EXHIBIT 4.2



                             SUBSCRIPTION AGREEMENT

--------------------------------------------------------------------------------


                              SUNPHARM CORPORATION

--------------------------------------------------------------------------------

                               UP TO 550,000 UNITS
                        (EACH CONSISTING OF ONE SHARE OF
                    COMMON STOCK AND ONE WARRANT TO PURCHASE
                           ONE SHARE OF COMMON STOCK)

--------------------------------------------------------------------------------


To:      SunPharm Corporation

         This Subscription Agreement (this "Agreement") is made between SunPharm
Corporation,  a  Delaware  corporation  (the  "Company"),  and  the  undersigned
prospective  purchaser who is subscribing  hereby for Units (the "Units"),  each
consisting  of one  share of the  Company's  Common  Stock  ("Common  Stock"  or
"Shares")  and a warrant to purchase  one share of the  Company's  Common  Stock
("Warrant").  The purchase price per Unit (the "Purchase  Price") is $5.50. This
subscription is submitted to you in accordance with and subject to the terms and
conditions described in this Subscription Agreement and the Confidential Private
Placement  Memorandum  dated May 15, 1996 (as it may be  supplemented or updated
from time to time, the "Memorandum"),  relating to the offering (the "Offering")
of up to 550,000 Units (which may be expanded by an additional  363,636 Units at
the discretion of the Company).

         In  consideration  of the  Company's  agreement  to sell  Units  to the
undersigned  upon the terms and  conditions  summarized in the  Memorandum,  the
undersigned agrees and represents as follows:

A.       SUBSCRIPTION.

         (1) The  undersigned  hereby  irrevocably  subscribes for and agrees to
purchase  the  number  of Units  indicated  on the  signature  page  hereto at a
purchase  price of $5.50 per Unit.  The  undersigned  encloses  herewith a check
payable to  "SunPharm  Corporation  Escrow  Account"  in the full  amount of the
purchase  price of the  Shares for which the  undersigned  is  subscribing  (the
"Payment").

         (2) The undersigned  understands that all payments by check as provided
in Paragraph (1) above shall be delivered to the Company and,  thereafter,  such
payment will be deposited as soon as practicable for the  undersigned's  benefit
in a non-interest  bearing escrow account  established at SunTrust.  The payment
(or, in the case of  rejection of a portion of the  undersigned's  subscription,
the part of the payment  relating  to such  rejected  portion)  will be returned
promptly,  without interest,  if the  undersigned's  subscription is rejected in
whole or in part. The Company expects to hold an


                                       -1-

<PAGE>



initial  closing  of the  Offering  (the  "Initial  Closing")  at any time after
subscriptions  for the  minimum  number of Units  identified  in the  Memorandum
hereby have been accepted and the other terms  specified  therein have been met,
before the final  closing (the "Final  Closing") on the final  closing date (the
"Final Closing Date").  The Company may hold additional  interim  closings after
the Initial Closing. Any such interim closings together with the Initial Closing
are each hereinafter  referred to as an "Interim Closing" and shall occur on one
or more dates each  hereinafter  referred to as an "Interim  Closing Date." Upon
receipt by the Company of the requisite payment for all Units to be purchased by
the  subscribers  whose  subscriptions  are accepted  (each, a "Purchaser"  and,
collectively, the "Purchasers") at the Interim Closing and at the Final Closing,
the Shares and Warrants included in the Units so purchased will be issued in the
name of each such  Purchaser,  and the name of such Purchaser will be registered
on the books of the Company as the record owner of such Shares and Warrants. The
Company  will  issue  to each  Purchaser  the  stock  certificates  and  warrant
certificates  representing  the Shares and  Warrants  purchased.  The Shares and
Warrants may not be transferred prior to the Final Closing.

         (3)  The  undersigned  hereby  acknowledges  receipt  of a copy  of the
Memorandum,  and hereby  agrees to be bound  thereby upon the (i)  execution and
delivery to the Company of the signature  page to this  Subscription  Agreement,
and (ii)  acceptance on the Initial Closing Date, an Interim Closing Date or the
Final  Closing  Date,  as the case may be, by the  Company of the  undersigned's
subscription (the "Subscription").

         (4) The  undersigned  agrees  that  the  Company  may,  in its sole and
absolute  discretion,  reduce the  undersigned's  subscription  to any amount of
Units that in the aggregate  does not exceed the amount of Units hereby  applied
for  without  any prior  notice to or further  consent by the  undersigned.  The
undersigned  hereby  irrevocably  constitutes  and appoints the Company and each
officer of the Company,  each of the foregoing acting singly,  in each case with
full power of substitution,  the true and lawful agent and  attorney-in-fact  of
the undersigned,  with full power and authority in the undersigned's name, place
and stead, to amend this Subscription Agreement and the Questionnaire, including
in each case the  undersigned's  signature  page  thereto,  to effect any of the
foregoing provisions of this Paragraph (4).

B.       REPRESENTATIONS AND WARRANTIES.

         The Company hereby represents and warrants as follows:

         (1)  Organization  and Good Standing The Company is a corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware. The Company has the requisite corporate power and authority to own and
operate its  properties  and assets and to carry on its  business  as  currently
conducted.  The Company is qualified to do business in the State of Florida. The
Company is not  qualified to do business as a foreign  corporation  in any other
jurisdiction and such  qualification  is not now required,  except to the extent
that the failure to so qualify would not have a material  adverse  effect on the
Company's business as currently conducted.


                                      -2-

<PAGE>

          (2) Corporate Power and  Authorization.  The Company has the corporate
power and authority to execute and deliver this Agreement, to issue and sell the
Shares and Warrants  hereunder,  to issue and deliver the Common Stock  issuable
upon exercise of the Warrants, and to perform its obligations under the terms of
this Agreement.  All corporate action on the part of the Company,  its directors
and  stockholders  necessary  for the  authorization,  execution,  delivery  and
performance  by the  Company  of this  Agreement  and the  authorization,  sale,
issuance and delivery of the Shares and Warrants (and the Common Stock  issuable
upon  exercise  of the  Warrants)  has been taken or will be taken  prior to the
Initial  Closing,  Interim  Closing or Final  Closing,  as the case may be. This
Agreement   constitutes  the  valid  and  binding  obligation  of  the  Company,
enforceable in accordance with its terms,  except as the enforceability  thereof
may be limited by bankruptcy,  insolvency or other laws relating to or affecting
creditors' rights generally and by general equitable principles. The Shares have
been duly  authorized and, when issued in compliance with the provisions of this
Agreement,  will be validly  issued,  fully paid and  nonassessable;  the Common
Stock  issuable  upon  exercise  of the  Warrants  has  been  duly  and  validly
authorized  and reserved for issuance and,  when issued in  compliance  with the
provisions of this  Agreement and the Warrants,  will be validly  issued,  fully
paid and  nonassessable;  and the Shares,  Warrants and such Common Stock,  when
issued and delivered,  will be free of any liens or encumbrances  created by the
Company;  provided,  however,  that the Shares and the Warrants  (and the Common
Stock issuable upon exercise thereof) may be subject to restrictions on transfer
under state or federal securities laws as set forth herein.

