Unassociated Document


     

    EXHIBIT 10.2


    FORM OF
SUBSCRIPTION AGREEMENT

    


    SPO
Medical Inc.

    3 Gavish
Street

    POB
2454

    Kfar Saba
Israel

    Attn:
Michael Braunold, Chief Executive Officer

    


    Ladies
and Gentlemen:

    


    1.           Subscription.  The
undersigned (the “Purchaser”), intending to be legally bound, hereby irrevocably
agrees to purchase from SPO Medical Inc., a Delaware corporation (the
“Company”), the number of Units (as defined below) of the Company set forth on
the signature page hereof at a purchase price of $30,000 per
Unit.  This subscription is submitted to you in accordance with and
subject to the terms and conditions described in this Subscription Agreement and
the Confidential Offering Memorandum, dated July 12, 2010, as may amended or
supplemented from time to time, including all attachments, schedules and
exhibits thereto (the “Memorandum,” and, together with this Subscription
Agreement, the “Offering Documents”) and relating to the offering (the
“Offering”) by the Company of up to 17 Units ($510,000) of the Company's
securities with the right at the sole discretion of the Company and the
Placement Agent to increase the maximum by an additional 17 Units
($510,000).  Each Unit (individually a "Unit" and collectively the
"Units") is being offered at a price of $30,000 per Unit and consists of (i)
200,000 shares of common stock, par value $0.01 per share (“Common Stock” or the
“Shares”) and (ii) three-year Common Stock Purchase Warrants (“Investor
Warrants”) to purchase up to 100,000 shares of Common Stock (the “Warrant
Shares”) at an exercise price of $0.25 per share.  We sometimes refer
to the Units, Shares, Warrant Shares and Investor Warrants collectively as the
“Securities.”  The Units are being offered on an exclusive basis
through Emerson Equity LLC (the “Placement Agent”) and its selected dealers, if
any, on a “reasonable efforts, no minimum” basis.  The minimum
subscription for a Purchaser in the Offering is one Unit ($30,000); provided, however, that Placement Agent
and the Company, in their sole discretion, may waive such minimum subscription
requirement from time to time.

     

    2.           Payment.  The
Purchaser encloses herewith a check payable to, or will immediately make a wire
transfer payment to “Signature Bank, Escrow Agent for SPO Medical
Inc.” in the full amount of the purchase price of the Units being subscribed
for.  Such funds will be held for the Purchaser's benefit, and will be
returned promptly, without interest or offset if this Subscription Agreement is
not accepted by the Company or the Offering is terminated pursuant to its terms
or by the Company or the Placement Agent.  Together with a check for,
or wire transfer of, the full purchase price, the Purchaser is delivering (i) a
completed and executed Signature Page to this Subscription Agreement and (ii) an
Accredited Investor Certification and Investor Profile, which is annexed
hereto.

    


    3.           Deposit of
Funds.  All payments made as provided in Section 2 hereof shall
be deposited by the Company or the Placement Agent as soon as practicable with
the Escrow Agent, in a non-interest-bearing escrow account (the “Escrow
Account”) until the earliest to occur of (a) the occurrence of a Closing (as
defined below), (b) the rejection of such subscription, or (c) the termination
of the Offering.  The Company and the Placement Agent may offer and
sell the Units and conduct closings (each, a “Closing”) during an offering
period commencing on the date of the Memorandum and continuing until September
7, 2010 (the “Initial Offering Period”), which period may be extended by the
Company and the Placement Agent, in their mutual discretion to a date no later
than November 9, 2010, unless terminated prior to such dates (the “Offering
Period”).


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    4.           Acceptance of
Subscription.  The Purchaser understands and agrees that the
Company and/or the Placement Agent, each in their sole discretion, reserve the
right to accept or reject this or any other subscription for Units, in whole or
in part, notwithstanding prior receipt by the Purchaser of notice of acceptance
of this or any other subscription.  The Company shall have no
obligation hereunder until the Company shall execute and deliver to the
Placement Agent (on behalf of the Purchaser) an executed copy of this
Subscription Agreement.  If this subscription is rejected in whole, or
the Offering is terminated, all funds received from the Purchaser will be
returned without interest, penalty, expense or deduction, and this Subscription
Agreement shall thereafter be of no further force or effect.  If this
subscription is rejected in part, the funds for the rejected portion of this
subscription will be returned without interest, penalty, expense or deduction,
and this Subscription Agreement will continue in full force and effect to the
extent this subscription was accepted.

    


    5.           Representations and Warranties of the
Purchaser.  The Purchaser hereby acknowledges, represents,
warrants, and agrees as follows:

    


    (a)           None
of the Units or the Securities offered pursuant to the Offering Documents are
registered under the Securities Act of 1933, as amended (the “Securities Act”),
or any state securities laws.  The Purchaser understands that the
offering and sale of the Units contemplated hereby is intended to be exempt from
registration under the Securities Act, by virtue of Section 4(2) thereof and the
provisions of Regulation D promulgated thereunder, based, in part, upon the
truth and accuracy of, and compliance with, representations, warranties and
agreements of the Purchaser contained in this Subscription
Agreement;

    


    (b)           The
Purchaser acknowledges that it and its attorney, accountant, purchaser
representative and/or tax advisor, if any (collectively, the “Advisors”), have
received the Offering Documents, either in hard copy or electronically, and all
other documents requested by the Purchaser and/or its Advisors, have carefully
reviewed them and understands the information contained therein, and the
Purchaser and the Advisors, if any, prior to the execution of this Subscription
Agreement, have had access to the same kind of information as would be available
in a registration statement filed by the Company under the Securities
Act.  Purchaser’s decision to enter into this Subscription Agreement
and the other Transaction Documents (as defined herein) has been made based
solely on the independent evaluation of the Purchaser and its Advisors, if
any;

