Document:

x109.htm

    
      

      

    

    Exhibit
10.9

     

    
       

       

      ROSS
MILLER

      Nevada
Secretary of State

      

      204 North
Carson Street, Ste 1

      Carson
City, Nevada 89701-4299

      (715) 684
6708

      

      Website:
secretaryofstate.biz

      

      

      Certificate
of Designation

      (PURSUANT
TO NRS 78.1955)

       

      
        
          	
                  USE
      BLACK INK ONLY – DO NOT HIGHLIGHT

                	
                  ABOVE
      SPACE IS FOR OFFICE USE ONLY

                

        

      

      

      

      Certificate of
Designation

      For Nevada Profit
Corporations

      (Pursuant
to NRS 78.1955)

      

      1.  Name
of corporation:

      

      NEXTPHASE
WIRELESS, INC.

      
 

      2.
 By resolution of the board of directors pursuant to a provision in the
articles of incorporation, this certificate establishes the following regarding
the voting powers, designations, preferences, limitations, restrictions and
relative rights of the following class or series of stock.

      

      Six
Hundred Thousand (600,000) shares of Series A Preferred Stock, par value $4.001
per share- The attached Certificate of Designation is incorporated herein by
this reference.

      

      3.  Effective
date of filing
(optional):                                                           9/30/08

      (must not
be later than 90 days after the certificate is filed)

      

      

      4.  Officer
Signature                                                                           X           /s/
Thomas Hemingway

      

      

      Filing
Fee: $175.00

      

      IMPORTANT:
Failure to include any of the above information and submit the proper fees may
cause this filing to be rejected.

      

      This form
must be accompanied by appropriate fees. 

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    SECURITIES
EXCHANGE AGREEMENT

     

    THIS
SECURITIES EXCHANGE AGREEMENT (“Agreement”), dated
for reference purposes as of September 30, 2008, is made and entered into by and
among NEXTPHASE WIRELESS, INC., a Nevada corporation (the “Company”), and the
person or persons identified on Schedule I attached hereto, or any supplement to
such Schedule (“Schedule I”),
severally and not jointly (each individually, the “Investor” and
collectively, the “Investors”).

     

    RECITALS

     

    
      	
              A.  

            	
              Each
      Investor desires either (a) to surrender, cancel and release promissory
      notes issued by the Company and all claims, interest or other charges
      thereunder and all security therefor (“Notes”) or
      other accounts payable of the Company (“Payables”) or
      (b) to pay cash (“Cash”)
      (collectively, the Notes, Payables and Cash are herein called the “Consideration”)
      in exchange for that total number of shares of Series A Preferred Stock,
      $0.001 par value per share, of the Company set forth in the column
      entitled the “Preferred Stock Amount” on Schedule I
      attached hereto (the “Preferred
      Stock”) having an original issue price equal to the Consideration
      as shown on Schedule I
      attached hereto and having the rights, preferences and privileges
      described in the Certificate of Designation (the “Certificate of
      Designation”) attached hereto as Exhibit
      A.

            

    

     

    
      	
              B.  

            	
              Upon
      the terms and subject to the conditions of this Agreement, the Company
      desires to issue to the Investors shares of the Preferred Stock which are
      convertible into shares of Common Stock, $0.001 par value per share, of
      the Company (the “Conversion
      Shares”).  The Preferred Stock and the Conversion Shares
      are herein called collectively, the “Securities”.

            

    

     

    AGREEMENTS

     

    In
consideration of the promises and the respective agreements, covenants,
representations and warranties contained herein and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

    

    ARTICLE
1

     

    ISSUANCE
OF SECURITIES

     

    1.1 Exchange of Securities for
the Consideration.  Upon the terms and subject to the
conditions set forth herein, and in reliance upon the respective representations
and warranties of the parties set forth herein, the Company hereby agrees to
issue to each Investor at Closing (as defined herein) that number of shares of
the Preferred Stock set forth in the column entitled “Preferred Stock Amount”
opposite such Investor’s name on Schedule I attached
hereto, aggregating that total number of shares of the Preferred Stock set forth
in the column entitled “Preferred Stock Amount” on Schedule I attached
hereto for all Investors (the “Shares”) for a
purchase price per share of $10.00 (the “Purchase Price”), and
such Investor agrees to transfer, assign and deliver to the Company that amount
of the Consideration set forth on the column entitled “Total Consideration”
opposite such Investor’s name on Schedule I attached
hereto.

     

    1.2 Closing.  The
closing of the exchange of the Consideration for the Preferred Stock hereunder
(the “Closing”)
will take place at the principal office of the Company or another place as shall
be mutually agreed by the Company and the Investors.  The Closing
shall take place on September 30, 2008 at 11:59 pm local time (“Closing
Date”).  Documents requiring a party's signature may be
delivered electronically at or prior to the Closing, and each Investor covenants
to promptly after the Closing forward originally-signed copies of such documents
to the Company.  Each party agrees to, and not to contest, the
validity and enforceability of all documents delivered
electronically.  Each party agrees that all deliveries made in
connection with the Closing pursuant to this Section 1.2 shall be
deemed to occur and be exchanged simultaneously, even if the Investors and the
Company may make such deliveries by means other than in person.  At
the Closing:

     

    (a) the
Company will deliver to each Investor (i) a certificate representing shares of
the Preferred Stock in the amount set forth opposite such Investor's name in the
column entitled “Preferred Stock Amount” on Schedule 1 attached
hereto, and, if applicable, such amount shall reflect interest accrued to and
including the Closing Date; (ii) a copy of the Certificate of Designation of the
Preferred Stock certified by an officer of the Company (to be followed within
two business days by a file-stamped by the office of the Nevada Secretary of
State); (iii) certified resolutions of the Board of Directors of the Company
authorizing the transactions contemplated by this Agreement and the execution
and delivery of the documents contemplated by this Agreement, and (iv) such
further documents and instruments as may be reasonably requested by such
Investor in order to carry out the terms and provisions of this Agreement;
and

     

    (b) each
Investor will deliver or will have delivered to the Company (i) the Notes, if
any, or Cash; (ii) an instrument executed by such Investor cancelling the Notes
or Payables, as the case may be, and waiving any interest accruing after the
Closing Date, substantially in the form attached hereto as Exhibit B, (iii)
releases and terminations of any security for the Notes or Payables in form and
substance reasonably acceptable to the Company, (iv) certification on Form W-9
of the Investor's taxpayer identification number, (v) such information as is
acceptable to the Company to document and confirm the Investor's investor
qualifications; and (vi) such further documents and instruments as may be
reasonably requested by the Company in order to carry out the terms and
provisions of this Agreement.  The Company's making of the deliveries
under Section
1.2(a) shall be deemed not to waive any of the deliveries required by
this Section
1.2(b); and each Investor shall make all such deliveries either at or
promptly after the Closing and, in any case, immediately upon request of the
Company.

     

    
      
        
        

      

      
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    ARTICLE
2

     

    CONDITIONS
TO CLOSING BY THE INVESTOR

     

    The
obligation of each Investor to exchange its portion of the Consideration for its
portion of the Preferred Stock at the Closing is subject to the fulfillment of
each of the following conditions:

     

    2.1 Representations and
Warranties Correct.  The representations and warranties made by
the Company in Article III shall be true and correct when made and shall be true
and correct as of the Closing as if made at the Closing.

     

    2.2 Performance.  All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by the Company at or prior to the Closing shall have been
performed or complied with.

     

    2.3 Approval.  The
Company's Board of Directors shall have approved and adopted resolutions
authorizing the execution, delivery and performance by the Company of this
Agreement, the issuance of the Securities and the transactions contemplated
hereby and thereby.

     

    2.4 Due
Diligence.  The Investor shall have become satisfied with (a)
the information received from or made available by the Company and all other
relevant information obtained by the Investor relevant to a decision to invest
in the Company's Securities and (b) the extent and scope of the information made
available by the Company at the Investor's request.

     

    2.5 No Material Adverse
Change.  There shall not have occurred any material adverse
change in the Company's business or financial condition, exclusive of any
changes in the general economy or business environment that do not selectively
affect the Company.

     

    2.6 Invention Assignments and
Confidentiality Agreements.  The Company shall have entered
into assignment of inventions and confidentiality agreements with each of its
key employees.

     

    2.7 Consent to Amendment of
Articles.  The Board of Directors of the Company shall have
approved and recommended to the Company's shareholders, and Thomas Hemingway
(“Hemingway”)
and Robert Ford (“Ford”) shall have
consented in writing and granted to an acceptable representative of the
Investors, an irrevocable proxy to consent in writing or by vote, to approve and
adopt an amendment of the Articles of Incorporation of the Company (the “Amendment”) that
changes the number of authorized shares of Common Stock from ten million
(10,000,000) to fifty million (50,000,000) and makes no other
change.  The voting power of Hemingway and Ford shall be sufficient to
approve the Amendment if voted in favor of the Amendment together with the
voting power of the holders of the Preferred Stock immediately after the
Closing.

     

    ARTICLE
3

     

    REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

     

    Except as
set forth on a Schedule of Exceptions dated the date hereof delivered by the
Company to the Investors (the “Schedule of
Exceptions”), the Company hereby represents and warrants to each Investor
that the statements contained in this Article III are true and complete as of
the date of this Agreement.  The Schedule of Exceptions shall be
arranged in sections corresponding to the numbered and lettered sections and
subsections contained in this Article III (provided that the Company's filings
with the SEC that are available on the SEC's web site at http://www.sec.gov
shall be deemed incorporated by reference into each section of the Schedule of
Exceptions), and the disclosures in any section or subsection of the Schedule of
Exceptions shall qualify other sections and subsections in this Article III only
to the extent it is clear from a reasonable reading of the disclosure that such
disclosure is applicable to such other sections and subsections.  When
used in this Article III, the phrase “knowledge” shall mean the actual knowledge
possessed by Thomas Hemingway or Robert Ford after reasonable due
inquiry.

     

    3.1 Organization, Good Standing
and Qualification.  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada.  The Company is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions in
which failure to so qualify, individually or in the aggregate, would not have,
or would not reasonably be expected to have, a Material Adverse
Effect.  The Company has all requisite corporate power and authority
to own and operate its properties and assets, to execute and deliver this
Agreement and the other Transaction Agreements, and to issue and sell the Shares
and the Conversion Shares, to carry out the provisions of this Agreement and the
other Transaction Agreements and to carry on its business as presently conducted
and as presently proposed to be conducted.

     

    3.2 Authorization; Binding
Obligations.  All corporate action on the part of the Company,
its stockholders, officers and directors necessary for the authorization of this
Agreement and the other Transaction Agreements, the performance of all
obligations of the Company hereunder and thereunder at the Closing and as
contemplated thereafter, and the authorization, sale, issuance and delivery of
the Shares pursuant hereto and the Conversion Shares pursuant to the Charter
shall have been taken on or prior to the Closing.  This Agreement is,
and the Transaction Agreements, when executed and delivered, will be, valid and
binding obligations of the Company, enforceable in accordance with their terms,
except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors’ rights, and (b) general principles of equity that restrict the
availability of equitable remedies.  The offer and sale of the Shares,
and the Common Stock issuable upon conversion of the Shares, are not subject to
any preemptive rights or rights of first refusal.

     

    
      
        
        

      

      
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    3.3 Capitalization; Valid
Issuance of Capital Stock; Voting Rights.

     

    (a) The
authorized capital stock of the Company immediately prior to the Closing
consists of 10,000,000 shares of Common Stock, $0.001 par value per share, and
20,000,000 shares of Preferred Stock, $0.001 par value per share, of which
600,000 shares are designated Series A Preferred Stock.

     

    (b) There are
6,571,181 shares of Common Stock outstanding as of September 29,
2008.  After giving effect to the filing of the Charter and
immediately after the Closing, there will be outstanding not more than 600,000
shares of Series A Preferred Stock.  There are 36,778 shares of Common
Stock reserved for issuance under outstanding stock options (the “Current Options”),
38,000 shares of Common Stock reserved for issuance upon exercise of outstanding
warrants and 223,034 shares of Common Stock reserved for issuance under
outstanding convertible promissory notes, including interest accrued as of
September 30, 2008.  The Company has reserved 2,000,000 shares of
Common Stock for issuance under the Plan.  The Company has no other
shares of capital stock authorized, issued or outstanding.

     

    (c) All
issued and outstanding shares of Common Stock (i) have been duly authorized and
validly issued, (ii) are fully paid and non-assessable, and (iii) were issued in
compliance with all applicable state and federal laws concerning the issuance of
such securities.  All other securities, including convertible notes
and warrants, were issued in compliance with all applicable state and federal
laws concerning the issuance of such securities.

     

    (d) Other
than as set forth in Section 3.3(b) above
and on Section
3.3 of the Schedule of Exceptions, there are no (i) outstanding options,
warrants, rights (including conversion, exchange or preemptive rights or rights
of first refusal) or Contracts of any kind for the purchase or acquisition from
the Company of any of its securities, (ii) Contracts for acceleration or other
changes in the vesting provisions or other terms of such Contract as the result
of any merger, consolidation, sale of stock or assets, change in control or any
other transaction(s) by or involving the Company or (iii) proxy or shareholder
voting agreements with respect to the voting of equity securities of the
Company.

     

    (e) When
issued pursuant to this Agreement and the Charter, the Shares and the Conversion
Shares will be validly issued, fully paid and non-assessable, and will be free
of any liens or encumbrances and any preemptive rights or rights of first
refusal; provided, however, that the Shares and the Conversion Shares may be
subject to restrictions on transfer under state and/or federal securities laws
at the time a transfer is proposed.  The rights, preferences,
privileges and restrictions of the Series A Preferred Stock, including the
Shares, are as stated in the Charter.

     

    (f) Except as
required pursuant to the Registration Rights Agreement, the Company is presently
not under any obligation, and has not granted any rights, to register under the
Securities Act of 1933, as amended (the “Securities Act”), any
of the Company’s presently outstanding securities or any of its securities that
may hereafter be issued.

     

    (g) Section 3.3(g)
contains a list of all convertible securities that are subject to anti-dilution
protection and the current conversion price.  Since the inception of
the Company, there are no convertible securities outstanding, the conversion
price of which has been or should have been adjusted pursuant to anti-dilution
protection (except for proportional adjustments in the event of stock splits,
stock dividends, or other customary adjustments for mergers and the
like).  There are no convertible securities outstanding that will be
subject to an anti-dilution conversion price adjustment in connection with the
transactions contemplated by this Agreement.

     

    (h) As of the
date of this Agreement, all equity incentive plans of the Company previously
implemented have been modified such that no further grants thereunder are
permitted and, except as to any previously outstanding awards, there are no
equity incentive plans currently in place.  Substantially all of the
options issued under such previous equity incentive plans have been cancelled or
terminated prior to exercise and only the Current Options are
outstanding.  A list of such Current Options and the related option
holder, as well as the date of termination or expiration of each such Current
Option is set forth on Section 3.3(h) of the
Schedule of Exceptions.

     

    (i) As of the
date of this Agreement, Thomas Hemingway is the only executive officer of the
Company who holds shares of capital stock of the Company.

     

    3.4 Offering
Valid.  Assuming the accuracy of the representations of the
Investors in Article IV of this Agreement and subject to the filings described
in Section 3.8
below, the Shares and the Conversion Shares will be issued in compliance with
all registration, qualification or similar requirements of applicable federal
and state securities laws.  Neither the Company nor any agent on its
behalf has solicited or will solicit any offers to sell or has offered to sell
or will offer to sell all or any part of the Shares to any person or persons so
as to bring the sale of such Shares by the Company to the Investors within the
registration provisions of the Securities Act or any state securities
laws.

     

    3.5 Corporate Records; Minute
Books.  True, correct and complete copies of the Company's
Charter (prior to adoption of the Certificate of Designation), Bylaws and all
amendments thereto are available to each Investor for review on the SEC web site
at http://www.sec.gov.  Such Charter and By-laws are in full force and
effect.  The minute books of the Company have been made available to
the Investors or their counsel and contain a complete summary of all meetings
and actions by written consent of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.  The stock ledger of the Company
has been made available to the Investors or their counsel and is complete and
reflects all insurances, transfers, repurchases and cancellations of shares of
capital stock of the Company.

     

    3.6 Subsidiaries.  The
Company does not own or control, directly or indirectly, any interest in any
other corporation, association, partnership, limited liability company or other
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.

