Document:

EXHIBIT
      4.10

     

    THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR AN OPINION OF
      COUNSEL REASONABLY SATISFACTORY TO ACORN FACTOR, INC. THAT SUCH REGISTRATION
      IS
      NOT REQUIRED.

    

    Void
      after 5:00 P.M. New York City time on the last day of the Exercise
      Period,

    as
      defined in the Warrant

     

    COMMON
      STOCK PURCHASE WARRANT

    OF

    ACORN
      FACTOR, INC.

     

    This
      is
      to certify that, FOR VALUE RECEIVED, ______________________________ (the
“Holder”),
      is
      entitled to purchase, subject to the provisions of this warrant (the
“Warrant”),
      from
      ACORN FACTOR, INC., a Delaware corporation (the “Company”),
      at an
      exercise price per share of four dollars and fifty cents ($4.50), subject to
      adjustment as provided in this Warrant (the “Warrant
      Exercise Price”),
      __________________ (___________) shares of common stock, par value $0.01 per
      share (the “Common
      Stock”).
      The
      shares of Common Stock deliverable upon such exercise, and as adjusted from
      time
      to time, are hereinafter sometimes referred to as the “Warrant
      Shares.”
      

     

    1.  ISSUANCE
      OF WARRANT/DEFINITIONS.
      This
      Warrant is being issued pursuant to that certain Subscription Agreement dated
      as
      of ________, 2007 between the Company and the Holder (the “Subscription
      Agreement”).
      Capitalized terms used but not otherwise defined herein shall have the meanings
      ascribed thereto in the Subscription Agreement or the Memorandum (hereinafter
      defined). In addition, the following terms shall have the meanings set forth
      below: 

     

    “Convertible
      Securities”
shall
      mean evidences of indebtedness, shares of stock or other securities, which
      are
      convertible into or exchangeable, with or without payment of additional
      consideration in cash and/or property, for shares of Common Stock, either
      immediately or upon the occurrence of a specified date or a specified
      event.

     

    “Debentures”
shall
      mean those 10% Convertible Redeemable Subordinated Debentures offered in the
      Placement and described in the Memorandum. 

    

    “Exercise
      Period”
shall
      mean the period commencing on the date hereof and ending at 5:00 p.m., Eastern
      Time on ___________, 2012. 

     

    “Fair
      Market Value”
of
      a
      share of Common Stock as of a particular date (the "Determination Date") shall
      mean: 

    

    (a) If
      the
      Company's Common Stock is traded on an exchange, then the closing or last sale
      price, reported for the last business day immediately preceding the
      Determination Date. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b) If
      the
      Company's Common Stock is not traded on an exchange but is traded on the NASD
      OTC Bulletin Board, the Pink Sheets, or other public trading market, then the
      average
      of
      the
      closing high and low prices on such market reported for the last business day
      immediately preceding the Determination Date.

    

    “Memorandum”
shall
      mean the Company’s Confidential Private Placement Memorandum dated as of March
      8, 2007(as amended or supplemented, and together with all exhibits attached
      thereto). 

     

    “Permitted
      Issuances”
shall
      mean (i) Common Stock issuable or issued to employees, consultants, officers,
      directors, or advisors of the Company directly or pursuant to a stock purchase
      plan or other compensation arrangement approved by the Board of Directors of
      the
      Company which are granted or issued at fair market value as applicable, (ii)
      capital stock, debt instruments convertible into capital stock or warrants
      or
      options to purchase capital stock issued in connection with bona fide
      acquisitions, of other operating entities or businesses (including acquisitions
      of operating divisions or operating groups, mergers, corporate partnering
      agreements, joint ventures or
      similar transactions with unaffiliated third parties ,, the terms of which
      are
      approved by the Board of Directors of the Company, (iii) Common Stock issuable
      upon the conversion of the Debentures or exercise of the warrants issued in
      connection with the Placement, (iv) Common Stock issued or issuable upon
      exercise or conversion of any warrants, options or any other securities
      exercisable or exchangeable for, or convertible into shares of Common Stock
      outstanding as of March 8, 2007 or (v) Common Stock issuable in connection
      with
      the sale of securities by the Company, in one or more transactions, resulting
      in
      aggregate gross proceeds of not more than $1,000,000. “Placement”
means
      the private placement by the Company of up to $6,000,000 of Debentures and
      warrants, including this Warrant, as described in the Memorandum.

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended, and all rules and regulations
      promulgated thereunder.

     

    2. EXERCISE
      OF WARRANT.
      

     

    (a) This
      Warrant may be exercised in whole or in part at any time or from time to time
      from the date hereof until the end of the Exercise Period by presentation and
      surrender of this Warrant to the Company at its principal office, or at the
      office of its stock transfer agent, if any, with the Purchase Form annexed
      hereto duly executed and accompanied by payment of the Warrant Exercise Price
      (or in certain events, by “cashless” exercise as provided in Sections 2(b) and
      2(c) below) for the number of shares of Common Stock specified in such form.
      If
      this Warrant should be exercised in part only, the Company shall, upon surrender
      of this Warrant for cancellation, execute and deliver a new Warrant evidencing
      the rights of the Holder to purchase the balance of the shares of Common Stock
      purchasable hereunder. Upon receipt by the Company of this Warrant at its
      office, or by the stock transfer agent of the Company at its office, in proper
      form for exercise, the Holder shall be deemed to be the holder of record of
      the
      shares of Common Stock issuable upon such exercise, notwithstanding that the
      stock transfer books of the Company shall then be closed or that certificates
      representing such shares of Common Stock shall not then actually be delivered
      to
      the Holder. As soon as practicable after each exercise of this Warrant, in
      whole
      or in part, and in any event within five (5) days thereafter, the Company at
      its
      expense (including the payment by it of any applicable issue taxes) will cause
      to be issued in the name of and delivered to the Holder hereof or, subject
      to
      Section 10 hereof, as the Holder (upon payment by the Holder of any applicable
      transfer taxes) may direct, a certificate or certificates (with appropriate
      restrictive legends, as applicable) for the number of duly authorized, validly
      issued, fully paid and non-assessable shares of Common Stock to which the Holder
      shall be entitled upon exercise. All issuances of Common Stock pursuant to
      the
      exercise of this Warrant shall be rounded down to the nearest whole share.
      

     

    
      
        
        

      

      
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    (b)
      If a
      Registration Statement (as defined in the Subscription Agreement) is effective
      and the Holder may utilize it to sell the Warrant Shares, this Warrant may
      be
      exercisable in whole or in part for cash only as set forth in Section 2 above.
      Commencing six months after the Closing Date, if no such Registration Statement
      is then effective, then commencing six months after the Closing Date, payment
      upon exercise may be made at the option of the Holder either in (i) cash, wire
      transfer or by certified or official bank check payable to the order of the
      Company equal to the applicable aggregate Warrant Exercise Price, (ii) by
      surrender of all or a portion of this Warrant in accordance with Sections 2(b)
      and 2(c) below ("cashless exercise") or (iii) by a combination of any of the
      foregoing methods, for the number of shares of Common Stock specified in such
      form and the Holder shall thereupon be entitled to receive the number of duly
      authorized, validly issued, fully paid and nonassessable shares of Common Stock
      determined as provided herein.

    

       (c)
      If
      the Fair Market Value of one share of Common Stock is greater than the Exercise
      Price (at the date of calculation as set forth below) and no Registration
      Statement relating to the shares of Common Stock underlying this Warrant is
      effective, in lieu of exercising this Warrant for cash, the holder may elect
      to
      receive shares equal to the value (as determined below) of this Warrant (or
      the
      portion thereof being cancelled) by surrender of this Warrant at the principal
      office of the Company together with the properly endorsed Exercise Notice,
      attached hereto as Exhibit A, in which event the Company shall issue to the
      holder a number of shares of Common Stock computed using the following
      formula:

    

    X=Y
      (A-B)

    A

     

    Where X= the
      number of shares of Common Stock to be issued to the Holder

    

    
      	 	
              Y=

            	
              the
                number of shares of Common Stock purchasable under the Warrant or,
                if only
                a portion of the Warrant is being exercised, the portion of the Warrant
                being exercised (at the date of such
                calculation)

            

    

     

    
      	 	
              A=

            	
              the
                Fair Market Value of one share of the Company’s Common Stock (at the date
                of such calculation)

            

    

     

    
      	
            	B=	
              Warrant
                Exercise Price (as adjusted to the date of such
                calculation)

            

    

     

    
      
        
        

      

      
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    (d) Call
      Provision.
      If
      at
      anytime during the Exercise Period the volume weighted average price for each
      of
      20 consecutive Trading Days (the "Measurement Period") exceeds $6.00 (subject
      to
      adjustment for forward and reverse stock splits, recapitalizations, stock
      dividends and the like) (the "Threshold Price"), then the Company may, within
      five Trading Days of the end of such period, call for cancellation of all or
      any
      portion of this Warrant for which a Exercise Notice has not yet been delivered
      (such right, a "Call"). To exercise this right, the Company must deliver to
      the
      Holder an irrevocable written notice (a "Call Notice"), indicating therein
      the
      portion of unexercised portion of this Warrant to which such notice applies.
      If
      the conditions set forth below for such Call are satisfied from the period
      from
      the date of the Call Notice through and including the Call Date (as defined
      below), then any portion of this Warrant subject to such Call Notice for which
      an Exercise Notice shall not have been received by the Call Date will be
cancelled
      at 6:30 p.m. (New York City time) on the 20th Trading Day after the date the
      Call Notice is received by the Holder (such date, the "Call Date"). Any
      unexercised portion of this Warrant to which the Call Notice does not pertain
      will be unaffected by such Call Notice. In furtherance thereof, the Company
      covenants and agrees that it will honor all Exercise Notices with respect to
      Warrant Shares subject to a Call Notice that are tendered through 6:30 p.m.
      (New
      York City time) on the Call Date. The parties agree that any Exercise Notice
      delivered following a Call Notice shall first reduce to zero the number of
      Warrant Shares subject to such Call Notice prior to reducing the remaining
      Warrant Shares available for purchase under this Warrant. Subject to the
      provisions of this Section 2(f), the Company may deliver subsequent Call Notices
      for any portion of this Warrant for which the Holder shall not have delivered
      an
      Exercise Notice. Notwithstanding anything to the contrary set forth in this
      Warrant, the Company may not deliver a Call Notice or require the cancellation
      of this Warrant (and any Call Notice will be void), unless, from the beginning
      of the 20th consecutive Trading Days used to determine whether the Common Stock
      has achieved the Threshold Price through the Call Date, (i) the Company shall
      have honored in accordance with the terms of this Warrant all Exercise Notices
      delivered by 6:30 p.m. (New York City time) on the Call Date and (ii) the
      Registration Statement shall be effective as to all Warrant Shares and the
      prospectus thereunder available for use by the Holder for the resale of all
      such
      Warrant Shares. The Company's right to Call the Warrant shall be exercised
      ratably among the Holders based on each Holder's initial purchase of Debentures
      pursuant to the Subscription Agreement.

     

    (e) Common
      Stock Legend.
      The
      Holder acknowledges and agrees that until such time as the Warrant Shares has
      been registered and sold in accordance with an effective registration statement,
      or pursuant to an exemption from registration, certificates and other
      instruments representing any of the Warrant Shares shall bear a restrictive
      legend in substantially the following form (and a stop-transfer order may be
      placed against transfer of any such securities):

    

    “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ACORN FACTOR,
      INC.
      THAT SUCH REGISTRATION IS NOT REQUIRED.”

    

    3. RESERVATION
      OF SHARES/FRACTIONAL SHARES.
      The
      Company hereby agrees that at all times there shall be reserved for issuance
      and/or delivery upon exercise of this Warrant such number of shares of Common
      Stock as shall be required for issuance and delivery upon exercise of this
      Warrant. No fractional shares or script representing fractional shares shall
      be
      issued upon the exercise of this Warrant. Instead, the Company will round up
      to
      the nearest whole share.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4. EXCHANGE,
      TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
      This
      Warrant is exchangeable, without expense, at the option of the Holder, upon
      presentation and surrender of this Warrant to the Company for other Warrants
      of
      different denominations entitling the Holder thereof to purchase in the
      aggregate the same number of shares of Common Stock purchasable hereunder.
      Upon
      surrender of this Warrant to the Company or at the office of its stock transfer
      agent, if any, with the Assignment Form annexed hereto duly executed and funds
      sufficient to pay any applicable transfer tax, the Company shall, without
      charge, execute and deliver a new Warrant in the name of the assignee named
      in
      such instrument of assignment and this Warrant shall promptly be canceled.
      This
      Warrant may be divided or combined with other Warrants which carry the same
      rights upon presentation of this Warrant at the office of the Company or at
      the
      office of its stock transfer agent, if any, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued
      and signed by the Holder hereof. The term “Warrant” as used herein includes any
      Warrants into which this Warrant may be divided or for which it may be
      exchanged. Upon receipt by the Company of evidence satisfactory to it of the
      loss, theft, destruction or mutilation of this Warrant, (and, in the case of
      loss, theft or destruction, of a reasonably satisfactory surety bond), and
      upon
      surrender and cancellation of this Warrant, the Company will execute and deliver
      a new Warrant of like tenor. Any such new Warrant executed and delivered shall
      constitute an additional contractual obligation on the part of the Company,
      whether or not this Warrant so lost, stolen, destroyed, or mutilated shall
      be at
      any time enforceable by anyone; provided, however, that if the original Warrant
      shall be presented for transfer by a protected purchaser (as defined in Section
      8-303 of the Uniform Commercial Code), then in addition to any rights on the
      surety bond or indemnity, the Company may recover the new Warrant in accordance
      with the provisions of Section 8-405 of the Uniform Commercial Code.

