Exhibit 10.1

[overnearlogo.gif]

Amended and Restated
Subscription Agreement

 

 
 
 

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

 

 
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT

OverNear, Inc.
9595 Wilshire Boulevard, Suite 900
Beverly Hills, CA 90212
Attn: Bill Glaser, President

Ladies and Gentlemen:

1.           Subscription.  The undersigned (the “Purchaser”), intending to be
legally bound, hereby agrees to purchase from OverNear, Inc., a Nevada
corporation (the “Company”), the number of Units (as defined below) of the
Company set forth on the signature page hereof at a purchase price of $25,000
per Unit.  This subscription is submitted to you in accordance with and subject
to the terms and conditions described in this Amended and Restated Subscription
Agreement (this “Subscription Agreement”) and the Confidential Private Placement
Memorandum, dated August 6, 2012, as supplemented by Supplement No. 1, dated
November 5, 2012, and as may be further amended or supplemented from time to
time, including all attachments, schedules and exhibits thereto (the
“Memorandum,” and, together with this Subscription Agreement, the “Offering
Documents”) and relating to the offering (the “Offering”) by the Company of up
to a maximum of 134 Units ($4,020,000) (the “Maximum Amount”).  Each Unit
(individually a "Unit" and collectively the "Units") is being offered at a price
of $30,000 per Unit and consists of (i) 120,000 shares of the Company’s Series A
Convertible Preferred Stock, par value $0.001 per share (“Preferred Stock” or
the “Shares”) and (ii) five-year Common Stock Purchase Warrants (“Investor
Warrants”) to purchase up to 120,000 shares of Common Stock (the “Warrant
Shares”) at an exercise price of $0.50 per share.  We sometimes refer to the
Units, Shares, Warrant Shares and Investor Warrants collectively as the
“Securities.”  The Units are being offered through Portfolio Advisors Alliance,
Inc. (“PAA”) and other registered broker-dealers that the Company may retain
from time to time (each a “Placement Agent” and collectively, including, without
limitation, PAA, the “Placement Agents”) and their respective selected dealers,
if any, on a “reasonable efforts, no minimum” basis.  Accordingly, this Offering
is being conducted with no minimum number of Units required to be sold as a
condition to consummate any closings hereunder.  The minimum subscription for a
Purchaser in the Offering is one Unit ($30,000); provided, however, that
Placement Agent and the Company, in their sole discretion, may waive such
minimum subscription requirement from time to time.  The terms of the Offering
are more completely described in the Memorandum and such terms are incorporated
herein in their entirety.

2.           Payment.  The Purchaser encloses herewith a check payable to, or
will immediately make a wire transfer payment to “Signature Bank, Escrow Agent
for OverNear, Inc.” in the full amount of the purchase price of the Units being
subscribed for.  Such funds will be held for the Purchaser's benefit, and will
be returned promptly, without interest, or offset if this Subscription Agreement
is not accepted by the Company or the Offering is terminated pursuant to its
terms or by the Company or the Placement Agent.  Together with a check for, or
wire transfer of, the full purchase price, the Purchaser is delivering (i) a
completed and executed Signature Page to this Subscription Agreement and (ii) an
Accredited Investor Certification and Investor Profile, which are annexed
hereto.

3.           Deposit of Funds.  All payments made as provided in Section 2
hereof shall be deposited by the Company or the Placement Agent as soon as
practicable with the Escrow Agent, in a non-interest-bearing escrow account (the
“Escrow Account”) until the earliest to occur of (a) the occurrence of a closing
(the initial closing is hereinafter referred to as the “First Closing”), (b) the
rejection of such subscription, or (c) the termination of the Offering.  The
Company and the Placement Agent may continue to offer and sell the Units and
conduct additional closings after the First Closing (each, a “Closing”) until
termination of the Offering.  In the event that the Company does not effect a
Closing, on or before December 31, 2012 (the “Offering Period”), the Company
will refund all subscription funds, without deduction and/or interest accrued
thereon, and will return the subscription documents to each Purchaser.  If the
Company and/or the Placement Agent rejects a subscription, either in whole or in
part (which decision is in their sole discretion), the rejected subscription
funds or the rejected portion thereof will be returned promptly to such
Purchaser without interest accrued thereon.
 
 
1

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

 
 
4.           Acceptance of Subscription.  The Purchaser understands and agrees
that the Company and/or the Placement Agent, each in their sole discretion,
reserve the right to accept or reject this or any other subscription for Units,
in whole or in part, notwithstanding prior receipt by the Purchaser of notice of
acceptance of this subscription.  The Company shall have no obligation hereunder
until the Company shall execute and deliver to the Placement Agent (on behalf of
the Purchaser) an executed copy of this Subscription Agreement.  If this
subscription is rejected in whole, or the Offering is terminated, all funds
received from the Purchaser will be returned without interest, penalty, expense
or deduction, and this Subscription Agreement shall thereafter be of no further
force or effect.  If this subscription is rejected in part, the funds for the
rejected portion of this subscription will be returned without interest,
penalty, expense or deduction, and this Subscription Agreement will continue in
full force and effect to the extent this subscription was accepted.

5.           Representations and Warranties of the Purchaser.  The Purchaser
hereby acknowledges, represents, warrants, and agrees as follows:

(a)           None of the Securities offered pursuant to the Offering Documents
or the Common Stock issuable upon conversion of the Shares (“Conversion Shares”)
are registered under the Securities Act of 1933, as amended (the “Securities
Act”), or any state securities laws.  The Purchaser understands that the
offering and sale of the Securities contemplated hereby is intended to be exempt
from registration under the Securities Act, by virtue of Section 4(2) thereof
and the provisions of Regulation D promulgated thereunder, based, in part, upon
the truth and accuracy of, and compliance with, representations, warranties and
agreements of the Purchaser contained in this Subscription Agreement;

(b)           The Purchaser acknowledges that it and its attorney, accountant,
purchaser representative and/or tax advisor, if any (collectively, the
“Advisors”), have received the Offering Documents, either in hard copy or
electronically, and all other documents requested by the Purchaser and/or its
Advisors, have carefully reviewed them and understands the information contained
therein, and the Purchaser and the Advisors, if any, prior to the execution of
this Subscription Agreement, have had access to the same kind of information as
would be available in a registration statement filed by the Company under the
Securities Act.  Purchaser’s decision to enter into this Subscription Agreement
and the other Transaction Documents (as defined herein) has been made based
solely on the independent evaluation of the Purchaser and its Advisors, if any;

(c)           Neither the Securities and Exchange Commission (the “SEC”) nor any
state securities commission or other regulatory body has approved the Securities
or passed upon or endorsed the merits of the Offering or confirmed the accuracy
or determined the adequacy of the Offering Documents.  Any representation to the
contrary is a criminal offense.  The Offering Documents have not been reviewed
by any federal, state or other regulatory authority.  The Securities, and the
Conversion Shares are subject to restrictions on transferability and resale and
may not be transferred or resold except as permitted under the Securities Act,
and the applicable state securities laws, pursuant to registration or exemption
therefrom;
 
 
 
2

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

 

 
(d)           All documents, records, and books pertaining to the investment in
the Securities (including, without limitation, the Offering Documents) have been
made available, subject to certain confidentiality restrictions, for inspection
by the Purchaser and its Advisors, if any;

