federal securities laws.  The Corporation
shall keep at its principal office, or at the offices of the Transfer Agent, a
register of the Series B Preferred Stock.  Upon the surrender of any
certificate representing Series B Preferred Stock at such place, the
Corporation, at the request of the record Holder of such certificate, shall
execute and deliver (at the Corporation’s expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares represented by the surrendered certificate.  Each such new
certificate shall be registered in such name and shall represent such number of
shares as is requested by the Holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate.

       

      8.  Miscellaneous.

       

      a.  Notices.  Any
and all notices to the Corporation shall be addressed to the Corporation’s
President or Chief Executive Officer at the Corporation’s principal place of
business on file with the Secretary of State of the State of
Delaware.  Any and all notices or other communications or deliveries
to be provided by the Corporation to any Holder hereunder shall be in writing
and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile telephone
number or address of such Holder appearing on the books of the Corporation, or
if no such facsimile telephone number or address appears, at the principal place
of business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this section prior to 5:30 p.m. Eastern
time, (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this section later than 5:30 p.m. but prior to 11:59 p.m. Eastern
time on such date, (iii) the second business day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      b.  Lost or Mutilated Preferred
Stock Certificate.  Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing shares of Series B Preferred Stock, and in the case
of any such loss, theft or destruction upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the Holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory) or in the case of any such mutilation upon surrender of such
certificate, the Corporation shall, at its expense, execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.

       

      c.  Headings.  The
headings contained herein are for convenience only, do not constitute a part of
this Certificate of Designations and shall not be deemed to limit or affect any
of the provisions hereof.

       

      RESOLVED,
FURTHER, that the chairman, chief executive officer, president or any
vice-president, and the secretary or any assistant secretary, of the Corporation
be and they hereby are authorized and directed to prepare and file a Designation
of Preferences, Rights and Limitations of Series B Preferred Stock in accordance
with the foregoing resolution and the provisions of Delaware law.

       

      IN
WITNESS WHEREOF, the undersigned have executed this Certificate this 17th day of
August 2009.

       

       

      
        	 
      	 
      
	 
      	 
      
	 
      	 
      
	 	 
	 
      	 
      
	 
      	 
      
	 
      	 
      


      

    

     

    
      


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      Exhibit
C

       

      Transfer
Agent Instructions

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      August
17, 2009

       

      National
Stock Transfer, Inc.

      1512 S
1100 E, Suite B

      Salt Lake
City, UT  84105

      


      Re:  Drinks
Americas Holdings, Ltd.

       

      Ladies
and Gentlemen:

       

      In
accordance with the Preferred Stock Purchase Agreement (“Purchase Agreement”),
dated August 17, 2009, by and between Drinks Americas Holdings, Ltd., a Delaware
corporation (“Company”), and
Optimus Special Situations Capital Partners, LLC, a Delaware limited liability
company (“Buyer”), pursuant to
which Company may issue and deliver shares of the Company’s common stock, par
value $0.001 per share on the exercise of warrants (“Warrants”) to
purchase such shares (“Warrant Shares”) of
Common Stock, this shall serve as our irrevocable authorization and direction to
you (provided that you are the transfer agent of the Company at such time) to
issue, in the event the holder of the Warrants elects or has elected to exercise
all or any portion of the Warrants, from time to time, upon surrender to you of
a notice of exercise of the Warrants, the Warrant Shares. Capitalized terms used
herein without definition shall have the respective meanings ascribed to them in
the Purchase Agreement.

