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Unassociated Document

    EMPLOYMENT
AGREEMENT

    

    This Employment Agreement (“Agreement”)
is entered into by and between Skinny Nutritional Corp. (the “Company”) and
Donald McDonald (“Employee”) on this 12th day of
August, 2010.

    

    Article
1.  Position and Duties.

    

    Section 1.01.  The
Company hereby continues the employment of the Employee and the Employee hereby
accepts continued employment pursuant to the terms of this Agreement. Your
employment under this Agreement will take effect on August 12, 2010 (the
“Effective Date”) and will continue until the third anniversary of the Effective
Date; provided
that the term of this Agreement shall automatically be extended for one (1)
additional year on the first  anniversary of the Effective Date and
each anniversary thereafter, unless, not less than ninety (90) days prior to
each such date, either party shall have given notice to the other that it does
not wish to extend the term.  You will be employed by the Company on a
full-time basis in the position of Chief Financial Officer.  In
addition, you will serve as an officer of one or more of the Company’s
Affiliates without further compensation, as you are requested from time to
time.

    

    During
the term of this Agreement (the “Term”), the Company shall nominate Employee,
and use its best efforts to have him elected, to the Board of Directors of the
Company (the “Board”) throughout
the term of this Agreement and shall include him in the management slate for
election as a director at every stockholders meeting during the Term at which
his term as a director would otherwise expire. Employee agrees to accept
election, and to serve during the Term, as director of the Company.

    

    Section 1.02.  You
agree to perform the duties of your position and such other duties as reasonably
may be assigned to you from time to time by the Chief Executive Officer and/or
the Board; provided, however, that you
shall not be assigned duties that are inconsistent with your position, duties,
responsibilities and status with the Company immediately prior to the Effective
Date.  You also agree that, while employed by the Company, you will
devote your full business time and your best efforts, business judgment, skill
and knowledge to the advancement of the business and interests of the Company
and its Affiliates and to the discharge of your duties and responsibilities for
them.  This provision does not prevent you from serving on the board
of any business, church, non-profit or charitable organization; provided that such
service does not give rise to a conflict of interest; provided further that such
activities do not materially detract from your performance of your duties
hereunder and that as a precondition the Board of Directors of the Company (the
“Board”) has been notified of your service on such board, and has agreed in
writing to permit such service.

    

    Article
2.  Compensation and Benefits.  During your
employment, as compensation in full for all services performed by you for the
Company and its Affiliates, the Company will provide you the following pay and
benefits.

     

    
      
        
        

      

      
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    Section 2.01.  Base Salary.  The
Company will pay you a base salary at the rate of $140,000 per year, payable in
accordance with the regular payroll practices of the Company and subject to
increase from time to time by the Board in its discretion. This salary will
increase by an amount to be determined by the Board or Compensation Committee
based on benchmarks set by the Board or Compensation Committee on each
anniversary of the Effective Date.  Whether any such increase will be
paid in cash or shares of Common Stock is in the discretion of the Board or its
designated committee (the “Committee”). In the event the Board or the Committee
elects to pay such increase in shares of the Company’s common stock (the “Common
Stock”), the number of shares of Common Stock to be issued in satisfaction of
such obligation shall be determined by reference to the fair market value of the
Company’s Common Stock, which shall be determined as follows: (i) if the
Company’s Common Stock is listed on a national securities exchange (including
the Nasdaq Stock Market, LLC) or is quoted on the OTC Bulletin Board, the last
sale price of the Common Stock in the principal trading market for the Common
Stock on such date, as reported by the exchange or the OTC Bulletin Board, as
the case may be, or if no sale was reported on that date, then on the last
preceding date on which such sale took place; (ii) if the Common Stock is not
listed on a national securities exchange or quoted on the OTC Bulletin Board,
but is traded in the residual over-the-counter market, the last sale price of
the Common Stock on such date, as reported by Pinksheets, LLC or similar
publisher of such information, or if no sale was reported on that date, then on
the last preceding date on which such sale took place; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Board or Committee shall determine in good
faith.

    

    Section 2.02.  Bonus
Compensation.  For each fiscal year completed during your
employment with the Company, you will be eligible to be considered by the Board
for an annual cash performance bonus, the actual amount of any bonus awarded to
you will be determined by the Board or its designated committee.

    

    Section
2.03.  Equity Rights.

    

    
      	
               
      

            	
              (a)

            	
              In the event the Company proposes
      to issue new shares of Common Stock (or Common Stock Equivalents, as such
      term is defined below) in a transaction for the principal purpose of
      raising capital, then in order to prevent the dilution of your
      then-current percentage interest in the Company (as determined in
      accordance with the applicable provisions of Regulation 13D, adopted by
      the Securities and Exchange Commission, as it currently exists and as it
      may be amended or replaced during the Term), you will be given the
      opportunity to purchase up to a maximum of such number of newly-issued
      shares of Common Stock (or such other Common Stock Equivalents) as would
      enable you to maintain such then-current percentage interest in the
      Company. Such purchase would occur at the same time, and under the same
      terms and conditions, as such shares are offered for purchase by other
      persons.   

            

    

    

    
      	
               
      

            	
              (b)

            	
              As
      used herein, the term “Common Stock Equivalents” shall mean any securities
      of the Company which would entitle the holder thereof to acquire at any
      time Common Stock, including, without limitation, any debt, preferred
      stock, rights, options, warrants or other instrument that is at any time
      convertible into or exercisable or exchangeable for, or otherwise entitles
      the holder thereof to receive, Common
Stock.

            

    

     

    
      
        
        

      

      
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              (c)

            	
              For
      the purpose of clarity, the following issuances of Common Stock or Common
      Stock Equivalents shall not be subject to the provisions of this Section
      2.03: (a) the issuance of shares of Common Stock or Common Stock
      Equivalents to employees, consultants, officers or directors of the
      Company pursuant to any equity compensation plan duly adopted by a
      majority of the non-employee members of the Board or a majority of the
      members of a committee of non-employee directors established for such
      purpose (including the issuance of shares of Common Stock upon exercise of
      Common Stock Equivalents granted pursuant to a Company plan subsequent to
      the date hereof ); (b) the issuance of Common Stock upon the exercise or
      exchange of or conversion of Common Stock Equivalents which are issued and
      outstanding on the date of this Agreement; (c) the issuance of shares of
      Common Stock (or Common Stock Equivalents) to consultants, vendors,
      lessors, distributors or similar persons, as consideration for services or
      assets provided to the Company (and the shares of Common Stock which may
      be issued upon exercise or conversion of securities issued to the class
      persons specified in this clause); (d) securities issued pursuant to
      mergers, acquisitions, consolidations, or reorganizations the primary
      purpose of which transaction is not to raise capital; and (e) shares of
      Common Stock or other securities issued in connection with any stock split
      or stock dividend of the Company.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Upon
      either the occurrence of a Change of Control or in the event of the
      termination of Employee’s employment either (i) by the Company without
      Cause or (ii) by the Employee for Good Reason, then effective as of the
      consummation of such Change of Control or termination date, and
      notwithstanding anything herein or in any stock option agreement to the
      contrary, (A) the Employee’s right to purchase shares of Common Stock of
      the Company pursuant to any stock option or stock option plan (whether
      granted before or subsequent to the Effective Date) shall immediately
      fully vest and become exercisable, (b) the exercise period in which
      Employee may exercise his options to purchase Company Common Stock under
      such options shall be extended to the duration of their original term, as
      if Employee remained an employee of the Company, and the terms of such
      options shall be deemed amended to take into account the foregoing
      provisions.

