Document:

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                                                                     EXHIBIT 4.1
                                STERICYCLE, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

                                    ARTICLE 1
                                     PURPOSE

         The purpose of this plan is to encourage employees of Stericycle, Inc.
(the "Company") to continue in their employment, and to participate in the
Company's future, by allowing them to purchase shares of the Company's common
stock at a price below the market price of the stock. This plan is intended to
be an employee stock purchase plan under Section 423 of the Internal Revenue
Code.

                                    ARTICLE 2
                                   DEFINITIONS

         ACCOUNT means the bookkeeping account established for each Participant.

         BOARD means the Company's Board of Directors.

         CARRIED OVER CASH is defined in Paragraph 6.5.

         CLOSING PRICE means the last reported sales price of a share of Common
Stock on the Nasdaq National Market.

         COMMON STOCK means the Company's Common Stock, par value $.01 per
share.

         COMPANY means Stericycle, Inc., a Delaware corporation.

         COMPENSATION means gross salary or wages.

         ELIGIBLE EMPLOYEE means, in respect of an Offering, (i) a full-time
Employee who has completed one year's employment as of the First Day of the
Offering or (ii) a part-time Employee who customarily works more than 20 hours
per week and who has completed one year's employment as of the First Day of the
Offering.

         EMPLOYEE means an employee of the Company or a Subsidiary. References
to "employment" are to employment by the Company or a Subsidiary.

         FIRST DAY means, in respect of an Offering, the first regular business
day during the Offering.

         HARDSHIP means, in respect of a Participant, a financial hardship by
reason of (i) medical expenses incurred or needed for the treatment of the
Participant or any dependent or family

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member; or (ii) the purchase of a new principal residence. The Plan
Administrator's determination regarding the existence of a Hardship for purposes
of this Plan shall be final and binding on the Participant.

         INTERNAL REVENUE CODE means the Internal Revenue Code of 1986, as
amended, and as it may be amended in the future.

         LAST DAY means, in respect of an Offering, the last regular business
day during the Offering.

         MINIMUM HOLDING PERIOD means, in respect of any Option Shares acquired
by a Participant in an Offering, the minimum period that the shares must remain
credited to the Participant's Account. Unless the Plan Administrator specifies a
different period prior to the first day of an Offering, the Minimum Holding
Period shall begin on the Last Day of the Offering and end on the second
anniversary of the First Day of the Offering.

         OFFICER means (i) the Company's President and Chief Executive Officer,
Chief Operating Officer, Chief Technical Officer or Chief Financial Officer (ii)
any Executive Vice President and (iii) any other person who is considered an
"officer" of the Company for purposes of Rule 16a-1(f) under the Securities
Exchange Act of 1934.

         OFFERING means an offering of Common Stock pursuant to Options granted
under this Plan.

         OPTION means the right of a Participant to purchase shares of Common
Stock in an Offering.

         OPTION GRANT DATE means the First Day of an Offering.

         OPTION EXPIRATION DATE means the Last Day of an Offering.

         OPTION PRICE means, in respect of an Option, the price per share at
which shares of Common Stock may be purchased pursuant to the exercise of the
Option.

         OPTION SHARES means the shares of Common Stock issued upon the exercise
of an Option.

         PARTICIPANT means an Eligible Employee who elects to participate in an
Offering.

         PLAN means this plan, as it may be amended. The name of this Plan is
the "Stericycle, Inc. Employee Stock Purchase Plan."

         PLAN ADMINISTRATOR means the Board or the committee of the Board or the
administrative committee of Officers of the Company to which the Board has
delegated its authority to administer the Plan in accordance with Paragraph 5.1

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         SUBSIDIARY means a "subsidiary corporation" as defined in Section
424(f) of the Internal Revenue Code (with the Company as the "employer
corporation").

                                    ARTICLE 3
                                 EFFECTIVE DATE

         3.1 EFFECTIVE DATE. This Plan shall become effective as of July 1,
2001, subject to approval by the Company's stockholders.

         3.2 STOCKHOLDER APPROVAL. Offerings may be made and Options may be
exercised prior to stockholder approval, but no Option Shares may be distributed
to a Participant prior to stockholder approval. If for any reason stockholder
approval is not obtained on or before December 31, 2001: (i) all outstanding
Options shall be cancelled; (ii) the Company shall refund to each Participant
(without interest) all amounts then credited to his or her Account; and (iii)
the Company shall refund to each Participant (without interest) the full Option
Price of all Option Shares then credited to his or her Account and cancel those
shares.

                                    ARTICLE 4
                                SHARES AVAILABLE

         The total number of Option Shares which may be issued under this Plan
is 150,000 shares (subject to adjustment as provided in Paragraph 8.1).

