astrata_8k-ex0401.htm


    EXHIBIT
      4.1

    
      


       

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE

       

      AGREEMENT

      


       

      


       

      Dated
        as of December 19, 2007

       

      


       

      among

       

      


       

      ASTRATA
        GROUP INCORPORATED

       

      


       

      and

       

      


       

      THE
        PURCHASERS LISTED ON EXHIBIT A

      


      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SERIES
        B CONVERTIBLE PREFERRED STOCK
        PURCHASE AGREEMENT

       

      This
        SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”) is dated
        as of December 19, 2007 by and among Astrata Group Incorporated, a Nevada
        corporation (the “Company”), and
        each
        of the Purchasers of shares of Series B Convertible Preferred Stock of the
        Company whose names are set forth on Exhibit A hereto
        (individually, a “Purchaser”
and
        collectively, the “Purchasers”).

       

      The
        parties hereto agree as follows:

       

      ARTICLE
        I

      Purchase
        and Sale of Preferred Stock

       

      Section
        1.1    Purchase
        and Sale of
        Stock.  Upon the following terms and conditions, the Company
        shall issue and sell to the Purchasers and each of the Purchasers shall purchase
        from the Company, the number of shares of the Company’s Series B Convertible
        Preferred Stock, par value $0.0001 per share and at a purchase price of $1.40
        per share (the “Preferred Shares”),
        convertible into shares of the Company’s common stock, par value $0.0001 per
        share (the “Common
        Stock”), in the amounts set forth opposite such Purchaser’s name on Exhibit
        A
        hereto.  The designation, rights, preferences and other terms and
        provisions of the Series B Convertible Preferred Stock are set forth in the
        Certificate of Designation of the Relative Rights and Preferences of the
        Series
        B Convertible Preferred Stock attached hereto as Exhibit B (the “Certificate
        of
        Designation”).  The Company and the Purchasers are executing
        and delivering this Agreement in accordance with and in reliance upon the
        exemption from securities registration afforded by Rule 506 of Regulation
        D
        (“Regulation
        D”) as promulgated by the United States Securities and Exchange
        Commission (the “Commission”) under
        the Securities Act of 1933, as amended (the “Securities Act”) or
        Section 4(2) of the Securities Act.

       

      Section
        1.2    Warrants.  Upon
        the following terms and conditions and for no additional consideration, each
        of
        the Purchasers shall be issued (i) Series A Warrants, in substantially the
        form
        attached hereto as Exhibit C-1 (the
“Series
        A
        Warrants”), to purchase the number of shares of Common Stock equal to
        fifty percent (50%) of the number of Conversion Shares (as defined in Section
        1.3 hereof) issuable upon conversion of the Preferred Shares purchased by
        each
        Purchaser pursuant to the terms of this Agreement, as set forth opposite
        such
        Purchaser’s name on Exhibit A hereto,
        (ii) Series B Warrants, in substantially the form attached hereto as Exhibit C-2 (the
“Series
        B
        Warrants”), to purchase the number of shares of Common Stock equal to
        fifty percent (50%) of the number of Conversion Shares issuable upon conversion
        of the Preferred Shares purchased by each Purchaser pursuant to the terms
        of
        this Agreement, as set forth opposite such Purchaser’s name on Exhibit A hereto,
        (iii) Series J Warrants, in substantially the form attached hereto as Exhibit C-3 (the
“Series
        J
        Warrants”), to purchase the number of shares of Series B-2 Convertible
        Preferred Stock equal to one hundred percent (100%) of the number of Preferred
        Shares purchased by each Purchaser, as set forth opposite such Purchaser’s name
        on Exhibit A
        hereto, (iv) Series C Warrants, in substantially the form attached hereto
        as
Exhibit C-4
        (the “Series C
        Warrants”), to purchase the number of shares of Common Stock equal to
        fifty percent (50%) of the number of Conversion Shares issuable upon conversion
        of the Preferred Shares purchased by each Purchaser pursuant to the terms
        of
        this Agreement, as set forth opposite such Purchaser’s name on Exhibit A hereto,
        and
        (v) Series D Warrants, in substantially the form attached hereto as Exhibit C-5 (the
“Series
        D
        Warrants” and, together with the Series A Warrants, the Series B
        Warrants, the Series J Warrants and the Series C Warrants, the “Warrants”), to
        purchase the number of shares of Common Stock equal to fifty percent (50%)
        of
        the number of Conversion Shares issuable upon conversion of the Preferred
        Shares
        purchased by each Purchaser pursuant to the terms of this Agreement, as set
        forth opposite such Purchaser’s name on Exhibit A
        hereto.  The Warrants shall expire five (5) years following the
        Closing Date, except for the Series C Warrants and the Series D Warrants,
        which
        shall expire six (6) years following the Closing Date, and the Series J
        Warrants, which shall expire one (1) year following the Closing
        Date.  Each of the Warrants shall have an exercise price per share
        equal to the Warrant Price (as defined in the applicable Warrant).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Section
        1.3    Conversion
        Shares.  The Company has authorized and has reserved and
        covenants to continue to reserve, free of preemptive rights and other similar
        contractual rights of stockholders, a number of shares of Common Stock equal
        to
        one hundred fifty percent (150%) of the number of shares of Common Stock
        as
        shall from time to time be sufficient to effect the conversion of all of
        the
        Preferred Shares and exercise of the Warrants then outstanding.  Any
        shares of Common Stock issuable upon conversion of the Preferred Shares and
        exercise of the Warrants (and such shares when issued) are herein referred
        to as
        the “Conversion
        Shares” and the "Warrant
        Shares",
        respectively.  The Preferred Shares, the Conversion Shares and the
        Warrant Shares are sometimes collectively referred to as the “Shares”.

       

      Section
        1.4    Purchase
        Price and
        Closing.  Subject to the terms and conditions hereof, the
        Company agrees to issue and sell to the Purchasers and, in consideration
        of and
        in express reliance upon the representations, warranties, covenants, terms
        and
        conditions of this Agreement, the Purchasers, severally but not jointly,
        agree
        to purchase the Preferred Shares and the Warrants for an aggregate purchase
        price of up to $3,000,000 (the “Purchase
        Price”).  The closing of the purchase and sale of the Preferred
        Shares and the Warrants to be acquired by the Purchasers from the Company
        under
        this Agreement shall take place at the offices of Kramer Levin Naftalis &
Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036 (the “Closing”) at 10:00
        a.m., New York time on such date as the Purchasers and the Company may agree
        upon; provided,
        that all of the conditions set forth in Article IV hereof and applicable
        to the
        Closing shall have been fulfilled or waived in accordance herewith (the "Closing
        Date").  Subject to the terms and conditions of this Agreement,
        at the Closing the Company shall deliver or cause to be delivered to each
        Purchaser (x) a certificate for the number of Preferred Shares set forth
        opposite the name of such Purchaser on Exhibit A hereto,
        (y)
        its Warrants to purchase such number of shares of Common Stock as is set
        forth
        opposite the name of such Purchaser on Exhibit A attached
        hereto and (z) any other documents required to be delivered pursuant to Article
        IV hereof.  At the Closing, each Purchaser shall deliver its Purchase
        Price by wire transfer to the escrow account pursuant to the Escrow Agreement
        (as hereafter defined).

       

      ARTICLE
        II

      Representations
        and Warranties

       

      Section
        2.1    Representations
        and
        Warranties of the Company.  The Company hereby represents and
        warrants to the Purchasers, as of the date hereof and the Closing Date (except
        as set forth on the Schedule of Exceptions attached hereto with each numbered
        Schedule corresponding to the section number herein), as follows:

       

      
        
          
          

        

        
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      (a)           
        Organization,
        Good
        Standing and Power.  The Company is a corporation duly
        incorporated, validly existing and in good standing under the laws of the
        State
        of Nevada and has the requisite corporate power to own, lease and operate
        its
        properties and assets and to conduct its business as it is now being
        conducted.  The Company does not have any subsidiaries except as set
        forth in the Company’s Form 10-KSB for the year ended February 28, 2007,
        including the accompanying financial statements (the “Form 10-KSB”), or in
        the Company’s Form 10-QSB for the fiscal quarters ended August 31, 2007, May 31,
        2007 and November 30, 2006 (collectively, the “Form 10-QSB”), or on
        Schedule 2.1(g)
        hereto.  The Company and each such subsidiary is duly qualified as a
        foreign corporation to do business and is in good standing in every jurisdiction
        in which the nature of the business conducted or property owned by it makes
        such
        qualification necessary except for any jurisdiction(s) (alone or in the
        aggregate) in which the failure to be so qualified will not have a Material
        Adverse Effect (as defined in Section 2.1(c) hereof) on the Company’s financial
        condition.

       

      (b)           
        Authorization;
        Enforcement.  The Company has the requisite corporate power and
        authority to enter into and perform this Agreement, the Registration Rights
        Agreement in the form attached hereto as Exhibit D (the “Registration
        Rights
        Agreement”), the Escrow Agreement by and among the Company, the
        Purchasers and the escrow agent, dated as of the date hereof, substantially
        in
        the form of Exhibit
        E attached hereto (the “Escrow
        Agreement”),
        the Irrevocable Transfer Agent Instructions (as defined in Section 3.13),
        the
        Certificate of Designation, and the Warrants (collectively, the “Transaction
        Documents”) and to issue and sell the Shares and the Warrants in
        accordance with the terms hereof.  The execution, delivery and
        performance of the Transaction Documents by the Company and the consummation
        by
        it of the transactions contemplated hereby and thereby have been duly and
        validly authorized by all necessary corporate action, and no further consent
        or
        authorization of the Company or its Board of Directors or stockholders is
        required.  This Agreement has been duly executed and delivered by the
        Company.  The other Transaction Documents will have been duly executed
        and delivered by the Company at the Closing.  Each of the Transaction
        Documents constitutes, or shall constitute when executed and delivered, a
        valid
        and binding obligation of the Company enforceable against the Company in
        accordance with its terms, except as such enforceability may be limited by
        applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
        conservatorship, receivership or similar laws relating to, or affecting
        generally the enforcement of, creditor’s rights and remedies or by other
        equitable principles of general application.

       

      (c)           
        Capitalization.  The
        authorized capital stock of the Company and the shares thereof currently
        issued
        and outstanding as of the date hereof are set forth on Schedule 2.1(c)
        hereto.  All of the outstanding shares of the Common Stock and the
        Preferred Shares have been duly and validly authorized.  Except as set
        forth on Schedule
        2.1(c) hereto, no shares of Common Stock are entitled to preemptive
        rights or registration rights and there are no outstanding options, warrants,
        scrip, rights to subscribe to, call or commitments of any character whatsoever
        relating to, or securities or rights convertible into, any shares of capital
        stock of the Company.  There are no contracts, commitments,
        understandings, or arrangements by which the Company is or may become bound
        to
        issue additional shares of the capital stock of the Company or options,
        securities or rights convertible into shares of capital stock of the
        Company.  Except as set forth on Schedule 2.1(c)
        hereto, the Company is not a party to any agreement granting registration
        or
        anti-dilution rights to any person with respect to any of its equity or debt
        securities.  The Company is not a party to, and it has no knowledge
        of, any agreement restricting the voting or transfer of any shares of the
        capital stock of the Company.  The offer and sale of all capital
        stock, convertible securities, rights, warrants, or options of the Company
        issued prior to the Closing complied with all applicable federal and state
        securities laws, and no stockholder has a right of rescission or claim for
        damages with respect thereto which would have a Material Adverse Effect (as
        defined below).  The Company has furnished or made available to the
        Purchasers true and correct copies of the Company’s Articles of Incorporation as
        in effect on the date hereof (the “Articles”), and
        the
        Company’s Bylaws as in effect on the date hereof (the “Bylaws”).  For
        the purposes of this Agreement, “Material Adverse
        Effect” means any material adverse effect on the business, operations,
        properties, prospects, or financial condition of the Company and its
        subsidiaries and/or any condition, circumstance, or situation that would
        prohibit or otherwise materially interfere with the ability of the Company
        to
        perform any of its obligations under this Agreement in any material
        respect.

       

      
        
          
          

        

        
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      (d)           
        Issuance of
        Shares.  The Preferred Shares and the Warrants to be issued at
        the Closing have been duly authorized by all necessary corporate action and
        the
        Preferred Shares, when paid for or issued in accordance with the terms hereof,
        shall be validly issued and outstanding, fully paid and nonassessable and
        entitled to the rights and preferences set forth in the Certificate of
        Designation.  When the Conversion Shares and the Warrant Shares are
        issued in accordance with the terms of the Certificate of Designation and
        the
        applicable Warrants, respectively, such shares will be duly authorized by
        all
        necessary corporate action and validly issued and outstanding, fully paid
        and
        nonassessable, and the holders shall be entitled to all rights accorded to
        a
        holder of Common Stock.

