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Appendix 7-C Series A Convertible Preferred Stock Purchase Agreement

[COMPANY NAME]

SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE

AGREEMENT

[Date]TABLE OF CONTENTS

1. Purchase and Sale of Preferred Stock

1.1. Sale and Issuance of Series A Preferred Stock

1.2. Closing; Delivery

2. Representations and Warranties of the Company

2.1. Organization, Good Standing and Qualification

2.2. Capitalization

2.3. Subsidiaries

2.4. Authorization and Compliance

2.5. Valid Issuance of Securities

2.6. Governmental Consents

2.7. Litigation

2.8. Intellectual Property

2.9. Compliance with Other Instruments and Laws; Permits

2.10. Agreements; Actions2.11. Disclosure

2.12. Related Party Transactions

2.13. Title to Assets

2.14. Financial Statements

2.15. Changes

2.16. Employee Benefit Plans

2.17. Tax Matters

2.18. Insurance

2.19. Labor Matters

2.20. Confidential Information and Invention Assignment Agreements

2.21. Corporate Documents

[2.22. Environmental and Safety Laws]

[2.23. Qualified Small Business Stock]

[2.23. Qualified Small Business Stock]

3. Representations and Warranties of the Purchasers

3.1. Authorization

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3.2. Experience; Accredited Investor

3.3. Purchase Entirely for Own Account

3.4. Disclosure of Information

3.5. Restricted Securities

3.6. No Public Market

3.7. Residence

3.8. Further Restrictions on Disposition3.9. Legends

3.10. Foreign Investors

4. Conditions of the Purchasers' Obligations at Closing

4.1. Representations and Warranties

4.2. Performance

4.3. Compliance Certificate

4.4. Qualifications

4.5. Opinion of Company Counsel

4.6. Board of Directors4.7. Investor Rights Agreement

4.8. Co-Sale Agreement

4.9. Voting Agreement

4.10. Restated Certificate

4.11. Minimum Closing Amount

4.12. [Others]

5. Conditions of the Company's Obligations at Closing

5.1. Representations and Warranties

5.2. Performance5.3. Qualifications

5.4. Investor Rights Agreement

5.5. Voting Agreement

6. Miscellaneous

6.1. Survival of Warranties

6.2. Transfer; Successors and Assigns

6.3. Governing Law

6.4. Counterparts6.5. Titles and Subtitles

6.6. Notices

6.7. Finder's Fee

6.8. Fees and Expenses

6.9. Attorney's Fees

6.10. Amendments and Waivers

6.11. Severability

6.12. Delays or Omissions; Remedies Cumulative

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6.13. Entire Agreement

6.14. California Corporate Securities Law

6.15. Confidentiality

6.16. Exculpation Among Purchasers

[6.17. Waiver of Conflicts]

[6.18. Acknowledgment as to Counsel]

EXHIBITS

Exhibit A- Schedule of Purchasers

Exhibit B- Form of Amended and Restated Certificate of Incorporation

Exhibit C- Schedule of Exceptions to Representations and Warranties

[Exhibit C- List of Stockholders]

Exhibit D- Form of Investor Rights Agreement

Exhibit E- Form of [Right of First Refusal and] Co-Sale Agreement

Exhibit F- Form of Voting Agreement

Exhibit G- Form of Legal Opinion [name of Company's counsel][Exhibit H- Form of Addendum Agreement]

[COMPANY NAME]

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

This Series A Convertible Preferred Stock Purchase Agreement (this Agreement) ismade as of the ________ day of ________ , ________ by and among ________ , a [e.g.,Delaware] corporation (the Company), and the investors listed on Exhibit A hereto (eacha Purchaser and together the Purchasers).

The parties agree as follows:

1. Purchase and Sale of Preferred Stock.

1.1 Sale and Issuance of Series A Preferred Stock.

(a) The Company shall adopt and file with the Secretary of State of the State ofDelaware on or before the Closing (as defined below) the Amended and RestatedCertificate of Incorporation in the form attached as Exhibit B (the RestatedCertificate).

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the State of [e.g., Delaware] and has all requisite corporate power and authority tocarry on its business as currently conducted and as proposed to be conducted [asdescribed in that certain business plan dated _______________ made available toeach Purchaser (the "Business Plan")]. The Company is duly qualified to transactbusiness and is in good standing in each jurisdiction in which the failure so to qualifywould have a material adverse effect on its [business, properties or condition(financial or otherwise)] [if representing the Purchasers, add "or prospects" hereand throughout this Agreement].

2.2 Capitalization.

(a) The authorized capital of the Company consists, or will consist,immediately prior to the Closing, of: (i) ________ shares of Preferred Stock, ofwhich ________ shares have been designated Series A Preferred, [none] ofwhich are issued and (ii) ________ shares of Common Stock, ________ sharesof which are issued and outstanding immediately prior to the Closing.

(b) All of the outstanding shares of the Company's Preferred Stock andCommon Stock are duly authorized, fully paid and nonassessable and were issuedin compliance with all applicable federal and state securities laws.

(c) The Company has reserved ________ shares of Common Stock forissuance to officers, directors, employees and consultants of the Companypursuant to its [Plan Year] Stock [Option] Plan duly adopted by the Board ofDirectors and approved by the Company's stockholders (the Stock Plan). Ofsuch reserved shares of Common Stock, ________ shares have been issuedpursuant to restricted stock purchase agreements, options to purchase ________shares have been granted and are currently outstanding, and ________ shares ofCommon Stock remain available for future grants under the Stock Plan.

(d) Except for (i) outstanding options issued pursuant to the Stock Plan [andwarrants to purchase ________ shares of ________ issued to ________ pursuantto a ________ Agreement dated ________ ], (ii) the conversion privileges of thePreferred Stock and (iii) the rights granted pursuant to the Investor RightsAgreement (as defined below), there are no outstanding options, warrants, rights(including conversion or preemptive rights and rights of first refusal or similarrights) or agreements, orally or in writing, for the purchase or acquisition from theCompany of any of its securities or any other agreements to participate in theprofits of the Company.