            

    

    

    Section 2.04.  Employee
Benefits.  While holding the position of Chief Financial Officer,
you will be entitled to participate in the employee benefit plans maintained by
the Company of general applicability to other senior executives of the Company,
including but not limited to the disability plan currently in place for senior
executives which the Company shall continue for your benefit.

    

    Section 2.05.  Paid Time
Off.  You will be entitled to earn paid time off at the rate
of  three (3) weeks per year, in addition to holidays observed by the
Company, and to use such paid time off in accordance with the policies of the
Company generally applicable to its executives, as in effect from time to
time.  In addition, the Company shall pay you $800 per month as an
automobile allowance during the Term.

     

    
      
        
        

      

      
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    Section 2.06.  Business
Expenses.  The Company will pay or reimburse you for all
reasonable business expenses incurred or paid by you in the performance of your
duties and responsibilities for the Company, subject to any maximum annual limit
and other restrictions on such expenses set by the Company and to such
reasonable substantiation and documentation as it may specify from time to
time.

    

    Section 2.07.  Signing
Bonus.  Upon execution of this Agreement, the Company shall
issue to Employee 3,000,000 shares of the Company’s Common Stock as a signing
bonus.  This bonus shall constitute good and valuable consideration,
the sufficiency of which is acknowledged by your signature below.

    

    Article
3.  Confidential Information and Restricted
Activities.

    

    Section 3.01.  Confidential
Information.  During the course of your employment with the
Company, you will learn of Confidential Information, as defined below, and you
may develop Confidential Information on behalf of the Company.  You
agree that you will not use or disclose to any Person (except as required by
applicable law after notice to the Board or for the proper performance of your
regular duties and responsibilities for the Company) any Confidential
Information obtained or developed by you incident to your employment or any
other association with the Company or any of its Affiliates.  You
understand and agree that this restriction shall continue to apply after your
employment terminates, regardless of the reason for such termination. Further,
Employee covenants and agrees that all Confidential Information shall be kept
secret and confidential at all times during or after the Term and shall not be
used or divulged by him outside the scope of his employment as contemplated by
his Agreement. In the event
that Employee is requested in a judicial, administrative or governmental
proceeding to disclose any of the Confidential Information, Employee will
promptly so notify the Company so that the Company may seek a protective order
of other appropriate remedy and/or waive compliance with this Agreement. If
disclosure of any of the Confidential Information is required, Employee may
furnish the material so required to be furnished, but Employee will furnish only
that portion of the Confidential Information that legally is
required.

    

    Section 3.02.  Protection
of Documents.  All documents, records and files, in any media
of whatever kind and description, relating to the business, present or
otherwise, of the Company or any of its Affiliates, and any copies, in whole or
in part, thereof (the “Documents”), whether or not prepared by you, shall be the
sole and exclusive property of the Company.  You agree to safeguard
all Documents and to surrender to the Company, at the time your employment
terminates or at such earlier time or times as the Board or its designee may
specify, all Documents and other property of the Company and its Affiliates then
in your possession or control.

     

    
      
        
        

      

      
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    Section
3.03.  Non-Competition.  You acknowledge that in your
employment with the Company you have had, and will continue to have, access to
Confidential Information which, if disclosed, would assist in competition
against the Company and its Affiliates; and that you also have generated and
will continue to generate goodwill for the Company and its Affiliates in the
course of your employment.  You further acknowledge that you are
receiving under this Agreement new consideration that is good and valuable and
fully sufficient to support your covenants set forth in this Section
3.  Therefore, you agree that the following restrictions on your
activities during and after your employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Affiliates:

    

    
      	
               
      

            	
              a)

            	
              While
      you are employed by the Company and during the one (1) year immediately
      following termination of your employment (in the aggregate, the
      “Non-Competition Period”), you shall not, directly or indirectly, whether
      as owner, partner, investor, consultant, agent, employee, co-venturer or
      otherwise, compete with the Business of the Company within the United
      States.  Specifically, but without limiting the foregoing, you
      agree not to work or provide services, in any capacity, whether as an
      employee, independent contractor or otherwise, whether with or without
      compensation, to any Person that is engaged in any business that is
      competitive with the Business of the Company in the United
      States.  For purposes of this Agreement, the “Business of the
      Company” means the business in which the Company is engaged in the United
      States during your employment.

            

    

    

    
      	
               
      

            	
              b)

            	
              You
      agree that during the Non-Competition Period, you will not (A) hire any
      employee of the Company or any of its Affiliates or seek to persuade any
      employee of the Company or any of its Affiliates to discontinue
      employment, (B) solicit or encourage any customer of the Company or any of
      its Affiliates or independent contractor providing services to the Company
      or any of its Affiliates to terminate or diminish its relationship with
      them or (C) seek to persuade any customer or prospective customer of the
      Company or any of its Affiliates to conduct with anyone else any business
      or activity that such customer or prospective customer conducts or could
      conduct with the Company or any of its Affiliates.  For purposes
      of your obligations hereunder after termination of your employment, an
      employee, independent contractor, customer or prospective customer shall
      mean any natural person or entity that was such at any time during the
      last six (6) months of your employment with the
  Company.

            

    

    

    Section 3.04.  Assignment
of Intellectual Property.  You agree to promptly and fully
disclose to the Company all Intellectual Property, as defined
below.  You hereby assign and agree to assign to the Company (or as
otherwise directed by the Company) your full right, title and interest in and to
all Intellectual Property.  You further agree to execute any and all
applications for domestic and foreign patents, copyrights and other proprietary
rights and do such other acts (including, among others, the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights and other proprietary rights in the
Intellectual Property.  You agree that you will not charge the Company
for time spent in complying with these obligations, including after your
employment ends.  All copyrightable works that you create shall be
considered “work made for hire” and shall be the property of the
Company.

