PREFERRED STOCK SUBSCRIPTION AND PURCHASE AGREEMENT

This Preferred Stock Subscription and Purchase Agreement (the "Agreement") is made and
entered into on ______, between ______, a[n] ______ [entity of seller] (the "Company"), and the
undersigned subscriber (the "Subscriber"). The Company and the Subscriber hereby agree as
follows:
1.

Issuance of Shares

The Company proposes to issue and sell, in the manner described in the Private Placement
Memorandum, up to an aggregate of ______ shares (the "Shares") of its Series A Preferred Stock
(the "Preferred Stock") to the Subscriber and to other purchasers (the "Other Subscribers") who
will be executing other subscription and purchase agreements (the "Other Subscription
Agreements") which shall be substantially identical to this Agreement. Any sale of Shares to the
Subscriber and to the Other Subscribers are to be separate sales and this Agreement and the
Other Subscription Agreements are to be separate agreements, but references to this "Agreement"
shall include the Other Subscription Agreements where the context so permits, together with all
modifications hereof and thereof. The preferences, voting powers, qualifications and special or
relative rights or privileges of the Preferred Stock are set forth in a Certificate of Designation for
the Preferred Stock (the "Certificate of Designation"), which is substantially in the form attached
as Exhibit ______ to the Private Placement Memorandum, and in the Articles of Incorporation of
the Company. The Certificate of Designation will be duly filed with the Secretary of State of the
State of ______ on or before the date of the Initial Closing.
Certain capitalized terms used in this Agreement are defined in paragraph 12; references to a
"paragraph" are, unless otherwise specified, to one of the paragraphs of this Agreement.
2.

Subscription and Purchase of Shares

Subject to the terms and conditions set forth herein and in the Private Placement Memorandum,
the Subscriber hereby irrevocably tenders this subscription (the "Subscription") for the number
of Shares indicated on the signature page of this Agreement (which amount shall be no less than
______ without the consent of the Company), at a price of $______ per Share, together with
payment in the form of wire transfer or cash or a check, bank draft or money order payable to
"______ Escrow" simultaneously with the delivery of an executed copy of the Registration
Rights Agreement, a Purchaser's Questionnaire and, if required, a Purchaser's Representative
Questionnaire, in the forms attached to the Private Placement Memorandum. The Company shall
have the sole right to accept or to reject this Subscription, in whole or in part in its absolute
discretion (and the same shall be deemed to be accepted by the Company only when this
Agreement has been executed by the Company), or, if the offering of the Shares is
oversubscribed, to allot a lesser number of Shares than the number for which Subscriber has
subscribed. In the event that Agreements covering the subscription for at least ______ Shares are
not received and accepted by the Company prior to ______ (or such later date as may be
established by the Company and Placement Agent without notice to the Subscriber being
required (the "Termination Date")), this Subscription shall be cancelled and this Agreement and
the funds submitted by the Subscriber with this Agreement shall be returned in the manner

described in paragraph 3.
3.

Escrow of Subscription Funds

3.1

Appointment of Escrow Agent

All funds submitted with this Subscription will be deposited and held in an escrow account (the
"Escrow Account") with ______ (the "Escrow Agent") pending the acceptance of this
Subscription by the Company, and the undersigned agrees that the Escrow Agent shall act in that
capacity for the undersigned and the Company as provided herein. Such funds will be
temporarily invested in accordance with the Company's instructions in money market accounts,
short-term United States government obligations, time and demand deposits, repurchase
agreements and other similar investments. The Subscriber may not withdraw funds from the
Escrow Account. Interest earned on Subscription funds will be paid to Subscriber with respect to
the period from the date of availability of the funds to the Escrow Agent to the date of acceptance
or rejection of the Subscription, as the case may be. If the Company does not receive and accept
Agreements covering the subscription for at least ______ Shares on or before the Termination
Date, or if the Company does not for some other reason accept all or part of this Subscription, the
appropriate portion of Subscription funds (with applicable interest) will be returned to Subscriber
by the Escrow Agent.
3.2

Power of Attorney
(a)
By executing this Agreement, the undersigned grants to the Company a special
power of attorney, making, constituting and appointing the Company as the undersigned's
attorney-in-fact, with power and authority to act in the undersigned's name and on the
undersigned's behalf to execute, acknowledge and file, and to swear to the execution,
acknowledgement and filing of, documents which shall be delivered to the Escrow Agent
setting forth instructions as to the delivery of the undersigned's subscription funds as
otherwise provided herein and the Escrow Agent shall be entitled to rely on such
instructions as fully set forth herein.
(b)

The special power of attorney hereby granted by the undersigned:

(1)
is a special power of attorney coupled with an interest, is irrevocable and
shall survive the death or legal incapacity of the undersigned;
(2)
may be exercised by the Company signing for the undersigned
individually or for all Subscribers executing any particular instrument; and
(3)

shall survive an assignment by the undersigned of his Shares.

