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EXHIBIT 10.1
 
SECURITIES EXCHANGE AGREEMENT
 
This Securities Exchange Agreement (this “Agreement”) is dated as of July ___,
2007, among Oxford Media, Inc., a Nevada corporation (the “Company”) and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Holder” and collectively the “Holders”).
 
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 of 1933, as amended
(the “Securities Act”), the Company desires to issue and sell to each Holder,
and each Holder, 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 Holder agree 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 Certificate of Designation (as defined
herein), and (b) the following terms have the meanings set forth in this Section
1.1:
 
“Action” shall have the meaning ascribed to such term in Section 3.1(h).
 
“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 Holder, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Holder will be deemed to be an Affiliate of such Holder.
 
“Authorized Shares Deficiency” shall have the meaning ascribed to such term in
Section 4.10(b).
 
“Authorized Share Reverse Action” shall have the meaning ascribed to such term
in Section 4.10(b).
 
“Business Day” means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
 
“Certificate of Designation” means the Certificate of Designation to be filed
prior to the Closing by the Company with the Secretary of State of Nevada in the
form of Exhibit B attached to the Purchase Agreement.
 

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“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.
 
“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and, subject to
Section 5.1, all conditions precedent set forth in Section 2.3 below 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 other class of securities into which such securities may
hereafter be reclassified or changed into.
 
“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
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
“Company Counsel” means Spectrum Law Group, LLP, with offices at 1900 Main
Street, Suite 125, Irvine, California, 92614.
 
“Conversion Price” shall have the meaning ascribed to such term in the
Certificate of Designation.
 
 “Effective Date” means the date that the Registration Statement of the
applicable Underlying Shares is filed by the Company pursuant to the
Registration Rights Agreement is first declared effective by the Commission.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Exchange Amount” shall mean, as to each Holder as applicable, as of the
Closing, the aggregate outstanding amount of (i) all indebtedness (principal and
interest and all other amounts due under each respective underlying obligation,
including but not limited to dividends); (ii) all amounts due in the nature of
liquidated damages or any similar remedy or recovery; (iii) preferred stock; and
(iv) warrants, each as beneficially owned by such Holder and to be exchanged for
the Preferred Stock purchased hereunder, in each case to the extent specified
below such Holder’s name on the signature page of this Agreement and next to the
heading “Exchange Amount”.

“FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington
Avenue, Suite 2620, New York, New York 10170-0002.

“Holder Party” shall have the meaning ascribed to such term in Section 4.9.

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“Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).

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

“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).

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

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

“Preferred Stock” means the 15,828.55 shares of the Company’s Series C
Convertible Preferred Stock issued hereunder, in addition to such shares issued
as dividends on such preferred stock, having the rights, preferences and
privileges set forth in the Certificate of Designation, in the form of Exhibit B
attached hereto.

“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.

“Purchase Agreement” means that certain Securities Purchase Agreement, dated as
of the date hereof, by and among the Company and the purchasers signatory
thereto.

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).
“Required 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
conversion in full of all shares of Preferred Stock, ignoring any conversion
limits set forth therein.
 
“Registration Rights Agreement” means the Registration Rights Agreement, dated
the date hereof, among the Company, the Holders and the signatories to the
Purchase Agreement.
 
“Registration Statement” shall mean a registration statement registering for
resale the Underlying Shares as provided for in the Registration Rights
Agreement.
 
“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.

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“Securities” means thePreferred Stock and the Underlying Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Senior Lenders” means, collectively, Palisades Master Fund, LP; Longview Fund,
L.P.; Midsummer Investment Fund; Camofi Master LDC; Crescent International,
Ltd.; Plus Four Private Equities, L.P.; Lew Jaffe; and, David L. Parker

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

“Subsidiary” means any subsidiary of the Company as identified in Section
3.1(a).

“SVI Parties” means, collectively, SVI Healthcare, Inc. (formerly known as SVI
SYSTEMS, INC.), an Illinois corporation; Marsha S. Glazer; Jay M. Glazer; The
Marital Trust Under The Richard L. Owens Trust Dated November 24, 1992; and,
Andrew Rubenstein.

“Trading Day” means a day on which the Common Stock is traded on a Trading
Market; provided that if the Company is not listed or quoted for trading on a
Trading Market, “Trading Day” shall mean “Business Day” unless the context
otherwise requires.

