Document:

EX-10.1

    Exhibit
      10.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of May 7, 2007, among WHO’S
      YOUR DADDY, INC., a Nevada corporation (the “Company”),
      and
      each purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Sections 3(a)(9) and 4(2) of the Securities Act (as defined herein) and Rule
      506
      promulgated thereunder, the Company desires to issue and sell to each Purchaser,
      and each Purchaser, severally but not jointly, desires to purchase from the
      Company certain securities of the Company, as more fully described in this
      Agreement.

     

    IN
      CONSIDERATION of the mutual covenants contained in this Agreement, and for
      other
      good and valuable consideration the receipt and adequacy of which are hereby
      acknowledged, the Company and each Purchaser agrees as follows:

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1    Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms have the meanings indicated in this Section
      1.1:

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person as such
      terms are used in and construed under Rule 144. With respect to a Purchaser,
      any
      investment fund or managed account that is managed on a discretionary basis
      by
      the same investment manager as such Purchaser will be deemed to be an Affiliate
      of such Purchaser.

     

    “Closing”
means
      the closing of the transaction pursuant to Section 2.1 and 2.2.

     

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any securities
      into which such common stock may hereafter be reclassified. 

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries 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 exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Company
      Counsel”
means
      Solomon Warde Seidenwurm & Smith, LLP.

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules of the Company delivered concurrently herewith.

     

    “Effective
      Date”
means
      the date that the Registration Statement is first declared effective by the
      Commission.

     

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

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose, (b) securities upon the exercise of or conversion of any
      securities issued hereunder, convertible securities, options or warrants issued
      and outstanding on the date of this Agreement, provided that such securities
      have not been amended since the date of this Agreement to increase the number
      of
      such securities, and (c) securities issued pursuant to acquisitions or strategic
      transactions, provided any such issuance shall only be to a Person which is,
      itself or through its subsidiaries, an operating company in a business
      synergistic with the business of the Company and in which the Company receives
      benefits in addition to the investment of funds, but shall not include a
      transaction in which the Company is issuing securities primarily for the purpose
      of raising capital or to an entity whose primary business is investing in
      securities.

     

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).

     

    “JB”
means
      Joel Bernstein, attorney-at-law with an office located at 2666 Tigertail Ave.,
      Suite 104, Miami, FL 33133.

     

    “Knowledge”
      means the actual, personal and present knowledge of the executive officers
      of
      the Company and such knowledge as a reasonable person charged with the duties
      and responsibilities of such person would reasonably be deemed to have.

     

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

     

    “Material
      Adverse Effect”
shall
      have the meaning ascribed to such term in Section 3.1(b).

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    
      
        
        

      

      
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    “Option”
means
      the option granted to the Purchasers to purchase shares of Common Stock in
      Section 2.3.

     

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

     

    “Pro
      Rata Portion”
shall
      mean the ratio of (x) the Subscription Amount of Securities purchased by a
      participating Purchaser and (y) the sum of the aggregate Subscription Amount
      of
      all participating Purchasers.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated as of the date of this Agreement,
      among
      the Company and each Purchaser, in the form of Exhibit
      A
      hereto.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the
      Shares.

     

    “Required
      Approvals”
shall
      have the meaning ascribed to such term in Section 3.1(e).

     

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

     

    “SEC
      Reports”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Securities”
means
      the Shares.

     

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

     

    “Shares”
means
      the shares of Common Stock issued or issuable to each Purchaser pursuant to
      this
      Agreement, including the shares issuable or issued upon exercise of the
      Option.

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the amounts set forth below such Purchaser’s signature
      block on the signature page hereto, in United States dollars and in immediately
      available funds.

     

    “Subsidiary”
shall
      mean the subsidiaries of the Company, if any, set forth on Schedule
      3.1(a).

     

    
      
        
        

      

      
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    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: over-the-counter market, the American
      Stock
      Exchange, the New York Stock Exchange, the Nasdaq Stock Market.

     

    “Transaction
      Documents”
means
      this Agreement, the Registration Rights Agreement and any other documents or
      agreements executed in connection with the transactions contemplated
      hereunder.

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1    Subject
      to the terms and conditions contained herein, Company shall assign and
Purchasers
      shall assume the rights and obligation of Company under the Securities
      Repurchase Agreement (the “Repurchase Agreement”) dated as of April 3, 2007 by
      and among the Company and AJW Partners, LLC, AJW Qualified Partners, LLC, AJW
      Offshore, Ltd. and New Millennium Partners II, LLC (the “Sellers”), a true and
      correct copy of which is filed as Exhibit 2.1 to Company’s Current Report on
      Form 8-K filed with the Securities and Exchange Commission on April 13, 2007,
      to
      purchase from the Sellers $1,750,000 in secured promissory notes issued by
      the
      Company (the “Notes”) and warrants to purchase 876,170 shares of the Company’s
      Common Stock (the “Warrants”) and to pay to the Sellers $1,000,000, 1,000,000
      shares of Company’s restricted Common Stock (which restricted shares will be
      delivered to the Company Counsel for delivery to the Sellers) and 1,000,000
      shares of Company’s Common Stock as set forth of Schedule I hereto. The Company
      shall be responsible for all other obligations under the Repurchase Agreement.
      

     

    2.2    Subject
      to the terms and conditions contained herein, the Company shall issue to the
      Purchasers 4,500,000 shares of Company Common Stock in exchange for the Notes
      and Warrants being acquired by the Purchasers pursuant to the Repurchase
      Agreement as set forth of Schedule I hereto. 

     

    2.3    Subject
      to the terms and conditions contained herein, and as set forth on Schedule
      I
      hereto, the Purchasers shall have the option to acquire up to 2,000,000 shares
      of the Company’s unregistered Common Stock from the Company (the “Option”) for
      $.50 per share (the “Option Price”) from time to time within 60 days following
      the Closing herein. The Option shall be exercised by written notice directed
      to
      the President of the Company, at the Company's principal place of business,
      accompanied by check in payment of the Option Price for the number of shares
      specified. The Company shall deliver a certificate representing such shares
      within five (5) business days after receipt of such notice and payment for
      such
      shares. In the event of any change in the outstanding shares of Common Stock
      of
      the Company by reason of any stock dividend, stock split, combination or
      exchange of shares, recapitalization, reclassification, merger, consolidation,
      reorganization, or other similar transactions (the "Capital Adjustments"),
      appropriate adjustments in the number and purchase price of shares covered
      by
      this Option shall be made. 

     

    
      
        
        

      

      
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    2.4    Closing.
      On the Closing Date, (a) each Purchaser shall purchase from the Sellers
      severally and not jointly with the other Purchasers, the Notes and Warrants
      and
      shall deliver to the Sellers their pro rata portion of the cash and Company
      Common Stock required to be paid to the Sellers pursuant to the Repurchase
      Agreement as set forth on Schedule I, and (b) each Purchaser shall exchange
      the
      Notes and Warrants purchased from the Sellers as set forth in this Section
      2.4
      for the shares of the Company Common Stock pursuant to Section 2.2. Upon
      satisfaction of each of the conditions set forth in Section 2.6, the Closing
      shall occur.

     

    2.5    Deliveries.

     

    (a)    On
      or
      before the Closing Date, the Company shall deliver or cause to be delivered
      to
      the Purchasers the following:

     

    (i)    this
      Agreement duly executed by the Company;

     

    (ii)   certificates
      for 4,500,000 shares of Company Common Stock registered as set forth in Schedule
      I hereto;

     

    (iii)   the
      Registration Rights Agreement, duly executed by the Company; 

     

    (iv)   a
      legal
      opinion of Company Counsel, in agreed form and addressed to the Purchasers;
      and

     

    (v)    evidence
      of the insurance policy referred to in Section 4.15. 

     

    (b)    On
      or
      before the Closing Date, the Purchasers shall deliver or cause to be delivered
      the following:

     

    (i)    this
      Agreement duly executed by such Purchaser;

     

    (ii)    $1,000,000
      by wire transfer to the Sellers pursuant to the Repurchase Agreement;

     

    (iii)   1,000,000
      shares of Company Common Stock required to be transferred to the Sellers
      pursuant to the Repurchase Agreement. 

     

    (iv)   1,000,000
      restricted shares of Company Common Stock shall be delivered to the Company
      Counsel for reissue and delivery to the Sellers; and

     

    (v)    the
      Registration Rights Agreement duly executed by such Purchaser.

     

    2.6    Closing
      Conditions. 

     

    (a)    The
      obligations of the Company hereunder in connection with the Closing are subject
      to the following conditions being met:

     

    
      
        
        

      

      
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    (i)    the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Purchasers contained herein; 

     

    (ii)    all
      obligations, covenants and agreements of the Purchasers required to be performed
      at or prior to the Closing Date shall have been performed;
      and

     

    (iii)    the
      delivery by the Purchasers of the items set forth in Section 2.5(b) of this
      Agreement.

     

    (b)    The
      respective obligations of the Purchasers hereunder in connection with the
      Closing are subject to the following conditions being met:

     

    (i)    the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Company contained herein;

     

    (ii)    all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date shall have been performed; 

     

    (iii)    the
      delivery by the Company of the items set forth in Section 2.5(a) of this
      Agreement; 

     

    (iv)    the
      delivery by the Sellers of the Notes and Warrants pursuant to the Repurchase
      Agreement; 

     

    (v)    there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof;

     

    (vi)    From
      the
      date hereof to the Closing Date, trading in the Common Stock shall not have
      been
      suspended by the Commission (except for any suspension of trading of limited
      duration agreed to by the Company, which suspension shall be terminated prior
      to
      the Closing), and, at any time prior to the Closing Date, trading in securities
      generally as reported by Bloomberg Financial Markets shall not have been
      suspended or limited, or minimum prices shall not have been established on
      securities whose trades are reported by such service, or on any Trading Market,
      nor shall a banking moratorium have been declared either by the United States
      or
      New York State authorities nor shall there have occurred any material outbreak
      or escalation of hostilities or other national or international calamity of
      such
      magnitude in its effect on, or any material adverse change in, any financial
      market which, in each case, in the reasonable judgment of each Purchaser, makes
      it impracticable or inadvisable to purchase the Shares at the Closing; and
      

     

    (vii)    Purchasers
      shall have received confirmation from the Company’s Chief Executive Officer and
      President that the executive compensation matters set forth in Section 4.17
      have
      been agreed upon and are effective. 

     

    
      
        
        

      

      
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    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1    Representations
      and Warranties of the Company.
      Except
      as
      set forth under the corresponding section of the Disclosure Schedules, which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to each Purchaser (which
      representations and warranties are supplemented by the Company’s SEC Reports, as
      defined in Section 3.1(h), below, copies of which have been provided to the
      Purchaser):

     

    (a)    Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth on
Schedule
      3.1(a).
      For the
      purpose of this Agreement, a “Subsidiary” means (i) a corporation or other
      entity whose shares of stock or other ownership interests having ordinary voting
      power (other than stock or other ownership interests having such power only
      by
      reason of the happening of a contingency) to elect a majority of the directors
      of such corporation, or other persons or entites performing similar functions
      for such person or entity, are owned, directly or indirectly, by such person
      or
      entity, or (ii) a corporation or other entity in which such person or entity
      owns, directly or indirectly, more than 50% of the equity interests at such
      time.  

