Document:

Exhibit
      10.1

    

    Fifth
      Amendment to the

    I-SECTOR
      CORP. INCENTIVE PLAN

    (As
      Amended and Restated Effective July 28, 2003)

    

    WHEREAS,
      the
      I-Sector Corp. Incentive Plan as amended and restated effective July 28,
      2003, (the “Plan”) was adopted by the Board of Directors of INX Inc. and
      approved by shareholders on July 28, 2003; and

    

    WHEREAS,
      under
      Section 7.7 of the Plan the Board has the authority to amend the Plan
      subject to certain shareholder approval requirements; and

    

    WHEREAS,
      the
      Board
      has authorized this fifth amendment of the Plan subject to stockholder approval
      as provided herein.

    

    NOW
      THEREFORE, the
      Plan
      is hereby amended as follows: 

    

    Section 1.4
      shall be amended in its entirety to read as follows: 

    

    1.4 Shares
      of Common Stock Available for Incentive Awards 

    

    Subject
      to
      adjustment under Section 6.5, there shall be available for Incentive Awards
      that are granted wholly or partly in Common Stock (including rights or Options
      that may be exercised for or settled in Common Stock) 2,723,103 Shares of
      Common Stock. The total number of Shares reserved for issuance under the Plan
      (pursuant to the previous sentence) shall be available for any one of the
      following types of grants: Incentive Stock Options, Nonstatutory Stock Options,
      SAR, Restricted Stock, a payment of a Performance Share in Shares, a payout
      of a
      Performance Unit in Shares, a payout of an Other Stock-Based Award in Shares
      described in Section 5 which includes, without limitation, Deferred Stock,
      purchase rights, shares of Common Stock awarded which are not subject to any
      restrictions or conditions, convertible or exchangeable debentures, other rights
      convertible into Shares, Incentive Awards valued by reference to the value
      of
      securities of or the performance of a specified Subsidiary, division or
      department, and settlement in cancellation of rights of any person with a vested
      interest in any other plan, fund, program or arrangement that is or was
      sponsored, maintained or participated in by the Company or any Parent or
      Subsidiary. The number of Shares of Common Stock that are the subject of
      Incentive Awards under this Plan, that are forfeited or terminated, expire
      unexercised, are settled in cash in lieu of Common Stock or in a manner such
      that all or some of the Shares covered by an Incentive Award are not issued
      to a
      Grantee or are exchanged for Incentive Awards that do not involve Common Stock,
      shall again immediately become available for Incentive Awards hereunder. The
      Committee may from time to time adopt and observe such procedures concerning
      the
      counting of Shares against the Plan maximum as it may deem appropriate. The
      Board and the appropriate officers of the Company shall from time to time take
      whatever actions are necessary to file any required documents with governmental
      authorities, stock exchanges and transaction reporting systems to ensure that
      Shares are available for issuance pursuant to Incentive Awards.

    

    During
      any
      period that the Company is a Publicly Held Corporation, then unless and until
      the Committee determines that a particular Incentive Award granted to a Covered
      Employee is not intended to comply with the Performance-Based Exception, the
      following rules shall apply to grants of Incentive Awards to Covered
      Employees:

    

    (a) Subject
      to adjustment as provided in Section 6.5, the maximum aggregate number of
      Shares of Common Stock (including Stock Options, SARs, Restricted Stock,
      Performance Units and Performance Shares paid out in Shares, or Other
      Stock-Based Awards paid out in Shares) that may be granted or that may vest,
      as
      applicable, in any calendar year pursuant to any Incentive Award held by any
      individual Employee shall be 2,753,103 Shares.

    

    (b) The
      maximum aggregate cash payout (including SARs, Performance Units and Performance
      Shares paid out in cash, or Other Stock-Based Awards paid out in cash) with
      respect to Incentive Awards granted in any calendar year which may be made
      to
      any individual Employee shall be Twenty Million dollars
      ($20,000,000).

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (c) With
      respect to any Stock Option or Stock Appreciation Right granted to a Covered
      Employee that is canceled or repriced, the number of Shares subject to such
      Stock Option or Stock Appreciation Right shall continue to count against the
      maximum number of Shares that may be the subject of Stock Options or Stock
      Appreciation Rights granted to such Employee hereunder to the extent such is
      required in accordance with Section 162(m) of the Code.

    

    (d) The
      limitations of subsections (a), (b) and (c) above shall be construed
      and administered so as to comply with the Performance-Based
      Exception.

    

    The
      Plan
      as amended hereby is effective on March 6, 2007, subject to approval of the
      stockholders of the Company within one year from March 6, 2007. Incentive
      Awards may be granted under the Plan pursuant to this amendment prior to the
      receipt of such stockholder approval; provided however, that if the requisite
      stockholder approval is not obtained then any such Incentive Awards granted
      hereunder shall automatically become null and void and have no force and
      effect.

     

    
      
        	 	INX
                Inc.
	 	 	 
	 	
                By: 

              	
                /s/
                  James H. Long

              	
              
	 	 	
                James
                  H. Long, Chairman of the Board and

                Chief
                  Executive
                  OfficerExhibit 4.1

    Exhibit
      4.1

    Form
      of Subscription Agreement utilized in a private placement of Common Stock,
      effective April 12, 2007

    

    AFP
      Imaging Corporation 

     

    Subscription
      Agreement

    

    

    AFP
      Imaging Corporation

    250
      Clearbrook Road

    Elmsford,
      New York 10523

    

    Dear
      Sirs
      and Madams:

    

    Based
      upon
      the terms and conditions set forth herein, the undersigned hereby irrevocably
      subscribes (the “Subscription”), subject to the terms and conditions herein, to
      purchase the number of shares (each, a “Share” and collectively, the “Shares”)
      of the common stock, par value $.01 per share (the “Common Stock”) of AFP
      Imaging Corporation, a New York corporation (the “Company”), set forth in the
      Execution Section of this Subscription Agreement, at a per Share purchase price
      (the “Subscription Price”) as set forth in the Execution Section of this
      Subscription Agreement.

    

    The
      Subscription is subject to and is made pursuant to the following terms and
      conditions:

    

    1. Representations,
      Warranties and Covenants of the Company.
      By its
      acceptance of this Subscription Agreement, the Company shall be deemed to
      represent and warrant to and covenant with the undersigned as
      follows:

    

    (a) Corporate
      Status.
      The
      Company (i) is a corporation duly organized, validly existing and in good
      standing under the laws of the State of New York, (ii) has all necessary
      corporate power and authority to own, operate or lease the properties and assets
      now owned, operated or leased by the Company and to carry on the business of
      the
      Company, as it is now being conducted, and (iii) is duly licensed or qualified
      and in good standing as a foreign corporation authorized to do business in
      each
      jurisdiction wherein the character of the properties owned or leased by the
      Company and/or the nature of the activities conducted by the Company makes
      such
      licensing or qualification necessary, except where the failure to be so licensed
      or qualified and in good standing would not prevent the Company from performing
      any of its material obligations under this Subscription Agreement and would
      not
      have a material adverse effect on the business, operations or financial
      condition of the Company (each, a “Material Adverse Effect”).

    

    (b) Authority
      of Agreement.
      The
      Company has the power and authority to accept the Subscription and to execute
      and deliver this Subscription Agreement and, upon acceptance by the Company
      (in
      whole or part), to carry out its obligations under this Subscription Agreement;
      and the execution, delivery and performance by the Company of this Subscription
      Agreement and the consummation of the transactions contemplated by this
      Subscription Agreement have been duly authorized by all necessary corporate
      action on the part of the Company and this Subscription Agreement, upon
      acceptance by the Company (in whole or part), constitutes the valid and legally
      binding obligations of the Company enforceable against the Company in accordance
      with its terms, except as the same may be limited by bankruptcy, insolvency,
      reorganization or other laws affecting the enforcement of creditors’ rights
      generally now or hereafter in effect and subject to the application of equitable
      principles and the availability of equitable remedies; the Shares to be issued
      hereunder will be duly authorized, validly issued fully paid and
      non-assessable.

    

    
      
         

      

      
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    (c) Consents
      and Approvals; No Conflict.

