Document:

EXHIBIT 4.5

                                     FORM OF

                       REGULATION D SUBSCRIPTION AGREEMENT

         THE  SECURITIES  OFFERED  HEREBY  HAVE  NOT  BEEN  REGISTERED  WITH THE
         SECURITIES  AND EXCHANGE  COMMISSION  OR ANY STATE OR OTHER  SECURITIES
         AUTHORITIES.  THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
         EFFECTIVE  REGISTRATION  STATEMENT OR AN EXEMPTION TO THE  REGISTRATION
         REQUIREMENTS OF THOSE SECURITIES LAWS.

         THIS SUBSCRIPTION  AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
         SOLICITATION OF AN OFFER TO PURCHASE,  ANY OF THE SECURITIES  DESCRIBED
         HEREIN BY OR TO ANY PERSON IN ANY  JURISDICTION  IN WHICH SUCH OFFER OR
         SOLICITATION  WOULD  BE  UNLAWFUL.   THESE  SECURITIES  HAVE  NOT  BEEN
         RECOMMENDED BY ANY FEDERAL,  STATE OR FOREIGN  SECURITIES  AUTHORITIES,
         NOR HAVE ANY SUCH  AUTHORITIES  REVIEWED OR DETERMINED  THE ACCURACY OF
         THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

         INVESTMENT  IN  THESE  SECURITIES  INVOLVES  A  HIGH  DEGREE  OF  RISK,
         INCLUDING  BUT NOT  LIMITED TO THOSE  RISK  FACTORS  IDENTIFIED  IN THE
         COMPANY'S  FORM S-3  FILED ON JULY 17,  2000  WITH THE  SECURITIES  AND
         EXCHANGE  COMMISSION.  INVESTORS MUST RELY ON THEIR OWN ANALYSIS OF THE
         INVESTMENT  TERMS AND  CONDITIONS OF THE PROPOSED  INVESTMENT AND THEIR
         OWN ASSESSMENT OF THE RISKS INVOLVED.

         This Regulation D Subscription  Agreement (the "Agreement") is executed
by the  undersigned  (the  "Subscriber")  in  connection  with the  offer to the
Subscriber  of, and the  subscription  by the Subscriber  for,  shares of Common
Stock, $.001 par value per share (the "Common Stock"), of SI DIAMOND TECHNOLOGY,
INC.,  a Texas  corporation  (the  "Company").  The  Company  shall  sell to the
Subscriber  _____________  shares of the  Company's  Common  Stock at a price of
$__________ per share, for an aggregate purchase price of $__________ .

         The solicitation of this  Subscription by the Company,  and if accepted
by the Company, the sale of the shares of Common Stock subscribed for, are being
made  on  reliance  upon  the  provisions  of  Regulation  D  ("Regulation   D")
promulgated under the Securities Act of 1933 (the "Securities Act").

         The  undersigned  Subscriber and the Company,  upon  acceptance of this
Agreement, hereby agree as follows:

<PAGE>

         1.       Offering

                  1.1  Offer to  Subscribe;  Purchase  Price  and  Closing;  and
Placement  Fees.  Subject to  satisfaction of the conditions to the closing of a
purchase  and sale of Common  Stock as to each  purchaser  of Common  Stock (the
"Closing")  set forth in Section  1.2 below,  the  Subscriber  hereby  offers to
subscribe for and purchase  shares of Common Stock,  for the aggregate  purchase
price set forth in Section 8 of this Agreement, all in accordance with the terms
and conditions of this Agreement. The Closing shall be deemed to occur when this
Agreement has been  executed by both the  Subscriber  and the Company,  and full
payment for the shares of Common  Stock  subscribed  for shall have been made by
the Subscriber, by wire transfer in United States Dollars, to the Company as set
forth  in  Section  7.1(a)  in  consideration  for  the  Company's  delivery  of
certificates representing the shares of Common Stock so subscribed for.

                  1.2      Conditions to  Subscriber's  Obligations.  The
                           ----------------------------------------
Subscriber's obligations hereunder are conditioned upon the occurrence of all of
the following:

                           (a)      other  than as  described  on  Schedule  1.2
                                    attached hereto, there have been no material
                                    adverse  changes in the  Company's  business
                                    prospects or financial  condition  since the
                                    date of the last balance  sheet  included in
                                    the  Disclosure  Documents (as defined below
                                    in Section 4.2);

                           (b)      the  representations  and  warranties of the
                                    Company  shall  be true and  correct  in all
                                    material respects on the date of Closing, as
                                    if made on such date,  and the Company shall
                                    deliver a certificate,  signed by an officer
                                    of the Company, to such effect; and

                           (c)      the Subscription Agreement has been accepted
                                    by the Company.

         2.  REPRESENTATIONS  AND WARRANTIES OF THE  SUBSCRIBER.  The Subscriber
hereby represents and warrants to the Company as follows (which  representations
and warranties shall be true as of the date of Closing):

                  2.1 Accredited Investor.  The Subscriber hereby represents and
                      -------------------
warrants to the Company that it is an "accredited  investor," as defined in Rule
501 of Regulation D, and has marked the applicable box set forth in Section 9 of
this Agreement signifying such status.

                  2.2 Investment Experience; Access to Information;
                      Independent Investigation.
                      ----------------------------------------------

                           2.2.1 Access to  Information.  The  Subscriber or its
                                 -----------------------
professional  advisor has been granted the  opportunity  to ask questions of and
receive  answers  from   representatives  of  the  Company,  and  its  officers,
directors,  employees  and agents  concerning  the terms and  conditions  of the
Offering,  and the Company and its  business  and  prospects,  and to obtain any
additional  information  which the Subscriber or its professional  advisor deems
necessary to verify the accuracy of the  information  received.  The  foregoing,
however,  does  not  limit  or  modify  the

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<PAGE>

Subscriber's right to rely upon representations and warranties of the Company in
Section 4 of this Agreement.

                           2.2.2 Ability to Evaluate.  The  Subscriber  has such
                                 -------------------
knowledge  and  experience  in financial  and business  matters that it is fully
capable of  evaluating  the merits and risks of an  investment  in the  Company,
including  without  limitation  those set forth in the Disclosure  Documents (as
defined below in Section 4.2).

                           2.2.3  Disclosure   Documents.   The  Subscriber  has
                           -----------------------------
received and  reviewed the  Disclosure  Documents  (as defined  below in Section
4.2). The foregoing, however, does not limit or modify the Subscriber's right to
rely upon the representations and warranties of the Company in Section 4 of this
Agreement.

