Document:

EX-10.28

 

Exhibit 10.28

EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made as of the 1st day of October, 2005, by and between RENT-WAY, INC., a
Pennsylvania corporation, with offices at One RentWay Place, Erie, Pennsylvania 16505 (the
“Company”) and John A. Lombardi, an individual residing at 5094 North Jarrod Court, Erie,
Pennsylvania 16506 (the “Employee”).

     WHEREAS, the Company desires to employ the Employee and the Employee desires to accept such
employment upon the terms and conditions contained in this Agreement, and

     WHEREAS, the Company and the Employee desire to rescind all prior agreements regarding
employment between them and make this Agreement the sole contract governing the Company’s
employment of the Employee.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein the
Company and the Employee agree as follows:

     1. Term. Subject to the terms and conditions set forth in this Agreement, the Company
hereby agrees to employ the Employee, and the Employee hereby accepts such employment, for the
period beginning on the date of this Agreement and continuing until 1) either party gives at least
two (2) weeks prior written notice to the other of the termination of this Agreement or 2) until
this Agreement is otherwise terminated as provided herein.

     If the Company terminates this Agreement for any reason other than the Employee’s death
pursuant to Section 5, the Employee’s disability pursuant to Section 6, or for cause pursuant to
Section 9, the Employee shall have the right to receive continuing payments of bi-weekly base
salary (at the rate in effect at the time notice of termination is given) during the 12-month
period following the date on which termination is effective. Such continuing payments of base
salary shall be severance pay and shall not constitute a continuation of the Employee’s employment
for any reason.

     2. Office; Duties. During the Term, the Employee shall serve as Vice President/
Corporate Controller/Chief Accounting Officer. The President or his designee may at any time
change the title of the Employee.

     Employee shall perform such duties and discharge such responsibilities as the President or his
designee shall from time to time reasonably direct. The Employee agrees to perform such duties and
discharge such responsibilities in a faithful manner and to the best of his ability. The Employee
agrees to devote his full business time and attention to the business and affairs of the Company
and to use his best efforts to promote the interests of the Company. The Employee further agrees
that he will engage in no outside business concerns or activities that conflict with his duties to
the Company, or are directly or indirectly competitive with the Company, without the Company’s
prior written consent.

     The President or his designee may from time to time assign to the Employee additional duties
and responsibilities and delegate to other employees of the Company duties and

 

 

responsibilities normally discharged by the Employee. All such assignments and delegations of
duties and responsibilities shall be made by the President or his designee and may include a
reduction of the Employee’s duties and responsibilities or a reduction in the Employee’s position
as reasonably determined by the President or his designee.

     3. Compensation. During the Term, the Company agrees that:

          3.1 The Employee shall receive an annual base salary of $176,748, payable in installments in
accordance with the regular payroll practices of the Company. The Company shall deduct or withhold
from payments of base salary, and from all other payments made to the Employee pursuant to this
Agreement, all amounts which may be required to be deducted or withheld under any applicable law
now in effect or which may become effective during the term of this Agreement (including but not
limited to Social Security contributions and income tax withholdings). The Employee’s base salary
shall be reviewed annually by the President or his designee and may reasonably be increased or
decreased on the basis of individual and corporate performance in accordance with criteria and
standards established by the President or his designee.

          3.2 Incentive Compensation; Bonuses. In addition to base salary, the Employee shall
be entitled to (i) participate in such incentive plans (including the right to defer income and
bonuses) made available by the Company to its executives and key employees and (ii) receive such
additional bonus or discretionary compensation payments as the President or his designee may
determine from time to time. The Employee’s eligibility for incentive plan participation and
additional bonus or discretionary compensation payments shall be reviewed annually by the President
or his designee and shall be awarded on the basis of corporate performance and in accordance with
criteria and standards established in the sole discretion of the President or his designee.

          3.3 Expenses. During the Term, the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred in connection with the performance of his duties
in accordance with the policies and procedures of the Company as may be in effect from time to
time.

          3.4 Benefits. During the Term, the Employee shall be entitled to receive a package of
benefits that includes all of the programs, plans and perquisites currently provided by the Company
to its employees, for so long as such programs, plans and perquisites are continued by the Company
and are available to employees of the Company.

     4. Stock Options. All terms of any stock option grants to the Employee shall be
governed by the stock option agreement under which they were granted.

     5. Termination of Employment by Reason of Death. If the Employee dies during the
Term, this Agreement shall terminate automatically as of the date of his death and the Company
shall pay to the Employee’s legal representatives such benefits determined in accordance with any
then existing Company-sponsored plans or programs providing benefits at death.

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     6. Termination of Employment by Reason of Disability. In the event that the Employee
shall sustain a disability which in the opinion of medical authority satisfactory to the Company
would substantially prevent him from rendering the services required under this Agreement for a
total of 180 days during any 360-day period, the Company shall have the right to terminate this
Agreement upon thirty (30) days’ prior written notice to the Employee.

     7. Termination After a Change in Control of the Company.

          (a) If within ninety (90) days following the occurrence of a Change of Control of the Company
(as defined in Appendix A) the Employee elects to voluntarily terminate his employment with the
Company, the Employee shall be entitled to receive continuing payments of bi-weekly base salary (at
the rate in effect at the time notice of termination is given) for 12 months following the date on
which termination is effective.

          (b) Except as stated in (a) above, a Change of Control of the Company shall not affect the
terms of this Agreement.

     8. Termination of Employment at Employee’s Election. If the Employee elects to
terminate this Agreement and the Employee gives two (2) weeks prior written notice of such
termination, the Employee shall be entitled to receive his salary then in effect for the two (2)
weeks notice period regardless of whether the Company desires the Employee to continue his
employment during that period.