       

      Specifically,
this shall constitute an irrevocable instruction to you to process any notice of
exercise of the Warrants in accordance with the terms of these instructions as
soon as practicable. Upon your receipt of a copy of the executed notice of
exercise of the Warrants, you shall use your best efforts to, within one (1)
Trading Day following the date of receipt of the notice of exercise, (A) issue
and surrender to a common carrier for overnight delivery to the address as
specified in the notice of exercise a certificate, registered in the name of the
Buyer or its designee, for the number of shares of Common Stock to which the
Buyer is entitled upon exercise of the Warrant as set forth in the notice of
exercise, or (B) provided you are participating in The Depository Trust Company
(DTC) Fast Automated Securities Transfer (FAST) Program, upon the request of the
Buyer, credit such aggregate number of shares of Common Stock to which the Buyer
is entitled to the Buyer’s or its designee’s balance account with DTC through
its Deposit Withdrawal At Custodian (DWAC) system provided the Buyer causes its
bank or broker to initiate the DWAC transaction.

       

      The
Company hereby confirms that the Warrant Shares should not be subject to any
stop-transfer restrictions and shall otherwise be freely transferable on the
books and records of the Company.

       

      The
Company hereby confirms and you acknowledge that, in the event counsel to the
Company does not issue any opinion of counsel required to issue any
Warrant  Shares free of legend, the Company authorizes you to accept
an opinion of counsel from Luce Forward Hamilton & Scripps LLP.

       

      The
Company hereby confirms that no instructions other than as contemplated herein
will be given to you by the Company with respect to the Warrant Shares. The
Company hereby agrees that it shall not replace you as the Company’s transfer
agent, until such time as the Company provides written notice to you and Buyer
that a suitable replacement has agreed to serve as transfer agent and to be
bound by the terms and conditions of these Irrevocable Transfer Agent
Instructions.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      The
Company and you hereby acknowledge and confirm that complying with the terms of
this agreement does not and shall not prohibit you from satisfying any and all
fiduciary responsibilities and duties you may owe to the Company.

       

      The
Company and you acknowledge that the Buyer is relying on the representations and
covenants made by the Company and you hereunder and that such representations
and covenants are a material inducement to the Buyer to enter into the Purchase
Agreement. The Company and you further acknowledge that without such
representations and covenants made hereunder, the Buyer would not enter into the
Purchase Agreement and purchase Securities pursuant thereto.

       

      Each
party hereto specifically acknowledges and agrees that a breach or threatened
breach of any provision hereof will cause irreparable damage and that damages at
law would be an inadequate remedy if these Irrevocable Transfer Agent
Instructions were not specifically enforced.  Therefore, in the event
of a breach or threatened breach by a party hereto, including, without
limitation, the attempted termination of the agency relationship created by this
instrument, in addition to all other rights or remedies, an injunction
restraining such breach and granting specific performance of the provisions of
these Irrevocable Transfer Agent Instructions should issue without any
requirement to show any actual damage or to post any bond or other
security.

       

      You may
at any time resign as transfer agent hereunder by giving fifteen (15) days prior
written notice of resignation to the Company and the Buyer. Prior to the
effective date of the resignation as specified in such notice, the Company will
issue to you instructions authorizing delivery of Warrant Shares to a substitute
transfer agent selected by, and in the sole discretion of, the Company. If no
successor transfer agent is named by the Company, you may apply to a court of
competent jurisdiction in the State of Delaware for appointment of a successor
transfer agent and for an order to deposit Warrant Shares with the clerk of any
such court.

       

      The
Company must keep its bill current with you – if the Company is not current and
is on suspension, the Buyer will have the right to pay the Company’s outstanding
bill, in order for you to act upon this agreement. If the outstanding bill is
not paid by the Company or the Buyer, you have no further obligation under this
agreement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the parties have caused this letter agreement regarding
Irrevocable Transfer Agent Instructions to be duly executed and delivered as of
the date first written above.

       

      
         

        
          
            	 
      	
                    DRINKS
      AMERICAS HOLDINGS, LTD.

                  
	 
      	 
      
	 
      	 
      
	 
      	
                    By:                        

                  
	 
      	
                    Name:                        

                  
	 
      	
                    Title:                        

                  


          

        

      

      


       

      THE
FOREGOING INSTRUCTIONS ARE ACKNOWLEDGED AND AGREED TO:

       

      NATIONAL
STOCK TRANSFER, INC.

