Document:

Unassociated Document

    EXHIBIT
      10.2

     

    THE
      SECURITIES REPRESENTED BY THIS WARRANT WERE ISSUED IN AN OFFSHORE TRANSACTION
      TO
      PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S PROMULGATED
      PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") PURSUANT TO
      REGULATION S. ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS WARRANT HAVE
      NOT
      BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND MAY NOT
      BE
      OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF (I) EXCEPT
      IN
      ACCORDANCE WITH THE PROVISIONS OF REGULATION S, (II) PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT OR (III) PURSUANT TO AN EXEMPTION WHICH
      IS
      CONFIRMED IN AN OPINION OF COMPANY COUNSEL. IN ADDITION, HEDGING TRANSACTIONS
      INVOLVING THE SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE CONDUCTED UNLESS
      IN ACCORDANCE WITH THE ACT.

     

    THIS
      WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
      REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
      AVAILABLE.

     

    THIS
      WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME (U.S.) ON THE EXPIRATION
      DATE
      (AS DEFINED HEREIN).

    

    No.
      __________

     

    TRACEGUARD
      TECHNOLOGIES, INC.

    

    WARRANT
      TO PURCHASE _______ SHARES OF

    COMMON
      STOCK, PAR VALUE $0.001 PER SHARE

    

    For
      VALUE
      RECEIVED, ______ (“Warrantholder”), is entitled to purchase, subject to the
      provisions of this Warrant, from TraceGuard Technologies, Inc., a Nevada
      corporation (“Company”), at any time not later than 5:00 p.m., Eastern time
      (U.S.), on June __, 2011 (the “Expiration Date”), at an exercise price per share
      equal to $0.80 (the exercise price in effect being herein called the “Warrant
      Price”), ______ shares (“Warrant Shares”) of the Company’s common stock, par
      value $0.001 per share (“Common Stock”). The number of Warrant Shares
      purchasable upon exercise of this Warrant and the Warrant Price shall be subject
      to adjustment from time to time as described herein.

    

    Section
      1. Transfers.
      As
      provided herein, this Warrant may be transferred only pursuant to (i) an
      effective registration statement filed under the Securities Act of 1933, as
      amended (the “Securities Act”), (ii) an exemption from such registration, or
      (iii) the provisions of Regulation S promulgated under the Securities Act.
      Subject to such restrictions, the Company shall transfer this Warrant from
      time
      to time upon the books to be maintained by the Company for that purpose, upon
      surrender thereof for transfer properly endorsed or accompanied by appropriate
      instructions for transfer and such other documents as may be reasonably required
      by the Company, including, if required by the Company, an opinion of its counsel
      to the effect that such transfer is exempt from the registration requirements
      of
      the Securities Act, to establish that such transfer is being made in accordance
      with the terms hereof, and a new Warrant shall be issued to the transferee
      and
      the surrendered Warrant shall be canceled by the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Section
      2. Exercise
      of Warrant.

    

    (a) Subject
      to the provisions hereof, the Warrantholder may exercise this Warrant in whole
      or in part at any time prior to its expiration upon surrender of the Warrant,
      together with delivery of the duly executed Warrant exercise form attached
      hereto as Appendix A (the “Exercise Agreement”) and payment by cash, certified
      check or wire transfer of funds for the aggregate Warrant Price for that number
      of Warrant Shares then being purchased, to the Company during normal business
      hours on any business day at the Company’s principal executive offices outside
      the United States (or such other office or agency of the Company as it may
      designate by notice to the Warrantholder). The Warrant Shares so purchased
      shall
      be deemed to be issued to the Warrantholder or the Warrantholder’s designee, as
      the record owner of such shares, as of the close of business on the date on
      which this Warrant shall have been surrendered (or evidence of loss, theft
      or
      destruction thereof and security or indemnity satisfactory to the Company),
      the
      Warrant Price shall have been paid and the completed Exercise Agreement shall
      have been delivered. Certificates for the Warrant Shares so purchased,
      representing the aggregate number of shares specified in the Exercise Agreement,
      shall be delivered to the Warrantholder within a reasonable time, not exceeding
      ten (10) business days, after this Warrant shall have been so exercised. The
      certificates so delivered shall be in such denominations as may be requested
      by
      the Warrantholder and shall be registered in the name of the Warrantholder
      or
      such other name as shall be designated by the Warrantholder. If this Warrant
      shall have been exercised only in part, then, unless this Warrant has expired,
      the Company shall, at its expense, at the time of delivery of such certificates,
      deliver to the Warrantholder a new Warrant representing the number of shares
      with respect to which this Warrant shall not then have been exercised. As used
      herein, “business day” means a day, other than a Saturday or Sunday, on which
      banks in New York City are open for the general transaction of business. Upon
      exercise, the Warrantholder will be required to make the representations and
      warranties contained in the Exercise Agreement.

    

    (b) Notwithstanding
      anything herein to the contrary, this Warrant may be exercised in whole or
      in
      part at any time prior to the Expiration Date by means of a “cashless exercise”
in which the Warrantholder shall be entitled to receive a certificate for the
      number of Warrant Shares equal to the quotient obtained by dividing [(A-B)
      (C)]
      by (A), where:

    

    (A)
      = the
      VWAP on the business day immediately preceding the date of such
      election;

    

    (B)
      = the
      Warrant Price of this Warrant, as adjusted; and

    

    (C)
      = the
      number of Warrant Shares issuable upon exercise of this Warrant in accordance
      with the terms of this Warrant by means of a cash exercise rather than a
      cashless exercise.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    For
      purposes hereof, “VWAP” means, for any business day, the volume weighted average
      price of the Common Stock for the nearest preceding business day on the OTC
      BB
      or other principal exchange or market on which the Common Stock trades as
      reported by Bloomberg Financial L.P. (based on a trading day from 9:30 A.M.
      to
      4:02 P.M. Eastern Time (US). In connection with a cashless exercise of this
      Warrant, the Warrantholder shall deliver a duly executed Exercise Agreement
      and
      this Warrant. The Company’s delivery of shares of Common Stock and, if
      applicable, the delivery of a replacement Warrant shall conform to the
      requirements set forth in Section 2(a) herein.

    

    Section
      3. Compliance
      with the Securities Act of 1933.
      The
      Company may cause the legend set forth on the first page of this Warrant to
      be
      set forth on each Warrant or similar legend on any security issued or issuable
      upon exercise of this Warrant, unless counsel for the Company is of the opinion
      as to any such security that such legend is unnecessary.

    

    Section
      4. Payment
      of Taxes.
      The
      Company will pay any documentary stamp taxes attributable to the initial
      issuance of Warrant Shares issuable upon the exercise of the Warrant; provided,
      however, that the Company shall not be required to pay any tax or taxes which
      may be payable in respect of any transfer involved in the issuance or delivery
      of any certificates for Warrant Shares in a name other than that of the
      Warrantholder in respect of which such shares are issued, and in such case,
      the
      Company shall not be required to issue or deliver any certificate for Warrant
      Shares or any Warrant until the person requesting the same has paid to the
      Company the amount of such tax or has established to the Company’s reasonable
      satisfaction that such tax has been paid. The Warrantholder shall be responsible
      for income taxes due under federal, state or other law, if any such tax is
      due.

    

    Section
      5. Mutilated
      or Missing Warrants.
      In case
      this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall
      issue in exchange and substitution of and upon cancellation of the mutilated
      Warrant, or in lieu of and substitution for the Warrant lost, stolen or
      destroyed, a new Warrant of like tenor and for the purchase of a like number
      of
      Warrant Shares, but only upon receipt of evidence reasonably satisfactory to
      the
      Company of such loss, theft or destruction of the Warrant, and with respect
      to a
      lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect
      thereto, if requested by the Company.