(e) Except for the Company's right to repurchase shares of stock from itsdirectors and employees pursuant to those certain Founders' Stock PurchaseAgreements and agreements entered into pursuant to the Stock Plan and theCompany's obligation to redeem shares of its Preferred Stock as set forth in theRestated Certificate, there are no outstanding rights or obligations of the Companyto repurchase or redeem any of its securities.

(f) Except as contemplated in the Investor Rights Agreement, the Company hasnot granted or agreed to grant any registration rights, including piggyback rights,to any person or entity. To the Company's knowledge, [except as contemplated in

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the Voting Agreement (as defined below)], no stockholder of the Company hasentered into any agreements with respect to the voting of capital shares of theCompany.

[if representing the investors, consider adding:]

[(g) A list of stockholders of the Company, which contains the name,address and number of shares held by each stockholder, is attached to thisAgreement asExhibit C.]

2.3 Subsidiaries. The Company does not currently own or control, directly orindirectly, any interest in any other corporation, association, or other business entity.The Company is not a participant in any joint venture, partnership or similararrangement. [Note: If the Company has subsidiaries, add references to"subsidiaries" as appropriate throughout this Section 2, add "taken as a whole"to all "MAC" clauses and add capitalization and Company ownershipinformation with regard to the subsidiaries.]

2.4 Authorization and Compliance.

(a) All corporate action on the part of the Company, its officers, directors andstockholders necessary for the authorization, execution and delivery of thisAgreement, the Investor Rights Agreement in the form attached as Exhibit D (theInvestor Rights Agreement), the [Right of First Refusal and] Co-SaleAgreement in the form attached as Exhibit E (the "Co-Sale Agreement"), and theVoting Agreement in the form attached as Exhibit F (the Voting Agreement andcollectively with this Agreement, the Investor Rights Agreement and the Co-SaleAgreement, the Agreements), the performance of all obligations of the

Company hereunder and thereunder and the authorization, issuance and deliveryof the Shares and the Common Stock issuable upon conversion of the Shares(together with the Shares, the Securities) has been taken or will be taken prior tothe Closing, and the Agreements, when executed and delivered by the Company,shall constitute valid and legally binding obligations of the Company, enforceableagainst the Company in accordance with their respective terms except (i) aslimited by applicable bankruptcy, insolvency, reorganization, moratorium,fraudulent conveyance, and other laws of general application affectingenforcement of creditors' rights generally, and as limited by laws relating to theavailability of specific performance, injunctive relief, or other equitable remedies,or (ii) to the extent the indemnification provisions contained in the Investor RightsAgreement may be limited by applicable federal or state securities laws.

(b) Subject to Section 4.4 of this Agreement, neither the execution and deliveryof the Agreements nor the performance by the Company of its obligations underthe Agreements (including the issuance of the Shares (and the Common Stockissuable upon conversion thereof)) will: (i) violate any provisions of the RestatedCertificate or the By-laws of the Company; (ii) with or without the giving ofnotice or the passage of time, or both, violate, or be in conflict with, or constitute adefault under, or cause or permit the termination or the acceleration of thematurity of, any debt or obligation of the Company; (iii) require notice to or theconsent of any party to any agreement or commitment, including, withoutlimitation, any lease or license to which the Company is a party, or by which it or

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its properties is bound or subject; (iv) result in the creation or imposition of anysecurity interest, lien, or other encumbrance upon any property or assets of theCompany under any agreement or commitment to which it is a party, or by whichit or its properties is bound or subject; or (v) violate any statute or law or anyjudgment, decree, order, regulation or rule of any court or governmental authorityto which the Company or its properties is bound or subject.

2.5 Valid Issuance of Securities. The Shares when issued, sold and delivered inaccordance with the terms hereof will be duly and validly issued, fully-paid andnonassessable and, based in part upon the representations of the Purchasers in thisAgreement, will be issued in compliance with all applicable federal and statesecurities laws regarding registration or qualification. The shares of Common Stockissuable upon conversion of the Shares have been duly and validly authorized andreserved for issuance and, upon issuance in accordance with the terms of the RestatedCertificate, shall be duly and validly issued, fully-paid and nonassessable and, basedin part upon the representations of the Purchasers in this Agreement, such shares ofCommon Stock if issued at the Closing would be issued in compliance with allapplicable federal and state securities laws.

2.6 Governmental Consents. No consent, approval, order or authorization of, orregistration, qualification, designation, declaration or filing with, any federal, state orlocal governmental authority on the part of the Company is required in connectionwith the offer, sale or issuance of the Shares (and the Common Stock issuable uponconversion of the Shares) or the consummation of any other transactionscontemplated by this Agreement, except for (i) filings pursuant to [e.g., Section25102(f) of the California Corporate Securities Law of 1968, as amended, andthe rules thereunder, other] applicable state securities laws and Regulation D of theSecurities Act of 1933, as amended (the Securities Act), which filings shall beeffected within the requisite time periods, and (ii) the filing of the RestatedCertificate in the office of the Secretary of State of the State of Delaware which shallbe filed by the Company on or prior to the Closing.

2.7 Litigation. There is no action, suit, proceeding or investigation pending or, tothe Company's knowledge, currently threatened against the Company that questionsthe validity of the Agreements or the right of the Company to enter into them, or toconsummate the transactions contemplated hereby or thereby, or that might result,either individually or in the aggregate, in any material adverse change in thebusiness, properties or condition (financial or otherwise) of the Company, nor is theCompany aware that there is any basis for the foregoing. The Company is not a partyto or subject to the provisions of any order, writ, injunction, judgment or decree ofany court or government agency or instrumentality specifically applicable to theCompany. There is no action, suit, proceeding or investigation by the Companycurrently pending or which the Company intends to initiate.