 “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 Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

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

“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion of the Preferred Stock.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (b)  if the Common Stock is not then quoted for trading on a Trading
Market and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink Sheets, LLC (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 (c) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good
faith by the Holder and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
 

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ARTICLE II
EXCHANGE
 
 
2.1
Closing.

 
(a)        On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to issue to each Holder
shares of Preferred Stock, and each Holder agrees, severally and not jointly, to
accept the shares of Preferred Stock in exchange for such Holder’s Exchange
Amount in the following amounts set forth below and as further summarized on
Exhibit “A”, attached hereto and incorporated herein by reference:
 
(i)         As to any Senior Non-Convertible Notes (represented by eight (8)
separate notes in the total original principal balance of $11,500,000 with said
total outstanding principal balance increased to $11,926,500 thereafter)
comprising such Holder’s Exchange Amount, for each $1,000 of all amounts due and
payable under the Senior Non-Convertible Notes exchanged hereunder, 1 share of
Preferred Stock;
 
(ii)        As to any Convertible Subordinated Notes (represented by three (3)
separate notes in the total original principal balance of $2,350,000 and issued
in connection with the Company’s acquisition of SVI Hotel Corporation)
comprising such Holder’s Exchange Amount, for each $1,000 due and payable under
the Convertible Subordinated Notes exchanged hereunder, 0.5 share of Preferred
Stock;
 
(iii)       As to any Series A Convertible Preferred Stock comprising such
Holder’s Exchange Amount, for each $1,000 due and payable under such preferred
stock exchanged hereunder (the outstanding stated value of which is $4,000,000),
0.25 share of Preferred Stock;
 
(iv)       As to any Series B Convertible Preferred Stock comprising such
Holder’s Exchange Amount, for each $1,000 due and payable under such preferred
stock exchanged hereunder (the outstanding stated value of which is $3,857,000),
0.25 share of Preferred Stock; and
 

 

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(v)        As to any Subordinated Non-Convertible Debt comprising such Holder’s
Exchange Amount (comprised of (i) a note in favor of Edward Kelly in the
original principal amount of $50,000; (ii) a note in favor of Paul & Kathleen
Kelly in the original principal amount of $50,000; (iii) a note in favor of Nick
Yocca in the original principal amount of $247,000; and, (iv) three notes in the
total principal amount of $100,000 issued to the sellers of SVI Hotel
Corporation), for each $1,000 due and payable under such debt exchanged
hereunder, 0.125 share of Preferred Stock.
 
(b)        Each Holder shall deliver to the Company the certificates
representing their respective Exchange Amount and the Company shall deliver to
each Holder their respective shares of Preferred Stock and the other items set
forth in Section 2.2 issuable at the Closing.  Upon satisfaction of the
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of FWS, or such other location as the parties shall mutually agree.
 
(c)        All Common Stock purchase warrants or options held by each Holder
shall hereby terminate and be of no further force or effect.
 
 
2.2
Deliveries.

 
(a)        On or prior to the Closing Date, the Company shall deliver or cause
to be delivered to each Holder the following:
 
(i)          this Agreement duly executed by the Company;
 
(ii)         a legal opinion of Company Counsel, in the form of Exhibit C
attached hereto;
 
(iii)        the Registration Rights Agreement duly executed by the Company; and
 
(iv)        one or more certificates evidencing the shares of Preferred Stock
issuable to such Holder pursuant to Section 2.1(a).
 
(b)        On the Closing Date, each Holder shall deliver or cause to be
delivered to the Company the following:
 
(i)         this Agreement duly executed by such Holder;
 
(ii)        the Registration Rights Agreement duly executed by such Purchaser;
and
 
(iii)       such Holder’s certificate representing the securities comprising the
Exchange Amount.
 

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2.3
Closing Conditions.

 
(a)         The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met (or waived by the
Company in its sole discretion):
 
(i)         the accuracy in all material respects when made and on the Closing
Date of the representations and warranties of each of the Holders contained
herein;
 
(ii)        all obligations, covenants and agreements of the Holders required to
be performed at or prior to the Closing Date shall have been performed;
 
(iii)       the execution (by all appropriate parties) and delivery of the
Purchase Agreement and the Registration Rights Agreement; and
 
(iv)       the delivery by the Holders of the items set forth in Section 2.2(b)
of this Agreement.
 
(b)        The obligations of each Holder hereunder in connection with the
Closing are subject to the following conditions being met (or waived by such
Holder in its sole discretion):
 
(i)          the accuracy in all material respects when made and 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
2.2(a) of this Agreement;
 
(iv)       David Parker shall have tendered his resignation from the Board of
Directors, with an effective date of July 16, 2007;
 
(v)        Lew Jaffe shall have agreed to a written restructuring of his
employment agreement which is reasonably acceptable to a majority of the
Holders;
 
(vi)       the execution (by all appropriate parties) and delivery of the
Settlement and Amendment Agreement to be executed with the sellers of SVI Hotel
Corporation;
 

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(vii)       the execution (by all appropriate parties) and delivery of the
Purchase Agreement and the closing of the transactions contemplated thereby,
with the Company receiving gross proceeds of at least $3,500,000 from the sale
of the Company’s senior secured debentures, the terms of which are set forth on
Exhibit 2.1(g)(ii) attached hereto (the “Debentures”);
 
(viii)      the execution (by all appropriate parties) and delivery of the
Registration Rights Agreement;
 
(ix)        the execution and delivery by each other Holder with an entry set
forth on Exhibit A hereto (Exchange Amounts) of all documents and instruments
contemplated to be delivered hereunder; and
 
(x)        there shall have been no Material Adverse Effect with respect to the
Company since the date hereof.
 