       

      (e)           
        No
        Conflicts.  The execution, delivery and performance of the
        Transaction Documents by the Company, the performance by the Company of its
        obligations under the Certificate of Designation and the consummation by
        the
        Company of the transactions contemplated herein and therein do not and will
        not
        (i) violate any provision of the Company’s Articles or Bylaws, (ii) conflict
        with, or constitute a default (or an event which with notice or lapse of
        time or
        both would become a default) under, or give to others any rights of termination,
        amendment, acceleration or cancellation of, any agreement, mortgage, deed
        of
        trust, indenture, note, bond, license, lease agreement, instrument or obligation
        to which the Company is a party or by which it or its properties or assets
        are
        bound, (iii) create or impose a lien, mortgage, security interest, charge
        or
        encumbrance of any nature on any property of the Company under any agreement
        or
        any commitment to which the Company is a party or by which the Company is
        bound
        or by which any of its respective properties or assets are bound, or (iv)
        result
        in a violation of any federal, state, local or foreign statute, rule,
        regulation, order, judgment or decree (including federal and state securities
        laws and regulations) applicable to the Company or any of its subsidiaries
        or by
        which any property or asset of the Company or any of its subsidiaries are
        bound
        or affected, except, in all cases other than violations pursuant to clauses
        (i)
        and (iv) above, for such conflicts, defaults, terminations, amendments,
        accelerations, cancellations and violations as would not, individually or
        in the
        aggregate, have a Material Adverse Effect.  The business of the
        Company and its subsidiaries is not being conducted in violation of any laws,
        ordinances or regulations of any governmental entity, except for possible
        violations which singularly or in the aggregate do not and will not have
        a
        Material Adverse Effect.  The Company is not required under federal,
        state or local law, rule or regulation to obtain any consent, authorization
        or
        order of, or make any filing or registration with, any court or governmental
        agency in order for it to execute, deliver or perform any of its obligations
        under the Transaction Documents, or issue and sell the Preferred Shares,
        the
        Warrants, the Conversion Shares and the Warrant Shares in accordance with
        the
        terms hereof or thereof (other than any filings which may be required to
        be made
        by the Company with the Commission or state securities administrators subsequent
        to the Closing, any registration statement which may be filed pursuant hereto,
        and the Certificate of Designation); provided that,
        for
        purposes of the representation made in this sentence, the Company is assuming
        and relying upon the accuracy of the relevant representations and agreements
        of
        the Purchasers herein.

       

      
        
          
          

        

        
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      (f)           
        Commission Documents,
        Financial Statements.  The Common Stock is registered pursuant
        to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended
        the
“Exchange
        Act”), and except as disclosed on Schedule
        2.1(f), the
        Company has timely filed all reports, schedules, forms, statements and other
        documents required to be filed by it with the Commission pursuant to the
        reporting requirements of the Exchange Act, including material filed pursuant
        to
        Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including
        filings incorporated by reference therein being referred to herein as the
“Commission
        Documents”).  The Company has delivered or made available to
        each of the Purchasers true and complete copies of the Commission
        Documents.  The Company has not provided to the Purchasers any
        material non-public information or other information which, according to
        applicable law, rule or regulation, was required to have been disclosed publicly
        by the Company but which has not been so disclosed, other than with respect
        to
        the transactions contemplated by this Agreement.  At the times of
        their respective filings, the Form 10-KSB and the Form 10-QSB complied in
        all
        material respects with the requirements of the Exchange Act and the rules
        and
        regulations of the Commission promulgated thereunder and other federal, state
        and local laws, rules and regulations applicable to such documents, and,
        as of
        their respective dates, none of the Form 10-KSB and the Form 10-QSB 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
        Commission Documents comply as to form in all material respects with applicable
        accounting requirements and the published rules and regulations of the
        Commission or other applicable rules and regulations with respect
        thereto.  Such financial statements have been prepared in accordance
        with United States generally accepted accounting principles (“GAAP”) applied
        on a
        consistent basis during the periods involved (except (i) as may be otherwise
        indicated in such financial statements or the notes thereto or (ii) in the
        case
        of unaudited interim statements, to the extent they may not include footnotes
        or
        may be condensed or summary statements), and fairly present in all material
        respects the financial position of the Company and its subsidiaries as of
        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 year-end audit
        adjustments).

       

      (g)           
        Subsidiaries.  Schedule
        2.1(g)
        hereto sets forth each subsidiary of the Company, showing the jurisdiction
        of
        its incorporation or organization and showing the percentage of each person’s
        ownership.  For the purposes of this Agreement, “subsidiary”
shall
        mean any corporation or other entity of which at least a majority of the
        securities or other ownership interest having ordinary voting power (absolutely
        or contingently) for the election of directors or other persons performing
        similar functions are at the time owned directly or indirectly by the Company
        and/or any of its other subsidiaries.  All of the outstanding shares
        of capital stock of each subsidiary have been duly authorized and validly
        issued, and are fully paid and nonassessable.  There are no
        outstanding preemptive, conversion or other rights, options, warrants or
        agreements granted or issued by or binding upon any subsidiary for the purchase
        or acquisition of any shares of capital stock of any subsidiary or any other
        securities convertible into, exchangeable for or evidencing the rights to
        subscribe for any shares of such capital stock.  Neither the Company
        nor any subsidiary is subject to any obligation (contingent or otherwise)
        to
        repurchase or otherwise acquire or retire any shares of the capital stock
        of any
        subsidiary or any convertible securities, rights, warrants or options of
        the
        type described in the preceding sentence.  Neither the Company nor any
        subsidiary is party to, nor has any knowledge of, any agreement restricting
        the
        voting or transfer of any shares of the capital stock of any
        subsidiary.

       

      
        
          
          

        

        
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      (h)           
        No Material Adverse
        Change.  Since February 28, 2007, the Company has not
        experienced or suffered any Material Adverse Effect.

       

      (i)           
        No Undisclosed
        Liabilities.  Neither the Company nor any of its subsidiaries
        has any liabilities, obligations, claims or losses (whether liquidated or
        unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise)
        other than those incurred in the ordinary course of the Company’s or its
        subsidiaries respective businesses since February 28, 2007 and which,
        individually or in the aggregate, do not or would not have a Material Adverse
        Effect on the Company or its subsidiaries.

       

      (j)           
        No Undisclosed
        Events
        or Circumstances.  No event or circumstance has occurred or
        exists with respect to the Company or its subsidiaries or their respective
        businesses, properties, prospects, operations or financial condition, which,
        under applicable law, rule or regulation, requires public disclosure or
        announcement by the Company but which has not been so publicly announced
        or
        disclosed.

       

      (k)           
        Indebtedness.  The
        Form 10-KSB, Form 10-QSB or Schedule 2.1(k)
        hereto sets forth as of a recent date 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
        $100,000 (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 $25,000 due under leases required
        to be
        capitalized in accordance with GAAP.  Except as set forth on Schedule 2.1(k),
        neither the Company nor any subsidiary is in default with respect to any
        Indebtedness.

       

      (l)           
        Title to
        Assets.  Each of the Company and the subsidiaries has good and
        marketable title to all of its real and personal property reflected in the
        Form
        10-KSB, free and clear of any mortgages, pledges, charges, liens, security
        interests or other encumbrances, except for those disclosed in the Form 10-KSB
        or such that, individually or in the aggregate, do not cause a Material Adverse
        Effect.  All leases of the Company and each of its subsidiaries are
        valid and subsisting and in full force and effect.

       

      
        
          
          

        

        
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      (m)           
        Actions
        Pending.  Except as disclosed on Schedule
        2.1(m),
        there is no action, suit, claim, investigation, arbitration, alternate dispute
        resolution proceeding or any other proceeding pending or, to the knowledge
        of
        the Company, threatened against the Company or any subsidiary which questions
        the validity of this Agreement or any of the other Transaction Documents
        or the
        transactions contemplated hereby or thereby or any action taken or to be
        taken
        pursuant hereto or thereto.  There is no action, suit, claim,
        investigation, arbitration, alternate dispute resolution proceeding or any
        other
        proceeding pending or, to the knowledge of the Company, threatened, against
        or
        involving the Company, any subsidiary or any of their respective properties
        or
        assets.  There are no outstanding orders, judgments, injunctions,
        awards or decrees of any court, arbitrator or governmental or regulatory
        body
        against the Company or any subsidiary or any officers or directors of the
        Company or subsidiary in their capacities as such.

       

      (n)           
        Compliance with
        Law.  The business of the Company and the subsidiaries has been
        and is presently being conducted in accordance with all applicable federal,
        state and local governmental laws, rules, regulations and ordinances, except
        for
        such noncompliance that, individually or in the aggregate, would not cause
        a
        Material Adverse Effect.  The Company and each of its subsidiaries
        have all franchises, permits, licenses, consents and other governmental or
        regulatory authorizations and approvals necessary for the conduct of its
        business as now being conducted by it unless the failure to possess such
        franchises, permits, licenses, consents and other governmental or regulatory
        authorizations and approvals, individually or in the aggregate, could not
        reasonably be expected to have a Material Adverse Effect.

       

      (o)           
        Taxes.  Except
        as disclosed on Schedule 2.1(o), the
        Company and each of the subsidiaries has accurately prepared and filed all
        federal, state and other tax returns required by law to be filed by it, has
        paid
        or made provisions for the payment of all taxes shown to be due and all
        additional assessments, and adequate provisions have been and are reflected
        in
        the financial statements of the Company and the subsidiaries for all current
        taxes and other charges to which the Company or any subsidiary is subject
        and
        which are not currently due and payable.  None of the federal income
        tax returns of the Company or any subsidiary have been audited by the Internal
        Revenue Service (the “Service”).  The
        Company has no knowledge of any additional assessments, adjustments or
        contingent tax liability (whether federal or state) of any nature whatsoever,
        whether pending or threatened against the Company or any subsidiary for any
        period, nor of any basis for any such assessment, adjustment or
        contingency.

       

      (p)           
        Certain
        Fees.  Except as set forth on Schedule
        2.1(p)
        hereto, no brokers, finders or financial advisory fees or commissions will
        be
        payable by the Company or any subsidiary or any Purchaser with respect to
        the
        transactions contemplated by this Agreement.

       

      (q)           
        Disclosure.  Neither
        this Agreement or the Schedules hereto nor any other documents, certificates
        or
        instruments furnished to the Purchasers by or on behalf of the Company or
        any
        subsidiary in connection with the transactions contemplated by this Agreement
        contain any untrue statement of a material fact or omit to state a material
        fact
        necessary in order to make the statements made herein or therein, in the
        light
        of the circumstances under which they were made herein or therein, not
        misleading.

       

      
        
          
          

        

        
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      (r)           
        Operation of
        Business.  The Company and each of the subsidiaries owns or
        possesses all patents, trademarks, domain names (whether or not registered)
        and
        any patentable improvements or copyrightable derivative works thereof, websites
        and intellectual property rights relating thereto, service marks, trade names,
        copyrights, licenses and authorizations as set forth in the Form 10-KSB,
        and all
        rights with respect to the foregoing, which are necessary for the conduct
        of its
        business as now conducted without any conflict with the rights of
        others.

       

      (s)           
        Environmental
        Compliance.  The Company and each of its subsidiaries have
        obtained all material approvals, authorization, certificates, consents,
        licenses, orders and permits or other similar authorizations of all governmental
        authorities, or from any other person, that are required under
        any  Environmental Laws.  The Form 10-KSB or Form 10-QSB
        describes all material permits, licenses and other authorizations issued
        under
        any Environmental Laws to the Company or its subsidiaries.  “Environmental
        Laws”
shall mean all applicable laws relating to the protection of the environment
        including, without limitation, all requirements pertaining to reporting,
        licensing, permitting, controlling, investigating or remediating emissions,
        discharges, releases or threatened releases of hazardous substances, chemical
        substances, pollutants, contaminants or toxic substances, materials or wastes,
        whether solid, liquid or gaseous in nature, into the air, surface water,
        groundwater or land, or relating to the manufacture, processing, distribution,
        use, treatment, storage, disposal, transport or handling of hazardous
        substances, chemical substances, pollutants, contaminants or toxic substances,
        material or wastes, whether solid, liquid or gaseous in nature.  The
        Company has all necessary governmental approvals required under all
        Environmental Laws and used in its business or in the business of any of
        its
        subsidiaries.  The Company and each of its subsidiaries are also in
        compliance with all other limitations, restrictions, conditions, standards,
        requirements, schedules and timetables required or imposed under all
        Environmental Laws.  Except for such instances as would not
        individually or in the aggregate have a Material Adverse Effect, there are
        no
        past or present events, conditions, circumstances, incidents, actions or
        omissions relating to or in any way affecting the Company or its subsidiaries
        that violate or may violate any Environmental Law after the Closing Date
        or that
        may give rise to any environmental liability, or otherwise form the basis
        of any
        claim, action, demand, suit, proceeding, hearing, study or investigation
        (i)
        under any Environmental Law, or (ii) based on or related to the manufacture,
        processing, distribution, use, treatment, storage (including without limitation
        underground storage tanks), disposal, transport or handling, or the emission,
        discharge, release or threatened release of any hazardous
        substance.

       

      (t)           
        Books and Records;
        Internal Accounting Controls.  The books and records of the
        Company and its subsidiaries accurately reflect in all material respects
        the
        information relating to the business of the Company and the subsidiaries,
        the
        location and collection of their assets, and the nature of all transactions
        giving rise to the obligations or accounts receivable of the Company or any
        subsidiary.  The Company and each of its subsidiaries maintain a
        system of internal accounting controls sufficient, in the judgment of the
        Company, 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
        actions is taken with respect to any differences.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      (u)           
        Material
        Agreements.  Neither the Company nor any subsidiary is a party
        to any written or oral contract, instrument, agreement, commitment, obligation,
        plan or arrangement, a copy of which would be required to be filed with the
        Commission as an exhibit to a registration statement on Form S-3 or applicable
        form (collectively, “Material Agreements”)
        if the Company or any subsidiary were registering securities under the
        Securities Act, except as may already be filed as an exhibit to or otherwise
        included in the Commission Documents.  The Company and each of its
        subsidiaries has in all material respects performed all the obligations required
        to be performed by them to date under the foregoing agreements, have received
        no
        notice of default and are not in default under any Material Agreement now
        in
        effect, the result of which could cause a Material Adverse Effect.  No
        written or oral contract, instrument, agreement, commitment, obligation,
        plan or
        arrangement of the Company or of any subsidiary limits or shall limit the
        payment of dividends on the Preferred Shares, other preferred stock of the
        Company, if any, or the Common Stock.