2.8 Intellectual Property. [To its knowledge, the] [The] Company owns orpossesses sufficient legal rights to all patents, trademarks, service marks, tradenames,copyrights, trade secrets, licenses, information and proprietary rights and processesnecessary for its business as now conducted [and as proposed to be conducted as setforth in the Business Plan] without any conflict with, or infringement of, the rights ofothers. The Company has not received any [written] communications alleging thatthe Company has violated or, by conducting its business, would violate any of thepatents, trademarks, service marks, tradenames, copyrights, trade secrets or otherproprietary rights or processes of any other person or entity. The Company is not

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aware that any of its employees or independent contractors is obligated under anycontract (including licenses, covenants or commitments of any nature) or otheragreement, or subject to any judgment, decree or order of any court or administrativeagency, that would interfere with the use of such employee's or independentcontractor's best efforts to promote the interest of the Company or that would conflictwith the Company's business as now conducted [and as proposed to be conducted asset forth in the Business Plan]. Neither the execution or delivery of this Agreement,nor the carrying on of the Company's business by the employees and independentcontractors of the Company, nor the conduct of the Company's business as nowconducted [and as proposed to conducted as set forth in the Business Plan], will, tothe Company's knowledge, conflict with or result in a breach of the terms, conditions,or provisions of, or constitute a default under, any contract, covenant or instrumentunder which any such employee or independent contractor is now obligated. TheCompany does not believe it is or will be necessary to use any inventions of any ofits employees (or persons it currently intends to hire) made prior to their employmentby the Company. Set forth in Section 2.8 of the Schedule of Exceptions is a listing ofall patents and trademarks of the Company and all applications therefor. [Note:confer with IP attorneys to determine appropriateness of this representation.]

2.9 Compliance with Other Instruments and Laws; Permits. The Company isnot in violation or default of any provision of its Restated Certificate or By-Laws.The Company is not in violation of, or default under any provision of any instrument,mortgage, deed of trust, loan, contract, commitment, judgment, decree, order orobligation to which it is a party or by which it or any of its properties are bound,which violations or defaults, individually or in the aggregate, would materiallyadversely affect the business, properties or condition (financial or otherwise) of theCompany. To the Company's knowledge, it is not in violation of any provision of anyfederal, state or local statute, rule or governmental regulation which would materiallyadversely affect the business, properties or condition (financial or otherwise) of theCompany. The Company has all franchises, permits, licenses and any similarauthority necessary for the conduct of its business, the lack of which could materiallyand adversely affect the business, properties or condition (financial or otherwise) of

the Company. The Company is not in default in any material respect under any ofsuch franchises, permits, licenses or other similar authority.

2.10 Agreements; Actions.

(a) Except for agreements explicitly contemplated by the Agreements, there areno agreements, understandings, instruments, contracts or proposed transactions towhich the Company is a party or by which it is bound that involve (i) obligations(contingent or otherwise) of, or payments to, the Company in excess of, [e.g.,$25,000], (ii) the license of any patent, copyright, trade secret or other proprietaryright to or from the Company (other than end-user, object code, internal use

software licenses and support/maintenance agreements), or (iii) the grant of rightsto any person or entity to manufacture, produce, assemble, license, market, or sellthe Company's products or services or affect adversely the Company's exclusiveright to develop, manufacture, assemble, distribute, market or sell its products orservices.

(b) The Company has not (i) declared or paid any dividends, or authorized ormade any distribution upon or with respect to any class or series of its capitalstock (including any repurchases thereof), (ii) incurred any indebtedness formoney borrowed or incurred any other liabilities individually in excess of [e.g.,

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$25,000] or in excess of[e.g., $100,000] in the aggregate, (iii) made any loans oradvances to any person or entity, other than ordinary advances for travel expenses,or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, otherthan the sale of its inventory in the ordinary course of business.

(c) The Company is not a guarantor or indemnitor of any indebtedness of anyother person or entity.

[(d) The Company has not engaged in the past three months in any discussion(i) with any representative of any entity or entities regarding the merger of theCompany with or into any such entity or entities or any affiliate thereof, (ii) withany representative of any entity or any individual regarding the sale, conveyanceor disposition of all or substantially all of the assets of the Company or atransaction or series of related transactions in which more than fifty percent (50%)of the voting power of the Company would be disposed of, or (iii) regarding anyother form of liquidation, dissolution or winding up of the Company.]

[2.11 Disclosure. The Company has fully provided the Purchasers with all theinformation that the Purchasers have requested for deciding whether to acquirethe Shares and all information that the Company believes is reasonablynecessary to enable the Purchasers to make such a decision, including certain ofthe Company's projections describing its proposed business (collectively, the"Business Plan"). [To the Company's knowledge, no] [No] representation orwarranty of the Company contained in this Agreement, any certificatefurnished or to be furnished to the Purchasers at the Closing, or any otherdocuments furnished to the Purchasers, including the Business Plan, when readtogether, contains any untrue statement of a material fact or omits to state amaterial fact necessary in order to make the statements contained herein ortherein not misleading in light of the circumstances under which they weremade. To the extent the Business Plan was prepared by management of the

Company, the Business Plan and the financial and other projections containedin the Business Plan were prepared in good faith; however, the Company doesnot warrant that it will achieve such projections nor has it assumed anyobligation to the Purchasers to update such projections.]

2.12 Related Party Transactions. The Company is not indebted, directly orindirectly, to any of its stockholders, officers or directors or to their respectiveaffiliates, spouses or children, in any amount whatsoever other than in connectionwith payments for services rendered and for expenses or advances of expensesincurred in the ordinary course of business or relocation expenses of employees. Tothe Company's knowledge, none of the Company's stockholders, officers or directors,or any affiliates thereof or members of their immediate families, are, directly or

indirectly, indebted to the Company (other than in connection with purchases of theCompany's stock) or have any direct or indirect ownership interest in any entity withwhich the Company is affiliated or with which the Company has a businessrelationship, or any entity which competes with the Company, except that officers,directors and/or stockholders of the Company may own stock in (but not exceedingtwo percent of the outstanding capital stock of) any publicly traded company thatmay compete with the Company. To the Company's knowledge, none of theCompany's stockholders, officers or directors or any members of their immediatefamilies are, directly or indirectly, interested in any material contract with theCompany (other than to the extent any such person or entity is a party to anAgreement).

