DEBT EXCHANGE AGREEMENT

(a)  

Organization: Authority.  The Holder is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate, partnership or other applicable power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder, and the execution, delivery and performance by the Holder of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of the Holder.  This Agreement, when executed and delivered by the Holder, will constitute a valid and legally binding obligation of the Holder, enforceable against the Holder in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions contained herein may be limited by federal or state securities laws.

(b)  

Investment Experience.  The Holder either alone or together with its representatives has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Exchange and make an informed decision to so invest, and has so evaluated the risks and merits of the Exchange.

(c)  

Absence of General Solicitation.  The Holder is not accepting the Exchange as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(d)  

No Conflicts: Advice.  Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, does or will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, or court to which the Holder is subject or any provision of its organizational documents or other similar governing instruments, or conflict with, violate or constitute a default under any agreement, credit facility, debt or other instrument or understanding to which the Holder is a party.

(e)  

Consents.  No authorization, consent, approval or other order of, or declaration to or filing with, any governmental agency or body or other Person is required on the part of the Holder for the valid authorization, execution, delivery and performance by the Holder of this Agreement and the consummation of the transactions contemplated hereby other than the filing of a Form 144 by the Holder in connection with its sale of the Shares.

(f)  

Ownership of Note and Assigned Debt.  Holder owns and holds, beneficially and of record, the entire right, title, and interest in and to the Note (including, without limitation, accrued and unpaid interest thereon) and the Assigned Debt, free and clear of all rights and Encumbrances (as defined below).  Holder has full power and authority to transfer and dispose of the Note (including, without limitation, accrued and unpaid interest thereon) and Assigned Debt, free and clear of any right or Encumbrance other than restrictions under the Act and applicable state securities laws.  Other than the transactions contemplated by this Agreement, there is no outstanding vote, plan, pending proposal, or other right of any person to acquire all or any of the Note or the Assigned Debt. “Encumbrances” shall mean any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent or conditional sale, or other title claim or retention agreement, interest or other right or claim of third parties, whether perfected or not perfected, voluntarily incurred or arising by operation of law, and including any agreement (other than this Note) to grant or submit to any of the foregoing in the future.

(a)  

Valid Issuance.  The 1,900,000 Shares, being issued in the Exchange have been duly authorized and, upon issuance, will be validly issued, fully paid and non-assessable shares of Common Stock of the Company and, upon consummation of the Exchange, the Holder will receive valid and good title to the Shares so issued free and clear of all liens, claims, charges and other encumbrances.  The Shares being issued in the Exchange represent less than nine and nine/tenths (9.9%) per cent of the outstanding shares of Common Stock of the Issuer.

(b)  

Organization: Authority.  The Company is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate, and other applicable power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder, and the execution, delivery and performance by the Company of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of the Company.  This Agreement, when executed and delivered by the Company, will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions contained herein may be limited by federal or state securities laws.

(c)  

No conflicts: Advice.  Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, does or will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, or court to which the Company is subject or any provision of its organizational documents or other similar governing instruments, or conflict with, violate or constitute a default under any agreement, credit facility, debt or other instrument or understanding to which the Assignee is a party.

(d)  

Consents.  No authorization, consent, approval or other order of, or declaration to or filing with, any governmental agency or body or other Person is required on the part of the Company for the valid authorization, execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby.

(e)  

No Litigation.  There is no action, suit, proceeding, judgment, claim or investigation pending, or to the knowledge of the Company, threatened against the Company which could reasonably be expected in any manner to challenge or seek to prevent, alter or delay the transaction contemplated hereby.