       

      (v)           
        Transactions with
        Affiliates.  Except as set forth in the Commission Documents,
        there are no loans, leases, agreements, contracts, royalty agreements,
        management contracts or arrangements or other continuing transactions between
        (a) the Company or any subsidiary on the one hand, and (b) on the other hand,
        any officer, employee, consultant or director of the Company, or any of its
        subsidiaries, or any person owning any capital stock of the Company or any
        subsidiary or any member of the immediate family of such officer, employee,
        consultant, director or stockholder or any corporation or other entity
        controlled by such officer, employee, consultant, director or stockholder,
        or a
        member of the immediate family of such officer, employee, consultant, director
        or stockholder.

       

      (w)           
        Securities Act
        of
        1933.  Based in material part upon the representations herein
        of the Purchasers, the Company has complied and will comply with all applicable
        federal and state securities laws in connection with the offer, issuance
        and
        sale of the Shares and the Warrants hereunder.  Neither the Company
        nor anyone acting on its behalf, directly or indirectly, has or will sell,
        offer
        to sell or solicit offers to buy any of the Shares, the Warrants or similar
        securities to, or solicit offers with respect thereto from, or enter into
        any
        preliminary conversations or negotiations relating thereto with, any person,
        or
        has taken or will take any action so as to bring the issuance and sale of
        any of
        the Shares and the Warrants under the registration provisions of the Securities
        Act and applicable state securities laws, and neither the Company nor any
        of its
        affiliates, nor any person acting on its or their behalf, has engaged in
        any
        form of general solicitation or general advertising (within the meaning of
        Regulation D under the Securities Act) in connection with the offer or sale
        of
        any of the Shares and the Warrants.

       

      (x)           
        Governmental
        Approvals.  Except for the filing of any notice prior or
        subsequent to the Closing Date that may be required under applicable state
        and/or federal securities laws (which, if required, shall be filed on a timely
        basis), including the filing of a Form D and a registration statement or
        statements pursuant to the Registration Rights Agreement, and the filing
        of the
        Certificate of Designation with the Secretary of State for the State of Nevada,
        no authorization, consent, approval, license, exemption of, filing or
        registration with any court or governmental department, commission, board,
        bureau, agency or instrumentality, domestic or foreign, is or will be necessary
        for, or in connection with, the execution or delivery of the Preferred Shares
        and the Warrants, or for the performance by the Company of its obligations
        under
        the Transaction Documents.

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      (y)           
        Employees.  Neither
        the Company nor any subsidiary has any collective bargaining arrangements
        or
        agreements covering any of its employees.  Neither the Company nor any
        subsidiary has any employment contract, agreement regarding proprietary
        information, non-competition agreement, non-solicitation agreement,
        confidentiality agreement, or any other similar contract or restrictive
        covenant, relating to the right of any officer, employee or consultant to
        be
        employed or engaged by the Company or such subsidiary.  No officer,
        consultant or key employee of the Company or any subsidiary whose termination,
        either individually or in the aggregate, could have a Material Adverse Effect,
        has terminated or, to the knowledge of the Company, has any present intention
        of
        terminating his or her employment or engagement with the Company or any
        subsidiary.

       

      (z)           
        Absence of Certain
        Developments.  Except as disclosed on Schedule
        2.1(z),
        since February 28, 2007, neither the Company nor any subsidiary
        has:

       

      (i)           
        issued any stock, bonds or other corporate securities or any rights, options
        or
        warrants with respect thereto;

       

      (ii)           borrowed
        any amount or incurred or become subject to any liabilities (absolute or
        contingent) except current liabilities incurred in the ordinary course of
        business which are comparable in nature and amount to the current liabilities
        incurred in the ordinary course of business during the comparable portion
        of its
        prior fiscal year, as adjusted to reflect the current nature and volume of
        the
        Company’s or such subsidiary’s business;

       

      (iii)          discharged
        or satisfied any lien or encumbrance or paid any obligation or liability
        (absolute or contingent), other than current liabilities paid in the ordinary
        course of business;

       

      (iv)          declared
        or made any payment or distribution of cash or other property to stockholders
        with respect to its stock, or purchased or redeemed, or made any agreements
        so
        to purchase or redeem, any shares of its capital stock;

       

      (v)           sold,
        assigned or transferred any other tangible assets, or canceled any debts
        or
        claims, except in the ordinary course of business;

       

      (vi)          sold,
        assigned or transferred any patent rights, trademarks, trade names, copyrights,
        trade secrets or other intangible assets or intellectual property rights,
        or
        disclosed any proprietary confidential information to any person except to
        customers in the ordinary course of business or to the Purchasers or their
        representatives;

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      (vii)         suffered
        any substantial losses or waived any rights of material value, whether or
        not in
        the ordinary course of business, or suffered the loss of any material amount
        of
        prospective business;

       

      (viii)        made
        any changes in employee compensation, except in the ordinary course of business
        and consistent with past practices;

       

      (ix)           made
        capital expenditures or commitments therefor that aggregate in excess of
        $100,000;

       

      (x)           
        entered into any other transaction other than in the ordinary course of
        business, or entered into any other material transaction, whether or not
        in the
        ordinary course of business;

       

      (xi)           made
        charitable contributions or pledges in excess of $25,000;

       

      (xii)          suffered
        any material damage, destruction or casualty loss, whether or not covered
        by
        insurance;

       

      (xiii)         experienced
        any material problems with labor or management in connection with the terms
        and
        conditions of their employment;

       

      (xiv)         effected
        any two or more events of the foregoing kind which in the aggregate would
        be
        material to the Company or its subsidiaries; or

       

      (xv)          entered
        into an agreement, written or otherwise, to take any of the foregoing
        actions.

       

      (aa)           
        Public Utility
        Holding
        Company Act and Investment Company Act Status.  The Company is
        not a “holding company” or a “public utility company” as such terms are defined
        in the Public Utility Holding Company Act of 1935, as amended.  The
        Company is not, and as a result of and immediately upon the Closing will
        not be,
        an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
        amended.

       

      (bb)           
        ERISA.  No
        liability to the Pension Benefit Guaranty Corporation has been incurred with
        respect to any Plan (as defined below) by the Company or any of its subsidiaries
        which is or would be materially adverse to the Company and its
        subsidiaries.  The execution and delivery of this Agreement and the
        issuance and sale of the Preferred Shares will not involve any transaction
        which
        is subject to the prohibitions of Section 406 of ERISA or in connection with
        which a tax could be imposed pursuant to Section 4975 of the Internal Revenue
        Code of 1986, as amended, provided that,
        if any
        of the Purchasers, or any person or entity that owns a beneficial interest
        in
        any of the Purchasers, is an “employee pension benefit plan” (within the meaning
        of Section 3(2) of ERISA) with respect to which the Company is a “party in
        interest” (within the meaning of Section 3(14) of ERISA), the requirements of
        Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.  As
        used in this Section 2.1(bb), the term “Plan”
shall mean
        an
“employee pension benefit plan” (as defined in Section 3 of ERISA) which is or
        has been established or maintained, or to which contributions are or have
        been
        made, by the Company or any subsidiary or by any trade or business, whether
        or
        not incorporated, which, together with the Company or any subsidiary, is
        under
        common control, as described in Section 414(b) or (c) of the Code.

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      (cc)           
        Dilutive
        Effect.  The Company understands and acknowledges that its
        obligation to issue Conversion Shares upon conversion of the Preferred Shares
        in
        accordance with this Agreement and the Certificate of Designation and its
        obligations to issue the Warrant Shares upon the exercise of the Warrants
        in
        accordance with this Agreement and the Warrants, is, in each case, absolute
        and
        unconditional regardless of the dilutive effect that such issuance may have
        on
        the ownership interest of other stockholders of the Company.

       

      (dd)           
        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 the offering of the Shares pursuant
        to this
        Agreement to be integrated with prior offerings by the Company for purposes
        of
        the Securities Act which would prevent the Company from selling the Shares
        pursuant to Rule 506 under the Securities Act, or any applicable
        exchange-related stockholder approval provisions, nor will the Company or
        any of
        its affiliates or subsidiaries take any action or steps that would cause
        the
        offering of the Shares to be integrated with other offerings.  The
        Company does not have any registration statement pending before the Commission
        or currently under the Commission’s review and except as set forth in the
        Commission Documents, since June 1, 2007, the
        Company has not offered or sold any of its equity securities or debt securities
        convertible into shares of Common Stock.

       

      (ee)           
        Sarbanes-Oxley
        Act.  The Company is in compliance with the applicable
        provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
        Act”),
        and the rules and regulations promulgated thereunder, that are effective,
        and
        intends to comply with other applicable provisions of the Sarbanes-Oxley
        Act,
        and the rules and regulations promulgated thereunder, upon the effectiveness
        of
        such provisions.

       

      (ff)           
        Independent Nature
        of
        Purchasers.  The Company acknowledges that the obligations of
        each Purchaser under the Transaction Documents are several and not joint
        with
        the obligations of any other Purchaser, and no Purchaser shall be responsible
        in
        any way for the performance of the obligations of any other Purchaser under
        the
        Transaction Documents.  The Company acknowledges that the decision of
        each Purchaser to purchase securities pursuant to this Agreement has been
        made
        by such Purchaser independently of any other purchase and independently of
        any
        information, materials, statements or opinions as to the business, affairs,
        operations, assets, properties, liabilities, results of operations, condition
        (financial or otherwise) or prospects of the Company or of its subsidiaries
        which may have been made or given by any other Purchaser or by any agent
        or
        employee of any other Purchaser, and no Purchaser or any of its agents or
        employees shall have any liability to any Purchaser (or any other person)
        relating to or arising from any such information, materials, statements or
        opinions.  The Company acknowledges that nothing contained herein, or
        in any Transaction Document, and no action taken by any Purchaser pursuant
        hereto or thereto, shall be deemed to constitute the Purchasers as a
        partnership, an association, a joint venture or any other kind of entity,
        or
        create a presumption that the Purchasers are in any way acting in concert
        or as
        a group with respect to such obligations or the transactions contemplated
        by the
        Transaction Documents.  The Company acknowledges that each Purchaser
        shall be entitled to independently protect and enforce its rights, including
        without limitation, the rights arising out of this Agreement or out of the
        other
        Transaction Documents, and it shall not be necessary for any other Purchaser
        to
        be joined as an additional party in any proceeding for such
        purpose.  The Company acknowledges that for reasons of administrative
        convenience only, the Transaction Documents have been prepared by counsel
        for
        one of the Purchasers and such counsel does not represent all of the Purchasers
        but only such Purchaser and the other Purchasers have retained their own
        individual counsel with respect to the transactions contemplated hereby. 
The Company acknowledges that it has elected to provide all Purchasers with
        the
        same terms and Transaction Documents for the convenience of the Company and
        not
        because it was required or requested to do so by the Purchasers.

       

      
        
          
          

        

        
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      (gg)           
        DTC
        Status.  The Company’s transfer agent is a participant in, and
        the Common Stock is eligible for transfer pursuant to, the Depository Trust
        Company (“DTC”)
        Automated Securities Transfer Program.  The name, address, telephone
        number, fax number, contact person and email address of the Company’s transfer
        agent is set forth on Schedule 2.1(gg)
        hereto.

       

      Section
        2.2       Representations
        and
        Warranties of the Purchasers.  Each Purchaser hereby makes the
        following representations and warranties to the Company with respect solely
        to
        itself and not with respect to any other Purchaser:

       

      (a)           
        Organization and
        Standing of the Purchasers.  If the Purchaser is an entity,
        such Purchaser is a corporation or partnership duly incorporated or organized,
        validly existing and in good standing under the laws of the jurisdiction
        of its
        incorporation or organization.

       

      (b)           
        Authorization
        and
        Power.  Each Purchaser has the requisite power and authority to
        enter into and perform this Agreement and to purchase the Preferred Shares
        and
        Warrants being sold to it hereunder.  The execution, delivery and
        performance of this Agreement and the Registration Rights Agreement by such
        Purchaser and the consummation by it of the transactions contemplated hereby
        and
        thereby have been duly authorized by all necessary corporate or partnership
        action, and no further consent or authorization of such Purchaser or its
        Board
        of Directors, stockholders, or partners, as the case may be, is
        required.  Each of this Agreement and the Registration Rights
        Agreement has been duly authorized, executed and delivered by such Purchaser
        and
        constitutes, or shall constitute when executed and delivered, a valid and
        binding obligation of the Purchaser enforceable against the Purchaser in
        accordance with the terms thereof.

       

      (c)           
        No
        Conflicts.  The execution, delivery and performance of this
        Agreement and the Registration Rights Agreement and the consummation by such
        Purchaser of the transactions contemplated hereby and thereby or relating
        hereto
        do not and will not (i) result in a violation of such Purchaser’s charter
        documents or bylaws or other organizational documents or (ii) conflict with,
        or
        constitute a default (or an event which with notice or lapse of time or both
        would become a default) under, or give to others any rights of termination,
        amendment, acceleration or cancellation of any agreement, indenture or
        instrument or obligation to which such Purchaser is a party or by which its
        properties or assets are bound, or result in a violation of any law, rule,
        or
        regulation, or any order, judgment or decree of any court or governmental
        agency
        applicable to such Purchaser or its properties (except for such conflicts,
        defaults and violations as would not, individually or in the aggregate, have
        a
        material adverse effect on such Purchaser).  Such Purchaser is not
        required to obtain any consent, authorization or order of, or make any filing
        or
        registration with, any court or governmental agency in order for it to execute,
        deliver or perform any of its obligations under this Agreement or the
        Registration Rights Agreement or to purchase the Preferred Shares or acquire
        the
        Warrants in accordance with the terms hereof, provided that for purposes
        of the
        representation made in this sentence, such Purchaser is assuming and relying
        upon the accuracy of the relevant representations and agreements of the Company
        herein.

