Document:

Exhibit 10.4

AMENDED AND RESTATED EMPLOYMENT AND
NONCOMPETITION AGREEMENT 

          This
AMENDED AND RESTATED EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is an amendment and complete
restatement of the Employment and Noncompetition Agreement made and entered into
as of the 31st day of December, 2006, by and between SHOE CARNIVAL, INC., an Indiana
corporation with its principal offices located at 7500 East Columbia Street,
Evansville, Indiana (the "Company"), and W.
KERRY JACKSON, an individual residing at 6666
Hillsgate Court, Newburgh, Indiana (the "Employee"). This restatement is
intended to conform the Agreement to the applicable provisions of the final
regulations interpreting Section 409A of the Internal Revenue Code of 1986, as
amended ("Code") and Revenue Ruling 2008-13. 

RECITALS 

          WHEREAS, the Company is one of the leading retailers of family shoes
in the United States;

          WHEREAS, the Company desires to retain the services of the Employee
upon the terms and conditions set forth herein; and

          WHEREAS, the Employee desires to be so employed by the Company, to be
eligible for opportunities of advancement, potential compensation increases and
the potential payments provided for herein; and

          WHEREAS, the Company and the Employee desire to enter into this
Agreement to set forth the terms and conditions of the employment relationship
between the Company and the Employee; and

          WHEREAS, in connection with its business, the Company has expended a
substantial amount of time, money, and effort to develop and maintain its
confidential, proprietary and trade secret information, and that this
information, if misused or disclosed, could be very harmful to Company’s
business and its competitive position in the marketplace. 

AGREEMENT 

          1.
Term of Employment. The Company hereby agrees to employ Employee and Employee hereby agrees to be employed by the Company, in
accordance with the terms and conditions herein, for a period commencing on the
effective date of this Agreement up to and through January 31, 2009, subject,
however, to earlier termination as expressly provided in this Agreement (such
term, including any extension thereof, shall herein be referred to as the
"Term"). This Agreement shall be renewed automatically for successive terms of
one (1) year each unless either party provides written notice of non-renewal to
the other party not more than ninety (90) days and not less than thirty (30)
days before the end of the then current Term.

          2.
Scope of Duties. The Employee is currently serving in the position of
Executive Vice President, Chief Financial Officer. During the Term, the Employee
agrees to perform such other services for the Company as may be directed by any
superior officer of the Company, and to assume such other title, duties and/or
responsibilities as the Board of Directors may determine. The Employee shall be
supportive of the Company's business and its best interests and shall not,
directly or indirectly, take any action which could reasonably be expected to
have an adverse effect upon the business or best interests of the Company. The
Employee covenants that he will at all times honestly and fairly conduct his
duties, and will at all times maintain the highest of professional standards in
representing the interests of the Company. The Employee will comply with Company
policies, decisions, and instructions, which may be changed by the Company over
time. Employee shall perform all duties incident to his position, as well as any
other duties as may from time to time be assigned by the President of the
Company or his designee, and agrees to abide by all By-laws, policies,
practices, procedures or rules of the Company.

          3.
Compensation of
Employee. For all services rendered by
the Employee under this Agreement, the Company shall compensate the Employee as
follows: 

          3.1
Base Salary. The base salary payable to the Employee under this Agreement shall be
that amount of base salary payable as of the effective date of this Agreement
("Base Salary"), payable in accordance with the Company's usual payroll
procedures, and subject to all taxes, withholdings and deductions as required by
law and as the Employee may authorize. The Company will review the Base Salary
on a periodic basis, approximately annually, during the Term to determine, in
the discretion of the Company, whether the Base Salary should be adjusted, and
if so, the amount of such adjustment and the time at which such adjustment
should take effect.

          3.2
Incentive Bonus. The Employee is entitled to participate in the Company’s
2006 Executive Incentive Compensation Plan in accordance with the terms
contained therein, and in any successor plan adopted by the Company from time to
time. However, Employee agrees that the failure of the Company to award any such
bonus and/or other incentive compensation shall not give rise to any claim
against the Company. 

          4.
Additional Compensation, Benefits, and
Obligations. During the Term, and so long
as the Employee serves in the position of Executive Vice President, Employee is
entitled to participate in any and all employee welfare and health benefit plans
(including, but not limited to, life insurance, health and medical, dental and
disability plans, and executive supplemental medical coverage) and other
employee benefit plans, including but not limited to, qualified pension plans,
stock purchase plans, and nonqualified deferred compensation plans, established
by the Company from time to time for the benefit of executives at his level and
position; provided, however, the Employee's participation in such plans is
subject to the eligibility requirements and other terms of such plans. The
Company may change, amend or discontinue any of its employee welfare and health
benefit plans at any time during the Term, and nothing in this Agreement shall
obligate the Company to institute, maintain or refrain from changing, amending
or discontinuing any such plans or programs. 

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          5.
Termination of
Employment. Employee’s employment may be
terminated as follows: 

          5.1
For Cause. The Company may terminate Employee’s employment at any time effective
immediately for "Cause." As used in this Agreement, the term "Cause" means the
occurrence of any one or more of the following events: (i) Employee's conviction
for a felony or other crime involving moral turpitude; (ii) Employee's engaging
in illegal conduct or gross misconduct which is injurious to the Company; (iii)
Employee's engaging in any fraudulent or dishonest conduct in his dealings with,
or on behalf of, the Company; (iv) Employee's failure or refusal to follow the
lawful and reasonable instructions of the Company's Chief Executive Officer,
President, or other executive officer to whom Employee reports, if such failure
or refusal continues for a period of ten (10) days after the Company delivers to
Employee a written notice stating the instructions which Employee has failed or
refused to follow; (v) Employee's material breach of any of his obligations
under this Agreement; (vi) Employee's material breach of the Company's policies;
(vii) Employee's use of alcohol or drugs which interferes with the performance
of his duties for the Company or which compromises the integrity or reputation
of the Company; or (viii) Employee's engaging in any conduct tending to bring
the Company into public disgrace or disrepute.

          5.2
Unilateral – The
Company. The Company may terminate
Employee’s employment at any time without Cause.

          5.3
Unilateral - Employee. Employee may terminate his employment at any time with the
Company by providing the Company with thirty (30) days' advance written notice
of such termination. At the sole option of the Company, such termination will be
considered effective on the date such notice is given.

          5.4
For Good Reason -
Employee. At any time during the Term,
Employee may terminate this Agreement for Good Reason if all of the following
conditions are satisfied: (a) Employee gives the Company a written notice of
termination, which describes in reasonable detail the condition claimed to
constitute Good Reason, within thirty (30) calendar days of the initial
existence of the condition claimed to constitute Good Reason; (b) the Company
does not remedy the condition within thirty (30) calendar days of the Company’s
receipt of Employee’s written notice of termination (the “Good Reason Cure
Period”); and (c) Employee gives the Company a second written notice of
termination within thirty (30) calendar days following the expiration of the
Good Reason Cure Period. For purposes of this Agreement, for “Good Reason" means
the occurrence, without Employee’s written consent, of a material reduction by
the Company in Employee’s Base Salary. Termination of this Agreement without
Cause or for Good Reason shall not be deemed to be a voluntary termination by
Employee for purposes of any stock option or equity incentive plans of the
Company.

          5.5
Disability or Death. If Employee suffers a "Disability," the Company shall have
the right to terminate Employee's employment by delivering to 

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Employee a
written notice of the Company's intent to terminate for Disability, specifying
in such notice a termination date not less than ten (10) calendar days after the
giving of the notice (the "Disability Notice Period"). The Employee's employment
shall terminate at the close of business on the last day of the Disability
Notice Period. For purpose of this Agreement, the term "Disability" shall mean
either (a) when Employee is deemed disabled in accordance with the long-term
disability insurance policy or plan of the Company in effect at the time of the
illness or injury causing the Disability, or (b) the inability of Employee,
because of injury, illness, disease or bodily or mental infirmity, to perform
the essential functions of his job (with reasonable accommodation) for more than
one hundred twenty (120) consecutive days. The existence of a Disability shall
be determined by the Company. If the Employee should die during the Term, this
Agreement shall terminate as of the date of
Employee's death.

          5.6
Compensation Upon
Termination. In the event of termination
of Employee’s employment as set forth herein, and subject to any lawful right of
offset the Company may have against any such benefits, compensation, or
severance amounts owed to Employee, whether the result of promissory notes,
loans, or other financial arrangements the Company may have entered into with or
on the Employee’s behalf, and which are or would become due and payable on or
after the termination date, to include the principal and interest pursuant to
such arrangements (which right of offset cannot be inconsistent with the
standards for nonqualified deferred compensation plans under Code Section 409A,
to the extent applicable), the Parties agree that the following terms shall be
the exclusive severance arrangements: 

     5.6.1 In the event of termination
of Employee's employment by the Company for Cause pursuant to Section 5.1 or
unilateral termination by the Employee pursuant to Section 5.3, the Company's
obligation to pay and provide Employee compensation and benefits under this
Agreement shall immediately terminate, except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; and (b) the Company shall pay or provide Employee
such other payments and benefits, if any, which had accrued hereunder before the
termination date. Other than the foregoing, the Company shall have no further
obligations to Employee under this Agreement. 

     5.6.2 In the event the Company terminates Employee's
employment without Cause pursuant to Section 5.2 or Employee terminates for Good
Reason pursuant to Section 5.4 within thirty (30) calendar days of the
expiration of the Good Reason Cure Period , at any time other than the two (2)
year period immediately following a "Change in Control," the Company's
obligation to pay and provide Employee compensation and benefits under this
Agreement shall immediately terminate, except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; (b) the Company shall pay to Employee, within
thirty (30) calendar days following the date of termination, a lump sum amount
equal to fifty-five percent (55%) of the product of (i) times (ii), where (i) is
his annual 

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Base Salary for
the fiscal year in which the termination occurs, and (ii) is a fraction, the
numerator of which is the number of days elapsed in such fiscal year through the
date of termination and the denominator of which is 365; (c) the Company shall
pay or provide Employee such other payments and benefits, if any, which had
accrued hereunder before the termination date; (d) the Company shall pay to
Employee, within thirty (30) calendar days following the termination date, a
lump sum payment in an amount equal to one hundred fifty percent (150%) of
Employee's Base Salary for the fiscal year in which the termination occurs; (e)
the Company shall pay Employee, within thirty (30) calendar days following the
termination date, a lump sum payment in an amount equal to the total of (i) plus
(ii), where (i) equals eighteen (18) times the monthly “COBRA Premium Rate”
(which is the monthly amount charged, as of the termination date, for COBRA
continuation coverage under the Company's group medical and dental plans for the
coverage options and coverage levels applicable to Employee and his covered
dependents immediately prior to the termination date), and (ii) is an additional
amount equal to the additional state and federal taxes that the Company
determines Employee will incur as a result of the payment of the lump sum
payment provided under this Section 5.6.2(e); (f) with respect to Company stock
options granted after the date of this Agreement, Employee would immediately
vest in any option that would have vested within twelve (12) months of
Employee’s termination date had Employee not been terminated, and such option
may be exercised pursuant to the provisions of the then current Company Stock
Option and Incentive Plan (“Stock Option Plan”) as if the option were vested at
the date of termination; and (g) all shares of restricted stock granted to the
Employee after the date of this Agreement, which are not intended to qualify as
“performance based compensation” under Section 162(m) of the Code shall contain
provisions which shall provide for immediate vesting upon Termination without
Cause or for Good Reason. Payment of the severance compensation described in
subpart (d) and (e) of this Section 5.6.2 is subject to the requirements of
Sections 5.9 and 5.10. Other than the foregoing, the Company shall have no
further obligations to Employee under this Agreement.

     5.6.3 In the event Employee's employment is terminated as a
result of Employee's Death or Disability pursuant to Section 5.5, the Company's
obligation to pay and provide the Employee compensation and benefits under this
Agreement shall immediately terminate except: (a) Employee shall be entitled to
receive that portion of his then Base Salary which shall have been earned
through the termination date; and (b) the Company shall pay or provide Employee
such other payments and benefits, if any, which had accrued hereunder before the
termination date. Other than the foregoing, the Company shall have no further
obligations to Employee under this Agreement.