(e)           The Purchaser 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 of the Securities and
the business, financial condition, and results of operations of the Company, and
all such questions have been answered by representatives of the Company to the
full satisfaction of the Purchaser and its Advisors, if any, and the Purchaser
and its Advisors have had access, through the Memorandum and/or the EDGAR
system, to true and complete copies of the Company’s most recent Annual Report
on Form 10-K for the 2011 fiscal year (the “10-K”) and all other reports filed
by the Company pursuant to the Securities Exchange Act of 1934, as amended,
since the filing of the 10-K and prior to the date hereof and has had the
opportunity to review such filings;

(f)           In evaluating the suitability of an investment in the Company, the
Purchaser has not relied upon any representation or other information (oral or
written) other than as stated in the Offering Documents;

(g)           The Purchaser is unaware of, is in no way relying on, and did not
become aware of the offering of the Units directly or indirectly through or as a
result of, any form of general solicitation or general advertising including,
without limitation, any press release, filing with the SEC (including, without
limitation, any registration statement that is currently pending or may be filed
with the SEC during the Offering Period), article, notice, advertisement or
other communication published in any newspaper, magazine or similar media or
broadcast over television, radio or the internet (including without limitation,
internet “blogs,” bulletin boards, discussion groups or social networking
sites), in connection with the offering and sale of the Units and is not
subscribing for Units and did not become aware of the offering of the Units
through or as a result of any seminar or meeting to which the Purchaser was
invited by, or any solicitation of a subscription by, a person not previously
known to the Purchaser in connection with investments in securities generally;

(h)           The Purchaser has taken no action which would give rise to any
claim by any person for brokerage commissions, finder’ fees or the like relating
to this Subscription Agreement or the transactions contemplated hereby (other
than commissions and other compensation to be paid by the Company to the
Placement Agent or as otherwise described in the Offering Documents);

(i)           The Purchaser's decision to enter into this Subscription Agreement
has been made based solely on the independent evaluation of the Purchaser and
its own Advisors, if any, and the Purchaser, either alone or together with its
Advisors, if any, has such knowledge and experience in financial, tax, and
business matters, and, in particular, investments in securities, so as to enable
it to utilize the information made available to it in connection with the
Offering to evaluate the merits and risks of an investment in the Units and the
Company and to make an informed investment decision with respect thereto;

(j)           The Purchaser is not relying on the Company, the Placement Agent
or any of their respective employees or agents with respect to the legal, tax,
economic and related considerations of an investment in the Units, and the
Purchaser has relied on the advice of, or has consulted with, only its own
Advisors, if any;
 
 
 
3

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

 
 
(k)           The Purchaser is neither a registered representative under the
Financial Industry Regulatory Authority (“FINRA”), a member of FINRA or
associated or affiliated with any member of FINRA, nor a broker-dealer
registered with the SEC under the Exchange Act or engaged in a business that
would require it to be so registered, nor is it an affiliate of a such a
broker-dealer or any person engaged in a business that would require it to be
registered as a broker-dealer. In the event such Purchaser is a member of FINRA,
or associated or affiliated with a member of FINRA, such Purchaser agrees, if
requested by FINRA, to sign a lock-up, the form of which shall be satisfactory
to FINRA with respect to the Securities.

(l)           The Purchaser is acquiring the securities comprising the Units,
and upon conversion of the Preferred Stock, the Conversion Shares and upon
exercise of the Investor Warrants, the Warrant Shares, solely for such
Purchaser's own account for investment purposes only and not with a view to or
intent of resale or distribution thereof, in whole or in part.  The Purchaser
has no agreement or arrangement, formal or informal, with any person to sell or
transfer all or any part of the Securities or Conversion Shares, and the
Purchaser has no plans to enter into any such agreement or arrangement;

(m)           The purchase of the Units represents a high risk capital
investment and the Purchaser is able to afford an investment in a speculative
venture having the risks and objectives of the Company and is in a position to
sustain a loss of their entire investment.  The Purchaser must bear the
substantial economic risks of the investment in the Units indefinitely because
none of the Securities or the Conversion Shares may be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from such registration is
available.  Legends shall be placed on the Securities and Conversion Shares to
the effect that they have not been registered under the Securities Act or
applicable state securities laws and appropriate notations thereof will be made
in the Company's books.  Stop transfer instructions will be placed with the
transfer agent of the Securities and Conversion Shares, if any, or with the
Company.  There can be no assurance that there will be any market for resale of
the Units, the Securities or the Conversion Shares.  The Company has agreed that
purchasers of the Securities will have, with respect to the Conversion Shares
and the Warrant Shares, the registration rights described herein;

(n)           The Purchaser has adequate means of providing for such Purchaser's
current financial needs and foreseeable contingencies and has no need for
liquidity of its investment in the Securities for an indefinite period of time;

(o)           The Purchaser is aware that an investment in the Units involves a
number of very significant risks and has carefully read and considered the
matters set forth under the caption “Risk Factors” in the Offering Documents,
and, in particular, acknowledges that the Company has a limited operating
history and limited assets, the Company has not had any revenues from product
sales to date, the Company has incurred loses since its inception, and that the
Company's independent registered public accounting firm has included an
explanatory paragraph in its opinion on the Company’s financial statements for
the fiscal years ended December 31, 2011, expressing doubt as to the Company's
ability to continue as a going concern;

(p)           The Purchaser meets the requirements of at least one of the
suitability standards for an “accredited investor” as that term is defined in
Regulation D under the Securities Act, and has truthfully and accurately
completed the Accredited Investor Certification and Investor Profile attached
hereto;
 
 
4

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

 

 
(q)           The Purchaser: (i) if a natural person, represents that the
Purchaser has reached the age of 21 and has full power and authority to execute
and deliver this Subscription Agreement and all other related agreements or
certificates and to carry out the provisions hereof and thereof; (ii) if a
corporation, partnership, or limited liability company or partnership, or
association, joint stock company, trust, unincorporated organization or other
entity, represents that such entity was not formed for the specific purpose of
acquiring the Units, such entity is duly organized, validly existing and in good
standing under the laws of the state of its organization, the consummation of
the transactions contemplated hereby is authorized by, and will not result in a
violation of any law applicable to it or its charter or other organizational
documents, such entity has full power and authority to execute and deliver this
Subscription Agreement and all other related agreements or certificates and to
carry out the provisions hereof and thereof and to purchase and hold the Units
and the Securities, the execution and delivery of this Subscription Agreement
has been duly authorized by all necessary action, this Subscription Agreement
has been duly executed and delivered on behalf of such entity and is a legal,
valid and binding obligation of such entity; or (iii) if executing this
Subscription Agreement in a representative or fiduciary capacity, represents
that it has full power and authority to execute and deliver this Subscription
Agreement in such capacity and on behalf of the subscribing individual, ward,
partnership, trust, estate, corporation, or limited liability company or
partnership, or other entity for whom the Purchaser is executing this
Subscription Agreement, and such individual, partnership, ward, trust, estate,
corporation, or limited liability company or partnership, or other entity has
full right and power to perform pursuant to this Subscription Agreement and make
an investment in the Company, and represents that this Subscription Agreement
constitutes a legal, valid and binding obligation of such entity.  The execution
and delivery of this Subscription Agreement will not violate or be in conflict
with any order, judgment, injunction, agreement or controlling document to which
the Purchaser is a party or by which it is bound;

