Exhibit 10.5
 
SUBSCRIPTION AGREEMENT
 
This Subscription Agreement (this “Agreement”) is being delivered to the
purchaser identified on the signature page to this Agreement (the “Subscriber”)
in connection with its investment in PR Complete Holdings, Inc., a Nevada
corporation (the “Company”). The Company is conducting a private placement (the
“Offering”) of units (“Units”) at a purchase price of $1,000.00 per Unit, with
each Unit consisting of (i) 10,000 shares of common stock, par value $0.0001 per
share (the “Shares”) and (ii) a five (5) year warrant to purchase 10,000 shares
of common stock (the “Warrant Shares”) at a per share exercise price of $0.10
(the “Exercise Price”), substantially in the form attached hereto as Exhibit A
(the “Warrants”). For purposes of this Agreement, the term “Securities” shall
refer to the Units, the Shares, the Warrants, and the Warrant Shares.
 
1.           SUBSCRIPTION AND PURCHASE PRICE
 
(a)           Subscription.  Subject to the conditions set forth in Section 2
hereof, the Subscriber hereby subscribes for and agrees to purchase the number
of Units indicated on page 10 hereof on the terms and conditions described
herein.
 
(b)           Purchase of Units.  The Subscriber understands and acknowledges
that the purchase price to be remitted to the Company in exchange for the Units
shall be set at $1,000.00 per Unit, for an aggregate purchase price as set forth
on page 10 hereof (the “Aggregate Purchase Price”). The Subscriber’s delivery of
this Agreement to the Company shall be accompanied by payment for the Units
subscribed for hereunder, payable in United States Dollars, by wire transfer of
immediately available funds delivered contemporaneously with the Subscriber’s
delivery of this Agreement to the Company in accordance with the wire
instructions provided on Exhibit B. The Subscriber understands and agrees that,
subject to Section 2 and applicable laws, by executing this Agreement, it is
entering into a binding agreement.
 
2.           ACCEPTANCE, OFFERING TERM AND CLOSING PROCEDURES
 
(a)           Acceptance or Rejection. The obligation of the Subscriber to
purchase the Units shall be irrevocable, and the Subscriber shall be legally
bound to purchase the Units subject to the terms set forth in this Agreement.
The Subscriber understands and agrees that the Company reserves the right to
reject this subscription for Units in whole or part in any order at any time
prior to the Closing for any reason, notwithstanding the Subscriber’s prior
receipt of notice of acceptance of the Subscriber’s subscription. In the event
of rejection of this subscription by the Company in accordance with this Section
2, or if the sale of the Units is not consummated by the Company for any reason
or no reason, this Agreement and any other agreement entered into between the
Subscriber and the Company relating to this subscription shall thereafter have
no force or effect, and the Company shall promptly return or cause to be
returned to the Subscriber the purchase price remitted to the Company, without
interest thereon or deduction therefrom.
 
(b)           Closing.  The closing of the purchase and sale of the Units
hereunder (the “Closing”) shall take place at the offices of Anslow & Jaclin,
LLP, 195 Route 9, South, Suite 204, Manalapan, NJ 07726 or such other place as
determined by the Company.  The Closing shall take place on a Business Day
promptly following the satisfaction of the conditions set forth in Section 8
below, as determined by the Company (the “Closing Date”). “Business Day” shall
mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time)
of a day other than a Saturday, Sunday or other day on which commercial banks in
New York, New York are authorized or required to be closed. The Shares and
Warrants purchased by the Subscriber will be delivered by the Company promptly
following the Closing.

(c)           Following Acceptance or Rejection.  The Subscriber acknowledges
and agrees that this Agreement and any other documents delivered in connection
herewith will be held by the Company. In the event that this Agreement is not
accepted by the Company for whatever reason, which the Company expressly
reserves the right to do, this Agreement, the Aggregate Purchase Price received
(without interest thereon) and any other documents delivered in connection
herewith will be returned to the Subscriber at the address of the Subscriber as
set forth in this Agreement. If this Agreement is accepted by the Company, the
Company is entitled to treat the Aggregate Purchase Price received as an
interest free loan to the Company until such time as the Subscription is
accepted.
 