    

    Section
      6. Reservation
      of Common Stock.
      The
      Company hereby represents and warrants that there have been reserved, and the
      Company shall at all applicable times keep reserved until issued (if necessary)
      as contemplated by this Section 7, out of the authorized and unissued shares
      of
      Common Stock, sufficient shares to provide for the exercise of the rights of
      purchase represented by this Warrant. The Company agrees that all Warrant Shares
      issued upon due exercise of the Warrant shall be, at the time of delivery of
      the
      certificates for such Warrant Shares, duly authorized, validly issued, fully
      paid and non-assessable shares of Common Stock of the Company.

    

    Section
      7. Adjustments.
      Subject
      and pursuant to the provisions of this Section 7, the Warrant Price and number
      of Warrant Shares subject to this Warrant shall be subject to adjustment from
      time to time as set forth hereinafter.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    (a) If
      the
      Company shall, at any time or from time to time while this Warrant is
      outstanding, pay a dividend or make a distribution on its Common Stock in shares
      of Common Stock, subdivide its outstanding shares of Common Stock into a greater
      number of shares or combine its outstanding shares of Common Stock into a
      smaller number of shares, then the number of Warrant Shares purchasable upon
      exercise of the Warrant immediately prior to the date upon which such change
      shall become effective, shall be adjusted by the Company so that the
      Warrantholder thereafter exercising the Warrant shall be entitled to receive
      the
      number of shares of Common Stock which, if the Warrant had been exercised
      immediately prior to such event, (i) the Warrantholder would have owned upon
      such exercise and been entitled to receive by virtue of such dividend,
      distribution or subdivision, or (ii) in the case of a combination, such number
      of shares into which the number of shares the Warrantholder would have owned
      upon such exercise would have been reduced to as a result of such combination.
      Whenever the number of shares of Common Stock purchasable upon exercise of
      this
      Warrant is adjusted as provided in this Section 7(a), then the Warrant Price
      shall also be adjusted by multiplying the Warrant Price in effect immediately
      prior to such adjustment, by a fraction, the numerator of which shall equal
      to
      the number of shares subject to this Warrant immediately prior to such
      adjustment, and the denominator of which shall equal to the number of shares
      subject to this Warrant immediately after such adjustment. Such adjustments
      shall be made successively whenever any event listed above shall
      occur.

    

    (b) In
      case
      the Company shall reorganize its capital, reclassify its capital stock (other
      than as provided in Section 7(a)), recapitalize, consolidate with, or merge
      with
      or into, another corporation, and pursuant to the terms of such reorganization,
      reclassification, recapitalization, merger, or consolidation, stock, securities,
      property or other assets is to be received by or distributed to the holders
      of
      Common Stock in lieu of or with respect to shares of Common Stock, then in
      each
      such case, the Warrantholder, upon exercise of this Warrant, shall be entitled
      to receive in lieu of the Warrant Shares or other securities and property
      receivable upon exercise of this Warrant prior to the consummation of such
      reorganization, reclassification, recapitalization, consolidation or merger,
      or
      if the Common Stock is not changed, exchanged or extinguished in such
      transaction then in addition to the rights specified herein, the stock or other
      securities, property or assets to which the Warrantholder would have been
      entitled to had it exercised this Warrant immediately prior to such consumation,
      by a holder of the number of shares of Common Stock for which this Warrant
      is
      exercisable immediately prior to such event. In case of any such reorganization,
      reclassification, recapitalization, merger or consolidation, the successor
      or
      acquiring corporation (if other than the Company) shall expressly assume the
      due
      and punctual observance and performance of each and every covenant and condition
      of this Warrant to be performed and observed by the Company and all the
      obligations and liabilities hereunder, subject to such modifications as may
      be
      deemed appropriate (as determined in good faith by resolution of the Board
      of
      Directors of the Company) in order to provide for adjustments of shares of
      Common Stock for which this Warrant is exercisable which shall be as nearly
      equivalent as practicable to the adjustments provided for in this Section 7(b).
      The foregoing provisions of this Section 7(b) shall similarly apply to
      successive reorganizations, reclassifications, recapitalizations, mergers or
      consolidations.

    

    (c) An
      adjustment to the Warrant Price or the number or type of securities issuable
      upon exercise of this Warrant shall become effective immediately after the
      payment date in the case of each dividend or distribution and immediately after
      the effective date of each other event which requires an
      adjustment.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    (d) In
      the
      event that, as a result of an adjustment made pursuant to this Section 7, the
      Warrantholder shall become entitled to receive any shares of capital stock
      of
      the Company other than shares of Common Stock, the number of such other shares
      so receivable upon exercise of this Warrant shall be subject thereafter to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as
      practicable to the provisions with respect to the Warrant Shares contained
      in
      this Warrant.

    

    Section
      8. Fractional
      Interest.
      The
      Company shall not be required to issue fractions of Warrant Shares upon the
      exercise of this Warrant. If any fractional share of Common Stock would, except
      for the provisions of the first sentence of this Section 9, be deliverable
      upon
      such exercise, the Company, in lieu of delivering such fractional share, shall
      pay to the exercising Warrantholder an amount in cash equal to the Market Price
      of such fractional share of Common Stock on the date of exercise.

    

    Section
      9. Benefits.
      Nothing
      in this Warrant shall be construed to give any person, firm or corporation
      (other than the Company and the Warrantholder) any legal or equitable right,
      remedy or claim, it being agreed that this Warrant shall be for the sole and
      exclusive benefit of the Company and the Warrantholder.

    

    Section
      10. Notices
      to Warrantholder.
      Upon
      the happening of any event requiring an adjustment of the Warrant Price, the
      Company shall promptly give written notice thereof to the Warrantholder at
      the
      address appearing in the records of the Company, stating the adjusted Warrant
      Price and the adjusted number of Warrant Shares resulting from such event and
      setting forth in reasonable detail the method of calculation and the facts
      upon
      which such calculation is based. Failure to give such notice to the
      Warrantholder or any defect therein shall not affect the legality or validity
      of
      the event giving rise to, or the, subject adjustment.

    

    Section
      11. Notice
      of Corporate Action.
      If at
      any time:

     

    (a) other
      than pursuant to a split or combination pursuant to Section 7(a) hereof, the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or other distribution, or any right
      to
      subscribe for or purchase any evidences of its indebtedness, any shares of
      stock
      of any class or any other securities or property, or to receive any other right,
      or

    

    (b) there
      shall be any capital reorganization of the Company, any reclassification, other
      than pursuant to a split or combination pursuant to Section 7(a) hereof, or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      corporation or,

    

    (c) there
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    then,
      in
      any one or more of such cases, the Company shall give to Warrantholder (i)
      at
      least 10 days’ prior written notice of the date on which a record date shall be
      selected for such dividend, distribution or right or for determining rights
      to
      vote in respect of any such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, liquidation or winding up, and
      (ii)
      in the case of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, dissolution, liquidation or winding up, at least
      10
      days’ prior written notice of the date when the same shall take place, and
provided,
      however,
      that
      the failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice; and provided,
      further,
      that if
      any action is taken on written consent in lieu of a meeting, notice shall be
      made as soon as reasonably practicable thereafter. Such notice in accordance
      with the foregoing clause also shall specify, as applicable, (i) the date on
      which any such record is to be taken for the purpose of such dividend,
      distribution or right, the date on which the holders of Common Stock shall
      be
      entitled to any such dividend, distribution or right, and the amount and
      character thereof, and (ii) the date on which any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      dissolution, liquidation or winding up is to take place and the time, if any
      such time is to be fixed, as of which the holders of Common Stock shall be
      entitled to exchange their shares of Common Stock for securities or other
      property deliverable upon such disposition, dissolution, liquidation or winding
      up. Each such written notice shall be sufficiently given if addressed to
      Warrantholder at the last address of Warrantholder appearing on the books of
      the
      Company and delivered in accordance with Section 13 hereof.