     

    5. RIGHTS
      AND OBLIGATIONS OF THE HOLDER.
      The
      Holder shall not, by virtue of this Warrant, be entitled to any rights of a
      stockholder of the Company, either at law or equity, and the rights of the
      Holder are limited to those expressed in this Warrant and are not enforceable
      against the Company except to the extent set forth herein. In addition,
      no
      provision hereof, in the absence of affirmative action by the Holder to purchase
      shares of Common Stock, and no enumeration herein of the rights or privileges
      of
      the Holder hereof shall give rise to any liability of such Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    6. ANTI-DILUTION
      PROVISIONS.
      

     

    The
      Warrant Exercise Price in effect at any time and the number and kind of
      securities purchasable upon exercise of each Warrant, shall be subject to
      adjustment as follows. The Company shall give each Holder notice of any event
      described below which requires an adjustment pursuant to this Section 6 at
      the
      time of such event:

     

    (a)  Stock
      Dividends, Subdivisions and Combinations.
      If at
      any time the Company shall:

     

    (i)  take
      a
      record of the holders of its Common Stock for the purpose of entitling them
      to
      receive a dividend payable in, or other distribution of, shares of Common
      Stock,

     

    (ii)  subdivide
      or reclassify its outstanding shares of Common Stock into a larger number of
      shares of Common Stock, or 

     

    (iii)  combine
      or reclassify its outstanding shares of Common Stock into a smaller number
      of
      shares of Common Stock or otherwise effect a reverse stock split, then:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (A)
      the
      number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event, would own or be entitled to receive after
      the
      happening of such event, and (B) the Warrant Exercise Price shall be adjusted
      to
      equal: (x) the Warrant Exercise Price immediately prior to such event multiplied
      by the number of shares of Common Stock for which this Warrant is exercisable
      immediately prior to the adjustment divided by (y) the number of shares for
      which this Warrant is exercisable immediately after such
      adjustment.

     

    (b)  Certain
      Other Distributions and Adjustments.
      

     

    (i)  If
      at any
      time the Company shall take a record of the holders of its Common Stock for
      the
      purpose of entitling them to receive any dividend or other distribution of:
      

     

    (A)  cash,
      

     

    (B)  any
      evidences of its indebtedness, any shares of its capital stock or any other
      securities or property of any nature whatsoever (other than Convertible
      Securities or shares of Common Stock), or

     

    (C)
      any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of its stock or any other securities or property of
      any
      nature whatsoever (other than Convertible Securities or shares of Common
      Stock),

    

    then,
      in
      the case of (A) the Warrant Exercise Price shall be reduced by the amount of
      such cash dividend when paid, or in the case of (B) or (C) the Warrant Holder
      shall be given notice as provided by Section 8 of this Warrant and the
      opportunity to exercise the Warrant prior to any such distribution.

    

    A
      reclassification of the Common Stock (other than a change in par value, or
      from
      par value to no par value or from no par value to par value) into shares of
      Common Stock and shares of any other class of stock shall be deemed a
      distribution by the Company to the holders of its Common Stock of such shares
      of
      such other class of stock and in such event the Holder shall be entitled to
      receive such distribution as if the Holder had exercised this Warrant and,
      if
      the outstanding shares of Common Stock shall be changed into a larger or smaller
      number of shares of Common Stock as a part of such reclassification, such change
      shall be deemed a subdivision or combination, as the case may be, of the
      outstanding shares of Common Stock within the meaning of Section
      6(a).

     

    (c)  Issuance
      of Additional Shares of Common Stock.
      

     

    (i) Except
      in
      connection with Permitted Issuances, if, at any time prior to the date which
      is
      six months from the original issue date of this Warrant (the “Issuance Date”),
      the Company shall issue or sell any shares of Common Stock for no consideration
      or for consideration in an amount per share of Common Stock less than the Share
      Price (as defined in the Subscription Agreement) (a “Discounted
      Price”),
      the
      Warrant Exercise Price then in effect shall immediately, and without any further
      action by the Company or the Holder required, be adjusted, concurrently with
      such issuance, to a price equal to 118% of the Discounted Price.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (ii)
       The
      provision of paragraph (i) of this Section 6(c) shall not apply to any issuance
      of shares of Common Stock for which an adjustment is provided under Section
      6(a)
      or 6(b). No adjustment of the number of shares of Common Stock for which this
      Warrant shall be exercisable shall be made under paragraph (i) of this Section
      6(c) upon the issuance of any shares of Common Stock which are issued pursuant
      to the exercise of any warrants or other subscription or purchase rights or
      pursuant to the exercise of any conversion or exchange rights in any Convertible
      Securities, if any such adjustment shall previously have been made upon the
      issuance of such warrants or other rights or upon the issuance of such
      Convertible Securities (or upon the issuance of any warrant or other rights
      therefor) pursuant to Section 6(d). 

    

     

    (d)
       Issuance
      of Warrants or Other Rights.
      

     

    (i)  Except
      in
      connection with any Permitted Issuances, if at any time prior to the date that
      which is six months from the Issuance Date, the Company shall distribute to
      the
      holders of its Common Stock for the purpose of entitling them to receive a
      distribution of, or shall in any manner (whether directly or by assumption
      in a
      merger in which the Company is the surviving corporation) issue or sell, any
      warrants or other rights to subscribe for or purchase any shares of Common
      Stock
      or any Convertible Securities, whether or not the rights to exchange or convert
      thereunder are immediately exercisable, and the price per share for which Common
      Stock is issuable upon the exercise of such warrants or other rights or upon
      conversion or exchange of such Convertible Securities shall be less than the
      Exercise Price, then the Warrant Exercise Price shall be adjusted to such price.
      No further adjustment of the Warrant Exercise Price shall be made upon the
      actual issue of such Common Stock or of such Convertible Securities upon
      exercise of such warrants or other rights or upon the actual issuance of such
      Common Stock upon such conversion or exchange of such Convertible
      Securities.

     

    (e)  Superseding
      Adjustment.
      If at
      any time after any adjustment of the Warrant Exercise Price shall have been
      made
      pursuant to Section 6(d) as the result of any issuance of warrants, rights
      or
      other Convertible Securities, 

     

    (i)  such
      warrants or rights, or the right of conversion or exchange in such other
      Convertible Securities, shall expire, and all or a portion of such warrants
      or
      rights, or the right of conversion or exchange with respect to all or a portion
      of such other Convertible Securities, as the case may be, shall not have been
      exercised, or

     

    (ii)  the
      consideration per share for which shares of Common Stock are issuable pursuant
      to such warrants or rights, or the terms of such other Convertible Securities,
      shall be increased solely by virtue of provisions therein contained for an
      automatic increase in such consideration per share upon the occurrence of a
      specified date or event,

     

    then
      for
      each outstanding Warrant such previous adjustment shall be rescinded and
      annulled and the shares of Common Stock which were deemed to have been issued
      by
      virtue of the computation made in connection with the adjustment so rescinded
      and annulled shall no longer be deemed to have been issued by virtue of such
      computation made in connection with the adjustment so rescinded and annulled
      shall no longer be deemed to have been issued by virtue of such computation.
      Thereupon, a re-computation shall be made of the effect of the issuance of
      such
      rights or options or other Convertible Securities on the basis of:

     

    (A)  treating
      the number of shares of Common Stock or other property, if any, theretofore
      actually issued or issuable pursuant to the previous exercise of any such
      warrants or rights or any such right of conversion or exchange, as having been
      issued on the date or dates of any such exercise and for the consideration
      actually received and receivable therefor, and

     

    
      
        
        

      

      
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    (B) treating
      any such warrants or rights or any such other Convertible Securities which
      then
      remain outstanding as having been granted or issued immediately after the time
      of such increase of the consideration per share for which shares of Common
      Stock
      or other property are issuable under such warrants or rights or other
      convertible Securities; whereupon a new adjustment of the number of shares
      of
      Common Stock for which this Warrant is exercisable and the Warrant Exercise
      Price(s) shall be made, which new adjustment shall supersede the previous
      adjustment so rescinded and annulled.

     

    (f)  No
      adjustment in the Warrant Exercise Price shall be required unless such
      adjustment would require an increase or decrease of at least One Cent ($0.01)
      in
      such price; provided, however, that any adjustments which by reason of this
      Section 6(f) are not required to be made shall be carried forward and taken
      into
      account in any subsequent adjustment. All calculations under this Section 6(f)
      shall be made to the nearest cent or to the nearest one-hundredth of a share,
      as
      the case may be. 

     

    (g)  The
      Company may retain a firm of independent public accountants of recognized
      standing selected by the Board (who may be the regular accountants employed
      by
      the Company) to make any computation required by this Section 6.

     

    (h)  In
      the
      event that at any time, as a result of an adjustment made pursuant to Section
      6(a), (b) or (c) of this Warrant, the Holder of any Warrant thereafter shall
      become entitled to receive any shares of the Company’s capital stock, other than
      Common Stock, thereafter the number of such other shares so receivable upon
      exercise of this Warrant shall be subject to adjustment from time to time in
      a
      manner and on terms as nearly equivalent as practicable to the provisions with
      respect to the Common Stock contained in Sections 6(a) through (h), inclusive,
      of this Warrant.

     

    (i)  Notwithstanding
      the foregoing, no adjustment pursuant to this Section 6 shall be effected due
      to, or as a result of, any Permitted Issuances.

     

    7. OFFICER’S
      CERTIFICATE.
      Whenever the Warrant Exercise Price(s) shall be adjusted as required by the
      provisions of Section 6 of this Warrant, the Company shall forthwith file in
      the
      custody of its Secretary or an Assistant Secretary at its principal office
      and
      with its stock transfer agent, if any, an officer’s certificate showing the
      adjusted Warrant Exercise Price(s) and the adjusted number of shares of Common
      Stock issuable upon exercise of this Warrant, determined as herein provided,
      setting forth in reasonable detail the facts requiring such adjustment,
      including a statement of the number of additional shares of Common Stock, if
      any, and such other facts as shall be necessary to show the reason for and
      the
      manner of computing such adjustment. Each such officer’s certificate shall be
      forwarded to the Holder in the manner provided in Section 12 hereof.

     

    8. NOTICES
      TO WARRANT HOLDERS.
      So long
      as this Warrant shall be outstanding, (a) if the Company shall pay any dividend
      or make any distribution upon Common Stock, or (b) if the Company shall offer
      to
      the holders of Common Stock for subscription or purchase by them any share
      of
      any class or any other rights, or (c) if any capital reorganization of the
      Company, reclassification of the capital stock of the Company, consolidation
      or
      merger of the Company with or into another entity, tender offer transaction
      for
      the Company’s Common Stock, sale, lease or transfer of all or substantially all
      of the property and assets of the Company, or voluntary or involuntary
      dissolution, liquidation or winding up of the Company shall be effected, at
      least ten (10) days prior to the date specified in clauses (a), (b), or (c),
      as
      the case may be, of this Section 8 a notice containing a brief description
      of
      the proposed action and stating the date on which (i) a record is to be taken
      for the purpose of such dividend, distribution or rights, or (ii) such
      reclassification, reorganization, consolidation, merger, tender offer
      transaction, conveyance, lease, dissolution, liquidation or winding up is to
      take place and the date, if any is to be fixed, as of which the holders of
      Common Stock or other securities shall receive cash or other property
      deliverable upon such reclassification, reorganization, consolidation, merger,
      conveyance, dissolution, liquidation or winding up.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    9. RECLASSIFICATION,
      REORGANIZATION OR MERGER.
      In case
      of any reclassification, capital reorganization or other change of outstanding
      shares of Common Stock of the Company, or in case of any consolidation or merger
      of the Company with or into another corporation (other than a merger with a
      subsidiary in which merger the Company is the continuing or surviving
      corporation and which does not result in any reclassification, capital
      reorganization or other change of outstanding shares of Common Stock of the
      class issuable upon exercise of this Warrant) or in case of any sale, lease
      or
      conveyance of all or substantially all of the assets of the Company, the Company
      shall, as a condition precedent to such transaction, cause effective provisions
      to be made so that (i) the Holder shall have the right thereafter by exercising
      this Warrant, to purchase the kind and amount of shares of stock and other
      securities and property receivable upon such reclassification, capital
      reorganization and other change, consolidation, merger, sale or conveyance
      by a
      holder of the number of shares of Common Stock which could have been purchased
      upon exercise of this Warrant immediately prior to such reclassification,
      change, consolidation, merger, sale or conveyance, and (ii) the successor or
      acquiring entity shall expressly assume the due and punctual observance and
      performance of each covenant and condition of this Warrant to be performed
      and
      observed by the Company and all obligations and liabilities hereunder (including
      but not limited to the provisions of Section 6 regarding the increase in the
      number of Warrant Shares potentially issuable hereunder). Any such provision
      shall include provision for adjustments which shall be as nearly equivalent
      as
      possible to the adjustments provided for in this Warrant. The foregoing
      provisions of this Section 9 shall similarly apply to successive
      reclassifications, capital reorganizations and changes of shares of Common
      Stock
      and to successive consolidations, mergers, sales or conveyances. In the event
      that in connection with any such capital reorganization or reclassification,
      consolidation, merger, sale or conveyance, additional shares of Common Stock
      shall be issued in exchange, conversion, substitution or payment, in whole
      in
      part, for a security of the Company other than Common Stock, any such issue
      shall be treated as an issuance of Common Stock covered by the provisions of
      Section 6 of this Warrant. 