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES
 
3.1        Representations and Warranties of the Company.  The Company hereby
makes the following representations and warranties to each Holder:
 
(a)        Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2006, as filed with the Commission. 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 of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
 
(b)        Organization and Qualification.  The Company and each of 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 condition (financial or otherwise) 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.
 

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(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 and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals.  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 and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
 
(d)        No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and 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,
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 could not have or reasonably be expected to
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 (other than the Holders) in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the Authorized Share Reverse Action, (ii)
filings required pursuant to Section 4.6, (iii) the filing of Form D with the
Commission and such filings as are required to be made under applicable state
securities laws, (iv) filing of the registration statement contemplated by the
Registration Rights Agreement or otherwise contemplated hereby and (v) filing of
any of the foregoing with the appropriate Trading Market(s)  (collectively, the
“Required Approvals”).
 

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(f)         Issuance of the Securities.  As of the Closing Date, the Securities
will be 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 imposed by the Company or any
other Person other than restrictions on transfer provided for in the Transaction
Documents and, if applicable, pledges or other actions taken by any particular
Holder with respect to such Holder’s Securities.  The Underlying Shares, when
issued in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company.
 
(g)        Capitalization.  The capitalization of the Company as of the date
hereof, immediately prior to the Closing, is as set forth on Schedule 3.1(g)(i),
and the capitalization of the Company immediately following the Closing,
assuming consummation of the transactions contemplated by this Agreement and the
Purchase Agreement, will be as set forth on Schedule 3.1(g)(ii), each of which
schedule shall include the number of shares of Common Stock and all other equity
securities or convertible debt securities owned or to be owned beneficially, and
of record, by each security holder of the Company (other than security holders
who hold less than 1% of the Common Stock as of the date hereof and are not
Affiliates of any party to the Exchange or the Purchase Agreement, which
security holders are denominated as a group as Other Common Stockholders),
together with the outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable 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 Common Stock Equivalents.  Except for the Authorized Shares
Increase Action, 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 Securities.  There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company’s stockholders
 
(h)        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) 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 or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. 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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(i)         Transactions with Affiliates and Employees.  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, 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 for (i) payment of salary, consulting fees
and directors’ fees for services rendered in the ordinary course of business
consistent with past practices, (ii) reimbursement for expenses incurred on
behalf of the Company and (iii) other employee benefits granted in the ordinary
course of business, including stock option agreements under any stock option
plan of the Company disclosed in filings with the Commission.
 
(j)         Certain Fees.  (i) Except as otherwise disclosed on Schedule 3.1(j)
attached hereto and incorporated herein, 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 the Transaction
Documents; and (ii) the Holders 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 the Transaction Documents.
 
(k)        Private Placement. Assuming the accuracy of the Holders’
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 Holders as contemplated hereby.
 
(l)         Listing and Maintenance Requirements.  The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
 
(m)       Disclosure.    All disclosure furnished by or on behalf of the Company
to the Holders regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.   The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement taken as a whole do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements, in light of the
circumstances under which they were made and when made, not misleading.  The
Company acknowledges and agrees that no Holder makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.
 

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(n)        No Integrated Offering. Assuming the accuracy of the Holders’
representations and warranties set forth in Section 3.2, 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
provision of any Trading Market on which any of the securities of the Company
are listed or designated.
 
(o)        No General Solicitation.  Neither the Company nor any person acting
on behalf of the Company has offered or sold (i) any of the Securities by any
form of general solicitation or general advertising, or (ii) any other
securities of the Company with comparable rights and preferences by any form of
general solicitation or general advertising within two months of the date
hereof.  The Company has offered such Securities for sale only to the Holders
and certain other “accredited investors” within the meaning of Rule 501 under
the Securities Act.
 
(p)        Acknowledgment Regarding Holders’ Purchase of Securities.  The
Company acknowledges and agrees that, to the best of its knowledge, each of the
Holders is acting solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions contemplated
thereby.  The Company further acknowledges that no Holder is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by any Holder or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Holders’ purchase of the
Securities.  The Company further represents to each Holder that the Company’s
decision to enter into this Agreement and the other Transaction Documents has
been based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
 
(q)        Acknowledgement Regarding Holders’ Trading Activity.  Anything in
this Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.16 hereof), it is understood and acknowledged by the
Company (i) that none of the Holders have been asked to agree, nor has any
Holder agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold the Securities for any specified term; (ii) that past
or future open market or other transactions by any Holder, including Short
Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) that any Holder, and counter-parties in
“derivative” transactions to which any such Holder is a party, directly or
indirectly, presently may have a “short” position in the Common Stock; and (iv)
that each Holder shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (a) one or more Holders may engage in
hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Underlying Shares deliverable with respect to Securities are being
determined and (b) such hedging activities (if any) could reduce the value of
the existing stockholders' equity interests in the Company at and after the time
that the hedging activities are being conducted.  The Company acknowledges that
such aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.
 