                           2.2.4  Investment  Experience;  Fend  for  Self.  The
                                  ----------------------------------------
Subscriber  has  substantial  experience in investing in securities and has made
investments  in  securities  other than  those of the  Company.  The  Subscriber
acknowledges that it is able to fend for itself in the transaction  contemplated
by this  Agreement  and that it has the ability to bear the economic risk of its
investment in the Company. The Subscriber has not been organized for the purpose
of investing in securities of the Company.

                           2.2.5    Not an Affiliate.  The  Subscriber is not an
                                    ----------------
officer,  director  or  "affiliate"  (as that term is defined in Rule 415 of the
Securities Act) of the Company.

                  2.3 Exempt Offering Under Regulation D
                      ----------------------------------

                           2.3.1 Investment; No Distribution.  The Subscriber is
                                 ----------------------------
acquiring the shares of Common Stock subscribed for (the "Common Shares") solely
for investment  purposes for the Subscriber's own account (or for beneficiaries'
accounts  over  which  the   Subscriber   has   investment   discretion  but  no
discretionary  authority as to voting or  disposition)  and not with a view to a
distribution of all or any part thereof.  The Subscriber is aware that there are
legal and  practical  limits on its  ability  to sell or  dispose  of the Common
Shares and  therefore,  that the  Subscriber  must bear the economic risk of its
investment  for an indefinite  period of time. The Subscriber has adequate means
of providing for its current needs and anticipated contingencies and has no need
for  liquidity  of this  investment.  The  Subscriber's  commitment  to illiquid
investments is reasonable in relation to its net worth.

                           2.3.2 No General Solicitation. The Common Shares were
                                 -----------------------
not offered to the Subscriber  through,  and the Subscriber is not aware of, any
form  of  general  solicitation  or  general  advertising,   including,  without
limitation,  (i) any  advertisement,  articles,  notice  or other  communication
published  in any  newspaper,  magazine  or  similar  media  or  broadcast  over
television or radio,  and (ii) any seminar or meeting whose  attendees have been
invited by any general solicitation or general advertising.

                           2.3.3  No   Registration   of  Common   Shares.   The
                                  ---------------------------------------
Subscriber  understands  that the Common Shares are not registered and therefore
are "restricted  securities" under the federal  securities laws inasmuch as they
are being  acquired  from the Company in a  transaction  not  involving a public
offering, and that, under such laws and applicable regulations,  such securities
may not be transferred or resold without  registration  under the

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<PAGE>

Securities Act or pursuant to an exemption  therefrom.  In this connection,  the
Subscriber  represents  that it is familiar  with Rule 144 under the  Securities
Act, as presently in effect,  and  understands  the resale  limitations  imposed
thereby and by the Securities Act.

                           2.3.4  Disposition.  Without in any way  limiting the
                                  -----------
representations  set forth above, the Subscriber  further agrees not to make any
disposition of all or any portion of the Securities unless and until:

                                    (a)     There   is   then   in    effect   a
                                            registration   statement  under  the
                                            Securities    Act   covering    such
                                            proposed    disposition   and   such
                                            disposition  is made  in  accordance
                                            with such Registration Statement; or

                                    (b)     The  Subscriber  shall have notified
                                            the   Company   of   the    proposed
                                            disposition and shall have furnished
                                            the   Company    with   a   detailed
                                            statement   of   the   circumstances
                                            surrounding       the       proposed
                                            disposition,  and (ii) if reasonably
                                            requested   by  the   Company,   the
                                            Subscriber  shall have furnished the
                                            Company  with an opinion of counsel,
                                            reasonably   satisfactory   to   the
                                            Company,  that such disposition will
                                            not  require   registration  of  the
                                            Common  Shares under the  Securities
                                            Act.

                  2.4      Due Authorization.
                           -----------------

                           2.4.1  Authority.  The Subscriber,  if executing this
                                  ---------
Subscription Agreement in a representative or fiduciary capacity, has full power
and authority to execute and deliver this Subscription  Agreement and each other
document  referred to herein for which a signature is required in such  capacity
and on  behalf  of  the  subscribing  individual,  partnership,  trust,  estate,
corporation  or other entity for whom or which the  Subscriber is executing this
Subscription Agreement.

                           2.4.2  Due  Authorization.   The  Subscriber,  if  an
                                  ------------------
entity, is duly and validly organized,  validly existing and in good standing as
such entity under the laws of the  jurisdiction of its  organization,  with full
power and authority to purchase the Common Shares  subscribed for and to execute
and deliver this Agreement.

         3. Acknowledgments. The Subscriber is aware of the following:
            ---------------

                  3.1  Risks  of  Investment.  The  Subscriber  recognizes  that
                       ---------------------
investment in the Company involves  certain risks,  including the potential loss
of the  Subscriber's  investment  herein.  The Subscriber  recognizes  that this
Agreement and the exhibits  hereto do not purport to

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<PAGE>

contain all the information which would be contained in a registration statement
under the Securities Act;

                  3.2 No Government Approval.  The Subscriber  acknowledges that
                      ----------------------
no federal,  state or foreign  agency has passed upon or reviewed  the terms and
conditions  of the  Offering  or made any  finding  or  determination  as to the
fairness of the Offering;

                  3.3  Restrictions  on Transfer.  The  Subscriber may not sell,
                       -------------------------
transfer,  assign,  pledge or  otherwise  dispose  of all or any  portion of the
Securities  in the absence of either an effective  registration  statement or an
exemption  from  the  registration   requirements  of  the  Securities  Act  and
applicable state securities law;

                  3.4 Exempt  Transaction.  The Common  Shares are being offered
                      -------------------
and sold in reliance on specific  exemptions from the registration  requirements
of  federal  and state  law and the  Subscriber's  representations,  warranties,
agreements,  acknowledgments  and  applicability  of  such  exemptions  and  the
suitability of the Subscriber to acquire Common Shares.

                  3.5 Legends. It is understood that any certificates evidencing
                      -------
the Common Shares shall bear the following legend:

                  "The  securities  represented  hereby have not been registered
                  under the  Securities  Act of 1933, as amended,  or applicable
                  state  securities  laws, nor the securities  laws of any other
                  jurisdiction.  They  may  not be sold  or  transferred  in the
                  absence of an  effective  registration  statement  under those
                  securities   laws  or  an  opinion  of   counsel,   REASONABLY
                  satisfactory  to the  Company,  that the sale or  transfer  is
                  pursuant to an exemption to the  registration  requirements of
                  those securities laws."