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2.13 Title to Assets. The Company has good and marketable title to all of itsassets that it purports to own, free and clear of all mortgages, liens, loans andencumbrances, except such encumbrances and liens which arise in the ordinarycourse of business and do not individually or in the aggregate materially impair theCompany's ownership or use of such assets. With respect to the assets it leases, theCompany is in material compliance with such leases and, to its knowledge, holds avalid leasehold interest free of any liens, claims or encumbrances.

2.14 Financial Statements. The Company has made available to each Purchaserits [unaudited] [audited] financial statements (including balance sheet, incomestatement and statement of cash flows) as of ________ and for the fiscal year ended________ [and its unaudited financial statements (including balance sheet,income statement and statement of cash flows) as of ________ and for the three-month period ended ________ ] (collectively, the Financial Statements). TheFinancial Statements have been prepared in accordance with generally acceptedaccounting principles applied on a consistent basis throughout the periods indicated,[except that the unaudited Financial Statements may not contain all footnotes

required by generally accepted accounting principles]. The Financial Statementsfairly present the financial condition and operating results of the Company as of thedates, and for the periods, indicated therein, subject to normal year-end auditadjustments. Except as set forth in the Financial Statements, the Company has nomaterial liabilities, contingent or otherwise, other than (i) liabilities incurred in theordinary course of business subsequent to ________ and (ii) obligations undercontracts and commitments incurred in the ordinary course of business and notrequired under generally accepted accounting principles to be reflected in theFinancial Statements, which, in both cases, individually or in the aggregate are notmaterial to the financial condition or operating results of the Company. OR [TheCompany has had no significant operations and has not prepared any financialstatements.]

[Note: The following section may not be relevant in that financial statements(and their cutoff date) did not form the basis for the Purchasers' investmentdecision. In any event the section should be reviewed carefully for applicability.]

2.15 Changes. Since ________ , there has not been:

(a) any change in the assets, liabilities, financial condition or operating resultsof the Company from that reflected in the Financial Statements, except changes inthe ordinary course of business that have not been, in the aggregate, materiallyadverse;

(b) any damage, destruction or loss, whether or not covered by insurance,materially and adversely affecting the business, properties or condition (financialor otherwise) of the Company;

(c) any waiver or material compromise by the Company of a valuable right orof a material debt owed to it;

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(d) any satisfaction or discharge of any lien, claim or encumbrance or paymentof any obligation by the Company, except in the ordinary course of business andthat is not material to the business, properties or condition (financial or otherwise)of the Company;

(e) any material change to a material contract or arrangement by which theCompany or any of its assets is bound or subject;

(f) any material change in any compensation arrangement or agreement withany employee, officer, director or stockholder;

(g) any sale, assignment or transfer of any patents, trademarks, copyrights,trade secrets or other intangible assets;

(h) any receipt of notice by the Company that there has been a loss of, ormaterial order cancellation by, any major customer of the Company;

(i) any resignation or termination of employment of any officer or keyemployee of the Company, and the Company is not aware of any impendingresignation or termination of employment of any such officer or key employee;

(j) any mortgage, pledge, transfer of a security interest in, or lien, created bythe Company, with respect to any of its material properties outside the ordinarycourse of business;

(k) any loans or guarantees made by the Company to or for the benefit of its

employees, officers or directors, or any members of their immediate families,other than travel advances and other advances made in the ordinary course of itsbusiness;

(l) any declaration, setting aside or payment or other distribution in respect ofany of the Company's capital stock, or any direct or indirect redemption, purchase,or other acquisition of any of such stock by the Company;

(m) to the Company's knowledge, any other event or condition of any characterthat might materially and adversely affect the business, properties or condition(financial or otherwise) of the Company;

[(n) any change in the proposed operations set forth in the Business Plan;] [or]

(o) any arrangement or commitment by the Company to do any of the thingsdescribed in this Section 2.15.

2.16 Employee Benefit Plans. The Company does not have any EmployeeBenefit Plan as defined in the Employee Retirement Income Security Act of 1974.

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2.17 Tax Matters. The Company has filed all tax returns and reports as requiredby law. These returns and reports are true and correct in all material respects. TheCompany has paid all taxes and other assessments due. The Company has not electedpursuant to the Internal Revenue Code of 1986, as amended (the Code), to betreated as a Subchapter S corporation or a collapsible corporation pursuant to Section1362(a) or Section 341(f) of the Code, nor has it made any other elections pursuant tothe Code (other than elections that relate solely to methods of accounting,depreciation or amortization) that would have a material effect on the business, properties or condition (financial or otherwise) of the Company. None of theCompany's tax returns have ever been audited by any governmental authorities. TheCompany has withheld or collected from each payment made to its employees theamount of all taxes (including without limitation, federal income taxes, FederalInsurance Contribution Act taxes and Federal Unemployment Tax Act taxes)required to be withheld or collected therefrom, and has paid the same to the propertax receiving officers or authorized depositories.

2.18 Insurance. The Company has in full force and effect fire and casualty

insurance policies, with extended coverage, sufficient in amount (subject toreasonable deductibles) to allow it to replace any of its properties that might bedamaged or destroyed.