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      (d)           
        Acquisition for
        Investment.  Each Purchaser is acquiring the Preferred Shares
        and the Warrants solely for its own account for the purpose of investment
        and
        not with a view to or for sale in connection with distribution.  Each
        Purchaser does not have a present intention to sell the Preferred Shares
        or the
        Warrants, nor a present arrangement (whether or not legally binding) or
        intention to effect any distribution of the Preferred Shares or the Warrants
        to
        or through any person or entity; provided, however,
        that by
        making the representations herein and subject to Section 2.2(h) below, such
        Purchaser does not agree to hold the Shares or the Warrants for any minimum
        or
        other specific term and reserves the right to dispose of the Shares or the
        Warrants at any time in accordance with federal and state securities laws
        applicable to such disposition.  Each Purchaser acknowledges that it
        is able to bear the financial risks associated with an investment in the
        Preferred Shares and the Warrants and that it has been given full access
        to such
        records of the Company and the subsidiaries and to the officers of the Company
        and the subsidiaries and received such information as it has deemed necessary
        or
        appropriate to conduct its due diligence investigation and has sufficient
        knowledge and experience in investing in companies similar to the Company
        in
        terms of the Company’s stage of development so as to be able to evaluate the
        risks and merits of its investment in the Company.

       

      (e)           
        Status of
        Purchasers.  Each Purchaser is an “accredited investor” as
        defined in Regulation D promulgated under the Securities Act.  Such
        Purchaser is not required to be registered as a broker-dealer under Section
        15
        of the Exchange Act and such Purchaser is not a broker-dealer.

       

      (f)           
        Opportunities
        for
        Additional Information.  Each Purchaser acknowledges that such
        Purchaser has had the opportunity to ask questions of and receive answers
        from,
        or obtain additional information from, the executive officers of the Company
        concerning the financial and other affairs of the Company, and to the extent
        deemed necessary in light of such Purchaser’s personal knowledge of the
        Company’s affairs, such Purchaser has asked such questions and received answers
        to the full satisfaction of such Purchaser, and such Purchaser desires to
        invest
        in the Company.

       

      (g)           
        No General
        Solicitation.  Each Purchaser acknowledges that the Preferred
        Shares and the Warrants were not offered to such Purchaser by means of any
        form
        of general or public solicitation or general advertising, or publicly
        disseminated advertisements or sales literature, including (i) any
        advertisement, article, notice or other communication published in any
        newspaper, magazine, or similar media, or broadcast over television or radio,
        or
        (ii) any seminar or meeting to which such Purchaser was invited by any of
        the
        foregoing means of communications.

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

      (h)           
        Rule
        144.  Such Purchaser understands that the Shares must be held
        indefinitely unless such Shares are registered under the Securities Act or
        an
        exemption from registration is available.  Such Purchaser acknowledges
        that such Purchaser is familiar with Rule 144 of the rules and regulations
        of
        the Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and
        that
        such person has been advised that Rule 144 permits resales only under certain
        circumstances.  Such Purchaser understands that to the extent that
        Rule 144 is not available, such Purchaser will be unable to sell any Shares
        without either registration under the Securities Act or the existence of
        another
        exemption from such registration requirement.

       

      (i)           
        General.  Such
        Purchaser understands that the Shares are being offered and sold in reliance
        on
        a transactional exemption from the registration requirement of federal and
        state
        securities laws and the Company is relying upon the truth and accuracy of
        the
        representations, warranties, agreements, acknowledgments and understandings
        of
        such Purchaser set forth herein in order to determine the applicability of
        such
        exemptions and the suitability of such Purchaser to acquire the
        Shares.

       

      (j)           
        Independent
        Investment.  Except as may be disclosed in any filings with the
        Commission by the Purchasers under Section 13 and/or Section 16 of the Exchange
        Act, no Purchaser has agreed to act with any other Purchaser for the purpose
        of
        acquiring, holding, voting or disposing of the Shares purchased hereunder
        for
        purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting
        independently with respect to its investment in the Shares.

       

      (k)           
        Trading
        Activities.  Each
        Purchaser’s trading activities with respect to
        the Shares shall
        be in
        compliance with all applicable federal and state securities laws.  No
        Purchaser nor any of
        its affiliates has an open short position in the Common Stock; each Purchaser
        agrees that it shall not, and that it will cause its affiliates not to, engage
        in any short sales with respect to the Common Stock until the date that is
        one
        year following the date the Conversion Shares and Warrant Shares are freely
        tradable.

       

      ARTICLE
        III

      Covenants

       

      The
        Company covenants with each of the Purchasers as follows, which covenants
        are
        for the benefit of the Purchasers and their permitted assignees (as defined
        herein).

       

      Section
        3.1       Securities
        Compliance.  The Company shall notify the Commission and all
        applicable state authorities in accordance with their respective rules and
        regulations, of the transactions contemplated by any of the Transaction
        Documents, including filing a Form D with respect to the Preferred Shares,
        Warrants, Conversion Shares and Warrant Shares as required under Regulation
        D
        and applicable “blue sky” laws, and shall take all other necessary action and
        proceedings as may be required and permitted by applicable law, rule and
        regulation, for the legal and valid issuance of the Preferred Shares, the
        Warrants, the Conversion Shares and the Warrant Shares to the Purchasers
        or
        subsequent holders.

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

      Section
        3.2       Registration
        and
        Listing.  The Company shall cause its Common Stock to continue
        to be registered under Sections 12(b) or 12(g) of the Exchange Act, to comply
        in
        all respects with its reporting and filing obligations under the Exchange
        Act,
        to comply with all requirements related to any registration statement filed
        pursuant to this Agreement, and to not take any action or file any document
        (whether or not permitted by the Securities Act or the rules promulgated
        thereunder) to terminate or suspend such registration or to terminate or
        suspend
        its reporting and filing obligations under the Exchange Act or Securities
        Act,
        except as permitted herein.  The Company will take all action
        necessary to continue the listing or trading of its Common Stock on the OTC
        Bulletin Board or other exchange or market on which the Common Stock is trading
        or may be traded in the future.  Subject to the terms of the
        Transaction Documents, the Company further covenants that it will take such
        further action as the Purchasers may reasonably request, all to the extent
        required from time to time to enable the Purchasers to sell the Shares without
        registration under the Securities Act within the limitation of the exemptions
        provided by Rule 144 promulgated under the Securities Act.  Upon the
        request of the Purchasers, the Company shall deliver to the Purchasers a
        written
        certification of a duly authorized officer as to whether it has complied
        with
        such requirements.

       

      Section
        3.3       Inspection
        Rights.  The Company shall permit, during normal business hours
        and upon reasonable request and reasonable notice, each Purchaser or any
        employees, agents or representatives thereof, so long as such Purchaser shall
        be
        obligated hereunder to purchase the Preferred Shares or shall beneficially
        own
        any Preferred Shares, or shall own Conversion Shares which, in the aggregate,
        represent more than 2% of the total combined voting power of all voting
        securities then outstanding, for purposes reasonably related to such Purchaser’s
        interests as a stockholder to examine and make reasonable copies of and extracts
        from the records and books of account of, and visit and inspect the properties,
        assets, operations and business of the Company and any subsidiary, and to
        discuss the affairs, finances and accounts of the Company and any subsidiary
        with any of its officers, consultants, directors, and key employees; provided, however,
        that the
        Company shall not provide to or discuss with such Purchaser any material
        non-public information, unless prior thereto such Purchaser shall have executed
        a written agreement regarding the confidentiality and use of such
        information.

       

      Section
        3.4      Compliance
        with
        Laws.  The Company shall comply, and cause each subsidiary to
        comply, with all applicable laws, rules, regulations and orders, noncompliance
        with which could have a Material Adverse Effect.

       

      Section
        3.5       Keeping
        of Records and Books
        of Account.  The Company shall keep and cause each subsidiary
        to keep adequate records and books of account, in which complete entries
        will be
        made in accordance with GAAP consistently applied, reflecting all financial
        transactions of the Company and its subsidiaries, and in which, for each
        fiscal
        year, all proper reserves for depreciation, depletion, obsolescence,
        amortization, taxes, bad debts and other purposes in connection with its
        business shall be made.

       

      Section
        3.6      Reporting
        Requirements.  If the Commission ceases making periodic reports
        filed under the Exchange Act available via the Internet, then at a Purchaser’s
        request the Company shall furnish the following to such Purchaser so long
        as
        such Purchaser shall be obligated hereunder to purchase the Preferred Shares
        or
        shall beneficially own any Shares:

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

      (a)           
        Quarterly Reports filed with the Commission on Form 10-QSB as soon as practical
        after the document is filed with the Commission, and in any event within
        five
        (5) days after the document is filed with the Commission;

       

      (b)           
        Annual Reports filed with the Commission on Form 10-KSB as soon as practical
        after the document is filed with the Commission, and in any event within
        five
        (5) days after the document is filed with the Commission; and

       

      (c)           
        Copies of all notices and information, including without limitation notices
        and
        proxy statements in connection with any meetings, that are provided to holders
        of shares of Common Stock, contemporaneously with the delivery of such notices
        or information to such holders of Common Stock.

       

      Section
        3.7      Amendments.  The
        Company shall not amend or waive any provision of the Articles or Bylaws
        of the
        Company in any way that would adversely affect the liquidation preferences,
        dividend rights, conversion rights, voting rights or redemption rights of
        the
        Preferred Shares; provided, however,
        that any
        creation and issuance of another series of Junior Stock (as defined in the
        Certificate of Designation) or any other class or series of equity securities
        which by its terms shall rank on parity with the Preferred Shares shall not
        be
        deemed to materially and adversely affect such rights, preferences or
        privileges.

       

      Section
        3.8      Other
        Agreements.  The Company shall not enter into any agreement in
        which the terms of such agreement would restrict or impair the right or ability
        to perform of the Company or any subsidiary under any Transaction
        Document.

       

      Section
        3.9      Distributions.  So
        long as any Preferred Shares or Warrants remain outstanding, the Company
        agrees
        that it shall not (i) declare or pay any dividends or make any distributions
        to
        any holder(s) of Common Stock or (ii) purchase or otherwise acquire for value,
        directly or indirectly, any Common Stock or other equity security of the
        Company.

       

      
        
          
          

        

        
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      Section
        3.10    Status
        of
        Dividends.  The Company covenants and agrees that (i) no
        federal income tax return or claim for refund of federal income tax or other
        submission to the Service will adversely affect the Preferred Shares, any
        other
        series of its Preferred Stock, or the Common Stock, and no deduction shall
        operate to jeopardize the availability to Purchasers of the dividends received
        deduction provided by Section 243(a)(1) of the Code or any successor provision,
        (ii) in no report to shareholders or to any governmental body having
        jurisdiction over the Company or otherwise will it treat the Preferred Shares
        other than as equity capital or the dividends paid thereon other than as
        dividends paid on equity capital unless required to do so by a governmental
        body
        having jurisdiction over the accounts of the Company or by a change in GAAP
        required as a result of action by an authoritative accounting standards setting
        body, and (iii) it will take no action which would result in the dividends
        paid
        by the Company on the Preferred Shares out of the Company’s current or
        accumulated earnings and profits being ineligible for the dividends received
        deduction provided by Section 243(a)(1) of the Code.  The preceding
        sentence shall not be deemed to prevent the Company from designating the
        Preferred Stock as “Convertible Preferred Stock” in its annual and quarterly
        financial statements in accordance with its prior practice concerning other
        series of preferred stock of the Company.  In the event that the
        Purchasers have reasonable cause to believe that dividends paid by the Company
        on the Preferred Shares out of the Company’s current or accumulated earnings and
        profits will not be treated as eligible for the dividends received deduction
        provided by Section 243(a)(1) of the Code, or any successor provision, the
        Company will, at the reasonable request of the Purchasers of 51% of the
        outstanding Preferred Shares, join with the Purchasers in the submission
        to the
        Service of a request for a ruling that dividends paid on the Shares will
        be so
        eligible for federal income tax purposes, at the Purchasers’
expense.  In addition, the Company will reasonably cooperate with the
        Purchasers (at Purchasers’ expense) in any litigation, appeal or other
        proceeding challenging or contesting any ruling, technical advice, finding
        or
        determination that earnings and profits are not eligible for the dividends
        received deduction provided by Section 243(a)(1) of the Code, or any successor
        provision to the extent that the position to be taken in any such litigation,
        appeal, or other proceeding is not contrary to any provision of the
        Code.  Notwithstanding the foregoing, nothing herein contained shall
        be deemed to preclude the Company from claiming a deduction with respect
        to such
        dividends if (i) the Code shall hereafter be amended, or final Treasury
        regulations thereunder are issued or modified, to provide that dividends
        on the
        Preferred Shares or Conversion Shares should not be treated as dividends
        for
        federal income tax purposes or that a deduction with respect to all or a
        portion
        of the dividends on the Shares is allowable for federal income tax purposes,
        or
        (ii) in the absence of such an amendment, issuance or modification and after
        a
        submission of a request for ruling or technical advice, the Service shall
        issue
        a published ruling or advise that dividends on the Shares should not be treated
        as dividends for federal income tax purposes.  If the Service
        specifically determines that the Preferred Shares or Conversion Shares
        constitute debt, the Company may file protective claims for refund.

       

      Section
        3.11     Use of
        Proceeds.  The net proceeds from the sale of the Shares
        hereunder shall be used by the Company for working capital and general corporate
        purposes and not to redeem any Common Stock or securities convertible,
        exercisable or exchangeable into Common Stock or to settle any outstanding
        litigation.