                                    ARTICLE 5
                               PLAN ADMINISTRATION

         5.1 PLAN ADMINISTRATOR. This Plan shall be administered by the Board.
The Board may delegate its authority to administer the Plan (but not its power
to amend, suspend or terminate this Plan) to a standing or other committee of
the Board or to an administrative committee consisting of any two or more
Officers.

         5.2 POWERS. Subject to and not inconsistent with the provisions of the
Plan, the Plan Administrator shall have the authority, in its discretion, to
determine the terms, conditions, restrictions and limitations applicable to each
Offering, the Options granted pursuant to the Offering, and the Option Shares
issued upon the exercise of those Options.

         5.3 INTERPRETATION. The Plan Administrator may interpret the Plan,
adopt and revise policies, procedures and guidelines to administer the Plan, and
make all determinations required for the Plan's administration. The actions of
the Plan Administrator shall be final and binding.

         5.4 NO DISCRIMINATION. All Eligible Employees shall have the same
rights and privileges under the Plan with the exception that, as provided in
Article 6, the number of shares of Common Stock which may be purchased under
Options granted in any Offering may bear a uniform relationship to compensation.
All policies, procedures and determinations in the administration of the Plan
shall be uniformly and consistently applied to all persons in similar
circumstances.

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                                    ARTICLE 6
                                    OFFERINGS

         6.1 OFFERINGS. Unless the Plan Administrator specifies otherwise (by
providing for Offerings of a different frequency or length, or by cancelling any
Offering prior to the First Day of the Offering), there shall be two Offerings
each calendar year (except 2001, when there shall be only one offering beginning
on July 1, 2001). The first Offering shall be begin on January 1 and end on the
following June 30 of each year, and the second Offering shall begin on July 1
and end on the following December 31.

         6.2 OPTION GRANT. Each Eligible Employee as of the First Day of any
Offering who has elected to participate in the Offering shall be granted an
Option as of the First Day of the Offering pursuant to the terms of the
Offering. The Option shall be for a number of shares of Common Stock equal to
the quotient obtained by dividing (i) the sum of (A) the aggregate Compensation
to be withheld and credited to the Participant's Account during the Offering
plus (B) Carried Over Cash by (ii) the Option Price (as determined in accordance
with Paragraph 6.5).

         6.3 PARTICIPATION. Each Eligible Employee (and each other Employee who
will become and in fact becomes an Eligible Employee as of the First Day of the
Offering) may participate in any Offering by completing an enrollment agreement
in the manner and within the time prior to the First Day of the Offering that
the Plan Administrator specifies.

         6.4 PAYROLL DEDUCTIONS. A Participant's enrollment agreement shall
specify the percentage of his or her Compensation during the Offering that the
Participant elects to have withheld and credited to his or her Account for
purposes of exercising the Participant's Option. The Participant may specify any
whole percentage of his or her Compensation not exceeding $5,000 during any
Offering Period (appropriately increased or reduced in the case of any Offering
Period longer or shorter than six months). Payroll deductions shall begin with
the first regular payroll period ending on or after the First Day of the
Offering and end with the last regular payroll period ending on or before the
Last Day (or, if earlier, upon the termination of the Participant's employment).

         6.5 OPTION PRICE. The Option Price shall be the lower of:

                (a) 85% of the Closing Price of a share of Common Stock on the
         First Day of the Offering (or on the first trading day following the
         First Day if it is not a trading day); or

                (b) 85% of the Closing Price of a share of Common Stock on the
         Last Day of the Offering (or on the last trading day preceding the Last
         Day if it is not a trading day).

         6.6 OPTION EXERCISE. Each Participant in an Offering shall be
considered to have exercised his or her Option on the Last Day of the Offering
so as to purchase the maximum whole number of Option Shares. The Option Shares
issuable upon the Participant's exercise shall be credited to his or her Account
as of the Last Day and considered to be issued and outstanding shares.
Fractional shares shall not be issued, and any amounts remaining credited to a
Participant's Account after the Participant's exercise of his or her Option
("Carrried Over Cash")

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shall be carried over to the next Offering. No interest shall accrue on any
Carried Over Cash.

         6.7 NONTRANSFERABILITY OF OPTIONS. No Participant in an Offering may
sell, pledge, transfer or otherwise dispose of his or her Option under any
circumstances.

         6.8 CANCELLATION OF OPTIONS. In the event that the employment of a
Participant in an Offering terminates prior to the Last Day of the Offering for
any reason (whether as a result of his or her resignation, death or otherwise),
the Participant's Option shall be cancelled as of the date of the Participant's
termination of employment. All amounts credited to a Participant's Account as of
his or her termination shall be refunded without interest no later than 30 days
after the Participant's termination.