(r)           The Purchaser and the Advisors, if any, have had the opportunity
to obtain any additional information, to the extent the Company had such
information in its possession or could acquire it without unreasonable effort or
expense, necessary to verify the accuracy of the information contained in the
Offering Documents and all documents received or reviewed in connection with the
purchase of the Units and have had the opportunity to have representatives of
the Company provide them with such additional information regarding the terms
and conditions of this particular investment and the financial condition,
results of operations, business and prospects of the Company deemed relevant by
the Purchaser or the Advisors, if any, and all such requested information, to
the extent the Company had such information in its possession or could acquire
it without unreasonable effort or expense, has been provided by the Company to
the full satisfaction of the Purchaser and the Advisors, if any;

(s)           Any information which the Purchaser has heretofore furnished or is
furnishing herewith to the Company or the Placement Agent is complete and
accurate and may be relied upon by the Company and the Placement Agent in
determining the availability of an exemption from registration under Federal and
state securities laws in connection with the Offering.  The Purchaser further
represents and warrants that it will notify and supply corrective information to
the Company and the Placement Agent immediately upon the occurrence of any
change therein occurring prior to the Company's issuance of the securities
underlying the Units;

(t)           The Purchaser has significant prior investment experience,
including investments in high risk securities.  The Purchaser is knowledgeable
about investments in unregistered and restricted securities of developing and
emerging growth companies such as the Company.  The Purchaser has a sufficient
net worth to sustain a loss of its entire investment in the Company in the event
such a loss should occur.  The Purchaser's overall commitment to investments
which are not readily marketable is not excessive in view of the Purchaser’s net
worth and financial circumstances and the purchase of the Units will not cause
such commitment to become excessive.  The investment is a suitable one for the
Purchaser;

(u)           The Purchaser is satisfied that it has received adequate
information with respect to all matters which it or the Advisors, if any,
consider material to its decision to make this investment;
 
 
5

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

 
 
(v)           The Purchaser acknowledges that any estimates or forward-looking
statements or projections included in the Offering Documents were prepared by
the Company in good faith but that the attainment of any such projections,
estimates or forward-looking statements cannot be guaranteed and will not be
updated by the Company and should not be relied upon;

(w)           No oral or written representations have been made, or oral or
written information furnished, to the Purchaser or its Advisors, if any, in
connection with the Offering which are in any way inconsistent with the
information contained in the Offering Documents;

(x)           Within five (5) business days after receipt of a request from the
Company or the Placement Agent, the Purchaser will provide such information and
deliver such documents as may reasonably be necessary to comply with any and all
laws and ordinances to which the Company or the Placement Agent is subject;

(y)           The Purchaser’s substantive relationship with the Company, the
Placement Agent or subagent through which the Purchaser is subscribing for Units
predates the Company’s, Placement Agent’s or such subagent's contact with the
Purchaser regarding an investment in the Units;

(z)           THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATES AND ARE
BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT AND SUCH LAWS.  THE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY
OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
OFFERING DOCUMENTS.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL;

(aa)           The Purchaser understands that affiliates and/or employees of the
Placement Agent (i) will receive the compensation set forth elsewhere in the
Offering Documents in connection with the Offering and (ii) may, but are not
obligated to, purchase Units in the Offering and all such Units purchased shall
be included in calculating whether the Maximum Amount of the Offering has been
obtained.

(bb)           (For ERISA plans only)    The fiduciary of the ERISA 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 Purchaser fiduciary or
Plan (a) is responsible for the decision to invest in the Company; (b) is
independent of the Company or any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Purchaser
fiduciary or Plan has not relied primarily on any advice or recommendation of
the Company or any of its affiliates;
 
 
6

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

 
 
 
(cc)           The Purchaser should check the Office of Foreign Assets Control
(“OFAC”) website at <http://www.treas.gov/ofac> before making the following
representations. The Purchaser represents that the amounts invested by it in the
Company in the Offering were not and are not directly or indirectly derived from
activities that contravene federal, state or international laws and regulations,
including anti-money laundering laws and regulations. Federal regulations and
Executive Orders administered by OFAC prohibit, among other things, the
engagement in transactions with, and the provision of services to, certain
foreign countries, territories, entities and individuals.  The lists of OFAC
prohibited countries, territories, persons and entities can be found on the OFAC
website at <http://www.treas.gov/ofac>.  In addition, the programs administered
by OFAC (the “OFAC Programs”) prohibit dealing with individuals1 or entities in
certain countries regardless of whether such individuals or entities appear on
the OFAC lists;

(dd) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2)
any person controlling or controlled by the Purchaser; (3) if the Purchaser is a
privately-held entity, any person having a beneficial interest in the Purchaser;
or (4) any person for whom the Purchaser is acting as agent or nominee in
connection with this investment is a country, territory, individual or entity
named on an OFAC list, or a person or entity prohibited under the OFAC
Programs.  Please be advised that the Company may not accept any amounts from a
prospective investor if such prospective investor cannot make the representation
set forth in the preceding paragraph.  The Purchaser agrees to promptly notify
the Company and the Placement Agent should the Purchaser become aware of any
change in the information set forth in these representations.  The Purchaser
understands and acknowledges that, by law, the Company may be obligated to
“freeze the account” of the Purchaser, either by prohibiting additional
subscriptions from the Purchaser, declining any redemption requests and/or
segregating the assets in the account in compliance with governmental
regulations, and the Placement Agent may also be required to report such action
and to disclose the Purchaser’s identity to OFAC.  The Purchaser further
acknowledges that the Company may, by written notice to the Purchaser, suspend
the redemption rights, if any, of the Purchaser if the Company reasonably deems
it necessary to do so to comply with anti-money laundering regulations
applicable to the Company and the Placement Agent or any of the Company’s other
service providers.  These individuals include specially designated nationals,
specially designated narcotics traffickers and other parties subject to OFAC
sanctions and embargo programs;

(ee) To the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2)
any person controlling or controlled by the Purchaser; (3) if the Purchaser is a
privately-held entity, any person having a beneficial interest in the Purchaser;
or (4) any person for whom the Purchaser is acting as agent or nominee in
connection with this investment is a senior foreign political figure2, or any
immediate family3 member or close associate4 of a senior foreign political
figure, as such terms are defined in the footnotes below; and

(ff)           If the Purchaser is affiliated with a non-U.S. banking
institution (a “Foreign Bank”), or if the Purchaser receives deposits from,
makes payments on behalf of, or handles other financial transactions related to
a Foreign Bank, the Purchaser represents and warrants to the Company that: (1)
the Foreign Bank has a fixed address, other than solely an electronic address,
in a country in which the Foreign Bank is authorized to conduct banking
activities; (2) the Foreign Bank maintains operating records related to its
banking activities; (3) the Foreign Bank is subject to inspection by the banking
authority that licensed the Foreign Bank to conduct banking activities; and (4)
the Foreign Bank does not provide banking services to any other Foreign Bank
that does not have a physical presence in any country and that is not a
regulated affiliate.
 
________________________________
1 These individuals include specially designated nationals, specially designated
narcotics traffickers and other parties subject to OFAC sanctions and embargo
programs.
 
2 A “senior foreign political figure” is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
foreign government (whether elected or not), a senior official of a major
foreign political party, or a senior executive of a foreign government-owned
corporation. In addition, a “senior foreign political figure” includes any
corporation, business or other entity that has been formed by, or for the
benefit of, a senior foreign political figure.
 
3 “Immediate family” of a senior foreign political figure typically includes the
figure’s parents, siblings, spouse, children and in-laws.
 
4 A “close associate” of a senior foreign political figure is a person who is
widely and publicly known to maintain an unusually close relationship with the
senior foreign political figure, and includes a person who is in a position to
conduct substantial domestic and international financial transactions on behalf
of the senior foreign political figure.
 
