Unassociated Document


    
      

      

    

    


    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of August __, 2006, by and among Oxford Media, Inc., a Nevada
      corporation (the “Company”),
      and
      PALISADES MASTER FUND LP ( including its successors and assigns, the
“Purchaser”).

     

    WHEREAS,
      the Company and the Purchaser are parties to that certain Bridge Loan Agreement
      dated in February 2006 (the “Bridge Loan Agreement”); 

    


    WHEREAS,
      in connection with the Bridge Loan Agreement, the Company issued its promissory
      note in the principal amount of $1,666,667.00 in favor of the Purchaser (the
      “Note”); 

    


    WHEREAS,
      the Company and the Purchaser are parties to a certain Extension Agreement
      dated
      July 20, 2006 (the “Extension Agreement”), pursuant to which Purchaser extended
      the Due Date (as defined in the “Extension Agreement”) on (i) $666,667 of
      principal amount of the Note, (ii) plus interest due on the Note, and (iii)
      $16,667.68 of liquidated damages (the “Extended Note”); 

    


    WHEREAS,
      the balance of the Note was exchanged for a new note pursuant to the Exchange
      Agreement (as hereinafter defined); 

    


    WHEREAS,
      the Company and the Purchaser are parties to that certain Exchange Agreement
      dated June 30, 2006, pursuant to which the Purchaser exchanged a $1,000,000.00
      principal amount note and $3,836.00 of accrued interest, for a $1,003,836.00
      principal amount new promissory note (the “New Note”); 

     

    WHEAREAS,
      payment on all amounts owing under the Extended Note and the New Note are due;
      

     

    WHEREAS,
      the Company issued Purchaser 2,500,000 shares of the Company’s common stock (the
“Purchaser’s Common Stock”); 

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated
      thereunder, the Company desires to issue and sell to the Purchaser, and the
      Purchaser desires to purchase from the Company in the aggregate $3,857,087
      of
      Preferred Stock on the Closing Date; 

     

    WHEREAS,
      the Purchase shall pay the purchase price of the Preferred Stock by delivering
      the Extended Note, the New Note and the Purchaser’s Common Stock. 

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and each Purchaser 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 indicated in this Section 1.1:

     

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

     

    “Actual
      Minimum”
means,
      as of any date, the maximum aggregate number of shares of Common Stock then
      issued or potentially issuable in the future pursuant to the Transaction
      Documents, including any Underlying Shares issuable upon conversion in full
      of
      all shares of Preferred Stock, ignoring any conversion or exercise limits set
      forth therein, and assuming that any previously unconverted shares of Preferred
      Stock are held until the fifth anniversary of the Closing Date and all dividends
      are paid in shares of Common Stock until such third anniversary, subject to
      the
      limitation on the number of shares of Common Stock issuable hereunder set forth
      in Section 5(a)(iii) of the Certificate of Designation.

     

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

     

    “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
      A
      attached
      hereto.

    


    “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 all conditions precedent to
      (i)
      each Purchaser’s obligations to pay the Subscription Amount have been satisfied
      or waived (ii) and the Company’s obligations to deliver the Securities have been
      satisfied or waived.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any securities
      into which such common stock shall hereinafter been reclassified
      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 exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

     

    


    
      
        
           

        

        
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    “Company
      Counsel”
means
      Spectrum Law Group, LLP

     

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

     

    “Discussion
      Time”
shall
      mean 9 P.M. (New York Time) on such calendar day when the Purchaser was first
      contacted regarding an investment in the Company.

    


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

     

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

     

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

     

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

     

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

     

    “Losses”
means
      any and all losses, claims, damages, liabilities, settlement costs and expenses,
      including without limitation costs of preparation and reasonable attorneys'
      fees.

     

    “Majority
      in Interest”
shall
      mean, at any time of determination, the majority in interest (based on
      then-outstanding Stated Value amounts of Preferred Stock at the time of such
      determination) of the Purchasers.

     

    “Market
      Price”
shall
      mean the average of the 10 VWAPs immediately prior to the date in
      question.

     

     

    
      
         

      

      
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    “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).

     

    “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 3,857 shares of the Company’s Series B Convertible Preferred Stock issued
      hereunder having the rights, preferences and privileges set forth in the
      Certificate of Designation.

    


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

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated the date hereof, among the Company
      and
      the Purchaser, in the form of Exhibit
      B.

     

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

     

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

     

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

     

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

     

    “Securities”
means
      the Preferred Stock and the Underlying Shares.

     

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

     

    “Set
      Price”
shall
      have the meaning ascribed to such term in the Certificate of
      Designations.