     5.6.4 In the event of a "Qualifying Termination" within two
(2) years immediately following a "Change In Control," then, in lieu of all
other benefits under this Agreement, the Company's obligation to pay and provide
Employee compensation and benefits under this Agreement shall immediately
terminate, 

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except: (a)
Employee shall be entitled to receive that portion of his then Base Salary which
shall have been earned through the termination date; (b) the Company shall pay
or provide Employee such other payments and benefits, if any, which had accrued
hereunder before the termination date; (c) the Company shall pay to Employee in
a lump sum not later than thirty (30) calendar days after the termination date
an amount equal to two times one hundred fifty-five percent (155%) of his annual
Base Salary for the fiscal year in which the termination occurs; (d) the Company
shall pay Employee, in a lump sum not later than thirty (30) calendar days after
the termination date, an amount equal to (i) plus (ii), where (i) equals
eighteen (18) times the COBRA Premium Rate and (ii) is an additional amount
equal to the additional state and federal taxes that the Company determines
Employee will incur as a result of the payment of the lump sum payment provided
under this Section 5.6.4(d); (e) the Company shall provide Employee with
reasonable and appropriate out-placement services, as determined and coordinated
by the Company, by paying a fee, not to exceed Two Thousand Five Hundred Dollars
($2,500.00), to an outplacement services provider selected by the Company,
provided that such services shall not extend past the end of the second taxable
year following the taxable year in which the Qualifying Termination occurs; and
(f) Employee shall be allowed to exercise available stock options in accordance
with the Stock Option Plan as if he were terminated without cause pursuant to
the Stock Option Plan. Payment or provision of the severance compensation or
benefits described in subparts (c), (d) and (e) of this Section 5.6.4 is subject
to the requirements of Sections 5.9 and 5.10. Other than the foregoing, the
Company shall have no further obligations to Employee under this Agreement.

For purposes of
this Agreement, a "Qualifying Termination" shall mean either (i) a unilateral
termination of Employee by the Company without Cause pursuant to Section 5.2 or
(ii) a termination by Employee for Good Reason pursuant to Section 5.4 within
thirty (30) calendar days of the expiration of the Good Reason Cure Period.

For purposes of
this Agreement, "Change In Control" of the Company shall mean and shall be
deemed to have occurred as of the first day any one or more of the following
conditions shall have been satisfied:

     (A) The acquisition, within a 12-month period ending on the
date of the most recent acquisition, by any individual entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act as in
effect from time to time) of thirty percent (30%) or more of either (i) the then
outstanding shares of common stock of the Company or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors; provided, however, that the following
acquisitions shall not constitute an acquisition of control: (a) any acquisition
directly from the 

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Company
(excluding an acquisition by virtue of the exercise of a conversion privilege),
(b) any acquisition by the Company, (c) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (d) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in clauses
(i), (ii) and (iii) of subsection (C) of this Section 5.6.4 are satisfied, (e)
any acquisition by any Person who, immediately before the commencement of the
twelve (12) month period, already held beneficial ownership of thirty percent
(30%) or more of the outstanding voting securities of the Company ("Affiliated
Person") or (f) upon the death of any shareholder who, on the date of this
Agreement, is the beneficial owner of 10% or more of the outstanding voting
securities of the Company, any acquisition triggered by the death of such
shareholder by operation of law, by any testamentary bequest or by the terms of
any trust or other contractual arrangement established by such shareholder;
or

     (B) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company (the
"Board"); provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or

     (C) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the outstanding
Company common stock and outstanding Company voting securities immediately prior
to such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization, merger
or consolidation, of the outstanding Company stock and outstanding Company
voting securities, as the case may be, (ii) no Person (excluding the Company,
any employee benefit plan or related trust of the Company or such corporation
resulting from such reorganization, merger or consolidation and any Person
beneficially owning, 

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immediately
prior to such reorganization, merger or consolidation, directly or indirectly,
[thirty percent (30%)] or more of the outstanding Company common stock or
outstanding voting securities, as the case may be) beneficially owns, directly
or indirectly, [thirty percent (30%)] or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization, merger or
consolidation; or

     (D) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation with respect to which following such sale or other disposition
(a) more than fifty percent (50%) of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Company common stock and outstanding
Company voting securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the outstanding Company common stock and
outstanding Company voting securities, as the case may be, (b) no Person
(excluding the Company and any employee benefit plan or related trust of the
Company or such corporation, any Affiliated Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, [thirty percent (30%)] or more of the outstanding Company common
stock or outstanding Company voting securities, as the case may be) beneficially
owns, directly or indirectly, [thirty percent (30%)] or more of, respectively,
the then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (c) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Company. 

Notwithstanding
any other provision of this Section 5.6.4 to the contrary, an occurrence shall
not constitute a Change in Control if it does not constitute a change in the
ownership or effective control of, or in the ownership of a substantial portion
of the assets of, the Company, within the meaning of Code Section
409A(a)(2)(A)(v) and its interpretive regulations. 

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          5.7
Internal Revenue Code
Limits. Should any payments by the Company to or for the benefit of Employee
under this Agreement constitute an "excess parachute payment" within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
then the Company shall pay Employee an additional amount of money (the "Gross-Up
Payment") that will equal the sum of (a) all excise or other taxes imposed upon
Employee by Section 4999 of the Code (excluding any penalties or interest) and
(b) all additional state and federal taxes, interest and/or penalties
attributable to the additional payments made to Employee pursuant to this
Section 5.7. If an excise tax is imposed pursuant to Section 4999 of the Code,
Employee agrees to immediately notify the Company within ten (10) days of the
event, in writing, and Employee hereby gives the Company the right to challenge
said imposition. Any Gross-Up Payment due under this Section 5.7 shall be paid
in a lump sum as soon as it can be calculated, but in no event later than 30
days after the date the Employee remits the related taxes. 

          5.8
Payroll Withholdings. The Company may withhold
from any compensation or benefits payable under this Agreement all federal,
state, city, or other taxes or deductions as may be required pursuant to any law
or governmental regulation or ruling.

          5.9
Compliance With Post-Employment
Restrictions. If Employee breaches, or
threatens to breach any of the covenants or provisions set forth in Sections 6
and 7 of this Agreement, then in such event the Company shall have the right
immediately and permanently to discontinue payment and provision of any of the
severance compensation and benefits payable under this Agreement. The Employee
and Company acknowledge and agree that such remedy is in addition to, and not in
lieu of, any and all other legal and/or equitable remedies that may be available
to the Company in connection with the Employee's breach or threatened breach of
any of the covenants or provisions of this Agreement. 

          5.10
Release Agreement. As a condition of receiving the severance benefits described
in Sections 5.6.2(c), 5.6.2(d), 5.6.4(c), 5.6.4(d), or 5.6.4(e), Employee will
be required to sign a standard release agreement acceptable to the Company in
which he releases and waives all claims which he may have against the Company or
any affiliate, employee, shareholder, officer, director, agent or representative
of the Company (except for his rights under this Agreement or any other vested
rights Employee may have under any insurance, pension, employee stock ownership
or stock option plans sponsored or made available by the Company). The Company
will provide such release agreement to Employee at the termination of Employee's
employment with the Company. As part of the release agreement, Employee will be
required (a) to agree to cooperate with the Company with respect to any business
matters about which he has knowledge, including any litigation or threatened
litigation, (b) agree not to cooperate with any claimants against the Company
unless required by law to do so, (c) agree not to make any negative or
derogatory comments about the Company or its executives and (d) affirm his
post-termination obligations under this Agreement, including without limitation
the obligations set forth in Sections 6 and 7. 

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          5.11
Delay of Separation Payments to Specified
Employee. Notwithstanding any other
provisions of this Agreement, if any amount payable to Employee under this
Agreement on account of Employee's separation from service with the Company
constitutes deferred compensation within the meaning of Code Section 409A, and
Employee is a specified employee, within the meaning of Code Section
409A(a)(2)(B)(i), on the date of his separation from service, payment of the
amount shall be delayed until the first business day that is at least six (6)
months after the date on which Employee's separation from service
occurred.

          6.
Non-competition. 

          6.1
General. Employee acknowledges that his position with the Company is special,
unique and intellectual in character and his position in the Company places him
in a position of confidence and trust with employees and customers of the
Company. Employee further acknowledges, recognizes, and represents receipt of
sufficient consideration for these restraints in the form of the Base Salary and
other valuable consideration contained herein. The restrictions and obligations
contained in this Section 6 shall survive the Term of this Agreement.
Notwithstanding the above, if the Company terminates, or elects not to renew
this Agreement, and subsequently terminates Employee’s employment without the
payment of severance payments equivalent to 100% of Employee’s Base Salary in
effect at the time of termination, which shall be payable in lump sum, the
Employee will not be subject to the restrictions and obligations of this Section
6.

          6.2
Non-competition. Employee agrees that during his employment with the Company
and for a period of one (1) year
immediately after the termination of
Employee’s employment with the Company, whether such employment is pursuant to
this Agreement or is without an Agreement, thereafter Employee shall
not: 

     6.2.1 Either alone or in concert
with others, whether as director, officer, consultant, principal, employee,
agent or otherwise, engage in or contribute Employee’s knowledge and abilities
to any business or entity in competition with the Company (“Competing
Business”);

     6.2.2 Be employed by, work for,
consult with, or act in any other capacity for, any person or entity that is
engaged in any Competing Business if in such employment, work or capacity
Employee likely would, because of the nature of his position with, or work for,
the competitor and his knowledge of the Company's Confidential Information,
inevitably use and/or disclose any of the Company's Confidential Information in
his work for or with such competitor;

     6.2.3 Solicit, recruit, hire, employ
or attempt to hire or employ any person who is then or within the proceeding one
(1) year period was, an employee of the Company, or otherwise urge, induce or
seek to induce any person to terminate his/her employment with the
Company;

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     6.2.4 Solicit, urge, induce or seek
to induce any of the Company's independent contractors, subcontractors, vendors,
suppliers, customers or consultants to terminate their relationship with, or
representation of, the Company or to cancel, withdraw, reduce, limit or in any
manner modify any such person's or entity's business with or representation of,
the Company for whatever purpose or reason;

     6.2.5 Take any action intended to harm the Company or its
reputation, which the Company reasonably concludes could lead to unwanted or
unfavorable publicity to the Company;

     6.2.6 The restrictive time periods set forth in this Section
6.2 shall not expire during any period in which Employee is in violation of any
of the restrictive covenants set forth in this Section 6.2, and all restrictions
shall automatically be extended by the period Employee was in violation of any
such restrictions;

     6.2.7 The restrictive covenants contained in this Section 6.2
prohibit Employee from engaging in certain activities directly or indirectly,
whether on his own behalf or on behalf of any other person or entity.

     6.2.8 The covenants and restrictions in this Section 6.2 are
separate and divisible, and to the extent any covenant, provision or portion of
Section 6.2 is determined to be unenforceable or invalid for any reason, such
unenforceability or invalidity shall not affect the enforceability or validity
of the remainder of the Agreement. Should any particular covenant, restriction,
provision or portion of Section 6.2 be held unreasonable or unenforceable for
any reason, including, without limitation, the time period, geographical area,
and/or scope of activity covered by any restrictive covenant, provision or
clause, such covenant, provision or clause shall automatically be deemed
reformed such that the contested covenant, provision or portion will have the
closest effect permitted by applicable law to the original form and shall be
given effect and enforced as so reformed to the extent reasonable and
enforceable under applicable law.

          6.3
Definition of “Competing
Business”: The term “Competing Business” shall mean: 

     6.3.1 The retail footwear business
of Collective Brands, Inc.; Brown Shoe Company, Inc.; Designer Shoe Warehouse;
Rack Room (dba); Kohls Corporation; Shoe Station (dba); Shoe City (dba); Shoe
Pavilion, Inc., Shoe Department (dba); Finish Line, Inc.; Foot Locker, Inc.;
Dick’s Sporting Goods, Inc.; The Sports Authority, Inc.; Off Broadway Shoe
Warehouse; and any other company which sells footwear at retail to consumers
within 25 miles of any Company store at price points competitive, or likely to
be competitive, with the 

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Company, where the footwear sales of
such other company constitute at least fifteen percent (15%) of such company's
annual revenues. 

     6.3.2 Ownership of an investment of
less than 5% of any class of equity or debt security of a publicly-held
Competing Business shall not constitute ownership or participation in violation
of the above. 