    


    (c)           Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities
commission or other regulatory body has approved the Securities or passed upon
or endorsed the merits of the Offering or confirmed the accuracy or determined
the adequacy of the Offering Documents.  Any representation to the
contrary is a criminal offense.  The Offering Documents have not been
reviewed by any federal, state or other regulatory authority.  The
Securities are subject to restrictions on transferability and resale and may not
be transferred or resold except as permitted under the Securities Act, and the
applicable state securities laws, pursuant to registration or exemption
therefrom;

    


    (d)           All
documents, records, and books pertaining to the investment in the Securities
(including, without limitation, the Offering Documents) have been made
available, subject to certain confidentiality restrictions, for inspection by
the Purchaser and its Advisors, if any;


    
      
         


      

      
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    (e)           The
Purchaser and its Advisors, if any, have had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
the Company concerning the offering of the Units and the business, financial
condition, and results of operations of the Company, and all such questions have
been answered by representatives of the Company to the full satisfaction of the
Purchaser and its Advisors, if any, and the Purchaser and its Advisors have had
access, through the Memorandum and/or the EDGAR system, to true and complete
copies of the Company’s most recent Annual Report on Form 10-K for the 2009 year
(the “10-K”) and all other reports filed by the Company pursuant to the
Securities Exchange Act of 1934, as amended, since the filing of the 10-K and
prior to the date hereof and have reviewed such filings;

    


    (f)     
      In evaluating the suitability of an
investment in the Company, the Purchaser has not relied upon any representation
or other information (oral or written) other than as stated in the Offering
Documents or as contained in documents so furnished to the Purchaser or its
Advisors, if any, by the Company or the Placement Agent;

    


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

    


    (h)           The
Purchaser has taken no action which would give rise to any claim by any person
for brokerage commissions, finder’ fees or the like relating to this
Subscription Agreement or the transactions contemplated hereby (other than
commissions and other compensation to be paid by the Company to the Placement
Agent or as otherwise described in the Offering Documents);

    


    (i)    
       The Purchaser's decision to enter into
this Subscription Agreement has been made based solely on the independent
evaluation of the Purchaser and its own Advisors, if any, and the Purchaser,
either alone or together with its Advisors, if any, has such knowledge and
experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the information made
available to it in connection with the Offering to evaluate the merits and risks
of an investment in the Units and the Company and to make an informed investment
decision with respect thereto;

    


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

    


    (k)           The Purchaser is neither a registered
representative under the Financial Industry Regulatory Authority (“FINRA”), a
member of FINRA or associated or affiliated with any member of FINRA, nor a
broker-dealer registered with the SEC under the Exchange Act or engaged in a
business that would require it to be so registered, nor is it an affiliate of a
such a broker-dealer or any person engaged in a business that would require it
to be registered as a broker-dealer. In the event such Purchaser is a member of
FINRA, or associated or affiliated with a member of FINRA, such Purchaser
agrees, if requested by FINRA, to sign a lock-up, the form of which shall be
satisfactory to FINRA with respect to the Securities.  Furthermore,
the Purchaser is not an underwriter of the Securities, nor is it an affiliate of
an underwriter of the Securities.


    
      
         


      

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

    


    (m)          The
purchase of the Units represents a high risk capital investment and the
Purchaser is able to afford an investment in a speculative venture having the
risks and objectives of the Company.  The Purchaser must bear the
substantial economic risks of the investment in the Units indefinitely because
none of the Units or the Securities may be sold, hypothecated or otherwise
disposed of unless subsequently registered under the Securities Act and
applicable state securities laws or an exemption from such registration is
available.  Legends shall be placed on the Units and the Securities to
the effect that they have not been registered under the Securities Act or
applicable state securities laws and appropriate notations thereof will be made
in the Company's books.  Stop transfer instructions will be placed
with the transfer agent of the Securities, if any, or with the
Company.  There can be no assurance that there will be any market for
resale of the Units or the Securities.  The Company has agreed that
purchasers of the Units will have, with respect to the Shares and the Warrant
Shares, the registration rights described herein;

    


    (n)           The
Purchaser has adequate means of providing for such Purchaser's current financial
needs and foreseeable contingencies and has no need for liquidity of its
investment in the Securities for an indefinite period of time;

    


    (o)           The
Purchaser is aware that an investment in the Units involves a number of very
significant risks and has carefully read and considered the matters set forth
under the caption “Risk Factors” in the Offering Documents, and, in particular,
acknowledges that the Company's independent registered public accounting firm
has included an explanatory paragraph in its opinion on the Company’s financial
statements for the fiscal years ended December 31, 2009, expressing doubt as to
the Company's ability to continue as a going concern;

    


    (p)           The
Purchaser meets the requirements of at least one of the suitability standards
for an “accredited investor” as that term is defined in Regulation D under the
Securities Act, and has truthfully and accurately completed the Accredited
Investor Certification and Investor Profile attached hereto;

    


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


    
      
         


      

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

    


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

    


    (t)           The
Purchaser has significant prior investment experience, including investments in
high risk securities.  The Purchaser is knowledgeable about
investments in small and thinly capitalized, companies.  The Purchaser
has a sufficient net worth to sustain a loss of its entire investment in the
Company in the event such a loss should occur.  The Purchaser's
overall commitment to investments which are not readily marketable is not
excessive in view of the Purchaser’s net worth and financial circumstances and
the purchase of the Units will not cause such commitment to become
excessive.  The investment is a suitable one for the
Purchaser;

    


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

    


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

    


    (w)          No
oral or written representations have been made, or oral or written information
furnished, to the Purchaser or its Advisors, if any, in connection with the
Offering which are in any way inconsistent with the information contained in the
Offering Documents;

    


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


    
      
         


      

      
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    (y)           The
Purchaser’s substantive relationship with the Company, the Placement Agent or
subagent through which the Purchaser is subscribing for Units predates the
Company’s, Placement Agent’s or such subagent's contact with the Purchaser
regarding an investment in the Units;

    


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

    


    (aa)         The
Purchaser understands that affiliates and/or employees of the Placement Agent
(i) will receive the compensation set forth elsewhere in the Offering Documents
in connection with the Offering and (ii) may, but are not obligated to, purchase
Units in the Offering and all such Units purchased shall be counted toward the
aggregate amount of the Offering.

