Document:

United States Securities and Exchange Commission EDGAR Filing

EXHIBIT 4.1

PC UNIVERSE, INC.

2007 STOCK INCENTIVE PLAN

1.

Purpose.  The purpose of this 2007 Stock Incentive Plan (the “Plan”) is to further the interests of PC Universe, Inc., a Nevada corporation (the "Company") by stimulating the efforts of employees who are selected to participate in the Plan, aligning the long term interests of participants with those of the Company's shareholders, and assisting the Company in attracting and retaining key employees.  The Plan permits the grant of stock options, restricted stock, restricted stock units and other forms of stock-based compensation to selected persons providing services to the Company (including non-employee directors).

2.

Definitions.  The following definitions will apply to the Plan:

“Award” means, individually or collectively, a stock option (whether an Incentive Stock Option or Nonqualified Stock Option), restricted stock or restricted stock unit that is granted under the Plan.

“Board” means the board of directors of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the committee appointed by the Board to administer the Plan or, if the Board does not appoint a Committee, “Committee” means the Board.

“Common Stock” means the Common Stock, par value $.001 per share, of the Company, or such other class of shares or securities as to which the Plan may be applicable pursuant to Section 9 of the Plan.

“Company” means PC Universe, Inc. and its Subsidiaries (if any).

“Date of Grant” means the date on or as of which an Award is granted, as specified by the Committee.

“Disability” means “disability” as defined in the Company’s long term disability plan or policy.

“Eligible Person” means any person who performs services for the Company, whether as a director, officer, Employee, consultant or other independent contractor.

“Employee” means any person employed on an hourly or salaried basis by the Company.

“Fair Market Value” means, with respect to the Common Stock, (i) if the Common Stock is listed for trading on a national securities exchange, the closing sale price, regular way, of the Common Stock on the principal national securities exchange on 

which the Common Stock is listed for trading on the trading day next preceding the date as of which Fair Market Value is being determined, or if no sale is reported on such date, the average of the closing bid and asked prices of the Common Stock on such exchange on such date, (ii) if the Common Stock is not listed for trading on any national securities exchange but is listed or quoted on the NASDAQ Stock Market or other interdealer electronic quotation service, the closing sale price of the Common Stock on the trading day next preceding the date as of which Fair Market Value is being determined as reported in NASDAQ or other quotation service, as the case may be, or if no sale is reported on such date, the average of the closing bid and asked prices of the Common Stock on such day as reported in NASDAQ or other quotation service, as the case may be, and (iii) if the Common Stock is not publicly traded on the date as of which Fair Market Value is being determined, Fair Market Value shall be as determined by the Board, using such factors as the Board considers relevant, such as the price at which recent sales have been made, the book value of the Common Stock, and the Company’s current and projected earnings.

“Incentive Stock Option” means a stock option, granted pursuant to this Plan or any other Company plan, that satisfies the requirements of Section 422 of the Code and that entitles the Recipient to purchase stock of the Company.

“Nonqualified Stock Option” means a stock option, granted pursuant to the Plan, that is not an Incentive Stock Option and that entitles the Recipient to purchase stock of the Company.

“Option” means an Incentive Stock Option or a Nonqualified Stock Option.

“Option Agreement” means a written agreement, between the Company and a Recipient, that sets out the terms and restrictions of an Option Award.

“Option Shareholder” means an Employee who has acquired Shares upon exercise of an Option.

“Option Shares” means Shares that a Recipient receives upon exercise of an Option.

“Period of Restriction” means the period beginning on the Date of Grant of a Restricted Stock or Restricted Stock Unit Award and ending on the date on which all restrictions applicable to the Shares or Restricted Stock Units subject to such Award expire.

“Plan” means this PC Universe, Inc. 2007 Stock Incentive Plan, as amended from time to time.

“Recipient” means an individual who receives an Award.

“Restricted Stock” means an Award granted pursuant to Section 7 of the Plan 

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consisting of Shares subject to such terms and restrictions as shall be established by the Committee.

"Restricted Stock Unit" means an Award granted pursuant to Section 7 of the Plan consisting of the right to receive one Share subject to, and upon satisfaction of, such vesting and other criteria, and subject to such restrictions on transfer and other terms and restrictions, as shall be established by the Committee.

“Share” means a share of the Common Stock, as adjusted in accordance with Section 9 of the Plan.

“Subsidiary” means any corporation 50 percent or more of the voting securities of which are owned directly or indirectly by the Company at any time during the existence of the Plan.

“Unvested Shares” means Shares issued upon exercise of an Option, or Shares issuable pursuant to the terms of Restricted Stock Unit Awards, which shall be subject to the provisions of Section 7 and shall otherwise be subject to such terms and restrictions as shall be established by the Committee.

3.

Administration.  The Committee will administer the Plan. The Committee shall consist of a minimum of two and a maximum of five members of the Board of Directors, each of whom shall be a “non-employee director” within the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as amended, or any future corresponding rule, except that the failure of the Compensation Committee for any reason to be composed solely of non-employee directors shall not prevent an Award from being considered granted under this Plan. The Committee has the exclusive power to select the Recipients of Awards pursuant to the Plan, to establish the terms of the Awards granted to each Recipient, and to make all other determinations necessary or advisable under the Plan.  The Committee has the sole discretion to determine whether the performance of an Eligible Person warrants an Award under the Plan, and to determine the size and type of the Award.  The Committee, in the exercise of its powers, may correct any defect or supply any omission, or reconcile any inconsistency in the Plan, or in any Agreement, in the manner and to the extent it deems necessary or expedient to make the Plan fully effective.  The Committee also has the power to determine the duration and purposes of leaves of absence which may be granted to a Recipient without constituting a termination of the Recipient’s employment for purposes of the Plan.  Any of the Committee’s determinations will be final and binding on all persons. The Committee shall have the right to construe the Plan and the Awards granted pursuant thereto, to correct defects and omissions and to reconcile inconsistencies to the extent necessary to effectuate the Plan and the Awards granted pursuant thereto, and such action shall be final, binding and conclusive upon all parties concerned.  No member of the Committee shall be liable for any act or omission (whether or not negligent) taken or omitted in good faith, or for the exercise of an authority or discretion granted in connection with the Plan to a Committee, or for the acts or omissions of any other members of a Committee.  Subject to the numerical limitations on Committee membership set forth herein, the Board of Directors may at any time appoint additional members of the Committee and may at any time remove any member of the Committee with or without cause.  Vacancies in the Committee, 

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however caused, may be filled by the Board of Directors, if it so desires.

4.

Shares Subject to Plan.  Subject to the readjustment provisions of Section 9 of the Plan, the maximum aggregate number of Shares that may be issued and delivered under the Plan is 4.0 million.  If an Award expires, lapses, terminates or becomes unexercisable, in whole or in part, the unissued Shares subject to such Award will be available for other Awards under the Plan.  Shares issued pursuant to Awards of Restricted Stock which are forfeited by the Recipient and Shares which the Company refrains from issuing for purposes of satisfying Withholding Requirements will be available for other Awards under the Plan. Reacquired Shares may also be used to grant Awards under this Plan.

5.

Eligibility. Any Eligible Person that the Committee in its sole discretion designates is eligible to receive an Award under the Plan.  All officers, directors and key employees of and important consultants and/or advisors to the Company and of or to any present or future Company parent or subsidiary corporation are eligible to receive Awards under this Plan. Only an Employee may receive an Incentive Stock Option.  The Committee’s grant of an Award to a Recipient in any year does not entitle the Recipient to an Award in any other year.  Furthermore, the Committee may grant different types of Awards to different Recipients.  The Committee may consider such factors as it deems pertinent in selecting Recipients and in determining the types and sizes of their Awards. Recipients may include persons who previously received stock, stock options, or other benefits under the Plan or another plan of the Company or a Subsidiary, whether or not the previously granted benefits have been fully exercised or vested.  An Award will not enlarge or otherwise affect a Recipient’s right, if any, to continue to serve the Company and its Subsidiaries in any capacity, and will not restrict the right of the Company or a Subsidiary to terminate at any time the Recipient’s employment. No non-employee director may receive Awards under this Plan which in the aggregate equal more than 20% of the total number of shares of Common Stock authorized for issuance under this Plan and no officer, employee or consultant may receive Awards under this Plan which in the aggregate equals more than 60% of the total number of shares of Common Stock authorized for issuance under this Plan.

6.

Options.  The Committee may grant Options to Recipients in such amounts as the Committee determines in its sole discretion.  An Option may be in the form of an Incentive Stock Option or a Nonqualified Stock Option.  The Committee may grant an Option alone or in addition to another Award.  Each Option will satisfy the following requirements:

(a)

Written Agreement.  Each Option granted to a Recipient will be evidenced by an Option Agreement.  The terms of the Option Agreement need not be identical for different Recipients.  The Option Agreement will contain such provisions as the Committee deems appropriate and will include a description of the substance of each of the requirements in this Section 6.

(b)

Number of Shares.  Each Option Agreement will specify the number of Shares that the Recipient may purchase upon exercise of the Option.

(c)

Exercise Price.  Except as provided in subsection 6(l) of the Plan, the exercise price of each Share subject to an Incentive Stock Option will equal the exercise 

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price designated by the Committee, but will not be less than the Fair Market Value on the Date of Grant.  The exercise price of each Share subject to a Nonqualified Stock Option will equal the exercise price designated by the Committee.

(d)

Duration of Option.  Except as otherwise provided in this Section 6, an Option will expire on the earlier of the tenth anniversary of the Date of Grant or the date set by the Committee on the Date of Grant.

(e)

Vesting of Option; Exercise for Unvested Shares.  Each Option Agreement will specify the vesting schedule applicable to the Option.  The Committee, in its sole discretion, may accelerate the vesting of any Option at any time, and may provide that any Option may be exercised for Unvested Shares.  Unless otherwise provided by the Committee in the terms of an Award, an unexercised Option that is not fully vested will become fully vested, and the restrictions applicable to Unvested Shares shall terminate, if the Recipient of the Option or the Unvested Shares, as the case may be, dies or terminates employment with the Company because of Disability.

(f)

Death.  If a Recipient dies, an Option granted to the Recipient will expire on the one-year anniversary of the Recipient’s death, or if earlier, the original expiration date of the Option.

(g)

Disability.  If the Recipient terminates employment with the Company because of his Disability, an Option granted to the Recipient will expire on the one year anniversary of the Recipient’s last day of employment, or, if earlier, the original expiration date of the Option.

(h)

Retirement or Involuntary Termination.  If the Recipient terminates employment with the Company as a result of his retirement in accordance with the Company’s normal retirement policies, or if the Company terminates the Recipient’s employment other than for Cause, (i) an Incentive Stock Option granted to the Recipient will expire 90 days following the last day of the Recipient’s employment, or, if earlier, the original expiration date of the Option, unless the Committee sets an earlier expiration date on the Date of Grant, and (ii) a Nonqualified Stock Option granted to the Recipient will expire 180 days following the last day of the Recipient’s employment, or, if earlier, the original expiration date of the Option, unless the Committee sets an earlier or later expiration date on the Date of Grant or a later expiration date subsequent to the Date of Grant but prior to 180 days following the Recipient’s last day of employment.

(i)

Termination of Service.  If the Recipient’s employment with the Company terminates for any reason other than the reasons described in subsections 6(f), (g), (h), or (j) of the Plan, an Option granted to the Recipient will expire 30 days following the last day of the Recipient’s employment with the Company, or, if earlier, the original expiration date of the Option, unless the Committee sets an earlier or later expiration date on the Date of Grant or a later expiration date subsequent to the Date of Grant but prior to the 30th day following the Recipient’s last day of employment.  The Committee may not delay the expiration of an Incentive Stock Option more than 90 days after termination of 

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the Recipient’s employment.  During any delay of the expiration date, the Option will be exercisable only to the extent it is exercisable on the date the Recipient’s employment terminates, subject to any adjustment under Section 9 of the Plan.

(j)

Suspension or Termination of Options.  Notwithstanding any provisions set forth in the Plan, if at any time (including after a notice of exercise has been delivered) the Committee reasonably believes that a Recipient has committed an act of misconduct as described in this paragraph, the Committee may suspect the Recipient's right to exercise any Option pending a determination of whether the Recipient committed an act of misconduct.  If the Committee determines that a Recipient has committed na act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company, breach of fiduciary duty or deliberate disregard of Company rules resulting in loss, damage or injury to the Company, or if a Recipient makes an unauthorized disclose of any Company trade secret or confidential information, engages in any conduct constituting unfair competition, or induces any customer to breach any contract with the Company, neither the Recipient nor his or her estate shall be entitled to exercise any Option whatsoever.  Any determination by the Committee shall be final, conclusive and binding on all parties.  For any Recipient who is an officer of the Company, the determination of the Committee shall be subject to the approval of the Board.

(k)

Conditions Required for Exercise.  An Option is exercisable only to the extent it is vested according to the terms of the Option Agreement, unless the Committee has provided that the Option may be exercised for Unvested Shares.  Furthermore, an Option is exercisable only if the issuance of Shares upon exercise would comply with applicable securities laws.  Each Agreement will specify any additional conditions required for the exercise of the Option.