      


      


      


        By:                         

        Name:                          

        Title:                         

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

                                                                       

      

      Exhibit
D

       

      Lock-Up
Agreement

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      August
17, 2009

      


      


      Optimus
Special Situations Capital Partners, LLC

      11150
Santa Monica Boulevard, Suite 1500

      Los
Angeles, CA 90025

       

      Ladies
and Gentlemen:

       

      This
Lock-Up Agreement is being delivered to you in connection with the Preferred
Stock Purchase Agreement dated as of August 17, 2009 (“Purchase Agreement”)
and entered into by and among Drinks Americas Holdings, Ltd., a Delaware
corporation (“Company”), and
Optimus Special Situations Capital Partners, LLC, a Delaware limited liability
company (“Investor”), with
respect to the purchase without registration under the Securities Act of 1933,
as amended (the “Act”), in reliance on
Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder, of
shares of the Company’s Series B Preferred Stock and related
Securities.  Capitalized terms used herein without definition shall
have the respective meanings ascribed to them in the Purchase
Agreement.

       

      In order
to induce Investor to enter into the Purchase Agreement, the undersigned agrees
that, for a period of ten Trading Days beginning on each date the Company
delivers a Tranche Notice to Investor (the “Tranche Notice Date”)
and ending on the Tranche Closing Date pursuant to the terms of the Purchase
Agreement (the “Lock-up Period”), the
undersigned will not, without the prior written consent of Investor, (a) sell,
offer to sell, contract or agree to sell, hypothecate, pledge, grant any option
to purchase or otherwise dispose of or agree to dispose of, directly or
indirectly, in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder (the “Exchange Act”) with
respect to, any Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock, or warrants or other rights to purchase Common
Stock or any such securities, or any securities substantially similar to the
Common Stock, (b) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or any such securities, or warrants or other rights to purchase
Common Stock, whether any such transaction is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise or (c) publicly
announce an intention to effect any transaction specified in clause (a) or (b);
provided, however, that the foregoing restriction shall terminate on the
six-month anniversary date of the Effective Date (as such term is defined in the
Purchase Agreement).

       

      The
foregoing sentence shall not apply to (a) bona fide gifts, provided the
recipient thereof agrees in writing to be bound by the terms of this Lock-Up
Agreement, (b) dispositions to any trust for the direct or indirect benefit of
the undersigned and/or the immediate family of the undersigned, provided that
such trust agrees in writing to be bound by the terms of this Lock-Up Agreement,
(c) sales made pursuant to any written sales plans established prior to the date
of this Lock-Up Agreement in conformity with the requirements of Rule 10b5-1(c)
promulgated under the Exchange Act or (d) exercise of options for Common Stock
and the disposition (whether by sale, gift or otherwise) of Common Stock
underlying such options.  Notwithstanding subsection (a) above, the
undersigned may make a bona fide gift of up to 10,000 shares of Common Stock to
a charity or other non-profit entity and such charity or entity shall not be
required to be bound by the terms of this Lock-Up Agreement; provided, however,
that in the event the undersigned exercises options during the Lock-Up Period,
the undersigned may not, during the Lock-Up Period, dispose of the number of
shares of Common Stock underlying such exercised options equal to the number of
shares of Common Stock gifted by the undersigned pursuant to this sentence
during the Lock-Up Period.  For purposes of this paragraph, “immediate
family” shall mean the undersigned and the spouse, any lineal descendent,
father, mother, brother or sister of the undersigned.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      Notwithstanding
anything contained to the contrary in this Agreement, this agreement shall not
apply to any shares of Common Stock sold by the pledgee under any bona fide
pledge of such stock by the undersigned prior to the date hereof.  The
Company agrees to provide the undersigned with notice that the Company has
delivered a Tranche Notice to Investor prior to, or simultaneous with, its
delivery of the Tranche Notice to Investor.  Such notice shall provide
the undersigned with the Tranche Notice Date and clearly indicate the beginning
of the Lock-up Period.

       

      Upon the
termination of the Purchase Agreement, this Lock-Up Agreement shall be
terminated and the undersigned shall be released from its obligations
hereunder.