1

--------------------------------------------------------------------------------

 
(d)           Favored Nations Provision.  Other than in connection with (i) full
or partial consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or assets of a
corporation or other entity which holders of such securities or debt are not at
any time granted registration rights equal to or greater than those granted to
the Subscribers, (ii) the Company’s issuance of securities in connection with
strategic license agreements and other partnering arrangements so long as such
issuances are not for the purpose of raising capital and which holders of such
securities or debt are not at any time granted registration rights equal to or
greater than those granted to the Subscribers, (iii) the Company’s issuance of
Common Stock or the issuances or grants of options to purchase Common Stock to
employees, directors, and consultants, pursuant to plans that have been approved
by a majority of the board of directors or in existence as such plans are
constituted on the date of this Agreement, (iv) securities upon the exercise or
exchange of or conversion of any securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement on the terms in effect on the Closing Date including the
permissible amendment thereof after the closing date,  (v) as a result of the
exercise of Warrants or conversion of notes which are granted or issued pursuant
to this Agreement, (vi) the Company’s issuance of Common Stock or the issuances
or grants of options to purchase Common Stock to consultants and service
providers, and (v) any and all securities required to be assumed by the Company
by the terms thereof as a result of any of the foregoing even if issued by a
predecessor acquired in connection with a business combination, merger or share
exchange (collectively, the foregoing (i) through (v) are “Excepted Issuances”),
if at any time prior to the five (5) year anniversary of the date of this
Agreement (the “Expiration Date”), the Company shall agree to or issue (the
“Lower Price Issuance”) any Common Stock or securities convertible into or
exercisable for shares of Common Stock (or modify any of the foregoing which may
be outstanding) to any person or entity at a price per share or conversion or
exercise price per share which shall be less than the Unit price per share of
Common Stock hereunder (disregarding any value attributable to the Warrants) in
effect at such time, or if less than the Warrant exercise price in effect at
such time, without the consent of the Subscribers, then the Company shall issue
such additional number of shares and the Warrant exercise price shall
automatically be reduced to such other lower price.  The average Purchase Price
of the Shares of Common Stock and average exercise price in relation to the
Warrant Shares shall be calculated separately for the Shares and Warrant
Shares.  Common Stock issued or issuable by the Company for no consideration or
for consideration that cannot be determined at the time of issue will be deemed
issuable or to have been issued for $0.0001 per share of Common Stock.  The
rights of Subscribers set forth in this Section 2 are in addition to any other
rights the Subscribers have pursuant to this Agreement, the Notes, or the
Warrants, and any other agreement referred to or entered into in connection
herewith or to which Subscribers and Company are parties.  Notwithstanding
anything herein or in any other agreement to the contrary, the Company shall
only be required to make a single adjustment with respect to any Lower Price
Issuance, regardless of the existence of multiple basis therefore.

(e)           Maximum Exercise of Rights.   In the event the exercise of the
rights described in Section 2  would or could result in the issuance of an
amount of Common Stock of the Company that would exceed the maximum amount that
may be issued to Subscribers calculated in the manner as described in Section
2(f) of this Agreement, then the issuance of such additional shares of Common
Stock of the Company to Subscribers will be deferred in whole or in part until
such time as Subscribers are able to beneficially own such Common Stock without
exceeding the applicable maximum amount set forth calculated in the manner
described in Section 2(f) of this Agreement and notifies the Company
accordingly.

(f)           Maximum Conversion.  A Subscriber shall not be entitled to convert
Warrants nor may the Company make any payment for a Lower Priced Issuance, or
otherwise, by delivery of shares of Common Stock which would be in excess of the
sum of (i) the number of shares of Common Stock beneficially owned by such
Subscriber and its Affiliates on a payment date, and (ii) the number of Warrant
Shares issuable upon the conversion of the Warrant with respect to which the
determination of this provision is being made on a calculation date, which would
result in beneficial ownership by Subscriber and its Affiliates of more than
4.99% of the outstanding shares of Common Stock of the Company on such
date.  For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Rule 13d-3 thereunder.  Subject to the
foregoing, the Subscriber shall not be limited to aggregate beneficial ownership
of only 4.99% and aggregate beneficial ownership by the Subscriber may exceed
4.99%.  The Subscriber may increase the permitted beneficial ownership amount up
to 9.99% upon and effective after 61 days prior written notice to the
Company.  Subscriber may allocate which of the equity of the Company deemed
beneficially owned by Subscriber shall be included in the 4.99% amount described
above and which shall be allocated to the excess above 4.99%.
 
2

--------------------------------------------------------------------------------

 
(g)           Share Issuance.  Until the Expiration Date, if the Company shall
issue any Common Stock except for the Excepted Issuances, prior to the complete
exercise of this Warrant for a consideration less than the Purchase Price that
would be in effect at the time of such issuance, then, and thereafter
successively upon each such issuance, the Purchase Price shall be reduced to
such other lower price for then outstanding Warrants.  For purposes of this
adjustment, the issuance of any security or debt instrument of the Company
carrying the right to convert such security or debt instrument into Common Stock
or of any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Purchase Price upon the issuance of the above-described
security, debt instrument, warrant, right, or option if such issuance is at a
price lower than the Purchase Price in effect upon such issuance and again at
any time upon any actual, permitted, optional, or allowed issuances of shares of
Common Stock upon any actual, permitted, optional, or allowed exercise of such
conversion or purchase rights if such issuance is at a price lower than the
Purchase Price in effect upon any actual, permitted, optional, or allowed such
issuance.  Common Stock issued or issuable by the Company for no consideration
will be deemed issuable or to have been issued for $0.0001 per share of Common
Stock.
 
(h)           Extraordinary Events Regarding Common Stock.  In the event that
the Company shall (a) issue additional shares of Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of Common Stock, then, in each such event,
the Unit Purchase Price shall, simultaneously with the happening of such event,
be adjusted by multiplying the then Purchase Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein. The number of shares of
Common Stock and Warrants that the Subscriber shall thereafter, be issued and
obtain on the exercise hereof, be entitled to receive shall be adjusted to a
number determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section) be issuable on such exercise
by a fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section) be in effect, and (b) the
denominator is the Purchase Price in effect on the date of such exercise.
 