(l)

Ten Percent Shareholders.  An Incentive Stock Option granted to an individual who, on the Date of Grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of either the Company or any parent or Subsidiary, will have an exercise price of 110 percent of Fair Market Value on the Date of Grant and will be exercisable only during the five-year period immediately following the Date of Grant.  For purposes of calculating stock ownership of any person, the attribution rules of Code Section 424(d) will apply, and any stock that such person may purchase under outstanding options will not be considered.

(m)

Maximum Option Grants.  The aggregate Fair Market Value, determined on the Date of Grant, of Shares with respect to which any Incentive Stock Options under the Plan and all other plans of the Company or its Subsidiaries become exercisable by any individual for the first time in any calendar year will not exceed $100,000.

(n)

Method of Exercise.  An Option will be deemed exercised when the person entitled to exercise the Option (i) delivers written notice to the President of the Company (or his delegate, in his absence) of the decision to exercise, (ii) concurrently tenders to the Company full payment for the Shares to be purchased pursuant to the exercise, and (iii) complies with such other reasonable requirements as the Committee 

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establishes pursuant to Section 8 of the Plan.  Payment for Shares with respect to which an Option is exercised may be made (i) in cash, (ii) by certified check, (iii) if permitted by the Company, in the form of Common Stock having a Fair Market Value equal to the exercise price, or (iv) by delivery of a notice instructing the Company to deliver the Shares to a broker subject to the broker’s delivery of cash to the Company equal to the exercise price.  No person will have the rights of a shareholder with respect to Shares subject to an Option granted under the Plan until all conditions to the issuance and delivery of the Shares have been satisfied to the Company's satisfaction and the Company has delivered the Shares to or to the order of the Recipient (which may be accomplished by physical delivery of a certificate or certificates for the Shares, by electronic or other book entry transfer or in such other manner as the Committee may determine).  A partial exercise of an Option will not affect the holder’s right to exercise the remainder of the Option from time to time in accordance with the Plan.

(o)

Designation of Beneficiary.  Each Recipient may file with the Company a written designation of a beneficiary to receive the Recipient’s Options in the event of the Recipient’s death prior to full exercise of such Options.  If the Recipient does not designate a beneficiary, or if the designated beneficiary does not survive the Recipient, the Recipient’s estate will be his beneficiary.  Recipients may, by written notice to the Company, change a beneficiary designation.

(p)

Transferability of Option.  To the extent permitted by tax, securities or other applicable laws to which the Company, the Plan, Recipients or Eligible Persons are subject, and unless provided otherwise by the Committee on the Date of Grant, a Recipient may transfer a Nonqualified Stock Option to (i) the Recipient’s spouse, child, stepchild, grandchild, parent, stepparent, grandparent, or sibling, (ii) a trust for the benefit of any of the foregoing, or (iii) a partnership whose partners consist solely of two or more of the Recipient, the Recipient’s spouse, child, stepchild, grandchild, parent, stepparent, grandparent, or sibling.  An Incentive Stock Option may not be transferred except by will or the laws of descent and distribution.  During the lifetime of the Recipient, all rights of the Incentive Stock Option are exercisable only by the Recipient.

(q)   Neither the Company nor any of its current or future parent, subsidiaries or affiliates, nor their officers, directors, shareholders, stock option plan committees, employees or agents shall have any liability to any optionee in the event: (i) an option granted pursuant to this Plan does not qualify as an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder; (ii) any optionee does not obtain the tax treatment pertaining to an “Incentive Stock Option;” or (iii) any option granted pursuant to this Plan hereof is an “Incentive Stock Option.”

7. 

Restricted Stock and Restricted Stock Units.  The Committee may grant Awards of Restricted Stock or Restricted Stock Units to Recipients in such amounts as the Committee determines in its sole discretion.  The Committee may grant Awards of Restricted Stock or Restricted Stock Units alone or in addition to another Award.  Each Restricted Stock or Restricted Stock Unit Award granted to a Recipient will satisfy the following requirements:

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(a)

Written Agreement. Each Award will be evidenced by a written agreement, the terms of which need not be identical for each Recipient.  The agreement will specify the Period(s) of Restriction and will include a description of the substance of each of the requirements in this Section 7 and will contain such provisions as the Committee deems appropriate.

(b)

Number of Shares or Restricted Stock Units.  Each agreement will specify the number of Shares of Restricted Stock and Restricted Stock Units granted to the Recipient.

(c)

Transferability.  Shares of Restricted Stock and Restricted Stock Units may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the end of the applicable Period of Restriction, or upon earlier satisfaction of any other conditions, as specified in the agreement with respect to the particular Award.

(d)

Other Restrictions.  The Committee may impose on Shares of Restricted Stock and Restricted Stock Units any other restrictions that the Committee deems advisable, including, without limitation, vesting restrictions, restrictions based upon the achievement of specific Company-wide, Subsidiary, or individual performance goals, and/or restrictions under applicable federal or state securities laws.  All such restrictions shall be set forth in the agreement with respect to the Award.  The Committee may also require that Recipients make cash payments at the time of grant or upon expiration of the Period of Restriction in an amount not less than the par value of the Shares of Restricted Stock or the Shares issued pursuant to Restricted Stock Units. 

(e)

Certificate Legend.  Each certificate representing Shares of Restricted Stock, if any, will bear the following legend: The sale or other transfer of the Shares represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the PC Universe, Inc. 2007 Stock Incentive Plan, and in an Agreement dated _____________. A copy of the Plan and the Agreement may be obtained from the Company.

(f)

Removal of Restrictions.  Upon expiration of the Period of Restrictions, except as otherwise set forth in the agreement with respect to any Award, (i) the restrictions on transferability of Shares of Restricted Stock and the risk of forfeiture set forth in subsection 7(k) hereof shall terminate, and any Recipient holding certificates representing Shares of Restricted Stock shall be entitled to receive a new certificate without the restrictive legend required by subsection 7(e) hereof, and (ii) the Company shall issue to the Recipient one Share for each Restricted Stock Unit as to which the Period of Restrictions has expired.

(g)

Voting Rights.  During the Period of Restriction, Recipients holding Restricted Stock may exercise full voting rights with respect to such Shares.  Recipients holding Restricted Stock Units will have no voting rights with respect to the Units or the Shares issuable with respect to such Units until such Shares are issued to the Recipient following expiration of the Period of Restriction. 

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(h)

Dividends and Other Distributions.  During the Period of Restriction, Recipients holding Restricted Stock will be entitled to receive all dividends and other distributions payable to the holders of the Common Stock generally.  If any such dividends or distributions are paid in Shares, such Shares will be subject to the same restrictions on transferability and risks of forfeiture as the Shares of Restricted Stock with respect to which they were paid.  If provided in the terms of an Award of Restricted Stock Units, if, during the Period of Restriction applicable to any Restricted Stock Units, the Company pays any cash dividends on the Common Stock, the Recipient shall receive a number of additional Restricted Stock Units, rounded down to the nearest whole number, equal to the quotient of (i) the number of Restricted Stock Units possessing Dividend Equivalent Rights held by the Recipient as of the record date for such dividend multiplied by the per share amount of the dividend, divided by (ii) the Fair Market Value of a share of Common Stock on the payment date of such dividend.  For purposes of the immediately preceding sentence, a Restricted Stock Unit will be deemed to possess "Dividend Equivalent Rights" only if, pursuant to the terms of the agreement under which such Restricted Stock Unit was granted, the Recipient is entitled to additional Restricted Stock Units in respect of such Restricted Stock Unit. 

(i)

Death.  The Period of Restrictions with respect to, and all other restrictions on, a Recipient’s Restricted Stock or Restricted Stock Units will terminate on the date of the Recipient’s death.

(j)

Disability.  If a Recipient terminates employment with the Company because of his total and permanent Disability, the Period of Restrictions with respect to, and all other restrictions on, the Recipient’s Restricted Stock or Restricted Stock Units will terminate  on the Recipient’s last day of employment.

(k)

Termination of Service.  If a Recipient ceases employment for any reason other than death or Disability, the Recipient will forfeit immediately to the Company all nonvested Restricted Stock and all Restricted Stock Units held by the Recipient.  The Committee may, in its sole discretion and upon such terms and conditions as it deems proper, provide for termination of the restrictions on Restricted Stock or Restricted Stock Units following termination of the Recipient's employment.

(l)

Designation of Beneficiary.  Each Recipient may file with the Company a written designation of a beneficiary to receive the Recipient’s Restricted Stock or Restricted Stock Units in the event of the Recipient’s death prior to removal of all restrictions thereon.  If the Recipient does not designate a beneficiary, or if the designated beneficiary does not survive the Recipient, the Recipient’s estate will be his beneficiary. Recipients may, by written notice to the Company, change a beneficiary designation.

8.

Taxes; Compliance with Law; Approval of Regulatory Bodies; Legends.  The Company will have the right to withhold from payments otherwise due and owing to the Recipient or his beneficiary or to require the Recipient or his beneficiary to remit to the Company in cash upon demand an amount sufficient to satisfy any federal (including FICA and FUTA amounts), state or local withholding tax requirements ("Withholding Requirements") at 

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the time the Recipient or his beneficiary recognizes income for federal, state or local tax purposes with respect to any Award under the Plan.  For purposes of satisfying a Recipient's or his beneficiary's obligations to the Company with respect to Withholding Requirements in whole or in part, the Company may elect, and may permit the Recipient or his beneficiary to elect to authorize the Company, to refrain from issuing a number of Shares with respect to an Award, with such Shares being valued for purposes of satisfying Withholding Requirements at Fair Market Value on the date such Shares would otherwise have been issued.  In such case the number of Shares to be issued to a Recipient or his beneficiary in respect of an Award shall be reduced by the number of Shares elected to be withheld.  The Company may revoke any right granted to a Recipient to elect to authorize the Company to satisfy Withholding Requirements by refraining from issuing Shares at any time prior to a Recipient's making such an election.  Any election by a Recipient to authorize the Company to satisfy Withholding Requirements by refraining from issuing Shares must be made on or prior to the date such Withholding Requirements must be satisfied, and once made shall be irrevocable.

The Committee may grant Awards and the Company may issue and deliver Shares under the Plan only in compliance with all applicable federal and state laws and regulations and the rules of all stock exchanges on which the Company’s stock is listed at any time.  Shares may be issued and delivered under the Plan only if either (i) a registration statement pertaining to the Shares to be issued has been filed with and declared effective by the Securities and Exchange Commission and remains effective on the date of issuance, or (ii) an exemption from the registration requirements of applicable securities laws is available.  The Plan does not require the Company, however, to file such a registration statement or to assure the availability of such exemptions.  Any certificate evidencing Shares issued under the Plan may bear such legends and statements, and will be subject to such transfer restrictions, as the Committee deems advisable to assure compliance with federal and state laws and regulations and with the requirements of this Section 8.  No Option Shares may be issued under the Plan until the Company has obtained the consent or approval of every regulatory body, federal or state, having jurisdiction over such matters as the Committee deems advisable. 

Each person who acquires the right to exercise an Option or to ownership of Shares by transfer, bequest or inheritance may be required by the Committee to furnish reasonable evidence of ownership of the Option as a condition to his exercise of the Option or receipt of Shares.  In addition, the Committee may require such consents and releases of taxing authorities as the Committee deems advisable. 

9.

Adjustment upon Change of Shares.  If a reorganization, merger, consolidation, reclassification, recapitalization, combination or exchange of shares, stock split, stock dividend, rights offering, or other expansion or contraction of the Common Stock occurs, the Committee, in its sole discretion, will equitably adjust the number and class of Shares for which Awards are authorized to be granted under the Plan, the number and class of Shares then subject to Awards previously granted to Employees under the Plan, and the price per Share payable upon exercise of each Award outstanding under the Plan.  To the extent deemed equitable and appropriate by the Board, subject to any required action by shareholders, any Award will pertain to the securities and other property to which a holder of the number of Shares of stock covered by the Award would have been entitled to receive in connection with any merger, consolidation, 

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reorganization, liquidation or dissolution.

10.

Liability of the Company.  Neither the Company nor any parent or Subsidiary of the Company that is in existence or hereafter comes into existence will be liable to any person for any tax consequences incurred by a Recipient or other person with respect to an Award.

11.

Amendment and Termination of Plan.  The Board may alter, amend, or terminate the Plan from time to time without approval of the shareholders of the Company.  The Board may, however, condition any amendment on the approval of the shareholders of the Company if such approval is necessary or advisable with respect to tax, securities or other laws applicable to the Company, the Plan, Recipients or Eligible Persons.  Any amendment, whether with or without the approval of shareholders of the Company, that alters the terms or provisions of an Award granted before the amendment (unless the alteration is expressly permitted under the Plan) will be effective only with the consent of the Recipient of the Award or the holder currently entitled to exercise the Award.

12.