     

    
      
        
        

      

      
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    3.7 Compliance with Other
Instruments.  The Company is not in violation or default (a) of
any term of its certificate of incorporation or by-laws, (b) of any provision of
any Contract to which it is party or by which it is, or any of its properties or
assets are, bound or (c) of any judgment, decree, order, writ, statute, rule or
regulation applicable to the Company or any of its properties or
assets.  The execution, delivery, and performance of and compliance
with this Agreement and the other Transaction Agreements, and the issuance and
sale of the Shares pursuant hereto and the Conversion Shares pursuant to the
Charter, will not, with or without the passage of time or giving of notice,
result in any such violation, or be in conflict with or constitute a default
under any such term, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or the
suspension, revocation, impairment, forfeiture or non-renewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.

     

    3.8 Consents.  No
consent, approval, order, or authorization of, or registration, qualification,
designation, declaration, or filing with, any federal, state, or local
governmental authority or any other Person on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for (a) the filing of the Charter with the Secretary of
State of the State of Nevada; (b) any filings or compliance required under
applicable state “blue sky” laws, which filings or compliance will be effected
in accordance with such laws; and (c) any filings under the Securities Act of
1933, including the filing of a Form D.

     

    3.9 Litigation.  There
is no action, suit, proceeding or investigation pending or, to the Company’s
knowledge, currently threatened against or directly affecting the Company that
questions the validity of this Agreement or the other Transaction Agreements or
the right of the Company to enter into any of such agreements, or to consummate
the transactions contemplated hereby or thereby, or which might result in,
either individually or in the aggregate, an adverse effect on the assets
(including intangible assets), condition (financial or otherwise), affairs,
business, property, prospects or results of operations of the Company, nor is
the Company aware that there is any basis for the foregoing.  There is
no action, suit, proceeding or investigation by the Company pending or which the
Company intends to initiate.

     

    3.10 Compliance with
Laws.  No governmental orders, permissions, consents, approvals
or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and or the other Transaction Agreements and the
issuance of the Shares or the Conversion Shares except such as have been duly
and validly obtained or filed, or with respect to any filings that must be made
after each Closing, as will be filed in a timely manner.  The Company
is in compliance with and has not violated, in any material respect, any
applicable provisions of any laws, statutes, ordinances or regulations, and the
Company is in compliance with the terms of any judgments, orders, decrees,
injunctions or writs applicable to the Company or its properties or
assets.

     

    3.11 Financial
Statements.  The audited financial statements of the Company
contained in its Form 10-KSB filed with the Securities and Exchange Commission
(“SEC”) on July
15, 2008 and unaudited financial statements of the Company contained in its Form
10-Q filed with the SEC on August 19, 2008 (“Financial
Statements”) are available to Investor for review on the SEC web site at
http://www.sec.gov.  The Financial Statements have been prepared in
accordance with U.S. generally accepted accounting principles (“GAAP”) applied on a
consistent basis throughout the periods indicated, except that the unaudited
Financial Statements may not contain all footnotes required by
GAAP.  The Financial Statements fairly present the financial condition
and operating results of the Company as of the dates, and for the periods,
indicated therein, subject in the case of the unaudited Financial Statements to
normal year-end audit adjustments. The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with GAAP.

     

    3.12 Absence of Undisclosed
Liabilities.  Except as and to the extent reflected or reserved
against in the Financial Statements and except for liabilities or obligations
arising in the ordinary course of business since June 30, 2008, there are no
liabilities or obligations of the Company of any kind whatsoever, whether
interest-bearing indebtedness or liabilities or obligations accrued, contingent,
absolute, determined, determinable, known, unknown or otherwise.

     

    3.13 Changes.  Since
June 30, 2008, there has not been any event or condition of any type that has
caused or would reasonably be expected to cause a Material Adverse Effect,
excluding general economic conditions.

     

    3.14 Material
Contracts.  True, correct and complete copies of each Material
Contract are available to each Investor for review on the SEC web site at
http://www.sec.gov.  Each such Material Contract is the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights, and (b) general principles of equity
that restrict the availability of equitable remedies.  The Company has
not assigned, mortgaged, pledged, encumbered or otherwise hypothecated any of
its rights, title and interest under any Material Contract.  There has
not occurred any material breach, violation or default or any event that, with
the lapse of time, the giving of notice or the election of any Person, or any
combination thereof, would constitute a material breach, violation or default by
the Company under any such Material Contract or by any other Person to any such
Material Contract.  The Company has not been notified that any party
to any Material Contract intends to amend, cancel, terminate, not renew or
exercise an option under any Material Contract, whether in connection with the
transactions contemplated hereby or otherwise.

     

    
      
        
        

      

      
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    3.15 Intellectual
Property.  The Company owns or possesses sufficient legal
rights to all Company Intellectual Property without any known conflict with, or
infringement of, the rights of others.  To the Company's knowledge, no
product or service marketed or sold (or proposed to be marketed or sold) by the
Company violates or will violate any license or infringes or will infringe any
Intellectual Property of any other Person.  Other than with respect to
commercially available software products under standard end-user object code
license agreements and commercially available hardware products under patent or
contractual restrictions, there are no outstanding options, licenses,
agreements, claims, encumbrances or shared ownership interests of any kind
relating to the Company Intellectual Property, nor is the Company bound by or a
party to any Contracts with respect to the Intellectual Property of any other
Person.  The Company has not received any communications alleging that
the Company has violated or, by conducting its business as presently conducted
or as presently proposed to be conducted, would violate any of the Intellectual
Property of any other Person.  The Company is not aware that any of
its employees is obligated under any Contract (including, without limitation,
any licenses, covenants or commitments of any nature) or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
the Company or that would conflict with the Company’s business as presently
conducted or as presently proposed to be conducted.  Neither the
execution nor delivery of this Agreement or the other Transaction Agreements,
nor the carrying on of the Company’s business by the employees of the Company,
nor the conduct of the Company’s business as presently conducted or as presently
proposed to be conducted, will conflict with or result in a breach of any of the
terms, conditions or provisions of, or constitute a default under, any Contract,
under which any of such employees is now obligated.  The Company has
obtained and possesses valid licenses to use all of the software programs
present on the computers and other software-enabled electronic devices that it
owns or leases or that it has otherwise provided to its employees for their use
in connection with the Company’s business.  To the Company’s
knowledge, it will not be necessary to use any inventions of any of its
employees, consultants or independent contractors (or Persons it currently
intends to hire) made prior to their employment by or performance of services
for, the Company.  Each employee, consultant and independent
contractor has assigned to the Company all Intellectual Property he, she or it
owns that are related to the Company’s business as presently conducted and as
presently proposed to be conducted.

     

    3.16 Title to Property and
Assets.

     

    (a) Subject
to Section 3.16
of the Schedule of Exceptions, the Company has good and marketable title to its
properties and assets necessary for its business as presently conducted and as
presently proposed to be conducted clear of any defects in title which could
materially impair the Company’s ownership or use of such property or assets and
free of any liens, claims or encumbrances.  With respect to the
property and assets it leases, the Company is in material compliance with such
leases and holds a valid leasehold interest, free of any liens, claims or
encumbrances.  The Company does not own any real
property.

     

    (b) All
machinery, equipment, furniture, fixtures and other personal property and all
buildings, structures and other facilities, if any, including, without
limitation, office or other space used by the Company in the conduct of its
business, are in good operating condition and fit for operation in the ordinary
course of business (subject to normal wear and tear) except for any defects
which will not interfere with the conduct of normal operations of the
Company.

     

    3.17 Permits.  The
Company has, and is in material compliance with, the terms of, all franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as presently conducted by it, the lack of which, individually or in the
aggregate, could have a Material Adverse Effect, and the Company reasonably
believes it can obtain any such franchises, permits, licenses or any similar
authority for the conduct of its business as presently proposed to be
conducted.

     

    3.18 Environmental and Safety
Laws.  The Company is not in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety.  No material expenditures are or will be required in order
to comply with any such existing statute, law or regulation.

     

    3.19 Tax Returns and
Payments.  The Company has duly and timely filed all returns
and reports with respect to Taxes (“Tax Returns”) as
required by law.  These Tax Returns, if any, are true and correct in
all material respects.  The Company has paid all Taxes due and has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, stockholder or
other Person.  All other Taxes due and payable by the Company on or
before the Closing, have been paid or will be paid prior to the time they become
delinquent.  The Company has delivered to each Investor correct and
complete copies of all income Tax Returns of the Company since its
inception.  The Company has no knowledge (a) that any of its Tax
Returns have been or are being audited as of the date hereof, or (b) of any
material dispute or claim concerning any Tax liability of the
Company.  The Company has no knowledge of any liability for any Tax to
be imposed upon it or its properties or assets as of the date of this Agreement
that is not adequately provided for.  No claim has been made by a Tax
authority in a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to Tax in that jurisdiction, and to the knowledge of the
Company, there is no valid basis for any such claim.

     

    3.20 Insurance.  The
Company has in full force and effect general commercial, product liability, fire
and casualty insurance policies with extended coverage, in amounts and coverage
reasonable for companies engaged in similar businesses as the
Company.

     

    
      
        
        

      

      
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    3.21 Labor Agreements, Employment
Terms and Relations.

     

    (a) No
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company.  To the Company’s knowledge, no employee of the
Company or consultant or independent consultant with whom the Company has
contracted, is in violation of any term of any employment or consulting
contract, proprietary information agreement or any other Contract relating to
the right of any such individual to be employed by, or to contract with, the
Company.

     

    (b) The
Company is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any Contract, with any labor union, and no labor union
has requested or, to the Company’s knowledge, has sought to represent any of the
employees, representatives or agents of the Company.  There is no
strike or other labor dispute involving the Company pending, or to the Company’s
knowledge, threatened, that could have a Material Adverse Effect, nor is the
Company aware of any labor organization activity involving its employees or the
employees of the Company.

     

    (c) The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the
Company.  The employment of each officer and employee of the Company
is terminable at the will of the Company.  The Company has complied in
all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.

     

    3.22 Employee Benefit
Plans.  The Company does not have any Employee Benefit Plan as
defined in the Employee Retirement Income Security Act of 1974.

     

    3.23 Related Party
Transactions.  Except as set forth in Section 3.23 of the
Schedule of Exceptions, which provides a list of such indebtedness and a related
description, including, but not limited to, the principal, interest and other
material terms, no employee, officer, director, stockholder or consultant of the
Company or member of his or her immediate family (i) is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them or (ii) has any direct or indirect ownership interest in
any Person with which the Company is affiliated or with which the Company has a
business relationship, or any Person that competes with the
Company.

     

    3.24 Executive
Officers.  None of the employees of the Company has been (a)
subject to voluntary or involuntary petition under the federal bankruptcy laws
or any state insolvency law or the appointment of a receiver, fiscal agent or
similar officer by a court for his business or property; (b) convicted in a
criminal proceeding or named as a subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses); (c) subject to any
order, judgment, or decree (not subsequently reversed, suspended, or vacated) of
any court of competent jurisdiction permanently or temporarily enjoining him
from engaging, or otherwise imposing limits or conditions on his engagement in
any securities, investment advisory, banking, insurance, or other type of
business or acting as an officer or director of a public company; or (d) found
by a court of competent jurisdiction in a civil action or by the Securities and
Exchange Commission to have violated any federal or state securities or unfair
trade practices law, which such judgment or finding has not been subsequently
reversed, suspended, or vacated.

     

    3.25 Confidential Information and
Invention Assignment Agreements.  Each current employee,
consultant and officer of the Company has executed an agreement with the Company
regarding confidentiality and proprietary information substantially in the form
or forms made available to the counsel for the Investors (the “Confidential Information
Agreements”).  No current or former employee has excluded works
or inventions from his or her assignment of inventions pursuant to such key
employee’s Confidential Information Agreement.  The Company is not
aware that any of its key employees is in violation thereof.

     

    3.26 Illegal
Payments.  Neither the Company nor any director, officer, agent
or employee of the Company has paid, caused to be paid, or agreed to pay,
directly or indirectly, in connection with the Company: i) to any government or
agency thereof, any agent or any supplier or customer, any bribe, kickback or
other similar payment; ii) any contribution to any political party or candidate
(other than from personal funds of directors, officers or employees not
reimbursed by their respective employers or as otherwise permitted by applicable
law); or iii) intentionally established or maintained any unrecorded fund or
asset or made any false entries on any books or records for any
purpose.

     

    3.27 Brokers.  There
is no investment banker, broker, finder, financial advisor or other Person which
has been retained by or is authorized by the Company to act on behalf of the
Company who is entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.  The Company agrees to
indemnify and hold harmless each Investor from any liability for any commission
or compensation in the nature of a finder’s or broker’s fee arising out of this
transaction (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.

     

    3.28 Full
Disclosure.  The Company provided the Investors with, or made
available to them, all information requested by the Investors in connection with
its decision to purchase the Shares, including all information the Company
believes is reasonably necessary to make such investment
decision.  Neither this Agreement, the attached schedules and
exhibits, the other Transaction Agreements nor any other document delivered by
the Company to the Investors or their attorneys or agents in connection herewith
or therewith or with the transactions contemplated hereby or thereby, taken as a
whole with all other disclosures given or made available, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not
misleading.  There are no facts that (individually or in the
aggregate) result in a Material Adverse Effect on the Company which have not
been disclosed in the Schedule of Exceptions.

     

    
      
        
        

      

      
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    3.29 Definitions.  For
purposes of Article III, the following terms have the respective meanings set
forth below:

     

    “Charter” means the
Company's Articles of Incorporation as heretofore amended and as amended by the
Certificate of Designation.

     

    “Company Intellectual
Property” means all Intellectual Property that is used in connection with
the business of the Company as presently conducted or as presently proposed to
be conducted and all Intellectual Property owned or licensed by the
Company.

     

    “Contracts” means all
written and oral contracts, agreements, deeds, mortgages, leases, indentures,
subleases, licenses, sublicenses, instruments, notes, commitments, commissions,
undertakings, arrangements and understandings.

     

    “Conversion Shares”
means the shares of Common Stock into which the Series A Preferred Stock is
convertible.

     

    “Intellectual
Property” means (i) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements thereon, and all
patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (ii) all trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (iii) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (iv) all trade secrets and
confidential business information (including, without limitation, ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (v) all computer software
(including, without limitation, data and related documentation and except for
any commercial “shrink-wrapped” software) and source codes, (vi) all other
proprietary rights, (vii) all copies and tangible embodiments of the foregoing
(in whatever form or medium) and (viii) all Contracts in connection with the
foregoing.

     

    “Material Adverse
Effect” means a material adverse effect on the assets (including
intangible assets), condition (financial or otherwise), affairs, business,
property, prospects or results of operations of the Company.

     

    “Material Contracts”
means all Contracts (i) that by their terms involve, or would reasonably be
expected to involve, aggregate payments by or to the Company in excess of
$25,000, (ii) under which any of the Company’s properties or assets are subject
or bound, (iii) the breach of which could reasonably be expected to have a
Material Adverse Effect or (iv) that restrict the Company’s ability to conduct
its business anywhere in the world.

     

    “Person” means any
natural person, corporation, partnership, company, limited liability company,
joint venture, association, government, governmental agency, trust,
unincorporated organization or other entity, whether acting in an individual,
fiduciary or other capacity.

     

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

     

    “Shares” means up to
600,000 shares of Series A Preferred Stock, the aggregate shares of Series A
Preferred Stock being sold to the Investors hereunder.

     

    “Taxes” means (i) all
federal, state, local and foreign taxes, charges, duties, fees and assessments
of any kind, (ii) all interest, penalties, fines, additions to tax or additional
amounts imposed with respect to any item described in clause (i), and (iii) any
liability with respect to an item described in clause (i) or (ii) payable as a
transferee or successor, by reason of contract or assumption, under Treasury
Regulation section 1.1502-6 or any similar provision of state, local or foreign
law, or otherwise.

     

    “Transaction
Agreements” means this Agreement, the Registration Rights Agreement, the
Charter and each of the exhibits and schedules thereto.