     

    “Shareholder
      Approval”
means
      such approval as may be required by the applicable rules and regulations of
      the
      Trading Market (or any successor entity) from the shareholders of the Company
      with respect to the transactions contemplated by the Transaction Documents,
      including the issuance of all of the Underlying Shares in excess of 19.9% of
      the
      Company’s issued and outstanding Common Stock on the Closing Date.

    


     

    


    
      
        
           

        

        
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    “Short
      Sales”
shall
      include, without limitation, all “short sales” as defined in Rule 3b-3 of the
      Exchange Act. 

     

    “Stated
      Value”
means
      $1,000 per share of Preferred Stock.

     

    “Subscription
      Amount”
shall
      mean $3,857,087, which the Purchaser shall pay by delivering to the Company
      the
      Extended Note, the new Note and the Purchaser’s Common Stock. 

     

    “Subsidiary”
means
      any subsidiary of the Company that is required to be listed in Schedule
      3.1(a).

     

    “Trading
      Day”
means
      any day during which the Trading Market shall be open for business.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: OTC Bulletin Board, the American Stock
      Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq
      SmallCap Market.

     

    “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 issuable upon conversion of the Preferred Stock
      and
      issued and issuable in lieu of the cash payment of dividends on 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 Financial L.P. (based on a
      Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)  if
      the Common Stock is not then listed or quoted on a Trading Market and if prices
      for the Common Stock are then quoted on the OTC Bulletin Board, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      listed or quoted on the OTC Bulletin Board and if prices for the Common Stock
      are then reported in the “Pink Sheets” published by the National Quotation
      Bureau Incorporated (or a similar organization or agency succeeding to its
      functions of reporting prices), the most recent bid price per share of the
      Common Stock so reported; or (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 Purchasers and reasonably acceptable to the
      Company.

     

    


     

    


    
      
        
           

        

        
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    ARTICLE
      II

    PURCHASE
      AND SALE

     

    2.1 
        Closing.
      On the
      Closing Date, the Purchaser shall purchase from the Company and the Company
      shall issue and sell to the Purchaser, (a) shares of Preferred Stock with an
      aggregate Stated Value equal to such Purchaser’s Subscription Amount. The
      aggregate number of shares of Preferred Stock sold hereunder shall be 3,857.
      The
      purchase price of the Preferred Stock sold hereunder shall be paid by the
      Purchaser delivering to the Company the New Note, the Extended Note and the
      Purchaser’s Common Stock. Upon satisfaction of the conditions set forth in
      Section 2.2, the Closing shall occur at the offices of Sichenzia Ross Friedman
      Ference LLP or such other location as the parties shall mutually
      agree.

     

    2.2 
        Conditions
      to Closing

     

    .
      The
      Closing is subject to the satisfaction or waiver by the party to be benefited
      thereby of the following conditions:

     

    (a)   The
      Company shall have delivered or caused to be delivered to each Purchaser the
      following:

     

    (i)    this
      Agreement duly executed by the Company;

     

    (ii)   a
      certificate evidencing a number of shares of Preferred Stock equal to the
      Purchaser’s Subscription Amount divided by the Stated Value, registered in the
      name of such Purchaser; 

     

    (iii)  
        a
      legal
      opinion of Company Counsel, in the form of Exhibit
      D
      attached
      hereto, addressed to each Purchaser; 

     

    (iv)  
        the
      Registration Rights Agreement duly executed by the Company; 

     

    
      
        (v)  
            a
          certificate, signed by the Secretary of the Company, attaching (i) the
          charter
          and By-Laws of the Company, and (ii) resolutions passed by its Board of
          Directors to authorize the transactions contemplated hereby and by the
          other
          Transaction Documents, and certifying that such documents are true and
          complete
          copies of the originals and that such resolutions have not been amended
          or
          superseded, it being understood that such Purchaser may rely on such certificate
          as a representation and warranty of the Company made
          herein;

      

    

     

    
      
        (vi)  
            the
          Certificate of Designation executed by the Company and accepted by the
          Secretary
          of State of Nevada;

      

    

     

    


    
      
        
           

        

        
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    (ix) 
        a
      certificate, signed by the Chief Executive Officer of the Company, certifying
      that the conditions specified in this Section have been fulfilled as of the
      Closing, it being understood that the Purchaser may rely on such certificate
      as
      though it were a representation and warranty of the Company made
      herein;
      and

    


    (x)  
        a
      copy of
      Press Release or Current Report on Form 8-K describing the Transaction
      Documents.

    


     

    (b)  
        At
      the
      Closing, the Purchaser shall have delivered or caused to be delivered to the
      Company the following:

     

    
      
        (i)   this
          Agreement duly executed by the Purchaser;

      

    

     

    (ii)   the
      Subscription Amount, which is payable in full by delivering the New Note, the
      Extended Note and the Purchaser’s Common Stock to the Company; and

     

    (iii)  
        the
      Registration Rights Agreement duly executed by the Purchaser, including
      questionnaire.