Expenses of Plan.  The Company will bear the expenses of administering the Plan.

13.

Duration of Plan.  Awards may be granted under the Plan only during the ten years immediately following the original effective date of the Plan.

14.

Notices.  All notices to the Company will be in writing and will be delivered to the attention of Tom Livia, President, PC Universe, Inc., 504 NW 77th Street, Boca Raton, Florida 33487.  All notices to a Recipient will be delivered personally or mailed to the Recipient at his address appearing in the Company’s personnel records.  The address of any person may be changed at any time by written notice given in accordance with this Section 14.

15.

Applicable Law.  The validity, interpretation, and enforcement of the Plan are governed in all respects by the laws of Florida and the United States of America.

16.

Effective Date.  The effective date of the Plan will be the later of (i) the date on which the Board adopts the Plan or (ii) the date on which the shareholders of the Company approve the Plan.

17. 

General Conditions.

(a) Nothing contained in this Plan or any Award granted pursuant to this Plan shall confer upon any employee the right to continue in the employ of the Company or any affiliated or subsidiary corporation or interfere in any way with the rights of the Company or any affiliated or subsidiary corporation to terminate his employment in any way.

(b) Nothing contained in this Plan or any Award granted pursuant to this Plan shall confer upon any director or consultant the right to continue as a director of, or consultant to, the Company or any affiliated or subsidiary corporation or interfere in any way with the rights of the Company or any affiliated or subsidiary corporation, or their respective shareholders, to 

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terminate the directorship of any such director or the consultancy relationship of any such consultant.

(c) Corporate action constituting an offer of stock for sale to any person under the terms of the options to be granted hereunder shall be deemed complete as of the date when the Committee authorizes the grant of the option to the such person, regardless of when the option is actually delivered to such person or acknowledged or agreed to by him.

(d) The terms “parent corporation” and “subsidiary corporation” as used throughout this Plan, and the options granted pursuant to this Plan, shall (except as otherwise provided in the option form) have the meaning that is ascribed to that term when contained in Section 422(b) of the Code and the regulations thereunder, and the Company shall be deemed to be the grantor corporation for purposes of applying such meaning.

(e) References in this Plan to the Code shall be deemed to also refer to the corresponding provisions of any future United States revenue law.

(f) To the extent restricted Shares or Common Stock issued upon the exercise of options granted pursuant to the Plan have not been registered under the federal and state securities laws or an exemption is otherwise unavailable, the certificates for Common Stock to be issued pursuant to the Plan shall bear the following securities legend (the “Securities Legend”):

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.  

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.  

(g) Unless another meaning is provided by agreement between the Company and the grantee, each of the events specified in the following clauses (i) and (ii) of this subsection (g) shall be deemed a “change in control”:  (i) a change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or (ii) any other events deemed to constitute a “change in control” by the Committee.

(h)  Attached hereto as an Appendix I and II is a form of Incentive Stock Option and Nonqualified Option, respectively which the Committee may use as a model. Appendix III is a form of Non-Employee Director Option. Appendix IV is a form of Restricted Stock Grant.

Adopted by the Board of Directors this 12 day of July, 2007.  

12

APPENDIX I

INCENTIVE STOCK OPTION

		
	To:

	 

	 
	Name

	 
	 

	Date of Grant:

	 

You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock (“Common Stock”) of PC Universe, Inc. (the “Company”) at a price of $____________  per share pursuant to the Company’s 2007 Stock Incentive Plan (the “Plan”). 

Your Option will vest over a five-year period. The Option may first be exercised at any time on or after __________ for up to 20% of the total number of shares subject to the Option and thereafter pursuant to the following schedule until the total number of shares subject to the Option are fully exercisable:  

Vesting Date

Percent of Award Vested

20%

20%

20%

20%

Thus, this Option is fully exercisable on or after five years from the Date of Grant.  This Option shall terminate and is not exercisable after 10 years from the Date of Grant (the “Scheduled Termination Date”)  This Option shall be adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend or distribution, supplemental offering of shares, stock split, combination of shares, recapitalization, merger, consolidation, exchange of shares, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances.  No fractional shares shall be issued or delivered.  

In the event of a “Change in Control” (as defined below) of the Company, your option will, in most cases, from and after the date of the Change in Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion to be similar circumstances) and your vesting date may accelerate accordingly.  A “Change in Control” shall be deemed to have occurred upon the happening of any of the following events:

1.

A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or

I-1

2.

Any other event deemed to constitute a “Change in Control” by the Committee.

You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase.  The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called “cashless exercise”; (b) unless prohibited by the Committee, certificates representing shares of Common Stock, which will be valued by the Secretary of the Company at the fair market value per share of Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) unless prohibited by the Committee, any combination of cash and Common Stock valued as provided in clause (b).  The use of the so-called “attestation procedure” to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable.

Your option will, to the extent not previously exercised by you, terminate in accordance with the terms of the Plan following the time your employment by the Company or a Company subsidiary corporation is terminated (whether such termination be voluntary or involuntary) other than by reason of disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder, or death (but in no event later than the Scheduled Termination Date).  After the date your employment is terminated, as aforesaid, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date your employment terminated.  If you are employed by a Company subsidiary corporation, your employment shall be deemed to have terminated on the date your employer ceases to be a Company subsidiary corporation, unless you are on that date transferred to the Company or another Company subsidiary corporation.  Your employment shall not be deemed to have terminated if you are transferred from the Company to a Company subsidiary corporation, or vice versa, or from one Company subsidiary corporation to another Company subsidiary corporation.

If you die while employed by the Company or a Company subsidiary corporation, your executor or administrator, as the case may be, may, at any time within one year after the date of your death (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase during your lifetime.  If your employment with the Company or a Company parent or subsidiary corporation is terminated by reason of your becoming disabled (within the meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may at any time within one year after the date of such termination (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase prior to such termination.  Your executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this option.

Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change in Control, the Committee shall have the right to terminate this option upon thirty (30) days prior 

I-2

written notice to you, subject to your right to exercise such option to the extent vested prior to such termination.  

This option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability.  Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company.  The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law.

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

(a)

Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder;

(b)

Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; 

(c)

During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell; or 

(d)

Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise, and (ii) your portion of other federal, state and local payroll and other taxes due in connection with the option exercise.

The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

(a)

The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to 

I-3

the effect that the proposed transaction will be exempt from such registration.  The optionee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

(b)

The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend:

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.  

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

It is the intention of the Company and you that this option shall, if possible, be an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder.  In the event this option is in any way inconsistent with the legal requirements of the Code or the regulations thereunder for an “Incentive Stock Option,” this option shall be deemed automatically amended as of the date hereof to conform to such legal requirements, if such conformity may be achieved by amendment.  If such conformity may not be achieved by amendment, such option shall be deemed to be a Nonqualified Stock Option.  

Nothing herein shall modify your status as an at-will employee of the Company.  Further, nothing herein guarantees you employment for any specified period of time.  This means that either you or the Company may terminate your employment at any time for any reason, or no reason.  You recognize that, for instance, you may terminate your employment or the Company may terminate your employment prior to the date on which your option becomes vested.

Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time.  However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks.  Thereafter, the dispute or disagreement will be submitted to arbitration.  At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the 

I-4

dispute by settlement.  You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses.  The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company.  Further, neither you nor the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award.

This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern.  This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.  

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions.    

			
	 
	PC UNIVERSE, INC.

	 
	 
	 

	 
	 
	 

	 
	By:

	 

I hereby acknowledge receipt of a copy of the foregoing stock option and the 2007 Stock Incentive Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions.  I accept this option in full satisfaction of any previous written or verbal promises made to me by the Company with respect to option grants.  

			
	 
	 
	 

	(Date)

	                    

	(Signature)

I-5

APPENDIX II

NON-QUALIFIED STOCK OPTION FOR OFFICERS

AND OTHER KEY EMPLOYEES

		
	To:

	 

	 
	Name

	 
	 

	Date of Grant:

	 

You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock (“Common Stock”) of PC Universe, Inc. (the “Company”) at a price of $_______ per share pursuant to the Company’s 2007 Stock Incentive Plan (the “Plan”). 

Your Option will vest over a five-year period. Your Option may first be exercised at any time on or after ________ for up to 20% of the total number of shares subject to the Option and thereafter pursuant to the following schedule until the total number of shares subject to the Option are fully exercisable:  

Vesting Date

Percent of Initial Award Vested

20%

20%

20%

20%

Thus, this Option is fully exercisable on or after five years from the Date of Grant.  This Option shall terminate and is not exercisable after 10 years from the Date of Grant (the “Scheduled Termination Date”).  This Option shall be adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend or distribution, supplemental offering of shares, stock split, combination of shares, recapitalization, merger, consolidation, exchange of shares, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances.  No fractional shares shall be issued or delivered.  

In the event of a “Change in Control” (as defined below) of the Company, your option will, in most cases, from and after the date of the Change in Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion to be similar circumstances) and your vesting date may accelerate accordingly.  A “Change in Control” shall be deemed to have occurred upon the happening of any of the following events:

1.

A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or

II-1

2.

Any other event deemed to constitute a “Change in Control” by the Committee.

You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase.  The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called “cashless exercise”; (b) unless prohibited by the Committee, certificates representing shares of Common Stock, which will be valued by the Secretary of the Company at the fair market value per share of Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) unless prohibited by the Committee, any combination of cash and Common Stock valued as provided in clause (b).  The use of the so-called “attestation procedure” to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable.

Your option will, to the extent not previously exercised by you, terminate in accordance with the terms of the Plan following such time as your employment by the Company or a Company subsidiary corporation is terminated (whether such termination be voluntary or involuntary) other than by reason of disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder, or death (but in no event later than the Scheduled Termination Date).  After the date your employment is terminated, as aforesaid, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date your employment terminated.  If you are employed by a Company subsidiary corporation, your employment shall be deemed to have terminated on the date your employer ceases to be a Company subsidiary corporation, unless you are on that date transferred to the Company or another Company subsidiary corporation.  Your employment shall not be deemed to have terminated if you are transferred from the Company to a Company subsidiary corporation, or vice versa, or from one Company subsidiary corporation to another Company subsidiary corporation.

If you die while employed by the Company or a Company subsidiary corporation, your executor or administrator, as the case may be, may, at any time within one year after the date of your death (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase during your lifetime.  If your employment with the Company or a Company parent or subsidiary corporation is terminated by reason of your becoming disabled (within the meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may at any time within one year after the date of such termination (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase prior to such termination.  Your executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this option.

In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee 

II-2

deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Committee.  

Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change in Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination.  

Except for transfers to ___________ under the terms set forth in the Plan, this option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability.  Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company.  The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law.

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

(a)

Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder;

(b)

Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; 

(c)

During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell; or

(d)

Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise and (ii) your portion of other federal, state and local payroll and other taxes due in connection with the option exercise.

The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

II-3

(a)

The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration.  The optionee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

(b)

The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend:

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.”

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

It is the intention of the Company and you that this option shall not be an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder.

Nothing herein shall modify your status as an at-will employee of the Company.  Further, nothing herein guarantees you employment for any specified period of time.  This means that either you or the Company may terminate your employment at any time for any reason, or no reason.  You recognize that, for instance, you may terminate your employment or the Company may terminate your employment prior to the date on which your option becomes vested.

Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time.  However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two 

II-4

weeks.  Thereafter, the dispute or disagreement will be submitted to arbitration.  At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement.  You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses.  The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company.  Further, neither you nor the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award.

This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern.  This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions. 

			
	 
	PC UNIVERSE, INC.

	 
	 
	 

	 
	 
	 

	 
	By:

	 

I hereby acknowledge receipt of a copy of the foregoing stock option and the 2007 Stock Incentive Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions.  I accept this option in full satisfaction of any previously written or verbal promises made to me by the Company with respect to option grants.  

			
	 
	 
	 

	(Date)

	                    

	(Signature)

II-5

APPENDIX III

NON-QUALIFIED STOCK OPTION FOR NON-EMPLOYEE DIRECTORS

AND IMPORTANT CONSULTANTS AND/OR ADVISORS

		
	To:

	 

	 
	Name

	 
	 

	Date of Grant:

	 

You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock (“Common Stock”) of PC Universe, Inc. (the “Company”), at a price of $_______  per share pursuant to the Company’s 2007 Stock Incentive Plan (the “Plan”). 

Your Option will vest over a five-year period.  The Option may first be exercised at any time on or after ______ for up to 20% of the total number of shares subject to the Option and thereafter pursuant to the following schedule until the total number of shares subject to the Option are fully exercisable:  

Vesting Date

Percent of Award Vested

20%

20%

20%

20%

Thus, this Option is fully exercisable on or after five years from the Date of Grant.  This Option shall terminate and is not exercisable after 10 years from the Date of Grant (the “Scheduled Termination Date”).  This Option shall be adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend or distribution, supplemental offering of shares, stock split, combination of shares, recapitalization, merger, consolidation, exchange of shares, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances.  No fractional shares shall be issued or delivered.  

