Document:

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                                                                     EXHIBIT 4.2

                            THE PATHWAYS GROUP, INC.

                          INSTRUCTIONS FOR SUBSCRIBING

             Two copies of a Subscription Agreement to subscribe to purchase
shares of Series A Preferred Stock of The Pathways Group, Inc. (the "Company")
and to purchase shares of Common Stock (collectively, the "Securities"), par
value $.01, issuable upon exercise of warrants of the Company are at tached.
Please follow these instructions:

             1. Please read the entire Subscription Agreement before you sign
it.

             2. Please complete and sign the Signature Page on both copies of
the Subscription Agree ment. The signature on both copies must be notarized. Be
sure to indicate in the space provided on the Signature Page the dollar amount
of the Interest for which you wish to subscribe.

             3. Please complete and sign the Confidential Offeree Questionnaire.
Please answer all questions.

             4. Attach a certified or bank check, payable to the order of "The
Pathways Group, Inc." in the amount of the full subscription price for the
Securities subscribed. Alternatively, you may make arrangements to wire funds to
the Company by contacting Mark T. Schuur.

             5. Forward BOTH copies of the Subscription Agreement, the
Confidential Offeree Questionnaire and your check (if paying by check) to: Mark
T. Schuur, The Pathways Group, Inc., 14201 NE 200th Street, Woodinville,
Washington 98072. One fully-executed copy of the Subscription Agreement will be
returned to you.

             If you have any questions, please contact Mr. Schuur at (425)
483-3411.

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                            THE PATHWAYS GROUP, INC.

                             SUBSCRIPTION AGREEMENT

To:      _______________________
         Name of Purchaser

             This will confirm your agreement to purchase units (the "Units"),
each unit consisting of one share of Series A Preferred Stock (the "Preferred
Shares") of The Pathways Group, Inc. (the "Company") and four Common Stock
Purchase Warrants (the "Warrants") to purchase shares (the "Warrant Shares") of
Common Stock, par value $.01, of the Company issuable upon exercise of the
Warrants (the Preferred Shares and the Warrants to be collectively known as the
"Units").

             1.  SUBSCRIPTION AND SALE.

             1.1 SUBSCRIPTION. Subject to the terms and conditions of this
Agreement, you irrevoc ably subscribe for, and agree to purchase, the Units for
the subscription price indicated on the Signa ture Page of this Agreement. You
are tendering to the Company with this Agreement (i) two completed and signed
copies of this Agreement, (ii) a completed and signed Confidential Offeree
Questionnaire and (iii) a certified or bank check in the amount of the
subscription price (or you are concurrently wire transferring such amount to the
Company).

             1.2 ACCEPTANCE OR REJECTION OF SUBSCRIPTION. All funds tendered by
you will be held in a segregated interest-bearing account pending acceptance or
rejection of this Agreement and the closing of your purchase of the Units. This
Agreement will either be accepted, in whole or in part, subject to the prior
sale of Units, or rejected, by the Company as promptly as is practicable. If
this Agreement is accepted only in part, you agree to purchase such smaller
number of Units as the Company determines to sell to you. If this Agreement is
rejected for any reason, including, without limitation, the termination of the
offering of the Units by the Company, this Agreement and all funds tendered with
it promptly will be returned to you, with interest and without deduction of any
kind, and this Agreement will be void and of no further force or effect. Deposit
and collection of the check tendered, or receipt of funds wired, with this
Agreement will not constitute acceptance of this Agreement.

             1.3 CLOSING. Subscriptions will be accepted at one or more
Closings, as described in the Offering Memorandum relating to this offering (the
"Memorandum"). On Closing, the subscription evidenced hereby, if not previously
rejected, will be accepted, in whole or in part, and the Company will execute a
copy of this Agreement and return it to you. If your subscription is accepted
only in part, this Agreement will be marked to indicate such fact and the
Company will return to you the portion of the funds tendered by you representing
the unaccepted portion of your subscription, with interest and without deduction
of any kind. The Units subscribed for will not be deemed to be issued to, or
owned by, you until this Agreement has been accepted by the Company.

             1.4 PAYMENT OF INTEREST. On Closing, all interest earned on your
subscription funds will be paid to you. Interest will be calculated from the day
such funds are received by the Company to the date of Closing, termination of
the offering or rejection of a subscription, as the case may be.

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             2.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. You represent
and warrant to the Company as follows:

             2.1 NON-REGISTRATION. You acknowledge that the Units to be acquired
by you are not and will not be registered under the Securities Act of 1933 (the
"Act") or any state securities law in reliance on exemptions from such
registration, and that such reliance is based in part on your repre sentations
and warranties set forth in this Section 2 and on the information set forth in
the Confidential Offeree Questionnaire tendered by you to the Company with this
Agreement.