     

    
      
        
        

      

      
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    ARTICLE
4

     

    REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR

     

    As a
material inducement to the Company to enter into the transactions contemplated
by this Agreement, each Investor, for itself and not for any other Investors,
hereby represents and warrants to the Company:

     

    4.1 Authorization;
Power.  The Investor has all requisite legal power to enter
into this Agreement and to carry out and perform its obligations under the term
of this Agreement. All action on the part of the Investor necessary for the
authorization, execution, delivery and performance by it of this Agreement and
the consummation by it of the transactions contemplated hereby has been taken.
This Agreement is the legal, valid and binding obligation of the Investor,
enforceable against such Investor in accordance with its terms.

     

    4.2 No
Violation.  The execution and delivery of this Agreement by the
Investor, the consummation by the Investor of the transactions provided for
herein or contemplated hereby, and the fulfillment by the Investor of the terms
hereof, will not (with or without notice or passage of time or both): (a) result
in a default, give rise to any right of termination, cancellation or
acceleration, or require any consent or approval under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, loan, license,
agreement, lease or other instrument or obligation to which the Investor is a
party or by which it or any of its assets may be bound, or (b) violate any law,
judgment, order, writ, injunction, decree, statute, rule or regulation of any
court, administrative agency, bureau, board, commission, office, authority,
department or other governmental entity applicable to the Investor or any of its
assets.

     

    4.3 Acquiring Securities for
Investment.

     

    (a) The
Investor will acquire the Securities for investment and not with a view to
distributing all or any part thereof in any transaction that would constitute a
“distribution” within the meaning of the Securities Act of 1933, as amended (the
“Securities
Act”).

     

    (b) The
Investor acknowledges that (i) the Securities have not been registered under the
Securities Act, and (ii) the Securities (and any other stock or securities
issuable upon conversion or exercise thereof) may not be transferred without
registration under the Securities Act or an exemption therefrom.

     

    (c) The
Investor is able to bear the complete loss of the Investor's investment in the
Securities.

     

    (d) The
Investor has had the opportunity to ask questions of, and receive answers from,
the Company and its management concerning its investment in the Securities, and
has received information satisfactory to the Investor.  The Investor
has had the opportunity to review all filings by the Company with the SEC, and
the Investor is familiar with the risk factors described therein.

     

    (e) The
Investor is an “accredited investor” as defined under Regulation D of the
Securities Act and, if the Investor is an entity, it is not an entity formed
solely to make this investment.

     

    (f) The
Investor has the business and financial experience necessary to protect the
Investor's interests in connection with this transaction and to evaluate the
merits and risks of an investment in the Securities (and the Common Stock of the
Company issuable upon conversion or exercise thereof).

     

    4.4 Fees and
Commissions.  The Investor has not made any agreement
obligating the Company to pay any compensation to any finder, broker, advisor or
representative (each, an “Intermediary”)in
connection with the transactions contemplated by this Agreement, and the
Investor agrees to indemnify and hold harmless the Company and each other
Investor from any liability for any compensation to any Intermediary and any
fees and expenses of defending against such liability or alleged liability that
arises from the Investor's breach of this Section 4.4.

     

    4.5 Consent to
Amendment.  This Agreement and surrender of the Notes shall
constitute consent in writing of the Investor to the approval, authorization and
adoption of the Amendment.  This consent is intended to be as valid as
if given by vote at a duly held meeting of the holders of the Preferred
Stock.

     

    
      
        
        

      

      
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    ARTICLE
5

     

    COVENANTS

     

    5.1 Rights of Participation in
Future Offerings.  Each Investor holding Preferred Stock or
Common Stock issuable upon conversion thereof shall have the right to
participate in future equity offerings of the Company in order to have an
opportunity to maintain its equity interest in proportion to the number of
shares of Common Stock it received or could acquire on conversion of Preferred
Stock (“As-Converted
Amount”) before the future equity offering divided by the sum of the
number of shares of Common Stock outstanding before the future equity offering
on a fully-diluted basis (not including convertible securities that have been
reserved but are not issued and outstanding).  The Company shall
provide each such Investor written notice of the terms of the future equity
offering at least fifteen (15) calendar days prior to the last business day on
which the Investor may elect to invest, and such notice shall specify the price
and terms of the future equity offering and the maximum amounts of equity to
which the holder can subscribe.  The right shall be exercised, if at
all, by such Investor's delivery of payment and executed agreements in the same
form as applicable to other investors in the offering.  The right
shall expire as to an Investor as to a particular future equity offering if the
purchase price and agreements shall not have been tendered by the Investor
within fifteen (15) days after notice in writing in given to such
Investor.  The right to participate in any future equity offering
shall exclude the issuances under and in accordance with presently outstanding
options, warrants or convertible notes, future equity compensation under and in
accordance with the Plan (as defined below) and with the relevant provisions of
this Agreement, bona fide acquisitions, commercial financings, or strategic
business arrangements (as approved by the Board of Directors of the Company,
which includes the Series A Directors (as defined in the Charter), and the
holders of a majority of the outstanding shares of Preferred Stock in accordance
with the Charter), and stock splits and stock dividends.  All rights
to participate under this Section 5.1 will
terminate on the first date when not more than twenty-five percent (25%) of the
“Preferred Stock Amount” as listed on Schedule I attached
hereto remain issued and outstanding.

     

    5.2 Co-Sale
Agreement.  Hemingway, by his execution of this Agreement,
hereby covenants to provide each other Investor with ten (10) days' advance
written notice of any proposed sale by Hemingway or his affiliates of any shares
of Preferred Stock and/or Common Stock, or any rights therein, and such notice
will specify the price, terms, date of sale and the purchaser; provided,
however, the Hemingway shall be permitted to sell shares of Common Stock to
unaffiliated third parties without such requirement only to the extent such
shares exceed that number of shares bearing the legend pursuant to the following
provisions.  Each other Investor shall have the right to sell on such
price and terms, on such date and to such purchaser a respective number of
shares of Preferred Stock equal to the total number of shares proposed to be
sold multiplied by a fraction with a numerator equal to the number of shares of
Preferred Stock that such Investor holds and the denominator is equal to the
total number of then outstanding shares of Preferred Stock.  Any
transfer by Hemingway without first complying with this Section 5.2 shall be
void and of no force or effect whatsoever.  The Preferred Stock and at
least that number of shares of Common Stock equal to the greater of (i) 500,000
shares of Common Stock and (i) the majority of shares of Common Stock held by
Hemingway from time to time shall bear an appropriate legend to that
effect.  All co-sale rights under this Section 5.2 will
terminate on the first date when not more than twenty-five percent (25%) of the
“Preferred Stock Amount” as listed on Schedule I attached
hereto remain issued and outstanding.

     

    5.3 Expenses.  On
or about November 5, 2008, the Company shall reimburse up to $5,000 of the
documented fees and costs of one special legal counsel in connection with the
negotiation of this Agreement and the transactions contemplated at the Closing,
and such counsel shall be selected by and serve as counsel to the Investor
acquiring a majority of the Preferred Stock being issued at
Closing.

     

    5.4 Vesting of Employee
Stock.  All stock incentive agreements of the Company with its
or its subsidiaries' employees, consultants, directors or officers shall provide
for periodic vesting, subject to continuation of service, not more accelerated
than ratably over a period of at least three (3) years.

     

    5.5 Registration
Rights.  From and after June 15, 2009, any Investors (except
for Tom) who are not permitted to sell all Preferred Stock held by such
Investors pursuant to Rule 144 within a period of 90 days shall have the right
to (a) demand of registration of the Common Stock receivable or received on
conversion of their Preferred Stock, by written notice to the Company given by a
majority in interest of such, and upon receiving such notice the Company shall
use commercially reasonable efforts to cause a registration statement to
register all such shares for resale to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, to become effective and to remain
effective for a reasonable period of time, not exceeding 20 trading days and (b)
to elect to include their shares on each or any registration statement (other
than a registration statement for an employee equity incentive plan or an
acquisition or other form inappropriate for including their shares) filed by the
Company with the Securities and Exchange Commission.  The Company
shall indemnify, defend and hold harmless each Investor from any loss, claim,
cause of action or demand arising from any allegedly false or misleading
statement in the registration statement, other than regarding any allegedly
false or misleading information provided by any Investor for inclusion in the
registration statement.  The Company shall enter into a registration
rights agreement, substantially in the form attached hereto as Exhibit C with each
Investor who purchases more than thirty percent (30%) of the shares of Preferred
Stock at Closing, and such registration rights agreement shall supersede the
obligations of the Company with respect to such Investor contained in this Section
5.5.

     

    5.6 Information
Rights.  The Company shall file its annual and quarterly
reports with the Securities and Exchange Commission on a timely basis, after the
effects of any extensions permitted by applicable rules.  So long as
an Investor holds at least fifteen percent (15%) of the then outstanding shares
of the Preferred Stock (a “Major Investor”), the
Company shall deliver to such Major Investor such information relating to the
financial condition, business, prospects or corporate affairs of the Company as
such Investor may reasonably request from time to time; provided, that the
Company shall not be obligated to provide written documentation to such Major
Investor more than ten (10) times in each fiscal year.  Each Major
Investor shall also have rights of inspection, in person or through
representatives, of the Company's financial books and records and access to the
Company's financial officers at reasonable times to ask questions and receive
answers concerning the Company's periodic financial statements.  All
information rights under this Section 5.6 will
terminate on the first date when not more than twenty-five percent (25%) of the
“Preferred Stock Amount” as listed on Schedule I attached
hereto remain issued and outstanding.

     

    
      
        
        

      

      
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    5.7 Availability of Information
and Management.  Prior to the Closing, the Company shall make
available to each Investor its facilities, management personnel (including
Hemingway and Ford) and records for purposes of due diligence by such Investor
or such Investor's representatives or advisors.  Each Investor, on
behalf of itself and its representatives or advisors, agrees to hold all
information provided or made available by the Company in strict confidence, not
to use or disclose, and not to permit the use or disclosure, of such information
except for the purpose of determining whether to invest under this Agreement and
for purposes reasonably necessary to enforcement of this Agreement after the
Closing.

     

    5.8 Stock Incentive
Plan.  The Company shall not amend any previously adopted
equity incentive plans (“Prior Plans”) or any
grants made under any previously adopted equity incentive plans (“Prior Grants”) and
shall allow all outstanding Prior Grants to expire in accordance with their
terms or earlier.  The Company shall prepare and submit, after the
Closing, a 2008 Stock Incentive Plan for consideration of the Investors holding
a majority of the outstanding Preferred Stock (in such form as may be approved
by holders of a majority of the outstanding Preferred Stock, the “Plan”).  The
Company shall not approve any amendment of the Plan that increases the amount of
Common Stock issuable under the Plan, accelerates the vesting of the awards
under the Plan or makes the Plan materially more burdensome to the Company, and
the Company shall not adopt or approve any other equity incentive plan or equity
awards for employees, consultants, directors or officers, except, in each such
case, with prior specific approval of holders of the majority of then
outstanding shares of Preferred Stock. All restrictions under Section 5.8 shall
terminate when not more than fifteen percent (15%) of the “Preferred Stock
Amount” as listed on Schedule I attached
hereto remain issued and outstanding.

     

    5.9 Cancellation of Prior Grants
and Voting Agreement.  Hemingway hereby agrees that all Prior
Grants to Hemingway are hereby released, terminated and
cancelled.  Each of Hemingway and Ford, by their signatures on this
Agreement, hereby irrevocably grant to the Investors holding a majority of the
outstanding Preferred Stock the right and proxy to vote and give written consent
on behalf of Hemingway and Ford respectively in favor of the
Amendment.  Such right and proxy is coupled with an
interest.

     

    5.10 No Shop
Clause.  The Company shall not, prior to the Closing, publicize
this Agreement or the terms for purposes of obtaining or seeking to obtain
similar financing on terms more favorable to the Company than those provided in
this Agreement.

     

    5.11 Amendment.  The
Company shall use best efforts to carry out all necessary corporate action to
put into effect promptly after the Closing an increase from 10,000,000 to
50,000,000 in the authorized number of shares of Common Stock.  In the
event such approval shall not have been received by March 31, 2009, the Company
shall offer the Investors an exchange of the Preferred Stock for the Cash, Notes
or Payables, as the case may be, exchanged hereunder for the Preferred Stock,
with interest, if any, accrued from the Closing Date.

     

    5.12 Indemnification.

     

    (a) In
addition to all of the rights and remedies available to each Investor a law or
in equity, the Company shall indemnify each Investor and such subsequent holder
of the Preferred Stock, and their respective affiliates, stockholders, officers,
directors, employees, agents, representatives, successors and permitted assigns
(collectively, the “Indemnified Parties”) and save and hold each of them
harmless against and pay on behalf of or reimburse such party as and when
incurred, for any loss (including without limitation, diminution in value),
liability, demand, claim, action, cause of action, cost, damage, deficiency,
tax, penalty, fine or expense, whether or not arising out of any claims by or on
behalf of any third party, including interest, penalties, reasonable attorneys’
fees and expenses and all reasonable amounts paid in investigation, defense or
settlement of any of the foregoing (collectively, “Losses”) which any such party
may suffer, sustain or become subject to, as a result of, in connection with,
relating or incidental to or by virtue of: (i) any misrepresentation or breach
of a representation or warranty on the part of the Company under Article III;
(i) without duplication of Section 5.12(a)(i), any misrepresentation in or
omission from any of the representations or warranties contained in the
Transaction Agreements, or any of the Schedules thereto, or any of the
certificates or other documents furnished to such Investor by the Company and
contemplated by the Transaction Agreement;  (iii) any non-fulfillment
or breach of any covenant or agreement on the part of the Company under the
Transaction Agreements; or  (iv) any action, demand, proceeding,
investigation or claim by any third party (including, without limitation,
governmental agencies) against or affecting the Company and/or its affiliates or
subsidiaries which, if successful, would give rise to or evidence the existence
of or relate to a breach of (A) any of the representations or warranties at the
time made or (B) covenants of the Company.

     

    (b) The
liability of the Company for indemnification shall not exceed the
Consideration.  The Company shall have no obligation or liability for
indemnification unless the claim exceeds ten percent (10%) of the
Consideration.  The representations and warranties in Section 3.9 and
3.11 through 3.28, inclusive, shall expire on the fourth anniversary of the
Closing Date and the balance shall survive indefinitely, subject to any
applicable statute of limitations.

     

    
      
        
        

      

      
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    ARTICLE
6                                

     

    MISCELLANEOUS

     

    6.1 Survival of Representations
and Warranties.  All representations and warranties contained
herein, or made pursuant hereto, will survive the execution and delivery of this
Agreement.

     

    6.2 Severability.  Whenever
possible, each provision of this Agreement will be interpreted in such a manner
as to be effective and valid under applicable law and to carry out the intent of
the parties, but if any provision of this Agreement is held to be prohibited by
or invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.

     

    6.3 Counterparts.  This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered will be deemed an original, and such counterparts taken
together will constitute one and the same agreement.

     

    6.4 Descriptive
Headings.  The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of this
Agreement.

     

    6.5 Interpretation of
Agreement.  Neither this Agreement, nor any other agreement,
document or instrument referred to herein or executed and delivered in
connection herewith, shall be construed against any party as the principal
draftsperson hereof or thereof.

     

    6.6 Governing
Law.  All questions concerning the construction, validity and
interpretation of, and performance of the obligations imposed by, this Agreement
shall be governed by and construed in accordance with the internal laws of the
State of California applicable to contracts made and wholly to be performed in
that state.

     

    6.7 Waivers and
Amendments.  Except as otherwise expressly provided herein, the
provisions of this Agreement (a) that are for the benefit of the Investor, may
only be waived by the holders of a majority of the Securities then outstanding
on an as-if converted basis, and (b) may be amended only by the written
agreement of the Company and the holders of a majority of the Securities then
outstanding on an as-if converted basis.

     

    6.8 Successors and
Assigns.  Except as otherwise expressly provided herein, all
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto, whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement that are for the benefit of each Investor or any
holder of the Securities are also for the benefit of, and enforceable by, any
subsequent holders of such Securities.

     

    6.9 Notices.  Any
notices required, permitted or desired to be given hereunder shall be delivered
personally, or sent by overnight courier or mailed, registered or certified
mail, return receipt requested, to the following addresses, and shall be deemed
to have been received on the day of personal delivery, one business day after
deposit with an overnight courier or three business days after deposit in the
mail:

     

    If to the
Company, to:

     

      
NEXTPHASE WIRELESS, INC.

      
300 S. Harbor Boulevard, Suite 500

      
Anaheim, CA 92805

      
Attention:  Thomas C. Hemingway, Chief Executive Officer

     

    If to an
Investor, to the address set forth on the respective Investor Signature
Page.