    

    (i) The
      acceptance, execution and delivery of this Subscription Agreement by the Company
      does not, and the performance by the Company of its obligations under this
      Subscription Agreement, upon acceptance by the Company (in whole or part),
      will
      not, require any consent, approval, authorization or other action by, or filing
      with or notification to, any governmental or regulatory authority, other than
      in
      connection with state securities or “blue sky” laws, except where failure to
      obtain such consent, approval, authorization or action, or to make such filing
      or notification, would not prevent the Company from performing any of its
      material obligations under this Subscription Agreement and would not have a
      Material Adverse Effect on the Company; and

    

    (ii) The
      acceptance, execution, delivery and performance of this Subscription Agreement
      by the Company and the consummation of the transactions contemplated by this
      Subscription Agreement do not and will not conflict with, violate or result
      in a
      breach or termination of any provision of, or constitute a default under (or
      event which with the giving of notice or lapse of time, or both, would become
      a
      default under) the Certificate of Incorporation or By-laws of the Company or,
      except as would not prevent the Company from performing any of its material
      obligations under this Subscription Agreement and would not have a Material
      Adverse Effect on the Company, any law, rule, regulation, order, writ, judgment,
      injunction, decree, determination or award applicable to the Company or give
      to
      others any rights of termination, amendment, acceleration or cancellation of,
      or
      result in the creation of any lien or encumbrance on any of the assets or
      properties of the Company pursuant to, any note, bond, mortgage, indenture,
      contract, agreement, lease, license, permit, franchise or other instrument
      relating to such assets or properties to which the Company is a party or by
      which any of such assets or properties is bound.

    

    (d) Absence
      of Litigation.
      No
      claim, action, proceeding or investigation is pending which seeks to delay
      or
      prevent the consummation of the transactions contemplated by this Subscription
      Agreement or which would be reasonably likely to adversely affect the Company’s
      ability to consummate the transactions contemplated by this Subscription
      Agreement or which would have a Material Adverse Effect on the Company, except
      as disclosed in the SEC Reports (as such term is defined below).

     

    (e) [Reserved]

    

    (f) Accuracy
      of Reports and Information.
      The
      Company is in full compliance, to the extent applicable, with all reporting
      obligations under Section 12(b), 12(g) or 15(d) of the Securities Exchange
      Act
      of 1934, as amended (the “Exchange Act”); the Company has registered the Common
      Stock pursuant to Section 12 of the Exchange Act and has filed all material
      required to be filed pursuant to all reporting obligations, under either Section
      13(a) or 15(d) of the Exchange Act, for a period of at least twelve months
      immediately preceding the date hereof.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (g) SEC
      Filings/Full Disclosure.
      None of
      the Company’s filings with the Securities and Exchange Commission (the
“Commission”) since July 1, 2004 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 Company has, since July 1, 2005, timely filed all
      requisite forms, reports and exhibits thereto with the Commission; and the
      Company’s Annual Report on Form 10-K for the year ended June 30, 2006 and
      Quarterly Reports on Forms 10-Q for the quarters ended September 30, 2006 and
      December 31, 2006 filed by the Company with the Commission, including exhibits
      thereto (collectively, the “SEC Reports”) 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.

    

    (h) Absence
      of Undisclosed Liabilities.
      The
      Company has no material liabilities or obligations, absolute or contingent
      (individually or in the aggregate), except as set forth in the financial
      statements included in the SEC Reports (collectively, the “Financial
      Statements”) or as incurred in the ordinary course of business after the date of
      the Financial Statements.

    

    (i) Governmental
      Consent, etc.
      No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of the Company is required in connection
      with the valid execution and delivery of this Subscription Agreement, or the
      offer, sale or issuance of the Shares, or the consummation of any other
      transaction contemplated by this Subscription Agreement, except the filing
      with
      the Commission of a registration statement on an appropriate form for the
      purpose of registering for resale the Shares and any state securities laws
      filings or registrations.

    

    (j) Intellectual
      Property Rights.
      Except
      as disclosed in the SEC Reports, the Company has sufficient trademarks, trade
      names, patent rights, copyrights and licenses to conduct its business as
      contemplated therein; and, to the Company’s knowledge, neither the Company nor
      its products and services are infringing or will infringe any trademark, trade
      name, patent right, copyright, license, trade secret or other similar right
      of
      others currently in existence; and there is no claim being made against the
      Company regarding any trademark, trade name, patent, copyright, license, trade
      secret or other intellectual property right which could have a Material Adverse
      Effect on the Company.

    

    (k) Material
      Contracts.
      Except
      as set forth in the SEC Reports or disclosed to the undersigned, the agreements
      to which the Company is a party described in the SEC Reports are valid
      agreements, in full force and effect, the Company is not in material breach
      or
      material default (with or without notice or lapse of time, or both) under any
      of
      such agreements, and, to the Company’s knowledge, the other contracting party or
      parties thereto are not in material breach or material default (with or without
      notice or lapse of time, or both) under any of such agreements.

    

    (l) Title
      to Assets.
      Except
      as set forth in SEC Reports, the Company has good and marketable title to all
      properties and material assets described therein as owned by it, free and clear
      of any pledge, lien, security interest, encumbrance, claim or equitable interest
      other than such as are not material to the business of the Company.

    

    (m) Subsidiaries.
      The
      Company does not presently own or control, directly or indirectly, any interest
      in any other corporation, partnership, association or other business entity,
      except as stated in the SEC Reports.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (n) Required
      Governmental Permits.
      The
      Company is in possession of and operating in compliance with all authorizations,
      licenses, certificates, consents, orders and permits from state, federal and
      other regulatory authorities which are material to the conduct of its business,
      all of which are valid and in full force and effect.

    

    (o) No
      Insider Information.
      The
      Company has not disclosed to the undersigned any material non-public information
      not otherwise disclosed in the SEC Reports except for the existence and terms
      of
      the financing contemplated by this Subscription Agreement, the Company’s
      proposed acquisition of Quantitative Radiology srl (“QR”), and the existence
      and/or proposed terms of other financing relating to the acquisition of
      QR.

    

    2. Representations,
      Warranties and Covenants of the Undersigned.
      The
      undersigned hereby represents, warrants and acknowledges to and covenants and
      agrees with the Company as follows:

    

    (a) Status.
      If the
      undersigned is a corporation or other entity, the undersigned is a corporation
      or other entity duly organized, validly existing and in good standing under
      the
      laws of the jurisdiction of its organization with full power and authority
      to
      execute, deliver and perform undersigned’s obligations under this Subscription
      Agreement; and, if the undersigned is an individual or are individuals, the
      undersigned has legal capacity to execute, deliver and perform his, her or
      their
      obligations under this Subscription Agreement.

    

    (b) Authority
      for Agreements.
      The
      undersigned has the power and authority to execute and deliver this Subscription
      Agreement and to carry out the undersigned’s obligations hereunder; and the
      execution, delivery and performance by the undersigned of this Subscription
      Agreement and the consummation of the transactions contemplated by this
      Subscription Agreement have been duly authorized by all necessary action on
      the
      part of the undersigned and this Subscription Agreement constitutes the valid
      and legally binding obligation of the undersigned, enforceable against the
      undersigned in accordance with its terms, except as the same may be limited
      by
      bankruptcy, insolvency, reorganization or other laws affecting the enforcement
      of creditors’ rights generally now or hereafter in effect and subject to the
      application of equitable principles and the availability of equitable
      remedies.

    

    (c) Consents
      and Approvals, No Conflicts.