(i)           Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock issuable hereunder or on the exercise
of the Warrants, the Company at its expense will promptly cause its Chief
Financial Officer or other appropriate designee to compute such adjustment or
readjustment in accordance with the terms hereof and of the Warrant and prepare
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based, including
a statement of (a) the consideration received or receivable by the Company for
any additional shares of Common Stock (or Other Securities) issued or sold or
deemed to have been issued or sold, (b) the number of shares of Common Stock (or
Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase
Price and the number of shares of Common Stock to be received and to be received
upon exercise of the Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided herein. The Company will
forthwith mail a copy of each such certificate to the Subscriber and of the
Warrant and any Warrant Agent of the Company.
 
3.           THE SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
 
The Subscriber hereby acknowledges, agrees with and represents, warrants and
covenants to the Company, as follows:
 
(a)           The Subscriber has full power and authority to enter into this
Agreement, the execution and delivery of which has been duly authorized, if
applicable, and this Agreement constitutes a valid and legally binding
obligation of the Subscriber.
 
(b)           The Subscriber acknowledges its understanding that the Offering
and sale of the Securities is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section
4(2) of the Securities Act and the provisions of Regulation D promulgated
thereunder (“Regulation D”).  In furtherance thereof, the Subscriber represents
and warrants to the Company and its affiliates as follows:
 
(i)           The Subscriber realizes that the basis for the exemption from
registration may not be available if, notwithstanding the Subscriber’s
representations contained herein, the Subscriber is merely acquiring the
Securities for a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. The Subscriber does not have any
such intention.
 
3

--------------------------------------------------------------------------------

 
(ii)           The Subscriber realizes that the basis for exemption would not be
available if the Offering is part of a plan or scheme to evade registration
provisions of the Securities Act or any applicable state or federal securities
laws.
 
(iii)           The Subscriber is acquiring the Securities solely for the
Subscriber’s own beneficial account, for investment purposes, and not with a
view towards, or resale in connection with, any distribution of the Securities.
 
(iv)           The Subscriber has the financial ability to bear the economic
risk of the Subscriber’s investment, has adequate means for providing for its
current needs and contingencies, and has no need for liquidity with respect to
an investment in the Company.
 
(v)           The Subscriber and the Subscriber’s attorney, accountant,
purchaser representative and/or tax advisor, if any (collectively, the
“Advisors”) has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of a prospective investment
in the Securities. If other than an individual, the Subscriber also represents
it has not been organized solely for the purpose of acquiring the Securities.
 
(vi)           The Subscriber (together with its Advisors, if any) has received
all documents requested by the Subscriber, if any, has carefully reviewed them
and understands the information contained therein, prior to the execution of
this Agreement.
 
(c)           The Subscriber is not relying on the Company or any of its
employees, agents, sub-agents or advisors with respect to the legal, tax,
economic and related considerations involved in this investment. The Subscriber
has relied on the advice of, or has consulted with, only its Advisors. Each
Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is
annexed to this Agreement) the specific details of any and all past, present or
future relationships, actual or contemplated, between the Advisor and the
Company or any affiliate or sub-agent thereof.
 
(d)           The Subscriber has carefully considered the potential risks
relating to the Company and a purchase of the Securities, and fully understands
that the Securities are a speculative investment that involves a high degree of
risk of loss of the Subscriber’s entire investment. Among other things, the
Subscriber has carefully considered each of the risks described under the
heading “Risk Factors” in the Company’s SEC Filings (as defined in Section 4(d)
below), which risk factors are incorporated herein by reference.
 
(e)           The Subscriber will not sell or otherwise transfer any Securities
without registration under the Securities Act or an exemption therefrom, and
fully understands and agrees that the Subscriber must bear the economic risk of
its purchase because, among other reasons, the Securities have not been
registered under the Securities Act or under the securities laws of any state
and, therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Securities Act and under the
applicable securities laws of such states, or an exemption from such
registration is available.  In particular, the Subscriber is aware that the
Securities are “restricted securities,” as such term is defined in Rule 144
promulgated under the Securities Act (“Rule 144”), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
Subscriber also understands that, except as otherwise provided in Section 5
hereof, the Company is under no obligation to register the Securities on behalf
of the Subscriber or to assist the Subscriber in complying with any exemption
from registration under the Securities Act or applicable state securities laws.
The Subscriber understands that any sales or transfers of the Securities are
further restricted by state securities laws and the provisions of this
Agreement.
 
(f)           No oral or written representations or warranties have been made,
or information furnished, to the Subscriber or its Advisors, if any, by the
Company or any of its officers, employees, agents, sub-agents, affiliates,
advisors or subsidiaries in connection with the Offering, other than any
representations of the Company contained herein, and in subscribing for the
Units, the Subscriber is not relying upon any representations other than those
contained herein.
 
(g)           The Subscriber’s overall commitment to investments that are not
readily marketable is not disproportionate to the Subscriber’s net worth, and an
investment in the Securities will not cause such overall commitment to become
excessive.
 
4

--------------------------------------------------------------------------------

 
(h)           The Subscriber understands and agrees that the certificates for
the Securities shall bear substantially the following legend until (i) such
Securities shall have been registered under the Securities Act and effectively
disposed of in accordance with a registration statement that has been declared
effective or (ii) in the opinion of counsel for the Company, such Securities may
be sold without registration under the Securities Act, as well as any applicable
“blue sky” or state securities laws:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
 
(i)           Neither the Securities and Exchange Commission (the “SEC”) nor any
state securities commission has approved the Securities or passed upon or
endorsed the merits of the Offering. There is no government or other insurance
covering any of the Securities.
 
