SUBSCRIPTION AGREEMENT

 

Document Security Systems, Inc.

200 Canal View Blvd, Suite 300

Rochester, New York 14623

 

Ladies and Gentlemen:

 

1. Subscription. The undersigned (the “Purchaser”) by execution of this
Subscription Agreement (“Subscription Agreement”), intending to be legally
bound, hereby irrevocably agrees to purchase from Document Security Systems,
Inc., a New York corporation (the “Company”) the number of shares (the “Shares”)
of the Company’s common stock, par value $0.02 per share (“Common Stock”), set
forth on the signature page hereto at a purchase price equal to $0.3037 per
Share, for the aggregate subscription price set forth on the signature page
hereto (the “Purchase Price”).

 

If this subscription is accepted, the Company will signify such acceptance by
executing counterparts of this Subscription Agreement and causing one such
mutually executed counterpart to be returned to the undersigned. This
subscription is submitted to you in accordance with and subject to the terms and
conditions described in this Subscription Agreement and all attachments,
schedules and exhibits hereto (collectively, the “Subscription Agreement”),
including but not limited to the risk factors (“Risk Factors”) set forth on
Schedule I hereto, relating to the offering (the “Offering”) by the Company of a
minimum of 3,000,000 Shares (the “Minimum Offering Amount”) and up to a maximum
of 6,000,000 Shares (the “Maximum Offering Amount”). Aegis Capital Corp has been
engaged as the exclusive placement agent in connection with the Offering (the
“Placement Agent”) and the Placement Agent is entitled to receive commissions of
8.0% of the total proceeds raised in the Offering, a non-accountable expense
allowance equal to 1.00% of the total proceeds raised in the Offering, and a
reimbursement of up to $40,000 of accountable expenses.

 

The Company’s directors and executive officers, as well as affiliates of the
Company, are approved to purchase Shares in this Offering; provided, however,
that Mr. Fai Heng Chan, the current Chairman of the Board of Directors of the
Company, shall be limited to purchase up to the Maximum Offering Amount,
provided that (i) the purchase price paid by Mr. Chan for the Shares is equal to
or greater than the closing price of the Company’s Common Stock immediately
preceding the date Mr. Chan executes this Subscription Agreement; and (ii) that
such purchase does not result in Mr. Fai Heng Chan’s total beneficial ownership
in the Company exceeding 33.3% of the Company’s total issued and outstanding
shares of the Company.

 

The offering price of the Shares has been unilaterally determined by the Company
and is not based on its assets or earnings.

 

By execution hereof, Purchaser acknowledges that this is an unregistered
offering of restricted securities, which securities, subject to the satisfaction
of certain requirements, may be sold in accordance with Rule 144. Rule 144
requires at least a six month holding period before shares can be publicly
traded. Although the Company is currently a reporting issuer in the United
States, there is no assurance that it will remain a reporting issuer and/or
remain in compliance with all requirements, including without limitation the
timely filing of its periodic reports, that allow for Purchasers to transfer
restricted securities of the Company in reliance upon Rule 144 or any other
exemption to the registration requirement of the Securities Act of 1933, as
amended (the “Securities Act”).

 

   

 

 

Furthermore, Purchaser acknowledges that a significant portion of the net
proceeds of this Offering will be applied to working capital and other general
corporate purposes, including but not limited to research and development,
capital expenditures, sales and marketing costs and compensation (in the form of
salary and bonuses) to officers and directors. Accordingly, the Company’s
management will have broad discretion as to the application of such proceeds.
There can be no assurance that management’s use of proceeds generated through
this Offering will prove optimal or translate into revenue or profitability for
the Company. Purchasers are urged to consult with their attorneys, accountants
and personal investment advisors prior to making any decision to invest in the
Company and to carefully review, with the assistance of their attorneys,
accountants and personal investment advisors, the Risk Factors set forth on
Schedule I hereto, and all of the Company’s public filings.

 

2. Payment. The undersigned shall cause the Purchase Price to be deposited
pursuant to the instruction of the Company or the Placement Agent. Any Purchase
Price deposited prior to a Closing shall be non-interest-bearing. Funds
deposited will be held for the Purchaser’s benefit, and will be returned
promptly, without interest or offset, if (i) this Subscription Agreement is not
accepted by the Company, or (ii) the Offering is terminated.

 

Together with the undersigned’s payment of the Purchase Price, the undersigned
is delivering a properly completed and executed investor questionnaire
(“Accredited Investor Certification”), a form of which is attached as Exhibit A
hereto.

 

3. Closing.

 

(a) First Closing. Following the Company’s receipt of subscriptions for the
Shares worth at least the Minimum Offering Amount, and the Company’s acceptance
of such subscriptions, a closing will occur to effect the purchase and sale of
such Shares (the “First Closing”).

 

(b) Subsequent Closings. The Company and the Placement Agent may continue to
offer and accept subscriptions for the Shares and conduct additional closings
(each, a “Subsequent Closing”) for the sale of such Shares after the First
Closing and until the termination of the Offering. Unless earlier terminated,
this Offering will continue until November 4, 2019 unless the Company, in its
sole discretion and without notice to Purchasers, extends the offering
termination date to November 19, 2019. There may be more than one Subsequent
Closing; provided, however, that the final Subsequent Closing shall take place
no later than November 4, 2019 (or November 19, 2019 if the Company extends the
termination date). The date of any subsequent closing is referred to as a
“Subsequent Closing Date.” Notwithstanding the foregoing, no more than the
Maximum Offering Amount will be sold at the First Closing and all Subsequent
Closings.

