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Placement Memorandum (Series A

Round) (Model)

Name of Offeree: [__________] Copy No. [_____]

Investors should be aware that issuers sometimes do not want the investors to know
certain information. For example, some issuers elect to code the numbers on the
private placement memorandum so that no investor knows he is receiving, say,
number 140; he is, instead, receiving "14-G." Some old hands advise against dating
the document, else the recipient may know at a glance the issuer has been struggling
for months.

NOT TO BE REPRODUCED OR DISTRIBUTED


NEWCO, INC.
[_____] SHARES
Issuers should approach offerings that have stated maximums and minimums, or an
exact number of shares, with caution. The SEC has made its position clear. If the
issuer elects to increase or decrease the size of the offering above/below the stated
maximum/minimum, each of the investors who has signed subscription agreements
must consent to the change in writing.[1] It is not open to the issuer to send out a
notice to the effect that "We are raising or lowering the minimum and, if we do not
hear from you, we assume you consent." The issuer must obtain the affirmative
consent of each investor, which may be a bit difficult if the investor is in a remote
location.

CONVERTIBLE PREFERRED STOCK, SERIES A


(€.01 Par Value)
[DATE]
Please Do Not Examine The Contents Unless You Have Executed the Attached
Confidentiality Agreement

The resistance of venture capitalists to executing confidentiality agreements is


legendary, at least until the term sheet stage.

Ready Capital Associates, Inc.


Placement Agent
This Memorandum relates to the issuance and sale of [_____] shares of Convertible
Preferred Stock, Series A, par value €.01 per share (the "Shares" or "Series A

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Preferred Stock"), of Newco, a Delaware corporation (the "Company"). The Shares
are convertible at any time at the option of the holder into shares of the Company's
Common Stock on a one share for one share basis. The Shares are not redeemable [are
redeemable at the option of the holder] and carry no stated dividend. The Shares have
a liquidation preference of €[_____] per Share.

This Offering Memorandum contains certain "forward-looking statements" (as such


term is defined in the Private Securities Litigation Reform Act of 1995), which can be
identified by the use of forward-looking terminology such as "believes," "expects,"
"may," "will," "should," or "anticipates" or the negative thereof, or other variations
thereon or comparable terminology, or by discussions of strategy that involve risk and
uncertainties. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause the actual results, performance, or
achievements of the Company or industry to be materially different from any future
results, performance, or achievements expressed or implied by such forward-looking
statements. Such factors include the timing, costs, and scope of any acquisition, the
revenue and profitability levels of any company that it may acquire, the anticipated
reduction of operating costs resulting from the integration and optimization of such
companies, and other matters contained above and herein in this Offering
Memorandum. Certain of these factors are discussed in more detail elsewhere in this
Offering Memorandum including, without limitation, under "Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Business." Given these uncertainties, prospective investors are
cautioned not to place undue reliance on such forward-looking statements. These
forward-looking statements are based on current expectations, and the Company
assumes no obligations to update this information.

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED


UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). NEITHER THE SECURITIES OFFERED BY THIS
MEMORANDUM NOR THE MERITS OF THIS OFFERING HAVE BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY SIMILAR REGULATORY AGENCY OF ANY STATE;
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, OR ANY
SIMILAR REGULATORY AGENCY OF ANY STATE, PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH


DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION. See "RISK
FACTORS."

1. The Shares will be sold on a "best efforts" basis exclusively through Ready
Capital, Inc. ("Agent"), which will be entitled to receive a placement fee of
[_____]% of the aggregate purchase price of all Shares sold, except that Agent
will receive a [_____]% placement fee (€[_____] per share) for sales resulting
from the Company's direct selling efforts. Agent will also be entitled to
purchase for a nominal amount five-year warrants to purchase [_____] shares
of Common Stock. The Company has agreed to indemnify Agent against

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certain civil liabilities, including liabilities under the Securities Act of 1933, as
amended. See "THE OFFERING."
2. Before deducting expenses payable by the Company (excluding the fees
referred to in Note 1 above) estimated to be €[_____].