         (3)  Capitalization.  The  authorized  capital  stock  of  the  Company
consists of 27,500,000  shares,  divided into 25,000,000 shares of Common Stock,
par value $0.0001 per share  ("Common  Stock"),  of which  2,884,535  shares are
issued and  outstanding,  and  2,500,000  shares of Preferred  Stock,  par value
$0.001  per  share  ("Preferred  Stock"),  none  of  which  will  be  issued  or
outstanding  prior to the  Initial  Closing.  All of the  outstanding  shares of
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. The Company has reserved up to 275,000 shares of Common Stock for
issuance  upon  exercise of the Warrants  and up to  2,870,151  shares of Common
Stock for issuance upon exercise of outstanding  options and warrants other than
the Warrants.  Except for the  foregoing,  as of the Initial  Closing Date,  and
other than as described in the  Company's SEC Reports (as  hereinafter  defined)
and the Memorandum,  there are no options,  warrants or other rights outstanding
to purchase or acquire, or any securities  convertible into, nor has the Company
agreed to issue or  reissue,  other than  pursuant  to this  Agreement  (and the
corresponding  agreements  of other  subscribers  in the  offering),  any of the
Company's  authorized  and unissued  capital  stock.  Except as described in the
Company's SEC Reports,  there are no agreements or understandings that affect or
relate to the voting or giving of  written  consent  with  respect to any of the
Company's  outstanding  securities.  Except as  described in the  Company's  SEC
Reports,  there are no preemptive rights with respect to the issuance or sale of
the Company's capital stock and there are no restrictions on the transfer of the
Company's  capital  stock  other  than  those  arising  from  federal  and state
securities laws.

         (4) SEC Reports;  Financial Statements.  The Company has filed with the
Securities and Exchange  Commission (the  "Commission")  all forms,  reports and
documents required to be filed by it pursuant to the Securities  Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
by the Commission thereunder, all of which, when filed, complied in all material
respects with all  applicable  requirements  of the Exchange Act. The Memorandum

                                       -3-

<PAGE>



includes  true and complete  copies (not  including  exhibits) of its (i) Annual
Report on Form 10-KSB for the fiscal year ended  December 31, 1995 as filed with
the Commission, (ii) Quarterly Report on Form 10-QSB for the quarter ended March
31, 1996 as filed with the Commission,  and (iii) proxy  statements  relating to
all meetings of its stockholders  (whether annual or special) since December 31,
1995 and prior to the date hereof  (collectively,  the "Company's SEC Reports").
As of their  respective  dates,  the  Company's  SEC Reports (not  including any
exhibits and schedules thereto and documents  incorporated by reference therein)
did not contain  any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The audited  financial  statements and unaudited  interim financial
statements of the Company  included in the Company's SEC Reports or incorporated
by  reference  therein  were  prepared in  accordance  with  generally  accepted
accounting principles ("GAAP") (subject, in the case of such unaudited financial
statements,  to the absence of complete footnotes) applied on a consistent basis
(except as indicated  therein or in the notes thereto) and fairly present in all
material respects the financial position of the Company at the dates thereof and
the results of its operations and cash flows for the periods then ended (subject
in the case of the unaudited  interim financial  statements,  to normal year-end
audit adjustments).

         (5) Absence of Certain  Developments.  Since March 31, 1996,  there has
been no change in the assets,  liabilities,  condition (financial or otherwise),
operating  results,  business or prospects of the Company from that reflected in
the Company's  SEC Reports,  except  changes in the ordinary  course of business
that have not been, individually or in the aggregate,  materially adverse to the
assets,  properties,  condition  (financial or  otherwise),  operating  results,
business or prospects of the Company.  Since March 31, 1996, the Company has not
(i) directly or indirectly  declared or paid any dividend or ordered or made any
other distribution on account of any shares of any class of the capital stock of
the  Company,  (ii)  directly or  indirectly  redeemed,  purchased  or otherwise
acquired any such shares or agreed to do so or set aside any sum or property for
any such purpose,  (iii) made any capital  expenditures  exceeding $100,000,  or
(iv) incurred any indebtedness exceeding $100,000.

         (6) Compliance with Other Instruments.  The Company is not in violation
or default of any provision of its Certificate of Incorporation or By-Laws or of
any material mortgage, indenture, contract, agreement,  instrument,  judgment or
decree to which the Company is a party or by which it is bound.  The  execution,
delivery and  performance by the Company of this Agreement and the  consummation
of the transactions  contemplated  hereby will not result in any violation of or
conflict with the Company's  Certificate of Incorporation  or By-Laws,  and will
not result in any violation of or conflict  with, or constitute a default under,
any material mortgage, indenture, contract, agreement,  instrument,  judgment or
decree  to  which  the  Company  is a party  or by  which  it is bound or in the
creation of any material mortgage,  pledge, lien, encumbrance or charge upon any
of the properties or assets of the Company.

         (7) Registration  Rights.  Except as set forth in the Memorandum or the
Company's  SEC  Reports  and  this  Agreement,  the  Company  is not  under  any
contractual obligation to register under the Securities Act any of its currently
outstanding securities or any of its securities which may hereafter be issued.


                                      -4-

<PAGE>
          (8) Governmental Consent. No consent,  approval or authorization of or
registration,   qualification,  designation,  declaration  or  filing  with  any
governmental authority on the part of the Company is required in connection with
the valid execution, delivery and performance of this Agreement, the offer, sale
or issuance of the Shares and the Warrants (and the issuance of the Common Stock
issuable  upon  exercise  of the  Warrants),  or the  consummation  of any other
transaction  contemplated  hereby  except for  filings  that may be  required to
comply with applicable federal and state securities laws.

         (9)  Offering.  Subject to the accuracy of the  representations  of the
Purchasers in their respective Subscription  Agreements and Questionnaires,  the
offer,  sale and issuance of the Shares and the Warrants as contemplated by this
Agreement,  and the issuance of the Common  Stock to be issued upon  exercise of
the  Warrants,   will  constitute  transactions  exempt  from  the  registration
requirements of Section 5 of the Securities Act.

         (10)  Subsidiaries.  The  Company  has no  subsidiaries  and  does  not
otherwise own or control,  directly or  indirectly,  any equity  interest in any
corporation,  association,  partnership or business entity,  nor has the Company
made any commitment or subscribed for the purchase of any such equity interest.

         (11) Absence of Undisclosed Liabilities.  The Company does not have any
liability or obligation,  absolute or  contingent,  that is not reflected in the
financial  statements  included  in  the  Company's  SEC  Reports,   other  than
obligations and liabilities  which taken  individually or in the aggregate would
not  have a  material  adverse  effect  on the  Company's  assets,  liabilities,
condition (financial or otherwise), operating results, business or prospects.

         (12) Taxes.  The Company has filed all tax returns and reports required
by law to be filed, and has paid all taxes,  assessments and other  governmental
charges  that are due and payable,  except for those  matters  reasonably  being
contested  by the  Company  and those  matters  which,  individually  and in the
aggregate,  would not have a material  adverse  effect on the Company's  assets,
liabilities,  condition (financial or otherwise), operating results, business or
prospects.  The  charges,  accruals  and reserves on the books of the Company in
respect of taxes are considered  adequate by the Company,  and the Company knows
of no assessment for additional taxes or any basis therefor.

         (13) Title to Properties; Liens and Encumbrances.  The Company has good
title to all of its properties and assets, both real and personal,  tangible and
intangible,  reflected on the balance sheet included in the financial statements
included in the Company's SEC Reports or acquired after the date thereof (except
inventory  or other  personal  property  disposed of in the  ordinary  course of
business subsequent to the date thereof), and such properties and assets are not
subject to any mortgage, pledge, lien, security interest,  encumbrance or charge
other than (i) liens for current  taxes not yet due and payable,  (ii) liens and
encumbrances  that do not  materially  detract  from the  value of the  property
subject  thereto or materially  impair the  operations of the Company,  or (iii)
liens securing obligations reflected in such financial statements.  With respect
to properties or assets it leases, the Company is in compliance with such leases
(except for such  defaults or  breaches  that would not have a material  adverse
affect on the Company) and holds valid  leasehold  interests  free

                                      -5-

<PAGE>

of any liens,  claims or encumbrances  except for those described in subsections
(i) through (iii) hereof.