          6.4 Acknowledgment Regarding Restrictions. Employee acknowledges and agrees that he understands the
restrictions in Section 6, and that they are reasonable and enforceable, in view
of, among other things, the Employee’s position within the Company, the highly
competitive nature of the Company's business, and the confidential nature of the
information the Employee has been provided. Employee further agrees that the
Company would not have adequate protection if Employee were permitted to work
for its competitors in violation of the terms of this Agreement since the
Company would be unable to verify whether its Confidential Information was being
disclosed and/ or misused, and whether Employee was involved in diverting the
Company’s customers and/or its customer goodwill. 

          6.5 Disclosures
Concerning New Employment. Employee
agrees that he (a) will immediately, within ten (10) days, notify the Company in
writing of his employment, engagement or other affiliation with any other
business or entity during the two (2) years immediately following the
termination of Employee's employment with the Company and (b) will provide a
copy of Section 6 and 7 of this Agreement to any prospective employer before
accepting employment or other work engagement with any such employer.

          7.
Confidential or Proprietary
Information 

          7.1
Confidentiality. As used in this Agreement, the term "Confidential
Information" means any and all of the Company's trade secrets, confidential and
proprietary information and all other information and data of the Company that
is not generally known to third persons who could derive economic value from its
use or disclosure, including, without limitation, the Company's profile of
prospective or current vendors or customers, business methods and structure,
details of the Company's contracts and business matters, employee compensation,
personnel information, marketing strategies and plans, business plans, pricing
information and strategies, costs information, and financial data, whether or
not reduced to writing or other tangible medium of expression, including work
product created by Employee in rendering services to the Company. During his
employment with the Company and thereafter, Employee will not use or disclose to
others any of the Confidential Information except as authorized in writing by
the Company or in the performance of work assigned Employee by the Company.
Employee also will abide by the Company's policies protecting the Confidential
Information. Employee's confidentiality obligations shall continue as long as
the Confidential Information remains confidential, and shall not apply to
information which becomes generally known to the public through no fault or
action of Employee. Employee agrees that the Company owns the Confidential

-12- 

Information and
Employee has no rights, title or interest in any of the Confidential
Information. At the Company's request or upon termination of Employee's
employment with the Company for any reason, Employee will immediately deliver to
the Company all materials (including all copies and electronically stored data)
containing any Confidential Information in Employee's possession, custody or
control. 

          7.2
Trade
Secrets-Developments. All improvements,
developments, concepts, and ideas ("Developments") relating to the Company's
business, or capable of beneficial use by the Company, including, but not
limited to, marketing, confidential and trade secret information, techniques,
discoveries, slogans, designs, artwork, and writings, which the Employee has
made or will make during his employment with the Company are the sole and
exclusive property of the Company without charge to the Company other than the
Employee's compensation. 

          7.3
Acknowledgement. Employee agrees that the restrictions set forth in Sections
7.1 and 7.2 are reasonable and necessary to protect the trade secrets,
confidential information, intellectual property rights and goodwill of the
Company. The restrictions and obligations contained in this Section 7 shall
survive the term of this Agreement. 

          8.
Remedies. In the event of a breach or threatened breach by the Employee of any of
the above provisions, the Company shall be entitled to an injunction restraining
Employee from such breach, in addition to all other remedies which the Company
shall be entitled to pursue. The Company also shall be entitled to recover from
Employee all litigation costs and attorneys' fees incurred by the Company in any
action or proceeding relating to this Agreement in which the Company prevails,
including, but not limited to, any action or proceeding in which the Company
seeks enforcement of this Agreement or seeks relief from Employee's violation of
this Agreement. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available for such breach, threatened breach,
or any breach of this Agreement. 

          9.
Survival of Post-Termination
Obligations. Employee acknowledges and
agrees that his post-termination obligations under this Agreement, including
without limitation Employee's non-competition and confidentiality obligations
set forth in Sections 6 and 7 of this Agreement, shall survive the termination
of Employee's employment with the Company, regardless whether such termination
is voluntary or involuntary, or is with or without Cause. 

          10.
Notices. All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the
date personally delivered or the dated mailed, postage prepaid, by certified
mail, return receipt requested, or telegraphed and confirmed, or faxed and
confirmed, if addressed to the respective parties as follows; 

	          	To Employee:  	     	W. Kerry Jackson 
  
		  		6666 Hillsgate
      Court  
		  		Newburgh, Indiana
      47630  

-13- 

	          	To Company:  	     	Chief Executive
      Officer  
		  		Shoe Carnival, Inc. 
    
		  		7500 East Columbia
      Street  
		  		Evansville, Indiana
      47715  

Either party hereto may designate a
different address by providing written notice of such new address to the other
party hereto. 

          11.
Waiver. The failure or delay of the Company at any time or times to require
performance of, or to exercise any of its powers, rights or remedies with
respect to, any term or provision of this Agreement or any other aspect of
Employee’s conduct or employment shall not affect the Company’s right to later
enforce any such term or provision. 

          12.
Assignment. The Company shall have the right to assign this Agreement. This
Agreement shall inure to the benefit of, may be enforced by, and shall be
binding on, any and all successors and assigns of the Company, including,
without limitation, by asset assignment, stock sale, merger, consolidation or
other corporate reorganization, and shall be binding on Employee, his executors,
administrators, personal representatives and other successors in interest.
Employee shall not have the right to assign this Agreement nor any of his
rights, powers, duties or obligations hereunder. 

          13.
Code Section 409A
Standards. This Agreement, and all other nonqualified deferred compensation plans in
which the Employee participates, are intended to comply with the standards for
nonqualified deferred compensation plans established by Code Section 409A and
its interpretive regulations and other regulatory guidance (the "Section 409A
Standards"), to the extent applicable, and this Agreement shall be construed
accordingly. In construing or interpreting any vague or ambiguous provisions of
this Agreement, the interpretation that will prevail is the interpretation that
will cause this Agreement to comply with the Section 409A Standards. Any
provision of this Agreement, or any deferred compensation provided under it,
that would fail to satisfy the Section 409A Standards shall not have any force
or effect until it is amended to comply with the applicable Section 409A
Standards, which amendment may be retroactive to the extent permissible under
the Section 409A Standards. 

          14.
Entire Agreement. This Agreement cancels and supersedes all prior
negotiations, discussions, commitments and understandings between the parties
relating hereto, whether oral or written. This Agreement embodies the entire
agreement and understanding between such parties with respect to the matters
covered hereby. Neither party shall be bound by any term or condition other than
as is expressly set forth herein. 

          15.
Amendment. This Agreement may be amended only by an instrument in writing executed
by the parties hereto. 

          16.
Governing Law: Forum
Selection. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Indiana, without regard to the conflicts of law rules thereof. Any legal
action relating to this Agreement shall be 

-14- 

commenced and maintained exclusively
before any appropriate state court of record in Vanderburgh County, Indiana, or,
if necessary because of a federal question mandating jurisdiction in the federal
courts is involved, the United States District Court for the Southern District
of Indiana, Evansville Division, and the parties hereby submit the jurisdiction
of such courts and waive any right to challenge or otherwise raise questions of
personal jurisdiction or venue in any action commenced or maintained in such
courts. 

          17.
Severability. The parties intend that the provisions of this Agreement shall be
enforced to the fullest extent permissible under the applicable law. Should any
provision of this Agreement be unenforceable or invalid for any reason, such
unenforceability or invalidity shall not affect the enforceability or validity
of the remainder of the Agreement. 

          IN WITNESS
WHEREOF, the parties hereto have executed this Amended and Restated Employment
and Noncompetition Agreement on this 11th. day of December, 2008. 

	SHOE
      CARNIVAL, INC.: "Company"  	 	W.
      KERRY JACKSON: "Employee"  
	  
	By:  	  /s/ Mark L. Lemond 
    		  /s/ 
      W. Kerry Jackson  
	 				
	Its:  	  CEO and President 
    		Date:   	  December 11, 2008 
    
		 			
	Date:   	  December 11, 2008 
    		  	 

-15-f8k121208ex10i_celsius.htm

    Exhibit
10.1

    

     

    SECURITIES
PURCHASE AGREEMENT

     

    

    THIS SECURITIES PURCHASE AGREEMENT,
dated as of December 12, 2008 (this “Agreement”),
is by and between CELSIUS HOLDINGS, INC., a Nevada corporation (the “Company”),
and CDS VENTURES OF SOUTH FLORIDA, LLC, a Florida limited liability company
(“Investor”).

    

    A.           The
Company wishes to sell to Investor, and Investor wishes to purchase from the
Company, upon the terms and subject to the conditions set forth in this
Agreement, (i) 2,000 shares of the Company’s Series B Convertible Preferred
Stock, having a stated value of $1,000 per share (the “Series B
Preferred Stock”), and (ii) a right to purchase up to an additional 2,000
shares of the Series B Preferred Stock before December 31, 2009, having a stated
value of $1,000 per share. The Series B Preferred Stock series shall be
designated pursuant to the Certificate of Designation in the form attached
hereto as Exhibit A
(the “Certificate of
Designation”).

    

    B.           The
Series B Preferred Stock shall (i) be convertible into shares of the Company’s
common stock, par value $.001 per share (“Common
Stock”), (ii) accrue dividends at a rate of 10% per annum, payable in
additional shares of Series B Preferred Stock, and (iii) mature on December 31,
2013 and be redeemed in shares of Common Stock.  The shares of Common
Stock and Series B Preferred Stock issuable hereunder or under the Certificate
of Designation, are collectively referred to herein as the “Securities”.

    

    C.           The
Company has agreed to effect the registration of the shares of Common Stock
issuable upon the conversion or maturity date of the Series B Preferred Stock
issued pursuant to this Agreement for resale by the holders thereof under the
Securities Act of 1933 (as amended, and the rules and regulations promulgated
thereunder, the “Securities
Act”), pursuant to a Registration Rights Agreement in the form attached
hereto as Exhibit B
(the “Registration
Rights Agreement”).

    

    D.           The
sale of the Securities by the Company to Investor, and any issuance of the
additional Securities, will be effected in reliance upon the exemption from
securities registration afforded by the provisions of Regulation D (“Regulation
D”), as promulgated by the Securities and Exchange Commission (the “Commission”)
under the Securities Act.

    

               In
consideration of the mutual promises made herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Investor hereby agree as follows:

    

    1.           TERMINOLOGY
AND USAGE.

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
 

    1.1           Definitions.  When
used herein, the terms below shall have the respective meanings
indicated:

    

    “Affiliate”
means, as to any Person (the “subject
Person”), any other Person (a) that directly or indirectly through
one or more intermediaries controls or is controlled by, or is under direct or
indirect common control with, the subject Person, (b) that directly or
indirectly beneficially owns or holds ten percent (10%) or more of any class of
voting equity of the subject Person, or (c) ten percent (10%) or more of
the voting equity of which is directly or indirectly beneficially owned or held
by the subject Person. For the purposes of this definition, “control”
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, through representation on such Person’s board of
directors or other management committee or group, by contract or
otherwise.

     

    “Allocation
Amount” has the meaning specified in Section
5.5 of this Agreement.

     

    “Board of
Directors” means the Company’s board of directors.

     

    “Business
Day” means any day other than a Saturday, a Sunday or a day on which the
Principal Market is closed or on which banks in the City of New York are
required or authorized by law to be closed.

     

    “Certificate of
Designation” has the meaning specified in the recitals of this
Agreement.

     

    “Closing”
and “Closing
Date” have the respective meanings specified in Section
2.1 of this Agreement.

     

    “Commission”
has the meaning specified in the recitals to this Agreement.

     

    “Common
Stock” has the meaning specified in the recitals to this
Agreement.

     

    “Company
Subsidiary” means a Subsidiary of the Company.

     

    “Debt”
means, as to any Person at any time: (a) all indebtedness, liabilities and
obligations of such Person for borrowed money; (b) all indebtedness, liabilities
and obligations of such Person to pay the deferred purchase price of Property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than 90 days; (c) all capital
lease obligations of such Person; (d) all Debt of others guaranteed by such
Person; (e) all indebtedness, liabilities and obligations secured by a Lien
(other than a Permitted Lien) existing on Property owned by such Person, whether
or not the indebtedness, liabilities or obligations secured thereby have been
assumed by such Person or are non-recourse to such Person; (f) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers’ acceptances, surety or other bonds and similar
instruments; and (g) all liabilities and obligations of such Person to redeem or
retire shares of capital stock of such Person.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Disclosure
Documents” means all SEC Documents filed with the Commission at least
three (3) Business Days prior to the Execution Date.

