Document:

Exhibit 10.11
	 

	 
		 
	 

	 
		SUBSCRIPTION AGREEMENT
	 

	 
		Towerstream Corporation
	 

	 
		55 Hammarlund Way
	 

	 
		Middletown, Rhode Island 02842
	 

	 
		Gentlemen:
	 

	 
		The undersigned (the “Investor”)
		hereby confirms its agreement with you as follows: 
	 

	 
		1. This Subscription Agreement, including the Terms and
		Conditions For Purchase of Shares attached hereto as Annex I (collectively,
		this “Agreement”), is made as of the date set forth below between
		Towerstream Corporation, a Delaware corporation (the “Company”),
		and the Investor.
	 

	 
		2. The Company has authorized the sale and issuance to
		certain investors of up to an aggregate of [____________] shares (the
		“Shares”) of its Common Stock, par value $_____ per share
		(the “Common Stock”), subject to adjustment by the Company’s
		Board of Directors, or a committee thereof, for a purchase price of $[____] per
		share (the “Purchase
		Price”).
	 

	 
		3. The offering and sale of the Shares (the
		“Offering”) are being made pursuant to (1) an effective
		Registration Statement on Form SB-2 (including a preliminary prospectus (the
		“Preliminary
		Prospectus”) contained therein
		(the “Registration
		Statement”) filed by the Company
		with the Securities and Exchange Commission (the “Commission”), (2) if applicable, certain “free writing
		prospectuses” (as that term is defined in Rule 405 under the Securities
		Act of 1933, as amended (the “Act”)),
		that have been or will be filed with the Commission and delivered to the
		Investor on or prior to the date hereof and (3) a final prospectus, in the form
		filed pursuant to Rule 424(b) of the Securities Act, (the “Final Prospectus” and together with the Preliminary Prospectus, the
		“Prospectus”).
	 

	 
		4. The Company and the Investor agree that the Investor
		will purchase from the Company and the Company will issue and sell to the
		Investor the Shares of Common Stock set forth below for the aggregate purchase
		price set forth below. The Shares shall be purchased pursuant to the Terms and
		Conditions for Purchase of Shares attached hereto as Annex I and
		incorporated herein by this reference as if fully set forth herein. The
		Investor acknowledges that the Offering is not being underwritten by the
		placement agents (the “Placement
		Agents”) named in the Prospectus
		and that there is no minimum offering amount.
	 

	 
		5. The manner of settlement of the Shares purchased by the
		Investor shall be determined by such Investor as follows (check
		one):
	 

	 
			
				
				  [____]
				

			 	
				
				  A.
				

			 	
				
				  Delivery by crediting the account of
				  the Investor’s prime broker (as specified by such Investor on
				  Exhibit A annexed hereto) with the Depository Trust Company
				  (“DTC”) through its Deposit/Withdrawal At Custodian
				  (“DWAC”) system, whereby Investor’s prime broker
				  shall initiate a DWAC transaction on the Closing Date using its DTC participant
				  identification number, and released by Pacific Stock Transfer Company, the
				  Company’s transfer agent (the “Transfer Agent”), at the Company’s direction.
				  NO LATER THAN 
				

			 

 

	 
		 
	 

	 
		 
	 

	 
	 

	 

	 
		ONE (1) BUSINESS DAY AFTER THE EXECUTION
		OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR
		SHALL:
	 

	 
			
				
				   
				

			 	 	
				
				  (I)
				

			 	
				
				  DIRECT THE BROKER-DEALER AT WHICH
				  THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP
				  A DWAC INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH
				  THE SHARES, AND
				

			 

 

	 
			
				
				   
				

			 	 	
				
				  (II)
				

			 	
				
				  REMIT BY WIRE TRANSFER THE AMOUNT
				  OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED
				  BY THE INVESTOR TO THE FOLLOWING ACCOUNT:
				

			 

 

	 
		JPMorgan Chase Bank, N.A. 
 ABA #
		021000021 
 Account Name: [________________] 
 Account Number:
		[________________]
	 

	 
		– OR –
	 

	 
			
				
				  [____]
				

			 	
				
				  B.
				

			 	
				
				  Delivery versus payment
				  (“DVP”) through DTC (i.e., the Company shall deliver Shares
				  registered in the Investor’s name and address as set forth below and
				  released by the Transfer Agent to the Investor through DTC at the Closing
				  directly to the account(s) at Lazard Capital Markets LLC
				  (“LCM”) identified by the Investor and simultaneously
				  therewith payment shall be made by LCM by wire transfer to the
				  Company). NO LATER THAN ONE (1) BUSINESS
				  DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE
				  INVESTOR SHALL: 
				

			 

 

	 
			
				
				   
				

			 	 	
				
				  (I)
				

			 	
				
				  NOTIFY LCM OF THE ACCOUNT OR
				  ACCOUNTS AT LCM TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH
				  INVESTOR, AND 
				

			 

 

	 
			
				
				   
				

			 	 	
				
				  (II)
				

			 	
				
				  CONFIRM THAT THE ACCOUNT OR
				  ACCOUNTS AT LCM TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR
				  HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES
				  BEING PURCHASED BY THE INVESTOR. 
				

			 

 

	 
		IT IS THE INVESTOR’S
		RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE PROPER
		ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF
		DWAC OR DVP IN A TIMELY MANNER. IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE
		PURCHASE PRICE FOR THE SHARES OR DOES NOT MAKE PROPER ARRANGEMENTS FOR
		SETTLEMENT IN A TIMELY MANNER, THE SHARES MAY NOT BE DELIVERED AT CLOSING TO
		THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
		ALTOGETHER.
	 

