astrata_8k-ex0401.htm


    EXHIBIT 4.1

     

    PREFERRED STOCK EXCHANGE
AGREEMENT

     

    This
Preferred Stock Exchange Agreement (this “Agreement”) is dated
as of May 29, 2008, by and among Astrata Group Incorporated, a Nevada
corporation (the “Company”), Vision
Opportunity China Fund Limited and Vision Opportunity Master Fund, Ltd.
(collectively, the “Holder”).

     

    Recitals:

     

    WHEREAS,
the Holder currently holds an aggregate of 4,500,000 shares of Series A
Convertible Preferred Stock of the Company, par value $.0001 per share and
stated value $1.00 per share, convertible into shares of the Company’s Common
Stock at a conversion price of $0.50 per share (the “Series A Preferred
Shares”), 2,142,857 shares of Series B Convertible Preferred Stock of the
Company, par value $.0001 per share and stated value $1.40  per share,
convertible into shares of the Company’s Common Stock at a conversion price of
$0.70 per share (the “Series B Preferred
Shares”, and together with the Series A Preferred Shares and Series B
Preferred Shares, the “Outstanding Preferred
Stock”), issued by the Company to the Holder pursuant to various
preferred stock financings of the Company consummated in 2006 and 2007 (the
“Preferred Stock
Financings”) as set forth on Exhibit A attached
hereto.  Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to such terms in the financing documents entered into
by the parties pursuant to the Preferred Stock Financings.

     

    WHEREAS,
subject to the terms and conditions set forth herein, the Company and the Holder
desire to exchange the Outstanding Preferred Stock for shares of the Company’s
newly issued Series A-2 convertible preferred stock, par value $.0001 per share
and stated value $0.25 per share (the “Series A Preferred
Stock”) at the exchange ratio set forth herein.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby agreed and acknowledged, the parties hereto hereby agree as
follows:

     

    AGREEMENT:

     

    1.    Exchange of Outstanding
Preferred Stock for Series A-2 Preferred Stock

     

    (a)    In
consideration of and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the Holder and the Company
agree to the exchange of the Holder’s Outstanding Preferred Stock into newly
issued shares of Series A-2 Preferred Stock.  Each Holder shall
receive such number of shares of Series A-2 Preferred Stock set forth on Exhibit A attached
hereto in exchange for the Outstanding Preferred Stock.

     

    (b)    The
closing under this Agreement (the “Closing”) shall take
place at the offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of
the Americas, New York, NY  10036 upon the satisfaction of each of the
conditions set forth in Sections 4 and 5 hereof (the “Closing
Date”).  At the Closing, the Company shall issue to the Holder
the shares of Series A-2 Preferred Stock and the Holder shall deliver to the
Company the Outstanding Preferred Stock.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)    The
designation, rights, preferences and other terms and provisions of the Series
A-2 Preferred Stock are set forth in the Certificate of Designation of the
Relative Rights and Preferences of the Series A-2 Convertible Preferred Stock
attached hereto as Exhibit B (the “Certificate of
Designation”).

     

    (d)    The
shares of Series A-2 Preferred Stock issuable upon the exchange of the
Outstanding Preferred Stock and the shares of Common Stock issuable upon
conversion of the Series A-2 Preferred Stock are sometimes collectively referred
to herein as the “Securities”.

     

    2.    Representations,
Warranties and Covenants of the Holder.  Each Holder
hereby makes the following representations and warranties to the Company, and
covenants for the benefit of the Company:

     

    (a)    Such
Holder is a corporation, limited liability company or partnership duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization.

     

    (b)    This
Agreement has been duly authorized, validly executed and delivered by such
Holder and is a valid and binding agreement and obligation of such Holder
enforceable against such Holder in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors’ rights generally, and such
Holder has full power and authority to execute and deliver the Agreement and the
other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.