       

      Section
        3.12     Reservation
        of
        Shares.  So long as any of the Preferred Shares or Warrants
        remain outstanding, the Company shall take all action necessary to at all
        times
        have authorized, and reserved for the purpose of issuance, free of preemptive
        rights and other similar contractual rights of stockholders, a number of
        shares
        of Common Stock equal to one hundred fifty percent (150%) of the number of
        shares of Common Stock as shall from time to time be sufficient to effect
        the
        conversion of all of the Preferred Shares and exercise of the Warrants then
        outstanding.

       

      
        
          
          

        

        
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      Section
        3.13     Transfer
        Agent
        Instructions.  The Company shall issue irrevocable instructions
        to its transfer agent, and any subsequent transfer agent, to issue certificates,
        registered in the name of each Purchaser or its respective nominee(s), for
        the
        Conversion Shares and the Warrant Shares in such amounts as specified from
        time
        to time by each Purchaser to the Company upon conversion of the Preferred
        Shares
        or exercise of the Warrants in the form of Exhibit F attached
        hereto (the “Irrevocable Transfer
        Agent
        Instructions”).  Prior to registration of the Conversion Shares
        and the Warrant Shares under the Securities Act, all such certificates shall
        bear the restrictive legend specified in Section 5.1 of this
        Agreement.  The Company warrants that no instruction other than the
        Irrevocable Transfer Agent Instructions referred to in this Section 3.13
        will be
        given by the Company to its transfer agent and that the Shares shall otherwise
        be freely transferable on the books and records of the Company as and to
        the
        extent provided in this Agreement and the Registration Rights
        Agreement.  If a Purchaser provides the Company with an opinion of
        counsel, in a generally acceptable form, to the effect that a public sale,
        assignment or transfer of all or some of such Purchaser’s Shares may be made
        without registration under the Securities Act or the Purchaser provides the
        Company with reasonable assurances that such Shares can be sold pursuant
        to Rule
        144 within the limitations of Rule 144, the Company shall permit the transfer,
        and, in the case of the Conversion Shares and the Warrant Shares, promptly
        instruct its transfer agent to issue one or more certificates in such name
        and
        in such denominations as specified by such Purchaser and without any restrictive
        legend.  The Company acknowledges that a breach by it of its
        obligations under this Section 3.13 will cause irreparable harm to the
        Purchasers by vitiating the intent and purpose of the transaction contemplated
        hereby.  Accordingly, the Company acknowledges that the remedy at law
        for a breach of its obligations under this Section 3.13 will be inadequate
        and agrees, in the event of a breach or threatened breach by the Company
        of the
        provisions of this Section 3.13, that the Purchasers shall be entitled, in
        addition to all other available remedies, to an order and/or injunction
        restraining any breach and requiring immediate issuance and transfer, without
        the necessity of showing economic loss and without any bond or other security
        being required.

       

      Section
        3.14      Disposition
        of
        Assets.  So long as any Preferred Shares remain outstanding,
        neither the Company nor any subsidiary shall sell, transfer or otherwise
        dispose
        of any of its properties, assets and rights including, without limitation,
        its
        software and intellectual property, to any person except for sales to customers
        in the ordinary course of business or with the prior written consent of the
        holders of a majority of the Preferred Shares then outstanding.

       

      Section
        3.15      Reporting
        Status. So
        long as a Purchaser beneficially owns any of the Shares, the Company shall
        timely file all reports required to be filed with the Commission pursuant
        to the
        Exchange Act, and the Company shall not terminate its status as an issuer
        required to file reports under the Exchange Act even if the Exchange Act
        or the
        rules and regulations thereunder would permit such termination.

       

      Section
        3.16      Disclosure
        of
        Transaction.  The Company shall issue a press release
        describing the material terms of the transactions contemplated hereby (the
        “Press
        Release”) as soon as practicable after the Closing but in no event later
        than 9:00 A.M. Eastern Time on the first Trading Day following the
        Closing.  The Company shall also file with the Commission a Current
        Report on Form 8-K (the “Form 8-K”) describing
        the material terms of the transactions contemplated hereby (and attaching
        as
        exhibits thereto this Agreement, the Registration Rights Agreement, the
        Certificate of Designation, the form of each series of Warrant and the Press
        Release) as soon as practicable following the Closing Date but in no event
        more
        than three (3) Trading Days following the Closing Date, which Press Release
        and
        Form 8-K shall be subject to prior review and comment by the
        Purchasers.  "Trading Day" means
        any day during which the OTC Bulletin Board (or other quotation venue or
        principal exchange on which the Common Stock is traded) shall be open for
        trading.

       

      
        
          
          

        

        
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      Section
        3.17      Disclosure
        of Material
        Information.  The Company covenants and agrees that neither it
        nor any other person acting on its behalf has provided or will provide any
        Purchaser or its agents or counsel with any information that the Company
        believes constitutes material non-public information (other than with respect
        to
        the transactions contemplated by this Agreement), unless prior thereto such
        Purchaser shall have executed a written agreement regarding the confidentiality
        and use of such information.  The Company understands and confirms that
        each Purchaser shall be relying on the foregoing representations in effecting
        transactions in securities of the Company.

       

      Section
        3.18      Pledge
        of
        Securities.  The Company acknowledges and agrees that the
        Shares may be pledged by a Purchaser in connection with a bonafide
        margin agreement
        or other loan or financing arrangement that is secured by the Common
        Stock.  The pledge of Common Stock shall not be deemed to be a
        transfer, sale or assignment of the Common Stock hereunder, and no Purchaser
        effecting a pledge of Common Stock shall be required to provide the Company
        with
        any notice thereof or otherwise make any delivery to the Company pursuant
        to
        this Agreement or any other Transaction Document; provided that,
        a
        Purchaser and its pledgee shall be required to comply with the provisions
        of
        Article V hereof in order to effect a sale, transfer or assignment of Common
        Stock to such pledgee. At the Purchasers' expense, the Company hereby agrees
        to
        execute and deliver such documentation as a pledgee of the Common Stock may
        reasonably request in connection with a pledge of the Common Stock to such
        pledgee by a Purchaser.

       

      Section
        3.19      Form SB-2
        Eligibility.  The Company currently meets the "registrant
        eligibility" and transaction requirements set forth in the general instructions
        to Form SB-2 applicable to "resale" registrations on Form SB-2 and the
        Company shall file all reports required to be filed by the Company with the
        Commission in a timely manner.

       

      Section
        3.20       Subsequent
        Financings.

       

      (a)           
        For a period of one (1) year following the effective date of the Registration
        Statement (as defined in the Registration Rights Agreement), the Company
        covenants and agrees to promptly notify in writing (a "Rights Notice") the
        Purchasers of the terms and conditions of any proposed offer or sale to,
        or
        exchange with (or other type of distribution to) any third party (a “Subsequent
        Financing”), of Common Stock or any debt or equity securities
        convertible, exercisable or exchangeable into Common Stock; provided, however,
        prior to
        delivering to each Purchaser a Rights Notice, the Company shall first deliver
        to
        each Purchaser a written notice of its intention to effect a Subsequent
        Financing (“Pre-Notice”) within
        three (3) Trading Days of receiving an applicable offer, which Pre-Notice
        shall
        ask such Purchaser if it wants to review the details of such
        financing.  Upon the request of a Purchaser, and only upon a request
        by such Purchaser within three (3) Trading Days of receipt of a Pre-Notice,
        the
        Company shall promptly, but no later than two (2) Trading Days after such
        request, deliver a Rights Notice to such Purchaser.  The Rights Notice
        shall describe, in reasonable detail, the proposed Subsequent Financing,
        the
        names and investment amounts of all investors participating in the Subsequent
        Financing (if known), the proposed closing date of the Subsequent Financing,
        which shall be no earlier than ten (10) Trading Days from the date of the
        Rights
        Notice, and all of the terms and conditions thereof and proposed definitive
        documentation to be entered into in connection therewith.  The Rights
        Notice shall provide each Purchaser an option (the “Rights Option”)
        during the ten (10) Trading Days following delivery of the Rights Notice
        (the
“Option
        Period”) to inform the Company whether such Purchaser will purchase up to
        its pro rata portion of all or a portion of the securities being offered
        in such
        Subsequent Financing on the same, absolute terms and conditions as contemplated
        by such Subsequent Financing, provided that,
        the
        amount of such purchase shall not exceed such Purchaser’s Purchase Price
        hereunder except as allowed by the following sentence.  If any
        Purchaser elects not to participate in such Subsequent Financing, the other
        Purchasers may participate on a pro-rata basis so long as such participation
        in
        the aggregate does not exceed the total Purchase Price hereunder.  For
        purposes of this Section, all references to “pro rata”
means,
        for
        any Purchaser electing to participate in such Subsequent Financing, the
        percentage obtained by dividing (x) the number of Preferred Shares purchased
        by
        such Purchaser at the Closing by (y) the total number of all of the Preferred
        Shares purchased by all of the participating Purchasers at the
        Closing.  Delivery of any Rights Notice constitutes a representation
        and warranty by the Company that there are no other material terms and
        conditions, arrangements, agreements or otherwise except for those disclosed
        in
        the Rights Notice, to provide additional compensation to any party participating
        in any proposed Subsequent Financing, including, but not limited to, additional
        compensation based on changes in the Purchase Price or any type of reset
        or
        adjustment of a purchase or conversion price or to issue additional securities
        at any time after the closing date of a Subsequent Financing.  If the
        Company does not receive notice of exercise of the Rights Option from any
        or all
        of Purchasers within the Option Period, the Company shall have the right
        to
        close the Subsequent Financing on the scheduled closing date set forth in
        the
        Rights Notice (or within thirty (30) days thereafter) without the participation
        of any or all of such Purchasers; provided that,
        all of
        the material terms and conditions of the closing are the same as those provided
        to the Purchasers in the Rights Notice.  If the closing of the
        proposed Subsequent Financing does not occur on the scheduled closing date
        set
        forth in the Rights Notice (or within thirty (30) days thereafter), any closing
        of the contemplated Subsequent Financing or any other Subsequent Financing
        shall
        be subject to all of the provisions of this Section 3.20(a), including, without
        limitation, the delivery of a new Rights Notice.  The provisions of
        this Section 3.20(a) shall not apply to issuances of securities in a Permitted
        Financing.

       

      
        
          
          

        

        
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      (b)           
        For purposes of this Agreement, a Permitted Financing (as defined hereinafter)
        shall not be considered a Subsequent Financing. A "Permitted Financing"
        shall mean (i) securities issued (other than for cash) in connection with
        a
        merger, acquisition, or consolidation, (ii) securities issued pursuant to
        the
        conversion or exercise of convertible or exercisable securities issued or
        outstanding on or prior to the date of this Agreement or issued pursuant
        to this
        Agreement (so long as the conversion or exercise price in such securities
        are
        not amended to lower such price and/or adversely affect the Purchasers),
        (iii)
        securities issued in connection with bona fide strategic license agreements
        or
        other partnering arrangements so long as such issuances are not for the purpose
        of raising capital, (iv) Common Stock issued or the issuance or grants of
        options to purchase Common Stock pursuant to the Company’s stock option plans
        and employee stock purchase plans outstanding as they exist on the date of
        this
        Agreement, and (v) any warrants issued to the placement agent and its designees
        for the transactions contemplated by the Purchase Agreement.

       

      (c)           
        For a period of two (2) years following the Closing Date, the Company shall
        be
        prohibited from effecting or entering into an agreement to effect any Subsequent
        Financing involving a “Variable Rate
        Transaction” without the prior written consent of the holders of 75% of
        the Preferred Shares then outstanding.  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 (other than customary anti-dilution features) or (ii) enters
        into any agreement, including, but not limited to, an equity line of credit,
        whereby the Company may sell securities at a future determined
        price.

       

      (d)           
        For the period commencing on the Closing Date and ending on the date that
        is one
        hundred eighty (180) days following the effective date of the Registration
        Statement, the Company shall not file any registration statement under the
        Securities Act without the prior written consent of the Purchasers, other
        than
        the Registration Statement.

       

      
        
          
          

        

        
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      ARTICLE
        IV

      CONDITIONS

       

      Section
        4.1       Conditions
        Precedent to the
        Obligation of the Company to Sell the Shares.  The obligation
        hereunder of the Company to issue and sell the Preferred Shares and the Warrants
        to the Purchasers is subject to the satisfaction or waiver, at or before
        the
        Closing, of each of the conditions set forth below.  These conditions
        are for the Company’s sole benefit and may be waived by the Company at any time
        in its sole discretion.

       

      (a)           
        Accuracy of Each
        Purchaser’s Representations and Warranties.  The
        representations and warranties of each Purchaser shall be true and correct
        in
        all material respects as of the date when made and as of the Closing Date
        as
        though made at that time, except for representations and warranties that
        are
        expressly made as of a particular date, which shall be true and correct in
        all
        material respects as of such date.

       

      (b)           
        Performance by
        the
        Purchasers.  Each Purchaser shall have performed, satisfied and
        complied in all respects with all covenants, agreements and conditions required
        by this Agreement to be performed, satisfied or complied with by such Purchaser
        at or prior to the Closing.

       

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

       

      (d)           
        Delivery of Purchase
        Price.  The Purchase Price for the Preferred Shares and
        Warrants has been delivered to the escrow agent pursuant to the Escrow
        Agreement.

       

      (e)           
        Delivery of
        Transaction Documents.  The Transaction Documents shall have
        been duly executed and delivered by the Purchasers and, with respect to the
        Escrow Agreement, the escrow agent, to the Company.