         (14) Litigation, etc. Except as described in the Company's SEC Reports,
there are no actions,  suits,  proceedings or investigations  (i) pending or, to
the  Company's  knowledge,  threatened  against the  Company or which  otherwise
involve  the  Company's  business  or  operations,  or  (ii)  to  the  Company's
knowledge,  pending or  threatened  against any of its  officers,  directors  or
principal   stockholders   in  their   capacities  as  officers,   directors  or
stockholders.

         (15) Employees.  To the Company's knowledge, no employee of the Company
is in violation of any term of any employment  contract or any other contract or
agreement  between such  employee and the Company.  None of the employees of the
Company is represented by any labor union, and there is no strike or other labor
dispute pending or, to the knowledge of the Company, threatened, with respect to
the Company.

         (16)  Compliance  With Law. The Company is conducting  its business and
operations in material  compliance with all  governmental  rules and regulations
applicable thereto,  including without limitation those relating to occupational
safety, environmental,  health and employment practices, and is not in violation
or default in any material  respect  under any statute,  law,  ordinance,  rule,
regulation,  judgment, order, decree, concession,  grant, franchise,  license or
other  governmental  authorization  or approval  applicable  to it or any of its
properties.

         (17)  Permits.  The  Company  has all  permits,  licenses,  orders  and
approvals of any federal,  state,  local or foreign  governmental  or regulatory
body  (collectively,  the  "Permits")  that are  material to or necessary in the
conduct of its business as now conducted; all such Permits are in full force and
effect; no violations have been recorded in respect of any such Permits;  and no
proceeding is pending or, to the knowledge of the Company,  threatened to revoke
or limit any such Permits.

         (18) Offering.  Subject to the accuracy of the  representations  of the
Purchasers in their  respective  Subscription  Agreements,  the offer,  sale and
issuance of the Shares and the Warrants as contemplated  by this Agreement,  and
the  issuance of the Common  Stock to be issued upon  exercise of the  Warrants,
will  constitute  transactions  exempt  from the  registration  requirements  of
Section 5 of the Securities Act.

         (19) Brokers or Finders.  The Company has not  retained any  investment
banker,  broker or finder in connection  with the  transactions  contemplated by
this Agreement, and there are no brokerage commissions, finder's fees or similar
items of compensation  payable in connection  therewith based on any arrangement
or  agreement  made by or on behalf of the Company  except as  disclosed  in the
Memorandum.

         (20)  Memorandum.  The  Memorandum  was  prepared  in good faith by the
Company and does not contain any untrue  statement of a material  fact or omit a
material fact necessary to make the statements therein not misleading.

                                      -6-

<PAGE>

          (21)  Intellectual   Property.  The  Company  owns  or  possesses  the
requisite  licenses  or rights to use all  trademarks,  service  marks,  service
names, trade names, patents and patent applications, copyrights and other rights
(collectively  the  "Intangibles")  described as owned by the Company in the SEC
Reports.  There is no claim,  action or proceeding by any person  pending or, to
the  Company's  knowledge,  threatened  which  pertains  to  or  challenges  the
exclusive  right of the  Company  with  respect to any  Intangibles  used in the
conduct of the Company's business except as described in the SEC Reports. To the
Company's knowledge,  the Company's current products,  services and processes do
not infringe on any Intangibles held by any third party.  Except as set forth in
the SEC Reports,  the Company is not under any  obligation  to pay  royalties or
fees of any kind whatsoever to any third party with respect to technology it has
developed, uses, employs or intends to use or employ.

         (22) Material Contracts.  All contracts,  agreements (including license
agreements  and any other  agreements  relative  to the  Company's  technology),
leases or other commitments,  written or oral, absolute or contingent,  to which
the Company is a party are filed or incorporated by reference as exhibits to the
Company's  SEC Reports  other than (i)  contracts  entered  into in the ordinary
course of business,  requiring the  expenditure by the Company or the payment to
the  Company of no more than  $100,000;  and (ii)  contracts  terminable  by the
Company on no more than 30 days' notice  without  material  cost or liability to
the Company.

         (23)  Interested  Party  Transactions.   Except  as  described  in  the
Company's  SEC  Reports,  no employee,  stockholder,  officer or director of the
Company is indebted (or  committed to make loans or extend or guarantee  credit)
to the Company nor is the Company indebted (or committed to make loans or extend
or  guarantee  credit)  to any of  them.  The  Company  is  not a  guarantor  or
indemnitor of any indebtedness of any other person, firm or corporation.  Except
as required to be  disclosed  in the  Company's  SEC  Reports,  no  stockholder,
officer, director or employee of the Company, nor any "affiliate" or "associate"
of such  persons  (as such  terms  are  defined  in the  rules  and  regulations
promulgated  under the Exchange Act), is now a party to any transaction with the
Company required to be disclosed therein under the Exchange Act or the rules and
regulations promulgated thereunder,  including without limitation, any contract,
agreement or other  arrangement  providing for the employment of,  furnishing of
services by, rental of real or personal  property  from, or otherwise  requiring
payments to, any such person or entity.

         (24) Books and Records. The minute books of the Company reflect, in all
material respects,  all meetings and other corporate actions of the stockholders
and Board of Directors (and any committees thereof) of the Company.

         (25) ERISA.  Except as disclosed  in the  Company's  SEC  Reports,  the
Company does not maintain any "Plan" subject to the Employment Retirement Income
Security Act of 1974, as amended ("ERISA").

         The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:


                                      -7-

<PAGE>


                    (1)  The   undersigned  has  been  furnished  with  and  has
          carefully read the Memorandum  (including the Attachments thereto) and
          this Agreement and is familiar with and  understands  the terms of the
          Offering.  The  undersigned  has carefully  considered and has, to the
          extent the undersigned believes such discussion  necessary,  discussed
          with  the  undersigned's   professional  legal,  tax,  accounting  and
          financial  advisors the suitability of an investment in the Shares and
          Warrants for the undersigned's  particular tax and financial situation
          and has determined  that the Shares and Warrants being  subscribed for
          by the undersigned are a suitable investment for the undersigned.

                    (2) The  undersigned  acknowledges  that (i) the undersigned
          has had the right to request  copies of any  documents,  records,  and
          books  pertaining  to this  investment  and (ii)  any such  documents,
          records  and books  which  the  undersigned  requested  have been made
          available  for  inspection  by  the  undersigned,   the  undersigned's
          attorney, accountant or adviser(s).

                    (3) The  undersigned  and/or  the  undersigned's  adviser(s)
          has/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 and all such  questions have been answered to
          the full satisfaction of the undersigned.

                    (4) The undersigned is not subscribing for Units as a result
          of or  subsequent  to any  advertisement,  article,  notice  or  other
          communication published in any newspaper, magazine or similar media or
          broadcast  over  television  or radio or  presented  at any seminar or
          meeting.

                    (5) If the undersigned is a natural person,  the undersigned
          has reached the age of majority in the state in which the  undersigned
          resides, has adequate means of providing for the undersigned's current
          financial  needs and  contingencies,  is able to bear the  substantial
          economic  risks of an  investment  in the Shares and  Warrants  for an
          indefinite  period  of  time,  has  no  need  for  liquidity  in  such
          investment  and, at the present time,  could afford a complete loss of
          such investment.

                    (6)  The   undersigned   or  the   undersigned's   purchaser
          representative,  as the case may be, has such knowledge and experience
          in financial, tax and business matters so as to enable the undersigned
          to utilize  the  information  made  available  to the  undersigned  in
          connection  with the  Offering to evaluate  the merits and risks of an
          investment  in the  Shares  and  Warrants  and  to  make  an  informed
          investment decision with respect thereto.