             2.2 INFORMATION. You have received, carefully read and understood
the Memorandum. You have been provided with the opportunity to ask questions of,
and to receive answers from, representatives of the Company concerning the
Company and the Securities and you have been provided with access to all
information pertaining to the Company to which you have requested access.

             2.3 INVESTMENT INTENT; LIMITATIONS ON RESALE. You are acquiring the
Preferred Shares solely for your own account, for investment and not with a view
to, or for resale in connection with, any distribution. You understand that the
Preferred Shares being acquired by you will be an illiquid investment, as it is
unlikely that a market will develop in the Preferred Shares and because the
Preferred Shares may not be sold, transferred or otherwise disposed of except
pursuant to an effective registration statement under the Act or an exemption
from such registration, and that in the absence of such registration or
exemption, or redemption of the Preferred Shares by the Company, the Preferred
Shares must be held indefinitely.

             2.4 SPECULATIVE NATURE OF INVESTMENT. You understand that your
investment in the Company is speculative and is subject to certain risks and may
remain so for an indefinite period and that no federal or state agency has
reviewed or made any recommendation or endorsement with respect to the
Securities.

             2.5 NO SOLICITATION. At no time in connection with the offer or
sale of the Preferred Shares were you solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio or
television advertisement or any other form of general advertising.

             2.6 INVESTMENT COMPANY ACT NON-REGISTRATION. You understand that
the Company is not and will not be registered as an investment company under the
Investment Company Act of 1940 (the "1940 Act"), by reason of Section 3(c)(1)
thereof which excludes from the definition of an investment company any issuer
which has not made and does not presently propose to make a public offering of
its securities and whose outstanding securities (other than short-term paper)
are beneficially owned by not more than 100 persons. In this regard, you were
not formed for the pur pose of investing in the Company nor did your
stockholders, partners, grantors or participants contri bute additional capital
to you for the purpose of such investment. Further, if you are purchasing
Capital Stock which will constitute more than 10% of all Capital Stock of the
Company at Closing, you are not an investment company, as defined under the 1940
Act, or an entity which would be an investment company for purposes of the 1940
Act if not for the exemption set forth in Section 3(c)(1) or Section 3(c)(7)
thereunder.

             2.7 STATUS. If you are a corporation, partnership, trust or other
entity, you are an "accredited investor", as that term is defined in Rule 501(a)
of Regulation D under the Act (see the Confidential Offeree Questionnaire for a
list of the types of accredited investors). If you are a natural person, you are
at least 21 years of age and you either are an "accredited investor" or meet the
experience standards set forth in Section 2.8 below.

             2.8 EXPERIENCE; FINANCIAL ABILITY. You, or if you are a
corporation, partnership, trust or other entity, you by and through your
officers, directors, trustees, employees or other advisors, (i) are

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experienced in evaluating companies such as the Company, (ii) have determined
that the Securities are a suitable investment for you and (iii) have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of your investment in the Company. You have the
financial ability to bear the economic risks of your entire investment for an
indefinite period and no need for liquidity with respect to your investment in
the Company, and, if you are a natural person, you have adequate means for
providing for your current needs and personal contingencies.

             2.9 FURTHER INFORMATION. The information which you are furnishing
hereunder and in the Confidential Offeree Questionnaire and any information
which you subsequently furnish to the Company with respect to your financial
position and business experience, is correct and complete as of the date of this
Agreement or as of the date it is furnished, whichever is later. If there is any
material change in such information prior to the date that this Agreement is
accepted, you will immediately furnish such revised or corrected information to
the Company.

             2.10 DUE AUTHORITY, ETC. If you are a corporation, partnership,
trust or other entity: (a) you are duly organized, validly existing and in good
standing under the laws of the jurisdiction of your formation and have all
requisite power and authority to own your properties and assets and to carry on
your business, (b) you have the requisite power and authority to execute this
Agreement and to carry out the transactions contemplated hereby, (c) your
execution and performance of this Agreement does not and will not result in any
violation of, or conflict with, any term of your charter, by-laws, partnership
agreement or indenture of trust, as the case may be, or any instrument to which
you are a party or by which you are bound or any law or regulation applicable to
you, (d) your execution and performance of this Agreement has been duly
authorized by all necessary corporate or other action, (e) you were not
specifically formed to invest in the Company and (f) the individual who has
executed this Agreement on your behalf was duly authorized to do so by all
requisite corporate or other action and, on request of the Company, you will
furnish appropriate evidence of the authority of such individual to act on your
behalf.

             2.11 VALID OBLIGATION. This Agreement has been duly executed and
delivered by or on behalf of you and, if and when accepted by the Company, in
whole or in part, will constitute your legal, valid and binding obligations,
enforceable in accordance with their respective terms (except as may be limited
by principles of equity or bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally).

             2.12 RELIANCE ON OWN ADVISORS. You confirm that, in making your
decision to invest in the Company, you have relied, as to legal and tax-related
matters concerning the investment, on independent investigations made by you and
any advisor or representative that you may have consulted, including your own
legal, tax and other advisors, and that you and your advisors or representatives
have investigated your investment in the Company to the extent you and they have
deemed advisable.

