Document:

Unassociated Document

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of August 10, 2007, between International Imaging Systems, Inc., a
      Delaware corporation (the “Company”),
      and
      each purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”),
      and Rule 506 promulgated thereunder, the Company desires to issue and sell
      to
      each Purchaser, and each Purchaser, severally and not jointly, desires to
      purchase from the Company, securities of the Company as more fully described
      in
      this Agreement.

     

    WHEREAS,
      Purchasers
      acknowledges that the Company is considered a “blank check company” or “shell”
and accordingly, the Securities presently can not be sold in reliance on Rule
      144.

    

    WHEREAS,
      Purchasers acknowledge that they have not received registration rights in
      connection with their purchase of the units. 

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and each Purchaser agree as
      follows:

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1 Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms have the meanings set forth in this Section
      1.1:

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person as such
      terms are used in and construed under Rule 405 under the Securities Act. With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.

     

    “Business
      Day”
means
      any day except Saturday, Sunday, any day which is a federal legal holiday in
      the
      United States or any day on which banking institutions in the State of New
      York
      are authorized or required by law or other governmental action to
      close.

     

    “Closing”
means
      the closing of the purchase and sale of the Securities pursuant to Section
      2.1.

     

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

    
      
        
        

      

      
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    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $.0001 per share, and any other
      class
      of securities into which such securities may hereafter be reclassified or
      changed into. 

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including, without limitation,
      any
      debt, preferred stock, rights, options, warrants or other instrument that is
      at
      any time convertible into or exercisable or exchangeable for, or otherwise
      entitles the holder thereof to receive, Common Stock.

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules of the Company delivered concurrently herewith.

     

    “Escrow
      Agent”
means
      the Law Office of Raul Silvestre and Associates, APLC.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    

    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction.

     

    “Material
      Adverse Effect”
shall
      mean: (i) a material adverse effect on the legality, validity or enforceability
      of any Transaction Document, (ii) a material adverse effect on the results
      of
      operations, assets, business, prospects or condition (financial or otherwise)
      of
      the Company, taken as a whole, or (iii) a material adverse effect on the
      Company’s ability to perform in any material respect on a timely basis its
      obligations under any Transaction Document

     

    “Per
      Share Purchase Price”
equals
      $0.1667.

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an informal investigation or partial proceeding, such as a
      deposition), whether commenced or threatened.

     

    “Purchaser
      Party”
shall
      have the meaning ascribed to such term in Section 4.8.

     

    
      
        
        

      

      
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    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the Shares and
      the
      Warrant Shares. 

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule. 

     

    “SEC
      Reports”
shall
      have the meaning ascribed to such term in Section 3.1(f).

     

    “Securities”
means
      the Shares, the Warrants and the Warrant Shares.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Shares”
means
      the shares of Common Stock issued or issuable to each Purchaser pursuant to
      this
      Agreement.

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the aggregate amount to be paid for Shares and Warrants
      purchased hereunder as specified below such Purchaser’s name on the signature
      page of this Agreement and next to the heading “Subscription Amount,” in United
      States dollars and in immediately available funds.

     

    “Trading
      Day”
means
      a
      day on which the New York Stock Exchange is open for trading.

     

    “Trading
      Market”
means
      the OTC Bulletin Board.

     

    “Transaction
      Documents”
means
      this Agreement, the Warrants, and any other documents or agreements executed
      in
      connection with the transactions contemplated hereunder.

     

    “Warrants”
means
      collectively the Common Stock purchase warrants delivered to the Purchasers
      at
      the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
      be
      exercisable immediately and have a term of 5 years and an exercise price of
      $1.15 per share, in the form of Exhibit
      A
      attached
      hereto.

     

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1 Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      substantially concurrent with the execution and delivery of this Agreement
      by
      the parties hereto, the Company agrees to sell, and the Purchasers, severally
      and not jointly, agree to purchase, in the aggregate, up to $100,000 of Shares
      and Warrants. Each Purchaser shall deliver to the Escrow Agent, via wire
      transfer or a certified check, immediately available funds equal to its
      Subscription Amount and the Company shall deliver to each Purchaser its
      respective Shares and a Warrant as determined pursuant to Section 2.2(a), and
      the Company and each Purchaser shall deliver the other items set forth in
      Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants
      and
      conditions set forth in Sections 2.2 and 2.3, the Closing shall
      occur.

     

    
      
        
        

      

      
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    2.2 Deliveries

     

    (a) On
      or
      prior to the Closing Date, the Company shall deliver or cause to be delivered
      to
      each Purchaser the following:

     

    (i) this
      Agreement duly executed by the Company;

     

    (ii) a
      certificate evidencing a number of Shares equal to such Purchaser’s Subscription
      Amount divided by the Per Share Purchase Price, registered in the name of such
      Purchaser; and

     

    (iii) a
      Warrant
      registered in the name of such Purchaser to purchase up to a number of shares
      of
      Common Stock equal to 100% of the Shares issuable to such Purchaser hereunder,
      with an exercise price equal to $1.15, subject to adjustment
      therein.

     

    (b) On
      or
      prior to the Closing Date, each Purchaser shall deliver or cause to be delivered
      to the Company (except as noted) the following:

     

    (i) this
      Agreement duly executed by such Purchaser; and

     

    (ii) such
      Purchaser’s Subscription Amount by wire transfer to the Escrow Agent.

     

    2.3 Closing
      Conditions. 

     

    (a) The
      obligations of the Company hereunder in connection with the Closing are subject
      to the following conditions being met:

     

    (i) the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Purchasers contained herein; 

     

    (ii) all
      obligations, covenants and agreements of each Purchaser required to be performed
      at or prior to the Closing Date shall have been performed; and

     

    (iii) the
      delivery by each Purchaser of the items set forth in Section 2.2(b) of this
      Agreement.

     

    (b) The
      respective obligations of the Purchasers hereunder in connection with the
      Closing are subject to the following conditions being met:

     

    
      
        
        

      

      
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    (i) the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Company contained herein;

     

    (ii) all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date shall have been performed; 

     

    (iii) the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement; and

     

    (iv) there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof.

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.
      

     

    Except
      as
      set forth under the corresponding section of the disclosure schedules delivered
      to the Purchasers concurrently herewith (the “Disclosure Schedules”) which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to each PurchaserThe
      Company
      hereby makes the following representations and warranties to each
      Purchaser:

     

    (a) Organization
      and Qualification.
      The
      Company is an entity duly incorporated or otherwise organized, validly existing
      and in good standing under the laws of the jurisdiction of its incorporation
      or
      organization (as applicable), with the requisite power and authority to own
      and
      use its properties and assets and to carry on its business as currently
      conducted. 

     

    (b) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations hereunder and thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated hereby and thereby
      have
      been duly authorized by all necessary action on the part of the Company and
      no
      further action is required by the Company, its board of directors or its
      stockholders in connection therewith other than in connection with the Required
      Approvals. 

     

    (c) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company,
      the issuance and sale of the Securities and the consummation by the Company
      of
      the other transactions contemplated hereby and thereby do not and will not
      (i)
      conflict with or violate any provision of the Company’s certificate or articles
      of incorporation, bylaws or other organizational or charter documents, or (ii)
      conflict with, or constitute a default (or an event that with notice or lapse
      of
      time or both would become a default) under, result in the creation of any Lien
      upon any of the properties or assets of the Company, or give to others any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing a Company debt or otherwise) or other understanding
      to
      which the Company is a party or by which any property or asset of the Company
      is
      bound or affected. 