     9. Termination of Employment for Cause. The Company shall have the right to terminate
the Employee’s employment immediately in the event the Employee shall do or cause to be done any
act that constitutes “cause” (as hereinafter defined) for termination. For purposes of this
Agreement, “cause” shall be deemed to mean a breach of his obligations under this Agreement (any
breach of Section 10, 11 or 12 hereof being an example of such a breach), gross negligence, willful
misconduct, insubordination, dishonesty to the Company, engaging in any conduct which could have
the effect of causing the termination or suspension of any license or permit which the Company
holds, conviction of any felony, or excessive absenteeism not related to disability. In addition,
“cause” shall include the Employee’s failure, as reasonably determined by the President, to
adequately perform his job responsibilities or to meet the performance goals and objectives
established for him by the Company. Should the Employee’s employment be terminated by the Company
for cause, the Company’s only obligation shall be to pay the Employee his base salary through the
date of termination. Nothing contained in this Section 8 shall in any way waive, restrict or
prejudice the Company’s rights and remedies in equity and at law against the Employee with respect
to the matter for which the Employee’s employment under this Agreement is terminated for cause.

     10. Confidentiality.

          10.1 During the course of his employment with the Company, the Employee has had and will have
access to and will gain knowledge with respect to all aspects of the business of the Company,
including financial information; business and marketing practices and procedures; information
concerning employees, customers, suppliers; and other valuable and proprietary information relating
to the business of Company (“Confidential Information”). The parties agree that certain covenants
by the Employee are essential to the growth and stability

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of the business of the Company. Among these covenants are the Employee’s promises not to make
unauthorized disclosures of the Confidential Information nor to use the Confidential Information
regardless of whether the Employee’s employment with the Company has terminated. Accordingly,
Employee agrees that, except as required by his duties under this Agreement, he shall not use nor
disclose to anyone at anytime during or after the Term any Confidential Information obtained by him
in the course of his employment with the Company. The Employee agrees to enter into any further
agreement regarding confidentiality that the Company may request. The Employee shall use his best
efforts to prevent the removal of any Confidential Information from the premises of the Company,
except as required in his normal course of employment by the Company. The Employee shall use his
best efforts to cause all persons or entities to whom any Confidential Information shall be
disclosed by him hereunder to observe the terms and conditions set forth herein as though each such
person or entity was bound hereby.

          10.2 Employee agrees to hold as the Company’s property all memoranda, books, papers, letters,
customer lists, processes, computer software, records, financial information, policy and procedure
manuals, training and recruiting procedures and other data, and all copies thereof and therefrom in
any way relating to the Company’s business and affairs, whether made by him or otherwise coming
into his possession, and on termination of his employment, or on demand of the Company at any time,
to deliver the same to the Company.

     11. Non-Competition; Non-Solicitation.

          11.1 During the Term of this Agreement and for a period continuing for one (1) year after the
date of its termination, the Employee agrees that he shall not directly or indirectly, for his own
account or as agent, employee, officer, director, trustee, consultant or shareholder of any
corporation or other entity [except for a two percent (2%) interest or less in any publicly traded
corporation or other entity] engage or attempt to engage anywhere in North America in any business
activity which is the same as, substantially similar to or directly competitive with the business
of the Company, or any subsidiary of the Company, as now or in the future conducted by the Company.

          11.2 During the Term of this Agreement and for a period continuing for one (1) year after the
date of its termination, the Employee agrees that he shall not, directly or indirectly, for his own
account or as agent, employee, officer, director, trustee, consultant or shareholder of any
corporation or other entity [except for a two percent (2%) interest or less in any publicly traded
corporation or other entity] (i) employ or solicit the employment of any employee of the Company,
any employee of a subsidiary of the Company, or any former employee of the Company whose employment
with the Company terminated within the preceding six (6) months or (ii) induce or attempt to induce
any employee of the Company, or any employee of a subsidiary of the Company, to terminate his or
her employment with the Company or any subsidiary of the Company.

          11.3 The Employee acknowledges and agrees that the foregoing territorial and time limitations
and restrictive covenants are reasonable and properly required for the adequate protection of the
business and affairs of the Company. In the event any such territorial or time limitation is found
to be unreasonable by a court of competent jurisdiction, the Employee

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agrees and submits to the reduction of either said territorial or time limitation (or both) to such
an area or period as the court may determine to be reasonable.

     12. Rights to Discoveries. The Employee agrees that all ideas, inventions, trademarks
and other techniques, procedures, developments or improvements conceived, developed or acquired by
the Employee, whether or not during working hours, at the premises of the Company or elsewhere,
alone or with others, that are within the scope of the Company’s business operations or that relate
to any work or projects of the Company shall be the sole and exclusive property of the Company.
The Employee agrees to disclose promptly and fully to the Company all such ideas, inventions,
trademarks or other techniques, procedures, developments or improvements and, at the request of the
Company, the Employee shall submit to the Company a full written report thereof regardless of
whether the request for a written report is made after the termination of this Agreement. The
Employee agrees that during the Term and thereafter, upon the request of the Company and at its
expense, he shall execute and deliver any and all applications, assignments and other instruments
which the Company shall deem necessary or advisable to transfer to and vest in the Company the
Employee’s entire right, title and interest in and to all such ideas, inventions, trademarks or
other techniques, procedures, developments or improvements and shall assist the Company in applying
for and obtaining patent, trademark or copyright protection for any such protectible ideas,
inventions, trademarks and other techniques, procedures, developments and improvements.

     13. Notices. All notices and other communications given pursuant to this Agreement
shall be deemed to have been properly given or delivered if mailed, by certified mail, postage
prepaid, addressed to the appropriate party, at the address for such party set forth at the
beginning of this Agreement. Any party may from time to time designate by written notice given
pursuant to this Section 13 any other address or party to which any such notice or communication or
copies thereof shall be sent.

     14. Equitable Relief. The Employee acknowledges that the Company will suffer damages
incapable of ascertainment in the event that any of the provisions of Section 10, 11 or 12 hereof
are breached and that the Company will be irreparably damaged in the event that the provisions of
Section 10, 11 or 12 are not enforced. Therefore, should any dispute arise with respect to the
breach or threatened breach of any such Sections, the Employee agrees and consents that in addition
to any and all other remedies available to the Company an injunction or restraining order or other
equitable relief may be issued or ordered by a court of competent jurisdiction restraining any
breach or threatened breach of such Sections. The Employee agrees not to urge in any such action
that an adequate remedy exists at law. All expenses, including, without limitation, attorney’s
fees and expenses incurred in connection with any legal proceeding arising as a result of a breach
or threatened breach of Section 10, 11 or 12 of this Agreement shall be borne by the losing party
to the fullest extent permitted by law and the losing party hereby agrees to indemnify and hold the
other party harmless from and against all such expenses.