    


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

    


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

     

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

    


    
      
         


      

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

    


    (ee) To the best of the Purchaser’s
knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled
by the Purchaser; (3) if the Purchaser is a privately-held entity, any person
having a beneficial interest in the Purchaser; or (4) any person for whom the
Purchaser is acting as agent or nominee in connection with this investment is a
senior foreign political figure2, or
any immediate family3
member or
close associate4 of a
senior foreign political figure, as such terms are defined in the footnotes
below; and

    


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

    


    6.           Representations, Warranties and
Covenants of the Company.  The Company hereby represents,
warrants, acknowledges and agrees as follows:

    


    (a)         Organization, Good Standing
and Qualification.  (a)  The Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority to own,
lease, use and operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted.  The Company has no
subsidiaries, other than SPO Medical Equipment Ltd., a company incorporated
under the laws of the State of Israel.  The Company is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which its  ownership or use of property or the nature
of the business conducted by it makes such qualification necessary except where
the failure to be so qualified or in good standing would not have a material
adverse effect on (i) the assets, liabilities, results of operations, financial
condition or business, or prospects of the Company or (ii) the ability of the
Company to perform its obligations under the Transaction Documents (as defined
below) (a “Material Adverse Effect”).

     

    
      
        

      

    

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

    


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

    


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


    
      
         


      

      
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    (b)         Authorization;
Enforceability. The Company has all corporate power and authority to (i)
conduct its business as presently conducted and as proposed to be conducted (as
described in the Memorandum) (ii) enter into and perform its obligations under
this Subscription Agreement (the “Subscription Agreement”), the Investor
Warrants substantially in the form of Annex B to the Memorandum, and the other
agreements contemplated hereby (this Subscription Agreement, the Warrants, and
the other agreements contemplated hereby, are collectively referred to herein as
the “Transaction Documents”), (iii) issue, sell and deliver the Shares and
Investor Warrants and (iv) issue, sell and deliver the Warrant
Shares.  The execution and delivery of this Agreement and the other
Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby, have been duly
authorized by the Company's Board of Directors.  This Agreement has
been duly authorized, executed and delivered and constitutes, and each of the
other Transaction Documents, upon due execution and delivery, will constitute,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms (i) except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect related to laws affecting
creditors’ rights generally, including the effect of statutory and other laws
regarding fraudulent conveyances and preferential transfers, and except that no
representation is made herein regarding the enforceability of the Company’s
obligations to provide indemnification and contribution remedies under the
securities laws and (ii) subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).

    


    7.           Registration
Rights.  Purchaser shall have the registration rights described
below.

    


    (a)        
Definitions.  As
used in the Subscription Agreement, the following terms shall have the following
meanings.

    


    (1)           The
term “Holder” shall mean any holder of Registrable Securities.

    


    (2)           The
terms “register”, “registered” and “registration” refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or order of
effectiveness of such registration statement or document.

    


    (3)           The
term “Registrable Securities” shall mean (i) the Shares, (ii) the Warrant
Shares  and (iii) any shares of Common Stock issuable (or issuable
upon the conversion or exercise of any warrant, right or other security that is
issued) pursuant to a dividend or other distribution with respect to or in
replacement of any such Securities; provided, however, that securities shall
only be treated as Registrable Securities if and only for so long as they (A)
have not been disposed of pursuant to a registration statement declared
effective by the SEC; (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale; (C) are held by a Holder or a
permitted transferee of a Holder pursuant to Section 7(j) and (D) may not be
disposed of under Rule 144 under the Securities Act without
restriction.


    
      
         


      

      
        A-8

        
          

        

      

      
         


      

    

    


    (4)           The
term “Trading Event” means the first date on which the Company’s common stock
trades on a national securities exchange or the Over the Counter Bulletin
Board.

    


    (b)         Piggyback
Registration.

    


    (1)           The
Company agrees that if, at any time, and from time to time, after the date
hereof  the Board of Directors of the Company (the “Board”) shall
authorize the filing of a registration statement under the Securities Act (other
than a registration statement on Form S-8, Form S-4 or any other form that does
not include substantially the same information as would be required in a form
for the general registration of securities) in connection with the proposed
offer of any of its securities by it or any of its stockholders, the Company
shall: (A) promptly notify each Holder that such registration statement will be
filed and that the Registrable Securities then held by such Holder will be
included in such registration statement at such Holder’s request; (B) cause such
registration statement to cover all of such Registrable Securities issued to
such Holder for which such Holder requests inclusion; (C) use reasonable best
efforts to cause such registration statement to become effective as soon as
practicable; and (D) take all other reasonable action necessary under any
Federal law or regulation of any governmental authority to permit all such
Registrable Securities that have been issued to such Holder to be sold or
otherwise disposed of, and maintain such compliance with each such Federal and
regulation of any governmental authority for the period necessary for such
Holder to promptly effect the proposed sale or other disposition.