     

    Section
      12. Identity
      of Transfer Agent.
      The
      Transfer Agent for the Common Stock is Nevada Agency and Trust Company. Upon
      the
      appointment of any subsequent transfer agent for the Common Stock or other
      shares of the Company’s capital stock issuable upon the exercise of the rights
      of purchase represented by the Warrant, the Company will mail to the
      Warrantholder a statement setting forth the name and address of such transfer
      agent.

     

    Section
      13. Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section prior to 6:30 p.m. Eastern time (U.S.) on a Trading Day,
      (b) the next Trading Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section on a day that is not a Trading Day or later than 6:30 p.m.
      Eastern time (U.S.) on any Trading Day, (c) the Trading Day following the
      date of mailing, if sent by U.S. nationally recognized overnight courier
      service, or (d) upon actual receipt by the party to whom such notice is
      required to be given. The address for such notices and communications shall
      be
      as follows:

    

    
      	
            	If
              to the Company:	
              TraceGuard
                Technologies, Inc.

            

    

    #6
      Ravnitzki Street

    Petach
      Tikva 49277 Israel 

    Fax
      No.:
      011-972-3-542-3710

    Attn: 
      David
      Ben-Yair, CFO

     

    
      	
            	With
              a copy to:	
              Moses
                & Singer LLP

            

    

    The
      Chrysler Building

    405
      Lexington Avenue

    New
      York,
      NY 10174-1299

    Fax
      No.:
      917-206-4381

    Attn:
      Allan Grauberd, Esq.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    If
      to
      Warrantholder: To
      the
      address or facsimile number set forth in that certain Confidential Private
      Placement Subscription Agreement between the Warrantholder and the Company,
      dated as of June __, 2008; or such other address or facsimile number as may
      be
      designated in writing hereafter, in the same manner, by such
      Person.

     

    Section
      14. Successors.
      All the
      covenants and provisions hereof by or for the benefit of the Warrantholder
      shall
      bind and inure to the benefit of its respective successors and assigns
      hereunder. 

    

    Section
      15. Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by and construed and enforced in accordance
      with the internal laws of the State of Nevada, without regard to the principles
      of conflicts of law thereof to the extent such principles would require the
      application of the laws of another jurisdiction.

    

    Section
      16. No
      Rights as Stockholder.
      Prior
      to the exercise of this Warrant, the Warrantholder shall not have or exercise
      any rights as a stockholder of the Company by virtue of its ownership of this
      Warrant.

    

    Section
      17. Amendment;
      Waiver.
      Any
      term of this Warrant may be amended or waived upon the written consent of the
      Company and the Warrantholder.

    

    Section
      18. Section
      Headings.
      The
      section headings in this Warrant are for the convenience of the Company and
      the
      Warrantholder and in no way alter, modify, amend, limit or restrict the
      provisions hereof.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as
      of
      the __ day of June, 2008.

     

    
      	 	 	 
	 	TRACEGUARD
              TECHNOLOGIES, INC.
	 
 	 
 	 

	 	By:  	 
	 	Name: 	 
	 	Title: 	 

    

     

    The
      Warrantholder accepts and agrees to the terms and conditions of this Warrant,
      including, without limitation, the last sentence of Section 3
      hereof.

     

     

    
      	 	 	 
	Date: June
              __, 2008	By:  	 
	 	
              Name:
                

              Title:
                

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    APPENDIX
      A

    TRACEGUARD
      TECHNOLOGIES, INC.

    WARRANT
      EXERCISE FORM

    

    To
      TraceGuard Technologies, Inc.:

    

    ___ The
      undersigned hereby irrevocably elects to exercise the right of purchase
      represented by the within Warrant (“Warrant”) for, and to purchase thereunder by
      the payment of the Warrant Price and surrender of the Warrant, _______________
      shares of Common Stock (“Warrant Shares”) provided for therein, and requests
      that certificates for the Warrant Shares be issued as follows: 

    

    _______________________________

    Name

    ________________________________

    Address

    ________________________________

    ________________________________

     

    and
      delivered to the above address (which must be outside the United States);

    

    and,
      if
      the number of Warrant Shares shall not be all the Warrant Shares purchasable
      upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
      Shares purchasable upon exercise of this Warrant be registered in the name
      of
      the undersigned Warrantholder or the undersigned’s Assignee as below indicated
      and delivered to the address stated below.

    

    ___ The
      undersigned hereby irrevocably elects to exercise this Warrant by means of
      a
      cashless exercise pursuant to the terms of Section 2(b) of this Warrant. For
      purposes of calculating the number of shares of Common Stock issuable upon
      such
      cashless exercise, the Warrantholder has used the following
      factors:

    

    (A) the
      VWAP
      on the business day immediately preceding the date of such election =
      $__________

    (B) the
      Warrant Price of this Warrant, as adjusted = ________

    (C) the
      number of Warrant Shares issuable upon exercise of this Warrant in accordance
      with the terms of this Warrant by means of a cash exercise rather than a
      cashless exercise = __________

    

    Total
      number of shares of Common Stock issuable upon this cashless exercise of this
      Warrant = ____________

    

    The
      undersigned hereby represents and warrants to the Company that (check only
      one
      of the appropriate answers)

    

    ___
      A. the
      undersigned is not a U.S. Person and the Warrant is not being exercised on
      behalf of a U.S. Person; or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    ___
      B the
      undersigned is hereby furnishing a written opinion of counsel, in a form
      reasonably acceptable to the Company, to the effect that the Warrant and the
      Warrant Shares delivered upon exercise of the Warrant have been registered
      under
      the Securities Act or are exempt from registration thereunder.

    

    In
      addition, the undersigned acknowledges that this Warrant may not be exercised
      in
      the United States, and that the Warrant Shares may not be delivered in the
      United States upon exercise, other than in an offering deemed to meet the
      definition of "offshore transaction" pursuant to Rule 902(h) of Regulation
      S,
      unless registered under the Securities Act or an exemption from such
      registration is available.

    

    

    

    

    

    Dated:
      ___________________, ____

     

    
      	Note:
              The signature must correspond with 	
               Signature:

            	  
	the name of the Warrantholder as
              written	 	 
	on
              the
              first page of the Warrant in every	 	  
	particular, without alteration or
              enlargement	 	Name (please print)
	or any change whatever, unless the
              Warrant 	 	 
	has
              been
              assigned. 	 	  
	 	 	  
	 	 	Address
	 	 	 
	 	 	 
              

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    APPENDIX
      B

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    
 

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

     

     

    
      	   
              	 whose
              address is
	 	 
	
               ,

            
	 
	 
	 
              

    

     

    Dated:
      ______________, _______

    
 

    
      
        	 Holder's
                Signature:	 	  
	 	 	 
	 Holder's
                Address:	 	  
	 	 	 
	 	 	 
                

      

    Signature
      Guaranteed: ___________________________________________

    
 

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in any fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.Unassociated Document

     

    

    SUBSCRIPTION
      AGREEMENT

    

      
        	
                To:
                  

              	
                Customer
                  Acquisition Network Holdings, Inc.

