Document:

exv10w1

 

Exhibit 10.1

ECHO THERAPEUTICS, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

          This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the 22nd day of
December, 2007 (the “Grant Date”), is between Echo Therapeutics, Inc., a Minnesota corporation (the
“Company”), and ___(the “Optionee”), an [employee] [director] of the Company.

          WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common
stock of the Company (“Common Stock”) as hereinafter provided;

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as
follows:

          1. Grant of Option. The Company hereby grants to the Optionee the right and option
(the “Option”) to purchase all or any part of an aggregate of ___shares of Common Stock.
The Option is in all respects limited and conditioned as hereinafter provided. It is intended that
the Option granted hereunder be a nonqualified stock option (“NQSO”) and not an incentive
stock option (“ISO”) as such term is defined in section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”).

          2. Exercise Price. The exercise price of the shares of Common Stock covered by this
Option shall be $1.39 per share. It is the determination of the Board of Directors of the Company
(the “Board”) that on the Grant Date the exercise price was not less than the greater of (i) 100%
of the “Fair Market Value,” or (ii) the par value of the Common Stock. The term “Fair Market
Value” for purposes of this Option Agreement means the average of the closing sale prices of a
share of Common Stock for the five (5) trading day-period immediately preceding the Grant Date.

          3. Term. Except as otherwise provided in Paragraph 8 or Paragraph 12, this Option
shall expire on December 22, 2017 (the “Expiration Date”), which date is not more than 10 years
from the Grant Date. This Option shall not be exercisable on or after the Expiration Date.

          4. Exercise of Option. The Optionee shall have the right to purchase from the
Company, on and after the following dates, the following number of Shares:

 

 

	 	 	 
	Date Installment Becomes	 	 
	Exercisable 	 	Number of Option Shares
	December 22, 2007

	 	                     Shares
	December 22, 2008

	 	                     Shares
	December 22, 2009

	 	                     Shares

Once options become exercisable, they will remain exercisable until they are exercised or until
they terminate.

          5. Method of Exercising Option. Subject to the terms and conditions of this Option
Agreement, the Option may be exercised by written notice to the Company at its principal office,
which is presently located at 10 Forge Parkway, Franklin, Massachusetts 02038, Attn: Chief
Executive Officer. Such notice (a suggested form of which is attached hereto) shall state the
election to exercise the Option and the number of whole shares with respect to which it is being
exercised; shall be signed by the person or persons so exercising the Option; shall, unless the
Company otherwise notifies the Optionee, be accompanied by the investment certificate referred to
in Paragraph 6; and shall be accompanied by payment of the full exercise price of such shares.
Only full shares will be issued.

          The exercise price shall be paid to the Company —

          (a) in cash, or by certified check, bank draft, or postal or express money order;

          (b) through the delivery of shares of Common Stock which shall be valued at the closing sale
price of the Common Stock on the date of exercise (“Exercise Fair Market Value”);

          (c) by having the Company withhold shares of Common Stock at the Exercise Fair Market Value on
the date of exercise;

          (d) by delivering a properly executed notice of exercise of the Option to the Company and a
broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount
of sale or loan proceeds necessary to pay the exercise price of the Option; or

          (e) in any combination of (a), (b), (c) or (d) above.

          In the event the exercise price is paid, in whole or in part, with shares of Common Stock, the
portion of the exercise price so paid shall be equal to the Exercise Fair Market Value of the
Common Stock surrendered.

          Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or
certificates representing the shares with respect to which the Option is so exercised. Such
certificate(s) shall be registered in the name of the person or persons so exercising the

 

 

Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the
notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s
spouse, jointly, with right of survivorship) and shall be delivered as provided above to, or upon
the written order of, the person or persons exercising the Option. In the event the Option is
exercised by any person or persons after the death or disability of the Optionee, the notice shall
be accompanied by appropriate proof of the right of such person or persons to exercise the Option.
All shares that are purchased upon the exercise of the Option as provided herein shall be fully
paid and non-assessable.