    


    (2)           Notwithstanding
any other provision of this Section 7(b), the Company may at any time, abandon
or delay any registration commenced by the Company.  In the event of
such an abandonment by the Company, the Company shall not be required to
continue registration of shares requested by the Holder for inclusion, the
Holder shall retain the right to request inclusion of shares as set forth above
and the withdrawn registration shall not be deemed to be a registration request
for the purposes of Section 7(b)(3) below.

    


    (3)           Each
Holder shall have the right to request inclusion of any of its Registrable
Securities in a registration statement as described in this Section 7(b) up to
two times.

    


    (4)           Notwithstanding the registration
obligations set forth in this Section 7, if at any time the SEC takes the
position that the offering of some or all of the Registrable Securities in a
Registration Statement is not eligible to be made on a delayed or continuous
basis under the provisions of Rule 415 under the Securities Act, the Company
shall use its commercially reasonable efforts (which shall include assistance
from Placement Agent’s counsel) to advocate with the SEC that the offering
contemplated by the Registration Statement is a valid secondary offering and not
an offering “by or on behalf of the issuer” as defined in Rule
415.  In the event that, despite the Company’s commercially reasonable
efforts and compliance with the terms of this Section 7(b), the SEC refuses
to alter its position, the Company shall (i) remove from the Registration
Statement such portion of the Registrable Securities and other securities
(“Other
Registrable Securities”)
that were included in the initial Registration Statement
filing  (“Cut-back
Shares”) and/or
(ii) agree to such restrictions and limitations on the registration and
resale of the Registrable Securities as the SEC may require to assure the
Company’s compliance with the requirements of Rule 415 (collectively, the “SEC
Restrictions”).  Any cut-back imposed on
the Holders pursuant to this Section 7(b)(4) shall be allocated among the
Holders and the holders of Other Registrable Securities on a pro rata
basis.  Any exclusion of Registrable Securities shall be made pro rata
among the Holders in proportion to the number of Registrable Securities held by
the Holders, with the Warrant Shares excluded first.  From and after
the date the Company is able to effect the registration of such Cut-back Shares
in accordance with any SEC Restrictions, all of the provisions of this
Section 7 shall again be applicable to such Cut Back
Shares.


    
      
         


      

      
        A-9

        
          

        

      

      
         


      

    

    


    (c)         Registration
Procedures. Whenever required under this Section 7 to include Registrable
Securities in a Company registration statement, the Company shall, as
expeditiously as reasonably possible:

    


    (1)           Use
reasonable efforts to (i) cause such registration statement to become effective,
and (ii) cause such registration statement to remain effective until the
earliest to occur of (A) such date as the Holders selling Registrable Securities
have completed the distribution described in the registration statement and (B)
such time that all of such Registrable Securities are no longer, by reason of
Rule 144 under the Act, required to be registered for the sale thereof by such
Holders.  The Company will also use its reasonable efforts to, during
the period that such registration statement is required to be maintained
hereunder, file such post-effective amendments and supplements thereto as may be
required by the Securities Act and the rules and regulations thereunder or
otherwise to ensure that the registration statement does not contain any untrue
statement of material fact or omit to state a fact required to be stated therein
or necessary to make the statements contained therein, in light of the
circumstances under which they are made, not misleading; provided, however, that
if applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permits, in lieu of filing a post-effective amendment
that (i) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (ii) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the Company
may incorporate by reference information required to be included in (i) and (ii)
above to the extent such information is contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act in the registration
statement. In the event that the Company becomes qualified for the use of Form
S-3 or any successor form at a time when any registration statement on any other
Form which includes Registrable Securities is required to be maintained
hereunder, the Company shall, upon the request of any selling Holder, subject to
Section 7(d), (i) as expeditiously as reasonably possible, use reasonable
efforts to cause a Short-Form Registration covering such Registrable Securities
to become effective and (ii) comply with each of the other requirements of this
Section 7(c) which may applicable thereto. Upon the effectiveness of such
Short-Form Registration, the Company shall be relieved of its obligations
hereunder to keep in effect the registration statement which initially covered
the Registrable Securities included in such Short-Form
Registration.

    


    (2)          Prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.

    


    (3)           Make
available for inspection upon reasonable notice during the Company’s regular
business hours by each selling Holder, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such selling Holder or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such selling Holder, underwriter,
attorney, accountant or agent in connection with such registration statement,
subject to the execution of appropriate confidentiality agreements.

    


    (4)           Furnish
to the selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus as amended or supplemented from time to time, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.


    
      
         


      

      
        A-10

        
          

        

      

      
         


      

    

    


    (5)           Use
reasonable efforts to register and qualify the securities covered by such
registration statement under such other federal or state securities laws of such
jurisdictions as shall be reasonably requested by the selling Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.

    


    (6)           In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering.  Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.

    


    (7)           Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, (i) when the registration statement or any post-effective
amendment and supplement thereto has become effective; (ii) of the issuance by
the SEC of any stop order or the initiation of proceedings for that purpose (in
which event the Company shall make every effort to obtain the withdrawal of any
order suspending effectiveness of the registration statement at the earliest
possible time or prevent the entry thereof); (iii) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iv) of the happening of any event as a result
of which the prospectus included 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 the light of the circumstances then existing (and each
Holder agrees to suspend any trading under the Registration Statement until such
condition is abated).

    


    (8)           Cause
all such Registrable Securities registered hereunder to be listed on each
securities exchange or quotation service on which similar securities issued by
the Company are then listed or quoted or, if no such similar securities are
listed or quoted on a securities exchange or quotation service, apply for
qualification and use best efforts to qualify such Registrable Securities for
inclusion on a national securities exchange or the OTCBB.

    


    (9)           Provide
a transfer agent and registrar for all Registrable Securities registered
pursuant hereunder and CUSIP number for all such Registrable Securities, in each
case not later than the effective date of such registration.