     15. Arbitration of Disputes. Except for an alleged violation of Section 10, 11
or 12 of this Agreement, the Employee and the Company waive any right to a court (including
jury) proceeding and instead agree to submit any dispute over the Employee’s employment with
the Company or the application, interpretation, validity or any other aspect of this
Agreement to final and binding arbitration consistent with the Company’s

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alternative dispute resolution program or, if none, then consistent with the application
of the Federal Arbitration Act and the rules for arbitration of employment disputes of the
American Arbitration Association (“AAA”) before a single arbitrator. Only true neutrals will
be eligible for consideration as arbitrators and under no circumstances will AAA furnish the
names of individuals who represent employees, unions or companies.

     16. Successors. The Company will require any successor to all or substantially all of
the business and/or assets of the Company (whether direct or indirect by purchase, merger,
consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if no such succession
had taken place. As used in this Agreement, the “Company” shall mean both Rent-Way, Inc. and any
successor to its business and/or assets (by merger, purchase or otherwise).

     17. Miscellaneous. This Agreement shall be governed by the internal domestic laws of
the Commonwealth of Pennsylvania without reference to conflict of laws principles. The Employee
consents to jurisdiction in Pennsylvania and venue in Erie County for purposes of all claims
arising under this Agreement. All headings and subheadings are for convenience only and are not of
substantive effect. This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements, negotiations,
understandings and writings (or any part thereof) whether oral or written between the parties
hereto relating to the subject matter hereof, all of which are hereby terminated and canceled.
There are no oral agreements in connection with this Agreement. Neither this Agreement nor any
provision of this Agreement may be waived, modified or amended orally or by any course of conduct
but only by an agreement in writing duly executed by both of the parties hereto. If any section,
portion, subsection or subportion of this Agreement shall be determined to be unenforceable or
invalid, then such section, portion, subsection or subportion shall be modified in the letter and
spirit of this Agreement to the extent permitted by applicable law so as to be rendered valid and
any such determination shall not affect the remainder of this Agreement, which shall be and remain
binding and effective as against the parties hereto.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to be effective as of
the date first above written.

	 	 	 	 	 
	 	 	COMPANY:

	EMPLOYEE:	 	RENT-WAY, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	John
A.
Lombardi                                  Date

	 	 	 	William S. Short, President                     Date

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APPENDIX A

     A “Change in Control of the Company” shall be deemed to have occurred if, as the result of a
single transaction or a series of transactions, the event set forth in either of the following
paragraphs shall have occurred:

     (1) there is consummated a merger or consolidation of the Company with any other corporation
or entity, other than a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately after such merger or
consolidation as appropriate; or

     (2) the stockholders of the Company approve a plan of liquidation or dissolution of the
Company or an agreement for the sale or disposition by the Company of all or substantially all of
the Company’s assets, other than a sale or disposition by the Company of all or substantially all
of the Company’s assets to an entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale.

7<PAGE>
                                                                   EXHIBIT 10.19

                          SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this "AGREEMENT") is dated as of
December 27, 2005, among INPLAY TECHNOLOGIES, INC., a Nevada corporation (the
"COMPANY"), and the investors identified on the signature pages hereto (each, an
"INVESTOR" and collectively, the "INVESTORS").

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

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

                                   ARTICLE I.
                                   DEFINITIONS

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

          "ACTION" means any action, suit, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the Company,
any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or
trading facility.

          "AFFILIATE" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 (as
defined below).

          "BUSINESS DAY" means any day except Saturday, Sunday and any day which
is a federal legal holiday or a day on which banking institutions in the State
of New York are authorized or required by law or other governmental action to
close.

          "CLOSING" has the meaning set forth in Section 2.1.

          "CLOSING DATE" means the Business Day immediately following the date
on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are
satisfied, or such other date as the parties may agree.

<PAGE>

          "COMMISSION" means the Securities and Exchange Commission.

          "COMMON STOCK" means the common stock of the Company, $0.001 par value
per share, and any securities into which such common stock may hereafter be
reclassified.

          "COMMON STOCK EQUIVALENTS" means any securities of the Company or any
Subsidiary which entitle the holder thereof to acquire Common Stock at any time,
including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.

          "COMPANY COUNSEL" means the law firm of Greenberg Traurig L.L.P.

          "COMPANY DELIVERABLES" has the meaning set forth in Section 2.1(a).

          "EFFECTIVE DATE" means the date that the Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.

          "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

          "GAAP" means U.S. generally accepted accounting principles.

          "INVESTOR DELIVERABLES" has the meaning set forth in Section 2.1(b).

          "INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in Section
3.1(p).

          "INVESTMENT AMOUNT" means, with respect to each Investor, the
Investment Amount indicated on such Investor's signature page to this Agreement.

          "INVESTOR PARTY" has the meaning set forth in Section 4.7.

          "LIEN" means any lien, charge, encumbrance, security interest, right
of first refusal or other restrictions of any kind.

          "MATERIAL ADVERSE EFFECT" means, as applicable, any of (i) a material
and adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material and adverse effect on the results of
operations, assets, prospects, business or condition (financial or other) of the
Company and the Subsidiaries, taken as a whole, or (iii) an adverse impairment
to the Company's ability to perform on a timely basis its obligations under any
Transaction Document.

          "PER SHARE PURCHASE PRICE" equals $2.75.

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<PAGE>

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

          "PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

          "RCP" means Roth Capital Partners, LLC.

          "REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Investors of the appropriate Registrable Securities as identified
in Section 2(a) of the Registration Rights Agreement.

          "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and the
Investors, in the form of Exhibit A hereto.

          "RELATED JUDGMENT" has the meaning set forth in Section 6.9.

          "RELATED PROCEEDINGS" has the meaning set forth in Section 6.9.

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

          "SEC REPORTS" has the meaning set forth in Section 3.1(h).