         4.  Representations  and Warranties of the Company.  The Company hereby
             ----------------------------------------------
makes the following representations and warranties to the Subscriber,  except as
disclosed in the  Disclosure  Documents or  otherwise  disclosed to  Subscriber,
which  representations and warranties shall be true as of the date of acceptance
of this Agreement by the Company and as of Closing:

                  4.1  Organization,  Good  Standing,  and  Qualification.   The
                       --------------------------------------------------
Company is a corporation  duly organized,  validly existing and in good standing
under the laws of the State of Texas and has all requisite  corporate  power and
authority to carry on its business as now conducted and as currently proposed to
be conducted.  The Company is duly qualified to transact business and is in good
standing in each  jurisdiction  in which the failure to so qualify  would have a
material  adverse  effect on the business or  properties  of the Company and its
subsidiaries taken as a whole. The Company is not the subject of any pending or,
to its knowledge,  threatened or contemplated investigation or administrative or
legal proceeding by the Internal Revenue

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<PAGE>

Service,  the  taxing  authorities  of any state or local  jurisdiction,  or the
Securities and Exchange Commission,  or any state securities commission,  or any
other governmental  entity, which are required to be disclosed in the Disclosure
Documents and have not been disclosed.

                  4.2  Corporate  Condition.  The Company  has timely  filed all
                       --------------------
forms,  and reports and documents with the  Securities  and Exchange  Commission
required to be filed by it under the  Securities  Exchange Act 1934,  as amended
(the "Exchange Act") through the date hereof (collectively,  the "SEC Reports").
Each of the SEC Reports,  at the time filed,  complied in all material  respects
with the requirements of the Exchange Act. The Company has made available to the
Subscriber  a copy of the  Company's  Form  10-KSB  for the  fiscal  year  ended
December 31, 1999, and a copy of the Company's  Forms 10-QSB,  8-K and S-3 filed
by the Company since January 1, 2000 (the "Most Recent Filings  Report").  Other
than as set forth in Schedule 4.2 attached hereto and made a part hereof,  there
have been no material  adverse  changes in the  Company's  business,  prospects,
operations  or  financial  condition  since the date of the Most Recent  Filings
Report.  The SEC Reports,  together  with  Schedule 4.2 and any other  documents
listed on Schedule  4.2(a)  attached hereto and made a part hereof and furnished
herewith by the Company to the  Subscriber are referred to  collectively  as the
"Disclosure  Documents."  The financial  statements  contained in the Disclosure
Documents have been prepared in accordance  with generally  accepted  accounting
principles,  consistently  applied,  and fairly present in all material respects
the  consolidated  financial  condition  of the  Company  as of the dates of the
balance sheets included therein and the  consolidated  results of its operations
and cash flows for the periods then ended. Without limiting the foregoing, there
are no material liabilities,  contingent or actual that are not disclosed in the
Disclosure  Documents  (other  than  liabilities  incurred by the Company in the
ordinary course of its business,  consistent  with its past practice,  after the
periods covered by the Disclosure Documents).  The Company has paid all material
taxes which are due, except for taxes which it reasonably disputes.  There is no
material claim,  litigation,  or administrative  proceeding pending,  or, to the
best of the Company's knowledge, threatened or contemplated against the Company,
except  as  disclosed  in the  Disclosure  Documents.  This  Agreement  and  the
Disclosure Documents do not contain any untrue statement of material fact and do
not omit to state any  material  fact  required  to be stated  therein or herein
necessary to make the statements  contained  therein or herein not misleading in
the light of the circumstances under which they were made.

                  4.3  Authorization.  All  corporate  action on the part of the
                       -------------
Company  by  its  officers,   directors  and  shareholders   necessary  for  the
authorization,  execution and delivery of this Agreement, the performance of all
obligations  of the  Company  hereunder  and  the  authorization,  issuance  and
delivery of the Common Shares have been taken,  and this  Agreement  constitutes
valid and legally binding obligations of the Company,  enforceable in accordance
with their  terms;  provided,  however  that  enforceability  is subject to: (i)
applicable  bankruptcy,   reorganization,   insolvency,  moratorium,  fraudulent
conveyance, and similar federal and state laws affecting the rights and remedies
of creditors  generally,  and (ii)  general  principles  of equity  limiting the
availability of equitable  remedies  (including but not limited to the remedy of
specific  performance),  whether considered in a proceeding at law or in equity.
The Company has obtained all consents and approvals  required for it to execute,
deliver and perform this Agreement.

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<PAGE>

                  4.4 Valid Issuance of Common Shares.  The Common Shares,  when
                      -------------------------------
issued,  sold and  delivered  in  accordance  with  the  terms  hereof,  for the
consideration   expressed  herein,  will  be  validly  issued,  fully  paid  and
nonassessable  and, based in part upon the  representations of the Subscriber in
this  Agreement,  will be issued in compliance  with all applicable  federal and
state  securities  laws. The Common Shares will be issued free of any preemptive
rights.

                  4.5 Compliance with Other  Instruments.  The Company is not in
                      ----------------------------------
violation or default of any provisions of its Restated Articles of Incorporation
or Bylaws as amended and in effect on and as of the date of this Agreement or of
any material  provision of any material  instrument or contract to which it is a
party or by which it is bound  or, to its  knowledge,  of any  provision  of any
federal or state judgment,  writ, decree,  order,  statute, rule or governmental
regulation applicable to the Company, which would have a material adverse effect
on the Company's  business or prospects,  except as described in the  Disclosure
Documents.  The  execution,  delivery and  performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any such
violation or be in conflict with or  constitute,  with or without the passage of
time and giving of notice, either a default under any such provision, instrument
or  contract or an event which  results in the  creation of any lien,  charge or
encumbrance upon any assets of the Company.

                  4.6 Reporting Company. The Company is subject to the reporting
                      -----------------
requirements of the Exchange Act, and has a class of securities registered under
Section 12 or Section 15 of the Exchange Act. When requested by the  Subscriber,
the  Company  shall  furnish  copies of reports  filed by the  Company  with the
Securities and Exchange Commission.