    

    (i) The
      execution and delivery of this Subscription Agreement by the undersigned do
      not,
      and the performance by the undersigned of undersigned’s obligations under this
      Subscription Agreement will not, require any consent, approval, authorization
      or
      other action by, or filing with or notification to, any governmental or
      regulatory authority, except where failure to obtain such consent, approval,
      authorization or action, or to make such filing or notification, would not
      prevent the undersigned from performing any of undersigned’s material
      obligations under this Subscription Agreement; and

    

    (ii) The
      execution, delivery and performance of this Subscription Agreement by the
      undersigned and the other agreements and agreements to be executed, delivered
      and performed by the undersigned pursuant to this Subscription Agreement and
      the
      consummation of the transactions contemplated by this Subscription Agreement
      and
      such other agreements and documents by the undersigned do not and will not
      conflict with, violate or result in a breach or termination of any provision
      of,
      or constitute a default under (or event which with the giving of notice or
      lapse
      of time, or both, would become a default under) the Certificate of Incorporation
      or By-laws of the undersigned (if the undersigned is a corporation), any other
      organizational instrument (if the undersigned is a legal entity other than
      a
      corporation), or, except as would not prevent the undersigned from performing
      any of undersigned’s material obligations under this Subscription Agreement and
      would not have a material adverse effect on the undersigned, any law, rule,
      regulation, order, writ, judgment, injunction, decree, determination or award
      applicable to the undersigned or give to others any rights of termination,
      amendment, acceleration or cancellation of, or result in the creation of any
      lien or encumbrance on any of the assets or properties of the undersigned
      pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
      license, permit, franchise or other instrument relating to such assets or
      properties to which the undersigned is a party or by which any of such assets
      or
      properties is bound.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (d) Investment
      Intent.
      The
      undersigned is acquiring the Shares for the undersigned’s own account, for
      investment only and not with a view to, or for sale in connection with, a
      distribution thereof or any part thereof, within the meaning of the Securities
      Act of 1933, as amended (the “Securities Act”), and the rules and regulations
      promulgated thereunder, or any applicable state securities or blue-sky
      laws.

    

    (e) Investor
      Status.
      The
      undersigned reasonably believes that it qualifies as an accredited investor
      as
      such term is defined under Regulation D promulgated under the Securities Act
      (“Regulation D”) for the reason(s) as set forth in the Execution Section of this
      Subscription Agreement, and all of the representations and warranties of the
      undersigned set forth in this Subscription Agreement are correct and complete
      as
      of the date of this Subscription Agreement, shall be true and correct as of
      the
      Closing Date (as defined herein) and shall survive the closing of the purchase
      of the Shares; and, if there should by any material change in such information
      prior to the sale to the undersigned of the Shares, the undersigned will
      immediately furnish such revised or corrected information to the
      Company.

    

    (f) Intent
      to Transfer.
      The
      undersigned is not a party or subject to or bound by any contract, undertaking,
      agreement or arrangement with any person to sell, transfer or pledge the Shares
      or any part or interest in the Shares to any person, and has no present
      intention to enter into such a contract, undertaking, agreement or
      arrangement.

    

    (g) Exemption
      from Registration; Company’s Reliance.

    

    (i) The
      Company has advised the undersigned that the Shares have not been registered
      under the Securities Act or under the laws of any state on the basis that the
      issuance thereof is exempt from such registration;

    

    (ii) The
      Company’s reliance on the availability of such exemption is, in part, based upon
      the accuracy and truthfulness of the undersigned’s representations contained in
      this Subscription Agreement;

    

    (iii) As
      a
      result of such lack of registration, the Shares may not be resold or otherwise
      transferred or disposed without registration pursuant to or an exemption
      therefrom available under the Securities Act and such state securities laws;
      and

    

    (iv) In
      furtherance of the provisions of this Section 2(g), each certificate
      representing any of the Shares shall bear a restrictive legend substantially
      in
      the following form:

    

    
      
         

      

      
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    “THE
      SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES HAVE BEEN ACQUIRED
      FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
      MAY
      NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT
      AN
      EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF
      1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
      SATISFACTORY TO THE ISSUER OF THESE SHARES TO THE EFFECT THAT REGISTRATION
      IS
      NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES
      LAWS.”

    

    (h) Sophistication
      of the Undersigned.
      The
      undersigned has evaluated the merits and risks of purchasing the Shares and
      has
      such knowledge and experience in financial and business matters that the
      undersigned is capable of evaluating the merits and risks of such purchase,
      is
      aware of and has considered the financial risks and financial hazards of
      purchasing the Shares, and is able to bear the economic risk of purchasing
      the
      Shares, including the possibility of a complete economic loss with respect
      to
      such purchase.

    

    (i) Access
      to Information.
      The
      undersigned has had access to such information regarding the business and
      finances of the Company and the Shares, the receipt and careful review of which
      is hereby acknowledged by the undersigned, and has been provided the opportunity
      to discuss with the Company’s management the business, affairs and financial
      condition of the Company and such other matters with respect to the Company
      as
      would concern a reasonable person considering the transactions contemplated
      by
      this Subscription Agreement and/or concerned with the operation of the Company,
      including, without limitation, pursuant to a meeting and/or discussions with
      management of the Company.

    

    (j) No
      Guarantees.
      It has
      never been represented, guaranteed or warranted to the undersigned by the
      Company, or any of its officers, directors, agents, representatives or
      employees, or any other person, expressly or by implication, that:

    

    (i) Any
      gain
      will be realized by the undersigned from the undersigned’s investment in the
      Shares;

    

    (ii) That
      there
      will be any approximate or exact length of time that the undersigned will be
      required to remain as a holder of the Shares; or

    

    (iii) That
      the
      past performance or experience on the part of the Company, its predecessors
      or
      of any other person, will in any way indicate any future results of the
      Company.

    

    (k) No
      Other Representations, Warranties, Covenants or Agreements of the
      Company.
      Except
      as set forth in this Subscription Agreement, the Company has not made any
      representation, warranty, covenant or agreement with respect to the matters
      contained herein.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (l) High
      Degree of Investment Risk.
      The
      undersigned acknowledges that the purchase of the Shares involves a high degree
      of risk and may result in a loss of the entire amount invested; that the Company
      has limited working capital and limited sources of financing available; that
      there is no assurance that the Company’s operations will be profitable in the
      future; and that there is no assurance that a public market for shares of Common
      Stock will continue to exist.

    

    (m) State
      of Residence or Principal Place of Business.
      The
      state of residence or state of incorporation and principal place of business
      as
      set forth in the Execution Section of this Subscription Agreement is the
      undersigned’s true and correct state of residence (if an individual) or state of
      incorporation or organization and state of principal place of business (if
      a
      corporation or other non-individual entity), and the undersigned has no present
      intention of becoming a resident, or reincorporating or relocating its principal
      place of business to, of any other country, state or jurisdiction.

    

    (n) No
      Purchaser Representative.
      The
      undersigned has not authorized any person or institution to act as the
      undersigned’s “purchaser representative” (as such term is defined in Rule 501 of
      Regulation D) in connection with the tendering of the Subscription.

    

    (o) No
      General Solicitation.
      The
      undersigned has not received any general solicitation or general advertising
      regarding the purchase of any of the Shares.

    

    (p) No
      Finder.
      Except
      for fees payable to HDR Partners and/or its agents or affiliates (“HDR”), which
      fees shall be borne solely by the Company, there is no finder or placement
      agent
      in connection with this Subscription Agreement and the purchase of the Shares
      contemplated hereby. The undersigned understands and acknowledges that HDR,
      as
      placement agent, is entitled to receive fees in connection with the sale of the
      Shares of up to five percent (5%) of the Subscription Price.

    

    (q) No
      Insider Trading.
      The
      undersigned will not engage in any transaction with respect to securities of
      the
      Company at any time if, at the time of such transaction, the undersigned is
      aware of any material non-public information relating to the Company or its
      securities.

    

    3. Acceptance
      or Rejection of Subscription; Company Withdrawal of Offer.
      It is
      understood and agreed that this Subscription Agreement is made subject to the
      following terms and conditions:

    

    (a) The
      Company shall have the right to accept or reject the Subscription and this
      Subscription Agreement, in whole or in part, for any reason, including, but
      not
      limited to, ineligibility of the undersigned under the applicable federal,
      state
      or foreign securities laws, for any other reason, or for no reason.

    

    (b) If
      the
      Subscription is rejected, in whole or part, (i) any funds representing the
      aggregate Subscription Price subject to the Subscription previously tendered
      will be returned to the undersigned without interest or penalty, (ii) the
      undersigned will have no further liability to the Company and (iii) the Company
      will have no further liability to the undersigned.