             2.13 FURTHER ERISA MATTERS. If you are an employee benefit plan
within the meaning of ERISA, you and your plan fiduciaries are not affiliated
with, and are independent of, the Company and are informed of and understand the
Company's investment objectives, policies and strategies. Your plan fiduciaries
believe that the decision to invest your plan assets in the Company is
consistent with the provisions of ERISA that require prudence in investment and
diversification of plan assets and impose other fiduciary responsibilities.
Further, your plan fiduciaries have considered the following factors with
respect to your investment in the Company and have determined that, in view of
such considerations, an investment in the Company is consistent with their
fiduciary responsibilities under ERISA:

             (a) the role such investment will play in the portion of your
portfolio that such plan fiduciaries manage;

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             (b) whether the investment is reasonably designed as part of the
portion of the portfolio managed by such plan fiduciaries to further your
purposes, taking into account both the risk of loss and opportunity for gain
that could result;

             (c) the composition of the portion of the portfolio managed by such
plan fiduciaries with regard to diversification;

             (d) the liquidity and current rate of return of the portion of the
portfolio managed by such plan fiduciaries relative to your anticipated cash
flow requirements; and

             (e) the projected return of the portion of the portfolio managed by
such plan fiduciaries relative to your funding objectives.

             This agreement has been executed on your behalf by a duly
designated Named Fiduciary (within the meaning of Section 402(a)(2) of ERISA).

             2.14 ADDRESS. The address set forth on the Signature Page of this
Agreement is your true and correct address and you have no present intention of
becoming a resident or domiciliary of any jurisdiction other than the one
indicated by your address.

             2.15 FEES AND COMMISSIONS. No fees or commissions have been paid or
are payable by you in connection with this Agreement and the issuance of the
Preferred Shares to you.

             3   COVENANTS OF THE ISSUER.

             3.1 LIMITATION ON INDEBTEDNESS. Without the consent of a majority
of the holders of the Preferred Shares outstanding at that time, the Company
shall not, and shall not suffer or permit any subsidiary to create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness other than any Indebtedness outstanding
at the date of the issuance of the Preferred Shares. For the purposes of this
section, "Indebtedness" shall mean (a) all indebtedness of the Company for
borrowed money; (b) all obligations relative to the face amount of all letters
of credit, whether or not drawn, and banker's acceptances issued for the account
of the Company; (c) the present value of all obligations issued, undertaken or
assumed to pay the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (d) all contingent liabilities of the Company in respect of any of the
foregoing; (e) all capital stock and warrants or other options therefor which
have mandatory put or redemption provisions which may be exercised prior to the
maturity date of the Preferred Shares.

             4   REGISTRATION RIGHTS.

             4.1 REGISTRATION OF COMMON SHARES. As soon as practicable, but in
any event no later than 75 days after August 28, 1999, the Company will file a
registration statement (the "Registration Statement") under the Securities Act
of 1933, as amended, with respect to all of the Warrant Shares, and the Company
shall use its best efforts to cause such Registration Statement to become
effective as soon as practicable after filing. In connection therewith, each
holder of Warrants (each, a "Holder") will provide in a timely manner all such
information and materials pertaining to it as may be required in order to permit
the Company to comply with all applicable requirements of the Commission and to
obtain the acceleration of the effective date of the Registration Statement. In
connection with such registration, the Company shall:

                  (a) keep the Registration Statement effective until the
earliest of (i) when each Holder has sold its Warrant Shares, (ii) one year
following the effective date of the Registration Statement, or (iii) the date
the Warrant Shares may be sold under Rule 144 under the Securities Act of 1933;

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                  (b) as expeditiously as possible furnish to each Holder such
reasonable numbers of copies of the prospectus as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Warrant Shares;

                  (c) as expeditiously as possible use its best efforts to
register or qualify the Warrant Shares under the securities or Blue Sky laws of
such states as Subscriber shall reasonably request, PROVIDED, HOWEVER, that the
Company shall not be required in connection with this paragraph (c) to qualify
as a foreign corporation or execute a general consent to service of process in
any jurisdiction;

                  (d) pay all costs and expenses incident to registration
hereunder, except as set forth in Section 2.3.

             4.2  HOLDER'S FEES. Each Holder shall pay an and all underwriters'
discounts, brokerage fees and transfer taxes incident to the sale of the Warrant
Shares sold by such Holder pursuant to this Section and the fees and expenses of
its counsel.

             4.3  INDEMNIFICATION.

                  (a) In connection with any registration effected pursuant
hereto, the Company will indemnify each Holder, each of such Holder's officers
and directors, and each person controlling such Holder within the meaning of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereto) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus (including any
related registration statement, notification or the like) incident to any such
registration, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with such
registration, and will reimburse each Holder such, such Holder's officers and
directors, and each person controlling such Holder, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage
or liability arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by an instrument duly executed
by such Holder specifically for use therein.