                  4.7 Authorized  and Issued  Shares.  The authorized and issued
                      ------------------------------
shares of the Company preferred stock, Common Stock and warrants,  options,  and
instruments convertible into Common Stock as of August 31, 2000 are as set forth
on Exhibit A.

                  4.8  Use of  Proceeds.  As of the  date  hereof,  the  Company
                       -----------------
expects to use the proceeds  from the Offering  (less fees and expenses) for the
purposes set forth on Exhibit B hereto.  These  purposes are  estimates  and are
subject to change,  but  represent  the  Company's  good faith best  estimate of
anticipated uses.

                  4.9 Compliance  with Laws. As of the date hereof,  the conduct
                      --------------------
of the  business  of the  Company  complies in all  material  respects  with all
material statutes, laws, regulations,  ordinances,  rules, judgments,  orders or
decrees applicable  thereto.  The Company has not received notice of any alleged
violation of any statute, law, regulations,  ordinance, rule, judgment, order or
decree  from any  governmental  authority.  The  Company  shall  comply with all
applicable securities laws with respect to the Offering.

                  4.10  No  Rights  of  Participation.   No  person  or  entity,
                        -----------------------------
including,  but not limited to, current or former  shareholders  of the Company,
underwriters,  brokers,  agents or other third  parties,  has any right of first
refusal,  preemptive  right,  right of  participation,  or any similar  right to
participate in the Offering which has not been waived.

                                       7
<PAGE>

                  4.11 Disclosures. There is no fact known to the Company (other
                       -----------
than general  economic  conditions  known to the public  generally) that has not
been disclosed in the Disclosure Documents that (a) could reasonably be expected
to have a  material  adverse  effect on the  business,  financial  condition  or
results of operations of the Company,  or which could  reasonably be expected to
materially  and adversely  affect the properties or assets of the Company or (b)
could  reasonably be expected to materially and adversely  affect the ability of
the  Company to perform  its  obligations  pursuant  to this  Agreement  and the
issuance of the Securities.

                  4.12   Representations   True  and  Correct.   The   foregoing
                         ------------------------------------
representations, warranties and agreements are true, correct and complete in all
material respects,  and shall survive the Closing and the issuance of the Common
Shares.

                  4.13  Termination  Date of  Offering.  In no event  shall  the
                        ------------------------------
Closing occur later than  September 30, 2000,  with any extension  based upon an
agreement between the Company and the Subscriber.

                  4.14  Underwriter's  Fees and  Rights  of First  Refusal.  The
                        --------------------------------------------------
Company is not obligated to pay any compensation or other fees, costs or related
expenditures in cash or securities to any  underwriter,  broker,  agent or other
representative in connection with the Offering.

         5.       Covenants of the Company

                  5.1 Independent  Auditors.  The Company shall,  until at least
                      ---------------------
two (2)  years  after  the  date of the  Closing,  maintain  as its  independent
auditors an accounting  firm  authorized to practice  before the  Securities and
Exchange Commission.

                  5.2 Corporate Existence and Taxes. The Company shall, until at
                      -----------------------------
least  two (2) years  after  the date of the  Closing,  maintain  its  corporate
existence in good standing (provided, however, that the foregoing covenant shall
not  prevent  the  Company   from   entering   into  any  merger  or   corporate
reorganization so long as the surviving entity in such  transaction,  if not the
Company,   assumes  all  of  the  Company's  obligations  with  respect  to  the
Securities)  and shall pay all its taxes when due,  except  for taxes  which the
Company disputes.

                  5.3 Filings  with  Securities  and  Exchange  Commission.  The
                      ----------------------------------------------------
Company shall provide the  Subscriber  with copies of its annual reports on Form
10-KSB,  quarterly reports on Form 10-QSB and current reports on Form 8-K for as
long as the Common Shares remain outstanding.

                  5.4  Listing.  The  Company  shall  use its  best  efforts  to
                       -------
maintain the listing of its Common Stock on the OTC Bulletin Board or a national
securities exchange or national quotation system.

                                       8
<PAGE>

         6.       Miscellaneous

                  6.1   Representations  and  Warranties  Survive  the  Closing;
                        --------------------------------------------------------
Severability.  The Subscriber's and the Company's representations and warranties
------------
shall survive the Closing of the transaction provided for hereby notwithstanding
any due  diligence  investigation  made by or on behalf of the party  seeking to
rely thereon.  In the event that any provision of this  Agreement  becomes or is
declared by a court of competent  jurisdiction to be illegal,  unenforceable  or
void,  this  Agreement  shall  continue  in full force and effect  without  said
provision.

                  6.2 Successors  and Assigns.  The terms and conditions of this
                      -----------------------
Agreement  shall  inure to the  benefit  of and be binding  upon the  respective
successors  and assigns of the parties.  Nothing in this  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 Agreement,  except as expressly  provided
in this  Agreement.  Neither party may assign its rights  hereunder  without the
prior written consent of the other parties.

                  6.3  Governing  Law. This  Agreement  shall be governed by and
                       --------------
construed  under the laws of the State of Texas  without  respect to conflict of
laws.

                  6.4 Execution in Counterparts Permitted. This Agreement may be
                      -----------------------------------
executed  in any  number of  counterparts,  each of which  shall be  enforceable
against the  parties  actually  executing  such  counterparts,  and all of which
together shall constitute one (1) instrument.

                  6.5 Titles and  Subtitles;  Gender.  The titles and  subtitles
                      ------------------------------
used  in  this  Agreement  are  used  for  convenience  only  and  are not to be
considered  in  construing  or  interpreting  this  Agreement.  The  use in this
Agreement of a masculine, feminine or neither pronoun shall be deemed to include
a reference to the others.

                  6.6  Written  Notices,  Etc.  Any  notice,  demand or  request
                       ----------------------
required or permitted to be given by the Company or the  Subscriber  pursuant to
the terms of this  Agreement  shall be in writing and shall be deemed given when
delivered  personally,  or by facsimile (with a hard copy to follow by overnight
or two (2) day  courier),  addressed  to the  parties  at the  addresses  and/or
facsimile telephone number of the parties set forth at the end of this Agreement
or such other address as a party may request by notifying the other in writing.

                  6.7 Expenses. Each of the Company and the Subscriber shall pay
                      --------
all  costs  and  expenses  that it  respectively  incurs,  with  respect  to the
negotiation, execution, delivery and performance of this Agreement.