The Shares are being offered for sale only to "accredited investors", subject to the
Company's right to reject subscriptions, in whole or in part. The minimum
subscription will be [_____] Shares, unless otherwise approved by the Company. The
Company reserves the right, in its discretion, to reject any subscription by any
investor and to hold multiple closings.

THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR


SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. IN ADDITION, THIS
MEMORANDUM CONSTITUTES AN OFFER ONLY TO THE PERSON WHOSE
NAME APPEARS IN THE SPACE MARKED "NAME OF OFFEREE" ON THE
COVER PAGE.

[COMPANY NAME]

The securities offered hereby will be sold subject to the provisions of a stock
subscription agreement (the "Subscription Agreement") containing certain
representations, warranties, terms, and conditions. Any investment in the securities
offered hereby should be made only after a complete and thorough review of the
provisions of the Subscription Agreement.

The Company will make available to any prospective qualified investor, prior to the
closing, the opportunity to ask questions of and receive answers from the Company or
persons acting on behalf of the Company concerning the terms and conditions of the
offering and the business and operations of the Company, and to obtain any additional
information to the extent the Company possesses such information.

This Memorandum contains summaries, believed by the Company to be accurate, of


certain agreements and other documents which are identified under "Documents
Available For Inspection." All such summaries are qualified in their entirety by
reference to such agreements or documents referred to herein, which documents will
be available to qualified prospective investors. This Memorandum does not purport to
be all-inclusive or contain all of the information which a prospective investor may
desire. The delivery of this memorandum at any time does not imply that information
herein is correct as of any time subsequent to its date. The forecasts included herein
have been prepared on the basis of assumptions stated therein. Future operating
results are impossible to predict and no representation of any kind is made respecting
the future accuracy or completeness of these forecasts. Inquiries regarding this
Memorandum should be directed to the Company [ADDRESS] or to the Placement
Agent [ADDRESS].

No person is authorized to give any information or make any representations (whether


oral or written) in connection with this offering except such information as is
contained in this Memorandum and in the exhibits hereto and documents summarized

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herein. Only information or representations contained herein may be relied upon as
having been authorized.

This Memorandum is not an offer to sell to or a solicitation of an offer to buy from,


nor shall any securities be offered or sold to, any person in any jurisdiction in which
such offer, solicitation, purchase or sale would be unlawful under the securities laws
of such jurisdiction.

This investment involves a high degree of risk. It is speculative and suitable only for
persons who have substantial financial resources and have no need for liquidity in this
investment. Further, this investment should only be made by those who understand or
have been advised with respect to the tax consequences of and risk factors associated
with the investment and who are able to bear the substantial economic risk of the
investment for an indefinite period of time. See "Risk Factors."

Prospective investors should not construe the contents of this Memorandum, or any
prior or subsequent communications from the Company of any of its agents, officers,
or representatives, as legal or tax advice. Each offeree should consult his own
advisors as to legal, tax, and related matters concerning an investment in the
Company.

There is no public market for the securities offered hereby, and there is no assurance
that one will ever develop. Furthermore, the transferability of these securities is
severely restricted by the securities laws. See "Risk Factors."

The offeree, by accepting delivery of this Memorandum, agrees to return it and all
enclosed documents to the Company if the offeree does not subscribe for shares
within the time period stated below.

This offering will terminate on [DATE], unless extended by the Company, in its sole
discretion, to a date not later than [DATE].

Summary Of The Offering


The following summary is qualified in its entirety by the detailed information
appearing elsewhere in this Memorandum and by reference to the Certificate of
Designation of the Series A Preferred Stock attached as Appendix A setting forth the
rights and preferences of the Series A Preferred Stock.