	 
		6. The Investor represents that, except as
		set forth below, (a) it has had no position, office or other material
		relationship within the past three years with the Company or persons known to
		it to be affiliates of the Company, (b) it is not a NASD member or an
		Associated Person (as such term is 
	 

	 
		 
	 

	 
		 
	 

	 
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		defined under the NASD Membership and
		Registration Rules Section 1011) as of the Closing, and (c) neither the
		Investor nor any group of Investors (as identified in a public filing made with
		the Commission) of which the Investor is a part in connection with the Offering
		of the Shares, acquired, or obtained the right to acquire, 20% or more of the
		Common Stock (or securities convertible into or exercisable for Common Stock)
		or the voting power of the Company on a post-transaction basis.
		Exceptions:
	 

	 
		 
	 

	 
			
				
				   
				

			 

 

	 
		 (If no exceptions, write “none.”
		If left blank, response will be deemed to be “none.”)
	 

	 
		7. The Investor represents that it has received (or
		otherwise had made available to it by the filing by the Company of an
		electronic version thereof with the Commission) the Preliminary Prospectus and
		any free writing prospectus (collectively, the “Disclosure Package”), prior to or in connection with the receipt of
		this Agreement. The Investor acknowledges that, prior to the delivery of this
		Agreement to the Company, the Investor will receive certain additional
		information regarding the Offering, including pricing information (the
		“Offering
		Information”). Such information
		may be provided to the Investor by any means permitted under the Act, including
		delivery of the Final Prospectus, a free writing prospectus and oral
		communications.
	 

	 
		 
	 

	 
		 
	 

	 
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		Number of
		Shares:___________________________________
	 

	 
		Purchase Price Per Share:
		$____________________________
	 

	 
		Aggregate Purchase Price:
		$___________________________
	 

	 
		Please confirm that the foregoing correctly
		sets forth the agreement between us by signing in the space provided below for
		that purpose.
	 

	 
		 
	 

	 
		 
	 

	 
			
				
				   
				

			 	
				
				   
				

			 	
				
				  Dated as of: ______ __, 2007
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				  INVESTOR
				

			 
	
				
				

				
				  
				

			 	
				
				   
				

			 	
				
				  By: 
				

			 	
				
				

				
				  
				

			 

			
				
				   
				

			 	
				
				   
				

			 	
				
				  Print Name:
				

			 	
				
				   
				

			 

			
				
				   
				

			 	
				
				   
				

			 	
				
				  Title:
				

			 	
				
				   
				

			 

			
				
				   
				

			 	
				
				   
				

			 	
				
				  Address:
				

			 	
				
				   
				

			 
	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
			
				
				  Agreed and Accepted
				

				
				  this ___ day of _______,
				  2007:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  TOWERSTREAM
				  CORPORATION
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  By: 
				

			 	
				
				

				
				  
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				

				
				  
				

			 
	
				
				  Title:
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 	
				
				   
				

			 

 

	 
		 
	 

	 
		 
	 

	 
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		ANNEX I
	 

	 
		TERMS AND CONDITIONS FOR PURCHASE OF
		SHARES
	 

	 
		1. Authorization and Sale of the Shares.
		Subject to the terms and conditions of
		this Agreement, the Company has authorized the sale of the Shares.
	 

	 
		2. Agreement to Sell and Purchase the
		Shares; Placement Agents.
	 

	 
		2.1 At the Closing (as defined in Section 3.1),
		the Company will sell to the Investor, and the Investor will purchase from the
		Company, upon the terms and conditions set forth herein, the number of Shares
		set forth on the last page of the Agreement to which these Terms and Conditions
		for Purchase of Shares are attached as Annex I (the
		“Signature Page”) for the aggregate purchase price therefor set
		forth on the Signature Page.
	 

	 
		2.2 The Company proposes to enter into substantially this
		same form of Subscription Agreement with certain other investors (the
		“Other Investors”) and expects to complete sales of Shares to
		them. The Investor and the Other Investors are hereinafter sometimes
		collectively referred to as the “Investors,” and this
		Agreement and the Subscription Agreements executed by the Other Investors are
		hereinafter sometimes collectively referred to as the
		“Agreements.”
	 

	 
		2.3 Investor acknowledges that the Company has agreed to
		pay Lazard Capital Markets LLC (“LCM”),
		Canaccord Adams Inc. (“Canaccord”) and Morgan Joseph & Co.
		Inc. (“Morgan Joseph” and together with LCM and Canaccord, the
		“Placement Agents”) a fee (the “Placement
		Fee”) in respect of the sale of Shares to the Investor.
	 

	 
		2.4 The Company has entered into a Placement Agent
		Agreement, dated _____ __, 2007 (the “Placement Agreement”), with the Placement Agents that contains certain
		representations, warranties, covenants and agreements of the Company that may
		be relied upon by the Investor, which shall be a third party beneficiary
		thereof. 
	 