          6. Shares to be Purchased for Investment. Unless the Company has theretofore notified
the Optionee that a registration statement covering the shares to be acquired upon the exercise of
the Option has become effective under the Securities Act of 1933, as amended (the “1933 Act”), and
the Company has not thereafter notified the Optionee that such registration statement is no longer
effective, it shall be a condition to any exercise of this Option that the shares acquired upon
such exercise be acquired for investment and not with a view to distribution, and the person
effecting such exercise shall submit to the Company a certificate of such investment intent,
together with such other evidence supporting the same as the Company may request. The Company
shall be entitled to restrict the transferability of the shares issued upon any such exercise to
the extent necessary to avoid a risk of violation of the 1933 Act (or of any rules or regulations
promulgated thereunder), or of any state laws or regulations. Such restrictions may, in the
discretion of the Company, be noted or set forth in full on the share certificates.

          7. Transferability of Option. This Option is not assignable or transferable, in whole
or in part, by the Optionee other than by will or by the laws of descent and distribution. During
the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event
of his or her disability, by his or her guardian or legal representative.

          8. Termination of Service. If the Optionee’s service with the Company is terminated
for any reason prior to the Expiration Date, this Option may be exercised, to the extent of the
number of shares with respect to which the Optionee could have exercised it on the date of such
termination of service, or to any greater extent permitted by the Company, by the Optionee at any
time prior to the earlier of (i) the Expiration Date, or (ii) six months after the date of such
termination of service.

          9. Withholding of Taxes. The obligation of the Company to deliver shares of Common
Stock upon the exercise of this Option shall be subject to applicable federal, state and local tax
withholding requirements. If the exercise of the Option is subject to the withholding requirements
of applicable federal, state and/or local tax law, the Optionee, subject to such additional
withholding rules (the “Withholding Rules”) as shall be adopted by the Company, may satisfy the
withholding tax, in whole or in part, by electing to have the Company withhold (or by returning to
the Company) shares of Common Stock, which shares shall be valued, for this purpose, at their Fair
Market Value on the date the amount attributable to the exercise of the Option is includable in
income by the Optionee under section 83 of the Code. Such election must be made in compliance with
and subject to the Withholding Rules, and the Company may

 

 

limit the number of withheld shares to the extent necessary to avoid adverse accounting
consequences.

          10. Change in Control. Notwithstanding any other Paragraph of this Option Agreement,
each outstanding Option shall become fully vested and exercisable upon a “Change in Control” (as
defined below). However, this Paragraph shall not increase the extent to which an Option is vested
or exercisable if the Optionee’s termination of service occurs prior to the Change in Control.
“Change in Control” means the date on which occurs a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination or exchange of shares, spin-off,
split-up, or other similar change in capitalization or event in which the stockholders of the
Company immediately prior to the transaction own less than 50% of the Company’s outstanding shares
immediately after such transaction.

          11. Adjustment in Case of Changes in Common Stock. The maximum number of shares with
respect to which Options may be granted under this Agreement, and the number of shares issuable
upon the exercise of outstanding Options under this Agreement (Paragraph 4), as well as the option
price per share of such outstanding Options (Paragraph 2), shall be adjusted, as may be deemed
appropriate by the Company, to reflect any stock dividend, stock split, spin-off, share combination
or similar change in the capitalization of the Company. In the event any such change in
capitalization cannot be reflected in a straight mathematical adjustment of the number of shares
issuable upon the exercise of outstanding Options (and a straight mathematical adjustment of the
exercise price thereof), the Committee shall make such adjustments as are appropriate to reflect
most nearly such straight mathematical adjustment. Such adjustments shall be made only as
necessary to maintain the proportionate interest of Optionees, and preserve, without exceeding, the
value of Options.