     

    (iv) 
        the Extended Note;


    


    (v)  
        the New Note;
      and

    


    (vi)  
        the Purchaser’s
      Common Stock. 

    


    (c)  
        All
      representations and warranties of the other party contained herein shall remain
      true and correct as of the Closing Date and all covenants of the other party
      shall have been performed if due prior to such date.

     

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

     

    


    
      
        
           

        

        
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    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 
        Representations
      and Warranties of the Company.
      Except
      as set forth under the corresponding section of the Disclosure Schedules which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to the Purchaser as of the date
      of the Agreement:

     

    (a)  
        Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth on
Schedule
      3.1(a).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all the issued
      and
      outstanding shares of capital stock of each Subsidiary are validly issued and
      are fully paid, non-assessable and free of preemptive and similar rights to
      subscribe for or purchase securities. If the Company has no subsidiaries, then
      references in the Transaction Documents to the Subsidiaries will be
      disregarded.

     

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

     

    (c) 
         Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations hereunder or thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated hereby or thereby have
      been duly authorized by all necessary action on the part of the Company and
      no
      further consent or action is required by the Company other than Required
      Approvals. Each of the Transaction Documents has been (or upon delivery will
      be)
      duly executed by the Company and, when delivered in accordance with the terms
      hereof, will constitute the valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms, subject to
      applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium and similar laws affecting creditors’ rights and remedies generally
      and general principles of equity. Neither the Company nor any Subsidiary is
      in
      violation of any of the provisions of its respective certificate or articles
      of
      incorporation, by-laws or other organizational or charter documents except
      where
      such violation could not, individually or in the aggregate, constitute a
      Material Adverse Effect.

     

    


    
      
        
           

        

        
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    (d) 
         No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      the issuance and sale of the Securities and the consummation by the Company
      of
      the other transactions contemplated thereby do not and will not (i) conflict
      with or violate any provision of the Company’s or any Subsidiary’s 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, or (iv) conflict with or violate
      the terms of any agreement by which the Company or any Subsidiary is bound
      or to
      which any property or asset of the Company or any Subsidiary is bound or
      affected; except in the case of each of clauses (ii) and (iii), such as could
      not have or reasonably be expected to result in a Material Adverse
      Effect.

     

    (e)  
         Filings,
      Consents and Approvals.
      Neither
      the Company nor any Subsidiary is required to obtain any consent, waiver,
      authorization or order of, give any notice to, or make any filing or
      registration with, any court or other federal, state, local or other
      governmental authority or other Person in connection with the execution,
      delivery and performance by the Company of the Transaction Documents, other
      than
      (i) the filings required under Section 4.9, (ii) the filing with the Commission
      of the Registration Statement, (iii) the application(s) to each applicable
      Trading Market for the listing of the Underlying Shares for trading thereon
      in
      the time and manner required thereby, (iv) the filing with the Commission of
      a
      Form D pursuant to Commission Regulation D, and (v) applicable Blue Sky filings
      (collectively, the “Required
      Approvals”).

     

    (f)   
         Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be duly and validly issued, fully
      paid and nonassessable, free and clear of all Liens. The Company has reserved
      from its duly authorized capital stock a number of shares of Common Stock for
      issuance of the Underlying Shares at least equal to the Actual Minimum on the
      date hereof.

     

    


    
      
        
           

        

        
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    (g)  
        Capitalization.
      Other
      than as disclosed on Schedule 3.1(g), attached hereto and incorporated herein
      by
      reference: The capitalization of the Company is as described in the Company’s
      most recent periodic report filed with the Commission. The Company has not
      issued any capital stock since such filing other than pursuant to the exercise
      of employee stock options under the Company’s stock option plans, the issuance
      of shares of Common Stock to employees pursuant to the Company’s employee stock
      purchase plan and pursuant to the conversion or exercise of outstanding Common
      Stock Equivalents. No Person has any right of first refusal, preemptive right,
      right of participation, or any similar right to participate in the transactions
      contemplated by the Transaction Documents. Except as a result of the purchase
      and sale of the Securities, there are no outstanding options, warrants, script
      rights to subscribe to, calls or commitments of any character whatsoever
      relating to, or securities, rights or obligations convertible into or
      exchangeable for, or giving any Person any right to subscribe for or acquire,
      any shares of Common Stock, or contracts, commitments, understandings or
      arrangements by which the Company or any Subsidiary is or may become bound
      to
      issue additional shares of Common Stock, of Common Stock Equivalents. The
      issuance and sale of the Securities will not obligate the Company to issue
      shares of Common Stock or other securities to any Person (other than the
      Purchasers) and will not result in a right of any holder of Company securities
      to adjust the exercise, conversion, exchange or reset price under such
      securities. All of the outstanding shares of capital stock of the Company are
      validly issued, fully paid and nonassessable, have been issued in compliance
      with all federal and state securities laws, and none of such outstanding shares
      was issued in violation of any preemptive rights or similar rights to subscribe
      for or purchase securities. No further approval or authorization of any
      stockholder, the Board of Directors of the Company or others is required for
      the
      issuance and sale of the shares of Preferred Stock. Except as disclosed in
      the
      SEC Reports, there are no stockholders agreements, voting agreements or other
      similar agreements with respect to the Company’s capital stock to which the
      Company is a party or, to the knowledge of the Company, between or among any
      of
      the Company’s stockholders.