     

    (b)    Organization
      and Qualification.
      Each of
      the Company and the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or financial condition of the Company and the Subsidiaries, taken
      as a
      whole, or (iii) a material adverse effect on the Company’s ability to perform in
      any material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    (c)    Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no further
      action is required by the Company in connection therewith other than in
      connection with the Required Approvals (as defined below). Each Transaction
      Document has been (or upon delivery will have been) duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute the
      valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms except (i) as limited by applicable bankruptcy,
      insolvency, reorganization, moratorium and other laws of general application
      affecting enforcement of creditors’ rights generally, and (ii) as limited by
      general principles of equity that restrict the availability of equitable or
      legal remedies.

     

    
      
        
        

      

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

     

    (e)    Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4
      of this Agreement, (ii) the filing with the Commission of the Registration
      Statement, and (iii) the filing of Form D with the Commission and such filings
      as are required to be made under applicable state securities laws (collectively,
      the “Required
      Approvals”).

     

    (f)    Issuance
      of the Shares.
      The
      Shares are duly authorized and, when issued and paid for in accordance with
      the
      Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company other than
      restrictions on transfer provided for in the Transaction Documents. The Company
      has reserved from its duly authorized capital stock the maximum number of shares
      of Common Stock issuable pursuant to this Agreement and the Option.

     

    
      
        
        

      

      
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    (g)    Capitalization.
      On the
      date of this Agreement, the authorized capital stock of the Company consists
      of
      an aggregate of 100,000,000 shares of common stock, $0.001 par value (“Common
      Stock”), of which 23,264,208 shares are issued and outstanding, and 20,000,000
      shares of preferred stock, $.001 par value (“Preferred Stock”) of which
      2,000,000 are issued and outstanding. Other than Around the Clock Partners,
      LP,
      no Person has any right of first refusal, preemptive right, right of
      participation, or any similar right to participate in the transactions
      contemplated by the Transaction Documents. Except as a result of the purchase
      and sale of the Securities, as disclosed in the SEC Reports and as set forth
      on
Schedule
      3.1(g),
      there
      are no outstanding options, warrants, script rights to subscribe to, calls
      or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exchangeable for, or giving any Person any
      right
      to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock,
      or
      securities or rights convertible or exchangeable into shares of Common Stock.
      The issue and sale of the Securities will not obligate the Company to issue
      shares of Common Stock or other securities to any Person (other than the
      Purchasers) and will not result in a right of any holder of Company securities
      to adjust the exercise, conversion, exchange or reset price under such
      securities. All of the outstanding shares of capital stock of the Company are
      validly issued, fully paid and nonassessable, and to the Company’s Knowledge
      have been issued in compliance with all federal and state securities laws,
      and
      none of such outstanding shares was issued in violation of any preemptive rights
      or similar rights to subscribe for or purchase securities. No further approval
      or authorization of any stockholder, the Board of Directors of the Company
      or
      others is required for the issuance and sale of the Shares. Except as disclosed
      in the SEC Reports, there are no stockholders agreements, voting agreements
      or
      other similar agreements with respect to the Company’s capital stock to which
      the Company is a party or, to the Knowledge of the Company, between or among
      any
      of the Company’s stockholders.

     

    (h)    SEC
      Reports; Financial Statements.
      The
      Company has filed all reports required to be filed by it under the Securities
      Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
      for the two years preceding the date hereof (or such shorter period as the
      Company was required by law to file such material) (the foregoing materials,
      including the exhibits thereto, being collectively referred to herein as the
      “SEC
      Reports”).
      As of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act and the rules and
      regulations of the Commission promulgated thereunder, and none of the SEC
      Reports, when filed, contained any untrue statement of a material fact or
      omitted to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading. The financial statements of the Company included
      in the SEC Reports comply in all material respects with applicable accounting
      requirements and the rules and regulations of the Commission with respect
      thereto as in effect at the time of filing and such financial statements have
      been prepared in accordance with United States generally accepted accounting
      principles applied on a consistent basis during the periods involved
      (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

    
      
        
        

      

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

     

    (j)    Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities, or (ii) except as disclosed
      in the SEC Reports, could, if there were an unfavorable decision, have or
      reasonably be expected to result in a Material Adverse Effect. Neither the
      Company nor any Subsidiary, nor any director, officer or employee thereof,
      is or
      has been the subject of any Action involving a claim of violation of or
      liability under federal or state securities laws or a claim of breach of
      fiduciary duty. There are no actions, claims or investigations pending, or
      to
      the Knowledge of any of the Company’s officers, threatened, which relate to (a)
      employment discrimination, age discrimination, sex discrimination and/or sexual
      harassment; (b) unpaid wages; (c) wrongful discharge, retaliation or breach
      of
      any alleged employment or other contracts; or (d) claims based on any tort,
      such
      as invasion of privacy, defamation, fraud and infliction of emotional distress
      by any of the Company, any Subsidiary or any of their current or former
      employees, officers or managers which could, if there were an unfavorable
      decision, have or reasonably be expected to result in a Material Adverse Effect.
      To the Company’s Knowledge, there is no basis for bringing any such action,
      claim or investigation. The Commission has not issued any stop order or other
      order suspending the effectiveness of any registration statement filed by the
      Company or any Subsidiary under the Exchange Act or the Securities Act.

     

    
      
        
        

      

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

     

    (l)    Compliance.
      Except
      as set forth in the SEC Reports, neither the Company nor any Subsidiary (i)
      is
      in default under or in violation of (and no event has occurred that has not
      been
      waived that, with notice or lapse of time or both, would result in a default
      by
      the Company or any Subsidiary under), nor has the Company or any Subsidiary
      received notice of a claim that it is in default under or that it is in
      violation of, any indenture, loan or credit agreement or any other agreement
      or
      instrument to which it is a party or by which it or any of its properties is
      bound (whether or not such default or violation has been waived), (ii) is in
      violation of any order of any court, arbitrator or governmental body, or (iii)
      is or has been in violation of any statute, rule or regulation of any
      governmental authority, including without limitation all foreign, federal,
      state
      and local laws applicable to its business except in each case as could not
      have
      a Material Adverse Effect. The Company has performed all procedures and complies
      with all statutes and regulations imposed by any agency or instrumentality
      of
      any governmental body relative to manufacture and sale of its products including
      all "labeling" as contemplated by the Federal Food, Drug and Cosmetic Act,
      as
      amended, and any other applicable law, rule and regulation. The Company’s
      packaging complies which any applicable recycling laws and the Company is in
      compliance with any recycling requirements.

     

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

     

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

    
       

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

    

     

    
      
        
        

      

      
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    (p)    Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged. To the best of Company’s Knowledge, such insurance contracts and
      policies are accurate and complete. Neither the Company nor any Subsidiary
      has
      any reason to believe that it will not be able to renew its existing insurance
      coverage as and when such coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business without a
      significant increase in cost. 

     

    (q)    Transactions
      With Affiliates and Employees.
      Except
      as set forth in the SEC Reports, none of the officers or directors of the
      Company and, to the Knowledge of the Company, none of the employees of the
      Company is presently a party to any transaction with the Company or any
      Subsidiary (other than for services as employees, officers and directors),
      including any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the Knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $60,000
      other than (i) for payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      for
      other employee benefits, including stock option agreements under any stock
      option plan of the Company.

     

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

     

    
      
        
        

      

      
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    (s)    Certain
      Fees.
      No
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement. The Purchasers shall have no obligation with
      respect to any fees or with respect to any claims made by or on behalf of other
      Persons for fees of a type contemplated in this Section that may be due in
      connection with the transactions contemplated by this Agreement.

     

    (t)    Private
      Placement.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market.

     

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

     

    (v)    Registration
      Rights.
      Except
      for the Sellers pursuant to the Repurchase Agreement and as disclosed in
Section
      3.1(v),
      no
      Person has any right to cause the Company to effect the registration under
      the
      Securities Act of any securities of the Company and the Company has not agreed
      to do so.

     

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

     

    
      
        
        

      

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

     

    (y)    Full
      Disclosure.
      Each of
      the Company and each of its Subsidiaries has provided the Purchaser with its
      SEC
      Reports which contain all information requested by the Purchaser in connection
      with its decision to purchase the Shares. Neither this Agreement, the
      Transaction Documents, the schedules hereto and thereto nor any other document
      delivered by the Company or any of its Subsidiaries to the Purchaser or its
      attorneys or agents in connection herewith or therewith or with the transactions
      contemplated hereby or thereby, as qualified by the statements of the Company
      in
      its SEC Reports, contain any untrue statement of a material fact nor omit to
      state a material fact necessary in order to make the statements contained herein
      or therein, in light of the circumstances in which they are made, not
      misleading. 

     

    (z)    No
      Integrated Offering.
      Assuming
      the accuracy of the Purchasers’ representations and warranties set forth in
      Section 3.2 and to the Company’s Knowledge, neither the Company, nor any of its
      affiliates, nor any Person acting on its or their behalf has, directly or
      indirectly, made any offers or sales of any security or solicited any offers
      to
      buy any security, under circumstances that would cause this offering of the
      Securities to be integrated with prior offerings by the Company for purposes
      of
      the Securities Act or any applicable shareholder approval provisions, including,
      without limitation, under the rules and regulations of any exchange or automated
      quotation system on which any of the securities of the Company are listed or
      designated.

     

    (aa)    Solvency.
      Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the Company's fair saleable value of its assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company's existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company's assets do not constitute
      unreasonably small capital to carry on its business for the current fiscal
      year
      as now conducted and as proposed to be conducted including its capital needs
      taking into account the particular capital requirements of the business
      conducted by the Company, and projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company, together
      with the proceeds the Company would receive, were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would be
      sufficient to pay all amounts on or in respect of its debt when such amounts
      are
      required to be paid. The Company does not intend to incur debts beyond its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt).

     

    
      
        
        

      

      
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    (bb)    Taxes.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no Knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

    (cc)    General
      Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Shares by any form of general solicitation or general advertising.
      The Company has offered the Securities for sale only to the Purchasers.

     

    (dd)    Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the Knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any
      corrupt funds for unlawful contributions, gifts, entertainment or other unlawful
      expenses related to foreign or domestic political activity, (ii) made any
      unlawful payment to foreign or domestic government officials or employees or
      to
      any foreign or domestic political parties or campaigns from corporate funds,
      (iii) failed to disclose fully any contribution made by the Company (or made
      by
      any person acting on its behalf of which the Company is aware) which is in
      violation of law, or (iv) violated in any material respect any provision of
      the
      Foreign Corrupt Practices Act of 1977, as amended.

     

    (ee)    Accountants.
      The
      Company’s accountants are Baum & Company, P.A. Such firm is a registered
      public accounting firm as required by the Securities Act. Such firm has not
      advised the Company of any matters which must be disclosed under Item
      304(a)(1)(iv)(B) of Commission Regulation S-B. 

     

    (ff)    Acknowledgment
      Regarding Purchasers’ Purchase of Shares.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm's length purchaser with respect to the Transaction
      Documents and the transactions contemplated hereby. The Company further
      acknowledges that no Purchaser is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to this Agreement and
      the
      transactions contemplated hereby and any advice given by any Purchaser or any
      of
      their respective representatives or agents in connection with this Agreement
      and
      the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Shares. The Company further represents to each Purchaser that
      the Company’s decision to enter into this Agreement has been based solely on the
      independent evaluation of the transactions contemplated hereby by the Company
      and its representatives.

     

    (gg)    Conduct
      of Business.
      The
      Company manufactures, distributes and sells “King of EnergyTM” drinks as set for
      in its SEC Reports and press releases issued prior to the date hereof concerning
      such business and has entered into the distribution agreements as described
      in
      such SEC Reports and press releases. 