(c)
A copy of this Agreement has been delivered to the Escrow Agent along with the
Subscription funds and the Escrow Agent shall be entitled to rely on any instructions
delivered to it by the Company as attorney-in-fact for the undersigned which reference

this Agreement and the particular terms herein upon which such instruction have been
given. The undersigned hereby agrees to such other conditions as may be reasonably
imposed by the Escrow Agent in connection with its administration of the Escrow
Account.
3.3

Escrow Agent Indemnification

The undersigned and the Company agree as follows with respect to the actions of the Escrow
Agent hereunder:
(a)
The Escrow Agent shall be protected in acting upon any written notice, letters,
request, waiver, consent, receipt or other paper or document, not only as to its due
execution and the validity and effectiveness of its provisions, but also as to the truth of
any information therein contained, which it in good faith believes to be genuine and what
it purports to be.
(b)
The Escrow Agent shall not be liable for any error of judgment, or for any action
taken or omitted by it in good faith, or mistake of act or law, or for anything it may do or
refrain from doing in connection herewith, except for its willful misconduct.
(c)
The Company and the undersigned, jointly and severally, agree to indemnify the
Escrow Agent for, and to save it harmless against, any loss, liability, damage or expense
(including reasonable legal and other fees) arising out of or in connection with the
performance of its duties hereunder, except for any loss, liability, damage of expense
arising out of Escrow Agent's willful misconduct.
(d)
Any directions which the Company may make to Escrow Agent with respect to
the delivery of funds, including interest thereon, shall be deemed to be made pursuant to
the power-of-attorney herein granted by the undersigned to the Company.
4.

Closing

Subject to the receipt and acceptance by the Company of Agreements covering the subscription
for a minimum of ______ Shares on or before the Termination Date, a closing (the "Initial
Closing") shall be scheduled to be held no later than [spelled number of days] (______) days
after such acceptance at such location as may be agreed upon by the Company and Placement
Agent. After the Initial Closing and prior to the Termination Date, the Company may continue to
accept subscriptions for up to an aggregate of ______ Shares and additional closings shall be
scheduled therefor at such location as may be agreed upon by the Company and Placement Agent
(each, a "Subsequent Closing"). (The term "Closing" shall be used herein to refer to the initial
Closing or any Subsequent Closing.) At the Closing with respect to the Shares to be purchased
by the Subscriber, (a) the Company shall duly acknowledge its acceptance of this Agreement and
shall issue to the Subscriber certificates representing the Shares purchased by it, (b) the Escrow
Agent shall deliver to the Company the funds for the Subscription and shall remit to the
Subscriber any accrued interest on funds held by the Escrow Agent for the Subscription and (c)
the Subscriber will receive a counterpart of the Registration Rights Agreement duly executed by

the Company.
5.

Conditions

5.1

Conditions to Subscriber's Obligations

The Subscriber's obligation to purchase and pay for the Shares to be purchased by the Subscriber
hereunder is subject to the fulfillment, on or before the date of the Closing with respect to the
Subscription (the "Closing Date"), of the following conditions:
5.1A. Representations and Warranties of Company
The representations and warranties contained in paragraph 6 shall be true and correct on and as
of the Closing Date with the same effect as though such representations and warranties had been
made on the Closing Date, except to the extent of changes caused by the transactions herein
contemplated.
5.1B

Compliance with Agreements and Conditions

The Company shall have complied with all agreements and conditions contained in this
Agreement required to be complied with by the Company on or as of the Closing Date.
5.1C

Certificate of Designation

The Certificate of Incorporation of the Company as in effect on the date hereof shall have been
supplemented by the Certificate of Designation, and such Certificate of Incorporation and
Certificate of Designation shall not have been amended, modified or supplemented in any respect
from the forms in effect on the date hereof or attached to the Private Placement Memorandum
except as disclosed to Subscriber in writing.
5.1D

No Restraint or Injunction

No order, decree, judgment or injunction shall be in effect which restrains, enjoins or prevents
the consummation of or otherwise affects the transactions contemplated by this Agreement.
5.1E