    

    (c) If
      the
      Subscription is accepted in part and rejected in part, the undersigned will
      be
      so notified, at which time the excess aggregate Subscription Price subject
      to
      the Subscription previously tendered shall promptly be returned to the
      undersigned without interest or penalty.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    4. Registration
      Rights.

    

    (a) Defined
      Terms.
      As used
      in this Article 4, terms defined elsewhere in this Subscription Agreement shall
      have their assigned meanings and each of the following terms shall have the
      following meanings (such definitions to be applicable to both the plural and
      singular of the terms defined):

    

    (i) Registerable
      Securities.
      The term
“Registerable Securities” shall mean any of the Shares and any shares of Common
      Stock or other securities received in connection with any stock split, stock
      dividend, merger, reorganization, recapitalization, reclassification or other
      distribution payable or issuable upon the Shares; provided,
      however,
      that,
      for the purposes of this Subscription Agreement, the Shares and/or such other
      securities will cease to be Registerable Securities when (A) a registration
      statement under the Securities Act covering such Registerable Securities has
      been declared effective and such Registerable Securities have been disposed
      of
      pursuant to such effective registration statement, (B) such Registerable
      Securities are distributed to the public pursuant to the Securities Act or
      pursuant to an exemption from the registration requirements of the Securities
      Act, including, but not limited to, Rules 144 and 144A promulgated under the
      Securities Act, or (C) such Registerable Securities have been otherwise
      transferred and the Company, in accordance with applicable law and regulations,
      has delivered new certificates or other evidences of ownership for such
      securities which are not subject to any stop transfer order or other restriction
      on transfer;

    

    (ii) Rightsholders.
      The term
“Rightsholder” shall include the undersigned, all successors and assigns of the
      undersigned, and all transferees of Registerable Securities where such transfer
      affirmatively includes the transfer and assignment of the rights of the
      transferor-Rightsholder under this Subscription Agreement with respect to the
      transferred Registerable Securities; provided,
      however,
      the term
“Rightsholders” shall not include any person or entity after the person or
      entity has sold, transferred or assigned all of the person’s or entity’s
      Registerable Securities; and

    

    (iii) The
      words
“hereof,” “herein” and “hereunder” and words of similar import when used in this
      Article 4 shall refer to this Article 4 as a whole and not to any particular
      provision of this Article 4, and article, section, subsection, paragraph,
      clause, schedule and exhibit references are to this Article 4 unless otherwise
      specified.

    

    (b) Required
      Registration.

    

    (i) Requirement
      to Register.
      No later
      than the date (the “Required Filing Date”) which is 150 days following the
      issuance of the Shares pursuant to this Subscription Agreement, the Company
      shall file a registration statement on an applicable form chosen by the Company,
      in its sole discretion, to register (the “Required Registration”) for resale
      under the Securities Act all of the Registerable Securities. The Company shall
      have the right to require each Rightsholder to specify the intended method(s)
      of
      disposition of the Registerable Securities of such Rightsholder, including,
      but
      not limited to, whether or not such distribution or portion thereof is to relate
      to an underwritten offering, the name of the managing underwriter(s), if any,
      the terms of any such underwriting and such other information as the Company
      may
      reasonably request. In the event that the Company fails to file the registration
      statement as contemplated by this Section 4(b)(i) on or before the Required
      Filing Date for any reason other than the failure of (A) the undersigned to
      timely provide information to the Company or its counsel concerning the
      undersigned necessary for inclusion in the registration statement pursuant
      to
      applicable rules and regulations of the Commission or (B) the independent
      auditors of the Company to timely complete any necessary audit and/or review
      of
      financial statements relating to QR that are required for inclusion in the
      registration statement pursuant to applicable rules and regulations of the
      Commission, the Company shall pay to the Rightsholder a fee equal to 1% of
      the
      Subscription Price, payable for each month (or portion thereof) in which such
      failure to file the registration statement shall occur. Each such monthly fee
      shall be due and payable no later than the fifteenth day following the end
      of
      the calendar month upon which such fee is calculated.

    

    (ii) Number
      of Required Registrations; Expenses.
      The
      Rightsholders shall be entitled, in the aggregate, to one Required Registration,
      the Registration Expenses (as defined in Section 4(d)) of which, subject to
      the
      provisions of Section 4(d), shall be borne by the Company, but the Company
      shall
      not be responsible for the payment of any underwriter’s discount, commission or
      selling concession in connection with any of the Registerable Securities. The
      Company shall not be deemed to have effected a Required Registration unless
      and
      until such Required Registration is declared effective.

    

    
      
         

      

      
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    (iii) Delay
      in Effecting Required Registration.
      Notwithstanding anything to the contrary contained in Paragraphs 4(b)(i) and
      4(b)(ii), the Company shall not be obligated to effect a Required Registration
      at any time when the Company, in the good faith judgment of its Board of
      Directors made no later than 30 days prior to the Required Filing Date, and
      certified in writing by an authorized officer of the Company, reasonably
      believes that the existence of a pending material event in respect of the
      Company would make the filing of the registration statement with respect to
      the
      Required Registration, or the offering of securities pursuant to the Required
      Registration, detrimental to the interests of the Company or its shareholders.
      Such delay shall only extend through the date such event is no longer
      pending.

    

    (iv) Approval
      of Underwriter by the Company.
      If the
      Required Registration is to involve an underwritten offering, the managing
      underwriter(s) and each selling agent selected by those Rightsholders
      participating in each such underwritten offering shall be subject to the written
      approval of the Company, which approval may not be unreasonably
      withheld.

    

    (c) Registration
      Procedures.

    

    (i) Obligations
      of the Company.
      The
      Company will, in connection with any registration pursuant to Section 4(b)
      hereof, as expeditiously as possible:

    

    (A) prepare
      and file with the Commission a registration statement under the Securities
      Act
      on any appropriate form chosen by the Company, in its sole discretion, which
      shall be available for the sale of all Registerable Securities, and use its
      commercially reasonable efforts to cause such registration statement to become
      effective as soon thereafter as reasonably practicable; provided,
      that
      subject to the provisions of Paragraph 4(b)(iii), that the obligation of the
      Company to effect such registration and/or cause such registration statement
      to
      become effective, may be postponed for (1) such period of time when the
      financial statements of the Company required to be included in such registration
      statement are not available (due solely to the fact that such financial
      statements have not been prepared in the regular course of business of the
      Company) or (2) any other bona
      fide
      corporate
      purpose;

    

    (B) use
      its
      commercially reasonable efforts to keep such registration statement effective
      for a period of up to 36 months from the Closing Date;

    

    
      
         

      

      
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    (C) notify
      the
      Rightsholders whose Registerable Securities are included in such registration
      statement and the managing underwriter(s), if any, of an underwritten offering
      of any of the Registerable Securities included in such registration statement,
      and confirm such advice in writing, (1) when a prospectus or any prospectus
      supplement or post-effective amendment has been filed, and, with respect to
      a
      registration statement or any post-effective amendment, when the same has become
      effective, (2) of any request by the Commission for amendments or supplements
      to
      a registration statement or related prospectus or for additional information,
      (3) of the issuance by the Commission of any stop order suspending the
      effectiveness of a registration statement or the initiation of any proceedings
      for that purpose, (4) if at any time the representations and warranties of
      the
      Company contemplated by clause (1) of Subparagraph 4(c)(i)(J) hereof cease
      to be
      true and correct, (5) of the receipt by the Company of any notification with
      respect to the suspension of the qualification of any of the Registerable
      Securities for sale in any jurisdiction or the initiation or threatening of
      any
      proceeding for such purpose and (6) of the happening of any event which makes
      any statement made in the registration statement, the prospectus or any document
      incorporated therein by reference untrue or which requires the making of any
      changes in the registration statement or prospectus so that such registration
      statement, prospectus or document incorporated by reference will not contain
      any
      untrue statement of material fact or omit to state any material fact required
      to
      be stated therein or necessary to make the statements therein not
      misleading;

    