                    (7) The undersigned will not sell or otherwise  transfer the
          Shares or Warrants  without  registration  under the Securities Act of
          1933, as amended (the "Securities Act") or applicable state securities
          laws or an exemption therefrom.  None of the Units, the Shares and the
          Warrants have been  registered  under the  Securities Act or under the
          securities laws of certain states. The undersigned represents that the
          undersigned   is   purchasing   the  Shares  and   Warrants   for  the
          undersigned's  own  account,  for  investment  and not  with a view to
          resale or  distribution  except in compliance with the Securities Act.
          The  undersigned  has not offered

                                      -8-

<PAGE>


          or sold the Shares or Warrants being acquired nor does the undersigned
          have any present  intention  of  selling,  distributing  or  otherwise
          disposing  of such Shares or Warrants  either  currently  or after the
          passage  of a fixed  or  determinable  period  of  time  or  upon  the
          occurrence   or   non-occurrence   of  any   predetermined   event  or
          circumstance  in violation of the Securities  Act. The  undersigned is
          aware that  there is  currently  no market  for the  Units,  Shares or
          Warrants.  The  undersigned  is  aware  that  an  exemption  from  the
          registration  requirements  of the Securities Act pursuant to Rule 144
          promulgated  thereunder is not  presently  available;  and,  except as
          provided in Section D below, the Company has no obligation to register
          the Units,  Shares or Warrants  subscribed  for  hereunder  or to make
          available an exemption from the registration  requirements pursuant to
          such Rule 144 or any successor rule for resale of the Units, Shares or
          Warrants.

                    (8) The undersigned recognizes that investment in the Shares
          and Warrants involves substantial risks,  including loss of the entire
          amount of such investment. Further, the undersigned has carefully read
          and  considered the matters set forth under the caption "Risk Factors"
          in the  Memorandum,  and has taken full  cognizance of and understands
          all of the risks related to the purchase of the Shares and Warrants.

                    (9)  The  undersigned  acknowledges  that  the  certificates
          representing  the Shares and Warrants  (and the Common Stock  issuable
          upon exercise of the Warrants) shall be stamped or otherwise imprinted
          with a legend substantially in the following form:

                           "The  securities  represented  hereby  have  not been
                  registered  under the Securities  Act of 1933, as amended,  or
                  any state  securities  laws and neither the securities nor any
                  interest therein may be offered, sold, transferred, pledged or
                  otherwise   disposed  of  except   pursuant  to  an  effective
                  registration  statement  under  such  act or  such  laws or an
                  exemption  from  registration  under  such act and such  laws,
                  which, in the opinion of counsel for the holder, which counsel
                  and opinion are  reasonably  satisfactory  to counsel for this
                  corporation, is available."

                    (10) The  undersigned  is an  "accredited  investor" as that
          term is defined in Rule 501(a) of Regulation D promulgated pursuant to
          the Securities Act and is a "sophisticated  person" within the meaning
          of Rule 506(B)(2)(ii) of Regulation D. The information provided by the
          undersigned  in the  Questionnaire  is complete and accurate,  and the
          undersigned  agrees to notify the Company in writing  immediately upon
          the  occurrence  of any  material  change  in any of such  information
          before the acceptance of the undersigned's subscription.

                    (11)  If  this   Subscription   Agreement  is  executed  and
          delivered on behalf of a  partnership,  corporation,  trust or estate:
          (i) such partnership,  corporation, trust or estate has the full legal
          right and power and all authority and approval required (a) to execute
          and deliver, or authorize execution and delivery of, this Subscription
          Agreement  and all other  instruments  executed and delivered by or on
          behalf of such partnership, corporation, trust or estate in connection
          with  the  purchase  of its  Shares  and  Warrants,  (b)  to  delegate
          authority

                                      -9-

<PAGE>


          pursuant  to a power of  attorney  and (c) to  purchase  and hold such
          Shares and Warrants; (ii) the signature of the party signing on behalf
          of such partnership, corporation, trust or estate is binding upon such
          partnership, corporation, trust or estate; and (iii) such partnership,
          corporation  or trust has not been formed for the specific  purpose of
          acquiring  such Shares or Warrants,  unless each  beneficial  owner of
          such entity is qualified as an accredited  investor within the meaning
          of Rule 501 (a) of Regulation D promulgated  under the  Securities Act
          and  has  submitted   information   substantiating   such   individual
          qualification.

                    (12) If the undersigned is a retirement plan or is investing
          on behalf of a retirement  plan,  the  undersigned  acknowledges  that
          investment in the Shares and Warrants poses additional risks including
          the  inability to use losses  generated by an investment in the Shares
          and Warrants to offset taxable income.

                    (13) The  undersigned  shall indemnify and hold harmless the
          Company  and each  officer,  director  or  control  person of any such
          entity, who is or may be a party or is or may be threatened to be made
          a party  to any  threatened,  pending  or  completed  action,  suit or
          proceeding, whether civil, criminal,  administrative or investigative,
          by reason of or arising  from any actual or alleged  misrepresentation
          or  misstatement of facts or omission to represent or state facts made
          or alleged to have been made by the  undersigned  to the Company,  (or
          any agent or  representative  of the Company) or omitted or alleged to
          have been omitted by the  undersigned,  concerning the  undersigned or
          the  undersigned's  authority  to  invest  or  financial  position  in
          connection with the Offering,  including, without limitation, any such
          misrepresentation,   misstatement   or  omission   contained   in  the
          Questionnaire  or any other  document  submitted  by the  undersigned,
          against losses, liabilities and expenses for which the Company, or any
          officer,  director or control  person of the Company has not otherwise
          been  reimbursed  (including  attorneys'  fees,  judgments,  fines and
          amounts paid in settlement)  actually and  reasonably  incurred by the
          Company,  or such  officer,  director or control  person in connection
          with such action, suit or proceeding.

C.       UNDERSTANDINGS.

         The undersigned  understands,  acknowledges and agrees with the Company
         as follows:

                    (1) This Subscription may be rejected,  in whole or in part,
          by the Company in the Company's sole and absolute  discretion,  at any
          time before the Final Closing Date,  notwithstanding  prior receipt by
          the   undersigned  of  notice  of  acceptance  of  the   undersigned's
          Subscription.

                    (2)  Except  as  set  forth  in  Section  C(1)  above,   the
          undersigned  hereby  acknowledges  and  agrees  that the  subscription
          hereunder is irrevocable by the undersigned,  that, except as required
          by law, the undersigned is not entitled to cancel, terminate or revoke
          this Agreement or any agreements of the undersigned hereunder and that
          this  Agreement and such other  agreements  shall survive the death or
          disability of the  undersigned  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
          undersigned  is  more  than  one 

                                      -10-

<PAGE>


          person,  the obligations of the  undersigned  hereunder shall be joint
          and  several  and  the  agreements,  representations,  warranties  and
          acknowledgments  herein contained shall be deemed to be made by and be
          binding   upon  each  such  person  and  his/her   heirs,   executors,
          administrators,   successors,   legal  representatives  and  permitted
          assigns.

                    (3) No  federal  or state  agency  has made any  finding  or
          determination  as to the accuracy or adequacy of the  Memorandum or as
          to the fairness of the terms of this offering for  investment  nor any
          recommendation or endorsement of the Units.

                    (4) The Offering is intended to be exempt from  registration
          under the  Securities  Act by virtue of Section 4(2) of the Securities
          Act and the  provisions of  Regulation D thereunder,  which is in part
          dependent upon the truth,  completeness and accuracy of the statements
          made by the undersigned herein and in the Questionnaire.

                    (5) There is no public or other market for the Units, Shares
          or Warrants and no such public or other market may ever develop. There
          can be no  assurance  that  the  undersigned  will  be able to sell or
          dispose of the Shares or Warrants.  It is understood that in order not
          to jeopardize the  Offering's  exempt status under Section 4(2) of the
          Securities Act and Regulation D, any transferee may, at a minimum,  be
          required to fulfill the investor suitability requirements thereunder.