         6.9 OPTION SHARES. A Participant shall possess all of the rights and
privileges of a stockholder with respect to the Option Shares credited to his or
her Account with the exception that, until the expiration of the Minimum Holding
Period for the Option Shares:

                (a) the Option Shares shall remain credited to the Participant's
         Account and the Participant shall not be entitled to a stock
         certificate or certificates representing the shares; and

                (b) the Participant may not sell, pledge, transfer or otherwise
         dispose of any of the Option Shares (other than by will or the laws of
         intestacy).

         6. 8 ACCOUNT BALANCES. No interest shall accrue on any amounts credited
to a Participant's Account. After the close of each Offering, a report shall be
sent to each Participant stating the entries made to his or her Account, the
number of Option Shares purchased, the applicable Option Price and any Carried
Over Cash.

         6.9 CONTINUING PARTICIPATION. A Participant's enrollment agreement
pursuant to Paragraph 6.3 shall remain in effect indefinitely (for both the
Offering in respect of which it was initially filed and all subsequent
Offerings) unless:

                (a) the Participant changes the percentage of Compensation that
         he or she elects to have withheld, with effect for the next Offering
         and all subsequent Offerings, in the manner and within the time prior
         to the First Day of the next Offering that the Plan Administrator
         specifies; or

                (b) the Participant ceases to participate in the current
         Offering by making a cash withdrawal pursuant to Paragraph 7.1.

         6.9 LIMITATIONS. Notwithstanding any other provision of this Plan:

                (a) No Option shall be granted to any Eligible Employee that
         would permit his or her rights to purchase shares of Common Stock under
         this Plan and all other employee stock purchase plans of the Company or
         any Subsidiary to accrue at a rate exceeding $25,000 of the fair market
         value of such shares (determined at the time that the Option is

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         granted) during any calendar year in which the Option is outstanding.
         Any Option granted under this Plan shall be deemed to be modified to
         the extent necessary in order to satisfy the requirements of this
         Paragraph 6.9(a) and Section 423(b)(8) of the Internal Revenue Code.

                (b) No Option shall be granted to any Eligible Employee if,
         immediately after the Option is granted, he or she would own (or would
         be deemed to own, applying the rules of Section 423(b)(3) of the
         Internal Revenue Code) stock possessing 5% or more of the voting power
         or value of all classes of stock of the Company or any Subsidiary.

                                    ARTICLE 7
                             PARTICIPANT WITHDRAWALS

         7.1 REVOCATION. Except for a Participant who is an Officer, a
Participant may cease participation in an Offering at any time prior to the Last
Day of the Offering and withdraw all amounts credited to his or her Account
(including any Carried Over Cash). The Participant's withdrawal shall serve to
cancel the Participant's Option and terminate his or her participation in the
Offering and all subsequent Offerings (subject, in the case of a subsequent
Offering, to participation by re-enrollment pursuant to Paragraph 6.3). Partial
cash withdrawals shall not be permitted. Cash withdrawal requests shall be made
in the manner and within the time prior to the Last Day of the Offering that the
Plan Administrator specifies.

         7.2 TRANSFER REQUESTS. Once each calendar year (or more frequently as
the Plan Administrator may allow) a Participant may request the Plan
Administrator to transfer to the Participant or the Participant's control of all
or any portion of the Option Shares then credited to his or her Account for at
least the applicable Minimum Holding Period. The Plan Administrator, in its
discretion, may permit a Participant's withdrawal of the Participant's Option
Shares prior to the expiration of the applicable Minimum Holding Period upon the
Participant's demonstration of a Hardship to the Plan Administrator's
satisfaction. All certificates that may be issued to Participants (for example,
Participants who are affiliates) shall bear any restrictive endorsements that
the Company considers necessary to comply with applicable federal and state
securities laws.

         7.3 TERMINATION OF EMPLOYMENT. Upon the termination of a Participant's
employment for any reason, the Plan Administrator shall transfer to the
Participant or the Participant's contol all of the Option Shares then credited
to his or her Account for at least the applicable Minimum Holding Period. The
Plan Administrator shall transfer to the Participant or the Participant's
control any remaining Option Shares then credited to the Participant's Account
upon the expiration of the applicable Minimum Holding Period.

                                    ARTICLE 8
                            MISCELLANEOUS PROVISIONS

         8.1 CAPITALIZATION ADJUSTMENTS. The aggregate number of shares of
Common Stock for which Options may be granted under the Plan, the aggregate
number of Option Shares in respect of each outstanding Option, and the exercise
price of each outstanding Option may be

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adjusted by the Plan Administrator as it considers appropriate in the event of
changes in the number of outstanding shares of Common Stock by reason of stock
dividends, stock splits, recapitalizations, reorganizations and the like.
Adjustments under this Paragraph 8.1 shall be made in the Plan Administrator's
discretion, and its decisions shall be final and binding.