    (D) make
      commercially reasonable efforts to obtain the withdrawal of any order suspending
      the effectiveness of such registration statement at the earliest possible moment
      and to prevent the entry of such an order;

    

    (E) use
      commercially reasonable efforts to register or qualify the Registerable
      Securities included in such registration statement under such other securities
      or blue sky laws of such jurisdictions as any Rightsholder whose Registerable
      Securities are included in such registration statement reasonably requests
      in
      writing and do any and all other acts and things which may be necessary or
      advisable to enable such Rightsholder to consummate the disposition in such
      jurisdictions of such Registerable Securities; provided,
      that the
      Company will not be required to (1) qualify generally to do business in any
      jurisdiction where it would not otherwise be required to qualify but for this
      Subparagraph 4(c)(i)(E), (2) subject itself to taxation in any such jurisdiction
      or (3) take any action which would subject it to general service of process
      in
      any such jurisdiction;

    

    (F) make
      available for inspection by each Rightsholder whose Registerable Securities
      are
      included in such registration, any underwriter(s) participating in any
      disposition pursuant to such registration statement, and any representative,
      agent or employee of or attorney or accountant retained by any such Rightsholder
      or underwriter(s) (collectively, the “Inspectors”), all financial and other
      records, pertinent corporate documents and properties of the Company
      (collectively, the “Records”) as shall be reasonably necessary to enable them to
      exercise their due diligence responsibility (or establish a due diligence
      defense), and cause the officers, directors and employees of the Company to
      supply all information reasonably requested by any Inspector in connection
      with
      such registration statement; provided,
      that the
      Rightsholder and Inspector enter into an appropriate non-disclosure agreement
      with the Company; provided,
      further,
      that the
      Records which the Company determines, in good faith, to be confidential and
      which it notifies the Inspectors are confidential shall not be disclosed by
      the
      Inspectors, unless (1) the release of the Records is ordered pursuant to a
      subpoena or other order from a court of competent jurisdiction or (2) the
      disclosure of the Records is required by any applicable law or regulation or
      any
      governmental regulatory body with jurisdiction over such Rightsholder or
      underwriter; provided,
      further,
      that
      such Rightsholder or underwriter(s) agree that such Rightsholder or
      underwriter(s) will, upon learning the disclosure of such Records is sought
      in a
      court of competent jurisdiction, give notice to the Company and allow the
      Company, at the Company’s expense, to undertake appropriate action to prevent
      disclosure of the Records deemed confidential;

    

    
      
         

      

      
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    (G) cooperate
      with the Rightsholder whose Registerable Securities are included in such
      registration statement and the managing underwriter(s), if any, to facilitate
      the timely preparation and delivery of certificates representing Registerable
      Securities to be sold thereunder, not bearing any restrictive legends, and
      enable such Registerable Securities to be in such denominations and registered
      in such names as such Rightsholder or any managing underwriter(s) may reasonably
      request at least two business days prior to any sale of Registerable
      Securities;

    

    (H) comply
      with all applicable rules and regulations of the Commission and promptly make
      generally available to its security holders an earnings statement covering
      a
      period of twelve months commencing, (1) in an underwritten offering, at the
      end
      of any fiscal quarter in which Registerable Securities are sold to
      underwriter(s), or (2) in a non-underwritten offering, with the first month
      of
      the Company’s first fiscal quarter beginning after the effective date of such
      registration statement, which earnings statement, in each such case, shall
      satisfy the provisions of Section 11(a) of the Securities Act;

    

    (I) provide
      a
      CUSIP number for all Registerable Securities not later than the effective date
      of the registration statement relating to the first public offering of
      Registerable Securities of the Company pursuant hereto;

    

    (J) enter
      into
      such customary agreements (including an underwriting agreement in customary
      form) and take all such other actions reasonably requested by the Rightsholders
      holding a majority of the Registerable Securities included in such registration
      statement or the managing underwriter(s) in order to expedite and facilitate
      the
      disposition of such Registerable Securities and, in such connection, whether
      or
      not an underwriting agreement is entered into and whether or not the
      registration is an underwritten registration, (1) make such representations
      and
      warranties, if any, to the holders of such Registerable Securities and any
      underwriter(s) with respect to the registration statement, prospectus and
      documents incorporated by reference, if any, in form, substance and scope as
      are
      customarily made by issuers to underwriter(s) in underwritten offerings and
      confirm the same if and when requested, (2) obtain opinions of counsel to the
      Company and updates thereof addressed to each such Rightsholder and the
      underwriter(s), if any, with respect to the registration statement, prospectus
      and documents incorporated by reference, if any, covering the matters
      customarily covered in opinions requested in underwritten offerings and such
      other matters as may be reasonably requested by such Rightsholders and
      underwriter(s), (3) obtain a “cold comfort” letter and updates of such letter
      from the Company’s independent certified public accountants addressed to such
      Rightsholders and to the underwriter(s), if any, which letter shall be in
      customary form and cover matters of the type customarily covered in “cold
      comfort” letters by accountants in connection with underwritten offerings, and
      (4) deliver such documents and certificates as may be reasonably requested
      by
      the Rightsholders holding a majority of such Registerable Securities and
      managing underwriter(s), if any, to evidence compliance with any customary
      conditions contained in the underwriting agreement or other agreement entered
      into by the Company; each such action required by this Subparagraph 4(c)(i)(J)
      shall be done at each closing under such underwriting or similar agreement
      or as
      and to the extent required thereunder; and

    

    
      
         

      

      
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    (K) if
      requested by the holders of a majority of the Registerable Securities included
      in such registration statement, use its best efforts to cause all Registerable
      Securities which are included in such registration statement to be listed,
      subject to notice of issuance, by the date of the first sale of such
      Registerable Securities pursuant to such registration statement, on each
      securities exchange, if any, on which securities similar to the Registered
      Securities are listed.

    

    (ii) Obligations
      of Rightsholders.
      In
      connection with any registration of Registerable Securities of a Rightsholder
      pursuant to Section 4(b) or 4(c):

    

    (A) The
      Company may require that each Rightsholder whose Registerable Securities are
      included in such registration statement furnish to the Company such information
      regarding the distribution of such Registerable Securities and such Rightsholder
      as the Company may from time to time reasonably request in writing;
      and

    

    (B) Each
      Rightsholder, upon receipt of any notice from the Company of the happening
      of
      any event of the kind described in clauses (2), (3), (5) and (6) of Subparagraph
      4(c)(i)(C) hereof, shall forthwith discontinue disposition of Registerable
      Securities pursuant to the registration statement covering such Registerable
      Securities until such Rightsholder’s receipt of the copies of the supplemented
      or amended prospectus contemplated by clause (1) of Subparagraph 4(c)(i)(C)
      hereof, or until such Rightsholder is advised in writing (the “Advice”) by the
      Company that the use of the applicable prospectus may be resumed, and until
      such
      Rightsholder has received copies of any additional or supplemental filings
      which
      are incorporated by reference in or to be attached to or included with such
      prospectus, and, if so directed by the Company, such Rightsholder will deliver
      to the Company (at the expense of the Company) all copies, other than permanent
      file copies then in the possession of such Rightsholder, of the current
      prospectus covering such Registerable Securities at the time of receipt of
      such
      notice; and the Company shall have the right to demand that such Rightsholder
      or
      other holder verify its agreement to the provisions of this Subparagraph
      4(c)(ii)(B) in any Holder Notice of the Rightsholder or in a separate document
      executed by the Rightsholder.

    

    
      
         

      

      
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    (d) Registration
      Expenses.
      All
      expenses incident to the performance of or compliance with this Subscription
      Agreement by the Company, including, without limitation, all registration and
      filing fees of the Commission, National Association of Securities Dealers,
      Inc.
      and other agencies, fees and expenses of compliance with securities or blue
      sky
      laws (including reasonable fees and disbursements of counsel in connection
      with
      blue sky qualifications of the Registerable Securities), rating agency fees,
      printing expenses, messenger and delivery expenses, internal expenses
      (including, without limitation, all salaries and expenses of its officers and
      employees performing legal or accounting duties), the fees and expenses incurred
      in connection with the listing, if any, of the Registerable Securities on any
      securities exchange and fees and disbursements of counsel for the Company and
      the Company’s independent certified public accountants (including the expenses
      of any special audit or “cold comfort” letters required by or incidental to such
      performance), Securities Act or other liability insurance (if the Company elects
      to obtain such insurance), the fees and expenses of any special experts retained
      by the Company in connection with such registration and the fees and expenses
      of
      any other person retained by the Company (but not including any underwriting
      discounts or commissions attributable to the sale of Registerable Securities
      or
      other out-of-pocket expenses of the Rightsholders, or the agents who act on
      their behalf, unless reimbursement is specifically approved by the Company)
      will
      be borne by the Company. All such expenses are referred to in this Article
      4 as
“Registration Expenses.”