     

    6.10 Delays or
Omissions.  No failure to exercise or delay in the exercise of
any right, power or remedy accruing to any holder of a Securities, upon any
breach or default of the Company under this Agreement will impair any such
right, power or remedy of such holder; nor will it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor will any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.

     

    6.11 Remedies
Cumulative.  All remedies, under this Agreement, the
Securities, by law or otherwise afforded to the holder of the Securities, will
be cumulative and not alternative.

     

    6.12 Time of
Essence.  Time is of the essence under this Agreement, and each
deadline herein is subject to strict enforcement

     

    
      
        
        

      

      
        - 12
-

        
          

        

      

      
        
        

      

    

     

     

     

    6.13 Hemingway
Employment.  Hemingway acknowledges that the Preferred Stock to
be received by Hemingway as set forth on Schedule I includes payment in full of
all unpaid compensation for his services for the Company or any affiliates to
June 30, 2008 and any and all loans extended to the Company through June 30,
2008.  Upon receipt of such Preferred Stock, Hemingway releases the
Company and each affiliate, its respective directors, officers, employees and
other agents, from any claim for unpaid compensation and loans for periods to
June 30, 2008 or for any related breach of the Employment Agreement, dated as
of  November 5, 2007, by and between the Company and
Hemingway.  In the event of any conflict or inconsistency between the
express provisions of this Agreement and the Employment Agreement, dated as
of  November 5, 2007, by and between the Company and Hemingway, the
terms of this Agreement shall control.

     

    6.14 Ford
Agreement.  Ford acknowledges that the Preferred Stock to be
received by Ford as set forth on Schedule I includes payment in full of all
unpaid compensation for his services for the Company or any affiliates and any
and all loans extended to the Company.  Upon receipt of such Preferred
Stock, Ford releases the Company and each affiliate, its respective directors,
officers, employees and other agents, from any claim for compensation, loans,
severance or any other claims whatsoever on account of or related to his
employment, termination of employment, or for any breach of the Employment
Agreement, dated as of  November 5, 2007, by and between the Company
and Ford; provided, the Company's obligation to reimburse Ford for expenses as
previously approved by the Company shall survive this release.  In the
event of any conflict or inconsistency between the express provisions of this
Agreement and the Employment Agreement, dated as of November 5, 2007, by and
between the Company and Ford, the terms of this Agreement shall
control.

     

     

    

    
      
         

      

      
        - 13
-

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first set forth above.

     

     

    NEXTPHASE
WIRELESS, INC.

     

     

    By:       
/s/ Thomas C.
Hemingway                                                                           

    Name:   Thomas
C. Hemingway

    Title:     Chief
Executive Officer and Chief
Financial Officer

     

    

     

     

    /s/ Thomas C.
Hemingway

    Thomas
Hemingway

     

     

    
 

     

    /s/ Robert
Ford

    Robert
Ford

     

    

     

    [INVESTOR
SIGNATURE PAGE FOLLOWS]

     

     

    
      
         

      

      
        - 14
-

        
          

        

      

      
         

      

    

     

     

    [INVESTOR
SIGNATURE PAGE]

     

     

     

    INVESTOR

     

     

    By:  _________________________

     

    Name:

     

    Title:

     

    Address:

     

    

     

    
      
         

      

      
        - 15
-

        
          

        

      

      
         

      

    

     

    SCHEDULE
I

     

    
      	 	 	 	 	 	 	
              Total
      Consideration

            	 	 	
              Preferred
      Stock Amount

            	 
	 
      	 	 	 	 	
              Total

              Interest
      @ 9/30/08

            	 	 	
              Total
      Balance Owing @ 9/30/08

            	 	 	 	 
	
              Investor

            	 	
              Principal

            	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
              Frank
      Moy

            	 	 	22,500.00	 	 	 	2,813.42	 	 	 	25,313.42	 	 	 	2,531	 
	
              James
      Davis

            	 	 	52,500.00	 	 	 	4,740.82	 	 	 	57,240.82	 	 	 	5,724	 
	
              Joseph
      Hinshaw

            	 	 	60,000.00	 	 	 	6,081.37	 	 	 	66,081.37	 	 	 	6,608	 
	
              Tyler
      Cohee

            	 	 	30,000.00	 	 	 	3,029.18	 	 	 	33,029.18	 	 	 	3,303	 
	
              Brueklander
      Family Rev Trust

            	 	 	15,000.00	 	 	 	1,852.60	 	 	 	16,852.60	 	 	 	1,685	 
	
              Chris
      Robinson

            	 	 	30,000.00	 	 	 	3,020.55	 	 	 	33,020.55	 	 	 	3,302	 
	
              Richard
      Chapman

            	 	 	30,000.00	 	 	 	2,983.15	 	 	 	32,983.15	 	 	 	3,298	 
	
              Dunn
      Family Trust

            	 	 	150,000.00	 	 	 	11,515.48	 	 	 	161,515.48	 	 	 	16,152	 
	
              Kenneth
      Miller

            	 	 	15,000.00	 	 	 	1,711.64	 	 	 	16,711.64	 	 	 	1,671	 
	
              Stuart
      Ledsam

            	 	 	120,000.00	 	 	 	11,898.08	 	 	 	131,898.08	 	 	 	13,190	 
	
              Helmstrom
      Family Living Trust

            	 	 	165,000.00	 	 	 	15,304.11	 	 	 	180,304.11	 	 	 	18,030	 
	
              James
      and Patricia Cowles

            	 	 	45,000.00	 	 	 	4,116.58	 	 	 	49,116.58	 	 	 	4,912	 
	
              The
      McKay Trust

            	 	 	60,000.00	 	 	 	5,166.58	 	 	 	65,166.58	 	 	 	6,517	 
	
              Robert
      Edmonson

            	 	 	30,000.00	 	 	 	2,275.48	 	 	 	32,275.48	 	 	 	3,228	 
	
              Stephen
      Cohee

            	 	 	15,000.00	 	 	 	1,245.62	 	 	 	16,245.62	 	 	 	1,625	 
	
              Randolph
      Alan Cole Trust

            	 	 	30,000.00	 	 	 	2,491.23	 	 	 	32,491.23	 	 	 	3,249	 
	
              David
      G. Coe and Larissa F Coe

            	 	 	30,000.00	 	 	 	2,491.23	 	 	 	32,491.23	 	 	 	3,249	 
	
              Richard
      V. and Lynda K. Logoteta

            	 	 	15,000.00	 	 	 	1,245.62	 	 	 	16,245.62	 	 	 	1,625	 
	
              Williamson
      Family Trust

            	 	 	30,000.00	 	 	 	2,002.19	 	 	 	32,002.19	 	 	 	3,200	 
	
              Strain(9)

            	 	 	375,000.00	 	 	 	33,842.47	 	 	 	408,842.47	 	 	 	40,884	 
	
              Strain
      (6)

            	 	 	2,300,000.000	 	 	 	138,378.08	 	 	 	2,438,378.08	 	 	 	243,838	 
	
              Louis
      Alfred Kridle

            	 	 	15,000.00	 	 	 	949.32	 	 	 	15,949.32	 	 	 	1,595	 
	
              James
      Barrett

            	 	 	30,000.00	 	 	 	1,881.37	 	 	 	31,881.37	 	 	 	3,188	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Sub-Totals

            	 	 	3,665,000.00	 	 	 	261,036.17	 	 	$	3,926,036.17	 	 	 	392,604	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Robert
      Ford

            	 	 	 	 	 	 	 	 	 	 	250,000.00	 	 	 	25,000	 
	
              Tom
      Hemingway

            	 	 	 	 	 	 	 	 	 	 	250,000.00	 	 	 	25,000	 
	
              David
      Noyes

            	 	 	 	 	 	 	 	 	 	 	70,000.00	 	 	 	7,000	 
	
              Don
      Burris

            	 	 	 	 	 	 	 	 	 	 	206,000.00	 	 	 	20,600	 
	
              Elite
      Financial

            	 	 	 	 	 	 	 	 	 	 	66,000.00	 	 	 	6,600	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Total

            	 	 	 	 	 	 	 	 	 	$	4,768,037	 	 	 	476,804	 

    

    

     

    
      
         

      

      
        - 16
-

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    Certificate
of Designation

     

    
      1. Designation, Amount, Par
Value.  The initial series of Preferred Stock shall be
designated as the Series A Preferred Stock (the “Series A Preferred
Stock”), and the number of shares so designated shall be six hundred
thousand (600,000).  The par value of each share of Series A Preferred
Stock shall be $0.001.

       

      2. Dividends.  The
holders of shares of Series A Preferred Stock shall be entitled to receive, out
of any assets legally available therefor, cumulative dividends that shall accrue
annually at the rate of one dollar ($1.00) per share of Series A Preferred
Stock, as adjusted for any stock splits, stock dividends and recapitalization,
and shall be payable only when, as and if (i) the shares of Series A Preferred
Stock are converted at the election of the holder pursuant to Section 6(a); (ii)
the shares of Series A Preferred Stock are converted automatically pursuant to
Section 6(b);
(iii) there is a Liquidation (as defined below) pursuant to Sections 3(a) or
3(b); or (iv)
the shares of Series A Preferred Stock are redeemed by the Corporation (any
redemption requiring a mutual agreement between the Corporation and the holder
of the shares of Series A Preferred Stock being redeemed); in each case of
clauses (i) through (iv) above, such dividends shall be payable in cash or, at
the election of the holder, converted into shares of Common Stock at the lower
of the then-current market price per share and the Conversion Price (as defined
below); provided, that in the case of clause (i) above, if the holder elects to
be paid in cash, the Corporation shall make such payment only if the Corporation
has sufficient reserves to continue to conduct its business in the ordinary
course as determined by the Board of Directors of the Corporation, including the
Series A Directors, and if it is determined that the Corporation does not have
sufficient reserves, the holder may elect to either convert such dividends into
shares of Common Stock as set forth above or terminate the potential conversion
of such shares of Series A Preferred Stock into shares of Common
Stock.  The holders of the Series A Preferred Stock also shall be
entitled to participate on an as converted basis in any dividends declared and
paid on the Common Stock, except stock dividends for which an appropriate
adjustment is made in the Conversion Price.  No dividend (other than a
dividend payable in Common Stock or rights to purchase Common Stock) may be
declared and paid upon shares of Common Stock while any shares of Series A
Preferred Stock are outstanding without the consent of holders of at least
two-thirds of the outstanding Series A Preferred Stock.  No accrued
and unpaid dividend shall ever bear interest.

       

      3. Liquidation
Preference.

       

      (a) In the
event of any liquidation, dissolution or winding up of the Corporation, either
voluntary or involuntary (a “Liquidation”), the
holders of the Series A Preferred Stock shall be entitled to receive, prior and
in preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock by reason of their ownership
thereof, a preference amount per share, in cash, or as provided in subsection
3(b) in kind, consisting of the sum of (A) ten dollars ($10.00) for each
outstanding share of Series A Preferred Stock, as adjusted for any stock splits,
stock dividends and recapitalizations, to the extent they change the number of
outstanding shares of Series A Preferred Stock (the “Original Issue
Price”) and (B) an amount equal to accrued but unpaid dividends on such
share, if any (the sum of such accrued dividends and the Original Issue Price
herein called the “Preference
Amount”).  If upon the occurrence of such event, the assets and
funds thus distributed among the holders of the Series A Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
Preference Amounts, then the entire assets and funds of the Corporation legally
available for distribution shall be distributed among such holders in proportion
to the full Preference Amount each such holder is otherwise entitled to
receive.

       

      (b) Subject
to subsection 6(b)(ii), a Liquidation shall be deemed to be occasioned by, or to
include the acquisition of the Corporation by another entity by means of any
transaction or series of related transactions (a “Sale”), including,
without limitation,  (i) any reorganization, merger or consolidation
but excluding any merger effected exclusively for the purpose of changing the
domicile of the Corporation, (ii) a sale of all or substantially all of the
assets of the Corporation; (iii) a sale of authorized and unissued shares of the
Corporation, unless in any of the cases described in clauses (i), (ii) or (iii),
the Corporation’s shareholders of record as constituted immediately prior to
such acquisition or sale will, immediately after such acquisition or sale (by
virtue of securities issued as consideration for the Corporation’s acquisition
or sale or otherwise) hold at least 50% of the voting power of the surviving or
acquiring entity.  Notwithstanding the foregoing, the holders of a
majority of the outstanding shares of Series A Preferred Stock shall have the
right to elect not to have a Sale be deemed a Liquidation for purposes of this
Section 3 and
such election shall be binding on all the holders of stock of the
Corporation.  In any of such events, if the consideration received by
the Corporation is other than cash, its value will be deemed to be such
consideration’s fair market value, as determined reasonably by the Board of
Directors, including the Series A Directors (as defined below), and payment
thereof shall be in kind and from the same source of payment as contemplated in
the acquisition.

       

      (c) After
payment to the holders of the Series A Preferred Stock of the amount set forth
in subsection 3(a) or 3(b), the then remaining assets and funds of the
Corporation legally available for distribution, if any, shall be distributed
among the holders of the Common Stock and the Series A Preferred Stock pro rata
based on the number of shares of Common Stock issuable upon conversion of all
such Series A Preferred Stock.

       

      4. No
Redemption.  This Corporation shall not have the unilateral
right to call or redeem any shares of the Series A Preferred Stock.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      5. Voting
Rights.  The holder of each share of the Series A Preferred
Stock shall be entitled to the number of votes equal to the number of full
shares of Common Stock into which such shares of Series A Preferred Stock could
be converted.  In the election of directors, the holders of Series A
Preferred Stock shall be entitled, voting separately as a class, to elect two
(2) directors (each, a “Series A Director and
collectively, the “Series A Directors”),
and the holders of Common Stock, voting as a separate class, shall be entitled
to elect all other directors, up to the number of authorized directors;
provided, however, if and only if a Qualified Public Offering (as defined below)
shall not have been consummated on or before November 30, 2012, the holders of
Series A Preferred Stock voting as a separate class shall thereafter have the
right to elect a majority of the authorized number of directors, and the holders
of Common Stock, voting as a separate class, shall be entitled to elect all
other directors, up to the number of authorized directors.  On all
matters requiring approval of shareholder other than (i) the election of
directors, (ii) as provided in Section 8, or (iii)
as expressly required by law, each holder of Series A Preferred Stock shall vote
together with the Common Stock as a single class.  Accordingly, each
holder of Series A Preferred Stock shall be entitled to notice of any
shareholders’ meeting, which shall be given in accordance with the Bylaws of the
Corporation.  Fractional votes shall not, however, be permitted and
any fractional voting rights available on an as-converted basis (after
aggregating all shares into which shares of Series A Preferred Stock held by
each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).

       

      6. Conversion.  The
holders of the Series A Preferred Stock shall have conversion rights as follows
(the “Conversion
Rights”):

       

      (a) Right to
Convert.  Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Original Issue Price (if the
holder elects not to convert any accrued and unpaid dividends and instead
receive payment in cash) or the Preference Amount (if the holder elects to
convert all accrued and unpaid dividends) by the then applicable Conversion
Price, determined as hereinafter provided, in effect on the date the certificate
is surrendered for conversion.  The initial Conversion Price per share
for Series A Preferred Stock (as from time to time in effect, the “Conversion Price”)
shall be one dollar ($1.00).  Such initial Conversion Price shall be
adjusted from time to time on and subject to the terms as hereinafter
provided.

       

      (b) Automatic
Conversion. Each share of Series A
Preferred Stock shall automatically be converted into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Original Issue Price (if the holder elects not to convert any accrued and unpaid
dividends and instead receive payment in cash) or the Preference Amount (if the
holder elects to convert all accrued and unpaid dividends) by the then
applicable Conversion Price, after adjustment as provided elsewhere in this
Section
6,

       

      (i) immediately
prior to the closing of a public offering of the Corporation’s Common Stock (a)
in which the gross proceeds to the Corporation are five million dollars
($5,000,000) or more,
and (b) at a price per share of Common Stock (adjusted for any stock splits,
stock dividends and recapitalizations of or on the Common Stock) not less than
two dollars ($2.00) (the "Target Value") for each share of Common Stock of the
same class into which the Series A Preferred Stock would then convert (a
“Qualified Public Offering”); or

       

      (ii) in the event the holders of
the majority of the shares of Series A Preferred Stock elect not to treat a Sale
as a Liquidation pursuant to Section 3(b), a Sale in which the holders of Series
A Preferred Stock would receive in cash or Marketable Securities (as defined
below) not less than the Target Value for each share of Common Stock into which
the share of Series A Preferred Stock would then convert, where “Marketable
Securities” means securities of the same class as those listed for trading on
the New York
Stock Exchange, the American Stock Exchange, or the Nasdaq Exchange, or accepted
for such trading upon issuance or official notice of issuance.

