f8k121609ex10xiii_swissinso.htm


     

    Exhibit 10.13

    
      


       

      SUBSCRIPTION
AGREEMENT

       

      


      THIS SUBSCRIPTION AGREEMENT
(this “Agreement”), is
dated as of _____ ________________, 2009, by and between SwissINSO Holding Inc.,
a Delaware corporation (the “Company”), and each of those
persons and entities, severally and not jointly, whose names are set forth on
the signature page hereto (which persons and entities are hereinafter
collectively referred to as “Subscribers” and each
individually as a “Subscriber”).

       

       WHEREAS, the Company and the
Subscriber are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6), Regulation D (“Regulation D”) and/or
Regulation S (“Regulation
S”) as promulgated by the United States Securities and Exchange
Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”).

       

      WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscriber, as provided herein, and the Subscriber
shall purchase (i) for the principal amount of the 9% Secured Convertible Note
(the “Note”), in the
form attached hereto as Exhibit A, in the
amount as set forth on the signature page hereof (the “Subscription Price”) (which
aggregate amount for all Subscribers shall be the maximum of $15,000,000),
convertible into shares of the Company’s Common Stock (the “Common Stock”) at a conversion
price of $0.50 per share (“Conversion Shares”) and (ii)
warrants, in the form attached hereto as Exhibit B (the “Warrants”), each of which
entitles the Subscriber to purchase one share of Common Stock (the “Warrant Shares”) at an
exercise price of $1.00 per share, expiring five (5) years after the Closing
Date (as defined below).  The Note, Conversion Shares, the Warrants
and the Warrant Shares are collectively referred to herein as the “Securities”;

       

      WHEREAS, the gross proceeds
from the sale of the Notes and the Warrants contemplated hereby shall be held in
escrow pursuant to the terms of an Escrow Agreement to be executed by the
parties in the form attached hereto as Exhibit C (the “Escrow
Agreement”).

       

      NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement, the Company and the Subscriber hereby agree as follows:

       

      1.            
Closing
Date.

       

      (a)     
 The “Initial Closing
Date” shall be the date that an aggregate of $1,000,000 is transmitted by
wire transfer or otherwise credited to or for the benefit of the Company
pursuant to the terms of the Escrow Agreement.  The consummation of
the transactions contemplated herein shall take place at the offices of Katten
Muchin Rosenman LLP, 575 Madison Avenue, New York, New York 10022 upon the
satisfaction or waiver of all conditions to closing set forth in this
Agreement.  Each of the Initial Closing Date and Subsequent Closing
Dates (as defined in Section 1(c) below) is referred to herein as a “Closing Date.”

       

       

      
        
           

        

        
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      (b)           Initial
Closing.  Subject to the satisfaction or waiver of the terms
and conditions of this Agreement and the Escrow Agreement, on the Initial
Closing Date, each Subscriber shall purchase and the Company shall sell to each
Subscriber a Note in the principal amount set forth on the signature page hereto
(“Initial Closing
Notes”), and Warrants as described in Section 2 of this
Agreement.  The principal amount of the Notes to be purchased by the
Subscribers on the Initial Closing Date shall no less than One Million Dollars
($1,000,000) (the “Initial
Closing Principal Amount”).

       

      (c)           Subsequent
Closings.  The “Subsequent Closing Dates”
shall be on or within five business days after the receipt by the Escrow Agent
of an executed Agreement and the applicable Subscription
Price.  Subject to the satisfaction or waiver of  the
conditions to Closing, on each Subsequent Closing Date, each Subscriber shall
purchase and the Company shall sell to each Subscriber a Note in the Principal
Amount set forth on the signature page hereto (“Subsequent Closing Notes”) and
Warrants as described in Section 2 of this Agreement .  The Subsequent
Closing Notes and said Warrants shall be of the same tenor as the Notes and
Warrants issuable on the Initial Closing Date.  The principal amount
of the Notes to be purchased by the Subscribers on the Subsequent Closing Date
shall be not greater than Fourteen Million Dollars ($14,000,000).

      


      2.         
  Warrants.

      


      (a)           Warrants.  On
the Closing Date, the Company will issue and deliver Warrants to the
Subscriber.  One (1) Warrant will be issued for each Conversion Share
which would be issued on the Closing Date assuming the conversion of the Note on
the Closing Date.  The exercise price to acquire a Warrant Share upon
exercise of a Warrant shall be $1.00, subject to reduction as described in the
Warrant.  The Warrants shall be exercisable until five (5) years after
the issue date of the Warrants.

       

      (b)           Allocation of Subscription
Price.   The Subscription Price will be allocated among
the components of the Securities so that each component of the Securities will
be fully paid and non-assessable.

      


      3.           Legends.

      


      (a)           Conversion Shares and
Warrant Shares Legend.  The Conversion Shares and Warrant
Shares shall bear the following or similar legend:

      


      “THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.”

       

       

      
        
           

        

        
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      (b)           Note and Warrants
Legend.  The Note and Warrants shall bear the following
legend:

      


      “NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE –OR-EXERCISABLE] HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.”

      


      4.           Subscriber Representations
and Warranties.  Subscriber hereby represents and warrants to
and agrees with the Company that:

      


      (a)           Organization and Standing of
the Subscriber.  Subscriber is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.

      


      (b)          Authorization and
Power.  Subscriber has the requisite
power and authority to enter into and perform this
Agreement, the Escrow Agreement, and any other agreements delivered
together with this Agreement or in connection herewith (collectively, “Transaction Documents”) and to purchase the Note being sold to it
hereunder.  The execution, delivery and performance of this Agreement
and the other Transaction Documents by Subscriber and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of
Subscriber, its Board of Directors, stockholders or any other third person is
required.  This Agreement and the other Transaction Documents have
been duly authorized, executed and when delivered by Subscriber and constitute,
or shall constitute when executed and delivered, a valid and binding obligation
of Subscriber enforceable against Subscriber in accordance with the terms
thereof.

       

       

      
        
           

        

        
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      (c)           No Conflicts.   violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (i) the articles or certificate of
incorporation, charter or bylaws or other organizational documents of the
Subscriber, (ii) any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Subscriber of any court, governmental agency or
body, or arbitrator having jurisdiction over the Subscriber or over the
properties or assets of the Subscriber, or (iii) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Subscriber is a party, by which the Subscriber is bound,
or to which any of the properties of the Subscriber is subject.  Subscriber is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement and the other
Transaction Documents  nor to purchase the Securities in accordance
with the terms hereof.

      


      (d)           Information on
Company.   Subscriber has been furnished with or has had
access at the EDGAR Website of the Commission to the Company's Form 10-K filed
on July 22, 2009 for the fiscal year ended May 31, 2009, the Current Reports on
Form 8-K filed thereafter, and the financial statements included in those
filings, together with all subsequent filings made with the Commission available
at the EDGAR website (hereinafter referred to collectively as the “Reports”).  In
addition, Subscriber may have received in writing from the Company such other
information concerning its operations, financial condition and other matters as
Subscriber has requested in writing, identified thereon as OTHER WRITTEN
INFORMATION (such other information is collectively, the “Other Written Information”),
and considered all factors Subscriber deems material in deciding on the
advisability of investing in the Securities.