     

    “Effective
Date” has the meaning specified in the Registration Rights
Agreement.

     

    “Embargoed
Person” has the meaning specified in Section
4.29 of this Agreement.

     

    “Environmental
Law” means any federal, state, provincial, local or foreign law, statute,
code or ordinance, principle of common law, rule or regulation, as well as any
permit, order, decree, judgment or injunction issued, promulgated, approved or
entered thereunder, relating to pollution or the protection, cleanup or
restoration of the environment or natural resources, or to the public health or
safety, or otherwise governing the generation, use, handling, collection,
treatment, storage, transportation, recovery, recycling, discharge or disposal
of hazardous materials.

     

    “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder.

     

    “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

     

    “Execution
Date” means the date of this Agreement.

     

    “GAAP”
means generally accepted accounting principles, applied on a consistent basis,
as set forth in (i) opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants, (ii) statements of the Financial
Accounting Standards Board and (iii) interpretations of the Commission and the
staff of the Commission.  Accounting principles are applied on a
“consistent basis” when the accounting principles applied in a current period
are comparable in all material respects to those accounting principles applied
in a preceding period.

     

    “Governmental
Authority” means any nation or government, any state, provincial or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including, without limitation, any stock exchange, securities market or
self-regulatory organization.

     

    “Governmental
Requirement” means any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, license or other directive
or requirement of any federal, state, county, municipal, parish, provincial or
other Governmental Authority or any department, commission, board, court, agency
or any other instrumentality of any of them.

     

    “Holder”
shall initially mean Investor, provided that any Person that
subsequently holds any Securities shall also be deemed a Holder.

     

    “Holder
Party” has the meaning specified in Section
5.10 of this Agreement.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    “Intellectual
Property” means any U.S. or foreign patents, patent rights, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including unregistered names and marks), trademark and
service mark registrations and applications, copyrights and copyright
registrations and applications, inventions, invention disclosures, protected
formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights.

     

    “Issuance
Event” has the meaning specified in Section
5.7 of this Agreement.

     

    “Key
Employee” has the meaning specified in Section
4.16 of this Agreement.

     

    “Lien”
means, with respect to any Property, any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest, tax lien, financing
statement, pledge, charge, or other lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such Property (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the
foregoing).

     

    “Material Adverse
Effect” means an effect that is material and adverse to (i) the
consolidated business, properties, assets, operations, results of operations,
financial condition, credit worthiness or prospects of the Company and the
Company Subsidiaries taken as a whole, (ii) the ability of the Company or any
material Company Subsidiary to perform its obligations under this Agreement or
the other Transaction Documents or (iii) the rights and benefits to which a
Holder is entitled under this Agreement, the Note, the Certificate of
Designation and the other Transaction Documents.

     

    “Material
Contracts” means, as to the Company and the Company Subsidiaries, any
agreement required pursuant to Item 601 of Regulation S-B or Item 601 of
Regulation S-K, as applicable, promulgated under the Securities Act to be filed
as an exhibit to any report, schedule, registration statement or definitive
proxy statement filed or required to be filed by the Company with the Commission
under the Exchange Act or any rule or regulation promulgated thereunder, and any
and all amendments, modifications, supplements, renewals or restatements
thereof.

     

    “Note” has
the meaning specified in the recitals of this Agreement.

     

    “Pension
Plan” means an employee benefit plan (as defined in ERISA) maintained by
the Company for employees of the Company or any of its Affiliates.

     

    “Permitted
Debt” means the following:  (a) Debt disclosed on Schedule
1.1(i) hereto; (b) Debt consisting of capitalized lease obligations and
purchase money indebtedness incurred in connection with acquisition of capital
assets and obligations under sale-leaseback or similar arrangements provided in
each case that such obligations are not secured by Liens on any assets of the
Company or the Company Subsidiaries other than the assets so leased; and (c)
Debt incurred after written approval by the Investor.

     

    “Permitted
Liens” means each of the following:

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

     

    (a)           Liens
disclosed on Schedule
1.1(ii) hereto;

     

    (b)           encumbrances
consisting of easements, rights-of-way, zoning restrictions or other
restrictions on the use of real Property or imperfections to title that do not
(individually or in the aggregate) materially impair the ability of the Company
or any Company Subsidiary to use such Property in its businesses, and none of
which is violated in any material respect by existing or proposed structures or
land use;

     

    (c)           Liens
for taxes, assessments or other governmental charges (including without
limitation in connection with workers’ compensation and unemployment insurance)
that are not delinquent or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the Property subject to such Liens, and for which adequate
reserves (as determined in accordance with GAAP) have been established;
and

     

    (d)           Liens
of mechanics, materialmen, warehousemen, carriers, landlords or other similar
statutory Liens securing obligations that are not yet due and are incurred in
the ordinary course of business or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the Property subject to such Liens, for which adequate
reserves (as determined in accordance with GAAP) have been
established.

     

    (e)           Liens
incurred after written approval by the Investor.

     

    “Person”
means any individual, corporation, trust, association, company, partnership,
joint venture, limited liability company, joint stock company, Governmental
Authority or other entity.

     

    “Principal
Market” means the principal exchange, market or quotation system on which
the Common Stock is listed, traded or quoted.

     

    “Property”
means property and/or assets of all kinds, whether real, personal or mixed,
tangible or intangible (including, without limitation, all rights relating
thereto).

     

    “Pro Rata
Share” means, with respect to a Holder, the ratio determined by dividing
(i) the principal amount of the Registrable Securities purchased hereunder by
such Holder at the Closing by (ii) the aggregate principal amount of all
Registrable Securities purchased hereunder by all of the Holders at the
Closing.

     

    “Purchase
Price” has the meaning specified in Section
2.1.

     

    “Registrable
Securities” has the meaning specified in the Registration Rights
Agreement.

     

    “Registration
Rights Agreement” has the meaning specified in the recitals to this
Agreement.

     

    “Registration
Statement” has the meaning specified in the Registration Rights
Agreement.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    “Regulation
D” has the meaning specified in the recitals to this
Agreement.

     

    “Restricted
Payment” means (a) any dividend or other distribution (whether in cash,
Property or obligations), direct or indirect, on account of (or the setting
apart of money for a sinking or other analogous fund for the benefit of) any
shares of any class of capital stock of the Company or the Company Subsidiaries
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to all of the holders of that class; (b) any redemption,
exchange, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of capital
stock of the Company or any of its Affiliates now or hereafter outstanding,
except the Securities; (c) any prepayment of principal of, premium, if any,
or interest on, or any redemption, conversion, exchange, purchase, retirement,
sinking fund or defeasance of, any Debt (whether upon acceleration of such Debt
or otherwise) other than Permitted Debt; and (d) any loan, advance or
payment to any officer, director or stockholder of the Company or any of its
Affiliates, exclusive of reasonable compensation and reimbursements paid to
officers or directors in the ordinary course of business.

     

               “Rule 144”
means Rule 144 under the Securities Act or any successor provision.

     

    “SEC
Documents” means all reports, schedules, registration statements and
definitive proxy statements filed by the Company with the
Commission.

     

    “Securities”
has the meaning specified in the recitals of this Agreement.

     

    “Securities
Act” has the meaning specified in the recitals of this
Agreement.

     

    “Security
Agreement” has the meaning specified in the recitals of this
Agreement.

     

    “Series B
Preferred Stock” has the meaning specified in the recitals of this
Agreement.

     

    “Stockholder Cap
Approval” means
the affirmative vote by the holders of a majority of the votes cast (including a
majority of the votes cast by each class entitled to vote as a separate class)
at a meeting of the Company’s stockholders, or approval by written consent in
accordance with applicable law, approving the issuance of Common Stock in excess
of the Cap Amount.

     

    “Subsidiary”
means, with respect to any Person, any corporation or other entity of which at
least a majority of the outstanding shares of stock or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or Persons performing similar functions) of such corporation
or entity (regardless of whether or not at the time, in the case of a
corporation, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or one or
more of its Subsidiaries or by such Person and one or more of its
Subsidiaries.

     

    “Trading
Day” means any day on which shares of Common Stock are purchased and sold
on the Principal Market.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

     

    “Transaction
Documents” means (i) this Agreement, (ii) the Securities, (iii) the
Certificate of Designation, (iv) the Registration Rights Agreement, and (v) all
other agreements, documents and other instruments executed and delivered by or
on behalf of the Company, any Company Subsidiary or any of their respective
officers on or after the Closing in connection with this Agreement.

     

    “Transfer
Agent” has the meaning specified in Section
3.5 of this Agreement.

     

    1.2           Other Definitional
Provisions.  All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms
defined.  The words “hereof”, “herein” and “hereunder” and words of
similar import contained in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement.

     

    

    2.           PURCHASE
AND SALE OF THE NOTE AND THE SHARES.

    

    2.1           Purchase Price;
Closing.  Upon the terms and subject to the satisfaction or
waiver of the conditions set forth in Sections 2.2
and 2.3, the
Company agrees to sell and Investor agrees to purchase the 2,000 shares and the
right to purchase up to an additional 2,000 shares of Series B Preferred Stock,
for an aggregate purchase price of $2,000,000 (two million dollars) (the “Purchase
Price”).  The closing of such purchase and sale is hereinafter
referred to as the “Closing”,
and the date on which the Closing occurs is hereinafter referred to as the
“Closing
Date”.  The Closing of the 2,000 shares will be deemed to occur
at the offices of the Company when each of the conditions to the Closing
described in Sections
2.2 and 2.3 have
been satisfied or waived as specified therein.    The
purchase of any part of the additional 2,000 shares of Series B Preferred Stock
(the “Additional Shares”) will have a consideration of $1,000 per share of
Series B Preferred Stock. The closing of the purchase and sale of any part of
the Additional Shares is also referred to as the Closing and shall occur on such
date(s) as the Investor may specify through notice in writing to the Company
which shall be not less than 10 or more than 30 days after such notice or such
later date(s) nearest to such specified date(s) when each of the condition to
such Closing described in section 2.2 and 2.3 have been satisfied or waived as
specified therein. The date on which each such Closing occurs is also a Closing
Date.

    

    2.2           Conditions to Investor’s
Obligations at the Closing.  Investor’s obligations to effect
the Closing, including, without limitation, its obligation to purchase the
Securities at the Closing, are conditioned upon the fulfillment (or waiver by
Investor in its sole and absolute discretion) of each of the following events as
of the Closing Date, and the Company shall use commercially reasonable efforts
to cause each of such conditions to be satisfied:

    

    
      	
               
      

            	
              2.2.1

            	
              the
      representations and warranties of the Company set forth in this Agreement
      and in the other Transaction Documents shall be true and correct in all
      material respects as of such date as if made on such date (except that to
      the extent that any such representation or warranty relates to a
      particular date, such representation or warranty shall be true and correct
      in all material respects as of that particular
  date);

            

    

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
               
      

            	
              2.2.2

            	
              the
      Company shall have complied with or performed in all material respects all
      of the agreements, obligations and conditions set forth in this Agreement
      and in the other Transaction Documents that are required to be complied
      with or performed by the Company on or before the
  Closing;

            

    

    

    
      	
               
      

            	
              2.2.3

            	
              the
      Company shall have delivered to Investor a certificate, signed by the
      Secretary of the Company and each Company Subsidiary, certifying true,
      complete and accurate copies of (i) the constituent organizational
      documents of each such entity, each as amended through the Closing Date,
      and (ii) the resolutions passed by the board of directors or similar
      governing body of each such entity authorizing the execution, delivery and
      performance of the Transaction Documents to which such entity is a
      party;

            

    

    

    
      	
               
      

            	
              2.2.4

            	
              the
      Company shall have delivered to Investor copies of (i) the executed stock
      certificates representing the purchased shares of Series B Preferred
      Stock, and (ii) the executed signature pages of the Company and Company
      Subsidiaries to each of the other Transaction Documents to which they are
      a party;

            

    

    

    
      	
               
      

            	
              2.2.5

            	
              the
      Company’s counsel shall have confirmed that it has in its possession the
      originals of each of the documents specified in Section
      2.2.4, and such counsel shall have confirmed that all such
      originals will be delivered to Investor or its counsel no later than the
      Business Day immediately following the Closing
  Date;

            

    

    

    
      	
               
      

            	
              2.2.6

            	
              the
      Certificate of Designation shall have been accepted for filing by the
      Secretary of State of the State of Nevada and shall be in full force and
      effect;

            

    

    

    
      	
               
      

            	
              2.2.7

            	
              the
      Company shall have delivered to Investor a legal opinion of its outside
      counsel covering the matters set forth on Exhibit
      C hereto and such opinion shall be in form and substance reasonably
      satisfactory to Investor;

            

    

    

    
      	
               
      

            	
              2.2.8

            	
              the
      Company shall have delivered to Investor the Company’s unaudited financial
      statements for the quarter most recently ended before the Closing date,
      and such financial statements shall not be, in Investor’s reasonable
      judgment, materially different from the projections for such quarter
      previously provided by the Company to
Investor;

            

    

    

    
      	
               
      

            	
              2.2.9

            	
              Investor
      shall have satisfactorily completed its due diligence of the
      Company;

            

    

     

     

     

    
      
        
        

      

      
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              2.2.10

            	
              there
      shall have occurred no material adverse change in the Company’s
      consolidated business or financial condition since the date of the
      Company’s most recent financial statements contained in the Disclosure
      Documents; and

            

    

    

    
      	
               
      

            	
              2.2.11

            	
              there
      shall be no injunction, restraining order or decree of any nature of any
      court or Governmental Authority of competent jurisdiction that is in
      effect that restrains or prohibits the consummation of the transactions
      contemplated hereby and by the other Transaction
  Documents.