 

The First Closing and any applicable Subsequent Closings are each referred to in
this Subscription Agreement as a “Closing.” The First Closing Date and any
Subsequent Closing Dates are sometimes referred to herein as a “Closing Date.”

 

(c) Closing Deliveries. At or within 10 business days of each Closing, the
Company shall deliver to the Purchaser duly executed certificates or evidence of
book-entry recordations representing the Shares due to such Purchaser against
the Purchaser’s Purchase Price.

 

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4. Acceptance of Subscription. The Purchaser understands and agrees that the
Company, in its sole discretion, reserves the right to accept or reject this or
any other subscription for the Shares, in whole or in part. The Company shall
have no obligation hereunder until the Company shall execute and deliver to the
Purchaser an executed copy of this Subscription Agreement. If this subscription
is rejected in whole or the Offering of Shares is terminated, all funds received
from the Purchaser will be returned without interest or offset, and this
Subscription Agreement shall thereafter be of no further force or effect. If
this subscription is rejected in part, the funds for the rejected portion of
this subscription will be returned without interest or offset, and this
Subscription Agreement will continue in full force and effect to the extent this
subscription was accepted.

 

5. Representations and Warranties of the Purchaser.

 

The Purchaser hereby acknowledges, represents, warrants, and agrees as follows:

 

(a) None of the Shares offered pursuant to this Subscription Agreement are
registered under the Securities Act, or any state securities laws. The Purchaser
understands that the offering and sale of the Shares is intended to be exempt
from registration under the Securities Act, by virtue of Section 4(a)(2) thereof
and the provisions of Regulation D (“Regulation D”) or Regulation S (“Regulation
S”) as promulgated by the United States Securities and Exchange Commission (the
“SEC”) thereunder, based, in part, upon the representations, warranties and
agreements of the Purchaser contained in this Subscription Agreement.
Notwithstanding the foregoing, if the Purchaser is a Non-U.S. Person (a “Reg S
Person”) and intends to rely upon Regulation S, such Purchaser hereby represents
that the representations contained in paragraphs (i) through (viii) of this
Section 5(a) are true and correct with respect to such Purchaser:

 

(i) (A) the issuance and sale to such Reg S Person of the Shares is intended to
be exempt from the registration requirements of the Securities Act, pursuant to
the provisions of Regulation S; (B) it is not a “U.S. Person,” as such term is
defined in Regulation S, and is not acquiring the Shares for the account or
benefit of any U.S. Person; and (C) the offer and sale of the Shares has not
taken place, and is not taking place, within the United States of America or its
territories or possessions. Such Reg S Person acknowledges that the offer and
sale of the Shares has taken place, and is taking place in an “offshore
transaction,” as such term is defined in Regulation S.

 

(ii) Such Reg S Person acknowledges and agrees that, pursuant to the provisions
of Regulation S, the Shares cannot be sold, assigned, transferred, conveyed,
pledged or otherwise disposed of to any U.S. Person or within the United States
of America or its territories or possessions for a period of six months from and
after the closing date of the Offering, unless such securities are registered
for sale in the United States pursuant to an effective registration statement
under the Securities Act or another exemption from such registration is
available. Such Reg S Person acknowledges that it has not engaged in any hedging
transactions with regard to the Shares.

 

(iii) Such Reg S Person consents to the placement of a legend on any certificate
or other document evidencing the Shares and understands that the Company shall
be required to refuse to register any transfer of securities not made in
accordance with applicable U.S. securities laws.

 

 A-3 

 

 

(iv) Such Reg S Person is not a “distributor” of securities, as that term is
defined in Regulation S, nor a dealer in securities.

 

(v) Such Reg S Person understands that the Shares have not been registered under
the Securities Act, or the securities laws of any state and are subject to
substantial restrictions on resale or transfer. The Shares are “restricted
securities” within the meaning of Regulation S and Rule 144, promulgated under
the Securities Act.

 

(vi) Such Reg S Person acknowledges that the Shares may only be sold offshore in
compliance with Regulation S or pursuant to an effective registration statement
under the Securities Act or another exemption from such registration, if
available. In connection with any resale of the Shares pursuant to Regulation S,
the Company will not register a transfer not made in accordance with Regulation
S, pursuant to an effective registration statement under the Securities Act or
in accordance with another exemption from the Securities Act.

 

(vii) The Purchaser has not acquired the Shares as a result of, and will not
itself engage in, any “directed selling efforts” (as defined in Regulation S
under the Securities Act) in the United States in respect of the Shares which
would include any activities undertaken for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States for the resale of the Shares; provided, however, that the
Purchaser may sell or otherwise dispose of the Shares pursuant to registration
thereof under the Securities Act and any applicable state and provincial
securities laws or under an exemption from such registration requirements;

 

(viii) Such Reg S Person makes the representations, declarations and warranties
as contained in this Section 5(a)(i)-(viii) with the intent that the same shall
be relied upon by the Company in determining its suitability as a purchaser of
such Securities.