    


    (10)         Cooperate
with the selling Holders and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the Registrable
Securities to be sold, which certificates will not bear any restrictive legends;
and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, shall request at
least two business days prior to any sale of the Registrable Securities to the
underwriters.

    


    (d)         Furnish Information.
 It shall be a condition precedent to the obligation of the Company to take
any action pursuant to this Section 7 with respect to the Registrable Securities
of any Holder that such Holder shall furnish to the Company such information
regarding the Holder, the Registrable Securities held by the Holder, and the
intended method of disposition of such securities as shall be reasonably
required by the Company to effect the registration of such Holder's Registrable
Securities.

    


    (e)         Registration
Expenses.  The Company shall bear and pay all Registration
Expenses incurred in connection with any registration, filing or qualification
of Registrable Securities, and shall pay the fees and expenses of one counsel to
the Holders to be designated by the Placement Agent (not to exceed $3,000) with
respect to reviewing the registration statement relating to such registrations
pursuant to Section 7 for each Holder, but excluding underwriting discounts and
commissions relating to Registrable Securities and excluding any professional
fees or costs of accounting, financial or legal advisors  to any of
the Holders (except as provided above).


    
      
         


      

      
        A-11

        
          

        

      

      
         


      

    

    


    (f)          Underwriting
Requirements.  In connection with any offering involving an
underwriting of shares of the Company's capital stock, the Company shall not be
required under Section 7(b) to include any of the Holders' Registrable
Securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company.  If the total
amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling Holders
according to the total amount of securities entitled to be included therein
owned by each selling Holder or in such other proportions as shall mutually be
agreed to by such selling Holders).  For purposes of the preceding
parenthetical concerning apportionment, for any selling Holder who is a holder
of Registrable Securities and is a partnership or corporation, the partners,
retired partners and stockholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single “selling Holder”,
and any pro-rata reduction with respect to such “selling Holder” shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such “selling Holder”, as defined in this
sentence.

    


    (g)         Delay of
Registration.  No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 7.

    


    (h)         Indemnification.  In
the event that any Registrable Securities are included in a registration
statement under this Section 7:

    


    (1)           To
the extent permitted by law, the Company will indemnify and hold harmless each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
“Violation”):  (i) any untrue statement or alleged untrue statement of
a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) 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, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, or any rule or regulation
promulgated under the Securities Act, or the Exchange Act, and the Company will
pay to each such Holder, underwriter or controlling person, as incurred, 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 indemnity agreement contained in this Section
7(h)(1) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person or a violation of any provision of the
Subscription Agreement by a Holder.


    
      
         


      

      
        A-12

        
          

        

      

      
         


      

    

    


    (2)           To
the extent permitted by law, each Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, or the Exchange Act,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration or a violation of any provision of the
Subscription Agreement by a Holder; and each such Holder will pay, as incurred,
any legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 7(h)(2), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 7(h)(2) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that, in no
event shall any indemnity under this Section 7(h)(2) exceed the greater of the
cash value of the (i) gross proceeds from the offering received by such Holder
or (ii) such Holder’s investment pursuant to this Subscription Agreement as set
forth on the signature page attached hereto.

    


    (3)           Promptly
after receipt by an indemnified party under this Section 7(h) of notice of the
commencement of any action (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 7(h), deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel selected by the indemnifying party and approved
by the indemnified party (whose approval shall not be unreasonably withheld);
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding.  The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7(h), but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7(h).

    


    (4)           If
the indemnification provided for in this Section 7 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations.  The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the alleged omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.


    
      
         


      

      
        A-13

        
          

        

      

      
         


      

    

    


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

    


    (6)           The
obligations of the Company and Holders under this Section 7(h) shall survive the
completion of any offering of Registrable Securities in a registration statement
under this Section 7, and otherwise.

    


    (i)          Reports Under Securities
Exchange Act of 1934.  With a view to making available to the
Holders the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:

    


    (1)           make
and keep public information available, as those terms are understood and defined
in Rule 144, at all times while the Registrable Securities are
outstanding;

    


    (2)           file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and

    


    (3)           furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request such other information as may be reasonably requested in availing
any Holder of any rule or regulation of the SEC which permits the selling of any
such securities without registration or pursuant to such form.

    


    (j)          Permitted
Transferees.  The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this Section
7 may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities if: (a) such Holder gives prior
written notice to the Company; (b) such transferee agrees to comply with the
terms and provisions of the Subscription Agreement; (c) such transfer is
otherwise in compliance with the Subscription Agreement, (d) such transfer
is otherwise effected in accordance with applicable securities laws and (e) such
Holder transfers at least 51% of its shares of Registrable Securities to the
transferee.  Except as specifically permitted by this Section 7(j),
the rights of a Holder with respect to Registrable Securities as set out herein
shall not be transferable to any other person, and any attempted transfer shall
cause all rights of such Holder therein to be forfeited.

    


    (k)         Termination of Registration
Rights  The right of any Holder to request inclusion in any
registration pursuant to Section 7 shall terminate if all shares of Registrable
Securities held by such Holder may immediately be sold under Rule 144 without
restriction.

    


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


    
      
         


      

      
        A-14

        
          

        

      

      
         


      

    

    


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

    


    10.         Modification.  Any
of the terms or provisions of this Subscription Agreement shall not be modified
or waived except by an instrument in writing signed by the party against whom
any such modification or waiver is sought.

     

    11.         Immaterial Modifications to the Transaction
Documents.  The Company may, at any time prior to the First
Closing, amend the Transaction Documents if necessary to clarify any provision
therein, without first providing notice or obtaining prior consent of the
Purchaser, if, and only if, such modification is not material in any
respect.