     

    
      
        
        

      

      
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    Section
3.05.  Enforcement.  In signing this Agreement, you
give the Company assurance that you have carefully read and considered all the
terms and conditions of this Agreement, including the restraints imposed on you
under this Section 3.  You agree without reservation that these
restraints are necessary for the reasonable and proper protection of the Company
and its Affiliates and that each and every one of the restraints is reasonable
in respect to subject matter, length of time and geographic area.  You
represent and warrant to the Company that these restrictions will not,
individually or in the aggregate, prevent you from obtaining other suitable
employment after your employment with the Company terminates and that you will
not, and will not permit anyone acting on your behalf, to take any position to
the contrary in any forum hereafter and you give the Company those assurances
with the understanding that the Company will rely upon them in continuing your
employment and in providing you access to Confidential Information and to its
other employees and its customers.  Further, you agree that, were you
to breach any of the covenants contained in this Section 3, the damage to the
Company and its Affiliates would be irreparable.  You therefore agree
that the Company, in addition to any other remedies available to it, shall be
entitled to preliminary and permanent injunctive relief against any breach or
threatened breach by you of any of those covenants, without having to post
bond.  You and the Company further agree that, in the event that any
provision of this Section 3. is determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, that
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.  It is also agreed that each of the
Company’s Affiliates shall have the right to enforce all of your obligations to
that Affiliate under this Agreement, including without limitation, pursuant to
this Section 3.

    

    
      Article
4.  Termination of Employment.  Your employment
under this Agreement shall continue until terminated pursuant to this Article 4,
unless earlier terminated pursuant to Section 1.01.

    

    

    
      Section
4.01.

    

    

    (a)           Without Cause or for Good
Reason.   In the event that your employment with the
Company hereunder is terminated by the Company, other than for Cause and other
than as a result of death or Disability, or if Employee terminates his
employment for Good Reason, then the Company will provide you the following
severance pay and benefits, subject to your signing and returning a timely and
effective release of claims in a form reasonably satisfactory to the parties and
subject also to your meeting in full your obligations as set forth in Section 3
of this Agreement: In addition to base salary for the final payroll period of
your employment, through the date your employment with the Company terminates,
which amounts shall be payable at the Company’s next regular payday following
such termination, the Company (i) will pay you severance pay of an amount equal
to the sum of your base salary for the amount of time remaining in the Term of
this Agreement and the Bonus Compensation paid for the fiscal year immediately
preceding termination, either in accordance with the Company’s regular pay
periods or in a lump-sum payment in the sole discretion of the Board; and (ii)
provided that you and your eligible dependents exercise your rights to continue
participation in the Company’s group health plans under the federal law
generally known as COBRA (or any successor law), the Company will pay the
premium cost of your participation and that of your eligible dependents in the
Company’s group health plans and will make payments to your Health Savings
Account (“HSA”), if any, in accordance with Company policy until the sooner to
occur of (Y) the expiration of the Severance Pay Period (as defined below) and
(Z) the date you become eligible to enroll in any health plan of another
employer; provided, however, that if your
continued participation in the Company’s group health plans is not possible
under the terms of those plans (other than as a result of your becoming eligible
to participate in a health plan of another employer), the Company shall instead
arrange to provide you and your eligible dependents substantially similar
benefits upon reasonably comparable terms or pay you an amount during the
Severance Pay Period equal to the premiums the Company would have paid if you
had continued to participate in the Company’s group health
plans.  Payments pursuant to clause (ii) of this Section 4.01(a) shall
be made on the first day of each month during the Severance Pay Period (or
sooner, if required by applicable law). You are not required to mitigate damages
or the amount of any payment provided for under this Section 4.01(a) by seeking
other employment or otherwise, but the amount of any payment provided for under
this Section 4.01(a) shall be reduced by any compensation you earn as the result
of employment by another employer during the Severance Pay
Period.  The Release creates legally binding obligations and the
Company advises you to consult an attorney prior to signing the
Release.

    

    
      
        
        

      

      
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      (b)           Severance Pay
Period.  The Severance Pay Period shall be the period of time
commencing on the date of termination of this Agreement for the reasons
specified in Section 4.01(a) and ending on the third anniversary of the
termination of the Agreement.

    

    

    (c)           Cause; Without Good
Reason.  If the Company terminates Employee’s employment for
Cause, or if Employee resigns as an employee of the Company for reasons other
than an event of Good Reason (not including death or Disability), then the
Company shall pay to Employee the Accrued Compensation (defined below) but shall
have no obligation to pay Employee any amount, whether for salary, benefits,
bonuses, or other compensation or expense reimbursements of any kind, accruing
or vesting after the end of the Term, and such rights shall, except as otherwise
required by law or pursuant to the applicable award agreement or plan, be
forfeited immediately upon the end of the Term, except that in the event the
Employee resigns for other than Good Reason (not including death or Disability),
than his
right to purchase shares of Common Stock of the Company pursuant to any stock
option or stock option plan to the extent vested as of the termination date
shall remain exercisable for a period of three months following the termination
date, but in no event after the expiration of the exercise period of such
option(s). As used herein, “Accrued Compensation” shall mean an amount which
shall include all amounts earned or accrued by Employee through the date of
termination of this Agreement but not paid as of such date, including (i) base
salary, (ii) reimbursement for business expenses incurred by the Employee on
behalf of the Company, pursuant to the Company’s expense reimbursement policy in
effect at such time, (iii) vacation pay per Company policy, and (iv) bonuses and
incentive compensation solely to the extent earned and awarded prior to the date
of termination. Accrued Compensation shall be paid on the first regular pay date
after the date of termination (or earlier, if required by applicable
law).

     

    
      
        
        

      

      
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      Section 4.02.  You
may elect to terminate your employment under this Agreement other than for Good
Reason at any time upon thirty (30) days’ notice to the Company; provided, however, that the
Company may elect to waive some or all of the notice given by paying you your
base salary for that portion of the first thirty (30) days of notice which it
elects to waive.

    

    

    
      Section 4.03.  This
Agreement shall automatically terminate in the event of your death at any time
during the Term of your employment and the Company may terminate your employment
hereunder by written notice in the event of Disability, as defined below. In the
event that Employee’s employment terminates as a result of his death, the
Employee’s estate shall be entitled to the same benefits and payments as if his
employment had been terminated by the Company for Cause except that any vested
options shall remain exercisable to the extent provided in the applicable option
agreement. In the event that the Company terminates Employee’s employment as a
result of Disability, Employee shall be entitled to the same benefits and
payments pursuant to Section 4.01(a) as if his employment had been terminated by
the Company without Cause except that (1) the amount of severance payable to
Employee would be equal to (A) an amount equal his then-current base salary for
a period of twelve months from the date of termination payable in accordance
with the Company’s regular pay periods or in a lump-sum payment in the sole
discretion of the Board and (B) the benefits described in clause (ii) of Section
4.01(a), except that the “Severance Pay Period” would be deemed reduced to a
period of 12 months from the date of termination and (2) any vested options
shall remain exercisable to the extent provided in the applicable option
agreement.