 
7

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

 
 
6.           Representations, Warranties and Covenants of the Company.  The
Company hereby represents, warrants, acknowledges and agrees as follows:

(a)           Organization, Good Standing and Qualification.  (a)  The Company
is duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority to own,
lease, use and operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted.  The Company has no
subsidiaries.  The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its  ownership
or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good
standing would not have a material adverse effect on (i) the assets,
liabilities, results of operations, financial condition or business, or
prospects of the Company or (ii) the ability of the Company to perform its
obligations under the Transaction Documents (as defined below) (a “Material
Adverse Effect”).

(b)           Authorization; Enforceability. The Company has all corporate power
and authority to (i) conduct its business as presently conducted and as proposed
to be conducted (as described in the Memorandum), (ii) enter into and perform
its obligations under this Subscription Agreement (the “Subscription
Agreement”), the Investor Warrants substantially in the form of Annex B to the
Memorandum, and the other agreements contemplated hereby (this Subscription
Agreement, the Warrants, and the other agreements contemplated hereby, are
collectively referred to herein as the “Transaction Documents”), and (iii)
issue, sell and deliver the Securities and Conversion Shares.  The execution and
delivery of this Agreement and the other Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby, have been duly authorized by the Company's Board of Directors.  This
Agreement has been duly authorized, executed and delivered and constitutes, and
each of the other Transaction Documents, upon due execution and delivery, will
constitute, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
related to laws affecting creditors’ rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers, and except that no representation is made herein regarding the
enforceability of the Company’s obligations to provide indemnification and
contribution remedies under the securities laws and (ii) subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).

(c)           Disclosure.  The information set forth in the Offering Documents
as of the date thereof contains no untrue statement of a material fact nor omits
to state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
 
(d)           Registration Statement.  The Company has agreed to use its
commercially reasonable efforts to file a registration statement on Form S-1 or
such other available form (the “Registration Statement”) within sixty (60) days
following the Final Closing (the “Filing Date”) and use its best efforts to have
the Registration Statement declared effective by the earlier of 5 days after
notice by the SEC that it may be declared effective or 150 days from the Filing
Date.  In the event that the Registration Statement is not filed by the Filing
Date or is not declared effective by the SEC for any reason on a timely basis,
the Company will incur monthly liquidated damages, payable to Investors in cash,
in an amount equal to one (1.0%) percent of the purchase price of the Units, on
a pro rata basis on the amount of each Purchaser’s investment until the
Registration Statement is filed (but in no event will the maximum aggregate
liquidated damages payable exceed twelve (12%) percent).
 
 
8

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

 
 
7.       Registration Rights.  Purchaser shall have the registration rights
described below.

(a)            Definitions.   As used in the Subscription Agreement, the
following terms shall have the following meanings.

(1)           The term “Holder” shall mean any holder of Registrable Securities.

(2)           The term “Other Registrable Securities” shall mean shares of
Common Stock other than the Registrable Securities that have registration rights
senior to, pari passu with or junior to, the Registrable Securities.

(3)           The terms “register”, “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
order of effectiveness of such registration statement or document.

(4)           The term “Registrable Securities” shall mean (i) the Conversion
Shares (or any successor security), (ii) the Warrant Shares (or any successor
security) and (iii) any shares of Common Stock issuable (or issuable upon the
conversion or exercise of any warrant, right or other security that is issued)
pursuant to a dividend or other distribution with respect to or in replacement
of any such securities; provided, however, that securities shall only be treated
as Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC;
(B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale; (C) are held by a Purchaser or a permitted transferee
of a Purchaser or Holder pursuant to Section 7(j) and (D) may not be disposed of
under Rule 144 under the Securities Act without restriction.

(b)           Automatic Registration rights. Within 60 days of the Final
Closing, the Company shall file a resale registration statement covering the
resale of the Conversion Shares and the Warrant Shares (or less than all, if the
Company is limited in the number of shares that it can include on such resale
registration statement by regulation or the requirements of any exchange), and
use its commercially reasonable efforts to have the registration statement
declared effective by the earlier of 5 days after notice by the SEC that it may
be declared effective or 150 days from the Filing Date.  In the event that the
registration statement is not filed on a timely basis or is not declared
effective by the SEC for any reason on a timely basis, the Company will incur
monthly liquidated damages, payable to Investors in cash, in an amount equal to
one (1.0%) percent of the purchase price of the Units, on a pro rata basis on
the amount of each Purchaser’s investment, until the registration statement is
filed (but in no event will the maximum aggregate liquidated damages payable
exceed twelve (12%) percent).

(c)           Registration Procedures. Whenever required under this Section 7 to
include Registrable Securities in a Company registration statement, the Company
shall, as expeditiously as reasonably possible:
 
 
9

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

 
 
(1)           Use reasonable efforts to (i) cause such registration statement to
become effective, and (ii) cause such registration statement to remain effective
until the earliest to occur of (A) such date as the Holders selling Registrable
Securities have completed the distribution described in the registration
statement and (B) one year from the effective date of the registration
statement.  The Company will also use its reasonable efforts to, during the
period that such registration statement is required to be maintained hereunder,
file such post-effective amendments and supplements thereto as may be required
by the Securities Act and the rules and regulations thereunder or otherwise to
ensure that the registration statement does not contain any untrue statement of
material fact or omit to state a fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they are made, not misleading; provided, however, that if applicable rules
under the Securities Act governing the obligation to file a post-effective
amendment permits, in lieu of filing a post-effective amendment that (i)
includes any prospectus required by Section 10(a)(3) of the Securities Act or
(ii) reflects facts or events representing a material or fundamental change in
the information set forth in the registration statement, the Company may
incorporate by reference information required to be included in (i) and (ii)
above to the extent such information is contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act in the registration
statement. In the event that the Company becomes qualified for the use of Form
S-3 or any successor form at a time when any registration statement on any other
Form which includes Registrable Securities is required to be maintained
hereunder, the Company shall, upon the request of any selling Holder, subject to
Section 7(d), (i) as expeditiously as reasonably possible, use reasonable
efforts to cause a Short-Form Registration covering such Registrable Securities
to become effective and (ii) comply with each of the other requirements of this
Section 7(c) which may applicable thereto. Upon the effectiveness of such
Short-Form Registration, the Company shall be relieved of its obligations
hereunder to keep in effect the registration statement which initially covered
the Registrable Securities included in such Short-Form Registration.

(2)           Prepare and file with the SEC such amendments and supplements to
such registration state­ment, and the prospectus used in connection with such
registra­tion statement, as may be necessary to comply with the provi­sions of
the Securities Act with respect to the disposition of all securities covered by
such registra­tion statement.

(3)           Make available for inspection upon reasonable notice during the
Company’s regular business hours by each selling Holder, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by such selling Holder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company reasonably requested, and cause the Company’s
officers, directors and employees to supply all information reasonably requested
by any such selling Holder, underwriter, attorney, accountant or agent in
connection with such registration statement, subject to the execution of
appropriate confidentiality agreements.

(4)           Furnish to the selling Holders such numbers of copies of a
prospectus, including a preliminary pros­pectus as amended or supplemented from
time to time, in conformi­ty with the requirements of the Securities Act, and
such other documents as they may reasonably request in order to facilitate the
disposi­tion of Registrable Securities owned by them.

(5)           Use reasonable efforts to register and qualify the securities
covered by such registration statement under such other federal or state
securities laws of such jurisdic­tions as shall be reason­ably requested by the
selling Holders; provided, however, that the Company shall not be required in
connection therewith or as a condition there­to to quali­fy to do business or to
file a general consent to ser­vice of process in any such states or
jurisdic­tions, unless the Company is already subject to service in such
jurisdiction and except as may be re­quired by the Securities Act.
 