          "SECURITIES ACT" means the Securities Act of 1933, as amended.

          "SHARES" means the shares of Common Stock issuable to the Investors at
the Closing in accordance with Section 2.1.

          "SHORT SALES" include, without limitation, all "short sales" as
defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and
all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps and similar arrangements (including on a total
return basis), and sales and other transactions through non-US broker dealers or
foreign regulated brokers.

          "SPECIFIED COURTS" has the meaning set forth in Section 6.9.

          "SUBSIDIARY" means any "significant subsidiary" as defined in Rule
1-02(w) of the Regulation S-X promulgated by the Commission under the Exchange
Act.

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<PAGE>

          "TRADING DAY" means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not quoted on any Trading Market,
a day on which the Common Stock is quoted in the over-the-counter market as
reported by the Pink Sheets, LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i) and (ii)
hereof, then Trading Day shall mean a Business Day.

          "TRADING MARKET" means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.

          "TRANSACTION DOCUMENTS" means this Agreement, the Registration Rights
Agreement, and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

          "WARRANTS" means the warrants to purchase the Common Stock in the form
of Exhibit B hereto.

          "WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

     2.1 Closing; Closing Deliveries. On the date hereof, subject to the terms
and conditions set forth in this Agreement, including the applicable Conditions
Precedent to Closing set forth in Article V, the Company shall issue and sell to
each Investor, and each Investor shall, severally and not jointly, purchase from
the Company, a number of Shares and a Warrant for an amount equal to such
Investor's Investment Amount, all such number of Shares, number of Warrant
Shares underlying such Warrant and such Investment Amount as set forth on each
such Investor's signature page attached hereto. The closing of the transactions
contemplated hereby (the "CLOSING") shall take place at the offices of Company
Counsel on the Closing Date or at such other location or time as the parties may
agree. In accordance with the foregoing, at the Closing:

          (a) the Company shall deliver or cause to be delivered to each
Investor the following (the "COMPANY DELIVERABLES"):

               (i) duly and validly executed copies of each of the Transaction
     Documents;

               (ii) a certificate evidencing a number of Shares equal to such
     Investor's Investment Amount divided by the Per Share Purchase Price,
     registered in the name of such Investor;

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<PAGE>

               (iii) a certificate representing a Warrant to purchase such
     number of Warrant Shares as is set forth on the signature page hereto for
     such Investor in the name of such Investor; and

               (iv) the legal opinion of Company Counsel, in the form attached
     hereto as Exhibit C, addressed to RCP and the Investors.

          (b) each Investor shall deliver or cause to be delivered to the
Company the following (the "INVESTOR DELIVERABLES"):

               (i) duly and validly executed copies of each of the Transaction
     Documents;

               (ii) an aggregate amount in cash equal to the number of Shares
     being acquired by such Investor hereunder multiplied by the Per Share
     Purchase Price for such Shares, by wire transfer of immediately available
     funds to an account designated in writing by the Company.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. The Company hereby makes
the following representations and warranties to each Investor as of the date
hereof and as of the Closing Date:

          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than as specified in the SEC Reports. The Company owns, directly or
indirectly, all of the capital stock of each Subsidiary free and clear of any
and all Liens, and all the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights.

          (b) Organization and Qualification. The Company and each Subsidiary
are duly incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted and described in the SEC Reports. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents except where the violation would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect. The Company and each Subsidiary are duly qualified to conduct its
respective businesses and are in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

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<PAGE>

          (c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further action is required by the Company in
connection therewith. Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.

          (d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.

          (e) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) the filing with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement, (ii) filings required by state securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the Commission under Regulation D of
the Securities Act, (iv) the filings required in accordance with Section 4.5 and
(v) those that have been made or obtained prior to the date of this Agreement.

          (f) Issuance of the Shares and the Warrants. The Shares, the Warrants
and the Warrant Shares issuable under Section 2.1 have been duly authorized for
issuance and sale.

                                        6

<PAGE>

The Shares, when issued and paid for in accordance with the Transaction
Documents, and the Warrant Shares, when issued against full payment of the
exercise price as provided in the Warrants, will be duly and validly issued,
fully paid and nonassessable, and free and clear of all Liens. The Company has
reserved from its duly authorized capital stock the shares of Common Stock
issuable pursuant to this Agreement in order to issue the Shares and the Warrant
Shares.

          (g) Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock of the Company, and all shares of Common
Stock reserved for issuance under the Company's various option and incentive
plans, is specified in the SEC Reports. Except as specified in the SEC Reports,
no Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as specified in the SEC
Reports, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
Except as specified in the SEC Reports, the issue and sale of the Shares and
Warrants, or the issuance of the Warrant Shares upon exercise of the Warrants,
will not, immediately or with the passage of time, obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Investors) and will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under such securities.

          (h) SEC Reports. The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the 12 months preceding the date hereof (the
foregoing reports and all amendments thereto being collectively referred to
herein as the "SEC Reports") on a timely basis or has timely filed a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied as to form in all material respects with (i) the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder and (ii) any SEC comments received or
otherwise conveyed to the Company with respect to any previously filed SEC
Reports. In addition, none of the SEC Reports, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the
results of operations and

                                        7

<PAGE>

cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

          (i) Press Releases. The press releases disseminated by the Company
during the 12 months preceding the date of this Agreement taken as a whole do
not contain any untrue statement of a material fact regarding the Company or its
business, financial condition or results of operations or omit to state a
material fact regarding the Company or its business, financial condition or
results of operations required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made and when made, not misleading.

          (j) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that would reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables, accrued expenses and other liabilities incurred
in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its shareholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.

          (k) Litigation. There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Shares, the Warrants or the Warrant Shares, or (ii) except as
specifically disclosed in the SEC Reports, would, if there were an unfavorable
decision with respect thereto, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof (in his or her
capacity as such), is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty, except as specifically disclosed in the SEC Reports.
There has not been, and to the knowledge of the Company, there is not pending
any investigation by the Commission involving the Company or any current or
former director or officer of the Company (in his or her capacity as such). The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

          (l) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.