       

      (c) Mechanics of
Conversion.  Before any holder of Series A Preferred Stock
shall be entitled to convert the same into shares of Common Stock, such holder
shall surrender the certificate or certificates thereof, duly endorsed, at the
office of the Corporation or of any transfer agent for such stock, and shall
give written notice to the Corporation at such office that states (a) such
holder elects to convert all or a specified number of shares of Series A
Preferred Stock constituting a portion thereof, (b) whether the holder elects to
convert dividends accrued on the shares being converted, and (c) the name or
names in which it wishes the certificate or certificates for shares of Common
Stock to be issued.  The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder a certificate or
certificates for the number of shares of Common Stock to which it shall be
entitled as aforesaid.  Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of surrender of the
shares of Series A Preferred Stock to be converted and such notice and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.

       

      (d) Conversion Price Adjustments
of Preferred Stock for Certain Dilutive Issuances, Splits and
Combinations.

       

      (i) The
Conversion Price of Series A Preferred Stock shall be subject to adjustment
from time to time as follows:

       

      (A) Upon each
issuance by this Corporation of any Additional Stock (as defined below) after
the date upon which any shares of the Series A Preferred Stock were first
issued (the “Purchase
Date”), without consideration or for a consideration per share less than
the Conversion Price for such series in effect immediately prior to the issuance
of such Additional Stock, the Conversion Price for such series in effect
immediately prior to each issuance shall forthwith (except as otherwise provided
in this clause (i)) be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock that the aggregate consideration received by
the Corporation for such issuance would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock.

       

      (B) No
adjustment of the Conversion Price for Series A Preferred Stock shall be
made in an amount less than one cent ($.01) per share, provided that any
adjustments that are not required to be made by reason of this sentence shall be
carried forward and shall be either taken into account in any subsequent
adjustment made prior to three (3) years from the date of the event giving rise
to the adjustment being carried forward, or shall be made at the end of three
(3) years from the date of the event giving rise to the adjustment being carried
forward, and upon such adjustment the Conversion Price for such Preferred Stock
shall be rounded up or down to the nearest cent.  Except to the
limited extent provided for in subsections 6(d)(i)(E)(3), (E)(4) or (E)(5) or
6(d)(iv), no adjustment of such Conversion Price pursuant to this subsection
6(d)(i) shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.

       

      
        
          
          

        

        
          - ii
-

          
            

          

        

        
          
          

        

      

       

      (C)           In
the case of the issuance of Common Stock for cash, the consideration shall be
deemed to be the amount of cash paid therefor before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by this
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.

       

      (D)           In
the case of the issuance of the Common Stock for a consideration in whole or in
part other than cash, the consideration other than cash shall be deemed to be
the fair value thereof as determined in good faith by the Board of Directors,
including the Series A Directors, irrespective of any accounting
treatment.

       

      (E)           In
the case of the issuance of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities, the following provisions shall apply for all
purposes of this subsection 6(d)(i) and subsection 6(d)(ii):

       

      (1)           The
aggregate maximum number of shares of Common Stock deliverable upon exercise
(whether or not then exercisable) of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 6(d)(i)(C) and
(d)(i)(D)), if any, received by the Corporation upon the issuance of such
options or rights, and not including the exercise price provided in such options
or rights for the Common Stock covered thereby until received by the
Corporation.

       

      (2)           The
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange (whether or not then convertible or exchangeable) for any such
convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration, if any, received by
the Corporation for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), and not
including the additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such securities (other than the
principal amount of convertible securities to the extent the Corporation has
received such consideration as of the issuance thereof) or the exercise of any
related options or rights until received by the Corporation.

       

      (3)           In
the event of any change in the number of shares of Common Stock deliverable upon
exercise of such options or rights or upon conversion of or in exchange for such
convertible or exchangeable securities, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Conversion Price of the
Series A Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities, shall be recomputed to reflect such
change.

       

      (4)           Subsequent
to the issuance of options or rights to purchase Common Stock, or of securities
convertible into or exchangeable for Common Stock, and upon any payment of the
exercise price provided in options or rights to purchase Common Stock, or upon
any payment of the additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of securities (other than the
principal amount of convertible or exchangeable securities to the extent the
Corporation had received such consideration as of the issuance of the
convertible or exchangeable securities) or the exercise of any related options
or rights, the Conversion Price of the Series A Preferred Stock, to the
extent computed using such options, rights or securities without including the
consideration or additional consideration, shall be recomputed to reflect the
payment of the consideration or additional consideration.

       

      (5)           Upon
the expiration of any such options or rights, the termination of any such rights
to convert or exchange or the expiration of any options or rights related to
such convertible or exchangeable securities, the Conversion Price of the
Series A Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and convertible or
exchangeable securities that remain in effect) actually issued upon the exercise
of such options or rights, upon the conversion or exchange of such securities or
upon the exercise of the options or rights related to such
securities.

       

      (ii) “Additional
Stock” shall mean any shares of Common Stock issued (or deemed to have been
issued pursuant to subsection 6(d)(i)(E)) by this Corporation after the Purchase
Date other than

       

      (A)           Common
Stock issued pursuant to a transaction described in subsection 6(d)(iii)
hereof;

       

      (B)           Common
Stock issued upon conversion of shares of Series A Preferred Stock;
or

       

      (C)           the
issuance of Common Stock to financial institutions or lessors in connection with
commercial credit arrangements, equipment financings or similar arms’ length
transactions with non-affiliates of the Corporation, in each case approved by
each of the Board of Directors, including the Series A Directors, and the
holders of a majority of the outstanding shares of Series A Preferred Stock
pursuant to Section
8(l).

       

      
        
          
          

        

        
          - iii
-

          
            

          

        

        
          
          

        

      

       

      (iii) In the
event the Corporation should at any time or from time to time after the Purchase
Date fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as “Common Stock
Equivalents”) without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the Conversion Price of the
Series A Preferred Stock shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of each share of such
series shall be increased in proportion to such increase of the aggregate of
shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.

       

      (iv) If the
number of shares of Common Stock outstanding at any time after the Purchase Date
is decreased by a reverse-split or combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be decreased in proportion to such decrease in
outstanding shares.

       

      (e) Other
Distributions. In the event this
Corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this Corporation or other persons, assets
(excluding cash dividends) or options or rights not referred to in subsection
6(d)(iii), then, in each such case for other purposes of this subsection 6(e),
the holders of Series A Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of the Corporation into which their shares
of Series A Preferred Stock are convertible as of the record date fixed for
the determination of the holders of Common Stock of the Corporation entitled to
receive such distribution.

       

      (f) Recapitalizations.  If
at any time or from time to time there shall be a recapitalization of the Common
Stock (other than a subdivision, combination or merger or sale of assets
transaction provided for elsewhere in this Section 6), provision
shall be made so that the holders of Series A Preferred Stock shall thereafter
be entitled to receive upon conversion of such Preferred Stock the number of
shares of stock or other securities or property of the Corporation or otherwise,
to which a holder of such number of shares of Common Stock deliverable upon
conversion immediately prior to that recapitalization would have been entitled
on such recapitalization.  In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 6 with
respect to the rights of the holders of Series A Preferred Stock after the
recapitalization to the end that the provisions of this Section 6 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of Series A Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.

       

      (g) Capital Reorganization,
Merger or Sale of Assets.  If at any time or from time to time
there shall be a capital reorganization of the Common Stock (other than a
subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this Section 6) or a
merger or consolidation of the Corporation with or into another corporation, or
the sale of all or substantially all of the Corporation’s properties and assets
to any other person, then, as a part of such reorganization, merger,
consolidation or sale, provision shall be made so that the holders of the Series
A Preferred Stock shall thereafter be entitled to receive upon conversion of the
Series A Preferred Stock, the number of shares of stock or other securities or
property of the Corporation, or of the successor corporation resulting from such
merger, consolidation or sale, to which a holder of Common Stock issuable upon
conversion would have been entitled on such capital reorganization, merger,
consolidation, or sale or an amount of cash receivable as if the Series A
Preferred Stock had converted into shares of Common Stock.  In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 6 with
respect to the rights of the holders of the Series A Preferred Stock after the
reorganization, merger, consolidation or sale to the end that the provisions of
this Section 6 shall
be applicable after that event in as nearly equivalent a manner as may be
practicable.  Subject to Sections 3 and 6(b), each holder of
Series A Preferred Stock upon the occurrence of an event set forth in this Section 6(g) shall
have the option of electing treatment of its shares of Series A Preferred Stock
under this Section
6(g) by giving the Corporation written notice of such election at least
ten days prior to the close of such transaction unless such holders received
notice of the transaction less than 20 days prior to the close of such
transaction, then the notice of election shall be given within 10 days after
such notice.

       

      (h) No
Impairment.  The Corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 6 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Series A Preferred Stock against
impairment.

       

      (i) Certificates as to
Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Section 6, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause independent public
accountants selected by the Corporation to verify such computation and prepare
and furnish to each holder of Series A Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based.  The Corporation shall, upon
the written request at any time of any holder of Series A Preferred Stock
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion Price at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of
Series A Preferred Stock.

       

      (j) Notices of Record
Date.  In the event of any taking by the Corporation of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any security or right convertible into or
entitling the holder thereof to receive or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall deliver to each
holder of Series A Preferred Stock at least twenty (20) days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution, security or right, and
the amount and character of such dividend, distribution, security or
right.  The failure to provide such notice itself shall not impair the
validity or effectiveness of such action.

       

      
        
          
          

        

        
          - iv
-

          
            

          

        

        
          
          

        

      

       

      (k) Issue
Taxes.  The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of shares of Series A Preferred Stock pursuant
hereto; provided, however, that the Corporation shall not be obligated to pay
any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.

       

      (l) Limitation on Conversion;
Reservation of Stock Issuable Upon Conversion.  At the date of
adoption of this Certificate of Designation, the Series A Preferred Stock shall
be convertible, on a first to convert basis, only to the extent that there are
authorized and unissued shares of Common Stock available for
issuance.  The Corporation shall take all such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes of conversion of all of the shares of Series A Preferred Stock
in addition to other existing and future commitments and uses for shares of
Common Stock, including, without limitation, engaging in best efforts to obtain
the requisite stockholder approval of any necessary amendment to its Articles of
Incorporation in order to increase the authorized number of shares of Common
Stock.  The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the Series A Preferred
Stock, either (a) all of its authorized and unissued shares of Common Stock or
(b) such lesser number of its authorized and unissued shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock.  If at any time
the number of authorized but unissued shares of Common Stock shall become
insufficient to effect the conversion of all then outstanding shares of the
Series A Preferred Stock, the Corporation will take such further corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose, including, without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary amendment
to its Articles of Incorporation.

       

      (m) No Fractional
Shares.  No fractional share shall be issued upon the
conversion of any share or shares of Series A Preferred Stock.  All
shares of Common Stock (including fractions thereof) issuable upon conversion of
more than one share of Series A Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share.  If, after the aforementioned
aggregation, the conversion would result in the issuance of a fraction of a
share of Common Stock, the Corporation shall, in lieu of issuing any fractional
share, pay the holder otherwise entitled to such fraction a sum in cash equal to
the fair market value of such fraction on the date of conversion (as determined
in good faith by the Board of Directors of the Corporation, including the Series
A Directors).

       

      (n) Notices.  Any
notice required by the provisions of this Section 6 to be given
to the holders of shares of Series A Preferred Stock shall be deemed given if
deposited in the United States mail, Certified Mail—Return Receipt Requested,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the Corporation.

       

      7. Amendment.  Any
term relating to the Series A Preferred Stock may be amended and the observance
of any term relating to the Series A Preferred Stock may be waived (either
generally or in a particular instance) only with the vote or written consent of
holders of a majority of the outstanding shares of the Series A Preferred
Stock.  Any amendment so effected shall be binding upon the
Corporation and every holder of the Series A Preferred Stock.

       

      8. Protective
Provisions.  So long as any shares of Series A Preferred Stock
remain outstanding, the Corporation shall not, without the vote or written
consent by the holders of a majority of the outstanding shares of Series A
Preferred Stock, voting as a separate class:

       

      (a) Change
(by merger, reclassification, amendment or otherwise) the rights, preferences,
privileges or limitations of the Series A Preferred Stock so as to affect them
adversely (including, without limitation, the issuance of securities having
dividend, liquidation or redemption rights senior to or on a parity with the
Series A Preferred Stock);

       

      (b) Effect,
or obligate itself to effect, (by way of any merger, consolidation,
reorganization, reclassification, recapitalization or other change with respect
to any outstanding shares of stock which results in) the issuance of shares of
stock or any other equity security, including options, rights to purchase
securities and convertible or exchangeable debt securities, senior to, or on a
parity with, the Series A Preferred Stock as to dividend rights, liquidation
preferences, or conversion rights, or senior to the Series A Preferred Stock as
to voting rights;

       

      (c) Purchase,
redeem or otherwise acquire any shares of Common Stock or other shares of
capital stock of the Corporation that are junior to or on a parity with the
Series A Preferred Stock; provided, however, that this restriction shall not
apply to the repurchase of shares of Common Stock from directors, officers,
consultants, vendors or employees of this Corporation or any subsidiary pursuant
to agreements approved by this Corporation’s Board of Directors, including the
Series A Directors, under which this Corporation has the option to repurchase
such shares for a nominal price upon the occurrence of termination of employment
or services;

       

      (d) Increase
or decrease (below the number of shares of Series A Preferred Stock then
outstanding) the total number of authorized shares of Series A Preferred
Stock;

       

      (e) Amend or
repeal any provision of the Corporation’s Articles of Incorporation if such
action would materially and adversely change the rights, preferences or
privileges of the Series A Preferred Stock;

       

      (f) Effect,
or obligate itself to effect, a Sale;

       

      (g) Increase the number of
directors to any number greater than seven (7);

       

      
        
          
          

        

        
          - v
-

          
            

          

        

        
          
          

        

      

       

      (h) Approve any liquidation,
dissolution, recapitalization or reorganization of the
Corporation;

       

      (i) Approve any encumbrance of
substantially all of the assets of the Corporation;

       

      (j) Declare or pay any dividend
or other distribution on the Common Stock or other shares of capital
stock of the Corporation that are junior to or on a parity with the Series A
Preferred Stock (other
than a dividend on shares of Common Stock payable in the form of shares of
Common Stock);

       

      (k) Approve stock purchase,
stock option, or any other equity incentive plan or agreement for, or any
issuances thereunder to, any employees, consultants, officers or directors of
the Corporation (other than grants approved by the Board of Directors, including
the Series A Directors, pursuant to a plan approved in accordance with this
provision); or

       

      (l) Issue any
shares of capital stock at a valuation below the then-current Conversion Price
to financial institutions or lessors in connection with commercial credit
arrangements, equipment financings or similar arms’ length transactions with
non-affiliates.

       

      9. No Reissuances of Series A
Preferred Stock.  No share or shares of Series A Preferred
Stock acquired by the Corporation by reason of purchase, conversion or otherwise
shall be reissued, and all such shares shall be returned to the status of
undesignated shares of Preferred Stock.

      
 

    

    
      
         

      

      
        - vi
-

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

     

     

    INSTRUMENT
OF CANCELLATION

    
      

      The
undersigned (the “Investor”) is a creditor of NextPhase Wireless, Inc., a Nevada
corporation (the “Company”), and hereby cancels, releases, relinquishes and
discharges all promissory notes heretofore issued by the Company ("Notes") and
any other outstanding accounts payable (“Payables”), in each case including
interest, costs, expenses and other charges thereunder, whether due or to become
due that is owed to the Investor by the Company.  Interest on any
Notes accruing after September 30, 2008, is hereby waived, relinquished and
forgiven.  This Instrument of Cancellation is delivered at the Closing
under and pursuant to the Securities Exchange Agreement (“Agreement”) entered
into between the Company and the investors listed therein dated for reference
purposes September 30, 2008.