 
10

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

 
 
(6)           In the event of any underwritten public offer­ing, enter into and
perform its obligations under an under­writing agreement, in usual and customary
form, with the managing under­writer of such offering.  Each Holder
participating in such under­writing shall also enter into and perform its
obligations under such an agreement.

(7)           Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a pro­spectus relating thereto is
required to be delivered under the Securities Act, (i) when the registration
statement or any post-effective amendment and supplement thereto has become
effective; (ii) of the issuance by the SEC of any stop order or the initiation
of proceedings for that purpose (in which event the Company shall make every
effort to obtain the withdrawal of any order suspending effectiveness of the
registration statement at the earliest possible time or prevent the entry
thereof); (iii) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose; and (iv)
of the happening of any event as a result of which the prospectus included in
such regis­tration statement, as then in effect, in­cludes an untrue state­ment
of a material fact or omits to state a material fact required to be stated
therein or neces­sary to make the statements therein not misleading in the light
of the circum­stances then existing (and each Holder agrees to suspend any
trading under the Registration Statement until such condition is abated).

(8)           Cause all such Registrable Securi­ties regis­tered hereunder to be
listed on each secu­rities exchange or quoted on a quotation service on which
similar securities issued by the Company are then listed or quoted or, if no
such similar securities are listed or quoted on a securities exchange or
quotation service, apply for qualification and use best efforts to qualify such
Registrable Securities for inclusion on a national securities exchange or the
quotation service.

(9)           Provide a transfer agent and regis­trar for all Regis­trable
Securities registered pursuant here­under and CUSIP number for all such
Registrable Securi­ties, in each case not later than the effective date of such
registration.

(10)           Cooperate with the selling Holders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing the Registrable Securities to be sold, which certificates will not
bear any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters, if
any, shall request at least two business days prior to any sale of the
Registrable Securities to the underwriters.

(d)           Furnish Information.                                           It
shall be a condition precedent to the obligation of the Company to take any
action pursu­ant to this Section 7 with respect to the Registrable Securi­ties
of any Holder that such Holder shall furnish to the Company such informa­tion
regarding the Holder, the Registra­ble Securities held by the Holder, and the
intended method of disposition of such securi­ties as shall be reasonably
required by the Company to effect the registration of such Holder's Registrable
Securities.

(e)           Registration Expenses.  The Company shall bear and pay all
Registration Expenses incurred in connection with any registra­tion, filing or
qualifica­tion of Registrable Securities, and shall pay the fees and expenses of
one counsel to the Holders to be designated by the Placement Agent (not to
exceed $10,000) with respect to reviewing the registration statement relating to
such registra­tions pursuant to Section 7 for each Holder, but excluding
under­writing dis­counts and com­missions relating to Registra­ble Securi­ties
and excluding any professional fees or costs of accounting, financial or legal
advisors  to any of the Holders (except as provided above).
 
 
11

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

 
 
(f)           Rule 415 Requirements.   Notwithstanding the registration
obligations set forth in this Section 7, in the event the SEC informs the
Company that all of the Registrable Securities cannot, as a result of the
application of Rule 415, be registered for resale on a single registration
statement, the Company agrees to promptly (i) inform each of the Holders
thereof, (ii) use its commercially reasonable efforts to file amendments to the
registration statement as required by the SEC and/or (iii) withdraw the
registration statement and file a new registration statement (a “New
Registration Statement”), in either case covering the maximum number of
Registrable Securities permitted to be registered by the SEC, on Form S-1 or
such other form available to register for resale the Registrable Securities as a
secondary offering; provided, however, that prior to filing such amendment or
New Registration Statement, the Company shall be obligated to use its
commercially reasonable efforts to advocate with the SEC  (which shall include
assistance from Placement Agent’s counsel) for the registration of all of the
Registrable Securities in accordance with the SEC guidance, including without
limitation, advocating that the offering contemplated by the Registration
Statement is a valid secondary offering and not an offering “by or on behalf of
the issuer” as defined in Rule 415.  In the event the Company amends the
registration statement or files a New Registration Statement, as the case may
be, under clauses (ii) or (iii) above, the Company will use its commercially
reasonable efforts to file with the SEC, as promptly as allowed by the SEC or by
SEC guidance provided to the Company or to registrants of securities in general,
one or more registration statements on Form S-1 or such other form available to
register for resale those Registrable Securities that were not registered for
resale on the registration statement, as amended, or the New Registration
Statement.  The foregoing notwithstanding, if the Company is required to limit
the number of shares that it can include in such resale registration statement
or New Registration Statement by regulation or the requirements of the SEC or
any exchange, then, notwithstanding the registration rights of the holders of
Other Registrable Securities, the number of Registrable Securities to be
included on such registration statement and New Registration Statement shall be
allocated first, to the Registrable Securities, on a pro rata basis, and second,
to the Other Registrable Securities, on a pro rata basis.  To the extent that
after the applications set forth in the prior sentence, it remains necessary to
limit the number of Registrable Securities that are to be included in such
resale registration statement or New Registration Statement,  the number of
Registrable Securities to be registered in such registration statements will
first be reduced by the Registrable Securities represented by the Warrant Shares
(applied, in the case that some Warrant Shares may be registered, to the Holders
on a pro rata basis based on the total number of unregistered Warrant Shares
held by such persons), and second by Registrable Securities represented by
Conversion Shares (applied, in the case that some Conversion Shares may be
registered, to the Holders on a pro rata basis based on the total number of
unregistered Conversion Shares held by such persons).

(g)           Delay of Registration.  No Holder shall have any right to obtain
or seek an injunction restrain­ing or otherwise delaying any such registration
as the result of any controversy that might arise with respect to the
inter­pretation or implemen­tation of this Section 7.

(h)           Indemnification.  In the event that any Regis­trable Securi­ties
are included in a registration state­ment under this Section 7:

(1)           To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or
under­writer within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabili­ties (joint or sever­al) to
which they may become subject under the Securities Act, or the Exchange Act,
insofar as such losses, claims, damag­es, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collec­tively a “Violation”):  (i) any untrue
state­ment or alleged untrue statement of a material fact contained in such
registra­tion state­ment, including any preliminary prospectus or final
prospectus contained therein or any amendments or sup­plements thereto, (ii) the
omission or alleged omis­sion to state therein a material fact re­quired to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any viola­tion or alleged violation by the Company of the Securities Act,
the Exchange Act, or any rule or regulation promulgated under the Securities
Act, or the Exchange Act, and the Company will pay to each such Holder,
under­writer or controlling person, as in­curred, any legal or other expenses
reasonably in­curred by them in connection with investi­gating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 7(h)(1) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
set­tlement is effected without the consent of the Compa­ny (which consent shall
not be unreasonably with­held), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformi­ty with written information furnished expressly for use in con­nection
with such registration by any such Holder, under­writer or controlling person or
a violation of any provision of the Subscription Agreement by a Holder.
 