              
	 	
                200
                  Park Avenue South

              
	 	
                Suite
                  908-909

              
	 	
                New
                  York, New York 10003

              
	 	
                Fax:
                  (954) 761-1971

              
	 	
                Attn:

              	
                Michael
                  D. Mathews,

              
	 	 	
                Chief
                  Executive Officer

              

      

    

    

    This
      Subscription Agreement (this “Agreement”)
      is
      being delivered to the purchaser identified on the signature page to this
      Agreement (the “Subscriber”)
      in
      connection with its investment in Customer Acquisition Network Holdings, Inc.,
      a
      Delaware corporation (the “Company”).
      The
      Company is conducting a private placement (the “Offering”)
      of
      units (the “Units”),
      with
      each Unit consisting of (i) 1 share of common stock, par value $0.001 per share
      (the “Shares”)
      and
      (ii) a five year warrant to purchase 0.5 of one share of common stock at an
      exercise price of $2.50 per share, (the “Warrant”)
      for a
      purchase price of $2.00. For purposes of this Agreement, the term “Securities”
shall
      refer to the Shares, the Warrants, and the shares of common stock underlying
      the
      Warrants (the “Warrant
      Shares”).
      

     

    1.    SUBSCRIPTION
      AND PURCHASE PRICE

     

    (a)    Subscription. 
      Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby
      subscribes for and agrees to purchase the number of Units indicated on page
      9
      hereof on the terms and conditions described herein. 

     

    (b)    Purchase
      of Units. 
      The Subscriber understands and acknowledges that the purchase price to be
      remitted to the Company in exchange for the Units shall be set at $2.00 per
      Unit, for an aggregate purchase price as set forth on page 9 hereof (the
“Aggregate
      Purchase Price”).
      The
      Subscriber’s delivery of this Agreement to the Company shall be accompanied by
      payment of the Aggregate Purchase Price for the Units subscribed for hereunder,
      payable in United States dollars, by wire transfer of immediately available
      funds delivered contemporaneously with the Subscriber’s delivery of this
      Agreement to the Company in accordance with the instructions provided on
Exhibit
      A.
      The
      Subscriber understands and agrees that, subject to Section 2 and applicable
      laws, by executing this Agreement, it is entering into a binding
      agreement.

     

    2.    ACCEPTANCE
      AND CLOSING PROCEDURES

     

    (a)    Acceptance
      or Rejection. 
      The obligation of the Subscriber to purchase the Units shall be irrevocable,
      and
      the Subscriber shall be legally bound to purchase the Units subject to the
      terms
      set forth in this Agreement. The Subscriber understands and agrees that the
      Company reserves the right to reject this subscription for Units in whole or
      part, at any time prior to the closing of the purchase and sale of Units
      contemplated herein (the “Closing”),
      for
      any reason, notwithstanding the Subscriber’s prior receipt of notice of
      acceptance of the Subscriber’s subscription. In the event of rejection of this
      subscription by the Company in accordance with this Section 2, or if the sale
      of
      the Units is not consummated by the Company for any reason, this Agreement
      and
      any other agreement entered into between the Subscriber and the Company relating
      to this subscription shall thereafter have no force or effect, and the Company
      shall promptly return or cause to be returned to the Subscriber the purchase
      price, without interest thereon or deduction therefrom.

     

    (b)    Closing. 
      The Closing shall take place at the offices of the Company at 200 Park Avenue
      South, Suite 908-909, New York, New York 10003, or such other place as
      determined by the Company. The Closing shall take place on a Business Day
      promptly following the satisfaction of the conditions set forth in Section
      9
      below, as determined by the Company. “Business
      Day”
shall
      mean from the hours of 9:00 a.m. (Eastern Standard Time) through 5:00 p.m.
      (Eastern Standard Time) of a day other than a Saturday, Sunday or other day
      on
      which commercial banks in New York are authorized or required to be closed.
      The
      Shares and Warrants purchased by the Subscriber will be delivered by the Company
      promptly following the Closing.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.    THE
      SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     

    The
      Subscriber hereby acknowledges, agrees with and represents, warrants and
      covenants to the Company and its affiliates, as follows:

     

    (a)    The
      Subscriber has full power and authority to enter into this Agreement, the
      execution and delivery of which has been duly authorized, if applicable, and
      this Agreement constitutes a valid and legally binding obligation of the
      Subscriber.

     

    (b)    The
      Subscriber acknowledges its understanding that the Offering and sale of the
      Securities is intended to be exempt from registration under the Securities
      Act
      of 1933, as amended (the “Securities
      Act”),
      by
      virtue of Section 4(2) of the Securities Act and the provisions of Regulation
      D
      promulgated thereunder (“Regulation
      D”).
      In
      furtherance thereof, the Subscriber represents and warrants to the Company
      and
      its affiliates as follows:

     

    (i)    The
      Subscriber realizes that the basis for the exemption from registration may
      not
      be available if, notwithstanding the Subscriber’s representations contained
      herein, the Subscriber is merely acquiring the Securities for a fixed or
      determinable period in the future, or for a market rise, or for sale if the
      market does not rise. The Subscriber does not have any such
      intention.

     

    (ii)    The
      Subscriber realizes that the basis for exemption would not be available if
      the
      Offering is part of a plan or scheme to evade registration provisions of the
      Securities Act or any applicable state or federal securities laws.

     

    (iii)    The
      Subscriber is acquiring the Securities solely for the Subscriber’s own
      beneficial account, for investment purposes, and not with view towards, or
      resale in connection with, any distribution of the Securities.

     

    (iv)    The
      Subscriber has the financial ability to bear the economic risk of the
      Subscriber’s investment, has adequate means for providing for its current needs
      and contingencies, and has no need for liquidity with respect to an investment
      in the Company.

     

    (v)    The
      Subscriber and the Subscriber’s attorney, accountant, purchaser representative
      and/or tax advisor, if any (collectively, the “Advisors”)
      has
      such knowledge and experience in financial and business matters as to be capable
      of evaluating the merits and risks of a prospective investment in the
      Securities. If other than an individual, the Subscriber also represents it
      has
      not been organized solely for the purpose of acquiring the
      Securities.

     

    (vi)    The
      Subscriber (together with its Advisors, if any) has received all documents
      requested by the Subscriber, if any, has carefully reviewed them and understands
      the information contained therein, prior to the execution of this
      Agreement.

     

    (c)    The
      Subscriber is not relying on the Company or any of its employees, agents,
      sub-agents or advisors with respect to economic considerations involved in
      this
      investment. The Subscriber has relied on the advice of, or has consulted with,
      only its Advisors. Each Advisor, if any, is capable of evaluating the merits
      and
      risks of an investment in the Securities, and each Advisor, if any, has
      disclosed to the Subscriber in writing (a copy of which is annexed to this
      Agreement) the specific details of any and all past, present or future
      relationships, actual or contemplated, between the Advisor and the Company
      or
      any affiliate or sub-agent thereof.

     

    (d)    The
      Subscriber has carefully considered the potential risks relating to the Company
      and a purchase of the Securities, and fully understands that the Securities
      are
      a speculative investment that involve a high degree of risk of loss of the
      Subscriber’s entire investment. Among other things, the Subscriber has carefully
      considered each of the risks described under the heading “Risk Factors” in the
      Company’s SEC Filings (as defined in Section 4(d) below), which risk factors are
      incorporated herein by reference.