2.19 Labor Matters. The Company has no collective bargaining agreements withany of its employees. There is no labor union organizing activity pending or, to theknowledge of the Company, threatened with respect to the Company. No current or prospective employee of the Company has been granted the right to continuedemployment by the Company or to any material compensation or other benefitsfollowing termination of employment with the Company or any change in its control.The Company is not aware that any officer or key employee intends to terminate hisor her employment with the Company within the six months after Closing. The

Company does not have a present intention to terminate the employment of anyofficer or key employee. Each officer and key employee is devoting 100% of his orher business time to the conduct of the business of the Company. The Company isnot aware that any officer or key employee intends to work less than full time duringthe six months after Closing.

2.20 Confidential Information and Invention Assignment Agreements. Eachemployee and independent contractor of the Company has executed an agreementwith the Company regarding confidentiality and proprietary information substantiallyin the form or forms delivered to the counsel for the Purchasers. The Company is notaware that any of its employees or independent contractors is in violation thereof.

2.21 Corporate Documents. The Restated Certificate and By-Laws of theCompany are in the form provided to counsel for the Purchasers. The copy of theminute books of the Company provided to the Purchasers' counsel contains true andcorrect minutes of all meetings of directors (including any committees thereof) andstockholders and all actions by written consent taken without a meeting by thedirectors and stockholders since [the date of incorporation].

[2.22 Environmental and Safety Laws. [To its knowledge, the] [The]Company is not in violation of any applicable statute, law or regulation relating

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to the environment or occupational health and safety, and to its knowledge, nomaterial expenditures are or will be required in order to comply with any suchexisting statute, law or regulation. No Hazardous Materials (as defined below)are used or have been used, stored, or disposed of by the Company or, to theCompany's knowledge [after reasonable investigation], by any other person orentity on any property owned, leased or used by the Company. For the purposesof the preceding sentence, "Hazardous Materials" shall mean (a) materialswhich are listed or otherwise defined as "hazardous" or "toxic" under anyapplicable local, state, federal and/or foreign laws and regulations that governthe existence and/or remedy of contamination on property, the protection of theenvironment from contamination, the control of hazardous wastes, or otheractivities involving hazardous substances, including building materials or (b)any petroleum products or nuclear materials.]

[If you represent the Company, try to avoid making any representationsregarding Section 1202 of the I.R.C.. If you must include a representation, usethe first of the following representations, and contact someone in the TaxDepartment to review compliance. If you represent the investors, use the secondrepresentation.]

[2.23 Qualified Small Business Stock. The Company represents and warrantsto the Purchasers that, to its knowledge, the Shares should qualify as "QualifiedSmall Business Stock" as defined in Section 1202(c) of the Internal RevenueCode of 1986, as amended as of the date hereof.]

[2.23 Qualified Small Business Stock.

(a) As of and immediately following the Closing, the Shares will meet eachof the requirements for qualification as "qualified small business stock" set

forth in Section 1202(c) of the Internal Revenue Code of 1986, as amended(the "Code"), including without limitation the following: (i) the Companywill be a domestic C corporation, (ii) the Company will not have made anypurchases of its own stock described in Code Section 1202(c)(3)(B) during theone-year period preceding the Closing, and (iii) the Company's (and anypredecessor's) aggregate gross assets, as defined by Code Section 1202(d)(2),at no time from the date of incorporation of the Company and through theClosing have exceeded or will exceed $50 million, taking into account theassets of any corporations required to be aggregated with the Company inaccordance with Code Section 1202(d)(3).

(b) As of the Closing, at least 80% (by value) of the assets of the Company

are used by it in the active conduct of one or more qualified trades orbusinesses, as defined by Code Section 1202(e)(3), and the Company is aneligible corporation, as defined by Code Section 1202(e)(4).]

3. Representations and Warranties of the Purchasers. Each Purchaser, severallyand not jointly, hereby represents and warrants to the Company that as of the datehereof and as of the Closing:

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3.1 Authorization. Such Purchaser has full power and authority to enter into theAgreements. The Agreements, when executed and delivered by such Purchaser, willconstitute valid and legally binding obligations of such Purchaser, enforceable inaccordance with their respective terms, except (a) as limited by applicablebankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and anyother laws of general application affecting enforcement of creditors' rights generally,and as limited by laws relating to the availability of a specific performance,injunctive relief, or other equitable remedies, or (b) to the extent the indemnificationprovisions contained in the Investor Rights Agreement may be limited by applicablefederal or state securities laws.

3.2 Experience; Accredited Investor. Such Purchaser has experience as aninvestor in securities of companies in the developmental stage and acknowledges thatit can bear the economic risk of its investment in the Securities. Such Purchaser haseither (a) a preexisting personal or business relationship with the Company or any ofits officers, directors or controlling persons that is of a nature and duration whichenables the Purchaser to be aware of the character, business acumen and generalbusiness and financial circumstances of the Company or (b) by reason of its businessor financial experience or the business or financial experience of its professional

advisors who are unaffiliated with and who are not compensated by the Company orany affiliate or selling agent of the Company, directly or indirectly, has the capacityto protect its own interests in connection with its purchase of the Securities. SuchPurchaser has the financial capacity to bear the risk of this investment. SuchPurchaser is an accredited investor as defined in Rule 501(a) of Regulation Dpromulgated under the Securities Act.

3.3 Purchase Entirely for Own Account. The Securities to be acquired by thePurchaser will be acquired for investment for the Purchaser's own account (or a trustaccount if such Purchaser is a nominee), not as a nominee or agent, and not with aview to the resale or distribution of any part thereof, and that the Purchaser has nopresent intention of selling, granting any participation in, or otherwise distributing

the same. The Purchaser does not presently have any contract, undertaking,agreement or arrangement with any person or entity to sell, transfer or grant participations to such person or to any third person, with respect to any of theSecurities. The Purchaser has not been formed for the specific purpose of acquiringsolely the Securities.