     

    12.         Notices.  Any notice
or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or
delivered against receipt to the party to whom it is to be given (a) if to the
Company, at the address set forth above, or (b) if to the Purchaser, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 12).  Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof.

    


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

    


    14.         Applicable
Law.  This Subscription Agreement shall be governed by and
construed under the laws of the State of New York as applied to agreements among
New York residents entered into and to be performed entirely within New
York.  Each of the parties hereto (1) agree that any legal suit,
action or proceeding arising out of or relating to this Subscription Agreement
shall be instituted exclusively in the state or federal courts located in New
York County, New York, (2) waive any objection which they may have now or
hereafter to the venue of any such suit, action or proceeding, and
(3) irrevocably consent to the jurisdiction of such courts in any such
suit, action or proceeding.  Each of the parties hereto further agrees
to accept and acknowledge service of any and all process which may be served in
any such suit, action or proceeding in such courts and agree that service of
process upon it mailed by certified mail to its address shall be deemed in every
respect effective service of process upon it, in any such suit, action or
proceeding.  THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY.

    


    15.         Blue Sky
Qualification.  The purchase of Units under this Subscription
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Units from applicable federal and state securities
laws.  The Company shall not be required to qualify this transaction
under the securities laws of any jurisdiction and, should qualification be
necessary, the Company shall be released from any and all obligations to
maintain its offer, and may rescind any sale contracted, in the
jurisdiction.


    
      
         


      

      
        A-15

        
          

        

      

      
         


      

    

    


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

    


    17.         Confidentiality.  The
Purchaser acknowledges and agrees that any information or data the Purchaser has
acquired from or about the Company, not otherwise properly in the public domain,
was received in confidence (the “Confidential Information”).  Any
distribution of the Confidential Information to any person other than the
Purchaser named above, in whole or in part, or the reproduction of the
Confidential Information, or the divulgence of any of its contents (other than
to the Purchaser’s tax and financial advisers, attorneys and accountants, who
will likewise be required to maintain the confidentiality of the Confidential
Information) is unauthorized, except that any Purchaser (and each employee,
representative, or other agent of such Purchaser) may disclose to any and all
persons, without limitations of any kind (except as provided in the next
sentence) the tax treatment and tax structure of the transaction and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Purchaser relating to such tax treatment and tax
structure.  Any such disclosure of the tax treatment, tax structure
and other tax-related materials shall not be made for the purpose of offering to
sell the Units offered hereby or soliciting an offer to purchase any such
securities.  Except as provided above with respect to tax matters, the
above named Purchaser agrees not to divulge, communicate or disclose, except as
may be required by law or for the performance of this Subscription Agreement, or
use to the detriment of the Company or for the benefit of any other person or
persons, or misuse in any way, any Confidential Information of the Company,
including any scientific, technical, trade or business secrets of the Company
and any scientific, technical, trade or business materials that are treated by
the Company as confidential or proprietary, including, but not limited to,
ideas, discoveries, inventions, developments and improvements belonging to the
Company and confidential information obtained by or given to the Company about
or belonging to third parties.

    


    18.         Most Favored Nations
Adjustment.  For a period commencing on the initial Closing and
terminating on the one year anniversary of the initial Closing (the “Adjustment
Period”), in the event the Company issues or grants any shares of Common Stock
or any warrants or other securities convertible, exchangeable or exercisable for
shares of Common Stock (hereinafter “Common Stock Equivalents”) pursuant to
which shares of Common Stock may be acquired at a price less than $0.15 per
share (other than Exempt Issuances (as described below)), then the Company shall
promptly issue additional shares of Common Stock to the Purchaser in an amount
sufficient that the subscription price paid hereunder, when divided by the total
number of shares issued and then held by such Purchaser (shares included in the
purchased Unit plus the additional shares issued under this provision), will
result in an actual price per share of Common Stock equal to such lower price
(this is intended to be a “full ratchet” adjustment). For example, if a
Purchaser purchases 1 Unit in the Offering (aggregating 200,000 shares of Common
Stock, excluding shares of Common Stock underlying Warrants) for a purchase
price of $30,000 (equals $0.15 per share of Common Stock) and then the Company
issues additional shares of Common Stock at $0.10 per share during the
Adjustment Period, the Company will provide notice to the Purchaser and to the
extent the Purchaser still owns such securities, promptly issue an additional
100,000 shares of Common Stock to the Purchaser.  Such adjustments
shall be made successively whenever such an issuance is made during the
Adjustment Period and shall be made with respect to shares of Common Stock still
owned by the Purchaser.  This clause shall not apply to an “Exempt
Issuance” which for purposes hereof shall mean (i) the issuance of any Common
Stock or Common Stock Equivalents to employees, officers or directors of, or
consultants or advisors or any other service providers to the Company or any
subsidiary; (ii) Common Stock or Common Stock Equivalents issued or issuable
pursuant to any rights or agreements, options, warrants or convertible
securities outstanding as of the initial closing of the Offering (so long as the
conversion or exercise price of such securities is not lowered to a price below
$0.15 other than in connection with any stock dividend, stock split or similar
transaction, and so long as the number of shares of Common Stock underlying such
securities is not otherwise increased other than in connection with any stock
dividend, stock split or similar transaction); (iii) Common Stock or Common
Stock Equivalents issued or issuable for consideration other than cash pursuant
to a merger, consolidation, strategic alliance, acquisition or similar business
combination; (iv) Common Stock or Common Stock Equivalents issued in connection
with bona fide strategic or OEM license agreements or other partnering
arrangements with a third party (whether or not affiliated with the Company as
of the date hereof)  so long as such issuances are not for the sole purpose
of raising capital; (v) Common Stock or Common Stock Equivalents issued in
settlement or extension of or otherwise in connection with any outstanding debt
of the Company existing as of the initial closing of the Offering; (vi) Common
Stock or Common Stock Equivalents issued or issuable in connection with any
stock split, stock dividend, distribution or recapitalization by the Company;
(vii) Common Stock or Common Stock Equivalents issued or issuable pursuant to
any equipment loan or leasing arrangement, real property leasing arrangement, or
debt financing from a bank or similar financial or lending institution and
(viii) Common Stock or Common Stock Equivalents issued or issuable to
Purchasers, the Placement Agent or any of their respective affiliates in
connection with the Offering