          (m) Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation, in any material respect, of (and no event has
occurred that has not been

                                        8

<PAGE>

waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation, in any material respect, of any indenture, loan or credit agreement
or any other agreement or instrument to which it is a party or by which it or
any of its properties is bound (whether or not such default or violation has
been waived), (ii) is or has been in violation, in any material respect, of any
order of any court, arbitrator or governmental body applicable to the Company or
such Subsidiary, as appropriate, or (iii) is in violation, in any material
respect, of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters applicable to the Company or
such Subsidiary, as appropriate. The Company is in compliance, in all material
respects, with all effective requirements of the Sarbanes-Oxley Act of 2002, as
amended, and the rules and regulations thereunder, that are applicable to it.

          (n) Regulatory Permits. Except as disclosed in the SEC Reports, the
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or material modification of
any such permits.

          (o) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance, except as
would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.

          (p) Patents and Trademarks. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person.
Except as set forth in the Sec Reports, to the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.

                                        9

<PAGE>

          (q) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. The Company has no reason to believe
that it will not be able to renew its and the Subsidiaries' existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business on terms
consistent with market for the Company's and such Subsidiaries' respective lines
of business.

          (r) Transactions With Affiliates and Employees. Except as set forth in
the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, that is required to be disclosed in the SEC Reports.

          (s) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for
the Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the Chief Executive Officer and Chief Financial Officer by others
within those entities, particularly during the period in which the Company's
Form 10-KSB or 10-QSB, as the case may be, is being prepared. The Company's
Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of the Company's controls and procedures in accordance with Item
307 of Regulation S-K under the Exchange Act for the Company's most recently
ended fiscal quarter or fiscal year-end (such date, the "EVALUATION DATE"). The
Company presented in its most recently filed Form 10-KSB or Form 10-QSB the
conclusions of the Chief Executive Officer and Chief Financial Officer about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's internal control over financial
reporting (as such term is defined in Item 308(c) of Regulation S-K under the
Exchange Act) or, to the Company's knowledge, in other factors that could
significantly affect the Company's internal control over financial reporting.

                                       10

<PAGE>

          (t) Solvency. Based on the financial condition of the Company as of
the Closing Date (and assuming that the Closing shall have occurred), (i) the
Company's fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company's assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof, and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).

          (u) Certain Fees. Except as disclosed in the SEC Reports, no brokerage
or finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
this Agreement. The Investors shall have no obligation with respect to any fees
or with respect to any claims (other than such fees or commissions owed by an
Investor pursuant to written agreements executed by such Investor which fees or
commissions shall be the sole responsibility of such Investor) made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement.

          (v) Certain Registration Matters. Assuming the accuracy of the
Investors' representations and warranties set forth in Sections 3.2(b)-(e), no
registration under the Securities Act is required for the offer and sale of the
Shares, the Warrants or the Warrant Shares by the Company to the Investors under
the Transaction Documents. Except as disclosed in the SEC Reports, the Company
has not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority that have not
been satisfied.

          (w) Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(g) of the Exchange Act. Except as specified in
the SEC Reports, the Company has not, in the one year preceding the date hereof,
received notice from any Trading Market to the effect that the Company is not in
compliance with the listing or maintenance requirements thereof. The Company is,
and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with the listing and maintenance requirements for continued
listing of the Common Stock on the Trading Market on which the Common Stock is
currently listed or quoted. The issuance and sale of the Shares and the Warrants
under the Transaction Documents, and the issuance of the Warrant Shares upon
exercise of the Warrants, does not contravene the rules and regulations of the
Trading Market on which the Common Stock is currently listed or quoted, and no
approval of the shareholders of the Company

                                       11

<PAGE>

thereunder is required for the Company to issue and deliver to the Investors the
Shares or the Warrants contemplated by Transaction Documents, or to issue the
Warrant Shares upon exercise of the Warrants.

          (x) Investment Company. The Company is not, and is not an Affiliate
of, and immediately following the Closing will not have become, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

          (y) Application of Takeover Protections. The Company has taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Investors as a
result of the Investors and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation the Company's issuance of the Shares and the Warrants, and the
issuance of the Warrant Shares upon exercise of the Warrants, and the Investors'
ownership of the Shares and the Warrants.

          (z) No Additional Agreements. The Company does not have any agreement
or understanding with any Investor with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.

          (aa) Disclosure. The Company confirms that neither it nor any Person
acting on its behalf has provided any Investor or its respective agents or
counsel with any information that the Company believes constitutes material,
non-public information except insofar as the existence and terms of the proposed
transactions hereunder may constitute such information. The Company understands
and confirms that the Investors will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Investors regarding the Company, its business and the
transactions contemplated hereby, furnished by or on behalf of the Company
(including the Company's representations and warranties set forth in this
Agreement) are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

          (bb) Tax Status. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

          (cc) No General Solicitation. Neither the Company nor any person
acting on behalf of the Company has offered or sold any of the Shares or the
Warrants by any form of general solicitation or general advertising. The Company
has offered the Shares and the

                                       12

<PAGE>

Warrants for sale only to the Investors and certain other "accredited investors"
within the meaning of Rule 501 under the Securities Act.

          (dd) Foreign Corrupt Practices. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

          (ee) Accountants. The Company's auditors are Deloitte & Touche LLP.
Such auditors, who have certified the consolidated financial statements included
in the SEC Reports are independent public accountants with respect to the
Company within the meaning of the Securities Act and the applicable rules and
regulations thereunder and constitute a registered public accounting firm within
the meaning of Section 102 of the Sarbanes-Oxley Act of 2002.

          (ff) Investors' Purchase of Securities. The Company acknowledges and
agrees that each of the Investors is acting solely in the capacity of an arm's
length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby. The Company further acknowledges that no Investor is acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
advice given by any Investor or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to the Investors' purchase of the Shares and the
Warrants. The Company further represents to each Investor that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its
representatives.

          (gg) Manipulation of Price. The Company has not, and to its knowledge
no one acting on its behalf has, in violation of applicable law, (i) taken,
directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Shares, the Warrants or the Warrant
Shares, or (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Shares or the Warrants (other than for the
placement agent's placement of the Shares and the Warrants).

