SECURITIES PURCHASE AGREEMENT

EXHIBIT 4.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this "Agreement") is dated as of

February 8, 2005 among RCG Companies Incorporated, a Delaware corporation (the

"Company"), and the purchasers 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 Section 4(2) of the Securities Act (as defined below), and Rule

506 promulgated thereunder, the Company desires to issue and sell to each

Purchaser, and each Purchaser, severally and not jointly, desires to purchase

from the Company, securities of the Company as more fully described in this

Agreement.

NOW, THEREFORE, 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: (a) capitalized terms that are not otherwise defined herein have the

meanings given to such terms in the Debentures (as defined herein), and (b) 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).

"Actual Minimum" means, as of any date, the maximum aggregate number

of shares of Common Stock then issued or potentially issuable in the

future pursuant to the Transaction Documents, including any Underlying

Shares issuable upon exercise or conversion in full of all Warrants and

Debentures, ignoring any conversion or exercise limits set forth therein.

"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 under the Securities Act. 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 purchase and sale of the

Securities pursuant to Section 2.1.

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"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) each Purchaser's obligations

to pay the Subscription Amount have been satisfied or waived (ii) and the

Company's obligations to deliver the Securities have been satisfied or

waived.

"Closing Price" means on any particular date (a) the last reported

closing bid price per share of Common Stock on such date on the Trading

Market (as reported by Bloomberg L.P. at 4:15 PM (New York time), or (b)

if there is no such price on such date, then the closing bid price on the

Trading Market on the date nearest preceding such date (as reported by

Bloomberg L.P. at 4:15 PM (New York time) for the closing bid price for

regular session trading on such day), or (c) if the Common Stock is not

then listed or quoted on a Trading Market and if prices for the Common

Stock are then quoted on the OTC Bulletin Board, the closing bid price of

the Common Stock for such date (or the nearest preceding date) on the OTC

Bulletin Board (as reported by Bloomberg L.P. at 4:15 PM (New York time),

(d) if the Common Stock is not then listed or quoted on the Trading Market

and if prices for the Common Stock are then reported in the "pink sheets"

published by the Pink Sheets LLC (formerly the National Quotation Bureau

Incorporated (or a similar organization or agency succeeding to its

functions of reporting prices), the most recent bid price per share of the

Common Stock so reported, or (e) if the shares of Common Stock are not

then publicly traded the fair market value of a share of Common Stock as

determined by a qualified independent appraiser selected in good faith by

the Purchasers of a majority in interest of the Principal Amount of

Debentures then outstanding.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the common stock of the Company, par value

$0.04 per share, and any securities into which such common stock shall

hereinafter have been reclassified into.

"Common Stock Equivalents" means any securities of the Company or

the Subsidiaries (other than Lifestyle Innovations, Inc.) 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.

"Company Counsel" means Adorno & Yoss PA.

"Conversion Price" shall have the meaning ascribed to such term in

the Debentures.

"Debentures" means, the Secured Convertible Debentures due, subject

to the terms therein, two years from their date of issuance, issued by the

Company to the Purchasers hereunder, in the form of Exhibit A.

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"Effective Date" means the date that the Registration Statement is

first declared effective by the Commission.

"Escrow Agent" shall have the meaning set forth in the Escrow

Agreement.

"Escrow Agreement" shall mean the Escrow Agreement in substantially

the form of Exhibit E hereto executed and delivered contemporaneously with

this Agreement.

"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 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,

(d) securities to the vendors or other creditors set forth on Schedule 1.1

to satisfy obligations of the Company or its Subsidiaries in amounts not

to exceed 125,000 shares, in the aggregate, per any 12 month period.

"FW" means Feldman Weinstein LLP with offices located at 420

Lexington Avenue, Suite 2620, New York, New York 10170-0002.

"GAAP" shall have the meaning ascribed to such term in Section

3.1(h).

"Liens" means a lien, charge, security interest, encumbrance, right

of first refusal, preemptive right or other similar restriction.

"Losses" means any and all losses, claims, damages, liabilities,

settlement costs and expenses, including without limitation costs of

preparation and reasonable attorneys' fees.

"Material Adverse Effect" shall have the meaning assigned 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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"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.

"Principal Amount" shall mean, as to each Purchaser, the amounts set

forth below such Purchaser's signature block on the signature pages hereto

and next to the heading "Principal Amount", in United States Dollars,

which shall equal such Purchaser's Subscription Amount multiplied by

1.266.

"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 the date hereof, among the Company and each Purchaser, in

the form of Exhibit B.

"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 Underlying 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 Debentures, the Warrants, the Warrant Shares

and the Underlying Shares.

"Securities Act" means the Securities Act of 1933, as amended.

"Security Agreement" means the Security Agreement, dated the date

hereof, among the Company and the Purchasers, in the form of Exhibit G

attached hereto.