    
      
         


      

      
        A-16

        
          

        

      

      
         


      

    

    


    19.         Miscellaneous.

    


    (a)           The
Offering Documents, together with the Transaction Documents, constitute the
entire agreement between the Purchaser and the Company with respect to the
subject matter hereof and supersede all prior oral or written agreements and
understandings, if any, relating to the subject matter hereof.

    


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

    


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

    


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

    


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

    


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

    


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

    


    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]


    
      
         


      

      
        A-17

        
          

        

      

      
         


      

    


     SPO
MEDICAL INC.

    SIGNATURE
PAGE TO THE

    SUBSCRIPTION
AGREEMENT

     

    Subscriber
hereby elects to subscribe under the Subscription Agreement for a total of
______ Units at a price of $30,000 Per Unit (NOTE: to be completed by
subscriber) and executes the Subscription Agreement.

     

    
      Date
(NOTE: To be completed by subscriber): ___________________________,
2010


    

    
      
        
          
            
              	 
	
                      If
      the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as
      TENANTS IN COMMON, or as COMMUNITY
PROPERTY:

                    


            

          

        

      

    

    


    
      
        	 
      	 
      	 
      	 
      	 
      
	 
      	
                Print
      Name(s)

              	 
      	
                Social
      Security Number(s)

              	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                Signature(s)
      of Subscriber(s)

              	 
      	
                Signature

              	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                Date

              	 
      	
                Address

              	 
      


      

    

    


    If the
Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:

    


    
      
        	 
      	 
      	 
      	 
      	 
      
	 
      	
                Name
      of Partnership,

              	 
      	
                Federal
      Taxpayer

              	 
      
	 
      	
                Corporation,
      Limited

              	 
      	
                Identification
      Number

              	 
      
	 
      	
                Liability
      Company or Trust

              	 
      	 
      	 
      


      

    

    


    
      
        	 
      	
                By:

              	 
      	 
      	 
      	 
      
	 
      	 
      	
                Name:

              	 
      	
                State
      of Organization

              	 
      
	 
      	 
      	
                Title:

              	 
      	 
      	 
      


      

    

    


    
      
        	 
      	 
      	 
      	 
      	 
      
	 
      	
                Date

              	 
      	
                Address

              	 
      


      

    

    


    
      
        	
                SPO
      MEDICAL INC.

              	 
      	
                EMERSON
      EQUITY LLC

              
	 
      	 
      	 
      
	
                By:

              	 
      	 
      	
                By:

              	 
      
	 
      	
                Authorized
      Officer

              	 
      	 
      	
                Authorized
      Officer

              


      

    


    
      
         


      

      
        A-18

        
          

        

      

      
         


      

    


    SPO
MEDICAL, INC.

    ACCREDITED
INVESTOR CERTIFICATION

    


    For
Individual Investors Only

    (all
Individual Investors must INITIAL where
appropriate):

    


    
      	
              Initial
      _______

            	
              I
      have a net worth (including the value of my primary residence, furnishings
      and automobiles) of at least $1 million either individually or through
      aggregating my individual holdings and those in which I have a joint,
      community property or other similar shared ownership interest with my
      spouse.

            


    

    


    
      	
              Initial
      _______

            	
              I
      initialed the above net worth category and confirm that I have a net worth
      (including furnishings and automobiles but excluding the
      value of my primary residence) of at least $1 million either individually
      or through aggregating my individual holdings and those in which I have a
      joint, community property or other similar shared ownership interest with
      my spouse.5

            


    

    


    
      	
              Initial
      _______

            	
              I
      have had an annual gross income for the past two years of at least
      $200,000 (or $300,000 jointly with my spouse) and expect my income (or
      joint income, as appropriate) to reach the same level in the current
      year.

            


    

    


    
      	
              Initial
      _______

            	
              I
      am a director or executive officer of SPO Medical,
  Inc.

            


    

    


    
      For
Non-Individual Investors

    

    
      (all
Non-Individual Investors must INITIAL where
appropriate):

    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a partnership, corporation, limited
      liability company or business trust that is 100% owned by persons who meet
      at least one of the criteria for Individual Investors set forth
      above.

            


    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a partnership, corporation, limited
      liability company or any organization described in Section 501(c)(3)
      of the Internal Revenue Code, Massachusetts or similar business trust that
      has total assets of at least $5 million and was not formed for the purpose
      of investing the Company.

            


    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an employee benefit plan within the meaning
      of the Employee Retirement Income Security Act of 1974, whose investment
      decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is
      a bank, savings and loan association, insurance company or registered
      investment adviser.

            


    

     

    
      

    

    
      	
              5

            	
              Based
      on language contained in the proposed Financial Regulatory Reform Bill
      (“FinReg Bill”), which may be enacted into law during the Offering Period,
      the net worth standard would remain at $1,000,000 but such threshold would
      exclude
      the value of a person’s primary residence.  In the event the
      FinReg Bill is enacted into law and becomes effective during the Offering
      Period, you are required to satisfy this revised net worth standard in the
      event you do not qualify as an accredited investor under another
      category.