In the event of a “Change in Control” (as defined below) of the Company, your option will, from and after the date of the Change in Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion to be similar circumstances) and your vesting date may accelerate accordingly.  A “Change in Control” shall be deemed to have occurred upon the happening of any of the following events:

1.

A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or

III-1

2.

Any other event deemed to constitute a “Change in Control” by the Committee.

You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase.  The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called “cashless exercise”; (b) unless prohibited by the Committee, certificates representing shares of Common Stock, which will be valued by the Secretary of the Company at the fair market value per share of  Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) unless prohibited by the Committee, any combination of cash and Common Stock valued as provided in clause (b).  The use of the so-called “attestation procedure” to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable.

Your option will, to the extent not previously exercised by you, terminate in accordance with the terms of the Plan following the time which you cease for any reason to be a director of, or consultant to, the Company or a subsidiary corporation (whether by death, disability, resignation, removal, failure to be reappointed, reelected or otherwise, or the expiration of any consulting arrangement, and regardless of whether the failure to continue as a director or consultant was for cause or without cause or otherwise), but in no event later than ten years from the date this option is granted.  After the date you cease to be a director or consultant, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date you ceased to be a director or consultant.  If you are a director of a subsidiary corporation, your directorship shall be deemed to have terminated on the date such company ceases to be a subsidiary corporation, unless you are also a director of the Company or another subsidiary corporation, or on that date became a director of the Company or another subsidiary corporation.  Your directorship or consultancy shall not be deemed to have terminated if you cease being a director of, or consultant to, the Company or a subsidiary corporation but are or concurrently therewith become (a) a director of, or consultant to, the Company or another subsidiary corporation or (b) an employee of the Company or a subsidiary corporation.

In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Committee.  

Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change in Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination.  

III-2

Except for transfers to __________ under the terms set forth in the Plan, this option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability.  Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company.  The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law.  

Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time:

(a)

Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder;

(b)

Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; 

(c)

During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell; or

(d)

Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise and (ii) your  portion of other federal, state and local payroll and other taxes due in connection with the option exercise.

The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

(a)

The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration. The optionee shall 

III-3

execute such instruments, representations, acknowledgements and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

(b)

The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend:

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.”

The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

It is the intention of the Company and you that this option shall not be an “Incentive Stock Option” as that term is used in Section 422 of the Code and the regulations thereunder.

Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time.  However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks.  Thereafter, the dispute or disagreement will be submitted to arbitration.  At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement.  You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses.  The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company.  Further, neither you nor the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award.

This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern.  This option constitutes the entire 

III-4

understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.

Please sign the copy of this option and return it to the Company’s Secretary, thereby indicating your understanding of and agreement with its terms and conditions.

			
	 
	PC UNIVERSE, INC.

	 
	 
	 

	 
	 
	 

	 
	By:

	 

I hereby acknowledge receipt of a copy of the foregoing stock option and the 2007 Stock Incentive Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions.  I accept this option in full satisfaction of any previous written or verbal promises made to me by the Company with respect to option grants.  

			
	 
	 
	 

	(Date)

	                    

	(Signature)

III-5

APPENDIX IV

RESTRICTED STOCK AGREEMENT

RS No.                               

An Award of Restricted Stock is hereby awarded on ___________, 20__ (the “Award Date”) by PC Universe, Inc. (the “Company”), to ___________________ (the “Grantee”), in accordance with the following terms and conditions and the conditions contained in the Company’s 2007 Stock Incentive Plan (the “Plan”):

1.

Share Award.  The Company hereby awards the Grantee ___________ shares (the “Shares”) of common stock of the Company (the “Common Stock”) pursuant to the Plan, as the same may from time to time be amended, and upon the terms and conditions and subject to the restrictions therein and hereinafter set forth.  A copy of the Plan as currently in effect is incorporated herein by reference and is attached hereto.

2.

Restrictions on Transfer and Restricted Period.  During the period (the “Restricted Period”) commencing on the Award Date and terminating on _________________, 20__, the Shares may not be sold, assigned, transferred, pledged, or otherwise encumbered by the Grantee, except as hereinafter provided.

Except as set forth below, the Restricted Period with respect to the Shares will lapse at a rate of ___% of the initial award for every ____ months of continuous service completed since the Award Date according to the following schedule: _______________.  Subject to the restrictions set forth in the Plan, the Committee referred to in Section 3 of the Plan or its successor (the “Committee”) shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Shares thereto, or to remove any or all of such restriction, whenever the Committee may determine that such action is appropriate by reason of changes in applicable tax or other laws, or other changes in circumstances occurring after the commencement of the Restricted Period.  

3.

Termination of Service.  Except as provided in Section 9 below, if the Grantee ceases to maintain “continuous service” for any reason other than death or disability, all Shares which at the time of such termination of continuous service are subject to the restrictions imposed by Section 2 above shall upon such termination of continuous service be forfeited to the Company.  If the Grantee ceases to maintain continuous service by reason of death or disability, the Shares then still subject to restrictions imposed by Section 2 will be free of those restrictions and shall not be forfeited.

4.

Certificates for the Shares.  The Company shall issue a certificate (or certificates) in the name of the Grantee with respect to the Shares, and shall hold such certificate (or certificates) on deposit for the account of the Grantee until the expiration of the Restricted Period with respect to the Shares represented thereby.  Such certificate (or certificates) shall bear the following restricted legend (the “Restricted Legend”):

IV-1

The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the 2007 Stock Incentive Plan of PC Universe, Inc.  Copies of such Plan are on file in the office of the Secretary of PC Universe, Inc., 504 NW 77th Street, Boca Raton, Florida 33487.  

The Grantee further agrees that simultaneously with the execution of the Agreement, the Grantee shall execute stock powers in favor of the Company with respect to the Shares and that the Grantee shall promptly deliver such stock powers to the Company.

The following two paragraphs shall be applicable if, on the Award Date, the Common Stock subject to such Award has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred:

The Grantee hereby agrees, warrants and represents that Grantee is acquiring the Common Stock to be issued pursuant to this Agreement for Grantee’s own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted.  The Grantee further agrees that Grantee will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration.  The Grantee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law.

The certificates for Common Stock to be issued pursuant to this Agreement shall bear the following securities legend (the “Securities Legend”):  

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws.  The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration.”

The Securities Legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required.  

The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws.

IV-2

5.

Grantee’s Rights.  Except as otherwise provided herein, the Grantee, as owner of the Shares, shall have all rights of a shareholder.  During any Restricted Period, the Grantee shall be entitled to vote such Shares as to which the Restricted Period has not yet lapsed or expired (the “Restricted Shares”) in Grantee’s sole discretion, at any annual and special meetings of the shareholders of the Company and at any continuations and adjournments of such meetings, upon any matters coming before such meetings or adjournments.  

6.

Cash Dividends.  Cash dividends, if any, paid on the Restricted Shares shall be held by the Company for the account of the Grantee and paid to the Grantee upon the expiration of the Restricted Period or upon the death or disability of the Grantee.  All such withheld dividends shall earn interest at an annual rate determined by the Committee.

7.

Expiration of Restricted Period.  Upon the lapse or expiration of the Restricted Period with respect to any portion of the Shares, the Company shall deliver to the Grantee (or in the case of a deceased Grantee, to Grantee’s legal representative) the certificate in respect of such Shares and the related stock powers held by the Company pursuant to Section 4 above.  The Shares as to which the Restricted Period shall have lapsed or expired shall be free of the restrictions referred to in Section 2 above and such certificate shall not bear the Restricted Legend provided for in Section 4 above.  Notwithstanding the foregoing, the Securities Legend described in Section 4 shall continue to be included on the certificates as long as registration has not occurred.  

8.

Adjustments for Changes in Capitalization of the Company.  In the event of any change in the outstanding shares of Common Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, or any change in the corporate structure of the Company or in the shares of Common Stock, the number and class of Shares covered by this Agreement shall be appropriately adjusted by the Committee in the same manner as other outstanding shares are adjusted.   Any shares of Common Stock or other securities received, as a result of the foregoing, by the Grantee with respect to Shares subject to the restrictions contained in Section 2 above also shall be subject to such restrictions and the certificate or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Company in the manner provided in Section 4 above.  

9.

Change in Control.  If the continuous service of the Grantee is involuntarily terminated for whatever reason, other than for cause (as defined by the Committee), at any time within 18 months of a “change in control” (as defined in the Plan), the Restricted Period with respect to all Shares shall lapse upon such termination and all Shares shall become fully vested in the Grantee.  

10.

Delivery and Registration of Shares of Common Stock.  The Company’s obligation to deliver Shares hereunder shall be conditioned upon the receipt of a representation as to the investment intention of the Grantee or any other person to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of the Securities Act of 1933, as amended, or any other Federal, state or local 

IV-3

securities legislation or regulation.  Any representation regarding investment intent shall become inoperative upon the registration of such shares or other action eliminating the necessity of such representation under such Securities Act or other securities regulation.  

The Company shall not be required to deliver any Shares under the Plan prior to the completion of such registration or other qualification of such Shares under any state or federal law, rule or regulation, as the Committee shall determine to be necessary or advisable.  

11.

Plan and Plan Interpretations as Controlling.  The Shares hereby awarded and the terms and conditions herein set forth are subject in all respects to the terms and conditions of the Plan, which are controlling.  All determinations and interpretations by the Committee shall be binding and conclusive upon the Grantee or Grantee’s legal representatives with regard to any question arising hereunder or under the Plan.  

12.

Grantee Service.  Nothing in this Agreement shall limit the right of the Company or any of its affiliates to terminate the Grantee’s service as an officer or employee, or otherwise impose upon the Company or any of its affiliates any obligation to employ or accept the services of the Grantee.  

13.

Withholding and Social Security Taxes.  Upon the termination of any Restricted Period with respect to any Shares (or any such earlier time, if any, that an election is made under Section 83(b) of the Code, or any successor provision thereto, to include the value of such Shares in taxable income), the Company shall have the right to withhold from the Grantee’s compensation an amount sufficient to fulfill its or its affiliate’s obligations for any applicable withholding and employment taxes.  Alternatively, the Company may require the Grantee to pay the Company the amount of any taxes which the Company is required to withhold with respect to the Shares, or, in lieu thereof, to retain or sell without notice a sufficient number of Shares to cover the amount required to be withheld.  The Company shall withhold from any cash dividends paid on the Restricted Stock an amount sufficient to cover taxes owed as a result of the dividend payment.  The Company’s method of satisfying its withholding obligations shall be solely in the discretion of the Company, subject to applicable federal, state and local laws.

14.

Tax Consequences.  Grantee has reviewed with Grantee’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  Grantee is relying solely on such advisors and not on any statements or representations of Company or any of its agents.  Grantee understands that Grantee (and not Company) shall be responsible for Grantee’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.  Grantee understands that Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes (as ordinary income) the fair market value of the Shares as of the date any “restrictions” on the Shares lapse.  To the extent that a grant hereunder is not otherwise an exempt transaction for purposes of Section 16(b) of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), with respect to officers, directors and 10% shareholders, a “restriction” on the Shares includes for these purposes the period after the grant of the Shares during which such officers, directors and 10% shareholders could be subject to suit under Section 16(b) of the 1934 Act.  Alternatively, Grantee 

IV-4

understands that Grantee may elect to be taxed at the time the Shares are granted rather than when the restrictions on the Shares lapse, or the Section 16(b) period expires, by filing an election under Section 83(b) of the Code with the I.R.S. within 30 days from the date of grant.

GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION AVAILABLE TO GRANTEE UNDER SECTION 83(B) OF THE CODE, EVEN IF GRANTEE REQUESTS THAT THE COMPANY OR ITS REPRESENTATIVES MAKE THIS FILING ON GRANTEE’S BEHALF.

15.

Arbitration.  Any dispute or disagreement between Grantee and the Company with respect to any portion of this Agreement or its validity, construction, meaning, performance or Grantee’s rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) or its successor, as amended from time to time by a sole arbitrator.  However, prior to submission to arbitration Grantee agrees to attempt to resolve any disputes or disagreements with the Company over this Agreement amicably and informally, in good faith, for a period not to exceed 14 days.  Thereafter, the dispute or disagreement will be submitted to arbitration.  The arbitrator shall be independent and impartial, mutually acceptable to the parties and appointed by AAA.  The arbitration shall be held in Palm Beach County, Florida or such other location as the parties may agree.  At any time prior to a decision from the sole arbitrator being rendered, Grantee and the Company may resolve the dispute by settlement.  The Grantee and the Company shall equally share the arbitrator’s fee and the costs charged by the AAA or its successor, but Grantee and the Company shall otherwise be solely responsible for their own respective counsel fees and expenses.  The decision of the sole arbitrator shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on Grantee and the Company.  Further, neither Grantee nor the Company shall appeal any such award.  Judgment of a court of competent jurisdiction may be entered upon the Award and may be enforced as such in accordance with the provisions of the Award.

16.