     

    
      
        
        

      

      
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    (d) Issuance
      of the Securities.
      The
      Securities are, duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be duly and validly issued, fully
      paid and nonassessable, free and clear of all Liens imposed by the Company
      other
      than restrictions on transfer provided for in the Transaction Documents. The
      Company has reserved from its duly authorized capital stock the maximum number
      of shares of Common Stock issuable pursuant to this Agreement and the
      Warrants.

     

    (e) Capitalization.
      The
      capitalization of the Company is as set forth on Schedule
      3.1(e),
      which
Schedule
      3.1(e)
      shall
      also include the number of shares of Common Stock owned beneficially, and of
      record, by Affiliates of the Company as of the date hereof. 

     

    (f) SEC
      Reports; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by the Company under the Securities Act and the Exchange
      Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (or such shorter period as the Company was required
      by
      law or regulation to file such material) (the foregoing materials, including
      the
      exhibits thereto and documents incorporated by reference therein, being
      collectively referred to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act, as applicable,
      and
      none of the SEC Reports, when filed, contained any untrue statement of a
      material fact or omitted to state a material fact required to be stated therein
      or necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the Commission with respect thereto as in effect at the time of filing.
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

    (g) Material
      Changes; Undisclosed Events, Liabilities or Developments.
      Since
      the date of the latest audited financial statements included within the SEC
      Reports, except as specifically disclosed in a subsequent SEC Report filed
      prior
      to the date hereof, (i) there has been no event, occurrence or development
      that
      has had or that could reasonably be expected to result in a Material Adverse
      Effect, (ii) the Company has not incurred any liabilities (contingent or
      otherwise) other than (A) trade payables and accrued expenses incurred in the
      ordinary course of business consistent with past practice and (B) liabilities
      not required to be reflected in the Company’s financial statements pursuant to
      GAAP or disclosed in filings made with the Commission, (iii) the Company has
      not
      altered its method of accounting, and (iv) the Company has not declared or
      made
      any dividend or distribution of cash or other property to its stockholders
      or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock. 

     

    
      
        
        

      

      
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    (h) Certain
      Fees.
      No
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by the Transaction Documents. 

     

    (i) Private
      Placement.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market.

     

    (j) No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising. The Company has offered the Securities for sale only to the
      Purchasers and certain other “accredited investors” within the meaning of Rule
      501 under the Securities Act.

     

    (k) Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated thereby. 

     

    3.2 Representations
      and Warranties of the Purchasers.
      Each
      Purchaser, for itself and for no other Purchaser, hereby represents and warrants
      as of the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a) Organization;
      Authority.
      Such
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with full right,
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations hereunder and thereunder. The execution and delivery of
      the
      Transaction Documents and performance by such Purchaser of the transactions
      contemplated by the Transaction Documents have been duly authorized by all
      necessary corporate or similar action on the part of such Purchaser. Each
      Transaction Document to which it is a party has been duly executed by such
      Purchaser, and when delivered by such Purchaser in accordance with the terms
      hereof, will constitute the valid and legally binding obligation of such
      Purchaser, enforceable against it in accordance with its terms, except (i)
      as
      limited by general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    
      
        
        

      

      
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    (b) Own
      Account.
      Such
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof in violation of the Securities Act or any applicable state securities
      law, has no present intention of distributing any of such Securities in
      violation of the Securities Act or any applicable state securities law and
      has
      no direct or indirect arrangement or understandings with any other persons
      to
      distribute or regarding the distribution of such Securities (this representation
      and warranty not limiting such Purchaser’s right to sell the Securities pursuant
      to the Registration Statement or otherwise in compliance with applicable federal
      and state securities laws) in violation of the Securities Act or any applicable
      state securities law. Such Purchaser is acquiring the Securities hereunder
      in
      the ordinary course of its business.

     

    (c) Purchaser
      Status.
      At the
      time such Purchaser was offered the Securities, it was, and at the date hereof
      it is, and on each date on which it exercises any Warrants, it will be either:
      (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
      (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
      buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
      not required to be registered as a broker-dealer under Section 15 of the
      Exchange Act. 

     

    (d) Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment.

     

    (e) General
      Solicitation.
      Such
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.
      

     

    (a) The
      Company is considered a “blank check” or “shell” company. Accordingly, the
      Purchaser will not be able to avail themselves of Rule 144 unless there is
      a
      changes in the Company’s status. 

     

    (b) The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1,
      of a legend on any of the Securities in the following form:

     

    THIS
      SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR
      THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
      INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
      SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

     

    
      
        
        

      

      
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    4.2 Securities
      Laws Disclosure; Publicity.
      The
      Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately
      following the date hereof, issue a Current Report on Form 8-K, disclosing the
      material terms of the transactions contemplated hereby, and filing the
      Transaction Documents as exhibits thereto. 

     

    4.3 Non-Public
      Information.
      Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company covenants and agrees
      that
      neither it nor any other Person acting on its behalf will provide any Purchaser
      or its agents or counsel with any information that the Company believes
      constitutes material non-public information, unless prior thereto such Purchaser
      shall have executed a written agreement regarding the confidentiality and use
      of
      such information. The Company understands and confirms that each Purchaser
      shall
      be relying on the foregoing covenant in effecting transactions in securities
      of
      the Company.

     

    4.4 Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Securities hereunder
      for
      working capital purposes.

     

    4.5 Indemnification
      of Purchasers.
      Subject
      to the provisions of this Section 4.5, the Company will indemnify and hold
      each
      Purchaser and its directors, officers, shareholders, members, partners,
      employees and agents (and any other Persons with a functionally equivalent
      role
      of a Person holding such titles notwithstanding a lack of such title or any
      other title), each Person who controls such Purchaser (within the meaning of
      Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
      directors, officers, shareholders, agents, members, partners or employees (and
      any other Persons with a functionally equivalent role of a Person holding such
      titles notwithstanding a lack of such title or any other title) of such
      controlling persons (each, a “Purchaser
      Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any such Purchaser Party may suffer or incur as a result
      of
      or relating to (a) any breach of any of the representations, warranties,
      covenants or agreements made by the Company in this Agreement or in the other
      Transaction Documents or (b) any action instituted against a Purchaser in any
      capacity, or any of them or their respective Affiliates, by any stockholder
      of
      the Company who is not an Affiliate of such Purchaser, with respect to any
      of
      the transactions contemplated by the Transaction Documents (unless such action
      is based upon a breach of such Purchaser’s representations, warranties or
      covenants under the Transaction Documents or any agreements or understandings
      such Purchaser may have with any such stockholder or any violations by the
      Purchaser of state or federal securities laws or any conduct by such Purchaser
      which constitutes fraud, gross negligence, willful misconduct or malfeasance).
      If any action shall be brought against any Purchaser Party in respect of which
      indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
      promptly notify the Company in writing, and the Company shall have the right
      to
      assume the defense thereof with counsel of its own choosing reasonably
      acceptable to the Purchaser Party. Any Purchaser Party shall have the right
      to
      employ separate counsel in any such action and participate in the defense
      thereof, but the fees and expenses of such counsel shall be at the expense
      of
      such Purchaser Party except to the extent that (i) the employment thereof has
      been specifically authorized by the Company in writing, (ii) the Company has
      failed after a reasonable period of time to assume such defense and to employ
      counsel or (iii) in such action there is, in the reasonable opinion of such
      separate counsel, a material conflict on any material issue between the position
      of the Company and the position of such Purchaser Party, in which case the
      Company shall be responsible for the reasonable fees and expenses of no more
      than one such separate counsel. The Company will not be liable to any Purchaser
      Party under this Agreement (i) for any settlement by a Purchaser Party effected
      without the Company’s prior written consent, which shall not be unreasonably
      withheld or delayed; or (ii) to the extent, but only to the extent that a loss,
      claim, damage or liability is attributable to any Purchaser Party’s breach of
      any of the representations, warranties, covenants or agreements made by such
      Purchaser Party in this Agreement or in the other Transaction
      Documents.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