 
12

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

 
 
(2)           To the extent permitted by law, each Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers, each
person, if any, who con­trols the Company within the meaning of the Securities
Act, any underwriter, any other Holder selling securi­ties in such registration
statement and any controlling person of any such under­writer or other Holder,
against any losses, claims, damages, or liabilities (joint or sever­al) to which
any of the foregoing persons may become subject, under the Securities Act, or
the Exchange Act, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information fur­nished by such
Holder ex­pressly for use in connection with such regis­tration or a violation
of any provision of the Subscription Agreement by a Holder; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intend­ed to be indemnified pursu­ant to this Section 7(h)(2), in
connection with investi­gating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indem­nity agreement
con­tained in this Section 7(h)(2) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
ef­fected with­out the consent of the Hold­er, which consent shall not be
unreasonably withheld; provid­ed, further, that, in no event shall any indemnity
under this Section 7(h)(2) exceed the greater of the cash value of the (i) gross
proceeds from the offering received by such Holder or (ii) such Holder’s
investment pursuant to this Subscription Agreement as set forth on the signature
page attached hereto.

(3)           Promptly after receipt by an indem­ni­fied party under this
Section 7(h) of notice of the commencement of any action (including any
governmental action), such indem­nified party shall, if a claim in respect
thereof is to be made against any indemnify­ing party under this Section 7(h),
deliver to the indemnify­ing party a written notice of the commencement thereof
and the indemni­fying party shall have the right to par­ticipate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party simi­larly notified, to assume the defense thereof with counsel selected
by the indemnifying party and approved by the indemnified party (whose approval
shall not be unreasonably withheld); provided, however, that an indemnified
party (together with all other indem­nified parties which may be represented
with­out conflict by one counsel) shall have the right to retain one sepa­rate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indem­nified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemni­fied party and any other party represented by
such counsel in such proceeding.  The failure to deliver written notice to the
indemnifying party within a rea­sonable time of the com­mencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indem­nifying party of any liability to the indemnified party under this Section
7(h), but the omission so to deliver written notice to the indemnify­ing party
will not re­lieve it of any liabil­ity that it may have to any indem­nified
party otherwise than under this Section 7(h).
 
 
 
13

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

 

 
(4)           If the indemnification provided for in this Section 7 is held by a
court of competent juris­diction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or ex­pense referred to therein,
then the indemnifying party, in lieu of indem­nifying such indemnified party
hereun­der, shall contrib­ute to the amount paid or pay­able by such indemnified
party as a result of such loss, liabil­ity, claim, dam­age, or expense in such
pro­por­tion as is appro­priate to reflect the relative fault of the
indem­nifying party on the one hand and of the indem­nified party on the other
in connection with the state­ments or omissions that resulted in such loss,
liabili­ty, claim, damage, or expense as well as any other relevant equita­ble
consid­er­ations.  The relative fault of the indemni­fying party and of the
indemnified party shall be deter­mined by refer­ence to, among other things,
whether the untrue or alleged untrue statement of a materi­al fact or the
alleged omission to state a material fact relates to infor­mation supplied by
the indemnifying party or by the indemnified party and the parties' rela­tive
intent, knowl­edge, access to infor­ma­tion, and opportunity to correct or
prevent such state­ment or omission.

(5)           Notwithstanding the foregoing, to the extent that the provisions
on indemnification and con­tri­bution contained in the underwriting agreement
en­tered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provi­sions in the underwriting
agreement shall con­trol.

(6)           The obligations of the Company and Holders under this Section 7(h)
shall survive the com­ple­tion of any offer­ing of Registrable Securities in a
registration state­ment under this Section 7, and other­wise.

(i)           Reports Under Securities Exchange Act of 1934.  With a view to
making available to the Holders the benefits of Rule 144 and any other rule or
regula­tion of the SEC that may at any time permit a Holder to sell securities
of the Company to the public without registration or pursuant to a registration
on Form S-3, the Company agrees to:

(1)           make and keep public information avail­able, as those terms are
understood and defined in Rule 144, at all times while the Registrable
Securities are outstanding;

(2)           file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

(3)           furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without regis­tration or pursuant to
such form.

(j)           Permitted Transferees.  The rights to cause the Company to
register Registrable Securities granted to the Purchasers by the Company under
this Section 7 may be assigned in full by a Purchaser or a subsequent Holder in
connection with a transfer by such Purchaser or Holder of its Registrable
Securities if: (a) such Purchaser or Holder gives prior written notice to the
Company; (b) such transferee agrees to comply with the terms and provisions of
the Subscription Agreement; (c) such transfer is otherwise in compliance with
the Subscription Agreement and (d) such transfer is otherwise effected in
accordance with applicable securities laws.  Except as specifically permitted by
this Section 7(j), the rights of a Purchaser or a Holder with respect to
Registrable Securities as set out herein shall not be transferable to any other
person, and any attempted transfer shall cause all rights of such Holder therein
to be forfeited.
 
 
14

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

 
 
8.           Indemnification.  The Purchaser agrees to indemnify and hold
harmless the Company, the Placement Agent, and their respective officers,
directors, employees, agents, attorneys, control persons and affiliates from and
against all losses, liabilities, claims, damages, costs, fees and expenses
whatsoever (including, but not limited to, any and all expenses incurred in
investigating, preparing or defending against any litigation commenced or
threatened) based upon or arising out of any actual or alleged false
acknowledgment, representation or warranty, or misrepresentation or omission to
state a material fact, or breach by the Purchaser of any covenant or agreement
made by the Purchaser herein or in any other document delivered in connection
with this Subscription Agreement.

9.           Irrevocability; Binding Effect.  The Purchaser hereby acknowledges
and agrees that the subscription hereunder is irrevocable by the Purchaser,
except as required by applicable law, and that this Subscription Agreement shall
survive the death or disability of the Purchaser and shall be binding upon and
inure to the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns.  If the Purchaser is
more than one person, the obligations of the Purchaser hereunder shall be joint
and several and the agreements, representations, warranties, and acknowledgments
herein shall be deemed to be made by and be binding upon each such person and
such person's heirs, executors, administrators, successors, legal
representatives, and permitted assigns.

10.           Modification.  Any of the terms or provisions of this Subscription
Agreement shall not be modified or waived except by an instrument in writing
signed by the party against whom any such modification or waiver is sought.
 
11.           Immaterial Modifications to the Transaction Documents.  The
Company may, at any time prior to the First Closing, amend the Transaction
Documents if necessary to clarify any provision therein, without first providing
notice or obtaining prior consent of the Purchaser, if, and only if, such
modification is not material in any respect.
 
12.           Notices.  Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to the Company, at the address set forth above, or (b) if
to the Purchaser, at the address set forth on the signature page hereof (or, in
either case, to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 12).  Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.

13.           Assignability.  This Subscription Agreement and the rights,
interests and obligations hereunder are not transferable or assignable by the
Purchaser and the transfer or assignment of the Units shall be made only in
accordance with all applicable laws.

14.           Applicable Law.  This Subscription Agreement shall be governed by
and construed under the laws of the State of New York as applied to agreements
among New York residents entered into and to be performed entirely within New
York.  Each of the parties hereto (1) agree that any legal suit, action or
proceeding arising out of or relating to this Subscription Agreement shall be
instituted exclusively in the state or federal courts located in New York
County, New York, (2) waive any objection which they may have now or hereafter
to the venue of any such suit, action or proceeding, and (3) irrevocably consent
to the jurisdiction of such courts in any such suit, action or proceeding.  Each
of the parties hereto further agrees to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in
such courts and agree that service of process upon it mailed by certified mail
to its address shall be deemed in every respect effective service of process
upon it, in any such suit, action or proceeding.  THE PARTIES HERETO AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR
AGREEMENT CONTEMPLATED HEREBY.
 