                  (b) In connection with any registration effected pursuant
hereto, each Holder will indemnify the Company, each of the Company's directors
and officers and each person controlling the Company within the meaning of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement or prospectus, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by such Holder of any rule
or regulation promulgated under the Securities Act applicable to such Holder and
relating to action or inaction required of such Holder in connection with such
registration, and will reimburse the Company, such directors, officers and
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder specifically for use therein.

             4.4  FURTHER ACTIONS. In connection with any registration effected
pursuant hereto, each Holder shall execute, deliver, furnish or file with the
Company, the underwriter(s), or the appropriate

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regulatory body, any information, representations, undertakings and agreements
necessary to carry out the registration covenant or to otherwise effect the
registration of the Warrant Shares.

             5.  MISCELLANEOUS.

             5.1 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter, merges and
supersedes any prior or contemporaneous understanding among them with respect to
its subject matter, and will not be modified, amended or terminated except by
another agreement in writing executed by you and the Company. Failure of a party
to enforce one or more of the provisions of this Agreement or to require at any
time per formance of any of the obligations hereof will not be construed to be a
waiver of such provisions by such party nor to in any way affect the validity of
this Agreement or such party's right thereafter to en force each and every
provision of this Agreement, nor to preclude such party from taking any other
action at any time which it would legally be entitled to take.

             5.2 BINDING EFFECT. This Agreement will be binding on and will
inure to the benefit of the parties and their respective successors and
permissible assigns.

             5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and agreements contained herein will survive the
execution, delivery and performance of this Agreement.

             5.4 GOVERNING LAW; CONSTRUCTION. This Agreement will in all
respects be governed by and construed in accordance with the laws of the State
of New York applicable to agreements made and fully to be performed in such
state, without giving effect to conflict of laws principles. References to
Sections herein are to the sections of this Agreement. Headings used in this
Agreement are for convenience only and will not be used in the construction of
this Agreement.

             5.5 FOR FLORIDA RESIDENTS. A FLORIDA RESIDENT WHO SUBSCRIBES FOR
THE SECURITIES HAS THE RIGHT TO WITHDRAW HIS SUBSCRIPTION AND TO RECEIVE A FULL
REFUND OF ALL MONIES PAID WITHIN THREE BUSINESS DAYS AFTER THIS SUB SCRIPTION
AGREEMENT IS EXECUTED OR PAYMENT FOR THE INTEREST IS MADE, WHICH EVER IS LATER.
SUCH WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO
ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LET TER OR TELEGRAM TO
THE COMPANY INDICATING HIS INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD
BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED THIRD BUSINESS
DAY. A LETTER SHOULD BE MAILED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
ENSURE ITS RECEIPT AND TO EVIDENCE THE TIME OF MAILING.

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                                 SIGNATURE PAGE

             IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date noted below.

INDIVIDUALS:                                                ENTITIES:

__________________________________             _________________________________
             Print Name                             Print Name of Subscriber

__________________________________             By ______________________________
             Signature                                 Authorized Signature

__________________________________             By ______________________________
    Signature (if Joint Tenants                     Print Name of Signatory and
       or Tenants in Common)                          Capacity in which Signed

SUBSCRIBER INFORMATION

Address (Residence for individuals;     Social Security or Tax ID No.:__________
business for others):

________________________________________________________________________________
Street                   City                 State                     Zip Code

Name of Partnership:_____________________________________________

Dollar Amount You Wish to Invest: $__________.  This is the amount of your
Interest and your Subscription Price.

================================================================================

                           FOR THE COMPANY'S USE ONLY

Agreed and Accepted as to $____________________________.

Dated:        , 199_.

                                   THE PATHWAYS GROUP, INC.

                                   By_________________________________________
                                     Mark T. Schuur, Senior Vice-President and
                                     Chief Financial Officer and Director

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                 CORPORATE, PARTNERSHIP OR TRUST ACKNOWLEDGMENT

STATE OF                       )
                               )   ss.:
COUNTY OF                      )

                  On this ___ day of ________________, 199_, before the
undersigned, a Notary Public, personally appeared ________________________ known
to me to be the person whose name is subscribed to the foregoing Agreement and
known to me to be the _______ of ___________________________ and acknowledged to
me that he/she executed the same as an official and duly authorized act of such
entity for the purposes and consideration therein expressed.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal in the State and County and on the day and year first above
written.

(SEAL)                                       ___________________________________
                                             Notary Public

                            INDIVIDUAL ACKNOWLEDGMENT

STATE OF                       )
                               )   ss.:
COUNTY OF                      )

                  On this ____ day of ___________, 199_ before the undersigned,
a Notary Public, personally appeared __________________________________ known to
me to be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he/she executed the foregoing Agreement, as his/her free
and voluntary act and deed for the purposes and consideration therein expressed.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the State and County and on the day and year first above written.