     

    4.6 Reservation
      of Common Stock.
      As of
      the date hereof, the Company has reserved and the Company shall continue to
      reserve and keep available at all times, free of preemptive rights, a sufficient
      number of shares of Common Stock for the purpose of enabling the Company to
      issue Shares pursuant to this Agreement and Warrant Shares pursuant to any
      exercise of the Warrants. 

     

    4.7 Equal
      Treatment of Purchasers.
      No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. For clarification purposes, this provision constitutes
      a
      separate right granted to each Purchaser by the Company and negotiated
      separately by each Purchaser, and is intended for the Company to treat the
      Purchasers as a class and shall not in any way be construed as the Purchasers
      acting in concert or as a group with respect to the purchase, disposition or
      voting of Securities or otherwise.

     

    4.8 Delivery
      of Securities After Closing.
      The
      Company shall deliver, or cause to be delivered, the respective Securities
      purchased by each Purchaser to such Purchaser within 3 Trading Days of the
      Closing Date.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1 Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the Closing has not been consummated on or before April 30, 2007;
      provided,
      however,
      that no
      such termination will affect the right of any party to sue for any breach by
      the
      other party (or parties).

     

    5.2 Entire
      Agreement.
      The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules.

     

    5.3 Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number set forth on the signature
      pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading
      Day,
      (b) the next Trading Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto on a day that is not a Trading Day or later
      than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd
      Trading
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth on the signature pages attached hereto.

     

    5.4 Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    5.5 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each Purchaser (other than by merger). Any Purchaser may assign
      any
      or all of its rights under this Agreement to any Person to whom such Purchaser
      assigns or transfers any Securities, provided such transferee agrees in writing
      to be bound, with respect to the transferred Securities, by the provisions
      of
      the Transaction Documents that apply to the “Purchasers.”

     

    5.6 No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.8.

     

    5.7 Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of New York, without regard
      to
      the principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and federal courts sitting in the City of New York. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of New York, borough of Manhattan for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or is an inconvenient venue for
      such
      proceeding. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any other
      manner permitted by law. If either party shall commence an action or proceeding
      to enforce any provisions of the Transaction Documents, then the prevailing
      party in such action or proceeding shall be reimbursed by the other party for
      its reasonable attorneys’ fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such action or
      proceeding.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

     

    5.8 Survival.
      The
      representations and warranties contained herein shall survive the Closing and
      the delivery of the Shares and Warrant Shares.

     

    5.9 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

     

    5.10 Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

     

    5.11 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) any of the other Transaction Documents, whenever any
      Purchaser exercises a right, election, demand or option under a Transaction
      Document and the Company does not timely perform its related obligations within
      the periods therein provided, then such Purchaser may rescind or withdraw,
      in
      its sole discretion from time to time upon written notice to the Company, any
      relevant notice, demand or election in whole or in part without prejudice to
      its
      future actions and rights; provided,
      however,
      in the
      case of a rescission of an exercise of a Warrant, the Purchaser shall be
      required to return any shares of Common Stock delivered in connection with
      any
      such rescinded exercise notice.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

     

    5.12 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof (in the case of mutilation),
      or
      in lieu of and substitution therefor, a new certificate or instrument, but
      only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft or destruction. The applicant for a new certificate or instrument under
      such circumstances shall also pay any reasonable third-party costs (including
      customary indemnity) associated with the issuance of such replacement
      Securities.

     

    5.13 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Purchasers and the Company
      will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations contained in the Transaction
      Documents and hereby agrees to waive and not to assert in any action for
      specific performance of any such obligation the defense that a remedy at law
      would be adequate.

     

    5.14 Independent
      Nature of Purchasers’ Obligations and Rights.
      The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance or non-performance of the obligations
      of any other Purchaser under any Transaction Document. 

     

    5.15 Liquidated
      Damages.
      The
      Company’s obligations to pay any partial liquidated damages or other amounts
      owing under the Transaction Documents is a continuing obligation of the Company
      and shall not terminate until all unpaid partial liquidated damages and other
      amounts have been paid notwithstanding the fact that the instrument or security
      pursuant to which such partial liquidated damages or other amounts are due
      and
      payable shall have been canceled.

     

    5.16 Construction.
      The
      parties agree that each of them and/or their respective counsel has reviewed
      and
      had an opportunity to revise the Transaction Documents and, therefore, the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

    5.17 Waiver
      of Jury Trial.
       In
      any
      action, suit or proceeding in any jurisdiction brought by any party against
      any
      other party, the parties each knowingly and intentionally, to the greatest
      extent permitted by applicable law, hereby absolutely, unconditionally,
      irrevocably and expressly waives forever trial by jury.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

     

    (Signature
      Pages Follow)

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    

    
      	
              INTERNATIONAL
                IMAGING SYSTEMS, INC.

               

            	
              Address
                for Notice:

              31200
                Via Colinas, Suite 200

              Westlake
                Village, CA 91362

            
	
              By:__________________________________________

              Name:

              Title:

            	
              Attn:

              e-mail:

              Tel:

              Fax:

            
	
              With
                a copy to (which shall not constitute notice):

               

               

            	 

    

    

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    [PURCHASER
      SIGNATURE PAGES TO NRLS SECURITIES PURCHASE AGREEMENT]

    

    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above.

     

    Name
      of
      Purchaser:
      _____________________________________________________________

    Signature
      of Authorized Signatory of Purchaser:
      ______________________________________

    Name
      of
      Authorized Signatory:
      ____________________________________________________

    Title
      of
      Authorized Signatory:
      _____________________________________________________

    Email
      Address of
      Purchaser:_______________________________________________________

    Fax
      Number of Purchaser:
      ________________________________________________________

    Address
      for Notice of
      Purchaser:___________________________________________________

    

    

    

    

    Address
      for Delivery of Securities for Purchaser (if not same as above):

    

    

    

    

    

    Subscription
      Amount:

    $:

    Shares:

    #:

    Warrant
      Shares:

    #:

    EIN
      Number:

    

    

    [SIGNATURE
      PAGES CONTINUE]

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    FORM
      OF
      WARRANT

    

    

    
      
        
        

      

      
        17WARRANT

    TO
      PURCHASE SHARES OF COMMON STOCK

    of

    INTERNATIONAL
      IMAGING SYSTEMS, INC

    A
      Delaware Corporation

     

    THIS
      WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED PURSUANT
      TO THE EXERCISE OF THIS WARRANT (THE “WARRANT SHARES”) WILL BE, ACQUIRED SOLELY
      FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
      DISTRIBUTION THEREOF. NEITHER THIS WARRANT OR THE WARRANT SHARES (TOGETHER,
      THE
“SECURITIES”) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
      SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
      REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
      COUNSEL THAT SUCH DISPOSITION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
      DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND OF ANY APPLICABLE STATE
      SECURITIES LAWS. THIS WARRANT MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER
      AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE OR OTHER TRANSFER OF ANY
      INTEREST IN ANY OF THE SHARES REPRESENTED BY THIS WARRANT.