     

    (c)    Such
Holder understands that the Securities are being offered and sold to it in
reliance on specific provisions of Federal and state securities laws and that
the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Holder set
forth herein for purposes of qualifying for exemptions from registration under
the Securities Act of 1933, as amended (the “Securities Act”) and
applicable state securities laws.  Such Holder understands that no
United States federal or state agency or any government or governmental agency
has passed upon or made any recommendation or endorsement of the
Securities.

     

    (d)    Such
Holder is an “accredited investor” (as defined in Rule 501 of Regulation D), and
such Holder has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the
Securities.  Such Holder is not required to be registered as a
broker-dealer under Section 15 of the Securities Exchange Act of 1934, as
amended, and such Holder is not a broker-dealer.  Such Holder
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk.

     

    (e)    Such
Holder is acquiring the Securities solely for its own account and not with a
view to or for sale in connection with distribution.  Such Holder does
not have a present intention to sell any of the Securities, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of any of the Securities to or through any person or entity; provided, however, that by
making the representations herein, such Holder does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with Federal and state
securities laws applicable to such disposition.  Such Holder
acknowledges that it (i) has such knowledge and experience in financial and
business matters such that such Holder is capable of evaluating the merits and
risks of such Holder's investment in the Company, (ii) is able to bear the
financial risks associated with an investment in the Securities and (iii) has
been given full access to such records of the Company and its subsidiaries and
to the officers of the Company and the subsidiaries as it has deemed necessary
or appropriate to conduct its due diligence investigation.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (f)    The offer
and sale of the Securities is intended to be exempt from registration under the
Securities Act, by virtue of Sections 3(a)(9) and 4(2) thereof.  Such
Holder understands that the Securities purchased hereunder have not been, and
may never be, registered under the Securities Act and that none of the
Securities can be sold or transferred unless they are first registered under the
Securities Act and such state and other securities laws as may be applicable or
the Company receives an opinion of counsel reasonably acceptable to the Company
that an exemption from registration under the Securities Act is available (and
then the Securities may be sold or transferred only in compliance with such
exemption and all applicable state and other securities laws).  Such
Holder acknowledges that it is familiar with Rule 144 of the rules and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act ("Rule
144"), and that such Holder has been advised that Rule 144 permits
resales only under certain circumstances.  Such Holder understands
that to the extent that Rule 144 is not available, such Holder will be unable to
sell any Securities without either registration under the Securities Act or the
existence of another exemption from such registration requirement.

     

    (g)    Such
Holder has not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’ structuring fees,
financial advisory fees or other similar fees in connection with any of the
transactions contemplated by this Agreement.

     

    (h)    Such
Holder acknowledges that the Securities were not offered to such Holder by means
of any form of general or public solicitation or general advertising, or
publicly disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media, or broadcast over television or radio, or
(ii) any seminar or meeting to which such Holder was invited by any of the
foregoing means of communications.  Such Holder, in making the
decision to purchase the Securities, has relied upon independent investigation
made by it and the representations, warranties and agreements set forth in this
Agreement and the other transaction documents and has not relied on any
information or representations made by third parties.

     

    3.    Representations,
Warranties and Covenants of the Company.  The Company
represents and warrants to each of the Holder, and covenants for the benefit of
each Holder, as follows:

     

    (a)    The
Company has been duly incorporated and is validly existing and in good standing
under the laws of the State of Nevada, with full corporate power and authority
to own, lease and operate its properties and to conduct its business as
currently conducted, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure to register or qualify would not have a
Material Adverse Effect.  For purposes of this Agreement, “Material Adverse
Effect” shall mean any effect on the business, results of operations,
prospects, assets or financial condition of the Company that is material and
adverse to the Company and its subsidiaries and affiliates, taken as a whole
and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company from entering
into and performing any of its obligations under this Agreement in any material
respect.