      

      Investor
further agrees to and confirms the amount of Series A Preferred Stock of the
Company as set forth in the attached copy of Schedule I to the Agreement to
be received by the undersigned Investor in exchange for the cancellation hereby
evidenced of the Notes and Payables, as applicable, owed to the undersigned
Investor.

      

      IN
WITNESS WHEREOF, the undersigned Investor has caused this Instrument of
Cancellation to be executed and delivered effective September 30,
2008.

       

      

      INVESTOR

      

      

      

      _________________________

      Print
Name:

      Title (if
any):

      

      

      COMPANY

      NextPhase
Wireless, Inc.

      

      By:
_________________________

             Thomas
Hemingway, President

       

       

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    EXHIBIT
C

     

     

     

     

     

    NextPhase
Wireless, Inc.

    
      

       

      REGISTRATION
RIGHTS AGREEMENT

       

       

       

       

       

      
        
          
            
            

             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

       

      TABLE
OF CONTENTS

       

      
        	 
      	 
      	
                Page

              
	 
      	 
      	 
      
	
                1.   DEFINITIONS

              	
                iii

              
	 	 	 
	 
      	
                1.1   
      “Affiliate”

              	
                 

              
	 
      	
                1.2   
      “Common Stock”

              	
                iii

              
	 
      	
                1.3   
      “Damages”

              	
                iii

              
	 
      	
                1.4   
      “Exchange Act”

              	
                iii

              
	 
      	
                1.5   
      “Excluded Registration”

              	
                iii

              
	 
      	
                1.6   
      “Form S-3”

              	
                iii

              
	 
      	
                1.7   
      “Holder”

              	
                iii

              
	 
      	
                1.8   
      “Immediate Family Member”

              	
                iii

              
	 
      	
                1.9   
      “Initiating Holders”

              	
                iii

              
	 
      	
                1.10  “Permitted
      Transferee”

              	
                iii

              
	 
      	
                1.11  “Person”

              	
                iii

              
	 
      	
                1.12  “Register”

              	
                iii

              
	 
      	
                1.13  “Registrable
      Securities”

              	
                iv

              
	 
      	
                1.14  “Restricted
      Securities”

              	
                iv

              
	 
      	
                1.15  “SEC”

              	
                iv

              
	 
      	
                1.16  “SEC
      Rule 144”

              	
                iv

              
	 
      	
                1.17  “SEC
      Rule 145”

              	
                iv

              
	 
      	
                1.18  “Securities
      Act”

              	
                iv

              
	 
      	
                1.19  “Selling
      Expenses”

              	
                iv

              
	 
      	
                1.20  “Selling
      Holder Counsel”

              	
                iv

              
	 
      	
                1.21  “Series
      A Preferred Stock”

              	
                iv

              
	 	 	 
	
                2.   REGISTRATION RIGHTS

              	
                iv

              
	 	 	 
	 
      	
                2.1   
      Demand Registration

              	
                iv

              
	 
      	
                2.2  
       Company Registration

              	
                v

              
	 
      	
                2.3   
      Form S-3 Registration

              	
                v

              
	 
      	
                2.4   
      Underwriting Requirements

              	
                v

              
	 
      	
                2.5  
       Obligations of the Company

              	
                vi

              
	 
      	
                2.6   
      Furnish Information

              	
                vi

              
	 
      	
                2.7   
      Expenses of Registration

              	
                vi

              
	 
      	
                2.8   
      Delay of Registration

              	
                vii

              
	 
      	
                2.9   
      Indemnification

              	
                vii

              
	 
      	
                2.10  Reports
      Under Exchange Act

              	
                viii

              
	 
      	
                2.11  Assignment
      of Registration Rights

              	
                viii

              
	 
      	
                2.12  Restrictions
      on Transfer

              	
                viii

              
	 
      	
                2.13  Termination
      of Registration Rights

              	
                ix

              
	 
      	
                2.14  Subsequent
      Registration Rights

              	
                ix

              
	 	 	 
	
                3.   MISCELLANEOUS

              	
                ix

              
	 	 	 
	 
      	
                3.1   
      Successors and Assigns

              	
                ix

              
	 
      	
                3.2   
      GOVERNING LAW

              	
                ix

              
	 
      	
                3.3   
      WAIVER OF JURY TRIAL

              	
                ix

              
	 
      	
                3.4   
      Counterparts; Facsimile

              	
                ix

              
	 
      	
                3.5  
       Titles and Subtitles

              	
                ix

              
	 
      	
                3.6   
      Notices

              	
                ix

              
	 
      	
                3.7   
      Amendments and Waivers

              	
                ix

              
	 
      	
                3.8   
      Severability

              	
                ix

              
	 
      	
                3.9   
      Aggregation of Stock

              	
                ix

              
	 
      	
                3.10  Entire
      Agreement

              	
                ix

              
	 
      	
                3.11  Delays
      or Omissions

              	
                x

              
	 
      	
                3.12  Injunctive
      Relief

              	
                x

              
	 
      	
                3.13  Cumulative
      Remedies

              	
                x

              
	 
      	
                3.14  Construction

              	
                x

              
	 
      	
                3.15  Approvals

              	
                x

              

      

    

     

    
      
        
          
             

          

          
            - ii
-

            
              

            

          

          
             

          

        

      

      

      REGISTRATION
RIGHTS AGREEMENT

       

      THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made as of the
30th day of September, 2008, by and among NextPhase Wireless, Inc., a Nevada
corporation (the “Company”) and each of the
investors listed on Schedule A attached
hereto (each, an “Investor” and collectively,
the “Investors”).

       

      RECITALS

       

      WHEREAS,  the
Investors are party to that certain Securities Exchange Agreement dated for
reference purposes September 30, 2008 among the Company, the Investors and the
other parties thereto (the “Exchange Agreement”), under
which the Company and the Investors’ obligations are conditioned upon the
execution and delivery of this Agreement by the Investors and the
Company;

       

      NOW, THEREFORE, the parties to
this Agreement agree as follows:

       

      1. Definitions. For purposes of this
Agreement:

       

      1.1 “Affiliate” means, with
respect to any Person, any other Person which controls, or is controlled by, or
is under common control with such Person.

       

      1.2 “Common Stock” means shares of
the Company’s common stock, par value $0.001 per share.

       

      1.3 “Damages” means any loss,
claim, damage or liability (joint or several) to which a party hereto may become
subject under the Securities Act, the Exchange Act, or other federal or state
securities law, insofar as such loss, claim, damage or liability (or any action
in respect thereof) arises out of or is based upon (i) any untrue statement or
allegedly untrue statement of a material fact contained in any registration
statement of the Company, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto;
(ii) an omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading in the circumstances in which made; or (iii) any violation or alleged
violation by the indemnifying party (or any of its agents or Affiliates) of the
Securities Act, the Exchange Act, any state securities law, or any rule or
regulation promulgated under the Securities Act, the Exchange Act, or any state
securities law.

       

      1.4 “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

       

      1.5 “Excluded Registration” means
(i) a registration relating either to the sale of securities to employees,
directors or other service providers of the Company pursuant to a stock option,
stock purchase, or similar plan, (ii) a registration relating to an SEC Rule 145
transaction; (iii) a registration on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities; or (iv)
a registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being
registered.

       

      1.6 “Form S-3” means such form
under the Securities Act as in effect on the date hereof or any registration
form under the Securities Act subsequently adopted by the SEC that permits
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.

       

      1.7 “Holder” means any holder of
Registrable Securities who is a party to this Agreement.

       

      1.8 “Immediate Family Member” means
a child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, of a natural
person referred to herein.

       

      1.9 “Initiating Holders” means,
collectively, Holders who properly initiate a registration request under this
Agreement.

       

      1.10 “Permitted Transferee” shall mean (i) in
the case of any Holder who is an individual, (A) an Immediate Family Member of
such individual and (B) any trust for the benefit of the foregoing; (ii) in the
case of any Holder that is a partnership, (A) any of the limited partners,
general partners, retired limited partners or retired general partners of such
partnership and (B) any Affiliate of such partnership; (iii) in the case of any
Holder that is a corporation, (A) any stockholder or former stockholder of such
corporation and (B) any Affiliate of such corporation; and (iv) in the case of
any Holder that is a limited liability company, (A) any member or retired member
of such limited liability company and (B) any Affiliate of such limited
liability company. 

       

      1.11 “Person” means any natural
person, corporation, partnership, company, limited liability company, joint
venture, association, government, governmental agency, trust, unincorporated
organization or other entity, whether acting in an individual, fiduciary or
other capacity.

       

      1.12 “Register,” “registered,” and
“registration” refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration
statement or document.

       

      
        
          
          

        

        
          - iii
-

          
            

          

        

        
          
          

        

      

       

       

      1.13 “Registrable Securities” means
(i) the Common Stock issuable or issued upon conversion of the Series A
Preferred Stock or conversion of dividends on the Series A Preferred Stock, (ii)
any Common Stock issued or issuable upon conversion of any capital stock of the
Company acquired by the Investors after the date hereof in exchange for the
Series A Preferred Stock, and (iii) any Common Stock issued as (or issuable upon
the conversion or exercise of any warrant, right, or other security that is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares referenced in clauses (i) and (ii) above;
excluding in all cases, however, any Registrable Securities sold by a Person in
a transaction in which the rights under Section 2 hereof
are not assigned or any shares for which registration rights have terminated
pursuant to Section 2.13 of
this Agreement.

       

      1.14 “Restricted Securities” means
the securities of the Company required to bear a legend substantially as set
forth in Section 2.12(b)
hereof.

       

      1.15 “SEC” means the Securities and
Exchange Commission.

       

      1.16 “SEC Rule 144” means
Rule 144 promulgated by the SEC under the Securities Act.

       

      1.17 “SEC Rule 145” means
Rule 145 promulgated by the SEC under the Securities Act.

       

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

       

      1.19 “Selling Expenses” shall have
the meaning set forth in Section 2.7.

       

      1.20 “Selling Holder Counsel” shall
have the meaning set forth in Section
2.7.

       

      1.21 “Series A Preferred Stock”
means shares of the Company’s Series A Preferred Stock, par value $0.001
per share.

       

      2. Registration
Rights.  The Company covenants and agrees as
follows:

       

      2.1 Demand
Registration.

       

      (a) If at any
time after September 30, 2009, the Company receives a request from Holders of
Registrable Securities holding at least 50% of the Registrable Securities issued
or issuable from Series A Preferred Stock then outstanding that the Company
file a registration statement covering such Registrable Securities, then the
Company shall: (i) within ten (10) days after the date such request is given,
give notice thereof (the “Demand Notice”) to all Holders
other than the Initiating Holders; and (ii) as soon as practicable, and in any
event within sixty (60) days after the date such request is given by the
Initiating Holders, use its best efforts to file a registration statement under
the Securities Act covering all Registrable Securities that the Initiating
Holders requested to be registered and any additional Registrable Securities
requested to be included in such registration by any other Holder, as specified
by notice given by each such Holder to the Company within twenty (20) days of
the date the Demand Notice is given, and in each case, subject to the
limitations of Section 2.1(b).

       

      (b) Notwithstanding
the foregoing obligations, if the Company furnishes to Holders requesting a
registration pursuant to this Section 2.1 a
certificate signed by the Company’s Chief Executive Officer stating that in the
good faith judgment of the Company’s Board of Directors it would be materially
detrimental to the Company and its stockholders for such registration statement
to either become effective or remain effective for as long as such registration
statement otherwise would be required to remain effective, because such action
would (i) materially interfere with a significant acquisition, corporate
reorganization, or other similar transaction involving the Company; (ii) require
premature disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential; or (iii) render the
Company unable to comply with requirements under the Securities Act or Exchange
Act, then the Company shall have the right to defer taking action with respect
to such filing for a period of not more than ninety (90) days after the request
of the Initiating Holders is given; provided, however, that the Company may not
invoke this right more than twice in any twelve (12) month period; and provided
further that the Company shall not register any securities (other than in an
Excluded Registration) for its own account or that of any other security holder
during such ninety (90) day period.

       

      (c) The
Company shall not be obligated to effect, or to take any action to effect, any
registration pursuant to this Section 2.1:  (i)
after the Company has effected one (1) registration; or (ii) if the Initiating
Holders propose to dispose of shares of Registrable Securities that may be
registered on Form S-3 pursuant to a request made pursuant to Section 2.3.  A
registration shall not be counted as “effected” for purposes of this Section 2.1
until such time as the applicable registration statement has been declared
effective by the SEC, unless the Initiating Holders withdraw their request for
such registration, elect not to pay the registration expenses therefor, and
forfeit their right to one demand registration statement pursuant to Section 2.7, in which
case such withdrawn registration statement shall be counted as “effected” for
purposes of this Section 2.1.

       

       

       

      
        
          
          

        

        
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      2.2 Company
Registration.  If the Company proposes to register (including,
for this purpose, a registration effected by the Company for stockholders other
than the Holders) any of its securities under the Securities Act in connection
with the public offering of such securities solely for cash (other than in an
Excluded Registration), the Company shall, at such time, promptly give each
Holder notice of such registration.  Upon the request of each Holder
given within twenty (20) days after such notice is given by the Company, the
Company shall, subject to the provisions of Section 2.4,
cause to be registered all of the Registrable Securities that each such Holder
has requested to be included in such registration.  The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 2.2
before the effective date of such registration, whether or not any Holder has
elected to include Registrable Securities in such registration.  The
expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.7.

       

      2.3 Form S-3
Registration.  If at any time
when it is eligible to use a Form S-3 registration statement, the Company
receives a request from the Initiating
Holders that the Company file a Form S-3
registration statement with respect to outstanding Registrable Securities
of such Holders having an anticipated aggregate offering
price, net of underwriting discounts and
commissions, of at least $1,000,000, then
the Company shall (i) within ten (10) days after the date such request is given,
give a notice thereof (the “Form S-3 Notice”) to all Holders
other than the Initiating Holders; and (ii) as soon as practicable, and in any case within seventy-five
(75) days after the date such request is
given by the Initiating Holders, to
file a Form S-3 registration statement
under the Securities Act covering all Registrable Securities requested to be
included in such registration by the Initiating Holders and any other Holders, as specified by notice given by each
such Holder to the Company within twenty (20) days of the date the Form S-3 Notice is
given, and in each case, subject to the limitations of Section 2.1(b) and Section 2.4; provided further that the Company shall not be obligated to effect any
registration pursuant to this Section 2.3 more than
once in any twelve (12) month period; and provided further that the Company shall not be obligated to effect any
registration pursuant to this Section 2.3 more than three (3) times in the aggregate. Registrations effected pursuant to this
Section 2.3
shall be counted as demands for registration or registrations effected pursuant
to Section 2.1.

       

      2.4 Underwriting
Requirements.

       

      (a) If,
pursuant to Section
2.1 or Section
2.3, the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2.1(a)
or Section 2.3,
and the Company shall include such information in the Demand Notice or the S-3
Notice, as the case may be.  The underwriter(s) will be selected by
the Initiating Holders, subject to the approval of the Company, such approval
not to be unreasonably withheld. In such event, the right of any Holder to
include such Holder’s Registrable Securities in such registration shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein.  All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in Section
2.5(e)) enter into an underwriting agreement in customary form with the
underwriter(s) selected for such underwriting; including, but not limited to,
limited representations and warranties and no liability for matters related to
the content of the registration statement not provided by Holders for inclusion
therein, any related amendments and supplements and the prospectus, including
the preliminary prospectus.  Notwithstanding any other provision of
this Section
2.4, if the managing underwriter(s) advise(s) the Initiating Holders in
writing that marketing factors require a limitation on the number of shares to
be underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities that otherwise would be underwritten pursuant hereto, and
the number of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders of Registrable Securities, including the
Initiating Holders, in proportion (as nearly as practicable) to the number of
Registrable Securities of the Company owned by each Holder or in such other
proportion as shall mutually be agreed to by all such selling Holders; provided, however,
that the number of Registrable Securities held by the Holders to be included in
such underwriting shall not be reduced unless all other securities are first
entirely excluded from the underwriting.