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

          (a) Organization; Authority. Such Investor is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with

                                       13

<PAGE>

the requisite corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the applicable Transaction Documents
and otherwise to carry out its obligations thereunder. The execution, delivery
and performance by such Investor of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate or, if such
Investor is not a corporation, such partnership, limited liability company or
other applicable like action, on the part of such Investor. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Investor, and when delivered by such Investor in accordance with terms hereof,
will constitute the valid and legally binding obligation of such Investor,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.

          (b) Investment Intent. Such Investor is acquiring the Shares and the
Warrants, and, upon exercise of the Warrants, the Warrant Shares, as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Shares or Warrants, or any part thereof, without
prejudice, however, to such Investor's right at all times to sell or otherwise
dispose of all or any part of such Shares or Warrants, or the Warrant Shares
issuable upon exercise of the Warrants, in compliance with applicable federal
and state securities laws. Subject to the immediately preceding sentence,
nothing contained herein shall be deemed a representation or warranty by such
Investor to hold the Shares or the Warrants, or the Warrant Shares issuable upon
exercise of the Warrants, for any period of time. Such Investor is acquiring the
Shares and the Warrants, and, upon exercise of the Warrant, the Warrant Shares,
hereunder in the ordinary course of its business. Such Investor does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Shares or the Warrants, or the Warrant Shares issuable
upon exercise of the Warrants.

          (c) Investor Status. At the time such Investor was offered the Shares
and the Warrants, it was, and at the date hereof it is, (i) knowledgeable,
sophisticated and experienced in making, and qualified to make, decisions with
respect to investments in securities representing an investment decision similar
to that involved in the purchase of the Shares and the Warrants, including
investments in securities issued by the Company and comparable entities, and has
had the opportunity to request, receive, review and consider all information it
deemed relevant in making an informed decision to purchase the Shares and the
Warrants; and (ii) an "accredited investor" as defined in Rule 501(a) under the
Securities Act. Such Investor is not a registered broker-dealer under Section 15
of the Exchange Act.

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

                                       14

<PAGE>

          (e) Access to Information. Such Investor acknowledges that it has
reviewed the SEC Reports and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Shares and the Warrants and the merits and risks of investing in
the Shares and the Warrants; (ii) access to information about the Company and
the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Investor or its representatives
or counsel shall modify, amend or affect such Investor's right to rely on the
truth, accuracy and completeness of the SEC Reports and the Company's
representations and warranties contained in the Transaction Documents.

          (f) Certain Trading Activities. Such Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Investor, engaged in any transactions in the securities
of the Company (including, without limitations, any Short Sales involving the
Company's securities) since the earlier to occur of (i) the time that such
Investor was first contacted by the Company or RCP regarding an investment in
the Company and (ii) the 30th day prior to the date of this Agreement. Such
Investor covenants that neither it nor any Person acting on its behalf or
pursuant to any understanding with it will engage in any transactions in the
securities of the Company (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed. Neither such
Investor (including its Affiliates), nor any Person acting on behalf of or
pursuant to any understanding with such Investor, holds a short position,
directly or indirectly, in any shares of the Company's common stock.

          (g) Reliance on Investor Representations. Such Investor understands
that the Shares and the Warrants are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of the Securities
Act and the rules and regulations promulgated thereunder, and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgements and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Shares and the Warrants. Under such laws and rules and
regulations the Shares and the Warrants, and the Warrant shares issuable upon
exercise of the Warrants, may be resold without registration under the
Securities Act only in certain limited circumstances. The Investor represents
that it is familiar with Rule 144 under the Securities Act, as presently in
effect, and understands the resale limitations.

          (h) Risks of Investment. Such Investor understands that its investment
in the Shares and the Warrants, and the Warrant Shares issuable upon exercise of
the Warrants, involves a significant degree of risk, including a risk of total
loss of the Investor's investment, and the Investor has full cognizance of and
understands all of the risk factors related to the

                                       15

<PAGE>

Investor's purchase of the Shares and the Warrants, including, but not limited
to, those set forth under the caption "Risk Factors" in the quarterly report on
Form 10-Q for the period ended September 30, 2005. The Investor understands that
the market price of the Common Stock has been volatile and that no
representation is being made as to the future value of the Common Stock. The
Investor has the knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the Shares
and the Warrants, and the Warrant Shares issuable upon exercise of the Warrants,
and has the ability to bear the economic risks of an investment in the Shares
and the Warrants, and the Warrant Shares issuable upon exercise of the Warrants.

          (i) No Approvals. Such Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Shares, the
Warrants or the Warrant Shares.

          (j) Location of Offices. Such Investors principal executive offices
are in the jurisdiction set forth immediately below the Investor's name on the
signature pages hereto.

          (k) Independent Investment Decision. Such Investor has independently
evaluated the merits of its decision to purchase Shares and Warrants pursuant to
the Transaction Documents, and such Investor confirms that it has not relied on
the advice of any other Investor's business and/or legal counsel in making such
decision. Such Investor has not relied on the business or legal advice of RCP or
any of its agents, counsel or Affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations
or warranties to such Investor in connection with the transactions contemplated
by the Transaction Documents.

The Company acknowledges and agrees that no Investor has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1 (a) The Shares, the Warrants and the Warrant Shares may only be
disposed of in compliance with state and federal securities laws. In connection
with any transfer of the Shares, the Warrants or the Warrant Shares other than
pursuant to an effective registration statement, to the Company, to an Affiliate
of an Investor or in connection with a pledge as contemplated in Section 4.1(b),
the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Shares, Warrants or
Warrant Shares under the Securities Act.

          (b) Certificates evidencing the Shares, the Warrants and the Warrant
Shares will contain the following legend, until such time as they are not
required under Section 4.1(c):

                                       16

<PAGE>

          THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
          EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
          RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
          OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
          BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
          STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
          EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
          REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
          STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
          THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
          REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED
          IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH
          SECURITIES.