            


    


    
      
         


      

      
        A-19

        
          

        

      

      
         


      

    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an employee benefit plan whose total assets
      exceed $5,000,000 as of the date of this
  Agreement.

            


    

    


    
      	
              Initial
      _______

            	
              The
      undersigned certifies that it is a self-directed employee benefit plan
      whose investment decisions are made solely by persons who meet either of
      the criteria for Individual
Investors.

            


    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a U.S. bank, U.S. savings and loan
      association or other similar U.S. institution acting in its individual or
      fiduciary capacity.

            


    

    


    
      	
              Initial
      _______

            	
              The
      undersigned certifies that it is a broker-dealer registered pursuant to
      §15 of the Securities Exchange Act of
1934.

            


    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an organization described in §501(c)(3) of
      the Internal Revenue Code with total assets exceeding $5,000,000 and not
      formed for the specific purpose of investing in the
    Company.

            


    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a trust with total assets of at least
      $5,000,000, not formed for the specific purpose of investing in the
      Company, and whose purchase is directed by a person with such knowledge
      and experience in financial and business matters that he is capable of
      evaluating the merits and risks of the prospective
    investment.

            


    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a plan established and maintained by a state
      or its political subdivisions, or any agency or instrumentality thereof,
      for the benefit of its employees, and which has total assets in excess of
      $5,000,000.

            


    

    


    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an insurance company as defined in §2(13) of
      the Securities Act, or a registered investment
  company.

            


    

    


    
      	
              Initial
      _______

            	
              An
      investment company registered under the Investment Company Act of 1940 or
      a business development company as defined in Section 2(a)(48) of that
      Act.

            


    

    


    
      	
              Initial
      _______

            	
              A
      Small Business Investment Company licensed by the U.S.  Small
      Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958.

            


    

    


    
      	
              Initial
      _______

            	
              A
      private business development company as defined in Section 202(a)(22)
      of the Investment Advisers Act of
1940

            


    

     

    
      
         


      

      
        A-20

        
          

        

      

      
         


      

    


    SPO
MEDICAL, INC.

    Investor
Profile

    (Must be completed by
Investor)

    


    Section A - Personal
Investor Information (Individual Investors)

    


    Investor
Name(s):
_________________________________________________________________________

     

    Individual(s)
executing: ________________________________________________________

     

    Social
Security Numbers / Federal I.D. Number:
_________________________________________________

     

    
      Date of
Birth:                       _________________            Marital
Status:  _______________________

      


      Joint
Party Date of
Birth:    _________________          
  Investment Experience (Years): __________

      


      Annual
Income:                   _________________             Liquid
Net Worth: ____________________

    

     

    Net Worth
(including value of primary residence): ________________

    


    Net Worth
(excluding value of primary residence): ________________

    


    Home
Street Address:
______________________________________________________________________

     

    Home
City, State & Zip Code:
_______________________________________________________________

     

    Home
Phone: ________________________ Home Fax: _____________________  Home
Email: _________

     

    Employer:
_______________________________________________________________________________

     

    Employer
Street Address:
___________________________________________________________________

     

    Employer
City, State & Zip Code:
____________________________________________________________

     

    Bus.
Phone: __________________________ Bus. Fax: __________________________ Bus.
Email: _______

     

    Type of
Business:
_________________________________________________________________________

     

    Emerson
Equity LLC Account Executive, if applicable:
________________________________________

    


    Section B - Investor
Information (Entity Investors)

    


    
      	
              If
      the investor is a corporation, partnership, limited liability company,
      trust, pension plan, foundation, joint Investor (other than a married
      couple) or other entity, an authorized officer, partner, or trustee must
      complete, date and sign this Certificate.

            
	 
      
	
              o Limited
      Partnership

            	
              o General
      Partnership

            
	 
      	 
      
	
              o Limited Liability
      Company

            	
              o Corporation

            
	 
      	 
      
	
              o Irrecoverable
      Trust:
      ________________________________________________________________

            
	 
      
	
              o Other form of
      organization:
      __________________________________________________________

            


    

     

    
      
         


      

      
        A-21

        
          

        

      

      
         


      

    

    


    Investor
Name(s):
_________________________________________________________________________

     

    Individual(s)
executing: ________________________________________________________

     

    Social
Security Numbers / Federal I.D. Number:
_________________________________________________

    


    Total
Assets:
_________________             Date
Entity Formed:____________________

    


    Street
Address:
_______________________________________________________________________________

     

    City,
State & Zip Code:
_________________________________________________________________________

     

    Bus.
Phone: __________________________ Bus. Fax: __________________________ Bus.
Email: ____________

     

    Type of
Business:
______________________________________________________________________________

     

    Emerson
Equity LLC Account Executive, if applicable:
___________________________________________________

    


    Section C – Certificate
Delivery Instructions

     

    ____
Please deliver certificate to the Employer Address listed in Section
A.

     

    ____
Please deliver certificate to the Home/Business Address listed in Sections A or
B, as applicable.

     

    ____
Please deliver certificate to the following address:
___________________________________________.

    


    Section D – Form of Payment
– Check or Wire Transfer

     

    ____
Check payable to Signature
Bank, As Agent for SPO Medical, Inc..

     

    ____ Wire
funds from my outside account according to the "How to subscribe for Shares"
Page.

     

    ____ Wire
funds from my Emerson Equity LLC account - See Following Page.

     

    
      ____ The
funds for this investment are rolled over, tax deferred from __________ within
the allowed 60 day window.

    

    


    Please
check if you are a FINRA member or affiliate of a FINRA member firm:
________

    


    
      
        	 
      	 
      	 
      
	
                Investor
      Signature

              	 
      	
                Date

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                Co-Investor
      Signature

              	 
      	
                Date

              


      

    

     

    
      
         


      

      
        A-22