The executive summary is sometimes known as the "elevator pitch" or "summary" ... a
summary to be delivered within the time it takes an elevator to go five floors.

The writer should organize the executive summary, with the understanding that
investors are extraordinarily busy and will skim the document. Brevity is thus
critical.[2] Indeed, one expert suggests the plan be prepared assuming the reader will
only devote five minutes to it, attempting in that period to accomplish the following:
- Determine the characteristics of the company and the industry;
- Determine the terms of the deal;
- Read the latest balance sheet;

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- Determine the caliber of the people in the deal;
- Determine what is different about this deal;.[3]

The Company

Newco, a ---COUNTRY--- corporation incorporated in [STATE] (the "Company"),


has its principal place of business at [ADDRESS]. Its telephone number is [PHONE].

Use Of Proceeds
The net proceeds to the Company from the sale of the Shares offered hereby, after
deduction of all fees and expenses, are estimated to be €[_____]. The Company will
allocate the proceeds of this offering for the purposes shown below.

1. Advertising fees, pre-production and distribution costs €


to secure sales and market development leads
2. Cooperative advertising charges with manufacturers €
and/or service networks
3. Promotional costs associated with trade shows and €
sample products
4. Research and development costs €
5. Recruiting and hiring key personnel to pursue strategies €
outlined in Business Plan
6. Staging the manufacturing process with raw materials €
and product in process
7. Working capital and miscellaneous €
Total Use of Proceeds €

The net proceeds to the Company may not be sufficient to provide all of the funds
required by the Company to achieve profitable operations. Consequently, additional
financing may be required during such period. See "RISK FACTORS, No Operating
History and Need for Substantial Additional Financing."

Dividend Policy
The Series A Preferred Stock does not have a stated dividend. The Company intends
to employ all available funds for the development of its business and, accordingly,
does not intend to declare or pay any cash dividends on its Series A Preferred Stock or
Common Stock in the foreseeable future. See "DESCRIPTION OF CAPITAL
STOCK."

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Capitalization
The following table sets forth the capitalization of the Company at [DATE], and at
that date giving effect to the net proceeds resulting from the sale of the Shares.

Outstanding[4]
Shareholders' Equity
Convertible Preferred Stock, Series A -
[____] shares authorized and issued after the
offering
Common Stock, €.01 Par Value - [____]
shares authorized and [____] shares issued
prior to and after the offering
Additional Paid-In Capital
Retained Earnings (deficit)
Total Shareholders' Equity
Total Capitalization

Risk Factors (Sometimes "Special Factors")


THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND THEIR PURCHASE SHOULD BE CONSIDERED ONLY BY PERSONS
WHO CAN AFFORD TO SUSTAIN A TOTAL LOSS OF THEIR INVESTMENT.
THE COMPANY'S PLANNED OPERATIONS HAVE BEEN UNDERTAKEN
COMMERCIALLY ONLY BY COMPETITORS ON A LIMITED BASIS AND
THERE CAN BE NO ASSURANCE THAT THE BUSINESS PLAN DESCRIBED
HEREIN WILL BE COMMERCIALLY VIABLE. IN ADDITION, ACTUAL
RESULTS OF OPERATIONS MAY REQUIRE SIGNIFICANT MODIFICATIONS
OF ALL OR PART OF SUCH PLAN. PROSPECTIVE PURCHASERS SHOULD
CAREFULLY CONSIDER, AMONG OTHER FACTORS, THE FOLLOWING:

1. No Operating History and Need for Substantial Additional Financing. The


Company has engaged in no revenue-producing activities to date and expects
to incur substantial losses at least through [Year]. The Company may need
additional financing to support its projected level of operations. No assurance
can be given as to the availability of additional financing or, if available, the
terms upon which it may be obtained. Any such additional financing may
result in dilution of an Investor's equity investment in the Company.
2. Uncertainties Regarding New Business. The Company has only engaged in a
limited amount of marketing of its products. Although Dr. Smith and the
Company have successfully installed a number of units around the country, no
sales and service organization has yet been organized. There can be no
assurance that the Company's products will find market acceptance or will be
saleable at a price that is profitable to the Company.