      


      (e)           Information on
Subscriber.   Subscriber is, and will be at the time of
the conversion of the Notes and exercise of the Warrants, an “Accredited Investor”, as such
term is defined in Regulation D promulgated by the Commission under the 1933
Act, is experienced in investments and business matters, has made investments of
a speculative nature and has purchased securities of United States
publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment.  Subscriber has the authority and
is duly and legally qualified to purchase and own the
Securities.  Subscriber is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof.  The
information set forth on the signature page hereto and the Investor
Questionnaire regarding Subscriber is accurate.

       

       

      
        
           

        

        
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      (f)           Purchase of Note and
Warrants.  Subscriber is purchasing the Note and Warrants as
principal for its own account for investment only and not with a view toward, or
for resale in connection with, the public sale or any distribution
thereof.  No other person has a direct or indirect beneficial interest
in such Securities or any portion thereof.  Further, the Subscriber
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to the Securities for which the undersigned is subscribing
or any part of the Securities.

      


      (g)           Compliance with Securities
Act.   Subscriber understands and agrees that the
Securities have not been registered under the 1933 Act or any applicable state
securities laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of the Subscriber contained
herein), and that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration. The Subscriber has the financial
ability to bear the economic risk of his investment, has adequate means for
providing for his current needs and personal contingencies and has no need for
liquidity with respect to his investment in the Company.

       

      (h)           Communication of
Offer.  The offer to sell the Securities was directly
communicated to Subscriber by the Company.  At no time was Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.

      


      (i)           Restricted
Securities.   Subscriber understands that the Securities
have not been registered under the 1933 Act and Subscriber will not sell, offer
to sell, assign, pledge, hypothecate or otherwise transfer any of the Securities
unless pursuant to an effective registration statement under the 1933 Act, or
unless an exemption from registration is available.  Notwithstanding
anything to the contrary contained in this Agreement, Subscriber may transfer
(without restriction and without the need for an opinion of counsel) the
Securities to its Affiliates (as defined below) provided that each such
Affiliate is an “accredited investor” under Regulation D and such Affiliate
agrees to be bound by the terms and conditions of this Agreement. For the
purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  Affiliate includes each Subsidiary of the
Company.  For purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

       

       

      
        
           

        

        
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      (j)           No Governmental
Review.  Subscriber understands that no United States federal
or state agency or any other governmental or state agency has passed on or made
recommendations or endorsement of the Securities or the suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.

      


      (k)           Correctness of
Representations.  Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof and,
unless Subscriber otherwise notifies the Company prior to the Closing Date shall
be true and correct as of the Closing Date.

      


      (l)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

       

      5.           Company Representations and
Warranties.  The Company represents and warrants to and agrees
with each Subscriber that:

       

      (a)           Due
Incorporation.  The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own its properties and to carry on its
business as presently conducted.

       

      (b)           Subsidiaries.  The
Company does not own, directly or indirectly, nor has it entered into any
agreement or understanding to purchase or sell, any capital stock or other
equity interests in any person and does not have any subsidiaries, other than
SwissINSO SA, a Swiss company.

       

      (c)           Authority;
Enforceability.  This Agreement, the Note, Warrants, and the
other Transaction Documents have been duly authorized, executed and delivered by
the Company and are valid and binding agreements of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity.  The Company has full corporate power and authority
necessary to enter into and deliver this Agreement and the other Transaction
Documents and to perform its obligations hereunder and thereunder.

       

      (d)           Capitalization and
Additional Issuances.   The authorized and outstanding
capital stock of the Company is as described in the Reports.  Other
than as set forth in the Reports, there are no options, warrants, or rights to
subscribe to, securities, rights, understandings or obligations convertible into
or exchangeable for or giving any right to subscribe for any shares of capital
stock or other equity interest of the Company.  There are no
outstanding agreements or preemptive or similar rights affecting the Company's
Common Stock.

       

       

      
        
           

        

        
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      (e)           Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the OTC Bulletin Board (the “Bulletin Board”) or the
Company's shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities.  The Transaction Documents and
the Company’s performance of its obligations thereunder has been unanimously
approved by the Company’s Board of Directors.

       

      (f)           No Violation or
Conflict.  Assuming the representations and warranties of the
Subscriber in Section 4 are true and correct, neither the issuance and sale of
the Securities nor the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:

       

      (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company, or (C) the terms of any bond, debenture, note or any other
evidence of indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to which the
Company is a party, by which the Company is bound, or to which any of the
properties of the Company is subject; or

       

      (ii)           result
in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company except pursuant to applicable
securities laws and regulations; or

       

      (iii)           result
in the activation of any anti-dilution rights or a reset or repricing of any
debt, equity or security instrument of any creditor or equity holder of the
Company, or the holder of the right to receive any debt, equity or security
instrument of the Company nor result in the acceleration of the due date of any
obligation of the Company; or

       

      (iv)           result
in the triggering of any piggy-back or other registration rights of any person
or entity holding securities of the Company or having the right to receive
securities of the Company.

       

       

      
        
           

        

        
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      (g)           The
Securities.  The Securities upon issuance:

       

      (i)           are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject only to restrictions upon transfer under the 1933 Act and
any applicable state or foreign securities laws;

      


      (ii)           have
been, or will be, duly and validly authorized and on the dates of issuance of
the Conversion Shares upon conversion of the Note, and the Warrant Shares upon
exercise of the Warrants, such Shares and Warrant Shares will be duly and
validly issued, fully paid and non-assessable;

       

      (iii)           will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company;

       

      (iv)           will
not subject the holders thereof to personal liability by reason of being such
holders; and

       

      (v)           assuming
the representations warranties of the Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.

       

      (h)           Litigation.  There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the complete and timely performance
by the Company of its obligations under the Transaction
Documents.  There is no pending or, to the best knowledge of the
Company, basis for or threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company, or any of its Affiliates which litigation if adversely
determined would have a material adverse effect on the Company or its proposed
operations.

       

      (i)           No Market
Manipulation.  The Company and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Securities
or affect the price at which the Securities may be issued or
resold.

       

      (j)           Information Concerning
Company.  The Reports and Other Written Information contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein.   The Reports and Other Written Information
including the financial statements included therein do not 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, taken as a whole,
not misleading in light of the circumstances when made.

       

       

      
        
           

        

        
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      (k)           Defaults.  The
Company is not in violation of its articles of incorporation or
bylaws.  The Company is (i) not in default under or in violation of
any other agreement or instrument to which it is a party or by which it or any
of its properties are bound or affected, which default or violation would have a
material adverse effect on the Company or its business, (ii) not in default with
respect to any order of any court, arbitrator or governmental body or subject to
or party to any order of any court or governmental authority arising out of any
action, suit or proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters, or (iii)
not in violation of any statute, rule or regulation of any governmental
authority which violation would have a material adverse effect on the Company or
its operations.