3.4 Disclosure of Information. Such Purchaser has received and reviewedinformation about the Company and has had an opportunity to discuss the Company'business, management and financial affairs with its management and to review theCompany's facilities. Such Purchaser understands and acknowledges that suchdiscussions, as well as any written information issued by the Company [, includingthe Business Plan,] (i) were intended to describe the aspects of the Company's

business and prospects which the Company believes to be material, but were notnecessarily an exhaustive description, and (ii) may have contained forward-lookingstatements involving known and unknown risks and uncertainties which may causethe Company's actual results in future periods or plans for future periods to differmaterially from what was anticipated and that no representations or warranties wereor are being made with respect to any such forwardlooking statements or theprobability of achieving any of the results projected in any of such forward-lookingstatements. Nothing contained in this Section 3.4 shall limit in any respect theCompany's representations and warranties contained in this Agreement.

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3.5 Restricted Securities. The Purchaser understands that the Securities have notbeen, and will not be, registered under the Securities Act, by reason of a specificexemption from the registration provisions of the Securities Act which depends upon,among other things, the bona fide nature of the investment intent and the accuracy ofthe Purchaser's representations as expressed herein. The Purchaser understands thatthe Securities are "restricted securities" under applicable U.S. federal and statesecurities laws and that, pursuant to these laws, the Purchaser must hold theSecurities indefinitely unless they are registered with the Securities and ExchangeCommission and qualified by state authorities, or an exemption from suchregistration and qualification requirements is available. The Purchaser acknowledgesthat the Company has no obligation to register or qualify the Securities for resale[except as set forth in the Investor Rights Agreement]. The Purchaser furtheracknowledges that if an exemption from registration or qualification is available, itmay be conditioned on various requirements including, but not limited to, the timeand manner of sale, the holding period for the Securities, and on requirementsrelating to the Company which are outside of the Purchaser's control, and which theCompany is under no obligation and may not be able to satisfy. Such Purchaseracknowledges that the Company will make a notation on its stock books regardingthe restrictions on transfers set forth in this Section 3 and will transfer securities onthe books of the Company only to the extent not inconsistent therewith.

3.6 No Public Market. The Purchaser understands that no public market nowexists for any of the securities issued by the Company, and that the Company hasmade no assurances that a public market will ever exist for the Securities.

3.7 Residence. If the Purchaser is an individual, the Purchaser resides in the stateor province identified in the address of the Purchaser set forth on the signature pageshereof or Exhibit A; if the Purchaser is an entity, then the office or offices of thePurchaser in which its investment decision was made is located at the address oraddresses of the Purchaser set on such signature pages or Exhibit A.

3.8 Further Restrictions on Disposition. Without in any way limiting theprovisions of Section 3.5, such Purchaser agrees not to make any disposition of all orany portion of the Securities unless and until the transferee has agreed in writing forthe benefit of the Company to be bound by this Section 3 and the Agreements(provided and to the extent the Agreements are then applicable), and any of thefollowing conditions apply: (a) There is then in effect a registration statement underthe Securities Act covering such proposed disposition and the disposition is made inaccordance with such registration statement; or (b) (i) such Purchaser shall havenotified the Company of the proposed disposition and shall have furnished theCompany with a statement of the circumstances surrounding the proposed dispositionand (ii) if reasonably requested by the Company, such Purchaser shall have furnishedthe Company with an opinion of counsel, reasonably acceptable to the Company, that

such disposition will not require registration under the Securities Act. It is agreed thatthe Company will not require opinions of counsel for transactions made pursuant toRule 144 except in unusual circumstances. Notwithstanding clauses (a) and (b), nosuch registration statement or opinion shall be required for a transfer by a Purchaserto her, his or its (1) constituent partner or member, (2) former partner or member, (3)estate, (4) spouse, sibling or the lineal descendants or ancestors of the Purchaser orhis or her spouse or (5) affiliate; provided, however, that any such transferee agreesin writing to be subject to the terms of the Agreements then applicable to thePurchaser.

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3.9 Legends. The Purchaser understands that the Securities, and any securitiesissued in respect of or exchange for the Securities, may bear one or all of thefollowing legends until they are no longer required by law or the provisions of thisAgreement:

(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVEBEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR INCONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCHSALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVEREGISTRATION STATEMENT RELATED THERETO OR AN OPINION OFCOUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCHREGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF1933."

(b) Any legend set forth in the other Agreements.

(c) Any legend required by the Blue Sky laws of any state to the extent suchlaws are applicable to the shares represented by the certificate so legended.

The legend set forth above shall be removed by the Company from any certificateevidencing Shares upon transfer of the Shares in compliance with Rule 144(k) underthe Securities Act or upon delivery to the Company of an opinion, in form andsubstance and by counsel reasonably satisfactory to the Company, that a registrationstatement under the Securities Act is at that time in effect with respect to thelegended security or that such security can be freely transferred without such aregistration statement being in effect and that such transfer will not jeopardize theexemption or exemptions from registration pursuant to which the Shares were issued.

3.10 Foreign Investors. If the Purchaser is not a United States person (as defined

by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), suchPurchaser hereby represents that it has satisfied itself as to the full observance of thelaws of its jurisdiction in connection with any invitation to subscribe for the Sharesor any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictionsapplicable to such purchase, (iii) any governmental or other consents that may needto be obtained, and (iv) the income tax and other tax consequences, if any, that maybe relevant to the purchase, holding, redemption, sale, or transfer of the Shares. SuchPurchaser's subscription and payment for and continued beneficial ownership of theShares, will not violate any applicable securities or other laws of the Purchaser'sjurisdiction.

4. Conditions of the Purchasers' Obligations at Closing. The obligations of eachPurchaser to the Company under this Agreement are subject to the fulfillment, onor before the Closing, of each of the following conditions, unless otherwise waivedby such Purchaser:

4.1 Representations and Warranties. The representations and warranties of theCompany contained in Section 2 and 6.7 shall be true and correct on and as of theClosing with the same effect as though such representations and warranties had beenmade on and as of the date of the Closing.

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4.2 Performance. The Company shall have performed and complied with allcovenants, agreements, obligations and conditions contained in this Agreement thatare required to be performed or complied with by it on or before the Closing.

