Common use of Convertible Preferred Stock Clause in Contracts

Convertible Preferred Stock. and accompanying Warrants to purchase shares of the Company’s common stock, par value $.01 per share1 50% of the number of shares of Common Stock into which Holder's Preferred Stock is convertible. (the “Common Stock”). The conversion shares and the warrant shares underlying each Unit may not be separately transferred. The Units together with the Convertible Preferred Stock, the Warrants and the securities underlying each Unit are sometimes collectively referred to as “Securities”). The Certificate of Rights and Designations of the Convertible Preferred Stock and the form of Warrant are included in the Booklet, which accompanies this Subscription Agreement. For purposes of this Offering, the minimum offering shall mean thirty (30) Units (the “Minimum Offering”) and a minimum gross amount raised of $3,000,000 (the “Minimum Amount”). The maximum offering shall mean seventy (70) Units (the “Maximum Offering”) and a maximum gross amount raised of $7,000,000 (the “Maximum Amount”). The minimum investor subscription amount is $100,000 to purchase one (1) Unit (“Minimum Investor Subscription Amount”); the Company reserves the right to accept subscriptions for lesser amounts. The Company, on notice to the purchasers of Units, may, within 30 days of the last closing with respect to the Maximum, exercise its option to sell an additional $3,000,000 of Units (30 Units), upon the same terms and conditions as set forth herein (the “Over Allotment Option”). If the Company exercises its Over Allotment Option, then the Offering Period defined below may be extended for a period not to exceed an additional 30 days. The Units are being offered by the Company. The Company, however, reserves the right to retain registered broker-dealers, “finders”, and other individuals and entities authorized by federal and applicable state securities laws to assist with the distribution of the Securities offered hereby. In such event, the Company shall pay a selling commission or finders fees to registered broker-dealers, “finders”, individuals and entities legally authorized to receive such commissions or fees, as applicable (collectively, the “Selling Agents”) of a sum ordinarily not to exceed ten percent (10%) of the investor subscription amount received, provided that such payments are permitted under federal and applicable state securities laws. Such broker’s compensation may include warrants as well. Subscriptions to purchase Units will be solicited until the earliest of: (i) November 30, 2006, unless extended by the Company in its sole discretion without notice for a period of up to an additional 90 days2 , (ii) the sale of the entire Offering, or (iii) if the Company elects to exercise its Over Allotment Option, for a period of up to an additional 30 days (the “Offering Period”). The Offering Period has been extended to January 15, 2007. __________________________ 1 50% of the number of shares of Common Stock into which Holder's Preferred Stock is convertible. 2 The Company initially extended the Offering Period to December 15, 2006 in order to close on the Minimum Offering. On December 14, 2006, the Company entered into subscription agreements with 27 individual investors for an offering of $3.875 million in consideration for 3,875 shares of Series A-1 Cumulative Convertible Preferred Stock, (the “Series A-1 Preferred Stock”). In addition, the Company issued warrants to purchase 1,160,204 shares of common stock exercisable at $1.67 per share.

Convertible Preferred Stock. and accompanying Warrants to purchase shares On December 26, 2018, we filed a Certificate of the Company’s common stock, par value $.01 per share1 50% Designation of the number Preferences of shares of Common Stock into which Holder's Series B Non-Voting Convertible Preferred Stock is convertible. (the “Common Stockconvertible preferred stock”). The conversion shares ) (the “Certificate of Designation”) classifying and designating the warrant shares underlying each Unit may not be separately transferred. The Units together with rights, preferences and privileges of the Convertible Preferred Stock, the Warrants and the securities underlying each Unit are sometimes collectively referred to as “Securities”)convertible preferred stock. The Certificate of Rights Designation authorized 2,857,143 shares of convertible preferred stock. The convertible preferred stock converts to shares of common stock on a 1-for-5 ratio and Designations has the same rights, preferences, and privileges as common stock other than it holds no voting rights. As of March 5, 2021, we had 1,257,143 shares of convertible preferred stock outstanding. Provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult to acquire us by means of a tender offer, a proxy contest, open market purchases, removal of incumbent directors and otherwise. These provisions, summarized below, are expected to discourage types of coercive