          12. Certain Corporate Transactions. In the event of a corporate transaction (such as,
for example, a merger, consolidation, acquisition of property or stock, separation, reorganization
or liquidation), the surviving or successor corporation shall assume each outstanding Option or
substitute a new option for each outstanding Option; provided, however, that, in the event of a
proposed corporate transaction, the Company may terminate all or a portion of the outstanding
Options, effective upon the closing of the corporate transaction, if it determines that such
termination is in the best interests of the Company. If the Company decides so to terminate
outstanding Options, the Company shall give the Optionee not less than seven days’ notice prior to
any such termination, and any Option which is to be so terminated may be exercised (if and only to
the extent that it is then exercisable, but taking into consideration the full vesting that occurs
under Paragraph 10 if the transaction constitutes a Change in Control) up to, and including the
time of, such termination. Further, the Company, in its discretion, may accelerate, in whole or in
part, the date on which any or all Options become exercisable. The Company also may, in its
discretion, change the terms of any outstanding Option to reflect any such corporate transaction.

          13. Governing Law. This Option Agreement shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of

 

 

Minnesota (without reference to the principles of conflict of laws) shall govern the operation of,
and the rights of the Optionee under, this Option Agreement.

     IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly executed by its
duly authorized officer and the Optionee has hereunto set his hand and seal, all as of the day and
year first above written.

	 	 	 	 	 
	 	 	ECHO THERAPEUTICS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Optionee

 

 

ECHO THERAPEUTICS, INC.

Notice of Exercise of Nonqualified Stock Option

     I hereby exercise the nonqualified stock option granted to me pursuant to the Nonqualified
Stock Option Agreement, dated as of December 22, 2007 by Echo Therapeutics, Inc. (the “Company”),
with respect to the following number of shares of the Company’s common stock (“Shares”), par value
$.01 per Share, covered by said option:

	 	 	 	 	 	 	 	 	 
	 	 	Number of Shares to be purchased	 	 	 	 
	 
	 	 	 	 	 	 	 
	 	 	Exercise price per Share	 	$	 	 
	 
	 	 	 	 	 	 	 
	 	 	Total exercise price	 	$	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	                    	 	A.	 	Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of
$                    in full/partial [circle one] payment for such Shares;

and/or

	 	 	 	 	 	 	 	 	 
	                    	 	B.	 	Enclosed is/are________ Share(s) with a total Exercise Fair Market
Value of $                     on the date hereof in full/partial [circle one] payment for such
Shares;

and/or

	 	 	 	 	 	 	 	 	 
	                    	 	C.	 	Please withhold ______ Shares with a total Exercise Fair Market
Value of $                    on the date hereof in full/partial [circle one] payment for
such Shares;

and/or

	 	 	 	 	 
	                    
	 	D.	 	I have provided notice to                                        [insert name of broker], a broker, who will render
	full/partial [circle one] payment for such Shares. [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable
instructions to pay to the Company the full exercise price for the number of Shares purchased in
this method.]

     Please have the certificate or certificates representing the purchased Shares registered in
the following name or names*                                                             and sent to:

	 	 	 
	 

	 	 

     If the condition in Paragraph 6 (“Shares to be Purchased for Investment”) of the Nonqualified
Stock Option Agreement related to the Shares purchased hereby is applicable, the

 

			
	*	 	 Certificates may be registered in the name of the
Optionee alone or in the joint names (with right of survivorship) of the
Optionee and his or her spouse.

 

undersigned hereby certifies that the Shares purchased hereby are being acquired for investment and
not with a view to the distribution of such Shares.