    

    

    Except as
provided above, it is agreed that, notwithstanding anything to the contrary
contained in this Agreement, any right to compensation and continued
participation in Company benefit plans during any period of leave of absence
granted you by the Company during your employment hereunder whether resulting
from a Disability, as defined in this Agreement, or from other illness, injury
or condition, shall be governed by any paid sick leave or other policies of the
Company generally applicable to its executives, and by applicable law, as in
effect from time to time.  If any question shall arise as to whether
you are disabled by illness, injury or condition to the extent that you are
unable to perform substantially all of your duties and responsibilities for the
Company as determined in the reasonable discretion of the Board of Directors,
you shall, at the Company’s request, submit to a medical examination by a
physician selected by the Company  to determine whether you are so
disabled and such determination shall for the purposes of this Agreement be
conclusive of the issue.  If such a question arises and you fail to
submit to the requested medical examination, the Company’s determination of the
issue shall be binding on you. In the event the Company elects to terminate this
Agreement due to the Disability of Employee, it shall give Employee written
notice of termination which shall take effect thirty (30) days after the date it
is sent to Employee unless Employee shall have returned to the performance of
his duties hereunder during such thirty (30) day period (whereupon such notice
shall become void).

     

    
      
        
        

      

      
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      Article V.  Effect
of Termination of Employment.

    

    

    Section
5.01.  Except as otherwise expressly provided in Section 4.01.
and except for payment of base salary for waiver of some or all of your notice
of termination other than for Good Reason pursuant to Section 4.02., the Company
shall have no obligation or liability to you hereunder following termination of
your employment, howsoever occurring, other than for payment of any unpaid base
salary earned by you during the last payroll period of your employment, through
the date of termination.

    

    Section
5.02.  Except for any right you may have under COBRA (or any
successor law) to continue participation in the Company’s group health plans,
all benefits shall terminate in accordance with the terms of the applicable
benefit plans based on the date of termination of your employment, without
regard to any continuation of base salary or other payment to you following
termination.  Except as expressly provided in Section 4.01., any
continuation in the Company’s group health plans under COBRA shall be at your
cost.

    

    Section
5.03.  Provisions of this Agreement shall survive any
termination if so provided in this Agreement or if necessary or desirable to
accomplish the purposes of other surviving provisions, including without
limitation your obligations under Article 3 of this Agreement.  The
obligation of the Company to make payments to you, or on behalf of you or your
eligible dependents under Section 4.01, is expressly conditioned upon your
continued full performance of obligations under Article 3, hereof.

    

    Article
VI.  Definitions.  For purposes of
this Agreement, the following definitions apply:

    

    Section
6.01.  “Affiliates” means all persons and entities directly or
indirectly controlling, controlled by or under common control with the Company,
where control may be by management authority, contract, or equity
interest.

    

    Section
6.02.  “Cause,” as used in this Agreement, means (i) the
commission of fraud, embezzlement, theft or other dishonesty in the performance
of your duties for, or responsibilities to, the Company, (ii) willful, or
repeated or negligent failure to adequately perform your duties for, or
responsibilities to the Company as reasonably determined by the Board or
material breach of this Agreement, and after reasonable notice from the Board
setting forth in reasonable detail the nature of such failure or breach and you
shall not have remedied such failure within thirty (30) days of receiving such
notice; or (iii) a breach of your fiduciary duty to the Company; or (iv)
personal dishonesty injurious to the Company.

     

    
      
        
        

      

      
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    Section
6.03.  “Change of Control” means (i) a sale of all or
substantially all of the Company’s business or assets in one transaction or a
series of related transaction, (ii) the consummation by the Company of any
merger, consolidation, or other business combination transaction of the Company
with or into or otherwise involving another corporation, entity or person, other
than a transaction in which the holders of at least a majority of the shares of
voting capital stock of the Company outstanding immediately prior to such
transaction continue to hold (either by such shares remaining outstanding or by
their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction, (iii) the direct or indirect acquisition (including by
way of a tender or exchange offer) by any person, or persons acting as a group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of
1934), other that the Company or any subsidiary of the Company, of beneficial
ownership or a right to acquire beneficial ownership of shares representing a
majority of the voting power of the then outstanding shares of capital stock of
the Company, (iv) a contested election of Directors, as a result of which or in
connection with which the persons who were Directors before such election or
their nominees cease to constitute a majority of the Board, or (v) a dissolution
or liquidation of the Company.

    

    Section
6.04.  “Confidential Information” means any and all information
of or concerning (i) the Company,  its Affiliates and employees and
their work on behalf of the Company and (ii) any other Person with which the
Company does or may do business, which is not generally known or readily
available to those Persons with whom the Company or any of its Affiliates
competes or does business or with whom the Company or any of its Affiliates
plans to compete or do business. Confidential Information also includes any
information received by the Company or any of its Affiliates from any Person
with any understanding, express or implied, that it will not be
disclosed.

    

    Section 6.05.  “Good
Reason,” as used in this Agreement, means the occurrence of any of the following
without your express written consent at any time during your employment, provided that you
have complied with the Good Reason Process: (i) the assignment to you by the
Company of duties materially inconsistent with your position, duties,
responsibilities and status with the Company or a material adverse change in
your titles or offices, or any removal of you from or any failure to reelect you
to any of such positions, including but not limited to your position as a
director of the Company, except in connection with the termination of your
employment for Disability or Cause or as a result of your death or by you other
than for Good Reason; (ii) a relocation of the Company’s principal executive
offices to a location outside of Metropolitan Philadelphia, Pennsylvania,
except for required travel by you on the Company’s business to an extent
substantially consistent with your business travel obligations at the time of
the Acquisition; or (iii) a breach of any of the material terms or conditions of
this Agreement by the Company that is not cured within 30 days after written
notice thereof.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
 

    Section
6.06.  “Good Reason Process”
shall mean that (A) you reasonably determine in good faith that a “Good Reason”
event has occurred; (B) you notify the Company in writing of the occurrence of
the Good Reason event within five (5) days of its occurrence); (C) you
cooperate in good faith with the Company’s efforts, for a period not less than
thirty (30) days following such notice, to modify your employment situation in a
manner acceptable to you and the Company; and (D) notwithstanding such efforts,
one or more of the Good Reason events continues to exist and has not been
modified in a manner acceptable to you.

    

    Section
6.07.  “Intellectual Property” means any invention, formula,
process, discovery, development, design, innovation or improvement (whether or
not patentable or registrable under copyright statutes) made, conceived or first
actually reduced to practice by you solely or jointly with others, during your
employment by the Company; provided, however, that, as
used in this Agreement, the term “Intellectual Property” shall not apply to any
invention that you develop on your own time, without using the equipment,
supplies, facilities or trade secrets or Confidential Information of the Company
or any of its Affiliates, unless such invention relates at the time of
conception or reduction to practice of the invention (i) to the business of the
Company or any of its Affiliates, (ii) to the actual or demonstrably anticipated
research or development of the Company or any of its Affiliates or (iii) results
from any work performed by you for the Company or any of its
Affiliates.

    

    Section
6.08.  “Person” means an individual, a corporation, a limited
liability company, an association, a partnership, an estate, a trust or any
other entity or organization, other than the Company or any of its
Affiliates.