     

    
      
        
        

      

      
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    (e)    The
      Subscriber represents, warrants and agrees that it will not sell or otherwise
      transfer the Securities without registration under the Securities Act or an
      exemption therefrom, and fully understands and agrees that the Subscriber must
      bear the economic risk of its purchase because, among other reasons, the
      Securities have not been registered under the Securities Act or under the
      securities laws of any state and, therefore, cannot be resold, pledged, assigned
      or otherwise disposed of unless they are subsequently registered under the
      Securities Act and under the applicable securities laws of such states, or
      an
      exemption from such registration is available. In particular, the Subscriber
      is
      aware that the Securities are “restricted securities,” as such term is defined
      in Rule 144 promulgated under the Securities Act (“Rule
      144”),
      and
      they may not be sold pursuant to Rule 144 unless all of the conditions of Rule
      144 are met. The Subscriber also understands that the Company is under no
      obligation to register the Securities on behalf of the Subscriber or to assist
      the Subscriber in complying with any exemption from registration under the
      Securities Act or applicable state securities laws. The Subscriber understands
      that any sales or transfers of the Securities are further restricted by state
      securities laws and the provisions of this Agreement.

     

    (f)    No
      oral
      or written representations or warranties have been made to the Subscriber by
      the
      Company or any of its officers, employees, agents, sub-agents, affiliates,
      advisors or subsidiaries, other than any representations of the Company
      contained herein, and in subscribing for the Shares and Warrants, the Subscriber
      is not relying upon any representations other than those contained
      herein.

     

    (g)    The
      Subscriber’s overall commitment to investments that are not readily marketable
      is not disproportionate to the Subscriber’s net worth, and an investment in the
      Securities will not cause such overall commitment to become
      excessive.

     

    (h)    The
      Subscriber understands and agrees that the certificates for the Securities
      shall
      bear substantially the following legend until (i) such Securities shall have
      been registered under the Securities Act and effectively disposed of in
      accordance with a registration statement that has been declared effective or
      (ii) in the opinion of counsel for the Company, such Securities may be sold
      without registration under the Securities Act, as well as any applicable “blue
      sky” or state securities laws:

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
      STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
      PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
      TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
      COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
      SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.

     

    (i)    Neither
      the Securities and Exchange Commission (the “SEC”)
      nor
      any state securities commission has approved the Securities or passed upon
      or
      endorsed the merits of the Offering. There is no government or other insurance
      covering any of the Securities.

     

    (j)    The
      Subscriber and its Advisors, if any, have had a reasonable opportunity to ask
      questions of and receive answers from a person or persons acting on behalf
      of
      the Company concerning the Offering and the business, financial condition,
      results of operations and prospects of the Company, and all such questions
      have
      been answered to the full satisfaction of the Subscriber and its Advisors,
      if
      any.

     

    (k)    The
      Subscriber is unaware of, is in no way relying on, and did not become aware
      of
      the Offering through or as a result of, any form of general solicitation or
      general advertising including, without limitation, any article, notice,
      advertisement or other communication published in any newspaper, magazine or
      similar media or broadcast over television or radio, or electronic mail over
      the
      Internet, in connection with the Offering and is not subscribing for Units
      and
      did not become aware of the Offering through or as a result of any seminar
      or
      meeting to which the Subscriber was invited by, or any solicitation of a
      subscription by, a person not previously known to the Subscriber in connection
      with investments in securities generally.

     

    
      
        
        

      

      
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    (l)    The
      Subscriber has taken no action that would give rise to any claim by any person
      for brokerage commissions, finders’ fees or the like relating to this Agreement
      or the transactions contemplated hereby.

     

    (m)    The
      Subscriber is not relying on the Company or any of its employees, agents, or
      advisors with respect to the legal, tax, economic and related considerations
      of
      an investment in the Securities and the Subscriber has relied on the advice
      of,
      or has consulted with, only its own Advisors.

     

    (n)    The
      Subscriber acknowledges that any estimates or forward-looking statements or
      projections furnished by the Company to the Subscriber, were prepared by
      management of the Company in good faith, but that the attainment of any such
      projections, estimates or forward-looking statements cannot be guaranteed by
      the
      Company or its management and should not be relied upon.

     

    (o)    No
      oral
      or written representations have been made, or oral or written information
      furnished, to the Subscriber or its Advisors, if any, in connection with the
      Offering that are in any way inconsistent with the information contained
      herein.

     

    (p)    (For
      ERISA plans only) The fiduciary of the ERISA plan (the “Plan”)
      represents that such fiduciary has been informed of and understands the
      Company’s investment objectives, policies and strategies, and that the decision
      to invest “plan assets” (as such term is defined in ERISA) in the Company is
      consistent with the provisions of ERISA that require diversification of plan
      assets and impose other fiduciary responsibilities. The Subscriber or Plan
      fiduciary (i) is responsible for the decision to invest in the Company; (ii)
      is
      independent of the Company and any of its affiliates; (iii) is qualified to
      make
      such investment decision; and (iv) in making such decision, the Subscriber
      or
      Plan fiduciary has not relied primarily on any advice or recommendation of
      the
      Company or any of its affiliates.

     

    (q)    This
      Agreement is not enforceable by the Subscriber unless it has been accepted
      by
      the Company, and the Subscriber acknowledges and agrees that the Company
      reserves the right to reject any subscription for any reason.

     

    (r)    The
      Subscriber will indemnify and hold harmless the Company and, where applicable,
      their respective directors, officers, employees, agents, advisors, affiliates
      and shareholders, and each other person, if any, who controls any of the
      foregoing, from and against any and all loss, liability, claim, damage and
      expense whatsoever (including, but not limited to, any and all fees, costs
      and
      expenses whatsoever reasonably incurred in investigating, preparing or defending
      against any claim, lawsuit, administrative proceeding or investigation whether
      commenced or threatened) (a “Loss”)
      arising out of or based upon any representation or warranty of the Subscriber
      contained herein or in any document furnished by the Subscriber to the Company
      in connection herewith being untrue in any material respect or any breach or
      failure by the Subscriber to comply with any covenant or agreement made by
      the
      Subscriber herein or therein; provided,
      however,
      that
      such Subscriber shall not be liable for any Loss that
      in
      the aggregate exceeds the amount such Subscriber would receive if Subscriber
      were to sell the Securities
      on the
      date the amount of the Loss was determined (based on the closing price of a
      share of Common Stock on its principal market on such date).

     

    (s)    The
      Subscriber is, and on each date on which the Subscriber continues to own
      restricted securities from the Offering will be, an “Accredited Investor” as
      defined in Rule 501(a) under the Securities Act. In general, an “Accredited
      Investor” is deemed to be an institution with assets in excess of $5,000,000 or
      individuals with net worth in excess of $1,000,000 or annual income exceeding
      $200,000 or $300,000 jointly with his or her spouse.

     

    (t)    The
      Subscriber, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the Offering, and has so
      evaluated the merits and risks of such investment. The Subscriber has not
      authorized any person or entity to act as its Purchaser Representative (as
      that
      term is defined in Regulation D of the General Rules and Regulations under
      the
      Securities Act) in connection with the Offering. The Subscriber is able to
      bear
      the economic risk of an investment in the Securities and, at the present time,
      is able to afford a complete loss of such investment.

     

    
      
        
        

      

      
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    (u)    The
      Subscriber has reviewed, or had an opportunity to review, all of the SEC
      Filings.