Legal Opinion

A favorable opinion, dated the Closing Date and addressed to Subscriber from ______, counsel
to the Company, as to: due incorporation of the Company, authorization of the Company's
capital stock, due authorization of the Preferred Stock and the Common Stock issuable upon
conversion of the Preferred Stock, absence of violations of the Company's Certificate of
Incorporation, Bylaws and certain agreements, and due authorization, execution and delivery by
the Company of this Agreement and the Registration Rights Agreement, shall have been
received.
5.1F

Registration Rights Agreement

The Company shall have executed a counterpart of the Registration Rights Agreement for the
benefit of the Subscriber.
5.1G

Consents and Permits

The Company shall have received all consents, permits and other authorizations, and made all
such filings and declarations, as may be required by or from any person pursuant to any law,
statute, regulation or rule (federal, state, local and foreign), and pursuant to all other agreements,
orders and decrees to which the Company is a party or to which the Company may be subject, in
connection with the transactions contemplated by this Agreement, the sale of the Shares, other
than the requirements of any state Blue Sky laws which may be satisfied subsequent to the
Closing Date pursuant to such Blue Sky laws.
5.1H Compliance Certificate
The Company shall have delivered a certificate, dated as of the Closing Date and signed by each
of its president and the chief financial officer, to the effect that:
(1)
The representations and warranties of the Company in this Agreement are true and
correct as if made at and as of such Closing Date; and the Company has complied with all
the obligations and satisfied all the conditions to be performed and satisfied on its part at
or prior to such Closing; and
(2)
All consents, approvals, authorizations or orders of any court, governmental
agency or body required to be obtained in connection with the consummation of the
transactions contemplated by this Agreement have been obtained.
5.1I

Secretary's Certificate

The Company shall have delivered a certificate, dated as of the Closing Date and signed by the
Clerk of the Company, to the effect that:
(1) There has been no amendment to the Articles of Incorporation of the Company since
______, the Articles of Incorporation and Certificate of Designation are in full force and
effect, and no action has been taken for the purpose of amending the Articles of
Incorporation or Certificate of Designation;
(2) The bylaws of the Company attached thereto as an exhibit were duly adopted, have
not been amended since ______, and are in full force and effect, and no action has been
taken for the purpose of amending the bylaws; and
(3) Attached thereto as an exhibit is a full, true and correct copy of resolutions duly
passed and adopted by the board of directors of the Company at meetings thereof
authorizing the preparation and delivery of the Private Placement Memorandum, the sale
of the Preferred Stock and the execution and delivery of the Agreement and other actions
with regard thereto, which resolutions have not been amended, altered or repealed and are
in full force and effect.

5.1J

Effect of Certificates

Any certificate signed by an officer of the Company and delivered to Subscriber or to its counsel
pursuant hereto shall be deemed to be a representation and warranty of the Company, as well as
of such officer, to Subscriber as to the statements made therein.
5.2

Conditions to the Company's Obligations

The obligation of the Company to sell the Shares to be sold to Subscriber hereunder is subject to
the fulfillment to the Company's satisfaction, on or before the Closing Date, of the following
conditions:
(a)
The representations and warranties contained in paragraph 7 shall be true and
correct on and as of the Closing Date with the same effect as though such representations
and warranties had been made on the Closing Date, except for changes caused by the
transactions herein contemplated.
(b)
Subscriber shall have complied in all material respects with all agreements and
conditions contained in this Agreement required to be complied with by Subscriber on or
as of the Closing Date.
(c)
No order, decree, judgment or injunction shall be in effect which restrains, enjoins
or prevents the consummation of, or otherwise affects the transactions contemplated by,
this Agreement.
6.

Representations and Warranties of the Company

The Company represents and warrants to Subscriber as of the date hereof as follows:
6.1

No Regulatory Orders

Neither the Securities and Exchange Commission (the "Commission") nor any state securities
agency or bureau has issued an order revoking any exemption of the offering from registration or
qualification under the 1933 Act, or under any securities, Blue Sky or similar laws, or an order
preventing or suspending the offering or the use of the Private Placement Memorandum, or of
any part thereof, in connection with the sale of the Preferred Stock.
6.2