    

    Section
6.09.  “Disability” means (i) Employee’s incapacity due to
physical or mental illness that results in his being substantially unable to
perform his duties hereunder for six consecutive months (or for six months out
of any nine month period) or (ii) a qualified independent physician mutually
acceptable to the Company and Employee determines that Employee is mentally or
physically disabled so as to be unable to regularly perform the duties of his
position and such condition is expected to be of a permanent duration. During a
period of Disability while he remains an employee of the Company, Employee shall
continue to receive his base salary hereunder, provided that if the Company
provides Employee with disability insurance coverage, payments of Employee’s
base salary shall be reduced by the amount of any disability insurance payments
received by Employee due to such coverage.

    

    Article
VII.  Conflicting Agreements.  You hereby
represent and warrant that your signing of this Agreement and the performance of
your obligations under it will not breach or be in conflict with any other
agreement to which you are a party or are bound and that you are not now subject
to any covenants against competition or similar covenants or any court order
that could affect the performance of your obligations under this
Agreement.  You agree that you will not disclose to or use on behalf
of the Company any proprietary information of any Person without that Person’s
consent.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Article
VIII.  Withholding.  All payments made
by the Company under this Agreement shall be reduced by any tax or other amounts
required to be withheld by the Company under applicable law.

    

    Article
IX.  Assignment.  Neither you nor
the Company may make any assignment of this Agreement or any interest in it, by
operation of law or otherwise, without the prior written consent of the other;
provided, however, that the
Company may assign its rights and obligations under this Agreement without your
consent to one of its Affiliates or to any Person with whom the Company shall
hereafter affect a reorganization, consolidate with, or merge into or to whom it
transfers all or substantially all of its properties or assets.  This
Agreement shall inure to the benefit of and be binding upon you and the Company,
and each of our respective successors, executors, administrators, heirs, and
permitted assigns.

    

    Article
X.  Severability.  If any portion or
provision of this Agreement shall to any extent be declared illegal or
unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.

    

    
      Article
XI. Indemnity.  The Company
hereby agrees to indemnify, defend, and hold harmless the Employee for any and
all claims arising from or related to his employment by the Company at any time
asserted, at any place asserted, to the fullest extent permitted by law, except
for claims based on Employee’s fraud, deceit or willfulness.  The
Company shall maintain such insurance as is necessary and reasonable to protect
the Employee from any and all claims arising from or in connection with his
employment by the Company during the term of Employee's employment with the
Company. The provisions of this Article XI are in addition to and not in lieu of
any indemnification, defense or other benefit to which Employee may be entitled
by statute, regulation, common law or otherwise.

    

    

    Article
XII.  Miscellaneous.

    

    Section 12.01.  This
Agreement sets forth the entire agreement between you and the Company and
supersedes any and all prior and contemporaneous communications, agreements and
understandings, written or oral, with respect to the terms and conditions of
your employment Agreement”); provided, however, that this
Agreement shall not supersede or otherwise terminate any effective assignment
you have made of any invention or other intellectual property to the Company or
any of its Affiliates on or before the Effective Date or otherwise with respect
to confidentiality, non-competition, non-solicitation or the like prior to the
Effective Date, all of which assignments and rights shall remain in full force
and effect.

    

    Section 12.02.  This
Agreement may not be modified or amended, and no breach shall be deemed to be
waived, unless agreed to in writing by you and an expressly authorized
representative of the Board.  The headings and captions in this
Agreement are for convenience only and in no way define or describe the scope or
content of any provision of this Agreement.  This Agreement may be
executed in two or more counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
 

    Section 12.03.  This
is a Pennsylvania
contract and shall be governed and construed in accordance with the laws of the
Commonwealth of
Pennsylvania, without regard to the conflict of laws principles
hereof.

    

    Section 12.04.  Upon
execution of this Agreement we will pay all reasonable attorneys’ fees which you
incur for the review and negotiation of this Agreement and any ancillary
documents and agreements relating thereto.

    

    Section 12.05.   It is the
intention of the parties that this Agreement comply  strictly with the
provisions of Section 409A of the Internal Revenue Code, as amended, and
Treasury Regulations and other Internal Revenue Service guidance promulgated
thereunder (the “409A Rules”). Consistent with that intention, all references
hereunder to termination of the Employee’s employment with the Company shall
mean separation from the service of the service recipient under the 409A
Rules.  Further, to the extent the Company determines in good faith
that the Employee is a specified employee under the 409A Rules, any payments of
deferred compensation within the meaning of the 409A Rules will be deferred for
a period of six (6) months and one (1) day, unless the Employee dies within such
period, in which event payment will be made pursuant to Section
4.03.  Accordingly, this Agreement, including, but not limited to, any
provisions relating to severance payments, may be amended from time to time as
may be necessary or appropriate to comply with the 409A Rules without obtaining
any additional consent from Employee, so long as such amendment or modification
does not materially affectthe net present value of the compensation or benefits
to which Employee otherwise would be entitled under this Agreement.

    

    Section
12.06.   The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and
obligations.

    

    Section
12.07.   Except as otherwise expressly provided in this
Agreement, any notices provided for in this Agreement shall be in writing and
shall be effective when delivered in person, consigned to a reputable national
courier service or deposited in the United States mail, postage prepaid, and
addressed to you at your last known address on the books of the Company or, in
the case of the Company, to it at its principal place of business, attention of
the Chair of the Board, or to such other address as either party may specify by
notice to the other actually received.

     

    Signature
page follows.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

     

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

     

    
      
        	 	
                Skinny
      Nutritional Corp.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Michael
      Salaman	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 
	 	
                Employee

              	 
	 	 	 
	 	 	
                /s/
      Donald J. McDonald

              	 
	 	 	
                Donald
      J. McDonald

              	 
	 	 	 	 

      

    

     

    
      
        
        

      

      
        14EXHIBIT
4.4

     

    THE
WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES THAT MAY BE ISSUED
UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN
ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

     

    Lightyear
Network Solutions, Inc.

    

    STOCK PURCHASE
WARRANT

    

    
      
        
          	
                  Warrant
      No.

                	
                  Original
      Date of Issuance:
[DATE]

                

        

      

    

    

    Lightyear
Network Solutions, Inc., a Nevada corporation (the “Company”), hereby certifies
that, for value received, [INVESTOR NAME] or his registered assigns (the “Holder”), is entitled to
purchase from the Company up to a total of [NO. SHARES] shares of common stock,
$0.001 par value per share (the “Common Stock”), of the Company
(each such share, a “Warrant
Share” and all such shares issuable under the warrants, the “Warrant Shares”) at an
exercise price equal to $0.01 per share (as adjusted from time to time as
provided in Section 9, the “Exercise Price”), at any time
and from the date hereof and through and including the date that is five (5)
years from the date of issuance hereof (the “Expiration Date”), and subject
to the following terms and conditions.  All such warrants are referred
to herein, collectively, as the “Warrants” and the holders
thereof along with the Holder named herein, the “Holders.”