     

    4.    THE
      COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     

    The
      Company hereby acknowledges, agrees with and represents, warrants and covenants
      to the Subscriber, as follows:

     

    (a)    The
      Company has the corporate power and authority to execute and deliver this
      Agreement and to perform its obligations hereunder. This Agreement has been
      duly
      authorized, executed and delivered by the Company and is valid, binding and
      enforceable against the Company in accordance with its terms.

     

    (b)    The
      Securities to be issued to the Subscriber pursuant to this Agreement, when
      issued and delivered in accordance with the terms of this Agreement, will be
      duly and validly issued and will be fully paid and non-assessable.

     

    (c)    Neither
      the execution and delivery nor the performance of this Agreement by the Company
      will conflict with the Company’s organizational materials, as amended to date,
      or result in a breach of any terms or provisions of, or constitute a default
      under, any material contract, agreement or instrument to which the Company
      is a
      party or by which the Company is bound.

     

    (d)    The
      Company is subject to, and in full compliance with, the reporting requirements
      of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
      “Exchange
      Act”).
      The
      Company has made available to each Subscriber through the EDGAR system true
      and
      complete copies of the Company’s Quarterly Reports on Form 10-QSB and each of
      the Company’s Current Reports on Form 8-K (collectively, the “SEC
      Filings”),
      and
      all such SEC Filings are incorporated herein by reference. The SEC Filings,
      including the financial statements included therein, when they were filed with
      the SEC (or, if any amendment with respect to any such document was filed,
      when
      such amendment was filed), complied in all material respects with the applicable
      requirements of the Exchange Act and the rules and regulations thereunder and
      did not, as of such date, contain an untrue statement of a material fact or
      omit
      to state a material fact required to be stated therein or necessary in order
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading. All reports and statements required to be filed
      by
      the Company under the Securities Act and the Exchange Act have been filed,
      together with all exhibits required to be filed therewith. The Company is
      engaged in all material respects only in the business described in the SEC
      Filings, and the SEC Filings contain a complete and accurate description in
      all
      material respects of the business of the Company.

     

    (e)    Any
      information furnished by the Company in connection with the Offering is true
      and
      correct in all material respects as of its date.

     

    (f)    The
      Company acknowledges and agrees that the Subscriber is acting solely in the
      capacity of an arm’s length purchaser with respect to the Securities and the
      transactions contemplated hereby. The Company further acknowledges that the
      Subscriber is not acting as a financial advisor or fiduciary of the Company
      (or
      in any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any advice given by any Subscriber or any of their
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is merely incidental to the Subscriber’s
      purchase of the Units. The Company further represents to the Subscriber that
      the
      Company’s decision to enter into this Agreement has been based solely on the
      independent evaluation of the transactions contemplated hereby by the Company
      and its representatives.

     

    (g)    The
      Company will indemnify and hold harmless the Subscriber and, where applicable,
      its directors, officers, employees, agents, advisors and shareholders, from
      and
      against any and all loss, liability, claim, damage and expense whatsoever
      (including, but not limited to, any and all fees, costs and expenses whatsoever
      reasonably incurred in investigating, preparing or defending against any claim,
      lawsuit, administrative proceeding or investigation whether commenced or
      threatened) arising out of or based upon any representation or warranty of
      the
      Company contained herein or in any document furnished by the Company to the
      Subscriber in connection herewith being untrue in any material respect or any
      breach or failure by the Company to comply with any covenant or agreement made
      by the Company to the Subscriber in connection therewith.

     

    
      
        
        

      

      
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    5.    MOST
      FAVORED NATION PROTECTION

     

    From
      the
      date hereof until such time as no Subscriber holds any of the Securities, in
      the
      event the Company issues or sells any shares of Common Stock in the Company’s
      next private placement (the “Private Placement”) (or any securities of the
      Company which would entitle the holder thereof to acquire at any time Common
      Stock, including, without limitation, any debt preferred stock, rights, options,
      warrants or other instrument that is ant any time convertible into or
      exercisable or exchangeable for, or otherwise entitled the holder thereof to
      receive, Common Stock (the “Common
      Stock Equivalent”)),
      if a
      Subscriber reasonably believes that any of the terms and conditions thereunder
      are more favorable to such investors as the terms and conditions granted
      hereunder, upon notice to the Company by such Subscriber the Company shall
      amend
      the terms of this transaction as to such Subscriber only so as to give such
      Subscriber the benefit of such more favorable terms and conditions in the
      Private Placement. The Subscriber shall be entitled to rely on the Company’s
      representations and warranties set forth in any agreement that the Company
      shall
      enter into with respect to the Private Placement. 

     

    6.    SUBSEQUENT
      EQUITY SALES

     

    (a)    Until
      the
      earlier of (i) twenty-four (24) months following the date of the Closing or
      (ii)
      such date that there is an effective registration statement on file with
      the SEC covering the resale of all of the Shares and Warrant Shares, in the
      event that the Company issues or sells any shares of Common Stock or any Common
      Stock Equivalent pursuant to which shares of Common Stock may be acquired at
      a
      price less than $2.00 per Unit, then the Company shall promptly issue additional
      shares of Common Stock to the Subscriber in an amount sufficient that the
      actual price per Unit paid hereunder (which is $2.00) (the
      "Per
      Unit Purchase Price"),
      when
      divided by the total number of shares issued will result in an actual Per
      Unit Purchase Price paid by the Subscriber hereunder equal to such
      lower price (this is intended to be a “full ratchet” adjustment). Such
      adjustment shall be made successively whenever such an issuance is made.
      Notwithstanding the foregoing, this Section 6(a) shall not apply in respect
      of
      an Exempt Issuance.

     

    (b)    For
      purposes of this Agreement, an “Exempt Issuance” shall mean the issuance of (i)
      shares of Common Stock or options to employees, officers, directors or
      consultants of the Company pursuant to any stock or option plan duly adopted
      by
      the Board of Directors of the Company, (ii) securities (including shares of
      Common Stock) upon the exercise or exchange of or conversion of any Securities
      issued hereunder and/or other securities exercisable or exchangeable for or
      convertible into shares of Common Stock issued and outstanding on the date
      of
      this Agreement, provided that such securities have not been amended since the
      date of this Agreement to increase the number of such securities or to decrease
      the exercise, exchange or conversion price of such securities, (iii) shares
      issuable upon exercise of the Warrants and (iv) securities issued pursuant
      to acquisitions or strategic transactions approved by a majority of the
      disinterested directors of the Company. 

     

    7.    USE
      OF PROCEEDS

     

    The
      Company shall use the net proceeds from the Offering for general working capital
      purposes.

    

    8.    INSIDER
      TRADING PROHIBITION; INDEMNITY

     

    Until
      the
      earlier of the effectiveness of the Registration Statement or the date on which
      sales are permitted under Rule 144 of the Securities Act, the Subscriber hereby
      agrees to (i) refrain from (A) engaging in any transactions with respect to
      the
      capital stock of the Company or securities exercisable or convertible into
      or
      exchangeable for any shares of capital stock of the Company, and (B) entering
      into any transaction that would have the same effect, or entering into any
      swap,
      hedge or other arrangement that transfers, in whole or in part, any of the
      economic consequences of ownership of the capital stock of the Company and
      (ii)
      indemnify and hold harmless the Company and its respective officers and
      directors, employees, agents, sub-agents, advisors and affiliates and each
      other
      person, if any, who controls any of the foregoing, against any Loss arising
      out
      of or based upon any violation of this Section 8 by the Subscriber; provided,
      however,
      that
      such Subscriber shall not be liable for any Loss that
      in
      the aggregate exceeds the amount such Subscriber would receive if Subscriber
      were to sell the Securities on the date the amount of the Loss was determined
      (based on the closing price of a share of Common Stock on its principal market
      on such date).