     

    
      
        
        

      

      
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    (b)    The
Securities have been duly authorized by all necessary corporate action and, when
paid for or issued in accordance with the terms hereof, the Securities shall be
validly issued and outstanding, fully paid and nonassessable, free and clear of
all liens, encumbrances and rights of refusal of any kind.

     

    (c)    This
Agreement has been duly authorized, validly executed and delivered on behalf of
the Company and is a valid and binding agreement and obligation of the Company
enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors’ rights generally, and the
Company has full power and authority to execute and deliver the Agreement and
the other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.

     

    (d)    The
execution and delivery of the Agreement and the consummation of the transactions
contemplated by this Agreement by the Company, will not (i) conflict with or
result in a breach of or a default under any of the terms or provisions of, (A)
the Company’s articles of incorporation or by-laws, or (B) of any material
provision of any indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which it or any of its
material properties or assets is bound, (ii) result in a violation of any
provision of any law, statute, rule, regulation, or any existing applicable
decree, judgment or order by any court, Federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Company, or any of its material properties or assets or (iii) result in the
creation or imposition of any material lien, charge or encumbrance upon any
material property or assets of the Company or any of its subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of their property or any of
them is subject except in the case of clauses (i)(B), (ii) or (iii) for any such
conflicts, breaches, or defaults or any liens, charges, or encumbrances which
would not have a Material Adverse Effect.

     

    (e)    The
delivery and issuance of the Securities in accordance with the terms of and in
reliance on the accuracy of each Holder’s representations and warranties set
forth in this Agreement will be exempt from the registration requirements of the
Securities Act.

     

    (f)    No
consent, approval or authorization of or designation, declaration or filing with
any governmental authority on the part of the Company is required in connection
with the valid execution and delivery of this Agreement or the offer, sale or
issuance of the Securities or the consummation of any other transaction
contemplated by this Agreement (other than any filings which may be required to
be made by the Company with the Secretary of State of Nevada or the Securities
and Exchange Commission (the “Commission”) or
pursuant to any state or “blue sky” securities laws subsequent to the
Closing).

     

    (g)    There is
no action, suit, claim, investigation or proceeding pending or, to the knowledge
of the Company, threatened against the Company which questions the validity of
this Agreement or the transactions contemplated hereby or any action taken or to
be taken pursuant thereto.  There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company or any subsidiary, or any of their
respective properties or assets which, if adversely determined, is reasonably
likely to result in a Material Adverse Effect.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (h)    The
Company has complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and delivery of the
Securities hereunder.  Neither the Company nor anyone acting on its
behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Securities, or similar securities to, or solicit offers
with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person, or has taken or will take any
action so as to bring the issuance and sale of any of the Securities under the
registration provisions of the Securities Act and applicable state securities
laws.  Neither the Company nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of any of the Securities.

     

    (i)    The
Company has not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’ structuring fees,
financial advisory fees or other similar fees in connection with any of the
transactions contemplated by this Agreement.

     

    4.    Conditions
Precedent to the Obligation of the Company to Issue the Series A-2 Preferred
Stock.  The obligation hereunder of the Company to issue and
deliver the Series A-2 Preferred Stock to the Holder is subject to the
satisfaction or waiver, at or before the Closing Date, of each of the conditions
set forth below.  These conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole
discretion.

     

    (a)    Each
Holder shall have executed and delivered this Agreement.

     

    (b)    The
Outstanding Preferred Stock shall have been delivered to the Company for
cancellation.

     

    (c)    The
representations and warranties of each Holder shall be true and correct in all
respects as of the date when made and as of the Closing Date as though made at
that time, except for representations and warranties that are expressly made as
of a particular date, which shall be true and correct in all respects as of such
date.

     

    (d)    The
transactions contemplated by that certain Amendment to Certain Warrants for the
Purchase of Shares of Common Stock of the Company (the “Warrant Amendment
Agreement”) dated on or about the date hereof shall have been
consummated.