       

      (l)           No Integrated
Offering.   Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security of the Company nor solicited
any offers to buy any security of the Company under circumstances that would
cause the offer of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the Bulletin Board.  No prior offering
will impair the exemptions relied upon in this offering or the Company’s ability
to timely comply with its obligations hereunder.  Neither the Company
nor any of its Affiliates will take any action or steps that would cause the
offer or issuance of the Securities to be integrated with other offerings which
would impair the exemptions relied upon in this offering or the Company’s
ability to timely comply with its obligations hereunder.  The Company
will not conduct any offering other than the transactions contemplated hereby
that may be integrated with the offer or issuance of the Securities that would
impair the exemptions relied upon in this offering or the Company’s ability to
timely comply with its obligations hereunder.

       

      (m)           No General
Solicitation.  Neither the Company, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

       

       (n)           No Undisclosed Events or
Circumstances.  Except as disclosed in the Reports, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed in the Reports.

       

      (o)           Dilution.   The
Company's executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
will have a potential dilutive effect on the equity holdings of other holders of
the Company’s equity or rights to receive equity of the Company.  The
board of directors of the Company has concluded, in its good faith business
judgment that the issuance of the Securities is in the best interests of the
Company.  The Company specifically acknowledges that its obligation to
issue the Conversion Shares upon conversion of the Note and the Warrant Shares
upon exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company or parties entitled to receive equity of the
Company.

       

       

      
        
           

        

        
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      (p)           No Disagreements with
Accountants and Lawyers.  There are no material disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise between the Company and the accountants and lawyers previously and
presently employed by the Company, including but not limited to disputes or
conflicts over payment owed to such accountants and lawyers, nor have there been
any such disagreements during the two years prior to the Closing
Date.

      


      (q)           Investment
Company.   Neither the Company nor any Affiliate of the
Company is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

      


      (r)           Foreign Corrupt
Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is  in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.

      


      (s)           Reporting
Company.  The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the “1934
Act”) and has a class of Common Stock registered pursuant to Section
12(g) of the 1934 Act.  Pursuant to the provisions of the 1934 Act,
the Company has timely filed all reports and other materials required to be
filed thereunder with the Commission during the preceding twelve
months.

      


      (t)           Listing.  The
Company's Common Stock is quoted on the Bulletin Board under the symbol
PASH.  The Company has not received any oral or written notice that
its Common Stock is not eligible nor will become ineligible for quotation on the
Bulletin Board nor that its Common Stock does not meet all requirements for the
continuation of such quotation.  The Company satisfies all the
requirements for the continued quotation of its Common Stock on the Bulletin
Board.

      


      (u)           Correctness of
Representations.  The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date in which case such representation or warranty shall be
true as of such date.

       

       

      
        
           

        

        
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      6.           Exempt  Offering.  The
offer and issuance of the Securities to the Subscribers is being made pursuant
to the exemption from the registration provisions of the 1933 Act afforded by
Section 4(2) or Section 4(6) of the 1933 Act, Rule 506 of Regulation D and/or
Regulation S promulgated thereunder.

      


      7.           Broker.   The
Company and Subscriber agree to indemnify the other against and hold the other
harmless from any and all liabilities to any persons claiming brokerage
commissions, finder’s fees, credit enhancement fees or due diligence fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement and the
offering.

       

      8.           Use of
Proceeds.   The proceeds of this Offering will be employed
by the Company (i) to repay a bridge loan in the amount of $750,000, (ii) as
additional loans and/or capital contributions to SwissINSO SA, (iii) for public
company expenses (in an amount of no less than $350,000), (iv) for expenses
related to this Offering and (v) general working capital.

       

      9.           Reservation.   The
Company undertakes to reserve on behalf of Subscriber from its authorized but
unissued Common Stock, a number of shares of Common Stock equal to the amount of
Common Stock necessary to allow Subscriber to be able to convert the Note and
the amount of Warrant Shares issuable upon exercise of the
Warrants.

       

      10.           Non-Public
Information.  The Company covenants and agrees that except for
the Reports, Other Written Information and schedules and exhibits to this
Agreement and the Transaction Documents, which information the Company
undertakes to publicly disclose on a Current Report on Form 8-K, neither it nor
any other person acting on its behalf will at any time provide Subscriber or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto Subscriber shall have
agreed in writing to accept such information.  The Company understands
and confirms that Subscriber shall be relying on the foregoing representations
in effecting transactions in securities of the Company.

       

      11.           Indemnification.  The
Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company,
the Company’s officers, directors, agents, Affiliates, members, managers,
control persons, representatives, principal shareholders and their respective
successors and assigns, against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred by or
imposed upon any such person which results, arises out of or is based upon any
misrepresentation by Subscriber or breach of any representation or warranty by
Subscriber in this Agreement or in any Exhibits or Schedules attached hereto in
any Transaction Document, or other agreement delivered pursuant hereto or in
connection herewith, now or after the date hereof.

       

       

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

       

       

      12.           Registration.

       

      12.1           Registration
Rights.  The Company hereby grants the following registration
rights to holders of the Securities:

       

      (i)           On
one occasion, but only subsequent to the 9th
month after the Initial Closing Date, upon a written request therefor from any
record holder or holders of more than 51% of the Conversion Shares issued and
issuable upon conversion of the outstanding Notes, the Company shall prepare and
file with the Commission a registration statement under the 1933 Act registering
the Registrable Securities, as defined in Section 12.1(iv) hereof, which are the
subject of such request for unrestricted public resale by the holder
thereof.  For purposes of Sections 12.1(i) and 12.1(ii), Registrable
Securities shall not include Securities which are (A) registered for resale in
an effective registration statement, (B) included for registration in a pending
registration statement, (C) which have been issued without further transfer
restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act or
(D) which may be resold under Rule 144 without volume
limitations.  Upon the receipt of such request, the Company shall
promptly give written notice to all other record holders of the Registrable
Securities that such registration statement is to be filed and shall include in
such registration statement Registrable Securities for which it has received
written requests within ten days after the Company gives such written
notice.  Such other requesting record holders shall be deemed to have
exercised their demand registration right under this Section
12.1(i).

       

      (ii)           If
the Company at any time proposes to register any of its securities under the
1933 Act for sale to the public, whether for its own account or for the account
of other security holders or both, except with respect to registration
statements on Forms S-4, S-8 or another form not available for registering the
Registrable Securities for sale to the public, provided the Registrable
Securities are not otherwise registered for resale by the Subscribers pursuant
to an effective registration statement, each such time it will give at least ten
days' prior written notice to the record holder of the Registrable Securities of
its intention so to do. Upon the written request of the holder, received by the
Company within ten days after the giving of any such notice by the Company, to
register any of the Registrable Securities not previously registered, the
Company will cause such Registrable Securities as to which registration shall
have been so requested to be included with the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
required to permit the sale or other disposition of the Registrable Securities
so registered by the holder of such Registrable Securities (the “Seller” or “Sellers”). In the event that
any registration pursuant to this Section 12.1(ii) shall be, in whole or in
part, an underwritten public offering of common stock of the Company, the number
of shares of Registrable Securities to be included in such an underwriting may
be reduced by the managing underwriter if and to the extent that the Company and
the underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein. Notwithstanding the foregoing provisions, the Company may withdraw or
delay or suffer a delay of any registration statement referred to in this
Section 12.1(ii) without thereby incurring any liability to the
Seller.