Private Placement Memorandum

The Company and the Private Placement Memorandum have, as of the date of the Private
Placement Memorandum, fully satisfied, and at the date of each Closing each will satisfy, all
applicable requirements of the 1933 Act, the 1934 Act, the securities, Blue Sky or similar laws of
each jurisdiction which Placement Agent has designated pursuant to Section 10(c) of the
Placement Agent Agreement between the Company and Placement Agent, and all applicable
rules and regulations adopted under any of the foregoing, including without limitation the

conditions and provisions of Regulation D promulgated under the 1933 Act. The Private
Placement Memorandum, as of its date, did not contain, and on the Closing Date will not
contain, any untrue statement of a material fact or to omit to state any material fact necessary in
order to make the statements therein not misleading in the light of the circumstances under which
they were or will be made and contained, and on the Closing Date will contain all statements and
information required to be included therein; provided, however, that the representations and
warranties in this Section 6 shall not apply to statements in or omissions from the Private
Placement Memorandum made in reliance upon and in conformity with information furnished to
the Company in writing by Placement Agent specifically for use in the Private Placement
Memorandum.
6.3

Organization and Licenses

The Company has been duly organized and is validly existing as a corporation in good standing
under the laws of the State of ______, with full power and authority (corporate and other) to
own, lease and operate its properties and conduct its business as described in the Private
Placement Memorandum, and is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business conducted by it or the
location of the properties owned or leased by it requires such qualification. Except as may be
otherwise stated in the Private Placement Memorandum, the Company holds all material
licenses, certificates, permits and similar authorization from state, federal and other regulatory
authorities necessary for the conduct of its business as described in the Private Placement
Memorandum and is in compliance with such licenses, certificates, permits and similar
authorization, and the Company owns or possesses adequate and enforceable rights to use all
patents, patent applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights and licenses described in the Private Placement
Memorandum as being owned by the Company or necessary for the conduct of the Company's
business as described therein and has not received any notice of conflict with the asserted rights
of others in respect thereof.
6.4

Capitalization

The authorized, issued and outstanding capital stock of the Company as of ______ is as set forth
in the Private Placement Memorandum under the caption "Capitalization." The Company has all
requisite power and authority to issue, sell and deliver the Preferred Stock and the Common
Stock into which the Preferred Stock is convertible in accordance with and upon the terms and
conditions set forth in this Agreement, the Placement Agent Agreement and in the Private
Placement Memorandum; the outstanding shares of Common Stock have been duly authorized;
and the outstanding Common Stock warrants have been duly authorized. The capital stock of the
Company conforms to the description thereof contained under the caption "Description of Other
Securities" in the Private Placement Memorandum. The Preferred Stock of the Company
conforms to the description thereof contained under the caption "Description of Preferred Stock"
in the Private Placement Memorandum.
6.5

Authorization of Preferred Stock

The Preferred Stock and the Common Stock into which the Preferred Stock is convertible have
been duly authorized and upon issuance and delivery and payment therefor in the manner
described in this Agreement, the Placement Agent Agreement and in the Private Placement
Memorandum will be validly issued, fully paid and non-assessable (provided that the conversion
price of the Preferred Stock is not less than $______, the par value of the Common Stock), and
will conform to the description thereof contained in the Private Placement Memorandum. No
further corporate approval or authority on behalf of the shareholders or the board of directors of
the Company will be required for the issuance and sale of the Preferred Stock or for the issuance
of the Common Stock into which the Preferred Stock is convertible at the current conversion rate
of the Preferred Stock.
6.6

Charter Documents and Contracts

The Company is not in violation of its Articles of Incorporation, bylaws or other charter or
governing documents. The Company is not in default, nor with the giving of notice or lapse of
time or both would it be in default, in the performance or observance of any material obligation,
agreement, covenant or condition contained in any bond, debenture, note or other evidence of
indebtedness or in any lease, material contract, indenture, mortgage, loan agreement, joint
venture, license agreement or other agreement or instrument to which the Company is a party or
by which it or any of its properties is bound. The performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions herein contemplated
and contemplated in the Registration Rights Agreement will not conflict with or result in a
breach or violation of any of the terms or provisions or, or constitute a default under, (a) any
indenture, mortgage, deed of trust, loan agreement, bond, debenture, note or other evidence of
indebtedness, lease, contract, license agreement or other agreement or instrument to which the
Company is a party or by which the Company or any of its properties is bound, or (b) the
Company's Certificate of Incorporation, bylaws or other charter or governing documents, or (c)
any law, order, rule, regulation, writ, injunction or decree applicable to the Company of any court
or governmental agency or body having jurisdiction over the Company or over any of its
properties, or result in the creation or imposition of any lien, charge, claim or encumbrance upon
any property or asset of the Company. Except as required by the 1933 Act, the 1934 Act and
applicable state securities and other similar laws, no consent, approval, authorization or order of
any court or governmental agency or body is required in connection with the performance of this
Agreement and the consummation by the Company of the transactions herein contemplated.
6.7