     

    10. TRANSFER
      TO COMPLY WITH THE SECURITIES ACT.
      This
      Warrant, the Warrant Shares or any other security issued or issuable upon the
      exercise of this Warrant may not be sold or otherwise disposed of except as
      follows:

     

    (a) to
      a
      person who, in the opinion of counsel for the Company, is a person to whom
      this
      Warrant or Warrant Shares may legally be transferred without registration and
      without the delivery of a current prospectus under the Securities Act with
      respect thereto and then only against receipt by the Company of an agreement
      of
      such person to comply with the provisions of this Section 10 with respect to
      any
      resale or other disposition of such securities, which agreement shall be
      satisfactory in form and substance to the Company and its counsel;
      or 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (b) to
      any
      person upon delivery of a prospectus then meeting the requirements of the
      Securities Act relating to such securities and the offering thereof for such
      sale or disposition.

     

    11. GOVERNING
      LAW; JURISDICTION.
      The
      corporate laws of the State
      of New
      York shall govern all issues concerning the relative rights of the Company
      and
      its stockholders. All issues concerning the construction, validity, enforcement
      and interpretation of this Warrant shall be governed by and construed in
      accordance with the internal laws of the State of New York without giving effect
      to the principles of conflicts of law thereof. The
      parties hereto agree that venue in any and all actions and proceedings related
      to the subject matter of this Warrant shall be in the state and federal courts
      in and for New York, New York, which courts shall have exclusive jurisdiction
      for such purpose, and the parties hereto irrevocably submit to the exclusive
      jurisdiction of such courts and irrevocably waive the defense of an inconvenient
      forum to the maintenance of any such action or proceeding. Service of process
      may be made in any manner recognized by such courts. This Warrant and any term
      hereof may be changed, waived, discharged or terminated only by an instrument
      in
      writing signed by the party against which enforcement of the change, waiver,
      discharge or termination is sought.

     

    12. NOTICES.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via
      facsimile at the facsimile telephone number specified in this Section prior
      to
      5:00 p.m. (New York City time) on a Business Day, (b) the Business Day after
      the
      date of transmission, if such notice or communication is delivered via
      facsimile at the facsimile telephone number specified in this Agreement later
      than 5:00 p.m. (New York City time) on any date and earlier than 11:59 p.m.
      (New
      York City time) on such date, (c) the Business Day following the date of
      mailing, if sent by nationally recognized overnight courier service, or (d)
      upon
      actual receipt by the party to whom such notice is required to be given. The
      address for such notices and communications shall be as follows:

    

      
        	
                If
                  to the Company:

              	 	
                Acorn
                  Factor, Inc.

              
	 	 	
                200
                  Route 17

              
	 	 	
                Mahwah,
                  NJ 07430

              
	 	 	
                Attn:
                  John A. Moore, Chief Executive Officer

              
	 	 	 
	
                With
                  a copy to: 

              	 	
                Eilenberg
                  Krause & Paul LLP

              
	 	 	
                11
                  East 44th Street 

              
	 	 	
                New
                  York, NY 10017

              
	 	 	
                Attn:
                  Sheldon Krause, Esq.

              
	 	 	 
	 	 	 
	
                If
                  to the Holder:

              	 	
                To
                  the Address Set Forth In the Records of the
                  Company

              

      

    

     

    13.  PAYMENT
      OF TAXES.
      The
      Company will pay the cost of all applicable documentary stamp taxes, if any,
      attributable to the issuance of shares of Common Stock underlying this Warrant
      upon exercise of this Warrant; provided,
      however,
      that
      the Company shall not be required to pay any tax which may be payable in respect
      of any transfer involved in the registration of any certificate for shares
      of
      Common Stock underlying this Warrant in a name other that of the Holder. The
      Holder is responsible for all other tax liability that may arise as a result
      of
      holding or transferring this Warrant or receiving shares of Common Stock
      underlying this Warrant upon exercise hereof.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    14. INCONSISTENCIES.
      To the
      extent there are any inconsistencies between the terms and provisions of this
      Warrant and the terms and provisions of the Subscription Agreement or the
      Memorandum, the terms and provisions of this Warrant shall govern and be
      controlling.

    

    15. WARRANT
      SOLICITATION FEE.
      The
      Company has agreed that First Montauk Securities Corp. (“FMSC”), a registered
      broker dealer, shall be entitled to a fee of five percent (5%) with respect
      to
      the exercise of any Warrant or portion thereof which is exercised by the Holder
      pursuant to the efforts of FMSC.][Signature Page Follows]

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      this
      Warrant has been duly executed as of __________ ___, 2007.

    
      	 	 	 
	 	
              ACORN
                FACTOR, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                

            
	 	Title:

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    Exhibit
      A

     

    EXERCISE
      NOTICE

    (To
      be
      signed only on exercise of Warrant)

    

    TO:
      Acorn
      Factor, Inc.

    

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No.____), hereby irrevocably elects to purchase (check applicable
      box):

    

    ___
      shares of the Common Stock covered by such Warrant; or

    

    ___the
      maximum number of shares of Common Stock covered by such Warrant pursuant to
      the
      cashless exercise procedure set forth in Sections 2(b) and (c) of this
      Warrant.

    

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant, which is $___________. Such
      payment takes the form of (check applicable box or boxes):

    

    ___ $__________
      in lawful money of the United States; and/or

    

    ___ the
      cancellation of such portion of the attached Warrant as is exercisable for
      a
      total of _______ shares of Common Stock (using a Fair Market Value of $_______
      per share for purposes of this calculation); and/or

    

    ___ the
      cancellation of such number of shares of Common Stock as is necessary, in
      accordance with the formula set forth in Section 2, to exercise this Warrant
      with respect to the maximum number of shares of Common Stock purchasable
      pursuant to the cashless exercise procedure set forth in Sections 2(b) and
      (c)
      thereof. 

    

    The
      undersigned requests that the certificates for such shares be issued in the
      name
      of, and delivered to ____________________ whose address is __________________
      _______________________________________________________________________.

    

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the "Securities Act") or pursuant to an exemption from registration
      under the Securities Act.

    

      
        	
                Dated:

              	 	 
	 	 	
                (Signature
                  must conform to name of holder as 

                specified
                  on the face of the Warrant)

              
	 	 	 
	 	 	
                (Print
                  or Type Name)

              
	 	 	 
	 	 	
                (Address)

              
	 	 	 
	 	 	
                (Social
                  Security or Tax I.D. Number)

              

      

    

     

    The
      holder acknowledges that the exercise of the warrant has been solicited by
      First
      Montauk Securities Corp. and that First Montauk securities Corp. shall be
      entitled to a warrant solicitation fee of 5% of the exercise
      proceeds.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    ASSIGNMENT
      FORM

    

    FOR
      VALUE RECEIVED,
      _______________________________________ hereby sells, assigns and transfer
      unto:

     

    Name:   _______________________________________________

    (Please
      typewrite or print in block letters)

     

    Address:                    
      _______________________________________________

     

           
        _______________________________________________  

     

    Social
      Security or Employer Identification No.:__________________________

     

    The
      right
      to purchase Common Stock represented by this Warrant to the extent of shares
      as
      to which such right is exercisable and does hereby irrevocably constitute and
      appoint __________________________________ as attorney to transfer the same
      on
      the books of the Company with full power of substitution.

     

    Dated:
      _________________, 200_.

     

    Signature:___________________________

     

    Signature
      Guaranteed:

     

    ___________________________________

     

    
      
        
        

      

      
        14EXHIBIT
        10.47

    
     

    ACORN
      FACTOR, INC. 

    

    SUBSCRIPTION
      AGREEMENT

    

    The
      undersigned (hereinafter “Subscriber”)
      hereby
      confirms its subscription for the purchase of a 10% Convertible Redeemable
      Subordinated Debenture, convertible into shares of common stock, par value
      $.01
      per share, (“Common
      Stock”),
      of
      ACORN FACTOR, INC., a
      Delaware corporation (the “Company”),
      at a
      price of $3.80 per share (the “Debenture”),
      and
      warrants exercisable for Common Stock (“Warrants”),
      on
      the terms described below 

    

    Capitalized
      terms used and not otherwise defined herein shall have the meanings set forth
      for such terms in the Company’s Confidential Private Placement Memorandum, dated
      March 8, 2007 (as amended or supplemented, and together with all documents
      and
      exhibits thereto, the “Memorandum”).
      The
      Debentures, Warrants (and shares issuable upon the respective conversion and
      exercise of the Debentures (“Debenture
      Shares”)
      and
      Warrants (“Warrant
      Shares”))
      are
      sometimes referred to collectively herein as the “Securities.”

    

    In
      connection with this subscription, Subscriber and the Company agree as
      follows:

    

    1. Purchase
      and Sale of the Debenture with Warrants.
      

    

       (a) The
      Company hereby agrees to issue and to sell to Subscriber, and Subscriber hereby
      agrees to purchase from the Company, the Debenture in the principal amount
      set
      forth on the signature page hereto (the “Principal
      Amount”).
      The
      Company further agrees to issue to Subscriber a Warrant exercisable for a term
      of five years from the date of issuance for an amount of Common Stock equal
      to
      25% of the number of Shares obtained by dividing the Principal Amount of the
      Debenture by the conversion price, $3.80. The exercise price of the Warrants
      shall be equal to $4.50 per share (the “Exercise
      Price”).
      Upon
      acceptance of this Subscription Agreement by the Company, the Company shall
      issue and deliver to Subscriber a Debenture evidencing the Principal Amount,
      and
      a warrant certificate evidencing the applicable number of Warrants subscribed
      for, against payment in U.S. Dollars of the Principal Amount.

    

    (b) Subscriber
      has hereby delivered and paid concurrently herewith the aggregate purchase
      price
      (the “Purchase
      Price”)
      set
      forth on the signature page hereof required to purchase the Debenture and
      Warrants subscribed
      for hereunder which amount has been paid in U.S. Dollars by cash, wire transfer
      or check of immediately available funds. The minimum Debenture principal amount
      denomination is $25,000.

    

    (c) Subscriber
      understands and acknowledges that this subscription is part of a proposed
      placement by the Company of Common Stock and Warrants, which offering is being
      made on a “best efforts” basis for a minimum of $2,000,000 of gross proceeds
      (the “Minimum Offering”)
      and up
      to $6,000,000 of gross proceeds (the “Maximum Offering”). The Maximum Offering
      is subject to an increase of 15% (or $950,000 (the “Overallotment Amount”))

    upon
      the
      agreement of the Company and the Placement Agent (as defined below) for an
      aggregate Maximum Offering of $6,950,000 During the period of the Offering,
      which period shall commence on the date of the Memorandum and shall expire
      at
      3:00 p.m., New York time, on March 30, 2007; provided however, that if the
      Minimum Offering has not been deposited into escrow on or before March 30,
      2007,
      the Company and Placement Agent may agree to extend the Offering until April
      16,
      2007, and provided further that if subscriptions representing the Minimum
      Offering have been deposited into escrow on or before March 30, 2007, or April
      16, 2007, as the case may be, then the offering period may be extended at the
      option of the Placement Agent until May 30, 2007. Such period, as the same
      may
      be so extended, shall hereinafter be referred to as the “Offering
      Period.”
During
      the Offering Period funds will be held in an escrow account established by
      the
      Company and the Placement Agent with Signature Bank, and released at the
      discretion of the Company and the Placement Agent from time to time. If a
      subscription is not accepted, whether in whole or in part, the subscription
      funds held therein will be returned to the investor without interest or
      deduction.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2. Covenants,
      Representations and Warranties of Subscriber.
      Subscriber covenants with, represents and warrants to, the Company and Placement
      Agent as follows:

    

    (a) Subscriber
      is an “accredited investor” as defined by Rule 501 under the Securities Act of
      1933, as amended (the “Act”),
      and
      Subscriber is capable of evaluating the merits and risks of Subscriber’s
      investment in the Company and has the capacity to protect Subscriber’s own
      interests.