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3. Dependence on Agreement with Licensee/Joint Venturer. The company does
not, and will not, have sufficient funds to establish an adequate marketing and
distribution network and is, therefore, entirely dependent on its agreements
with Bigco, Inc. Those agreements contain a number of conditions which may
allow Bigco to cancel the same.
4. Dependence on Management. The success of the Company depends to a large
degree upon the personal efforts and ability of its President, John Brown, and
its founder, Dr. John Smith, the loss of whose services would have a
materially adverse effect on the Company. The Company has entered into
employment agreements with Mr. Brown and Dr. Smith. See
"MANAGEMENT."
5. Technological Change. Certain intellectual property is patented. See
"INTELLECTUAL PROPERTY." However, new developments in the field of
electronics are occurring at a rapid pace and there can be no assurance that
such developments will not render the Company's products obsolete. The
Company's employees have signed confidentiality agreements under which
they have agreed not to use or disclose any of the Company's proprietary
information. There can be no assurance that any commercially successful
products will be developed from the Company's proprietary technology.
6. Competition. Several competitors presently compete directly with the
Company. Many potential competitors have substantially greater financial
resources and significantly greater accumulated experience in marketing
products.
7. No Public Market for Shares. There is no public market for the Common or
Series A Preferred Stock of the Company and none will result from this
offering. The sale of the Series A Preferred Stock is not being registered under
the Securities Act of 1933, as amended (the "Securities Act"), and the Shares
may not be resold or otherwise transferred unless they are subsequently
registered under the Securities Act and qualified under applicable state laws or
unless exemptions from registration and qualification are available.
Accordingly, purchasers may not be able to readily liquidate their investment.
8. Although the Common Stock into which Series A Preferred Stock issued in
this offering may be converted has certain registration rights, (i) it is highly
uncertain whether the Company can effectuate an initial public offering and/or
(ii) holders may not be able to include any or all of the underlying shares of
Common Stock for which registration is requested in an offering of the
Company's Common Stock registered under the Securities Act. Even if the
Company is public, the ability of an investor to sell shares of Common Stock
in compliance with Rule 144 under the Act at satisfactory prices may depend
on, among other things, development of a trading market for the Company's
Common Stock. Moreover, such sales may have a depressive effect on the
market price of the Company's Common Stock and adversely affect the price
per share received in a subsequent Rule 144 sale or a public offering of the
Company's Common Stock. It is not anticipated that a trading market will
develop for the Series A Preferred Stock.
9. Financial Projections. Appendix C to this Memorandum contains five-year
financial projections with respect to the Company's operations. The Company
believes that the assumptions underlying the projections are reasonable.
However, the projections are based upon numerous assumptions, the most
significant of which relate to the market penetration of and costs associated

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with the Company's product. Some of the assumptions may not materialize
and unanticipated events and circumstances may occur. For these reasons,
actual results achieved during these periods may vary from the projections,
and the variations may be material.
10. Absence of Dividends. The Company does not expect to declare or pay any
cash dividends in the foreseeable future. See "DIVIDEND POLICY" and
"DESCRIPTION OF CAPITAL STOCK."
11. Continued Control by Management. After completion of the offering made
hereby, the directors and officers of the Company will continue to exercise
voting control over approximately [ ]% of the outstanding shares of Common
Stock of the Company. The holders of the Company's Common Stock are
entitled to one vote for each share held, without cumulative voting for
directors. This means that the holders of more than 50% of the shares voting
for the election of directors can elect all the directors to be elected if they
choose to do so, and in such event, the holders of the remaining shares will not
be able to elect any person as a director. See "DESCRIPTION OF
SECURITIES" and "MANAGEMENT, SHARE OWNERSHIP."
12. Environmental Regulations. Many of the Company's operations are affected
by federal, state and local environmental regulations and could potentially be
interrupted or terminated on the basis of environmental or other
considerations. Moreover, the Company is potentially subject to significant
financial penalties if it violates such regulations. Attempted compliance with
such regulations may affect the Company's operations and may necessitate
significant capital outlays.