            

    

    

    

    

    2.3           Conditions to Company’s
Obligations at the Closing.  The Company’s obligations to
effect the Closing with Investor are conditioned upon the fulfillment (or waiver
by the Company in its sole and absolute discretion) of each of the following
events as of the Closing Date:

    

    
      	
               
      

            	
              2.3.1

            	
              the
      representations and warranties of Investor set forth in this Agreement and
      in the other Transaction Documents to which it is a party shall be true
      and correct in all material respects as of such date as if made on such
      date (except that to the extent that any such representation or warranty
      relates to a particular date, such representation or warranty shall be
      true and correct in all material respects as of that
  date);

            

    

    

    
      	
               
      

            	
              2.3.2

            	
              Investor
      shall have complied with or performed all of the agreements, obligations
      and conditions set forth in this Agreement that are required to be
      complied with or performed by Investor on or before the
      Closing;

            

    

    

    
      	
               
      

            	
              2.3.3

            	
              there
      shall be no injunction, restraining order or decree of any nature of any
      court or Governmental Authority of competent jurisdiction that is in
      effect that restrains or prohibits the consummation of the transactions
      contemplated hereby and by the other Transaction
  Documents;

            

    

    

    
      	
              (a)  

            	
              2.3.4    Investor shall have executed each
      Transaction Document to which it is a party and shall have delivered the
      same to the Company;
and

            

    

     

    
      	
              (b)  

            	
              2.3.5    Investor shall have wire
      transferred to the Company’s account, in immediately available funds, an
      amount equal to $2,000,000, or $1,000 for each
      Additional Share purchased, paid at the Closing of each such purchase.

            

    

     

    3.           REPRESENTATIONS
AND WARRANTIES OF INVESTOR.

    

    Investor hereby represents and warrants
to the Company and agrees with the Company that, as of the Execution
Date:

     

     

     

    
      
        
        

      

      
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    3.1           Authorization;
Enforceability.  Investor is duly and validly organized,
validly existing and in good standing under the laws of the State of Florida
with the requisite corporate power and authority to purchase the Securities to
be purchased by it hereunder and to execute and deliver this Agreement and the
other Transaction Documents to which it is a party.  This Agreement
constitutes, and upon execution and delivery thereof, each other Transaction
Document to which Investor is a party will constitute, Investor’s valid and
legally binding obligation, enforceable in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws of general application relating to or affecting
the enforcement of creditors’ rights generally and (ii) general principles of
equity.

    

    3.2           Accredited
Investor.  Investor (i) is an “accredited investor” as that
term is defined in Rule 501 of Regulation D, (ii) was not formed or organized
for the specific purpose of making an investment in the Company, and (iii) is
acquiring the Securities solely for its own account and not with a present view
to the public resale or distribution of all or any part thereof, except pursuant
to sales that are registered under, or exempt from the registration requirements
of, the Securities Act and/or sales registered under the Securities Act; provided, however, that in
making such representation, Investor does not agree to hold the Securities for
any minimum or specific term and reserves the right to sell, transfer or
otherwise dispose of the Securities at any time in accordance with the
provisions of this Agreement and with federal and state securities laws
applicable to such sale, transfer or disposition. Investor can bear
the economic risk of a total loss of its investment in the Securities and has
such knowledge and experience in business and financial matters so as to enable
it to understand the risks of and form an investment decision with respect to
its investment in the Securities.

    

    3.3           Information.  The
Company has, prior to the Execution Date, provided Investor with information
regarding the business, operations and financial condition of the Company and has, prior to the
Execution Date, granted to Investor the opportunity to ask questions of and
receive answers from representatives of the Company, its officers, directors,
employees and agents concerning the Company in order for Investor to make an
informed decision with respect to its investment in the Securities. Neither such
information nor any other investigation conducted by Investor or any of its
representatives shall modify, amend or otherwise affect Investor’s right to rely
on the Company’s representations and warranties contained in this
Agreement.

    

    3.4           Limitations on
Disposition.  Investor acknowledges that, except as provided in
the Registration Rights Agreement, the Securities have not been and are not
being registered under the Securities Act and may not be transferred or resold
without registration under the Securities Act or unless pursuant to an exemption
therefrom.

     

    3.5           Legend.  Investor
understands that the certificates representing the Common Stock and Series B
Preferred Stock may bear at issuance a restrictive legend in substantially the
following form:

    

    “The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any state
securities laws, and may not be offered for sale or sold unless a registration
statement under the Securities Act and applicable state securities laws shall
have 

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    become
effective with respect thereto, or an exemption from registration under the
Securities Act and applicable state securities laws is available in connection
with such offer or sale.  These securities [and the securities
issuable hereunder] (i) may be pledged or hypothecated in connection with a bona
fide margin account or other financing secured by such securities or (ii) may be
transferred or assigned to an affiliate of the holder hereof without the
necessity of an opinion of counsel or the consent of the issuer
hereof.”

    

    Notwithstanding
the foregoing, it is agreed that, as long as (A) the resale or transfer
(including, without limitation, a pledge) of any of the Securities is registered
pursuant to an effective registration statement, (B) such Securities have been
sold pursuant to Rule 144, subject to receipt by the Company of customary
documentation reasonably acceptable to the Company in connection therewith, or
(C) such Securities are eligible for resale without limitation as to amount
under Rule 144 or any successor provision, such Securities shall be issued
without any legend or other restrictive language and, with respect to Securities
upon which such legend is stamped, the Company shall issue new certificates
without such legend to the holder upon request.  The Company shall
execute and deliver written instructions to the transfer agent for its Common
Stock (the “Transfer
Agent”) as may be necessary to satisfy any request by a Holder for
removal of such legends no later than the close of business on the third (3rd)
Business Day following the receipt of the request from a Holder to the extent
such legends may be removed in accordance with this Section
3.5.

    

    3.6           Reliance on
Exemptions.  Investor understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of U.S. federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations and
warranties of Investor set forth in this Section 3
in order to determine the availability of such exemptions and the eligibility of
Investor to acquire the Securities.  Investor acknowledges that it did
not purchase the Securities based upon any advertisement in any publication of
general circulation.  Investor is relying on the representations,
acknowledgements and agreements made by the Company in Section 4
and elsewhere in this Agreement in making investing, trading and/or other
decisions concerning the Company’s securities.

     

    3.7           Fees.  Investor
has not agreed to pay any compensation or other fee, cost or related expenditure
to any underwriter, broker, agent or other representative in connection with the
transactions contemplated hereby.

     

    3.8           No
Conflicts.  The
execution and performance of this Agreement and the other Transaction Documents
to which Investor is a party
do not conflict in any material respect with any agreement to which
Investor is a party or is
bound, any court order or judgment applicable to Investor, or the constituent documents of
Investor.

     

                   
3.9           No
Governmental Review.  Investor understands that no U.S. federal or state
agency or any other Governmental Authority has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of an investment in the Securities nor have such authorities passed upon
the accuracy of any information provided to Investor or made any findings
or determinations as to the merits of the offering of the Securities.

     

     

    
      
        
        

      

      
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    4.           REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.  The Company hereby represents
and warrants to each Holder and agrees with such Holder that, as of the
Execution Date:

    

    4.1           Organization, Good Standing
and Qualification.  Each of the Company and Company
Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power
and authority to carry on its business as now conducted.  Each of the
Company and Company Subsidiaries is duly qualified to transact business and is
in good standing in each jurisdiction in which it conducts business except where
the failure so to qualify has not had or would not reasonably be expected to
have a Material Adverse Effect.

    

    4.2           Authorization;
Consents.  The Company has the requisite corporate power and
authority to enter into and perform its obligations under the Transaction
Documents, including, without limitation, the issuance and sale of the
Securities to Investor in accordance with the terms hereof and
thereof.  All corporate action on the part of the Company necessary
for the authorization, execution and delivery of, and the performance by the
Company of its obligations under, the Transaction Documents to which the Company
is a party has been taken, and no further consent or authorization of any Person
(including, without limitation, any of the Company’s directors or shareholders
or any Governmental Authority (other than such approval as may be required under
the Securities Act and applicable state laws in respect of the Registration
Rights Agreement) is required under any organizational document, Material
Contract, Governmental Requirement or otherwise.  The Board of
Directors has determined that the sale and issuance of the Securities, and the
consummation of the transactions contemplated hereby and by the other
Transaction Documents, are in the best interests of the Company.

    

    4.3                      Enforcement.  This
Agreement has been and, at or prior to the Closing, each other Transaction
Document required to be delivered by the Company at the Closing will be, duly
executed and delivered by the Company.  This Agreement constitutes
and, upon the execution and delivery thereof by the Company, each other
Transaction Documents will constitute, the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with their
respective terms, subject to (i) applicable bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or other similar laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity.

    

    4.4           Disclosure Documents;
Agreements; Financial Statements; Other Information.  The
Company is subject to the reporting requirements of the Exchange Act and, except
as described on Schedule
4.4, the Company has filed with the Commission all SEC Documents that the
Company was required to file with the Commission on or after December 31,
2006.  The Company is not aware of any event occurring or expected to
occur on or prior to the Closing Date (other than the transactions effected
hereby) that would require the filing of, or with respect to which the Company
intends to file, a Form 8-K after the Closing.  Each SEC Document
filed on or after December 31, 2006, as of the date of the filing thereof with
the Commission (or if amended or superseded by a filing prior to the Execution
Date, then on the date of such amending or superseding filing), complied in all
material respects with the requirements of the Securities Act or Exchange Act,
as 

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    applicable,
and, as of the date of such filing (or if amended or superseded by a filing
prior to the Execution Date, then on the date of such filing), such SEC Document
(including all exhibits and schedules thereto and documents incorporated by
reference therein) did not contain an untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  All documents required to be filed as exhibits to the
SEC Documents filed on or after December 31, 2006 have been filed as
required.  Except as set forth in the Disclosure Documents, the
Company has no liabilities, contingent or otherwise, other than liabilities
incurred in the ordinary course of business which, individually or in the
aggregate, are not material to the consolidated business or financial condition
of the Company and the Company Subsidiaries. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect
thereto.  Such financial statements have been prepared in accordance
with GAAP consistently applied at the times and during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end adjustments).  The Company will prepare the financial
statements to be included in any reports, schedules, registration statements and
definitive proxy statements that the Company is required to file or files with
the Commission after the date hereof in accordance with GAAP (except in the case
of unaudited interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements).

    

    4.5           Capitalization; Subsidiaries; Outstanding
Debt.

    

    (a)           The
capitalization of the Company, including its authorized capital stock, the
number of shares issued and outstanding, the number of shares issuable and
reserved for issuance pursuant to the Company’s stock option plans and
agreements, the number of shares issuable and reserved for issuance pursuant to
securities (other than the Securities) payable in, exercisable for, or
convertible into or exchangeable for any shares of Common Stock is set forth on
Schedule
4.5(a).  All outstanding shares of capital stock of the Company
have been, or upon issuance will be, validly issued, fully paid and
non-assessable.