     

    
      
        
        

      

      
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    3.2    Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby, for itself and for no other Purchaser, represents and warrants
      as of the date hereof and as of the Closing Date to the Company as
      follows:

     

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

     

    (b)    Investment
      Intent.
      Such
      Purchaser understands that the Shares, Notes and Warrants are “restricted
      securities” and have not been registered under the Securities Act or any
      applicable state securities law and is acquiring the Securities as principal
      for
      its own account and not with a view to or for distributing or reselling such
      Securities or any part thereof, has no present intention of distributing any
      of
      such Securities and has no arrangement or understanding with any other persons
      regarding the distribution of such Securities (this representation and warranty
      not limiting such Purchaser’s right to sell the Securities pursuant to the
      Registration Statement or otherwise in compliance with applicable federal and
      state securities laws). Such Purchaser is acquiring the Securities hereunder
      in
      the ordinary course of its business. Such Purchaser does not have any agreement
      or understanding, directly or indirectly, with any Person to distribute any
      of
      the Securities except as set forth herein. 

     

    (c)    Purchaser
      Status.
      At the
      time such Purchaser was offered the Securities, it was, and at the date hereof
      it is, and on each date on which it exercises the Option, it will be either:
      (i)
      an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
      (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as
      defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required
      to be registered as a broker-dealer under Section 15 of the Exchange Act.

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

     

    (f)    Certain
      Trading Activities.
      Each
      Purchaser represents that from the 60th
      day
      prior to the date hereof until the closing date hereof, it has not directly
      or
      indirectly made, nor has any Person over which such Purchaser has direct control
      directly or indirectly made, any purchases or sales of, or granted any option
      for the purchase of or entered into any hedging or similar transaction with
      the
      same economic effect as a short sale, of the Common Stock.

     

    (g)    Access
      to Information.
      Such
      Purchaser acknowledges that it has been afforded (i) the opportunity to ask
      such
      questions as it has deemed necessary of, and to receive answers from,
      representatives of the Company concerning the terms and conditions of the
      offering of the Shares and the merits and risks of investing in the Securities;
      (ii) access to public information about the Company and the Subsidiaries and
      their respective financial condition, results of operations, business,
      properties, management and prospects sufficient to enable it to evaluate its
      investment; and (iii) the opportunity to obtain such additional publicly
      disseminated information that the Company possesses or can acquire without
      unreasonable effort or expense that is necessary to make an informed investment
      decision with respect to the investment. Neither such inquiries nor any other
      investigation conducted by or on behalf of such Purchaser or its representatives
      or counsel shall modify, amend or affect such Purchaser’s right to rely on the
      truth, accuracy and completeness of the Company’s representations and warranties
      contained in the Transaction Documents.

     

    (h)    Independent
      Investment Decision.
      Such
      Purchaser has independently evaluated the merits of its decision to purchase
      Securities pursuant to the Transaction Documents, and such Purchaser confirms
      that it has not relied on the advice of any other Purchaser’s business and/or
      legal counsel in making such decision. 

     

    The
      Company acknowledges and agrees that each Purchaser does not make or has not
      made any representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in this Section
      3.2.

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1    Transfer
      Restrictions.
      

     

    
      
        
        

      

      
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    (a)    The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an affiliate of a Purchaser or in connection with a pledge as contemplated
      in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of JB or such other counsel selected by the transferor and
      to
      which the Company has no reasonable objection, the form and substance of which
      opinion shall be reasonably satisfactory to the Company, to the effect that
      such
      transfer does not require registration of such transferred Securities under
      the
      Securities Act. As a condition of transfer, any such transferee shall agree
      in
      writing to be bound by the terms of this Agreement and shall have the rights
      of
      a Purchaser under this Agreement and the Registration Rights
      Agreement.

     

    (b)    The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1(b), of a legend on any of the Securities in the following form:

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
      INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
      SECURITIES ACT.

     

    The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and the Registration Rights Agreement and, if required under the terms of such
      arrangement, such Purchaser may transfer pledged or secured Securities to the
      pledgees or secured parties. Such a pledge or transfer would not be subject
      to
      approval of the Company and no legal opinion of legal counsel of the pledgee,
      secured party or pledgor shall be required in connection therewith. Further,
      no
      notice shall be required of such pledge. At the appropriate Purchaser’s expense,
      the Company will execute and deliver such reasonable documentation as a pledgee
      or secured party of Securities may reasonably request in connection with a
      pledge or transfer of the Securities, including, if the Securities are subject
      to registration pursuant to the Registration Rights Agreement, the preparation
      and filing of any required prospectus supplement under Rule 424(b)(3) under
      the
      Securities Act or other applicable provision of the Securities Act to
      appropriately amend the list of Selling Stockholders thereunder.

     

    
      
        
        

      

      
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    (c)    Certificates
      evidencing the Shares shall not contain any legend (including the legend set
      forth in Section 4.1(b)), (i) while a registration statement (including the
      Registration Statement) covering the resale of such security is effective under
      the Securities Act, or (ii) following any sale of such Shares pursuant to Rule
      144, or (iii) if such Shares are eligible for sale under Rule 144(k), or (iv)
      if
      such legend is not required under applicable requirements of the Securities
      Act
      (including judicial interpretations and pronouncements issued by the Staff
      of
      the Commission). The Company shall cause its counsel to issue a legal opinion
      to
      the Company’s transfer agent promptly after the Effective Date if required by
      the Company’s transfer agent to effect the removal of the legend hereunder. If
      all or any portion of the Option is exercised at a time when there is an
      effective registration statement to cover the resale of the Shares purchased
      pursuant to exercise of the Option, such Shares shall be issued free of all
      legends. The Company agrees that following the Effective Date or at such time
      as
      such legend is no longer required under this Section 4.1(c), it will, no later
      than 5 Trading Days following the delivery by a Purchaser to the Company or
      the
      Company’s transfer agent of a certificate representing Shares, as the case may
      be, issued with a restrictive legend (such date, the “Legend
      Removal Date”),
      deliver or cause to be delivered to such Purchaser a certificate representing
      such Securities that is free from all restrictive and other legends. The Company
      may not make any notation on its records or give instructions to any transfer
      agent of the Company that enlarge the restrictions on transfer set forth in
      this
      Section.

     

    (d)    In
      addition to such Purchaser’s other available remedies, the Company shall pay to
      a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
      each $1,000 of Shares (based on the Closing Price of the Common Stock on the
      date such Securities are submitted to the Company’s transfer agent) subject to
      Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five
      (5)
      Trading Days after such damages have begun to accrue) for each Trading Day
      after
      the Legend Removal Date until such certificate is delivered. Nothing herein
      shall limit such Purchaser’s right to pursue actual damages for the Company’s
      failure to deliver certificates representing any Securities as required by
      the
      Transaction Documents, and such Purchaser shall have the right to pursue all
      remedies available to it at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief.

     

    (e)    Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      the
      removal of the restrictive legend from certificates representing Securities
      as
      set forth in this Section 4.1 is predicated upon the Company’s reliance that the
      Purchaser will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom.

     

    (f)    Until
      the
      date that each Purchaser holds less than 20% of the Shares initially purchased
      hereunder by such Purchaser, the Company shall not undertake a reverse or
      forward stock split or reclassification of the Common Stock without the prior
      written consent of the Purchasers holding a majority in interest of the
      Shares.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    4.2    Furnishing
      of Information.
      As long
      as any Purchaser owns Securities, the Company covenants to timely file (or
      obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. As long as any Purchaser owns Securities, if
      the
      Company is not required to file reports pursuant to the Exchange Act, it will
      prepare and furnish to the Purchasers and make publicly available in accordance
      with Rule 144(c) such information as is required for the Purchasers to sell
      the
      Securities under Rule 144. The Company further covenants that it will take
      such
      further action as any holder of Securities may reasonably request, all to the
      extent required from time to time to enable such Person to sell such Securities
      without registration under the Securities Act within the limitation of the
      exemptions provided by Rule 144.

     

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

     

    4.4    Securities
      Laws Disclosure; Publicity.
      The
      Company shall, by 8:30 a.m. Eastern time on the fourth (4th)
      Trading
      Day following the date hereof, issue a Current Report on Form 8-K, reasonably
      acceptable to each Purchaser disclosing the material terms of the transactions
      contemplated hereby and shall attach the Transaction Documents thereto. The
      Company and each Purchaser shall consult with each other in issuing any other
      press releases with respect to the transactions contemplated hereby, and neither
      the Company nor any Purchaser shall issue any such press release or otherwise
      make any such public statement without the prior consent of the Company, with
      respect to any press release of any Purchaser, or without the prior consent
      of
      each Purchaser, with respect to any press release of the Company, which consent
      shall not unreasonably be withheld, except if such disclosure is required by
      law, in which case the disclosing party shall promptly provide the other party
      with prior notice of such public statement or communication. Notwithstanding
      the
      foregoing, the Company shall not publicly disclose the name of any Purchaser,
      or
      include the name of any Purchaser in any filing with the Commission or any
      regulatory agency or Trading Market, without the prior written consent of such
      Purchaser, except (i) as required by federal securities law in connection with
      the registration statement contemplated by the Registration Rights Agreement,
      and (ii) to the extent such disclosure is required by law or Trading Market
      regulations, in which case the Company shall provide the Purchasers with prior
      notice of such disclosure permitted under subclause (i) or (ii).

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    4.6    Non-Public
      Information. The Company covenants and agrees that neither it nor any other
      Person acting on its behalf will provide any Purchaser or its agents or counsel
      with any information that the Company believes constitutes material non-public
      information, unless prior thereto such Purchaser shall have executed a written
      agreement regarding the confidentiality and use of such information. The Company
      understands and confirms that each Purchaser shall be relying on the foregoing
      representations in effecting transactions in securities of the
      Company.

     

    4.7    Simultaneous
      Closing. The transactions set forth in Sections 2.1 and 2.2 herein shall
      take place simultaneously. In the event such transactions have not closed as
      of
      the Closing Date unless otherwise extended, this Agreement shall be null and
      void. 

     

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

     

    4.9    Indemnification
      of Purchasers. Subject to the provisions of this Section 4.9, the Company
      will indemnify and hold the Purchasers and their directors, officers,
      shareholders, partners, employees and agents (each, a “Purchaser Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any such Purchaser Party may suffer or incur as a result
      of
      or relating to (a) any breach of any of the representations, warranties,
      covenants or agreements made by the Company in this Agreement or in the other
      Transaction Documents, or (b) any action instituted against a Purchaser, or
      any
      of them or their respective Affiliates, by any stockholder of the Company who
      is
      not an Affiliate of such Purchaser, with respect to any of the transactions
      contemplated by the Transaction Documents (unless such action is based upon
      a
      breach of such Purchaser’s representations, warranties or covenants under the
      Transaction Documents or any agreements or understandings such Purchaser may
      have with any such stockholder or any violations by the Purchaser of state
      or
      federal securities laws or any conduct by such Purchaser which constitutes
      fraud, gross negligence, willful misconduct or malfeasance). If any action
      shall
      be brought against any Purchaser Party in respect of which indemnity may be
      sought pursuant to this Agreement, such Purchaser Party shall promptly notify
      the Company in writing, and the Company shall have the right to assume the
      defense thereof with counsel of its own choosing. Any Purchaser Party shall
      have
      the right to employ separate counsel in any such action and participate in
      the
      defense thereof, but the fees and expenses of such counsel shall be at the
      expense of such Purchaser Party except to the extent that (i) the employment
      thereof has been specifically authorized by the Company in writing, (ii) the
      Company has failed after a reasonable period of time to assume such defense
      and
      to employ counsel, or (iii) in such action there is, in the reasonable opinion
      of such separate counsel, a material conflict on any material issue between
      the
      position of the Company and the position of such Purchaser Party. The Company
      will not be liable to any Purchaser Party under this Agreement (i) for any
      settlement by a Purchaser Party effected without the Company’s prior written
      consent, which shall not be unreasonably withheld or delayed, or (ii) to the
      extent, but only to the extent that a loss, claim, damage or liability is
      attributable to any Purchaser Party’s breach of any of the representations,
      warranties, covenants or agreements made by the Purchasers in this Agreement
      or
      in the other Transaction Documents.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    4.10    Reservation
      of Common Stock.
      As of
      the date hereof, the Company has reserved and the Company shall continue to
      reserve and keep available at all times, free of preemptive rights, a sufficient
      number of shares of Common Stock for the purpose of enabling the Company to
      issue Shares pursuant to this Agreement including any exercise of the
      Option.