(SEAL)                                       ___________________________________
                                             Notary Public<PAGE>

                                                                     EXHIBIT 4.3

                   OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT

                  AGREEMENT, dated as of_________ ____, 1999, by and between THE
PATHWAYS GROUP, INC., a Delaware corporation, with its principal office
at14201N.E. 200th Street, Woodinville,Washington, United States 98072 (the
"Company"), the purchaser whose name and address are listed on the signature
page hereof (the "Purchaser") and Salans Hertzfeld Heilbronn Christy & Viener,
acting as escrow agent (the "Escrow Agent")

                              W I T N E S S E T H:

                  WHEREAS, the Company is offering up to 4,000,000 shares (the
"Shares") of its Common Stock, par value $0.01 per share (the "Common Stock");
and

                  WHEREAS, in reliance upon the respective representations and
warranties of the Company and the Purchaser, and the terms and conditions
hereinafter set forth, the Purchaser desires to acquire the number of Shares set
forth on the signature page hereof at a purchase price per Share in United
States Dollars specified on the signature page hereof (the "Purchase Price");

                  NOW, THEREFORE, in consideration of the premises and the
respective covenants hereinafter set forth, the Company, the Purchaser and the
Escrow Agent hereby agree as follows:

                  1. SUBSCRIPTION.

                  1.1. The Purchaser hereby tenders this Subscription Agreement
and subscribes for the purchase of the number of Shares set forth on the
signature page hereof. Such sale and purchase shall take place upon payment of
the Purchase Price for the Shares, as set forth on the signature page of this
Agreement, by electronic transfer of funds to Escrow Agent as follows:

                  Salans Hertzfeld Heilbronn Christy & Viener, as Escrow Agent
                  Account No. 967-2-14564
                  The Chase Manhattan Bank
                  270 Park Avenue
                  New York, New York 10017
                  ABA # 021000021
                  Ref: Pathways Group Escrow

                  1.2. At the closing, the Escrow Agent shall instruct the
Company to deliver the Shares to the Purchaser against payment therefor. Upon
delivery of the Shares, the Purchase Price shall be wire transferred by the
Escrow Agent to a bank account or bank accounts specified by the Company.

<PAGE>

                  2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company hereby represents and warrants to Purchaser that:

                  2.1. The Company has been duly organized, is validly existing
and is in good standing under the laws of the State of Delaware.

                  2.2. The Company has full corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to sell the
Shares to the Purchaser.

                  2.3. The Company knows of no fact or circumstance with respect
to the Company, which might materially adversely affect the Company's
operations, properties, assets, prospects, or condition, financial or otherwise,
which has not been disclosed in the Company's periodic reports on file with the
Securities and Exchange Commission.

                  2.4. The Company's common stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and is traded over-the-counter and quoted on the NASDAQ SmallCap Market.

                  2.5. The Company is, to the best of its knowledge and belief,
in compliance in all material respects with all applicable material laws and
regulations of Federal, State and local government agencies having jurisdiction
over it.

                  2.6. The Shares will be duly authorized, validly issued, fully
paid and non-assessable, and the delivery to Purchaser of the Shares, against
payment therefor, pursuant to the provisions of this Agreement, will be
sufficient to convey to the Purchaser valid title in the Shares, free and clear
of all liens, encumbrances, restrictions, claims and commitments of every kind,
except for those restrictions set forth in the Securities Act of 1933, as
amended (the "Act") and the regulations thereunder, including, without
limitation, the restrictions set forth in Regulation S.

                  2.7. Neither the execution or delivery of this Agreement or
the Shares or the performance by the Company of the transactions contemplated
herein and therein violate any provision of law applicable to the Company or
conflict with or result in a breach or termination of any provision of, or
constitute at default, or will result in the creation of any lien, charge or
encumbrance upon any of the property or assets of the Company pursuant to or
under any corporate charter, by-laws, mortgage, deed of trust, indenture or
other material agreement or instrument, or any order, judgment, decree, statute,
regulation or any other restriction of any kind or character to which the
company is a party or by which any of the assets of the company may be bound
with or without the giving of notice, the passage of time or both, except with
respect to applicable laws affecting creditors' rights.

                  2.8. (i) The Company is a reporting issuer as defined by Rule
902 of Regulation S. The Company is in full compliance, to the extent
applicable, with all reporting obligations under Sections 12(g) and 13 of the
Exchange Act.

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<PAGE>

                 (ii) The Company has not offered the Shares to any person in
the United States, any identifiable group of U.S. citizens abroad or to any U.
S. Person (as defined in Regulation S). Based upon the representations of the
Purchaser contained herein, at the time the buy orders for the Shares in the
offering in connection with which this Subscription Agreement is being delivered
were originated, the Company and/or its agents reasonably believed that all
purchasers thereof were outside of the United States and were not U.S. Persons.
The Company has no reason to believe that the purchase of the Shares pursuant to
the offering in connection with this Subscription Agreement has been prearranged
with a purchaser in the United States.