4.3 Compliance Certificate. The President of the Company shall deliver to thePurchasers at the Closing a certificate certifying that the conditions specified inSections 4.1 and 4.2 have been fulfilled.

4.4 Qualifications. All authorizations, approvals or permits, if any, of anygovernmental authority or regulatory body of the United States or of any state thatare required to be in effect as of the Closing in connection with the lawful issuanceand sale of the Shares pursuant to this Agreement shall be obtained and effective asof the Closing. [Review whether a Hart-Scott-Rodino filing is required.]

4.5 Opinion of Company Counsel. The Purchasers shall have received from[________ ], counsel for the Company, an opinion, dated as of the Closing, insubstantially the form of Exhibit G.

4.6 Board of Directors. As of the Closing, the Board shall be comprised of________ .

4.7 Investor Rights Agreement. The Company, each Purchaser and [Add forpost Series A: the requisite number of any other parties named in the signaturepages thereto] shall have executed and delivered the Investor Rights Agreement insubstantially the form attached as Exhibit D.

4.8 Co-Sale Agreement. The Company, each Purchaser, and and [the requisite

number of any other parties named in the signature pages thereto] shall haveexecuted and delivered the Co-Sale Agreement in substantially the form attached asExhibit E.

4.9 Voting Agreement. The Company, each Purchaser, and [the requisitenumber of any other parties named in the signature pages thereto] shall haveexecuted and delivered the Voting Agreement in substantially the form attached asExhibit F.

4.10 Restated Certificate. The Company shall have filed the Restated Certificatewith the Secretary of State of Delaware on or prior to the Closing Date, which shall

continue to be in full force and effect as of the Closing Date.

4.11 [Minimum Closing Amount]. The aggregate purchase price to be receivedby the Company at the Closing shall be at least $________ .

4.12 [Others].

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5. Conditions of the Company's Obligations at Closing. The obligations of theCompany to each Purchaser under this Agreement are subject to the fulfillment,on or before the Closing, of each of the following conditions, unless otherwisewaived:

5.1 Representations and Warranties. The representations and warranties of eachPurchaser contained in Section 3 and 6.7 shall be true and correct on and as of theClosing with the same effect as though such representations and warranties had beenmade on and as of the Closing.

5.2 Performance. All covenants, agreements and conditions contained in thisAgreement to be performed by the Purchasers on or prior to the Closing shall havebeen performed or complied with in all material respects.

5.3 Qualifications. All authorizations, approvals or permits, if any, of anygovernmental authority or regulatory body of the United States or of any state thatare required to be in effect as of the Closing in connection with the lawful issuance

and sale of the Shares pursuant to this Agreement shall be obtained and effective asof the Closing.

5.4 Investor Rights Agreement. The Company, each Purchaser and [therequisite number of any other parties named in the signature pages thereto]shall have executed and delivered the Investor Rights Agreement in substantially theform attached as Exhibit D.

5.5 Voting Agreement. The Company, each Purchaser, and [the requisitenumber of any other parties named in the signature pages thereto] shall haveexecuted and delivered the Voting Agreement in substantially the form attached as

Exhibit F.

6. Miscellaneous.

6.1 Survival of Warranties. Unless otherwise set forth in this Agreement, therepresentations and warranties of the Company and the Purchasers contained in ormade pursuant to this Agreement shall survive the execution and delivery of thisAgreement and the Closing [for a period of one (1) year following the Closing];provided, however, that such representations and warranties are only made as of thedate of such execution and delivery and as of such Closing. The covenants set forthin Section 3.8 shall survive indefinitely.

6.2 Transfer; Successors and Assigns. The terms and conditions of thisAgreement shall inure to the benefit of and be binding upon the respective successorsand assigns of the parties as are permitted by the Agreements. Nothing in thisAgreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights,remedies, obligations, or liabilities under or by reason of this Agreement, except asexpressly provided in this Agreement.

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6.3 Governing Law. This Agreement and all acts and transactions pursuant heretoand the rights and obligations of the parties hereto shall be governed, construed andinterpreted in accordance with the laws of the State of [________ ], without givingeffect to its principles of conflicts of law or choice of law.

6.4 Counterparts. This Agreement may be executed in any number ofcounterparts and signatures may be delivered by facsimile, each of which may beexecuted by less than all Purchasers, each of which shall be enforceable against theparties actually executing such counterparts, and all of which together shall constituteone instrument.

6.5 Titles and Subtitles. The titles and subtitles used in this Agreement are usedfor convenience only and are not to be considered in construing or interpreting thisAgreement.

6.6 Notices. Any notice required or permitted by this Agreement shall be inwriting and shall be deemed sufficient upon delivery, when delivered personally or

by overnight courier or sent by telegram or fax, or forty-eight (48) hours after beingdeposited in the U.S. mail, as certified or registered mail, with postage prepaid,addressed to the party to be notified at such party's address as set forth on thesignature page or Exhibit A hereto, or as subsequently modified by written notice,and (a) if to the Company, with a copy to [Company Counsel Name and Address]or (b) if to the Purchasers, with a copy to [Purchaser Counsel Name andAddress].

6.7 Finder's Fee. Each party represents that it neither is nor will be obligated forany finder's fee or commission in connection with this transaction. Each Purchaseragrees to indemnify and to hold harmless the Company from any liability for anycommission or compensation in the nature of a finder's fee (and the costs and

expenses of defending against such liability or asserted liability) for which eachPurchaser or any of its officers, employees, or representatives is responsible. TheCompany agrees to indemnify and hold harmless each Purchaser from any liabilityfor any commission or compensation in the nature of a finder's fee (and the costs andexpenses of defending against such liability or asserted liability) for which theCompany or any of its officers, employees or representatives is responsible.