Amendment/Choice of Law.  This Agreement constitutes the entire understanding between the Company and the Grantee with respect to the subject matter hereof and no amendment, supplement or waiver of this Agreement, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company.  This Agreement and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Florida.  

17.

Grantee Acceptance.  The Grantee shall signify Grantee’s acceptance of the terms and conditions of this Agreement by signing in the space provided below and signing the attached stock powers and returning a signed copy of this Agreement and the original attached stock powers to the Company.  IF A FULLY EXECUTED COPY HEREOF AND THE ATTACHED STOCK POWERS HAVE NOT BEEN RECEIVED BY THE COMPANY, THE COMPANY HAS THE RIGHT TO REVOKE THIS AWARD, AND AVOID ALL OBLIGATIONS UNDER THIS AGREEMENT.

IV-5

IN WITNESS WHEREOF, the parties hereto have caused this RESTRICTED STOCK AGREEMENT to be executed as of the date first above written.

			
	 
	PC UNIVERSE, INC.

	 
	 
	 

	 
	 
	 

	 
	By:

	 

	 
	 
	Name:

	 
	 
	Title:

	 
	 

	 

	 
	 

	 

	 
	 

	 

	 
	ACCEPTED:

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	(Street Address)

	 
	 

	 
	 

	 
	 

	 
	 

	 
	(City, State & Zip Code)

	 
	 

	 
	 

	 
	 

IV-6

STOCK POWER

For value received, I hereby sell, assign, and transfer to PC Universe, Inc. (the “Company”) ____________ shares of the common stock of the Company, standing in my name on the books and records of the aforesaid Company, represented by Certificate No. _____ and do hereby irrevocably constitute and appoint the Secretary of the Company attorney, with full power of substitution, to transfer this stock on the books and records of the aforesaid Company.

		
	 
	 

		
	Dated:                                                       

	 

		
	In the presence of:

	 

		
	 
	 

IV-7United States Securities and Exchange Commission EDGAR Filing

EXHIBIT 4.2

PC UNIVERSE, INC.

SUBSCRIPTION AGREEMENT

INCLUDING INVESTMENT REPRESENTATIONS

The undersigned, ____________________________________, hereby invests a total amount of $_______________ as a subscription for the purchase of ______________ shares of common stock, $0.001 par value per share (the “Shares”), of PC Universe, Inc., a Nevada corporation (the “Company”), at a price of $____ per share. Unless otherwise agreed to by the Company, the undersigned herewith submits the undersigned’s check payable to “PC Universe, Inc.” in full payment for such Shares along with this Agreement.

1.

Certain Representations of the Subscriber. In connection with, and in consideration of, the sale of the Shares to the undersigned, the undersigned hereby represents and warrants to the Company and its officers, directors, employees, agents and stockholders as follows:

(a)     The undersigned has been given access to full and complete information regarding the Company and has utilized such access to his/her satisfaction for the purpose of obtaining information; and has either attended or been given reasonable opportunity to meet with representatives of the Company for the purpose of asking questions of, and receiving answers from, such representatives concerning the terms and conditions of the offering of the Shares and to obtain any additional information necessary to verify the accuracy of information provided to the undersigned and does not desire further information.

(b)       The undersigned realizes that a purchase of the Shares represents a speculative investment involving a high degree of risk.

(c)      The undersigned can bear the economic risk of an investment in the Shares for an indefinite period of time, can afford to sustain a complete loss of such investment, has no need for liquidity in connection with an investment in the Shares, and can afford to hold the Shares indefinitely.

(d)     The undersigned realizes that there are significant restrictions on the transferability of the Shares, that the Shares have not been registered for sale under the Securities Act of 1933, as amended (the “Act”) or applicable state securities laws (the “State Laws”), and may be sold only pursuant to registration under the Act and State Laws or an opinion of counsel that such registration is not required.

(e)     The undersigned is experienced and knowledgeable in financial and business matters, capable of evaluating the merits and risks of investing in the Shares, and does not need or desire the assistance of a knowledgeable representative to aid in the evaluation of such risks (or, in the alternative, has a knowledgeable representative whom such investor intends to use in connection with a decision as to whether to purchase the securities).

(f)     The undersigned recognizes that any investment in the Company involves substantial risk, and has evaluated and fully understands all risk in its decision to 

1

purchase the Shares hereunder, including, without limitation, the Risk Factors set forth on Exhibit A attached hereto. 

(g)     The undersigned has completed the Investor Questionnaire, attached hereto as Exhibit B, and that all information contained therein is true and accurate in all material respects.

(h)     That all of the written information pertaining to the undersigned which the undersigned has heretofore furnished to the Company and all information pertaining to the undersigned which is set forth in this Agreement, is correct and complete as of the date hereof and, if there should be any material change in such information hereafter, the undersigned shall promptly furnish such revised or corrected information to the Company. 

(i)     The undersigned otherwise meets any special suitability standards applicable to the undersigned’s state of residence.

2.

Investment Intent. The undersigned has been advised that the Shares have not been registered under the Act or the relevant State Laws but are being offered, and will be offered and sold pursuant to exemptions from the Act and State Laws, and that the Company’s reliance upon such exemptions is predicated in part on the undersigned’s representations contained herein. The undersigned represents and warrants that the securities are being purchased for the undersigned’s own account and for long term investment and without the intention of reselling or redistributing the securities, that the undersigned has made no agreement with others regarding any of the securities, and that the undersigned’s financial condition is such that it is not likely that it will be necessary for the undersigned to dispose of the securities in the foreseeable future. The undersigned is aware that (i) in the view of the Securities and Exchange Commission, a purchase of securities with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market values, or any change in the liquidation or settlement of any loan obtained for the acquisition of the securities and for which the securities were or may be pledged as security would represent an intent inconsistent with the investment representations set forth above and (ii) the transferability of the securities is restricted and (A) requires the written consent of the Company, and (B) will be further restricted by a legend placed on the certificate(s) representing the securities containing substantially the following language:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OT OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.”

The undersigned further represents and agrees that if, contrary to the undersigned’s foregoing intentions, the undersigned should later desire to dispose of or transfer the securities in any manner, the undersigned shall not do so without first obtaining (i) an opinion of counsel satisfactory to the Company that such proposed disposition or transfer may be made lawfully without the registration of such Securities pursuant to the Act and applicable State Laws, or (ii) 

2

registration of such securities (it being expressly understood that the Company shall not have any obligation to register such securities ).

3.

Residence. The undersigned represents and warrants that the undersigned is a bona fide resident of (or if an entity is organized or incorporated under the laws of, and is domiciled in), the State (or Country if not in USA) of _______________________________ (INSERT NAME OF STATE OR COUNTRY) and that the securities are being purchased by the undersigned in the undersigned’s name solely for the undersigned’s own beneficial interest and not as nominee for, on behalf of, for the beneficial interest of, or with the intention to transfer to, any other person, trust, or organization.

PARAGRAPHS 4 AND 5 ARE REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO THE OFFER AND SALE OF THE SECURITIES. ALL OF SUCH INFORMATION WILL BE KEPT CONFIDENTIAL, AND WILL BE REVIEWED ONLY BY THE COMPANY AND ITS COUNSEL. The undersigned agrees to furnish any additional information, which the Company or its counsel deems necessary in order to verify the responses set forth below.

4.

Accredited Status. The undersigned represents and warrants as follows (CHECK IF APPLICABLE):

INDIVIDUALS - Check All That Apply

____

(a)

The undersigned is an individual with a net worth, or a joint net worth together with his/her spouse, in excess of $1,000,000. (In calculating net worth, you may include equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property minus debt secured by such property.)

____

(b)

The undersigned is an individual that had an individual income in excess of $200,000 in each of the prior two years and reasonably expects an income in excess of $200,000 in the current year; or

____

(c)

The undersigned is an individual that had with his/her spouse joint income in excess of $300,000 in each of the prior two years and reasonably expects joint income in excess of $300,000 in the current year.

____

(d)

The undersigned is a director or officer of PC Universe, Inc.

ENTITIES - Check All That Apply

____

(e)

The undersigned, if other than an individual, is an entity all of whose equity owners meet one of the tests set forth in (a) through (d) above.

____

(f)

The undersigned is an entity, and is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Act, which definition is set forth on Exhibit C 

3

attached hereto. This representation is based on the following (check one or more, as applicable):

____

(i)

The undersigned (or, in the case of a trust, the undersigned trustee) is a bank or savings and loan association as defined in Sections 3(a)(2) and 3(a)(5)(A), respectively, of the Act acting either in its individual or fiduciary capacity.

____

(ii)

The undersigned is an insurance company as defined in Section 2(13) of the Act.

____

(iii)

The undersigned is an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act.

____

(iv)

The undersigned is a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.

____

(v)

The undersigned is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and either (check one or more, as applicable):

____

(a)

the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser; or

____

(b)

the employee benefit plan has total assets in excess of $5,000,000; or

____

(c)

the plan is a self-directed plan with investment decisions made solely by persons who are “Accredited Investors” as defined under the 1933 Act.

____

(vi)

The undersigned is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

____

(vii)

The undersigned has total assets in excess of $5,000,000, was not formed for the specific purpose of purchasing the Shares and is one or more of the following (check one or more, as appropriate):

____

(a)

an organization described in Section 501(c)(3) of the Internal Revenue Code; or

____

(b)

a corporation; or

____

(c)

a Massachusetts or similar business trust; or

____

(d)

a partnership.

4

____

(viii)

The undersigned is a trust with total assets exceeding $5,000,000, which was not formed for the specific purpose of purchasing the Securities, whose purchase is directed by a person who has such knowledge and experience in financial and business matters and who is capable of evaluating the merits and risks of the investment in the Securities. (IF ONLY THIS RESPONSE IS CHECKED, please contact the Company to receive and complete an information statement before this subscription can be considered by the Company.)

5.

Entities. If the undersigned is an entity, the individual signing on behalf of such entity and the entity jointly and severally agree and certify that:

(a)

the undersigned was not organized for the specific purpose of acquiring the securities; and

(b)

this Agreement has been duly authorized by all necessary action on the part of the undersigned, has been duly executed by an authorized officer or representative of the undersigned and is a legal, valid, and binding obligation of the undersigned enforceable in accordance with its terms.

6.

Relationship to Securities Brokerage Firms. (PLEASE ANSWER EACH OF THE FOLLOWING QUESTIONS BY CHECKING THE APPROPRIATE RESPONSE.)

(a)

____ YES ____ NO: Are you a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or employed by, a securities brokerage firm? (IF YES, please contact the Company to provide additional information before your subscription can be considered.)

(b)

____ YES ____ NO: Is your spouse, father, mother, father-in-law, mother-in-law, or any of your brothers, sisters, brothers-in-law, sisters-in-law or children, or any relative which you support, a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or engaged by, a securities brokerage firm? (IF YES, please contact the Company to provide additional information before your subscription can be considered.)

(c)

____ YES ____ NO: Does the Subscriber own voting securities of any securities brokerage firm? (IF YES, please contact the Company to provide additional information before your subscription can be considered.)

(d)

____ YES ____ NO: If the undersigned is an entity, is any director, officer, partner or 5% owner of the undersigned also a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or employed by a securities brokerage firm? (IF YES, please contact the Company to provide additional information before the Subscriber’s subscription can be considered.)

7.

Miscellaneous.

5

(a)

Manner in Which Title Is to Be Held: (check one)

_______

Individual Ownership

_______

Joint Tenant with Right of Survivorship

_______

Partnership

_______

Tenants in Common

_______

Corporation

________

Other ____________________________ (describe)

(b)

The undersigned agrees that the undersigned understands the meaning and legal consequences of the agreements, representations and warranties contained herein, agrees that such agreements, representations and warranties shall survive and remain in full force and effect after the execution hereof and payment for the Shares, and further agrees to indemnify and hold harmless the Company, each current and future officer, director, employee, agent and shareholder from and against any and all loss, damage or liability due to, or arising out of, a breach of any agreement, representation or warranty of the undersigned contained herein.

(c)

This Agreement shall be construed and interpreted in accordance with the laws and courts of the State of Florida.

[Signature Page Follows]

6

			
	INDIVIDUAL SUBSCRIBERS: 

	                    

	 

	 
	 
	Signature

	 
	 
	 

	 
	 
	 

	 
	 
	Name (Typed or Printed)

	 
	 
	 

	 
	 
	 

	 
	 
	Signature (If more than one individual subscriber)

	 
	 
	 

	 
	 
	 

	 
	 
	Name (Typed or Printed)

	 
	 
	 

	 
	 
	 

	ENTITY SUBSCRIBERS: 

	 
	 

	 
	 
	Name of Entity 

	 
	 
	 

	 
	 
	 

	 
	 
	Signature

	 
	 
	 

	 
	 
	 

	 
	 
	Name (Typed or Printed) 

	 
	 
	 

	 
	 
	 

	 
	 
	Title

	 
	 
	 

	 
	 
	 

	ALL SUBSCRIBERS:

	 
	 

	 
	 
	Street Address

	 
	 
	 

	 
	 
	 

	 
	 
	City, State and Zip Code

	 
	 
	 

	 
	 
	 

	 
	 
	Business Telephone Number

	 
	 
	 

	 
	 
	 

	 
	 
	Fax Telephone Number

	 
	 
	 

	 
	 
	 

	 
	 
	Tax I.D. # or Social Security Number

	 
	 
	 

PC Universe, Inc. hereby acknowledges receipt from                       of such subscriber’s check in the amount of $                  , and accepts this subscription for $                    as of                  , 2007.

