UP TO 600,000 SHARES DISCOVER SCREENS, INC. (a Florida corporation)
EXHIBIT 10.02
THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED FOR OFFER OR SALE WITH, AND HAVE NOT BEEN REVIEWED OR APPROVED BY, THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, THE FLORIDA DEPARTMENT OF BANKING, DIVISION OF SECURITIES, OR ANY OTHER LOCAL, STATE OR FEDERAL AGENCY AND ARE SUBJECT TO RESTRICTIONS AND LIMITATIONS ON RESALE OR OTHER TRANSFER BY FEDERAL AND STATE SECURITIES LAWS. AN INVESTMENT IN THE SECURITIES COVERED BY THIS DOCUMENT IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.
UP TO 600,000 SHARES
DISCOVER SCREENS, INC.
(a Florida corporation)
COMMON STOCK AND SERIES A COMMON STOCK PURCHASE WARRANTS
SUBSCRIPTION DOCUMENT
From: |
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(Name of Subscriber) | ||||
To: | Discover Screens, Inc. (the Company) |
GENTLEMEN:
This Subscription Document (Subscription Document) relates to the prospective purchase of Common Stock, $0.001 Par Value (Common Stock) and Series A Common Stock Purchase Warrants (the Series A Warrants) (collectively, the Securities), each to be issued by the Company to the Subscriber. The Company is offering up to 600,000 shares of Common Stock, at a price of $0.50 per share, along with Series A Warrants to subscribe for and purchase 600,000 shares of Common Stock at an exercise price of $1.00 per share (the Offering). The Company will deliver a Confidential Private Placement Memorandum (the PPM), which will contain a more complete description of the terms and conditions of the Securities and the Offering. Until the Subscriber receives the PPM and elects, in writing, to proceed with the investment after receipt of the PPM, the Subscriber is not bound to purchase the Securities and the Subscriber may revoke his offer to purchase at his discretion.
The Securities are being offered on a best efforts and open-ended basis, such that no minimum number of shares of Common Stock will be required to be sold prior to the Company having the legal right to take title and possession of whatever subscription proceeds are tendered by investors. In connection with the Offering, the Company and Midtown Partners & Co., LLC (the Placement Agent) have requested Bush Ross, P.A. (the Escrow Agent) to serve as the interim depository for subscription proceeds (the Subscription Funds) that are tendered by investors that offer to purchase the Securities by submitting completed subscription agreements (each a Subscription Agreement) which are accepted by the Company. The Subscriber understands that the Escrow Agent represents the Company and the Placement Agent in various matters. The Subscriber understands further that the Escrow Agent may represent the Placement Agent or the Company in a matter that might be adverse to the Subscriber and hereby waives any right it might have to claim that the Escrow Agent has a conflict of interest if the Escrow Agent represents the Placement Agent or the Company in a manner adverse to the Subscriber.
The undersigned is informed: (a) there are factors relating to the subsequent transfer of any securities, including the Securities, acquired which would make their resale difficult; and (b) there is no guarantee that the Subscriber will realize any gain from any investment in the Company.
We hereby extend to each Subscriber the opportunity, prior to the consummation of a sale of any Securities, to ask questions of, and to receive answers from, our Chief Executive Officer, Robin Hoover, concerning the Offering and to obtain any additional information to the extent that we possess the same or can acquire it without unreasonable effort or expense in order to verify the accuracy of the information set forth herein. All such additional information, however, must be in writing and identified as such by us. Any information other than that contained in the Subscription Agreement, the exhibits to the Subscription Agreement, or in documents furnished by us, upon request, must not be relied upon in connection with this Offering. Requests for additional information should be directed to us, via overnight delivery service, addressed to: Robin Hoover, Chief Executive Officer, Discover Screerns, Inc., 8350 Beth Page Drive, Duluth, GA 30097. Mr. Hoovers telephone number is (770)  ###-###-####.
1. Offering and Subscription.
(a) Subject to the terms and conditions hereof, the undersigned hereby tenders this Subscription Document, expressing his, her or its intention to purchase shares of Common Stock, together with the same number of Series A Warrants.