    

    (b)           All
of the Company Subsidiaries are disclosed on Schedule
4.5(b).  Each of the Company Subsidiaries that is indicated as
being “active” on Schedule
4.5(b) operates the business set forth opposite its name on Schedule
4.5(b).  None of the Company Subsidiaries that is indicated as
being “inactive”
on Schedule
4.5(b) has any assets or operations of any kind.  Except as
disclosed on Schedule
4.5(b), the Company or a wholly-owned Company Subsidiary owns all of the
capital stock of each Company Subsidiary, which capital stock is validly issued,
fully paid and non-assessable, and no shares of the capital stock of the Company
or any Company Subsidiary are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any such Company Subsidiary or any
Liens created by or through the Company or any such Company
Subsidiary.

     

     

    
      
        
        

      

      
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    (c)           Except
as disclosed on Schedule
4.5(c) or as contemplated herein, there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
or exchangeable for, any shares of capital stock of the Company or any Company
Subsidiary, or arrangements by which the Company or any Company Subsidiary is or
may become bound to issue additional shares of capital stock of the Company or
any Company Subsidiary (whether pursuant to anti-dilution, “reset” or other
similar provisions).

     

    (d)           Schedule
4.5(d) identifies each individual item of Debt of the Company and/or any
Company Subsidiary currently outstanding in excess of $25,000 as of the date
hereof.

    

    4.6           Due Authorization; Valid
Issuance.  The Securities are duly authorized and, when issued,
sold and delivered in accordance with the terms of this Agreement, will be duly
and validly issued, free and clear of any Liens imposed by or through the
Company.  Assuming the accuracy of Investor’s representations
contained herein, the issuance and sale of the Securities under this Agreement
will be effected in compliance with all applicable federal and state securities
laws.

    

    4.7           Form
S-1.  The Company is eligible to register the Registrable
Securities for resale by each Holder on a registration statement on Form S-1
under the Securities Act.   As of the date hereof and as of the
Closing Date, there exist no facts or circumstances (including, without
limitation, any required approvals or waivers of any circumstances that may
delay or prevent the obtaining of accountant’s consents) that could reasonably
be expected to prohibit or delay the preparation, filing or effectiveness of
such registration statement on Form S-1.

    

    4.8           No
Conflict.  Neither the Company nor any Company Subsidiary is in
violation of any provisions of its certificate or articles of incorporation,
bylaws or any other organizational document.  Neither the Company nor
any Company Subsidiary is in violation of or in default (and no event has
occurred which, with notice or lapse of time or both, would constitute a
default) under any provision of any instrument or contract to which it is a
party or by which it or any of its Property is bound, or in violation of any
provision of any Governmental Requirement applicable to the Company or any
Company Subsidiary, except for any violation or default that has not had or
would not reasonably be expected to have a Material Adverse
Effect.  The (i) execution, delivery and performance of this Agreement
and the other Transaction Documents and (ii) consummation of the transactions
contemplated hereby and thereby will not result in any violation of any
provisions of the Company’s certificate of incorporation, bylaws or any other
organizational document or in a default under any provision of any material
instrument or contract to which the Company or any Company Subsidiary is a party
or by which it or any of its Property is bound, or in violation of any provision
of any Governmental Requirement applicable to the Company or be in conflict with
or constitute, with or without the passage of time and giving of notice, a
default under any such instrument or contract or the triggering of any
preemptive or anti-dilution rights (including, without limitation, pursuant to
any “reset” or similar provisions) or rights of first refusal or first offer, or
any other rights that would allow or permit the holders of the Company’s
securities or any other Person to purchase shares of Common Stock or other
securities of the Company or any Company Subsidiary (whether pursuant to a
shareholder rights plan provision or otherwise).

    

    4.9           Financial Condition; Taxes;
Litigation.

     

     

     

    
      
        
        

      

      
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    4.9.1                      The
financial condition of each of the Company and Company Subsidiaries is, in all
material respects, as described in the Disclosure Documents, except for changes
in the ordinary course of business and normal year-end adjustments that are not,
in the aggregate, materially adverse to the consolidated business or financial
condition of the Company and the Company Subsidiaries.  There has been
no (i) material adverse change to the business, operations, properties,
financial condition, prospects or results of operations of the Company and any
Company Subsidiary since the date of the Company’s most recent financial
statements contained in the Disclosure Documents or (ii) change by the
Company in its accounting principles, policies and methods except as required by
changes in GAAP.

     

    4.9.2                      Each
of the Company and Company Subsidiaries has prepared in good faith and duly and
timely filed all tax returns required to be filed by it and such returns are
complete and accurate in all material respects, except for tax returns that
would not reasonably be expected to have a Material Adverse Effect; and each of
the Company and Company Subsidiaries has paid all taxes required to have been
paid by it, except for taxes which it reasonably disputes in good faith or the
failure of which to pay has not had or would not reasonably be expected to have
a Material Adverse Effect.  Neither the Company nor any Company
Subsidiary has any liability with respect to taxes that accrued on or before the
date of the most recent balance sheet of the Company included in the Disclosure
Documents in excess of the amounts accrued with respect thereto that are
reflected on such balance sheet.

    

    4.9.3                      Neither
the Company nor any Company Subsidiary is the subject of any pending or, to the
Company’s knowledge, threatened inquiry, investigation or administrative or
legal proceeding by any Governmental Authority.

    

    4.9.4                      There
is no material claim, litigation or administrative proceeding pending, or, to
the Company’s knowledge, threatened or contemplated, against the Company or any
Company Subsidiary, or against any officer, director or employee of the Company
or any such Company Subsidiary in connection with such Person’s employment
therewith, except for Schedule
4.9.4.  Neither the Company nor any Company Subsidiary is a
party to or subject to the provisions of, any order, writ, injunction, judgment
or decree of any court or Governmental Authority which has had or would
reasonably be expected to have a Material Adverse Effect.

    

    4.10           Manipulation of
Price.  The Company has not, and to its knowledge no one acting
on its behalf has, taken, directly or indirectly, any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the
Securities.

    

    4.11           Intellectual
Property.

    

    (a)           Each
of the Company and Company Subsidiaries owns, free and clear of claims or rights
of any other Person, with full right to use, sell, license, sublicense, dispose
of, and bring actions for infringement of, or, to the knowledge of the Company,
has acquired licenses or other rights to use, all Intellectual Property
necessary for the conduct of its business as presently conducted (other than
with respect to software which is generally commercially available and not used
or incorporated into the Company’s or such Company Subsidiary’s products and
open source software which may be subject to one or more “general public”
licenses).  All works that are used or 

     

     

    
      
        
        

      

      
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      incorporated
into the Company’s or any Company Subsidiary’s services, products or services or
products actively under development and which is proprietary to the Company or
such Company Subsidiary was developed by or for the Company or a Company
Subsidiary by the current or former employees, consultants or independent
contractors of the Company or a Company Subsidiary or purchased or licensed by
the Company or a Company Subsidiary.

    

    

    (b)           The
business of each of the Company and Company Subsidiaries as presently conducted
and the production, marketing, licensing, use and servicing of any products or
services of each of the Company and Company Subsidiaries do not, to the
knowledge of the Company, infringe or conflict with any patent, trademark,
copyright, or trade secret rights of any third parties or any other Intellectual
Property of any third parties in any material respect.  Neither the
Company nor any Company Subsidiary has received written notice from any third
party asserting that any Intellectual Property owned or licensed by the Company
or a Company Subsidiary, or which the Company or any Company Subsidiary
otherwise has the right to use, is invalid or unenforceable by the Company or
such Company Subsidiary and, to the Company’s knowledge, there is no valid basis
for any such claim (whether or not pending or threatened).

    

    (c)           No
claim is pending or, to the Company’s knowledge, threatened against the Company
or any Company Subsidiary nor has the Company or any Company Subsidiary received
any written notice or other written claim from any Person asserting that the
Company’s or any Company Subsidiary’s present or contemplated activities
infringe or may infringe in any material respect any Intellectual Property of
such Person, and the Company is not aware of any infringement by any other
Person of any material rights of the Company or any Company under any
Intellectual Property Rights.

    

    (d)           All
licenses or other agreements under which the Company or any Company Subsidiary
is granted Intellectual Property (excluding licenses to use software utilized in
the Company’s or such Company Subsidiary’s internal operations and which is
generally commercially available) are in full force and effect and, to the
Company’s knowledge, there is no material default by any party
thereto.  The Company has no reason to believe that the licensors
under such licenses and other agreements do not have and did not have all
requisite power and authority to grant the rights to the Intellectual Property
purported to be granted thereby.

    

    (e)           All
licenses or other agreements under which the Company or any Company Subsidiary
has granted rights to Intellectual Property to others (including all end-user
agreements) are in full force and effect, there has been no material default by
the Company or any Company Subsidiary thereunder and, to the Company’s
knowledge, there is no material default of any provision thereof relating to
Intellectual Property by any other party thereto.

    

    (f)           Each
of the Company and Company Subsidiaries has taken all steps required in
accordance with commercially reasonable business practice to establish and
preserve their ownership in their owned Intellectual Property and to keep
confidential all material technical information developed by or belonging to the
Company or such Company which has not been patented or
copyrighted.  To the Company’s knowledge, neither the Company nor any
Company Subsidiary is making any unlawful use of any Intellectual Property of
any other Person, including, without limitation, any former employer of any past
or present employees of the Company or any 

     

     

    
      
        
        

      

      
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      Company
Subsidiary.  To the Company’s knowledge, neither the Company, any
Company Subsidiary nor any of their respective employees has any agreements or
arrangements with former employers of such employees relating to any
Intellectual Property of such employers, which materially interfere or conflict
with the performance of such employee’s duties for the Company or any Company
Subsidiary or result in any former employers of such employees having any rights
in, or claims on, the Company’s or any Company Subsidiary’s Intellectual
Property.  Each current employee of each of the Company and Company
Subsidiaries who has access to material Intellectual Property has executed
agreements regarding confidentiality, proprietary information and assignment of
inventions and copyrights to the Company or such Company Subsidiary, as the case
may be, each independent contractor or consultant of each of the Company and
Company Subsidiaries who has access to material Intellectual Property has
executed agreements regarding confidentiality and proprietary information, and
neither the Company nor any Company Subsidiary has received written notice that
any employee, consultant or independent contractor is in violation of any
agreement or in breach of any agreement or arrangement with former or present
employers relating to proprietary information or assignment of
inventions.  Without limiting the foregoing: (i) each of the Company
and Company Subsidiaries has taken reasonable security measures to guard against
unauthorized disclosure or use of any of its Intellectual Property that is
confidential or proprietary; and (ii) the Company has no reason to believe that
any Person (including, without limitation, any former employee or consultant of
the Company or any Company Subsidiary) has unauthorized possession of any of its
Intellectual Property, or any part thereof, or that any Person has obtained
unauthorized access to any of its Intellectual Property.  Each of the
Company and Company Subsidiaries has complied in all material respects with its
respective obligations pursuant to all agreements relating to Intellectual
Property rights that are the subject of licenses granted by third parties,
except for any non-compliance that has not had or would not reasonably be
expected to have a Material Adverse Effect.

    

    

    4.12           Registration Rights; Rights
of Participation.  Except as set forth on Schedule
4.12, the Company has not granted or agreed to grant to any Person any
rights (including “piggy-back” registration rights) to have any securities of
the Company registered with the Commission or any other Governmental Authority
which has not been satisfied in full or waived on or prior to the date hereof
and no Person, including, but not limited to, current or former shareholders of
the Company, underwriters, brokers, agents or other third parties, has any right
of first refusal, preemptive right, right of participation, anti-dilutive right
or any similar right to participate in, or to receive securities or other assets
of the Company solely as a result of the transactions contemplated by this
Agreement or the other Transaction Documents.

    

    4.13           Solicitation; Other
Issuances of Securities.  In the preceding twelve months,
neither the Company nor any of its Affiliates, nor any Person acting on its or
their behalf, (i) has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities, or (ii) has, directly or indirectly, made any offers or
sales of any security or the right to purchase any security, or solicited any
offers to buy any security or any such right, under circumstances that would
require registration of the Securities under the Securities Act.