          The Company acknowledges and agrees that an Investor may from time to
time pledge, and/or grant a security interest in some or all of the Shares, the
Warrants or the Warrant Shares pursuant to a bona fide margin agreement in
connection with a bona fide margin account and, if required under the terms of
such agreement or account, such Investor may transfer pledged or secured Shares,
Warrants or Warrant Shares to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval or consent of the Company and no legal
opinion of legal counsel to the pledgee, secured party or pledgor shall be
required in connection with the pledge, but such legal opinion may be required
in connection with a subsequent transfer following default by the Investor
transferee of the pledge. No notice shall be required of such pledge. At the
appropriate Investor's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares, Warrants or
Warrant Shares may reasonably request in connection with a pledge or transfer of
the Shares, the Warrants or the Warrant Shares including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.

          (c) Upon an Investor's written request, certificates evidencing the
Shares, the Warrants or the Warrant Shares containing any legend (including the
legend set forth in Section 4.1(b)): (i) while a registration statement
(including a Registration Statement) covering the resale of such security is
effective under the Securities Act, or (ii) following a sale or transfer of such
Shares, Warrants or Warrant Shares pursuant to Rule 144 (assuming the transferor
is not an Affiliate of the Company), or (iii) while such Shares, Warrants or
Warrant Shares are eligible for sale under Rule 144(k), shall be replaced with
certificates that do not bear such legends as hereafter set forth; provided,
however, in the case of clause (i) the request is accompanied by a written
certification by the Investor that (A) the Investor has a present intention to
dispose of the Shares, the Warrants or the Warrant Shares covered by such
Registration Statement pursuant to a plan of distribution included in a
currently available prospectus related thereto, and (B) the

                                       17

<PAGE>

Investor will comply with the prospectus delivery requirements applicable to
such disposition and, in the case of clause (ii) or (iii), the request is
accompanied by such reasonable and appropriate customary representations as may
be reasonably requested by the Company. The Company agrees that following the
Effective Date or at such time as such legend is no longer required under this
Section 4.1(c), it will, no later than seven (7) Trading Days following the
delivery by a Investor to the Company or the Company's transfer agent of a
certificate representing the Shares, the Warrants or the Warrant Shares issued
with a restrictive legend (such seventh Trading Day, the "Legend Removal Date"),
together with the written request of such Investor accompanied by the written
representation letter in customary form, deliver or cause to be delivered to
such Investor a certificate representing such shares that is free from all
restrictive and other legends. Certificates for the Shares, the Warrants or the
Warrant Shares subject to legend removal hereunder shall be transmitted by the
transfer agent of the Company to the Investors by crediting the account of the
Investor's prime broker with the Depository Trust Company System.

          (d) Each Investor, severally and not jointly with the other Investors,
agrees that the removal of the restrictive legend from certificates representing
the Shares, the Warrants or the Warrant Shares as set forth in this Section 4.1
is predicated upon the Company's reliance that the Investor will sell any Shares
or Warrants pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom.

     4.2 Furnishing of Information. As long as any Investor owns Shares,
Warrants or Warrant Shares, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. As long as any Investor owns Shares, Warrants or Warrant
Shares, if the Company is not required to file reports pursuant to such laws, it
will prepare and furnish to the Investors and make publicly available in
accordance with Rule 144(c) such information as is required for the Investors to
sell the Shares, the Warrants or the Warrant Shares under Rule 144. The Company
further covenants that it will take such further action as any holder of the
Shares, the Warrants or the Warrant Shares may reasonably request, all to the
extent required from time to time to enable such Person to sell the Shares, the
Warrants or the Warrant Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.

     4.3 Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Shares and the Warrants in a manner that would require the registration
under the Securities Act of the sale of the Shares and the Warrants to the
Investors, or that would be integrated with the offer or sale of the Shares and
the Warrants for purposes of the rules and regulations of any Trading Market in
a manner that would require shareholder approval of the sale of the Shares and
the Warrants to the Investors.

                                       18

<PAGE>

     4.4 Subsequent Registrations. Other than the Registration Statements under
the Registration Rights Agreement, prior to the Effective Date of the
Registration Statements that cover the Registrable Securities, the Company may
not file any registration statement (other than on Form S-8) with the Commission
with respect to any securities of the Company.

     4.5 Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York time) on
the Trading Day following the execution of this Agreement, and by 9:00 a.m. (New
York time) on the Trading Day following the Closing Date, the Company shall
issue press releases disclosing the transactions contemplated hereby and the
Closing. On the Trading Day following the execution of this Agreement the
Company will file a Current Report on Form 8-K disclosing the material terms of
the Transaction Documents (and attach as exhibits thereto the Transaction
Documents), and on the Trading Day following the Closing Date the Company will
file additional Current Reports on Form 8-K to disclose the occurrence of the
Closing. In addition, the Company will make such other filings and notices in
the manner and time required by the Commission and the Trading Market on which
the Common Stock is listed. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Investor, or include the name of any Investor
in any filing with the Commission (other than the Registration Statement and any
exhibits to filings made in respect of this transaction in accordance with
periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market, without the prior written consent of such Investor, except to
the extent such disclosure is required by law or Trading Market regulations.

     4.6 Limitation on Issuance of Future Priced Securities. During the six
months following the Closing Date, the Company shall not issue any "Future
Priced Securities" as such term is described by NASD IM-4350-1.

     4.7 Indemnification of Investors. In addition to the indemnity provided in
the Registration Rights Agreement, the Company will indemnify and hold the
Investors and their directors, officers, shareholders, partners, employees and
agents (each, an "INVESTOR PARTY") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation (collectively, "LOSSES") that any
such Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.

     4.8 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Investor or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Investor shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Investor shall be

                                       19

<PAGE>

reasonably relying on the foregoing representations in effecting transactions in
securities of the Company.

     4.9 Listing of Shares. The Company agrees, (i) if the Company applies to
have the Common Stock traded on any other Trading Market, it will include in
such application the Shares and the Warrant Shares, and will take such other
action as is necessary or desirable to cause the Shares to be listed on such
other Trading Market as promptly as possible, and (ii) it will take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the Trading
Market.

     4.10 Use of Proceeds. The Company will use the net proceeds from the sale
of the Shares for working capital and general corporate purposes.