"Security Documents" means the Security Agreement, the Subsidiary

Guarantees and any other documents and filing required thereunder in order

to grant the Purchasers a perfected security interest in all of the assets

of the Company, including all UCC-1 filing receipts.

"Shareholder Approval" means such approval as may be required by the

applicable rules and regulations of the Principal Market (or any successor

entity) from the shareholders of the Company with respect to the

transactions contemplated by the Transaction Documents, including the

issuance of all of the Underlying Shares in excess of 19.9% of the

Company's issued and outstanding Common Stock on the Closing Date.

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"Subscription Amount" shall mean, as to each Purchaser, the amount

to be paid for Debentures and Warrants purchased hereunder as specified

below such Purchaser's name on the signature page of this Agreement, in

United States Dollars.

"Subsidiary" means any subsidiary of the Company that is required to

be listed in Schedule 3.1(a).

"Subsidiary Guarantee" means the Subsidiary Guarantee, dated the

date hereof, among each of the Subsidiaries and the Purchasers, in the

form of Exhibit H attached hereto.

"Trading Day" means any day during which the Trading Market shall be

open for business.

"Trading Market" means the following markets or exchanges on which

the Common Stock is listed or quoted for trading on the date in question:

the American Stock Exchange, the New York Stock Exchange, the Nasdaq

National Market or the Nasdaq SmallCap Market.

"Transaction Documents" means this Agreement, the Debentures, the

Warrants, the Escrow Agreement, the Security Agreement and Security

Documents and the Registration Rights Agreement.

"Underlying Shares" means the shares of Common Stock issuable upon

conversion of the Debentures and upon exercise of the Warrants.

"Warrants" means the Common Stock Purchase Warrants, in the form of

Exhibit C, delivered to the Purchasers at the Closing in accordance with

Section 2.2 hereof.

"Warrant Shares" means the shares of Common Stock issuable upon

exercise of the Warrants.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. On the Closing Date, each Purchaser shall purchase from

the Company, severally and not jointly with the other Purchasers, and the

Company shall issue and sell to each Purchaser, (a) up to $7,000,000

Principal Amount of Debentures; and (b) the Warrants as determined

pursuant to Sections 2.2(a)(iii) - (iv). Upon satisfaction of the

conditions set forth in Section 2.2, the Closing shall occur at the

offices of the Escrow Agent or such other location as the parties shall

mutually agree.

2.2 Conditions to Closing. The Closing is subject to the

satisfaction or waiver by the party to be benefited thereby of the

following conditions.

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a) The Company shall have delivered or caused to be delivered to the

Escrow Agent the following:

(i) this Agreement duly executed by the Company;

(ii) a Debenture with a principal amount equal to such Purchaser's

Principal Amount, registered in the name of such Purchaser;

(iii) a Warrant registered in the name of such Purchaser to purchase

up to a number of shares of Common Stock equal to 100% of such

Purchaser's Principal Amount divided by the average of the 5

Closing Prices immediately prior to the date hereof, with an

exercise price equal to $1.55, subject to adjustment as set

forth therein and exercisable beginning 181 days after the

date hereof for a term of 3.5 years;

(iv) a Warrant registered in the name of such Purchaser to purchase

up to a number of shares of Common Stock equal to 100% of such

Purchaser's Principal Amount divided by the average of the 5

Closing Prices immediately prior to the date hereof, with an

exercise price equal to $1.87, subject to adjustment as set

forth therein and exercisable beginning 181 days after the

date hereof for a term of 3.5 years;

(v) the written voting agreement, substantially in the form of

Exhibit F attached hereto, of all of the executive officers

and directors to vote all Common Stock owned by each of such

shareholders as of the record date for the annual or special

meeting of shareholders of the Company in favor of Shareholder

Approval;

(vi) a legal opinion of Company Counsel, in the form of Exhibit D

attached hereto, addressed to each Purchaser;

(vii) the Escrow Agreement duly executed by the Company;

(viii) the Registration Rights Agreement duly executed by the

Company; and

(ix) the Security Agreement, duly executed by the Company, along

with all the Security Documents.

b) At the Closing, each Purchaser shall have delivered or caused to be

delivered to the Escrow Agent the following:

(i) this Agreement duly executed by such Purchaser;

(ii) such Purchaser's Subscription Amount by wire transfer to the

account of the Escrow Agent;

(iii) the Escrow Agreement duly executed by such Purchaser;

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(iv) the Registration Rights Agreement duly executed by such

Purchaser; and

(v) the Security Agreement duly execute by such Purchaser.

(c) All representations and warranties of the other party contained

herein shall remain true and correct in all material respects (except

those qualified as to materiality, which shall remain true and correct) as

of the Closing Date except for those that speak as of a specific date and

all covenants of the other party shall have been performed if due prior to

such date.