                  6.8  Entire  Agreement;   Written  Amendments  Required.  This
                       --------------------------------------------------
Agreement,  the Common  Stock  certificates  and the other  documents  delivered
pursuant  hereto  constitute  the full and entire  understanding  and  agreement
between the parties with regard to the subjects hereof and thereof, and no party
shall be  liable or bound to any other  party in any  manner by any  warranties,
representations  or covenants except as specifically  set forth herein.  Neither
this

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<PAGE>

Agreement nor any terms hereof may be amended, waived,  discharged or terminated
other than by a written  instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.

         7.       Subscription and Wiring Instructions; Irrevocability.

                  7.1      Subscription
                           ------------

                           (a)      WIRE   TRANSFER   OF   SUBSCRIPTION   FUNDS.
                                    Subscriber shall send its subscription funds
                                    by wire transfer to the Company as follows:

                                    Bank:  Chase Bank  Texas  Account  Name:  SI
                                    Diamond   Technology,   Inc.   Account  No.:
                                    081-00053751 ABA Routing No.: 113000609

                           (b)      IRREVOCABLE  SUBSCRIPTION.   The  Subscriber
                                    hereby  acknowledges and agrees,  subject to
                                    the  provisions  of  any   applicable   laws
                                    providing  for the  refund  of  subscription
                                    amounts  submitted by the  Subscriber,  that
                                    this Agreement is  irrevocable  and that the
                                    Subscriber   is  not   entitled  to  cancel,
                                    terminate   or   revoke   this    Agreement;
                                    provided, however, that if the conditions to
                                    Closing   are  not   satisfied   or  if  the
                                    Disclosure Documents are discovered prior to
                                    Closing  to  contain  statements  which  are
                                    materially inaccurate, or omit statements of
                                    material facts, the Subscriber may revoke or
                                    cancel this Agreement.

                           (c)      COMPANY'S RIGHT TO REJECT SUBSCRIPTION. This
                                    Agreement  shall be  accepted by the Company
                                    when   the   Company    countersigns    this
                                    Agreement.  The Subscriber  hereby  confirms
                                    that the  Company has full right in its sole
                                    discretion   to   accept   or   reject   the
                                    subscription of the Subscriber,  in whole or
                                    in  part,  provided  that,  if  the  Company
                                    decides  to reject  such  subscription,  the
                                    Company  must do so promptly and in writing.
                                    In the case of  rejection,  the Company will
                                    promptly  return any  rejected  payments and
                                    (if   rejected  in  whole)   copies  of  all
                                    executed  subscription  documents (including
                                    without   limitation   this   Agreement)  to
                                    Subscriber.

                  7.2 Acceptance of  Subscription.  In the case of acceptance of
                      --------------------------
this subscription,  ownership of the number of securities being purchased hereby
will pass to the Subscriber upon the Closing.

                  7.3  Subscriber  to  Forward   Original  Signed   Subscription
                       ---------------------------------------------------------
Agreement  to  Company.  The  Subscriber  agrees to courier to the  Company  its
----------------------
original inked signed Subscription  Agreement within three (3) days after faxing
said signed Agreement to the Company.

                                       10
<PAGE>

         8. Number of Shares and  Purchase  Price.  The  undersigned  Subscriber
            -------------------------------------
hereby  subscribes  for and agrees to  purchase  ____________-  shares of Common
Stock for a total  purchase price (to be paid by wire transfer) in the amount of
______________________________ ($________) (the "Purchase Price").

         9.  Accredited  Investor.  The  Subscriber is (please check  applicable
             --------------------
box):

              (a)    [ ]    a corporation,  business  trust,  or partnership not
                            formed for the  specific  purpose of  acquiring  the
                            securities  offered,  with total assets in excess of
                            $5,000,000.

              (b)    [ ]    any   trust,   with   total   assets  in  excess  of
                            $5,000,000,  not formed for the specific  purpose of
                            acquiring the securities offered,  whose purchase is
                            directed  by a  sophisticated  person  who has  such
                            knowledge  and  experience in financial and business
                            matters that he is capable of evaluating  the merits
                            and risks of the prospective investment.

              (c)    [ ]    an individual, who

                     [ ]    is a director,  executive officer or general partner
                            of the  issuer of the  securities  being  offered or
                            sold or a  director,  executive  officer  or general
                            partner of a general partner of that issuer.

                     [ ]    has an individual net worth, or joint net worth with
                            that  person's  spouse,  at the time of the purchase
                            exceeding $1,000,000.

                     [ ]    had an  individual  income in excess of  $200,000 in
                            each of the two most  recent  years or joint  income
                            with that  person's  spouse in excess of $300,000 in
                            each of those years and has a reasonable expectation
                            of  reaching  the same  income  level in the current
                            year.

              (d)    [ ]    an  entity,   each  owner  of  which  is  an  entity
                            described  in (a) or (b)  above or is an  individual
                            described in (c) above.

         The undersigned  acknowledges  that this Agreement and the subscription
represented  hereby  shall not be  effective  unless  accepted by the Company as
indicated below.

            (The remainder of this page is intentionally left blank.)

                                       11
<PAGE>

         IN WITNESS WHEREOF, the undersigned Subscriber does hereby execute this
Agreement this _____ day of September, 2000.

Subscriber

-------------------------
Name:

                                       DELIVERY INSTRUCTIONS:
                                       ----------------------
                                       Please type or print address where your
                                       security is to be delivered

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

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

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

ACCEPTANCE BY COMPANY:

         THIS  SUBSCRIPTION IS ACCEPTED BY THE COMPANY AND THE COMPANY AGREES TO
BE BOUND BY THE TERMS AND CONDITIONS THEREOF THIS ______ DAY OF SEPTEMBER, 2000.

                                            By:________________________________

                                            Name:______________________________

                                            Title:_____________________________

                                       12
<PAGE>

                                   EXHIBIT "A"

                                 CAPITALIZATION

Shares of Common Stock Outstanding:           58,342,004

Series G Preferred Stock Outstanding:                900

Common Stock Options Outstanding:              4,189,493

Common Stock Warrants Outstanding:            10,080,000

                                       13
<PAGE>

                                   EXHIBIT "B"

                                 USE OF PROCEEDS

Working Capital

                                       14FORM OF

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT  ("Agreement") is entered into as of
September  ___,  2000,  by and  between SI  DIAMOND  TECHNOLOGY,  INC.,  a Texas
corporation  (the  "Company")  and the  subscriber  (hereinafter  referred to as
"Subscriber" or "Investor") to the Company's offering ("Offering") of its Common
Stock pursuant to the Regulation D Subscription  Agreements  between the Company
and the Subscriber (the "Subscription Agreements") executed as of September ___,
2000.