     

    
      	
              Warrant
                No.: W-«Note»

            	
              DATE

            

    

     

    THIS
      CERTIFIES THAT, for value received, [_________] (the “Holder”) is entitled to
      subscribe for and purchase from International Imaging Systems, Inc., a Delaware
      corporation (the “Company”), [__________] shares of the Company's Common Stock
      (as adjusted pursuant to Section 2 hereof) (the “Warrant Shares”) at the
      purchase price of $1.15 per share (as adjusted pursuant to Section 2 hereof)
      (the “Exercise Price”), upon the terms and subject to the conditions hereinafter
      set forth:

     

    Exercise
      Rights.

     

    (a) Cash
      Exercise. The
      purchase rights represented by this Warrant may be exercised by the Holder
      at
      any time during the term hereof, in whole or in part, by surrender of this
      Warrant and delivery of a completed and duly executed Notice of Cash Exercise,
      in the form attached as Exhibit
      A
      hereto,
      accompanied by payment to the Company of an amount equal top the Exer-cise
      Price
      then in effect multiplied by the number of Warrant Shares to be pur-chased
      by
      the Holder in connection with such cash exercise of this Warrant, which amount
      may be paid, at the election of the Holder, by wire transfer, delivery of a
      check payable to the order of the Company or delivery of a promissory note
      made
      by the Company for whole or partial cancellation, or any combination of the
      foregoing, to the principal offices of the Company. The exercise of this Warrant
      shall be deemed to have been effected on the day on which the Holder surrenders
      this Warrant to the Company and satisfies all of the requirements of this
      Section 1. Upon such exercise, the Holder will be deemed a shareholder of record
      of those Warrant Shares for which the Warrant has been exercised with all rights
      of a shareholder (including, without limitation, all voting rights with respect
      to such Warrant Shares and all rights to receive any dividends with respect
      to
      such Warrant Shares). If this Warrant is to be exercised in respect of less
      than
      all of the Warrant Shares covered hereby, the Holder shall be entitled to
      receive a new warrant covering the number of Warrant Shares in respect of which
      this Warrant shall not have been exercised and for which it remains subject
      to
      exercise. Such new warrant shall be in all other respects identical to this
      Warrant.

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    

     

    (b) Net
      Issue Exercise.

     

    (i) In
      lieu
      of exercising the purchase rights represented by this Warrant on a cash basis
      pursuant to Section 1(a) hereof, the Holder may elect to exercise such rights
      represented by this Warrant at any time during the term hereof, in whole or
      in
      part, on a net-issue basis by electing to receive the number of Warrant Shares
      which are equal in value to the value of this Warrant (or any portion thereof
      to
      be canceled in connection with such net-issue exercise) at the time of any
      such
      net-issue exercise, by delivery to the principal offices of the Company this
      Warrant and a completed and duly executed Notice of Net-Issue Exercise, in
      the
      form attached as Exhibit
      B
      hereto,
      properly marked to indicate (A) the number of Warrant Shares to be delivered
      to
      the Holder in connection with such net-issue exercise, (B) the number of Warrant
      Shares with respect to which the Warrant is being surrendered in payment of
      the
      aggregate Exercise Price for the Warrant Shares to be delivered to the Holder
      in
      connection with such net-issue exercise, and (C) the number of Warrant
      Shares which remain subject to the Warrant after such net-issue exercise, if
      any
      (each as determined in accordance with Section 1(b)(ii) hereof). 

     

    (ii) In
      the
      event that the Holder shall elect to exercise the rights represented by this
      Warrant in whole or in part on a net-issue basis pursuant to this Section 1(b),
      the Company shall issue to the Holder the number of Warrant Shares determined
      in
      accordance with the following formula:

     

    X
      =
Y
      (A-B)

          
      A

     

    
      	 	
              X      
                =

            	
              the
                number of Warrant Shares to be issued to the Holder in connection
                with
                such net-issue exercise.

            

    

     

    
      	 	
              Y      
                =

            	
              the
                number of Warrant Shares subject to this
                Warrant.

            

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    

     

    
      	 	
              A      
                =

            	
              the
                Fair Market Value (as defined below) of one share Common Stock on
                the date
                of exercise.

            

    

     

    
      	 	
              B      
                =

            	
              the
                Exercise Price in effect as of the date of such net-issue exercise
                (as
                adjusted pursuant to Section 2
                hereof).

            

    

     

    (c) Fair
      Market Value.
      For
      purposes of this Section 1, the “Fair Market Value” of the Common Stock
      shall have the following meanings:

     

    (i) If
      the
      Common Stock is not listed for trading on a national securities exchange or
      admitted for trading on a national market system, the then Fair Market Value
      of
      a share of Common Stock shall be as determined in good faith by the Board of
      Directors (the “Board of Directors”) of the Company as of the date of exercise
      pursuant to clause (b).

     

    (ii) If
      the
      Common Stock is listed for trading on a national securities exchange or admitted
      for trading on a national market system, then the Fair Market Value of Common
      Stock shall be deemed to be the closing price quoted on the principal securities
      exchange on which the Common Stock is listed for trading, or if not so listed,
      the average of the closing bid and asked prices for Common Stock quoted on
      the
      national market system on which Common Stock is admitted for trading, each
      as
      published in the Western Edition of The
      Wall Street Journal,
      in each
      case for the ten trading days prior to the date of exercise pursuant to
      clause (b) of Fair Market Value for Common Stock in accordance
      herewith.

     

    (d) Additional
      Conditions to Exercise of Warrant.
      Unless
      there is a registration statement declared or ordered effective by the
      Securities and Exchange Commission (the “Commission”) under the Securities Act
      which includes the Warrant Shares to be issued upon the exercise of the rights
      represented by this Warrant, such rights may not be exercised unless and
      until:

     

    (i) 
      the
      Company shall have received an Investment Representation Statement, in the
      form
      attached as Exhibit C
      hereto,
      certifying that, among other things, the Warrant Shares to be issued upon the
      exercise of the rights represented by this Warrant are being acquired for
      investment and not with a view to any sale or distribution thereof;
      and

     

    (ii) each
      certificate evidencing the Warrant Shares to be issued upon the exercise of
      the
      rights represented by this Warrant shall be stamped or imprinted with a legend
      substantially in the following form:

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
      NOT
      FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933,
      AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY
      NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED
      IN THE ABSENCE OF SUCH REGISTRATION OR AN OPIN-ION OF COUNSEL SATISFACTORY
      TO
      THE COMPANY AND ITS COUN-SEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
      SECURITIES ACT. COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF THESE SHARES
      AND RESTRICTING THEIR TRANS-FER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
      MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY
      AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. THIS CERTIFICATE MUST BE
      SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO
      THE
      SALE, PLEDGE OR OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SHARES REPRESENTED
      BY THIS CERTIFICATE.