     

    
      
        
        

      

      
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    9.    CONDITIONS
      TO ACCEPTANCE OF SUBSCRIPTION

     

    The
      Company’s right to accept the subscription of the Subscriber, on the one hand,
      and a Subscriber’s right to withdraw its funds, on the other hand, is
      conditioned upon satisfaction of the following conditions precedent on or before
      the date the Company accepts such subscription (any or all of which may be
      waived by the other party):

     

    (a)    As
      of the
      Closing, no legal action, suit or proceeding shall be pending which seeks to
      restrain or prohibit the transactions contemplated by this Agreement; provided
      that neither party hereto shall directly or indirectly initiate any such action,
      suit or proceeding.

     

    (b)    The
      representations and warranties of the Company and the Subscriber contained
      in
      this Agreement shall have been true and correct on the date of this Agreement
      and shall be true and correct as of the Closing as if made on the date of the
      Closing.

     

    (c)    The
      Common Stock shall continue to be listed on The OTC Bulletin Board.

     

    (d)    There
      are
      no stop orders preventing or suspending any offering of securities by the
      Company, or suspension of the qualification of the Common Stock for offering
      or
      sale in any jurisdiction.

     

    10.    NOTICES
      TO SUBSCRIBERS

     

    (a)    THE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES
      LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
      FROM
      THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE
      SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE
      SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE
      FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR
      THE
      ACCURACY OR ADEQUACY OF ANY INFORMATION FURNISHED IN CONNECTION WITH THIS
      OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

     

    (b)    THE
      SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
      NOT
      BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND
      APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
      THEREFROM. SUBSCRIBERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
      FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
      TIME.

     

    
      
        11.    MISCELLANEOUS
          PROVISIONS

      

    

     

    (a)    Counsel.
       All parties hereto have been represented by counsel, and no inference
      shall be drawn in favor of or against any party by virtue of the fact that
      such
      party’s counsel was or was not the principal draftsman of this Agreement. The
      Company and the Subscriber each have requested that attorneys at Haynes and
      Boone, LLP (“Counsel”) assist in documenting the terms of the agreement of the
      parties contained in this Agreement and related agreements. The parties
      acknowledge that Counsel may have previously represented the Subscriber and
      currently is counsel to Company in connection with this Agreement and related
      matters, and may continue to represent each of the parties in the future. Each
      of the parties has been provided the opportunity to be represented by counsel
      of
      its choice and has been encouraged by Counsel to seek separate representation
      to
      the extent that it deems such desirable, but the absence of such shall not
      be
      asserted as a basis for the enforceability or interpretation of any of the
      terms
      or provisions of this Agreement, or as a reason to seek disqualification of
      Counsel in any controversy or proceeding.

     

    (b)    Legal
      Fees.
       Each of the parties hereto shall be responsible to pay the costs and
      expenses of their own legal counsel in connection with the preparation and
      review of this Agreement and related documentation.

     

    
      
        
        

      

      
        -
          7
          -

        
          

        

      

      
        
        

      

    

     

    (c)    Modification. 
      Neither this Agreement, nor any provisions hereof, shall be waived, modified,
      discharged or terminated except by an instrument in writing signed by the party
      against whom any waiver, modification, discharge or termination is
      sought.

     

    (d)    Survival. 
      The representations, warranties and agreements of the Subscriber and the Company
      made in this Agreement shall survive the execution and delivery of this
      Agreement and the delivery of the Securities.

     

    (e)    Notices. 
      Any party may send any notice, request, demand, claim or other communication
      hereunder to the Subscriber at the address set forth on the signature page
      of
      this Agreement or to the Company at the address set forth above using any means
      (including personal delivery, expedited courier, messenger service, fax,
      ordinary mail or electronic mail), but no such notice, request, demand, claim
      or
      other communication will be deemed to have been duly given unless and until
      it
      actually is received by the intended recipient. Any party may change the address
      to which notices, requests, demands, claims and other communications hereunder
      are to be delivered by giving the other parties written notice in the manner
      herein set forth.

     

    (f)    Binding
      Effect. 
      Except as otherwise provided herein, this Agreement shall be binding upon,
      and
      inure to the benefit of, the parties to this Agreement and their heirs,
      executors, administrators, successors, legal representatives and assigns. If
      the
      Subscriber is more than one person or entity, the obligation of the Subscriber
      shall be joint and several and the agreements, representations, warranties
      and
      acknowledgments contained herein shall be deemed to be made by, and be binding
      upon, each such person or entity and his or its heirs, executors,
      administrators, successors, legal representatives and assigns. This Agreement
      sets forth the entire agreement and understanding between the parties as to the
      subject matter thereof and merges and supersedes all prior discussions,
      agreements and understandings of any and every nature among them.

     

    (g)    Assignability.
       This Agreement is not transferable or assignable by the parties
      hereto.

     

    (h)    Governing
      Law.
       This Agreement shall be governed by and construed in accordance with the
      laws of the State of New York, without giving effect to conflicts of law
      principles.

     

    (i)    Jurisdiction
      and Venue.
       The Company and the Subscriber hereby agree that any dispute which may
      arise between them arising out of or in connection with this Agreement shall
      be
      adjudicated before a court located in New York City, New York, and they hereby
      submit to the exclusive jurisdiction of the federal and state courts of the
      State of New York located in New York City with respect to any action or legal
      proceeding commenced by any party, and irrevocably waive any objection they
      now
      or hereafter may have respecting the venue of any such action or proceeding
      brought in such a court or respecting the fact that such court is an
      inconvenient forum, relating to or arising out of this Agreement or any acts
      or
      omissions relating to the sale of the securities hereunder, and consent to
      the
      service of process in any such action or legal proceeding by means of registered
      or certified mail, return receipt requested, postage prepaid, in care of the
      address set forth herein or such other address as either party shall furnish
      in
      writing to the other.

     

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

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        -
          8
          -

        
          

        

      

      
        
        

      

    

    

    ALL
      SUBSCRIBERS MUST COMPLETE THIS PAGE

     

    IN
      WITNESS WHEREOF, the Subscriber has executed this Agreement on the __ day of
      June 2008.

    

     

    
      	
                  250,000                

            	
              x
                $2.00 for each Unit

            	
              =
                $    500,000            .

            
	
              Units
                subscribed for

            	 	
              Aggregate
                Purchase Price

            

    

     

    Manner
      in
      which Title to Shares and Warrants is to be held (Please Check One):

     

    
      	
              1.

            	
              _X_

            	
              Individual

            	 	
              7.

            	
              ___

            	
              Trust/Estate/Pension
                or Profit sharing Plan

              Date
                Opened:______________

            
	
              2.

            	
              ___

            	
              Joint
                Tenants with Right of Survivorship

            	 	
              8.

            	
              ___

            	
              As
                a Custodian for

              ________________________________

              Under
                the Uniform Gift to Minors Act of the State of

              ________________________________

            
	
              3.

            	
              ___

            	
              Community
                Property

            	 	
              9.

            	
              ___

            	
              Married
                with Separate Property

            
	
               

              4.

            	
               

              ___

            	
               

              Tenants
                in Common

            	 	
               

              10.

            	
               

              ___

            	
               

              Keogh

            
	
               

              5.

            	
               

              ___

            	
               

              Corporation/Partnership/
                Limited Liability Company

            	 	
               

              11.