THE PROSPECTIVE FINANCIAL INFORMATION CONTAINED HEREIN


REPRESENTS PROJECTIONS OF FUTURE EVENTS WHICH MAY OR MAY
NOT OCCUR. THEY ARE BASED ON ASSUMPTIONS WHICH MAY OR MAY
NOT PROVE TO BE ACCURATE AND SHOULD NOT BE RELIED UPON TO
INDICATE THE ACTUAL RESULTS WHICH MIGHT BE OBTAINED BY THE
COMPANY. NO REPRESENTATION OR WARRANTY OF ANY KIND IS
GIVEN WITH RESPECT TO THE ACCURACY OF SUCH PROJECTIONS.

THE PROJECTIONS HAVE BEEN PREPARED BY MANAGEMENT OF THE


COMPANY AND HAVE NOT BEEN REVIEWED OR COMPILED BY
INDEPENDENT PUBLIC ACCOUNTANTS.

Intellectual Property
The description under this heading should include a documented story on proprietary
protection of intellectual property, including not just a reference to, but a discussion
of, existing or pending patents and the trade secret protection program.[5]

Determination Of The Offering Price


The offering price and the conversion price for the Series A Preferred Stock were
determined through negotiations between the Company and the Agent. Such price was
based on a number of factors, including the estimates of the business potential and
earnings prospects of the Company, the consideration of the above factors in relation

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to market valuations of comparable companies, and the current condition of the
market and the economy as a whole. The offering price should not, however, be
considered a determination of the actual value of the Series A Preferred Stock.

Management
One of the most widely read segments of the memo is the discussion of management,
the curricula vitae of the directors and senior officers, together with an exposition of
their compensation. In the start-up world, nothing is tranquil, thus, in describing the
management team, even the disclosure of names may occasionally be dicey; some
people will agree to join the officer corps of a start-up if, and only if, the financing is
successful. Because there is no other solution, it is permissible to denote these
individuals as Doctor X and Mister Y. Disclosure of compensation euro can also be
sensitive. Prudent issuers should fully set forth for all senior employees the terms of
the employment agreement, any understandings concerning bonuses, the
"parachutes" (i.e., the penalty paid if the employee is dismissed) and the stock
arrangements. The investors are likely to zero in on the agreements between the firm
and its key managers; the memorandum should disclose how the managers have had
their wagons hitched to the company with non-compete clauses and "golden
handcuffs."

There is a relatively high potential for embarrassment in this section for those
charged with due diligence. For some perverse reason, resumes often contain easily
checkable lies (X claims a doctorate in chemical engineering from Purdue when he
didn't complete the course). Moreover, federal and state laws contain so called "bad
boy" provisions meaning that disclosures are required and exemptions from
registration are not available if anyone connected with the issue (or the issuer) has in
the recent past been convicted of crimes or subjected to administrative proceedings
which are relevant to the sale of securities. An overlooked felony conviction for mail
fraud (particularly if a computer search on the Nexus system would have disclosed it)
can be more embarrassing than a phony degree]

Directors and Officers

The table below lists all directors of the Company, their ages and other corporate
offices held by them, if any. Directors of the Company hold such positions until the
next annual shareholders' meeting and until their respective successors are elected and
are duly qualified. Each officer holds his respective position at the discretion of the
Board of Directors.

Name Age Office


Director and Secretary
Director
Chairman of the Board of Directors
Director

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Director, Vice President and Chief
Operating Officer
Director, President and Chief
Executive Officer

In addition, three directors will be appointed by the Investors at the Closing.