       

       

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

       

       

      (iii)           If,
at the time any written request for registration is received by the Company
pursuant to Section 12.1(i), the Company has determined to proceed with the
actual preparation and filing of a registration statement under the 1933 Act in
connection with the proposed offer and sale for cash of any of its securities
for the Company's own account and the Company actually does file such other
registration statement, such written request shall be deemed to have been given
pursuant to Section 12.1(ii) rather than Section 12.1(i), and the rights of the
holders of Registrable Securities covered by such written request shall be
governed by Section 12.1(ii).

       

      (iv)           As
provided for in Section 12.1(i) or (ii), the Company shall file with the
Commission a Form S-1 registration statement (the “Registration Statement”) (or
such other form that it is eligible to use) in order to register the Registrable
Securities for resale and distribution under the 1933 Act.  The
Company will register not less than a number of shares of common stock in the
aforedescribed registration statement that is equal to 100% of the Shares issued
and issuable upon conversion of all of the Notes and 100% of the Warrant Shares
issuable upon exercise of the Warrants (collectively the “Registrable Securities”). The
Registrable Securities shall be reserved and set aside exclusively for the
benefit of each Subscriber, pro rata, and not issued,
employed or reserved for anyone other than each Subscriber.

       

      12.2.           Registration
Procedures.  If and whenever the Company is required by the
provisions of Sections 12.1(i) or 12.1(ii) to effect the registration of any
Registrable Securities under the 1933 Act, the Company will, as expeditiously as
possible:

       

      (a)           subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 12, with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), promptly notify the Sellers (by
telecopier and by e-mail addresses provided by the Subscribers) on or before the
second  business day thereafter that the Company receives notice that
(i) the Commission has no comments or no further comments on the registration
statement, and (ii) the registration statement has been declared
effective;

       

      (b)           prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until such registration
statement has been effective for a period of one (1) year, and comply with the
provisions of the 1933 Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with
the Sellers’ intended method of disposition set forth in such registration
statement for such period;

       

      (c)           furnish
to the Sellers, at the Company’s expense, such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement or make them electronically available;

       

       

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

       

      (d)           use
its reasonable best efforts to register or qualify the Registrable Securities
covered by such registration statement under the securities or “blue sky” laws
in such jurisdictions as the Sellers shall request in writing, provided,
however, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;

       

      (e)           list
the Registrable Securities covered by such registration statement with any
securities exchange on which the Common Stock of the Company is then
listed;

       

      (f)           notify
the Sellers within twenty-four hours of the Company’s becoming aware that a
prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of any event of which the Company has knowledge as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing or which
becomes subject to a Commission, state or other governmental order suspending
the effectiveness of the registration statement covering any of the Registrable
Securities;

       

      (g)           provided
same would not be in violation of the provision of Regulation FD under the 1934
Act, make available for inspection by the Sellers during reasonable business
hours,  and any attorney, accountant or other agent retained by the
Sellers or underwriter, all publicly available, non-confidential financial and
other records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the Sellers,
attorney, accountant or agent in connection with such registration statement at
such requesting Seller’s expense; and

       

      (h)           provide
to the Sellers copies of the Registration Statement and amendments thereto five
business days prior to the filing thereof with the Commission.  Any
Seller’s failure to comment on any registration statement or other document
provided to a Subscriber or its counsel shall not be construed to constitute
approval thereof nor the accuracy thereof.

       

      12.3.           Provision of
Documents.  In connection with each registration described in
this Section 12, each Seller will furnish to the Company in writing such
information and representation letters with respect to itself and the proposed
distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.

       

       

      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

       

      12.4.           Expenses.  All
expenses incurred by the Company in complying with Section 12, including,
without limitation, all registration and filing fees, printing expenses (if
required), fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
the NASD, transfer taxes, and fees of transfer agents and registrars, are called
“Registration Expenses”.
All underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called “Selling
Expenses”.  The Company will pay all Registration Expenses in
connection with any registration statement described in Section
12.  Selling Expenses in connection with each such registration
statement shall be borne by the Seller and may be apportioned among the Sellers
in proportion to the number of shares included on behalf of the Seller relative
to the aggregate number of shares included under such registration statement for
all Sellers, or as all Sellers thereunder may agree.

       

      12.5.           Indemnification and
Contribution.

       

      (a)           In
the event of a registration of any Registrable Securities under the 1933 Act
pursuant to Section 12, the Company will, to the extent permitted by law,
indemnify and hold harmless the Seller, each of the officers, directors, agents,
Affiliates, members, managers, control persons, and principal shareholders of
the Seller, each underwriter of such Registrable Securities thereunder and each
other person, if any, who controls such Seller or underwriter within the meaning
of the 1933 Act, against any losses, claims, damages or liabilities, joint or
several, to which the Seller, or such underwriter or controlling person may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Securities
was registered under the 1933 Act pursuant to Section 12, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances when made,
and will subject to the provisions of Section 12.5(c) reimburse the Seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to the Seller to the extent that any such
damages arise out of or are based upon an untrue statement or omission made in
any preliminary prospectus if (i) the Seller failed to send or deliver a copy of
the final prospectus delivered by the Company to the Seller with or prior to the
delivery of written confirmation of the sale by the Seller to the person
asserting the claim from which such damages arise, (ii) the final prospectus
would have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission, or (iii) to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by any such Seller for use in such registration
statement or prospectus.

       

       

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

       

       

      (b)           In
the event of a registration of any of the Registrable Securities under the 1933
Act pursuant to Section 12, each Seller severally but not jointly will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the 1933 Act
pursuant to Section 12, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished to the
Company by such Seller for use in such registration statement or
prospectus.

       

      (c)           Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 12.5(c) and shall only relieve it from any liability
which it may have to such indemnified party under this Section 12.5(c), except
and only if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 12.5(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnifying party shall
have reasonably concluded that there may be reasonable defenses available to
indemnified party which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified parties, as a group, shall have the right to select one separate
counsel, reasonably satisfactory to the indemnified and indemnifying party, and
to assume such legal defenses and otherwise to participate in the defense of
such action, with the reasonable expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.

       

       

      
        
           

        

        
          -16-

          
            

          

        

        
           

        

      

       

       

      (d)           In
order to provide for just and equitable contribution in the event of joint
liability under the 1933 Act in any case in which either (i) a Seller, or any
controlling person of a Seller, makes a claim for indemnification pursuant to
this Section 12.5 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 12.5 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
not provided under this Section 12.5; then, and in each such case, the Company
and the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities sold by it pursuant
to such registration statement; and (z) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.

       

      13.           Miscellaneous.

       

      (a)           Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: SwissINSO Holding Inc.,
Biopole, Route de la Corniche, 1066 Epalinges, Switzerland, with a copy by fax
only to:  Katten Muchin Rosenman LLP, 575 Madison Avenue, New York,
New York 10022, Attn: Michael Hirschberg, Esq., facsimile:
(212)  894-5646, and (ii) if to the Subscriber, to: the address and
fax number indicated on the signature page hereto.