         8.2 AMENDMENT AND TERMINATION. The Board may amend, suspend or
terminate this Plan at any time. The Company's stockholders shall be required to
approve any amendment which would increase the number of Option Shares which may
be granted under this Plan. If this Plan is terminated, the provisions of this
Plan shall continue to apply to Options granted and Option Shares issued prior
to termination, and no amendment, suspension or termination of the Plan shall
adversely affect the rights of the holder of any outstanding Option without his
or her consent.

         8.3 NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any Offering
shall confer on any person the right to continue in the employ of the Company or
a Subsidiary or limit the right of the Company or the Subsidiary to terminate
his or her employment.

         8.4 NOTICES. Notices required or permitted under this Plan shall be
considered to have been duly given if sent by certified or registered mail
addressed to the Plan Administrator at the Company's principal office or to any
other person at his or her address as it appears on the Company's payroll or
other records.

         8.5 SEVERABILITY. If any provision of this Plan is held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions, and the Plan shall be construed and administered as if the
illegal or invalid provision had not been included.

         8.6 GOVERNING LAW. This Plan shall be governed in accordance with the
laws of the State of Illinois.<PAGE>   1

                                                                    Exhibit 4(a)

                                                                 May 8, 2001
Demegen, Inc.
1051 Brinton Road
Pittsburgh, PA 15221

Gentlemen:

         1. Subscription. The undersigned, intending to be legally bound,
irrevocably applies to purchase from Demegen, Inc., a corporation organized
under the laws of the State of Colorado (the "Company"), the number of Units,
each Unit consisting of 1 share of the Common Stock, par value $0.001 per share
("Common Stock") and 1 Warrant to acquire 1 share of the Common Stock
("Warrant"), of the Company set forth in Section 15 below, in accordance with
the terms and subject to the conditions of this Subscription Agreement. Each
share of Common Stock subscribed for hereby shall entitle the holder to such
rights as are conveyed by the terms of the stock certificates representing such
shares of Common Stock. Each Warrant subscribed for hereby shall entitle the
holder to such rights as are conveyed by the terms of the warrant certificates
representing such warrants. The shares of Common Stock and Warrants subscribed
for hereby are sometimes referred to herein as the "Subject Securities". The
shares of Common Stock and warrants shall be separately transferable immediately
after the closing of the offering of the Subject Securities. The securities
being offered are part of an offering of shares and warrants by the Company (the
"Offering") to certain qualified investors without (i) registration under the
Securities Act of 1933, as amended (the "Securities Act") or (ii) qualification
under state securities laws ("Blue Sky laws") in reliance upon the exemption
from registration set forth in Section 4(2) of the Securities Act and Regulation
D thereunder and applicable provisions of state securities laws.

         2. Purchase Price; Payment. The purchase price for each Unit subscribed
for shall equal $0.50. Simultaneously with the execution and delivery of this
Subscription Agreement, the undersigned is delivering to the Company the amount
(the "Purchase Price") set forth below. Payment of the Purchase Price is being
made by delivery to the Company of a check, subject to collection, or by the
wire transfer of the Purchase Price to or by other means satisfactory to the
Company.

         3. Acceptance. The undersigned understands and agrees that the Company,
in its sole discretion, reserves the right to accept or reject any subscription
for the Subject Securities, in whole or in part, and to withdraw its offer to
sell the Subject Securities at any time before the issuance thereof. A
subscription shall be deemed accepted by the Company only when the Company
transmits a notice of acceptance to the undersigned or issues the Subject
Securities upon receipt of the Purchase Price. There is no minimum number of

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subscriptions necessary prior to the Company accepting any subscription for the
purchase and sale of the Subject Securities. If any additional subscriptions to
purchase the Subject Securities are received, the Company may accept them at any
time. The Company, at its sole discretion, may terminate this offering at any
time. No funds received in connection with subscriptions will be held in escrow.
In the event a subscription is rejected or this offer is withdrawn, the Company
shall return to the undersigned, without interest, all funds received from the
undersigned in respect of the Purchase Price.

