Common use of Terms of the Subscription Clause in Contracts

Terms of the Subscription. This Offering is made in connection with a Confidential Offering Memorandum (the “Memorandum”) which is incorporated by reference and made a part of this Subscription Agreement. The subscription is for units (the “Units”) comprised of a 10% Convertible Debenture and Warrants to purchase shares of the Company's Common Stock. The Debenture (the form of which is attached to the Memorandum as Exhibit “A”) shall be repaid five (5) years after the date of issuance (the “Maturity Date”). The “Debenture shall bear interest at the rate of ten percent (10%) per annum and shall be repaid quarterly, commencing with the quarter ending March 30, 2007, in amount of shares of Common Stock equal to the amount of interest owed to the Holder, divided by the Conversion Price of $1.00, subject to adjustment. The Warrants (a form of which is attached to the Memorandum as Exhibit "B") may be exercised immediately upon issuance to purchase shares of the Company’s Common Stock as follows: 20,000 shares at a price of $2.00 per share; 20,000 shares of a price of $3.00 per share; and 20,000 shares at a price of $4.00 per share, subject to adjustment.