 

(b) Prior to the execution of this Subscription Agreement, the Purchaser and the
Purchaser’s attorney, accountant, purchaser representative and/or tax adviser,
if any (collectively, the “Advisers”), have received or accessed and actually
reviewed this Subscription Agreement, including the Risk Factors contained in
Schedule I hereof, all the Company’s public filings filed with the SEC (the “SEC
Reports”), and all other documents requested by the Purchaser, have carefully
reviewed them and understand the information contained therein;

 

(c) All documents, records, and books pertaining to the investment in the Shares
(including, without limitation, this Subscription Agreement) have been made
available for inspection by such Purchaser and its Advisers, if any;

 

(d) In making an investment decision Purchasers must rely on their own
examination of the Company and the terms of the Offering, including the merits
and risks involved. The Purchaser should be aware that it will be required to
bear the financial risks of this investment for an indefinite period of time;

 

(e) The Purchaser and its Advisers, if any, have had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the offering of the Securities and the business,
financial condition and results of operations of the Company, and all such
questions have been answered to the full satisfaction of the Purchaser and its
Advisers, if any;

 

 A-4 

 

 

(f) In evaluating the suitability of an investment in the Company, the Purchaser
has not relied upon any representation or information (oral or written) other
than as stated in this Subscription Agreement;

 

(g) The Purchaser is unaware of, is in no way relying on, and did not become
aware of the Offering of the Shares through or as a result of, any form of
general solicitation or general advertising including, without limitation, any
article, notice, advertisement or other communication published in any
newspaper, magazine or similar media or broadcast over television, radio or the
Internet (including, without limitation, internet “blogs,” bulletin boards,
discussion groups and social networking sites) in connection with the Offering
and sale of the Shares and is not subscribing for the Shares and did not become
aware of the Offering of the Shares through or as a result of any seminar or
meeting to which the Purchaser was invited by, or any solicitation of a
subscription by, a person not previously known to the Purchaser in connection
with investments in securities generally;

 

(h) The Purchaser has taken no action that would give rise to any claim by any
person for brokerage commissions, finders’ fees or the like relating to this
Subscription Agreement or the transactions contemplated hereby, except to the
extent the Purchaser learned of the Offering through a Placement Agent, if any;

 

(i) The Purchaser, together with its Advisers, if any, has such knowledge and
experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the information made
available to it in connection with the Offering to evaluate the merits and risks
of an investment in the Shares and the Company and to make an informed
investment decision with respect thereto;

 

(j) The Purchaser is not relying on the Company or the Placement Agent any of
its employees or agents with respect to the legal, tax, economic and related
considerations of an investment in the Shares, and the Purchaser has relied on
the advice of, or has consulted with, only its own Advisers;

 

(k) The Purchaser is acquiring the Shares solely for such Purchaser’s own
account for investment purposes only and not with a view to or intent of resale
or distribution thereof, in whole or in part. The Purchaser has no agreement or
arrangement, formal or informal, with any person to sell or transfer all or any
part of the Shares, and the Purchaser has no plans to enter into any such
agreement or arrangement;

 

(l) The Purchaser must bear the substantial economic risks of the investment in
the Shares indefinitely because none of the Shares may be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from such registration is
available. Legends shall be placed on the Shares to the effect that they have
not been registered under the Securities Act or applicable state securities laws
and appropriate notations thereof will be made in the Company’s stock books.
Appropriate notations will be made in the Company’s stock books to the effect
that the Shares have not been registered under the Securities Act or applicable
state securities laws. Stop transfer instructions will be placed with the
transfer agent of the Shares. There can be no assurance that there will be any
market for resale of the Shares, nor can there be any assurance that the Shares
will be freely transferable at any time in the foreseeable future;

 

 A-5 

 

 

(m) The Purchaser understands the substance of and acknowledges the legend that
will be placed on the Shares in substantially the following form:

 

For Non-U.S. Purchasers:

 

THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). ACCORDINGLY,
NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED HEREIN)
OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN
ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED
UNLESS IN ACCORDANCE WITH THE SECURITIES ACT. “UNITED STATES” AND “U.S. PERSON”
ARE AS DEFINED BY REGULATION S UNDER THE SECURITIES ACT.

 

For U.S. Purchasers:

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND
SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT
AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES
HAVE NOT BEEN RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION
AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL

 

(n) The Purchaser is aware that an investment in the Shares is high risk,
involving a number of very significant risks;

 

(o) The Purchaser meets the requirements of at least one of the suitability
standards for an “accredited investor” as that term is defined in Regulation D
and as set forth on the Accredited Investor Certification attached hereto;

 

 A-6 

 

 

(p) The Purchaser (i) if a natural person, represents that the Purchaser has
reached the age of 21 and has full power and authority to execute and deliver
this Subscription Agreement and all other related agreements or certificates and
to carry out the provisions hereof and thereof; (ii) if a corporation,
partnership, or limited liability company or partnership, or association, joint
stock company, trust, unincorporated organization or other entity, represents
that such entity was not formed for the specific purpose of acquiring the
Shares, such entity is duly organized, validly existing and in good standing
under the laws of the state of its organization, the consummation of the
transactions contemplated hereby is authorized by, and will not result in a
violation of state law or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this Subscription
Agreement and all other related agreements or certificates and to carry out the
provisions hereof and thereof and to purchase and hold the Shares, the execution
and delivery of this Subscription Agreement has been duly authorized by all
necessary action, this Subscription Agreement has been duly executed and
delivered on behalf of such entity and is a legal, valid and binding obligation
of such entity; or (iii) if executing this Subscription Agreement in a
representative or fiduciary capacity, represents that it has full power and
authority to execute and deliver this Subscription Agreement in such capacity
and on behalf of the subscribing individual, ward, partnership, trust, estate,
corporation, or limited liability company or partnership, or other entity for
whom the Purchaser is executing this Subscription Agreement, and such
individual, partnership, ward, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company,
and represents that this Subscription Agreement constitutes a legal, valid and
binding obligation of such entity. The execution and delivery of this
Subscription Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which the Purchaser
is a party or by which it is bound;