         1.       Definitions. For purposes of this Agreement:
                  -----------

                  (a) The terms  "register",  "registered,"  and  "registration"
refer  to a  registration  effected  by  preparing  and  filing  a  registration
statement or similar  document with the Securities and Exchange  Commission (the
"SEC") in compliance with the Securities Act of 1933, as amended (the "Act") and
pursuant to Rule 415 under the Act or any successor rule, and the declaration or
ordering of effectiveness of such registration statement or document;

                  (b) The term "Registrable  Securities" means the shares of the
Company's  Common Stock,  together with any capital stock issued in  replacement
of, in exchange  for or  otherwise  in respect of such Common Stock (the "Common
Stock"),  issued to Subscriber in the offering as identified in the Subscription
Agreements);

                  (c) The term  "Holder"  means any person  owning or having the
right to acquire Registrable Securities or any permitted assignee thereof;

                  (d) The terms "Offering" and "Closing" shall have the meanings
ascribed to them in the Subscription Agreements.

         2.       Voluntary Registration.
                  ----------------------

                  (a) Notwithstanding any other obligation as identified in this
Agreement,  the Company  shall use its  reasonable  best efforts to  voluntarily
register all of the  Registrable  Securities  received by the Holder pursuant to
the Subscription  Agreements (the "Holder's Shares") under the Act and any state
acts  within  forty-five  (45)  days  from  the  date  of  this  Agreement  (the
"Post-Effective  Amendment  Registration  Period")  by  filing a  post-effective
amendment to the Company's  Registration  Statement on Form S-3 previously filed
with the SEC on July 17, 2000 (the "Registration Statement").

                  (b) The Holder whose Holder's Shares are to be included in any
registration  statement or amended  registration to be filed by the Company with
the SEC pursuant to the Act and this  Agreement  shall  furnish the Company with
such appropriate  information as the Company shall reasonably request in writing
concerning  the  Holder as is

<PAGE>

necessary for the Company to comply with the disclosure requirements of the Act,
and the rules and regulations  promulgated  thereunder.  Following the effective
date of any such registration statement,  the Company shall, upon the reasonable
request  of  the  Holder,   supply  such  number  of  prospectuses  meeting  the
requirements  of the Act as shall be  requested  by such  Holder to permit  such
Holder  to make a public  offering  of all the  shares of such  Holder  included
therein.  The Company shall  exercise good faith efforts to qualify the Holder's
Shares for sale in such states as the Holder shall reasonably designate.

         3. Obligations to Increase the Number of Available Shares. In the event
            ------------------------------------------------------
that the number of shares  available  under the  amendment  to the  Registration
Statement to be filed pursuant to Section 2 above is  insufficient  to cover all
of the Holder's Registrable Securities then outstanding, then:

                  (a) If the Company's efforts pursuant to the foregoing Section
2(a) result in less than seventy-five percent (75%) of the Holder's Shares being
registered  under the Act,  then and in that event,  the Company  shall use it's
best reasonable efforts to file a new registration  statement so as to cover all
of the Holder's Shares then  outstanding.  The Company shall file such amendment
or new registration  within sixty (60) days of the date that the  Post-Effective
Amendment Registration Period under Section 2 expires; or

                  (b) If the Company's  efforts pursuant to the foregoing clause
(a) result in  seventy-five  percent (75%) or more of the Holder's  Shares being
registered  under the Act,  then and in that  event,  if the Company at any time
thereafter elects, or proposes,  to register any of its authorized capital stock
under the Act with the SEC  pursuant  to which  shares of the  Company's  Common
Stock owned by any  shareholder  of the Company may be  registered,  the Company
shall give prompt  written notice (the  "Registration  Notice") to the Holder of
its intentions to register the Common Stock.  Within fifteen (15) days after the
Registration  Notice shall have been given to the Holder,  the Holder shall give
written  notice to the Company  (the  "Holder's  Notice")  stating the number of
Registrable  Shares the Holder  desires the Company to  register  (the  Holder's
Shares"). The Company shall use its best efforts to register the Holder's Shares
under the Act and any state acts.

                  (c) Anything contained herein to the contrary notwithstanding,
the  Company  has the right to  withdraw  and  discontinue  registration  of the
Holder's Shares at any time prior to the effective date of any such registration
statement  if  the   registration   of  the  Holder's  Shares  is  withdrawn  or
discontinued.

         4.       Obligations of the Company.  Whenever  required under this
                  --------------------------
Agreement to effect the registration of any Registrable Securities,  the Company
shall, as expeditiously as reasonably possible:

                  (a)  Prepare  and file with the SEC a  registration  statement
with respect to such  Registrable  Securities  and use its best efforts to cause
such registration statement to become effective.

<PAGE>

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

                  (c) With respect to any registration  statement filed pursuant
to this Agreement,  keep such registration statement effective until the earlier
of (i) the date upon which the Holders of Registrable Securities covered by such
registration statement shall have sold such Registrable Securities;  or (ii) one
(1) year after the date of the Closing of the Offering.

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

                  (e)  Use  its  best   efforts  to  register  and  qualify  the
securities covered by such registration statement under such other securities or
Blue Sky laws of such  jurisdictions  as shall be  reasonably  requested  by the
Holders of the Registrable  Securities  covered by such registration  statement,
provided that the Company shall not be required in connection  therewith or as a
condition  thereto  to qualify to do  business  or to file a general  consent to
service of process in any such states or jurisdictions.

                  (f) As promptly as  practicable  after  becoming aware of such
event, notify each Holder of the happening of any event of which the Company has
knowledge,  as a result of which the  prospectus  included  in the  Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material  fact  required to be stated  therein or  necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading,  and use its best efforts promptly to prepare a supplement
or amendment to the  Registration  Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request.

                  (g) Provide  Holders  with  written  notice of the date that a
registration  statement registering the resale of the Registrable  Securities is
declared effective by the SEC.

                  (h) Provide Holders and their  representatives the opportunity
to conduct a reasonable due diligence inquiry of Company's  pertinent  financial
and other records and make  available its officers,  directors and employees for
questions  regarding such information as it relates to information  contained in
the registration  statement,  subject to all information received by the Holders
and their representatives being kept confidential.