                    (6) Some NASD members may receive compensation in connection
          with the Offering but are not guaranteeing or assuming  responsibility
          for the  operation or possible  liability  of the Company,  including,
          without  limitation,  compliance  by the Company  with the  agreements
          entered into in connection  with the Offering,  and will not supervise
          or participate in the operation or management of the Company.

                    (7)  The  undersigned   acknowledges  that  certain  of  the
          information contained in the Memorandum is confidential and non-public
          and agrees that all such  information  shall be kept in  confidence by
          the   undersigned   and  neither  used  by  the  undersigned  for  the
          undersigned's  personal  benefit  (other than in connection  with this
          subscription)  nor  disclosed  to any  third  party  for  any  reason;
          provided,  however,  that this obligation  shall not apply to any such
          information that (i) is part of the public knowledge or literature and
          readily accessible at the date hereof, (ii) becomes part of the public
          knowledge or literature and readily accessible by publication  (except
          as a result of a breach of this  provision)  or (iii) is received from
          third parties  (except third parties who disclose such  information in
          violation of any confidentiality agreements or obligations, including,
          without limitation,  any Subscription  Agreement entered into with the
          Company). The undersigned acknowledges that the foregoing restrictions
          on the  undersigned's  use and  disclosure  of any such  confidential,
          non-public  information  contained  in the  Memorandum  restricts  the
          undersigned  from trading in the  Company's  securities  to the extent
          such trading is based on such confidential, non-public information.

                    (8) The  representations,  warranties  and agreements of the
          undersigned  contained  herein and in any other  writing  delivered in
          connection with the transactions contemplated 



                                      -11-

<PAGE>
          hereby shall be true and correct in all respects on and as of the date
          of the sale of the  Units as if made on and as of such  date and shall
          survive the execution and delivery of this  Agreement and the purchase
          of the Units.

                  (9)  Insofar  as  indemnification  for  liabilities  under the
         Securities  Act may be permitted to directors,  officers or controlling
         persons of the  Company,  the  Company  has been  informed  that in the
         opinion of the Securities and Exchange Commission such  indemnification
         is against  public  policy as  expressed  in such Act and is  therefore
         unenforceable to such extent.

                  (10) IN MAKING AN INVESTMENT  DECISION PURCHASERS MUST RELY ON
         THEIR OWN  EXAMINATION  OF THE COMPANY  AND THE TERMS OF THE  OFFERING,
         INCLUDING THE MERITS AND RISKS INVOLVED.  THE SECURITIES OFFERED HEREBY
         HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION
         OR REGULATORY  AUTHORITY.  FURTHERMORE,  THE FOREGOING AUTHORITIES HAVE
         NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE MEMORANDUM
         OR THIS  DOCUMENT.  ANY  REPRESENTATION  TO THE  CONTRARY IS A CRIMINAL
         OFFENSE.

                  (11) THE  SECURITIES  OFFERED  HEREBY MAY NOT BE  TRANSFERRED,
         RESOLD  OR  OTHERWISE   DISPOSED  OF  EXCEPT  AS  PERMITTED  UNDER  THE
         SECURITIES  ACT AND  APPLICABLE  STATE  SECURITIES  LAWS,  PURSUANT  TO
         REGISTRATION OR EXEMPTION  THEREFROM.  PURCHASERS  SHOULD BE AWARE THAT
         THEY WILL BE REQUIRED TO BEAR THE  FINANCIAL  RISKS OF THIS  INVESTMENT
         FOR AN INDEFINITE PERIOD OF TIME.

                  (12)     For Residents of Arkansas:

                  THE SECURITIES  OFFERED HEREBY ARE OFFERED PURSUANT TO A CLAIM
         OF EXEMPTION UNDER SECTION  23-42-504(a)(14) OF THE ARKANSAS SECURITIES
         ACT AND SECTION  4(2) Of THE  SECURITIES  ACT OF 1933.  A  REGISTRATION
         STATEMENT  RELATING  TO THESE  SECURITIES  HAS NOT BEEN  FILED WITH THE
         ARKANSAS  SECURITIES  DEPARTMENT  OR WITH THE  SECURITIES  AND EXCHANGE
         COMMISSION.  NEITHER THE  DEPARTMENT NOR THE COMMISSION HAS PASSED UPON
         THE VALUE OF THE SECURITIES OFFERED HEREBY, MADE ANY RECOMMENDATIONS AS
         TO THEIR PURCHASE, APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON
         THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM.  ANY REPRESENTATION TO THE
         CONTRARY IS UNLAWFUL.

                 

                                      -12-

<PAGE>
                    (13) For Residents of California:

                    THE SALE OF THE  SECURITIES  WHICH ARE THE  SUBJECT  OF THIS
          SUBSCRIPTION AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
          CORPORATIONS  OF THE  STATE OF  CALIFORNIA  AND THE  ISSUANCE  OF SUCH
          SHARES OR THE  PAYMENT  OR  RECEIPT  OF ANY PART OF THE  CONSIDERATION
          THEREFOR PRIOR TO SUCH  QUALIFICATION IS UNLAWFUL,  UNLESS THE SALE OF
          SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR
          25105 OF THE CALIFORNIA  CORPORATIONS  CODE. THE RIGHTS OF ALL PARTIES
          TO THIS  SUBSCRIPTION  AGREEMENT ARE EXPRESSLY  CONDITIONED  UPON SUCH
          QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

                    (14) For Residents of Connecticut:

                    THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-
          485 OF THE CONNECTICUT  UNIFORM SECURITIES ACT AND THEREFORE CANNOT BE
          RESOLD  UNLESS  THEY  ARE  REGISTERED  UNDER  SUCH  ACT OR  UNLESS  AN
          EXEMPTION  FROM  REGISTRATION  IS AVAILABLE.  THE  SECURITIES  OFFERED
          HEREBY  HAVE  NOT  BEEN  APPROVED  OR   DISAPPROVED   BY  THE  BANKING
          COMMISSIONER OF THE STATE OF CONNECTICUT.  ANY  REPRESENTATION  TO THE
          CONTRARY IS UNLAWFUL.

                    (15) For Residents of Florida:

                    THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
          THE FLORIDA SECURITIES ACT (THE "FLORIDA ACT") AND WILL BE OFFERED AND
          SOLD  PURSUANT TO AN EXEMPTION  UNDER  SECTION  517.061 OF THE FLORIDA
          ACT.  ALL FLORIDA  RESIDENTS  SHALL HAVE THE  PRIVILEGE OF VOIDING THE
          PURCHASE OF ANY OF THE  SECURITIES  WITHIN  THREE DAYS AFTER THE FIRST
          TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE COMPANIES, AN
          AGENT OF THE COMPANIES,  OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER
          THE  AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,
          WHICHEVER OCCURS LATER.

                    (16) For Residents of Georgia:

                    THE  UNDERSIGNED  ACKNOWLEDGES  AND UNDERSTANDS (I) THAT THE
          SECURITIES SUBSCRIBED FOR HEREBY WILL BE ISSUED OR SOLD IN RELIANCE ON
          PARAGRAPH 13 OF CODE SECTION  10-5-9 OF THE GEORGIA  SECURITIES ACT OF
          1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH
          IS EXEMPT  UNDER SUCH ACT OR  PURSUANT  TO AN  EFFECTIVE  REGISTRATION
          STATEMENT UNDER SUCH ACT AND (II) THAT 

                                      -13-

<PAGE>

          THE  CERTIFICATES  REPRESENTING  THE SECURITIES  SUBSCRIBED FOR HEREBY
          WILL CONTAIN A LEGEND TO SUCH EFFECT.