                                   ARTICLE V.
                        CONDITIONS PRECEDENT TO CLOSINGS

     5.1 Conditions Precedent to the Obligations of the Investors to Purchase
Shares and Warrants at the Closing. The obligation of each Investor to acquire
Shares at the Closing is subject to the satisfaction or waiver by such Investor,
at or before the Closing, of each of the following conditions:

          (a) Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing as though made on and as
of such date;

          (b) Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing;

          (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;

          (d) Adverse Changes. Since the date of execution of this Agreement, no
event or series of events shall have occurred that has resulted in or reasonably
would be expected to result in a Material Adverse Effect (the parties agreeing
that a decrease in stock price alone shall not be deemed such an event);

          (e) No Suspensions of Trading in Common Stock; Listing. Trading in the
Common Stock shall not have been suspended by the Commission or any Trading
Market (except for any suspensions of trading of not more than one Trading Day
solely to permit dissemination of material information regarding the Company) at
any time since the date of

                                       20

<PAGE>

execution of this Agreement, and the Common Stock shall have been at all times
since such date listed for trading on a Trading Market;

          (f) Officer's Certificate. The Company shall have delivered to the
Investors a certificate executed by a duly authorized officer of the Company
certifying that (i) the representations and warranties of the Company contained
herein are true and correct in all material respects as of the date when made
and as of the Closing as though made on and as of such date, (ii) the Company
has performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing and (iii)
the items referenced in Sections 5.1(c)-(e) have been satisfied;

          (g) Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.1;

     5.2 Conditions Precedent to the Obligations of the Company to Sell Shares
and Warrants at the Closing. The obligation of the Company to sell Shares at the
Closing is subject to the satisfaction or waiver by the Company, at or before
the Closing, of each of the following conditions:

          (a) Representations and Warranties. The representations and warranties
of each Investor contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made on
and as of such date;

          (b) Performance. Each Investor shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by such Investor at or prior to the Closing;

          (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents; and

          (d) Investor Deliverables. The Company shall have received the
Investor Deliverables in accordance with Section 2.1.

                                   ARTICLE VI.
                                  MISCELLANEOUS

     6.1 Fees and Expenses. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of the Transaction Documents. The Company shall pay all
stamp and other taxes and duties levied in connection with the sale of the
Shares.

                                       21

<PAGE>

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

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

     If to the Company: InPlay Technologies, Inc.
                        234 South Extension Road
                        Mesa, Arizona 85210
                        Attn: Chief Executive Officer
                        Facsimile: (480) 844-9625

     With a copy to:    Greenberg Traurig LLP
                        2375 East Camelback Road, Suite 700
                        Phoenix, Arizona 85016
                        Attn: Quinn Williams, Esq.
                        Facsimile: (602) 445-8100

     If to an Investor: To the address set forth under such Investor's name on
                        the signature pages hereof;

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

     6.4 Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived or amended except in a written instrument signed by the
Company and the Investors holding a majority of the Shares. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right

                                       22

<PAGE>

hereunder in any manner impair the exercise of any such right. No consideration
shall be offered or paid to any Investor to amend or consent to a waiver or
modification of any provision of any Transaction Document unless the same
consideration is also offered to all Investors who then hold Shares.

     6.5 [Intentionally Omitted].

     6.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

     6.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors. Any Investor may assign any
or all of its rights under this Agreement to any Person to whom such Investor
assigns or transfers any Shares, provided such transferee agrees in writing to
be bound, with respect to the transferred Shares, by the provisions hereof that
apply to the "Investors."

     6.8 Third-Party Beneficiaries. Except as set forth below, this Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, except as otherwise set forth in
Section 4.7 (as to each Investor Party). RCP is a third party beneficiary of the
Company's and each Investor's representations, warranties, covenants and
agreements hereunder and shall be entitled to the benefits thereof, and to
enforce the provisions hereof, to the same extent as if it were a party hereto.

     6.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Arizona, without regard to the principles of conflicts of law thereof. Any legal
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby ("RELATED PROCEEDINGS") may be instituted in
the federal courts of the United States of America located in Maricopa County,
Arizona, or the courts of the State of Arizona in each case located in Maricopa
County (collectively, the "SPECIFIED COURTS"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "RELATED
JUDGMENT"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth on the signature pages hereto
shall be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and

                                       23

<PAGE>

unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum.

     6.10 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery of the Shares.

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

     6.12 Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

     6.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Investor exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform
its related obligations within the periods therein provided, then such Investor
may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.

     6.14 Replacement of Shares, Warrants or Warrant Shares. If any certificate
or instrument evidencing any Shares, Warrants or Warrant Shares is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested. The applicants
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement
certificates or instruments. If any such replacement certificate or instrument
is requested due to a mutilation thereof, the Company may require delivery of
such mutilated certificate or instrument as a condition precedent to any
issuance of a replacement.

     6.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that

                                       24

<PAGE>

monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.

     6.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Investor pursuant to any Transaction Document or an Investor
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

     6.17 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Shares pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.

     6.18 Limitation of Liability. Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of an Investor
arising directly or indirectly, under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other Affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities of
such Investor.

                                       25

<PAGE>

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

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]

                                       26

<PAGE>

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

                                        INPLAY TECHNOLOGIES, INC.

                                        By:
                                            ------------------------------------
                                        Name: Robert J. Brilon
                                        Title: President

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGES FOR INVESTORS FOLLOW]

                                       27

<PAGE>

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

                                        NAME OF INVESTOR

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

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        Investment Amount: $
                                                            --------------------
                                        Tax ID No.:
                                                    ----------------------------
                                        Number of Shares Purchased:
                                                                    ------------
                                        Number of Warrant Shares
                                        Underlying Warrant:
                                                            --------------------

                                        ADDRESS FOR NOTICE

                                        c/o:
                                             -----------------------------------
                                        Street:
                                                --------------------------------
                                        City/State/Zip:
                                                        ------------------------
                                        Attention:
                                                   -----------------------------
                                        Tel:
                                             -----------------------------------
                                        Fax:
                                             -----------------------------------

                                       28

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