    

    (b) Subscriber
      understands that the Securities are not presently registered, but Subscriber
      is
      entitled to certain rights with respect to the registration of the Debenture
      Shares and Warrant Shares (in accordance with Section 5 below). Subscriber
      further understands that the Debentures and Warrants are redeemable and
      callable, respectively, by the Company upon the terms as described in the
      Memorandum, and that the redemption by the Company may occur at time when the
      subscriber may be unable, due to his own personal financial condition, to
      exercise the Warrants or, due to the then-current market price of the Common
      Stock, the Subscriber may not find it in his or her interest to convert the
      Debentures or exercise the Warrants. 

    

    (c) Subscriber
      is purchasing the Securities for investment purposes and not with a view to
      distribution or resale, nor with the intention of selling, transferring or
      otherwise disposing of all or any part thereof for any particular price, or
      at
      any particular time, or upon the happening of any particular event or
      circumstances, except selling, transferring, or disposing the Securities in
      full
      compliance with the applicable provisions of the Act, the rules and regulations
      promulgated thereunder, and applicable state securities laws.

    

    (d) Subscriber
      acknowledges that the Securities must be held indefinitely unless subsequently
      registered under the Act or unless an exemption from such registration is
      available. Subscriber is aware of the provisions of Rule 144 promulgated under
      the Act which permit limited resale of common stock purchased in a private
      placement subject to the satisfaction of certain conditions, including, among
      other things, the existence of a public market for the common stock, the
      availability of certain current public information about the Company, the resale
      occurring not less than one year after a party has purchased and paid for the
      security to be sold, the sale being effected through a “broker’s transaction” or
      in transactions directly with a “market maker” and the number of shares of
      common stock being sold during any three-month period not exceeding specified
      limitations.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (e) Subscriber
      acknowledges that Subscriber has had the opportunity to ask questions of, and
      receive answers from the Company or any person acting on its behalf concerning
      the Company and its business and to obtain any additional information, to the
      extent possessed by the Company (or to the extent it could have been acquired
      by
      the Company without unreasonable effort or expense) necessary to verify the
      accuracy of the information received by Subscriber. In connection therewith,
      Subscriber acknowledges that Subscriber has had the opportunity to discuss
      the
      Company’s business, management and financial affairs with the Company’s
      management or any person acting on its behalf. Subscriber has received and
      reviewed the Memorandum, and all the information that it desires. Without
      limiting the generality of the foregoing, Subscriber has been furnished with
      or
      has had the opportunity to acquire, and to review: (i) copies of all of the
      Company’s publicly available documents, and (ii) all information that it desires
      with respect to the Company’s business, management, financial affairs and
      prospects. In determining whether to make this investment, Subscriber has relied
      solely on Subscriber’s own knowledge and understanding of the Company and its
      business based upon the Memorandum and any other information furnished to
      Subscriber in writing. Subscriber understands that no person has been authorized
      to give any information or to make any representations which were not furnished
      pursuant to this paragraph and Subscriber has not relied on any other
      representations or information.

    

    (f) Subscriber
      has all requisite legal and other power and authority to execute and deliver
      this Subscription Agreement and to carry out and perform Subscriber’s
      obligations under the terms of this Subscription Agreement. This Subscription
      Agreement constitutes a valid and legally binding obligation of Subscriber,
      enforceable in accordance with its terms, and subject to laws of general
      application relating to bankruptcy, insolvency and the relief of debtors and
      rules of law governing specific performance, injunctive relief or other general
      principals of equity, whether such enforcement is considered in a proceeding
      in
      equity or law.

    

    (g) Subscriber
      has carefully considered and has discussed with the Subscriber’s professional
      legal, tax, accounting and financial advisors, to the extent the Subscriber
      has
      deemed necessary, the suitability of this investment and the transactions
      contemplated by this Subscription Agreement for the Subscriber’s particular
      federal, state, local and foreign tax and financial situation and has determined
      that this investment and the transactions contemplated by this Subscription
      Agreement are suitable for the Subscriber. Subscriber relies solely on such
      advisors and not on any statements or representations of the Company or any
      of
      its agents. Subscriber understands that Subscriber (and not the Company) shall
      be responsible for Subscriber’s own tax liability that may arise as a result of
      this investment or the transactions contemplated by this Subscription Agreement.
      

    

    (h) Subscriber
      acknowledges (i) that each Debenture and its associated Warrants are an
“investment unit” within the meaning of Section 1273(c)(2) of the Internal
      Revenue Code of 1986, as amended (the “Code”) and (ii) that, as described in the
      Memorandum, the Debenture is being issued at an “original issue discount” within
      the meaning Code. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (i) The
      information provided by the Subscriber in the Confidential Purchaser
      Questionnaire accompanying this Subscription Agreement does not contain any
      untrue statement of a material fact or omit any material fact concerning
      Subscriber.

    

    (j) There
      are
      no actions, suits, proceedings or investigations pending against Subscriber
      or
      Subscriber’s properties before any court or governmental agency (nor, to
      Subscriber’s knowledge, is there any threat thereof) which would impair in any
      way Subscriber’s ability to enter into and fully perform Subscriber’s
      commitments and obligations under this Subscription Agreement or the
      transactions contemplated hereby.

    

    (k) The
      execution, delivery and performance of and compliance with this Subscription
      Agreement and the issuance of the Securities will not result in any material
      violation of, or conflict with, or constitute a material default under, any
      of
      Subscriber’s articles of incorporation or bylaws, if applicable, or any of
      Subscriber’s material agreements nor result in the creation of any mortgage,
      pledge, lien, encumbrance or charge against any of the assets or properties
      of
      Subscriber or the Securities.

    

    (l) Subscriber
      acknowledges that the Securities are speculative and involve a high degree
      of
      risk and that Subscriber can bear the economic risk of the purchase of the
      Securities, including a total loss of its investment.

    

    (m) Subscriber
      acknowledges that it has carefully reviewed the Memorandum and considered the
      risk factors discussed in the “Risk Factors” section prior to making an
      investment decision.

     

    (n) Subscriber
      recognizes that no federal, state or foreign agency has recommended or endorsed
      the purchase of the Securities. Subscriber is not being represented by counsel
      to the Company or the Placement Agent and has been instructed to obtain
      independent advice regarding the Offering and the making of this investment.
      

    

    (o) Subscriber
      is aware that the Securities when issued will be “restricted securities” as that
      term is defined in Rule 144 of the general rules and regulations under the
      Act.

    

    (p) Subscriber
      understands that any and all certificates representing the Securities and any
      and all securities issued in replacement thereof or in exchange therefore shall
      bear the following legend or one substantially similar thereto, which Subscriber
      has read and understands:

    

    “THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
      NOR
      ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
      DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
      ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
      LAWS
      WHICH, IN THE OPINION OF COUNSEL FOR ACORN FACTOR, INC., IS
      AVAILABLE.”

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (q) Because
      of the restrictions imposed on resale, Subscriber understands that the Company
      shall have the right to note stop-transfer instructions in its stock transfer
      records, and that the Company intends to do so. Any sales, transfers, or any
      other dispositions of the Securities by Subscriber, if any, will be in
      compliance with the Act.

    

    (r) Subscriber
      acknowledges that Subscriber has such knowledge and experience in financial
      and
      business matters that he is capable of evaluating the merits and risks of an
      investment in the Securities and of making an informed investment
      decision.

    

    (s) Subscriber
      represents that: (i) Subscriber is able to bear the economic risks of an
      investment in the Securities and to afford the complete loss of the investment,
      and (ii) (A) Subscriber could be reasonably assumed to have the capacity to
      protect its own interests in connection with this subscription; or (B)
      Subscriber has a pre-existing personal or business relationship with either
      the
      Company or any affiliate thereof of such duration and nature as would enable
      a
      reasonably prudent purchaser to be aware of the character, business acumen
      and
      general business and financial circumstances of the Company or such affiliate
      and is otherwise personally qualified to evaluate and assess the risks, nature
      and other aspects of this subscription.

    

    (t) Subscriber
      further represents that the address set forth below is its principal residence
      (or, if Subscriber is a company, partnership or other entity, the address of
      its
      principal place of business); that Subscriber is purchasing the Securities
      for
      Subscriber’s own account and not, in whole or in part, for the account of any
      other person; Subscriber is purchasing the Securities for investment and not
      with a view to resale or distribution; and that Subscriber has not formed any
      entity for the purpose of purchasing the Securities.

    

    (u) Subscriber
      understands that the Company and the Placement Agent shall have the
      unconditional right to accept or reject this subscription, in whole or in part,
      for any reason or without a specific reason, in the sole and absolute discretion
      of the Company (even after receipt and clearance of Subscriber’s funds). This
      Subscription Agreement is not binding upon the Company until accepted by an
      authorized officer of the Company. In the event that the subscription is
      rejected, Subscriber’s subscription funds will be returned without interest
      thereon or deduction therefrom.

    

    (v) In
      making
      its decision whether to make an investment in the Securities being offered
      in
      this Offering, Subscriber is not relying upon any information other than that
      contained in the Memorandum and Subscription Agreement, which Subscriber has
      carefully read, or other information provided in writing by the
      Company.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (w) Subscriber
      represents that Subscriber is not subscribing for Securities in this Offering
      as
      a result of any advertisement, article, notice or other communication published
      in any newspaper, magazine or similar media or broadcast over the Internet,
      television or radio or presented at any seminar or meeting.

     

    (x) Subscriber
      has carefully read this Subscription Agreement and the Memorandum, and
      Subscriber has accurately completed the Confidential Purchaser Questionnaire
      which accompanies this Subscription Agreement.

    

    (y) No
      representations or warranties have been made to Subscriber by the Company,
      or
      any officer, employee, agent, affiliate or subsidiary of the Company, other
      than
      the representations of the Company contained herein, and in subscribing for
      the
      Securities the Subscriber is not relying upon any representations other than
      those contained in the Memorandum or in this Subscription
      Agreement.

    

    (z) Subscriber
      represents and warrants, to the best of its knowledge, that other than the
      Placement Agent, no finder, broker, agent, financial advisor or other
      intermediary, nor any purchaser representative or any broker-dealer acting
      as a
      broker, is entitled to any compensation in connection with the transactions
      contemplated by this Subscription Agreement.

    

    (aa) Subscriber
      (either directly or indirectly) : (i) has not distributed or reproduced the
      Memorandum, in whole or in part, at any time, without the prior written consent
      of the Company and the Placement Agent; and (ii) shall keep confidential the
      existence of the Memorandum and the information contained therein or made
      available in connection with any further investigation of the Company and not
      use the information about the Company (including the terms of the Offering)
      for
      any other purpose, including trading of the Company’s securities (including any
      short selling or other hedging transactions), until the terms of the Offering
      have been publicly disclosed. 

    

    3. Covenants,
      Representations and Warranties of the Company.
      The
      Company covenants with, represents and warrants to, Subscriber as
      follows:

    

    (a) The
      Company and its Controlled Subsidiaries, are (a) corporations duly organized,
      validly existing and in good standing under the laws of their respective states
      of incorporation, each have full power and authority to own or lease all of
      the
      assets owned or leased by each of them and to conduct their respective business
      as described in the Memorandum and (b) are duly qualified to do business and
      in
      good standing as a foreign corporation in all jurisdictions in which the nature
      of the activities conducted or the character of the assets owned or leased
      makes
      such qualification necessary, except where the failure to be so qualified would
      not have a material adverse effect on the Company's presently conducted business
      (taken as a whole with the business of the Controlled Subsidiaries).
The
      term
“Controlled Subsidiaries” means any corporation or other organization in which
      the Company owns, directly or indirectly, (i) an equity or other ownership
      interest equal to or greater than 50% or (ii) the right to vote more than 50%
      of
      the outstanding voting stock or to elect or appoint a majority of the members
      of
      the board of directors.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b) The
      Company has all such corporate power and authority to enter into, deliver and
      perform this Subscription Agreement.

    

    (c) All
      necessary corporate action has been duly and validly taken by the Company to
      authorize the execution, delivery and performance of this Subscription Agreement
      by the Company, and the issuance and sale of the Securities to be sold by the
      Company pursuant to this Subscription Agreement. This Subscription Agreement
      has
      been duly and validly authorized, executed and delivered by the Company and
      constitutes the legal, valid and binding obligation of the Company enforceable
      against the Company in accordance with its terms, except as the enforceability
      thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
      or
      other similar laws affecting the enforcement of creditors’ rights generally and
      by general equitable principles.