(j)           The Subscriber and its Advisors, if any, have had a reasonable
opportunity to ask questions of and receive answers from a person or persons
acting on behalf of the Company concerning the Offering and the business,
financial condition, results of operations and prospects of the Company, and all
such questions have been answered to the full satisfaction of the Subscriber and
its Advisors, if any.
 
(k)           The Subscriber is unaware of, is in no way relying on, and did not
become aware of, the Offering through or as a result of, any form of general
solicitation or general advertising, including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, or electronic
mail over the Internet, in connection with the Offering and is not subscribing
for Units and did not become aware of the Offering through or as a result of any
seminar or meeting to which the Subscriber was invited by, or any solicitation
of a subscription by, a person not previously known to the Subscriber in
connection with investments in securities generally.
 
(l)           The Subscriber has taken no action that would give rise to any
claim by any person for brokerage commissions, finders’ fees or the like
relating to this Agreement or the transactions contemplated hereby.
 
(m)           The Subscriber is not relying on the Company or any of its
employees, agents, or advisors with respect to the legal, tax, economic and
related considerations of an investment in the Shares, and the Subscriber has
relied on the advice of, or has consulted with, only its own Advisors.
 
(n)           The Subscriber acknowledges that any estimates or forward-looking
statements or projections furnished by the Company to the Subscriber were
prepared by the management of the Company in good faith, but that the attainment
of any such projections, estimates or forward-looking statements cannot be
guaranteed by the Company or its management and should not be relied upon.
 
(o)           No oral or written representations have been made, or oral or
written information furnished, to the Subscriber or its Advisors, if any, in
connection with the Offering that are in any way inconsistent with the
information contained herein.
 
(p)           (For ERISA plans only) The fiduciary of the ERISA plan (the
“Plan”) represents that such fiduciary has been informed of and understands the
Company’s investment objectives, policies and strategies, and that the decision
to invest “plan assets” (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities. The Subscriber or Plan
fiduciary (i) is responsible for the decision to invest in the Company; (ii) is
independent of the Company and any of its affiliates; (iii) is qualified to make
such investment decision; and (iv) in making such decision, the Subscriber or
Plan fiduciary has not relied primarily on any advice or recommendation of the
Company or any of its affiliates.
 
5

--------------------------------------------------------------------------------

 
(q)           This Agreement is not enforceable by the Subscriber unless it has
been accepted by the Company, and the Subscriber acknowledges and agrees that
the Company reserves the right to reject any subscription for any reason.
 
(r)           The Subscriber will indemnify and hold harmless the Company and,
where applicable, its directors, officers, employees, agents, advisors,
affiliates and shareholders, and each other person, if any, who controls any of
the foregoing from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) (a “Loss”) arising out of or based upon any
representation or warranty of the Subscriber contained herein or in any document
furnished by the Subscriber to the Company in connection herewith being untrue
in any material respect or any breach or failure by the Subscriber to comply
with any covenant or agreement made by the Subscriber herein or therein;
provided, however, that the Subscriber shall not be liable for any Loss that in
the aggregate exceeds the Subscriber’s Aggregate Purchase Price tendered
hereunder.
 
(s)           The Subscriber is, and on each date on which the Subscriber
continues to own restricted securities from the Offering will be, an “Accredited
Investor” as defined in Rule 501(a) under the Securities Act. In general, an
“Accredited Investor” is deemed to be an institution with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with his or her spouse.
 
(t)           The Subscriber, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the Offering,
and has so evaluated the merits and risks of such investment. The Subscriber has
not authorized any person or entity to act as its Purchaser Representative (as
that term is defined in Regulation D of the General Rules and Regulations under
the Securities Act) in connection with the Offering. The Subscriber is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
 
(u)           The Subscriber has reviewed, or had an opportunity to review, all
of the SEC Filings.
 
6

--------------------------------------------------------------------------------

 
4.           THE COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS
 
The Company hereby acknowledges, agrees with and represents, warrants and
covenants to the Subscriber, as follows:
 
(a)           The Company has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement
has been duly authorized, executed and delivered by the Company and is valid,
binding and enforceable against the Company in accordance with its terms.
 
(b)           The Securities to be issued to the Subscriber pursuant to this
Agreement, when issued and delivered in accordance with the terms of this
Agreement, will be duly and validly issued and will be fully paid and
non-assessable.
 
(c)           Neither the execution and delivery nor the performance of this
Agreement by the Company will conflict with the Company’s organizational
materials, as amended to date, or result in a breach of any terms or provisions
of, or constitute a default under, any material contract, agreement or
instrument to which the Company is a party or by which the Company is bound.
 