Thereafter, as long as any shares of Preferred Stock are outstanding, the three
directors appointed by the Investors will be reelected annually unless one or more
such directors is unable to serve or does not seek reelection, in which event the
remaining director or directors chosen by the Investors shall designate a successor
who shall be elected to fill any such vacancy.

Locating useful directors for a start-up company is difficult but often vital. While the
founder, his wife and his lawyer comprise the paradigmatic start-up board, perceptive
organizers try to fill gaps in their business expertise by adding experienced directors.
Start-ups backed by professionally managed venture firms are lucky; the investors'
representative ordinarily makes an enormous contribution. Many emerging
companies do not enjoy professional backing in the first round. Accordingly, with no
money to pay for full- or part-time experts, a founder is often well-advised to dangle
directorships, coupled with cheap stock, in front of experienced individual
businessmen. In today's corporate world, as multinationals change ownership in
staccato fashion and fashion dictates that white-collar staffs be pared to the bone, a
large cohort of relatively young, dynamic, and highly competent businessmen have
been released into the workforce. Many are loath to return to the large corporate
environment; they are disgusted and enraged at the big company culture, and they
have "parachutes" which relieve them of the necessity of working full time. Thus they
are prime candidates to help nurture an emerging business to maturity. Accordingly,
it is increasingly becoming an integral part of an advanced venture strategy to
harness the energy of early retirees, inducing them to join start-up boards and fill in
the experience gap.

Employment Contracts

The Company has entered into employment contracts with Mr. Brown and Dr. Smith
which provide for base salaries, as indicated below, optional bonuses, severance pay
equal to one year's salary and a one-year non-compete obligation post-termination if
voluntary or for cause (as defined).

Remuneration

The following information is furnished as to the current annual rate being paid by the
Company with respect to each executive officer or director whose annual rate of
compensation exceeds €60,000 and as to all officers and directors as a group:

Name Capacities in Which Current Annual Rate


Remuneration Received
President and Chief €

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Executive Officer
Vice President and Chief €
Operating Officer
All Officers and Directors as €
a group (6 persons)

Stock Option Plan

The Company has adopted the [__________] Stock Option Plan for Executive and
Key Employees (the "Plan") for the granting of "incentive stock options" as well as
nonqualified stock options. The Plan provides for the granting of options to key
employees designated from time to time by the Compensation Committee of the
Board, which administers the Plan. The aggregate number of shares which may be
issued upon exercise of options may not exceed 10% of the shares of the Company's
Common Stock outstanding. Presently, [_____] shares of the Company's Common
Stock have been reserved for issuance pursuant to the Plan. The per share exercise
price of an option will not be less than 100% of the fair market value of the shares on
the date of the grant, or 110% of the fair market value in the case of incentive stock
options granted to an individual then owning more than 10% of the total combined
voting power of all classes of stock of the Company, any subsidiary or any parent
corporation.

No incentive stock option may be exercised after ten years from the date the option
was granted (or five years in the case of an individual owning more than 10% of the
total combined voting power of stock of the Company) or one year from the date of
the employee's termination of employment, except that if the option is exercised after
three months from the date of termination by reason other than death or permanent
disability, the option will not be considered an incentive stock option but rather will
be taxed as a nonqualified option. No nonqualified option may be exercised after ten
years and one day from the date the option was granted.

The following table sets forth the options held by the Company's employees under the
Plan:

Name Number of Shares Weighted Average Expiration


Subject to Option Exercise Price Dates
John Brown 00,000 €0.00 June 30, 20__
Dr. John Smith 00,000 €0.00 June 30, 20__
Patricia Jones 00,000 €0.50 June 30, 20__

Certain Transactions
The purchase price for the shares sold in each of the foregoing transactions was equal
to the fair value of the shares at the respective dates of sale or option grant, as
determined by the Company's Board of Directors.