         4. Representations and Warranties of the Purchaser. In order to induce
the Company to sell the Subject Securities to the undersigned, the undersigned
hereby represents, warrants and covenants to the Company as follows:

                  (a) Except as provided in paragraph (l) of this Section 4, the
undersigned is acquiring the Subject Securities solely for the account of the
undersigned, for investment purposes only and not with a view to, or for,
subdivision, resale, distribution, or fractionalization thereof, or for the
account, in whole or in part, of others. No other person has or will have a
direct or indirect beneficial interest in the Subject Securities. The
undersigned recognizes the restrictions on the transferability of the Subject
Securities and is able to bear the substantial economic risk of an investment in
the Subject Securities, including a complete loss thereof, for an indefinite
period of time. The undersigned has no need for liquidity of this investment and
has no reason to anticipate any change in circumstances, financial or otherwise,
or other particular occasion or event which might cause or require the
undersigned to attempt to sell or transfer any of the Subject Securities. The
undersigned understands that the statutory basis on which the Subject Securities
are being sold to the undersigned would not be available if the undersigned's
present intent were to hold the Subject Securities for a limited fixed period or
until the occurrence of a certain event. The undersigned's overall commitment to
investments which are not readily marketable is not disproportionate to the
undersigned's net worth.

                  (b) The undersigned understands that the sale of the Subject
Securities to the undersigned is intended to be exempt from registration under
the Securities Act by virtue of Section 4(2) of the Securities Act and
applicable state securities laws. The undersigned will not sell, hypothecate or
otherwise transfer any or all of the Subject Securities other than in accordance
with the following provisions:

                  (i) pursuant to a registration statement under the Securities
Act which has become effective, and a prospectus related thereto which is
current, with respect to the securities to be disposed of and, if required, a
registration statement under applicable state securities laws; or

                  (ii) pursuant to a specific exemption from registration under
the Securities Act and applicable state securities laws, but

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<PAGE>   3

only upon the undersigned first having delivered to the Company a favorable
written opinion of counsel for the undersigned, reasonably satisfactory in form
and substance to the Company, to the effect that the proposed sale or transfer
is exempt from registration under the Securities Act and any applicable state
securities laws.

                  (c) The undersigned understands that the Subject Securities
are not registered under the Securities Act or applicable state securities laws
and such securities must be held indefinitely, unless the subsequent disposition
thereof is registered under the Securities Act and applicable state securities
laws or an exemption from such registration is available. The undersigned
acknowledges that, except as provided in this Subscription Agreement, the
Company has not undertaken to register the Subject Securities pursuant to the
Securities Act and, except as provided therein, will have no obligation to
effect on behalf of the undersigned any registration under the Securities Act or
to assist the undersigned in complying with any exemption from registration
under the Securities Act or any state securities laws. The undersigned
understands that the exemption from registration afforded by certain rules and
regulations under the Securities Act depends upon the satisfaction of various
conditions and that, if applicable, such rules and regulations may afford the
basis for sales of the Subject Securities only in limited amounts.

                  (d) The undersigned acknowledges that the certificate or
certificates evidencing the Subject Securities, and any substitutions or
replacements thereof, shall bear a legend in substantially the following form:

"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS
THEN AVAILABLE"

                  (e) The undersigned further represents and warrants that in
order to make an informed decision in connection with the purchase of the
Subject Securities:

                  (i) the undersigned has reviewed the merits and risks of an
investment in the Subject Securities with such tax and legal counsel and with an
investment advisor to the extent deemed advisable by the undersigned;

                  (ii) the undersigned recognizes that an investment in the
Subject Securities involves a high degree of risk; and the undersigned has
carefully studied the Information for Investors dated May 8, 2001 which were
delivered to the Subscriber ("Investment Materials") and in particular the Risk
Factors set forth therein;

                  (iii) the undersigned is a highly sophisticated investor who
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Subject
Securities; and

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<PAGE>   4

                  (iv) the undersigned, A) has been provided with sufficient
information with respect to the business of the Company and has carefully
reviewed the same including, without limitation, the Investment Materials, B)
has been provided with such additional information with respect to the Company
as the undersigned has requested, and C) has had the opportunity to discuss such
information with members of the management of the Company and any questions that
the undersigned had with respect thereto have been answered to the full
satisfaction of the undersigned.

                  (f) The undersigned is not relying on the Company with respect
to the general economic, tax and other considerations relevant to the
undersigned's decision relating to this investment. With respect to such
considerations, the undersigned has relied on the advice of his own qualified
advisors to the extent the undersigned has deemed appropriate. The undersigned
understands that no United States federal or state agency of government has
examined or made any determination regarding the fairness of this Offering.