       

      
        
          	 
      	
                  Sincerely,

                
	 
      	 
      
	 
      	 
      
	 
      	
                  _______________________________

                
	 
      	
                  Stockholder

                


        

      

       

       

      Acknowledged
and Agreed:

      


      Drinks
Americas Holdings, Ltd.

      


      


      


        By:                         

        Name:                          

        Title:                         

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

                                                                         

      

      Exhibit
E

       

      Opinion

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit
F

       

      Tranche
Notice

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Dated:
[________],
20[__]

      


      


      Optimus
Special Situations Capital Partners, LLC

      11150
Santa Monica Boulevard, Suite 1500

      Los
Angeles, CA 90025

       

      Re:         Tranche
Notice

       

      Ladies
& Gentlemen:

       

      Pursuant
to the August 17, 2009 Preferred Stock Purchase Agreement (“Agreement’) between
Drinks Americas Holdings, Ltd., a Delaware corporation (“Company”), and
Optimus Special Situations Capital Partners, LLC (“Investor”), Company
hereby elects to exercise a Tranche.  Capitalized terms not otherwise
defined herein shall have the meanings defined in the Agreement.

       

      At the
Tranche Closing, Company will sell to Investor [___________] Preferred
Shares at $10,000.00 per share for a Tranche Amount of $[___________].

       

      On behalf
of Company, the undersigned hereby certifies to Investor as
follows:

       

      1.           The
undersigned is a duly authorized officer of Company;

       

      2.           The
above Tranche Amount does not exceed the Maximum Tranche Amount;
and

       

      3.           All
of the conditions precedent to the right of the Company to deliver a Tranche
Notice set forth in Section 2.3(d) of the
Agreement have been satisfied.

       

      IN
WITNESS WHEREOF, the Company has executed and delivered this Tranche Notice as
of the date first written above.

       

      
        
          
            
              	 
      	
                      DRINKS
      AMERICAS HOLDINGS, LTD.

                    
	 
      	 
      
	 
      	 
      
	 
      	
                      By:                        

                    
	 
      	
                      Name:                        

                    
	 
      	
                      Title:                        

                    


            

          

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

                           

      

      Exhibit
G

       

      Stock
Loan Agreement

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      STOCK LOAN
AGREEMENT

       

      This
Stock Loan Agreement (“Agreement”) is
entered into and effective as of __________, 2009
(“Effective
Date”), by and between the undersigned stockholder (“Lending Stockholder”)
of _______________, a
__________
corporation (“Company”), and
Optimus Capital Partners, LLC, a Delaware limited liability company, dba Optimus
Special Situations Capital Partners, LLC (including its designees, successors
and assigns, “Borrower”).

       

      RECITALS

       

      A.  Lending Stockholder holds
shares of common stock of Company.  In light of Lending Stockholder’s
substantial equity interest in Company, it is in the best interests of Lending
Stockholder to execute this Agreement, inasmuch as Lending Stockholder will
derive substantial direct and indirect benefits from the commitment made to
Company pursuant to a Preferred Stock Purchase Agreement to be entered into
between Borrower and Company as of the Effective Date (the “Purchase
Agreement”).

       

      B.  As a condition to
Borrower entering into the Purchase Agreement, Lending Stockholder desires to
enter into this Agreement and, in order to assist in protecting the value of its
investment in Company, desires to induce Borrower to enter into the Purchase
Agreement.

       

      C.  Borrower desires to
borrow and, as a material inducement to Borrower to enter into the Purchase
Agreement, Stockholder desires to lend shares of common stock of Company to
Borrower on the terms and conditions contained herein.