     

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

     

    


    
      
        
           

        

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

     

    (j)   Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) 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. There has not been, and to the knowledge of the
      Company, there is not pending or contemplated, any investigation by the
      Commission involving the Company or any current or former director or officer
      of
      the Company. The Commission has not issued any stop order or other order
      suspending the effectiveness of any registration statement filed by the Company
      or any Subsidiary under the Exchange Act or the Securities Act.

     

    


     

    


     

    


    
      
        
           

        

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

     

    (l)   Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      except in each case as could not have a Material Adverse Effect. 

     

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

     

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

     

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

     

    


    
      
        
           

        

        
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    (p)  
        Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged. Directors and officers insurance coverage at least equal to the
      aggregate Subscription Amount will be purchase with the proceeds from the
      Closing no later than 30 days from the date of the Agreement. To the best of
      Company’s knowledge, such insurance contracts and policies are accurate and
      complete. Neither the Company nor any Subsidiary has any reason to believe
      that
      it will not be able to renew its existing insurance coverage as and when such
      coverage expires or to obtain similar coverage from similar insurers as may
      be
      necessary to continue its business without a significant increase in
      cost.

     

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

     

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

     

    


    
      
        
           

        

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

     

    (t)   Private
      Placement.
      Assuming the accuracy of the Purchaser’s 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 Purchaser as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market.

     

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

     

    (v)  
        Registration
      Rights.
      No
      Person has any right to cause the Company to effect the registration under
      the
      Securities Act of any securities of the Company.

     

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

     

    


     

    


     

    


     

    


    
      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

    

     

     

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

     

    (y)       
      Disclosure.
      The
      Company confirms that, neither the Company nor, to the best knowledge of the
      Company any other Person acting on its behalf, has provided the Purchaser or
      its
      agents or counsel with any information that constitutes or might constitute
      material, non-public information. The Company understands and confirms that
      the
      Purchaser will rely on the foregoing representations and covenants in effecting
      transactions in securities of the Company. All disclosure provided to the
      Purchaser regarding the Company, its business and the transactions contemplated
      hereby, including the Schedules to this Agreement, furnished by or on behalf
      of
      the Company with respect to the representations and warranties made herein
      are
      true and correct with respect to such representations and warranties and do
      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 Company
      acknowledges and agrees that the Purchaser does not make and has not made any
      representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in Section 3.2
      hereof.

     

    (z)       
      No
      Integrated Offering.
      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 which could violate any applicable
      shareholder approval provisions, including, without limitation, under the rules
      and regulations of the Trading Market. 

     

    (aa)     
      Solvency/Indebtedness.
      Based
      on the financial condition of the Company as of the Closing Date: (i) the fair
      saleable market value of the Company’s assets exceeds the amount that will be
      required to be paid on or in respect of the Company's existing debts and other
      liabilities (including known contingent liabilities) as they mature; (ii) the
      Company's assets do not constitute unreasonably small capital to carry on its
      business for the current fiscal year as now conducted and as proposed to be
      conducted including its capital needs taking into account the particular capital
      requirements of the business conducted by the Company, and projected capital
      requirements and capital availability thereof; and (iii) the current cash flow
      of the Company, together with the proceeds the Company would receive, were
      it to
      liquidate all of its assets, after taking into account all anticipated uses
      of
      the cash, would be sufficient to pay all amounts on or in respect of its debt
      when such amounts are required to be paid. The Company does not intend to incur
      debts beyond its ability to pay such debts as they mature (taking into account
      the timing and amounts of cash to be payable on or in respect of its debt).
      The
      Company has no knowledge of any facts or circumstances which lead it to believe
      that it will file for reorganization or liquidation under the bankruptcy or
      reorganization laws of any jurisdiction within one year from the Closing Date.
      The SEC Reports set forth as of the dates thereof all outstanding secured and
      unsecured Indebtedness of the Company or any Subsidiary, or for which the
      Company or any Subsidiary has commitments. For the purposes of this Agreement,
      “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      Indebtedness of others, whether or not the same are or should be reflected
      in
      the Company's balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments
      in excess of $50,000 due under leases required to be capitalized in accordance
      with GAAP. Neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    