 

(q) The Purchaser and the Advisers, if any, have had the opportunity to obtain
any additional information, to the extent the Company has such information in
its possession or could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information contained in this
Subscription Agreement and all documents received or reviewed in connection with
the purchase of the Shares and have had the opportunity to have representatives
of the Company provide them with such additional information regarding the terms
and conditions of this particular investment and the financial condition,
results of operations, business of the Company deemed relevant by the Purchaser
or the Advisers, if any, and all such requested information, to the extent the
Company had such information in its possession or could acquire it without
unreasonable effort or expense, has been provided to the full satisfaction of
the Purchaser and the Advisers, if any;

 

(r) Any information which the Purchaser has heretofore furnished or is
furnishing herewith to the Company or the Placement Agent is complete and
accurate and may be relied upon by the Company and the Placement Agent in
determining the availability of an exemption from registration under federal and
state securities laws in connection with the offering of securities as described
in this Subscription Agreement. The Purchaser further represents and warrants
that it will notify and supply corrective information to the Company and the
Placement Agent immediately upon the occurrence of any change therein occurring
prior to the Company’s issuance of the Shares;

 

(s) The Purchaser has significant prior investment experience, including
investment in non-listed and non-registered securities. The Purchaser is
knowledgeable about investment considerations in companies with limited
operating histories. The Purchaser has a sufficient net worth to sustain a loss
of its entire investment in the Company in the event such a loss should occur.
The Purchaser’s overall commitment to investments which are not readily
marketable is not excessive in view of the Purchaser’s net worth and financial
circumstances and the purchase of the Shares will not cause such commitment to
become excessive. The investment is a suitable one for the Purchaser;

 

 A-7 

 

 

(t) The Purchaser is satisfied that the Purchaser has received adequate
information with respect to all matters which it or the Advisers, if any,
consider material to its decision to make this investment;

 

(u) The Purchaser acknowledges that any estimates or forward-looking statements
or projections included in this Subscription Agreement were prepared by the
Company in good faith but that the attainment of any such projections, estimates
or forward-looking statements cannot be guaranteed by the Company and should not
be relied upon;

 

(v) No oral or written representations have been made, or oral or written
information furnished, to the Purchaser or the Advisers, if any, in connection
with the Offering which are in any way inconsistent with the information
contained in SEC Reports;

 

(w) Within five (5) days after receipt of a request from the Company, the
Purchaser will provide such information and deliver such documents as may
reasonably be necessary to comply with any and all laws and ordinances to which
the Company is subject;

 

(x) The Purchaser’s substantive relationship with the Company or the Placement
Agent (if applicable) predates the Company’s or the Placement Agent’s contact
with the Purchaser regarding an investment in the Shares;

 

(y) (For ERISA plans only) The fiduciary of the ERISA plan (the “Plan”)
represents that such fiduciary has been informed of and understands the
Company’s investment objectives, policies and strategies, and that the decision
to invest “plan assets” (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities. The Purchaser fiduciary or
Plan (a) is responsible for the decision to invest in the Company; (b) is
independent of the Company or any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Purchaser
fiduciary or Plan has not relied primarily on any advice or recommendation of
the Company or any of its affiliates;

 

(z) The Purchaser should check the Office of Foreign Assets Control (“OFAC”)
website at <http://www.treas.gov/ofac> before making the following
representations. The Purchaser represents that the amounts invested by it in the
Company in the Offering were not and are not directly or indirectly derived from
activities that contravene federal, state or international laws and regulations,
including anti-money laundering laws and regulations. Federal regulations and
Executive Orders administered by OFAC prohibit, among other things, the
engagement in transactions with, and the provision of services to, certain
foreign countries, territories, entities and individuals. The lists of OFAC
prohibited countries, territories, persons and entities can be found on the OFAC
website at <http://www.treas.gov/ofac>. In addition, the programs administered
by OFAC (the “OFAC Programs”) prohibit dealing with individuals1 or entities in
certain countries regardless of whether such individuals or entities appear on
the OFAC lists;

 

 

1 These individuals include specially designated nationals, specially designated
narcotics traffickers and other parties subject to OFAC sanctions and embargo
programs

 

 A-8 

 

 

(aa) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2)
any person controlling or controlled by the Purchaser; (3) if the Purchaser is a
privately-held entity, any person having a beneficial interest in the Purchaser;
or (4) any person for whom the Purchaser is acting as agent or nominee in
connection with this investment is a country, territory, individual or entity
named on an OFAC list, or a person or entity prohibited under the OFAC Programs.
The Purchaser acknowledges that the Company may not accept any amounts from a
prospective investor if such prospective investor cannot make the representation
set forth in the preceding paragraph. The Purchaser agrees to promptly notify
the Company and the Placement Agent should the Purchaser become aware of any
change in the information set forth in these representations. The Purchaser
understands and acknowledges that, by law, the Company may be obligated to
“freeze the account” of the Purchaser, either by prohibiting additional
subscriptions from the Purchaser, declining any redemption requests and/or
segregating the assets in the account in compliance with governmental
regulations, and may also be required to report such action and to disclose the
Purchaser’s identity to OFAC. The Purchaser further acknowledges that the
Company may, by written notice to the Purchaser, suspend the redemption rights,
if any, of the Purchaser if the Company reasonably deems it necessary to do so
to comply with anti-money laundering regulations applicable to the Company and
the Placement Agent or any of the Company’s service providers. These individuals
include specially designated nationals, specially designated narcotics
traffickers and other parties subject to OFAC sanctions and embargo programs;