Compliance with Laws and Orders

The Company is not in violation of any law, order, rule, regulation, writ, injunction or decree of
any government, governmental instrumentality or court, domestic or foreign, nor, except as may
be otherwise stated in the Private Placement Memorandum, has it failed to obtain any license,
permit, franchise or other governmental authorization necessary to the ownership of its property
or to the conduct of its business, where such default or violation or failure to obtain is likely to
have any material adverse effect on the condition (financial or otherwise), properties, operations
or net worth of the Company.
6.8

Compliance with 1934 Act Reporting Requirements

The Company has filed on a timely basis all reports and other documents required to be filed by
it pursuant to the 1934 Act and all such filings did not contain, as of the date of such filings, any
untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the circumstances under
which they were made.
6.9

Authority and Enforceability

The Company has full right, power and authority to enter into this Agreement and the
Registration Rights Agreement, and this Agreement and the Registration Rights Agreement has
been duly authorized, executed and delivered by the Company and constitutes the valid and
binding agreements of the Company enforceable in accordance with their respective terms.
6.10

Litigation

Except as described in the Private Placement Memorandum, there is no pending, or to the

knowledge of the Company, threatened or contemplated, action, suit, proceeding or investigation
to which the Company is a party before any court, governmental agency or body or arbitrator,
which might result in any material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company.
6.11

Financial Information

The audited financial statements and the related notes and schedules included or incorporated by
reference in the Private Placement Memorandum, present fairly the financial position, results of
operations, shareholders' equity and changes in financial position of the Company as of the dates
and for the periods to which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the periods involved.
The interim unaudited financial statements included or incorporated in the Private Placement
Memorandum reflect all adjustments necessary for a fair presentation of the operating results for
the interim periods presented.
6.12

Absence of Material Changes

Subsequent to the respective dates as of which information is given in the Private Placement
Memorandum, and except as may be otherwise stated in the Private Placement Memorandum,
there has not been (a) any material adverse change in the financial position, net worth, business,
key personnel, properties or results of operations of the Company, or any development involving
a prospective change which might have a material adverse effect on such matters, (b) any
transaction which is material to the Company entered into by it, except transactions in the
ordinary course of business, (c) any obligation, material to the Company, direct or contingent,
incurred by it except obligations incurred in the ordinary course of business, (d) any material
change in the capital stock of the Company or any material increase in the short-term debt or any
increase in the long-term debt of the Company, (e) any dividend or distribution of any kind
declared, paid or made on the Company's capital stock, or (f) except in the ordinary course of

business, any issuance by the Company of any securities, options, warrants, convertible
securities or other rights to purchase the capital stock of the Company.
6.13

Title to Properties and Assets

Except as disclosed in the Private Placement Memorandum, the Company has good and
marketable title or license rights to all its properties and assets, including without limitation all
patents and patent applications described in the Private Placement Memorandum as owned by it
free and clear of all liens, charges, encumbrances or restrictions other than such as are not
materially significant or important in relation to the business of the Company, and the Company
has valid and enforceable leases to the real and/or personal properties described in the Private
Placement Memorandum as leased by it.
6.14

Taxes

The Company has filed all necessary tax returns and has paid all taxes shown thereon as due, and
the Company has no knowledge of any tax deficiency which has been or might be asserted
against it which would materially and adversely affect the business, operation or financial
condition of the Company, and all tax liabilities are adequately provided for on the books of the
Company.
6.15

Insurance

Except as disclosed in the Private Placement Memorandum, the Company maintains insurance of
the types and in amounts which it deems adequate for its business and consistent with insurance
coverage maintained by similar companies and businesses, all of which insurance is in full force
and effect.
6.16

Subsidiaries

The Company has no subsidiaries.

7.