    

    (e) Indemnification;
      Contribution.

    

    (i) Indemnification
      by the Company.
      The
      Company agrees to indemnify and hold harmless, to the full extent permitted
      by
      law, each Rightsholder, its officers and directors and each person who controls
      such Rightsholder (within the meaning of the Securities Act), if any, and any
      agent thereof against all losses, claims, damages, liabilities and expenses
      incurred by such party pursuant to any actual or threatened suit, action,
      proceeding or investigation (including reasonable attorney’s fees and expenses
      of investigation) arising out of or based upon any untrue or alleged untrue
      statement of a material fact contained in any registration statement, prospectus
      or preliminary prospectus or any omission or alleged omission to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of a prospectus, in the light of the circumstances under
      which they were made) not misleading, except insofar as the same arise out
      of or
      are based upon, any such untrue statement or omission based upon information
      with respect to such Rightsholder furnished in writing to the Company by such
      Rightsholder expressly for use therein.

    

    (ii) Indemnification
      by Rightsholder.
      In
      connection with any registration statement in which a Rightsholder is
      participating, each such Rightsholder will be required to furnish to the Company
      in writing such information with respect to such Rightsholder as the Company
      reasonably requests for use in connection with any such registration statement
      or prospectus, and each Rightsholder agrees to the extent it is such a holder
      of
      Registerable Securities included in such registration statement, and each other
      such holder of Registerable Securities included in such Registration Statement
      will be required to agree, to indemnify, to the full extent permitted by law,
      the Company, the directors and officers of the Company and each person who
      controls the Company (within the meaning of the Securities Act) and any agent
      thereof, against any losses, claims, damages, liabilities and expenses
      (including reasonable attorney’s fees and expenses of investigation) incurred by
      such party pursuant to any actual or threatened suit, action, proceeding or
      investigation arising out of or based upon any untrue or alleged untrue
      statement of a material fact or any omission or alleged omission of a material
      fact necessary, to make the statements therein (in the case of a prospectus,
      in
      the light of the circumstances under which they are made) not misleading, to
      the
      extent, but only to the extent, that such untrue statement or omission is based
      upon information relating to such Rightsholder or other holder furnished in
      writing to the Company expressly for use therein.

    

    (iii) Conduct
      of Indemnification Proceedings.
      Promptly
      after receipt by an indemnified party under this Section 4(e) of written notice
      of the commencement of any action, proceeding, suit or investigation or threat
      thereof made in writing for which such indemnified party may claim
      indemnification or contribution pursuant to this Subscription Agreement, such
      indemnified party shall notify in writing the indemnifying party of such
      commencement or threat; but the omission so to notify the indemnifying party
      shall not relieve the indemnifying party from any liability which the
      indemnifying party may have to any indemnified party (A) hereunder, unless
      the
      indemnifying party is actually prejudiced thereby, or (B) otherwise than under
      this Section 4(e). In case any such action, suit or proceeding shall be brought
      against any indemnified party, and the indemnified party shall notify the
      indemnifying party of the commencement thereof, the indemnifying party shall
      be
      entitled to participate therein and the indemnifying party shall assume the
      defense thereof, with counsel reasonably satisfactory to the indemnified party,
      and the obligation to pay all expenses relating thereto. The indemnified party
      shall have the right to employ separate counsel in any such action, suit or
      proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such indemnified party unless (A)
      the
      indemnifying party has agreed to pay such fees and expenses, (B) the
      indemnifying party shall have failed to assume the defense of such action,
      suit
      or proceeding or to employ counsel reasonably satisfactory to the indemnified
      party therein or to pay all expenses relating thereto or (C) the named parties
      to any such action or proceeding (including any impleaded parties) include
      both
      the indemnified party and the indemnifying party and the indemnified party
      shall
      have been advised by counsel that there may be one or more legal defenses
      available to the indemnified party which are different from or additional to
      those available to the indemnifying party and which may result in a conflict
      between the indemnifying party and such indemnified party (in which case, if
      the
      indemnified party notifies the indemnifying party in writing that the
      indemnified party elects to employ separate counsel at the expense of the
      indemnifying party, the indemnifying party shall not have the right to assume
      the defense of such action or proceeding on behalf of the indemnified party;
      it
      being understood, however, that the indemnifying party shall not, in connection
      with any one such action, suit or proceeding or separate but substantially
      similar or related actions, suits or proceedings in the same jurisdiction
      arising out of the same general allegations or circumstances, be liable for
      the
      fees and expenses of more than one separate firm of attorneys at any time for
      the indemnified party, which firm shall be designated in writing by the
      indemnified party).

    

    
      
         

      

      
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    (iv) Contribution.
      If the
      indemnification provided for in this Section 4(e) from the indemnifying party
      is
      unavailable to an indemnified party under this Section 4(e) in respect of any
      losses, claims, damages, liabilities or expenses referred to in this Section
      4(e), then the indemnifying party, in lieu of indemnifying such indemnified
      party, shall contribute to the amount paid or payable by such indemnified party
      as a result of such losses, claims, damages, liabilities or expenses (A) in
      such
      proportion as is appropriate to reflect the relative benefits received by the
      indemnifying party on the one hand and the indemnified party on the other or
      (B)
      if the allocation provided by clause (A) above is not permitted by applicable
      law, in such proportion as is appropriate to reflect not only the relative
      benefits received by the indemnifying party on the one hand and the indemnified
      party on the other but also the relative fault of the indemnifying party and
      indemnified party, as well as any other relevant equitable considerations.
      The
      relative fault of such indemnifying party and the indemnified parties shall
      be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact or omission
      or alleged omission to state a material fact, has been made by, or relates
      to
      information supplied by, such indemnifying party or indemnified parties, and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action. The amount paid or payable by a party as a
      result of the losses, claims, damages, liabilities and expenses referred to
      in
      this Paragraph 4(e)(iv) shall be deemed to include, subject to the limitation
      set forth in Paragraph 4(e)(v), any legal or other fees or expenses reasonably
      incurred by such party in connection with any investigation or
      proceeding.

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Paragraph 4(e)(iv) were determined by pro rata allocation
      or by
      any other method of allocation which does not take into account the equitable
      considerations referred to in clauses (A) and (B) of the immediately preceding
      paragraph. 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.

    

    (v) Limitation.
      Anything
      to the contrary contained in this Section 4(e) or in Section 4(f)
      notwithstanding, no holder of Registerable Securities shall be liable for
      indemnification and contribution payments aggregating an amount in excess of
      the
      maximum amount received by such holder in connection with any sale of
      Registerable Securities as contemplated herein.

    

    
      
         

      

      
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    (f) Participation
      in Underwritten Registration.
      No
      Rightsholder may participate in any underwritten registration hereunder unless
      such Rightsholder (i) agrees to sell such holder’s securities on the basis
      provided in any underwriting arrangements approved by the persons entitled
      hereunder to approve such arrangements and to comply with Regulation M under
      the
      Exchange Act and (ii) completes and executes all questionnaires, appropriate
      and
      limited powers of attorney, escrow agreements, indemnities, underwriting
      agreements and other documents reasonably required under the terms of such
      underwriting arrangement; provided,
      that all
      such documents shall be consistent with the provisions of this Article
      4.

    

    5. Further
      Assurances.
      At any
      time and from time to time after the date hereof, the undersigned shall, without
      further consideration, execute and deliver to the Company, or such other party
      as the Company may direct, such other instruments or documents and shall take
      such other actions as the Company may reasonably request to carry out the
      transactions contemplated by this Subscription Agreement.