       

      
        
          
          

        

        
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      Section
        4.2       Conditions
        Precedent to the
        Obligation of the Purchasers to Purchase the Shares.  The
        obligation hereunder of each Purchaser to acquire and pay for the Preferred
        Shares and the Warrants is subject to the satisfaction or waiver, at or before
        the Closing, of each of the conditions set forth below.  These
        conditions are for each Purchaser’s sole benefit and may be waived by such
        Purchaser at any time in its sole discretion.

       

      (a)           
        Accuracy of the
        Company’s Representations and Warranties.  Each of the
        representations and warranties of the Company in this Agreement and the
        Registration Rights Agreement shall be true and correct in all respects as
        of
        the date when made and as of the Closing Date as though made at that time,
        except for representations and warranties that are expressly made as of a
        particular date, which shall be true and correct in all respects as of such
        date.

       

      (b)           
        Performance by
        the
        Company.  The Company shall have performed, satisfied and
        complied in all respects with all covenants, agreements and conditions required
        by this Agreement to be performed, satisfied or complied with by the Company
        at
        or prior to the Closing.

       

      (c)           
        No Suspension,
        Etc.  Trading in the Company’s Common Stock shall not have been
        suspended by the Commission or the OTC Bulletin Board (except for any suspension
        of trading of limited duration agreed to by the Company, which suspension
        shall
        be terminated prior to the applicable Closing), and, at any time prior to
        the
        Closing Date, trading in securities generally as reported by Bloomberg Financial
        Markets (“Bloomberg”) shall
        not
        have been suspended or limited, or minimum prices shall not have been
        established on securities whose trades are reported by Bloomberg, or on the
        New
        York Stock Exchange, 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 or crisis of such magnitude in its effect on, or any
        material adverse change in any financial market which, in each case, in the
        judgment of such Purchaser, makes it impracticable or inadvisable to purchase
        the Preferred Shares.

       

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

       

      (e)           
        No Proceedings
        or
        Litigation.  No action, suit or proceeding before any
        arbitrator or any governmental authority shall have been commenced, and no
        investigation by any governmental authority shall have been threatened, against
        the Company or any subsidiary, or any of the officers, directors or affiliates
        of the Company or any subsidiary seeking to restrain, prevent or change the
        transactions contemplated by this Agreement, or seeking damages in connection
        with such transactions.

       

      (f)           
        Certificate of
        Designation of Rights and Preferences.  Prior to the Closing,
        the Certificate of Designation in the form of Exhibit B attached
        hereto shall have been filed with the Secretary of State of Nevada.

       

      
        
          
          

        

        
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      (g)           
        Opinion of Counsel,
        Etc. At the Closing, the Purchasers shall have received an opinion of
        counsel to the Company, dated the date of the Closing, in the form of Exhibit G hereto,
        and
        such other certificates and documents as the Purchasers or its counsel shall
        reasonably require incident to the Closing.

       

      (h)           
        Registration Rights
        Agreement.  At the Closing, the Company shall have executed and
        delivered the Registration Rights Agreement to each Purchaser.

       

      (i)           
        Certificates.  The
        Company shall have executed and delivered to the Purchasers the certificates
        (in
        such denominations as such Purchaser shall request) for the Preferred Shares
        and
        the Warrants being acquired by such Purchaser at the Closing (in such
        denominations as such Purchaser shall request).

       

      (j)           
        Resolutions.  The
        Board of Directors of the Company shall have adopted resolutions consistent
        with
        Section 2.1(b) hereof in a form reasonably acceptable to such Purchaser (the
        "Resolutions").

       

      (k)           
        Reservation of
        Shares.  As of the Closing Date, the Company shall have
        reserved out of its authorized and unissued Common Stock, solely for the
        purpose
        of effecting the conversion of the Preferred Shares and the exercise of the
        Warrants, a number of shares of Common Stock equal to one hundred fifty percent
        (150%) of the aggregate number of Conversion Shares issuable upon conversion
        of
        the Preferred Shares issued or to be issued pursuant to this Agreement and
        the
        number of Warrant Shares issuable upon exercise of the number of Warrants
        issued
        or to be issued pursuant to this Agreement.

       

      (l)           
        Transfer Agent
        Instructions.  As of the Closing Date, the Irrevocable Transfer
        Agent Instructions, in the form of Exhibit F attached
        hereto, shall have been delivered to and acknowledged in writing by the
        Company’s transfer agent.

       

      (m)           
        Secretary’s
        Certificate.  The Company shall have delivered to such
        Purchaser a secretary’s certificate, dated as of the Closing Date, as to (i) the
        Resolutions, (ii) the Articles, (iii) the Bylaws, (iv) the Certificate of
        Designation, each as in effect at the Closing, and (iv) the authority and
        incumbency of the officers of the Company executing the Transaction Documents
        and any other documents required to be executed or delivered in connection
        therewith.

       

      (n)           
        Officer’s
        Certificate.  The Company shall have delivered to the
        Purchasers a certificate of an executive officer of the Company, dated as
        of the
        Closing Date, confirming the accuracy of the Company’s representations,
        warranties and covenants as of the Closing Date and confirming the compliance
        by
        the Company with the conditions precedent set forth in this Section 4.2 as
        of
        the Closing Date.

       

      (o)           
        Escrow
        Agreement.  At the Closing, the Company and the escrow agent
        shall have executed and delivered the Escrow Agreement in the form of Exhibit E attached
        hereto to each Purchaser.

       

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

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

       

      ARTICLE
        V

      Stock
        Certificate Legend

       

      Section
        5.1      Legend.  Each
        certificate representing the Preferred Shares and the Warrants, and, if
        appropriate, securities issued upon conversion thereof, shall be stamped
        or
        otherwise imprinted with a legend substantially in the following form (in
        addition to any legend required by applicable state securities or “blue sky”
laws):

       

      THESE
        SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
        OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
        DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
        STATE SECURITIES LAWS OR ASTRATA GROUP INCORPORATED SHALL HAVE RECEIVED AN
        OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
        ACT
        AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
        REQUIRED.

       

      The
        Company agrees to reissue certificates representing any of the Conversion
        Shares
        and the Warrant Shares, without the legend set forth above if at such time,
        prior to making any transfer of any such securities, such holder thereof
        shall
        give written notice to the Company describing the manner and terms of such
        transfer and removal as the Company may reasonably request.  Such
        proposed transfer and removal will not be effected until: (a) either (i)
        the
        Company has received an opinion of counsel reasonably satisfactory to the
        Company, to the effect that the registration of the Conversion Shares or
        the
        Warrant Shares under the Securities Act is not required in connection with
        such
        proposed transfer, (ii) a registration statement under the Securities Act
        covering such proposed disposition has been filed by the Company with the
        Commission and has become effective under the Securities Act, (iii) the Company
        has received other evidence reasonably satisfactory to the Company that such
        registration and qualification under the Securities Act and state securities
        laws are not required, or (iv) the holder provides the Company with reasonable
        assurances that such security can be sold pursuant to Rule 144 under the
        Securities Act; and (b) either (i) the Company has received an opinion of
        counsel reasonably satisfactory to the Company, to the effect that registration
        or qualification under the securities or "blue sky" laws of any state is
        not
        required in connection with such proposed disposition, or (ii) compliance
        with
        applicable state securities or "blue sky" laws has been effected or a valid
        exemption exists with respect thereto.  The Company will respond to
        any such notice from a holder within five (5) business days.  In the
        case of any proposed transfer under this Section 5.1, the Company will use
        reasonable efforts to comply with any such applicable state securities or
        "blue
        sky" laws, but shall in no event be required, (x) to qualify to do business
        in
        any state where it is not then qualified, (y) to take any action that would
        subject it to tax or to the general service of process in any state where
        it is
        not then subject, or (z) to comply with state securities or “blue sky” laws of
        any state for which registration by coordination is unavailable to the
        Company.  The restrictions on transfer contained in this Section 5.1
        shall be in addition to, and not by way of limitation of, any other restrictions
        on transfer contained in any other section of this
        Agreement.  Whenever a certificate representing the Conversion Shares
        or Warrant Shares is required to be issued to a Purchaser without a legend,
        in
        lieu of delivering physical certificates representing the Conversion Shares
        or
        Warrant Shares (provided that a registration statement under the Securities
        Act
        providing for the resale of the Warrant Shares and Conversion Shares is then
        in
        effect), the Company shall cause its transfer agent to electronically transmit
        the Conversion Shares or Warrant Shares to a Purchaser by crediting the account
        of such Purchaser or such Purchaser's Prime Broker with the DTC through its
        Deposit Withdrawal Agent Commission system (to the extent not inconsistent
        with
        any provisions of this Agreement).

       

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

        

      

      ARTICLE
        VI

      Indemnification

       

      Section
        6.1     General
        Indemnity.  The Company agrees to indemnify and hold harmless
        the Purchasers (and their respective directors, officers, managers, partners,
        members, shareholders, affiliates, agents, successors and assigns) from and
        against any and all losses, liabilities, deficiencies, costs, damages and
        expenses (including, without limitation, reasonable attorneys’ fees, charges and
        disbursements) incurred by the Purchasers as a result of any inaccuracy in
        or
        breach of the representations, warranties or covenants made by the Company
        herein.  Each Purchaser severally but not jointly agrees to indemnify
        and hold harmless the Company and its directors, officers, affiliates, agents,
        successors and assigns from and against any and all losses, liabilities,
        deficiencies, costs, damages and expenses (including, without limitation,
        reasonable attorneys’ fees, charges and disbursements) incurred by the Company
        as result of any inaccuracy in or breach of the representations, warranties
        or
        covenants made by such Purchaser herein.  The maximum aggregate
        liability of each Purchaser pursuant to its indemnification obligations under
        this Article VI shall not exceed the portion of the Purchase Price paid by
        such
        Purchaser hereunder.

       

      Section
        6.2     Indemnification
        Procedure.  Any party entitled to indemnification under this
        Article VI (an “indemnified party”) will give written notice to the indemnifying
        party of any matters giving rise to a claim for indemnification; provided that,
        the
        failure of any party entitled to indemnification hereunder to give notice
        as
        provided herein shall not relieve the indemnifying party of its obligations
        under this Article VI except to the extent that the indemnifying party is
        actually prejudiced by such failure to give notice.  In case any
        action, proceeding or claim is brought against an indemnified party in respect
        of which indemnification is sought hereunder, the indemnifying party shall
        be
        entitled to participate in and, unless in the reasonable judgment of the
        indemnified party a conflict of interest between it and the indemnifying
        party
        may exist with respect of such action, proceeding or claim, to assume the
        defense thereof with counsel reasonably satisfactory to the indemnified
        party.  In the event that the indemnifying party advises an
        indemnified party that it will contest such a claim for indemnification
        hereunder, or fails, within thirty (30) days of receipt of any indemnification
        notice to notify, in writing, such person of its election to defend, settle
        or
        compromise, at its sole cost and expense, any action, proceeding or claim
        (or
        discontinues its defense at any time after it commences such defense), then
        the
        indemnified party may, at its option, defend, settle or otherwise compromise
        or
        pay such action or claim.  In any event, unless and until the
        indemnifying party elects in writing to assume and does so assume the defense
        of
        any such claim, proceeding or action, the indemnified party’s costs and expenses
        arising out of the defense, settlement or compromise of any such action,
        claim
        or proceeding shall be losses subject to indemnification
        hereunder.  The indemnified party shall cooperate fully with the
        indemnifying party in connection with any negotiation or defense of any such
        action or claim by the indemnifying party and shall furnish to the indemnifying
        party all information reasonably available to the indemnified party which
        relates to such action or claim.  The indemnifying party shall keep
        the indemnified party fully apprised at all times as to the status of the
        defense or any settlement negotiations with respect thereto.  If the
        indemnifying party elects to defend any such action or claim, then the
        indemnified party shall be entitled to participate in such defense with counsel
        of its choice at its sole cost and expense.  The indemnifying party
        shall not be liable for any settlement of any action, claim or proceeding
        effected without its prior written consent.  Notwithstanding anything
        in this Article VI to the contrary, the indemnifying party shall not, without
        the indemnified party’s prior written consent, settle or compromise any claim or
        consent to entry of any judgment in respect thereof which imposes any future
        obligation on the indemnified party or which does not include, as an
        unconditional term thereof, the giving by the claimant or the plaintiff to
        the
        indemnified party of a release from all liability in respect of such
        claim.  The indemnification required by this Article VI shall be made
        by periodic payments of the amount thereof during the course of investigation
        or
        defense, as and when bills are received or expense, loss, damage or liability
        is
        incurred, so long as the indemnified party irrevocably agrees to refund such
        moneys if it is ultimately determined by a court of competent jurisdiction
        that
        such party was not entitled to indemnification.  The indemnity
        agreements contained herein shall be in addition to (a) any cause of action
        or
        similar rights of the indemnified party against the indemnifying party or
        others, and (b) any liabilities the indemnifying party may be subject to
        pursuant to the law.

       

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

      

      ARTICLE
        VII

      Miscellaneous

       

      Section
        7.1      Fees and
        Expenses.  Except as otherwise set forth in this Agreement and
        the other Transaction Documents, each party shall pay the fees and expenses
        of
        its advisors, counsel, accountants and other experts, if any, and all other
        expenses, incurred by such party incident to the negotiation, preparation,
        execution, delivery and performance of this Agreement, provided that,
        the
        Company shall pay all actual attorneys’ fees and expenses (including
        disbursements and out-of-pocket expenses) incurred by the Purchasers in
        connection with (i) the preparation, negotiation, execution and delivery
        of this
        Agreement and the other Transaction Documents and the transactions contemplated
        thereunder, which payment shall be made at the Closing and shall not exceed
        $25,000 (plus disbursements and out-of-pocket expenses), (ii) the filing
        and
        declaration of effectiveness by the Commission of the Registration Statement
        and
        (iii) any amendments, modifications or waivers of this Agreement or any of
        the
        other Transaction Documents.