            	
               

              ___

            	
               

              Tenants
                by the Entirety

            
	
              6.

            	
              ___

            	
              IRA

            	 	 	 	 

    

    

    ALTERNATIVE
      DISTRIBUTION INFORMATION

     

    To
      direct
      distribution to a party other than the registered owner, complete the
      information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA
      INVESTMENT.

     

    Name
      of
      Firm (Bank, Brokerage, Custodian):

     

    Account
      Name:

     

    Account
      Number:

     

    Representative
      Name:

     

    Representative
      Phone Number:

     

    Address:

     

    City,
      State, Zip:

     

     

    
      
        
        

      

      
        -
          9
          -

        
          

        

      

      
        
        

      

    

    

    IF
      MORE
      THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.

    INDIVIDUAL
      SUBSCRIBERS MUST COMPLETE THIS PAGE 10.

    SUBSCRIBERS
      WHICH ARE ENTITIES MUST COMPLETE PAGE 11.

     

    EXECUTION
      BY NATURAL PERSONS

     

    
      	
              _____________________________________________________________________________

              Exact
                Name in Which Title is to be Held

            
	
                Stephen
                B.
                Wechsler           

              Name
                (Please Print)

            	 	
              _________________________________

              Name
                of Additional Purchaser

            
	
              _________________________________

              Residence:
                Number and Street

            	 	
              _________________________________

              Address
                of Additional Purchaser

            
	
              _________________________________

              City,
                State and Zip Code

            	 	
              _________________________________

              City,
                State and Zip Code

            
	
              _________________________________

              Social
                Security Number

            	 	
              _________________________________

              Social
                Security Number

            
	
              _________________________________

              Telephone
                Number

            	 	
              _________________________________

              Telephone
                Number

            
	
              _________________________________

              Fax
                Number (if available)

            	 	
              ________________________________

              Fax
                Number (if available)

            
	
              _________________________________

              E-Mail
                (if available)

            	 	
              ________________________________

              E-Mail
                (if available)

            
	
                  
                /s/ Stephen B. Wechsler          

              (Signature)

               

            	 	
              ________________________________

              (Signature
                of Additional Purchaser)

            
	
              ACCEPTED
                this 16 day of June 2008, on behalf of the Company.

            
	 	
               

              By:     /s/
                Michael D. Mathews                

                    
                Name: Michael D. Mathews

                    
                Title: Chief Executive Officer

            
	 	 

    

    

    

    
      
        
        

      

      
        -
          10
          -

        
          

        

      

      
        
        

      

    

    

    EXECUTION
      BY SUBSCRIBER WHICH IS AN ENTITY

    (Corporation,
      Partnership, LLC, Trust, Etc.)

     

    

    
      	
              _____________________________________________________________________________

              Name
                of Entity (Please Print)

            
	
              Date
                of Incorporation or Organization:

            
	 
	
              State
                of Principal Office:

            
	 
	
              Federal
                Taxpayer Identification Number:

               

              ____________________________________________

              Office
                Address

               

              ____________________________________________

              City,
                State and Zip Code

               

              ____________________________________________

              Telephone
                Number

               

              ____________________________________________

              Fax
                Number (if available)

               

              ____________________________________________

              E-Mail
                (if available)

            
	 	
              By:
                _________________________________

                    
                Name:

                    
                Title:

            
	
              [seal]

               

              Attest:
                _________________________________

                      (If
                Entity is a Corporation)

            	
               

               

              _________________________________

               

              _________________________________

              Address

            
	 	 
	 	 
	 	 
	
              ACCEPTED
                this ___ day of _________ 2008, on behalf of the
                Company.

            
	 	
               

               

              By:
                _________________________________

                    
                Name:

                    
                Title:

            

    

     

     

    
      
        
        

      

      
        -
          11
          -

        
          

        

      

      
        
        

      

    

     

    INVESTOR
      QUESTIONNAIRE

     

    Instructions:
      Check all boxes below which correctly describe you.

     

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

            

    

     

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

            

    

     

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

            

    

     

    
      	o	
              You
                are a director or executive officer of Customer Acquisition Network
                Holdings, Inc.

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

     

    
      
        
        

      

      
        -
          12
          -

        
          

        

      

      
        
        

      

    

    

    Check
      all boxes below which correctly describe you.

     

    With
      respect to this investment in the Units and its underlying securities,
      your:

    

      
        	 	
                Investment
                  Objectives:  

              	
                x Aggressive
                  Growth 

              	
                x Speculation

              	 
	 	 	 	 	 
	 	
                Risk
                  Tolerance:  

              	
                o Low
                  Risk  

              	
                o Moderate
                  Risk  

              	
                x High
                  Risk

              

      

    

     

    Are
      you
      associated with a NASD Member Firm?   o Yes 
       o No

     

    Your
      initials (purchaser and co-purchaser, if applicable) are required for each
      item
      below:

     

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

            

    

     

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

            

    

     

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

            

    

     

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

            

    

     

    The
      Subscriber hereby represents and warrants that all of its answers to this
      Investor Questionnaire are true as of the date of its execution of the
      Subscription Agreement pursuant to which it purchased the Units.

     

    
      	
               

               

              ___________________________________

              Name
                of Purchaser [please print]

               

              ___________________________________

              Signature
                of Purchaser (Entities please

              provide
                signature of Purchaser’s duly

              authorized
                signatory.)

               

              ___________________________________

              Name
                of Signatory (Entities only)

               

              ___________________________________

              Title
                of Signatory (Entities only)

            	
               

               

              ___________________________________

              Name
                of Co-Purchaser [please print]

               

              ___________________________________

              Signature
                of Co-Purchaser

            

    

    
 

    
      
        
        

      

      
        -
          13
          -

        
          

        

      

      
        
        

      

    

    

    VERIFICATION
      OF INVESTMENT ADVISOR/BROKER

     

    I
      state
      that I am familiar with the financial affairs and investment objectives of
      the
      investor named above and reasonably believe that a purchase of the securities
      is
      a suitable investment for this investor and that the investor, either
      individually or together with his or her purchaser representative, understands
      the terms of and is able to evaluate the merits of this offering. I
      acknowledge:

     

    
      	 	
              (a)

            	
              that
                I have reviewed the Subscription Agreement and forms of securities
                presented to me, and attachments (if any)
                thereto;

            

    

     

    
      	 	
              (b)

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

            

    

     

    
      	 	
              (c)

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

            

    

     

     

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

     

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

    

      
        	
                _____________________________________

              	
                ____________________________________

              
	
                Broker/Dealer

              	
                Account
                  Executive

              
	 	 
	
                _____________________________________

              	
                ____________________________________

              
	
                (Name
                  of Broker/Dealer)

              	
                (Signature)

              
	 	 
	
                _____________________________________

              	
                ____________________________________

              
	
                (Street
                  Address of Broker/Dealer Office)

              	
                (Print
                  Name)

              
	 	 
	
                _____________________________________

              	
                ____________________________________

              
	
                (City
                  of Broker/Dealer Office) (State) (Zip)

              	
                (Representative
                  I.D. Number)

              
	 	 
	
                _____________________________________

              	
                ____________________________________

              
	
                (Telephone
                  Number of Broker/Dealer Office)

              	
                (Date)

              
	 	 
	
                _____________________________________
                  

              	
                ____________________________________

              
	
                (Fax
                  Number of Broker/Dealer Office)

              	
                (E-mail
                  Address of Account Executive)

              

      

    

     

     

    
      
        
        

      

      
        -
          14
          -

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