       

      AGREEMENT

       

      NOW,
THEREFORE, IN CONSIDERATION of the premises, the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Company and Investor agree as
follows:

       

      1.  Borrowed
Shares.  Stockholder hereby lends to Borrower __________ shares
(“Borrowed
Shares”) of freely tradable common stock, par value $0.001, of
Company.  Borrowed Shares will be issued in electronic form (if
available), without restriction on resale, and delivered by Lending Stockholder
on the Effective Date, time being of the essence, in electronic form to an
account with Depository Trust Company (“DTC”) specified by
Borrower.  At any time or from time to time after receipt, Borrower
may sell, transfer, assign, encumber or otherwise dispose of the Borrowed Shares
in any manner, at any time, and for any consideration, in Borrower’s sole
discretion.  Provided, however, that Borrower shall not vote any
Borrowed Shares on any matter.

       

      2.  Fee.  Borrower
shall pay to Lending Stockholder a fee of $1,000.00 in cash or by wire transfer
of immediately available funds.

       

      3.  Interest.  Unless
and until all Borrowed Shares are returned to Lending Stockholder as provided
below, outstanding Borrowed Shares will accrue interest at One Percent (1.0%)
per annum, with the Borrowed Shares valued at the volume weighted average price
(VWAP), calculated based upon the ratio of the aggregate value of the common
stock of Company traded on the Trading Market (as defined in the Purchase
Agreement) to the total volume of such stock traded on such market for such date
(or the nearest preceding date), for the 5 trading days immediately preceding
the Effective Date.  Interest is payable if, as and when Borrowed
Shares are returned to Lending Stockholder, in cash or at Borrower’s sole
election in freely tradable shares of common stock of the Company.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      4.  Return.  The
Borrowed Shares, or an equal number of shares of freely-tradeable common stock
of the Company, shall be returned to Lending Stockholder three trading days
after the earlier of the date that (i) a registration statement allowing the
lawful resale without restriction of all shares of common stock of the Company
held by or on behalf of, or issuable upon the exercise of warrants held by,
Borrower is declared effective by the U.S. Securities and Exchange Commission,
and, to the extent any of the warrants are exercised, all such shares are issued
or converted into electronic form in an account with DTC specified by Borrower,
(ii) all shares of common stock of the Company held by or on behalf of, or
issuable on the exercise of warrants held by, Borrower may be resold without
restriction in accordance with Rule 144 under the Act,  and, to the
extent any of the warrants are exercised, all such shares are issued or
converted into electronic form in an account with DTC specified by Borrower, or
(iii) is the one (1) year anniversary of the Effective Date.

       

      5.  Pre-payment.  Borrower
may return the Borrowed Shares to the Lending Stockholder, in whole or in part,
at any time or from time to time, without penalty or premium.

       

      6.  Representations
and Warranties.  Lending Stockholder hereby represents,
warrants and covenants to Borrower as follows:

       

      a)  Lending
Stockholder has all necessary power and authority to (a) execute, deliver and
perform all of its obligations under this Agreement, and (b) lend and deliver
the Borrowed Shares.  Lending Stockholder has such knowledge and
experience in business and financial matters that it is able to protect its own
interests and evaluate the risks and benefits of entering into this
Agreement.

       

      b)  The
execution, delivery and performance of this Agreement by Lending Stockholder has
been duly authorized by all requisite action on the part of Lending Stockholder,
and has been duly executed and delivered by Lending Stockholder.

       

      c)  The
execution and delivery by the Lending Stockholder of this Agreement does not,
and Lending Stockholder’s performance of its obligations thereunder will not (i)
violate any charter documents of Lending Stockholder, as in effect on the date
hereof, (ii) require any authorization, consent, approval of or other action of,
notice to or filing or qualification with any state or federal governmental
authority, except as have been, or will be, made or obtained prior to execution
hereof, (iii) violate in any material respect any state or federal law, rule,
regulation or ordinance or any judgment, order or decree of any state or federal
court or governmental or administrative authority to which Lending Stockholder
or to Lending Stockholder’s knowledge Borrower or any other person, is subject,
including without limitation Section 5 of the Securities Act of 1933, as
amended, and other federal and state securities laws and
regulations.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      d)  Lending
Stockholder is not, and within 90 days of the Effective Date has not been, (i)
an officer, director, representative or affiliate of Company, (ii) directly or
indirectly, through one or more intermediaries, in control of, controlled by, or
under common control with Company, or (iii) alone or together with any group, in
beneficial ownership or control of more than 9.99% of the total outstanding
voting securities of the Company.

