Document:

Exhibit 10.27

    
      

    

     

    Exhibit
      10.27

     

     

    

      

      
        FORM
          OF

        SUBSCRIPTION
          AGREEMENT

        

        Smart
          Online, Inc.

        2530
          Meridian Parkway

        2nd
          Floor

        Durham,
          North Carolina 27713 

        Attention:
          Michael Nouri

        

        Gentlemen:

        

        (1)    Pursuant
          to prior understandings and discussions, the undersigned (“Subscriber”) hereby
          agrees to purchase from Smart Online, a Delaware corporation (the “Company”),
          for a purchase price of Five Dollars and Fifty Cents ($5.50) per share
          the
          number of shares of Common Stock, par value $0.001 per share (“Common Stock”)
          set forth on the signature page of this Agreement. (The Common Stock is
          sometimes hereinafter referred to collectively as the “Securities.”) Subscriber
          hereby acknowledges (i) that this subscription shall not be deemed to have
          been
          accepted by the Company until the Company indicates its acceptance by returning
          to Subscriber an executed copy of this subscription, and (ii) that acceptance
          by
          the Company of this subscription is conditioned upon the information and
          representations of Subscriber hereunder being complete, true and correct
          as of
          the date of this subscription and as of the date of closing of sale of
          the
          Securities to Subscriber. As a condition to Subscriber’s purchase of the
          Securities pursuant to this Agreement, Subscriber and the Company will
          execute
          and deliver to one another a copy of the Registration Rights Agreement
          in
          substantially the form attached hereto as Appendix
          A
          (the
“Registration Rights Agreement”) and a Dribble Out Agreement in the form
          attached hereto as Appendix
          B
          (the
“Dribble Out Agreement”).

        

        (2)    Until
          actual delivery of the purchase price to the Company and acceptance by
          the
          Company of the purchase price and this Subscription Agreement, the Company
          shall
          have no obligation to Subscriber. The Company may revoke a prior acceptance
          of
          this Subscription Agreement at any time prior to delivery to and acceptance
          by
          the Company of the purchase price for the Securities.

        

        (3)    Subscriber
          hereby represents and warrants to the Company as follows:

        

        (a)    Disclosure.
          Subscriber has carefully reviewed the Summary Private Placement Memorandum
          and
          Draft Registration Statement, including financial information, provided
          by the
          Company, including all risk factors, and fully understands all risks associated
          with investment in the Company, including, without limitation, the risks
          posed
          by prior disclosures made by the company to its shareholders and investors
          in
          connection with a reorganization and private placement, and the remedies
          such
          shareholders have, including the company’s planned rescission
          offer.

        

        (b)    Authorization.
          Subscriber has full power and authority to enter into this Agreement. This
          Agreement constitutes Subscriber’s valid and legally binding obligation,
          enforceable in accordance with its terms except as limited by (i) applicable
          bankruptcy, insolvency, receivership, reorganization, moratorium and other
          laws
          of general application affecting enforcement of creditors’ rights generally, and
          (ii) general principals of equity, the application of which may deny the
          Company
          the right to specific performance, injunctive relief and other equitable
          remedies.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (c)    Experience.
          Subscriber is experienced in evaluating and investing in private placement
          transactions of securities of technology companies such as the Company,
          has such
          knowledge and experience in financial and business matters that Subscriber
          is
          capable of evaluating the merits and risks of Subscriber’s investment in the
          Securities, is able to bear the economic risk of the investment and is
          prepared
          to hold the shares for an indefinite period of time.

        

        (d)    Investment.
          Subscriber is acquiring the Securities for investment for Subscriber’s own
          account and not with a view to, or for resale in connection with, any
          distribution thereof, and Subscriber has no present intention of selling
          or
          distributing the Securities. Subscriber does not have any contract, undertaking,
          agreement or arrangement with any person to sell, transfer or grant
          participation to such person or to any third person with respect to any
          of the
          Securities other than as set forth in this Agreement. Subscriber understands
          that the Securities to be purchased by Subscriber have not been registered
          under
          the Securities Act of 1933, as amended (the “Act”) by reason of a specific
          exemption from the registration provisions of the Act which depends upon,
          among
          other things, the bona fide nature of the investment intent as expressed
          herein.