     

    4.11    Listing
      of Common Stock. The
      Company hereby agrees to use best efforts to secure the listing of the Common
      Stock on the American Stock Exchange (“ASE”). The Company shall use its best
      efforts to adopt and comply with all Corporate Governance Rules and Regulations
      as is required for listing by the ASE within 60 days of the Closing. The Company
      shall submit its application for listing on the ASE within the later of 90
      days
      of the execution of this agreement or 15 days after the Company meets the
      listing requirements of the ASE. If all appropriate actions have been completed
      by the Company to gain ASE listing and the stock price at that time is less
      than
      $2.00 per share, a member of the Board of Directors of the Company shall contact
      the ASE to determine if it is reasonable to submit the application at that
      time.
      If the Company is advised by the ASE it is allowed to submit an application
      to
      the ASE under an exception rule, the Company shall make the filing. Prior to
      listing on the ASE, the Company shall use its best efforts to maintain the
      quotation of its Common Stock on the OTC Bulletin Board. 

     

    4.12    Equal
      Treatment of Purchasers. No consideration shall be offered or paid to any
      person to amend or consent to a waiver or modification of any provision of
      any
      of the Transaction Documents unless the same consideration is also offered
      to
      all of the parties to the Transaction Documents. For clarification purposes,
      this provision constitutes a separate right granted to each Purchaser by the
      Company and negotiated separately by each Purchaser, and is intended to treat
      for the Company the Purchasers as a class and shall not in any way be construed
      as the Purchasers acting in concert or as a group with respect to the purchase,
      disposition or voting of Securities or otherwise.

     

    4.13    Future
      Financing. The Company agrees no debt financing will be issued for a period
      of 24 months from the Closing without the direct consent and prior approval
      of
      the Purchasers. This paragraph does not limit the Company from expanding its
      production credit line or obtaining additional credit lines for operations.
      From
      the date hereof until 12 months after the Closing Date, upon any financing
      by
      the Company by sale of its Common Stock or Common Stock Equivalents in an amount
      exceeding $3,000,000 and provided that 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

      each
        Purchaser continues to hold at least 60% of the Shares (a “Subsequent
        Financing”), each Purchaser shall have the right to participate in up to
        100% of such Subsequent Financing (the “Participation Maximum”).  At
        least 15 Trading Days prior to the closing of the Subsequent Financing, the
        Company shall deliver to each Purchaser a written notice of its intention
        to
        effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask
        such Purchaser if it wants to review the details of such financing (such
        additional notice, a “Subsequent Financing Notice”).  Upon the
        request of a Purchaser, and only upon a request by such Purchaser, for a
        Subsequent Financing Notice, the Company shall promptly, but no later than
        1
        Trading Day after such request, deliver a Subsequent Financing Notice to
        such
        Purchaser.  The Subsequent Financing Notice shall describe in reasonable
        detail the proposed terms of such Subsequent Financing, the amount of proceeds
        intended to be raised thereunder, the Person with whom such Subsequent Financing
        is proposed to be effected, and attached to which shall be a term sheet or
        similar document relating thereto.  If by 6:30 p.m. (Eastern time) on
        the second Trading Day after all of the Purchasers have received the Pre-Notice,
        notifications by the Purchasers of their willingness to participate in the
        Subsequent Financing (or to cause their designees to participate) is, in
        the
        aggregate, less than the total amount of the Participation Maximum, then
        the
        Company may effect the remaining portion of such Subsequent Financing on
        the
        terms and to the Persons set forth in the Subsequent Financing Notice.  If
        the Company receives no notice from a Purchaser as of such 2nd
        Trading
        Day, such Purchaser shall be deemed to have notified the Company that it
        does
        not elect to participate.  The Company must provide the Purchasers with a
        second Subsequent Financing Notice, and the Purchasers will again have the
        right
        of participation set forth above in this Section 4.13, if the Subsequent
        Financing subject to the initial Subsequent Financing Notice is not consummated
        for any reason on the terms set forth in such Subsequent Financing Notice
        within
        60 Trading Days after the date of the initial Subsequent Financing Notice.
        In
        the event the Company receives responses to Subsequent Financing Notices
        from
        Purchasers seeking to purchase more than the aggregate amount of the
        Participation Maximum, each such Purchaser shall have the right to purchase
        their Pro Rata Portion of the Participation Maximum.  Notwithstanding the
        foregoing, this Section 4.13 shall not apply in respect of an Exempt
        Issuance.

    

     

    4.14    Subsequent
      Equity Sales. Except for (i) the transactions provided for herein, (ii) the
      vesting of stock options in the ordinary course, (iii) the exercise of currently
      outstanding warrants, and (iv) the payment of restricted Common Stock for
      director fees, from the date hereof until 90 days after the Effective Date
      neither the Company nor any Subsidiary shall issue shares of Common Stock or
      Common Stock Equivalents; provided, however, the 90 day period set
      forth in this Section 4.14 shall be extended for the number of Trading Days
      during such period in which (y) trading in the Common Stock is suspended by
      any
      Trading Market, or (z) following the Effective Date, the Registration Statement
      is not effective or the prospectus included in the Registration Statement may
      not be used by the Purchasers for the resale of the Shares and Option Shares.
      In
      addition to the limitations set forth herein, from the date hereof until such
      time as no Purchaser holds any of the Securities, the Company shall be
      prohibited from effecting or entering into an agreement to effect any Subsequent
      Financing involving a “Variable Rate Transaction” or an “MFN
      Transaction” (each as defined below). The term “Variable Rate
      Transaction” shall mean a transaction in which the Company issues or sells
      (i) any debt or equity securities that are convertible into, exchangeable or
      exercisable for, or include the right to receive additional shares of Common
      Stock either (A) at a conversion, exercise or exchange rate or other price
      that
      is based upon and/or varies with the trading prices of or quotations for the
      shares of Common Stock at any 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

       

      time
        after the initial issuance of such debt or equity securities, or (B) with
        a
        conversion, exercise or exchange price that is subject to being reset at
        some
        future date after the initial issuance of such debt or equity security or
        upon
        the occurrence of specified or contingent events directly or indirectly related
        to the business of the Company or the market for the Common Stock. The term
“MFN
        Transaction” shall mean a transaction in which the Company issues or sells any
        securities in a capital raising transaction or series of related transactions
        which grants to an investor the right to receive additional shares based
        upon
        future transactions of the Company on terms more favorable than those granted
        to
        such investor in such offering. Any Purchaser shall be entitled to obtain
        injunctive relief against the Company to preclude any such issuance, which
        remedy shall be in addition to any right to collect damages. Notwithstanding
        the
        foregoing, this Section 4.14 shall not apply in respect of an Exempt Issuance,
        except that no Variable Rate Transaction or MFN Transaction shall be an Exempt
        Issuance.

       

      4.15    Insurance.
        The Company will purchase a life insurance policy in the amount of $1,000,000
        naming the Purchasers as the beneficiaries, on Mr. Eldon Moya1 as long as
        he is
        employed by the Company and on any future Chief Executive Officer of the
        Company. Each such policy shall be a 10 year term policy. The insurance purchase
        shall be applied for no later than May 7, 2007 and the Company shall use
        commercially reasonable efforts to complete this insurance purchase by no
        later
        than May 31, 2007. Each Purchaser shall be a pro rata beneficiary of each
        such
        life insurance policy based on the Shares of Common Stock acquired under
        this
        Agreement.

       

      4.16    (a)
        Optional Purchaser Designated Directors; Expenses of Directors.

       

      (i)    Contingent
        upon and effective as of the Closing, the Company’s Board of Directors shall
        have elected up to two (2) persons, one of which shall be designated by Around
        the Clock Partners, LP (“ATC”) (which director shall be Wayne Anderson or
        such other person to whom the Company has no reasonable objection) and one
        of
        whom shall be jointly designated by ATC and Cohiba Partners (“Cohiba”) to
        the Company’s Board of Directors (the “ATC Directors”) and one such
        director appointed by ATC shall serve on the Company’s compensation committee.
        The Company shall not appoint an executive committee. At each annual meeting
        of
        the stockholders of the Company and at each special meeting of the stockholders
        of the Company called for the purposes of electing directors, and at any
        time at
        which stockholders of the Company shall have the right to, or shall, vote
        for or
        consent to the election of directors, then the Company shall nominate for
        election the ATC Directors provided that ATC continues to hold 20% of the
        Shares
        it purchased hereunder and provided further that neither ATC nor Cohiba are
        in
        material default under any agreement with the Company or are in breach of
        their
        respective fiduciary obligations to the Company, and such default or breach
        has
        not been cured within 30 days after receipt of notice from the Company
        specifying such default or breach. The ATC Directors shall have the right
        to
        attend any meetings of the Board of Directors and its committees by telephone
        conference call and shall receive all reports and materials provided to the
        directors of the Company at the time such reports and materials are provided
        to
        the other Company directors. 

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      (ii)    ATC
        shall
        timely notify the Company in writing of the person or persons designated
        by
        pursuant to this Section as nominee for election to the Board, and shall
        promptly furnish all information necessary for all required filings with
        the
        SEC. In the absence of any notice from ATC, the ATC Directors then serving
        and
        previously designated by ATC shall be renominated. 

       

      (iii)    Any
        vacancy
        on the Board of Directors created by the resignation, removal, incapacity,
        or
        death of any ATC Director may be filled by another ATC Director selected
        by ATC.

       

      (iv)    The
        ATC
        Directors shall be entitled to reimbursement for reasonable out-of-pocket
        expenses incurred in connection with the attending of meetings of the Board
        of
        Directors and any committees of the Board of Directors and performance of
        their
        duties as a Director. The ATC Directors shall be provided with indemnification
        and advancement of expenses to the fullest extent allowed under the laws
        of the
        Company’s state of incorporation. The ATC Directors shall be covered by such
        indemnification insurance and indemnification policies and compensation policies
        established by the Board of Directors for all Directors generally in addition
        to
        any rights that the ATC Directors may have at common law, pursuant to the
        Company's Articles of Incorporation, the Company's Bylaws, Resolutions of
        the
        Board of Directors, or otherwise. 

       

      (b)    Observer
        Rights.
        ATC and
        Cohiba shall each be allowed one representative (the “Board
        Observer”)
        of its
        choice (which individual shall be reasonably acceptable to the Company) to
        attend all meetings of the Company’s Board of Directors and all committees
        thereof for so long as ATC and Cohiba shall have the option to have a ATC
        Director appointed but there is no ATC Director on the Company’s Board of
        Directors. In connection therewith, the Company shall provide the Board Observer
        with copies of all notices, minutes, consents, and other materials, financial
        or
        otherwise, that the Company provides to its Board of Directors. The Company
        shall reimburse the Board Observer for any reasonable expenses incurred in
        connection with its function as a Board Observer, including travel and lodging
        expenses incurred to attend meetings of the Company’s Board of Directors and its
        committees. The Board Observer shall have the right to attend any such meetings
        by telephone conference call. The Board Observer’s rights shall be limited to
        observation and shall not include the right to vote or otherwise participate
        in
        any meeting of the Company’s Board of Directors. Notwithstanding the foregoing,
        the Company’s Board of Directors, acting upon the advice of counsel, may limit
        the observation rights provided hereunder to the extent that such limitation
        may
        be reasonably necessary to preserve for the Company the benefit of the
        attorney-client privilege. The Company also may require each Board Observer
        to
        enter into such confidentiality arrangements as may be reasonably necessary
        to
        preserve, in connection with the observation rights granted hereunder, the
        confidentiality of information made available to the Company’s Board of
        Directors.