     

    (e)    The
transactions contemplated by the Warrant Exchange Agreement (the “Warrant Exchange
Agreement”) dated on or about the date hereof shall have been
consummated.

     

    5.    Conditions
Precedent to the Obligation of the Holder to Accept the Series A-2 Preferred
Stock. The obligation hereunder of the Holder to accept the Series A-2
Preferred Stock is subject to the satisfaction or waiver, at or before the
Closing Date, of each of the conditions set forth below.  These
conditions are for each Holder’s sole benefit and may be waived by such Holder
at any time in its sole discretion.

     

    (a)    The
Company shall have executed and delivered this Agreement.

     

    (b)    Each of
the representations and warranties of the Company shall be true and correct in
all respects as of the date when made and as of the Closing Date as though made
at that time, except for representations and warranties that speak as of a
particular date, which shall be true and correct in all respects as of such
date.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (c)    No
statute, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement at or prior to the Closing
Date.

     

    (d)    No
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, shall be pending against or affecting the Company, or
any of its properties, which questions the validity of the Agreement or the
transactions contemplated thereby or any action taken or to be taken pursuant
thereto.  As of the Closing Date, no action, suit, claim or proceeding
before or by any court or governmental agency or body, domestic or foreign,
shall be pending against or affecting the Company, or any of its properties,
which, if adversely determined, is reasonably likely to result in a Material
Adverse Effect.

     

    (e)    The
certificates representing the shares of Series A-2 Preferred Stock shall have
been duly executed and delivered to the Holder.

     

    (f)    The
Certificate of Designation shall have been filed with the Nevada Secretary of
State.

     

    (g)    The
Company shall have delivered on the Closing Date to the Holder (i) a certified
copy of the resolutions of the board of directors of the Company authorizing the
transactions contemplated by this Agreement and (ii) a certified copy of the
Certificate of Designation evidencing its acceptance with the Nevada Secretary
of State.

     

    (h)   At the
Closing, the Holder shall have received an opinion of counsel to the Company,
dated the date of the Closing, in the form of Exhibit C
hereto.

     

    (i)    The
Company shall have received executed written consents and waivers from its
security Holder, if required, consenting to the transactions contemplated by
this Agreement and waiving any price protection such security Holder may be
entitled as a result of the issuance of the Securities.

     

    (j)    The
transactions contemplated by the Warrant Amendment Agreement shall have been
consummated.

     

    (k)    The
transactions contemplated by the Warrant Exchange Agreement shall have been
consummated.

     

    (l)    The
Company shall have received the consent of at least 51% of its shareholders
entitled to vote to amend the Company’s Articles of Incorporation (the “Charter Amendment”)
to increase the number of authorized shares of  the Company’s Common
Stock and Preferred Stock to a number sufficient to issue Series C Preferred
Stock and Series A-2 Preferred Stock pursuant to this Agreement, the Warrant
Exchange Agreement and the Warrant Amendment Agreement and shares of Common
Stock upon conversion of the Series C Preferred Stock and Series A-2 Preferred
Stock.

     

    (m)    No
Material Adverse Effect shall have occurred at or before the Closing
Date.

     

    6.    Fees and
Expenses.  Each party shall pay the fees and expenses of its
advisors, 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, provided, however, that the
Company shall pay all reasonable attorneys’ fees and expenses (exclusive of
disbursements and out-of-pocket expenses) incurred by the Holder in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the Certificate of Designation.

     

    
      
        
        

      

      
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    7.    Company
Indemnification.  The Company
hereby agrees to indemnify and hold harmless the Holder and their respective
officers, directors, shareholders, employees, agents and attorneys against any
and all losses, claims, damages, liabilities and reasonable expenses
(collectively “Claims”) incurred by
each such person in connection with defending or investigating any such Claims,
whether or not resulting in any liability to such person, to which any such
indemnified party may become subject, insofar as such Claims arise out of or are
based upon any breach of any representation or warranty or agreement made by the
Company in this Agreement.