    

    (d) The
      Memorandum
      and/or
      information provided by the Company to the undersigned hereof, including,
      without limitation, all filings of the Company filed with the Securities and
      Exchange Commission under the Securities and Exchange Act of 1934, as amended
      (the “Exchange Act”), included therewith or filed prior to the completion of the
      Offering ( collectively, “SEC Reports”) do not contain any untrue statement of a
      material fact or omit to state any material fact required to be stated therein
      or necessary to make the statements therein not misleading. Except
      as
      may have been corrected or supplemented in a subsequent SEC Report, as of their
      respective dates, the SEC Reports complied in all material respects with the
      requirements of the Exchange Act and the rules and regulations of the Commission
      promulgated thereunder. The
      Company
      has established disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
      controls and procedures to ensure that material information relating to the
      Company, including its Subsidiaries, is made known to the certifying officers
      by
      others within those entities, particularly during the period in which the
      Company’s most recently filed periodic report under the Exchange Act, as the
      case may be, is being prepared. The Company’s certifying officers have evaluated
      the effectiveness of the Company’s controls and procedures as of the date prior
      to the filing date of the most recently filed periodic report under the Exchange
      Act (such date, the “Evaluation Date”). 

    

    (e) As
      of the
      date hereof there is no litigation, arbitration, claim, governmental or other
      proceeding (formal or informal), or investigation pending or to the Company's
      knowledge threatened, with respect to the Company, or its respective operations,
      businesses, properties, or assets, except as properly described in the
      Memorandum or such as individually or in the aggregate do not now have and
      will
      not in the future have a material adverse effect upon the operations, business,
      properties, or assets of the Company. The Company is not, nor as of each closing
      date shall be, in violation of, or in default with respect to, any law, rule,
      regulation, order, judgment, or decree, except as properly described in the
      Memorandum or such as individually or in the aggregate do not have and will
      not
      in the future have a material adverse effect upon the operations, business,
      properties, or assets of the Company; nor is the Company required to take any
      action in order to avoid any such violation or default

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (f) To
      the
      best of its knowledge, the Company has not infringed, is not infringing, and
      has
      not received notice of infringement with respect to asserted intangibles of
      others. To the best knowledge of the Company, none of the patents, patent
      applications, trademarks, service marks, trade names and copyrights, and
      licenses and rights to the foregoing presently owned or held by the Company,
      materially infringe upon any like right of any other person or entity. The
      Company (i) owns or has the right to use, free and clear of all liens, charges,
      claims, encumbrances, pledges, security interests, defects or other restrictions
      of any kind whatsoever, sufficient patents, trademarks, service marks, trade
      names, copyrights, licenses and right with respect to the foregoing, to conduct
      its business as presently conducted except as set forth in the Memorandum,
      and
      (ii) except as set forth in the Memorandum, is not obligated or under any
      liability whatsoever to make any payments by way of royalties, fees or otherwise
      to any owner or licensee of, or other claimant to, any patent, trademark,
      service mark, trade name, copyright, know-how, technology or other intangible
      asset, with respect to the use thereof or in connection with the conduct of
      its
      business as now conducted or otherwise. The Company has direct ownership of
      title to all its intellectual property (including all United States and foreign
      patent applications and patents), other proprietary rights, confidential
      information and know-how; owns all the rights to its Intangibles as are
      currently used in or have potential for use in its business. 

    

    (g) The
      Debentures and Warrants to be issued and sold to the undersigned as provided
      in
      the Memorandum have been duly authorized and when issued and delivered against
      payment therefor, will be validly issued, fully paid and non-assessable and
      will
      conform to the description thereof in the Memorandum. The Warrant Shares and
      the
      Debenture Shares have been duly authorized and when issued and delivered upon
      either conversion or exercise and due payment therefor will be validly issued,
      fully paid and non-assessable and will conform to the description thereof in
      the
      Memorandum; and there are no preemptive or other rights to subscribe for or
      to
      purchase, nor any restriction upon the voting or transfer of, any shares of
      the
      Common Stock issuable upon exercise of the Warrants or conversion of Debentures
      pursuant to the Company's certificate of incorporation or by-laws or any
      agreement or other outstanding instrument to which the Company is a party or
      is
      otherwise known to the Company. The Company has reserved sufficient shares
      of
      Common Stock to be issued upon exercise of the Warrants and conversion of the
      Debentures.

    

    (h)
       The
      Company, until payment in full of all principal and interest due on the
      Debentures, will not pay or declare any dividends or other distributions of
      cash
      or other assets with respect to its capital stock; provided, however, that
      the
      Company may declare and pay a dividend or distribution to its shareholders
      of
      its shares in its equity affiliate, Comverge, Inc., a Delaware corporation,
      if and only if (i) the holders of the Warrants receive notice of the Company’s
      intent to make such a dividend or distribution of Comverge shares no later
      than
      30 days prior to the record date determined by the Board of Directors of the
      Company for such dividend or distribution and (ii) there is, as of the record
      date for the dividend or distribution, a registration statement which has been
      declared effective by the SEC providing for the immediate resale of the shares
      of Common Stock underlying the Warrants.

    

    (i) The
      Company shall provide for the transfer, upon request of the Subscriber, or
      removal of any legends upon the Securities, all as may be allowed in accordance
      with SEC Rule 144, and provide any required opinions of counsel to the Company’s
      transfer agents, at no cost to the Subscriber. The Company shall make generally
      available such information as may be necessary under SEC Rule 144 to allow
      for
      the resale of Securities by the Subscriber for at least three (3) years after
      the final Closing of the Offering.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (j) The
      Company’s capitalization prior to the Offering is as stated in the Memorandum,
      under the column titled “Actual” in the table under the caption
“Capitalization.”

    

    (k) The
      outstanding options, warrants and other convertible securities of the Company
      are as set forth in the Memorandum and the Company’s SEC Reports included as
      exhibits to the Memorandum (collectively, the “Company
      Documents”).
      Other
      than as described in the Company Documents, neither the Company nor any
      subsidiary is a party to an agreement, instrument or understanding which calls
      for, and no securities of the Company or any subsidiary contain provisions
      relating to, the
      resetting or repricing
      of any debt or equity security instrument of the Company or any Subsidiary.
      The
      issuance of the Securities or the consummation of the Offering will not trigger
      any resetting or repricing of any debt or equity security instrument of the
      Company or any Subsidiary and will not result in any preemptive rights to
      acquire securities of the Company in favor of any third party, except with
      respect to those certain investors, who purchased securities pursuant to the
      prior private offering completed by the Company in July, 2006. 

     

    (l) Neither
      the Company nor any of its subsidiaries are (i) in violation of its certificate
      of incorporation or by-laws, (ii) to the best knowledge of the Company, in
      violation of any statute, law, rule, code, administrative regulation, ordinance,
      judgment, order or decree of any government, governmental instrumentality,
      court, domestic or foreign, or arbitration panel or other body applicable to
      it
      where such violation would have a material adverse effect or (iii) to the best
      knowledge of the Company, in default in the performance or observance of any
      obligation, agreement, covenant or condition contained in any indenture,
      mortgage, deed of trust, voting agreement, voting trust agreement, loan
      agreement, bond, debenture, note or other evidence of indebtedness, lease,
      sublease, license agreement, contract or other agreement or instrument to which
      it is a party or by which it or any of its respective properties are bound
      or
      affected (“contracts”), where such defaults, singly or in the aggregate, would
      have a material adverse effect. To the knowledge of the Company, no other party
      under any contract is in default in any material respect thereunder which
      affects the Company or any subsidiary.

    

    (m)
      The
      Company and its subsidiaries (A) has paid all federal, state, local and foreign
      taxes for which it is liable and has furnished all information returns it is
      required to furnish pursuant to the Code, (B) has established adequate reserves
      for such taxes which are not due and payable and (C) does not have any tax
      deficiency or claims outstanding, proposed or assessed against it.

    

    (n) The
      Company and the subsidiaries maintain a system of internal accounting and other
      controls sufficient to provide reasonable assurances that: (i) transactions
      are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of reliable
      financial statements in conformity with United States generally accepted
      accounting principles and to maintain accountability for assets, (iii) access
      to
      assets is permitted only in accordance with management’s general or specific
      authorization, and (iv) the recorded accounting for assets is compared with
      existing assets at reasonable intervals and appropriate action is taken with
      respect to any material differences.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (o)
       The
      Company is in compliance with applicable requirements of the Sarbanes-Oxley
      Act
      of 2002 and applicable rules and regulations promulgated by the Commission
      thereunder in effect as of the date of this Agreement, except where such
      noncompliance could not be reasonably expected to have, individually or in
      the aggregate, a material adverse effect upon the Company.

    

    4. Indemnification.
      Subscriber agrees to indemnify and hold harmless the Company, the Placement
      Agent, and their respective officers, directors, employees, shareholders, agents
      representatives and affiliates, and any person acting on behalf of the Company
      or Placement Agent, from and against any and all damage, loss, liability, cost
      and expense (including reasonable attorneys’ fees) which any of them may incur
      by reason of the failure by Subscriber to fulfill any of the terms and
      conditions of this Subscription Agreement, or by reason of any breach of the
      representations and warranties made by Subscriber herein, or in any other
      document provided by Subscriber to the Company. All representations, warranties
      and covenants of each of Subscriber and the Company contained herein shall
      survive the acceptance of this subscription.

    

    5. Registration
      Rights Granted to Subscriber.
      In
      consideration of the investment in the Company described in this Agreement
      and
      the Memorandum, the Company hereby grants to the Subscriber the registration
      rights set forth on Annex
      A
      attached
      hereto. 

    

    6. Anti-Dilution
      Adjustments; Right of Participation.
      

    

    (a)
       In
      the
      event that, during the term commencing on the Closing of this Offering and
      ending on a date which is 6 months after the effective date of the registration
      statement required to be filed by the Company in accordance with this
      Subscription Agreement (as described in Annex A), if the Company sells or issues
      additional shares of Common Stock, or securities (debt and/or equity)
      convertible into Common Stock, with a purchase, exercise or conversion price
      (the “Share Antidilution Price”) of less than the Conversion Price (as adjusted
      for stock splits, stock dividends and the like), with certain exceptions set
      forth in clause (b) below, the Conversion Price of the Debentures and the
      exercise price of the Warrants shall be reduced on a “full rachet basis” to the
      Share Antidilution Price; provided, however, the exercise price of the Warrants
      shall be reduced to 118% of the Share Antidilution Price, as provided in the
      Warrants.

     

    (b) The
      adjustments to Conversion Price and the Exercise Price as provided in clause
      (a)
      above shall not be applicable in the following instances: (i) Common Stock
      issuable or issued to employees, consultants or directors of the Company
      directly or pursuant to a stock plan or other compensation arrangement which
      shall be approved by the Board of Directors of the Company, (ii) capital stock,
      debt instruments convertible into capital stock or warrants or options to
      purchase capital stock issued in connection with bona fide acquisitions,
      mergers, technology licenses or purchases, corporate partnering agreements,
      joint ventures or similar transactions, the terms of which are approved by
      the
      Board of Directors of the Company, and (ii) Common Stock issued or issuable
      upon
      conversion of the Warrants or any other securities exercisable or exchangeable
      for, or convertible into shares of Common Stock outstanding as of the date
      of
      the Memorandum. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (c) The
      Company hereby agrees that until the effectiveness of the registration statement
      required to be filed in connection herewith, as described in Annex A hereto,
      notwithstanding anything else to the contrary contained in this Subscription
      Agreement, other than with respect to issuances provided for under clause (b)
      above, it shall not issue or agree to issue any shares of its Common Stock
      or
      securities (whether debt or equity) convertible into shares of Common Stock
      with
      a issue, purchase or conversion price of less than the Conversion Price of
      the
      Debentures without the written consent of Subscribers holding 75% of the then
      outstanding Debentures.

     

    7. Patriot
      Act Compliance

    

    To
      induce
      the Company to accept the undersigned’s investment, the undersigned hereby makes
      the following representations, warranties and covenants to the
      Company:

     

    (a)  The
      undersigned represents and warrants that no holder of any beneficial interest
      in
      the undersigned’s equity securities of the Company (each a “Beneficial
      Interest Holder”)
      and,
      no Related Person (in the case the undersigned is an entity) is or will
      be:

     

    
      	
            	(1)	
              A
                person or entity whose name appears on the list of specially designated
                nationals and blocked persons maintained by the Office of Foreign
                Asset
                Control from time to time;

            

    

     

    
      	
            	(2)	
              A
                Foreign Shell Bank; or

            

    

     

    
      	
            	(3)	
              A
                person or entity resident in or whose subscription funds are transferred
                from or through an account in a Non-Cooperative Jurisdiction.
                

            

    

     

    (b)  The
      undersigned represents that the bank or other financial institution (the
“Wiring
      Institution”)
      from
      which the undersigned’s funds will be wired is located in a FATF
      Country.

     

    (c)  The
      undersigned represents that:

     

    
      	
            	(1)	
              Neither
                it, any Beneficial Interest Holder nor any Related Person (in the
                case of
                the undersigned is an entity) is a Senior Foreign Political Figure,
                any
                member of a Senior Foreign Political Figure’s Immediate Family or any
                Close Associate of a Senior Foreign Political Figure;
                or

            

    

     

    
      	
            	(2)	
              Neither
                it, any Beneficial Interest Holder nor any Related Person (in the
                case the
                undersigned is an entity) is resident in, or organized or chartered
                under
                the laws of, a jurisdiction that has been designated by the Secretary
                of
                the Treasury under Section 311 or 312 of the USA PATRIOT Act as warranting
                special measures due to money laundering
                concerns.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
            	(3)	
              Its
                investment funds do not originate from, nor will they be routed through,
                an account maintained at a Foreign Shell Bank, an “offshore bank,” or a
                bank organized or chartered under the laws of a Non-Cooperative
                Jurisdiction. 