     

    The
Holder acknowledges and agrees that, at any time after the Weighted Average
Price (as defined below) of shares of the Common Stock of the Company is not
less than 200% of the Exercise Price (as adjusted pursuant to Section 9, below)
for twenty (20) consecutive Trading Days, the Company may either:  (a)
require the Holder to exercise this Warrant for the full number of Warrant
Shares (as set forth in Section 10) or (b) repurchase and redeem this Warrant
from the Holder upon payment to the Holder of an amount equal to $4.00 per share
(as adjusted pursuant to Section 9, below), at which time this Warrant and the
rights thereunder shall be canceled and extinguished.

     

    1.           Definitions.  In
addition to the terms defined elsewhere in this Warrant, capitalized terms that
are not otherwise defined shall have the meaning given them in the Subscription
Agreement between the Company and the Holder.

     

    2.           Registration of
Warrant.  The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder hereof from time to time.  The Company may
deem and treat the registered Holder of this Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.

     

    3.           Registration of
Transfers.  The Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant,
with the Form of Assignment attached hereto duly completed and signed, to the
Company’s transfer agent or to the Company at its address specified
herein.  Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such new
warrant, a “New
Warrant”), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder.  The acceptance of the New Warrant by the transferee thereof
shall be deemed the acceptance by such transferee of all of the rights and
obligations of a holder of a Warrant.

     

    4.           Exercise and Duration of
Warrants.

     

    (a)           This
Warrant shall be exercisable by the registered Holder at any time and from time
to time on or after the date hereof to and including the Expiration
Date.  At 6:30 P.M., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void and
of no value.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           A
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the “Exercise Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised
(which may take the form of a
“cashless exercise” if so indicated in the Exercise Notice only if a “cashless
exercise” may occur at such time pursuant to Section 10 below), and the
date such items are delivered to the Company (as determined in accordance with
the notice provisions hereof) is an “Exercise Date.”  The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder.  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.

     

    (c)           Exercise
Disputes.  In the case of any dispute with respect to the
number of shares to be issued upon exercise of this Warrant, the Company shall
promptly issue such number of shares of Common Stock that is not disputed and
shall submit the disputed determinations or arithmetic calculations to the
Holder via fax (or, if the Holder has not provided the Company with a fax
number, by overnight courier) within two (2) Business Days of receipt of the
Holder’s election to purchase Warrant Shares.  If the Holder and the
Company are unable to agree as to the determination of the Purchase Price within
two (2) Business Days of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall in accordance with this
Section, submit via facsimile the disputed determination to an independent
reputable accounting firm of national standing, selected jointly by the Company
and the Holder.  The Company shall cause such accounting firm to
perform the determinations or calculations and notify the Company and the Holder
of the results as promptly as possible from the time it receives the disputed
determinations of calculations.  Such accounting firm’s determination
shall be binding upon all parties absent manifest error.  The Company
shall then on the next Business Day issue certificate(s) representing the
appropriate number of Warrant Shares of Common Stock in accordance with such
accounting firm’s determination and this Section.  The prevailing
party shall be entitled to reimbursement of all fees and expenses of such
determination and calculation.

     

    5.           Delivery of Warrant
Shares.

     

    (a)           Upon
exercise of this Warrant, the Company shall promptly (but in no event later than
five Trading Days after the Exercise Date) issue or cause to be issued and cause
to be delivered to or upon the written order of the Holder and in such name or
names as the Holder may designate, a certificate for the Warrant Shares to which
the Holder is entitled upon such exercise, free of restrictive legends unless a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable pursuant to Rule 144 under the Securities Act
of 1933, as amended.  The Company shall, upon request of the Holder,
use its best efforts to deliver Warrant Shares hereunder electronically through
the Depository Trust Corporation or another established clearing corporation
performing similar functions.  For the purposes hereof, the term
“Trading Day” means (a) any day on which the Common Stock is listed or
quoted and traded on its primary trading market, (b) if the Common Stock is
not then listed or quoted and traded on any trading market, then a day on which
trading occurs on the Nasdaq Global Market (or any successor thereto), or
(c) if trading ceases to occur on the Nasdaq Global Market (or any
successor thereto), any Business Day.

     

    (b)           This
Warrant is exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares.  Upon surrender of this
Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.

     

    (c)           The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares.  Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock upon
exercise of the Warrant  as required pursuant to the terms
hereof.

     

    6.           Charges, Taxes and
Expenses.  Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer agent fee or
other incidental tax or expense in respect of the issuance of such certificates,
all of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the
Holder.  The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.           Replacement of
Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable bond or indemnity, if requested.  Applicants for a New
Warrant under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe.

     

    8.           Reservation of Warrant
Shares.  The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued
and otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, 100% of
the number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (after giving effect
to the adjustments and restrictions of Section 9, if any).
The Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.  The Company will take all such action as may be
necessary to assure that such shares of Common Stock may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation system upon which
the Common Stock may be listed.

     

    9.           Certain
Adjustments.  The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section
9.

     

    (a)           Stock Dividends and
Splits.  If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, or (iii) combines outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such
event.  Any adjustment made pursuant to clause (i) of this paragraph
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

     

    (b)           Distributions Made Prior to
Exercise.  If the Company, at any time while this Warrant is
outstanding, distributes to all of the holders of Common Stock (i) evidences of
its indebtedness, (ii) any security (other than a distribution of Common Stock
covered by Section 9(a)), (iii) rights or warrants to subscribe for or purchase
any security, or (iv) any other asset (in each case, a “Distribution”), then in each
such case any Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution shall be reduced, effective as of the
close of business on such record date, to a price determined by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the Weighted
Average Price1 of the
Common Stock on the Trading Day immediately preceding such record date minus the
value of the Distribution (as determined in good faith by the Company’s Board of
Directors) applicable to one share of Common Stock, and (ii) the denominator
shall be the Weighted Average Price of the Common Stock on the Trading Day
immediately preceding such record date.

     

    (c)           Notwithstanding
the provisions set forth in Section 9(b) above,
if the Company, at any time while this Warrant is outstanding, makes a
Distribution to the holders of Common Stock, then in each such case the Holder
shall have the option to receive such Distribution which would have been made to
the Holder had such Holder been the holder of such Warrant Shares on the record
date for the determination of stockholders entitled to such Distribution;
provided, however, if the Holder elects to receive such Distribution, it will
not be entitled to receive the adjustment to the Exercise Price specified in
clause (b) above.