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(r)        Regulation M Compliance.  The Company has not, and to its knowledge
no one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the securities of the Company, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and
(iii), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.
 
(s)        3(a)(9) Exchange. The exchange of securities comprising the Exchange
Amounts is being consummated pursuant to Sections 3(a)(9) and 18(b)(4)(C) of the
Securities Act.  Accordingly, pursuant to Rule 144(d), the holding period of the
Underlying Shares shall tack back to the original issue date of the securities
comprising the Exchange Amount.
 
(t)        Representations and Warranties of the Purchase Agreement.  The
representations and warranties of the Company made pursuant to the Purchase
Agreement, as qualified by the Disclosure Schedules attached thereto and hereto
and delivered to the Holders, are true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
 
3.2       Representations and Warranties of the Holders.  Each Holder hereby,
for itself and for no other Holder, represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows:
 
 
 
 
 
 

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(a)        Organization; Authority.  Such Holder 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 hereunder and thereunder
(or, as appropriate, is an individual with full right, power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out his obligations hereunder and thereunder).
The execution, delivery and performance by such Holder of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such Holder.  Each Transaction
Document to which it is a party has been duly executed by such Holder, and when
delivered by such Holder in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Holder, 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)        Own Account.  Such Holder understands that the Securities 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 in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Holder’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws). Such Holder is acquiring the
Securities hereunder in the ordinary course of its business.
 
(c)        Holder Status.  At the time such Holder was offered the Securities,
it was, and at the date hereof it is, and on each date on which it converts any
shares of Preferred Stock, 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 Holder is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
 
(d)        Experience of Such Holder.  Such Holder, 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 Holder 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.
 

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(e)        General Solicitation.  Such Holder 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)         Short Sales and Confidentiality Prior To The Date Hereof.  Other
than the transaction contemplated hereunder, such Holder has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Holder, executed any disposition, including Short
Sales, in the securities of the Company during the period commencing from the
time that such Holder first received a term sheet (written or oral) from the
Company or any other Person setting forth the material terms of the transactions
contemplated hereunder until the date hereof (“Discussion
Time”).  Notwithstanding the foregoing, in the case of a Holder that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Holder's assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Holder's assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement.  Other than to other Persons party to this Agreement,
such Holder has maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms of this
transaction).
 
(g)        No Commission or Other Recommendation for Solicitation of Exchange.
The Holder has not received any commission or other remuneration for the
solicitation of any of the participants in, or recommendation with respect to,
the share exchange contemplated by this Agreement.

 
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
 
 
4.1
Transfer Restrictions.

 
(a)        The Securities may only be disposed of in compliance with state and
federal securities laws.  In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Holder 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 counsel selected by the transferor and reasonably
acceptable to the Company, 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 the Registration Rights Agreement
and shall have the rights of a Holder under this Agreement and the Registration
Rights Agreement.
 
(b)        The Holders agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following form:
 

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[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
[EXERCISE] [CONVERSION] OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 
The Company acknowledges and agrees that a Holder 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 Holder 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 Holder’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, 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 Underlying Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, or (ii) following any sale of such Underlying Shares
pursuant to Rule 144, or (iii) if such Underlying 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). Upon a sale pursuant to a
Registration Statement or pursuant to Rule 144, the Company shall cause its
counsel to issue a legal opinion to the Company’s transfer agent promptly upon
any such request, so long as the Holder provides the Company’s counsel with all
such information counsel reasonably and customarily requests to provide such
opinion. If all or any shares of Preferred Stock is converted at a time when
there is an effective registration statement to cover the resale of the
Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k) or
if such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission) then such Underlying 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 five Trading Days following the delivery by a Holder to the Company
or the Company’s transfer agent of a certificate representing Underlying Shares,
as applicable, issued with a restrictive legend (such fifth Trading Day, the
“Legend Removal Date”), deliver or cause to be delivered to such Holder a
certificate representing such shares that is free from all restrictive and other
legends; provided however that the Company has been provided with such
information as is reasonably and customarily required to make the determination
that the legend should be removed. 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.  Certificates for
Underlying Shares subject to legend removal hereunder shall be transmitted by
the transfer agent of the Company to the Holders by crediting the account of the
Holder’s prime broker with the Depository Trust Company System.

(d)        In addition to such Holder’s other available remedies, the Company
shall pay to a Holder, in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common
Stock on the date such Securities are submitted to the Company’s transfer agent)
delivered for removal of the restrictive legend and subject to Section 4.1(c),
$10 per Trading Day (increasing to $20 per Trading Day 10 Trading Days after
such damages have begun to accrue) for each Trading Day after the Legend Removal
Date until such certificate is delivered without a legend; provided however that
if the Company is not listed or quoted on a Trading Market, no such payment
shall be required. Nothing herein shall limit such Holder’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 Holder 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 Holder, severally and not jointly with the other Holders, 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 Holder will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein.