            

    

     

    (d) Form
      purposes of this Section 7, the following definitions shall apply;

     

    Close
      Associate:
      With
      respect to a Senior Foreign Political Figure, a person who is widely and
      publicly known internationally 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.

     

    FATF:
      The
      Financial Action Task Force on Money Laundering.

     

    FATF
      Country:
      A
      country that is a member of FATF. As of September 1, 2003, the countries which
      are members of FATF are: Argentina; Australia; Austria; Belgium; Brazil; Canada;
      Denmark; Finland; France; Germany; Greece; Hong Kong; Iceland; Ireland; Italy;
      Japan; Luxembourg; Mexico; Kingdom of the Netherlands; New Zealand; Norway;
      Portugal; Singapore; South Africa; Spain; Sweden; Switzerland; Turkey; United
      Kingdom and United States. For a current list of FATF members see
      http://www1.oecd.org/fatf/Members_en.htm.

     

    Foreign
      Bank:
      An
      organization that (i) is organized under the laws of a country outside the
      United States; (ii) engages in the business of banking; (iii) is recognized
      as a
      bank by the bank supervisory or monetary authority of the country of its
      organization or principal banking operations; (iv) receives deposits to a
      substantial extent in the regular course of its business; and (v) has the power
      to accept demand deposits, but does not include the U.S. branches or agencies
      of
      a foreign bank.

     

    Foreign
      Shell Bank:
      A
      Foreign Bank without a Physical Presence in any country, but does not include
      a
      Regulated Affiliate.

     

    Government
      Entity:
      Any
      government or any state, department or other political subdivision thereof,
      or
      any governmental body, agency, authority or instrumentality in any jurisdiction
      exercising executive, legislative, regulatory or administrative functions of
      or
      pertaining to government.

     

    Immediate
      Family:
      With
      respect to a Senior Foreign Political Figure, typically includes the political
      figure’s parents, siblings, spouse, children and in-laws.

     

    Non-Cooperative
      Jurisdiction:
      Any
      foreign country or territory that has been designated as non-cooperative with
      international anti-money laundering principles or procedures by an
      intergovernmental group or organization, such as FATF, of which the United
      States is a member and with which designation the United States representative
      to the group or organization continues to concur. See
      http://www1.oecd.org/fatf/NCCT_en.htm for FATF’s list of non-cooperative
      countries and territories.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Physical
      Presence:
      A place
      of business that is maintained by a Foreign Bank and is located at a fixed
      address, other than solely a post office box or an electronic address, in a
      country in which the Foreign Bank is authorized to conduct banking activities,
      at which location the Foreign Bank: (a) employs one or more individuals on
      a
      full-time basis; (b) maintains operating records related to its banking
      activities; and (c) is subject to inspection by the banking authority that
      licensed the Foreign Bank to conduct banking activities.

     

    Publicly
      Traded Company:
      An
      entity whose securities are listed on a recognized securities exchange or quoted
      on an automated quotation system in the U.S. or country other than a
      Non-Cooperative Jurisdiction or a wholly-owned subsidiary of such an
      entity.

     

    Qualified
      Plan:
      A tax
      qualified pension or retirement plan in which at least 100 employees participate
      that is maintained by an employer that is organized in the U.S. or is a U.S.
      Government Entity.

     

    Regulated
      Affiliate:
      A
      Foreign Shell Bank that: (a) is an affiliate of a depository institution, credit
      union, or Foreign Bank that maintains a Physical Presence in the U.S. or a
      foreign country, as applicable; and (b) is subject to supervision by a banking
      authority in the country regulating such affiliated depository institution,
      credit union, or Foreign Bank.

     

    Related
      Person:
      With
      respect to any entity, any interest holder, director, senior officer, trustee,
      beneficiary or grantor of such entity; provided that in the case of an entity
      that is a Publicly Traded Company or a Qualified Plan, the term “Related Person”
shall exclude any interest holder holding less than 5% of any class of
      securities of such Publicly Traded Company and beneficiaries of such Qualified
      Plan.

     

    Senior
      Foreign Political Figure:
      A
      senior official in the executive, legislative, administrative, military or
      judicial branches of a non-U.S. government (whether elected or not), a senior
      official of a major non-U.S. political party, or a senior executive of a
      non-U.S. 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.

     

    USA
      PATRIOT Act:
      The
      Uniting and Strengthening America by Providing Appropriate Tools Required to
      Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001 (Pub. L.
      No. 107-56).

    

    8. Miscellaneous.

    

    (a) Subscriber
      agrees not to transfer or assign this Subscription Agreement or any of
      Subscriber’s interest herein and further agrees that the transfer or assignment
      of the Securities acquired pursuant hereto shall be made only in accordance
      with
      all applicable laws.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (b) Subscriber
      agrees that Subscriber cannot cancel, terminate, or revoke this Subscription
      Agreement or any agreement of Subscriber made hereunder, and this Subscription
      Agreement shall survive the death or legal disability of Subscriber and shall
      be
      binding upon Subscriber’s heirs, executors, administrators, successors, and
      permitted assigns.

    

    (c) This
      Subscription Agreement constitutes the entire agreement among the parties hereto
      with respect to the subject matter hereof and may be amended only by a written
      execution by all parties.

    

    (d) Subscriber
      acknowledges that it has been advised to consult with its own attorney regarding
      this subscription and Subscriber has done so to the extent that Subscriber
      deems
      appropriate. Subscriber understands and agrees that Subscriber has not been
      represented in this transaction by counsel to the Company or the Placement
      Agent.

    

    (e) Any
      notice or other document required or permitted to be given or delivered to
      the
      Subscriber shall be in writing and sent: (i) by registered or certified mail
      with return receipt requested (postage prepaid) or (ii) by a recognized
      overnight delivery service (with charges prepaid). 

     

    If
      to the
      Company, at:

     

    403
      Marsh
      Lane

    Wilmington,
      DE 19804

    Attn.:
      John A. Moore, Chief Executive Officer 

    

    If
      to the
      Subscriber, at its address set forth on the signature page to this Subscription
      Agreement, or such other address as it shall have specified to the Company
      in
      writing, with a copy (which shall not constitute notice) to each of the
      following: 

    

    If
      to
      First Montauk Securities Corp. at:

    

    Parkway
      109 Office Center

    Red
      Bank,
      New Jersey 07701

    Tel
      No.:
      732-842-4700

    Attn:
      Director of Corporate Finance 

    

    (f) Failure
      of the Company to exercise any right or remedy under this Subscription Agreement
      or any other agreement between the Company and the Subscriber, or otherwise,
      or
      delay by the Company in exercising such right or remedy, will not operate as
      a
      waiver thereof. No waiver by the Company will be effective unless and until
      it
      is in writing and signed by the Company.

    

    (g) This
      Subscription Agreement shall be enforced, governed and construed in all respects
      in accordance with the laws of the State of New York, as such laws are applied
      by the New York courts except with respect to the conflicts of law provisions
      thereof, and shall be binding upon the Subscriber, the Subscriber’s heirs,
      estate, legal representatives, successors and assigns and shall inure to the
      benefit of the Company, its successors and assigns.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (h) Any
      legal
      suit, action or proceeding arising out of or relating to this Subscription
      Agreement or the transactions contemplated hereby shall be instituted
      exclusively in New York, New York, or in the United States District Court for
      the Southern District of New York (the “New York Courts”). The parties hereto
      hereby: (i) waives any objection which they may now have or hereafter have
      to
      the venue of any such suit, action or proceeding, and (ii) irrevocably consents
      to the jurisdiction of the New York Courts in any such suit, action or
      proceeding. The parties further agree to accept and acknowledge service of
      any
      and all process which may be served in any such suit, action or proceeding
      in
      the New York Courts and agree that service of process upon a party mailed by
      certified mail to such party’s address shall be deemed in every respect
      effective service of process upon such party in any such suit, action or
      proceeding.

    

    (i) If
      any
      provision of this Subscription Agreement is held to be invalid or unenforceable
      under any applicable statute or rule of law, then such provision shall be deemed
      modified to conform to such statute or rule of law. Any provision hereof that
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provisions hereof.

    

    (j)
       The
      parties understand and agree that money damages would not be a sufficient remedy
      for any breach of the Subscription Agreement by the Company or the Subscriber
      and that the party against which such breach is committed shall be entitled
      to
      equitable relief, including injunction and specific performance, as a remedy
      for
      any such breach. Such remedies shall not be deemed to be the exclusive remedies
      for a breach by either party of the Subscription Agreement but shall be in
      addition to all other remedies available at law or equity to the party against
      which such breach is committed.

    

    (k) All
      pronouns and any variations thereof used herein shall be deemed to refer to
      the
      masculine, feminine, singular or plural, as identity of the person or persons
      may require. 

    

    (l) This
      Subscription Agreement may be executed in counterparts and by facsimile, each
      of
      which shall be deemed an original, but all of which shall constitute one and
      the
      same instrument.

    

    Notwithstanding
      anything else contained in this Subscription Agreement or the Memorandum, each
      prospective investor (and its employees, representatives or other agents) and
      the Company may disclose to any and all persons, without limitation of any
      kind,
      the tax treatment and tax structure (as such terms are used in
      Sections 6011, 6111 and 6112 of the Code and the Treasury Regulations
      promulgated thereunder) of the undersigned subscribers investment in the Company
      and any transactions entered into by the Company and all materials of any kind
      (including opinions or other tax analyses) that are provided to such prospective
      investor relating to such tax treatment and tax structure; provided
      that no prospective investor or its employees, representatives or agents shall
      disclose any information for which nondisclosure is reasonably necessary in
      order to comply with U.S. securities laws; and provided further
      that this authorization is not intended to permit disclosure of any term or
      detail not relevant to the tax treatment or the tax structure of the Company,
      the Offering or transactions entered into by the parties
      hereto.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    The
      undersigned understands and agrees that this authorization to disclose such
      tax
      treatment and tax structure is not intended to permit disclosure of any other
      information including (without limitation) (i) any portion of any materials
      to the extent not related to the tax treatment or tax structure of the Company,
      the Offering or transactions entered into by the undersigned and the Company,
      (ii) the identities of any investors in the Offering or (iii)  any
      other term or detail not relevant to the tax treatment or the tax structure
      of
      the Partnership or transactions entered into by it. 

     

    [Signature
      Pages Follow]

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Signature
      Page for Individuals:

    

    IN
      WITNESS WHEREOF, Subscriber has caused this Subscription Agreement to be
      executed as of the date indicated below.

     

    
      	 	 	 	
            	 
	 $	
            	 	
               $

            	
            
	 	
              

              Purchase
                Price (Same as Principal Amount)

            	 	
            	
              

              Principal
                Amount of Debenture 

            
	 	
            	 	
            	
            
	 	
              

              Print
                or Type Name

            	 	
            	
              

              Print
                or Type Name (Joint-owner)

            
	 	 	 	 	 
	 	
              

              Signature

            	 	
            	
              

              Signature
                (Joint-owner)

            
	 	 	 	 	 
	 	
              

              Date

            	 	
            	
              

              Date
                (Joint-owner)

            
	 	 	 	 	 
	 	
              

              Social
                Security Number

            	 	
            	
              

              Social
                Security Number (Joint-owner)

            
	 	 

              

            	 	 	 

              

            
	 	 	 	 	 
	 	
              

              Address

            	 	
            	
              

              Address
                (Joint-owner)

            
	 	 	 	 	 
	 	
              _______
                Joint Tenancy

            	 	 	______
              Tenants in Common

    

     

    Wiring
      Instructions:

     

    
      	 	
              Bank
                Name:

            	
              Signature
                Bank

            
	 	
              ABA
                #:

            	
              026013576

            
	 	
              Tel
                Number

            	
              646-822-1361

            
	 	
              Address

            	
              261
                Madison Avenue, New York, New York 10016

            
	 	
              Acct
                #:

            	1500836071
	 	
              Acct.
                Name: 

            	
              Signature
                Bank as Escrow Agent for Acorn Factor, Inc.

            
	 	
              Reference

            	 

    

    
    

     

    
      
        
        

      

      
        S-1

        
          

        

      

      
        
        

      

    

     

    Signature
      Page for Partnerships, Corporations or Other Entities:

    

    IN
      WITNESS WHEREOF, Subscriber has caused this Subscription Agreement to be
      executed as of the date indicated below.