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER
      CONTAINED IN AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF
      WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

     

    (e) Fractional
      Shares. Upon
      the
      exercise of the rights represented by this Warrant, the Company shall not be
      obligated to issue fractional shares of Common Stock, and in lieu thereof,
      the
      Company shall pay to the Holder an amount in cash equal to the Fair Market
      Value
      per share of Common Stock immediately prior to such exercise multiplied by
      such
      fraction (rounded to the nearest cent).

     

    (f) Expiration
      of Warrant.
      This
      Warrant shall expire and shall no longer be exercisable five years from the
      date
      of this Warrant.

     

    (g) Record
      Ownership of Warrant Shares. The
      Warrant Shares shall be deemed to have been issued, and the person in whose
      name
      any certificate representing Warrant Shares shall be issuable upon the exercise
      of the rights represented by this Warrant (as indicated in the appropriate
      Notice of Exercise) shall be deemed to have become the holder of record of
      (and
      shall be treated for all purposes as the record holder of) the Warrant Shares
      represented thereby, immediately prior to the close of business on the date
      or
      dates upon which the rights represented by this Warrant are exercised in
      accordance with the terms hereof.

     

    (h) Stock
      Certificates.
      In
      the
      event of any exercise of the rights represented by this Warrant, certificates
      for the Warrant Shares so purchased pursuant hereto shall be delivered to the
      Holder promptly and, unless this Warrant has been fully exercised or has
      expired, a new Warrant representing the Warrant Shares with respect to which
      this Warrant shall not have been exercised shall also be issued to the Holder
      within such time.

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    

     

    (i) Issue
      Taxes.
      The
      issuance of certificates for shares of stock upon the exercise of the rights
      represented by this Warrant shall be made without charge to the Holder for
      any
      issuance tax in respect thereof; provided,
      however,
      that
      the Company shall not be required to pay any tax which may be payable in respect
      of any transfer involved in the issuance and delivery of any certificate in
      a
      name other than that of the Holder of the Warrant.

     

    (j) Conditional
      Exercise.
      The
      Holder of this Warrant shall have the right to submit a notice of exercise
      of
      this Warrant conditional upon the an acquisition of the Company. If such
      transaction upon which such exercise is conditioned is not consummated, such
      notice of exercise shall be deemed of no further force or effect. For the
      purposes hereof, the Fair Market Value for the purposes of Section 1(b)
      hereto shall be the value of the consideration payable or issuable to the
      holders of the Company's Common Stock.

     

    (k) Stock
      Fully Paid; Reservation of Shares.
      All
      Warrant Shares that may be issued upon the exercise of the rights represented
      by
      this Warrant, upon issuance, will be duly and validly issued, will be fully
      paid
      and nonassessable, will not violate any preemptive rights or rights of first
      refusal, will be free from restrictions on transfer other than restrictions
      on
      transfer imposed by applicable federal and state securities laws, will be issued
      in compliance with all applicable federal and state securities laws, and will
      have the rights, preferences and privileges described in the Company's
      Certificate of Incorporation, as amended; and the Warrant Shares will be free
      of
      any liens or encumbrances, other than any liens or encumbrances created by
      or
      imposed upon the Holder through no action of the Company. During the period
      within which the rights represented by the Warrant may be exercised, the Company
      will at all times have authorized and reserved for the purpose of issuance
      upon
      exercise of the purchase rights evidenced by this Warrant, a sufficient number
      of shares of Common Stock to provide for the exercise of the right represented
      by this Warrant. 

     

    2. Adjustment
      Rights.

     

    (a) Right
      to Adjustment.
      The
      number of Warrant Shares purchasable upon the exercise of the rights represented
      by this Warrant, and the Exercise Price therefor, shall be subject to adjustment
      from time to time upon the occurrence of certain events, as follows:

     

    (i) Merger.
      If
      at any
      time there shall be a merger or consolidation of the Company with or into
      another corporation when the Company is not the surviving corporation, then,
      as
      a part of such merger or consolidation, lawful provision shall be made so that
      the holder of this Warrant shall thereafter be entitled to receive upon exercise
      of this Warrant, during the period specified herein and upon payment of the
      aggregate Exercise Price then in effect, the number of shares of stock or other
      securities or property of the successor corporation resulting from such merger
      or consolidation, to which a holder of the stock deliverable upon exercise
      of
      this Warrant would have been entitled in such merger or con-solidation if this
      Warrant had been exercised immediately before such merger or consolidation.
      In
      any such case, appropriate adjustment shall be made in the application of the
      provisions of this Warrant with respect to the rights and interests of the
      Holder after the merger or consolidation.

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    

     

    (ii) Stock
      Splits, Dividends, Combinations and Consolidations.
      In
      the
      event of a stock split, stock dividend or subdivision of or in respect of the
      outstanding shares of Common Stock, the number of Warrant Shares issuable upon
      the exercise of the rights represented by this Warrant immediately prior to
      such
      stock split, stock dividend or subdivision shall be proportionately increased
      and the Exercise Price then in effect shall be proportionately decreased,
      effective at the close of business on the date of such stock split, stock
      dividend or subdivision, as the case may be. In the event of a reverse stock
      split, consolidation, combination or other similar event of or in respect of
      the
      outstanding shares of Common Stock, the number of Warrant Shares issuable upon
      the exercise of the rights represented by this Warrant immediately prior to
      such
      reverse stock split, consolidation, combination or other similar event shall
      be
      proportionately decreased and the Exercise Price shall be proportionately
      increased, effective at the close of business on the date of such reverse stock
      split, consolidation, combination or other similar event, as the case may
      be.

     

    (b) Adjustment
      Notices.
      Upon any
      adjustment of the Exercise Price, and any increase or decrease in the number
      of
      Warrant Shares subject to this Warrant, in accordance with this Section 2,
      the Company, within 30 days there-after, shall give written notice thereof
      to
      the Holder at the address of such Holder as shown on the books of the Company,
      which notice shall state the Exercise Price as adjusted and, if appli-cable,
      the
      increased or decreased number of Warrant Shares subject to this Warrant, setting
      forth in reasonable detail the method of calculation of each such adjustment.
      

     

    3. Transfer
      of Warrant.

     

    (a) Conditions. This
      Warrant and the rights represented hereby are not transferable, except in
      accordance with the conditions set forth in this Section 3. In order to
      effect any transfer of all or a portion of this Warrant, the Holder hereof
      shall
      deliver to the Company a completed and duly executed Notice of Transfer, in
      the
      form attached as Exhibit D
      hereto.
      Once the Warrant is exercised, the Warrant Shares shall be transferable in
      accordance with the Investor Rights Agreement.

     

    (b) Additional
      Conditions to Transfer of Warrant.
      Unless
      there is a registra-tion statement declared or ordered effective by the
      Commission under the Securities Act which includes this Warrant, this Warrant
      may not be transferred unless and until:

     

    (i) the
      Company receives an Investment Representation Statement, in the form attached
      as
Exhibit E
      hereto,
      certifying that, among other things, this Warrant is being acquired for
      investment and not with a view to any sale or distribution thereof;
      and

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    

     

    (ii) the
      Company receives a written notice from the Holder which describes the manner
      and
      circumstances of the proposed transfer accompanied by a written opinion of
      Holder’s legal counsel, in form and substance reasonably satisfactory to the
      Company, stating that such transfer is exempt from the registration and
      prospectus delivery requirements of the Securities Act and all applicable state
      securi-ties laws or with a Commission “no-action” letter stating that future
      transfers of such securities by the transferor or the contemplated transferee
      would be exempt from registration under the Securities Act or such securities
      may be transferred in accordance with Rule 144(k). Upon receipt of the
      foregoing, the Company shall, or shall instruct its transfer agent to, promptly,
      and without expense to the Holder issue new securities in the name of the Holder
      not bearing the legends required under Section 1(d)(ii). In addition, new
      securities shall be issued without such legend if such legends may be properly
      removed under the terms of Rule 144(k).