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4.2        Acknowledgment of Dilution.  The Company acknowledges that the
issuance of the Securities will result in substantial dilution of the
outstanding shares of Common Stock.  The Company further acknowledges that its
obligations under the Transaction Documents, including without limitation its
obligation to issue the Underlying Shares pursuant to the Transaction Documents,
are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Holder and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.
 
4.3        Furnishing of Information.  From and after the Effective Date and as
long as any Holder 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 Holder owns Securities, if the
Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Holders and make publicly available in accordance
with Rule 144(c) such information as is required for the Holders 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, to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144, including providing a legal opinion of counsel if required
by the Transfer Agent to effect such transfer.
 
4.4        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 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 Holders or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market.
 
4.5        Conversion and Exercise Procedures.  The form of Notice of Conversion
included in the Certificate of Designation sets forth the totality of the
procedures required of the Holders in order to convert the Preferred Stock.  No
additional legal opinion or other information or instructions shall be required
of the Holders to convert their Preferred Stock.  The Company shall honor
conversions of the Preferred Stock and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in the
Transaction Documents.
 
4.6        Securities Laws Disclosure; Publicity.  The Company shall, by the
fourth Business Day following the date hereof, issue a Current Report on Form
8-K, disclosing the material terms of the transactions contemplated hereby and
including the Transaction Documents as exhibits thereto.  The Company and each
Holder shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Company nor any
Holder 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 Holder, or without the prior consent of each Holder, with respect
to any press release of the Company, which consent shall not unreasonably be
withheld or delayed, 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 Holder, or include the name
of any Holder in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Holder, except (i) as
required by federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B) the filing
of final Transaction Documents (including signature pages thereto) with the
Commission and (ii) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall provide the Holders with
prior notice of such disclosure permitted under this subclause (ii).
 

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4.7        Shareholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any Holder
is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Holder 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
Holders.
 
4.8        Non-Public Information.  Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it nor any other Person acting on
its behalf will provide any Holder or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Holder shall have executed a written agreement regarding the
confidentiality and use of such information.  The Company understands and
confirms that each Holder shall be relying on the foregoing representations in
effecting transactions in securities of the Company.
 
4.9        Indemnification of Holders.   Subject to the provisions of this
Section 4.9, the Company will indemnify and hold each Holder and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Holder (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (each, a
“Holder Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Holder Party may suffer or incur as a
result of or relating to (a) any material breach of any of the material
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 Holder, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Holder, with respect
to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Holder’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings
such Holder may have with any such stockholder or any violations by the Holder
of state or federal securities laws or any conduct by such Holder which
constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any
action shall be brought against any Holder Party in respect of which indemnity
may be sought pursuant to this Agreement, such Holder Party shall promptly
notify the Company in writing, and the Company shall have the right to assume
the defense thereof with counsel of its own choosing reasonably acceptable to
the Holder Party.  Any Holder Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Holder Party except
to the extent that (i) the employment thereof has been specifically authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the
position of such Holder Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel
for each class of Holder Parties with substantially identical interests in all
pending issues.  The Company will not be liable to any Holder Party under this
Agreement (i) for any settlement by a Holder Party effected without the
Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any Holder Party’s breach of any of the
representations, warranties, covenants or agreements made by such Holder Party
in this Agreement or in the other Transaction Documents.
 

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4.10
Reservation and Listing of Securities.

 
(a)        Subject to Sections 4.10(b) and (c), the Company shall maintain a
reserve from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.
 
(b)        Subject to Section 4.10(c), if, on any date, the number of authorized
but unissued (and otherwise unreserved) shares of Common Stock is less than 100%
of (i) the Required Minimum on such date, minus (ii) the number of shares of
Common Stock previously issued pursuant to the Transaction Documents (an
“Authorized Share Deficiency”) then the Company shall immediately take
commercially reasonable efforts to provide the Company with authorized shares of
Common Stock in an amount sufficient to allow the Company to reserve the
Required Minimum. Without limiting the generality of the forgoing sentence, as
soon as practicable after the date of the occurrence of an Authorized Share
Deficiency, but in no event later than forty-five (45) days after the occurrence
of such Authorized Share Deficiency, the Company shall use its best efforts to
either (i) obtain stockholder approval of an increase in the number of
authorized shares of Common Stock or (ii) effect a properly authorized reverse
stock split of its Common Stock whereby all post-split shares of unissued Common
Stock would be authorized and available for issuance (each such action, an
“Authorized Share Reverse Action”); provided that the Company will not be
required at any time to authorize a number of shares of Common Stock greater
than the maximum remaining number of shares of Common Stock that could possibly
be issued after such time pursuant to the Transaction Documents and any other
agreements binding on the Company, including any Underlying Shares issuable upon
conversion in full of all Preferred Stock, ignoring any conversion limits set
forth therein.
 