(d)           The Company is subject to, and in full compliance with, the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). The Company has made available to each
Subscriber through the EDGAR system true and complete copies of each of the
Company’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and
Current Reports on Form 8-K, in each case filed since September 12, 2008
(collectively, the “SEC Filings”), and all such SEC Filings are incorporated
herein by reference.  The SEC Filings, when they were filed with the SEC (or, if
any amendment with respect to any such document was filed, when such amendment
was filed), complied in all material respects with the applicable requirements
of the Exchange Act and the rules and regulations thereunder and did not, as of
such date, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. All reports and statements required to be filed by the
Company under the Securities Act and the Exchange Act have been filed, together
with all exhibits required to be filed therewith. The Company and each of its
direct and indirect subsidiaries, if any (collectively, the “Subsidiaries”), are
engaged in all material respects only in the business described in the SEC
Filings, and the SEC Filings contain a complete and accurate description in all
material respects of the business of the Company and the Subsidiaries.
 
(e)           The Company acknowledges and agrees that the Subscriber is acting
solely in the capacity of an arm’s length purchaser with respect to the
Securities and the transactions contemplated hereby. The Company further
acknowledges that the Subscriber is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by the
Subscriber or any of its representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to the
Subscriber’s purchase of the Units. The Company further represents to the
Subscriber that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
 
(f)           The Company will indemnify and hold harmless the Subscriber and,
where applicable, its directors, officers, employees, agents, advisors and
shareholders, from and against any and all Loss arising out of or based upon any
representation or warranty of the Company contained herein or in any document
furnished by the Company to the Subscriber in connection herewith being untrue
in any material respect or any breach or failure by the Company to comply with
any covenant or agreement made by the Company to the Subscriber in connection
therewith; provided, however, that the Company’s liability shall not exceed the
Subscriber’s Aggregate Purchase Price tendered hereunder.
 
7

--------------------------------------------------------------------------------

 
5.           PIGGY-BACK REGISTRATION RIGHTS
 
(a)           For a period of twelve (12) months following the Closing Date, the
Company shall notify the Subscriber in writing at least twenty (20) days prior
the filing of any registration statement under Securities Act, in connection
with a public offering of shares of the Company’s common stock (including, but
not limited to, registration statements relating to secondary offerings of
securities of the Company but excluding any registration statements (i) on Form
S-4 or S-8 (or any successor or substantially similar form), or of any employee
stock option, stock purchase or compensation plan or of securities issued or
issuable pursuant to any such plan, or a dividend reinvestment plan, (ii)
otherwise relating to any employee, benefit plan or corporate reorganization or
other transactions covered by Rule 145 promulgated under the Securities Act, or
(iii) on any registration form that does not permit secondary sales or does not
include substantially the same information as would be required to be included
in a registration statement covering the resale of the Shares and the Warrant
Shares) and will afford the Subscriber an opportunity to include in such
registration statement all or part of the Shares and Warrant Shares held by the
Subscriber. In the event the Subscriber desires to include in any such
registration statement all or any part of the Shares and the Warrant Shares held
by the Subscriber, the Subscriber shall within ten (10) days after the
above-described notice from the Company, so notify the Company in writing,
including the number of such Shares and Warrant Shares that the Subscriber
wishes to include in such registration statement. If the Subscriber decides not
to include all of its Shares and Warrant Shares in any registration statement
thereafter filed by the Company, the Subscriber shall nevertheless continue to
have the right to include any Shares and Warrant Shares in any subsequent
registration statement or registration statements as may be filed by the Company
with respect to the offering of the securities, all upon the terms and
conditions set forth herein.
 
(b)           Notwithstanding the foregoing, if the managing underwriter or
underwriters of any such proposed public offering advise the Company that the
total amount or kind of securities that the Subscriber, the Company and any
other persons intended to be included in such proposed public offering is
sufficiently large to adversely affect the success of such proposed public
offering, then the amount or kind of securities to be offered for the various
parties wishing to have shares of the Company’s common stock registered shall be
included in the following order:
 
(i)           if the Company proposes to register treasury shares or authorized
but unissued shares of its common stock (collectively, “Primary Securities”):
 
(A)           first, the Primary Securities;
 
(B)           second, the Shares and Warrant Shares requested to be included in
such registration statement, together with shares of its common stock that do
not constitute Shares, Warrant Shares or Primary Securities (“Other Securities”)
held by parties exercising similar piggy-back registration rights (or if
necessary, such Shares, Warrant Shares and Other Securities pro rata among the
holders thereof based upon the number of such Shares, Warrant Shares and Other
Securities requested to be registered by each such holder).
 
(ii)           if the Company proposes to register Other Securities:
 
(A)           first, the Other Securities requested to be included in such
registration by holders exercising demand registration rights;
 
(B)           second, the Shares and Warrant Shares requested to be included in
such registration, together with Other Securities held by parties exercising
similar piggy-back registration rights (or if necessary, such Shares, Warrant
Shares and Other Securities pro rata among the holders thereof based upon the
number of such Shares, Warrant Shares and Other Securities requested to be
registered by each such holder).
 
Anything to the contrary in this Agreement notwithstanding, the Company may
withdraw or postpone a registration statement referred to herein (a
“Registration Statement”) at any time before it becomes effective or withdraw,
postpone or terminate the offering after it becomes effective without obligation
to the Subscriber.
 
(c)           In connection with its obligation under this Section 5, the
Company will (i) furnish to the Subscriber without charge, at least one copy of
any effective registration statement and any post-effective amendments thereto,
including financial statements and schedules, and, if the Subscriber so requests
in writing, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference) in the form filed with the SEC; and
(ii) deliver to the Subscriber and the underwriters, if any, without charge, as
many copies of the then effective prospectus included in the registration
statement, as the same may be amended or supplemented (including such prospectus
subject to completion) (the “Prospectus”), and any amendments or supplements
thereto as such persons may reasonably request.
 