	 
		3. Closings and Delivery of the Shares
		and Funds. 
	 

	 
		3.1 Closing.
		The completion of the purchase and sale
		of the Shares (the “Closing”) shall occur at a place and time
		(the “Closing Date”) to be specified by the Company and LCM,
		and of which the Investors will be notified in advance by LCM, in accordance
		with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as
		amended (the “Exchange Act”). At the Closing, (a) the Company
		shall cause the Transfer Agent to deliver to the Investor the number of Shares
		set forth on the Signature Page registered in the name of the Investor or, if
		so indicated on the Investor Questionnaire attached hereto as Exhibit A,
		in the name of a nominee designated by the Investor and (b) the aggregate
		purchase price for the Shares being purchased by the Investor will be delivered
		by or on behalf of the Investor to the Company. 
	 

	 
		3.2 Conditions to the Company’s
		Obligations. (a) The Company’s obligation to issue and sell the
		Shares to the Investor shall be subject to: (i) the receipt by the Company of
		the purchase price for the Shares being purchased hereunder as set forth on the
		Signature Page and (ii) the accuracy of the representations and warranties made
		by the Investor and the fulfillment of those undertakings of the Investor to be
		fulfilled prior to the Closing Date.
	 

	 
		 
	 

	 
		 
	 

	 
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		(b) Conditions to the Investor’s
		Obligations. The Investor’s obligation to purchase the
		Shares will be subject to the accuracy of the representations and warranties
		made by the Company and the fulfillment of those undertakings of the Company to
		be fulfilled prior to the Closing Date, including without limitation, those
		contained in the Placement Agreement, and to the condition that the Placement
		Agents shall not have: (a) terminated the Placement Agreement pursuant to the
		terms thereof or (b) determined that the conditions to the closing in the
		Placement Agreement have not been satisfied. The Investor’s obligations
		are expressly not conditioned on the purchase by any or all of the Other
		Investors of the Shares that they have agreed to purchase from the
		Company.
	 

	 
		3.3 Delivery of Funds. 
	 

	 
		(a) Delivery by Electronic Book-Entry at The Depository
		Trust Company. If the Investor elects
		to settle the Shares purchased by such Investor through delivery by electronic
		book-entry at DTC, no later than one
		(1) business day after the execution of this Agreement by the Investor and the
		Company, the Investor shall remit
		by wire transfer the amount of funds equal to the aggregate purchase price for
		the Shares being purchased by the Investor to the following account designated
		by the Company and the Placement Agents pursuant to the terms of that certain
		Escrow Agreement (the “Escrow
		Agreement”) dated as of _____ __,
		2007, by and among the Company, the Placement Agents and JPMorgan Chase Bank,
		N.A. (the “Escrow
		Agent”):
	 

	 
		JPMorgan Chase Bank, N.A. 
 ABA #
		021000021 
 Account Name: [_________] 
 Account Number:
		[_________]
	 

	 
		Such funds shall be held in escrow until the
		Closing and delivered by the Escrow Agent on behalf of the Investors to the
		Company upon the satisfaction, in the sole judgment of the Placement Agents, of
		the conditions set forth in Section 3.2(b) hereof. The Placement Agents shall
		have no rights in or to any of the escrowed funds, unless the Placement Agents
		and the Escrow Agent are notified in writing by the Company in connection with
		the Closing that a portion of the escrowed funds shall be applied to the
		Placement Fee. The Company and the Investor agree to indemnify and hold the
		Escrow Agent harmless from and against any and all losses, costs, damages,
		expenses and claims (including, without limitation, court costs and reasonable
		attorneys fees) (“Losses”)
		arising under this Section
		3.3 or otherwise with respect to the
		funds held in escrow pursuant hereto or arising under the Escrow Agreement,
		unless it is finally determined that such Losses resulted directly from the
		willful misconduct or gross negligence of the Escrow Agent. Anything in this
		Agreement to the contrary notwithstanding, in no event shall the Escrow Agent
		be liable for any special, indirect or consequential loss or damage of any kind
		whatsoever (including but not limited to lost profits), even if the Escrow
		Agent has been advised of the likelihood of such loss or damage and regardless
		of the form of action.
	 

	 
		(b) Delivery Versus Payment through The Depository Trust
		Company. If the Investor elects to
		settle the Shares purchased by such Investor by delivery versus payment through
		DTC, no later than one (1) business
		day after the execution of this Agreement by the Investor and the
		Company, the Investor shall confirm
		that the account or accounts at LCM to be credited with the Shares being
		purchased by the Investor have a minimum balance equal to the aggregate
		purchase price for the Shares being purchased by the Investor. 
	 

	 
		 
	 

	 
		 
	 

	 
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		3.4 Delivery of Shares. 
	 

	 
		(a) Delivery by Electronic Book-Entry at The Depository
		Trust Company. If the Investor elects
		to settle the Shares purchased by such Investor through delivery by electronic
		book-entry at DTC, no later than one
		(1) business day after the execution of this Agreement by the Investor and the
		Company, the Investor shall direct
		the broker-dealer at which the account or accounts to be credited with the
		Shares being purchased by such Investor are maintained, which broker/dealer
		shall be a DTC participant, to set up a Deposit/Withdrawal at Custodian
		(“DWAC”) instructing the Transfer Agent to credit such
		account or accounts with the Shares by means of an electronic book-entry
		delivery. Such DWAC shall indicate the settlement date for the deposit of the
		Shares, which date shall be provided to the Investor by LCM. Simultaneously
		with the delivery to the Company by the Escrow Agent of the funds held in
		escrow pursuant to Section
		3.3 above, the Company shall direct the
		Transfer Agent to credit the Investor’s account or accounts with the
		Shares pursuant to the information contained in the DWAC. 
	 