    

    6. Indemnification.
      The
      undersigned acknowledges that the undersigned understands the meaning and legal
      consequences of the representations, warranties and covenants contained herein,
      and the undersigned hereby agrees to indemnify and hold harmless the Company,
      and the Company’s directors, officers, employees, agents and controlling
      persons, from and against any and all loss, damage or liability due to or
      arising out of a breach by the undersigned of any of its representations,
      warranties and covenants.

    

    7. Conditions
      to Closing.

    

    (a) QR
      Transaction.
      The
      subscription for the Shares contemplated hereby shall be subject to a
      post-closing condition that the acquisition by the Company of QR on terms
      substantially similar to those set forth in the addendum annexed hereto as
      Exhibit A (consisting of a Power Point presentation and the definitive purchase
      agreement) is consummated on or before May 31, 2007. In the event that this
      condition is not fulfilled, the undersigned shall have the right to rescind
      the
      purchase of the Shares hereunder. In such event, the undersigned shall tender
      the Shares to the Company and the Company shall promptly reimburse the
      undersigned for the full amount of the Subscription Price.

    

    (b) Limitation
      on Shares.
      The
      Shares, after giving effect to the issuance thereof, shall not constitute more
      than 19.99% of the issued and outstanding Common Stock.

    

    8. Closing.
      The
      closing of the subscription for the Shares contemplated by this Subscription
      Agreement shall occur on or about three (3) business days prior to the closing
      of the QR acquisition or such other date as may be agreed to by the parties
      (the
“Closing Date”). On the Closing Date, the Company shall issue and deliver to the
      undersigned certificates representing the Shares and the undersigned shall
      deliver the Subscription Price to the Company by wire transfer of immediately
      available funds to an account or accounts designated by the
      Company.

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    9. Miscellaneous.

    

    (a) Survival
      of Warranties.
      The
      warranties and representations contained or made pursuant to this Subscription
      Agreement will survive the execution and delivery of this Subscription Agreement
      and the closing of the transactions contemplated by this Subscription Agreement,
      including, but not limited to, the making of the Subscription and issuance
      of
      the Shares.

    

    (b) Successors
      and Assigns.
      The
      rights, benefits, duties and obligations of the parties to this Subscription
      Agreement may not be assigned by such assigning party without the prior written
      consent of the other party. The terms and conditions of this Subscription
      Agreement will inure to the benefit of and be binding upon the respective
      successors and assigns of the parties. Nothing in this Subscription Agreement,
      express or implied, is intended to confer upon any party other than the parties
      hereto or their respective successors and assigns any rights, remedies,
      obligations or liabilities under or by reason of this Subscription Agreement,
      except as expressly provided in this Subscription Agreement.

    

    (c) Governing
      Law.
      This
      Subscription Agreement will be governed by, and construed and enforced in
      accordance with the laws of the State of New York without regard to the conflict
      of laws provisions thereof. The parties hereto do hereby consent and submit
      to
      the venue and jurisdiction of the state and federal courts sitting in the State
      of New York, County of Westchester, as the sole and exclusive forum for such
      matters of dispute, and further agree that, in the event of any action or suit
      as to any matters of dispute between the parties, service of any process may
      be
      made upon the other party in the same manner as the giving of notices under
      Section 9(f) of this Subscription Agreement.

    

    (d) Counterparts.
      This
      Subscription Agreement may be signed in counterparts, any one of which will
      be
      deemed to be an original and all of which, when taken together, will constitute
      one and the same agreement.

    

    (e) Titles
      and Subtitles.
      The
      titles and subtitles used in this Subscription Agreement are for convenience
      only and are not to be considered in construing or interpreting this
      Subscription Agreement.

    

    (f) Notices.
      All
      requests, demands, notices and other communications required or otherwise given
      under this Subscription Agreement shall be sufficiently given if (a) delivered
      by hand against written receipt therefor, (b) forwarded by overnight courier
      requiring acknowledgment of receipt or (c) mailed by postage prepaid, registered
      or certified mail, return receipt requested, addressed as follows:

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    If
      to the
      Company, to:  David
      Vozick, Chairman of the Board

    AFP
      Imaging Corporation

    250
      Clearbrook Road

    Elmsford,
      New York 10523

    

    with
      a
      copy to:  David
      R.
      Fishkin, Esq.

    Snow
      Becker Krauss P.C.

    605
      Third
      Avenue

    New
      York,
      New York 10158-0125

    

    If
      to the
      undersigned, to: The
      undersigned at the mailing address set forth in the Execution Section of this
      Subscription Agreement.

    

    or,
      in the
      case of any of the parties hereto, at such other address as such party shall
      have furnished in writing, in accordance with this Section 9(f), to the other
      parties hereto. Each such request, demand, notice or other communication shall
      be deemed given (i) on the date of delivery by hand, (ii) on the first business
      day following the date of delivery to an overnight courier or (iii) three
      business days following mailing by registered or certified mail.

    

    (g) Amendment
      and Waivers.
      Any
      amendment to this Subscription Agreement will not be effective unless the same
      is in writing and signed by all of the parties to this Subscription Agreement.
      The waiver by a party of a breach of any provision of this Subscription
      Agreement by another party must be in writing and shall not operate or be
      construed as a waiver of any subsequent breach by such other party.

    

    (h) Severability.
      If one
      or more provisions of this Subscription Agreement are held to be unenforceable
      under applicable law, such provision will be excluded from this Subscription
      Agreement and the balance of this Subscription Agreement will be interpreted
      as
      if such provision were excluded and will be enforceable in accordance with
      its
      terms.

    

    (i) Entire
      Agreement.
      This
      Subscription Agreement amends, supplements and restates all agreements or
      understandings, of whatever nature, whether oral or written, between and among
      the parties hereto, including affiliates thereof, related in any way to, or
      arising under, the Subscription and constitutes the full and entire
      understanding and agreement between the parties with respect to the subject
      matter hereof.

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (j) Proper
      Construction.
      The
      language of all parts of this Subscription Agreement shall in all cases be
      construed as a whole according to its fair meaning, and not strictly for or
      against any of the parties. The parties hereto agree that they have been
      represented by counsel during the negotiation and execution of this Subscription
      Agreement and, therefore, waive the application of any law, regulation, holding
      or rule of construction providing that ambiguities in an agreement or other
      document will be construed against the party drafting such agreement or
      document. As used in this Subscription Agreement, the term “or” shall be deemed
      to include the term “and/or” and the singular or plural number shall be deemed
      to include the other whenever the context so indicates or requires.

    

    (k) Further
      Assurances.
      Each
      party agrees to do and perform, or cause to be done and performed, all such
      further acts and things, and shall execute and deliver all other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Subscription Agreement and the transactions contemplated by this Subscription
      Agreement.

    

    (l) Legal
      Representation of the Undersigned.
      The
      undersigned acknowledges that (i) the undersigned has read this Subscription
      Agreement in its entirety, (ii) the undersigned has either (A) consulted with
      legal counsel and other professionals of the undersigned’s own choosing or (B)
      has chosen to forego such consultation after being advised to seek such
      consultations and (iii) the undersigned understands the terms and consequences
      of entering into this Subscription Agreement and is fully aware of the legal
      and
      binding effect of entering into this Subscription Agreement.