                  (g) The undersigned represents and warrants that the
undersigned is an "accredited investor" as that term is defined in Rule 501
promulgated under Regulation D of the Securities Act by virtue of one or more of
the following:

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

                  (ii) The undersigned is a private business development company
as defined in Section 202(a)(22) of the Investment Advisors Act of 1940; or

                  (iii) The undersigned is an organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), or a
corporation, Massachusetts or similar business trust or partnership, not formed
for the specific purpose of acquiring the securities offered hereby, with total
assets in excess of $5,000,000; or

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<PAGE>   5

                  (iv) The undersigned is a director or executive officer of the
Company; or (v) The undersigned is a natural person whose individual net worth,
or joint net worth with that person's spouse, at the time of the purchase,
exceeds $ 1,000,000; or

                  (vi) The undersigned is a natural person who had individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income level in the
current year; or

                  (vii) The undersigned is a trust, with total assets in excess
of $5,000,000, not formed for the specific purpose of acquiring the securities
offered hereby, whose purchase is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) under the Securities Act; or

                  (viii) The undersigned is a corporation or other entity all of
whose shareholders or other equity owners are themselves accredited investors by
virtue of this subparagraph or by subparagraphs (i), (ii), (iii), (iv), (v),
(vi) or (vii) above.

                  For purposes hereof, "individual income" means adjusted gross
income as reported for federal income tax purposes, less any income attributable
to a spouse or to property owned by a spouse, increased by the following amounts
(but not including any amounts attributable to a spouse or to property owned by
a spouse): (i) the amount of any interest income received which is tax-exempt
under Section 103 of the Code, (ii) the amount of losses claimed as a limited
partner in a limited partnership (as reported on Schedule E of Form 1040), (iii)
any deduction claimed for depletion under Section 611 et seq. of the Code, and
(iv) any amount by which income from long term capital gains has been reduced in
arriving at adjusted gross income pursuant to the provisions of Section 1202 of
the Code. For purposes hereof, "net worth" means the excess of total assets at
fair market value, including home and personal property, over total liabilities,
including mortgage.

                  (h) No oral or written representations have been made or oral
or written information furnished to the undersigned or the undersigned's
advisors in connection with the Offering which were in any way inconsistent with
the information provided to the undersigned in the Disclosure Documents. The
undersigned acknowledges that the Disclosure Documents replace and supersede any
and all information delivered prior to delivery of the Disclosure Documents.

                  (i) The undersigned is not subscribing to purchase the Subject
Securities as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media of
general circulation or broadcast over television or radio, or presented at any
seminar or meeting pursuant

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<PAGE>   6

to a publicly circulated invitation, or any solicitation of a subscription by a
person not previously known to the undersigned in connection with investments in
securities generally.

                  (j) If the undersigned is a corporation, partnership, trust or
other entity (i) it is duly authorized and empowered to execute, deliver and
perform this Subscription Agreement and to purchase the Subject Securities, and
has duly taken all requisite action in connection therewith; and (ii) the person
signing this Subscription Agreement on behalf of the undersigned has been duly
authorized by the undersigned to do so.

                  (k) This Subscription Agreement is a valid and binding legal
obligation of the undersigned, enforceable against the undersigned in accordance
with its terms; and the execution, delivery and performance of this Subscription
Agreement and the purchase of the Subject Securities do not and will not
conflict with, violate or constitute a default under any applicable law or
regulation, the undersigned's certificate of incorporation, by-laws, partnership
agreement or any agreement or arrangement to which the undersigned is a party or
by which the undersigned may be bound.

                  (l) If the undersigned is acting in a fiduciary capacity in
purchasing the Subject Securities, the fiduciary represents and warrants that he
or she has authority to execute this Subscription Agreement on behalf of the
person or persons for whom the Subject Securities are being purchased, that such
persons have been given the Disclosure Documents and this Subscription Agreement
and have confirmed to the fiduciary that they have reviewed the same, and that
the representations and warranties contained in this Subscription Agreement (and
in any other written statement or document delivered to the Company) shall be
deemed to have been made on behalf of such person or persons.

                  (m) All information which the undersigned has furnished and is
furnishing to the Company, including, without limitation, the representation as
to the undersigned's status as an "Accredited Investor" within the meaning of
Rule 501 under the Securities Act and all other representations contained in
this Subscription Agreement, are correct and complete as of the date of this
Subscription Agreement, and if there should be any material change in such
information prior to the undersigned's receipt of the Subject Securities, the
undersigned will immediately furnish such revised or corrected information to
the Company. The undersigned is executing and delivering this Subscription
Agreement with full awareness of its implications and in recognition of the fact
that the Company is relying on the undersigned's representations and warranties
in selling the Subject Securities to the undersigned, and that the Company and
other investors may be damaged if such representations or warranties are
incorrect.

                   (n) The undersigned agrees, within five days after receipt of
a request from the Company, to provide such information and to execute and
deliver such documents as may reasonably be necessary to comply with any and all
laws and ordinances to which the Company is subject.

                                       9
<PAGE>   7

         6. Representations and Warranties of the Company. The Company hereby
represents and warrants to the undersigned as follows:

                  (a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado and has
full power and authority (corporate and otherwise) to conduct its business as
presently conducted and proposed to be conducted by it, as set forth in the
Disclosure Documents and to effect the transactions contemplated hereby.