     

    4. No
      Shareholder Rights.
      The
      Holder of this Warrant (and any transferee hereof) shall not be entitled to
      vote
      on matters submitted for the approval or consent of the shareholders of the
      Company or to receive dividends declared on or in respect of shares of Common
      Stock, or otherwise be deemed to be the holder of Common Stock or any other
      capital stock or other securities of the Company which may at any time be
      issuable upon the exercise of the rights represented hereby for any purpose,
      nor
      shall anything contained herein be construed to confer upon the Holder (or
      any
      transferee hereof) any of the rights of a shareholder of the Company or any
      right to vote for the election of directors or upon any matter submitted for
      the
      approval or consent of the shareholders, or to give or withhold consent to
      any
      corporate action (whether upon any recapitalization, issuance of stock,
      reclassification of stock, merger or consolidation, conveyance, or otherwise)
      or
      to receive notice of meetings, or to receive dividends or subscription rights
      or
      other-wise until this Warrant shall have been exercised as provided herein.
      No
      provision of this Warrant, in the absence of the actual exercise of such Warrant
      or any part thereof into Common Stock issuable upon such exercise, shall give
      rise to any liability on the part of such Holder as a shareholder of the
      Company, whether such liability shall be asserted by the Company or by creditors
      of the Company.

     

    5. Miscellaneous.

     

    (a) Governing
      Law.
      This
      Warrant will be construed in accordance with, and governed in all respects
      by,
      the laws of the State of California, as applied to agreements entered into,
      and
      to be performed entirely in such state, between residents of such
      state.

     

    (b) Dispute
      Resolution. 

     

    (i) Negotiation.
      In
      the
      event of any dispute, controversy or claim arising out of or relating to this
      Warrant, representatives of the parties will meet in a location chosen by the
      party initiating the negotiation not later than ten business days after written
      notice from one party to the other of such dispute and will enter into good
      faith negotiations aimed at resolving the dispute. If they are unable to resolve
      the dispute in a mutually satisfactory manner within 30 business days from
      the
      date of such notice, the matter may be submitted by either party to arbitration
      as provided for in Section 5(b)(ii), below.

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    

     

    (ii) Arbitration.

     

    (a) Any
      dispute, controversy or claim between or among any of the parties hereto arising
      out of or relating to this Warrant or the breach, termination or invalidity
      thereof, including any dispute as to whether any dispute is subject to
      arbitration, which has not been resolved after good faith negotiations pursuant
      to subsection 5(b)(i) hereof will be settled by binding arbitration
      administered by the American Arbitration Association in accordance with its
      then
      current Commercial Arbitration Rules except as provided herein.

     

    (b) Any
      arbitration will be conducted in a location in the metropolitan area of the
      party responding to the action by a three person arbitration panel. The three
      person arbitration panel will consist of one party arbitrator selected by the
      Company, one party arbitrator selected by the Holder, each of whom will be
      named
      within ten business days of the demand for arbitration, and one neutral
      arbitrator selected by the first two arbitrators. If the two party appointed
      arbitrators cannot agree on the neutral arbitrator within ten business days
      of
      the selection of the last party appointed arbitrator, the American Arbitration
      Association will appoint the neutral arbitrator, who will act as chairperson.
      In
      the event of a vacancy with respect to an arbitrator, the vacancy will be filled
      within ten business days of notice of the vacancy in the same manner and subject
      to the same requirements as are provided for in the original appointment to
      that
      position. If the vacancy is not filled within ten business days, the American
      Arbitration Association will make the appointment.

     

    It
      is the
      intent of the parties to avoid the appearance of impropriety due to bias or
      partiality on the part of the neutral arbitrator. Accordingly, prior to his
      or
      her appointment, such neutral arbitrator will disclose to the parties and the
      other members of the tribunal, any financial, fiduciary, kinship or other
      relationship between the neutral arbitrator and any party or its counsel. Any
      party will have the right to challenge in writing the appointment of the neutral
      arbitrator on the basis of and within five days of such disclosure. In the
      event
      of a challenge, the American Arbitration Association will uphold or dismiss
      the
      challenge and its decision will be conclusive.

     

    (c) The
      law
      applicable to the validity of the arbitration clause, the conduct of the
      arbitration, including the resort to a court for interim relief, enforcement
      of
      the award or any other question of arbitration law or procedure will be the
      United States' Federal Arbitration Act, 9 U.S.C. § 1 et seq.
      The
      parties shall be entitled to engage in reasonable discovery including requests
      for the production of all relevant documents and a reasonable number of
      depositions. The arbitration panel shall have the sole discretion to determine
      the reasonableness of any requested document production or deposition. It is
      the
      intent of the parties that a substantive hearing be held as soon as practicable
      after the appointment of the neutral arbitrator or the rejection of a challenge
      thereto, whichever occurs later. The presentation of evidence will be governed
      by the federal Rules of Evidence. A stenographic record of all witness testimony
      will be made.

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    

     

    (d) Any
      award, including any interim award, made will be made by a majority of the
      arbitrators applying the substantive law of California and will (i) be in
      writing and state the arbitration panel's findings of fact and conclusions
      of
      law, (ii) be made promptly, and in any event within 60 days after the
      conclusion of the arbitration hearing; and (iii) be binding against the
      parties involved and may be entered for enforcement in any court of competent
      jurisdiction.

     

    (e) Fifty
      percent of the costs of any arbitration proceeding (e.g., arbitrators, court
      reporter and room rental fees) will be borne by the Company with the remaining
      50% to paid by the other party to the dispute. However, each party will pay
      its
      own expense, including attorneys' and other professionals' fees and
      disbursements.

     

    (f) The
      arbitration provision set forth in this Section 5(b)(ii) will be a complete
      defense to any suit, action or proceeding instituted in any court with respect
      to any matter arbitrable under this Warrant, except that judicial intervention
      may be sought in accordance with Section 5(b)(iii) hereof.

     

    (iii) No
      Waivers; Interim Relief.
      The
      parties mutually acknowledge that an award of damages may be inadequate to
      remedy any breach hereof and that injunctive relief may be required. Therefore,
      (i) a party may request a court of competent jurisdiction to provide interim
      injunctive relief in aid of arbitration or to prevent a violation of this
      Warrant pending arbitration, and any such request will not be deemed a waiver
      or
      breach of the obligations to arbitrate set forth herein and (ii) the arbitrators
      may order equitable relief where they deem it appropriate and the parties agree
      that any interim relief ordered by the arbitrators may be immediately and
      specifically enforced by a court otherwise having jurisdiction over the
      parties.

     

    (c) Successors
      and Assigns.
      Subject
      to the restrictions on transfer described in Section 3, the rights and
      obligations of the Company and Holder of this Warrant shall be binding upon
      and
      benefit the successors, assigns, heirs, administrators and transferees of the
      parties.