    

    THE
      SHARES HAVE NOT BEEN REGISTERED OR APPROVED OR DISAPPROVED BY THE SECURITIES
      AND
      EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR
      HAS
      THE COMMISSION OR ANY SUCH AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF
      THIS SUBSCRIPTION AGREEMENT OR THE AGREEMENTS AND DOCUMENTS REFERRED TO OR
      INCORPORATED BY REFERENCE HEREIN (COLLECTIVELY, THE “DOCUMENTS”). ANY
      REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

    

    THE
      SHARES ARE BEING OFFERED BY THE COMPANY IN RELIANCE UPON AN EXCEPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WHICH EXEMPTION
      DEPENDS UPON THE EXISTENCE OF CERTAIN FACTS, INCLUDING, BUT NOT LIMITED TO,
      THE
      REQUIREMENTS THAT THE SHARES ARE NOT BEING OFFERED THROUGH GENERAL ADVERTISING
      OR GENERAL SOLICITATION, ADVERTISEMENTS OR COMMUNICATIONS IN NEWSPAPERS,
      MAGAZINES OR OTHER MEDIA, OR BROADCASTS ON RADIO OR TELEVISION, AND THAT THE
      DOCUMENTS SHALL BE TREATED AS CONFIDENTIAL BY THE PERSONS TO WHOM IT IS
      DELIVERED. ANY DISTRIBUTION OF THE DOCUMENTS OR ANY PART OF THE DOCUMENTS OR
      DIVULGENCE OF ANY OF ITS CONTENTS SHALL BE UNAUTHORIZED.

    

    IN
      MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
      OF
      THE COMPANY, INCLUDING THE MERITS AND RISKS INVOLVED. THE SHARES 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 DOCUMENTS. ANY REPRESENTATION TO
      THE
      CONTRARY IS A CRIMINAL OFFENSE. THE SHARES ARE SUBJECT TO RESTRICTIONS ON
      TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
      PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE APPLICABLE STATE
      SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. IN ADDITION,
      THE CERTIFICATES REPRESENTING THE SHARES WILL BEAR A LEGEND TO SUCH EFFECT
      AS
      SET FORTH IN THIS SUBSCRIPTION AGREEMENT. INVESTORS SHOULD BE AWARE THAT THEY
      MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
      PERIOD OF TIME.

    

    IN
      WITNESS WHEREOF, the
      undersigned has duly executed this Subscription Agreement as of the date set
      forth below the undersigned’s signature in the Execution Section to this
      Subscription Agreement.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    EXECUTION
      SECTION FOR SUBSCRIPTION BY NON-INDIVIDUALS

    

    I. SUBSCRIPTION
      AMOUNT:

    

    The
      undersigned subscribes to purchase ____________ Shares at the Subscription
      Price
      determined immediately prior to Closing based on the average of (A) the volume
      weighted average price of the Common Stock for the six-month period ending
      on
      the date three (3) business days prior to the closing of the QR acquisition
      less
      a discount of 5% and (B) the average closing price of the Common Stock for
      the
      six-month period ending on the date three (3) business days prior to the closing
      of the QR acquisition less a discount of 5%.

    

    II. SUBSCRIBER
      STATUS:

    

    The
      undersigned is (check
      appropriate box and, if applicable, fill in state with jurisdiction over
      custodial account):

     

    
      	G	
              CORPORATION
                (Please include certified corporate resolution authorizing
                signature).

            

    

     

    
      	G	
              PARTNERSHIP.

            

    

    

    
      	G	
              TRUST.

            

    

    

    
      	G	
              LIMITED
                LIABILITY COMPANY.

            

    

    

    
      	G	
              LIMITED
                LIABILITY PARTNERSHIP.

            

    

    

    [X]
      OTHER
      (Including
      Employment Benefit Plans and Trusts, Individual Retirement Accounts, and KEOUGH
      Plans).

    

    III. INFORMATION
      AS IT IS TO APPEAR ON THE COMPANY RECORDS:

    

    Name
      of

    Subscriber: 

    Federal
      Taxpayer Identifying Number: 

    State
      of
      Incorporation or Organization:

    State
      of
      Principal Place of Business: 

    Mailing
      Address: 

    Telephone
      Number: 

    Facsimile
      Number:  

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    IV. INVESTOR
      STATUS (check
      all appropriate boxes and, if applicable, provide all information
      requested):

    

    The
      undersigned is an accredited investor, as such term is defined under Regulation
      D, by reason of the fact that the undersigned is:

    

    
      	
              G

            	
              A
                bank as defined in Section 3(a)(2) of the Securities Act, or any
                savings
                and loan association or other institution as defined in Section 3(a)(5)(A)
                of the Securities Act whether acting in its individual or fiduciary
                capacity; a broker or dealer registered pursuant to Section 15 of
                the
                Securities Exchange Act of 1934 (the “Exchange Act”); an insurance company
                as defined in Section 2(13) of the Securities Act; an investment
                company
                registered under the Investment Company Act of 1940 or a business
                development company as defined in Section 2(a)(48) of that Act; a
                Small
                Business Investment Company licensed by the U.S. Small Business
                Administration under Section 301(c) or (d) of the Small Business
                Investment Act of 1958; a plan established and maintained by a state,
                its
                political subdivisions, or any agency or instrumentality of a state
                or its
                political subdivisions, for the benefit of its employees, and having
                total
                assets in excess of $5,000,000; an employee benefit plan within the
                meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”)
                with investment decisions made by a plan fiduciary, as defined in
                Section
                3(21) of such Act, which is either a bank, savings and loan association,
                insurance company or registered investment adviser; an employee benefit
                plan within the meaning of ERISA and having total assets in excess
                of
                $5,000,000.

            

    

    

    
      	
              G

            	
              An
                employee benefit plan within the meaning of ERISA which is a self-directed
                plan, with investment decisions made solely by the following persons
                who
                are accredited investors, as defined in Regulation
                D:

            

    

    

    ________________________________________________________________________

    

    ________________________________________________________________________

    

    
      	
              G

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

            

    

    

    
      	
              G

            	
              An
                organization described in Section 501(c)(3) of the Internal Revenue
                Code,
                corporation, Massachusetts or similar business trust or partnership,
                not
                formed for the specific purpose of acquiring the securities offered,
                with
                total assets in excess of
                $5,000,000.

            

    

    

    
      	
              G

            	
              A
                trust, with total assets in excess of $5,000,000, not formed for
                the
                specific purpose of acquiring any shares of Common Stock, whose purchase
                is directed by the following sophisticated person meeting the description
                set forth in Rule 506(b)(2)(ii) of Regulation
                D:

            

    

    

    ________________________________________________________________________

    

    
      	
              G

            	
              An
                entity in which all of the equity owners are accredited investors,
                as
                defined in Regulation D. (The
                Company has the right to request the names of each such accredited
                investor equity owners and to require such person(s) to complete
                a
                Qualified Purchaser Questionnaire prior to the Company’s acceptance of the
                undersigned’s subscription.)

            

    

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    

    V. SIGNATURE(S)

    

    The
      undersigned corporate officer, partner, trustee or fiduciary certifies that
      the
      undersigned has full power and authority from all requisite stockholders,
      partners, co-trustees, co-fiduciaries of the subscribing entity named above
      to
      execute this Subscription Agreement on behalf of the subscribing entity and
      to
      make the representations, warranties and agreements made herein on its and
      their
      behalf and that investment in the Shares has been affirmatively authorized
      by
      the governing board or body of such entity and is not prohibited by law or
      the
      governing documents of the subscribing entity.

    
      	
               

               

               

              By:

               

            	 	 	
               

               

               

              By:

               

            	 
	 	
               

              (Signature
                of Authorized Signatory)

               

            	 	 	
               

              (Signature
                of Authorized Co-Signatory)

               

            
	 	 	 	 	 
	 	
               

              (Name
                of Authorized Signatory)

               

            	 	 	
               

              (Name
                of Authorized Co-Signatory)

               

            
	 	 	 	 	 
	 	
               

              (Title
                of Authorized Signatory)

               

            	 	 	
               

              (Title
                of Authorized Co-Signatory)

               

            

    

    

    Date: _______________________________________,
      2007

     

    
 

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    ACCEPTANCE
      PAGE

    (To
      be
      completed by the Company)

    

    

    SUBSCRIPTION
      AND SUBSCRIPTION AGREEMENT ACCEPTED AND AGREED TO:

    

    Aggregate
      number of Shares for

    which
      the
      Subscription is accepted:

    

    

    _________________

    

    Subscription
      Price:

    

    $________________

    

    

    AFP
      Imaging Corporation

    

    

    By:
      /s/ Donald
      Rabinovitch, President

    Donald
      Rabinovitch, President

    

    

    Dated: ______________________________,
      2007

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    Exhibit
      A

    

    Addendum

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