 
 

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(c)        The Holders acknowledge that the Company does not have sufficient
Common Stock authorized as of the Closing Date to reserve the Required Minimum
and meet its other reserve requirements. Notwithstanding Section 4.10(a) and
4.10(b) to the contrary, the parties agree that: (i) such failure shall not be
considered an Authorized Share Deficiency until September 30, 2007; (ii) prior
to such date, the Company shall use its best efforts to take an Authorized Share
Reverse Action; (iii) the Holders, to the extent each owns any Common Stock or
Preferred Stock, will vote in favor of the Authorized Share Reverse Action; and
(iv) pending such Authorized Share Reverse Action, the Company will reserve all
unreserved Common Stock with respect to the Securities.

(d)        The Company shall, if applicable: (i) in the time and manner required
by the principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares of Common
Stock at least equal to the Required Minimum on the date of such application,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing on such Trading Market as soon as possible thereafter,
(iii) provide to the Holders evidence of such listing, and (iv) maintain the
listing of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market.
 
4.11      Equal Treatment of Holders.  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 Holder by
the Company and negotiated separately by each Holder, and is intended for the
Company to treat the Holders as a class and shall not in any way be construed as
the Holders acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.
 
4.12      Short Sales and Confidentiality After The Date Hereof.  Each Holder
severally and not jointly with the other Holders covenants that neither it nor
any Affiliate acting on its behalf or pursuant to any understanding with it will
execute any Short Sales during the period commencing at the Discussion Time and
ending at the time that the transactions contemplated by this Agreement are
first publicly announced as described in Section 4.6.  Each Holder, severally
and not jointly with the other Holders, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.6, such Holder will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).  Each
Holder understands and acknowledges, severally and not jointly with any other
Holder, that the Commission currently takes the position that coverage of short
sales of shares of the Common Stock “against the box” prior to the Effective
Date of the Registration Statement with the Securities is a violation of Section
5 of the Securities Act, as set forth in Item 65, Section A, of the Manual of
Publicly Available Telephone Interpretations, dated July 1997, compiled by the
Office of Chief Counsel, Division of Corporation Finance.  Notwithstanding the
foregoing, no Holder makes any representation, warranty or covenant hereby that
it will not engage in Short Sales in the securities of the Company after the
time that the transactions contemplated by this Agreement are first publicly
announced as described in Section 4.6.  Notwithstanding the foregoing, in the
case of a Holder that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Holder’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Holder’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.
 

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4.13      Form D; Blue Sky Filings.  The Company agrees to timely file, if
necessary, a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Holder. The
Company shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the Securities for,
sale to the Holders at the Closing under applicable securities or “Blue Sky”
laws of the states of the United States, and shall provide evidence of such
actions promptly upon request of any Holder.
 
4.14      Palisades Board of Directors.  At any time following the date hereof,
Palisades Master Fund, L.P. (“Palisades Board Appointer”) or its designees shall
have the right, in their sole discretion, to appoint 1 member to the Board of
Directors of the Company.  The Board of Directors of the Company shall not
exceed 9 members following any such appointment.  The Company agrees that it
shall have its Board of Directors or nominating committee, if it has one, to
re-nominate the individuals designated by Palisades Board Appointer or its
designees, as directors pursuant to this Section 4.14 or for re-election at each
meeting of shareholders called for such purpose, to recommend to the Company’s
shareholders that that they vote “for” such nominees, and that all proxies given
to management are voted in favor of such nominees.  If Palisades Board Appointer
shall exercise its right to appoint a member to the Company’s Board of
Directors, the Company shall use best efforts to obtain and maintain directors
and officers liability insurance in such amounts as are customary for companies
of the Company’s size and market position; and shall enter into indemnification
contracts with the individuals designated by Palisades Board Appointer, or its
designees, as members of the Board of Directors, in form and substance customary
under comparable circumstances and reasonably satisfactory to such
individuals.  The right of Palisades Board Appointer, its designees, to appoint
members of the Board of Directors pursuant to this Section 4.14 shall terminate
upon the earlier of (i) written notice of such termination by Palisades Board
Appointer to the Company or (ii) the Debentures are paid-in-full and retired in
their entirety.
 