                (iii) The Company and/or its agent believe that the transaction
has not been prearranged with an investor in the United States.

                 (iv) In regard to this transaction, the Company has not, nor to
its knowledge has any affiliate or person acting on behalf of itself or the
Company, conducted any "directed selling efforts" as that term is defined in
Rule 902 of Regulation S nor has the Company conducted any general solicitation
relating to the offer and sale of the Shares to persons resident within the
United States or elsewhere.

                  (v) The issuance of the Shares by the Company pursuant hereto
is not a transaction (or any element of a series of transactions) that is part
of any plan or scheme to evade the registration provisions of the Securities
Act.

                  3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

                  The Purchaser hereby represents and warrants to the Company
that:

                  3.1. It understands and acknowledges that the Shares acquired
pursuant to this Agreement have not been registered under the Act, and are being
sold in reliance upon an exemption from registration afforded by Regulation S
promulgated under the Act; and that the Shares have not been registered with any
state securities commission or authority. The Purchaser further understands that
pursuant to the requirements of Regulation S, the Shares (acquired herein may
not be transferred, sold or otherwise exchanged unless in compliance with the
provisions of Regulation S and/or pursuant to registration under the Act, or
pursuant to an available exemption under the Act and applicable state securities
laws.

                  3.2. (i) It is not a U.S. person and is not acquiring the
Shares for the account of any U.S. person, (ii) if a corporation, it is not
organized or incorporated under the laws of the United States; (iii) if a
corporation, no director or executive officer is a national or citizen of the
United States; and (iv) it is not otherwise deemed to be a "U.S. Person" within
the meaning of Regulation S.

                  3.3. It was not formed specifically for the purpose of
acquiring the Shares purchased pursuant to this Agreement.

                                       3
<PAGE>

                  3.4. It acknowledges that it has, either alone and/or through
its agents, been afforded access to all material information concerning the
Company and has received responses to all questions specifically posed to the
Company relevant to the Purchaser's decision to acquire the Shares. Without
limiting the foregoing, it has alone and/or through its agents, had adequate
opportunity to ask questions of and receive answers from, responsible officers
and/or directors of the Company and to conduct any other investigation it deems
necessary and appropriate concerning acquisition of the Shares. Except as set
forth herein, the Company has made no representations or warranties to the
Purchaser which have induced, persuaded or stimulated it to subscribe for and
acquire the Shares hereunder.

                  3.5. It has received copies of the following documents (the
"Disclosure Documents"): the Offering Memorandum, as amended, with respect to
the Shares; the Company's Form 10-KSB Annual Report for the fiscal year ended
December 31, 1998 as filed with the Commission, and the Company's Form 10-QSB
Quarterly Report for the fiscal quarter ended September 30, 1999.

                  3.6. It acknowledges that the Company is relying upon the
representations made herein in selling the Shares hereunder without registration
and in reliance upon Regulation S promulgated under the Act. It is familiar with
Regulation S and has consulted with legal counsel familiar with Regulation S in
connection with this transaction.

                  3.7. If a corporation, all corporate action on its part,
necessary for the authorization, execution, delivery and performance of the
Purchaser's obligations under this Agreement has been or shall be taken prior to
the closing of this transaction, and this Agreement, when executed and
delivered, shall constitute a valid and legally binding obligation of the
Purchaser.

                  3.8. It is purchasing the Shares for its own account and risk
and not for the account or benefit of a U.S. Person (as defined in Regulation S)
and no other person has any interest in or participation in the Shares or any
right, option, security interest, pledge or other interest in or to the Shares.
It understands, acknowledges and agrees that it must bear the economic risk of
its investment in the Shares for an indefinite period of time and that prior to
any such offer or sale, the Company may require, as a condition to effecting a
transfer of the Shares, an opinion of counsel, acceptable to the Company, as to
the registration or exemption therefrom under the Act and applicable state
securities laws.

                  3.9. The Purchaser agrees to dispose of or encumber its Shares
only if (i) the Shares are duly registered under the Act and all applicable
state securities laws, or (ii) an exemption from registration under the Act,
including any exemption from the registration requirements of the Act which may
be available pursuant to Regulation S, and all applicable state securities laws,
is available.

                  3.10. The offer leading to the sale evidenced hereby was made
in an "offshore transaction", for purposes of Regulation S. The Purchaser
understands that an "offshore transaction" as defined under Regulation S is any
offer or sale not made to a person in the United States; and either (A)

                                       4
<PAGE>

at the time the buy order is originated, the purchaser is outside the United
States, or the seller or any person acting on his behalf reasonably believe that
the purchaser is outside the United States; or (B) for purposes of (1) Rule 903
of Regulation S, the transaction is executed in, or on or through a physical
trading floor of an established foreign exchange that is located outside the
United States; or (2) Rule 904 of Regulation S, the transaction is executed in,
on or through the facilities of a designated offshore securities market, and
neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States.