takeover practices and inadequate takeover bids and to encourage persons to acquire control of us to first negotiate with us. We believe that the benefits of increase protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because negotiation of these proposals could result in an improvement of their terms. We are subject to section 203 of the Convertible Preferred Stock and the form of Warrant are included DGCL, or Section 203. Section 203 generally prohibits a public Delaware corporation from engaging in the Booklet, which accompanies this Subscription Agreement. For purposes of this Offering, the minimum offering shall mean thirty (30) Units (the a “Minimum Offering”) and a minimum gross amount raised of $3,000,000 (the business combination” with an “Minimum Amount”). The maximum offering shall mean seventy (70) Units (the “Maximum Offering”) and a maximum gross amount raised of $7,000,000 (the “Maximum Amount”). The minimum investor subscription amount is $100,000 to purchase one (1) Unit (“Minimum Investor Subscription Amount”); the Company reserves the right to accept subscriptions for lesser amounts. The Company, on notice to the purchasers of Units, may, within 30 days of the last closing with respect to the Maximum, exercise its option to sell an additional $3,000,000 of Units (30 Units), upon the same terms and conditions as set forth herein (the “Over Allotment Option”). If the Company exercises its Over Allotment Option, then the Offering Period defined below may be extended for a period not to exceed an additional 30 days. The Units are being offered by the Company. The Company, however, reserves the right to retain registered broker-dealers, “finders”, and other individuals and entities authorized by federal and applicable state securities laws to assist with the distribution of the Securities offered hereby. In such event, the Company shall pay a selling commission or finders fees to registered broker-dealers, “finders”, individuals and entities legally authorized to receive such commissions or fees, as applicable (collectively, the “Selling Agents”) of a sum ordinarily not to exceed ten percent (10%) of the investor subscription amount received, provided that such payments are permitted under federal and applicable state securities laws. Such broker’s compensation may include warrants as well. Subscriptions to purchase Units will be solicited until the earliest of: (i) November 30, 2006, unless extended by the Company in its sole discretion without notice interested stockholder” for a period of up three years after the date of the transaction in which the person became an interested stockholder, unless: • prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an additional 90 days2 interested stockholder; • upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the sale right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or • at or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the entire Offering, or (iii) if the Company elects to exercise its Over Allotment Option, for a period affirmative vote of up to an additional 30 days (the “Offering Period”). The Offering Period has been extended to January 15, 2007. __________________________ 1 50at least 66 2/3% of the number outstanding voting stock which is not owned by the interested stockholder. Section 203 defines a business combination to include: • any merger or consolidation involving the corporation and the interested stockholder; • any sale, transfer, pledge or other disposition involving the interested stockholder of shares 10% or more of Common Stock into which Holder's Preferred Stock the assets of the corporation; • subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; • subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or • the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. Subject to certain exceptions, Section 203 defines an “interested stockholder” as an entity or person (other than the corporation or any direct or indirect majority-owned subsidiary of the corporation) who, together with the entity or person’s affiliates and associates, beneficially owns, or is convertiblean affiliate or associate of the corporation and within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation. 2 The Company initially extended existence of this provision generally will have an anti-takeover effect for transactions not approved in advance by the Offering Period to December 15board of directors, 2006 including discouraging attempts that might result in order to close on a premium over the Minimum Offering. On December 14, 2006, market price for the Company entered into subscription agreements with 27 individual investors for an offering of $3.875 million in consideration for 3,875 shares of Series A-1 Cumulative Convertible Preferred Stock, (the “Series A-1 Preferred Stock”). In addition, the Company issued warrants to purchase 1,160,204 shares of common stock exercisable at $1.67 per shareheld by stockholders.