	 
		(b) Delivery Versus Payment through The Depository Trust
		Company. If the Investor elects to
		settle the Shares purchased by such Investor by delivery versus payment through
		DTC, no later than one (1) business
		day after the execution of this Agreement by the Investor and the
		Company, the Investor shall notify
		LCM of the account or accounts at LCM to be credited with the Shares being
		purchased by such Investor. On the Closing Date, the Company shall deliver the
		Shares to the Investor through DTC directly to the account(s) at LCM identified
		by Investor and simultaneously therewith payment shall be made by LCM by wire
		transfer to the Company. 
	 

	 
		4. Representations, Warranties and
		Covenants of the Investor.
	 

	 
		 The Investor acknowledges, represents and
		warrants to, and agrees with, the Company and the Placement Agents that:

	 

	 
		4.1 The Investor (a) is knowledgeable, sophisticated and
		experienced in making, and is qualified to make decisions with respect to,
		investments in shares presenting an investment decision like that involved in
		the purchase of the Shares, including investments in securities issued by the
		Company and investments in comparable companies, (b) has answered all questions
		on the Signature Page and the Investor Questionnaire and the answers thereto
		are true and correct as of the date hereof and will be true and correct as of
		the Closing Date and (c) in connection with its decision to purchase the number
		of Shares set forth on the Signature Page, has received and is relying only
		upon the Disclosure Package.
	 

	 
		 
	 

	 
		 
	 

	 
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		4.2 (a) No action has been or will be taken in any
		jurisdiction outside the United States by the Company or the Placement Agents
		that would permit an offering of the Shares, or possession or distribution of
		offering materials in connection with the issue of the Shares in any
		jurisdiction outside the United States where action for that purpose is
		required, (b) if the Investor is outside the United States, it will comply with
		all applicable laws and regulations in each foreign jurisdiction in which it
		purchases, offers, sells or delivers Shares or has in its possession or
		distributes any offering material, in all cases at its own expense and (c) the
		Placement Agents are not authorized to make and have not made any
		representation, disclosure or use of any information in connection with the
		issue, placement, purchase and sale of the Shares, except as set forth in the
		Prospectus.
	 

	 
		4.3 (a) The Investor has full right, power, authority and
		capacity to enter into this Agreement and to consummate the transactions
		contemplated hereby and has taken all necessary action to authorize the
		execution, delivery and performance of this Agreement, and (b) this Agreement
		constitutes a valid and binding obligation of the Investor enforceable against
		the Investor in accordance with its terms, except as enforceability may be
		limited by applicable bankruptcy, insolvency, reorganization, moratorium or
		similar laws affecting creditors’ and contracting parties’ rights
		generally and except as enforceability may be subject to general principles of
		equity (regardless of whether such enforceability is considered in a proceeding
		in equity or at law) and except as to the enforceability of any rights to
		indemnification or contribution that may be violative of the public policy
		underlying any law, rule or regulation (including any federal or state
		securities law, rule or regulation).
	 

	 
		4.4 The Investor understands that nothing in this
		Agreement, the Prospectus, the Offering Information or any other materials
		presented to the Investor in connection with the purchase and sale of the
		Shares constitutes legal, tax or investment advice. The Investor has consulted
		such legal, tax and investment advisors as it, in its sole discretion, has
		deemed necessary or appropriate in connection with its purchase of
		Shares.
	 

	 
		4.5 Since the date on which any Placement Agent first
		contacted such Investor about the Offering, it has not engaged in any
		transactions in the securities of the Company (including, without limitation,
		any Short Sales involving the Company’s securities). Each Investor
		covenants that it will not engage in any transactions in the securities of the
		Company (including Short Sales) prior to the time that the transactions
		contemplated by this Agreement are publicly disclosed. Each Investor agrees
		that it will not use any of the Shares acquired pursuant to this Agreement to
		cover any short position in the Common Stock if doing so would be in violation
		of applicable securities laws. For purposes hereof, “Short Sales”
		include, without limitation, all “short sales” as defined in Rule 200
		promulgated under Regulation SHO under the Exchange Act, whether or not against
		the box, and all types of direct and indirect stock pledges, forward sales
		contracts, options, puts, calls, short sales, swaps, “put equivalent
		positions” (as defined in Rule 16a-1(h) under the Exchange Act) and
		similar arrangements (including on a total return basis), and sales and other
		transactions through non-US broker dealers or foreign regulated brokers.

	 

	 
		5. Survival of Representations,
		Warranties and Agreements; Third Party Beneficiary. Notwithstanding any investigation made by any party to
		this Agreement or by the Placement Agents, all covenants, agreements,
		representations and warranties made by the Company and the Investor herein will
		survive the execution of this Agreement, the delivery to the Investor of the
		Shares being purchased and the payment therefor. The Placement Agents and
		Lazard Fréres & Co. shall be third party beneficiaries with respect
		to the representations, warranties and agreements of the Investor in Section 4
		hereof.
	 