     

    $
      _______________________________________      
      $_________________________________

    Total
      Purchase Price (Same
      as
      Principal Amount)     
      Principal Amount of Debenture

    

    _____________________________________________________________________________

    Print
      or
      Type Name of Entity

    

    ______________________________________________________________________________

    Address

    

    ____________________________________  ____________________________________

    Taxpayer
      I.D. No. (if applicable)    
 
Date

    

    
      	 	 	 	 	 
	By:	  	 	 	  
	
              Signature:
                Name:

                
                Title:

            	 	 	
              Print
                or Type Name and Indicate

              Title
                or Position with Entity

            

    

    
      

      
        	 	 	 	 
	  Signature
                (other authorized signatory)	 	 	
                Print
                  or Type Name and Indicate

                Title
                  or Position with Entity

              

      

       

    

    All
      subscriptions from partnerships, corporations, trusts or limited liability
      companies must be accompanied by resolutions of the appropriate corporate
      authority (board of directors, trustee or managing partner or members, as
      applicable) and trust documents evidencing the authorization and power to make
      the subscription.

    

    Wiring
      Instructions:

     

    
      
        	 	
                Bank
                  Name:

              	
                Signature
                  Bank

              
	 	
                ABA
                  #:

              	
                026013576

              
	 	
                Tel
                  Number

              	
                646-822-1361

              
	 	
                Address

              	
                261
                  Madison Avenue, New York, New York 10016

              
	 	
                Acct
                  #:

              	1500836071
	 	
                Acct.
                  Name: 

              	
                Signature
                  Bank as Escrow Agent for Acorn Factor, Inc.

              
	 	
                Reference

              	 

      

      
      

       

      
        
          
          

        

        
          S-2

          
            

          

        

        
          
          

        

      

    

     

    SUBSCRIPTION
      SIGNATURE PAGE AND ACCEPTANCE ACORN FACTOR, INC.

    

    IN
      WIITNESS WHEREOF, the Company has caused this Subscription Agreement to be
      executed, and the foregoing subscription accepted, as of the date indicated
      below.

     

    
      	 	 	 
	 	
              ACORN
                FACTOR, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
	 	Title

    

    

    Date:
      __________________________, 2007

     

    
      
        
        

      

      
        S-3

        
          

        

      

      
        
        

      

    

    

    Annex
      A

    

    Registration
      Rights

    

    ACORN
      FACTORS, INC. (the “Company”) hereby grants to the Subscriber the following
      registration rights. 

    

    1. Definitions.

    

    Capitalized
      terms used herein without definition shall have the respective meanings given
      such terms as set forth in the Subscription Agreement between ACORN
      FACTOR, INC. and
      the
      subscriber signatory thereto (the “Subscription
      Agreement”)
      or in
      the Company’s Confidential Private Placement Memorandum, dated as of March 8,
      2007 (as amended or supplemented, and together with all documents and exhibits
      attached thereto, the “Memorandum”).
      As
      used herein, the following terms shall have the following meanings:

    

    Business
      Day:
      Any day
      other than a day on which banks are authorized or required to be closed in
      the
      State of New York.

    

    Commission:
      The
      United States Securities and Exchange Commission.

    

    Common
      Stock:
      The
      Common Stock, par value $.01 per share, of the Company.

    

    Debentures:
      The
      convertible Debentures to be purchased in the offering, such shares to which
      the
      Debentures are convertible to be known as “Debenture Shares.”

    

    Exchange
      Act:
      The
      Securities Exchange Act of 1934, as amended, and the rules and regulations
      of
      the Commission promulgated thereunder.

    

    Holder
      or
Holders:
      Any
      holder of the Registrable Securities.

    

    Offering:
      means
      the private placement offering of securities by the Company as described in
      the
      Memorandum. 

    

    Person:
      Any
      individual, corporation, partnership, joint venture, association, joint stock
      company, trust, unincorporated organization or government or other agency or
      political subdivision thereof.

    

    Prospectus:
      The
      prospectus included in any Registration Statement (including, without
      limitation, a prospectus that discloses information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by such Registration Statement,
      and all other amendments and supplements to the prospectus, including
      post-effective amendments, and all material incorporated by reference or deemed
      to be incorporated by reference in such prospectus.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    Questionnaire:
      A
      questionnaire prepared by the Company, and included herewith, which is to be
      completed by each Holder in order to provide the information required by
      Sections 507 and 508 of Regulation S-K, as promulgated under the Securities
      Act
      and the Exchange Act, for inclusion in a Registration Statement, including
      the
      identification of all beneficial owners of Registrable Securities.

    

    Registrable
      Securities:
      The
      Debenture Shares, the Warrant Shares, and the shares underlying the Placement
      Agent Warrants, and any and all shares of Common Stock issued as dividends
      with
      respect to the foregoing or issued or issuable upon any stock split, until
      such
      time as (1) a Registration Statement covering such Registrable Securities has
      been declared effective by the Commission or (2) such Registrable Securities
      are
      saleable pursuant to Rule 144(k) (or any similar provision then in force) under
      the Securities Act, without any restriction, whichever is earlier.

    

    Registration
      Statement:
      Any
      registration statement of the Company that covers any of the Registrable
      Securities pursuant to the provisions of this Agreement, including the
      Prospectus, amendments and supplements to such registration statements,
      including post effective amendments, all exhibits, and all material incorporated
      by reference or deemed to be incorporated by reference in such registration
      statement.

    

    Securities
      Act:
      The
      Securities Act of 1933, as amended, and the rules and regulations of the
      Commission promulgated thereunder.

    

    Warrants:
      The
      warrant to purchase Common Stock included in the Offering

    

    Warrant
      Shares:
      The
      shares of Common Stock issuable upon exercise of the Warrant
      Shares.

    

    2. Registration
      Rights.

    

    (a) Required
      Registration Within
      30
      days from the later of (i) the date of filing of the Company’s Annual Report for
      the fiscal year ended December 31, 2006 (the “2006 Form 10-K”) or (ii) the final
      Closing of the Offering, the Company shall prepare and file with the Commission
      a Registration Statement on appropriate form as determined under the regulations
      of the Commission for the purpose of registering for public resale: (i) the
      Debenture Shares and the Warrant Shares issuable in connection with the
      Debentures and Warrants sold in the Offering, and (ii) the shares underlying
      warrants issuable to the Placement Agent in connection with the Offering. The
      Company shall use its best efforts to ensure that such Registration Statement
      is
      declared effective within 120 days of such date. In the event that the
      Registration Statement is not declared effective by the Commission within the
      earlier of 120 days from (i) the due date of the 2006 Form 10-K (as such date
      may have been extended pursuant to Rule 12b-25 promulgated under the 1934 Act)
      and (ii) the actual date of filing of the 2006 Form 10-K, or, thereafter, the
      Registration Statement does not stay effective for 30 consecutive days for
      any
      reason during the two year period commencing after its effectiveness, then
      Holder shall be entitled to liquidated damages equal to one percent (1%) of
      the
      Holder’s original subscription price in the Offering for each 30 day period, pro
      rated on a daily basis; provided, however, that such damages shall not exceed
      11.25% of such Holder’s original subscription payment. The Company will agree to
      take all actions as are necessary to keep the Registration Statement effective
      until the later of: (i) the first anniversary of the first date on which no
      Warrants remain unexercised or unexpired and no Debentures remain unconverted
      or
      unredeemed or (ii) the date all Debenture Shares and Warrant Shares may be
      sold
      without any restrictions under Rule 144 during any 90-day period in accordance
      with all rules and regulations regarding sales of securities pursuant to Rule
      144(k). The Company shall bear all expenses of the Registration Statement,
      including fees and expenses of counsel or other advisors to the investors in
      the
      Placement and the Placement Agent, (which counsel fees shall be the sum of
      $15,000 and payable in advance at the final closing of the Offering) as well
      as
      any filing fees payable in connection with any required NASD filings by the
      Placement Agent.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (b) Withdrawal.
      If a
      registration pursuant to this Section 2 involves an underwritten public
      offering, any Holder requesting to be included in such registration may elect,
      in writing prior to the effective date of the registration statement filed
      in
      connection with such registration, not to register the Holder’s securities in
      connection with such registration. The foregoing provisions notwithstanding,
      the
      Company may withdraw any registration statement referred to in this Section
      2
      without thereby incurring any liability to the Holders.

    

    (c) Holdback
      Agreements.
      If any
      registration of Registrable Securities shall be in connection with an
      underwritten public offering, each Holder agrees, provided that all other
      security holders of the Company whose securities are included in the
      Registration Statement similarly agree, not to effect any public sale or
      distribution, including any sale pursuant to Rule 144 under the Securities
      Act,
      of any Registrable Securities, and not to effect any transfer, sale, assignment
      or pledge of any securities of the Company beneficially owned by the Holder
      during the thirty (30) days prior to, and continuing for the 180 days following
      the effective date of such Registration Statement (except as part of such
      registration).

    

    (d) Exceptions.
      Notwithstanding the foregoing, the Company may delay the registration of
      Registrable Securities pursuant to Section 2 hereof for the time periods
      described in Section 2(e) hereof upon the occurrence of any of the
      following:

    

    (i) The
      Company shall have previously entered into an agreement or letter of intent
      contemplating an underwritten public offering on a firm commitment basis of
      Common Stock or securities convertible into or exchangeable for Common Stock
      and
      the managing underwriter of such proposed public offering advises the Company
      in
      writing that in its opinion such proposed underwritten offering would be
      materially and adversely affected by a concurrent registered offering of
      Registrable Securities (such opinion to state the reasons
      therefore);

    

    (ii) The
      Company shall have entered into an agreement or letter of intent, which has
      not
      expired or otherwise terminated, contemplating a material business acquisition
      by the Company or its subsidiaries whether by way of merger, consolidation,
      acquisition of assets, acquisition of securities or otherwise; or

    

    (iii) The
      Company is in possession of material nonpublic information that the Company
      would be required to disclose in the Registration Statement and that is not,
      but
      for the registration, otherwise required to be disclosed at the time of such
      registration, the disclosure of which, in its good faith judgment, would have
      a
      material adverse effect on the business, operations, prospects or competitive
      position of the Company.

     

    (e)
       Period
      of Delay.
      If an
      event described in clauses (i) through (iii) of Section 2(d) shall occur, the
      Company may, by written notice to the Holders, delay the filing of a
      Registration Statement with respect to the Registrable Securities to be covered
      thereby for a period of time not exceeding 60 days. 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (f) Inclusion
      in Registration Statement.
      Each
      Holder agrees, by acquisition of the Registrable Securities, that it shall
      not
      be entitled to be named as a selling security holder in a Registration Statement
      or use the Prospectus for offers and resales of Registrable Securities at any
      time, unless such Holder has returned to the Company a completed and signed
      Questionnaire on or prior to at least three (3) business days prior to the
      filing of the Registration Statement. If a Holder of Registrable Securities
      returns a Questionnaire after the deadline specified in the previous sentence,
      the Company shall use its best efforts to take such actions as are required
      to
      name such Holder as a selling security holder in the Registration Statement
      or
      any pre-effective or post-effective amendment thereto and to include (to the
      extent not theretofore included) in the Registration Statement the Registrable
      Securities identified in such late Questionnaire, provided that the Company
      will
      take such action on or prior to the 45th day following receipt of the applicable
      Questionnaire.

    

    3. Registration
      Procedures.

    

    In
      connection with the registration obligations of the Company pursuant to the
      terms and conditions of this Agreement, the Company shall:

    

    (a) prior
      to
      filing a Registration Statement or Prospectus or any amendments or supplements
      thereto, including documents incorporated by reference after the initial filing
      of the Registration Statement, the Company will furnish to the Holders covered
      by such Registration Statement (the “Selling
      Holders”),
      Holders’ legal counsel and the underwriters, if any, draft copies of all such
      documents proposed to be filed at least three (3) Business Days prior thereto,
      which documents will be subject to the review of such Holders’ legal counsel and
      the underwriters, if any. The Company will notify each Selling Holder of any
      stop order issued or threatened by the Commission in connection therewith and
      take all reasonable actions required to prevent the entry of such stop order
      or
      to remove it if entered;

    

    (b) as
      promptly as practicable prepare and file with the Commission such amendments
      and
      post-effective amendments to the Registration Statement as may be necessary
      to
      keep such Registration Statement effective for the period required pursuant
      to
      Section 2; cause the Prospectus to be supplemented by any required Prospectus
      supplement, and, as so supplemented, to be filed pursuant to Rule 424 under
      the
      Securities Act; and comply with the provisions of the Securities Act applicable
      to it with respect to the disposition of all Registrable Securities covered
      by
      such Registration Statement during the applicable period in accordance with
      the
      intended methods of disposition by the Selling Holders set forth in such
      Registration Statement or supplement to the Prospectus;

    