(d) 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

Debentures at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth in

the SEC Reports or 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.

(a) Subsidiaries. All of the direct and indirect subsidiaries of the

Company are set forth on Schedule 3.1(a). The Company owns, directly or

indirectly, all of the capital stock or other equity interests of each

Subsidiary free and clear of any Liens, and all the issued and outstanding

shares of capital stock of each Subsidiary (other than Lifestyle

Innovations, Inc.) are validly issued and are fully paid, non-assessable

and free of preemptive and similar rights to subscribe for or purchase

securities. If the Company has no subsidiaries, then references in the

Transaction Documents to the Subsidiaries will be disregarded.

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(b) Organization and Qualification. Each of the Company and the

Subsidiaries (other than Lifestyle Innovations, Inc.) 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 (other than Lifestyle Innovations,

Inc.) 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 (other than Lifestyle Innovations, Inc.) 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 or financial condition of the Company and the

Subsidiaries, taken as a whole other than any change, event or occurrence

resulting from any change to the extent generally affecting the national

or any local economy or the industries in which the Company and the

Subsidiaries operate, 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, to the Company's knowledge, no Proceeding

has been instituted in any such jurisdiction revoking, limiting or

curtailing or seeking to revoke, limit or curtail such power and authority

or qualification.

(c) Authorization; Enforcement. The Company has the requisite

corporate power and authority to enter into and to consummate the

transactions contemplated by each of the Transaction Documents and

otherwise to carry out its obligations hereunder or thereunder. The

execution and delivery of each of the Transaction Documents by the Company

and the consummation by it of the transactions contemplated hereby or

thereby have been duly authorized by all necessary action on the part of

the Company and no further consent or action is required by the Company

other than Required Approvals. Each of the Transaction Documents has been

(or upon delivery will be) duly executed by the Company and, when

delivered in accordance with the terms hereof, will constitute the valid

and binding obligation of the Company enforceable against the Company in

accordance with its terms, subject to applicable bankruptcy, insolvency,

fraudulent conveyance, reorganization, moratorium and similar laws

affecting creditors' rights and remedies generally and general principles

of equity. Neither the Company nor any Subsidiary (other than Lifestyle

Innovations, Inc.) is in violation of any of the provisions of its

respective certificate or articles of incorporation, by-laws or other

organizational or charter documents except where such violation could not,

individually or in the aggregate, constitute a Material Adverse Effect.

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(d) No Conflicts. The execution, delivery and performance of the

Transaction Documents by the Company, the issuance and sale of the

Securities and the consummation by the Company of the other transactions

contemplated thereby do not and will not: (i) conflict with or violate any

provision of the Company's or any Subsidiary's (other than Lifestyle

Innovations, Inc.) 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 (other than Lifestyle Innovations, Inc.) debt or otherwise)

or other understanding to which the Company or any Subsidiary (other than

Lifestyle Innovations, Inc.) is a party or by which any property or asset

of the Company or any Subsidiary (other than Lifestyle Innovations, Inc.)

is bound or affected, or (iii) subject to the Required Approvals, 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 (other than

Lifestyle Innovations, Inc.) is subject (including federal and state

securities laws and regulations), or by which any property or asset of the

Company or a Subsidiary is bound or affected, or (iv) conflict with or

violate the terms of any agreement by which the Company or any Subsidiary

(other than Lifestyle Innovations, Inc.) is bound or to which any property

or asset of the Company or any Subsidiary is bound or affected; except in

the case of each of clauses (ii), (iii) and (iv), such as could not have

or reasonably be expected to result in a Material Adverse Effect.

(e) Filings, Consents and Approvals. Neither the Company nor any

Subsidiary is required to obtain any consent, waiver, authorization or

order of, give any notice to, or make any filing or registration with, any

court or other federal, state, local or other governmental authority or

other Person in connection with the execution, delivery and performance by

the Company of the Transaction Documents, other than (i) the filings

required under Section 4.4, (ii) the filing with the Commission of the

Registration Statement, (iii) the application(s) to each applicable

Trading Market for the issuance and sale of the Debentures and Warrants

and the listing of the Underlying Shares for trading thereon in the time

and manner required thereby, (iv) the filing with the Commission of a Form

D pursuant to Commission Regulation D and (v) applicable Blue Sky filings

and (collectively, the "Required Approvals").

(f) Issuance of the Securities. The Securities are duly authorized

and, when issued and paid for in accordance with the applicable

Transaction Documents, will be duly and validly issued, fully paid and

nonassessable, free and clear of all Liens. The Company has reserved from

its duly authorized capital stock a number of shares of Common Stock for

issuance of the Underlying Shares at least equal to the Actual Minimum on

the date hereof.