    
      
        
           

        

        
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    (bb)     
      Tax
      Status.
      The
      Company and each of its Subsidiaries has made or filed all federal, state and
      foreign income and all other tax returns, reports and declarations required
      by
      any jurisdiction to which it is subject (unless and only to the extent that
      the
      Company and each of its Subsidiaries has set aside on its books provisions
      reasonably adequate for the payment of all unpaid and unreported taxes) and
      has
      paid all taxes and other governmental assessments and charges that are material
      in amount, shown or determined to be due on such returns, reports and
      declarations, except those being contested in good faith and has set aside
      on
      its books provisions reasonably adequate for the payment of all taxes for
      periods subsequent to the periods to which such returns, reports or declarations
      apply. There are no unpaid taxes in any material amount claimed to be due by
      the
      taxing authority of any jurisdiction, and the officers of the Company know
      of no
      basis for any such claim. The Company has not executed a waiver with respect
      to
      the statute of limitations relating to the assessment or collection of any
      foreign, federal, statue or local tax. None of the Company’s tax returns is
      presently being audited by any taxing authority.

     

    (cc)     
      No
      General Solicitation or Advertising in Regard to this
      Transaction.
      Neither
      the Company nor, to the knowledge of the Company, any of its directors or
      officers (i) has conducted or will conduct any general solicitation (as that
      term is used in Rule 502(c) of Regulation D) or general advertising with respect
      to the sale of the Preferred Stock, or (ii) made any offers or sales of any
      security or solicited any offers to buy any security under any circumstances
      that would require registration of the Preferred Stock, the Underlying Shares
      under the Securities Act or made any “directed selling efforts” as defined in
      Rule 902 of Regulation S.

     

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

     

    


    
      
        
           

        

        
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    (ee)
            Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      The
      Company acknowledges and agrees that the Purchaser is acting solely in the
      capacity of arm’s length purchaser with respect to this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that the
      Purchaser is not acting as a financial advisor or fiduciary of the Company
      (or
      in any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any statement made by the Purchaser or any of its
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is not advice or a recommendation and is merely
      incidental to the Purchaser’s purchase of the Securities. The Company further
      represents to each Purchaser that the Company’s decision to enter into this
      Agreement has been based solely on the independent evaluation of the Company
      and
      its representatives.

    


    (ff)      
       Seniority.
      As of
      the date of this Agreement, no other equity of the Company is senior to the
      Preferred Stock in right of payment, whether with respect to interest or upon
      liquidation or dissolution, or otherwise.

    


    (gg)    
       Accountants.
      The
      Company’s accountants are set forth on Schedule 3.1(ff) of the Disclosure
      Schedule. To the Company’s knowledge, such accountants, who expressed their
      opinion with respect to the financial statements to be included in the Company’s
      Annual Report on Form 10-KSB for the year ending December 31, 2005 are a
      registered public accounting firm as required by the Securities
      Act.

    


    (hh)    
       No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the accountants and lawyers formerly or
      presently employed by the Company and the Company is current with respect to
      any
      fees owed to its accountants and lawyers.

    


    (ii)      
       Acknowledgement
      Regarding Purchaser’s Trading Activity.
      Anything in this Agreement or elsewhere herein to the contrary notwithstanding
      (except for Section 4.16 hereof), it is understood and agreed by the Company
      (i)
      that the Purchaser has not been asked to agree, nor has the Purchaser 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 Purchaser, 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 Purchaser, and counter parties in “derivative” transactions to
      which any such Purchaser is a party, directly or indirectly, presently may
      have
      a “short” position in the Common Stock, and (iv) that the Purchaser shall not be
      deemed to have any affiliation with or control over any arm’s length
      counter-party in any “derivative” transaction.

    


    


    


    
      
        
           

        

        
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    3.2      
       Representations
      and Warranties of the Purchaser.
      The
      Purchaser hereby, represents and warrants as of the date hereof and as of the
      Closing Date to the Company as follows:

     

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

     

    (b)       
      No
      View to Distribute.
      Such
      Purchaser 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, has no present intention of distributing any of such Securities and
      has
      no arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not limiting
      such Purchaser’s right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws). Such Purchaser is acquiring the Securities hereunder in the
      ordinary course of its business. Such Purchaser does not have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities.

     

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

     

    


     

    


     

    


    
      
        
           

        

        
          -18-

          
            

          

        

        
           

        

      

    

     

     

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

     

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

     

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

     

     

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1       
      Transfer
      Restrictions.