     

    
      
        

      

      1 “Weighted Average Price” means, for any
security as of any date, the dollar volume-weighted average price for such
security on NASDAQ during the period beginning at 9:30:01 a.m., New York Time
(or such other time as NASDAQ publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York Time (or such other time as
NASDAQ publicly announces is the official close of trading) as reported by
Bloomberg (means Bloomberg Financial Markets) through its “Volume at Price”
functions, or, if the foregoing does not apply, the dollar volume-weighted
average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30:01 a.m.,
New York Time (or such other time as such Principal Market publicly announces is
the official open of trading), and ending at 4:00:00 p.m., New York Time (or
such other time as such market publicly announces is the official close of
trading) as reported by Bloomberg, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.).  If the Weighted
Average Price cannot be calculated for a security on a particular date on any of
the foregoing bases, the Weighted Average Price of such security on such date
shall be the fair market value as mutually determined by the Company in good
faith.  All such determinations shall be appropriately adjusted for
any share dividend, share split, share combination or other similar transaction
during the applicable calculation period.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           Fundamental
Transactions.  If, at any time during the term of this Warrant,
(i) the Company effects any merger or consolidation of the Company with or into
(whether or not the Company is the surviving corporation) another Person, (ii)
the Company effects any sale, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a series of
related transactions; provided, however, that for avoidance of doubt, the
granting of a lien on all or substantially all of the Company’s assets as
collateral shall not be deemed a Fundamental Transaction hereunder, (iii) allow
another Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than the 50% of either the outstanding shares of Common
Stock (not including any shares of Common Stock held by the Person or Persons
making or party to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), or (v) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (other than as a result of a subdivision or
combination of shares of Common Stock covered by Section 9(a) above)
(in any such case, a “Fundamental Transaction”),
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate
Consideration”).  The aggregate Exercise Price for this Warrant
will not be affected by any such Fundamental Transaction, but the Company shall
apportion such aggregate Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction.  At the Holder’s request, any successor to
the Company or surviving entity in such Fundamental Transaction shall issue to
the Holder a new warrant consistent with the foregoing provisions and evidencing
the Holder’s right to purchase the Alternate Consideration for the aggregate
Exercise Price upon exercise thereof.  The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this paragraph (d) and insuring that the Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.

     

    (e)           Number of Warrant
Shares.  Simultaneously with any adjustment to the Exercise
Price pursuant to paragraph (a) of this Section, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or
decreased proportionately, as applicable, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased or decreased, as
applicable, number of Warrant Shares shall be the same as the aggregate Exercise
Price in effect immediately prior to such adjustment.

     

    (f)           Calculations.  All
calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as
applicable.  The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock.

     

    (g)           Notice of
Adjustments.  Upon the occurrence of each adjustment pursuant
to this Section
9, the Company at its expense will promptly compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment, including a statement of the adjusted Exercise Price and
adjusted number or type of Warrant Shares or other securities issuable upon
exercise of this Warrant (as applicable), describing the transactions giving
rise to such adjustments and showing in detail the facts upon which such
adjustment is based.  Upon written request, the Company will promptly
deliver a copy of each such certificate to the Holder and to the Company’s
Transfer Agent.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (h)           Notice of Corporate
Events.  If the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common
Stock, including without limitation any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any Subsidiary,
(ii) authorizes or approves, enters into any agreement contemplating or solicits
stockholder approval for any Fundamental Transaction or (iii) authorizes the
voluntary dissolution, liquidation or winding up of the affairs of the Company,
then the Company shall deliver to the Holder a notice describing the material
terms and conditions of such transaction, at least ten calendar days prior to
the applicable record or effective date on which a Person would need to hold
Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice.

     

    10.         Payment of Exercise
Price.  The Holder shall pay the Exercise Price in immediately
available funds (a “cash exercise”); provided, however, that the Holder may
satisfy its obligation to pay the Exercise Price through a “cashless exercise,”
in which event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:

     

    
      	 
      	
              X =
      Y [(A-B)/A]

            
	
              where:

            	 
      
	 
      	
              X =
      the number of Warrant Shares to be issued to the
Holder.

            
	 
      	 
      
	 
      	
              Y =
      the number of Warrant Shares with respect to which this Warrant is being
      exercised (prior to cashless exercise).

            
	 
      	 
      
	 
      	
              A =
      the average of the Closing Prices for the five Trading Days immediately
      prior to (but not including) the Exercise Date.

            
	 
      	 
      
	 
      	
              B =
      the Exercise Price.

            

    

    

    For
purposes of this Section 10, “Closing Prices” for any date, shall mean the
closing price per share of the Common Stock for such date (or the nearest
preceding date) on the primary trading market on which the Common Stock is then
listed or quoted.

     

    11.         Limitation on
Exercise.2  Notwithstanding
anything to the contrary contained herein, the number of shares of Common Stock
that may be acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent necessary to insure
that, following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% (the “Maximum
Percentage”) of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise).  For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder.  The Company’s obligation to
issue shares of Common Stock in excess of the limitation referred to in this
Section shall be suspended (and shall not terminate or expire notwithstanding
any contrary provisions hereof) until such time, if any, as such shares of
Common Stock may be issued in compliance with such limitation, but in no event
later than the Expiration Date.  By written notice to the Company, the
Holder may waive the provisions of this Section or increase or decrease the
Maximum Percentage to any other percentage specified in such notice, but (i) any
such waiver or increase will not be effective until the 61st day after such
notice is delivered to the Company, and (ii) any such waiver or increase or
decrease will apply only to the Holder and not to any other holder of
Warrants.

     

    12.         Fractional
Shares.  The Company shall not be required to issue or cause to
be issued fractional Warrant Shares on the exercise of this
Warrant.  If any fraction of a Warrant Share would, except for the
provisions of this Section, be issuable upon exercise of this Warrant, the
number of Warrant Shares to be issued will be rounded up to the nearest whole
share.

     

    13.         Notices.  Any
and all notices or other communications or deliveries hereunder (including
without limitation any Exercise Notice) shall be in writing and shall be deemed
given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in the Subscription Agreement prior to 6:30 p.m. (New York City time)
on a Trading Day, (ii) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in the Subscription Agreement on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given.  The address for such notices or communications
shall be as set forth in the Subscription Agreement.

     

    
      
        

      

      2 This provision is
available for Investors, and the percentage may be modified at the Investor’s
request.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    14.         Warrant
Agent.  The Company shall serve as warrant agent under this
Warrant.  Upon 30 days’ notice to the Holder, the Company may appoint
a new warrant agent.  Any corporation into which the Company or any
new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party
shall be a successor warrant agent under this Warrant without any further
act.  Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.

     

    15.         Miscellaneous.

     

    (a)           Subject
to the restrictions on transfer set forth on the first page hereof, this Warrant
may be assigned by the Holder.  This Warrant may not be assigned by
the Company, except to a successor in the event of a Fundamental
Transaction.  This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and
assigns.  Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and the Holder
any legal or equitable right, remedy or cause of action under this
Warrant.

     

    (b)           The
Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, seek to call or redeem this
Warrant or avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
dilution or other impairment.  Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any Warrant Shares
above the amount payable therefor on such exercise, (ii) will take all such
action as may be reasonably necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares, free
from all taxes, liens, security interests, encumbrances, preemptive or similar
rights and charges of stockholders (other than those imposed by the Holders), on
the exercise of the Warrant, and (iii) will not close its stockholder books or
records in any manner which interferes with the timely exercise of this
Warrant.