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(g) Capitalization. The capitalization of the Company is as

described in the Company's most recent periodic report filed with the

Commission. The Company has not issued any capital stock since such filing

other than pursuant to the exercise of employee stock options under the

Company's stock option plans, the issuance of shares of Common Stock to

employees pursuant to the Company's employee stock purchase plan and

pursuant to the conversion or exercise of outstanding Common Stock

Equivalents. No Person has any right of first refusal, preemptive right,

right of participation, or any similar right to participate in the

transactions contemplated by the Transaction Documents. Except as a result

of the purchase and sale of the Securities, there are no outstanding

options, warrants, script rights to subscribe to, calls or commitments of

any character whatsoever relating to, or securities, rights or obligations

convertible into or exchangeable for, or giving any Person any right to

subscribe for or acquire, any shares of Common Stock, or contracts,

commitments, understandings or arrangements by which the Company or any

Subsidiary (other than Lifestyle Innovations, Inc.) 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, have been issued in

compliance with all federal and state securities laws, and none of such

outstanding shares was issued in violation of any preemptive rights or

similar rights to subscribe for or purchase securities. No further

approval or authorization of any stockholder, the Board of Directors of

the Company or others is required for the issuance and sale of the shares

of Preferred Stock other than Shareholder Approval to comply with rules of

the American Stock Exchange. 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") on a timely basis or has received a valid

extension of such time of filing and has filed any such SEC Reports prior

to the expiration of any such extension. 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. 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, (i) there has been no event,

occurrence or development that has had or that would 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 executive 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

(other than Lifestyle Innovations, Inc.) 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) would, if there were an

unfavorable decision, have or reasonably be expected to result in a

Material Adverse Effect. Neither the Company nor any Subsidiary (other

than Lifestyle Innovations, Inc.), nor any director or executive officer

thereof, is or has been the subject of any Action involving a claim of

violation of or liability under federal or state securities laws or a

claim of breach of fiduciary duty as it relates to the Company or its

Subsidiary. There has not been, and to the knowledge of the Company, there

is not pending or contemplated, any investigation by the Commission

involving the Company or any current or former director or officer of the

Company. 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 (other than Lifestyle Innovations, Inc.) under

the Exchange Act or the Securities Act.

(k) Labor Relations. No material labor dispute exists or, to the

knowledge of the Company, is imminent with respect to any of the employees

of the Company which could reasonably be expected to result in a Material

Adverse Effect.

(l) Compliance. Neither the Company nor any Subsidiary (other than

Lifestyle Innovations, Inc.) (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 (other than Lifestyle Innovations, Inc.) under), nor has the

Company or any Subsidiary (other than Lifestyle Innovations, Inc.)

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.

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(m) Regulatory Permits. The Company and the Subsidiaries (other than

Lifestyle Innovations, Inc.) possess all certificates, authorizations and

permits issued by the appropriate federal, state, local or foreign

regulatory authorities necessary to conduct their respective businesses as

described in the SEC Reports, except where the failure to possess such

permits could not, individually or in the aggregate, have or reasonably be

expected to result in a Material Adverse Effect ("Material Permits"), and

neither the Company nor any Subsidiary (other than Lifestyle Innovations,

Inc.) 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 (other than

Lifestyle Innovations, Inc.) 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 (other than Lifestyle Innovations, Inc.) and

good and marketable title in all personal property owned by them that is

material to the business of the Company and the Subsidiaries (other than

Lifestyle Innovations, Inc.), in each case free and clear of all Liens,

except for Liens as 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 (other than Lifestyle

Innovations, Inc.) 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 (other than Lifestyle Innovations, Inc.) are

held by them under valid, subsisting and enforceable leases of which the

Company and the Subsidiaries (other than Lifestyle Innovations, Inc.) are

in material compliance.

(o) Patents and Trademarks. The Company and the Subsidiaries (other

than Lifestyle Innovations, Inc.) have, or have rights to use, all

patents, patent applications, trademarks, trademark applications, service

marks, trade names, copyrights, licenses and other similar rights that are

necessary or material for use in connection with their respective

businesses as described in the SEC Reports and which the failure to so

have could have a Material Adverse Effect (collectively, the "Intellectual

Property Rights"). Neither the Company nor any Subsidiary (other than

Lifestyle Innovations, Inc.) has received a written notice that the

Intellectual Property Rights used by the Company or any Subsidiary (other

than Lifestyle Innovations, Inc.) 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 (other than

Lifestyle Innovations, Inc.) are insured against such losses and risks and

in such amounts as are prudent and customary in the businesses in which

the Company and the Subsidiaries (other than Lifestyle Innovations, Inc.)

are engaged. Neither the Company nor any Subsidiary (other than Lifestyle

Innovations, Inc.) 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. None of the

executive 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 Lifestyle

Innovations, Inc.) (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. The Company 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 (other than Lifestyle Innovations, Inc.) 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 (other than Lifestyle Innovations, Inc.), 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 receip