                                       3
<PAGE>

         5.  Furnish  Information.  It shall  be a  condition  precedent  to the
             --------------------
obligations  of the Company to take any action  pursuant to this  Agreement with
regard to each selling  Holder that such selling  Holders  shall  furnish to the
Company such information regarding themselves,  the Registrable  Securities held
by them, and the intended  method of disposition of such  securities as shall be
required  to effect  the  registration  of their  Registrable  Securities  or to
determine  that  registration  is not  required  pursuant  to Rule  144 or other
applicable provision of the Act.

         6.  Expenses of  Registration.  All expenses,  other than  underwriting
             -------------------------
discounts  and  commissions  and fees and  expenses  of counsel  to the  selling
Holders,  incurred in connection with the  registrations  pursuant to Section 2,
including (without limitation) all registration,  filing and qualification fees,
printers'  and  accounting  fees,  fees and  disbursements  of  counsel  for the
Company, shall be borne by the Company.

         7.       Indemnification.  In the event any Registrable Securities  are
                  ---------------
 included in a registration  statement  under this Agreement:

                  (a) To the extent permitted by law, the Company will indemnify
and hold  harmless each Holder,  the officers and directors of each Holder,  any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls  such  Holder  or  underwriter  within  the  meaning  of the Act or the
Securities  Exchange  Act of 1934,  as amended  (the "1934  Act"),  against  any
losses,  claims,  damages,  or liabilities  (joint or several) to which they may
become  subject  under  the Act,  the 1934 Act or other  federal  or state  law,
insofar as such losses,  claims,  damages, or liabilities (or actions in respect
thereof)  arise  out of or are  based  upon  any  of the  following  statements,
omissions or violations  (collectively a "Violation"):  (i) any untrue statement
or alleged untrue  statement of a material fact  contained in such  registration
statement,  including any preliminary  prospectus or final prospectus  contained
therein or any amendments or supplements  thereto,  (ii) the omission or alleged
omission to state  therein a material  fact  required to be stated  therein,  or
necessary to make the statements therein not misleading,  or (iii) any violation
by the Company of the Act, the 1934 Act, any state securities law or any rule or
regulation  promulgated under the Act, the 1934 Act or any state securities law;
and  the  Company  will  reimburse  each  such  Holder,   officer  or  director,
underwriter  or controlling  person for any legal or other  expenses  reasonably
incurred by them in connection  with  investigating  or defending any such loss,
claim,  damage,  liability,  or action;  provided,  however,  that the indemnity
agreement  contained in this  subsection 7(a) shall not apply to amounts paid in
settlement  of any such  loss,  claim,  damage,  liability,  or  action  if such
settlement is effected  without the consent of the Company  (which consent shall
not be unreasonably withheld),  nor shall the Company be liable in any such case
for any such loss,  claim,  damage,  liability,  or action to the extent that it
arises out of or is based upon a Violation  which occurs in reliance upon and in
conformity with written  information  furnished  expressly for use in connection
with such  registration by any such Holder,  officer,  director,  underwriter or
controlling person.

                                       4
<PAGE>

                  (b) To the  extent  permitted  by law,  each  selling  Holder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors,  each of its officers who have signed the registration statement,
each person, if any, who controls the Company within the meaning of the Act, any
underwriter  and any  other  Holder  selling  securities  in  such  registration
statement or any of its  directors  or officers or any person who controls  such
Holder, against any losses,  claims,  damages, or liabilities (joint or several)
to which the  Company or any such  director,  officer,  controlling  person,  or
underwriter or controlling person, or other such Holder or director,  officer or
controlling  person may  become  subject,  under the Act,  the 1934 Act or other
federal or state law, insofar as such losses,  claims,  damages,  or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such  Violation  occurs in
reliance  upon and in  conformity  with  written  information  furnished by such
Holder  expressly for use in connection  with such  registration;  and each such
Holder will  reimburse any legal or other  expenses  reasonably  incurred by the
Company and any such  director,  officer,  controlling  person,  underwriter  or
controlling person, other Holder,  officer,  director,  or controlling person in
connection  with  investigating  or  defending  any such  loss,  claim,  damage,
liability, or action; provided,  however, that the indemnity agreement contained
in this  subsection  7(b) shall not apply to amounts paid in  settlement  of any
such loss,  claim,  damage,  liability or action if such  settlement is effected
without the  consent of the  Holder,  which  consent  shall not be  unreasonably
withheld;  provided, that, in no event shall any indemnity under this subsection
7(b) exceed the net purchase  price of securities  sold by such Holder under the
registration statement.

                  (c) Promptly after receipt by an indemnified  party under this
Section  7  of  notice  of  the  commencement  of  any  action   (including  any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made  against any  indemnifying  party under this Section 7, deliver to
the  indemnifying  party a written  notice of the  commencement  thereof and the
indemnifying  party shall have the right to  participate  in, and, to the extent
the indemnifying  party so desires,  jointly with any other  indemnifying  party
similarly  noticed,   to  assume  the  defense  thereof  with  counsel  mutually
satisfactory to the parties; provided,  however, that an indemnified party shall
have the right to retain its own counsel,  with the reasonably incurred fees and
expenses  of  one  such  counsel  to be  paid  by  the  indemnifying  party,  if
representation  of  such  indemnified  party  by  the  counsel  retained  by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel  in such  proceeding.  The  failure  to  deliver  written  notice to the
indemnifying  party within a  reasonable  time of the  commencement  of any such
action, if prejudicial to its ability to defend such action,  shall relieve such
indemnifying  party of any liability to the indemnified party under this Section
7, but the omission so to deliver written notice to the indemnifying  party will
not  relieve  it of any  liability  that it may  have to any  indemnified  party
otherwise than under this Section 7.