6.8 Fees and Expenses. The Company and the Purchasers shall bear their ownexpenses and legal fees incurred on their behalf with respect to this Agreement andthe transactions contemplated hereby; provided, however, that the Company shallbear up to $________ for the reasonable fees and expenses of [the Purchasers][________ ] incurred on their behalf with respect to this Agreement and the

transactions contemplated hereby upon receipt of reasonably detailed documentationtherefor. [Note: for investments made by nonventure firms, the investorsfrequently bear their own expenses.]

6.9 Attorney's Fees. If any action at law or in equity (including arbitration) isnecessary to enforce or interpret the terms of any of the Agreements, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessarydisbursements in addition to any other relief to which such party may be entitled.

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6.10 Amendments and Waivers. Any term of this Agreement may be amendedor waived (either generally or in a particular instance and either retroactively orprospectively) only with the written consent of the Company and the holders of atleast [a majority] of the Common Stock issued or issuable upon conversion of theShares. Any amendment or waiver effected in accordance with this Section 6.10 shallbe binding upon the Purchasers and each transferee of the Shares (or the CommonStock issuable upon conversion thereof), each future holder of all such securities, andthe Company.

6.11 Severability. If one or more provisions of this Agreement are held to beunenforceable under applicable law, the parties agree to renegotiate such provision ingood faith. In the event that the parties cannot reach a mutually agreeable andenforceable replacement for such provision, then (a) such provision shall be excludedfrom this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall beenforceable in accordance with its terms.

6.12 Delays or Omissions; Remedies Cumulative. No delay or omission to

exercise any right, power or remedy accruing to any party under this Agreement,upon any breach or default of any other party under this Agreement, shall impair anysuch right, power or remedy of such non-breaching or non-defaulting party nor shallit be construed to be a waiver of any such breach or default, or an acquiescencetherein, or of or in any similar breach or default thereafter occurring; nor shall anywaiver of any single breach or default be deemed a waiver of any other breach ordefault theretofore or thereafter occurring. Any waiver, permit, consent or approvalof any kind or character on the part of any party of any breach or default under thisAgreement, or any waiver on the part of any party of any provisions or conditions ofthis Agreement, must be in writing and shall be effective only to the extentspecifically set forth in such writing. All remedies, either under this Agreement or bylaw or otherwise afforded to any party, shall be cumulative and not alternative.

6.13 Entire Agreement. This Agreement and the Exhibits hereto constitute theentire agreement among the parties hereto pertaining to the subject matter hereof, andany and all other written or oral agreements relating to the subject matter hereofexisting among any of the parties hereto are expressly canceled.

[6.14 [e.g., California Corporate Securities Law. THE SALE OF THESECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOTBEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OFTHE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES ORTHE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATIONTHEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE

SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BYSECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONSCODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT AREEXPRESSLY CONDITIONED UPON THE QUALIFICATION BEINGOBTAINED UNLESS THE SALE IS SO EXEMPT.]]

6.15 Confidentiality. The Company and each Purchaser agrees that, except withthe prior written permission of the applicable party, it shall at all times keepconfidential and not divulge, furnish or make accessible to anyone any confidentialinformation, knowledge or data concerning or relating to the business or financial

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affairs of the other parties to which such party has been or shall become privy byreason of this Agreement, discussions or negotiations relating to this Agreement, theperformance of its obligations hereunder or the ownership of Shares purchasedhereunder. The provisions of this Section 6.15 shall be in addition to, and not insubstitution for, the provisions of any separate nondisclosure agreement executed bythe parties hereto with respect to the transactions contemplated hereby.

6.16 Exculpation Among Purchasers. Each Purchaser acknowledges that it isnot relying upon any person or entity, other than the Company and itsrepresentatives, in making its investment or decision to invest in the Company. EachPurchaser agrees that no Purchaser nor the respective controlling persons, officers,directors, partners, members, agents, or employees of any Purchaser shall be liable toany other Purchaser for any action heretofore or hereafter taken or omitted to betaken by any of them in connection with the purchase of the Securities.

[6.17 Waiver of Conflicts. Each party to this Agreement acknowledges that[name of company's counsel], counsel for the Company, has in the past performedand may continue to perform legal services for certain of the Purchasers in matters

unrelated to the transactions described in this Agreement, including [therepresentation of such Purchasers in venture capital financings and othermatters]. Accordingly, each party to this Agreement hereby (a) acknowledges that________[name of Company's counsel] has represented the Company and not anyof the Purchasers with respect to the transactions contemplated herein, (b)acknowledges that they have had an opportunity to ask for information relevant tosuch representation; and (c) gives its informed consent to [name of company'scounsel] representation of certain of the Purchasers in such unrelated matters and to[name of company's counsel] representation of the Company in connection withthis Agreement and the transactions contemplated hereby.]

[6.18 Acknowledgement as to Counsel. The parties acknowledge and agree that

________[name of Company's counsel] has prepared this Agreement and the otherdocuments contemplated hereby as counsel to the Company and not as counsel to thePurchasers, and that each Purchaser is entitled to retain his or its own counsel at hisor its own expense.]

[Signature Pages Follow]

The parties have executed this Series A Preferred Stock Purchase Agreement as of thedate first written above.

COMPANY:

[COMPANY NAME]

By: ________

Name:________(print)

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Title: ________

Address:

PURCHASERS:

_______________(Print Name of Purchaser)

By: ________

Name: ________(print)

Title: ________

Address:

EXHIBITS

Exhibit A -- Schedule of Purchasers

Exhibit B -- Form of Amended and Restated Certificate of Incorporation

Exhibit C -- Schedule of Exceptions to Representations and Warranties

[Exhibit C -- List of Stockholders]

Exhibit D -- Form of Investor Rights Agreement

Exhibit E -- Form of[Right of First Refusal and] Co-Sale Agreement

Exhibit F -- Form of Voting Agreement

Exhibit G -- Form of Legal Opinion of[name of Company's counsel]

[Exhibit H-- Form of Addendum Agreement]