Representations and Warranties of the Purchaser

7.1

Acquisition for Investment; Funding Source

Subscriber represents, and in making this sale to Subscriber it is specifically understood and
agreed, that Subscriber is acquiring the Shares solely for its own account for the purpose of
investment and not with a view to or for sale in connection with any distribution thereof and that
it has no present intention or plan to effect any distribution of the Shares or the shares of
Common Stock issuable upon conversion of the Shares. No one other than Subscriber has any
interest in or any right to acquire the Shares subscribed for by Subscriber. Subscriber
understands and acknowledges that the Company will have no obligation to recognize the
ownership, beneficial or otherwise, of such Shares by anyone but Subscriber. Subscriber
acknowledges that the Shares and the shares of Common Stock issuable upon conversion of the
Shares have not been registered under the 1933 Act, and may be sold or disposed of in the

absence of such registration only pursuant to an exemption from such registration and in
accordance with this Agreement. The Shares and the shares of Common Stock subject to the
provisions of this paragraph shall bear a legend to the following effect:
"The securities represented by this certificate have not been registered under the Securities Act of
1933, as amended, and may not be sold or otherwise transferred in the absence of an effective
registration statement with respect to such securities filed and made effective under the Securities
Act of 1933 or an opinion of counsel satisfactory to the Company to the effect that registration
under such Act is not required."
7.2

Additional Representations and Warranties of Purchaser

Subscriber further represents and warrants to the Company to the Company that:
(a)
If Subscriber is a corporation, partnership or association, it is duly organized and
existing in good standing under the laws of the state of its incorporation or organization,
as the case may be, and has the corporate power to own its property and to carry on its
business as now being conducted.
(b)
If Subscriber is a corporation, the execution and delivery of this Agreement and
the Registration Rights Agreement by it and compliance by it with all of the provisions of
this Agreement and the Registration Rights Agreement (1) are within its corporate powers
and authority; (2) do not require the approval or consent of any of its stockholders; and
(3) have been authorized by all requisite corporate proceedings on its part.
(c)
Each of this Agreement and the Registration Rights Agreement constitutes a legal,
valid and binding agreement of Subscriber, enforceable in accordance with its terms.
(d)
Subscriber is not required to obtain the consent, approval or authorization of, or to
make any declaration or filing with, any governmental authority as a condition to or in
connection with the valid execution, delivery and performance of this Agreement and the
Registration Rights Agreement (except as contemplated by the Registration Rights
Agreement) or the performance by Subscriber of its obligations in respect thereof.
(e)
Neither the execution and delivery of this Agreement or the Registration Rights
Agreement, nor fulfillment of, nor compliance with, the terms and provisions hereof or
thereof, will conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, Subscriber's charter or by-laws
(if it is a corporation) or any mortgage, agreement, instrument, order, judgment, decree,
statute, law, rule or regulation to which it or its property is subject.
(f)
The information provided by Subscriber in the Purchaser's Questionnaire is
complete and accurate as of the date hereof and will be complete and accurate as of the
Closing Date. The Company shall have the right to assume the truth and accuracy of all
information included in the Purchaser's Questionnaire, and to rely thereon, unless
Subscriber has provided written notice of the untruth or inaccuracy of such information to

the Company.
(g)
Subscriber's financial condition is such that it is able to bear the risk of holding
the Shares for an indefinite period of time and the risk of loss of its entire investment in
the Shares.
(h)
Subscriber has received, has read and understood and is familiar with the Private
Placement Memorandum and this Agreement.
(i)
The Company has made available all additional information which the
undersigned has requested in connection with the transactions contemplated by this
Agreement.
(j)
No representations or warranties have been made to Subscriber by the Company
or any agent of the Company other than as set forth in this Agreement or in the Private
Placement Memorandum.
(k)
The Company has made available to Subscriber at a reasonable time prior to
Subscriber's execution of this Agreement the opportunity to ask questions of and receive
answers from the Company concerning the terms and conditions of the purchase of the
Shares and to obtain any additional information which the Company possesses or can
acquire without unreasonable effort or expense to verify the accuracy of the information
provided by the Company in connection with such purchase.
(l)
Subscriber has investigated the acquisition of the Shares to the extent it deems
necessary or desirable and the Company has provided it with any assistance it has
requested in connection therewith.
(m)
Subscriber has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of acquisition of the Shares and of
making an informed investment decision with respect thereto, or is relying on a qualified
Purchaser Representative in such investment decision.
(n)
If Subscriber utilized the services of a Purchaser Representative, such Purchaser
Representative's identity is disclosed in Subscriber's Purchaser Questionnaire, Subscriber
has been advised by such Purchaser Representative as to the merits and risks of
investment in the Shares, and Subscriber has designated the person executing the
Questionnaire for Purchaser Representative, a copy of which has been reviewed by
Subscriber, to be Subscriber's Purchaser Representative in connection with investment in
the Shares.
(o)

The address set forth below is Subscriber's true and correct residence.