       

       (b)           Entire Agreement;
Assignment.  This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties.  Neither the Company nor the Subscriber has
relied on any representations not contained or referred to in this Agreement and
the documents delivered herewith.   No right or obligation of the
Subscriber shall be assigned without prior notice to and the written consent of
the Company.

       

      
        
           

        

        
          -17-

          
            

          

        

        
           

        

      

       

       

       

      (c)           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by electronic transmission.

       

      (d)           Law Governing this
Agreement.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state and county of New York.  The parties to this Agreement
hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens.  The parties executing this Agreement
and other agreements referred to herein or delivered in connection herewith on
behalf of the Company agree to submit to the in personam jurisdiction of such
courts and hereby irrevocably waive trial by jury.  The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.  In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement.  Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.

       

      (e)           Specific Enforcement,
Consent to Jurisdiction.  The Company and Subscriber
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or
equity.  Subject to Section 13(d) hereof, the Subscriber hereby
irrevocably waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.

       

      
        
           

        

        
          -18-

          
            

          

        

        
           

        

      

       

       

      (f)           Captions: Certain
Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.

       

      (g)           Severability.  In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.

       

       

      
        
           

        

        
          -19-

          
            

          

        

        
           

        

      

       

       

      SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT

       

      


      Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

      


      SWISSINSO
HOLDING INC.

      


      By:___________________________

      Name:
Yves Ducommun

      Title: Chief Executive
Officer

      


      Dated:
___________________, 2009

      


      


      


      
        	
                SUBSCRIBER

                ADDRESS

              	
                PURCHASE
      PRICE AND NOTE PRINCIPAL

              	
                WARRANTS

              
	
                 

                 

                 

                 

                ____________________________________________

                By:

                Title:

              	
                $

              	 
      
	
                 

                 

                ____________________________________________

                By:

                Title:

              	 
      	 
      
	
                 

                 

                ____________________________________________

                By:

                Title:

                 

              	 
      	 
      


      

       

       

      
        
           

        

        
          -20-

          
            

          

        

        
           

        

      

       

      
 

      INVESTOR
QUESTIONNAIRE

      


      
        	
                A.

              	
                General
      Information

              	 
      
	 
      	 
      	 
      
	
                1.

              	
                Print
      Full Name of Investor:

              	
                Individual:

              
	 
      	 
      	
                ____________________________________

              
	 
      	 
      	
                First,
      Middle, Last

              
	 
      	 
      	 
      
	 
      	 
      	
                Partnership,
      Corporation, Trust, Custodial Account, Other:

              
	 
      	 
      	 
      
	 
      	 
      	
                ____________________________________

              
	 
      	 
      	
                Name
      of Entity

              
	 
      	 
      	 
      
	
                2.

              	
                Address
      for Notices:

              	
                ____________________________________

              
	 
      	 
      	
                ____________________________________

              
	 
      	 
      	
                ____________________________________

              
	 
      	 
      	 
      
	
                3.

              	
                Name
      of Primary Contact Person:

                Title:

              	
                ____________________________________

              
	 
      	 
      	 
      
	
                4.

              	
                Telephone
      Number:

              	
                ____________________________________

              
	 
      	 
      	 
      
	
                5.

              	
                E-Mail
      Address:

              	
                ____________________________________

              
	 
      	 
      	 
      
	
                6.

              	
                Facsimile
      Number:

              	
                ____________________________________

              
	 
      	 
      	 
      


      

       

       

      
        
           

        

        
          -21-

          
            

          

        

        
           

        

      

       

      
 

      
        	
                7.

                 

                 

              	
                U.S. Investors
      Only:

                 

                U.S.
      Taxpayer Identification or Social

                Security
      Number:

                 

              	
                 

                 

                 

                ____________________________________

              


      

      


      B.           Accredited Investor
Status

      


      The
Subscriber represents and warrants that the Subscriber is an “accredited
investor” within the meaning of Rule 501 of Regulation D under the Securities
Act of 1933, as amended (the “Securities Act”), and has checked the box or boxes
below which are next to the categories under which the Investor qualifies as an
accredited investor:

      


      
        	
                FOR
      INDIVIDUALS:

                 

              
	
                o

              	
                A
      natural person with individual net worth (or joint net worth with spouse)
      in excess of $1 million. For purposes of this item, “net worth” means the
      excess of total assets at fair market value, including home, home
      furnishings and automobiles (and including property owned by a spouse),
      over total liabilities.

              
	 
      	 
      	 
      
	
                o

              	
                A
      natural person with individual income (without including any income of the
      Investor’s spouse) in excess of $200,000, or joint income with spouse of
      $300,000, in each of the two most recent years and who reasonably expects
      to reach the same income level in the current year.

              
	 
      	 
      	 
      
	
                FOR
      ENTITIES:

              
	 
      	 
      	 
      
	
                o

              	
                A
      bank as defined in Section 3(a)(2) of the Securities Act or any savings
      and loan association or other institution as defined in Section 3(a)(5)(A)
      of the Securities Act, whether acting in its individual or fiduciary
      capacity.

              
	 
      	 
      	 
      
	
                o

              	
                An
      insurance company as defined in Section 2(13) of the Securities
      Act.

              	 
      
	 
      	 
      	 
      
	
                o

              	
                A
      broker-dealer registered pursuant to Section 15 of the Securities Exchange
      Act of 1934.

              	 
      
	 
      	 
      	 
      
	
                o

              	
                An
      investment company registered under the Investment Company Act of 1940, as
      amended (the “Investment Company Act”). If an Investor has checked this
      box, please contact Michael Hirschberg, Esq. at 212-940-8511 for
      additional information that will be required.

              
	 
      	 
      	 
      
	
                o

              	
                A
      business development company as defined in Section 2(a)(48) of the
      Investment Company Act.

              	 
      
	 
      	 
      	 
      
	
                o

              	
                A
      small business investment company licensed by the Small Business
      Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958.

              
	 
      	 
      	 
      


         

         

        
          
             

          

          
            -22-

            
              

            

          

          
             

          

        

         

         

        	
                o

              	
                A
      private business development company as defined in Section 202(a)(22) of
      the Investment Advisers Act of 1940. If an Investor has checked this box,
      please contact Michael Hirschberg, Esq. for additional information that
      will be required.

              
	 
      	 
      	 
      
	
                o

              	
                An
      organization described in Section 501(c)(3) of the Internal Revenue Code,
      a corporation, Massachusetts or similar business trust, or partnership,
      not formed for the specific purpose of acquiring the Securities, with
      total assets in excess of $5 million.

              
	 
      	 
      	 
      
	
                o

              	
                A
      trust with total assets in excess of $5 million not formed for the
      specific purpose of acquiring the Securities, whose purchase is directed
      by a person with such knowledge and experience in financial and business
      matters as to be capable of evaluating the merits and risks of an
      investment in the Company and the purchase of the
    Securities.