 

(bb) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2)
any person controlling or controlled by the Purchaser; (3) if the Purchaser is a
privately-held entity, any person having a beneficial interest in the Purchaser;
or (4) any person for whom the Purchaser is acting as agent or nominee in
connection with this investment is a senior foreign political figure,[2] or any
immediate family[3] member or close associate[4] of a senior foreign political
figure, as such terms are defined in the footnotes below; and

 

(cc) If the Purchaser is affiliated with a non-U.S. banking institution (a
“Foreign Bank”), or if the Purchaser receives deposits from, makes payments on
behalf of, or handles other financial transactions related to a Foreign Bank,
the Purchaser represents and warrants to the Company that: (1) the Foreign Bank
has a fixed address, other than solely an electronic address, in a country in
which the Foreign Bank is authorized to conduct banking activities; (2) the
Foreign Bank maintains operating records related to its banking activities; (3)
the Foreign Bank is subject to inspection by the banking authority that licensed
the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does
not provide banking services to any other Foreign Bank that does not have a
physical presence in any country and that is not a regulated affiliate.

 

 

2 A “senior foreign political figure” is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
foreign government (whether elected or not), a senior official of a major
foreign political party, or a senior executive of a foreign government- owned
corporation. In addition, a “senior foreign political figure” includes any
corporation, business or other entity that has been formed by, or for the
benefit of, a senior foreign political figure.

3 “Immediate family” of a senior foreign political figure typically includes the
figure’s parents, siblings, spouse, children and in-laws.

4 A “close associate” of a senior foreign political figure is a person who is
widely and publicly known to maintain an unusually close relationship with the
senior foreign political figure, and includes a person who is in a position to
conduct substantial domestic and international financial transactions on behalf
of the senior foreign political figure.

 

 A-9 

 

 

6. Representations by the Company.

 

The Company hereby represents and warrants to the Purchaser as follows:

 

(a) Organization. The Company is a company duly organized and validly existing
under the Laws of the State of New York and has the requisite corporate power
and authority to carry on its business as it is now being conducted. The Company
is in good standing under the Laws of New York.

 

(b) Due Authorization; Enforceability. The Company has all right, corporate
power and authority to enter into, execute and deliver this Subscription
Agreement. The execution and delivery by the Company of this Subscription
Agreement and the compliance by the Company with each of the provisions of this
Subscription Agreement are within the corporate power and authority of the
Company and have been duly authorized by all requisite corporate and other
action of the Company. This Subscription Agreement has been duly and validly
executed and delivered by the Company, and this Subscription Agreement
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with their respective terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar Laws
affecting the enforcement of creditors’ rights generally and for limitation
imposed by general principles of equity, regardless of whether enforcement is
sought at law or in equity and insofar as indemnification and contribution
provisions may be limited by applicable Law.

 

(c) Subsidiaries. Except as set forth in the SEC Reports, the Company does not
own any securities or other interests in any corporation or other Person having
the power to elect a majority of that corporation’s or other Person’s board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person. “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.

 

(d) Capitalization.

 

(i) The SEC Reports contain information about the authorized capital of the
Company and the issued and outstanding shares of each class of authorized
capital. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable.

 

(ii) Except as set forth in the SEC Reports, as defined below, there are no (i)
outstanding subscriptions, warrants, options, calls, rights of first offer,
rights of first refusal, tag along rights, drag along rights, subscription
rights, conversion rights, exchange rights, or commitments or rights of any
character relating to or entitling any Person to purchase or otherwise acquire
any equity securities of the Company or requiring the Company to issue or sell
any equity securities, (ii) obligations or securities convertible into or
exchangeable for shares of any equity securities of the Company or any
commitments of any character relating to or entitling any Person to purchase or
otherwise acquire any such obligations or securities, (iii) statutory preemptive
rights or preemptive rights granted under the organizational documents of the
Company, (iv) stock appreciation rights, phantom stock, profit participation, or
other similar rights with respect to the Company, or (v) there are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Shares. There are no stockholder agreements,
voting trusts, proxies or other agreements, instruments or understandings with
respect to the purchase, sale, transfer or voting of the outstanding shares of
equity securities of the Company. There are no commitments under which the
Company is obligated to repurchase, redeem, retire or otherwise acquire any
equity securities of the Company.

 

 A-10 

 

 

(iii) The Shares have been duly authorized and when issued and delivered in
accordance with the terms of this Subscription Agreement, will be validly issued
and outstanding, fully paid and non-assessable (in jurisdictions where such
concept is recognized), free and clear of any and all encumbrances and not
subject to the preemptive or other similar rights of any shareholders of the
Company, other than restrictions imposed by applicable securities Laws,
including, but not limited to the statutes of the State of New York.

 

(e) SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company under the Securities Act
and the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the “Exchange Act”), including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) and when filed, each SEC Report was in compliance
in all material respects with the requirements of its report form, the Exchange
Act and the Securities Act. All proxy statements, reports, registration
statements, schedules, forms and other documents required to be filed with the
SEC by the Company under the Exchange Act and the Securities Act after the date
hereof through the relevant Closing Date will, if and when filed, be in
compliance in all material respects with the requirements of its respective
report form, the Exchange Act and the Securities Act and will not, at the time
they are filed or declared effective, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading; provided, however, that any failure by the Company to
file any proxy statement, report, registration statement, schedule, form and
other documents shall not constitute a breach of this Section 6.