                    (17) For Residents of Missouri:

                    THE  UNDERSIGNED  ACKNOWLEDGES  AND UNDERSTANDS (I) THAT THE
          SECURITIES SUBSCRIBED FOR HEREBY ARE NOT REGISTERED UNDER THE MISSOURI
          UNIFORM  SECURITIES ACT AND MAY BE DISPOSED OF ONLY THROUGH A LICENSED
          BROKER-DEALER  AND (II)  THAT IT IS A  FELONY  TO SELL  SECURITIES  IN
          VIOLATION OF THE MISSOURI SECURITIES ACT.

                    (18) For Residents of New York:

                    THIS PRIVATE  OFFERING  MEMORANDUM  HAS NOT BEEN REVIEWED BY
          THE  ATTORNEY  GENERAL  PRIOR TO ITS  ISSUANCE  AND USE.  THE ATTORNEY
          GENERAL  OF THE STATE OF NEW YORK HAS NOT  PASSED ON OR  ENDORSED  THE
          MERITS  OF  THIS  OFFERING.  ANY  REPRESENTATION  TO THE  CONTRARY  IS
          UNLAWFUL.

                    (19) For Residents of Pennsylvania:

                    EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES
          BEING OFFERED HEREBY AGREES NOT TO SELL THESE  SECURITIES FOR A PERIOD
          OF TWELVE  MONTHS AFTER THE DATE OF PURCHASE.  UNDER  PROVISION OF THE
          PENNSYLVANIA  SECURITIES ACT OF 1972, EACH PENNSYLVANIA RESIDENT SHALL
          HAVE THE RIGHT TO WITHDRAW HIS OR HER ACCEPTANCE WITHOUT INCURRING ANY
          LIABILITY  TO THE  ISSUER  WITHIN TWO  BUSINESS  DAYS FROM THE DATE OF
          RECEIPT BY THE COMPANY OF THIS SUBSCRIPTION  AGREEMENT.  TO ACCOMPLISH
          THIS  WITHDRAWAL A  SUBSCRIBER  NEED ONLY SEND A LETTER OR TELEGRAM TO
          THE ISSUER AT THE ADDRESS SET FORTH IN THE TEXT HEREOF, INDICATING HIS
          OR HER INTENTION TO WITHDRAW.  SUCH LETTER OR TELEGRAM  SHOULD BE SENT
          AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED  SECOND BUSINESS
          DAY.  IT IS  PRUDENT TO SEND SUCH  LETTER BY  CERTIFIED  MAIL,  RETURN
          RECEIPT REQUESTED,  TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE
          THE TIME WHEN IT WAS MAILED.  IF THE REQUEST IS MADE ORALLY (IN PERSON
          OR BY  TELEPHONE,  TO THE  ISSUER  AT THE  NUMBER  LISTED  IN THE TEXT
          HEREOF),  A WRITTEN  CONFIRMATION  THAT THE REQUEST HAS BEEN  RECEIVED
          SHOULD BE REQUESTED.

D.       REGISTRATION RIGHTS.

         (1)  Registration  of Common  Shares.  After the expiration of one year
from the Final Closing Date, the Company shall use its  reasonable  best efforts
to prepare for filing with the 


                                      -14-

<PAGE>

Commission, and cause to be declared effective, a "shelf" registration statement
(the  "Shelf  Registration")  pursuant  to Rule 415  under  the  Securities  Act
providing for the sale by the  Purchasers of the shares of Common Stock included
in the Units and issuable upon exercise of the Warrants (the "Underlying  Common
Shares").  The  registration  statement  for the  Shelf  Registration  shall  be
prepared and filed as soon as practicable  after the expiration of one-year from
the Final Closing Date.  The Company  shall use its  reasonable  best efforts to
cause the registration statement to be declared effective as soon as practicable
after it has been  filed  with the  Commission.  The  Company  agrees to use its
reasonable best efforts to keep such Shelf Registration  continuously  effective
for a  period  ending  on the  earliest  of (a)  the  fifth  anniversary  of the
effective  date of such  Shelf  Registration,  (b) the  date on  which  all such
Underlying  Common Shares covered thereby have been sold thereunder,  or (c) the
date upon  which all such  Underlying  Common  Shares  are  freely  transferable
without restriction under the Securities Act. For the purpose of this Agreement,
"reasonable best efforts" shall mean the best efforts of the Company  consistent
with sound and reasonable business practices and judgment.

         (2)   Registration   Procedures.   In  connection  with  the  Company's
obligations  with respect to the Shelf  Registration,  the Company shall use its
reasonable best efforts to effect the registration in furtherance of the sale of
the  Underlying  Common  Shares by the holders  thereof in  accordance  with the
intended  method or  methods  of  distribution  thereof  described  in the Shelf
Registration.  In connection therewith, the Company shall, as promptly as may be
practicable:

                  (a)  prepare  and file  with  the  Commission  a  registration
         statement with respect to the Underlying  Common Shares on any form for
         which the Company then qualifies or which counsel for the Company shall
         deem  appropriate and which form shall be available for the disposition
         of the Underlying  Common Shares in accordance with the intended method
         or methods of disposition thereof;

                  (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 for the applicable  period  specified in Paragraph
         (1) above;

                  (c)  furnish to each  Purchaser  which is  selling  Underlying
         Common Shares a copy of such registration statement, each amendment and
         supplement  thereto (in each case  including  all exhibits  thereto but
         excluding  all  documents  incorporated  by  reference  therein  unless
         specifically so requested by such Purchaser) and such reasonable number
         of copies of the  prospectus  included in such  registration  statement
         (including   each   preliminary   prospectus)  as  such  Purchaser  may
         reasonably request;

                  (d) use  reasonable  best  efforts to  register or qualify the
         Underlying  Common Shares under such other  securities laws or blue sky
         laws of such jurisdictions as the Purchasers shall reasonably  request,
         and take any and all such  actions as may be  reasonably  necessary  or
         advisable to enable the  Purchasers to consummate  the  disposition  in
         such jurisdictions of such Underlying Common Shares;



                                      -15-

<PAGE>


                  (e)  notify  each  Purchaser,  at any time  when a  prospectus
         relating  thereto is required to be delivered  under the Securities Act
         within the period that the Company is required to keep the registration
         statement effective, of the happening of any event as a result of which
         the  prospectus  included in such  registration  statement  (as then in
         effect)  contains an untrue  statement  of a material  fact or omits to
         state any material fact  required to be stated  therein or necessary to
         make the statements therein not misleading;


                  (f) advise each  Purchaser,  promptly after  receiving  notice
         thereof,  of any stop order issued or threatened by the  Commission and
         use its reasonable best efforts to take all actions required to prevent
         the entry of such stop order, or to remove it if entered;

                  (g) use its  reasonable  best efforts to cause all  Underlying
         Common Shares including in such registration statement to be listed, by
         the date of the first sale of Underlying Common Shares pursuant to such
         registration statement, on each securities exchange on which the Common
         Stock of the Company is then listed or proposed to be listed;

                  (h) furnish to each  Purchaser on the  effective  date of such
         registration   statement  a  signed   counterpart,   addressed  to  the
         Purchasers,  of (i) an opinion of counsel  representing the Company and
         reasonably  satisfactory  to  such  Purchasers  that  the  registration
         statement   (including   each  amendment  or  supplement   thereto  and
         prospectus  included  therein)  complies  as to  form  in all  material
         respects with the requirements of the Securities Act and the applicable
         rules and regulations thereunder,  and (ii) a "comfort" letter from the
         independent  public accountants  retained by the Company,  stating that
         they are  independent  public  accountants  within  the  meaning of the
         Securities  Act and  that,  in the  opinion  of such  accountants,  the
         financial  statements  of  the  Company  included  or  incorporated  by
         reference  in the  registration  statement  or the  prospectus,  or any
         amendment  or  supplement  thereof,  comply as to form in all  material
         respects with the applicable accounting  requirements of the Securities
         Act and the published  rules and regulations  thereunder,  and covering
         such other financial  matters of the type  customarily  covered by such
         letters;

                  (i) otherwise use its  reasonable  best efforts to comply with
         the provisions of the Securities Act with respect to the disposition of
         all of the  Underlying  Common  Shares  covered  by  such  registration
         statement in accordance with the intended methods of disposition by the
         Purchasers thereof set forth in such registration statement and to make
         generally  available to its  security  holders,  as soon as  reasonably
         practicable, an earnings statement satisfying the provisions of Section
         11(a) of the Securities Act and Rule 158 thereunder.