              
	 
      	 
      	 
      
	
                o

              	
                An
      employee benefit plan within the meaning of ERISA if the decision to
      invest in the Securities is made by a plan fiduciary, as defined in
      Section 3(21) of ERISA, which is either a bank, savings and loan
      association, insurance company, or registered investment adviser, or if
      the employee benefit plan has total assets in excess of $5 million or, if
      a self-directed plan, with investment decisions made solely by persons
      that are accredited investors.

              
	 
      	 
      	 
      
	
                o

              	
                A
      plan established and maintained by a state, its political subdivisions, or
      any agency or instrumentality of a state or its political subdivisions,
      for the benefit of its employees, if the plan has total assets in excess
      of $5 million.

              
	 
      	 
      	 
      
	
                o

              	
                An
      entity, including a grantor trust, in which all of the equity owners are
      accredited investors as determined under any of the foregoing paragraphs
      (for this purpose, a beneficiary of a trust is not an equity owner, but
      the grantor of a grantor trust is an equity
  owner).

              


      

       

       

      
        
           

        

        
          -23-

          
            

          

        

        
           

        

      

       

      
 

      IF
THE FOLLOWING SECTION IS APPLICABLE, CHECK HERE ___ INDICATING THAT THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THE FOLLOWING SECTION ARE EXPRESSLY
MADE BY THE SUBSCRIBER

      


      C.       Regulation
S

      


      The Subscriber understands that the
Securities are being offered and sold in reliance on an exemption from the
registration requirements of United States federal and state securities laws
under Regulation S promulgated under the Securities Act and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Investor set forth herein
in order to determine the applicability of such exemptions and the suitability
of the Investor to acquire the Securities.  In this regard, the
Subscriber represents, warrants and agrees that:

      


      
        	
                1.  

              	
                The
      Subscriber is not a U.S. Person (as defined below) and is an affiliate (as
      defined in Rule 501(b) under the Securities Act) of the Company and is not
      acquiring the Securities for the account or benefit of a U.S.
      Person.

              


      

      


       A U.S. Person means any one of
the following:

       

      
        	
                ·  

              	
                any
      natural person resident in the United States of
  America;

              


      

       

      
        	
                ·  

              	
                any
      partnership or corporation organized or incorporated under the laws of the
      United States of America;

              


      

       

      
        	
                ·  

              	
                any
      estate of which any executor or administrator is a U.S.
      person;

              


      

       

      
        	
                ·  

              	
                any
      trust of which any trustee is a U.S.
person;

              


      

       

      
        	
                ·  

              	
                any
      agency or branch of a foreign entity located in the United States of
      America;

              


      

       

      
        	
                ·  

              	
                any
      non-discretionary account or similar account (other than an estate or
      trust) held by a dealer or other fiduciary for the benefit or account of a
      U.S. person;

              


      

       

      
        	
                ·  

              	
                any
      discretionary account or similar account (other than an estate or trust)
      held by a dealer or other fiduciary organized, incorporated or (if an
      individual) resident in the United States of America;
  and

              


      

       

      
        	
                ·  

              	
                any
      partnership or corporation if:

              


      

       

       

      
        
           

        

        
          -24-

          
            

          

        

        
           

        

      

       

      
 

      
        (A)
organized or incorporated under the laws of any foreign jurisdiction;
and

         

        (B)
formed by a U.S. person principally for the purpose of investing in securities
not registered under the Securities Act, unless it is organized or incorporated,
and owned, by accredited investors (as defined in Rule 501(a) under the
Securities Act) who are not natural persons, estates or
trusts.

      

      


      
        	
                2.  

              	
                At
      the time of the origination of contact concerning this Agreement and the
      date of the execution and delivery of this Agreement, the Subscriber was
      outside of the United States.

              


      

      


      
        	
                3.  

              	
                The
      Subscriber will not, during the period commencing on the date of issuance
      of the Note or Warrants and ending on the six month anniversary of such
      date, (the “Restricted Period”), offer, sell, pledge or otherwise transfer
      the Note or the Warrants in the United States, or to a U.S. Person for the
      account or for the benefit of a U.S. Person, or otherwise in a manner that
      is not in compliance with Regulation
S.

              


      

      


      
        	
                4.  

              	
                The
      Subscriber will, after expiration of the Restricted Period, offer, sell,
      pledge or otherwise transfer the Note or Warrants only pursuant to
      registration under the Securities Act or an available exemption therefrom
      and, in accordance with all applicable state and foreign securities
      laws.

              


      

      


      
        	
                5.  

              	
                The
      Subscriber was not in the United States, engaged in, and prior to the
      expiration of the Restricted Period will not engage in, any short selling
      of or any hedging transaction with respect to the Securities, including
      without limitation, any put, call or other option transaction, option
      writing or equity swap.

              


      

      


      
        	
                6.  

              	
                Neither
      the Subscriber nor or any person acting on his behalf has engaged, nor
      will engage, in any directed selling efforts to a U.S. Person with respect
      to the Securities and the Investor and any person acting on his behalf
      have complied and will comply with the “offering restrictions”
      requirements of Regulation S under the Securities
  Act.

              


      

      


      
        	
                7.  

              	
                The
      transactions contemplated by this Agreement have not been pre-arranged
      with a buyer located in the United States or with a U.S. Person, and are
      not part of a plan or scheme to evade the registration requirements of the
      Securities Act.

              


      

      


      
        	
                8.  

              	
                Neither
      the Subscriber nor any person acting on his behalf has undertaken or
      carried out any activity for the purpose of, or that could reasonably be
      expected to have the effect of, conditioning the market in the United
      States, its territories or possessions, for any of the
      Securities.  The Subscriber agrees not to cause any
      advertisement of the Securities to be published in any newspaper or
      periodical or posted in any public place and not to issue any circular
      relating to the Securities, except such advertisements that include the
      statements required by Regulation S under the Securities Act, and only
      offshore and not in the U.S. or its territories, and only in compliance
      with any local applicable securities
laws.

              


      

       

      
        
           

        

        
          -25-

          
            

          

        

        
           

        

      

       

      
 

      
        	
                9.  

              	
                In
      addition to the legends described in Section 3 of the Agreement, each
      certificate representing the Securities shall be endorsed with the
      following legends, in addition to any other legend required to be placed
      thereon by applicable federal or state securities
  laws:

              


      

      


      “THE
SECURITIESARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES
ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT.”

       

      D.          Supplemental
Data for Entities

      


      1.           If
the Subscriber is not a natural person, furnish the following supplemental data
(natural persons may skip this Section D of the Investor
Questionnaire):

      


      Legal
form of entity (trust, corporation, partnership, etc.):
_________________________

      


      Jurisdiction
of organization: ________________________________________________

      


      2.           Was
the Subscriber organized for the specific purpose of acquiring the
Securities?

      


      
        	
                o  Yes

              	
                o  No

              


      

      


      If the
answer to the above question is “Yes,” please contact Michael Hirschberg, Esq.
at 212-940-8511 for additional information that will be required.

      


      3.           Are
shareholders, partners or other holders of equity or beneficial interest in the
Investor able to decide individually whether to participate, or the extent of
their participation, in the Investor’s investment in the Company (i.e., can
shareholders, partners or other holders of equity or beneficial interest in the
Investor determine whether their capital will form part of the capital invested
by the Investor in the Company)?