Convertible Preferred Stock. and accompanying Warrants to purchase shares of the Company’s common stock, par value $.01 per share1 50% of the number of shares of Common Stock into which Holder's Preferred Stock is convertible. (the “Common Stock”). The conversion shares and the warrant shares underlying each Unit may not be separately transferred. The Units together with the Convertible Preferred Stock, the Warrants and the securities underlying each Unit are sometimes collectively referred to as “Securities”). The Certificate of Rights and Designations of the Convertible Preferred Stock and the form of Warrant are included in the Booklet, which accompanies this Subscription Agreement. For purposes of this Offering, the minimum offering shall mean thirty (30) Units (the “Minimum Offering”) and a minimum gross amount raised of $3,000,000 (the “Minimum Amount”). The maximum offering shall mean seventy (70) Units (the “Maximum Offering”) and a maximum gross amount raised of $7,000,000 (the “Maximum Amount”). The minimum investor subscription amount is $100,000 to purchase one (1) Unit (“Minimum Investor Subscription Amount”); the Company reserves the right to accept subscriptions for lesser amounts. The Company, on notice to the purchasers of Units, may, within 30 days of the last closing with respect to the Maximum, exercise its option to sell an additional $3,000,000 of Units (30 Units), upon the same terms and conditions as set forth herein (the “Over Allotment Option”). If the Company exercises its Over Allotment Option, then the Offering Period defined below may be extended for a period not to exceed an additional 30 days. The Units are being offered by the Company. The Company, however, reserves the right to retain registered broker-dealers, “finders”, and other individuals and entities authorized by federal and applicable state securities laws to assist with the distribution of the Securities offered hereby. In such event, the Company shall pay a selling commission or finders fees to registered broker-dealers, “finders”, individuals and entities legally authorized to receive such commissions or fees, as applicable (collectively, the “Selling Agents”) of a sum ordinarily not to exceed ten percent (10%) of the investor subscription amount received, provided that such payments are permitted under federal and applicable state securities laws. Such broker’s compensation may include warrants as well. Subscriptions to purchase Units will be solicited until the earliest of: (i) November 30, 2006, unless extended by the Company in its sole discretion without notice for a period of up to an additional 90 days2 days, (ii) the sale of the entire Offering, or (iii) if the Company elects to exercise its Over Allotment Option, for a period of up to an additional 30 days (the “Offering Period”). The Offering Period has been extended to January 15, 2007. __________________________ 1 50150% of the number of shares of Common Stock into which Holder's Preferred Stock is convertible. 2 The Company initially extended the Offering Period to December 15, 2006 in order to close on the Minimum Offering. On December 14, 2006, the Company entered into subscription agreements with 27 individual investors for an offering of $3.875 million in consideration for 3,875 shares of Series A-1 Cumulative Convertible Preferred Stock, (the “Series A-1 Preferred Stock”). In addition, the Company issued warrants to purchase 1,160,204 shares of common stock exercisable at $1.67 per share.

Convertible Preferred Stock. Subject to and accompanying Warrants upon the terms and conditions hereof, (i) the Prencen Entities waive any default that may exist due to purchase the failure of the Company to maintain the Required Reserve Amount as required by Section 4(m) of the Securities Purchase Agreement and Section 11 of the Note, and (ii) the Lender (and its successors and assigns) agrees not to convert any portion of its Note to the extent necessary to ensure that at all times the Company has available a sufficient number of authorized shares of Common Stock under its Certificate of Incorporation to be reserved solely for the Company’s common stock, par value $.01 per share1 50% purpose of effecting the conversion of (A) all of the shares of Preferred Stock then outstanding and (B) the conversion of the full principal amount of the Notes issued pursuant to the Watershed Securities Purchase Agreement (as defined in the Securities Purchase Agreement) then outstanding; provided that the waiver and agreement set forth in the foregoing clauses (i) and (ii) shall terminate (with no further action on the part of any Person) upon the filing of the Charter Amendment (as defined below). Notwithstanding anything to the contrary provided herein, the waivers set forth in Section 2(a), Section 2(b) and clause (i) of this Section 2(c) shall immediately terminate (with no further action on the part of any Person) if (1) within five Business Days following the closing date of the issuance of the Preferred Stock under the Preferred Stock SPA, the Company does not receive the consents of the holders of a majority of the outstanding voting securities of the Company in the form attached hereto as Exhibit B (the “Transaction Stockholder Consent”) authorizing the amendment of the Certificate of Incorporation of the Company to increase the authorized number of shares of Common Stock into which Holder's Preferred Stock is convertible. (the “Common Stock”). The conversion shares and the warrant shares underlying each Unit may not be separately transferred. The Units together with the Convertible Preferred Stock, the Warrants and the securities underlying each Unit are sometimes collectively referred to as “Securities”). The Certificate of Rights and Designations of the Convertible Preferred Stock and the form of Warrant are included in the Booklet, which accompanies this Subscription Agreement. For purposes of this Offering, the minimum offering shall mean thirty (30) Units (the “Minimum Offering”) and a minimum gross amount raised of $3,000,000 (the “Minimum Amount”). The maximum offering shall mean seventy (70) Units (the “Maximum Offering”) and a maximum gross amount raised of $7,000,000 (the “Maximum Amount”). The minimum investor subscription amount is $100,000 to purchase one (1) Unit (“Minimum Investor Subscription Amount”); the Company reserves the right to accept subscriptions for lesser amounts. The Company, on notice to the purchasers of Units, may, within 30 days of the last closing with respect to the Maximum, exercise its option to sell an additional $3,000,000 of Units (30 Units), upon the same terms and conditions as set forth herein (the “Over Allotment Option”). If the Company exercises its Over Allotment Option, then the Offering Period defined below may be extended for a period not to exceed an additional 30 days. The Units are being offered by the Company. The Company, however, reserves the right to retain registered broker-dealers, “finders”, and other individuals and entities authorized by federal and applicable state securities laws to assist with the distribution of the Securities offered hereby. In such event, the Company shall pay a selling commission or finders fees to registered broker-dealers, “finders”, individuals and entities legally authorized to receive such commissions or fees, as applicable (collectively, the “Selling Agents”) of a sum ordinarily not to exceed ten percent (10%) of the investor subscription amount received, provided that such payments are permitted under federal and applicable state securities laws. Such broker’s compensation may include warrants as well. Subscriptions to purchase Units will be solicited until the earliest of: (i) November 30, 2006, unless extended by the Company in its sole discretion without notice for a period of up to an additional 90 days2 , (ii) the sale of the entire Offering, or (iii) if the Company elects to exercise its Over Allotment Option, for a period of up to an additional 30 days (the “Offering Period”). The Offering Period has been extended to January 15, 2007. __________________________ 1 50% of the number of from 1,000,000,000 shares of Common Stock into which Holder's to 3,000,000,000 shares of Common Stock, (2) the Company fails to prepare and file with the SEC, as promptly as practicable after the closing of the issuance of the Preferred Stock is convertible. 2 The Company initially extended under the Offering Period Preferred Stock SPA, but in no event later than the date 20 calendar days after such closing, an information statement (the “Information Statement”), at the expense of the Company, informing the stockholders of the Company’s receipt of the Transaction Stockholder Consent, (3) in the event that the SEC elects to December 15, 2006 in order to close on review the Minimum Offering. On December 14, 2006Information Statement, the Company entered into subscription agreements with 27 individual investors does not use its reasonable best efforts to cause the Information Statement to become effective as soon as possible, (4) in the event that the SEC does not elect to review the Information Statement, the Information Statement is not effective within two months following the date of the closing for the issuance of the Preferred Stock under the Preferred Stock SPA, or (5) the Company fails to file an offering amendment to its Certificate of $3.875 million in consideration for 3,875 shares of Series A-1 Cumulative Convertible Preferred Stock, Incorporation (the “Series A-1 Preferred StockCharter Amendment”). In addition, ) increasing the Company issued warrants number of authorized shares from 1,000,000,000 to purchase 1,160,204 shares 3,000,000,000 within five (5) Business Days following the effective date of common stock exercisable at $1.67 per sharethe Information Statement.