     

    (d) Waiver
      and Amendment.
      Any
      provision of this Warrant may be amended, waived or modified upon the written
      consent of the Company and the Holder.

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    

     

    (e) Notices. All
      notices and other communications required or permitted hereunder will be in
      writing and will be sent by telecopier or mailed by first-class mail, postage
      prepaid, or delivered either by hand or by messenger, addressed (a) if to
      the Holder, at the address indicated on the Company's books, or at such other
      address and telecopier number as Holder will have furnished to the Company
      in
      writing, or (b) if to the Company, at 9700 Great Seneca Highway, Rockville,
      Maryland 20850 Attn: Chief Financial Officer, or at such other address and
      telecopier number as the Company will have furnished to the Holder and each
      such
      other holder in writing.

     

    Each
      such
      notice or other communication will for all purposes of this Agreement be treated
      as effective or having been given when delivered if delivered personally or
      by
      messenger, or, if sent by mail, at the earlier of its receipt or 72 hours after
      the same has been deposited in a regularly maintained receptacle for the deposit
      of the United States mail addressed and mailed as aforesaid.

     

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

     

    (g) Lost
      Warrant.
      Upon
      receipt from the Holder of written notice or other evidence reasonably
      satisfactory to the Company of the loss, theft, destruction or mutilation of
      the
      Warrant and, in the case of any such loss, theft or destruction, upon receipt
      of
      an unsecured indemnity agreement and an affidavit of lost warrant, or in the
      case of any such mutilation upon surrender and cancellation of the Warrant,
      the
      Company, at the Company's expense, will make and deliver a new Warrant in lieu
      of the lost, stolen, destroyed or mutilated Warrant carrying the same rights
      and
      obligations as the original Warrant. The Company will also pay the cost of
      all
      deliveries of the Warrant upon any exchange thereof. 

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
      authorized officer as of the date first written above.

     

     

    
      	 	
              INTERNATIONAL
                IMAGING SYSTEMS, INC.

            
	 	
              a
                Delaware corporation

            
	 	 	 
	 	 	 
	 	
              By:

            	  

	 	 	
              John
                Vogel

            
	 	 	
              President
                and Chief Executive Officer

            

    

     

    

     

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

    NOTICE
      OF CASH EXERCISE

     

    TO: [_________]

     

    1. The
      undersigned hereby elects to purchase ____________ shares of Common Stock of
      Interntional Imaging Sytems, Inc, Inc., a Delaware corporation (the “Company”),
      pursuant to the terms of Warrant No. W-«Note»,
      issued
      ___________ to and in the name of [________], a copy of which is attached hereto
      (the “Warrant”), and tenders herewith full payment of the aggregate Exercise
      Price for such shares in accordance with the terms of the Warrant.

     

    2. Please
      issue a certificate or certificates representing said shares of ____________
      Stock in such name or names as specified below:

     

    
      	 	 	 
	
              (Name)

            	 	
              (Name)

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
              (Address)

            	 	
              (Address)

            

    

     

    3. The
      undersigned hereby represents and warrants that the aforesaid shares of stock
      are being acquired for the account of the undersigned for investment and not
      with a view to, or for resale in connection with, the distribution thereof,
      and
      that the undersigned has no present intention of distributing or reselling
      such
      shares. The under-signed has executed an Investment Representation Statement
      with certain representations and warranties, in the form attached as
Exhibit
      C
      to the
      Warrant, concurrently herewith.

     

    
      	
              Date:
                _________

            	
              [_________________]

            
	 	 
	 	
              By:

            	  

	 	 	
              (Signature
                must conform in all respects to name of the Holder as set forth on
                the
                face of the Warrant)

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      B

     

    NOTICE
      OF NET-ISSUE EXERCISE

     

    TO: [_________]

     

    1. The
      undersigned hereby elects to purchase ____________ shares of Common Stock of
      International Imaging Sytems, Inc., a Delaware corporation (the “Company”), on a
      net-issue basis pursuant to the terms of Warrant No. W-«Note»,
      issued
      _____________ to and in the name of [__________], a copy of which is attached
      hereto (the “Warrant”).

     

    2.
      Net-Issue
      Information:

     

    (a) Number
      of
      Shares of  
      Stock to
      be Delivered:   

     

    (b) Number
      of
      Shares Subject to the Warrant Surrendered:   

     

    (c) Number
      of
      Shares Remaining Subject to Warrant:    

     

    3. Please
      issue a certificate or certificates representing said shares of  
      Stock in
      such name or names as specified below:

     

    
      	 	 	 
	
              (Name)

            	 	
              (Name)

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
              (Address)

            	 	
              (Address)

            

    

     

    4. The
      undersigned hereby represents and warrants that the aforesaid shares of stock
      are being acquired for the account of the undersigned for investment and not
      with a view to, or for resale in connection with, the distribution thereof,
      and
      that the undersigned has no present intention of distributing or reselling
      such
      shares. In support thereof, the under-signed has executed an Investment
      Representation Statement, in the form attached as Exhibit
      C
      to the
      Warrant, concurrently herewith.

     

    
      	
              Date:
                _________

            	
              [______________]

            
	 	 
	 	
              By:

            	  

	 	 	
              (Signature
                must conform in all respects to name of the Holder as set forth on
                the
                face of the Warrant)

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      C

     

    INVESTMENT
      REPRESENTATION STATEMENT

     

    

      
        	
                PURCHASER

              	
                :

              	
                [______________]

              
	 	 	 
	
                SELLER
                  

              	
                :

              	
                [_________]

              
	 	 	 
	
                COMPANY 

              	
                :

              	
                International
                  Imaging Sytems Inc.

              
	 	 	 
	
                SECURITY 

              	
                :

              	
                COMMON
                  STOCK ISSUED UPON THE EXERCISE OF WARRANT NO. W-«Note»,
                  ISSUED ON ________

              
	 	 	 
	
                AMOUNT 

              	
                :

              	
                [_____________]
                  SHARES

              
	 	 	 
	
                DATE 

              	
                :

              	
                ________________________

              

      

    

     

    The
      undersigned hereby represents and warrants to International Imaging Sytems,
      Inc., a Delaware corporation (the “Company”), as follows:

     

    1. I
      am
      aware of the business affairs, finan-cial condition and results of operations
      of
      the Company and have acquired sufficient information about the Company to reach
      an informed and knowledgeable investment decision to acquire the Securities.
      I
      am purchasing the Securities for my own account for investment purposes only
      and
      not with a view to, or for the resale in connection with, any “distribution”
thereof for purposes of the Securities Act of 1933, as amended (the “Securities
      Act”).

     

    2. I
      understand that the Securities have not been registered under the Securities
      Act
      in reliance upon a specific exemption therefrom, which exemption depends upon,
      among other things, the bona fide nature of my investment intent as expressed
      herein. I understand that, in the view of the Securities and Exchange Commission
      (the “Commission”), the statutory basis for such exemption may be unavailable if
      my representation was predicated solely upon a present intention to hold the
      Securities for the minimum capital gains period specified under tax statutes,
      for a deferred sale, for or until an increase or decrease in the market price
      of
      the Securities, or for a period of one year or any other fixed period in the
      future.