	 
		 
	 

	 
		 
	 

	 
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		6. Notices. All notices, requests, consents and other communications
		hereunder will be in writing, will be mailed (a) if within the domestic United
		States by first-class registered or certified airmail, or nationally recognized
		overnight express courier, postage prepaid, or by facsimile or (b) if delivered
		from outside the United States, by International Federal Express or facsimile,
		and will be deemed given (i) if delivered by first-class registered or
		certified mail domestic, three business days after so mailed, (ii) if delivered
		by nationally recognized overnight carrier, one business day after so mailed,
		(iii) if delivered by International Federal Express, two business days after so
		mailed and (iv) if delivered by facsimile, upon electric confirmation of
		receipt and will be delivered and addressed as follows:
	 

	 
			
				
				   
				

			 	
				
				  (a)
				

			 	
				
				  if to the Company, to:

				

			 

 

	 
		Towerstream Corporation 
 55 Hammarlund
		Way 
 Middletown, Rhode Island 02842 
 Attention: Jeffrey M. Thompson,
		CEO 
 Facsimile: (401) [___-____]
	 

	 
		with copies to: 
	 

	 
		Haynes and Boone, LLP
	 

	 
		153 East 53rd Street
	 

	 
		Suite 4900
	 

	 
		New York, New York 10022
	 

	 
		Attention: Harvey J. Kesner, Esq.
	 

	 
		Facsimile: (212) 918-8989
	 

	 
			
				
				   
				

			 	
				
				  (b)
				

			 	
				
				  if to the Investor, at its address
				  on the Signature Page hereto, or at such other address or addresses as may have
				  been furnished to the Company in writing.
				

			 

 

	 
		7. Changes. This Agreement may not be modified or amended except
		pursuant to an instrument in writing signed by the Company and the
		Investor.
	 

	 
		8. Headings. The headings of the various sections of this Agreement
		have been inserted for convenience of reference only and will not be deemed to
		be part of this Agreement.
	 

	 
		9. Severability. In case any provision contained in this Agreement should
		be invalid, illegal or unenforceable in any respect, the validity, legality and
		enforceability of the remaining provisions contained herein will not in any way
		be affected or impaired thereby.
	 

	 
		10. Governing Law. This Agreement will be governed by, and construed in
		accordance with, the internal laws of the State of New York, without giving
		effect to the principles of conflicts of law that would require the application
		of the laws of any other jurisdiction.
	 

	 
		11. Counterparts. This Agreement may be executed in two or more
		counterparts, each of which will constitute an original, but all of which, when
		taken together, will constitute but one instrument, and will become effective
		when one or more counterparts have been signed by each party hereto and
		delivered to the other parties.
	 

	 
		 
	 

	 
		 
	 

	 
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		12. Confirmation of Sale.
		The Investor acknowledges and agrees
		that such Investor’s receipt of the Company’s counterpart to this
		Agreement shall constitute written confirmation of the Company’s sale of
		Shares to such Investor.
	 

	 
		13. Press Release. The Company and the Investor agree that the Company
		shall issue a press release announcing the Offering prior to the opening of the
		financial markets in New York City on the business day immediately after the
		date hereof.
	 

	 
		14. Termination. In the event that the Placement Agreement is
		terminated by the Placement Agents pursuant to the terms thereof, this
		Agreement shall terminate without any further action on the part of the parties
		hereto.
	 

	 
		 
	 

	 
		 
	 

	 
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		EXHIBIT
		A
	 

	 
		TOWERSTREAM CORPORATION
	 

	 
		INVESTOR QUESTIONNAIRE
	 

	 
		Pursuant to Section 3 of
		Annex I to the Agreement, please provide us with the following
		information:
	 

	 
		 
	 

	 
			
				
				  1.
				

			 	
				
				  The exact name that your Shares are
				  to be registered in. You may use a nominee name if appropriate:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  2.
				

			 	
				
				  The relationship between the
				  Investor and the registered holder listed in response to item 1 above:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  3.
				

			 	
				
				  The mailing address of the
				  registered holder listed in response to item 1 above:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  4.
				

			 	
				
				  The Social Security Number or Tax
				  Identification Number of the registered holder listed in the response to item 1
				  above:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  5.
				

			 	
				
				  Name of DTC Participant
				  (broker-dealer at which the account or accounts to be credited with the Shares
				  are maintained):
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  6.
				

			 	
				
				  DTC Participant Number:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  7.
				

			 	
				
				  Name of Account at DTC Participant
				  being credited with the Shares:
				

			 	
				
				   
				

			 	
				
				   
				

			 
	
				
				  8.
				

			 	
				
				  Account Number at DTC Participant
				  being credited with the Shares:TOWERSTREAM CORPORATION

2007 INCENTIVE STOCK PLAN

1.    Purpose of the Plan.

This 2007 Incentive Stock Plan (the ‘‘Plan’’) is intended as an incentive, to retain in the employ of and as directors, officers, consultants, advisors and employees to Towerstream Corporation, a Delaware corporation (the ‘‘Company’’), and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the ‘‘Code’’), persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries.

It is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422 of the Code (the ‘‘Incentive Options’’) while certain other options granted pursuant to the Plan shall be nonqualified stock options (the ‘‘Nonqualified Options’’). Incentive Options and Nonqualified Options are hereinafter referred to collectively as ‘‘Options.’’

The Company intends that the Plan meet the requirements of Rule 16b-3 (‘‘Rule 16b-3’’) promulgated under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act. Further, the Plan is intended to satisfy the performance-based compensation exception to the limitation on the Company’s tax deductions imposed by Section 162(m) of the Code with respect to those Options for which qualification for such exception is intended. In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in this Section 1.