        

        (e)    Reliance
          Upon Subscriber Representations.
          Subscriber understands that the Securities are not registered under the
          Act on
          the grounds that the sale provided for in this Agreement and the issuance
          of
          Securities hereunder is being made in reliance upon an exemption from the
          registration requirements of the Act pursuant to Section 4(2) thereof as
          a
          transaction by an issuer of Securities not involving a public offering
          or
          pursuant to Section 4(6) thereof as a transaction by an issuer of securities
          solely to accredited investors, and is similarly exempt under applicable
          state
          securities laws, and that the Company’s reliance on such exemption is predicated
          on Subscriber’s representations as set forth in this Agreement. 

        

        (f)    Restricted
          Securities.
          Subscriber acknowledges that the Securities have not been registered under
          the
          Act or any applicable state securities law and that the Securities may
          not be
          sold, assigned, pledged, hypothecated or transferred, unless there exists
          an
          effective registration statement therefor under the Act and all applicable
          state
          securities laws or the Company has received an opinion of counsel, reasonably
          acceptable to counsel for the Company, or other reasonable assurances,
          that such
          sale, assignment, pledge, hypothecation or transfer is exempt from registration.
          Subscriber understands that in the absence of an effective registration
          statement covering the Securities or an exemption therefrom under the Act
          and
          all applicable state securities laws, the Securities must be held indefinitely.
          In particular, Subscriber is aware that the Securities may not be sold
          pursuant
          to Rule 144 promulgated under the Act, unless all conditions of Rule 144
          are
          met. Among the conditions for the use of Rule 144 may be the availability
          of
          current and adequate information to the public about the Company. Such
          information is not now available and, except as set forth in the Registration
          Rights Agreement, the Company has no obligation to make such information
          available. Notwithstanding the foregoing, no opinion of counsel shall be
          required by the Company in connection with the transfer of the Securities
          to an
          entity that is a direct or indirect wholly-owned subsidiary of Subscriber.
          

        
          
            
            

          

          
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        (g)    Legends.
          

        

        (i)    Each
          certificate representing the Securities shall, in addition to any legends
          required elsewhere, bear the following legend as appropriate for stock
          certificates and warrant agreements: 

        

        THE
          SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAW AND
          MAY
          NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR TRANSFERRED UNLESS THERE
          EXISTS
          AN EFFECTIVE REGISTRATION STATEMENT THEREFOR UNDER THE SECURITIES ACT OF
          1933,
          AS AMENDED, AND ALL APPLICABLE STATE SECURITIES LAWS OR THE ISSUER HEREOF
          HAS
          RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL OF THE
          ISSUER, THAT SUCH SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR TRANSFER IS
          EXEMPT
          FROM REGISTRATION.

        

        (ii)    Each
          certificate representing Securities shall also bear any legend required
          by any
          applicable state securities law or by any other agreement to which the
          holder
          thereof is a party or by which the holder thereof is bound.

        

        (h)    No
          Public Market.
          Subscriber understands that no public market now exists for any of the
          securities issued by the Company and that it is uncertain whether a public
          market will ever exist for the Securities.

        

        (i)     Access
          to Information.
          Subscriber has received all information that Subscriber considers necessary
          or
          appropriate for deciding whether to purchase Securities. Subscriber has
          had an
          opportunity to ask questions and receive answers from the Company’s management
          regarding the terms and conditions of the offering of the Securities and
          the
          business, properties, prospects and financial condition of the Company
          and to
          obtain additional information from the Company (to the extent that the
          Company
          possessed such information or could acquire it without unreasonable effort
          or
          expense) necessary to verify the accuracy of any information furnished
          to
          Subscriber or to which Subscriber had access.

        

        (j)    Accredited
          Investor.
          Subscriber
          recognizes it is important under the Act and state securities law that
          the
          Company determine if potential investors are “accredited investors,” as defined
          in Appendix
          C
          attached
          hereto. Subscriber represents that Subscriber is an “accredited investor” by
          reason of the following: _________________________________________ (Insert
          Item
          Number from Appendix C). Subscriber further represents that Subscriber
          is a
          citizen of the state of _______________. Subscriber is not a resident of
          any
          other jurisdiction.

        
          
            
            

          

          
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        (4)    The
          representations, warranties, understandings, acknowledgments and agreements
          in
          this Agreement are true and accurate as of the date hereof, shall be true
          and
          accurate as of the date of the acceptance hereof by the Company and shall
          survive thereafter.