 

(f) Litigation. Except as set forth in the SEC Reports, there is no claim,
action, suit, investigation or proceeding pending or, to the Company’s
knowledge, threatened before any court, arbitrator or other governmental entity.
Except as disclosed in the SEC Reports, the Company is not in default under or
in breach of any order, judgment, injunction or decree of any court, arbitrator
or other governmental entity.

 

(g) No Conflicts or Violation; Consents and Approvals. Neither the execution,
delivery or performance by the Company of this Subscription Agreement, nor the
consummation of the transactions contemplated hereby will:

 

(i) conflict with, or result in a breach or a violation of, any provision of the
organizational documents of the Company or (ii) constitute a breach, violation
or default, or give rise to any right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
under any (1) law applicable to or binding on the Company or (2) provision of
any commitment to which the Company is a party, except in the case of clause
(a)(ii)(2), where such conflict, breach, violation or default would not result
in a Material Adverse Change. “Material Adverse Change” means any material
adverse change on the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company and its subsidiaries, taken as a whole; and

 

 A-11 

 

 

(ii) apart from the filing of a Form D with the SEC after the issuance of the
Shares, if applicable, require the Company to make or obtain the consent,
waiver, agreement, approval, permit or authorization of, or declaration, filing,
notice or registration to or with, or assignment by, any governmental entity or
any Person that is not a governmental entity (including any party to any
commitment to which the Company is a party to).

 

(h) Compliance. Except as set forth in the SEC Reports, neither the Company nor
its subsidiaries (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company under), nor has the Company or its
subsidiaries received written notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any judgment, decree or order of any court, arbitrator
or governmental authority, and (iii) is in violation of any statute, rule,
ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in each case as could not have or reasonably be expected to
result in a Material Adverse Change.

 

(i) Transactions With Affiliates and Employees. None of the officers or
directors of the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction with the
Company or its subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of
money to or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner, in each case in excess of $500,000 other
than for: (i) payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and (iii) other
employee benefits, including stock option, restricted stock or other
compensation-related agreements under any equity plan of the Company.

 

(j) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 6, no registration under the Securities Act
is required for the offer and sale of the Shares by the Company to the
Purchasers as contemplated hereby.

 

(k) Investment Company. The Company is not, and immediately after receipt of
payment for the Shares, and for so long as any Purchaser holds any Shares, will
not be, an “investment company” within the meaning of the Investment Company Act
of 1940, as amended. The Company shall conduct its business in a manner so that
it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended. The Company is not controlled by an
“investment company” and shall not take any actions that would cause the Company
to be controlled by an “investment company”.

 

(l) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12 (b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration.

 

 A-12 

 

 

(m) No Payment of Transfer Taxes. No transfer, documentary, stamp, sales, use
and other taxes have been or will be required or imposed by reason of, the
transfer of the Shares to the Purchasers.

 

(n) Office of Foreign Assets Control. Neither the Company nor, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department. “Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144 under the Securities Act.

 

(o) Money Laundering. The operations of the Company are and have been conducted
at all times in compliance with applicable financial record-keeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and
regulations thereunder (collectively, the “Money Laundering Laws”), and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

 

7. Indemnification.

 

(a) The Purchaser agrees to indemnify and hold harmless the Company and its
officers, directors, employees, agents, control persons and affiliates from and
against all losses, liabilities, claims, damages, costs, fees and expenses
whatsoever (including, but not limited to, any and all expenses incurred in
investigating, preparing or defending against any litigation commenced or
threatened) based upon or arising out of any actual or alleged false
acknowledgment, representation or warranty, or misrepresentation or omission to
state a material fact, or breach by the Purchaser of any covenant or agreement
made by the Purchaser herein or in any other document delivered in connection
with this Subscription Agreement.

 

(b) The Company agrees to indemnify and hold harmless the Purchaser and its
officers, directors, employees, agents, control persons and affiliates from and
against all losses, liabilities, claims, damages, costs, fees and expenses
whatsoever (including, but not limited to, any and all expenses incurred in
investigating, preparing or defending against any litigation commenced or
threatened) based upon or arising out of any actual or alleged false
acknowledgment, representation or warranty, or misrepresentation or omission to
state a material fact, or breach by the Company of any covenant or agreement
made by the Company herein or in any other document delivered in connection with
this Subscription Agreement.

 

8. Irrevocability; Binding Effect. The Purchaser hereby acknowledges and agrees
that the subscription hereunder is irrevocable by the Purchaser, except as
required by applicable law, and that this Subscription Agreement shall survive
the death or disability of the Purchaser and shall be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns. If the Purchaser is
more than one person, the obligations of the Purchaser hereunder shall be joint
and several and the agreements, representations, warranties, and acknowledgments
herein shall be deemed to be made by and be binding upon each such person and
such person’s heirs, executors, administrators, successors, legal
representatives, and permitted assigns.

 

 A-13 

 

 

9. Modification. This Subscription Agreement shall not be modified or waived
except by an instrument in writing signed by the party against whom any such
modification or waiver is sought.

 

10. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given (a) if to the Company, at the address set forth above, or (b) if to the
Purchaser, at the address set forth on the signature page hereof (or, in either
case, to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 10). Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party’s address which
shall be deemed given at the time of receipt thereof.