                  3.11. Neither the Purchaser nor any affiliate of the Purchaser
or any person acting on its behalf, has made or is aware of any "directed
selling efforts" in the United States, which is defined in Regulation S to be
any activity undertaken for the purpose of, or that could reasonably be expected
to have the effect of, conditioning the market in the United States for any of
the securities being purchased hereby.

                  3.12. It understands that the Company is the seller of the
securities which are the subject of this agreement, and that, for purpose of
Regulation S, a "distributor" is any underwriter, dealer or other person who
participates, pursuant to a contractual arrangement, in the distribution of
securities offered or sold in reliance on Regulation S and that an "affiliate"
is any partner, officer, director or any person directly or indirectly
controlling, controlled by or under common control with any person in question.
In this regard, the Purchaser shall not, during the 40-day period set forth
under Rule 903(c)(2), act as a distributor, either directly or though any
affiliate, nor shall it sell, transfer, hypothecate or otherwise convey the
stock or interest therein, other than to a non-U.S. Person.

                  3.13. Except as set forth herein and in the Disclosure
Documents, no representations or warranties have been made to the Purchaser by
the Company, the officers or directors of the Company, or any agent, employee or
affiliate of any of them,, and in entering into this transaction the Purchaser
is not relying upon any information, other than that contained in the Disclosure
Documents, and the results of its own independent investigation.

                  3.14. If the Purchaser is a corporation or trust or other
entity, the officer or trustee or other person executing this Agreement
represents and warrants that it is authorized to so sign and that the entity is
authorized by the governing documents of the entity as the case may be, to make
this investment.

                  3.15. It consents to the Company's placing an appropriate stop
transfer order against the certificates representing the Shares and acknowledges
that such certificates will bear a legend in substantially the following form:

                  THE SHARES MAY NOT BE OFFERED OR SOLD WITHIN THE
                  UNITED STATES OR TO, OR FOR THE ACCOUNT OR
                  BENEFIT OF, U. S. PERSONS (i) AS PART OF THEIR
                  DISTRIBUTION AT ANY TIME OR (ii) OTHERWISE UNTIL
                  ONE YEAR AFTER THE LATER OF THE COMMENCEMENT

                                       5
<PAGE>

                  OF THE OFFERING AND THE CLOSING DATE, EXCEPT IN
                  EITHER CASE IN ACCORDANCE WITH REGULATION S (OR
                  RULE 144, IF AVAILABLE) UNDER THE SECURITIES
                  ACT OF 1933 OR PURSUANT TO REGISTRATION OF THE
                  SHARES OR AN EXEMPTION FROM REGISTRATION. TERMS
                  USED IN THIS LEGEND HAVE THE MEANING GIVEN TO
                  THEM BY REGULATION S. THE SALE OR OTHER DISPOSITION
                  OF THE SHARES IS RESTRICTED AND IN ANY EVENT IS
                  PROHIBITED UNLESS THE COMPANY RECEIVES AN OPINION
                  OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
                  SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT
                  REGISTRATION UNDER THE SECURITIES ACT OF 1933.

                  4. APPOINTMENT OF ESCROW AGENT.

                  4.1. The Company and the Purchaser hereby appoint the Escrow
Agent and the Escrow Agent hereby accepts its appointment as Escrow Agent
pursuant to the terms and conditions hereinafter set forth.

                  4.2. The Company shall cause to be delivered to the Escrow
Agent certificates for the Shares, with the appropriate Regulation S legends
thereon, in the name of the Purchaser, Escrow Agent shall hold the Shares until
it receives, by wire transfer as hereinbefore set forth, the Purchase Price.
Upon receipt of the Purchase Price, the Escrow Agent shall disburse the Purchase
Price in accordance with instructions it receives from the Company. The Escrow
Agent shall simultaneously therewith, deliver the Shares to the Purchaser,
pursuant to its instructions.

                  4.3. It is understood and agreed by the parties to this
Agreement as follows:

                  (a) The Escrow Agent is not and shall not be deemed to be a
trustee for any party for any purpose and is merely acting as a depository and
in a ministerial capacity hereunder with the limited duties herein prescribed.

                  (b) The Escrow Agent does not have and shall not be deemed to
have any responsibility in respect of any instruction, certificate or notice
delivered to it other than faithfully to carry out the obligations undertaken in
this Agreement and to follow the directions in such instruction or notice
provided in accordance with the terms hereof.

                  (c) The Escrow Agent is not and shall not be deemed to be
liable for any action taken or omitted by it in good faith and may rely upon,
and act in accordance with, the advice of its counsel without liability on its
part for any action taken or omitted in accordance with such advice. In any
event, its liability hereunder shall be limited to liability for gross
negligence, willful misconduct or bad faith on its part.