     

    8.    Governing
Law; Consent to Jurisdiction.  This Agreement
shall be governed by and interpreted in accordance with the laws of the State of
New York without giving effect to the rules governing the conflicts of
laws.  Each of the parties consents to the exclusive jurisdiction of
the Federal courts whose districts encompass any part of the County of New York
located in the City of New York in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.  Each party
waives its right to a trial by jury.  Each party to this Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein.  Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.

     

    9.    Notices.  All notices and
other communications provided for or permitted hereunder shall be made in
writing by hand delivery, express overnight courier, registered first class
mail, or telecopier (provided that any notice sent by telecopier shall be
confirmed by other means pursuant to this Section 10), initially to the address
set forth below, and thereafter at such other address, notice of which is given
in accordance with the provisions of this Section.

     

    (a)          if to the
Company:

     

    
      	
              Astrata
      Group Incorporated

              940
      South Coast Drive, Suite 215,

              Costa
      Mesa, California 92626

              Attention:
      Chief Executive Officer

              Tel.
      No.: (714) 641-1512

              Fax
      No.:  (___) ___-____

            
	
               

              with
      a copy to:

            
	
               

              Anslow
      & Jaclin, LLP

              195
      Route 9 South, Suite 204

              Manalapan,
      New Jersey 07726

              Attention:
      Richard I. Anslow, Esq.

              Tel.
      No.: (732) 409-1212

              Fax
      No.: (732) 577-1188

            


    

     

    (b)          if to a
Holder:

                                           


    
      	To
      the applicable address set forth on the signature page
    hereto 
	 
	
              with
      a copy to:

              Kramer
      Levin Naftalis & Frankel LLP

              1177
      Avenue of the Americas

              New
      York, New York 10036

              Attention:
      Christopher S. Auguste, Esq.

              Tel
      No.: (212) 715-9100

              Fax
      No.: (212) 715-8000

            


    

     

    All such
notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; when receipt is acknowledged, if
telecopied; or when actually received or refused if sent by other
means.

     

    
      
        
        

      

      
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    10.   Entire
Agreement.  This Agreement,
together with the Warrant Amendment Agreement and the Warrant Exchange
Agreement, constitutes the entire understanding and agreement of the parties
with respect to the subject matter hereof and supersedes all prior and/or
contemporaneous oral or written proposals or agreements relating thereto all of
which are merged herein.  This Agreement may not be amended or any
provision hereof waived in whole or in part, except by a written amendment
signed by both of the parties.

     

    11.   Counterparts.  This Agreement
may be executed by facsimile signature and in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

     

    [THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, this Agreement was duly executed on the date first written
above.

     

    
      	 	

              ASTRATA
      GROUP INCORPORATED 

            
	 	 
	 	By: /s/ Martin George
      Euler                                       
      
	 	
              Name:  Martin
      George Euler 

            
	 	

              Title:    Chief
      Executive Officer 

            
	 	 
	 	

              HOLDER: 

            
	 	 
	 	Vision Opportunity Master Fund,
      Ltd. 
	 	 
	 	By:___________________________________ 
	 	

              Name: 

            
	 	
              Title: 

            
	 	 
	 	

              Vision
      Opportunity Master Fund, Ltd.

              20
      W 55th St., 5th
      Floor

              New
      York, NY 10019

              Tel.
      No.: (212) 849-8226

              Fax
      No.: (212) 867-1416

              Attention:  Antti
      Uusiheimala 

            
	 	 
	 	

              HOLDER:  

            
	 	 
	 	

              Vision
      Opportunity China Fund Limited 

            
	 	 
	 	By:___________________________________ 
	 	

              Name:  

            
	 	

              Title:  

            
	 	 
	 	

              c/o
      Vision Opportunity Master Fund, Ltd.