       

      4.17    Certain
        Executive Compensation Matters. The current Chief Executive Officer and
        President of the Company shall forgo their right to receive any compensation
        from the Company based on Company Gross Revenues, as set forth in their
        Employment Agreements dated December 27, 2005. In lieu of this payment, the
        Chief Executive Officer and President shall receive five year options to
        purchase Company Common Stock based on annual gross revenues of the Company
        in
        each year during the term of their respective employment agreements. In each
        year beginning on January 1, 2007, at the time it is determined the Company
        surpasses $5 million in gross revenues, options will be issued to the Chief
        

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

         

        Executive
          Officer and President to purchase Company Common Stock. The strike price
          of such
          option will be at 100% of the closing price of the Company’s Common Stock on the
          day of such option grant(s) and the number of shares of such options shall
          be
          $120,000 divided by the strike price. For each additional $5 million in
          gross
          revenues in each year, warrants will be issued on the same basis except
          that the
          number of shares subject to purchase on exercise of such options shall
          be
          $100,000 divided by the applicable strike price. At the end of each year
          they
          will receive additional stock options on a pro-rata basis for any sales
          over $5
          million in such year for which they have not previously received stock
          options.
          For example, if annual sales were $9 million, they will have receive options
          on
          the first $5 million of sales during the year and will be entitled to received
          additional options on the last trading day of the year with an aggregate
          option
          price of $80,000 ($4 million/$5 million x $100,000). As compensation for
          amending their Employment Agreements as set forth herein, the CEO and President
          will receive 5 year stock options for 100,000 shares of Common Stock with
          an
          exercise price of $1.50 per share. In the event any outstanding stock options
          and warrants held by the CEO, President and any other employee, officer
          or
          director of the Company allows cashless exercise, such options and warrants
          will
          be modified to require a full cash payment to the Company upon exercise
          and
          cashless exercise shall not be permitted. The Purchasers likewise agree
          to
          exercise any options and warrants held by them by cash payment of the purchase
          price and not by cashless exercise. 

         

        4.18    Use
          of
          Proceeds. The Company shall use the proceeds from the sale of Shares set
          forth in Section 2.3 for current working capital requirements of the business
          of
          the Company and not for payment of past wages or other debts, liabilities
          and
          obligations outstanding as of the date hereof. 

      

    

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1    Fees
      and Expenses.
      The
      Company shall reimburse Around the Clock Partners, LP any legal fees and
      expenses in connection with the transactions herein, including expenses in
      connection with filing any forms, reports and schedules with the Commission,
      in
      an amount not to exceed $17,500. Except as otherwise set forth in this
      Agreement, each party shall pay the fees and expenses of its advisers, counsel,
      accountants and other experts, if any, and all other expenses incurred by such
      party incident to the negotiation, preparation, execution, delivery and
      performance of this Agreement. The Company shall pay all stamp and other taxes
      and duties levied in connection with the sale of the Securities. 

     

    5.2    Entire
      Agreement. The Transaction Documents, together with the exhibits and
      schedules thereto, contain the entire understanding of the parties with respect
      to the subject matter hereof and supersede all prior agreements and
      understandings, oral or written, with respect to such matters, which the parties
      acknowledge have been merged into such documents, exhibits and
      schedules.

     

    5.3    Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto prior to 6:30 p.m. (Eastern time) on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      set
      forth on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 6:30 p.m. (Eastern time) on any Trading Day, (c) the second
      Trading Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth on the signature pages attached hereto.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    5.6    Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each Purchaser. Any Purchaser may assign any or all of its rights
      under this Agreement to any Person to whom such Purchaser assigns or transfers
      any Securities, provided such transferee agrees in writing to be bound, with
      respect to the transferred Securities, by the provisions hereof that apply
      to
      the “Purchasers”.

     

    5.7    No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.9.

     

    5.8    Governing
      Law. All questions concerning the construction, validity, enforcement and
      interpretation of the Transaction Documents shall be governed by and construed
      and enforced in accordance with the internal laws of the State of California,
      without regard to the principles of conflicts of law thereof. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof via
      registered or certified mail or overnight delivery (with evidence of delivery)
      to such party at the address in effect for notices to it under this Agreement
      and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to limit
      in
      any way any right to serve process in any manner permitted by law. The parties
      hereby waive all rights to a trial by jury. If either party shall commence
      an
      action or proceeding to enforce any provisions of the Transaction Documents,
      then the prevailing party in such action or proceeding shall be reimbursed
      by
      the other party for its attorneys’ fees and other costs and expenses incurred
      with the investigation, preparation and prosecution of such action or
      proceeding.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    5.9    
Survival.
      The representations and warranties herein shall survive the Closing and delivery
      of the Shares. 

     

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

     

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

     

    5.12    Rescission
      and Withdrawal Right. Notwithstanding anything to the contrary contained in
      (and without limiting any similar provisions of) the Transaction Documents,
      whenever any Purchaser exercises a right, election, demand or option under
      a
      Transaction Document and the Company does not timely perform its related
      obligations within the periods therein provided, then the Company has the right
      to cure such failure upon 30 business days prior written notice to the Company.
      If the Company fails to perform its obligations by the expiration of the 30
      day
      cure period, then such Purchaser may rescind or withdraw, in its sole discretion
      from time to time upon written notice to the Company, any relevant notice,
      demand or election in whole or in part without prejudice to its future actions
      and rights.

     

    5.13    Replacement
      of Securities. If any certificate or instrument evidencing any Securities is
      mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
      issued in exchange and substitution for and upon cancellation thereof, or in
      lieu of and substitution therefor, a new certificate or instrument, but only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft or destruction and customary and reasonable indemnification agreement,
      if
      requested, but no indemnity bond shall be required in connection with such
      replacement. The applicants for a new certificate or instrument under such
      circumstances shall also pay any reasonable third-party costs associated with
      the issuance of such replacement Securities.

     

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

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

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

     

    5.16    Independent
      Nature of Purchasers’ Obligations and Rights. The obligations of each
      Purchaser under any Transaction Document are several and not joint with the
      obligations of any other Purchaser, and no Purchaser shall be responsible in
      any
      way for the performance of the obligations of any other Purchaser under any
      Transaction Document. Nothing contained herein or in any Transaction Document,
      and no action taken by any Purchaser pursuant thereto, shall be deemed to
      constitute the Purchasers as a partnership, an association, a joint venture
      or
      any other kind of entity, or create a presumption that the Purchasers are in
      any
      way acting in concert or as a group with respect to such obligations or the
      transactions contemplated by the Transaction Document. Each Purchaser shall
      be
      entitled to independently protect and enforce its rights, including without
      limitation, the rights arising out of this Agreement or out of the other
      Transaction Documents, and it shall not be necessary for any other Purchaser
      to
      be joined as an additional party in any proceeding for such purpose. Each
      Purchaser has been represented by its own separate legal counsel in their review
      and negotiation of the Transaction Documents. For reasons of administrative
      convenience only, Purchasers and their respective counsel have chosen to
      communicate with the Company through JB. JB does not represent all of the
      Purchasers but only Around the Clock Partners, LP. The Company has elected
      to
      provide all Purchasers with the same terms and Transaction Documents for the
      convenience of the Company and not because it was required or requested to
      do so
      by the Purchasers.

     

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

     

    (Signature
      Page Follows)

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

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

     

    

    
      	
              WHO’S
                YOUR DADDY, INC., a Nevada Corporation

            	
              Address
                for Notice:

              President
                

              Who’s
                Your Daddy, Inc.

              5840
                El Camino Real

              Suite
                108

              Carlsbad,
                CA 92008

            
	
              By:
                /s/ Edon
                Moyal                                              

                    
                Name: Edon Moyal

                    
                Title: CEO

            	 
	
               

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

               

              Harry
                J. Proctor, Esq.

              SOLOMON
                WARD SEIDENWURM & SMITH LLP

              401
                “B” Street, Suite 1200

              San
                Diego, California 92101

            	 

    

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES FOR PURCHASERS FOLLOW]

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    
[PURCHASER
      SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. SECURITIES PURCHASE
      AGREEMENT]

    

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

     

    Name
      of
      Investing Entity: AROUND
      THE CLOCK PARTNERS, LP

     

    
      	 	
              By:
                Around
                the Clock Trading and Capital Management, LLC,

              General
                Partner

               

              By:
                /s/ Wayne
                Anderson                                           

              Wayne
                Anderson

              Managing
                Member

            

    

     

    Email
      Address of Authorized Entity: wanderson@aroundtheclocktcm.com

    

    Address
      for Notice of Investing Entity:

     

    
      	 	
              Wayne
                Anderson, Managing Member 

              Around
                the Clock Trading and Capital Management, LLC

              721
                First Avenue North

              Suite
                106

              St.
                Petersburg, FL 33713

            

    

     

    This
      signature page also constitutes the signature page for the purchase of 140,000
      shares of Company Common Stock for $70,000 pursuant to Section 2.3 of the
      Agreement. 

    
 

    [SIGNATURE
      PAGES CONTINUE]

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    

    [PURCHASER
      SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. SECURITIES PURCHASE
      AGREEMENT]

    

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

     

    Name
      of
      Investing Entity:      COHIBA
      PARTNERS INC.

    

    Signature
      of Authorized Signatory of Investing Entity:
/s/
      Collin
      Nix                                                       

    Name
      of
      Authorized Signatory: Collin
      Nix 

    Title
      of
      Authorized Signatory: President
      

    Email
      Address of Authorized
      Entity:________________________________________________

    

    Address
      for Notice of Investing Entity:

    

    

    

    

    Address
      for Delivery of Securities for Investing Entity (if not same as
      above):

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    

    [PURCHASER
      SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. SECURITIES PURCHASE
      AGREEMENT]

    

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

     

    Name
      of
      Investing Entity: AROUND THE CLOCK TRADING AND CAPITAL MANAGEMENT, LLC

    Signature
      of Authorized Signatory of Investing Entity:
/s/
      Wayne
      Anderson                                          

    Name
      of
      Authorized Signatory: Wayne Anderson

    Title
      of
      Authorized Signatory: Managing Member

    Email
      Address of Authorized Entity: wanderson@aroundtheclocktcm.com

    

    Address
      for Notice of Investing Entity:

    

    Wayne
      Anderson, Managing Member 

    Around
      the Clock Trading and Capital Management, LLC

    721
      First
      Avenue North

    Suite
      106

    St.
      Petersburg, FL 33713

    

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    

    [PURCHASER
      SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. SECURITIES PURCHASE
      AGREEMENT]

    

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

     

    Name
      of
      Investing Entity:     STRONG
      PARTNERS CORPORATION

    

    Signature
      of Authorized Signatory of Investing Entity:
/s/
      Charles
      McGuirk                                          

    Name
      of
      Authorized Signatory: Charles
      McGuirk

    Title
      of
      Authorized Signatory: Chief
      Executive Officer

    Email
      Address of Authorized
      Entity:________________________________________________

    

    Address
      for Notice of Investing Entity:

    

    

    

    

    Address
      for Delivery of Securities for Investing Entity (if not same as
      above):

    

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    

    [PURCHASER
      SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. SECURITIES PURCHASE
      AGREEMENT]

    

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

     

    Name
      of
      Investing Entity:      TURID
      HOLDINGS

    

    Signature
      of Authorized Signatory of Investing Entity:
/s/
      Henry
      Ward                                                 

    Name
      of
      Authorized Signatory: Henry
      Ward

    Title
      of
      Authorized Signatory: Managing
      Director

    Email
      Address of Authorized
      Entity:________________________________________________

    

    Address
      for Notice of Investing Entity:

    

    

    

    

    Address
      for Delivery of Securities for Investing Entity (if not same as
      above):

    

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    

    [PURCHASER
      SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. SECURITIES PURCHASE AGREEMENT FOR
      PURCHASE PURSUANT TO SECTION 2.3]

    

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

     

    Name
      of
      Investors: CHUCK LAUBACH and JIM POMFRET, as joint tenants in
      common

    

    

    
      	
              Signatures: /s/ Chuck
                Laubach                                       

              Chuck
                Laubach

            	
              /s/ Jim
                Pomfret                                                          

              Jim Pomfret

            

    

     

    Address
      for Notice of Investors:

    

    

    

    

    Address
      for Delivery of Securities for Investors (if not same as above):

     

    

    

    

    Subscription
      Amount: $250,000

    Shares:
      500,000

     

     

    36Sub Filer Ccc

    Exhibit
      10.2

     

    REGISTRATION
      RIGHTS AGREEMENT

     

     This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of May ___, 2007, by and among WHO’S YOUR DADDY, INC.,
      a Nevada corporation (the “Company”),
      and
      the purchasers signatory hereto (each such purchaser, a “Purchaser”
and
      collectively, the “Purchasers”).

     

     This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof among the Company and the Purchasers (the “Purchase
      Agreement”).

     

     
      The Company and the Purchasers hereby agree as follows:

     

    1.    Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement shall have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms shall have the
      following meanings:

     

    “Advice”
shall
      have the meaning set forth in Section 6(d).

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any securities
      into which such common stock may hereafter be reclassified. 

     

    “Effectiveness
      Date”
means,
      with respect to the Registration Statement required to be filed hereunder,
      earlier of (a) the 75th
      calendar
      day following the date of the Purchase Agreement, and (b) the 5th
      Trading
      Day following the date on which the Company is notified by the Commission that
      the Registration Statement will not be reviewed or is no longer subject to
      further review and comments.

     

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2(a).

     

    “Event”
shall
      have the meaning set forth in Section 2(b).

     

    “Event
      Date”
shall
      have the meaning set forth in Section 2(b).

     

    “Filing
      Date”
means,
      with respect to the Registration Statement required to be filed hereunder,
      the
      45th
      calendar
      day following the date of the Purchase Agreement.

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

     

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Losses”
shall
      have the meaning set forth in Section 5(a).

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    “Option”
means
      the option granted to the Purchasers to purchase shares of the Company’s Common
      Stock pursuant to Section 2.3 of the Purchase Agreement.

     

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

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Prospectus”
means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by the Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    “Registrable
      Securities”
means
      all of the Shares issuable at the Closing, together with any shares of Common
      Stock issued or issuable upon any stock split, dividend or other distribution,
      recapitalization or similar event with respect to the foregoing, all the shares
      owned by any Purchaser acquired from the Company prior to the date hereof and
      all shares which may be acquired by any Purchaser pursuant to the exercise
      of
      options and warrants issued prior to the date hereof and any shares required
      to
      be registered pursuant to the Repurchase Agreement. 

     

    “Registration
      Statement”
means
      the registration statements required to be filed hereunder, including (in each
      case) the Prospectus, amendments and supplements to the registration statement
      or Prospectus, including pre- and post-effective amendments, all exhibits
      thereto, and all material incorporated by reference or deemed to be incorporated
      by reference in the registration statement.

     

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same purpose and
      effect as such Rule.

     

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same purpose and
      effect as such Rule.

     

    “Shares”
means
      the shares of Common Stock issued or issuable to each Purchaser pursuant to
      the
      Purchase Agreement, including the shares issued or issuable upon exercise of
      the
      Option.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    “Trading
      Day”
means
      a
      day on which the Company’s Common Stock is traded on a Trading
      Market.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: over-the-counter market, the American
      Stock
      Exchange, the New York Stock Exchange, the Nasdaq Stock Market.

     

    2.    Registration.

     

    (a)    On
      or
      prior to the Filing Date, the Company shall prepare and file with the Commission
      the Registration Statement covering the resale of all of the Registrable
      Securities for an offering to be made on a continuous basis pursuant to Rule
      415. The Registration Statement required hereunder shall be on Form SB-2 (except
      if the Company is not then eligible to register for resale the Registrable
      Securities on Form SB-2, in which case the Registration shall be on another
      appropriate form in accordance herewith). The Registration Statement required
      hereunder shall contain (except if otherwise directed by the Holders)
      substantially the “Plan
      of Distribution”
      attached hereto as Annex
      A.
      Subject
      to the terms of this Agreement, the Company shall use its best efforts to cause
      the Registration Statement to be declared effective under the Securities Act
      as
      promptly as possible after the filing thereof, but in any event not later than
      the Effectiveness Date, and shall use its best efforts to keep the Registration
      Statement continuously effective under the Securities Act until the date when
      all Registrable Securities covered by the Registration Statement have been
      sold
      or may be sold without volume restrictions pursuant to Rule 144(k) as determined
      by the counsel to the Company pursuant to a written opinion letter to such
      effect, addressed and acceptable to the Company’s transfer agent and the
      affected Holders (the “Effectiveness
      Period”).

     

    (b)    If:
      (i) a
      Registration Statement is not filed on or prior to the Filing Date (if the
      Company files a Registration Statement without affording the Holder the
      opportunity to review and comment on the same as required by Section 3(a),
      the
      Company shall not be deemed to have satisfied this clause (i)), or (ii) the
      Company fails to file with the Commission a request for acceleration in
      accordance with Rule 461 promulgated under the Securities Act, within 5 Trading
      Days of the date that the Company is notified (orally or in writing, whichever
      is earlier) by the Commission that a Registration Statement will not be
“reviewed,” or is not subject to further review, or (iii) prior to the date when
      such Registration Statement is first declared effective by the Commission,
      the
      Company fails to file a pre-effective amendment and otherwise respond in writing
      to comments made by the Commission in respect of such Registration Statement
      within 10 calendar days after the receipt of comments by or notice from the
      Commission that such amendment is required in order for a Registration Statement
      to be declared effective, or (iv) a Registration Statement filed or required
      to
      be filed hereunder is not declared effective by the Commission on or before
      the
      Effectiveness Date, or (v) after a Registration Statement is first declared
      effective by the Commission, it ceases for any reason to remain continuously
      effective as to all Registrable Securities for which it is required to be
      effective, or the Holders are not permitted to utilize the Prospectus therein
      to
      resell such Registrable Securities, for in any such case 10 consecutive calendar
      days but no more than an aggregate of 15 calendar days during any 12 month
      period (which need not be consecutive Trading Days)(any such failure or breach
      being referred to as an “Event,”
and
      for purposes of clause (i) or (iv) the date on which such Event occurs, or
      for
      purposes of clause (ii) the date on which such five Trading Day period is
      exceeded, or for purposes of clause (iii) the date which such 10 calendar day
      period is exceeded, or for purposes of clause (v) the date on which such 10
      or
      15 calendar day period, as applicable, is exceeded being referred to as
“Event
      Date”),
      then
      in addition to any other rights the Holders may have hereunder or under
      applicable law, on each such Event Date, the Company shall pay to each Holder
      an
      amount in cash, as partial liquidated damages and not as a penalty, equal to
      2.0% of the aggregate purchase price paid by such Holder for any Registrable
      Securities then held by such Holder and, on each monthly anniversary of each
      such Event Date (if the applicable Event shall not have been cured by such
      date)
      until the applicable Event is cured, the Company shall pay to each Holder an
      amount in cash, as partial liquidated damages and not as a penalty, equal to
      2.0% of the aggregate purchase price paid by such Holder Registrable Securities
      then held by such Holder. If the Company fails to pay any partial liquidated
      damages pursuant to this Section in full within seven days after the date
      payable, the Company will pay interest thereon at a rate of 18% per annum (or
      such lesser maximum amount that is permitted to be paid by applicable law)
      to
      the Holder, accruing daily from the date such partial liquidated damages are
      due
      until such amounts, plus all such interest thereon, are paid in full. The
      partial liquidated damages pursuant to the terms hereof shall apply on a daily
      pro-rata basis for any portion of a month prior to the cure of an Event.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    For
      purposes of calculating the liquidated damages payable pursuant to this
      agreement,  the
      purchase price of the Holder of the Registrable Securities shall be the
      following:

    

    (i)    For
      shares
      acquired pursuant to Section 2.1 of the Purchase Agreement the purchase price
      shall be the average of the closing bid and asked price of the Company Common
      Stock on the Closing Date of the Purchase Agreement; (ii) for Shares acquired
      pursuant to Section 2.3 of the Purchase Agreement the purchase price shall
      be
      $.50 per share; and (iii) for any other Registrable Securities the purchase
      price shall be the average of the closing bid and asked price of the Company
      Common Stock on the Closing Date of the Purchase Agreement. 

    

    3.    Registration
      Procedures

     

    In
      connection with the Company's registration obligations hereunder, the Company
      shall:

     

    (a)    Not
      less
      than 5 Trading Days prior to the filing of the Registration Statement or any
      related Prospectus or any amendment or supplement thereto, the Company shall,
      (i) furnish to the Holders copies of all such documents proposed to be filed
      (including documents incorporated or deemed incorporated by reference to the
      extent requested by such Person) which documents will be subject to the review
      of such Holders, and (ii) cause its officers and directors, counsel and
      independent certified public accountants to respond to such inquiries as shall
      be necessary, in the reasonable opinion of respective counsel, to conduct a
      reasonable investigation within the meaning of the Securities Act. The Company
      shall not file the Registration Statement or any such Prospectus or any
      amendments or supplements thereto to which the Holders of a majority of the
      Registrable Securities shall reasonably object in good faith, provided that
      the
      Company is notified of such objection in writing no later than 5 Trading Days
      after the Holders have been so furnished copies of such documents. Each Holder
      agrees to furnish to the Company a completed Questionnaire in the form attached
      to this Agreement as Annex
      B
      (a
“Selling
      Holder Questionnaire”)
      not
      less than 2 Trading Days prior to the Filing Date or by the end of the
      4th
      Trading
      Day following the date on which such Holder receives draft materials in
      accordance with this Section.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (b)    (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to the Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep the Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement, and as so supplemented
      or
      amended to be filed pursuant to Rule 424; (iii) respond as promptly as
      reasonably possible to any comments received from the Commission with respect
      to
      the Registration Statement or any amendment thereto and, as promptly as
      reasonably possible, upon request, provide the Holders true and complete copies
      of all correspondence from and to the Commission relating to the Registration
      Statement; and (iv) comply in all material respects with the provisions of
      the
      Securities Act and the Exchange Act with respect to the disposition of all
      Registrable Securities covered by the Registration Statement during the
      applicable period in accordance with the intended methods of disposition by
      the
      Holders thereof set forth in the Registration Statement as so amended or in
      such
      Prospectus as so supplemented.