(p)
Subscriber understands that the Shares have not been registered under the 1933
Act or any state securities act in reliance on an exemption for private offerings, and
Subscriber acknowledges that it is purchasing the Shares without being furnished any

offering literature or prospectus other than the Private Placement Memorandum.

(q)
If Subscriber is not an Accredited Investor, Subscriber (1) has a preexisting
personal or business relationship with the Company or its controlling persons, such as
would enable a reasonably prudent purchaser to be aware of the character, business
acumen and general business and financial circumstances of the Company or its
controlling persons and (2) by reason of his, her or its business or financial experience,
individually or in conjunction with his, her or its unaffiliated professional advisers, has
the capacity to protect his, her or its own interests.
(r)
Subscriber acknowledges that the projections set forth in the Private Placement
Memorandum are based on assumptions and estimates of the Company's management
and that there can be no assurance that any of such projections or results will be realized
or that any of the assumptions on which they are based will prove to be correct in whole
or in part.
The foregoing representations and warranties are true and accurate as of the date hereof and shall
be true and accurate as of the date of Closing and shall survive such date. If in any respect such
representations and warranties, or any of the information in the Purchaser's Questionnaire, shall
not be true and accurate prior to Closing, the undersigned shall give immediate notice of such
fact to the Company by telex or telegram, specifying which representation and warranties or
information are not true and accurate and the reasons therefor. The Company understands and
acknowledges that the representations of the Subscriber contained herein shall not be construed
so as to limit or modify the representations and warranties of the Company set forth herein or the
right of the Subscriber to rely upon them.
7.3

Nondisclosure of Confidential Information

Without the prior written consent of the Company, any information relating to the Company
contained in the Private Placement Memorandum, including all exhibits and attachments thereto,
and any other information that may have been provided to Subscriber in connection with the
purchase of shares which is either confidential, proprietary, or otherwise not generally available
to the public (but excluding information Subscriber has obtained independently from third-party
sources without knowledge that the source violated any fiduciary or other duty not to disclose
such information or which Subscriber is otherwise required to disclose by any governmental
body) (the "Confidential Information") will be kept confidential by Subscriber and its directors,
officers, employees, and representatives (collectively, "Representatives"), using the same
standard of care in safeguarding the Confidential Information as Subscriber employs in
protecting its own proprietary information which it desires not to disseminate or publish. It is
understood (a) that such Representatives shall be informed by Subscriber of the confidential
nature of the Confidential Information, (b) that such Representatives shall be bound by the
provisions of this paragraph 7C as a condition of receiving the Confidential Information and (c)
that, in any event, Subscriber shall be responsible for any breach of this Agreement by any of its
Representatives.
8.

Indemnification

Subscriber acknowledges that it understands the meaning and legal consequences of the
representations and warranties made by it herein, and that the Company is relying on such
representations and warranties in making its determination to accept or reject this Subscription.
Subscriber hereby agrees to indemnify and hold harmless the Company and each director, officer
or employee thereof from and against any and all loss, damage or liability due to or arising out of
a breach of any representation or warranty of Subscriber contained in this Agreement or in the
Purchaser's Questionnaire.
9.

Transferability

Subscriber agrees not to transfer or assign this Agreement, or any interest herein.
10.

No Revocation

Subscriber agrees that this Agreement and any agreement of Subscriber made hereunder is
irrevocable, and that this Agreement shall survive the death or disability of the undersigned,
except as provided below in Paragraph 11.
11.

Termination

If the Closing does not take place as contemplated by paragraph 4 or if this Subscription is
rejected by the Company, then and in any such event this Agreement shall be null and void and
of no further force and effect, and no party shall have any rights against any other party
hereunder, and the Company shall return or cause to be returned to the undersigned this
Agreement and the funds previously delivered in the manner provided in this Agreement.
12.

Definitions

For the purpose of this Agreement the following terms shall have the meanings specified with
respect thereto below:
"Accredited Investor" shall have the meaning given to such term under Rule 501 under the 1933
Act.
"Agreement" shall have the meaning specified in paragraph 1.
"Certificate of Designation" shall have the meaning specified in paragraph 1.
"Closing" shall have the meaning specified in paragraph 4.
"Closing Date" shall have the meaning specified in paragraph 5.
"Commission" shall have the meaning specified in paragraph 6.
"Common Stock" shall mean the Company's Common Stock, $______ par value.