     

    (c)           Remedies; Specific
Performance.  The Company acknowledges and agrees that there
would be no adequate remedy at law to the Holder of this Warrant in the event of
any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant and accordingly, the Company
agrees that, in addition to any other remedy to which the Holder may be entitled
at law or in equity, the Holder shall be entitled to seek to compel specific
performance of the obligations of the Company under this Warrant, without the
posting of any bond, in accordance with the terms and conditions of this Warrant
in any court of the United States or any State thereof having jurisdiction, and
if any action should be brought in equity to enforce any of the provisions of
this Warrant, the Company shall not raise the defense that there is an adequate
remedy at law.  Except as otherwise provided by law, a delay or
omission by the Holder hereof in exercising any right or remedy accruing upon
any such breach shall not impair the right or remedy or constitute a waiver of
or acquiescence in any such breach.  No remedy shall be exclusive of
any other remedy.  All available remedies shall be
cumulative.

     

    (d)           Amendments and
Waivers.  The Company may, without the consent of the Holders,
by supplemental agreement or otherwise, (i) make any changes or corrections in
this Agreement that are required to cure any ambiguity or to correct or
supplement any provision herein which may be defective or inconsistent with any
other provision herein or (ii) add to the covenants and agreements of the
Company for the benefit of the Holders (including, without limitation, reduce
the Exercise Price or extend the Expiration Date), or surrender any rights or
power reserved to or conferred upon the Company in this Agreement; provided
that, in the case of (i) or (ii), such changes or corrections shall not
adversely affect the interests of Holders of then outstanding Warrants in any
material respect.  This Warrant may also be amended or waived with the
consent of the Company and the Holder.  Further, the Company may, with
the consent, in writing or at a meeting, of the Holders (the “Required Holders”) of the then
outstanding Warrants exercisable for a majority or greater of the Common Stock
eligible under such Warrants, amend in any way, by supplemental agreement or
otherwise, this Warrant and/or all of the outstanding Warrants; provided,
however, that (i) no such amendment by its express terms shall adversely affect
any Holder differently than it affects all other Holders, unless such Holder
consents thereto, and (ii) no such amendment concerning the number of Warrant
Shares or Exercise Price shall be made unless any Holder who will be affected by
such amendment consents thereto.  If a new warrant agent is appointed
by the Company, it shall at the request of the Company, and without need of
independent inquiry as to whether such supplemental agreement is permitted by
the terms of this Section 15(d), join
with the Company in the execution and delivery of any such supplemental
agreements, but shall not be required to join in such execution and delivery for
such supplemental agreement to become effective.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (e)           GOVERNING LAW; VENUE; WAIVER
OF JURY TRIAL.  THE CORPORATE LAWS OF THE STATE OF NEVADA SHALL
GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.  THE COMPANY AND HOLDERS HEREBY IRREVOCABLY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF
NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY
THE COMPANY OR ANY HOLDER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY
WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE
COMPANY OR ANY HOLDER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT 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 VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN
EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY
ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  THE
COMPANY AND HOLDERS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

     

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

     

    (g)           In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.

     

    
      
        
          	
                  LIGHTYEAR
      NETWORK SOLUTIONS, INC.

                
	 
      
	
                  By:

                
	
                  Name:
      J. Sherman Henderson III

                
	
                  Title:  Chief
      Executive Officer

                

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    FORM OF EXERCISE
NOTICE

    

    (To be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)

     

    To:  Lightyear
Network Solutions, Inc.

     

    The
undersigned is the Holder of Warrant No. _______ (the “Warrant”) issued by
Lightyear Network Solutions, Inc., a Nevada corporation (the
“Company”).  Capitalized terms used herein and not otherwise defined
have the respective meanings set forth in the Warrant.

     

    
      	
               
      

            	
              (a)

            	
              The
      Warrant is currently exercisable to purchase a total of ______________
      Warrant Shares.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      undersigned Holder hereby exercises its right to purchase
      _________________ Warrant Shares pursuant to the
  Warrant.

            

    

     

    
      	  	
              (c)

            	
              The
      Holder shall make Payment of the Exercise Price as follows (check
      one):

            

    

     

    ____     “Cash
Exercise” under Section 10

    ____     “Cashless
Exercise” under Section 10

    

    
      	
               
      

            	
              (d)

            	
              If
      the holder is making a Cash Exercise, the holder shall pay the sum of
      $____________ to the Company in accordance with the terms of the
      Warrant.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Pursuant
      to this exercise, the Company shall deliver to the holder _______________
      Warrant Shares in accordance with the terms of the
  Warrant.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Following
      this exercise, the Warrant shall be exercisable to purchase a total of
      ______________ Warrant Shares.

            

    

     

    
      	
               
      

            	
              (g)

            	
              Notwithstanding
      anything to the contrary contained herein, this Exercise Notice shall
      constitute a representation by the Holder that, after giving effect to the
      exercise provided for in this Exercise Notice, the Holder (together with
      its affiliates) will not have beneficial ownership (together with the
      beneficial ownership of such Person’s affiliates) of a number of shares of
      Common Stock which exceeds the Maximum Percentage of the total outstanding
      shares of Common Stock as determined pursuant to the provisions of Section
      11(a) of the Warrant.

            

    

     

    
      
        
          
            
              
                	
                        Dated:                                     ,
      _____

                      	
                        Name of Holder:

                      	
                           

                      	  
       
	 
      	 
      	
                        (Print)

                      	 

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  	 
      	
                          By:

                        	
                              

                        	  
       

                

              

            

          

        

      

      
        
          
            
              
                	 
      	
                        Name:

                      	
                           

                      	 
       

              

            

          

        

      

      
        
          
            
              
                	 
      	
                        Title:

                      	
                            

                      	  
       

              

            

          

        

      

      
        
          
            
              
                	 
      	
                        (Signature
      must conform in all respects to name of holder 

                        as
      specified on the face of the
Warrant)

                      

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    FORM OF
ASSIGNMENT

    

    [To be
completed and signed only upon transfer of Warrant]

    

    FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant to
purchase  ____________ shares of Common Stock of Company Name to which
the within Warrant relates and appoints ________________ attorney to transfer
said right on the books of Company Name with full power of substitution in the
premises.

     

    
      
        
          
            
              
                
                  
                    	
                            

                              Dated:                                     ,
      _____

                            

                          	 
      
	 
      	 
      
	 
      	
                                                                                     
      

                          
	 
      	
                            (Signature
      must conform in all respects to name of holder as specified
      on the face of the
Warrant)

                          

                  

                

              

            

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                                                                 

                                
	 
      	
                                  Address
      of Transferee

                                
	 
      	 
      
	 
      	
                                    
        
                                              

                                
	 
      	 
      
	 
      	
                                    
      

                                
	 
      	 
      
	
                                  In
      the presence of:

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