       

      e)  Except as
expressly stated herein, Lending Stockholder is not, directly or indirectly,
receiving any consideration from or being compensated in any manner by, and will
not at any time in the future accept any consideration or compensation from,
Company, any affiliate of Company, or any other person for entering into this
Agreement or lending the Borrowed Shares.

       

      7.  Fees and
Expenses.  Borrower will pay the reasonable expenses of Lending
Stockholder incurred in facilitating delivery and return of the Borrowed Shares,
up to a total of $1,000.00.  Subject to the foregoing, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement.

       

      8.  Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified on
the signature page prior to 5:30 p.m. Eastern time on a business day and an
electronic confirmation of delivery is received by the sender, (b) the next
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section 8 on a day
that is not a business day or later than 5:30 p.m. Eastern time on any business
day, (c) three business days following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given.  The addresses
for such notices and communications are those set forth on the signature pages
hereof, or such other address as may be designated in writing hereafter, in the
same manner, by such person.

       

      9.  Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.

       

      10.  Successors
and Assigns.  This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted
assigns.

       

      11.  No
Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

       

      12.  Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by
law.  The parties hereby waive all rights to a trial by
jury.  If either party shall commence an action or proceeding to
enforce any provisions of this Agreement, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      13.  Survival.  The
representations and warranties contained herein shall survive the closing of the
transactions contemplated herein and the delivery of the Borrowed
Shares.

       

      14.  Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together 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, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

       

      15.  Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

       

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

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      17.  Entire
Agreement.  This Agreement contains the entire agreement and
understanding of the parties, and supersedes all prior and contemporaneous
agreements, understandings, communications and discussions, both oral and
written.  No party, representative, attorney or agent has relied upon
any collateral contract, agreement, assurance, promise, understanding or
representation not expressly set forth herein above.  The parties
hereby waive all rights and remedies, at law and in equity, arising out of,
relating to, or which may arise as the result of, any person’s reliance on any
such assurance.  The parties acknowledge that all prior agreements
have been merged into this Agreement.

       

      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

       

      Lending
Stockholder:

      


      Name:                        

      


      By:                        

      


      Its:                        


      
        
          	 
      	
                  Borrower:

                
	 
      	 
      
	 
      	
                  OPTIMUS
      SPECIAL SITUATIONS CAPITAL PARTNERS, LLC

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:                        

                


        

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      Addresses
for Notice

       

      
        
          	
                  To
      Stockholder:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Name:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Address:

                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                  Fax
      No.:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Email:

                	 
      	 
      
	 
      	 
      	 
      
	
                  with
      a copy to:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Name:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Address:

                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                  Fax
      No.:

                	 
      	 
      
	 
      	 
      	 
      
	
                  Email:

                	 
      	 
      


        

      

       

       

      
        
          	 
      	
                  To
      Borrower:

                
	 	 
	 
      	
                  Optimus
      Special Situations Capital Partners, LLC

                
	 
      	
                  11150
      Santa Monica Boulevard, Suite 1500

                
	 
      	
                  Los
      Angeles, CA 90025

                
	 
      	
                  Attention:  Terry
      Peizer

                
	 
      	
                  Fax
      No.:  (310) 444-5300

                
	 
      	
                  Email:  info@optimuscg.com

                
	 	 
	 
      	
                  with
      a copy to:

                
	 	 
	 
      	
                  Luce
      Forward Hamilton & Scripps LLP

                
	 
      	
                  601
      South Figueroa Street, Suite 3900

                
	 
      	
                  Los
      Angeles, CA 90017

                
	 
      	
                  Attention:  John
      C. Kirkland, Esq.

                
	 
      	
                  Fax
      No.:  (213) 452-8035

                
	 
      	
                  Email:  jkirkland@luce.com