                  (b) The authorized capital stock of the Company immediately
prior to this Offering consists of 140,000,000 shares of which 40,000,000 shares
are Preferred Stock, par value $0.001 per share, which may be issued in series
by the Board of Directors of the Company, and 100,000,000 are shares of Common
Stock, par value $0.001 per share. Of such authorized shares, 4,444,444 shares
of Redeemable Convertible Preferred Stock, which are convertible into a like
amount of shares of Common Stock, are issued and outstanding and 36,779,778
shares of Common Stock are issued and outstanding, not including 23,350,935
shares of Common Stock which are reserved for issuance pursuant to the exercise
of outstanding options and/or warrants which are exercisable for prices ranging
from $0.05 to $1.25 per share. Other than the foregoing securities, there are no
outstanding securities, options or other rights to acquire any capital stock or
securities of the Company and no agreements made by or known to the Company
respecting the ownership, voting or other aspects of any shares of the Company's
capital stock.

                  (c) No consent, authorization or other approval from, nor any
registration, qualification or filing with, any person or governmental authority
is required in connection with the Offering or the transactions contemplated
hereby, which consent, authorization or approval has not heretofore been
obtained or which registration, qualification or filing has not heretofore been
made.

                  (d) The Company has taken all corporate action required on the
part of the Company to authorize and approve the Offering and the transactions
contemplated hereby and the Subject Securities, when paid for and delivered
pursuant to the terms hereof, will be validly issued, fully paid and
non-assessable.

         7. Covenants of the Company. (a) The Company hereby agrees to endeavor
to file such reports and take such other action necessary to allow the
undersigned to sell the Common Stock and the shares of Common Stock obtainable
upon exercise of the Warrants pursuant to Rule 144 under the Securities Act of
1933.

                  (b) (i) The Company agrees that the holders of a majority of
the Subject Securities purchased pursuant to the Offering ( the "Electing
Stockholders ") shall have the one-time right, exercisable at any time three (3)
months after the closing of the Offering but not more than two years from the
closing of the Offering, upon written notice to the Company, to require that the
Company

                                       10
<PAGE>   8

prepare and promptly file a registration statement, as may be required under the
Securities Act, in connection with the public offering of the shares of Common
Stock and shares of Common Stock obtainable upon exercise of the Warrants
acquired pursuant to this Subscription Agreement (the "Underlying Shares");
provided, however, that such underlying shares are not then freely transferable
pursuant to an exemption from registration pursuant to the Securities Act. In
connection therewith, the Company shall be obligated to prepare and file such
registration statement within 60 days of receipt of the requisite number of
notices and shall be further obligated to use its best efforts, including the
filing of any amendments or supplements thereto, to have any such registration
statement declared effective under the Securities Act and the rules and
regulations promulgated thereunder as soon as practicable after the filing date
thereof. The Company shall also use its best efforts to keep any such
registration statement, and the accompanying prospectus, effective and current
under the Securities Act at its expense, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all shares covered thereby or one
hundred twenty (120) days after the effective date thereof. If the Electing
Stockholder intends to distribute the shares so registered by means of an
underwriting, it shall so advise the Company in its written notice. Upon receipt
of any such request by the Electing Stockholder to file a registration
statement, the Company shall promptly give written notice of such proposed
registration to all stockholders of the Company entitled to registration rights
pursuant to the Subscription Agreements. Such stockholders shall have the right
to participate in such registration as provided in, and subject to the terms and
conditions of, such Subscription Agreements. The Company shall also have the
right to include in any registration statement filed pursuant hereto other
securities of the Company then proposed to be distributed; provided, however,
that if the underwriter (if any) managing the offering determines that, because
of marketing factors, all of the shares requested to be registered by the
Electing Stockholder and all other stockholders requesting to participate in
such registration and the securities proposed by the Company to be included in
such registration, may not be included in the offering, then the shares
requested to be included in such registration by all stockholders and the
Company shall be reduced pro rata based upon the number of shares that such
stockholders and the Company have requested to be registered.

                  (ii) If at the time of any request to register the shares of
Common Stock or shares obtainable upon exercise of the Warrants, the Company is
engaged or has fixed plans to engage within thirty (30) days of the time of the
request in a registered public offering or is engaged in any other activity
that, in the good faith determination of the Company's Board of Directors, would
be adversely affected by the requested registration to the material detriment of
the Company, then the Company may at its option direct that such request be
delayed for a period not in excess of six months from the effective date of such
offering or the date of commencement of such other material activity, as the
case may be.