     

     

    
      
        
        

      

      
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    4.14           Fees.  Except
as set forth on Schedule
4.14, the Company is not obligated to pay any brokers, finders or
financial advisory fees or commissions to any underwriter, broker, agent or
other representative in connection with the transactions contemplated
hereby.  The Company will indemnify and hold harmless each Holder from
and against any claim by any Person alleging that such Holder is obligated to
pay any such compensation, fee, cost or related expenditure in connection with
the transactions contemplated hereby.

    

    4.15           Foreign Corrupt
Practices.  Neither the Company, any Company Subsidiary nor, to
the knowledge of the Company, any director, officer, agent, employee or other
Person acting on behalf of the Company or any Company Subsidiary, has (i) used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity, (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee, or (iii) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended, or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.

    

    4.16           Key Employees. The
“executive officers” (as defined in Rule 501(f) of the Securities Act) of the
Company (each, a “Key
Employee”) is currently serving in the capacity described in the
Disclosure Documents.  The Company has no knowledge of any fact or
circumstance (including, without limitation, (i) the terms of any agreement to
which such person is a party or any litigation in which such person is or may
become involved and (ii) any illness or medical condition that could reasonably
be expected to result in the disability or incapacity of such person) that would
limit or prevent any such person from serving in such capacity on a full-time
basis in the reasonably foreseeable future, or of any intention on the part of
any such person to limit or terminate his or her employment with the Company or
any Company Subsidiary.  No Key Employee has borrowed money pursuant
to a currently outstanding loan that is secured by Common Stock or any right or
option to receive Common Stock.

    

    4.17           Labor
Matters.  There is no strike, labor dispute or union
organization activities pending or, to the knowledge of the Company, threatened
between the Company or any Company Subsidiary and their respective
employees.  No employees of the Company or any Company Subsidiary
belong to any union or collective bargaining unit.  Each of the
Company and Company Subsidiaries has complied in all material respects with all
applicable federal and state equal opportunity and other laws related to
employment.

    

    4.18           Environment.  Neither
the Company nor any Company Subsidiary has any liabilities under any
Environmental Law, nor, to the Company's knowledge, do any factors exist that
are reasonably likely to give rise to any such liability, affecting any of the
properties owned or leased by the Company or any Company Subsidiary, in each
case other than liabilities that have not had and would not reasonably be
expected to have a Material Adverse Effect.  Neither the Company nor
any Company Subsidiary has violated any Environmental Law applicable to it now
or previously in effect, other than any violation that has not had and would not
reasonably be expected to have a Material Adverse Effect.

     

    4.19           ERISA.  Neither
the Company nor any Company Subsidiary maintains or contributes to, or has any
obligation under, any Pension Plan, except for 401K plan that ADP TotalSource
and Oasis Outsourcing maintains for Company employees as part of its payroll
services.  Each of the Company and Company Subsidiaries is in
compliance in all material respects with the presently applicable provisions of
ERISA and the United States Internal Revenue Code of 1986, as amended, with
respect to each Pension Plan except in any such case for any such matters that,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect.

     

     

    
      
        
        

      

      
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    4.20           Insurance.  The
Company maintains insurance for itself and each Company Subsidiary in such
amounts and covering such losses and risks as are reasonably sufficient and
customary in the businesses in which the Company and each such Company
Subsidiary are engaged.  As of the date hereof and as of the Closing
Date, no notice of cancellation has been received for any of such policies and
the Company is in compliance in all material respects with all of the terms and
conditions thereof.  The Company has no 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 to conduct its business as currently conducted without a significant
increase in cost.  Without limiting the generality of the foregoing,
the Company maintains Director’s and Officer’s insurance in an amount not less
than $5 million for each covered occurrence.

    

    4.21           Property.  Each
of the Company and Company Subsidiaries has good and marketable title to all
real and personal Property owned by it, in each case free and clear of all
Liens, other than the Permitted Liens.  Any Property held under lease
by the Company or a Company Subsidiary is held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made or proposed to be made of such Property by the Company or such
Company Subsidiary.

     

    4.22           Regulatory
Permits.  Each of the Company and Company Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct its business, except
where the failure to have any such certificate,
authorization
or permit would not have a Material Adverse Effect, and neither the
Company nor any Company Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit.

    

    4.23           Investment
Company.  Neither the Company nor any Company Subsidiary is
and, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof, will become an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.

    

    4.24           U.S. Real Property Holding
Corporation.  The Company is not, nor has ever been, a U.S.
real property holding corporation within the meaning of Section 897 of the
Internal Revenue Code of 1986, as amended.

    

    4.25           Off Balance Sheet
Arrangements.  There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its Exchange Act
filings and is not so disclosed or that otherwise would be reasonably likely to
have a Material Adverse Effect.

     

     

     

    
      
        
        

      

      
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    4.26           Money
Laundering.  The operations of the Company and the Company
Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder, and no
action, suit or proceeding by or before any Governmental Authority involving the
Company or any of the Company Subsidiaries with respect to such Governmental
Requirements is pending or, to the knowledge of the Company,
threatened.

    

    4.27           Transfer Taxes. No
stock transfer or other taxes (other than income taxes) are required to be paid
in connection with the issuance and sale of any of the Securities, other than
such taxes for which the Company has established appropriate reserves and
intends to pay in full on or before the Closing.

    

    4.28           Sarbanes-Oxley Act; Internal
Controls and Procedures.  To the Company’s knowledge, the
Company is in material compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and
regulations promulgated by the Commission thereunder that are effective as of
the date hereof.  The Company maintains internal accounting controls,
policies and procedures, and such books and records as are reasonably designed
to provide reasonable assurance that (i) all transactions to which the Company or any Company
Subsidiary is a party or by which its properties are bound are effected by a
duly authorized employee or agent of the Company, supervised by and acting
within the scope of the authority granted by the Company’s senior management;
(ii)
the recorded accounting of the Company’s consolidated assets is compared with
existing assets at regular intervals; and (iii) all
transactions to which the Company or any Company Subsidiary is a party, or by
which its properties are bound, are recorded (and such records maintained) in
accordance with all Governmental Requirements and as may be necessary or
appropriate to ensure that the financial statements of the Company are prepared
in accordance with GAAP.

    

    4.29           Embargoed
Person.  None of the funds or other assets of the Company or
any Company Subsidiary shall constitute property of, or shall be beneficially
owned, directly or indirectly, by any Person subject to trade restrictions under
United States law, including, but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. § 1701 et seq., the Trading
with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Orders or regulations promulgated under any such United States laws
(each, an “Embargoed
Person”), with the result that the investments evidenced by the
Securities are or would be in violation of any Governmental
Requirements.  No Embargoed Person shall have any interest of any
nature whatsoever in the Company or any Company Subsidiary with the result that
the investments evidenced by the Securities are or would be in violation of any
Governmental Requirements.  None of the funds or other assets of the
Company or any Company Subsidiary shall be derived from any unlawful activity
with the result that the investments evidenced by the Securities are or would be
in violation of any Governmental Requirements.

    

    4.30           Transactions with Interested
Persons.  Except as provided in the Transaction Documents
and/or Disclosure Documents, no officer, director or employee of the Company or
any Company Subsidiary is or has made any arrangements with the Company or any
Company Subsidiary to become a party to any transaction with the Company or any
Company 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.

     

     

    
      
        
        

      

      
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    4.31           Customers and
Suppliers.  The relationships of each of the Company and
Company Subsidiaries with its customers and suppliers are maintained on
commercially reasonable terms.  To the Company’s knowledge, no
customer or supplier of the Company or a Company Subsidiary has any plan or
intention to terminate its agreement with the Company or such Company
Subsidiary, which termination would reasonably be expected to have a Material
Adverse Effect.

    

    4.32           Accountants.  The
Company’s accountants, who the Company expects will render their opinion with
respect to the financial statements to be included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008, are, to the Company’s
knowledge, independent accountants as required by the Securities
Act.

    

    4.33           Bankruptcy.  The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will be required to file for reorganization or liquidation under
bankruptcy or reorganization laws of any jurisdiction, and has no present
intention to so file.

    

    4.34           Disclosure.  The
representations, warranties and written statements contained in this Agreement
and the other Transaction Documents and in the certificates, exhibits and
schedules delivered by the Company to Investor pursuant to this Agreement and
the other Transaction Documents and in connection with Investor’s due diligence
investigation of the Company, do not contain any untrue statement of a material
fact, and do not omit to state a material fact required to be stated therein or
necessary in order to make such representations, warranties or statements not
misleading in light of the circumstances under which they were
made.  Neither the Company nor any Person acting on its behalf or at
its direction has provided Investor with material non-public information other
than the terms of the transactions contemplated hereby.  Following the
issuance of a press release in accordance with Section 5.1(c), to the Company’s
knowledge, Investor will not possess any material non-public information
concerning the Company that was provided to Investor by the Company or its
agents or representatives.  The Company acknowledges that Investor is
relying on the representations, acknowledgments and agreements made by the
Company in this Section 4.34 and elsewhere in this Agreement in making trading
and other decisions concerning the Company’s securities.

    

    5.           COVENANTS
AND AGREEMENTS.

    

    5.1           Filings and Public
Disclosure by the Company.  The Company shall:

     

    (a)           file
a Form D with respect to the Securities issued at the Closing as and when
required under Regulation D and provide a copy thereof to Investor promptly
after such filing;

     

    (b)           at
or prior to the Closing, take such action as the Company reasonably determines
upon the advice of counsel is necessary to qualify the Securities for sale under
applicable state or “blue-sky” laws or obtain an exemption therefrom, and shall
promptly provide evidence of any such action to Investor at Investor’s request;
and

     

     

    
      
        
        

      

      
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    (c)           (i)
on or prior to 8:30 a.m. (eastern time) on the Business Day following the
Execution Date, issue a press release disclosing the material terms of this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby, and (ii) on or prior to 5:00 p.m. (eastern time) on the
Business Day following the Execution Date, file with the Commission a Current
Report on Form 8-K disclosing the material terms of and including as exhibits
this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby; provided, however, that
Investor shall have a reasonable opportunity to review and comment on any such
press release or Form 8-K prior to the issuance or filing thereof; and provided, further, that if
the Company fails to issue a press release disclosing the material terms of this
Agreement and the other Transaction Documents within the time frames described
herein, any Holder may issue a press release disclosing such information without
any notice to or consent by the Company.  Thereafter, the Company
shall timely file any filings and notices required by the Commission or
applicable law with respect to the transactions contemplated
hereby.

    

    5.2           Use of
Proceeds.  The Company shall use the proceeds from the sale of
the Securities for marketing and growth purposes.

     

    5.3           Certain Affirmative
Covenants of the Company.  The Company agrees that, unless an
exception is permitted by the prior written approved of Holders of a majority of
the outstanding Securities, the Company shall, and shall cause each Company
Subsidiary to:

     

    (a)           maintain
its corporate existence in good standing;

    

    (b)           comply
with all Governmental Requirements applicable to the operation of its business,
except for instances of noncompliance that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;

    

    (c)           comply
with all agreements, documents and instruments binding on it or affecting its
Properties or business, including, without limitation, all Material Contracts,
except for instances of noncompliance that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;

    

    (d)           provide
each Holder with copies of all materials sent to its shareholders at the same
time as such materials are delivered to such shareholders;

     

    (e)           timely
file with the Commission all reports required to be filed pursuant to the
Exchange Act and refrain from terminating its status as an issuer required by
the Exchange Act to file reports thereunder even if the Exchange Act or the
rules or regulations thereunder would permit such termination (and otherwise
make and keep public information available, as those terms are understood and
defined in Rule 144);

     

    (f)           ensure
that the Common Stock is at all times listed or quoted on the Nasdaq
over-the-counter bulletin board market, Nasdaq Global Market, the New York Stock
Exchange, the American Stock Exchange, or such other exchange or quotation
service reasonably satisfactory to the Holder (or if there is more than one
Holder, the Holders holding a majority of the Series B Preferred Stock held by
all Holders); and

     

     

    
      
        
        

      

      
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    (g)           maintain
commercially reasonable insurance coverage (including D&O insurance) for
each of the Company and Company Subsidiaries.