Convertible Preferred Stock. Subject to and accompanying Warrants upon the terms and conditions hereof, (i) the Prencen Entities waive any default that may exist due to purchase the failure of the Company to maintain the Required Reserve Amount as required by Section 4(m) of the Securities Purchase Agreement and Section 11 of the Note, and (ii) the Lender (and its successors and assigns) agrees not to convert any portion of its Note to the extent necessary to ensure that at all times the Company has available a sufficient number of authorized shares of Common Stock under its Certificate of Incorporation to be reserved solely for the Company’s common stock, par value $.01 per share1 50% purpose of effecting the conversion of (A) all of the shares of Preferred Stock then outstanding and (B) the conversion of the full principal amount of the Notes issued pursuant to the Watershed Securities Purchase Agreement (as defined in the Securities Purchase Agreement) then outstanding; provided that the waiver and agreement set forth in the foregoing clauses (i) and (ii) shall terminate (with no further action on the part of any Person) upon the filing of the Charter Amendment (as defined below). Notwithstanding anything to the contrary provided herein, the waivers set forth in Section 2(a), Section 2(b) and clause (i) of this Section 2(c) shall immediately terminate (with no further action on the part of any Person) if (1) within five Business Days following the closing date of the issuance of the Preferred Stock under the Preferred Stock SPA, the Company does not receive the consents of the holders of a majority of the outstanding voting securities of the Company in the form attached hereto as Exhibit B (the "Transaction Stockholder Consent") authorizing the amendment of the Certificate of Incorporation of the Company to increase the authorized number of shares of Common Stock into which Holder's Preferred Stock is convertible. (the “Common Stock”). The conversion shares and the warrant shares underlying each Unit may not be separately transferred. The Units together with the Convertible Preferred Stock, the Warrants and the securities underlying each Unit are sometimes collectively referred to as “Securities”). The Certificate of Rights and Designations of the Convertible Preferred Stock and the form of Warrant are included in the Booklet, which accompanies this Subscription Agreement. For purposes of this Offering, the minimum offering shall mean thirty (30) Units (the “Minimum Offering”) and a minimum gross amount raised of $3,000,000 (the “Minimum Amount”). The maximum offering shall mean seventy (70) Units (the “Maximum Offering”) and a maximum gross amount raised of $7,000,000 (the “Maximum Amount”). The minimum investor subscription amount is $100,000 to purchase one (1) Unit (“Minimum Investor Subscription Amount”); the Company reserves the right to accept subscriptions for lesser amounts. The Company, on notice to the purchasers of Units, may, within 30 days of the last closing with respect to the Maximum, exercise its option to sell an additional $3,000,000 of Units (30 Units), upon the same terms and conditions as set forth herein (the “Over Allotment Option”). If the Company exercises its Over Allotment Option, then the Offering Period defined below may be extended for a period not to exceed an additional 30 days. The Units are being offered by the Company. The Company, however, reserves the right to retain registered broker-dealers, “finders”, and other individuals and entities authorized by federal and applicable state securities laws to assist with the distribution of the Securities offered hereby. In such event, the Company shall pay a selling commission or finders fees to registered broker-dealers, “finders”, individuals and entities legally authorized to receive such commissions or fees, as applicable (collectively, the “Selling Agents”) of a sum ordinarily not to exceed ten percent (10%) of the investor subscription amount received, provided that such payments are permitted under federal and applicable state securities laws. Such broker’s compensation may include warrants as well. Subscriptions to purchase Units will be solicited until the earliest of: (i) November 30, 2006, unless extended by the Company in its sole discretion without notice for a period of up to an additional 90 days2 , (ii) the sale of the entire Offering, or (iii) if the Company elects to exercise its Over Allotment Option, for a period of up to an additional 30 days (the “Offering Period”). The Offering Period has been extended to January 15, 2007. __________________________ 1 50% of the number of from 1,000,000,000 shares of Common Stock into which Holder's to 3,000,000,000 shares of Common Stock, (2) the Company fails to prepare and file with the SEC, as promptly as practicable after the closing of the issuance of the Preferred Stock is convertible. 2 The Company initially extended under the Offering Period Preferred Stock SPA, but in no event later than the date 20 calendar days after such closing, an information statement (the "Information Statement"), at the expense of the Company, informing the stockholders of the Company's receipt of the Transaction Stockholder Consent, (3) in the event that the SEC elects to December 15, 2006 in order to close on review the Minimum Offering. On December 14, 2006Information Statement, the Company entered into subscription agreements with 27 individual investors for an offering of $3.875 million in consideration for 3,875 shares of Series A-1 Cumulative Convertible Preferred Stockdoes not use its reasonable best efforts to cause the Information Statement to become effective as soon as possible, (4) in the “Series A-1 Preferred Stock”). In additionevent that the SEC does not elect to review the Information Statement, the Information Statement is not effective within two months following the date of the closing for the issuance of the Preferred Stock under the Preferred Stock SPA, or (5) the Company issued warrants fails to purchase 1,160,204 file an amendment to its Certificate of Incorporation (the "Charter Amendment") increasing the number of authorized shares from 1,000,000,000 to 3,000,000,000 within five (5) Business Days following the effective date of common stock exercisable at $1.67 per sharethe Information Statement.