      


      
        	
                o  Yes

              	
                o  No

              


      

      


      


      If the
answer to the above question is “Yes,” please contact Michael Hirschberg for
additional information that will be required.

       

      
        
           

        

        
          -26-

          
            

          

        

        
           

        

      

       

      
 

      4(a).       Please
indicate whether or not the Subscriber is, or is acting on behalf of, (i) an
employee benefit plan within the meaning of Section 3(3) of ERISA, whether or not such plan is
subject to ERISA, or (ii) an entity which is deemed to hold the assets of
any such employee benefit plan pursuant to 29 C.F.R. § 2510.3-101. For example,
a plan which is maintained by a foreign corporation, governmental entity or
church, a Keogh plan covering no common-law employees and an individual
retirement account are employee benefit plans within the meaning of Section 3(3)
of ERISA but generally are not subject to ERISA (collectively, “Non-ERISA Plans”). In
general, a foreign or US entity which is not an operating company and which is
not publicly traded or registered as an investment company under the Investment
Company Act of 1940, as amended, and in which 25% or more of the value of any
class of equity interest is held by employee pension or welfare plans (including
an entity which is deemed to hold the assets of any such plan), would be deemed
to hold the assets of one or more employee benefit plans pursuant to 29 C.F.R. §
2510.3-101. However, if only Non-ERISA Plans were invested in such an entity,
the entity generally would not be subject to ERISA. For purposes of determining
whether this 25% threshold has been met or exceeded, the value of any equity
interest held by a person (other than such a plan or entity) who has
discretionary authority or control with respect to the assets of the entity, or
any person who provides investment advice for a fee (direct or indirect) with
respect to such assets, or any affiliate of such a person, is
disregarded.

      


      
        	
                o  Yes

              	
                o  No

              


      

      


      


      4(b).           If
the Subscriber is, or is acting on behalf of, such an employee benefit plan, or
is an entity deemed to hold the assets of any such plan or plans, please
indicate whether or not the Investor is subject to ERISA.

      


      
        	
                o  Yes

              	
                o  No

              


      

      


      4(c.)           If
the Subscriber answered “Yes” to question 4.(b) and the Subscriber is investing
the assets of an insurance company general account, please indicate what
percentage of the Investor’s assets the purchase of the Securities is subject to
ERISA. ___________%.

      


      5.             
Does the amount of the Subscriber’s subscription for the Securities in the
Company exceed 40% of the total assets (on a consolidated basis with its
subsidiaries) of the Subscriber?

      


      
        	
                o   Yes

              	
                o   No

              


      

      


        If
the question above was answered “Yes,” please contact Michael Hirschberg for
additional information that will be required.

      


      6(a).           Is
the Subscriber a private investment company which is not registered under the
Investment Company Act, in reliance on Section 3(c)(1) or Section 3(c)(7)
thereof?

      


      
        	
                o  Yes

              	
                o  No

              


      

      


      6(b).           If
the question above was answered “Yes,” was the Subscriber formed prior to April
30, 1996?

      


      
        	
                o  Yes

              	
                o  No

              


      

      


        If
the questions set forth in (a) and (b) above were both answered “Yes,” please
contact Michael Hirschberg for additional information that will be
required.

      


      7(a).           Is
the Subscriber a grantor trust, a partnership or an S-Corporation for US federal
income tax purposes?

      


      
        	
                o  Yes

              	
                o  No

              


      

       

       

      
        
           

        

        
          -27-

          
            

          

        

        
           

        

      

      
 

      7(b).           If
the question above was answered “Yes,” please indicate whether or
not:

      


      (i) more
than 50 percent of the value of the ownership interest of any beneficial owner
in the Subscriber is (or may at any time during the term of the Company be)
attributable to the Subscriber’s (direct or indirect) interest in the Company;
or

      


      
        	
                o  Yes

              	
                o  No

              


      

      


      (ii) it
is a principal purpose of the Subscriber’s participation in the Company to
permit the Partnership to satisfy the 100 partner limitation contained in US
Treasury Regulation Section 1.7704-1(h)(3).

      


      
        	
                o  Yes

              	
                o  No

              


      

      


        If
either question above was answered “Yes,” please contact Michael Hirschberg for
additional information that will be required.

      


      8.             
If the Subscriber’s tax year ends on a date other than December 31, please
indicate such date below:

       

      
        	 
      	 
      
	 
      	
                (Date)

              


      

       

      E.           
Related
Parties

      


      1. To the
best of the Subscriber’s knowledge, does the Subscriber control, or is the
Subscriber controlled by or under common control with, any other investor in the
Company?

      


      
        	
                o  Yes

              	
                o  No

              


      

       

      If the
answer above was answered “Yes”, please identify such related investor(s)
below.

       

      Name(s)
of related investor(s): _______________________________

      


      2.                                                      
Will any other person or persons have a beneficial interest in the Securities to
be acquired hereunder (other than as a shareholder, partner, or other beneficial
owner of equity interest in the Subscriber)?

      


      
        	
                o  Yes

              	
                o  No

              


      

       

      If either
question above was answered “Yes”, please contact Michael Hirschberg for
additional information that will be required.

       

       

       

      
        
           

        

        
          -28-

          
            

          

        

        
           

        

      

      
 

      The
Subscriber understands that the foregoing information will be relied upon by the
Company for the purpose of determining the eligibility of the Subscriber to
purchase the Securities. The Subscriber agrees to notify the Company immediately
if any representation or warranty contained in this Agreement, including this
Investor Questionnaire, becomes untrue at any time. The Subscriber agrees to
provide, if requested, any additional information that may reasonably be
required to substantiate the Subscriber’s status as an accredited investor or to
otherwise determine the eligibility of the Subscriber to purchase the
Securities. The Subscriber agrees to indemnify and hold harmless the Company and
each officer, director, shareholder, agent and representative of the Company and
their respective affiliates and successors and assigns from and against any
loss, damage or liability due to or arising out of a breach of any
representation, warranty or agreement of the Subscriber contained
herein.

      


      


      
        	 
      	
                INDIVIDUAL:

              
	 
      	 
      
	 
      	
                ____________________________________

              
	 
      	
                (Signature)

              
	 
      	 
      
	 
      	
                ____________________________________

              
	 
      	
                (Print
      Name)

              
	 
      	 
      
	 
      	
                PARTNERSHIP,
      CORPORATION, TRUST, CUSTODIAL ACCOUNT, OTHER:

              
	 
      	 
      
	 
      	
                ___________________________________

              
	 
      	
                (Name
      of Entity)

              
	 
      	 
      
	 
      	
                By:  ________________________________

              
	 
      	
                (Signature)

              
	 
      	 
      
	 
      	
                       ________________________________

              
	 
      	
                (Print
      Name and Title)

              


      

       

      
 

      
        
           

        

        
          -29-

          
            

          

        

        
           

        

      

      


      Annex
1

      


      DEFINITION
OF “INVESTMENTS”

      


      


      The term
“investments” means:

      


      
        	
                1)  

              	
                Securities,
      other than securities of an issuer that controls, is controlled by, or is
      under common control with, the Subscriber that owns such securities,
      unless the issuer of such securities
is:

              


      

      


      
        	
                (i)  

              	
                An
      investment company or a company that would be an investment company but
      for the exclusions or exemptions provided by the Investment Company Act,
      or a commodity pool; or

              


      

      


      
        	
                (ii)  

              	
                a
      Public Company (as defined below);

              


      

      


      
        	
                (iii)  

              	
                A
      company with shareholders’ equity of not less than $50 million (determined
      in accordance with generally accepted accounting principles) as reflected
      on the company’s most recent financial statements, provided that such
      financial statements present the information as of a date within 16 months
      preceding the date on which the Subscriber acquires
      Securities;

              


      

      


      
        	
                2)  

              	
                Real
      estate held for investment
purposes;

              


      

      


      
        	
                3)  

              	
                Commodity
      Shares (as defined below) held for investment
  purposes;

              


      

      


      
        	
                4)  

              	
                Physical
      Commodities (as defined below) held for investment
    purposes;

              


      

      


      
        	
                5)  

              	
                To
      the extent not securities, Financial Contracts (as defined below) entered
      into for investment purposes;

              


      

      


      
        	
                6)  

              	
                In
      the case of a Subscriber that is a company that would be an investment
      company but for the exclusions provided by Section 3(c)(1) or 3(c)(7) of
      the Investment Company Act, or a commodity pool, any amounts payable to
      such Subscriber pursuant to a firm agreement or similar binding commitment
      pursuant to which a person has agreed to acquire an interest in, or make
      capital contributions to, the Subscriber upon the demand of the
      Subscriber; and

              


      

      


      
        	
                7)  

              	
                Cash
      and cash equivalents held for investment
  purposes.

              


      

      


      Real
Estate that is used by the owner or a Related Person (as defined below) of the
owner for personal purposes, or as a place of business, or in connection with
the conduct of the trade or business of such owner or a Related Person of the
owner, will NOT be considered Real Estate held for investment purposes, provided
that real estate owned by an Subscriber who is engaged primarily in the business
of investing, trading or developing real estate in connection with such business
may be deemed to be held for investment purposes. However, residential real
estate will not be deemed to be used for personal purposes if deductions with
respect to such real estate are not disallowed by section 280A of the Internal
Revenue Code of 1986, as amended.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      A
Commodity Interest or Physical Commodity owned, or a Financial Contract entered
into, by the Subscriber who is engaged primarily in the business of investing,
reinvesting, or trading in Commodity Shares, Physical Commodities or Financial
Contracts in connection with such business may be deemed to be held for
investment purposes.

      


      “Commodity
Shares” means commodity futures contracts, options on commodity futures
contracts, and options on physical commodities traded on or subject to the rules
of:

      


      
        	
                (i)  

              	
                Any
      contract market designated for trading such transactions under the
      Commodity Exchange Act and the rules thereunder;
  or

              


      

      


      
        	
                (ii)  

              	
                Any
      board of trade or exchange outside the United States, as contemplated in
      Part 30 of the rules under the Commodity Exchange
  Act.

              


      

      


      “Public
Company” means a company that:

      


      
        	
                (i)  

              	
                files
      reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934, as amended; or

              


      

      


      
        	
                (ii)  

              	
                has
      a class of securities that are listed on a Designated Offshore Securities
      Market, as defined by Regulation S of the Securities
  Act.

              


      

      


      “Financial
Contract” means any arrangement that:

      


      
        	
                (i)  

              	
                takes
      the form of an individually negotiated contract, agreement, or option to
      buy, sell, lend, swap, or repurchase, or other similar individually
      negotiated transaction commonly entered into by participants in the
      financial markets;

              


      

      


      
        	
                (ii)  

              	
                is
      in respect of securities, commodities, currencies, interest or other
      rates, other measures of value, or any other financial or economic
      interest similar in purpose or function to any of the foregoing;
      and

              


      

      


      
        	
                (iii)  

              	
                is
      entered into in response to a request from a counter party for a
      quotation, or is otherwise entered into and structured to accommodate the
      objectives of the counterparty to such
  arrangement.

              


      

      


      “Physical
Commodities” means any physical commodity with respect to which a Commodity
Interest is traded on a market specified in the definition of Commodity Shares
above.

      


      “Related
Person” means a person who is related to the Subscriber as a sibling, spouse or
former spouse, or is a direct lineal descendant or ancestor by birth or adoption
of the Subscriber, or is a spouse of such descendant or ancestor, provided that,
in the case of a Family Company, a Related Person includes any owner of the
Family Company and any person who is a Related Person of such an owner. “Family
Company” means a company that is owned directly or indirectly by or for two or
more natural persons who are related as siblings or spouse (including former
spouses), or direct lineal descendants by birth or adoption, spouses of such
persons, the estates of such persons, or foundations, charitable organizations
or trusts established for the benefit of such persons.

      


      For
purposes of determining the amount of investments owned by a company, there may
be included investments owned by majority-owned subsidiaries of the company and
investments owned by a company (“Parent Company”) of which the company is a
majority-owned subsidiary, or by a majority-owned subsidiary of the company and
other majority-owned subsidiaries of the Parent Company.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      In
determining whether a natural person is a qualified purchaser, there may be
included in the amount of such person’s investments any investment held jointly
with such person’s spouse, or investments in which such person shares with such
person’s spouse a community property or similar shared ownership interest. In
determining whether spouses who are making a joint investment in the Partnership
are qualified purchasers, there may be included in the amount of each spouse’s
investments any investments owned by the other spouse (whether or not such
investments are held jointly). There shall be deducted from the amount of any
such investments any amounts specified by paragraph 2(a) of Annex 2 incurred by
such spouse.

      


      In
determining whether a natural person is a qualified purchaser, there may be
included in the amount of such person’s investments any investments held in an
individual retirement account or similar account the investments of which are
directed by and held for the benefit of such person.

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Annex 2

      


       

      VALUATIONS
OF INVESTMENTS

       

      The
general rule for determining the value of investments in order to ascertain
whether a person is a qualified purchaser is that the value of the aggregate
amount of investments owned and invested on a discretionary basis by such person
shall be their fair market value on the most recent practicable date or their
cost. This general rule is subject to the following provisos:

      


      
        	
                1)  

              	
                In
      the case of Commodity Shares, the amount of investments shall be the value
      of the initial margin or option premium deposited in connection with such
      Commodity Shares; and

              


      

      


      
        	
                2)  

              	
                In
      each case, there shall be deducted from the amount of investments owned by
      such person the following amounts:

              


      

      


      
        	
                (i)  

              	
                The
      amount of any outstanding indebtedness incurred to acquire the investments
      owned by such person.

              


      

      


      
        	
                (ii)  

              	
                A
      Family Company, in addition to the amounts specified in paragraph (a)
      above, shall have deducted from the value of such Family Company’s
      investments any outstanding indebtedness incurred by an owner of the
      Family Company to acquire such
investments.

              


      

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      Exhibit
A

      


      NOTE

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      Exhibit
B

      


      WARRANT

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

         

         

      

      Exhibit
C

      


      ESCROW
AGREEMENT