4.15      Midsummer Board of Directors.  At any time following the date hereof,
Midsummer Investment Limited (“Midsummer Board Appointer”) or its designees
shall have the right, in their sole discretion, to appoint 2 members to the
Board of Directors of the Company.  The Board of Directors of the Company shall
not exceed 9 members following any such appointment.  The Company agrees that it
shall have its Board of Directors or nominating committee, if it has one, to
re-nominate the individuals designated by Midsummer Board Appointer or its
designees, as directors pursuant to this Section 4.15 or for re-election at each
meeting of shareholders called for such purpose, to recommend to the Company’s
shareholders that that they vote “for” such nominees, and that all proxies given
to management are voted in favor of such nominees.  If Midsummer Board Appointer
shall exercise its right to appoint a member to the Company’s Board of
Directors, the Company shall use best efforts to obtain and maintain directors
and officers liability insurance in such amounts as are customary for companies
of the Company’s size and market position; and shall enter into indemnification
contracts with the individuals designated by Midsummer Board Appointer, or its
designees, as members of the Board of Directors, in form and substance customary
under comparable circumstances and reasonably satisfactory to such
individuals.  The right of Midsummer Board Appointer, its designees, to appoint
members of the Board of Directors pursuant to this Section 4.15 shall terminate
upon the earlier of (i) written notice of such termination by the Midsummer
Board Appointer to the Company or (ii) the Debentures are paid-in-full and
retired in their entirety.
 

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4.16      Release. In consideration of the execution of this Agreement, the
satisfaction of the terms and conditions of this Agreement, and other good and
valuable consideration, the receipt and value of which is hereby confirmed,
effective as of the Closing, the Senior Lenders on the one hand, and each of
them, and the SVI Parties on the other hand, and each of them, hereby fully,
finally, and forever settle and release each other from any and all claims,
losses, fines, penalties, damages, demands, judgments, debts, obligations,
interests, liabilities, causes of action, breaches of duty, costs, expenses,
judgments and injunctions of any nature whatsoever, whether known or unknown,
from all relationships between them as of the Closing (cumulatively referred to
as the “Released Claims”). The Released Claims shall expressly not include any
matters arising out of facts and circumstances arising or accruing after the
Closing, and shall not include any matters arising out of this Agreement.
 
4.17      Director Compensation.  Any compensation paid to members of the Board
of Directors shall be reasonable and commensurate with what is customary in the
industry.
 
 
ARTICLE V
MISCELLANEOUS
 
5.1        Termination.  This Agreement may be terminated by any Holder, as to
such Holder’s obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Holders, by written notice to
the other parties, if the Closing has not been consummated on or before July 13,
2007; provided, however, that such termination will not affect the right of any
party to sue for any breach by the other party (or parties).
 
5.2        Fees and Expenses.  At the Closing, the Company has agreed to
reimburse Midsummer Capital, LLC (“Midsummer”) and the SVI Parties for their
reasonable legal fees and expenses incurred in connection with the transactions
contemplated herein.  Except as expressly set forth in the Transaction Documents
to the contrary, 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 transfer agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Holders.
 
5.3        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.
 

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5.4        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 5:30 p.m. (New York
City 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 5:30 p.m. (New York City time) on any Trading
Day, (c) the 2nd 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.
 
5.5        Amendments; Waivers.  No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment prior to the Automatic Conversion Date (as defined in the
Certificate of Designation), by the Company and all holders of Preferred Stock
then outstanding, in the case of an amendment after the Automatic Conversion
Date, by the Company and Holders holding at least 67% of the shares of Preferred
Stock then outstanding or, in the case of a waiver, by the party against whom
enforcement of any such waived provision 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 any party to exercise any right hereunder in any
manner impair the exercise of any such right.
 
5.6        Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
5.7        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 Holder (provided that
nothing herein shall prevent the Company from assigning the remaining
obligations after the Closing Date through merger or comparable corporate
transactions consummated in accordance with applicable law).  Any Holder may
assign any or all of its rights under this Agreement to any Person to whom such
Holder assigns or transfers any Securities, provided such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the “Holders”.
 
5.8        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.
 

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5.9        Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.  Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an  inconvenient venue for such proceeding.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other 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 reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
 
5.10      Survival.  The representations and warranties shall survive the
Closing and the delivery of Securities for the applicable statue of limitations.
 
5.11      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 hereunder, it being understood that both parties need
not sign the same counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature page were an original thereof.
 
5.12      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.
 

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5.13      Rescission and Withdrawal Right.  Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Holder 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
such Holder 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.
 
5.14      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 (in the case of mutilation), 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.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
 
5.15      Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Holders 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 contained in the Transaction Documents and hereby agrees to waive
and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
 
5.16      Payment Set Aside. To the extent that the Company makes a payment or
payments to any Holder pursuant to any Transaction Document or a Holder 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.
 
5.17      Usury.  To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner whatsoever claim, and will resist
any and all efforts to be compelled to take the benefit or advantage of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Holder in order to
enforce any right or remedy under any Transaction Document.  Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate.  It is agreed that if the
maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date forward, unless such application
is precluded by applicable law.  If under any circumstances whatsoever, interest
in excess of the Maximum Rate is paid by the Company to any Holder with respect
to indebtedness evidenced by the Transaction Documents, such excess shall be
applied by such Holder to the unpaid principal balance of any such indebtedness
or be refunded to the Company, the manner of handling such excess to be at such
Holder’s election.
 