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The compensation issue overlaps with a section on conflicts of interest. This section,
mandated by rule in public offerings and by prudence in private placements, requires
the disclosure of any transactions between the issuer and its insiders, the company
leasing its offices from the founder, for example. Tax implications lurk below the
surface; if goods or services are exchanged with an employee at bargain prices, the
bargain element may be compensation. Corporate law also imposes a gloss. Insider
transactions may be avoided later as a result of a lawsuit by a disgruntled
stockholder unless the transaction is approved by disinterested directors and/or
stockholders or is "fair" to the corporation] The institution of a financing, public or
private, often is the occasion for reviewing and canceling some of those "sweetheart"
deals. The disclosure requirement can be therapeutic and educational, by educating
the founder on what it means to have partners.

Shareholders
The following table sets forth information with respect to all persons owning the
Company's equity securities, as of the date hereof and assuming the sale of all of the
shares offered hereby:

Name Class of Number of Percentage of Percentage of


Securities Shares Class Common Stock
Assuming
Conversion[11]
Dr. John Smith Common
Stock
John Brown Common
Stock
Patricia Jones Common
Stock
Investors in Series A
Series A Preferred
Preferred Stock Stock
offered hereby
Common Stock
Options

Description Of Capital Stock


The authorized capital stock of the Company consists of (i) [_____] shares of
Common Stock, par value at €.01 per share, and (ii) [_____] shares of Series A
Convertible Preferred Stock, par value €.01 per share.

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Common Stock

Each share of Common Stock is entitled to one vote per share for the election of
directors and on all other matters submitted to a vote of stockholders. There are no
cumulative voting rights. Common stockholders do not have preemptive rights or
other rights to subscribe for additional shares, and the Company's Common Stock is
not subject to conversion or redemption. All the outstanding Common Stock is, and
all shares issuable upon conversion of the Series A Universal Preferred Stock offered
hereby will be, duly and validly issued and fully paid and nonassessable. In the event
of liquidation, subject to the rights of holders of the Series A Preferred Stock and any
other preferred stock subsequently issued, the holders of Common Stock will share
equally in any balance of corporate assets available for distribution to them. Subject to
the rights of holders of the Series A Preferred Stock and any other preferred stock
subsequently issued, holders of the Common Stock are entitled to receive dividends
when and as declared by the Company's Board of Directors out of funds legally
available therefor. The Company has not paid any dividends since its inception and
has no intention to pay any dividends in the foreseeable future. Any future dividends
would be subject to the discretion of the Company's Board of Directors and would
depend on, among other things, future earnings, the operating and financial condition
of the Company, its capital requirements, and general business conditions.

Series A Preferred Stock

The following description of the Series A Preferred Stock offered hereby (the
"Shares") is a brief summary of certain provisions contained in the Certificate of
Designation of the Convertible Preferred Stock, Series A (the "Certificate") and is
qualified in its entirety by the provisions of the Company's Certificate of
Incorporation, the Certificate and the resolutions of the Board of Directors of the
Company creating the Series A Preferred Stock. The Certificate (which includes such
Board resolutions) is attached hereto as Exhibit A.

Pursuant to the Certificate, there will be authorized [_____] shares of Series A


Preferred Stock. The Shares, when issued against payment therefor as set forth in this
Confidential Private Placement Memorandum, will be fully paid and nonassessable.
The terms of the Series A Preferred Stock are summarized below.

Dividends

Holders of Series A Preferred Stock shall be entitled to cash dividends out of any
funds legally available therefor, but only if, as and when declared and paid thereon in
the discretion of the Board of Directors. Such dividends are noncumulative and no
dividend shall accrue to the holders of the Shares by reason of the fact that dividends
on such Shares were not declared or paid in any prior year.