Convertible Preferred Stock. Following the Effective Time, and accompanying Warrants without requiring any further action by the Lender, the Company shall use its best efforts to purchase issue shares of senior preferred equity of the Company (the “Preferred Equity”) in exchange for the reduction and termination of the Obligations as described in Section 4.c. The Preferred Equity shall be issued based on a price of $1 per share, shall have a 7.5% per annum payment-in-kind dividend and shall be convertible at the Lender’s sole option into fully paid common stock of the Company at a per-share conversion price equal to the prior 10-day average common stock trading price at the time the preferred equity is issued. Aside from the Loan and the JV Loan, the Preferred Equity shall be the most senior security in the capital structure; provided, however, that the Lender acknowledges and agrees that the Preferred Equity may not be issued without, and shall be subject to, the approval of the holders of Series A Preferred Stock of the Company. Further, the payment of stock dividends shall be subject to the availability of authorized, unissued and unreserved shares, although the Company agrees to use its best efforts to authorize more preferred shares if needed for the purpose of fulfilling this obligation. The terms of the preferred equity shall include a liquidation preference and a ratchet provision with respect to the conversion price, as well as whatever negative covenants including the further issuance of preferred shares and debt as many be agreeable between the Lender and the Company. The Preferred Equity grant may contain a provision blocking the Lender from converting some or all of such Preferred Equity to common shares, to the extent that, following such conversion, the Lender would be being deemed to be the “beneficial owner” (as such term is defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of more than four and ninety-nine one-hundredths percent (4.99%) of the Company’s outstanding common stock, par value $.01 per share1 50% of the number of shares of Common Stock into which Holder's Preferred Stock is convertible. (the “Common Stock”). The conversion shares and the warrant shares underlying each Unit may not be separately transferred. The Units together with the Convertible Preferred Stock, the Warrants and the securities underlying each Unit are sometimes collectively referred to as “Securities”). The Certificate of Rights and Designations of the Convertible Preferred Stock and the form of Warrant are included in the Booklet, which accompanies this Subscription Agreement. For purposes of this Offering, the minimum offering shall mean thirty (30) Units (the “Minimum Offering”) and a minimum gross amount raised of $3,000,000 (the “Minimum Amount”). The maximum offering shall mean seventy (70) Units (the “Maximum Offering”) and a maximum gross amount raised of $7,000,000 (the “Maximum Amount”). The minimum investor subscription amount is $100,000 to purchase one (1) Unit (“Minimum Investor Subscription Amount”); the Company reserves the right to accept subscriptions for lesser amounts. The Company, on notice to the purchasers of Units, may, within 30 days of the last closing with respect to the Maximum, exercise its option to sell an additional $3,000,000 of Units (30 Units), upon the same terms and conditions as set forth herein (the “Over Allotment Option”). If the Company exercises its Over Allotment Option, then the Offering Period defined below may be extended for a period not to exceed an additional 30 days. The Units are being offered by the Company. The Company, however, reserves the right to retain registered broker-dealers, “finders”, and other individuals and entities authorized by federal and applicable state securities laws to assist with the distribution of the Securities offered hereby. In such event, the Company shall pay a selling commission or finders fees to registered broker-dealers, “finders”, individuals and entities legally authorized to receive such commissions or fees, as applicable (collectively, the “Selling Agents”) of a sum ordinarily not to exceed ten percent (10%) of the investor subscription amount received, provided that such payments are permitted under federal and applicable state securities laws. Such broker’s compensation may include warrants as well. Subscriptions to purchase Units will be solicited until the earliest of: (i) November 30, 2006, unless extended by the Company in its sole discretion without notice for a period of up to an additional 90 days2 , (ii) the sale of the entire Offering, or (iii) if the Company elects to exercise its Over Allotment Option, for a period of up to an additional 30 days (the “Offering Period”). The Offering Period has been extended to January 15, 2007. __________________________ 1 50% of the number of shares of Common Stock into which Holder's Preferred Stock is convertible. 2 The Company initially extended the Offering Period to December 15, 2006 in order to close on the Minimum Offering. On December 14, 2006, the Company entered into subscription agreements with 27 individual investors for an offering of $3.875 million in consideration for 3,875 shares of Series A-1 Cumulative Convertible Preferred Stock, (the “Series A-1 Preferred Stock”). In addition, the Company issued warrants to purchase 1,160,204 shares of common stock exercisable at $1.67 per share.