                                       6
<PAGE>

                  (d) The Escrow Agent may conclusively rely upon and act in
accordance with any certificate, instruction notice, letter, telegram, cablegram
or other written instrument believed by it to be genuine and signed by the
Company and the Purchaser.

                  (e) The Company and the Purchaser agree to save harmless,
indemnify and defend the Escrow Agent for, from and against any loss, damage,
liability, judgment, cost and expense whatsoever, including attorney's fees,
suffered or incurred by it by reason of, or on account of, any misrepresentation
made to it or as to its status or activities as Escrow Agent under this
Agreement except for any loss, damage, liability, judgment, cost or expense
resulting from gross negligence, willful misconduct or bad faith on the part of
the Escrow Agent.

                  (f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement. If any such legal proceeding is instituted against it, the
Escrow Agent agrees promptly to give notice of such proceeding to the Company
and Purchaser. The Escrow Agent shall not be required to institute legal
proceedings of any kind.

                  (g) The Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either under
this Agreement or generally, unless such waiver be in writing, and no waiver
shall be valid unless it is in writing, signed by the Escrow Agent, and only to
the extent expressly therein set forth. A waiver by the Escrow Agent under the
terms of this Agreement shall not be construed as a bar to, or waiver of, the
same or any other such right or remedy which it would otherwise have on any
other occasion.

                  (h) The Escrow Agent may refrain from taking any action other
than keeping all property held by it in escrow if it is uncertain concerning its
duties or rights under this Escrow Agreement or receives claims or demands from
any person or entity or receives a final judgment by a court of competent
jurisdiction if it deems that necessary or advisable.

                  5. INDEMNIFICATION.

                  The Purchaser and the Company agree to indemnify the other and
their corporate officers, directors and agents (collectively, the "Indemnitees")
and to hold the Indemnitees harmless from and against any and all losses,
damages, liabilities, costs and expenses that they or any of them may sustain or
incur in connection with the breach by the Purchaser or the Company (as the case
may be) of any representation, warranty, covenant or acknowledgment made by the
Purchaser or the Company; (as the case may be) herein.

                                       7
<PAGE>

                  6. MISCELLANEOUS.

                  6.1. Except as specifically referred herein, this agreement
constitutes the entire contract between the parties hereto concerning the
subject matter hereof and no party shall be liable or bound to the other in any
manner by any warranties, representations or covenants except as specifically
set forth herein. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties hereto. Nothing in this Agreement, express or implied is intended to
conf er upon any party, other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided herein.

                  6.2. Any notice under the provisions of this Agreement shall
be given in writing and delivered by hand, overnight courier or messenger
service, against signed receipt or acknowledgment of receipt, or by registered
or certified mail, return receipt requested, or telecopier or similar means of
communication if receipt is confirmed or if transmission is confirmed by mail as
provided in this paragraph 6.2, to the Purchaser at its address set forth above
and/or its facsimile number set forth on the signature page hereof or to the
company at its address set forth above and/or its facsimile number set forth on
the signature page hereof, or to the Escrow Agent at its address set forth above
and/or its facsimile number set forth on the signature page hereof. Any party
may by like notice, change the address to which notice should be given.

                  6.3. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York.

                  6.4. This Agreement may be executed in two counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

                  6.5. The warranties and representations of the Company and the
Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the closing hereunder.

                  6.6. Except as herein provided, any provision of this
Agreement may be amended or waived only by a written instrument signed by the
parties hereto.

                  6.7. Unless the context requires otherwise, all personal
pronouns used in this Subscription Agreement, whether in the masculine, feminine
or neuter gender, shall include all other genders.

                  6.8. This Agreement may be executed in counterparts and by
facsimile and each of such counterparts shall constitute an original, and all of
which together shall constitute one and the same document.

                                       8
<PAGE>

                  IN WITNESS WHEREOF, the undersigned have hereunto set their
hands and seals as of the date and year first written above.

Number of Shares subscribed: __________

Purchase Price of Shares Purchased, U.S. $________

Country in which this Agreement is executed by Purchaser:___________________

                                           _________________________________
                                           (Purchaser)

                                           By:______________________________

                                           Address:

                                           _________________________________

                                           _________________________________

                                           _________________________________

                                           Facsimile No:____________________

                                           E-mail:__________________________

                                       9
<PAGE>

                                           THE PATHWAYS GROUP, INC.

                                           By:______________________________
                                                         President

                                           14201 N.E. 200th Street
                                           Woodinville, Washington 98072
                                           United States
                                           Facsimile: (425) 485-1986

                                           SALANS HERTZFELD HEILBRONN CHRISTY
                                           & VIENER, AS ESCROW AGENT:

                                           By_______________________________

                                           Address:

                                           620 Fifth Avenue
                                           New York, New York 11005
                                           Attention: S. R. Berger
                                           Facsimile No: (212) 632-5555

                                       10

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