8

--------------------------------------------------------------------------------

 
(d)           As a condition to the inclusion of its Shares and Warrant Shares,
the Subscriber shall furnish to the Company such information regarding the
Subscriber and the distribution proposed by the Subscriber as the Company may
request in writing or as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
 
(e)           The Subscriber agrees by acquisition of the Shares and Warrant
Shares that, upon receipt of any notice from the Company of the happening of any
event that, in the good faith judgment of the Company’s Board of Directors,
requires the suspension of the Subscriber’s rights under this Section 5, the
Subscriber will forthwith discontinue disposition of the Shares and Warrant
Shares pursuant to the then current Prospectus until the Subscriber is advised
in writing by the Company that the use of the Prospectus may be resumed. If so
directed by the Company, on the happening of such event, the Subscriber will
deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies then in the Subscriber’s possession, of the Prospectus
covering the Shares and Warrant Shares at the time of receipt of such notice.
 
(f)           The Subscriber hereby covenants with the Company (i) not to make
any sale of Shares and Warrant Shares without effectively causing the prospectus
delivery requirements under the Securities Act to be satisfied, and (ii) if such
Shares and Warrant Shares are to be sold by any method or in any transaction
other than on a national securities exchange, the Nasdaq Global Select Market,
the Nasdaq Global Market, Nasdaq Capital Market or in the over-the-counter
market, in privately negotiated transactions, or in a combination of such
methods, to notify the Company at least 5 business days prior to the date on
which the Subscriber first offers to sell any such Shares or Warrant Shares.
 
(g)           The Subscriber acknowledges and agrees that the Shares and Warrant
Shares sold pursuant to a registration statement described in this Section 5 are
not transferable on the books of the Company unless the stock certificate
submitted to the transfer agent evidencing the Shares or Warrant Shares is
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (x) the Shares and Warrant Shares have been sold in accordance with
such registration statement and (y) the requirement of delivering a current
Prospectus has been satisfied.
 
(h)           The Subscriber shall not take any action with respect to any
distribution deemed to be made pursuant to such registration statement that
would constitute a violation of Regulation M under the Exchange Act, or any
other applicable rule, regulation or law.
 
(i)           Upon the expiration of the effectiveness of any registration
statement described in this Section 5, the Subscriber shall discontinue sales of
the Shares and Warrant Shares pursuant to such registration statement upon
receipt of notice from the Company of the Company’s intention to remove from
registration the Shares and Warrant Shares covered by such registration
statement that remain unsold, and the Subscriber shall notify the Company of the
number of registered Shares and Warrant Shares that remain unsold immediately
upon receipt of such notice from the Company.
 
(j)           In the case of the registration of any underwritten primary
offering initiated by the Company (other than any registration by the Company on
Form S-4 or Form S-8 (or any successor or substantially similar form), or of (i)
an employee stock option, stock purchase or compensation plan or of securities
issued or issuable pursuant to any such plan, or (ii) a dividend reinvestment
plan) or any underwritten secondary offering initiated at the request of a
holder of securities of the Company pursuant to registration rights granted by
the Company, the Subscriber agrees not to effect any public sale or distribution
of securities of the Company, except as part of such underwritten registration,
during the period beginning fifteen (15) days prior to the closing date of such
underwritten offering and during the period ending ninety (90) days after such
closing date (or such longer period as may be reasonably requested by the
Company or by the managing underwriter or underwriters).
 
(k)           Anything to the contrary contained in this Agreement
notwithstanding, when, in the opinion of counsel for the Company, registration
of the Shares and Warrant Shares is not required by the Securities Act, in
connection with a proposed sale of such Shares and Warrant Shares, the
Subscriber shall have no rights pursuant to this Section 5. In furtherance and
not in limitation of the foregoing, the Subscriber shall have no rights pursuant
to this Section 5 at such time as all of the Subscriber’s Shares and Warrant
Shares may be sold without limitation pursuant to Rule 144.
 
9

--------------------------------------------------------------------------------

 
6.           USE OF PROCEEDS
 
The Company anticipates using the gross proceeds from the Offering for general
corporate purposes including growth initiatives and capital expenditures.

7.           CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION
 
The Company’s right to accept the subscription of the Subscriber is conditioned
upon satisfaction of the following conditions precedent on or before the date
the Company accepts such subscription:
 
(a)           As of the Closing, no legal action, suit or proceeding shall be
pending that seeks to restrain or prohibit the transactions contemplated by this
Agreement.
 
(b)           The representations and warranties of the Company contained in
this Agreement shall have been true and correct in all material respects on the
date of this Agreement and shall be true and correct as of the Closing as if
made on the Closing Date.
 
8.
MISCELLANEOUS PROVISIONS

 
(a)           All parties hereto have been represented by counsel, and no
inference shall be drawn in favor of or against any party by virtue of the fact
that such party’s counsel was or was not the principal draftsman of this
Agreement.
 
(b)           Each of the parties hereto shall be responsible to pay the costs
and expenses of its own legal counsel in connection with the preparation and
review of this Agreement and related documentation.
 