       

      (b) In
connection with any offering involving an underwriting of shares of the
Company’s capital stock pursuant to Section 2.2, the
Company shall not be required to include any of the Holders’ Registrable
Securities in such underwriting unless the Holders accept the terms of the
underwriting as agreed upon between the Company and its underwriters, and then
only in such quantity as the underwriters in their sole discretion determine
will not jeopardize the success of the offering by the Company.  If
the total number of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the number of securities to
be sold (other than by the Company) that the underwriters in their reasonable
discretion determine is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters and the
Company in their sole discretion determine will not jeopardize the success of
the offering.  In no event shall any Registrable Securities be
excluded from such offering unless all other stockholders’ securities have been
first excluded.  If the underwriters determine that less than all of
the Registrable Securities requested to be registered can be included in such
offering, then the Registrable Securities that are included in such offering
shall be allocated among the selling
Holders in proportion (as nearly as
practicable) to the number of Registrable Securities owned by each selling Holder or in such other proportions as shall
mutually be agreed to by all such selling Holders.  For purposes of
the provision in this Section 2.4(b)
concerning apportionment, for any selling Holder, the Permitted Transferees of
such Holder shall be deemed to be a single “selling Holder,” and any pro rata
reduction with respect to such “selling Holder” shall be based upon the
aggregate number of Registrable Securities owned by all Persons included in such
“selling Holder,” as defined in this sentence.

       

      (c) For
purposes of Sections 2.1 and 2.3, a registration shall not be counted as
“effected” if, as a result of an exercise of the underwriter’s cutback
provisions in Section
2.4(a), fewer than fifty
percent (50%) of the total number of Registrable Securities that Holders have
requested to be included in such registration statement are actually
included.

       

      
        
          
          

        

        
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      2.5 Obligations of the
Company.  Whenever required under this Section 2 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

       

      (a) prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such
registration statement to become effective and keep such registration statement
effective for a period of up to ninety (90) days or, if earlier, until the
distribution contemplated in the registration statement has been completed;
provided, however, that (i)
such ninety (90) day period shall be extended for a period of time equal to the
period Holders refrain, at the request of an underwriter of Common Stock (or
other securities) of the Company, from selling all Registrable Securities
included in such registration, and (ii) in the case of any registration of
Registrable Securities on Form S-3 that are intended to be offered on a
continuous or delayed basis, subject to compliance with applicable SEC rules,
such period shall be one hundred eighty (180) days rather than ninety (90)
days;

       

      (b) prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the Securities Act in order to
enable the disposition of all securities covered by such registration
statement;

       

      (c) furnish
to the selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other
documents as the Holders may reasonably request in order to facilitate their
disposition of their Registrable Securities;

       

      (d) use its
best efforts to register and qualify the securities covered by such registration
statement under such other securities or blue-sky laws of such jurisdictions as
shall be reasonably requested by the selling Holders prior to the filing of the
registration statement and the number of such jurisdictions shall in no event
exceed four (4) in number; provided that the Company
shall not be required to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;

       

      (e) in the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering;

       

      (f) use its
best efforts to cause all such Registrable Securities covered by such
registration statement to be listed on a national securities exchange or trading
system and each securities exchange and trading system (if any) on which similar
securities issued by the Company are then listed;

       

      (g) provide a
transfer agent and registrar for all Registrable Securities registered pursuant
to this Agreement and provide a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration;

       

      (h) promptly
make available for inspection by the selling Holders, any underwriter(s)
participating in any disposition pursuant to such registration statement, and
any attorney or accountant or other agent retained by any such underwriter or
selected by the selling Holders, all financial and other records, pertinent
corporate documents, and properties of the Company, and cause the Company’s
officers, directors, employees, independent accountants and other agents to
supply all information reasonably requested by any such selling Holder,
underwriter, attorney, accountant or agent in connection with any such
registration statement;

       

      (i) notify
each selling Holder, promptly after the Company receives notice thereof, of the
time when such registration statement has been declared effective or a
supplement to any prospectus forming a part of such registration statement has
been filed; and

       

      (j) after
such registration statement becomes effective, notify each selling Holder of any
request by the SEC that the Company amend or supplement such registration
statement or prospectus.

       

      2.6 Furnish
Information.  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as is reasonably required to effect the registration of such Holder’s
Registrable Securities.

       

      2.7 Expenses of
Registration.  All expenses (other than Selling Expenses)
incurred in connection with registrations, filings, or qualifications pursuant
to Section 2,
including all registration, filing, and qualification fees; printers’ and
accounting fees; fees and disbursements of counsel for the Company; and the
reasonable fees and disbursements, of one counsel for the selling Holders (the
“Selling Holder
Counsel”) not to exceed twenty thousand dollars ($20,000), shall be borne
and paid by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 2.1 or
Section 2.3 if
the registration request is subsequently withdrawn at the request of the holders
of a majority of the Registrable Securities (in which case all selling Holders
shall bear such expenses pro rata based upon the number of Registrable
Securities that were to be included in the withdrawn registration), unless the
holders of a majority of the Registrable Securities agree to forfeit their right
to one registration pursuant to Section 2.1 or
Section 2.3, as
the case may be; provided further, that if, at
the time of such withdrawal, the Holders learned of a material adverse change in
the condition, business, or prospects of the Company that was not known to the
Holders at the time of their request and have withdrawn the request with
reasonable promptness after learning of such information, then the Holders shall
not be required to pay any of such expenses and shall not forfeit their right to
one registration pursuant to Section 2.1 or
Section 2.3.  All
underwriting discounts, commissions and other expenses of the Selling Holders
relating to the sale of Registrable Securities registered pursuant to this Section 2,
except for the fees and disbursements of the Selling Holder Counsel borne and
paid by the Company pursuant to this Section 2.7 shall be
borne and paid by the Holders pro rata on the basis of the number of Registrable
Securities registered on their behalf (the “Selling
Expenses”).

       

      
        
          
          

        

        
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      2.8 Delay of
Registration.  No Investor shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration pursuant
to this Agreement as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 2.

       

      2.9 Indemnification.  If any Registrable
Securities are included in a registration statement under this Section 2:

       

      (a) To the
extent permitted by law, the Company will indemnify and hold harmless each
selling Holder, and the partners, managers, officers, directors and employees of
each such Holder; any underwriter (as defined in the Securities Act) for each
such Holder; and each Person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
Damages, and the Company will pay to each such Holder, underwriter, controlling
Person, or other aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with investigating any matter or defending any
claim or proceeding from which Damages may result, as such expenses are
incurred; provided, however, that the
indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such investigation, claim
or proceeding if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, nor shall the Company be
liable for any Damages to the extent that they arise solely out of or are based
solely upon actions or omissions made in reliance upon and in conformity with
written information furnished by or on behalf of any such Holder, underwriter,
controlling Person, or other aforementioned Person expressly for use in
connection with such registration.

       

      (b) To the
extent permitted by law, each selling Holder, severally and not jointly, will
indemnify and hold harmless the Company, and each of its directors, each of its
officers who has signed the registration statement, each Person (if any) who
controls the Company within the meaning of the Securities Act, legal counsel and
accountants for the Company, any underwriter (as defined in the Securities Act),
any other Holder selling securities in such registration statement, and any
controlling Person of any such underwriter or other Holder, against any Damages,
in each case only to the extent that such Damages arise solely out of or are
based solely upon actions or omissions made in reliance upon and in conformity
with written information furnished by or on behalf of such selling Holder
expressly for use in connection with such registration; and each such selling
Holder will pay to the Company and each other aforementioned Person any legal or
other expenses reasonably incurred thereby in connection with investigating any
investigation or defending any proceeding from which Damages may result, as such
expenses are incurred; provided, however, that the
indemnity agreement contained in this Section 2.9(b)
shall not apply to amounts paid in settlement of any such investigation or
proceeding if such settlement is effected without the consent of such Holder,
which consent shall not be unreasonably withheld; and provided further that in no
event shall the aggregate amounts payable by any Holder by way of indemnity
under this Section 2.9(b)
exceed the proceeds from the offering received by such Holder (net of any
Selling Expenses paid by such Holder), except in the case of fraud or willful
misconduct by such Holder.

       

      (c) Promptly
after receipt by an indemnified party under this Section 2.9 of
notice of the commencement of any action (including any governmental action) for
which a party may be entitled to indemnification hereunder, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 2.9,
give the indemnifying party notice of the commencement thereof.  The
indemnifying party shall have the right to participate in such action and, to
the extent the indemnifying party so desires, participate jointly with any other
indemnifying party to which notice has been given, and to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such action.

       

      (d) The
foregoing indemnity agreements of the Company and the selling Holders are
subject to the condition that, insofar as they relate to any Damages arising
from any untrue statement or alleged untrue statement of a material fact
contained in, or omission or alleged omission of a material fact from, a
preliminary prospectus (or necessary to make the statements therein not
misleading) that has been corrected in the form of prospectus included in the
registration statement at the time it becomes effective, or any amendment or
supplement thereto filed with the SEC pursuant to Rule 424(b) under the
Securities Act (the “Final
Prospectus”), such indemnity agreement shall not inure to the benefit of
any Person if a copy of the Final Prospectus was furnished to the indemnified
party and such indemnified party failed to deliver, at or before the
confirmation of the sale of the shares registered in such offering, a copy of
the Final Prospectus to the Person asserting the loss, liability, claim, or
damage in any case in which such delivery was required by the Securities
Act.

       

      (e) To
provide for just and equitable contribution to joint liability under the
Securities Act in any case in which either (i) any party otherwise entitled to
indemnification hereunder makes a claim for indemnification pursuant to this
Section 2.9 but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Section 2.9
provides for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any party hereto for which
indemnification is provided under this Section 2.9,
then, and in each such case, such parties will contribute to the aggregate
losses, claims, damages, liabilities, or expenses to which they may be subject
(after contribution from others) in such proportion as is appropriate to reflect
the relative fault of each of the indemnifying party and the indemnified party
in connection with the statements, omissions, or other actions that resulted in
such loss, claim, damage, liability, or expense, as well as to reflect any other
relevant equitable considerations.  The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or allegedly untrue statement of a
material fact, or the omission or alleged omission of a material fact, relates
to information supplied by the indemnifying party or by the indemnified party
and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission; provided, however, that, in any
such case, (x) no Holder will be required to contribute any amount in excess of
the public offering price of all such Registrable Securities offered and sold by
such Holder pursuant to such registration statement, and (y) no Person guilty of
fraudulent misrepresentation (within the meaning of section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation; and provided further that in no
event shall a Holder’s liability pursuant to this Section 2.9(e),
when combined with the amounts paid or payable by such Holder pursuant to Section 2.9(b),
exceed the proceeds from the offering received by such Holder (net of any
Selling Expenses paid by such Holder), except in the case of willful misconduct
or fraud by such Holder.

       

      (f) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.

       

      (g) Unless
otherwise superseded by an underwriting agreement entered into in connection
with the underwritten public offering, the obligations of the Company and the
Holders under this Section 2.9
shall survive the completion of any offering of Registrable Securities in a
registration under this Section 2, and
otherwise shall survive the termination of this Agreement.

      
        
          
          

        

        
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      2.10 Reports Under Exchange
Act.  With a view to making available to the Holders the
benefits of SEC Rule 144 and any other rule or regulation of the SEC that
may at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
shall:

       

      (a) make and
keep available adequate current public information, as those terms are
understood and defined in SEC Rule 144, at all times;

       

      (b) use
commercially reasonable efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act (at any time after the Company has become subject to such
reporting requirements); and

       

      (c) furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request: (i) a written statement by the Company that it has complied with
the reporting requirements of SEC Rule 144, the Securities Act, and the
Exchange Act (at any time after the Company has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after the Company so qualifies); and
(ii) such other information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC that permits the selling of any such
securities without registration (at any time after the Company has become
subject to the reporting requirements under the Exchange Act) or pursuant to
such Form S-3 (at any time after the Company so qualifies to use such
form).

       

      2.11 Assignment of Registration
Rights.  The rights to cause the Company to register
Registrable Securities pursuant to this Section 2 may be
assigned (but only with all related obligations) by a Holder to (a) a Permitted
Transferee of such transferring Holder, or (b) any transferee acquiring at least
five thousand (5,000) shares of Registrable Securities; provided, however, that (x) the
Company is, within a reasonable time prior to such transfer, furnished with
written notice of the name and address of such transferee and the Registrable
Securities with respect to which such registration rights are being transferred;
and (y) such transferee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement, including the provisions of Section 2.12.  For
the purposes of determining the number of shares of Registrable Securities held
by a transferee, the holdings of a transferee that is a Permitted
Transferee of a Holder shall be aggregated together with those of the
transferring Holder; provided further that all
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices, or taking any action under this Section 2.

       

      2.12 Restrictions on
Transfer.

       

      (a) The
Series A Preferred Stock and the Registrable Securities shall not be sold,
pledged or otherwise transferred, and the Company shall not recognize any such
sale, pledge or transfer, except upon the conditions specified in this
Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act.  A transferring Holder will cause
any proposed purchaser, pledgee, or transferee of the Series A Preferred Stock
and the Registrable Securities held by such Holder to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Agreement.

       

      (b) Each
certificate representing a Holder's (i) Series A Preferred Stock,
(ii) Registrable Securities and (iii) any other securities issued in
respect of the securities referenced in clauses (i) and (ii), upon any
stock split, stock dividend, recapitalization, merger, consolidation, or similar
event, shall (unless otherwise permitted by the provisions of Section 2.12(c))
be stamped or otherwise imprinted with a legend in substantially the following
form:

       

      THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH
SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.

       

      THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF A REGISTRATION RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.

       

      The
Holders consent to the Company making a notation in its records and giving
instructions to any transfer agent of the Restricted Securities in order to
implement the restrictions on transfer set forth in this Section 2.12.

       

      (c) The
Holder of each certificate representing Restricted Securities, by acceptance
thereof, agrees to comply in all respects with the provisions of this Section 2.  Before
any proposed sale, pledge or transfer of any Restricted Securities, unless there
is in effect a registration statement under the Securities Act covering the
proposed transaction, such Holder thereof shall give notice to the Company of
such Holder’s intention to effect such sale, pledge or transfer.  Each
such notice shall describe the manner and circumstances of the proposed sale,
pledge or transfer in sufficient detail and, if reasonably requested by the
Company, shall be accompanied at such Holder’s expense by either: (i) a
written opinion of legal counsel who shall, and whose legal opinion shall, be
reasonably satisfactory to the Company, addressed to the Company, to the effect
that the proposed transaction may be effected without registration under the
Securities Act; (ii) a “no action” letter from the SEC to the effect that
the proposed sale, pledge or transfer of such Restricted Securities without
registration will not result in a recommendation by the staff of the SEC that
action be taken with respect thereto; or (iii) any other evidence
reasonably satisfactory to counsel to the Company to the effect that the
proposed sale, pledge or transfer of the Restricted Securities may be effected
without registration under the Securities Act, whereupon such Holder shall be
entitled to sell, pledge or transfer such Restricted Securities in accordance
with the terms of the notice given by such Holder to the Company.  The
Company will not require such a legal opinion or “no action” letter (x) in
any transaction in compliance with Rule 144 or (y) in any transaction
in which such Holder distributes Restricted Securities to a Permitted Transferee
of such Holder for no consideration; provided that each transferee agrees in
writing to be subject to the terms of this Section 2.12(c).  Each
certificate evidencing the Restricted Securities transferred as above provided
shall bear, except if such transfer is made pursuant to Rule 144, the
appropriate restrictive legend set forth in Section 2.12(b),
except that such certificate shall not bear such restrictive legend if, in the
opinion of counsel for such Holder and the Company, such legend is not required
in order to establish compliance with any provisions of the Securities
Act.

       

      
        
          
          

        

        
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      2.13 Termination of Registration
Rights.  Notwithstanding any other terms or provisions of this
Agreement, the right of any Holder to request registration or inclusion of
Registrable Securities in any registration pursuant to Section 2.1,
Section 2.2, or
Section 2.3
shall terminate when all of such Holder’s Registrable Securities may be sold
without restriction under SEC Rule 144.

       

      2.14 Subsequent Registration
Rights.  After the date of this Agreement, the Company shall
not enter into any agreement with any holder or prospective holder of any
securities of the Company that would grant such holder rights to demand the
registration of shares of the Company’s capital stock (other than only as to one
or more Excluded Registrations), or to include such shares in a registration
statement that would reduce the number of shares includable by the Holders, in
each case unless consented to by the holders of a majority of the Registrable
Securities, such consent not to be withheld or delayed
unreasonably.