     

    (c)    Notify
      the Holders of Registrable Securities to be sold as promptly as reasonably
      possible and (if requested by any such Person) confirm such notice in writing
      promptly following the day (i)(A) when a Prospectus or any Prospectus supplement
      or post-effective amendment to the Registration Statement is proposed to be
      filed; (B) when the Commission notifies the Company whether there will be a
      “review” of the Registration Statement and whenever the Commission comments in
      writing on the Registration Statement (the Company shall upon request provide
      true and complete copies thereof and all written responses thereto to each
      of
      the Holders); and (C) with respect to the Registration Statement or any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other Federal or state governmental authority
      during the period of effectiveness of the Registration Statement for amendments
      or supplements to the Registration Statement or Prospectus or for additional
      information; (iii) of the issuance by the Commission or any other federal or
      state governmental authority of any stop order suspending the effectiveness
      of
      the Registration Statement covering any or all of the Registrable Securities
      or
      the initiation of any Proceedings for that purpose; (iv) of the receipt by
      the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Registrable Securities for sale
      in
      any jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (v) of the occurrence of any event or passage of time that makes
      the financial statements included in the Registration Statement ineligible
      for
      inclusion therein or any statement made in the Registration Statement or
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference untrue in any material respect or that requires any revisions to
      the
      Registration Statement, Prospectus or other documents so that, in the case
      of
      the Registration Statement or the Prospectus, as the case may be, it will not
      contain any untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not
      misleading.

     

    (d)    Use
      commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
      the withdrawal of (i) any order suspending the effectiveness of the Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (e)    Furnish
      to each Holder, without charge, at least one conformed copy of the Registration
      Statement and each amendment thereto, including financial statements and
      schedules, all documents incorporated or deemed to be incorporated therein
      by
      reference to the extent requested by such Person, and all exhibits to the extent
      requested by such Person (including those previously furnished or incorporated
      by reference) promptly after the filing of such documents with the
      Commission.

     

    (f)    Promptly
      deliver to each Holder, without charge, as many copies of the Prospectus or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as such Persons may reasonably request in connection with
      resales by the Holder of Registrable Securities. Subject to the terms of this
      Agreement, the Company hereby consents to the use of such Prospectus and each
      amendment or supplement thereto by each of the selling Holders in connection
      with the offering and sale of the Registrable Securities covered by such
      Prospectus and any amendment or supplement thereto, except after the giving
      on
      any notice pursuant to Section 3(c).

     

    (g)    Prior
      to
      any resale of Registrable Securities by a Holder, use commercially reasonable
      efforts to register or qualify or cooperate with the selling Holders in
      connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the applicable state securities, or “Blue Sky” laws of such
      jurisdictions within the United States as any Holder reasonably requests in
      writing, to keep the Registration or qualification (or exemption therefrom)
      effective during the Effectiveness Period and to do any and all other acts
      or
      things reasonably necessary to enable the disposition in such jurisdictions
      of
      the Registrable Securities covered by the Registration Statement; provided,
      that
      the Company shall not be required to qualify generally to do business in any
      jurisdiction where it is not then so qualified, or become subject to any
      material tax in any such jurisdiction where it is not then so subject or file
      a
      general consent to service of process in any such jurisdiction.

     

    (h)    If
      requested by the Holders, cooperate with the Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to the Registration Statement, which
      certificates shall be free, to the extent permitted by the Purchase Agreement,
      of all restrictive legends, and to enable such Registrable Securities to be
      in
      such denominations and registered in such names as any such Holders may
      request.

     

    (i)    Upon
      the
      occurrence of any event contemplated by Section 3(c)(v), as promptly as
      reasonably possible, prepare a supplement or amendment, including a
      post-effective amendment, to the Registration Statement or a supplement to
      the
      related Prospectus or any document incorporated or deemed to be incorporated
      therein by reference, and file any other required document so that, as
      thereafter delivered, neither the Registration Statement nor such Prospectus
      will contain an untrue statement of a material fact or omit to state a material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not
      misleading. If
      the
      Company notifies the Holders in accordance with clauses (ii) through (v) of
      Section 3(c) above to suspend the use of any Prospectus until the requisite
      changes to such Prospectus have been made, then the Holders shall suspend use
      of
      such Prospectus. The Company will use its best efforts to ensure that the use
      of
      the Prospectus may be resumed as promptly as is practicable. The Company shall
      be entitled to exercise its right under this Section 3(i) to suspend the
      availability of a Registration Statement and Prospectus, subject to the payment
      of liquidated damages pursuant to Section 2(b), for a period not to exceed
      60
      days (which need not be consecutive days) in any 12 month period.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (j)    Comply
      with all applicable rules and regulations of the Commission.

     

    (k)    The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the person thereof that has voting
      and dispositive control over the Shares. During any periods that the Company
      is
      unable to meet its obligations hereunder with respect to the registration of
      the
      Registrable Securities solely because any Holder fails to furnish such
      information within 3 Trading Days of the Company’s request, any liquidated
      damages that are accruing at such time as to such Holder only shall be tolled
      and any Event that may otherwise occur solely because of such delay shall be
      suspended as to such Holder only, until such information is delivered to the
      Company.

     

    4.    Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to the Registration Statement. The
      fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses (A) with respect to filings required to be made with the
      Trading Market on which the Common Stock is then listed for trading, and (B)
      in
      compliance with applicable state securities or Blue Sky laws), (ii) printing
      expenses (including, without limitation, expenses of printing certificates
      for
      Registrable Securities and of printing prospectuses if the printing of
      prospectuses is reasonably requested by the holders of a majority of the
      Registrable Securities included in the Registration Statement), (iii) messenger,
      telephone and delivery expenses, (iv) fees and disbursements of counsel for
      the
      Company, (v) Securities Act liability insurance, if the Company so desires
      such
      insurance, and (vi) fees and expenses of all other Persons retained by the
      Company in connection with the consummation of the transactions contemplated
      by
      this Agreement. In addition, the Company shall be responsible for all of its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder. In no event shall the Company be
      responsible for any broker or similar commissions or, except to the extent
      provided for in the Transaction Documents, any legal fees or other costs of
      the
      Holders.

     

    5.    Indemnification

     

    (a)    Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, agents and employees of
      each
      of them, each Person who controls any such Holder (within the meaning of Section
      15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all losses, claims,
      damages, liabilities, costs (including, without limitation, reasonable
      attorneys' fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to any untrue or alleged untrue statement
      of a material fact contained in the Registration Statement, any Prospectus
      or
      any form of prospectus or in any amendment or supplement thereto or in any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein (in the case of any Prospectus or form of prospectus
      or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading, except to the extent, but only to the extent, that (i) such
      untrue statements or omissions are based solely upon information regarding
      such
      Holder furnished in writing to the Company by such Holder expressly for use
      therein, or to the extent that such information relates to such Holder or such
      Holder's proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by such Holder expressly for use
      in
      the Registration Statement, such Prospectus or such form of Prospectus or in
      any
      amendment or supplement thereto (it being understood that the Holder has
      approved Annex A hereto for this purpose), or (ii) in the case of an occurrence
      of an event of the type specified in Section 3(c)(ii)-(v), the use by such
      Holder of an outdated or defective Prospectus after the Company has notified
      such Holder in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by such Holder of the Advice contemplated in Section 6(d). The
      Company shall notify the Holders promptly of the institution, threat or
      assertion of any Proceeding of which the Company is aware in connection with
      the
      transactions contemplated by this Agreement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    (b)    Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder's failure to comply with the prospectus delivery
      requirements of the Securities Act; or (y) any untrue or alleged untrue
      statement of a material fact contained in any Registration Statement, any
      Prospectus, or any form of prospectus, or in any amendment or supplement thereto
      or in any preliminary prospectus, or arising out of or relating to any omission
      or alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein not misleading (i) to the extent,
      but
      only to the extent, that such untrue statement or omission is contained in
      any
      information so furnished in writing by such Holder or on such Holder’s behalf to
      the Company specifically for inclusion in the Registration Statement or such
      Prospectus or (ii) to the extent that (1) such untrue statements or omissions
      are based solely upon information regarding such Holder furnished in writing
      to
      the Company by such Holder or on such Holder’s behalf expressly for use therein,
      or to the extent that such information relates to such Holder or such Holder's
      proposed method of distribution of Registrable Securities and was reviewed
      and
      expressly approved in writing by such Holder expressly for use in the
      Registration Statement (it being understood that the Holder has approved Annex
      A
      hereto for this purpose), such Prospectus or such form of Prospectus or in
      any
      amendment or supplement thereto, or (2) in the case of an occurrence of an
      event
      of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an
      outdated or defective Prospectus after the Company has notified such Holder
      in
      writing that the Prospectus is outdated or defective and prior to the receipt
      by
      such Holder of the Advice contemplated in Section 6(d). In no event shall the
      liability of any selling Holder hereunder be greater in amount than the dollar
      amount of the gross proceeds received by such Holder upon the sale of the
      Registrable Securities giving rise to such indemnification
      obligation.

     

    (c)    Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided,
      that
      the failure of any Indemnified Party to give such notice shall not relieve
      the
      Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
      except (and only) to the extent that it shall be finally determined by a court
      of competent jurisdiction (which determination is not subject to appeal or
      further review) that such failure shall have prejudiced the Indemnifying
      Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such Indemnified Party shall reasonably believe
      that a material conflict of interest is likely to exist if the same counsel
      were
      to represent such Indemnified Party and the Indemnifying Party (in which case,
      if such Indemnified Party notifies the Indemnifying Party in writing that it
      elects to employ separate counsel at the expense of the Indemnifying Party,
      the
      Indemnifying Party shall not have the right to assume the defense thereof and
      the reasonable fees and expenses of one separate counsel shall be at the expense
      of the Indemnifying Party). The Indemnifying Party shall not be liable for
      any
      settlement of any such Proceeding effected without its written consent, which
      consent shall not be unreasonably withheld. No Indemnifying Party shall, without
      the prior written consent of the Indemnified Party, effect any settlement of
      any
      pending Proceeding in respect of which any Indemnified Party is a party, unless
      such settlement includes an unconditional release of such Indemnified Party
      from
      all liability on claims that are the subject matter of such
      Proceeding.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within 10 Trading Days of written notice thereof to the
      Indemnifying Party; provided,
      that
      the Indemnified Party shall promptly reimburse the Indemnifying Party for that
      portion of such fees and expenses applicable to such actions for which such
      Indemnified Party is not entitled to indemnification hereunder, determined
      based
      upon the relative faults of the parties.

     

    (d)    Contribution.
      If a
      claim for indemnification under Section 5(a) or 5(b) is unavailable to an
      Indemnified Party (by reason of public policy or otherwise), then each
      Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
      contribute to the amount paid or payable by such Indemnified Party as a result
      of such Losses, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties' relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in this Agreement, any reasonable attorneys’ or other reasonable fees or
      expenses incurred by such party in connection with any Proceeding to the extent
      such party would have been indemnified for such fees or expenses if the
      indemnification provided for in this Section was available to such party in
      accordance with its terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 5(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission, except in the case of fraud
      by
      such Holder.

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

     

    6.    Miscellaneous

     

    (a)    Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their obligations
      under this Agreement, each Holder or the Company, as the case may be, in
      addition to being entitled to exercise all rights granted by law and under
      this
      Agreement, including recovery of damages, will be entitled to specific
      performance of its rights under this Agreement. The Company and each Holder
      agree that monetary damages would not provide adequate compensation for any
      losses incurred by reason of a breach by it of any of the provisions of this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall waive the defense
      that
      a remedy at law would be adequate.