(c)           Neither this Agreement, nor any provisions hereof, shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, modification, discharge or
termination is sought.
 
(d)           The representations, warranties and agreement of the Subscriber
and the Company made in this Agreement shall survive the execution and delivery
of this Agreement and the delivery of the Securities.
 
(e)           Any party may send any notice, request, demand, claim or other
communication hereunder to the Subscriber at the address set forth on the
signature page of this Agreement or to the Company at its primary office
(including personal delivery, expedited courier, messenger service, fax,
ordinary mail or electronic mail), but no such notice, request, demand, claim or
other communication will be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may change the address
to which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other parties written notice in the manner
herein set forth.
 
(f)           Except as otherwise provided herein, this Agreement shall be
binding upon, and inure to the benefit of, the parties to this Agreement and
their heirs, executors, administrators, successors, legal representatives and
assigns.  If the Subscriber is more than one person or entity, the obligation of
the Subscriber shall be joint and several and the agreements, representations,
warranties and acknowledgments contained herein shall be deemed to be made by,
and be binding upon, each such person or entity and its heirs, executors,
administrators, successors, legal representatives and assigns. This Agreement
sets forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
 
(g)           This Agreement is not transferable or assignable by the
Subscriber.
 
(h)           This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to conflicts of
law principles.
 
10

--------------------------------------------------------------------------------

 
(i)           The Company and the Subscriber hereby agree that any dispute that
may arise between them arising out of or in connection with this Agreement shall
be adjudicated before a court located in the City of New York, Borough of
Manhattan, and they hereby submit to the exclusive jurisdiction of the federal
and state courts of the State of New York located in the City of New York,
Borough of Manhattan with respect to any action or legal proceeding commenced by
any party, and irrevocably waive any objection they now or hereafter may have
respecting the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Agreement or any acts or omissions relating to the sale of
the securities hereunder, and consent to the service of process in any such
action or legal proceeding by means of registered or certified mail, return
receipt requested, postage prepaid, in care of the address set forth herein or
such other address as either party shall furnish in writing to the other.
 
(j)           This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
 
[Signature Pages Follow]
 
11

--------------------------------------------------------------------------------

 
ALL SUBSCRIBERS MUST COMPLETE THIS PAGE

IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the ____ day
of December 2009.
 

 
x           $1,000.00 for each Unit           =
 
Units subscribed for
 
      Aggregate Purchase Price

Manner in which Title is to be held (Please Check One):
 
1.
___
Individual
7.
___
Trust/Estate/Pension or Profit sharing Plan
Date Opened:______________
2.
___
Joint Tenants with Right of Survivorship
8.
___
As a Custodian for
________________________________
Under the Uniform Gift to Minors Act of the State of
________________________________
3.
___
Community Property
9.
___
Married with Separate Property
4.
___
Tenants in Common
10.
___
Keogh
5.
___
Corporation/Partnership/ Limited Liability Company
11.
___
Tenants by the Entirety
6.
___
IRA
     

ALTERNATIVE DISTRIBUTION INFORMATION
 
To direct distribution to a party other than the registered owner, complete the
information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA INVESTMENT.
 
Name of Firm (Bank, Brokerage, Custodian):
 
Account Name:
 
Account Number:
 
Representative Name:
 
Representative Phone Number:
 
Address:
 
City, State, Zip:
 
12

--------------------------------------------------------------------------------

 
IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 11.
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 12.
 
EXECUTION BY NATURAL PERSONS
 
_____________________________________________________________________________
Exact Name in Which Title is to be Held
_________________________________
Name (Please Print)
 
_________________________________
Name of Additional Purchaser
_________________________________
Residence: Number and Street
 
_________________________________
Address of Additional Purchaser
_________________________________
City, State and Zip Code
 
_________________________________
City, State and Zip Code
_________________________________
Social Security Number
 
_________________________________
Social Security Number
_________________________________
Telephone Number
 
_________________________________
Telephone Number
_________________________________
Fax Number (if available)
 
________________________________
Fax Number (if available)
_________________________________
E-Mail (if available)
 
________________________________
E-Mail (if available)
__________________________________
(Signature)
 
 
 
________________________________
(Signature of Additional Purchaser)
ACCEPTED this ___ day of _________ 2009, on behalf of the Company.
 
 
By:_________________________________
       Name:
       Title:
   

13

--------------------------------------------------------------------------------

 
EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation, Partnership, LLC, Trust, Etc.)
 

_____________________________________________________________________________
Name of Entity (Please Print)
Date of Incorporation or Organization:
State of Principal Office:
Federal Taxpayer Identification Number:
____________________________________________
Office Address
 
____________________________________________
City, State and Zip Code
 
____________________________________________
Telephone Number
 
____________________________________________
Fax Number (if available)
 
____________________________________________
E-Mail (if available)
 
 
By: _________________________________
       Name:
       Title:
[seal]
Attest: _________________________________
        (If Entity is a Corporation)
 
_________________________________
 
_________________________________
Address
   
ACCEPTED this ____ day of __________ 2009, on behalf of the Company.
 