                  (d) In the event that the indemnity  provided in paragraph (a)
or (b) of this Section 7 is unavailable to or  insufficient  to hold harmless an
indemnified  party for any

                                       5
<PAGE>

reason,  the  Company  and  each  Holder  of  Registrable  Securities  agree  to
contribute to the aggregate claims,  losses,  damages and liabilities (including
legal or other expenses  reasonably incurred in connection with investigating or
defending same) (collectively  "Losses") to which the Company and one or more of
the Holders of Registrable  Securities  may be subject in such  proportion as is
appropriate  to reflect  the  relative  fault of the  Company and the Holders in
connection  with the  statements  or  omissions  which  resulted in such Losses;
provided,  however,  that in no case  shall any  Holder be  responsible  for any
amount in excess of the net purchase  price of  securities  sold by it under the
registration  statement.  Relative  fault shall be  determined  by  reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or by the  Holders.  The  Company  and the Holders  agree that it
would not be just and  equitable if  contribution  were  determined  by pro rata
allocation or any other method of allocation  which does not take account of the
equitable  considerations  referred to above.  Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution  from any
person who was not guilty of such fraudulent misrepresentation.  For purposes of
this  Section 7, each  person who  controls a holder of  Registrable  Securities
within the meaning of either the Act or the 1934 Act and each director, officer,
partner,  employee  and  agent  of a  Holder  shall  have  the  same  rights  to
contribution as such holder, and each person who controls the Company within the
meaning of either the Act or the 1934 Act and each director of the Company,  and
each  officer of the Company who has signed the  registration  statement,  shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).

                  (e) The  obligations  of the Company  and  Holders  under this
Section 7 shall survive the  redemption  and  conversion,  if any, of the Common
Stock,   the  completion  of  any  offering  of  Registrable   Securities  in  a
registration statement under this Agreement, and otherwise.

         8. Reports Under Securities Exchange Act of 1934. With a view to making
            ---------------------------------------------
available to the Holders the benefits of Rule 144 promulgated  under the Act and
any other rule or  regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without  registration,  the Company
agrees to:

                  (a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144;

                  (b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and

                  (c)  furnish to any  Holder,  so long as the  Holder  owns any
Registrable  Securities,  forthwith upon request (i) a written  statement by the
Company,  if true,  that it has complied with the reporting  requirements of SEC
Rule 144,  the Act and the 1934 Act,  (ii) a copy of the most  recent  annual or
quarterly report of the Company and such other reports and

                                       6
<PAGE>

documents so filed by the Company,  and (iii) such other  information  as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration.

         9.  Notices.  All notices  required or permitted  under this  Agreement
             -------
shall be made in writing signed by the party making the same,  shall specify the
section  under  this  Agreement  pursuant  to which it is  given,  and  shall be
addressed if to (i) the Company at: 3006 Longhorn Boulevard,  Suite 107, Austin,
Texas 78758, Telephone No. (512) 339-5020, Facsimile No. (512) 248-620-5037, and
(ii) the  Holders  at their  respective  last  address  as the party  shall have
furnished  in writing as a new  address  to be  entered  on such  register.  Any
notice, except as otherwise provided in this Agreement, shall be made by fax and
shall be deemed given at the time of transmission of the facsimile.

         10. Termination. This Agreement shall terminate on the earlier to occur
             -----------
of (a) the date  that is one (1) year  from the date of the  Closing  or (b) the
date the  resale by  Holders  of all  Registrable  Securities  described  in any
registration  statement  filed  pursuant to this  Agreement  is  completed;  but
without  prejudice  to (i) the  parties'  rights and  obligations  arising  from
breaches of this  Agreement  occurring  prior to such  termination or (ii) other
indemnification obligations under this Agreement.

         11.  Assignment.  No  assignment,  transfer or  delegation,  whether by
              ----------
operation of law or otherwise, of any rights or obligations under this Agreement
by the  Company or any  Holder,  respectively,  shall be made  without the prior
written  consent of the  majority  in  interest  of the  Holders or the  Company
respectively;  provided  that the  rights of a Holder  may be  transferred  to a
subsequent  holder  of  the  Holder's  Registrable   Securities  (provided  such
transferee  shall provide to the Company,  a writing executed by such transferee
agreeing to be bound as a Holder by the terms of this  Agreement);  and provided
further  that the Company may  transfer  its rights and  obligations  under this
Agreement to a purchaser of all or a substantial  portion of its business if the
obligations of the Company under this  Agreement are assumed in connection  with
such  transfer,  either by merger or other  operation  of law (which may include
without  limitation a transaction  whereby the Registrable  Shares are converted
into securities of the successor in interest) or by specific assumption executed
by the transferee.

         12.      Miscellaneous.
                  -------------

                  (a)      Governing  Law. This  Agreement  shall be governed by
                           --------------
and construed in accordance  with the laws of the State of Texas without  giving
effect to conflict of laws.

                  (b)  Successors  and  Assigns.  Except as  otherwise  provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon,  the  successors,  assigns,  heirs,  executors and  administrators  of the
parties hereto.

                                       7
<PAGE>

                  (c) Delays or Omissions.  No delay or omission to exercise any
right,  power or remedy accruing to any holder of any Registrable  Shares,  upon
any breach or default of the Company under this Agreement, shall impair any such
right,  power or remedy of such holder nor shall it be  construed to be a waiver
of any such  breach or  default,  or an  acquiescence  therein,  or of or in any
similar  breach or  default  thereunder  occurring,  nor shall any waiver of any
single  breach or  default  be deemed a waiver  of any other  breach or  default
thereafter  occurring.  Any waiver,  permit,  consent or approval of any kind or
character  on the  part of any  holder  of any  breach  or  default  under  this
Agreement,  or any  waiver  on  the  part  of any  party  of any  provisions  of
conditions of this Agreement,  must be in writing and shall be effective only to
the extent  specifically set forth in such writing.  All remedies,  either under
this  Agreement,  or by law  or  otherwise  afforded  to any  holder,  shall  be
cumulative and not alternative.

                  (d) Counterparts. This Agreement may be executed in any number
of  counterparts,  each  of  which  may be  executed  by  less  than  all of the
Investors,  each of which shall be  enforceable  against  the  parties  actually
executing such  counterparts,  and all of which  together  shall  constitute one
instrument.

                  (e) Severability.  In the case any provision of this Agreement
shall  be  invalid,  illegal  or  unenforceable,   the  validity,  legality  and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.

            {The remainder of this page is intentionally left blank.}

                                       8
<PAGE>

         The foregoing  Registration  Rights  Agreement is hereby executed as of
the date first above written.

                                        SI DIAMOND TECHNOLOGY, INC.

                                        By: _______________________________
                                        Name:______________________________
                                        Title: ____________________________

                               SUBSCRIBER(S)

                                        Subscriber's Name:

                                        By:__________________________________

                                        By:__________________________________

                                    Address:

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