     

    
      
        
        

      

      
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    (b)    No
      Piggyback on Registrations.
      Except
      as set forth on Schedule 6(b) attached hereto, neither the Company nor any
      of
      its security holders (other than the Holders in such capacity pursuant hereto)
      may include securities of the Company in a Registration Statement other than
      the
      Registrable Securities. No Person has any right to cause the Company to effect
      the registration under the Securities Act of any securities of the Company.
      The
      Company shall not file any other registration statement until after the
      Effective Date.

     

    (c)    Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to the Registration Statement.

     

    (d)    Discontinued
      Disposition.
      Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Section 3(c), such Holder will forthwith discontinue disposition
      of
      such Registrable Securities under the Registration Statement until such Holder's
      receipt of the copies of the supplemented Prospectus and/or amended Registration
      Statement or until it is advised in writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement. The Company will use its best efforts to ensure that
      the
      use of the Prospectus may be resumed as promptly as it practicable. The
      Company agrees and acknowledges that any periods during which the Holder is
      required to discontinue the disposition of the Registrable Securities hereunder
      shall be subject to the provisions of Section 2(b).

     

    (e)    Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with the stock option or other employee benefit plans, then the
      Company shall send to each Holder a written notice of such determination and,
      if
      within 15 days after the date of such notice, any such Holder shall so request
      in writing, the Company shall include in such registration statement all or
      any
      part of such Registrable Securities such Holder requests to be registered,
      subject to customary underwriter cutbacks applicable to all holders of
      registration rights.

     

    (f)    Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and each Holder of the then outstanding Registrable
      Securities.

     

    (g)    Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be made in accordance with the provisions of the
      Purchase Agreement.

     

    (h)    Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. Each Holder may assign their respective rights hereunder in the manner
      and to the Persons as permitted under the Purchase Agreement.

     

    
      
        
        

      

      
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    (i)    Execution
      and Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    (j)    Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be determined with the provisions of the Purchase
      Agreement.

     

    (k)    Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

     

    (l)    
Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

     

    (m)    Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (n)    Independent
      Nature of Purchasers' Obligations and Rights.
      The
      obligations of each Holder hereunder are several and not joint with the
      obligations of any other Holder hereunder, and no Holder shall be responsible
      in
      any way for the performance of the obligations of any other Holder hereunder.
      Nothing contained herein or in any other agreement or document delivered at
      any
      closing, and no action taken by any Holder pursuant hereto or thereto, shall
      be
      deemed to constitute the Holders as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Holders
      are in any way acting in concert with respect to such obligations or the
      transactions contemplated by this Agreement. Each Holder shall be entitled
      to
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement, and it shall not be necessary for any other Holder to
      be
      joined as an additional party in any proceeding for such purpose.

     

    (o)    Good
      Faith; Best Efforts.
      The
      Company shall use its best efforts to file any registration statement required
      to be filed hereunder and to cause such registration statement to become
      effective with the time periods set forth herein. The Company shall not seek
      to
      avoid or evade its registration obligations hereunder. 

     

    *************************

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

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

     

    
      	 	
              WHO’S
                YOUR DADDY, INC.

               

            
	 	
              By:
                /s/ Edon
                Moyal                                           

                   
                Name: Edon Moyal

                   
                Title: CEO

            

    

    

     

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
       

      
        [PURCHASER
          SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. REGISTRATION RIGHTS
          AGREEMENT]

      

      

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

       

      Name
        of
        Investing Entity:      COHIBA
        PARTNERS INC.

      

      Signature
        of Authorized Signatory of Investing Entity:
/s/
        Collin
        Nix                                                       

      Name
        of
        Authorized Signatory: Collin
        Nix 

      Title
        of
        Authorized Signatory: President
        

      Email
        Address of Authorized
        Entity:  cnix@cohibapartners.com                                        

      Address
        for Notice of Investing Entity:

      

      

      

      

      Address
        for Delivery of Securities for Investing Entity (if not same as
        above):

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        [PURCHASER
          SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. REGISTRATION RIGHTS
          AGREEMENT]

      

      

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

       

      Name
        of
        Investing Entity:     STRONG
        PARTNERS CORPORATION

      

      Signature
        of Authorized Signatory of Investing Entity:
/s/
        Charles
        McGuirk                                          

      Name
        of
        Authorized Signatory: Charles
        McGuirk

      Title
        of
        Authorized Signatory: Chief
        Executive Officer

      Email
        Address of Authorized Entity:
 mcguirk@elite.net                                                     

      
 

      Address
        for Notice of Investing Entity:

      

      

      

      

      Address
        for Delivery of Securities for Investing Entity (if not same as
        above):

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

      [PURCHASER
        SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. REGISTRATION RIGHTS
        AGREEMENT]

      

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

       

      Name
        of
        Investing Entity:      TURID
        HOLDINGS

      

      Signature
        of Authorized Signatory of Investing Entity:
/s/
        Henry
        Ward                                                 

      Name
        of
        Authorized Signatory: Henry
        Ward

      Title
        of
        Authorized Signatory: Managing
        Director

      Email
        Address of Authorized Entity: 
        henryward@hotmail.com                                                        

      

      Address
        for Notice of Investing Entity:

      

      

      

      

      Address
        for Delivery of Securities for Investing Entity (if not same as
        above):

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

      [PURCHASER
        SIGNATURE PAGES TO WHO’S YOUR DADDY, INC. SECURITIES PURCHASE
        AGREEMENT]

      

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

       

      Name
        of
        Investors: CHUCK LAUBACH and JIM POMFRET, as joint tenants in
        common

      

      

      
        	
                Signatures: /s/ Chuck
                  Laubach                                       

                Chuck
                  Laubach

              	
                /s/ Jim
                  Pomfret                                                          

                Jim Pomfret

              

      

       

      Address
        for Notice of Investors:

      

       

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    ANNEX
      A

     

    Plan
      of Distribution

     

    The
      Selling Stockholders (the “Selling
      Stockholders”)
      of the
      common stock (“Common
      Stock”)
      of
      Who’s Your Daddy, Inc., a Nevada corporation (the “Company”),
      and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of Common Stock on any stock exchange,
      market or trading facility on which the shares are traded or in private
      transactions. These sales may be at fixed or negotiated prices. The Selling
      Stockholders may use any one or more of the following methods when selling
      shares:

     

    
      	·      
               	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	·      
               	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	·      
               	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	·      
               	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	·      
               	
              privately
                negotiated transactions;

            

    

     

    
      	·      
               	
              settlement
                of short sales entered into after the date of this
                prospectus;

            

    

     

    
      	·      
               	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	·      
               	
              a
                combination of any such methods of
                sale;

            

    

     

    
      	·      
               	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or otherwise;
                or

            

    

     

    
      	·      
               	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated. Each
      Selling Stockholder does not expect these commissions and discounts relating
      to
      its sales of shares to exceed what is customary in the types of transactions
      involved.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    In
      connection with the sale of our common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume. The Selling
      Stockholders may also sell shares of our common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any agreement or understanding, directly or
      indirectly, with any person to distribute the Common Stock.

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act. In addition, any securities covered by this prospectus
      which qualify for sale pursuant to Rule 144 under the Securities Act may be
      sold
      under Rule 144 rather than under this prospectus. Each Selling Stockholder
      has
      advised us that they have not entered into any agreements, understandings or
      arrangements with any underwriter or broker-dealer regarding the sale of the
      resale shares. There is no underwriter or coordinating broker acting in
      connection with the proposed sale of the resale shares by the Selling
      Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to the prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to our common stock for a period of two business
      days prior to the commencement of the distribution. In addition, the Selling
      Stockholders will be subject to applicable provisions of the Exchange Act and
      the rules and regulations thereunder, including Regulation M, which may limit
      the timing of purchases and sales of shares of our common stock by the Selling
      Stockholders or any other person. We will make copies of this prospectus
      available to the Selling Stockholders and have informed them of the need to
      deliver a copy of this prospectus to each purchaser at or prior to the time
      of
      the sale.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    ANNEX
      B

     

    Who’s
      Your Daddy, Inc.

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock, par value $0.001 per share (the
      “Common
      Stock”),
      of
      Who’s Your Daddy, Inc., a Nevada corporation (the “Company”),
      (the
“Registrable
      Securities”)
      understands that the Company has filed or intends to file with the Securities
      and Exchange Commission (the “Commission”)
      a
      registration statement on Form SB-2 (the “Registration
      Statement”)
      for
      the registration and resale under Rule 415 of the Securities Act of 1933, as
      amended (the “Securities
      Act”),
      of
      the Registrable Securities, in accordance with the terms of the Registration
      Rights Agreement, dated as of April , 2007 (the “Registration
      Rights Agreement”),
      among
      the Company and the Purchasers named therein. A copy of the Registration Rights
      Agreement is available from the Company upon request at the address set forth
      below. All capitalized terms not otherwise defined herein shall have the
      meanings ascribed thereto in the Registration Rights Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus. Accordingly, holders and
      beneficial owners of Registrable Securities are advised to consult their own
      securities law counsel regarding the consequences of being named or not being
      named as a selling securityholder in the Registration Statement and the related
      prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling
      Securityholder”)
      of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it and listed below in Item 3 (unless otherwise specified under such Item
      3)
      in the Registration Statement.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    1.    Name.

     

    
      	 	
              (a)

            	
              Full
                Legal Name of Selling Securityholder

               

              _____________________________________________________________________________________________________________________________

            

      	 	 	 

    

     

    
      	 	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities Listed in Item 3 below are held:

               

              _____________________________________________________________________________________________________________________________

            

    

     

    
      	 	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly you indirectly alone or with others has power to vote or
                dispose
                of the securities covered by the questionnaire):

               

              _____________________________________________________________________________________________________________________________

            

    

     

    2.    Address
      for
      Notices to Selling Securityholder:

     

    
      	_________________________________________________________________________________________________________________________ 
	_________________________________________________________________________________________________________________________ 
	_________________________________________________________________________________________________________________________ 
	
              Telephone:________________________________________________________________________________________________________________________________

            
	
              Fax:______________________________________________________________________________________________________________________________________

            
	
              Contact
                Person:_____________________________________________________________________________________________________________________________

            

    

    

    3.    Beneficial
      Ownership of Registrable Securities:

     

    
      	 	
              (a)

            	
              Type
                and Principal Amount of Registrable Securities beneficially
                owned:

               

              _____________________________________________________________________________________________________________________________

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    4.    Broker-Dealer
      Status:

     

    
      	 	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

                         Yes
r    No
r

     

    
      	 	
              Note:

            	
              If
                yes, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

     

    
      	 	
              (b)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    
                           Yes
r    No
r

    

     

    
      	 	
              (c)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                bought
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    
                           Yes
r    No
r

    

     

    
      	 	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

     

    5.    Beneficial
      Ownership of Other Securities of the Company Owned by the Selling
      Securityholder.

     

    Except
      as set forth below in this Item 5, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the Registrable
      Securities listed above in Item 3.

     

    
      	 	
              (a)

            	
              Type
                and Amount of Other Securities beneficially owned by the Selling
                Securityholder:

              ____________________________________________________________________________________________________________________________

              ____________________________________________________________________________________________________________________________

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    6.    Relationships
      with the Company:

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    State
      any
      exceptions here:

          
      ____________________________________________________________________________________________________________________________________

    
            
        ____________________________________________________________________________________________________________________________________

    

     

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 6 and the inclusion of such
      information in the Registration Statement and the related prospectus. The
      undersigned understands that such information will be relied upon by the Company
      in connection with the preparation or amendment of the Registration Statement
      and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    
      	Dated:
              ________________________________________________ 	Beneficial Owner:
              ______________________________________________ 
	 	 
	 	By:_________________________________________________________   
	 	
              Name:

              Title: 

            

    

       

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

     

    22

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