Convertible Preferred Stock. This opinion is limited to the Federal laws of the United States, the laws of the State of New York and accompanying Warrants the Delaware General Corporation Law. No opinion is expressed with respect to the laws, rules or regulations of any other jurisdiction, whether U.S. or foreign. This opinion is furnished to the Investors solely for its benefit in connection with the transactions described above and may not be relied upon by any other person or for any other purpose without our prior written consent. Very truly yours, SNOW BECKXX XXXUXX X.X. INSTRUCTIONS TO TRANSFER AGENT Integrated Surgical Systems, Inc. July ____, 1999 American Stock Transfer and Trust Company 40 Wxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Xxxn: Barrx Xxxxxxxxx Xxar Sirs: Reference is made to the Preferred Stock Purchase Agreement and all Exhibits thereto (the "Agreement") dated as of July ___, 1999, between the Investors named therein and Integrated Surgical Systems, Inc. (the "Company"). Pursuant to the Agreement, and subject to the terms and conditions set forth in the Agreement, the Investors have agreed to purchase from the Company, and the Company has agreed to sell to the Investors, shares of Series E Convertible Preferred Stock of the Company’s common stock, par value $.01 0.01 per share1 50% share (the "Preferred Stock"), and the Company has issued to the Investors (i) 3,000 shares of Series E Convertible Preferred Stock of the number of Company, par value $0.01 per share, and (ii) a warrant to purchase 37,500 shares of Common Stock into which Holder's Preferred Stock is convertible. (the “Common Stock”"Warrant"). The conversion shares and As a condition to the warrant shares underlying each Unit may not be separately transferred. The Units together with the Convertible Preferred Stock, the Warrants and the securities underlying each Unit are sometimes collectively referred to as “Securities”). The Certificate of Rights and Designations effectiveness of the Convertible Preferred Stock and the form of Warrant are included in the Booklet, which accompanies this Subscription Agreement. For purposes of this Offering, the minimum offering shall mean thirty (30) Units (the “Minimum Offering”) and a minimum gross amount raised of $3,000,000 (the “Minimum Amount”). The maximum offering shall mean seventy (70) Units (the “Maximum Offering”) and a maximum gross amount raised of $7,000,000 (the “Maximum Amount”). The minimum investor subscription amount is $100,000 to purchase one (1) Unit (“Minimum Investor Subscription Amount”); the Company reserves the right to accept subscriptions for lesser amounts. The Company, on notice to the purchasers of Units, may, within 30 days of the last closing with respect to the Maximum, exercise its option to sell an additional $3,000,000 of Units (30 Units), upon the same terms and conditions as set forth herein (the “Over Allotment Option”). If the Company exercises its Over Allotment Option, then the Offering Period defined below may be extended for a period not to exceed an additional 30 days. The Units are being offered by the Company. The Company, however, reserves the right to retain registered broker-dealers, “finders”, and other individuals and entities authorized by federal and applicable state securities laws to assist with the distribution of the Securities offered hereby. In such event, the Company shall pay a selling commission or finders fees has agreed to registered broker-dealers, “finders”, individuals and entities legally authorized issue to receive such commissions or feesyou, as applicable the transfer agent for the Common Stock (collectivelythe "Transfer Agent"), these instructions relating to the “Selling Agents”Common Stock to be issued to the Investor (or a permitted assignee) of a sum ordinarily not pursuant to exceed ten percent (10%) the Agreement upon conversion of the investor subscription amount received, provided that such payments are permitted under federal and applicable state securities laws. Such broker’s compensation may include warrants as well. Subscriptions to purchase Units will be solicited until the earliest of: (i) November 30, 2006, unless extended by the Company in its sole discretion without notice for a period of up to an additional 90 days2 , (ii) the sale Preferred Stock or upon exercise of the entire Offering, or (iii) if Warrant. All terms used herein and not otherwise defined shall have the Company elects to exercise its Over Allotment Option, for a period of up to an additional 30 days (meaning set forth in the “Offering Period”). The Offering Period has been extended to January 15, 2007. __________________________ 1 50% of the number of shares of Common Stock into which Holder's Preferred Stock is convertible. 2 The Company initially extended the Offering Period to December 15, 2006 in order to close on the Minimum Offering. On December 14, 2006, the Company entered into subscription agreements with 27 individual investors for an offering of $3.875 million in consideration for 3,875 shares of Series A-1 Cumulative Convertible Preferred Stock, (the “Series A-1 Preferred Stock”). In addition, the Company issued warrants to purchase 1,160,204 shares of common stock exercisable at $1.67 per shareAgreement.