	 	 	 	 	 
	DATED:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Optionee’s SignatureTHE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "US. SECURITIES ACT"). THIS WARRANT
CANNOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE
CONVEYED, IN WHOLE OR IN PART, BY THE WARRANTHOLDER, EXCEPT WITH THE PRIOR
WRITTEN CONSENT OF THE COMPANY. THE HOLDER HEREOF, BY PURCHASING THE WARRANT,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THE WARRANTS MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY
(A) TO THE COMPANY (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATIONS UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH
LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S.
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS,
PRIOR TO ANY SUCH SALE OR TRANSFER SET FORTH IN (A)-(D) ABOVE, FURNISHED TO THE
COMPANY AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
SALE OR TRANSFER MAY BE LAWFULLY MADE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS.

                              WARRANTS TO PURCHASE
                         COMMON SHARES OF GOLD RUN INC.

WARRANT CERTIFICATE NUMBER: _________          NUMBER OF WARRANTS: _____________
                                                                      [NUMBER]

      THIS IS TO CERTIFY THAT for value received by Gold Run Inc. (the
"Company") on _____, 2008 ________ [name & address] (the "Warrantholder") has
the right to purchase in respect of each whole warrant (the "Warrants")
represented by this certificate or by a replacement certificate (in either case
this "Warrant Certificate"), at any time up to 5:00 p.m., New York time, on
__________ [one year after termination of Offering] (the "Expiry Time"), one
fully paid and non-assessable common share (the "Shares" and which term shall
include any shares or other securities to be issued in addition thereto or in
substitution or replacement therefor as provided herein) of the Company (the
"Company"), a company incorporated under the laws of Delaware, as constituted on
the date hereof at a purchase price (the "Exercise Price") of $0.75 per Share,
subject to adjustment as provided herein.

      The Company agrees that the Shares purchased pursuant to the exercise of
the Warrants shall be and be deemed to be issued to the Warrantholder as of the
close of business on the date on which this Warrant Certificate shall have been
surrendered and payment made for such Shares as aforesaid.
<PAGE>

      Nothing contained herein shall confer any right upon the Warrantholder to
subscribe for or purchase any Shares at any time after the Expiry Time and from
and after the Expiry Time the Warrants and all rights under this Warrant
Certificate shall be void and of no value.

      The above provisions are subject to the following:

1. EXERCISE: In the event that the Warrantholder desires to exercise the right
to purchase Shares conferred hereby, the Warrantholder shall (a) complete in the
manner indicated and execute a subscription form attached as Schedule "A" to
this Warrant Certificate, (b) surrender this Warrant Certificate to the Company
at 330 Bay Street, Suite 820, Toronto, Ontario M5H 2S8 Canada, and (c) pay the
amount payable on the exercise of such Warrants in respect of the Shares
subscribed for either in cash or by bank draft or certified check payable to the
Company. Upon such surrender and payment as aforesaid, the Warrantholder shall
be deemed for all purposes to be the holder of record of the number of Shares to
be so issued and the Warrantholder shall be entitled to delivery of a
certificate or certificates representing such Shares and the Company shall cause
such certificate or certificates to be delivered to the Warrantholder at the
address specified in the subscription form within three (3) business days of
such surrender and payment as aforesaid. No fractional Shares shall be issuable
upon any exercise of the Warrants and the Warrantholder shall not be entitled to
any cash payment or compensation in lieu of a fractional Share.

2. PARTIAL EXERCISE: The Warrantholder may, at any time without notice and from
time to time subscribe for and purchase any lesser number of Shares than the
number of Shares expressed in this Warrant Certificate. In the event that the
Warrantholder subscribes for and purchases any such lesser number of Shares
prior to the Expiry Time, the Warrantholder shall be entitled to receive a
replacement certificate representing the unexercised balance of the Warrants.

3. NOT A SHAREHOLDER: The holding of the Warrants shall not constitute the
Warrantholder a shareholder of the Company or entitle the Warrantholder to any
right or interest in respect thereof except as expressly provided in this
Warrant Certificate.

4. NON-TRANSFERABLE: This Warrant cannot be sold, assigned, transferred,
pledged, hypothecated, or otherwise conveyed, in whole or in part, by the
Warrantholder, except with the prior written consent of the Company.