       

      3. Miscellaneous.

       

      3.1 Successors and
Assigns.  The terms and conditions of this Agreement inure to
the benefit of and are binding upon the respective successors and permitted
assignees of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assignees any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.  The rights under this Agreement may be
assigned by each Holder (but only with all related obligations) by a Holder to
(a) a Permitted Transferee of such transferring Holder, or (b) any transferee
acquiring at least five thousand (5,000) shares of Registrable Securities, provided, however, that (x) the
Company is, within a reasonable time prior to such transfer, furnished with
written notice of the name and address of such transferee and the Registrable
Securities with respect to which such registration rights are being transferred;
and (y) such transferee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement, including the provisions of Section 2.12.  For
the purposes of determining the number of shares of Registrable Securities held
by a transferee, the holdings of a transferee that is a Permitted
Transferee of a Holder shall be aggregated together with those of the
transferring Holder; provided further that all
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices, or taking any action under this
Agreement.

       

      3.2 GOVERNING
LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.  

       

      3.3 WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT ANY
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY SUCH PROCEEDING.  

       

      3.4 Counterparts;
Facsimile.  This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, regardless of whether all of the
parties have executed the same counterpart.  Counterparts may be
delivered via facsimile, electronic mail (including pdf) or other transmission
method and any counterpart so delivered shall be deemed to have been duly and
validly delivered and be valid and effective for all purposes.

       

      3.5 Titles and
Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

       

      3.6 Notices.  All
notices, requests, and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given (i) upon
personal delivery to the party to be notified; (ii) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid; or (iii) one (1) day after deposit with a nationally recognized
overnight courier, specifying next-day delivery, with written verification of
receipt.  All communications shall be sent to the respective parties
at their addresses as set forth on the signature page or Schedule A
hereto, or to such address as subsequently modified by written notice given in
accordance with this Section 3.6.  

       

      3.7 Amendments and
Waivers.  No provision of this Agreement may be amended,
terminated or waived without the written consent of (i) the Company; and (ii)
the holders of a majority of the Registrable Securities; provided, however, that if
approved, such amendment, termination or waiver shall be binding on all the
parties hereto, regardless of whether any such party has consented
thereto.

       

      3.8 Severability.  In
case any one or more of the provisions contained in this Agreement is for any
reason held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement, and such invalid, illegal, or unenforceable provision shall
be reformed and construed so that it will be valid, legal, and enforceable to
the maximum extent permitted by law.

       

      3.9 Aggregation of
Stock.  All shares of Registrable Securities held or acquired
by Affiliates shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.

       

      3.10 Entire
Agreement.  This Agreement (including any schedules and
exhibits hereto) and the Transaction Agreements (as defined in the Exchange
Agreement) constitutes the full and entire understanding and agreement between
the parties with respect to the subject matter hereof, and supersedes any and
all other understandings, term sheets, negotiations or agreements between the
parties hereto.

       

      
        
          
          

        

        
          - ix
-

          
            

          

        

        
          
          

        

      

       

       

      3.11 Delays or
Omissions.  No delay or omission to exercise any right, power
or remedy accruing to any party under this Agreement, upon any breach or default
of any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.  Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such
writing.  

       

      3.12 Injunctive
Relief.  In the event of a breach or threatened breach by any
party of any provision of this Agreement, any other party shall be entitled to
an injunction or similar equitable relief restraining such party from committing
or continuing any such breach or threatened breach or granting specific
performance of any action required to be performed by such party under any such
provision, without the necessity of proving any actual damages and without the
necessity of posting any bond or other security. 

       

      3.13 Cumulative
Remedies.  None of the rights, powers or remedies conferred
upon the Holders on the one hand or the Company on the other hand shall be
mutually exclusive, and each such right, power or remedy shall be cumulative and
in addition to every other right, power or remedy, whether conferred by this
Agreement or any of the other Transaction Agreements, now or hereafter available
at law, in equity, by statute or otherwise.

       

      3.14 Construction.  The
parties hereto agree that this Agreement is the product of negotiations between
sophisticated parties and individuals, each of whom was represented by counsel,
and each of whom had an opportunity to participate in, and did participate in,
the drafting of each provision hereof.  Accordingly, ambiguities in
this Agreement, if any, shall not be construed strictly or in favor of or
against any party hereto but rather shall be given a fair and reasonable
construction without regard to the rule of contra proferentem.  Words
used in the singular form in this Agreement shall be deemed to import the
plural, and vice versa, as the sense may require.  As used in this
Agreement, the word “including” shall mean “including without limitation” and
the masculine gender shall include the feminine and the neuter gender, and the
neuter gender shall include the masculine and the feminine gender.

       

      3.15 Approvals.  Without
limiting anything set forth in this Agreement, including any other remedies
provided herein or available at law or equity, the parties hereto agree that in
the event that the parties must approve or consent to any action to be taken by
the Company, any action taken by the Company without such consent or approval as
required by the terms of this Agreement shall be null and void and of no force
and effect.

      
 

       

      [Remainder
of Page Intentionally Left Blank]

      
 

      

        
          
             

          

          
            - x
-

            
              

            

          

          
             

          

        

       

      IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.

      

       

      COMPANY:

      

      NEXTPHASE
WIRELESS, INC.

      

      

      By:  /s/ Thomas C.
Hemingway 

      Name: 
 Thomas C. Hemingway

      Title:    
Chief Executive Officer

      

      

      INVESTORS:

      

      

      

      

      /s/ Richard C.
Strain                                                                    

            Richard
C. Strain

      

      

      
        
           

        

        
          - xi
-

          
            

          

        

        
           

        

      

      SCHEDULE
A

      

       

      Investors

       

      

      
        	
                Name and Address

              	 	
                Number of Shares
  Held

              

      

       

       

      Richard
C. Strain

    
 

    
      
         

      

      
        - xii
-e10-11.htm

    EXHIBIT 10.11

      

       

      RMB
Facility Loan Contract

       

      Contract
No: 2004 Zhongdi
003

       

      Type
of Loan: Medium-term
Current Capital Loan

       

      Borrower
(Party A): Huludao
Wonder Fruit Co.,Ltd.

       

      Address:
Hujia Village, Gaotai
Town, Suizhong County

       

      Post
Code: 125200

       

      Legal
Representative (Chief Officer): Niu
Hongling

       

      Fax:
86-0429-6833995                                           Tel: 86-0429-6833997

       

      Lender
(Party B):
Industrial-Commercial Urban Credit Cooperative

       

      Address:
No.11,2nd
Section of
Xinxing Street,Suizhong Town,Suizhong County
125200

       

      Chief
Officer: Li
Yumin

       

      Fax:           Tel:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Borrower
(“Party A”): Huludao
Wonder Fruit Co.,Ltd.

       

      Lender
(“Party B”): Industrial-Commercial Urban
Credit Cooperative

       

      Whereas
Party A applies to Party B for, and Party B agrees to provide Party A with, a
loan facility (the “Facility”). Pursuant to relevant laws and regulations and
through consultation, Party A and Party B enter into this Contract:

       

      Article
1. Type of Loan

       

      Working
Capital Loan (short-term or middle-term)

       

      Article
2. Use of Loan

       

      2.1 The
Loan is only for buying fixed assets
unless given written consent from Party B.

       

      2.2 Party
B cannot change the use of Loan according to the Contract without the written
consent of Party A.

       

      Article
3. Availability Period and Amount of the Facility

       

      The
Availability Periodic the Facility shall commence from   July 9,2004 and end on July 10,2009 (the
“Availability Period”).

       

      The
amount of the Facility shall be RMB ten million (in
words) (the “Maximum Amount”).

       

      Article
4. Interest Rate, Calculation and Payment of Interests and Fees

       

      4.1 The
monthly interest rate applicable to the Loan shall be fixed at 7.905‰.

       

      4.2
Interest Settlement

       

      The
interest rate shall be calculated and paid according to the fixed interest rate,
and the 20th
day of each month shall be the
date for the settlement of interest.

       

      4.3 The
interest rate should be flexible with the adjustment of the interest rate of
China People’s Bank. In the event of interest rate adjustment, Party B can make
an adjustment over the interest rate and calculation method without informing
Party A.

       

      Article
5. Repayment

       

      5.1
Interest Payment

       

      Party A
shall pay to Party B the due interest on the Interest Payment Date. The
first

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      interest
payment shall be made on the first Interest Payment Date after the disbursement
of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all
the unpaid interest together with the principal.

       

      5.2
Method of Repayment

       

      Party A
shall deposit into its account with Party B such funds as sufficient to repay
the amount due to Party B before each Repayment Date specified in this Contract,
and shall automatically transfer such
funds to Party B for repayment; or Party A shall transfer a sufficient
amount from its other accounts to make such repayment on the
aforementioned Repayment Date. If Party A fails to repay any indebtedness
punctually, Party B has the right to directly debit for the corresponding amount
any account opened by Party A with any branch or office of China Construction
Bank.

       

      Article
6. Security for the Loan

       

      6.1 The
security(ies) for this Contract shall be Item [2] as below.

       

      
        	
                (1)

              	
                Guarantee

              

      

       

      (2)           Mortgage

       

      (3)           Pledge

       

      (4)           Standby
Letter of Credit

       

      (5)           Credit
Insurance

       

      (6)           Other
Forms of Security:
Mortgage

       

      6.2 Party
A should use all their efforts to coordinate with Party B to sign the loan
contract of No: 2004
Zhongdi 003.

       

      6.3 If
the status of the Mortgage changed in Creditor’s right, which is likely to cause
damage to the interest of the Creditor’s right, Party A should provide a new
Mortgage until the Mortgage meets the requirements of Party B.

       

      Article
7. Rights and Obligations of Party A

       

      7.1 Party
A has the right to require Party B to keep in confidence relevant financial
information and trade secrets relating to production and operation of Party A
unless otherwise provided by laws and regulations.

       

      7.2 Party
A shall provide relevant financial information and the information relating to
production and operation as required by Party B and shall be responsible for the
authenticity, integrity and validity of such information.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      7.3 Party
A undertakes that all settlements and deposits relating to the Loan shall be
conducted through its accounts opened with Party B or Party B’s relevant
branch.

       

      7.4 Party
A shall assist in and accept Party B’s inspection and supervision of its
production, operation, financial activities and the utilization of the
Loan.

       

      7.5 Party
A shall utilize the Loan for the purpose as provided for hereunder.

       

      7.6 Party
A shall punctually repay the principal and interest in accordance with this
Contract.

       

      7.7 Party
A or its investors shall not transfer any funds or assets in order to evade the
indebtedness owed to Party B.

       

      7.8 Party
A shall give Party B a prior written notice for Party B’s consent if Party A
intends to provide security for any third party during the term of this Contract
and such security may affect Party A’s ability to make repayment under this
Contract.

       

      7.9 Party
A shall promptly arrange for new security(ies) satisfactory to Party B where the
Guarantor in respect to this Contract ceases or suspends production; its
corporate registration is canceled or business license revoked; it is bankrupt
or dissolved; it is operating at a loss; or any other negative change has
occurred, and such aforesaid incidents result in loss or partial loss of the
Guarantor’s ability to secure the Loan, or where the mortgaged or pledged
property(ies) for securing the Loan depreciate(s) or is (are) damaged or
destroyed.

       

      7.10
Party A shall promptly inform Party B of any relevant changes during the term of
this Contract, including without limitation its business name, legal
representative (or chief officer), registered office, business purpose or
registered capital.

       

      7.11
Where Party A intends to carry out activity(ies) during the term of this
Contract which may have an impact on the realization of Party B’s rights
hereunder, Party A shall give Party B a [30] banking days prior written notice
for its consent to such intended activity(ies) and shall further take sufficient
measures to safeguard the repayment of the indebtedness under this Contract and
arrange for security in accordance with Party B’s instructions. The
aforementioned activities shall include without limitation contracting, leasing,
transformation to a stock company, forming an economic association with another
enterprise, consolidation, merger, division, setting up a joint venture,
application for suspension of production or for winding up or for
bankruptcy

       

      7.12
Party A shall promptly inform Party B in writing, take sufficient measures to
safeguard the repayment of the indebtedness under this Contract and arrange for
security(ies) in accordance with Party B’s instructions if there has occurred to
Party A incident(s) during the term of this Contract that may have substantially
negative effects on Party B’s performance of its obligations hereunder. The
aforementioned incidents shall include without limitation the following: Party A
ceases or suspends production; its corporate registration is canceled or
business license revoked; its legal representative or

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      high-ranking
officers are involved in illegal activities; it is involved in litigation with a
major impact; great difficulties arise in respect to its production or
operation; or its financial standing deteriorates.

       

      7.13
Party A shall bear all fees and expenses in connection with this Contract and
the security(ies) for this Contract including without limitation fees and
expenses in respect to legal services, insurance, evaluation, registration,
storage, authentication and notarization.

       

      Article
8. Rights and Obligations of Party B

       

      8.1 Party
B is entitled to have access to information about production, operation, and
financial activities of Party A, and to require Party A to provide financial
information and documents in respect to its production and
operation.

       

      8.2 If
the credit rating of Party A declines, Party B is entitled to adjust or even
cancel the Facility that is otherwise available.

       

      8.3 Party
B is entitled to debit any account opened by Party A with any branch or office
of China Commerce Bank for any amount due to Party B under this
Contract.

       

      8.4 Party
B shall disburse the Loan to Party A in accordance with this Contract, except
for any delay caused by Party A.

       

      8.5 Party
B shall keep in confidence financial information and trade secrets in relation
to production and operation of Party A unless otherwise required by laws or
regulations.

       

      Article
9. Effectiveness,Modification,
Rescission and Termination

       

      9.1 The
Contract will be effective after the signing and stamping.

       

      9.2 Party
B will rescind the contract and ask for repayment and compensation if Party A
breaks any item below:

       

      9.2.1
Dissolution and shop closure or revocation of the business license has
happened.

       

      9.2.2
There are some changes in the Mortgage under the provision of the contract,
which is likely to cause damage to the creditor’s right; in this case, Party A
fails to provide a new Mortgage that is satisfactory to Party B.

       

      9.2.3
Other serious default activities.

       

      9.3 If
Party A ask for extension of the contract, Party A should offer a written
application to Party B with the written consent from cautioner at least 30 days
before

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      the
contract will expire. The extension contract will not become effective until
Party A gets approval from Party B. The loan contract remains effective until
the signing of the extension contract.

       

      9.4
Neither Party should make any adjust or expiration without consent from the
opposite Party except for the provision already defined in the Contract. Any
adjustment or expiration requires approval from both Parties and must be reached
by written agreement if the status is necessary.

       

      9.5 The
original contract remains effective until both Parties reach a
consensus.

       

      Article
10. Amendment to this Contract

       

      Upon
effect of this Contract, any Party intending to amend this Contract shall notify
the other Party promptly and a written agreement shall be executed if the
Parties so agree, unless otherwise provided in this Contract or in any other
agreement.

       

      Article
11. Dispute Resolution

       

      11.1 Any
dispute arising out of or in connection with this Contract shall be settled
through friendly consultation. If no agreement is reached through such friendly
consultation, such dispute shall be settled in accordance with the
following:

       

      11.2
Instituting legal proceedings with the People’s Court in the location of Party
B.

       

      11.3 The
Parties shall perform this Contract in accordance with the undisputed parts
during the course of such legal proceedings or arbitration.

       

      Article
12. This Contract Shall be Made in [2] Counterparts

       

      All
documents created within the Availability Period and within the Maximum Amount
of the Facility which underlie the debtor-creditor relationship between the
Parties (including but not limited to Application for Drawing, Notice of
Drawing or other certificates and documents) are integral parts of this
Contract.

       

      Article
13. Representations

       

      13.1
Party A is fully informed and aware of the business purpose and powers of Party
B.

       

      13.2
Party A has read all the terms of this Contract and Party B has given
explanation as required by Party A. Party A hereby acknowledges that it fully
understands all terms of this Contract and corresponding legal consequences
thereof.

       

      13.3
Party A has the right and power to execute this Contract.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Party A :
Huludao Wonder Fruit
Co.,Ltd.

       

      Legal
Representative (or Chief Officer) or Authorized Representative
(Signature):

       

       /s/:Niu
Hongling

       

      Date:
07/09/2004

       

      Party B:
Industrial-Commercial
Urban Credit Cooperative

      Chief
Officer or Authorized Representative (Signature): /s/: Li
Yumin

       

      Date:
07/09/2004

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