2.    Administration of the Plan.

The Board of the Company (the ‘‘Board’’) shall appoint and maintain as administrator of the Plan a Committee (the ‘‘Committee’’) consisting of two or more directors who are (i) ‘‘Independent Directors’’ (as such term is defined under the rules of the NASDAQ Stock Market), (ii) ‘‘Non-Employee Directors’’ (as such term is defined in Rule 16b-3) and (iii) ‘‘Outside Directors’’ (as such term is defined in Section 162(m) of the Code), which shall serve at the pleasure of the Board (‘‘Outside Directors’’) The Committee, subject to Sections 3, 5 and 6 hereof, shall have full power and authority to designate recipients of Options and restricted stock (‘‘Restricted Stock’’) and to determine the terms and conditions of the respective Option and Restricted Stock agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan. The Committee shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option.

Subject to the provisions of the Plan, the Committee shall interpret the Plan and all Options and Restricted Stock granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Options or Restricted Stock granted under the Plan in the manner and to the extent that the Committee deems desirable to carry into effect the Plan or any Options or Restricted Stock. The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority at a meeting duly held. Subject to the provisions of the Plan, any action taken or determination made by the Committee pursuant to this and the other Sections of the Plan shall be conclusive on all parties.

In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, then the Plan shall be administered 

by the Board, and references herein to the Committee (except in the proviso to this sentence) shall be deemed to be references to the Board, and any such grant, award or other acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3; provided, however, that grants to the Company’s Chief Executive Officer or to any of the Company’s other four most highly compensated officers that are intended to qualify as performance-based compensation under Section 162(m) of the Code may only be granted by the Committee.

3.    Designation of Optionees and Grantees.

The persons eligible for participation in the Plan as recipients of Options (the ‘‘Optionees’’) or Restricted Stock (the ‘‘Grantees’’ and together with Optionees, the ‘‘Participants’’) shall include directors, officers and employees of, and subject to their meeting the eligibility requirements of Rule 701 promulgated under the Securities Act of 1933, as amended (the ‘‘Securities Act’’), consultants, vendors, joint venture partners, and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to employees of the Company and any Subsidiary. In selecting Participants, and in determining the number of shares to be covered by each Option or share of Restricted Stock granted to Participants, the Committee may consider any factors it deems relevant, including without limitation, the office or position held by the Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Participant’s length of service, promotions and potential. A Participant who has been granted an Option or Restricted Stock hereunder may be granted an additional Option or Options, or Restricted Stock if the Committee shall so determine.

Grants to Outside Directors shall be approved by the Board. With respect to awards to such directors, all rights, powers and authorities vested in the Committee under the Plan shall instead be exercised by the Board, and all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to the Board for such purpose.

The Committee may only grant Options or award Restricted Stock on the first business day of each March, June, September or December of any calendar year, or on such other pre-determined dates as maybe set by the Committee (the ‘‘Pre-Determined Grant Dates’’). Notwithstanding the foregoing, the Committee may grant Options or award Restricted Stock to a new employee, executive officer, director or consultant to the Company as an inducement for such person to enter the service of the Company on a date other than a Pre-Determined Grant Date.

4.    Stock Reserved for the Plan.

Subject to adjustment as provided in Section 8 hereof, a total of 2,500,000 shares of the Company’s common stock, par value $0.001 per share (the ‘‘Stock’’), shall be subject to the Plan. The maximum number of shares of Stock that may be subject to Options shall conform to any requirements applicable to performance-based compensation under Section 162(m) of the Code, if qualification as performance-based compensation under Section 162(m) of the Code is intended. The shares of Stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of Stock shall be and is hereby reserved for such purpose. Any of such shares of Stock that may remain unsold and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option or Restricted Stock expire or be canceled prior to its exercise or vesting in full or should the number of shares of Stock to be delivered upon the exercise or vesting in full of an Option or Restricted Stock be reduced for any reason, the shares of Stock theretofore subject to such Option or Restricted Stock may be subject to future Options or Restricted Stock under the Plan, except where such reissuance is inconsistent with the provisions of Section 162(m) of the Code where qualification as performance-based compensation under Section 162(m) of the Code is intended.

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5.    Terms and Conditions of Options.

Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

    (a)    Option Price. The purchase price of each share of Stock purchasable under an Incentive Option shall be determined by the Committee at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Stock on the date the Option is granted; provided, however, that with respect to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Stock shall be at least 110% of the Fair Market Value per share of Stock on the date of grant. The purchase price of each share of Stock purchasable under a Nonqualified Option shall not be less than 100% of the Fair Market Value of such share of Stock on the date the Option is granted. The exercise price for each Option shall be subject to adjustment as provided in Section 8 below. ‘‘Fair Market Value’’ means the closing price on the final trading day immediately prior to the grant of publicly traded shares of Stock on the principal securities exchange on which shares of Stock are listed (if the shares of Stock are so listed), or, if not so listed, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over the counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code. Anything in this Section 5(a) to the contrary notwithstanding, in no event shall the purchase price of a share of Stock be less than the minimum price permitted under the rules and policies of any national securities exchange on which the shares of Stock are listed.

    (b)    Option Term. The term of each Option shall be fixed by the Committee, but no Option shall be exercisable more than ten years after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five years after the date such Incentive Option is granted.

    (c)    Exercisability. Subject to Section 5(j) hereof, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant; provided, however, that in the absence of any Option vesting periods designated by the Committee at the time of grant, Options shall vest and become exercisable as to one-third of the total number of shares subject to the Option on each of the first, second and third anniversaries of the date of grant; and provided further that no Options shall be exercisable until such time as any vesting limitation required by Section 16 of the Exchange Act, and related rules, shall be satisfied if such limitation shall be required for continued validity of the exemption provided under Rule 16b-3(d)(3).