Note on Liquidation Preference

In the event of any voluntary or involuntary liquidation, dissolution or winding up of


the Company, any merger or consolidation in which the Corporation is not the
surviving entity, or any sale of all or substantially all of the Corporation's assets,

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holders of Shares shall be entitled to receive out of the assets of the Company,
whether such assets are capital or surplus of any nature, an amount per Share equal to
$[ ] and no more. In the event assets are insufficient to pay the entire liquidation
preference of the Shares, the entire assets of the Company legally available for
distribution shall be distributed among the holders of Series A Preferred Stock in
proportion to their respective liquidation preferences.

Optional Conversion

Each Share is convertible at the option of the holder thereof at any time into Common
Stock on a one-for-one basis, subject to adjustment to prevent dilution in certain
circumstances, as summarized below.

Automatic Conversion

Each Share shall automatically be converted into shares of Common Stock upon the
earlier of either (i) the closing of a firm commitment underwritten offering pursuant to
an effective registration statement under the Securities Act covering the offer and sale
of any Common Stock for the account of the Company to the public at an aggregate
offering price of not less than €7,500,000, or (ii) upon the aggregate remaining
outstanding number of Shares of Series A Preferred Stock being less than or equal to
[_____].

Antidilution Provisions

The conversion rate of the Series A Preferred Stock shall be subject to adjustment to
prevent dilution in the event of (i) any subdivision, combination or reclassification of
the Company's outstanding Common Stock, (ii) the payment of a stock dividend to
holders of Common Stock or to holders of any other series of stock convertible into
Common Stock, or (iii) any future issuances of Common Stock or Common Stock
equivalents at a price less than €[ ] per share, the original purchase price per Share of
the Series A Preferred Stock.

Voting Rights

Except as otherwise provided by law, holders of Shares shall vote on all matters
together as a single class with all other stockholders of the Company. In such matters,
a holder of Shares will be entitled to the number of votes equal to the number of
shares of Common Stock into which his Shares are then convertible.

Redemption

The Series A Preferred Stock is not redeemable [is redeemable at the option of the
holder on or after the fifth anniversary of the closing at the liquidation preference per
Share plus accrued but unpaid dividends].

Sinking Fund

There shall be no sinking fund with respect to the Series A Preferred Stock.

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Reports to Shareholders

The Company will furnish when available annual and quarterly unaudited financial
statements to each holder of Series A Preferred Stock. The right to receive such
financial statements shall terminate upon the effective date of an offering of the
Company's securities registered under the Securities Act.

Documents Available For Inspection


The following is a list of documents available for inspection by prospective
purchasers of the Series A Preferred Stock. Some documents provided may contain
deletions to protect confidential information.

1. Certificate of Incorporation of the Company as amended to date


2. Form of Restated Certificate of Incorporation to be filed by the closing setting
forth the rights, preferences, privileges, and restrictions of the Series A
Preferred Stock
3. Bylaws of the Company
4. Lease Agreement for the Company's facilities
5. Stock Option Plan dated [DATE] and form of Stock Option Grant
6. Employment Agreements between the Company and Mr. Brown and Dr.
Smith
7. Forms of legal opinions of Smith & Kelly, counsel to the Company, to be
delivered at the closing
8. The Company's revolving and lease lines of credit agreements with Bank of
[_____]
9. Placement Agent Agreement between Agent and the Company
10. Shareholders Agreement between the Company and certain shareholders of
the Company.
11. A carefully prepared business plan will usually contain third-party
endorsements, ranging from letters from satisfied customers to studies by
independent consultants.

Certain Legal Matters


The validity of the Series A Preferred Stock will be passed upon for the Company by -
--NAME LAW FIRM---, are acting as counsel for the Placement Agent in connection
with certain legal matters relating to the shares of Series A Preferred Stock. As of the
close of the offering, certain attorneys of the firm of Smith & Kelly will own
[Number] shares of the Common Stock of the Company.

There is some question whether, from the law firm's point of view, its name should be
mentioned in the document. The issue of whether the firm holds itself out as having
prepared the document, and this increases its exposure.

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