     

    (a)       
      The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an Affiliate of a Purchaser or in connection with a pledge as contemplated
      in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of counsel selected by the transferor and reasonably
      acceptable to the Company, the form and substance of which opinion and shall
      be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Securities under the Securities
      Act. As a condition of transfer, any such transferee shall agree in writing
      to
      be bound by the terms of this Agreement and shall have the rights of a Purchaser
      under this Agreement and the Registration Rights Agreement.

     

    (b) 
         Each
      Purchaser agrees to the imprinting, so long as is required by this Section
      4.1(b), of the following legend on any certificate evidencing Securities:


     

    NEITHER
      THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
      HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
      OTHER
      LOAN SECURED BY SUCH SECURITIES.

     

    


    
      
        
           

        

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

     

    (c)      
      Certificates
      evidencing Underlying Shares shall not contain any legend (including the legend
      set forth in Section 4.1(b)): (i) while a registration statement (including
      the
      Registration Statement) covering the resale of such Underlying Shares is
      effective under the Securities Act, or (ii) following any sale of such
      Underlying Shares pursuant to Rule 144, or (iii) if such Securities are eligible
      for sale under Rule 144(k), or (iv) if such legend is not required under
      applicable requirements of the Securities Act (including judicial
      interpretations and pronouncements issued by the Staff of the Commission).
      The
      Company shall cause its counsel to issue a legal opinion to the Company’s
      transfer agent promptly after the Effective Date if required by the Company’s
      transfer agent to effect the removal of the legend hereunder. If all or any
      shares of Preferred Stock is converted or exercised (as applicable) 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 thereof) 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 three Trading Days following the
      delivery by the Purchaser to the Company or the Company's transfer agent of
      a
      certificate representing Securities issued with a restrictive legend (such
      date,
      the “Legend
      Removal Date”),
      deliver or cause to be delivered to such Purchaser a certificate representing
      such Underlying Shares that is free from all restrictive and other legends.
      The
      Company may not make any notation on its records or give instructions to any
      transfer agent of the Company that enlarge the restrictions on transfer set
      forth in this Section. Certificates for Securities subject to legend removal
      hereunder shall be transmitted by the transfer agent of the Company to the
      Purchaser by crediting the account of the Purchaser’s prime broker with the
      Depository Trust Company System.

    


    
      
        
           

        

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

    


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

    


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

    


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

     

    


     

    


     

    


    
      
        
           

        

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

     

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

     

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

     

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

     

    


    
      
        
           

        

        
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    4.7 
        Use
      of
      Proceeds.
      The net
      proceeds received by the Company hereunder shall be used solely for working
      capital and general corporate purposes, which shall specifically include the
      purchase of directors and officers insurance coverage pursuant to Section 3.1(p)
      above. 

     

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

     

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

     

    


    
      
        
           

        

        
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    4.10  Reservation
      and Listing of Securities.

     

    (a)   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)   If,
      on
      any date, the number of authorized but unissued (and otherwise unreserved)
      shares of Common Stock is less than 130% of (i) the Actual Minimum on such
      date, minus (ii) the number of shares of Common Stock previously issued pursuant
      to the Transaction Documents, then the Board of Directors of the Company shall
      use commercially reasonable efforts to amend the Company's certificate or
      articles of incorporation to increase the number of authorized but unissued
      shares of Common Stock to at least the Actual Minimum at such time (minus the
      number of shares of Common Stock previously issued pursuant to the Transaction
      Documents), as soon as possible and in any event not later than the 75th day
      after such date; 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.

     

    (c)   The
      Company shall: (i) in the time and manner required by the 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
      Actual 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 the Trading
      Market as soon as possible thereafter, (iii) provide to each Purchaser evidence
      of such listing, and (iv) use reasonable efforts to maintain the listing of
      such
      Common Stock on such Trading Market or another Trading Market. In addition,
      the
      Company shall hold a special meeting of shareholders (which may also be at
      the
      annual meeting of shareholders) at the earliest practical date, for the purpose
      of obtaining Shareholder Approval, with the recommendation of the Company’s
      Board of Directors that such proposal be approved, and the Company shall solicit
      proxies from its shareholders in connection therewith in the same manner as
      all
      other management proposals in such proxy statement and all management-appointed
      proxyholders shall vote their proxies in favor of such proposal.

     

    


     

    


     

    


     

    


     

    


    
      
        
           

        

        
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    4.11  Conversion
      and Exercise Procedures.
      The
      forms of Conversion Notice included in the Certificate of Designation set forth
      the totality of the procedures required in order to convert the Preferred Stock.
      No additional legal opinion or other information or instructions shall be
      necessary to enable the Purchaser to convert their Preferred Stock. The Company
      shall honor the 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. The Company acknowledges that the issuance of the
      Securities may result in dilution of the outstanding shares of Common Stock,
      which dilution may be substantial under certain market conditions. The Company
      further acknowledges that its obligations under the Transaction Documents,
      including 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 Purchaser and
      regardless of the dilutive effect that such issuance may have on the ownership
      of the other stockholders of the Company.