 

11. Assignability. This Subscription Agreement and the rights, interests and
obligations hereunder are not transferable or assignable by the Purchaser and
the transfer or assignment of the Shares shall be made only in accordance with
all applicable laws.

 

12. Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts to be wholly- performed within said State.

 

13. Arbitration. The parties agree to submit all controversies to arbitration in
accordance with the provisions set forth below and understand that:

 

(a) Arbitration is final and binding on the parties.

 

(b) The parties are waiving their right to seek remedies in court, including the
right to a jury trial.

 

(c) Pre-arbitration discovery is generally more limited and different from court
proceedings.

 

(d) The arbitrator’s award is not required to include factual findings or legal
reasoning and any party’s right to appeal or to seek modification of rulings by
arbitrators is strictly limited.

 

(e) The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry.

 

(f) All controversies which may arise between the parties concerning this
Subscription Agreement shall be determined by arbitration pursuant to the rules
then pertaining to the Financial Industry Regulatory Authority, Inc. (“FINRA”)
in New York City, New York. Judgment on any award of any such arbitration may be
entered in the Supreme Court of the State of New York or in any other court
having jurisdiction of the person or persons against whom such award is
rendered. Any notice of such arbitration or for the confirmation of any award in
any arbitration shall be sufficient if given in accordance with the provisions
of this Agreement. The parties agree that the determination of the arbitrators
shall be binding and conclusive upon them.

 

14. Blue Sky Qualification. The purchase of Shares under this Subscription
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Shares from applicable federal and state securities laws.
The Company shall file such notices and related documents as necessary to permit
the Shares to be sold without registration under applicable securities or “Blue
Sky” laws of the states of the United States (or to obtain an exemption from
such qualification).

 

 A-14 

 

 

15. Use of Pronouns. All pronouns and any variations thereof used herein shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons referred to may require.

 

16. Confidentiality. The Purchaser acknowledges and agrees that any information
or data the Purchaser has acquired from or about the Company, not otherwise
properly in the public domain, was received in confidence. The Purchaser agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Agreement, or use to the detriment of the Company or The
Company or for the benefit of any other person or persons, or misuse in any way,
any confidential information of the Company or The Company, including any
scientific, technical, trade or business secrets of the Company or The Company
and any scientific, technical, trade or business materials that are treated by
the Company or The Company as confidential or proprietary, including, but not
limited to, ideas, discoveries, inventions, developments and improvements
belonging to the Company or The Company and confidential information obtained by
or given to the Company or The Company about or belonging to third parties.

 

17. Miscellaneous.

 

(a) This Subscription Agreement, together with all attachments, schedules and
exhibits hereto, and the Accredited Investor Certification, constitute the
entire agreement between the Purchaser and the Company with respect to the
subject matter hereof and supersede all prior oral or written agreements and
understandings, if any, relating to the subject matter hereof. The terms and
provisions of this Subscription Agreement may be waived, or consent for the
departure therefrom granted, only by a written document executed by the party
entitled to the benefits of such terms or provisions.

 

(b) The representations and warranties of the Purchaser made in this
Subscription Agreement shall survive the execution and delivery hereof and
delivery of the Shares.

 

(c) Each of the parties hereto shall pay its own fees and expenses (including
the fees of any attorneys, accountants, appraisers or others engaged by such
party) in connection with this Subscription Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.

 

(d) This Subscription Agreement may be executed in one or more counterparts each
of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

 

(e) Each provision of this Subscription Agreement shall be considered separable
and, if for any reason any provision or provisions hereof are determined to be
invalid or contrary to applicable law, such invalidity or illegality shall not
impair the operation of or affect the remaining portions of this Subscription
Agreement.

 

(f) Paragraph titles are for descriptive purposes only and shall not control or
alter the meaning of this Subscription Agreement as set forth in the text.

 

(g) The Purchaser understands and acknowledges that there may be multiple
closings for this Offering.

 

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Schedule I

 

Risk Factors

 

An investment in the Shares involves a high degree of risk and is subject to
many uncertainties. In addition to the risk factors specific to this offering
set forth below, the risk factors set forth in Item 1A, “Risk Factors,” in the
Company’s Annual Report on Form 10-K, and any other SEC Report, are incorporated
herein by reference. These risks and uncertainties may adversely affect the
Company’s business, operating results and financial condition. In such an event,
the trading price, if one were to exist after the Company is approved to have a
trading symbol assigned to it, for Common Stock could decline substantially, and
you could lose all or part of your investment. In order to attain an
appreciation for these risks and uncertainties, you should read all risk factors
in their entirety and consider all of the information and advisements contained
in the Subscription Agreement and all other related agreements or certificates
and all other documents requested by the Purchaser, including the following risk
factors and uncertainties and the SEC Reports.

 

RISKS RELATED TO THIS OFFERING

 

There will be restrictions on resale of the Shares and there is no assurance of
the registration of the Shares.

 

None of the Shares may be sold unless, at the time of such intended sale, there
is a current registration statement covering the resale of the Shares or there
exists an exemption from registration under the Securities Act, and such
Securities have been registered, qualified, or deemed to be exempt under
applicable securities or “blue sky” laws in the state of residence of the seller
or in the state where sales are being effected. The Company has no current
intention of filing a registration statement covering the resale of the Shares.
If no registration statement is filed and declared effective covering the resale
of any of the Shares sold pursuant to this Subscription Agreement, Purchasers
will be precluded from disposing of such Securities unless such Securities may
become eligible to be disposed of under the exemptions provided by Rule 144
under the Securities Act without restriction. If the Shares are not registered
for resale under the Securities Act, or exempt therefrom, and registered or
qualified under applicable securities or “blue sky” laws, or deemed exempt
therefrom, the value of such securities will be greatly reduced.