        

        (5)    This
          Agreement shall be enforced, governed and construed in all respects in
          accordance with the laws of the State of Delaware, as such laws are applied
          by
          Delaware courts to agreements entered into and to be performed in Delaware,
          and
          shall be binding upon Subscriber, the Subscriber’s heirs, estate, legal
          representatives, successors and assigns and shall inure to the benefit
          of the
          Company and its successors and assigns.

        

        (6)    Subscriber
          agrees not to transfer or assign this Agreement, or any of Subscriber’s interest
          herein, without the express written consent of the Company.

        

        (7)    This
          Agreement constitutes the entire agreement among the parties hereto with
          respect
          to the subject matter hereof and supersedes any and all prior or contemporaneous
          representations, warranties, agreements and understandings in connection
          therewith. This Agreement may be amended only by a writing executed by
          all
          parties hereto. This Agreement may be executed in one or more
          counterparts.

        

        (The
          remainder of this page is intentionally left blank.)

        
          
            
            

          

          
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        IN
          WITNESS WHEREOF, Subscriber has executed this Subscription Agreement this
          ____
          day of ___________, 2005.

        

        
          	 	
                  SUBSCRIPTION

                
	 	 
	 	
                  Number
                    of Shares of Common Stock

                
	 	 
	 	
                  Total
                    payment enclosed 

                
	 	 
	 	 
	 	 
	 	
                  __________________________________

                
	 	
                  By:
                    

                

        

        

        

        Address:
          ____________________________

        

        ____________________________

        

        

        

        _______________________

        Social
          Security Number

        

        

        

        ACCEPTANCE

        

        The
          foregoing Subscription Agreement is accepted on this the ____ day of
          ____________, 2005.

        

        
          	
                   

                	
                  SMART
                    ONLINE, INC.

                
	 	 
	 	 
	
                   

                	
                  By:
                    ___________________________

                
	 	
                  Michael
                    Nouri, President 

                

        

        

        

        

        
 

         

         

         

        
          5Exhibit 10.28

    
      

    

     

    Exhibit
      10.28

     

     

    

    FORM
      OF

    DRIBBLE
      OUT AGREEMENT

    

    

    AGREEMENT
      dated as of ________________, 2005 between Smart Online, Inc., Delaware
      corporation (the “Company”), and _______________ (“Subscriber”).

    

    WHEREAS,
      Subscriber has purchased shares of Common Stock (the “Purchased Shares”) from
      the Company and the Company desires Subscriber to agree to limit its sales
      of
      the Purchased Shares in return for granting Subscriber the right to have the
      Purchased Shares registered. The Purchased Shares are hereinafter individually
      and collectively referred to as the “Securities”).

    

    NOW,
      THEREFORE, the parties hereby agree as follows:

    

    (1)    Registration
      of Shares.
      The
      Company agrees to enter into the Registration Rights Agreement with
      Subscriber.

    

    (2)    “Dribble-Out”
      Agreement.
      

    

    (a)    In
      consideration for the Registration Rights Agreement, Subscriber hereby agrees
      that, except as permitted under subsection (c) of this Section, during the
      Dribble Out Period, as defined herein, Subscriber will not:

    

    (i)    Sell
      any
      of the Securities or other securities of the Company or Holding Company received
      on account of ownership of the Securities (the “Dribble-Out
      Securities”).

    

    (ii)    Transfer,
      assign or otherwise dispose of any of the Dribble-Out Securities.

    

    (iii)    Pledge,
      hypothecate or otherwise create a lien on any of the Lock-Up
      Securities.

    

    (iv)    Loan
      to
      any person or entity any shares or other securities of the Company or Holding
      Company.

    

    (v)    Sell
      short any shares or other securities of the Company or Holding
      Company.

    

    (vi)    Acquire
      a
      put option or grant a call option with respect to any shares or other securities
      of the Company or Holding Company.

    

    (vii)    Enter
      into any agreement concerning any of the foregoing transactions, or otherwise
      facilitate any other person conducting any of the foregoing
      transactions.