                                       11

<PAGE>   9

                  (iii) If the Company at any time proposes to register any of
its Common Stock under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both (except
with respect to registration statements on Form S-4 or S-8 or another form not
available for registering the Subject Securities for sale to the public), it
will give written notice at such time to all holders of the Subject Securities.
Upon the written request of any such holder, given within 20 days after receipt
of any such notice by the Company, to register any of its Underlying Shares
(which request shall state the intended method of disposition thereof or the
Company can so designate), the Company will use its best efforts to cause the
Underlying Shares as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company. The number of Underlying Shares to be included in
such an underwriting may be reduced (pro rata among the requesting holders based
upon the number of shares so requested to be registered) if and to the extent
that the managing underwriter shall be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein.

                  (iv) If and whenever the Company is required by the provisions
hereof to effect the registration of any of the Underlying Shares under the
Securities Act, the Company will, as expeditiously as possible use its best
efforts to file such registration statement and cause such registration
statement to become effective. The Company will pay all registration expenses in
connection with each such registration statement, not including commissions,
underwriting discounts or similar expenses or the fees, if any of a selling
stockholder's counsel. To the extent permitted by law, the Company will
indemnify and hold harmless each such seller against any losses, claims, damages
or liabilities, joint or several, to which such seller may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each such seller for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such seller in writing specifically for use in such
registration statement.

         8. Governing Law. This Subscription Agreement has been made in, and
shall be construed in accordance with, the laws of the State of New York
applicable to contracts made and to be fully performed entirely within such
State.

                                       12
<PAGE>   10

         9. Severability. Each provision of this Subscription Agreement is
intended to be severable from every other provision, and the invalidity or
illegality of any provision shall not affect the validity or legality of the
remaining provisions of this Subscription Agreement.

         10. Assignability. This Subscription Agreement is not transferable or
assignable by the undersigned.

         11. Backup Withholding . The undersigned verifies under penalties of
perjury, that the Taxpayer Identification Number set forth below is true,
correct and complete and that the undersigned is not subject to backup
withholding either:

         (a) because the undersigned has not been notified that the undersigned
is subject to backup withholding as a result of a failure to report all interest
or dividends; or

         (b) because the Internal Revenue Service has notified the undersigned
that the undersigned is no longer subject to backup withholding.

         12. Modification. Neither this Subscription Agreement nor any of its
provisions shall be waived, modified, discharged or terminated except by an
instrument in writing signed by the party against whom any such waiver,
modification, discharge or termination is sought.

         13. Notices. Any notice, demand or other communication which any party
to this Subscription Agreement may be required, or may elect, to give to anyone
interested hereunder shall be sufficiently given if:(a) deposited, postage
prepaid, in a United States mail box, stamped registered or certified mail,
return receipt requested, addressed to such address as may be listed on the
books and records of the Company; or (b) delivered personally at such address.

         14. Entire Agreement. This Subscription Agreement contains the entire
understanding and agreement of the parties with respect to the subject matter
hereof and supersedes all negotiations, representations and other agreements
made by and between such parties with respect hereto.

                                INVESTOR NOTICES

THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND
SUCH LAWS. THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH
LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SHARES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE
ACCURACY OR ADEQUACY OF ANY INFORMATION PROVIDED TO THE UNDERSIGNED IN
CONNECTION WITH AN INVESTMENT IN THE SHARES. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.

                                       13
<PAGE>   11

15. General Information

         (a) Name(s) of Subscriber: _________________________________

         (b) Type of Ownership:

         ______ Individual

         ______ Corporation/partnership/other business entity

         ______ Joint Tenants with rights Of survivorship

         ______ Trust, pension etc. plan

         ______ Tenants in Common

         ______ Other (describe)

         (c) Number of Units subscribed for: ___________________

         (d) Aggregate Purchase Price for Units: $____________($0.50 per share)

         (e) Subscriber's Address:_________________________________

         (g) Social Security or Tax Identification No., Subscriber:
             Co-Subscriber: ___________________________________________

         (h) Date and jurisdiction of organization if subscriber is a business
             entity: __________________________________________________

         (i) Date and governing jurisdiction if subscriber is a trust:
             __________________________________________________________

         (j) Trustees:
             Name(s): ________________________________________
             Address: ________________________________________
             Telephone No.: __________________________________

         The undersigned, intending to be bound hereby, subscribes to the
purchase of the Subject Securities as set forth above.

                                         _______________________________________
                                         Name(s)

                                         _______________________________________
                                         Title

                                         _______________________________________
                                         Name(s)

                                         _______________________________________
                                         Title

Agreed to and accepted this
_________ day of ______,2001

DEMEGEN, INC.

By:________________________________
   Name: Richard D. Ekstrom
   Title: President & CEO

                                       14

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