              20
      W 55th St., 5th
      Floor

              New
      York, NY 10019

              Tel.
      No.: (212) 849-8226

              Fax
      No.: (212) 867-1416 

              Attention:  Antti
Uusiheimala

            


    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

    


    
      	
              Holder

            	
              Issue
      Date:

            	
              Preferred
      Stock

            	
              Series
      A-2 Preferred  Shares:

            
	
              Vision
      Opportunity Master Fund Ltd.

               

            	
              October
      13, 2006

            	
              4,500,000
      shares of Series A Convertible Preferred Stock

               

            	
              900,000
      shares of Series 

              A-2
      Convertible Preferred Stock

               

            
	
              Vision
      Opportunity Master Fund Ltd.

               

            	
              November
      16, 2006

            	
              314,286
      shares of Series
      B Convertible Preferred Stock

               

            	
              88,000
      shares of Series 

              A-2
      Convertible Preferred Stock

               

            
	
              Vision
      Opportunity China Fund Limited

            	
              December
      19, 2007

            	
              1,828,571
      shares of Series B Convertible Preferred Stock

               

            	
              512,000
      shares of Series 

              A-2
      Convertible Preferred Stock

               

            
	
              Seth
      Mankin

               

            	
              December
      14, 2006

            	
              50,000
      shares of Series A Convertible Preferred Stock

               

            	
              10,000
      shares of Series

              A-2
      Convertible Preferred Stock

               

            
	
              Place
      Agent Warrant Holders

            	
              October
      13, 2006

               

            	
              Warrants
      to purchase 250,000 shares of Series A Convertible Preferred
      Stock

            	
              Warrants
      to Purchase 50,000 shares of Series A-2
      Convertible Preferred Stock

            
	 	 	 	 
	 	
              November
      20, 2006 

            	
              Warrants
      to purchase 25,000 shares of Series A Convertible Preferred
      Stock 

            	

              Warrants
      to Purchase 5,000 shares of Series

              A-2
      Convertible Preferred Stock 

            
	 	 	 	 
	 	
              December
      14, 2006 

            	
              Warrants
      to purchase 5,000 shares of Series A Convertible Preferred
      Stock 

            	

              Warrants
      to Purchase 1,000 shares of Series

              A-2
      Convertible Preferred Stock 

            
	 	 	 	 
	 	

              December
      19, 2007 

            	
              Warrants
      to purchase 428,572 shares of Series B Convertible Preferred
      Stock 

            	

              Warrants
      to Purchase 120,000 shares of Series

              A-2
      Convertible Preferred Stock 

            


    

    


     

    
      
        
        

      

      
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    EXHIBIT
B

    


    FORM
OF CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
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    EXHIBIT
C

    


    FORM
OF OPINION

    


    1.    The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada and has the requisite corporate
power to own, lease and operate its properties and assets, and to carry on its
business as presently conducted.

    


    2.    The
Company has the requisite corporate power and authority to enter into and
perform its obligations under the Exchange Agreement and to issue the Series A-2
Preferred Stock and the Common Stock issuable upon conversion of the Series A-2
Preferred Stock.  The execution, delivery and performance of each of
the transaction documents contemplated by the Exchange Agreement by the Company
and the consummation by it of the transactions contemplated thereby have been
duly and validly authorized by all necessary corporate action and no further
consent or authorization of the Company or its Board of Directors or
stockholders is required.

    


    3.    The
Series A-2 Preferred Stock has been duly authorized and the shares of Common
Stock issuable upon conversion of the Series A-2 Preferred Stock, have been duly
authorized and reserved for issuance, and, when delivered upon conversion or
against payment in full as provided in the Certificate of Designation, will be
validly issued, fully paid and nonassessable.

    


    4.    The
offer, issuance and sale of the Series A-2 Preferred Stock and the offer,
issuance and sale of the shares of Common Stock issuable upon conversion of the
Series A-2 Preferred Stock pursuant to the Exchange Agreement and the
Certificate of Designation, are exempt from the registration requirements of the
Securities Act.

     

     

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