 
 
By: _________________________________
       Name:
       Title: President and Chief Executive Officer

 

14

--------------------------------------------------------------------------------

 
INVESTOR QUESTIONNAIRE
 
Instructions:  Check all boxes below which correctly describe you.
 
o
You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), (ii) a savings and loan association or other
institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in an individual or fiduciary capacity, (iii) a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), (iv) an insurance company as defined in Section
2(13) of the Securities Act, (v) an investment company registered under the
Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi)
a business development company as defined in Section 2(a)(48) of the Investment
Company Act, (vii) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301 (c) or (d) of the Small Business
Investment Act of 1958, as amended, (viii) a plan established and maintained by
a state, its political subdivisions, or an agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees and you have
total assets in excess of $5,000,000, or (ix) an employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) and (1) the decision that you shall subscribe for and purchase shares
of common stock and warrants to purchase common stock (the “Units”), is made by
a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or (2) you have total assets in excess of $5,000,000 and the decision
that you shall subscribe for and purchase the Shares is made solely by persons
or entities that are accredited investors, as defined in Rule 501 of Regulation
D promulgated under the Securities Act (“Regulation D”) or (3) you are a
self-directed plan and the decision that you shall subscribe for and purchase
the Units is made solely by persons or entities that are accredited investors.

 
o
You are a private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940, as amended.

 
o
You are an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar
business trust or a partnership, in each case not formed for the specific
purpose of making an investment in the Units and its underlying securities in
excess of $5,000,000.

 
o
You are a director or executive officer of the Company.

 
o
You are a natural person whose individual net worth, or joint net worth with
your spouse, exceeds $1,000,000 at the time of your subscription for and
purchase of the Units.

 
o
You are a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with your spouse in excess of
$300,000 in each of the two most recent years, and who has a reasonable
expectation of reaching the same income level in the current year.

 
o
You are a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Units and whose subscription for and purchase
of the Units is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D.

 
o
You are an entity in which all of the equity owners are persons or entities
described in one of the preceding paragraphs.

 
15

--------------------------------------------------------------------------------

 
Check all boxes below which correctly describe you.
 
With respect to this investment in the Units, your:
 
Investment Objectives:                              p Aggressive
Growth                          p Speculation
 
Risk Tolerance:                                            o Low
Risk                                            o Moderate
Risk                                 p High Risk
 
Are you associated with a FINRA Member Firm?   o Yes  o No
 
 
Your initials (purchaser and co-purchaser, if applicable) are required for each
item below:

 
____   ____ 
I/We understand that this investment is not guaranteed.

 
____   ____ 
I/We are aware that this investment is not liquid.

 
____   ____ 
I/We are sophisticated in financial and business affairs and are able to
evaluate the risks and merits of an investment in this offering.

 
____   ____ 
I/We confirm that this investment is considered “high risk.” (This type of
investment is considered high risk due to the inherent risks including lack of
liquidity and lack of diversification.  Success or failure of private placements
such as this is dependent on the corporate issuer of these securities and is
outside the control of the investors. While potential loss is limited to the
amount invested, such loss is possible.)

 
The Subscriber hereby represents and warrants that all of its answers to this
Investor Questionnaire are true as of the date of its execution of the
Subscription Agreement pursuant to which it purchased the Units.
 
 
 
___________________________________
Name of Purchaser  [please print]
 
___________________________________
Signature of Purchaser (Entities please
provide signature of Purchaser’s duly
authorized signatory.)
 
___________________________________
Name of Signatory (Entities only)
 
___________________________________
Title of Signatory (Entities only)
 
 
___________________________________
Name of Co-Purchaser  [please print]
 
___________________________________
Signature of Co-Purchaser

 
16

--------------------------------------------------------------------------------

 
VERIFICATION OF INVESTMENT ADVISOR/BROKER
 
I state that I am familiar with the financial affairs and investment objectives
of the investor named above and reasonably believe that a purchase of the
securities is a suitable investment for this investor and that the investor,
either individually or together with his or her purchaser representative,
understands the terms of and is able to evaluate the merits of this offering.  I
acknowledge:
 
 
(a)
that I have reviewed the Subscription Agreement and forms of securities
presented to me, and attachments (if any) thereto;

 
 
(b)
that the Subscription Agreement and attachments thereto have been fully
completed and executed by the appropriate party; and

 
 
(c)
that the subscription will be deemed received by the Company upon acceptance of
the Subscription Agreement.

 
Deposit securities from this offering directly to purchaser’s account?
o Yes 
o No

 
 
If “Yes,” please indicate the account number:
_____________________________________

 
_____________________________________                                                                                     ____________________________________
Broker/Dealer                                                                                                                                                  
Account Executive
 
_____________________________________                                                                                     ____________________________________
(Name of
Broker/Dealer)                                                                                                                                
(Signature)
 
_____________________________________                                                                                     ____________________________________
(Street Address of Broker/Dealer
Office)                                                                                                    
(Print Name)
 
_____________________________________                                                                                     ____________________________________
(City of Broker/Dealer
Office)  (State)  (Zip)                                                                                                (Representative
I.D. Number)
 
_____________________________________                                                                                     ____________________________________
(Telephone Number of Broker/Dealer
Office)                                                                                            
 (Date)
 
_____________________________________                                                                                     ____________________________________
(Fax Number of Broker/Dealer
Office)                                                                                                    
      (E-mail Address of Account Executive)
 
 
 
17

--------------------------------------------------------------------------------