     

    5.4           Certain Negative Covenants
of the Company.  The Company agrees that, without the prior
written approval of Holders of a majority of the outstanding Securities the
Company shall not, and shall cause each Company Subsidiary not to:

    

    (a)           enter
into any transaction or arrangement with any Affiliate, employee, officer,
director or shareholder of the Company or Company Subsidiary, unless such
transaction is effectuated on an arms’ length basis and approved by the
independent directors of the Company or such Company Subsidiary, as the case may
be;

    

    (b)           incur
(or permit to exist) any Debt (other than Permitted Debt);

    

    (c)           grant,
establish or maintain any Lien on any of its Property other than Permitted
Liens;

    

    (d)           make
any Restricted Payments other than Restricted Payments made by a Company
Subsidiary to the Company;

    

    (e)           make
any offers or sales of any security or solicit any offers to buy any security,
which will be integrated with the sale of the Securities in a manner which would
require the registration of any of the Securities under the Securities Act or
require stockholder approval under the rules and regulations of the Principal
Market;

    

    (f)           issue
any shares of its Series B Preferred Stock;

    

    (g)           dispose
of all or any part of its Property unless (i) such disposition is in the
ordinary course of business and for fair market value, and (ii) such Property is
not material to the Company’s or any Company Subsidiary’s business, operations
or financial condition or performance;

    

    (h)           consent
to or implement any termination, amendment, modification, supplement or waiver
of the certificate or articles of incorporation, articles of organization,
bylaws, regulations or other constituent documents of the Company or any Company
Subsidiary which would reasonably be expected to adversely affect the rights of
any Holder under the Transaction Documents;

    

    (i)           issue
any shares of its Common Stock or warrants/options, or any other right to
purchase Common Stock, except Common Stock issued as conversion of Permitted
Debt, options issued from the Company Incentive Stock Plan or Common Stock
issued through exercise of warrants and options outstanding as of this date;
or

    

    (j)           reverse
stock split or combination of any class of outstanding shares of its capital
stock.

    

     

     

    
      
        
        

      

      
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    5.5           Intentionally
left blank.

     

    5.6.           Intentionally
left blank.

     

    5.7           Intentionally
left blank.

    

    5.8           Use of Holder’s
Name.  Except as may be required by applicable law and/or this
Agreement, the Company shall not use, directly or indirectly, any Holder’s name
or the name of any of its Affiliates in any advertisement, announcement, press
release or other similar communication unless it has received the prior written
consent of such Holder for the specific use contemplated or as otherwise
required by applicable law or regulation.  Notwithstanding the
foregoing, it is agreed by the parties that a Form 8K filing disclosing this
Agreement and the Transaction Documents shall not require the Holder’s prior
written consent.

    

    5.9           Disclosure of Non-Public
Information. The Company agrees that it will not at any time following
the Execution Date disclose material non-public information to any Holder
without first obtaining such Holder’s prior written consent confirming that such
Holder is willing to receive material non-public information at such
time.

    

    5.10           Indemnification of
Holders.   The Company will indemnify and hold each Holder
and its directors, managers, officers, shareholders, members, partners,
employees and agents (each, a “Holder
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 that any such Holder 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 by
the Company or any Company Subsidiary in the other Transaction Documents or (b)
any action instituted against a Holder, or any of its Affiliates, by any
shareholder of the Company who is not an Affiliate of such Holder, with respect
to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Holder’s representation, warranties
or covenants under the Transaction Documents or any agreements or understandings
such Holder may have with any such shareholder or any violations by such Holder
or any such Affiliate of state or federal securities laws or any conduct by such
Holder or any such Affiliate which constitutes fraud, gross negligence, willful
misconduct or malfeasance).  If any action shall be brought against
any Holder Party in respect of which indemnity may be sought pursuant to this
Agreement, such Holder 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.  Any Holder Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Holder
Party 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 following such Holder Party’s written request that it
do so, 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 on any material issue between the position of the Company and the
position of such Holder Party.  The Company will not be liable to any
Holder Party under this Agreement (i) for any settlement by a Holder 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 attributable to such Holder Party’s
wrongful actions or omissions, or gross negligence or to such Holder Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Holder Party in this Agreement or in the other Transaction
Documents.

     

     

    
      
        
        

      

      
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    5.11           Limitations on Disposition
by Holder.  No Holder shall sell, transfer, assign or dispose
of any Securities or any right hereunder to acquire any Securities,
unless:

     

    (a)           there
is then in effect an effective registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or

    

    (b)           such
Holder has notified the Company in writing of any such disposition, and
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such Securities
or rights, as the case may be, under the Securities Act; provided, however, that no
such opinion of counsel will be required (A) if the sale, transfer,
assignment or disposition is made to an Affiliate of such Holder, (B) if the
sale, transfer, assignment or disposition is made pursuant to Rule 144 and
such Holder provides the Company with evidence reasonably satisfactory to the
Company that the proposed transaction satisfies the requirements of Rule 144,
(C) if such Securities are eligible for resale without limitation so to amount
under Rule 144 or any successor provision or (D) if in connection with a
bona fide pledge or
hypothecation of any Securities under a margin arrangement with a broker-dealer
or other financial institution or the sale of any such Securities by such
broker-dealer or other financial institution following such Holder’s default
under such margin arrangement.

    

    
      6.    MISCELLANEOUS.

    

    
    

    

    6.1           Survival;
Severability.  The representations, warranties, covenants and
indemnities made by the parties herein and in the other Transaction Documents
shall survive the Closing notwithstanding any due diligence investigation made
by or on behalf of the party seeking to rely thereon. In the event that any
provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision; provided that in such case
the parties shall negotiate in good faith to replace such provision with a new
provision which is not illegal, unenforceable or void, as long as such new
provision does not materially change the economic benefits of this Agreement to
the parties.

    

    6.2           Successors and
Assigns.  The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties.  Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.  A Holder may assign its rights
and obligations hereunder in connection with any private sale or transfer of all
or any part of the Securities or right hereunder to acquire all or any part of
the Securities that is permitted hereunder, as long as, as a condition precedent
to such transfer, the transferee executes an acknowledgment agreeing to be bound
by the applicable provisions of this Agreement, in which case the term “Holder”
shall be deemed to refer to such transferee as though such transferee were an
original signatory hereto, and such assignment complies with applicable
Governmental Requirements.  The Company may not assign its rights or
obligations under this Agreement.

     

     

     

    
      
        
        

      

      
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    6.3           No
Reliance.  Each party acknowledges that (i) it has such
knowledge in business and financial matters as to be fully capable of evaluating
this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby, (ii) it is not relying on any advice or
representation of any other party in connection with entering into this
Agreement, the other Transaction Documents or such transactions (other than the
representations made in this Agreement or the other Transaction Documents),
(iii) it has not received from any other party any assurance or guarantee as to
the merits (whether legal, regulatory, tax, financial or otherwise) of entering
into this Agreement or the other Transaction Documents or the performance of its
obligations hereunder and thereunder, and (iv) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisors
to the extent that it has deemed necessary, and has entered into this Agreement
and the other Transaction Documents based on its own independent judgment and,
if applicable, on the advice of such advisors, and not on any view (whether
written or oral) expressed by any other party.

    

    6.4           Independent Nature of
Holders’ Obligations and Rights.  The obligations of each
Holder hereunder are several and not joint with the obligations of the other
Holders hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. The Company
acknowledges and agrees that nothing contained herein or in any other
Transaction Document, and no action taken by any Holder pursuant hereto or
thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or a “group” as
described in Section 13(d) of the Exchange Act, or create a presumption that the
Holders are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement.  Each Holder has been
represented by its own separate counsel in connection with the transactions
contemplated hereby, shall be entitled to protect and enforce its rights,
including, without limitation, rights arising out of this Agreement or the other
Transaction Documents, individually, and shall not be required to join any other
Holder as an additional party in any proceeding for such purpose.

    

    6.5           Injunctive
Relief.  The Company acknowledges and agrees that a breach by
it of its obligations hereunder will cause irreparable harm to each Holder and
that the remedy or remedies at law for any such breach will be inadequate and
agrees, in the event of any such breach, in addition to all other available
remedies, such Holder shall be entitled to an injunction restraining any breach
and requiring immediate and specific performance of such obligations without the
necessity of showing economic loss or the posting of any bond.

     

    6.6           Governing Law; Jurisdiction;
Waiver of Jury Trial.

    

    (a)           This
Agreement shall be governed by and construed under the laws of the State of
Florida applicable to contracts made and to be performed entirely within the
State of Florida.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City and
County of Palm Beach for the adjudication of any dispute hereunder or

     

     

    
      
        
        

      

      
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    any other
Transaction Document or in connection herewith or therewith or with any
transaction contemplated hereby or thereby, 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 brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper.  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 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.

    

    (b)           EACH
PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY DISPUTE OR CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT
(I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION
6.6(b).

    

    6.7           Counterparts;
Facsimile.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.  Any executed
signature page delivered by facsimile or e-mail transmission shall be binding to
the same extent as an original executed signature page, with regard to any
agreement subject to the terms hereof or any amendment thereto.

    

    6.8           Headings.  The
headings used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

    

    6.9           Governing Law, Jurisdiction
and Attorneys Fees.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
contracts made and to be performed entirely within the State of
Florida.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Palm Beach County,
Florida, for the adjudication of any dispute hereunder or under the other
Transaction Documents or in connection herewith or therewith, 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 brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper, and, in furtherance of
such agreement, each party hereby agrees and consents that without limiting
other methods of obtaining jurisdiction, personal jurisdiction over it in any
such action or proceeding may be obtained within or without the jurisdiction of
such court and that any process or notice of motion or other application to any
such court in connection with any such action or proceeding may be served upon
such party by registered mail to or by personal service at the address of such
party provided in accordance with Section 6.10 hereof. The prevailing party in
any action arising under this Agreement or the Transaction Documents shall be
entitled to be reimbursed for its reasonable attorneys fees and costs incurred
in such action and through all appeals.

    

    

    6.10           Notices.  Any
notice, demand or request required or permitted to be given by the Company or
the Holder pursuant to the terms of this Agreement shall be in writing and shall
be deemed delivered (i) when delivered personally or by verifiable facsimile
transmission, unless such delivery is made on a day that is not a Business Day,
in which case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to an
overnight courier and (iii) on the Business Day actually received if deposited
in the U.S. mail (certified or registered mail, return receipt requested,
postage prepaid), addressed as follows:

    

    If to the
Company:

    Celsius
Holdings, Inc

    140 NE
4th
Ave, Suite C

    Delray
Beach, FL 33483

    Attn:
Chief Executive Officer

    Tel:
(561) 276-2239

    Fax:
(561) 276-2268

    

    With a copy (which shall not constitute
notice) to:

    

    Baritz
Colman LLP

    1075
Broken Sound Parkway, NW

    Suite
102

    Boca
Raton, Florida 33487

    Attn:
Roger Shaffer

    Tel:
(561) 862-5535

    Fax:
(561) 864-5101

     

     

     

    
      
        
        

      

      
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    and if to
any Holder, to such address for such Holder as shall appear on such Holder’s
signature page hereto, or as shall be designated by such Holder in writing to
the Company in accordance with this Section
6.10.

    

    6.11           Entire Agreement;
Amendments.  This Agreement and the other Transaction Documents
constitute the entire agreement between the parties with regard to the subject
matter hereof and thereof, superseding all prior agreements or understandings,
whether written or oral, between or among the parties.  Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended except pursuant to a written instrument executed by the Company and (i)
while the Note is outstanding, by the Holders holding a majority of the
outstanding principal of the Note, and (ii) if the Note is no longer
outstanding, by the Holders holding a majority of the shares of Series B
Preferred Stock held by all Holders.  Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

    

     

    [Signature
Pages to Follow]

     

     

     

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.

    

    CELSIUS
HOLDINGS, INC.

    

    

    By:           /s/ Stephen C. Haley        

               Name:
Stephen C. Haley

               Title:   Chief
Executive Officer

    

    

    CDS
VENTURES OF SOUTH FLORIDA, LLC

    

    

    By:                
William H. Milmoe        

               Name:
William H. Milmoe

               Title:  Manager

    

    

    ADDRESS:

    

    3299 NW
Second Avenue

    Boca
Raton, Florida 33431

    

    With
a copy (which shall not constitute notice) to:

    

    Muller
& Lebensburger

    7385
Galloway Road

    Suite
200

    Miami,
Florida 33173

    Attention:  Charles
Muller, Esq.

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