     

    4.12  ________________.
      RESERVED 

     

    4.13  Participation
      in Future Financing.
      From
      the date hereof until 12 months after such date, upon any financing by the
      Company of its Common Stock or Common Stock Equivalents (a “Subsequent
      Financing”),
      the
      Purchaser shall have the right to participate in up to 100% of such Subsequent
      Financing, with the express exception of the proposed acquisition of SVI Hotel
      Corporation and all financing transactions directly related thereto. At least
      5
      Trading Days prior to the closing of the Subsequent Financing, the Company
      shall
      deliver to the Purchaser a written notice of its intention to effect a
      Subsequent Financing (“Pre-Notice”),
      which
      Pre-Notice shall ask such Purchaser if it wants to review the details of such
      financing (such additional notice, a “Subsequent
      Financing Notice”).
      Upon
      the request of the Purchaser, and only upon a request by such Purchaser, for
      a
      Subsequent Financing Notice, the Company shall promptly, but no later than
      1
      Trading Day after such request, deliver a Subsequent Financing Notice to such
      Purchaser. The Subsequent Financing Notice shall describe in reasonable detail
      the proposed terms of such Subsequent Financing, the amount of proceeds intended
      to be raised thereunder, the Person with whom such Subsequent Financing is
      proposed to be effected, and attached to which shall be a term sheet or similar
      document relating thereto. If by 6:30 p.m. (New York City time) on the
      5th
      Trading
      Day after the Purchaser has received the Pre-Notice, notifications of the
      Purchaser of their willingness to participate in the Subsequent Financing (or
      to
      cause their designees to provide) is, in the aggregate, less than the total
      amount of the Subsequent Financing, then the Company may effect the remaining
      portion of such Subsequent Financing on the terms and to the Persons set forth
      in the Subsequent Financing Notice. If the Company receives no notice from
      a
      Purchaser as of such 5th
      Trading
      Day, such Purchaser shall be deemed to have notified the Company that it does
      not elect to participate. The Company must provide the Purchaser with a second
      Subsequent Financing Notice, and the Purchaser will again have the right of
      participation set forth above in this Section 4.13, if the Subsequent Financing
      subject to the initial Subsequent Financing Notice is not consummated for any
      reason on the terms set forth in such Subsequent Financing Notice within 60
      Trading Days after the date of the initial Subsequent Financing Notice. In
      the
      event the Company receives responses to Subsequent Financing Notices from the
      Purchaser seeking to purchase more than the aggregate amount of the Subsequent
      Financing, such Purchaser shall have the right to purchase its Pro Rata Portion
      (as defined below) of the Subsequent Financing. “Pro
      Rata Portion”
is
      the
      ratio of (x) the Subscription Amount of a participating Purchaser and (y) the
      sum of the aggregate Subscription Amount of all participating Purchaser.
      Notwithstanding the foregoing, this Section 4.13 shall not apply in respect
      of
      an Exempt Issuance.

     

    


    
      
        
           

        

        
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    4.14  Future
      Financings.
      From
      the date hereof until 90 days after the Effective Date, other than as
      contemplated by this Agreement, neither the Company nor any Subsidiary (with
      respect to Common Stock Equivalents) shall issue or sell any Common Stock or
      Common Stock Equivalents entitling any Person to acquire shares of Common Stock,
      with the express exception of the proposed acquisition of SVI Hotel Corporation
      and all financing transactions directly related thereto. Notwithstanding
      anything herein to the contrary, the 90 day period set forth in this Section
      4.14 shall be extended for the number of Trading Days during such period in
      which (i) trading in the Common Stock is suspended by any Trading Market, or
      (ii) following the Effective Date, the Registration Statement is not effective
      or the prospectus included in the Registration Statement may not be used by
      the
      Purchaser for the resale of the Underlying Shares. Notwithstanding anything
      to
      the contrary herein, this Section 4.14 shall not apply in respect of an Exempt
      Issuance. In addition to the limitations set forth herein, from the date hereof
      until such time as the Purchaser does not hold any of the Preferred Stock,
      the
      Company shall be prohibited from effecting or enter into an agreement to effect
      any Subsequent Financing involving a “Variable
      Rate Transaction”
or
      an
“MFN
      Transaction”
(each
      as defined below). The term “Variable
      Rate Transaction”
shall
      mean a transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock.
      The
      term “MFN
      Transaction”
shall
      mean a transaction in which the Company issues or sells any securities in a
      capital raising transaction or series of related transactions which grants
      to an
      investor the right to receive additional shares based upon future transactions
      of the Company on terms more favorable than those granted to such investor
      in
      such offering. In addition, unless Shareholder Approval has been obtained and
      deemed effective in accordance with Section 4.10(c), the Company shall not
      make
      any issuance whatsoever of Common Stock or Common Stock Equivalents which would
      cause any adjustment of the Set Price to the extent the holders of Preferred
      Stock would not be permitted, pursuant to Section 5(a) (iii) of the Certificate
      of Designations, to convert their respective outstanding Preferred Stock in
      full.