    Upon the occurrence of a ‘‘Change in Control’’ (as hereinafter defined), the Committee may accelerate the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Committee in its sole discretion. In its sole discretion, the Committee may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within a specified number of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each share of Company Stock subject to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately prior to such Change in Control over the exercise price per share of such Option; such amount shall be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Committee shall determine in its sole discretion.

For purposes of the Plan, a Change in Control shall be deemed to have occurred if:

(i)    a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of 

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the time immediately prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;

(ii)    the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;

(iii)    the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates; or

(iv)    a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their affiliates.

For purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such purposes, ‘‘Person’’ shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, that a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.

    (d)    Method of Exercise. Options to the extent then exercisable may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares of Stock to be purchased, accompanied by payment in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may be made at the election of the Optionee (i) in the form of Stock owned by the Optionee (based on the Fair Market Value of the Stock which is not the subject of any pledge or security interest, (ii) in the form of shares of Stock withheld by the Company from the shares of Stock otherwise to be received with such withheld shares of Stock having a Fair Market Value equal to the exercise price of the Option, or (iii) by a combination of the foregoing, such Fair Market Value determined by applying the principles set forth in Section 5(a), provided that the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is at least equal to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying disposition of all or a portion of the Stock received upon exercise of an Incentive Option. An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Stock purchased upon exercise of an Option at such time as the Optionee (i) has given written notice of exercise and has paid in full for such shares, and (ii) has satisfied such conditions that may be imposed by the Company with respect to the withholding of taxes.

    (e)    Non-transferability of Options. Options are not transferable and may be exercised solely by the Optionee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Committee, in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee, (ii) a member of the Optionee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations 

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order. Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.

    (f)    Termination by Death. Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable (or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or until the expiration of the stated term of such Option as provided under the Plan, whichever period is shorter.

    (g)    Termination by Reason of Disability. Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of total and permanent disability, any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever period is shorter; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.

    (h)    Termination by Reason of Retirement. Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever date is earlier; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.

For purposes of this paragraph (h), ‘‘Normal Retirement’’ shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65, and ‘‘Early Retirement’’ shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55.

(i)    Other Termination. Unless otherwise determined by the Committee and except as is provided below, if any Optionee’s employment with or service to the Company or any Subsidiary terminates for any reason other than death, disability or Normal or Early Retirement, the Option shall thereupon terminate, except that the portion of any Option that was exercisable on the date of such termination of employment or service may be exercised for the lesser of ninety (90) days after the date of termination (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the balance of such Option’s term, which ever period is shorter. The transfer of an Optionee from the employ of or service to the Company to the employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or service for purposes of the Plan.

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(i)    In the event that the Optionee’s employment or service with the Company or any Subsidiary is terminated by the Company or such Subsidiary for ‘‘cause’’ any unexercised portion of any Option shall immediately terminate in its entirety. For purposes hereof, ‘‘Cause’’ shall exist upon a good-faith determination by the Board, following a hearing before the Board at which an Optionee was represented by counsel and given an opportunity to be heard, that such Optionee has been accused of fraud, dishonesty or act detrimental to the interests of the Company or any Subsidiary of Company or that such Optionee has been accused of or convicted of an act of willful and material embezzlement or fraud against the Company or of a felony under any state or federal statute; provided, however, that it is specifically understood that ‘‘Cause’’ shall not include any act of commission or omission in the good-faith exercise of such Optionee’s business judgment as a director, officer or employee of the Company, as the case may be, of the Company, or upon the advice of counsel to the Company.

(ii)    In the event that an Optionee is removed as a director, officer or employee by the Company at any time other than for ‘‘Cause’’ or resigns as a director, officer or employee for ‘‘Good Reason’’ the Option granted to such Optionee may be exercised by the Optionee, to the extent the Option was exercisable on the date such Optionee ceases to be a director, officer or employee. Such Option may be exercised at any time within one (1) year after the date the Optionee ceases to be a director, officer or employee (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof), or the date on which the Option otherwise expires by its terms; which ever period is shorter, at which time the Option shall terminate; provided, however, if the Optionee dies before the Options are forfeited and no longer exercisable, the terms and provisions of Section 5(f) shall control. For purposes of this Section 5(i) Good Reason shall exist upon the occurrence of the following:

(i)    the assignment of Optionee of any duties inconsistent with the position in the Company that Optionee held immediately prior to the assignment;

(ii)    a Change of Control resulting in a significant adverse alteration in the status or conditions of Optionee’s participation with the Company or other nature of Optionee’s responsibilities from those in effect prior to such Change of Control, including any significant alteration in Optionee’s responsibilities immediately prior to such Change in Control; and

(iii)    the failure by the Company to continue to provide Optionee with benefits substantially similar to those enjoyed by Optionee prior to such failure.

(j)    Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Incentive Option is granted, of Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000.

6.    Terms and Conditions of Restricted Stock.

Restricted Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock upon a Change of Control), not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

        (a)    Grantee rights. A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award within the period prescribed by the Committee and, if the Committee shall deem desirable, makes payment to the Company in cash, or by check or such other instrument as may be acceptable to the Committee. After acceptance and issuance of a certificate or certificates, as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject to the non-transferability and forfeiture restrictions described in Section 6(d) below.

        (b)    Issuance of Certificates. The Company shall issue in the Grantee’s name a certificate or certificates for the shares of Common Stock associated with the award promptly after the Grantee accepts such award.