5. COVENANTS AND REPRESENTATIONS: The Company hereby represents and warrants
that it is authorized to create and issue the Warrants and covenants and agrees
that it shall cause the Shares from time to time subscribed for and purchased in
the manner provided in this Warrant Certificate and the certificate representing
such Shares to be issued and that, at all times prior to the Expiry Time, it
shall reserve and there shall remain unissued a sufficient number of Shares to
satisfy the right of purchase provided for in this Warrant Certificate. The
Company hereby further covenants and agrees that it shall at its expense
expeditiously use its best efforts to obtain the listing of such Shares (subject
to issue or notice of issue) on each stock exchange or over-the-counter market
on which the Shares may be listed from time to time. All Shares which are issued
upon the exercise of the right of purchase provided in this Warrant Certificate,
upon payment therefor of the amount at which such Shares may be purchased
pursuant to the provisions of this Warrant Certificate, shall be and be deemed
to be fully paid and non-assessable common shares and free from all taxes, liens
and charges with respect to the issue thereof. The Company hereby represents and
warrants that this Warrant Certificate is a valid and enforceable obligation of
the Company, enforceable in accordance with the provisions of this Warrant
Certificate.

                                       2
<PAGE>

6. ANTI-DILUTION PROTECTION: If this Warrant shall be exercised subsequent to
any stock dividend, split-up, recapitalization, reclassification, merger,
consolidation, combination or exchange of Shares, reorganization or liquidation
of the Company occurring after the date hereof, as a result of which shares of
any class shall be issued in respect of outstanding Shares of the Company (or
shall be issuable in respect to securities convertible into Shares) or upon
exercise of rights (other than this Warrant) to purchase Shares or Shares shall
be changed into the same or a different number of shares of the same or another
class or classes, the Warrantholder exercising this Warrant shall receive, for
the aggregate price paid upon such exercise, the aggregate number and class of
shares which such Warrantholder would have received thereafter if this Warrant
had been exercised immediately prior to the first such stock dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
reorganization or liquidation of the Company.

7. FURTHER ASSURANCES: The Company hereby covenants and agrees that it shall do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged
and delivered, all and every such other act, deed and assurance as the
Warrantholder shall reasonably require for the better accomplishing and
effectuating of the intentions and provisions of this Warrant Certificate.

8. TIME OF ESSENCE: Time shall be of the essence of this Warrant.

9. GOVERNING LAWS: This Warrant shall be construed in accordance with the laws
of the State of Delaware.

10. NOTICES: All notices or other communications to be given under this Warrant
shall be delivered by hand or by telecopier and, if delivered by hand, shall be
deemed to have been given on the delivery date and, if sent by telecopier, on
the date of transmission if sent before 5:00 p.m. on a business day or, if such
day is not a business day, on the first business day following the date of
transmission.

                  Notices to the Company shall be addressed to:

                                  Gold Run Inc.
                                 330 Bay Street
                                    Suite 820
                            Toronto, Ontario M5H 2S8
                                     Canada
               Attention: John Pritchard, Chief Executive Officer
                           Telecopier: (416) 363-0151

Notices to the Warrantholder shall be addressed to the address of the
Warrantholder set out on the face page of this Warrant Certificate.

                                       3
<PAGE>

The Company and the Warrantholder may change its address for service by notice
in writing to the other of them specifying its new address for service under
this Warrant Certificate.

11. LEGENDS ON COMMON SHARES: Any certificate representing Shares issued upon
the exercise of the Warrant shall bear the following legends:

      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
      SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES
      FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD
      OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY (B) OUTSIDE THE UNITED
      STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
      SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH LOCAL LAWS AND
      REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
      THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
      REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE
      SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO ANY SUCH SALE OR TRANSFER
      SET FORTH IN (A)-(D) ABOVE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH SALE OR TRANSFER MAY BE
      LAWFULLY MADE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS.