 

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5.18      Independent Nature of Holders’ Obligations and Rights.  The
obligations of each Holder under any Transaction Document are several and not
joint with the obligations of any other Holder, and no Holder shall be
responsible in any way for the performance or non-performance of the obligations
of any other Holder under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Holder pursuant
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 or as a group with
respect to such obligations or the transactions contemplated by the Transaction
Documents.  Each Holder 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 Holder to be joined as an additional party in any
proceeding for such purpose.  Each Holder has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents.  For reasons of administrative convenience only, Holders and their
respective counsel have chosen to communicate with the Company through FWS.  FWS
does not represent all of the Holders but only Midsummer.  The Company has
elected to provide all Holders 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 Holders.
 
5.19      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.
 
5.20      Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
 
[Signature Page Follows]

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

OXFORD MEDIA, INC.
Address/Facsimile Number/E-mail
Address for Notice:
By:__________________________________________
Name:
Title:
 
 
With a copy to (which shall not constitute notice):
 
 
 
 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
 

 

 

 

 

 

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[PURCHASER SIGNATURE PAGES TO OXMI SECURITIES EXCHANGE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Exchange
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 
Name of Holder: ____________________________________________________
 
Signature of Authorized Signatory of Holder: __________________________
 
Name of Authorized Signatory: ____________________________________
 
Title of Authorized Signatory: _____________________________________
 
Email Address of Authorized Signatory:
___________________________________________
 
Fax Number of Authorized Signatory: _________________________________________
 
 
Address for Notice of Holder:

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

Exchange Amount:
 
Senior Non-Convertible Debt (including accrued and unpaid interest):
Convertible Subordinated Debt (including accrued and unpaid interest):
Series A Convertible Preferred Stock (including accrued and unpaid dividends):
Series B Convertible Preferred Stock (including accrued and unpaid dividends):
Subordinated Non-Convertible debt (including accrued and unpaid interest):

Shares of Preferred Stock: ____________

[SIGNATURE PAGES CONTINUE]

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EXHIBIT “A”

Summary of Exchange Amounts

Section 2.1(a)(i); Senior Non-Convertible Notes:

Holder
 
Total Amount
 
Preferred Shares
 
Common Shares
             
Palisades
 
$ 5,373,527
 
5,373.527
 
n/a
Longview
 
$ 2,652,766
 
2,652.766
 
n/a
Midsummer
 
$ 2,096,986
 
2,096.986
 
n/a
Camofi
 
$ 1,048,493
 
1,048.493
 
n/a
Cresent
 
$    524,247
 
 524.2466
 
n/a
Plus Four
 
$    524,247
 
 524.2466
 
n/a
Parker
 
$    104,849
 
 104.8493
 
n/a
Jaffe
 
$    104,849
 
 104.8493
 
n/a

Section 2.1(a)(ii); Convertible Subordinated Notes:

Owens Trust
 
$ 1,278,542
 
   639.271
 
n/a
Glazers
 
$ 1,278,542
 
   639.271
 
n/a
Rubenstein
 
$      52,185
 
     26.092
 
n/a

Section 2.1(a)(iii); Series A Convertible Preferred Stock:

Palisades
 
  4,134,040
 
  1,033.51
 
n/a

Section 2.1(a)(iv); Series B Convertible Preferred Stock

Midsummer
 
  3,985,179
 
   996.295
 
n/a

Section 2.1(a)(v); Subordinated Non-Convertible Debt

Yocca
 
$    297,839
 
     37.229
 
n/a
Owens Trust
 
$      54,406
 
       6.800
 
n/a
Glazers
 
$      54,406
 
       6.800
 
n/a
E. Kelly
 
$      52,144
 
       6.518
 
n/a
P. Kelly
 
$      52,144
 
       6.518
 
n/a
Rubenstein
 
$        2,221
 
       0.277
 
n/a

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EXHIBIT “B”

Certificate of Designation

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EXHIBIT “C”

Legal Opinion of Company Counsel

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EXHIBIT 2.1(g)(ii)

Terms of the Company’s Senior Secured Debentures

12% interest; senior security interest in all assets of the Company; interest
payable  quarterly within 3 Business Days of January 1, April 1, July 1 and
October 1; principal paid in eight (8) equal installments at the same time
interest payments are due hereunder commencing on September 30, 2009, with all
remaining amounts due hereunder to be paid in full on the fourth anniversary of
the Debentures.

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SCHEDULE 3.1(g)(i)
AND
SCHEDULE 3.1(g)(ii)

Company Capitalization; Pre & Post Closing

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SCHEDULE 3.1(j)

Certain Fees

1.           In the event Anthony Cantone or any affiliated or related entity
executes the Purchase Agreement and invests in the Company, a fee equal to one
percent (1%) of said investment will be due and payable to Barry Kaplan
Associates.

2.           In the event Marc Kreloff or any affiliated or related entity
executes the Purchase Agreement and invests in the Company, a fee equal to eight
percent (8%) of said investment will be due and payable to Early Bird Capital.

 

 

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