       

      Section
        7.2      Specific
        Enforcement,
        Consent to Jurisdiction.

       

      (a)           
        The Company and the Purchasers acknowledge and agree that irreparable damage
        would occur in the event that any of the provisions of this Agreement or
        the
        other Transaction Documents were not performed in accordance with their specific
        terms or were otherwise breached. It is accordingly agreed that the parties
        shall be entitled to an injunction or injunctions to prevent or cure breaches
        of
        the provisions of this Agreement or the Registration Rights Agreement and
        to
        enforce specifically the terms and provisions hereof or thereof, this being
        in
        addition to any other remedy to which any of them may be entitled by law
        or
        equity.

       

      (b)           
        Each of the Company and the Purchasers (i) hereby irrevocably submits to
        the
        jurisdiction of the United States District Court sitting in the Southern
        District of New York and the courts of the State of New York located in New
        York
        county for the purposes of any suit, action or proceeding arising out of
        or
        relating to this Agreement or any of the other Transaction Documents or the
        transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
        not to assert in any such suit, action or proceeding, any claim that it is
        not
        personally subject to the jurisdiction of such court, that the suit, action
        or
        proceeding is brought in an inconvenient forum or that the venue of the suit,
        action or proceeding is improper. Each of the Company and the Purchasers
        consents to process being served in any such suit, action or proceeding by
        mailing a copy thereof 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 in this Section
        7.2
        shall affect or limit any right to serve process in any other manner permitted
        by law.

       

      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

        

      

      Section
        7.3      Entire
        Agreement;
        Amendment.  This Agreement and the Transaction Documents
        contain the entire understanding and agreement of the parties with respect
        to
        the matters covered hereby and, except as specifically set forth herein or
        in
        the Transaction Documents, neither the Company nor any of the Purchasers
        makes
        any representation, warranty, covenant or undertaking with respect to such
        matters and they supersede all prior understandings and agreements with respect
        to said subject matter, all of which are merged herein.  No provision
        of this Agreement may be waived or amended other than by a written instrument
        signed by the Company and the holders of at least seventy-five percent (75%)
        of
        the Preferred Shares then outstanding, and no provision hereof may be waived
        other than by an a written instrument signed by the party against whom
        enforcement of any such amendment or waiver is sought.  No such
        amendment shall be effective to the extent that it applies to less than all
        of
        the holders of the Preferred Shares then outstanding.  No
        consideration shall be offered or paid to any person to amend or consent
        to a
        waiver or modification of any provision of any of the Transaction Documents
        unless the same consideration is also offered to all of the parties to the
        Transaction Documents or holders of Preferred Shares, as the case may
        be.

       

      Section
        7.4      Notices.  Any
        notice, demand, request, waiver or other communication required or permitted
        to
        be given hereunder shall be in writing and shall be effective (a) upon hand
        delivery by telex (with correct answer back received), telecopy or facsimile
        at
        the address or number designated below (if delivered on a business day during
        normal business hours where such notice is to be received), or the first
        business day following such delivery (if delivered other than on a business
        day
        during normal business hours where such notice is to be received) or (b)
        on the
        second business day following the date of mailing by express courier service,
        fully prepaid, addressed to such address, or upon actual receipt of such
        mailing, whichever shall first occur.  The addresses for such
        communications shall be:

       

      
        	
                If
                  to the Company:

              	
                Astrata
                  Group Incorporated

                950
                  South Coast Drive, Suite 265

                Costa
                  Mesa, California 92626-1776

                Attention:
                  Chief Executive Officer

                Tel.
                  No.: (714) 641-1512

                Fax
                  No.:  (714) 360-0535

              


         

        
          
            
            

          

          
            -28-

            
              

            

          

          
            
            

          

        

        
          	 	 
	
                  with
                    copies to:

                	
                  Anslow
                    & Jaclin, LLP

                  195
                    Route 9 South, Suite 204

                  Manalapan,
                    New Jersey 07726

                  Attention:
                    Richard I. Anslow, Esq.

                  Tel.
                    No.: (732) 409-1212

                  Fax
                    No.: (732) 577-1188

                
	 	 
	
                  If
                    to any Purchaser:

                	
                  At
                    the address of such Purchaser set forth on Exhibit A to this Agreement, with
                    copies to
                    Purchaser’s counsel as set forth on Exhibit
                    A or as
                    specified in writing by such Purchaser with copies to:

                
	 	 
	 	
                  Kramer
                    Levin Naftalis & Frankel LLP

                  1177
                    Avenue of the Americas

                  New
                    York, New York 10036

                  Attention:
                    Christopher S. Auguste

                  Tel
                    No.: (212) 715-9100

                  Fax
                    No.: (212) 715-8000

                


        

         

      

      Any
        party
        hereto may from time to time change its address for notices by giving at
        least
        ten (10) days written notice of such changed address to the other party
        hereto.

       

      Section
        7.5      Waivers.  No
        waiver by either party 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 other provisions, condition or requirement
        hereof,
        nor shall any delay or omission of any party to exercise any right hereunder
        in
        any manner impair the exercise of any such right accruing to it
        thereafter.

       

      Section
        7.6      Headings.  The
        article, section and subsection headings in this Agreement are for convenience
        only and shall not constitute a part of this Agreement for any other purpose
        and
        shall not be deemed to limit or affect any of the provisions
        hereof.

       

      Section
        7.7     Successors
        and
        Assigns.  This Agreement shall be binding upon and inure to the
        benefit of the parties and their successors and assigns. 

       

      Section
        7.8     No Third
        Party
        Beneficiaries.  This Agreement is intended for the benefit of
        the parties hereto and their respective permitted successors and assigns
        and is
        not for the benefit of, nor may any provision hereof be enforced by, any
        other
        person.

       

      
        
          
          

        

        
          -29-

          
            

          

        

        
          
          

        

      

      Section
        7.9     Governing
        Law.  This Agreement shall be governed by and construed in
        accordance with the internal laws of the State of New York, without giving
        effect to any of the conflicts of law principles which would result in the
        application of the substantive law of another jurisdiction.  This
        Agreement shall not be interpreted or construed with any presumption against
        the
        party causing this Agreement to be drafted.

       

      Section
        7.10   Survival.  The
        representations and warranties of the Company and the Purchasers shall survive
        the execution and delivery hereof and the Closings hereunder.

       

      Section
        7.11   Counterparts.  This
        Agreement may be executed in any number of counterparts, each of which when
        so
        executed shall be deemed to be an original and, all of which taken together
        shall constitute one and the same Agreement and shall become effective when
        counterparts have been signed by each party and delivered to the other parties
        hereto, it being understood that all parties need not sign the same
        counterpart.  In the event that any signature is delivered by
        facsimile transmission or scanned electronic mail (e-mail) attachment, such
        signature shall create a valid binding obligation of the party executing
        (or on
        whose behalf such signature is executed) the same with the same force and
        effect
        as if such facsimile or scanned signature were the original
        thereof.

       

      Section
        7.12   Publicity.  The
        Company agrees that it will not disclose, and will not include in any public
        announcement, the name of the Purchasers without the consent of the Purchasers
        unless and until such disclosure is required by law or applicable regulation,
        and then only to the extent of such requirement.

       

      Section
        7.13   Severability.  The
        provisions of this Agreement and the Transaction Documents are severable
        and, in
        the event that any court of competent jurisdiction shall determine that any
        one
        or more of the provisions or part of the provisions contained in this Agreement
        or the Transaction Documents shall, for any reason, be held to be invalid,
        illegal or unenforceable in any respect, such invalidity, illegality or
        unenforceability shall not affect any other provision or part of a provision
        of
        this Agreement or the Transaction Documents and such provision shall be reformed
        and construed as if such invalid or illegal or unenforceable provision, or
        part
        of such provision, had never been contained herein, so that such provisions
        would be valid, legal and enforceable to the maximum extent
        possible.

       

      Section
        7.14   Further
        Assurances.  From and after the date of this Agreement, upon
        the request of any Purchaser or the Company, each of the Company and the
        Purchasers shall execute and deliver such instrument, documents and other
        writings as may be reasonably necessary or desirable to confirm and carry
        out
        and to effectuate fully the intent and purposes of this Agreement, the Preferred
        Shares, the Conversion Shares, the Warrants, the Warrant Shares, the Certificate
        of Designation, and the Registration Rights Agreement.

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
        
          
          

        

        
          -30-

          
            

          

        

        
          
          

        

      

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

       

      
        	 	
                ASTRATA
                  GROUP INCORPORATED

              
	 	 
	 	 
	 	
                By:
                  /s/
                  Martin George
                  Euler

              
	 	
                      Name:
                  Martin George Euler

                      Title:   Chief
                  Executive Officer

              


      

      


      


      
        	 	
                PURCHASER

              
	 	 
	 	
                
                

                VISION
                  OPPORTUNITY CHINA LIMITED PARTNERSHIP

              
	 	 
	 	 
	 	
                By:        /s/
                  Adam Benowitz

                Authorised
                  Signatory

                Vision
                  Opportunity China GP Limited

                acting
                  in its capacity as general partner
                  of

                Vision
                  Opportunity China Limited
                  Partnership

              
	 	 
	 	 
	 	
                
                

                VISION
                  OPPORTUNITY MASTER FUND LTD

              
	 	 
	 	 
	 	
                By:        /s/
                  Adam Benowitz

                Name:
                  Adam
                  Benowitz

                Title:
                  Director

              
	 	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A to the

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

      ASTRATA
        GROUP INCORPORATED

       

      
        
          	
                  Names
                    and Addresses

                	
                  Number
                    of Preferred Shares

                	
                  Dollar
                    Amount of

                
	
                  of
                    Purchasers

                	
                  & Warrants
                    Purchased

                	
                  Investment

                
	 	 	 
	
                  Vision
                    Opportunity Master Fund, Ltd.

                	
                  Preferred
                    Shares:    324,286

                	
                  $440,000.40

                
	
                  20
                    W 55th
                    Street, 5th
                    floor

                	
                  Series
                    A Warrants: 324,286

                	 
	
                  New
                    York, NY 10019

                	
                  Series
                    B Warrants: 324,286

                	 
	 	
                  Series
                    J Warrants

                	 
	 	
                  (Series
                    B-2

                	 
	 	
                  Preferred
                    Shares):  324,286

                	 
	 	
                  Series
                    C Warrants: 324,286

                	 
	 	
                  Series
                    D Warrants: 324,286

                	 
	 	 	 
	 	 	 
	 	 	 
	
                  Vision
                    Opportunity China LP

                	
                  Preferred
                    Shares:    1,828,571

                	
                  $2,559,999.40

                
	
                  20
                    W 55th
                    Street, 5th
                    floor

                	
                  Series
                    A Warrants: 1,828,571

                	 
	
                  New
                    York, NY 10019

                	
                  Series
                    B Warrants: 1,828,571

                	 
	 	
                  Series
                    J Warrants

                	 
	 	
                  (Series
                    B-2

                	 
	 	
                  Preferred
                    Shares):  1,828,571

                	 
	 	
                  Series
                    C Warrants: 1,828,571

                	 
	 	
                  Series
                    D Warrants: 1,828,571

                	 


        

      

       

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      


      EXHIBIT
        B to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF CERTIFICATE OF DESIGNATION 

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        C-1 to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF SERIES A WARRANT 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        C-2 to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF SERIES B WARRANT 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        C-3 to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF SERIES J WARRANT 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        C-4 to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF SERIES C WARRANT 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        C-5 to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF SERIES D WARRANT 

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      


      EXHIBIT
        D to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF REGISTRATION RIGHTS AGREEMENT 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        E to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF ESCROW AGREEMENT 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      EXHIBIT
        F to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS 

      


      ASTRATA
        GROUP INCORPORATED

      


       

      as
        of
        December __, 2007

       

      [Name
        and
        address of Transfer Agent]

      Attn:  _____________

      


       

      Ladies
        and Gentlemen:

       

      Reference
        is made to that certain Series B Convertible Preferred Stock Purchase Agreement
        (the “Purchase
        Agreement”), dated as of December 19, 2007, by and among Astrata Group
        Incorporated, a Nevada corporation (the “Company”), and the purchasers
        named therein (collectively, the “Purchasers”) pursuant to which
        the Company is issuing to the Purchasers shares of its Series B Convertible
        Preferred Stock, par value $0.0001 per share, (the “Preferred Shares”) and
        warrants (the “Warrants”) to purchase shares
        of the Company’s common stock, par value $0.0001 per share (the “Common
        Stock”).  This letter shall serve as our irrevocable
        authorization and direction to you provided that you are the transfer agent
        of
        the Company at such time to issue shares of Common Stock upon conversion
        of the
        Preferred Shares (the “Conversion Shares”) and
        exercise of the Warrants (the “Warrant Shares”) to or upon
        the order of a Purchaser from time to time upon (i) surrender to you of a
        properly completed and duly executed Conversion Notice or Exercise Notice,
        as
        the case may be, in the form attached hereto as Exhibit I and Exhibit II,
        respectively, (ii) in the case of the conversion of Preferred Shares, a copy
        of
        the certificates representing Preferred Shares being converted or, in the
        case
        of Warrants being exercised, a copy of the Warrants being exercised, and
        (iii)
        delivery of an instruction letter duly executed by a duly authorized officer
        of
        the Company.  So long as you have previously received (x) written
        confirmation from counsel to the Company that a registration statement covering
        resales of the Conversion Shares or Warrant Shares, as applicable, has been
        declared effective by the Securities and Exchange Commission (the “SEC”) under the Securities
        Act
        of 1933, as amended (the “1933
        Act”), and no subsequent notice by the Company or its counsel of the
        suspension or termination of its effectiveness and (y) a copy of such
        registration statement, and if the Purchaser represents in writing that the
        Conversion Shares or the Warrant Shares, as the case may be, were sold pursuant
        to the Registration Statement, then certificates representing the Conversion
        Shares and the Warrant Shares, as the case may be, shall not bear any legend
        restricting transfer of the Conversion Shares and the Warrant Shares, as
        the
        case may be, thereby and should not be subject to any stop-transfer
        restriction.  Provided, however, that if you have not previously
        received those items and representations listed above, then the certificates
        for
        the Conversion Shares and the Warrant Shares shall bear the following
        legend:

       

      “THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT”), OR ANY STATE
        SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
        UNLESS
        REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS,
        OR
        ASTRATA GROUP INCORPORATED SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
        THAT
        REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
        PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      and,
        provided further, that the Company may from time to time notify you to place
        stop-transfer restrictions on the certificates for the Conversion Shares
        and the
        Warrant Shares in the event a registration statement covering the Conversion
        Shares and the Warrant Shares is subject to amendment for events then
        current.