 
15

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

 
 
15.           Blue Sky Qualification.  The purchase of Units under this
Subscription Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Units from applicable federal and
state securities laws.  The Company shall not be required to qualify this
transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in the
jurisdiction.

16.           Use of Pronouns.  All pronouns and any variations thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the person or persons referred to may require.

17.           Confidentiality.  The Purchaser acknowledges and agrees that any
information or data the Purchaser has acquired from or about the Company, not
otherwise properly in the public domain, was received in confidence (the
“Confidential Information”).  Any distribution of the Confidential Information
to any person other than the Purchaser named above, in whole or in part, or the
reproduction of the Confidential Information, or the divulgence of any of its
contents (other than to the Purchaser’s tax and financial advisers, attorneys
and accountants, who will likewise be required to maintain the confidentiality
of the Confidential Information) is unauthorized, except that any Purchaser (and
each employee, representative, or other agent of such Purchaser) may disclose to
any and all persons, without limitations of any kind (except as provided in the
next sentence) the tax treatment and tax structure of the transaction and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Purchaser relating to such tax treatment and tax structure.  Any
such disclosure of the tax treatment, tax structure and other tax-related
materials shall not be made for the purpose of offering to sell the Units
offered hereby or soliciting an offer to purchase any such securities.  Except
as provided above with respect to tax matters, the above named Purchaser agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Subscription Agreement, or use to the detriment of the
Company or for the benefit of any other person or persons, or misuse in any way,
any Confidential Information of the Company, including any scientific,
technical, trade or business secrets of the Company and any scientific,
technical, trade or business materials that are treated by the Company as
confidential or proprietary, including, but not limited to, ideas, discoveries,
inventions, developments and improvements belonging to the Company and
confidential information obtained by or given to the Company about or belonging
to third parties.

18.           Miscellaneous.

(a)           The Offering Documents, together with the Transaction Documents,
constitute the entire agreement between the Purchaser and the Company with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings, if any, relating to the subject matter hereof.

(b)           The representations and warranties of the Company and the
Purchaser made in this Subscription Agreement shall survive the execution and
delivery hereof and delivery of the Units hereunder.

(c)           Each of the parties hereto shall pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or others engaged
by such party) in connection with this Subscription Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.

(d)           This Subscription Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
 
 
16

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

 
 
(e)           Each provision of this Subscription Agreement shall be considered
separable and, if for any reason any provision or provisions hereof are
determined to be invalid or contrary to applicable law, such invalidity or
illegality shall not impair the operation of or affect the remaining portions of
this Subscription Agreement.

(f)           Paragraph titles are for descriptive purposes only and shall not
control or alter the meaning of this Subscription Agreement as set forth in the
text.

(g) The Purchaser understands and acknowledges that there may be multiple
Closings for the Offering.
 
To subscribe for Units in the private offering of OverNear, Inc.

1.
Date and Fill in the number of Units being purchased and Complete and Sign the
Amended and Restated Subscription Agreement.

2.
Initial the Accredited Investor Certification page attached to this Amended and
Restated Subscription Agreement.

3.
Complete and return the Investor Profile and, if applicable, Wire Transfer
Authorization attached to this letter.

4.
If returning forms to Portfolio Advisors Alliance, Inc. Please either scan and
email all forms to skurland@allenps.com or fax all forms to Scott Kurland at
(212) 867-1993.  In either case, all signed original documents should be sent
to:

 
Portfolio Advisors Alliance, Inc.
275 Madison Avenue
Suite 1410
New York, NY  10016
Attn: Scott Kurland

 
If returning forms to OverNear, Inc.:  Please either scan and email all forms to
bill@overnear.com or fax all forms to Bill Glaser at (310) 861-0911.  In either
case, all signed original documents should be sent to:

 
OverNear, Inc.
9595 Wilshire Blvd.
Suite 900, Beverly Hills, CA 90212
Attn: Bill Glaser
 
5. 
If payment is made by check, please make your subscription payment payable to
the order of"Signature Bank, Escrow Agent for OverNear, Inc.”

 
 
 
17

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

 
 
For wiring funds directly to the escrow account, please use the following
instructions:
 
 

Name: Signature Bank ABA Number: 026013576 SWIFT Code:    SIGNUS33 A/C Name:  
Signature Bank, as Agent for   OverNear, Inc.   261 Madison Avenue, New York,
New York 10016 A/C Number:    1501843217 FBO:  Investor
Name:  ______________________   Social Security Number: ________________  
Address:  ____________________________   _____________________________________  
 

 
Questions regarding completion of the subscription documents should be directed
to Scott Kurland at (212) 812-8900 or Bill Glaser at (310) 744-6060.
 
 
 
18

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

 
 
 
ANTI MONEY LAUNDERING REQUIREMENTS
 
The USA PATRIOT Act
 
What is money laundering?
 
How big is the problem and why is it important?
 
The USA PATRIOT Act is designed to detect, deter, and punish terrorists in the
United States and abroad.  The Act imposes new anti-money laundering
requirements on brokerage firms and financial institutions.  Since April 24,
2002 all brokerage firms have been required to have new, comprehensive
anti-money laundering programs.
 
To help you understand these efforts, the Placement Agent wants to provide you
with some information about money laundering and its steps to implement the USA
PATRIOT Act.
 
 
Money laundering is the process of disguising illegally obtained money so that
the funds appear to come from legitimate sources or activities.  Money
laundering occurs in connection with a wide variety of crimes, including illegal
arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.
 
 
The use of the U.S. financial system by criminals to facilitate terrorism or
other crimes could well taint our financial markets.  According to the U.S.
State Department, one recent estimate puts the amount of worldwide money
laundering activity at $1 trillion a year.

What is the Placement Agent required to do to eliminate money laundering?
 
Under new rules required by the USA PATRIOT Act, the Placement Agent’s
anti-money laundering program must designate a special compliance officer, set
up employee training, conduct independent audits, and establish policies and
procedures to detect and report suspicious transaction and ensure compliance
with the new laws.
 
 
As part of its required program, the Placement Agent may ask you to provide
various identification documents or other information.  Until you provide the
information or documents the Placement Agent needs, we may not be able to effect
any transactions for you.

 
19

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

 
 
OVERNEAR, INC.
SIGNATURE PAGE TO THE
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
 
Subscriber hereby elects to subscribe under the Amended and Restated
Subscription Agreement for a total of ______ Units at a price of $30,000 Per
Unit (NOTE: to be completed by subscriber) and executes the Subscription
Agreement.
 
Subscriber also acknowledges that it has received OverNear, Inc.’s Supplement
No. 1, dated November 6, 2012, to its Confidential Private Placement Memorandum,
dated August 6, 2012.
 
Date (NOTE: To be completed by subscriber): ___________________________, 2012

If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS
IN COMMON, or as COMMUNITY PROPERTY:
 

            Print Name(s)    Social Security Number(s)                        
Signature(s) of Subscriber(s)    Signature                         Date  
Address  

 
If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:
 

            Name of Partnership, Corporation, Limited  Liability Company or
Trust   Federal Taxpayer Identification Number               By:        
    Name:  
    Title:
  State of Organization                         Date     Address  

OVERNEAR, INC.    PORTFOLIO ADVISORS ALLIANCE, INC.               By:
/s/
  By:
/s/
   
Authorized Officer 
   
Authorized Officer
 

                                                    

 
20

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

 
 
 
OVERNEAR, INC.
ACCREDITED INVESTOR CERTIFICATION

For Individual Investors Only
(all Individual Investors must INITIAL where appropriate):

Initial _______
I have an individual net worth, or joint net worth with my spouse, in excess of
$1 million.  For purposes of the foregoing net worth calculation, I have
excluded my/our primary residence as an asset and have reviewed and complied
with the rules set forth in footnote 5 below in calculating my net worth.