         (3) Expenses.  All expenses incident to the Company's performance of or
compliance with the provisions of this Section D (including, without limitation,
all  registration  and  filing  fees,  fees  and  expenses  of  compliance  with
securities or blue sky laws,  fees and expenses  incurred in connection with the
listing of the  Underlying  Common Shares to be  registered  on each  securities
exchange on which  similar  securities  issued by the  Company are then  listed,
printing expenses, fees and disbursements of counsel for the Company, reasonable
fees  and  disbursements  of  one  counsel  for  the  Purchasers  and  fees  and
disbursements of all independent  certified public accountants and


                                      -16-

<PAGE>

other  persons   retained  by  the  Company)  will  be  borne  by  the  Company.
Notwithstanding the foregoing, the Purchasers shall pay any and all underwriting
fees,  discounts or commissions  attributable  to the sale of Underlying  Common
Shares.


         (4)      Indemnification.

                  (a) Upon the registration of Underlying Common Shares pursuant
         to  Section  D(1)  of  this  Agreement,  and  in  consideration  of the
         agreements of the Purchasers  contained herein,  the Company shall, and
         it  hereby  agrees  to,  indemnify  and hold  harmless,  to the  extent
         permitted by law, each of the Purchasers which holds Underlying  Common
         Shares to be included in such registration, its officers and directors,
         each  underwriter of such  Underlying  Common Shares,  if any, and each
         person who controls such person  (within the meaning of the  Securities
         Act)  against all losses,  claims,  damages,  liabilities  and expenses
         (including  reasonable  attorneys'  fees and  expenses)  to which  such
         Purchaser,  its  officers,   directors,   each  underwriter,   or  such
         controlling persons may become subject, insofar as such losses, claims,
         damages, liabilities and expenses (or actions in respect thereof) arise
         out of or are  based  upon  any  untrue  statement  or  alleged  untrue
         statement  of  material  fact   contained  in  any  such   registration
         statement,  any prospectus or preliminary  prospectus contained therein
         or any  amendment  or  supplement  thereto,  or any 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  each such  Purchaser,  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;  except (i)  insofar as the same
         arise  out of or are based  upon an untrue  statement  or  omission  or
         alleged  omission  so made based  upon  information  furnished  by such
         Purchaser,  underwriter or controlling  person in writing  specifically
         for use in such registration statement or prospectus or (ii) insofar as
         the same are caused by such Purchaser's or such  underwriter's  failure
         to deliver a copy of such  registration  statement or prospectus or any
         amendments or supplements  thereto after the Company has furnished such
         Purchaser or such underwriter with a sufficient number of copies of the
         same;  and  provided,   however,   that  the  foregoing  indemnity  and
         reimbursement obligation shall not be applicable to the extent that any
         such loss, claim, damage, liability or action arises out of or is based
         on  any  untrue  statement  or  omission  made  in:  (i) a  preliminary
         prospectus,  which  untrue  statement  or omission is  corrected in the
         final  prospectus  and such final  prospectus is made available to such
         Purchaser in  accordance  with the  requirements  of Rule 424 under the
         Securities  Act; or (ii) any  prospectus,  which  untrue  statement  or
         omission is corrected in a prospectus  supplement or amended prospectus
         and such prospectus  supplement or amended prospectus is made available
         to such Purchaser  prior to the sale of Underlying  Common Shares which
         gave rise to such loss, claim, damage, liability or expense.

                  (b) In connection with any registration  statement under which
         Underlying  Common Shares are  registered  under the Securities Act and
         pursuant  to which a  Purchaser  offers  and  sells  Underlying  Common
         Shares,  each such Purchaser  shall, and it hereby agrees to, indemnify
         and hold harmless, to the extent permitted by law, each of the Company,
         its  officers and  directors,  and each person who controls the Company
         (within the meaning of 

                                      -17-

<PAGE>
          the Securities Act) and, if the offering is an underwritten  offering,
          the underwriters, against all losses, claims, damages, liabilities and
          expenses (including  reasonable attorneys' fees and expenses) to which
          the Company, its officers and directors,  underwriters, or controlling
          persons may become subject,  insofar as such losses, claims,  damages,
          liabilities and expenses (or actions in respect  thereof) arise out of
          or are based upon any untrue  statement or alleged untrue statement of
          material  fact  contained  in any  such  registration  statement,  any
          prospectus  or  preliminary   prospectus   contained  therein  or  any
          amendment or supplement  thereto,  or any 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, insofar as (i) the same arise out
          of or are based  upon any  untrue  statement  or  omission  or alleged
          omission so made based upon  information  furnished by such Purchaser,
          or an underwriter or controlling person of such Purchaser,  in writing
          specifically for use in such  registration  statement or prospectus or
          (ii) the same are  caused by such  Purchaser's  or such  underwriter's
          failure to deliver a copy of such registration statement or prospectus
          or any  amendments  or  supplements  thereto  after  the  Company  has
          furnished such Purchaser or such underwriter with a sufficient  number
          of copies of the same and  provided,  further,  that the  liability of
          each  Purchaser  under  this  Paragraph  4(b)  shall be limited to the
          proportion of any such loss, claim, damage, liability or expense which
          is  equal  to  the  proportion  that  the  public  offering  price  of
          Underlying   Common   Shares  sold  by  such   Purchaser   under  such
          registration statement bears to the total public offering price of all
          securities  sold  thereunder,  but not to  exceed  the  amount  of the
          proceeds  received by such  Purchaser  from the sale of the Underlying
          Common Shares covered by such registration statement.

                    (c) Any person  entitled to  indemnification  hereunder will
          (i) give  prompt  notice to the  indemnifying  party of any claim with
          respect  to which it seeks  indemnification  (but the  failure to give
          such  notice will not affect the right to  indemnification  hereunder,
          unless  the  indemnifying  party  is  materially  prejudiced  by  such
          failure)  and  (ii)  unless  in such  indemnified  party's  reasonable
          judgment a conflict of interest may exist between such indemnified and
          indemnifying   parties  with  respect  to  such  claim,   permit  such
          indemnifying  party to assume the  defense of such claim with  counsel
          selected by the indemnifying party and reasonably  satisfactory to the
          indemnified  party. If such defense is not assumed by the indemnifying
          party or if the  indemnifying  party is not  permitted  to assume such
          defense then (x) the  indemnified  party shall select  counsel,  which
          counsel must be reasonably  satisfactory to the indemnifying party and
          (y) the  indemnifying  party will not be subject to any  liability for
          any  settlement  made without its consent  (which  consent will not be
          unreasonably withheld). No indemnifying party will consent to entry of
          any judgment or enter into any settlement which does not include as an
          unconditional  term thereof the giving by the claimant or plaintiff to
          such  indemnified  party of a release from all liability in respect of
          such claim or litigation.  An  indemnifying  party who is not entitled
          to,  or elects  not to,  assume  the  defense  of a claim  will not be
          obligated  to pay the fees and  expenses  of more than one counsel for
          all parties  indemnified  by such  indemnifying  party with respect to
          such claim, unless in the reasonably judgment of any indemnified party
          a conflict of interest may exist 


                                      -18-

<PAGE>

          between  such  indemnified  party  and any  other of such  indemnified
          parties  with  respect to such claim,  in which case the  indemnifying
          party  shall  be  obligated  to  pay  the  fees  and  expenses  of one
          additional  counsel,  who  must  be  reasonably  satisfactory  to  the
          indemnifying party.