    (c) as
      promptly as practicable furnish to any Selling Holder and the underwriters,
      if
      any, without charge, such number or conformed copies of such Registration
      Statement and any post-effective amendment thereto and such number of copies
      of
      the Prospectus (including each preliminary Prospectus) and any amendments or
      supplements thereto, and any documents incorporated by reference therein, as
      such Selling Holder or underwriter may reasonably request in order to facilitate
      the disposition of the Registrable Securities being sold by such Selling Holder
      (it being understood that the Company consents to the use of the Prospectus
      and
      any amendment or supplement thereto by each Selling Holder and the underwriters,
      if any, in connection with the offering and sale of the Registrable Securities
      covered by the Prospectus or any amendment or supplement thereto); 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (d) on
      or
      prior to the date on which the Registration Statement is declared effective,
      register or qualify such Registrable Securities under such other securities
      or
      blue sky laws of such jurisdictions as any Selling Holder or underwriter
      reasonably requests and do any and all other acts and things which may be
      necessary or advisable to enable such Selling Holder to consummate the
      disposition in such jurisdictions of such Registrable Securities owned by such
      Selling Holder; keep each such registration or qualification (or exemption
      therefrom) effective during the period which the Registration Statement is
      required to be kept effective; and do any and all other acts or things
      reasonably necessary or advisable to enable the disposition in such
      jurisdictions of the Registrable Securities covered by the applicable
      Registration Statement; provided
      that the
      Company shall not be required to (i) qualify to do business as a foreign
      corporation or as a broker-dealer in any jurisdiction where it is not then
      so
      qualified or (ii) take any action which would subject it to general service
      of
      process or to taxation in any jurisdiction where it is not then so
      subject;

    

    (e) cause
      the
      Registrable Securities covered by such Registration Statement to be registered
      with or approved by such other governmental agencies or authorities as may
      be
      necessary by virtue of the business and operations of the Company to enable
      the
      Selling Holders to consummate the disposition of such Registrable
      Securities;

    

    (f) as
      promptly as practicable notify each Selling Holder and any underwriter and
      (if
      requested by any such Person) confirm such notice in writing, (i) when a
      Prospectus or any Prospectus supplement or post-effective amendment has been
      filed and, with respect to a Registration Statement or any post-effective
      amendment, when the same has become effective, (ii) of the issuance by the
      Commission of any stop order suspending the effectiveness of a Registration
      Statement or the initiation or threatening of any proceedings for that purpose,
      (iii) of the issuance by any state securities commission or other regulatory
      authority of any order suspending the qualification or exemption from
      qualification of any of the Registrable Securities under state securities or
      blue sky laws or the initiation of any proceedings for that purpose and (iv)
      of
      the happening of any event which makes any statement made in a Registration
      Statement or related Prospectus or any document incorporated or deemed to be
      incorporated by reference therein untrue or which requires the making of any
      changes in such Registration Statement, Prospectus or documents so that they
      will not contain any untrue statement of a material fact or omit to state any
      material fact required to be stated therein or necessary to make the statements
      therein not misleading; and, as promptly as practicable thereafter, prepare
      and
      file with the Commission and furnish a supplement or amendment to such
      Prospectus so that, as thereafter deliverable to the purchasers of such
      Registrable Securities, such Prospectus will not contain any untrue statement
      of
      a material fact or omit to state a material fact necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading;

    

    (g) use
      its
      reasonable efforts to prevent the issuance of any order suspending the
      effectiveness of a Registration Statement, and, if one is issued, to obtain
      the
      withdrawal of any order suspending the effectiveness of a Registration Statement
      at the earliest possible moment;

     

    Each
      Selling Holder, upon receipt of any notice from the Company of the happening
      of
      any event of the kind described in subsection (f) of this Section 3, shall
      forthwith discontinue disposition of the Registrable Securities until such
      Selling Holder’s receipt of the copies of the supplemented or amended Prospectus
      contemplated by subsection (f) of this Section 3 or until it is advised in
      writing (the “Advice”)
      by the
      Company that the use of the Prospectus may be resumed, and has received copies
      of any additional or supplemental filings which are incorporated by reference
      in
      the Prospectus, and, if so directed by the Company, such Selling Holder will,
      or
      will request the managing underwriter or underwriters, if any, to, deliver
      to
      the Company (at the Company’s expense) all copies, other than permanent file
      copies then in such Selling Holder’s possession, of the Prospectus covering such
      Registrable Securities current at the time of receipt of such notice.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    4. Registration
      Expenses.

    

    (a) All
      expenses incident to the Company’s performance of, or compliance with, the
      provisions hereof, including without limitation, (i) all Commission and
      securities exchange or NASD registration and filing fees, (ii) fees and expenses
      of compliance with securities or blue sky laws (including fees and disbursements
      of counsel in connection with blue sky qualifications of the Registrable
      Securities), (iii) printing expenses, messenger and delivery expenses, (iv)
      internal expenses (including, without limitation, all salaries and expenses
      of
      the Company’s officers and employees performing legal or accounting duties), (v)
      fees and expenses incurred in connection with the listing of the securities
      to
      be registered, if any, on each securities exchange on which similar securities
      issued by the Company are then listed, (vi) fees and disbursements of counsel
      for the Company and its independent certified public accountants (including
      the
      expense of any special audit or “cold comfort” letters required by, or incident
      to, such performance), (vii) Securities Act liability insurance (if the Company
      elects to obtain such insurance), (viii) fees and expenses of any special
      experts retained by the Company in connection with such registration, (ix)
      fees
      and expenses of other persons retained by the Company in connection with each
      registration hereunder and (xi) the fees of Placement agent’s counsel in the
      amount of $15,000 to review, on behalf of the Placement Agent and the Holders
      the Registration Statement and to make the necessary filings under Rule 2710
      on
      behalf of the Placement Agent; provided, however, the Company shall not be
      responsible for any underwriting fees, discounts or commissions attributable
      to
      the sale of Registrable Securities by the Holders). The foregoing expenses
      are
      herein called “Registration Expenses.”

    

    (b) The
      Company will pay all Registration Expenses in connection with the Registration
      Statement filed pursuant to Section 2 except as otherwise set forth therein.
      Other than as specifically provided for in Section 2(a) hereto, all expenses
      to
      be borne by the Holders in connection with any Registration Statement filed
      pursuant to Section 2 (including, without limitation, all underwriting fees,
      discounts or commissions attributable to such sale of Registrable Securities)
      shall be borne by the participating Holders pro rata in relation to the number
      of Registrable Securities to be registered by each Holder. In addition, the
      Company shall bear the costs and expenses of any required legal opinion or
      transfer agent fees in connection with any transfer of Registrable Securities
      pursuant to Rule 144. 

    

    5. Indemnification;
      Contribution.

    

    (a) Indemnification
      by the Company.
      The
      Company agrees to indemnify and hold harmless, to the full extent permitted
      by
      law, each Holder, its officers, directors and each Person who controls such
      Holder (within the meaning of the Securities Act), and any agent or investment
      adviser thereof, against all losses, claims, damages, liabilities and expenses
      (including reasonable attorneys’ fees and costs of investigation) arising out of
      or based upon any untrue or alleged untrue statement of material fact contained
      in any Registration Statement, any amendment or supplement thereto, any
      Prospectus or preliminary Prospectus or any omission or alleged omission to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading, except insofar as the same arise out
      of
      or are based upon any such untrue statement or omission based upon information
      with respect to such Holder furnished in writing to the Company by or on behalf
      of such Holder expressly for use therein; provided
      that, in
      the event that the Prospectus shall have been amended or supplemented and copies
      thereof as so amended or supplemented, shall have been furnished to a Holder
      prior to the confirmation of any sales of Registrable Securities, such indemnity
      with respect to the Prospectus shall not inure to the benefit of such Holder
      if
      the Person asserting such loss, claim, damage or liability and who purchased
      the
      Registrable Securities from such holder did not, at or prior to the confirmation
      of the sale of the Registrable Securities to such Person, receive a copy of
      the
      Prospectus as so amended or supplemented and the untrue statement or omission
      of
      a material fact contained in the Prospectus was corrected in the Prospectus
      as
      so amended or supplemented.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (b) Indemnification
      by Holders of Registrable Securities.
      In
      connection with any Registration Statement in which a Holder is participating,
      each such Holder will furnish to the Company in writing such information with
      respect to the name and address of such Holder and such other information as
      may
      be reasonably required for use in connection with any such Registration
      Statement or Prospectus and agrees to indemnify, to the full extent permitted
      by
      law, the Company, its directors and officers and each Person who controls the
      Company (within the meaning of the Securities Act) against any losses, claims,
      damages, liabilities and expenses resulting from any untrue statement of a
      material fact in the Registration Statement or Prospectus or any amendment
      thereof or supplement thereto or necessary to make the statements therein not
      misleading, to the extent, but only to the extent, that such untrue or alleged
      untrue statement relates to any information with respect to such Holder so
      furnished in writing by such Holder specifically for inclusion in any Prospectus
      or Registration Statement; provided,
      however,
      that
      such Holder shall not be liable in any such case to the extent that prior to
      the
      filing of any such Registration Statement or Prospectus or amendment thereof
      or
      supplement thereto, such Holder has furnished in writing to the Company
      information expressly for use in such Registration Statement or Prospectus
      or
      any amendment thereof or supplement thereto which corrected or made not
      misleading information previously furnished to the Company. In no event shall
      the liability of any Selling Holder hereunder be greater in amount than the
      dollar amount of the proceeds received by such Selling Holder upon the sale
      of
      the Registrable Securities giving rise to such indemnification
      obligation.

    

    (c) Conduct
      of Indemnification Proceedings.
      Any
      Person entitled to indemnification hereunder agrees to give prompt written
      notice to the indemnifying party after the receipt by such Person of any written
      notice of the commencement of any action, suit, proceeding or investigation
      or
      threat thereof made in writing for which such Person will claim indemnification
      or contribution pursuant to the provisions hereof and, unless in the judgment
      of
      counsel of such indemnified party a conflict of interest may exist between
      such
      indemnified party and the indemnifying party with respect to such claim, permit
      the indemnifying party to assume the defense of such claim. Whether or not
      such
      defense is assumed by the indemnifying party, the indemnifying party will not
      be
      subject to any liability for any settlement made without its consent (but such
      consent will not be unreasonably withheld). No indemnifying party will consent
      to entry of any judgment or enter into any settlement which does not include
      as
      an unconditional term thereof the giving by the claimant or plaintiff to such
      indemnified party of a release from all liability in respect of such claim
      or
      litigation. If the indemnifying party is not entitled to, or elects not to,
      assume the defense of a claim, it will not be obligated to pay the fees and
      expenses of more than one counsel (plus such local counsel, if any, as may
      be
      reasonably required in other jurisdictions) with respect to such claim, unless
      in the judgment of any indemnified party a conflict of interest may exist
      between such indemnified party and any other of such indemnified parties with
      respect to such claim, in which event the indemnifying party shall be obligated
      to pay the fees and expenses of such additional counsel or counsels. For the
      purposes of this Section 5(c), the term “conflict of interest” shall mean that
      there are one or more legal defenses available to the indemnified party that
      are
      different from or additional to those available to the indemnifying party or
      such other indemnified parties, as applicable, which different or additional
      defenses make joint representation inappropriate.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    (d) Contribution.
      If the
      indemnification from the indemnifying party provided for in this Section 5
      is
      unavailable to an indemnified party hereunder in respect of any losses, claims,
      damages, liabilities or expenses referred to therein, then the indemnifying
      party, in lieu of indemnifying such indemnified party, shall contribute to
      the
      amount paid or payable by such indemnified party as a result of such losses,
      claims, damages, liabilities or expenses in such proportion as is appropriate
      to
      reflect the relative fault of the indemnifying party and indemnified parties
      in
      connection with the actions which resulted in such losses, claims, damages,
      liabilities or expenses, as well as any other relevant equitable considerations.
      The relative fault of such indemnifying party and indemnified parties shall
      be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact, has been
      made by, or relates to information supplied by, such indemnifying party or
      indemnified parties, and the parties intent, knowledge, access to information
      and opportunity to correct or prevent such action. The amount paid or payable
      by
      a party as a result of the losses, claims, damages, liabilities and expenses
      referred to above shall be deemed to include, subject to the limitations set
      forth in Section 5(c), any reasonable legal or other fees or expenses reasonably
      incurred by such party in connection with any investigation or proceeding.
      No
      Person guilty of fraudulent misrepresentation (within the meaning of Section
      11(f) of the Securities Act) shall be entitled to contribution from any person
      who was not guilty of such fraudulent misrepresentation.

    

    (e) If
      indemnification is available under this Section 5, the indemnifying parties
      shall indemnity each indemnified party to the full extent provided in Sections
      5(a) and (b) without regard to the relative fault of said indemnifying party
      or
      indemnified party or any other equitable consideration provided for in this
      Section 5.

    

    6. Transfer
      of Rights.

    

    The
      rights to cause the Company to register Registrable Securities granted pursuant
      to the provisions hereof may be transferred or assigned by any Holder to a
      transferee or assignee; provided;
      however,
      that
      the transferee or assignee of such rights assumes the obligations of such
      transferor or assignor, as the case may be, hereunder.

    

    7. Amendment

    

    Except
      as
      otherwise provided herein, the provisions hereof may not be amended, modified
      or
      supplemented, and waivers or consents to departures from the provisions hereof
      may not be given unless the Company has obtained the written consent of Holders
      of at least a majority of the aggregate number of the Registrable Securities
      then outstanding.

    

    
      
        
        

      

      
        -8-

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