    

    (b)    For
      purposes of this Section, Holding Company shall mean any company whose stock
      is
      publicly traded (i) with which the Company merges or consolidates or (ii) of
      which 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      (b)    For
        purposes of this Section, Holding Company shall mean any company whose stock
        is
        publicly traded (i) with which the Company merges or consolidates or (ii)
        of
        which the
        Company or its successor becomes a subsidiary. For purposes of this Section,
        the
        Dribble Out Period shall mean the period beginning on the date of this Agreement
        and ending six (6) months after the effective date of the first registration
        statement of the Company that registers for resale the Dribble-Out Securities
        (the “Effective Date”). Notwithstanding the foregoing, after the Effective Date
        Subscriber may sell (if permitted under a registration statement), during
        any
        rolling thirty-day period during the Dribble Out Period, up to 25% of the
        Dribble-Out Securities owned by Subscriber on the Effective Date. The Board
        of
        Directors of the Company or Holding Company may terminate the Dribble Out
        Period
        or allow Subscriber to take a prohibited action prior to termination of the
        Dribble Out Period with respect to some or all of the Dribble-Out Securities
        owned by the Subscriber, if the Board provides all other Subscribers of the
        Company or Holding Company who have the same Dribble Out Period with the
        same
        termination or waiver at the same time and to the same extent as for
        Subscriber.

    

    

    (c)    Notwithstanding
      the foregoing, provided the transferee first signs an agreement on substantially
      the terms set forth herein and reasonably acceptable to the Company or Holding
      Company, Subscriber may transfer securities of the Company or Holding Company
      without payment or other consideration: (i) if Subscriber is an individual,
      to
      any family member, (ii) if Subscriber is a corporation, to any direct or
      indirect parent or subsidiary or any shareholder of Subscriber, (iii) if
      Subscriber is a partnership, to any partner of Subscriber, (iv) if Subscriber
      is
      a limited liability company, to any member of Subscriber, and (v) if Subscriber
      is a trust, to any beneficiary of such trust.

    

    (d)    Subscriber
      further agrees that before and after termination of the Dribble Out Period,
      Subscriber will comply with all securities laws, rules and regulations when
      purchasing or reselling securities of the Company or Holding Company, including,
      without limitation, those prohibiting sales and purchases of securities while
      in
      possession of material nonpublic information.

    

    (e)    The
      Dribble-Out Securities of Subscriber shall have a legend in form and substance
      acceptable to the Company and Holding Company referring to the restrictions
      of
      this Agreement and the Company or Holding Company may instruct the transfer
      agent of the Company or Holding Company to stop any transfer of any securities
      in violation of this Agreement and may take any other action required to avoid
      violation of this Agreement, including, without limitation, obtaining an
      injunction.

    

    (f)    The
      provisions of this Section shall continue in effect after the Dribble-Out
      Securities are registered pursuant to the Registration Rights
      Agreement.

    

    (g)    Stop
      Transfer Instructions.
      Subscriber agrees that the Company may issue instructions to its transfer agent
      that prohibit transfer in violation of this Agreement.

    

    (h)    Legends.
      The
      Company may place a legend on the Dribble Out Securities referring to the
      restrictions contained in this Agreement.

    

    (3)    The
      representations, warranties, understandings, acknowledgments and agreements
      in
      this Agreement are true and accurate as of the date hereof, shall be true and
      accurate as of the date of the acceptance hereof by the Company and shall
      survive thereafter.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    

    

    (4)    This
      Agreement shall be enforced, governed and construed in all respects in
      accordance with the laws of the State of Delaware, as such laws are applied
      by
      Delaware courts to agreements entered into and to be performed in Delaware,
      and
      shall be binding upon Subscriber, the Subscriber’s heirs, estate, legal
      representatives, successors and assigns and shall inure to the benefit of the
      Company and its successors and assigns.

    

    (5)    Subscriber
      agrees not to transfer or assign this Agreement, or any of Subscriber’s interest
      herein, without the express written consent of the Company.

    

    (6)    This
      Agreement constitutes the entire agreement among the parties hereto with respect
      to the subject matter hereof and supersedes any and all prior or contemporaneous
      representations, warranties, agreements and understandings in connection
      therewith. This Agreement may be amended only by a writing executed by all
      parties hereto. This Agreement may be executed in one or more
      counterparts.

    

    (The
      remainder of this page is intentionally left blank.)

    

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      written above.

    

    

    
      	
              SMART
                ONLINE, INC.

            	 
	 	 
	 	 
	
              By:
                ______________________

            	
              By:
                __________________________

            
	
              Michael
                Nouri, President 

            	
              Name:

            
	 	 
	 	
              Address:
                ______________________

            
	 	
              ______________________

            
	 	 

    

    

    

     

     

     

     

     

     

     

    4

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