                  (d) Each  party  hereto  agrees  that,  if for any  reason the
         indemnification  provisions contemplated by Paragraph 4(a) or Paragraph
         4(b)  are   unavailable  or  are   insufficient  to  hold  harmless  an
         indemnified   party  in  respect  of  any  losses,   claims,   damages,
         liabilities  or expenses  (or actions in respect  thereof)  referred to
         therein,  then each  indemnifying  party shall contribute to the amount
         paid or payable by such  indemnified  party as a result of such losses,
         claims,  damages,  liabilities  or  expenses  (or  actions  in  respect
         thereof) in such  proportion as is  appropriate to reflect the relative
         fault of the  indemnifying  party and the indemnified  party as well as
         any other relevant equitable considerations. The relative fault of such
         indemnifying  party  and  indemnified  party  shall  be  determined  by
         reference to, among other things,  whether the untrue or alleged untrue
         statement of a material fact or omission or alleged omission to state a
         material  fact  relates to  information  supplied by such  indemnifying
         party  or  indemnified   party,  and  the  parties'   relative  intent,
         knowledge,  access to information and opportunity to correct or prevent
         such statement or omission.  The parties hereto agree that it would not
         be just and equitable if  contribution  pursuant to this Paragraph 4(d)
         were determined by pro rata  allocation  (even if the Purchasers or any
         underwriters  or all of  them  were  treated  as one  entity  for  such
         purpose) or by any other method of allocation  which does not take into
         account the  equitable  considerations  referred  to in this  Paragraph
         4(d).  No person  guilty of  fraudulent  misrepresentation  (within the
         meaning of Section  11(f) of the  Securities  Act) shall be entitled to
         contribution  from any  person  who was not  guilty of such  fraudulent
         misrepresentation.

                  (e) The indemnification and contribution  obligations and each
         other  provision  set forth in this  Paragraph  4 shall  remain in full
         force and effect regardless of any  investigation  made by or on behalf
         of the Company,  any Purchaser,  any officer or employee of the Company
         or such  Purchaser,  any  underwriter,  any officer or employee of such
         underwriter,  or any  controlling  person of any of the  foregoing  and
         shall survive the transfer and registration of Underlying common Shares
         by such Purchaser.

         (5) Rule 144 Reporting.  With a view to making  available to Purchasers
the benefits of Rule 144 promulgated by the Commission under the Securities Act,
the Company agrees to use its reasonable best efforts to:

                    (a) make and keep adequate  current public  information with
          respect to the Company available,  as those terms are used in Rule 144
          under the Securities Act, at all times after the Final Closing Date;

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

                 


                                      -19-

<PAGE>

                    (c) furnish to  Purchasers  promptly  upon request a written
          statement  by the  Company  as to its  compliance  with the  reporting
          requirements  of Rule  144 and the  Exchange  Act,  a copy of the most
          recent  annual or  quarterly  report of the  Company,  and such  other
          reports and documents of the Company as any  Purchaser may  reasonably
          request in order to permit such  Purchaser to avail itself of any rule
          or regulation of the  Commission  allowing such  Purchaser to sell its
          Underlying Common Shares without registration.

          (6) Holders of Underlying Common Shares.  For purposes of this Section
D,  holders of the  Warrants  shall be deemed to be  holders  of the  Underlying
Common Shares issuable upon exercise thereof.

          (7)  Amendments  and Waivers.  Any  provision of this Section D may be
amended or waived if, but only if, in the case of an amendment,  such  amendment
is in  writing  and is  signed by the  Company  and the  Purchasers  who are the
holders  of a  majority  of the  Underlying  Common  Shares or, in the case of a
waiver,  such waiver is in writing and is signed by the party to be charged with
having granted such waiver.  No failure or delay by the Company or any Purchaser
in exercising any right, power or privilege  hereunder shall operate as a waiver
thereof,  nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

E.       MISCELLANEOUS.

         (1) All pronouns and any variations thereof used herein shall be deemed
to refer to the  masculine,  feminine,  impersonal,  singular or plural,  as the
identity of the person or persons may require.

         (2) Except as set forth in Section A(4) and D(7)  herein,  neither this
Agreement  nor  any  provision  hereof  shall  be  waived,  modified,   changed,
discharged,  terminated,  revoked or canceled except by an instrument in writing
signed by the party  effecting  the same against  whom any change,  discharge or
termination is sought.

         (3) Notices  required or  permitted to be given  hereunder  shall be in
writing and shall be deemed to be sufficiently  given when personally  delivered
or sent by registered mail, return receipt requested,  addressed:  (i) if to the
Company, to SunPharm Corporation,  4651 Salisbury Road, Suite 205, Jacksonville,
Florida 32256, Attention: Stefan Borg (ii) if to the undersigned, to the address
for correspondence  set forth in the Questionnaire,  or at such other address as
may have  been  specified  by  written  notice  given in  accordance  with  this
Paragraph (3).

         (4) Failure of the Company to exercise  any right or remedy  under this
Agreement or any other  agreement  between the Company and the  undersigned,  or
otherwise,  or delay by the Company in exercising such right or remedy, will not
operate as a waiver thereof.  No waiver by the Company will be effective  unless
and until it is in writing and signed by the Company.

         (5) This  Agreement  shall be enforced,  governed and  construed in all
respects in accordance  with the laws of the State of Florida,  as such laws are
applied by Florida  courts to 


                                      -20-

<PAGE>

agreements  entered into and to be performed in Florida by and between residents
of Florida, and shall be binding upon the undersigned,  the undersigned's heirs,
estate,  legal  representatives,  successors  and assigns and shall inure to the
benefit of the Company,  its  successors  and assigns.  If any provision of this
Subscription  Agreement 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  provision  hereof  that  may  prove  invalid  or
unenforceable  under any law shall not affect the validity or  enforceability of
any other provision hereof.

         (6) This Agreement constitutes 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 hereto.

          (7) Each party hereto has had the opportunity to review this Agreement
with its separate legal counsel.

F.       SIGNATURE.

         The signature of this  Agreement is contained as part of the applicable
subscription package, entitled "Signature Page".


                                      -21-

<PAGE>


                              SUNPHARM CORPORATION
                                 SIGNATURE PAGE


         The  undersigned  hereby  subscribes  for the number of Units set forth
below.

         1.       Dated:                         , 1996 
                        ------------------------
         2.       Number of Units subscribed for :
                                                  ------------------------

         3.       Aggregate purchase price for number of Units subscribed for,
                  at $5.50 per Unit:

                  $
                   ------------------



------------------------------                  ------------------------------
Signature of Subscriber                          Taxpayer Identification or
(and title, if applicable)                       Social Security Number


------------------------------                  ------------------------------
Signature of Joint Purchaser                     Taxpayer Identification or
(if any)                                         Social Security Number

------------------------------                  ------------------------------
Name and Residence Address                       Mailing Address, if different
(Post Office Address Not Acceptable):            from Residence Address:


------------------------------                  ------------------------------
Name (please print as name will                  Name (please print)
appear on certificate)


------------------------------                  ------------------------------
Number and Street                                Number and Street


------------------------------                  ------------------------------
City      State       Zip Code                  City       State     Zip Code