 

Furthermore, Purchasers investing in the Shares being offered in reliance upon
Regulation S may only be able to sell the Shares in offshore transactions in
compliance with Regulation S or pursuant to an effective registration statement
under the Securities Act or another exemption from such registration, if
available. In connection with any resale of the Shares pursuant to Regulation S,
the Company will not register a transfer not made in accordance with Regulation
S, pursuant to an effective registration statement under the Securities Act or
in accordance with another exemption from the Securities Act.

 

   

 

 

We have significant discretion over the use of certain of the net proceeds.

 

A significant portion of the net proceeds of this Offering will be applied to
working capital and other general corporate purposes, including but not limited
to research and development, capital expenditures, sales and marketing costs and
compensation (in the form of salary and bonuses) to officers and directors.
Accordingly, our management will have broad discretion as to the application of
such proceeds. There can be no assurance that management’s use of proceeds
generated through this Offering will prove optimal or translate into revenue or
profitability for the Company. Purchasers are urged to consult with their
attorneys, accountants and personal investment advisors prior to making any
decision to invest in the Company.

 

Greater risk of loss to the early investors than to later investors.

 

There is no minimum offering amount. Consequently, the Company can close on any
sum raised, and do so on a rolling basis. As a result, there can be no assurance
that the Company will raise a minimally sufficient amount of capital enabling it
to continue operations. If the Company fails to raise a sufficient amount of
capital to continue its business, such failure may lead to investors losing
their entire investment. In addition, if the Company raises an appreciable sum
that is nevertheless substantially less than the amount equivalent of a sale of
the Maximum Offering Amount, the Company is likely to have insufficient funds to
fully implement its current business strategy. Therefore, the sale of a minimal
number of Shares could have material, adverse consequences on the Company’s
business, financial condition and future outlook.

 

The offering price for the Shares has been arbitrarily determined by us.

 

The offering price of the Shares was arbitrarily determined by us. The price of
the Shares does not necessarily bear any relationship to established valuation
criteria such as earnings, book value or assets. Rather, the price of the Shares
may be derived as a result of our negotiations with investors based upon various
factors including prevailing market conditions, our future prospects and our
capital structure. These prices do not necessarily accurately reflect the actual
value of the Shares or the price that may be realized upon disposition of the
Shares.

 

An investment in our securities is speculative and there can be no assurance of
any return on any such investment.

 

An investment in the Shares is speculative and there is no assurance that
Purchasers will obtain any return on their investment. Purchasers will be
subject to substantial risks involved in an investment in the Company, including
the risk of losing their entire investment.

 

We do not intend to pay dividends for the foreseeable future.

 

We have paid no dividends to date and it is not anticipated that any dividends
will be paid to holders of our securities in the foreseeable future. While our
future dividend policy will be based on the operating results and capital needs
of the business, it is currently anticipated that any earnings will be retained
to finance our future expansion and for the implementation of our business plan.
You should take note of the fact that a lack of a dividend can further affect
the market value, if any, of our stock, and could significantly affect the value
of any investment in us.

 

   

 

 

Your ownership interest is subject to dilution.

 

Each Purchaser’s proportionate ownership interest may be diluted when we issue
additional shares of our common stock. We may raise additional capital in the
future through additional sales of shares of our common stock or other
securities convertible or exercisable into shares of our common stock, and your
percentage interest in our common stock would be diluted if you do not
participate in such additional sales.

 

*****The foregoing list of risk factors does not purport to be a complete
enumeration or explanation of the risks involved in an investment in the Shares.
Purchaser should read this entire Subscription Agreement, including Schedule I
that is made an integral part hereof and all SEC Reports, and consult with its
own advisors before deciding to purchase the Shares.*****

 

FORWARD-LOOKING STATEMENTS

 

We have included in this Subscription Agreement certain forward-looking
statements. Such statements can be identified by the use of forward-looking
terminology such as “believe,” “expect,” “may,” “should,” “seek,” “on-track,”
“plan,” “project,” “forecast,” “intend” or “anticipate,” or the negative thereof
or comparable terminology, or by discussions of vision, strategy or outlook,
including statements related to revenues and profitability, pricing and
competition, the continued viability of our technology, our growth and expansion
plans, including retaining new employees, compliance with governmental
regulations, our intellectual property protection strategies, payment of
dividends, the volatility and the market, if any, of and for our common stock,
dilution, trading restrictions, use of proceeds and the need for additional debt
or equity funding. You are cautioned that our business and operations are
subject to a variety of risks and uncertainties, many of which are beyond our
control and, consequently, our actual results may differ materially from those
projected by any forward-looking statements. See the section titled “Risk
Factors” on Schedule I and those described under the heading “Risk Factors”
contained in the Company’s Annual Report on Form 10-K, and any other SEC Report,
are incorporated herein by reference, for information regarding certain
important factors that could cause our actual results to differ materially from
those projected in our forward-looking statements. Our forward-looking
statements contained herein speak only as of the date of this Agreement. We make
no commitment to revise or update any forward-looking statements in order to
reflect events or circumstances after the date any such statements are made.