     

    3. I
      further
      understand that the Securities must be held indefinitely unless subsequently
      registered under the Securities Act or unless an exemption from registration
      is
      otherwise avail-able. Moreover, I understand that the Company is under no
      obliga-tion to register the Securities. In addition, I understand that the
      certificate evidencing the Securities will be imprinted with a legend which
      prohibits the transfer of the Securities unless they are registered or such
      registration is not required in the opinion of counsel for the
      Company.

     

    4. I
      am
      familiar with the provisions of Rule 144, promul-gated under the Securities
      Act, which, in substance, permits limited public resale of “restricted
      securities” acquired, directly or indirectly, from the issuer thereof, in a
      non-public offering subject to the satisfaction of certain
      conditions.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    5. I
      agree
      that, if so requested by the Company or any representative of the underwriters
      (the "Managing Underwriter") in connection with any registration of the offering
      of any securities of the Company under the Securities Act, I shall not sell
      or
      otherwise transfer any of the above listed Securities or other securities of
      the
      Company during the 180-day period (or such other period as may be requested
      in
      writing by the Managing Underwriter and agreed to in writing by the Company)
      (the "Market Standoff Period") following the effective date of a registration
      statement of the Company filed under the Securities Act. Such restriction shall
      apply only to the first registration statement of the Company to become
      effective under the Securities Act that includes securities to be sold on behalf
      of the Company to the public in an underwritten public offering under the
      Securities Act. The Company may impose stop-transfer instructions with respect
      to securities subject to the foregoing restrictions until the end of such Market
      Standoff Period.

     

    6. I
      further
      understand that in the event all of the appli-cable requirements of Rule 144
      are
      not satisfied, registration under the Securities Act, compliance with
      Regula-tion A, or some other registration exemption will be required; and
      that, notwith-standing the fact that Rule 144 is not exclusive, the Staff
      of the Commission has expressed its opinion that persons proposing to sell
      private placement securities other than in a registered offering and otherwise
      than pursuant to Rule 144 will have a substantial burden of proof in
      establishing that an exemption from registration is available for such offers
      or
      sales, and that such persons and their respective brokers who participate in
      such transactions do so at their own risk.

     

    
      	
              Date:
                _________

            	
              International
                Imaging Sytems, Inc. 

            
	 	 	 
	 	
              By:

            	  

	 	 	
              (Signature
                must conform in all respects to name of the Holder as set forth on
                the
                face of the Warrant)

            

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    EXHIBIT
      D

     

    NOTICE
      OF TRANSFER

     

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ______________________________ the right represented by Warrant No.
      W-«Note»,
      issued
      on [________] to and in the name of [_________] to purchase __________ shares
      of
      Common Stock
      of
      International Imaging Systems, Inc., a Delaware corporation (the “Company”), a
      copy of which is attached hereto (the “Warrant”), and appoints
      ______________________________ as attorney-in-fact to transfer such right on
      the
      books of the Company with full power of substitution in the
      premises.

     

    
      	
              Date:
                _________

            	
              [______________]

            
	 	 
	 	
              By:

            	  

	 	 	
              (Signature
                must conform in all respects to name of the Holder as set forth on
                the
                face of the Warrant)

            
	 	 	 
	 	 	  

	 	 	  

	 	 	
              (Address)

            
	 	 	 
	Signed
              in the
              presence of:	 	 
	  
	 	 
	 	 	 

    

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      E 

     

    INVESTMENT
      REPRESENTATION STATEMENT

     

    
      
        	
                PURCHASER

              	
                :

              	
                __________________________

              
	 	 	 
	
                TRANSFEROR

              	
                :

              	
                __________________________

              
	 	 	 
	
                COMPANY 

              	
                :

              	
                International
                  Imaging Sytems, Inc. 

              
	 	 	 
	
                SECURITY 

              	
                :

              	
                Warrant
                  no. W-«Note»
                  issued on _________, 2007

              
	 	 	 
	
                AMOUNT 

              	
                :

              	
                __________
                  SHARES

              
	 	 	 
	
                DATE 

              	
                :

              	
                ________________________

              

      

    

     

    The
      undersigned hereby represents and warrants to International Imaging Systems,
      Inc., a Delaware corporation (the “Company”), as follows:

     

    1. I
      am
      aware of the business affairs, finan-cial condition and results of operations
      of
      the Company, and have acquired sufficient information about the Company to
      reach
      an informed and knowledgeable investment decision to acquire the Securities.
      I
      am purchasing the Securities for my own account for investment purposes only
      and
      not with a view to, or for the resale in connection with, any “distribution”
thereof for purposes of the Securities Act of 1933, as amended (the “Securities
      Act”).

     

    2. I
      understand that the Securities have not been registered under the Securities
      Act
      in reliance upon a specific exemption therefrom, which exemption depends upon,
      among other things, the bona fide nature of my investment intent as expressed
      herein. I understand that, in the view of the Securities and Exchange Commission
      (the “Commission”), the statutory basis for such exemption may be unavailable if
      my representation was predicated solely upon a present intention to hold the
      Securities for the minimum capital gains period specified under tax statutes,
      for a deferred sale, for or until an increase or decrease in the market price
      of
      the Securities, or for a period of one year or any other fixed period in the
      future.

     

    3. I
      further
      understand that the Securities must be held indefinitely unless subsequently
      registered under the Securities Act or unless an exemption from registration
      is
      otherwise avail-able. Moreover, I understand that the Company is under no
      obliga-tion to register the Securities. In addition, I understand that the
      certificate evidencing the Securities will be imprinted with a legend which
      prohibits the transfer of the Securities unless they are registered or such
      registration is not required in the opinion of counsel for the
      Company.

     

    4. I
      am
      familiar with the provisions of Rule 144, promul-gated under the Securities
      Act, which, in substance, permits limited public resale of “restricted
      securities” acquired, directly or indirectly, from the issuer thereof, in a
      non-public offering subject to the satisfaction of certain
      conditions.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

    5. I
      agree
      that, if so requested by the Company or any representative of the underwriters
      (the "Managing Underwriter") in connection with any registration of the offering
      of any securities of the Company under the Securities Act, I shall not sell
      or
      otherwise transfer any of the above listed Securities or other securities of
      the
      Company during the 180-day period (or such other period as may be requested
      in
      writing by the Managing Underwriter and agreed to in writing by the Company)
      (the "Market Standoff Period") following the effective date of a registration
      statement of the Company filed under the Securities Act. Such restriction shall
      apply only to the first registration statement of the Company to become
      effective under the Securities Act that includes securities to be sold on behalf
      of the Company to the public in an underwritten public offering under the
      Securities Act. The Company may impose stop-transfer instructions with respect
      to securities subject to the foregoing restrictions until the end of such Market
      Standoff Period.

     

    6. I
      further
      understand that in the event all of the appli-cable requirements of Rule 144
      are
      not satisfied, registration under the Securities Act, compliance with
      Regula-tion A, or some other registration exemption will be required; and
      that, notwith-standing the fact that Rule 144 is not exclusive, the Staff
      of the Commission has expressed its opinion that persons proposing to sell
      private placement securities other than in a registered offering and otherwise
      than pursuant to Rule 144 will have a substantial burden of proof in
      establishing that an exemption from registration is available for such offers
      or
      sales, and that such persons and their respective brokers who participate in
      such transactions do so at their own risk.

     

    

     

    

    
      	
              Date:
                _________

            	
              By:

            	 

	 	 	 
	 	
              Name:

            	 

    

     

    

    
      
         

      

      
        -2-

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