       

      A
        form of
        written confirmation from counsel to the Company that a registration statement
        covering resales of the Conversion Shares and the Warrant Shares has been
        declared effective by the SEC under the 1933 Act is attached hereto as Exhibit
        III.

       

      Please
        be
        advised that the Purchasers are relying upon this letter as an inducement
        to
        enter into the Purchase Agreement and, accordingly, each Purchaser is a third
        party beneficiary to these instructions.

       

      Please
        execute this letter in the space indicated to acknowledge your agreement
        to act
        in accordance with these instructions.  Should you have any questions
        concerning this matter, please contact me at ___________.

       

      Very
        truly yours,

       

      ASTRATA
        GROUP INCORPORATED


      


      By:_____________________________

      Name:___________________________ 
        

      Title:____________________________

       

      ACKNOWLEDGED
        AND AGREED:

       

      [TRANSFER
        AGENT]

       

      By:_________________________________

      Name:_______________________________

      Title:________________________________

      Date:________________________________

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        I

       

      ASTRATA
        GROUP INCORPORATED

      CONVERSION
        NOTICE

       

      Reference
        is made to the Certificate of Designation of the Relative Rights and Preferences
        of the Series B Preferred Stock of Astrata Group Incorporated (the “Certificate
        of Designation”).  In accordance with and pursuant to the Certificate
        of Designation, the undersigned hereby elects to convert the number of shares
        of
        Series B Preferred Stock, par value $0.0001 per share (the “Preferred Shares”),
        of Astrata Group Incorporated, a Nevada corporation (the “Company”), indicated
        below into shares of Common Stock, par value $0.0001 per share (the “Common
        Stock”), of the Company, by tendering the stock certificate(s) representing the
        share(s) of Preferred Shares specified below as of the date specified
        below.

       

      
        
          	
                  Date
                    of Conversion:

                	___________________________________ 
	 	 
	
                  Number
                    of Preferred Shares to be converted:

                	_______________ 
	 	 
	
                  Stock
                    certificate no(s). of Preferred Shares to be converted:

                	_______________ 


        

      

       

      The
        Common Stock have been sold pursuant to the Registration Statement (as defined
        in the Registration Rights Agreement): YES ____NO____

      


      Please
        confirm the following information:

      
         

        
          
            	
                    
                      Conversion
                        Price:

                    

                  	___________________________________ 
	 	 
	
                    
                      Number
                        of shares of Common Stock to
                        be issued:

                    

                  	___________________________________ 


          

        

      

      


      Number
        of
        shares of Common Stock beneficially owned or deemed beneficially owned by
        the
        Holder on the Date of Conversion: _________________________

      


      Please
        issue the Common Stock into which the Preferred Shares are being converted
        and,
        if applicable, any check drawn on an account of the Company in the following
        name and to the following address:

       

      
        
          	
                  Issue
                    to:

                	____________________________________ 
	 	____________________________________ 
	 	 
	
                  Facsimile
                    Number:

                	____________________________________ 
	 	 
	
                  Authorization:

                	____________________________________ 
	 	
                  By:
                    _____________________________

                
	 	
                  Title:________________________________

                
	 	 
	
                  Dated:

                	 


        

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        II

       

      FORM
        OF EXERCISE NOTICE

       

      EXERCISE
        FORM

       

      ASTRATA
        GROUP INCORPORATED

       

      The
        undersigned _______________, pursuant to the provisions of the within Warrant,
        hereby elects to purchase _____ shares of Common Stock of Astrata Group
        Incorporated covered by the within Warrant.

      


      
        	
                Dated:
                  _________________

              	Signature       ___________________________ 
	 	Address        
                _____________________
	 	                       
                _____________________


      

       

      Number
        of
        shares of Common Stock beneficially owned or deemed beneficially owned by
        the
        Holder on the date of Exercise: _________________________

      


      ASSIGNMENT

      


      FOR
        VALUE
        RECEIVED, _________________ hereby sells, assigns and transfers unto
        __________________ the within Warrant and all rights evidenced thereby and
        does
        irrevocably constitute and appoint _____________, attorney, to transfer the
        said
        Warrant on the books of the within named corporation.

       

      
        
          	
                  Dated:
                    _________________

                	Signature       ___________________________ 
	 	Address        
                  _____________________
	 	                       
                  _____________________


        

         

      

      PARTIAL
        ASSIGNMENT

      


      FOR
        VALUE
        RECEIVED, _________________ hereby sells, assigns and transfers unto
        __________________ the right to purchase _________ shares of Warrant Stock
        evidenced by the within Warrant together with all rights therein, and does
        irrevocably constitute and appoint ___________________, attorney, to transfer
        that part of the said Warrant on the books of the within named
        corporation.

      
        


        
          	
                  Dated:
                    _________________

                	Signature       ___________________________ 
	 	Address        
                  _____________________
	 	                       
                  _____________________


        

         

      

      FOR
        USE
        BY THE ISSUER ONLY:

      


      This
        Warrant No. W-_____ canceled (or transferred or exchanged) this _____ day
        of
        ___________, _____, shares of Common Stock issued therefor in the name of
        _______________, Warrant No. W-_____ issued for ____ shares of Common Stock
        in
        the name of _______________.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        III

       

      FORM
        OF NOTICE OF EFFECTIVENESS

      OF
        REGISTRATION STATEMENT

       

      [Name
        and
        address of Transfer Agent]

      Attn:  _____________

      


      Re:           
        Astrata
        Group Incorporated

       

      Ladies
        and Gentlemen:

       

      We
        are
        counsel to Astrata Group Incorporated, a Nevada corporation (the “Company”), and have
        represented the Company in connection with that certain Series B Convertible
        Preferred Stock Purchase Agreement (the “Purchase Agreement”), dated as
        of December 19, 2007, by and among the Company and the purchasers named therein
        (collectively, the “Purchasers”) pursuant to which
        the Company issued to the Purchasers shares of its Series B Convertible
        Preferred Stock, par value $0.0001 per share, (the “Preferred Shares”) and
        warrants (the “Warrants”) to purchase shares
        of the Company’s common stock, par value $0.0001 per share (the “Common
        Stock”).  Pursuant to the Purchase Agreement, the Company has
        also entered into a Registration Rights Agreement with the Purchasers (the
        “Registration Rights
        Agreement”), dated as of December 19, 2007, pursuant to which the Company
        agreed, among other things, to register the Registrable Securities (as defined
        in the Registration Rights Agreement), including the shares of Common Stock
        issuable upon conversion of the Preferred Shares and exercise of the Warrants,
        under the Securities Act of 1933, as amended (the “1933 Act”).  In
        connection with the Company’s obligations under the Registration Rights
        Agreement, on ________________, 2008, the Company filed a Registration Statement
        on Form SB-2 (File No. 333-________) (the “Registration Statement”) with
        the Securities and Exchange Commission (the “SEC”) relating to the
        resale
        of the Registrable Securities which names each of the present Purchasers
        as a
        selling stockholder thereunder.

       

      In
        connection with the foregoing, we advise you that a member of the SEC’s staff
        has advised us by telephone that the SEC has entered an order declaring the
        Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS]
        on [ENTER DATE OF
        EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a
        member of the SEC’s staff, that any stop order suspending its effectiveness has
        been issued or that any proceedings for that purpose are pending before,
        or
        threatened by, the SEC and accordingly, the Registrable Securities are available
        for resale under the 1933 Act pursuant to the Registration
        Statement.

       

      Very
        truly yours,

       

      [COMPANY
        COUNSEL]

       

      By:_______________________________

       

      cc:           
        [LIST NAMES OF
        PURCHASERS]

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        G to the 

      SERIES
        B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR 

      ASTRATA
        GROUP INCORPORATED

      


      FORM
        OF OPINION OF COUNSEL 

      


      1.           
        The Company is a corporation duly incorporated, validly existing and in good
        standing under the laws of the State of Nevada and has the requisite corporate
        power to own, lease and operate its properties and assets, and to carry on
        its
        business as presently conducted. The Company is duly qualified as a foreign
        corporation to do business and is in good standing in every jurisdiction
        in
        which the nature of the business conducted or property owned by it makes
        such
        qualification necessary.

      


      2.           
        The Company has the requisite corporate power and authority to enter into
        and
        perform its obligations under the Transaction Documents and to issue the
        Preferred Stock, the Warrants and the Common Stock issuable upon conversion
        of
        the Preferred Stock and exercise of the Warrants. The execution, delivery
        and
        performance of each of the Transaction Documents by the Company and the
        consummation by it of the transactions contemplated thereby have been duly
        and
        validly authorized by all necessary corporate action and no further consent
        or
        authorization of the Company or its Board of Directors or stockholders is
        required. Each of the Transaction Documents have been duly executed and
        delivered, and the Preferred Stock and the Warrants have been duly executed,
        issued and delivered by the Company and each of the Transaction Documents
        constitutes a legal, valid and binding obligation of the Company enforceable
        against the Company in accordance with its respective terms. The Common Stock
        issuable upon conversion of the Preferred Stock and exercise of the Warrants
        are
        not subject to any preemptive rights under the Articles of Incorporation
        or the
        Bylaws.

      


      3.           
        The Preferred Stock and the Warrants have been duly authorized and, when
        delivered against payment in full as provided in the Purchase Agreement,
        will be
        validly issued, fully paid and nonassessable. The shares of Common Stock
        issuable upon conversion of the Preferred Stock and exercise of the Warrants,
        have been duly authorized and reserved for issuance, and, when delivered
        upon
        conversion or against payment in full as provided in the Certificate of
        Designation and the Warrants, as applicable, will be validly issued, fully
        paid
        and nonassessable.

      


      4.           
        The execution, delivery and performance of and compliance with the terms
        of the
        Transaction Documents and the issuance of the Preferred Stock, the Warrants
        and
        the Common Stock issuable upon conversion of the Preferred Stock and exercise
        of
        the Warrants do not (i) violate any provision of the Articles of Incorporation
        or Bylaws, (ii) conflict with, or constitute a default (or an event which
        with
        notice or lapse of time or both would become a default) under, or give to
        others
        any rights of termination, amendment, acceleration or cancellation of, any
        material agreement, mortgage, deed of trust, indenture, note, bond, license,
        lease agreement, instrument or obligation to which the Company is a party,
        (iii)
        create or impose a lien, charge or encumbrance on any property of the Company
        under any agreement or any commitment to which the Company is a party or
        by
        which the Company is bound or by which any of its respective properties or
        assets are bound, or (iv) result in a violation of any federal, state, local
        or
        foreign statute, rule, regulation, order, judgment, injunction or decree
        (including federal and
        state securities laws and regulations) applicable to the Company or by which
        any
        property or asset of the Company is bound or affected, except, in all cases
        other than violations pursuant to clauses (i) and (iv) above, for such
        conflicts, default, terminations, amendments, acceleration, cancellations
        and
        violations as would not, individually or in the aggregate, have a Material
        Adverse Effect.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      5.           
        No consent, approval or authorization of or designation, declaration or filing
        with any governmental authority on the part of the Company is required under
        federal, state or local
        law, rule or regulation in connection with the valid execution and delivery
        of
        the Transaction Documents, or the offer, sale or issuance of the Preferred
        Stock, the Warrants or the Common Stock issuable upon conversion of the
        Preferred Stock and exercise of the Warrants other than the Certificate of
        Designation and the Registration Statement.

      


      6.           
        There is no action, suit, claim, investigation or proceeding pending or
        threatened against the Company which questions the validity of this Agreement
        or
        the transactions contemplated hereby or any action taken or to be taken pursuant
        hereto or thereto. There is no action, suit, claim, investigation or proceeding
        pending, or to our knowledge, threatened, against or involving the Company
        or
        any of its properties or assets and which, if adversely determined, is
        reasonably likely to result in a Material Adverse Effect. There are no
        outstanding orders, judgments, injunctions, awards or decrees of any court,
        arbitrator or governmental or regulatory body against the Company or any
        officers or directors of the Company in their capacities as such.

      


      7.           
        The offer, issuance and sale of the Preferred Stock and the Warrants and
        the
        offer, issuance and sale of the shares of Common Stock issuable upon conversion
        of the Preferred Stock and exercise of the Warrants pursuant to the Purchase
        Agreement, the Certificate of Designation and the Warrants, as applicable,
        are
        exempt from the registration requirements of the Securities Act.

      


      8.           
        The Company is not, and as a result of and immediately upon Closing will
        not be,
        an "investment company" or a company "controlled" by an "investment company,"
        within the meaning of the Investment Company Act of 1940, as
        amended.

      


      


      Very
        truly yours