				
	 
	 
	PC UNIVERSE, INC.

	 
	 
	 

	 
	By:

	 

	 
	 
	Name:

	 

	 
	 
	Title:

	 

7

EXHIBIT A

RISK FACTORS

RISKS RELATING TO OUR BUSINESS

We have Experienced Fluctuations in Sales and There is no Assurance That we Will Be Able to Maintain Profitable Operations.

Several factors have caused our sales and results of operations to fluctuate and we expect these fluctuations to continue indefinitely.  Causes of these fluctuations include: 

·

changes in the economy;

·

evolution of the personal computer industry;

·

reduction of corporate investment in information technology products;

·

downward demand for hardware and software products;

·

increased competition;

·

fluctuations in postage, paper, shipping, and printing costs and in merchandise returns;

·

adverse weather conditions that affect response, distribution, or shipping;

·

changes and acceptance of new product;

·

reduced consumer demand for information technology products; and

·

negative changes in vendor distribution of products. 

Our results also may vary based on our success of integrating acquisitions into our business, the impact of the costs of acquisitions and integration, and our ability to hire and retain sales representatives and other essential personnel. In addition, customer response rates for our marketing vehicles are subject to variations.

We are Exposed to Inventory Risks.

We are exposed to inventory risks as a result of the rapid technological changes that affect the market and pricing for the products we sell.  We seek to minimize our inventory exposure through a variety of inventory management procedures and policies, including vendor price protection and product return programs.  However, if there were unforeseen product developments that created more rapid obsolescence or if vendors were to change their terms and conditions, our inventory risks could increase.  We also periodically take advantage of cost savings associated with certain opportunistic bulk inventory purchases offered by our vendors.  These bulk purchases could increase our exposure to inventory obsolescence.

We Acquire Products for Resale from a Limited Number of Vendors. The Loss of Any One of These Vendors Could Have a Material Adverse Effect on Our Business.

We acquire products for resale both directly from manufacturers and indirectly through distributors and other sources. If we were unable to acquire adequate amounts of 

8

products from these sources, we could experience a short-term disruption in the availability of products, and such disruption could have a material adverse effect on our results of operations and cash flows. 

Termination, Interruption, or Contraction of Relationships with Our Vendors, Including a Reduction in the Level of Trade Credit Provided to us, Could Have a material Adverse Effect on our Financial Position. 

Some product manufacturers either do not permit us to sell the full line of their products or limit the number of product units available to direct marketers such as us. An element of our business strategy is to continue increasing our participation in first-to-market purchase opportunities. The availability of certain desired products, especially in the direct marketing channel, has been constrained in the past. We could experience a material adverse effect to our business if we are unable to source first-to-market purchase or similar opportunities, or if we face the reemergence of significant availability constraints. 

Dependence on Manufacturers and Distributors.

Our success is highly dependent on manufacturers and distributors for their purchases of computer hardware and software.  We do not have complete control over manufacture/distributor product availability, pricing and shipping.  This lack of control can result in a negative affect on our profit margins and customer satisfaction.  We have been a key partner of major manufacturers and distributors in the industry for several years, and we continue to maintain close relationships with them.  However, no assurances can be given that we will be able to continue to maintain these relationships or to develop new ones. 

We May Not be Able to Compete Successfully and Our Customers May not Continue to Purchase Our Products.

We face intense competition in the sale of our products. We compete with multiple companies in each our product lines.  We compete on the basis of a number of considerations, including, price, services, quality, product characteristics and the ability to supply customers in a timely manner.  Many of our competitors have financial and other resources that are substantially greater than ours and may be better able that us to withstand price competition.  Each of our product lines faces a different competitive landscape.  We may not be able to compete successfully with respect to any of the foregoing factors.  Competition could result in our products losing market share or our having to reduce our prices, either of which would have a material adverse effect on our business and results of operations and financial condition.  

9

We Have a Substantial Portion of our Revenue and Trade Accounts Receivable Due From a Limited Number of Customers.  

A substantial portion or our revenue and trade accounts receivable are due from a limited number of our customers.  We have had very good relationships with these customers for numerous years.  However, we may not be able to keep these customers.  A loss of these customers may have a material adverse effect on our business and results of operations.  No assurances can be given that we will be successful in continue to maintain these customers or that we will be able to replace any of these customers.

Risks Inherent in the Business.   

The business model may be affected by factors beyond our control and is highly speculative. Factors which can negatively affect the success of our business model include but are not limited to, general economic conditions, government regulations, weather and seasonal changes, changing market conditions, any acts outside our control, including terrorism, acts of God and natural disasters.  There can be no assurance that we will be able to overcome any of these factors.

We Could Experience System Failures, Including Natural Disasters, which Would Interfere with our Ability to Process Orders. 

We depend on the accuracy and proper use of our management information systems, including our telephone system. Many of our key functions depend on the quality and effective utilization of the information generated by our management information systems, including: 

·

our ability to manage inventory and accounts receivable collection;

·

our ability to purchase, sell, and ship products efficiently and on a timely basis; and

·

our ability to maintain operations. 

Our management information systems require continual upgrades to most effectively manage our operations and customer database. We are currently in the midst of a major upgrade to our sales processing system. Although we maintain some redundant systems, with full data backup, a substantial interruption in management information systems or in telephone communication systems, including those resulting from natural disasters as well as power loss, telecommunications failure, and similar events, would substantially hinder our ability to process customer orders and thus could have a material adverse effect on our business. 

10

We Rely on the Continued Development of Electronic Commerce and Internet Infrastructure Development. 

We have had an increasing level of sales made over the Internet in part because of the growing use and acceptance of the Internet by end users. No one can be certain that acceptance and use of the Internet will continue to develop or that a sufficiently broad base of consumers will adopt and continue to use the Internet and other online services as a medium of commerce. Sales of computer products over the Internet represent a significant and increasing portion of overall computer product sales. Growth of our Internet sales is dependent on potential customers using the Internet in addition to traditional means of commerce to purchase products. We cannot accurately predict the rate at which they will do so. 

Our success in growing our Internet business will depend in large part upon the development of an infrastructure for providing Internet access and services. If the number of Internet users or their use of Internet resources continues to grow rapidly, such growth may overwhelm the existing Internet infrastructure. Our ability to increase the speed with which we provide services to customers and to increase the scope of such services ultimately is limited by, and reliant upon, the speed, reliability, and cost-effectiveness of the networks operated by third parties, and these networks may not continue to be developed or be available at prices consistent with our required business model. 

Potential Liability for Information Displayed on Our Web Site may Require us to Defend Against Legal Claims, Which may Cause Significant Operational Expenditures.

We may be subject to claims for fraud,  copyright or trademark infringement or to claims based on other theories relating to the information on our web site.  These types of claims have been brought, sometimes successfully, against on line services in the past. We could also be subject  to claims based on the content that is accessible from our web site through links to other web sites.  Our insurance coverage may not adequately protect us against these claims. 

Our Networks May be Vulnerable to Security Risks. 

The secure transmission of confidential information over public networks in a critical element of our operations.  We have not experienced significant network security problems.  However, our networks may in the future be vulnerable to unauthorized access, computer viruses and other security problems.  Person who circumvent security measures could wrongfully use our confidential information or our client’s confidential information or cause interruptions or malfunctions in our operations.  We may be required to expend significant additional resources to protect against the threat of security breaches or to alleviate problems caused by any breaches.  We may not be able to implement security measures that will protect against all security risks. 

11

We may Experience Potential Increases in Shipping, Paper, and Postage Costs, which May Adversely Affect our Business if We are not Able to Pass Such Increases on to our Customers. 

Shipping costs are a significant expense in the operation of our business. Increases in postal or shipping rates and paper costs could significantly impact the cost of producing and mailing direct mail and shipping customer orders. Postage prices and shipping rates increase periodically, and we have no control over future increases. We generally invoice customers for shipping and handling charges. There can be no assurance that we will be able to pass on to our customers the full cost, including any future increases in the cost, of commercial delivery services such as FedEx and UPS. 

We also incur substantial paper and postage costs related to our marketing activities, including producing and mailing our catalogs. Paper prices historically have been cyclical, and we have experienced substantial increases in the past. Significant increases in postal or shipping rates and paper costs could adversely impact our business, financial condition, and results of operations, particularly if we cannot pass on such increases to our customers or offset such increases by reducing other costs. 

Privacy Concerns With Respect to List Development and Maintenance may Materially Adversely Affect our Business. 

We mail marketing materials and send electronic messages to names in our proprietary customer database and to potential customers whose names we obtain from rented or exchanged mailing lists. World-wide public concern regarding personal privacy has subjected the rental and use of customer mailing lists and other customer information to increased scrutiny. Any domestic or foreign legislation enacted limiting or prohibiting these practices could negatively affect our business. 

We are Dependent on Key Personnel. 

Our future performance will depend to a significant extent upon the efforts and abilities of our senior executives. The competition for qualified management personnel in the computer products industry is very intense, and the loss of service of one or more of these persons could have an adverse effect on our business. Our success and plans for future growth will also depend on our ability to hire, train, and retain skilled personnel in all areas of our business, including sales account managers and technical support personnel. There can be no assurance that we will be able to attract, train, and retain sufficient qualified personnel to achieve our business objectives. 

RISKS RELATING TO OUR INDUSTRY

We May Experience a Reduction in the Incentive Programs Offered by Vendors. 

Some product manufacturers and distributors incentives such as supplier reimbursements, payment discounts, price protection, rebates, and other similar 

12

arrangements. The increasingly competitive computer hardware market has already resulted in the following: 

·

reduction or elimination of some of these incentive programs;

·

more restrictive price protection and other terms; and

·

reduced advertising allowances and incentives, in some cases. 

Many product suppliers provide Co-op advertising support, and in exchange, we feature their products in our marketing vehicles. This support significantly defrays our marketing production and media expense. In the past, we have experienced a decrease in the level of Co-op advertising support available to us from certain manufacturers. The level of Co-op advertising support we receive from some manufacturers may further decline in the future. Such a decline could decrease our gross margin and increase our SG&A expenses as a percentage of sales and have a material adverse effect on our cash flows.

Substantial Competition Could Reduce our Market Share and Significantly Harm our Financial Performance.

The market for information technology products and accessories is highly competitive. Our competition includes:

·

national direct marketers, such as CDW Corporation, PC Mall and Zones;

·

value-added resellers;

·

manufacturers, such as Dell, who sell directly to customers;

·

computer superstores, such as CompUSA;

·

government resellers, such as GTSI;

·

consumer electronic and office supply superstores, such as Best Buy, Circuit City, Office Depot, Office Max and Staples;

·

corporate resellers; and

·

Web resellers, such as Amazon.com, Buy.com and Newegg.com.

Some of our hardware and software vendors have sold, and could intensify their efforts to sell, their products directly to customers.  In addition, some software manufacturers have developed, and may continue to develop, sales methods that directly provide customers with subscription-based software programs and packages.  If either of these trends becomes more prevalent, it could adversely affect our sales growth and profitability. 

We believe that competition may increase in the future, which could require us to reduce prices, increase advertising expenditures or take other actions which may have an adverse effect on our operating results. Some of our competitors have reduced their prices in an attempt to stimulate sales.  Decreasing prices of information technology products and accessories resulting from competition and technological changes require us to sell a greater number of products to achieve the same level of net sales and gross profit. If this trend continues and we are unable to attract new customers and sell increased quantities 

13

of products, our sales growth and profitability could be adversely affected. 

We cannot be certain that we can continue to compete effectively against our current or future competitors. If we encounter new competition or fail to compete effectively against our competitors, our business may be harmed.

 

We Face and Will Continue to Face Significant Price Competition. 

Generally, pricing is very aggressive in the personal computer industry, and we expect pricing pressures to continue.  An increase in price competition could result in a reduction of our profit margins.  There can be no assurance that we will be able to offset the effects of price reductions with an increase in the number of customers, higher sales, cost reductions, or otherwise. 

The Methods of Distributing Personal Computers and Related Products are Changing, and such Changes may Negatively Impact us and our Business. 

The manner in which personal computers and related products are distributed and sold is changing, and new methods of distribution and sale, such as online shopping services, have emerged. Hardware and software manufacturers have sold, and may intensify their efforts to sell, their products directly to end users. From time to time, certain manufacturers have instituted programs for the direct sales of large order quantities of hardware and software to certain major corporate accounts. These types of programs may continue to be developed and used by various manufacturers. Some of our vendors currently sell some of their products directly to end users and have stated their intentions to increase the level of such direct sales. In addition, manufacturers may attempt to increase the volume of software products distributed electronically to end users. An increase in the volume of products sold through or used by consumers of any of these competitive programs or distributed electronically to end users could have a material adverse effect on our results of operations.