12. LOST CERTIFICATE: If this Warrant Certificate or any replacement hereof
becomes stolen, lost, mutilated or destroyed, the Company shall, on such terms
as it may in its discretion impose, acting reasonably, issue and deliver a new
certificate, in form identical hereto but with appropriate changes, representing
any unexercised portion of the subscription rights represented hereby to replace
the certificate so stolen, lost, mutilated or destroyed.

      IN WITNESS WHEREOF the Company has caused this certificate to be signed by
an authorized officer as of the ___ day of _____ 2008.

                                                      GOLD RUN INC.

                                                      By:__________________
                                                         John Pritchard
                                                         Chief Executive Officer

                                       4
<PAGE>

                                                                    SCHEDULE "A"

                                TO: GOLD RUN INC.
                                SUBSCRIPTION FORM

      The undersigned hereby subscribes for _____________ common shares
("Shares") of Gold Run Inc. (the Company") (or such other number of common
shares or other securities to which such subscription entitles the undersigned
in lieu thereof or in addition thereto pursuant to the provisions of the warrant
certificate (the "WARRANT CERTIFICATE") dated as of the ____ day of ______ 2008
issued by the Company) at the purchase price of $0.75 per Share if subscribed
for at time prior to 5:00 p.m. (New York time) on [date one year after
termination of Offering] (or at such other purchase price as may be in effect
under the provisions of the Warrant Certificate) and on and subject to the other
terms and conditions specified in the Warrant Certificate and hereunder and
encloses herewith a check, bank draft or money order or has transmitted good
same day funds by wire or other lawful money of the United States payable to or
to the order of the Company in payment of the subscription price.

      In the event the Shares underlying exercise of the Warrants have not be
registered under the Securities Act, the Warrantholder represents that it is an
"accredited investor" as such term is defined in Rule 501(a) under the
Securities Act, as set forth at Appendix I hereto, and has checked the
applicable category of "accredited investor" on Appendix I.

      The undersigned hereby directs that the Shares subscribed for be
registered and delivered as follows:

Name in Full: ____________________________________
Address: _________________________________________
Number of Common Shares: _________________________

DATED this     day of _____, 200 __.
By: _______________________________

                                       5
<PAGE>

                                   APPENDIX I

The Undersigned hereby certifies that it is an Accredited Investor as that term
is defined in Rule 501(a) of Regulation D, promulgated pursuant to the
Securities Act of 1933, as amended. THE SPECIFIC CATEGORY OF ACCREDITED INVESTOR
APPLICABLE TO THE UNDERSIGNED IS CHECKED BELOW. ALL REFERENCES TO DOLLAR AMOUNTS
IN THIS APPENDIX I ARE IN U.S. CURRENCY.

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

_____       b) Any private business development company as defined in Section
            202(a)(22) of the Investment Advisers Act of 1940;

_____       c) Any organization described in Section 501(c)(3) of the Internal
            Revenue Code, corporation, Massachusetts or similar business trust,
            or partnership, not formed for the specific purpose of acquiring the
            securities offered, with total assets in excess of $5,000,000;

_____       d) Any director, executive officer, or general partner of the issuer
            of the securities being offered or sold, or any director, executive
            officer, or general partner of a general partner of that issuer;

_____       e) Any natural person whose individual net worth, or joint net worth
            with that person's spouse, at the time of his purchase exceeds
            $1,000,000;

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

_____       g) Any trust, with total assets in excess of $5,000,000, not formed
            for the specific purpose of acquiring the securities offered, whose
            purchase is directed by a sophisticated person as described in
            Section 230.506(b)(2)(ii); and

                                       6
<PAGE>

_____       h) Any entity in which all of the equity owners are accredited
            investors.

                                                   __________________________
                                                   Name of Investor

                                                   By:  _____________________
                                                   Name:
                                                   Title:

                                                   Date: ____________________

                                       7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}]]