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        (c)    Delivery of Certificates. Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted Stock shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Committee at the time of grant.

        (d)    Forfeitability, Non-transferability of Restricted Stock. Shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied. Shares of Restricted Stock are not transferable until the date on which the Committee has specified such restrictions have lapsed. Unless otherwise provided by the Committee at or after grant, distributions in the form of dividends or otherwise of additional shares or property in respect of shares of Restricted Stock shall be subject to the same restrictions as such shares of Restricted Stock.

        (e)    Change of Control. Upon the occurrence of a Change in Control as defined in Section 5(c), the Committee may accelerate the vesting of outstanding Restricted Stock, in whole or in part, as determined by the Committee, in its sole discretion.

        (f)    Termination of Employment. Unless otherwise determined by the Committee at or after grant, in the event the Grantee ceases to be an employee or otherwise associated with the Company for any other reason, all shares of Restricted Stock theretofore awarded to him which are still subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock power. The Committee may provide (on or after grant) that restrictions or forfeiture conditions relating to shares of Restricted Stock will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.

7.    Term of Plan.

No Option or Restricted Stock shall be granted pursuant to the Plan on the date which is ten years from the effective date of the Plan, but Options theretofore granted may extend beyond that date.

8.    Capital Change of the Company.

In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Stock, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee’s proportionate interest shall be maintained (to the extent possible) as immediately before the occurrence of such event. The Committee shall, to the extent feasible, make such other adjustments as may be required under the tax laws so that any Incentive Options previously granted shall not be deemed modified within the meaning of Section 424(h) of the Code. Appropriate adjustments shall also be made in the case of outstanding Restricted Stock granted under the Plan.

The adjustments described above will be made only to the extent consistent with continued qualification of the Option under Section 422 of the Code (in the case of an Incentive Option) and Section 409A of the Code.

9.    Purchase for Investment/Conditions.

Unless the Options and shares covered by the Plan have been registered under the Securities Act, or the Company has determined that such registration is unnecessary, each person exercising or receiving Options or Restricted Stock under the Plan may be required by the Company to give a representation in writing that he is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. The Committee may impose any additional or further restrictions on awards of Options or Restricted Stock as shall be determined by the Committee at the time of award.

10.    Taxes.

        (a)    The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Options or Restricted Stock granted under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters.

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        (b)    If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under Section 83(b) of the Code (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), such Grantee shall notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority of Code Section 83(b).

        (c)    If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise of an Incentive Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition within ten (10) days hereof.

11.    Effective Date of Plan.

The Plan shall be effective upon the date of its approval by the Company’s stockholders, and further, that in the event certain Option grants hereunder are intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code, the requirements as to stockholder approval set forth in Section 162(m) of the Code are satisfied.

12.    Amendment and Termination.

The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Participant under any Option or Restricted Stock theretofore granted without the Participant’s consent, and except that no amendment shall be made which, without the approval of the stockholders of the Company would:

        (a)    materially increase the number of shares that may be issued under the Plan, except as is provided in Section 8;

        (b)    materially increase the benefits accruing to the Participants under the Plan;

        (c)    materially modify the requirements as to eligibility for participation in the Plan;

        (d)    decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof or the exercise price of a Nonqualified Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof; or

        (e)    extend the term of any Option beyond that provided for in Section 5(b).

The Committee may at any time or times amend the Plan or any outstanding award for any purpose which may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of awards, provided that (except to the extent expressly required or permitted by the Plan) no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required under the listing requirements of the NASDAQ Stock Market and in order for the Plan to continue to qualify for the award of Incentive Options under Section 422 of the Code.

It is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the ‘‘Section 409A Rules’’) and the Committee shall exercise its discretion in granting awards hereunder (and the terms of such awards), accordingly. The Plan and any grant of an award hereunder may be amended from time to time (without, in the case of an award, the consent of the Participant) as may be necessary or appropriate to comply with the Section 409A Rules.

13.    Government Regulations.

The Plan, and the grant and exercise of Options or Restricted Stock hereunder, and the obligation of the Company to sell and deliver shares under such Options and Restricted Stock shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required.

14.    General Provisions.

    (a)    Certificates. All certificates for shares of Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, 

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regulations and other requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any stock exchange or interdealer quotation system upon which the Stock is then listed or traded and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.

    (b)    Employment Matters. Neither the adoption of the Plan nor any grant or award under the Plan shall confer upon any Participant who is an employee of the Company or any Subsidiary any right to continued employment or, in the case of a Participant who is a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention of any of its consultants or advisors at any time.

    (c)    Limitation of Liability. No member of the Committee, or any officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.

    (d)    Registration of Stock. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States. The Company shall not be under any obligation to register under applicable federal or state securities laws any Stock to be issued upon the exercise of an Option granted hereunder in order to permit the exercise of an Option and the issuance and sale of the Stock subject to such Option, although the Company may in its sole discretion register such Stock at such time as the Company shall determine. If the Company chooses to comply with such an exemption from registration, the Stock issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Stock represented thereby, and the Committee may also give appropriate stop transfer instructions with respect to such Stock to the Company’s transfer agent.

15.    Non-Uniform Determinations.

The Committee’s determinations under the Plan, including, without limitation, (i) the determination of the Participants to receive awards, (ii) the form, amount and timing of such awards, (iii) the terms and provisions of such awards and (ii) the agreements evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, awards under the Plan, whether or not such Participants are similarly situated.

16.    Governing Law.

The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law.

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