No Assurance of Future Profitability.

Our operating results are difficult to forecast.  External factors affecting our sales and operating results include:

·

purchasing cycles of commercial and public sector customers;

·

the level of corporate investment in new IT-related capital equipment;

·

industry announcements of new products or upgrades;

·

industry consolidation;

·

cost of compliance with new legal and regulatory requirements; and

·

general economic conditions. 

We have taken a number of steps to reduce fixed costs, such as reducing redundant headcount. We intend to continue exploring additional means of cost reduction; but, there is no assurance that we will be able to continue to identify or achieve 

14

additional cost savings or to maintain profitability going forward. 

No Assurance as to Sales Levels.

There is no assurance that we will sustain our current sales levels. Sales may decline for any number of reasons, such as:

·

a decline in corporate profits leading to a change in corporate investment in IT-related equipment;

·

increased competition;

·

more manufacturers going direct;

·

changes in customers’ buying habits;

·

the loss of significant customers;

·

changes in the selection of products available for resale; or 

·

general economic conditions. 

A decline in sales levels could adversely affect our business, financial condition, cash flows or results of operations.

Pressure on Margins.

The technology products and services industries continue to grow at above average growth rates.  However, there are considerable price pressures on computer hardware as the price for computer power continues to decline.  The Internet and more attractive pricing is fueling growth, however the dollar growth rates are slowing and gross profit margins are shrinking.   As a result, there is intense price competition and pressure on profit margins in the computer products industry. The barrier to entry in the computer reseller market is very low and the Internet has considerably increased the number of computer resellers.  In addition, an increasing number of manufacturers are providing their products direct to customers. Various other factors also may create downward pressure on our gross margins, such as shifts in vendor programs and an increasing proportion of sales to enterprise, public sector or other competitive bid accounts on which margins could be lower. We have been able to grow revenues and maximize profit margins through our proprietary Active Sourcing system, negotiation, and a wide array of technology services including break-fix, configuration, integration, networking, maintenance, technical consulting, managed services and VoIP.  If we are unable to continue to maintain or improve gross margins in the future, our business, financial condition, or results of operations would be adversely effected.

State Tax Uncertainties.

We collect and remit sales and use taxes in states in which we have voluntarily registered and/or has a physical presence. Various states have sought to require the collection of state and local sales taxes on products shipped to the taxing jurisdiction’s residents by DMRs.  Many states aggressively pursue out of state businesses, and legislation that would expand the ability of states to impose sales tax collection 

15

obligations on out of state businesses has been introduced in Congress on many occasions. A change in the law could require us to collect sales taxes or similar taxes on sales in states in which have no presence and could potentially subject us to a liability for prior year sales, either of which could have a material adverse effect on our business, financial condition, and results of operations.

RISKS RELATING TO THE OFFERING

You Have no Discretion in How the Proceeds of Your Purchase Will be Used.  

Your money will be used for general working capital purposes and potential acquisition candidates, which we may not have yet identified. Accordingly, investors will not have an opportunity to review and evaluate the investment opportunities prior to funding by the Company, and may not agree with how we use the proceeds derived from the sale of Shares pursuant to this Subscription Agreement. The investors will have no discretion in how the proceeds are used.  There can be no assurance that the proceeds derived from the sale of Shares pursuant to this Subscription Agreement will be used exactly in the manner described as we have complete discretion over the use of the funds.  

No Minimum Offering.

The Shares are being offered for sale on a best efforts basis without a minimum subscription requirement. Without a minimum subscription requirement, there can be no assurance that of how many Shares offered hereunder will be sold. Not requiring a minimum subscription could negatively affect our ability to diversify our projects.  In such event, our returns to investors may be negatively impacted.

Restrictions on Transferability and Lack of Public Market.

The Shares are subject to significant restrictions on transferability and resale and may not be transferred or resold except as permitted under this Agreement or the Securities Act of 1933 (the “1933 Act”), as amended, and the applicable state securities laws, pursuant to registration or exemption therefrom.  Additionally, the Shares are not registered under the Securities Act or qualified under the blue-sky laws of any state or jurisdiction, nor do we have any current intention to seek registration.  Currently there is no ready market for the Shares, as a result, any investor should assume the Shares are illiquid.

Need for Additional Financing.

Our financial success may depend on our ability to raise significant additional capital.  There can be no assurance that additional financing will be available or, if available, that it would be obtainable on acceptable terms, or if obtained, that such additional financing will not be dilutive to investors who purchase Shares pursuant to this Subscription Agreement. There can be no assurance that we will be successful in raising additional capital, or that if we do raise additional capital it will be on terms and conditions favorable to our shareholders.

16

Determination of Offering Price.

The offering price for the Shares has been determined solely by the Company.  The determination of the offering price was arbitrary and bears no inherent relationship to the Company’s assets, book value, net income or any other recognized measure of value.  The offering price does not necessarily indicate the current value of the Shares offered hereby and should not be regarded as an indicator of any future market performance thereof.  

Dilution.

Purchasers of the Shares offered hereby will experience immediate dilution in the net tangible book value of their Shares.  Further, additional infusions of capital may have a dilutive effect on the book value of outstanding securities, including Shares purchased pursuant to this Subscription Agreement, and shares issued in any subsequent financing.

We Have not Paid, and Do Not Anticipate Paying for the Foreseeable Future, Dividends on our Common Stock. 

We have not paid, and do not anticipate paying for the foreseeable future, any dividends on our common stock. We intend to retain future earnings, if any, for use in the operation and expansion of our business and payment of our outstanding debt. 

Illiquidity of Investments.

It is anticipated that any acquisition will be relatively illiquid, our ability to promptly cash out of any investment in response to changing market, economic, financial or other investment conditions is very limited.  These factors could materially impede our ability to respond to adverse events which could materially effect our results and operations in an adverse manner; thereby negatively impacting any rate of return to the investors.

RISK ASSOCIATED WITH RETIREMENT PLANS.

An Investment in the Company may not Qualify as an Appropriate Investment Under Retirement Plans.  

There are special considerations that apply to pension or profit sharing trusts or IRA’s investing in the securities of a Company and thus you should consult with your financial and retirement plan advisors prior to investing any money from your retirement plan.  If you are investing the assets of a Pension, Profit Sharing, 401K, Keogh, or other qualified Retirement Plan, or the assets of an IRA in this Company, you could incur liability or subject the plan to taxation if:

 

17

·

Your investment is not consistent with your fiduciary obligations under ERISA under the Internal Revenue Code.

·

Your investment is not made in accordance with the documents and instruments governing your plan or IRA, including your plans investment policy.  

·

Your investment does not satisfy the prudence and diversification requirements of Section 40 (a) (1)(B) and 404 (A) (1)(C) of ERISA.

·

Your investment impairs the liquidity of the plan.

·

Your investment produces “unrelated business taxable income” for the plan or IRA.

·

You will not be able to value the assets of the plan annually in accordance with ERISA requirements.

·

Your investment cost to a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

18

EXHIBIT B

INVESTOR QUESTIONNAIRES

INDIVIDUAL INVESTOR QUESTIONNAIRE

Investor Name:                                              

The information contained in this Questionnaire is being furnished in order to determine whether the undersigned Investor's subscription to purchase the Common Stock described in the Securities Purchase Agreement may be accepted.

ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.  The undersigned Investor understands, however, that the Company may present this Questionnaire to such parties as it deems appropriate if called upon to establish that the proposed offer to purchase the Common Stock is exempt from registration under the Securities Act of 1933, as amended, or meets the requirements of applicable state securities or “blue sky” laws.  Further, the undersigned Investor understands that the offering may be required to be reported to the Securities and Exchange Commission and to various state securities and “blue sky” regulators.

Please answer all questions.  If the answer is “none” or “not applicable,” please so state.  

INFORMATION REQUIRED OF EACH PROSPECTIVE INVESTOR: 

								
	1.   Name:                                                                  

	Age:        

	 
	 
	 
	 

	 
	Social Security Number:                             

	 
	No. of Dependents:                           

	 
	 
	 
	 

	 
	Marital Status:                                             

	 
	Citizenship:                                                  

	 
	 
	 
	 

	2.   Residence Address and Telephone Number:

	 

	 
	  

	 
	  

	 
	 
	 
	 

	3.   State in which you:

	 
	 

	 
	 
	 
	 

	 
	Are licensed to drive?

	 

	 
	 
	 
	 

	 
	Are registered to vote?

	 

	 
	 
	 
	 

19

								
	 
	File income tax returns?

	 

	 
	 
	 
	 

	4.   Employer and Position:

	 

	 
	 
	 
	 

	 
	  

	 
	 
	 
	 

	5.   Business Address and Telephone Number:

	 

	 
	 
	 
	 

	 
	  

	 
	 
	 
	 

	 
	  

	 
	 
	 
	 

	6.   School

	Degree

	Year Received

	 
	 
	 
	 

	 
	  

	 
	 

	 
	  

	 
	 

	 
	  

							
	7.   (a)

	   

	Individual income during 2006:            

	     

	          

	   

	$50,000 - $100,000         

	 
	 
	(exclusive of spouse's

	 
	 
	 
	$100,000 - $200,000

	 
	 
	income)

	 
	 
	 
	over $200,000

	 
	 
	 
	 
	 
	 
	 

	      (b)

	   

	Individual income during 2007:

	     

	          

	   

	$50,000 - $100,000

	 
	 
	(exclusive of spouse's

	 
	 
	 
	$100,000 - $200,000

	 
	 
	income)

	 
	 
	 
	over $200,000

	 
	 
	 
	 
	 
	 
	 

	      (c)

	   

	Estimated income during 2007:

	 
	 
	 
	$50,000 - $100,000

	 
	 
	(exclusive of spouse's

	 
	 
	 
	$100,000 - $200,000

	 
	 
	income)

	 
	 
	 
	over $200,000

	 
	 
	 
	 
	 
	 
	 

	      (d)

	 
	Joint income, with spouse,

	 
	 
	 
	$100,000 - $300,000

	 
	 
	during 2006

	 
	 
	 
	over $300,000

	 
	 
	 
	 
	 
	 
	 

	      (e)

	 
	Joint income, with spouse,

	 
	 
	 
	$100,000 - $300,000

	 
	 
	during 2007

	 
	 
	 
	over $300,000

	 
	 
	 
	 
	 
	 
	 

	       (f)

	 
	Estimated joint income,

	 
	 
	 
	$100,000 - $300,000

	 
	 
	with spouse, for 2007

	 
	 
	 
	over $300,000

	 
	 
	 
	 
	 
	 
	 

	8.

	 
	Estimated net worth

	 
	 
	 
	under $1,000,000

	 
	 
	(may include joint net

	 
	 
	 
	over $1,000,000

	 
	 
	worth with spouse)

	 
	 
	 
	 

20

9.

Are you involved in any litigation, which, if an adverse decision occurred, would materially affect your financial condition? Yes        No        If yes, please provide details:

10.

I consider myself to be an experienced and sophisticated investor or am advised by a qualified investment advisor, all as required under the various securities laws and regulations:  Yes ____   No ____

11.

 Iunderstand the full nature and risk of an investment in the Common Stock, and I can afford the complete loss of my entire investment.   Yes ____   No ____

12.

I am able to bear the economic risk of an investment in the Common Stock for an indefinite period of time and understand that an investment in the Common Stock is illiquid.  Yes ____   No ____ 

13.

I further understand that I will be required to agree not to dispose of the Common Stock except in compliance with other conditions contained in the accompanying Securities Purchase Agreement.  Yes ____   No ____

14.

Have you participated in other private placements of securities?

    Yes ____      No ____

I understand that the Company will be relying on the accuracy and completeness of my responses to the foregoing questions and I represent and warrant to the Company as follows:

·

The answers to the above questions are complete and correct and may be relied upon by the Company whether the offering in which I propose to participate is exempt from registration under the Act and the securities laws of certain states;

·

I will notify the Company immediately of any material change in any statement made herein occurring prior to the closing of any purchase by me of an interest in the Company; and 

·

I have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment; I am able to bear the economic risk of the investment and currently could afford a complete loss of such investment.  

 [Signature Page Follows]

21

IN WITNESS WHEREOF, I have executed this Investor Questionnaire this ________ __, 2007 and declare that it is truthful and correct to the best of my knowledge.

                                                                       

Signature of Prospective Investor

                                                                       

Signature of Prospective Investor

22

CORPORATION INVESTOR QUESTIONNAIRE

Investor Name:                                                            (the “Corporation”) 

The information contained in this Questionnaire is being furnished in order to determine whether the undersigned Corporation's subscription to purchase the Common Stock described in the Securities Purchase Agreement may be accepted.

ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.  The undersigned Corporation understands, however, that the Company may present this Questionnaire to such parties as it deems appropriate if called upon to establish that the proposed offer to purchase the Common Stock is exempt from registration under the Securities Act of 1933, as amended, or meets the requirements of applicable state securities or “blue sky” laws.  Further, the undersigned Corporation understands that the offering may be required to be reported to the Securities and Exchange Commission and to various state securities and “blue sky” regulators.

I.

PLEASE CHECK ANY OF STATEMENTS 1-4 BELOW THAT APPLIES TO THE CORPORATION.

___ 1. 

The undersigned Corporation: (a) has total assets in excess of $_________; and (b) was not formed for the specific purpose to purchase the Shares.

___ 2. 

Each of the stockholders of the undersigned Corporation is able to certify that such stockholder meets at least one of the following two conditions:

a.

the stockholder is a natural person whose individual net worth(1) or joint net worth with his/her spouse exceeds $_________; or

b.

the stockholder is a natural person who had an individual income in excess of $_______ in each of 2005 and 2006 and who reasonably expects an individual income in excess of $_______ in 2007.

___ 3. 

Each of the stockholders of the undersigned Corporation is able to certify that such stockholder is a natural person who, together with his/her spouse, has had a joint income in excess of $_______ in each of 2005 and 2006 and who reasonably expects a joint income in excess of $_______ during 2007.

———————

(1) For purposes of this Questionnaire, the term “net worth” means the excess of total assets over total liabilities.  In determining income, an investor should add to his or her adjusted gross income any amounts attributable to tax-exempt income received, losses claimed as a limited partnership, deductions claimed for depletion, contributions to IRA or Keogh retirement plan, alimony payments, and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income.

23

___ 4. 

The undersigned Corporation is:

a.

a bank as defined in Section 3(a)(2) of the Securities Act; or

b.

a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; or

c.

a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended; or

d.

an insurance company as defined in Section 2(13) of the Securities Act; or

e.

an investment company registered under the Investment Company Act of 1940, as amended, or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940, as amended; or

f.

a small business investment company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended; or

g.

an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or a Massachusetts or similar business trust or Company not formed for the specific purpose to purchase the Common Stock offered hereby, with total assets in excess of $_________; or

h.

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

IF YOU CHECKED STATEMENT 2 OR STATEMENT 3 IN SECTION I AND DID NOT CHECK STATEMENT 1, YOU MUST PROVIDE A LETTER SIGNED BY AN OFFICER OF THE UNDERSIGNED CORPORATION LISTING THE NAME OF EACH STOCKHOLDER AND THE REASON (UNDER STATEMENT 2 OR STATEMENT 3) WHY SUCH STOCKHOLDER QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL INCOME, OR JOINT INCOME) OR EACH STOCKHOLDER MUST PHOTOCOPY AND COMPLETE SECTION II BELOW.

II.

IF YOU CHECKED STATEMENT 2 OR STATEMENT 3 IN SECTION I ABOVE, EACH STOCKHOLDER MUST CHECK ANY OF THE STATEMENTS 1-5 BELOW THAT APPLIES TO SUCH STOCKHOLDER AND SIGN BELOW WHERE INDICATED.

24

___ 1. 

I have an individual net worth or joint net worth with my spouse in excess of $_________.

___ 2. 

I have had an individual income in excess of $_______ in each of 2005 and 2006, and I reasonably expect an individual income in excess of $_______ for 2007.  NOTE: IF YOU ARE BUYING JOINTLY WITH YOUR SPOUSE, YOU MUST EACH HAVE AN INDIVIDUAL INCOME IN EXCESS OF $200,000 IN EACH OF THESE YEARS IN ORDER TO CHECK THIS BOX.

___ 3. 

My spouse and I have had a joint income in excess of $_______ in each of 2005 and 2006, and I reasonably expect a joint income in excess of $_______ for 2007.

___ 4. 

I am a Massachusetts resident, and my purchase of the Common Stock does not exceed 25% of my net worth or, if I am married, 25% of the combined net worth of my spouse and me, excluding principal residence and home furnishings.

___ 5.

I am a director or executive officer of the Corporation.

			
	                                                           

	 
	                                                           

	Print Name of Shareholder(s)

	          

	Signature of Shareholder(s)

III. 

OTHER CERTIFICATIONS.

By signing the Signature Page, the undersigned certifies the following:

(a)

that the Corporation's purchase of the Common Stock will be solely for the Corporation's own account and not for the account of any other person or entity; and

(b)

that the Corporation's name, address of principal place of business, place of incorporation, and taxpayer identification number as set forth in this Questionnaire are true, correct, and complete.

IV. 

GENERAL INFORMATION.

1.

PROSPECTIVE PURCHASER (THE CORPORATION)

Name:                                                                                                                         

Principal Place of Business:                                                                                       

(Number and Street)

Address for Correspondence (if different):                                                                

(Number and Street)

Telephone Number:  (_____)                                       

25

State of Incorporation:                                Date of Formation:                                 

Taxpayer Identification Number:                                                                               

Number of Stockholders:                                                                                           

2.

INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE CORPORATION

Name:                                                                                                                         

Position or Title:                                                                                                        

3.

IF SECTION II HAS BEEN COMPLETED, NAMES OF INDIVIDUAL STOCKHOLDERS

Name(s) of Stockholders:                                                                                          

Name(s) of Stockholders:                                                                                          

[Signature Page Follows]

26

The undersigned understands that the Company is relying upon the representations set forth above in determining whether to accept the subscription being tendered.

			
	 
	 
	                                                                       

	 
	 
	Name of Corporation

	 
	 
	 

	 
	 
	 

	 
	By:

	 
	 
	*Signature of Authorized Officer

	 
	 
	 

	 
	 
	 

	 
	 
	Title (If Signed on Behalf of Entity)

	 
	 
	 

	 
	 
	 

	 
	 
	Print Name

	 
	 
	 

	 
	 
	 

	 
	 
	Date

	 
	 
	 

*

Signature must match signatory to attached Subscription Agreement.

27

PARTNERSHIP INVESTOR QUESTIONNAIRE

Investor Name:                                                             (the “Partnership”)

The information contained in this Questionnaire is being furnished in order to determine whether the undersigned Partnership’s subscription to purchase the Common Stock described in the Company’s Securities Purchase Agreement may be accepted.

ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.  The undersigned Partnership understands, however, that the Company may present this Questionnaire to such parties as it deems appropriate if called upon to establish that the proposed offer to purchase the Common Stock is exempt from registration under the Securities Act of 1933, as amended, or meets the requirements of applicable state securities or “blue sky” laws.  Further, the undersigned Partnership understands that the offering may be required to be reported to the Securities and Exchange Commission and to various state securities and “blue sky” regulators.

I.

PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLIES TO THE PARTNERSHIP.

___ 1. 

The undersigned Partnership: (a) has total assets in excess of $_________; and (b) was not formed for the specific purpose to purchase the Common Stock.

___ 2. 

Each of the partners of the undersigned Partnership is able to certify that such partner meets at least one of the following two conditions:

a.

the partner is a natural person whose individual net worth(2) or joint net worth with his/her spouse exceeds $_________; or

b.

the partner is a natural person who had an individual income in excess of $_______ in each of 2005 and 2006 and who reasonably expects an individual income in excess of $_______ in 2007.

___ 3. 

Each of the partners of the undersigned Partnership is able to certify that such partner is a natural person who, together with his/her spouse, has had a joint income in excess of $_______ in each of 2005 and 2006 and who reasonably expects a joint income in excess of $_______ during 2007.

———————

(2) For purposes of this Questionnaire, the term “net worth” means the excess of total assets over total liabilities.  In determining income, an investor should add to his or her adjusted gross income any amounts attributable to tax-exempt income received, losses claimed as a limited partnership, deductions claimed for depletion, contributions to IRA or Keogh retirement plan, alimony payments, and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income.

28

IF YOU CHECKED STATEMENT 2 OR STATEMENT 3 IN SECTION I AND DID NOT CHECK STATEMENT 1, YOU MUST PROVIDE A LETTER SIGNED BY AN OFFICER, PARTNER OR GENERAL PARTNER OF THE UNDERSIGNED PARTNERSHIP LISTING THE NAME OF EACH PARTNER AND THE REASON (UNDER STATEMENT 2 OR STATEMENT 3) WHY SUCH PARTNER QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL INCOME, OR JOINT INCOME) OR EACH PARTNER MUST PHOTOCOPY AND COMPLETE SECTION II BELOW.

II. 

IF YOU CHECKED STATEMENT 2 OR STATEMENT 3 IN SECTION I ABOVE, EACH PARTNER MUST CHECK ANY OF THE STATEMENTS 1-5 BELOW THAT APPLIES TO SUCH PARTNER AND SIGN BELOW WHERE INDICATED.

___ 1. 

I have an individual net worth or joint net worth with my spouse in excess of $_________.

___ 2. 

I have had an individual income in excess of $_______ in each of 2005 and 2006, and I reasonably expect an individual income in excess of $_______ for 2007.  

___ 3. 

My spouse and I have had a joint income in excess of $_______ in each of 2005 and 2006, and I reasonably expect a joint income in excess of $_______ for 2007.

___ 4. 

I am a Massachusetts resident, and my purchase of the Common Stock does not exceed 25% of my net worth or, if I am married, 25% of the combined net worth of my spouse and me, excluding principal residence and home furnishings.

___ 5. 

I am a director, manager or executive officer of the Partnership.

			
	 
	 
	 

	Print Name of Partner(s)

	          

	Signature of Partner(s)

	 

	 
	 

	 

	 
	 

	Print Name of Partner(s)

	 
	Signature of Partner(s)

	 

	 
	 

	 

	 
	 

	Print Name of Partner(s)

	 
	Signature of Partner(s)

29

III. 

OTHER CERTIFICATIONS.

By signing the Signature Page, the undersigned certifies the following:

1.

that the Partnership's purchase of the Common Stock will be solely for the Partnership's own account and not for the account of any other person or entity; and

2.

that the Partnership's name, address of principal place of business, place of incorporation, and taxpayer identification number as set forth in this Questionnaire are true, correct, and complete.

IV. 

GENERAL INFORMATION.

1.

PROSPECTIVE PURCHASER (THE PARTNERSHIP)

Name:                                                                                                                         

Principal Place of Business:                                                                                       

(Number and Street)

Address for Correspondence (if different):                                                                

(Number and Street)

Telephone Number:  (        )                                

State of Incorporation:                                    Date of Formation:                             

Taxpayer Identification Number:                                            

Number of Partners:                                                 

2.

INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE PARTNERSHIP

Name:                                                                                                                         

Position or Title:                                                                                                        

3.

IF SECTION II HAS BEEN COMPLETED, NAMES OF INDIVIDUAL PARTNERS 

Name(s) of Partners:                                                                                                  

Name(s) of Partners:                                                                                                  

30

4.

IF SECTION II HAS BEEN COMPLETED, THE FOLLOWING INFORMATION FOR EACH INDIVIDUAL PARTNERS 

(a)

Are you involved in any litigation, which, if an adverse decision occurred, would materially affect your financial condition?   Yes         No         If yes, please provide details:

(b)

I consider myself to be an experienced and sophisticated investor or am advised by a qualified investment advisor, all as required under the various securities laws and regulations:  Yes ____   No ____

(c)

I understand the full nature and risk of an investment in the Common Stock, and I can afford the complete loss of my entire investment.   Yes ____   No ____

(d)

I am able to bear the economic risk of an investment in the Common Stock for an indefinite period of time and understand that an investment in the Common Stock is illiquid.  Yes ____   No ____ 

(e)

I further understand that I will be required to agree not to dispose of the Common Stock except in compliance with other conditions contained in the accompanying Securities Purchase Agreement.  Yes ____   No ____

(f)

Have you participated in other private placements of securities?   Yes ____   No ____

[Signature Page Follows]

31

The undersigned understands that the Company is relying upon the representations set forth above in determining whether to accept the subscription being tendered.

			
	                                             

	                                                            

	 
	Name of Partnership

	 
	 
	 

	 
	By:

	 

	 
	 
	Name:                                                  

	 
	 
	Its:                                                       

	 
	 
	 

	 
	 
	 

32

EXHIBIT C

ACCREDITED INVESTOR

An Accredited Investor is one who meets one of the following criteria:

1.

An individual whose net worth or joint net worth (i.e., total assets in excess of total liabilities) with a spouse (including homes, furnishings, etc.) exceeds $1,000,000.

2.

An individual who had gross income in excess of $200,000 during the past two years and expects the same in the current tax year.

3.

An individual whose joint gross income with a spouse exceeded $300,000 in 2005 and 2006 and expects the same in 2007.

4.

A corporation, Company, trust or other business entity, which has total assets in excess of $5,000,000 and which has not been formed for the specific purpose of acquiring the Shares offered hereby.

5.

A corporation, Company, trust or other business entity that does not qualify as an “Accredited Investor” under the Securities Act of 1933, Rule 501(a)(1) but whose individual owners are Accredited Investors; in other words, their individual owners meet the Accredited Investor criteria of numbers 1, 2 or 3 above.

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