"Company" shall have the meaning specified in the introduction to this Agreement.
"Escrow Account" shall have the meaning specified in paragraph 3.
"Escrow Agent" shall have the meaning specified in paragraph 3.
"Initial Closing" shall have the meaning specified in paragraph 4.
"Other Subscribers" shall have the meaning specified in paragraph 1.
"Other Subscription Agreements" shall have the meaning specified in paragraph 1.
"Private Placement Memorandum" shall mean the Company's Confidential Private Placement
Memorandum dated ______, including all attachments and appendices thereto and any and all
amendments and supplements thereto.
"Preferred Stock" shall have the meaning specified in paragraph 1.
"Purchaser Representative" shall have the meaning given to such term in Rule 501 under the
1933 Act.
"Registration Rights Agreement" shall mean the Registration Rights Agreement between the
Company and Subscriber substantially in the form of Exhibit ______ to the Private Placement
Memorandum.
"Shares" shall have the meaning specified in paragraph 1.
"Subscriber" shall have the meaning specified in the introduction to this Agreement.
"Subscription" shall have the meaning specified in paragraph 2.
"Subsequent Closing" shall have the meaning specified in paragraph 4.
"Placement Agent" shall mean ______, the placement agent with respect to the offering of the
Shares.
"Termination Date" shall have the meaning specified in paragraph 2.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
13.

Miscellaneous

13.1

Consent to Amendments

Prior to the Closing Date, this Agreement may be amended, modified or supplemented, and
waivers of or consents to departures from the provisions hereof and thereof may be given,
provided that the same are in writing and signed by the Subscriber and the Company. Thereafter,
this Agreement may be amended with the consent of the Company, and the Company may take
any action herein prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment, action, or
omission to act of the holder or holders of not less than a majority of the Shares at the time
outstanding, and each holder of any Shares at the time or thereafter outstanding shall be bound
by any consent authorized by this paragraph 13.1. No course of dealing between the Company
and the holder of any Shares nor any delay in exercising any rights hereunder shall operate as a
waiver of any rights of any holder of such Shares.
13.2

Survival of Representations and Warranties

All representations and warranties contained herein or made in writing by Subscriber or the
Company in connection herewith shall survive the execution and delivery of this Agreement, the
sale and purchase of the Shares and any disposition thereof.
13.3

Successors and Assigns

All covenants and agreements contained in this Agreement by or on behalf of either of the parties
hereto shall bind and inure to the benefit of the Company's successors and assigns and
Subscriber's successors and assigns.
13.4

Descriptive Headings

The descriptive headings of the several paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
13.5

Governing Law

This Agreement is being delivered and is intended to be performed in ______, and shall be
construed and enforced in accordance with, and the rights of the parties shall be governed by, the
law of such state.
13.6

Counterparts

This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement, to produce or account
for more than one such counterpart.
13.7

Notices

Prior to the Closing, and thereafter with respect to matters pertaining to this Agreement only, all
notices and other communications provided for or permitted hereunder shall be made by hand-

delivery, first-class mail, overnight air courier, telex or fax:

(a)

If to Subscriber at the address set forth on the signature page hereof;

(b)
If to the Company at ______, ______, ______ ______ with a copy to Placement
Agent at ______.
All such notices and communications shall be deemed to have been duly given: when delivered
by hand, if personally delivered; two business days after being deposited in the mail, or
overnight air courier, postage prepaid, if mailed or sent by air courier, when answered back, if
telexed; and when receipt is acknowledged, if faxed.
13.8

Delivery

Subscriber hereby appoints Placement Agent to accept delivery of the Shares to be purchased by
Subscriber and other documents to be delivered to Subscriber at the Closing and to execute a
receipt for such Shares and documents on behalf of the Subscriber.
13.9

Financial Information

If the Closing occurs, the Company will thereafter furnish to each Subscriber copies of its annual
reports on Form 10-K and its quarterly reports on Form 10-Q, each within five business days of
their filing with the Commission.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on this ______.
SUBSCRIBER:
[Sig Block Party 2]
Address: ______, ______, ______ ______
[Notary Party 2]
Please indicate:
Number of Shares: ______
Amount of Enclosed Check: $______
Agreed and Accepted:
COMPANY:
[Sig Block Party 1]

Dated:
[Notary Party 1]
Accepted on Behalf of Escrow Agent:
______
By:
______, ______
Dated:
*[
STATE OF ______

COUNTY OF ______

This instrument was acknowledged before me on this ___________ day of ___________,

__________________ by ______, ______ of ______.

Notary Public
My Commission Expires:
]*