Initial _______
I have had an annual gross income for the past two years of at least $200,000
(or $300,000 jointly with my spouse) and expect my income (or joint income, as
appropriate) to reach the same level in the current year.

Initial_______
I am a director or executive officer of OverNear, Inc.

For Non-Individual Investors
  (all Non-Individual Investors must INITIAL where appropriate):

Initial_______
 The investor certifies that it is a partnership, corporation, limited liability
company or business trust that is 100% owned by persons who meet at least one of
the criteria for Individual Investors set forth above.

Initial _______
The investor certifies that it is a partnership, corporation, limited liability
company or any organization described in Section 501(c)(3) of the Internal
Revenue Code, Massachusetts or similar business trust that has total assets of
at least $5 million and was not formed for the purpose of investing the Company.

Initial_______
The investor certifies that it is an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, whose investment decision
is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings
and loan association, insurance company or registered investment adviser.

Initial _______
The investor certifies that it is an employee benefit plan whose total assets
exceed $5,000,000 as of the date of this Agreement.

Initial_______
The undersigned certifies that it is a self-directed employee benefit plan whose
investment decisions are made solely by persons who meet either of the criteria
for Individual Investors.

Initial _______
The investor certifies that it is a U.S. bank, U.S. savings and loan association
or other similar U.S. institution acting in its individual or fiduciary
capacity.

 
 
21

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

 
 
Initial _______
The undersigned certifies that it is a broker-dealer registered pursuant to §15
of the Securities Exchange Act of 1934.

Initial_______
The investor certifies that it is an organization described in §501(c)(3) of the
Internal Revenue Code with total assets exceeding $5,000,000 and not formed for
the specific purpose of investing in the Company.

Initial _______
The investor certifies that it is a trust with total assets of at least
$5,000,000, not formed for the specific purpose of investing in the Company, and
whose purchase is directed by a person with such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment.

Initial _______
The investor certifies that it is a plan established and maintained by a state
or its political subdivisions, or any agency or instrumentality thereof, for the
benefit of its employees, and which has total assets in excess of $5,000,000.

Initial _______
The investor certifies that it is an insurance company as defined in §2(13) of
the Securities Act, or a registered investment company.

Initial _______
An investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act.

Initial _______
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.

Initial _______
A private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940

____________
5 For purposes of calculating net worth, (A) the person’s primary residence
shall not be included as an asset, (B) indebtedness that is secured by the
person’s primary residence, up to the estimated fair market value of the primary
residence at the time of the sale of securities, shall not be included as a
liability (except that if the amount of such indebtedness outstanding at the
time of sale of securities exceeds the amount outstanding 60 days before such
time, other than as a result of the acquisition of the primary residence, the
amount of such excess shall be included as a liability), and (C) indebtedness
that is secured by the person’s primary residence in excess of the estimated
fair market value of the primary residence at the time of the sale of securities
shall be included as a liability.
 
 
22

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

 
 
OVERNEAR, INC.
Investor Profile
(Must be completed by Investor)

Section A - Personal Investor Information (Individual Investors)

Investor Name(s):
_________________________________________________________________________
 
Individual(s) executing:
________________________________________________________
 
Social Security Numbers / Federal I.D. Number:
_________________________________________________

Date of
Birth:                                _________________                                          
    Marital Status:      _______________________

Joint Party Date of
Birth:            _________________                                             
 Investment Experience (Years): __________

Annual
Income:                           _________________                                         
     Liquid Net Worth: ____________________

Net Worth (excluding value of primary residence,
after deducting any mortgage securing such residence):  $________

Home Street Address:
______________________________________________________________________
 
Home City, State & Zip Code:
_______________________________________________________________
 
Home Phone: ________________________ Home Fax: _____________________  Home
Email: _________
 
Employer:
_______________________________________________________________________________
 
Employer Street Address:
___________________________________________________________________
 
Employer City, State & Zip Code:
____________________________________________________________
 
Bus. Phone: __________________________ Bus. Fax: __________________________ Bus.
Email: _______
 
Type of Business:
_________________________________________________________________________
 
Portfolio Advisors Alliance, Inc. Account Executive, if applicable:
__________________________________
 
 
23

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

 
 
Section B - Investor Information (Entity Investors)

 
If the investor is a corporation, partnership, limited liability company, trust,
pension plan, foundation, joint Investor (other than a married couple) or other
entity, an authorized officer, partner, or trustee must complete, date and sign
this Certificate.
 
o Limited Partnership
o General Partnership
o Limited Liability Company
o Corporation
o Irrecoverable Trust:
________________________________________________________________
o Other form of organization:
__________________________________________________________

Investor Name(s):
_________________________________________________________________________
 
Individual(s) executing:
________________________________________________________
 
Social Security Numbers / Federal I.D. Number:
_________________________________________________

Total Assets:
_________________                                                                             Date
Entity Formed:____________________

Street Address:
_______________________________________________________________________________
 
City, State & Zip Code:
_________________________________________________________________________
 
Bus. Phone: __________________________ Bus. Fax: __________________________ Bus.
Email: ____________
 
Type of Business:
______________________________________________________________________________
 
Portfolio Advisors Alliance, Inc. Account Executive, if applicable:
_______________________________________

 
24

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

 

Section C – Certificate Delivery Instructions

 
____ Please deliver certificate to the Employer Address listed in Section A.
 
____ Please deliver certificate to the Home/Business Address listed in Sections
A or B, as applicable.
 
____ Please deliver certificate to the following address:
___________________________________________.

 Section D – Form of Payment – Check or Wire Transfer

 
____ Check payable to Signature Bank, As Agent for OverNear, Inc.
 
____ Wire funds from my outside account according to the "How to subscribe for
Shares" Page.
 
____ Wire funds from my Portfolio Advisors Alliance, Inc. account - See
Following Page.
 
____ The funds for this investment are rolled over, tax deferred from __________
within the allowed 60 day window.

Please check if you are a FINRA member or affiliate of a FINRA member firm:
________
 

      Investor Signature   Date             Co-Investor Signature   Date      

 

 
25

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

 
 
 
Memorandum
Wire Transfer Authorization

TO:           Operations Manager
                  Portfolio Advisors Alliance, Inc. as Placement Agent for
OverNear, Inc.

RE:           Client Wire Transfer Authorization
                 OVERNEAR, INC.

DATE:________________

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

 
This memorandum authorizes the transfer of the following listed funds from my
Portfolio Advisors Alliance, Inc. Brokerage Account as follows:

Brokerage Account #                                         
  ______________________

Wire
Amount                                                        $______________________

BANK NAME:                SIGNATURE BANK
ABA NUMBER:             026013576
SWIFT CODE:               SIGNUS33
A/C NAME:                    SIGNATURE BANK, AS AGENT FOR
                                          OVERNEAR, INC.
                                          261 MADISON AVENUE, NEW YORK, NEW YORK
10016
A/C Number:                  1501843217

REFERENCE:
SUBSCRIBER LEGAL NAME
 

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

 
TAX ID NUMBER   
                                         

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

 
SUBSCRIBER ADDRESS                                              
 

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

FBO:                                 
          ________________________________________________

 
Investment
Title:                       ________________________________________________

Signature:                                   ________________________________________________

Signature:                                   ________________________________________________
(Joint Signature)
 
 
 

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