    


    4.15  Short
      Sales.
      The
      Purchaser covenants that neither it nor any affiliates acting on its behalf
      or
      pursuant to any understanding with it will execute
      any Short Sales during the period from the Discussion Time until prior to the
      time that the transactions contemplated by this Agreement are first publicly
      announced as described in Section 4.4. Notwithstanding the foregoing, the
      Purchaser does not make 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 4.4.

     

    


    
      
        
           

        

        
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    ARTICLE
      V

    MISCELLANEOUS

     

    5.1 
        Fees
      and Expenses.
      Except
      as otherwise set forth in this Agreement, each party shall pay the fees and
      expenses of its advisers, counsel, accountants and other experts, if any, and
      all other expenses incurred by such party incident to the negotiation,
      preparation, execution, delivery and performance of this Agreement. The Company
      shall pay all stamp and other taxes and duties levied in connection with the
      sale of the Securities.

     

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

     

    5.3 
        Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified on the signature
      page prior to 5:30 p.m. (New York City time) on a Trading Day and an electronic
      confirmation of delivery is received by the sender, (b) the next Trading Day
      after the date of transmission, if such notice or communication is delivered
      via
      facsimile at the facsimile number specified in this Section 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) three Trading Days 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 addresses for such notices and
      communications are those set forth on the signature pages hereof, or such other
      address as may be designated in writing hereafter, in the same manner, by such
      Person.

     

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

     

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

     

    


    
      
        
           

        

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

     

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

     

    5.8 
        Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of 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 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 manner
      permitted by law. The parties hereby waive all rights to a trial by jury. If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its attorneys’ fees and
      other costs and expenses incurred with the investigation, preparation and
      prosecution of such action or proceeding.

     

    5.9    Survival.
      The
      representations and warranties contained herein shall survive the Closing and
      the delivery, exercise and/or conversion of the Securities, as
      applicable.

     

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

     

    


    
      
        
           

        

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

     

    5.12  Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever the Purchaser
      exercises a right, election, demand or option under a Transaction Document
      and
      the Company does not timely perform its related obligations within the periods
      therein provided, then such Purchaser may rescind or withdraw, in its sole
      discretion from time to time upon written notice to the Company, any relevant
      notice, demand or election in whole or in part without prejudice to its future
      actions and rights; provided,
      however,
      in the
      case of a rescission of a conversion of the Preferred Stock, the Purchaser
      shall
      be required to return any shares of Common Stock subject to such conversion
      notice.

     

    5.13  Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement
      Securities.

     

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

     

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

     

    


    
      
        
           

        

        
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    5.16  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.

     

    5.17  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 Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    
      	
              OXFORD
                MEDIA, INC.

            	
              Address
                for Notice:

            
	 	 	 
	 	 	 
	
              By:

            	
              _________________________________________

            	
              Oxford
                Media, Inc.

            
	 	
              Name:

            	
              One
                Technology Drive, Building H

            
	 	
              Title:

            	
              Irvine,
                CA 92618 

               

              Tel  
                949.341.0050

            


    

    


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

    


    Keith
      A.
      Rosenbaum

    SPECTRUM
      LAW GROUP, LLP

    1900
      Main
      Street

    Suite
      125

    Irvine,
      California  92614

    Tel.
      949-851-4300 (ext.212)

    Fax:
      949-851-5940

    


    


    


    


    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

     

    


    
      
        
           

        

        
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    [PURCHASER
      SIGNATURE PAGES TO OXMI SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name
      of
      Purchaser: __________________________

    Signature
      of Authorized Signatory of Purchaser:
      __________________________

    Name
      of
      Authorized Signatory: _________________________

    Title
      of
      Authorized Signatory: __________________________

    Email
      Address of Authorized Signatory:________________________________

    


    Address
      for Notice of Investing Entity:

    


    


    


    


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

    


    


    


    


    


    Subscription
      Amount:

    Shares
      of
      Preferred Stock:

    EIN
      Number: [PROVIDE
      THIS UNDER SEPARATE COVER]

    


    [SIGNATURE
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