(b) The Subscriber acknowledges his, her or its awareness that all questions as to the validity, form, eligibility (including time of receipt) and acceptance of any Subscription Agreement will be determined by the Company and that the Company has reserved the right to accept or reject any Subscription Agreement, as made, and to waive any condition of its offer, except as otherwise herein stated. If, for any reason, the Company rejects the Subscribers Subscription Agreement and the purchase price for the Securities tendered herewith, or if the Offering is withdrawn, the funds tendered with the Subscription Agreement will be returned to the Subscriber, without interest or deduction, together with all of the executed documents presented with the subscription.
2. Representations and Warranties of Subscriber. In order to induce the Company to accept his, her or its subscription, the Subscriber hereby represents and warrants to and agrees with the Company as follows:
(a) The Subscriber, if a natural person, is at least 21 years of age. The residence of the Subscriber set forth below is the true and correct residence of the Subscriber, and the Subscriber has no present intention of becoming a resident or domiciliary of any other state or jurisdiction.
(b) If the Subscriber is not a natural person, the Subscriber was not formed for the purpose of acquiring the Securities. The Subscriber understands that it may be required to provide additional information in support of the representation set forth in the preceding sentence. The principal place of business of the Subscriber is as set forth on the signature pages below.
(c) One or more of the descriptions set forth below is applicable to Subscriber (such applicable item(s) being marked X below by Subscriber) and accurately reflect(s) the Subscribers current financial situation (please mark as many as are applicable):
IF THE SUBSCRIBER IS AN INDIVIDUAL, please check all that apply in (1) through (4) below: | ||||
1. | The Subscriber is a natural person whose individual net worth, or joint net worth with that persons spouse, at the time of the purchase of the Securities exceeds $1,000,000. | ¨ | ||
2. | The Subscriber is a natural person whose income for each of 2004 and 2005 has exceeded $200,000, and there is a reasonable expectation that the Subscribers income for 2006 will also be in excess of $200,000. Such income is solely that of the Subscriber and excludes the income of the Subscribers spouse. | ¨ | ||
3. | The Subscriber is a natural person whose income, together with that of his/her spouse, for each of 2004 and 2005 has exceeded $300,000, and there is a reasonable expectation that the Subscribers income (combined with spouses) for 2006 will also be in excess of $300,000. | ¨ |
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4. | The Subscriber is any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer. | ¨ | ||
5. | The Subscriber is not an accredited investor, as defined in Rule 501 of Regulation D, C.F.R. § 230.501. | ¨ | ||
IF THE SUBSCRIBER IS A CORPORATION OR OTHER NON-INDIVIDUAL SUBSCRIBER, please check all that apply in (6) through (18) below: | ||||
6. | The Subscriber is any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity. | ¨ | ||
7. | The Subscriber is a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934. | ¨ | ||
8. | The Subscriber is an insurance company as defined in section 2(a)(13) of the Act. | ¨ | ||
9. | The Subscriber is an investment company registered under the Investment Company Act of 1940 or a business development company defined in Section 2(a)(48) thereof. | ¨ | ||
10. | The Subscriber is a Small Business Investment Company licensed under Section 301(c) or (d) of the Small Business Investment Act of 1958. | ¨ | ||
11. | The Subscriber is any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefits of its employees, if such plan has total assets in excess of $5,000,000. | ¨ | ||
12. | The Subscriber is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, and (a) if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, (i) the plan fiduciary is either a bank, savings and loan association, insurance company, or registered investment adviser, or (ii) the employee benefit plan has total assets in excess of $5,000,000 or, (b) if a self-directed plan, the investment decisions are made solely by persons that are accredited investors. | ¨ | ||
13. | The Subscriber is a private business development company defined in Section 202(a)(22) of the Investment Advisors Act of 1940. | ¨ | ||
14. | The Subscriber is a tax exempt organization described in Section 501(c)(3) of the Internal Revenue Code, not formed for the specific purpose of acquiring the securities offered, with total assets of more than $5,000,000. | ¨ | ||
15. | The Subscriber is a corporation or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets of more than $5,000,000. | ¨ | ||
16. | The Subscriber is a trust (a) with total assets in excess of $5,000,000, (b) not formed for the specific purpose of acquiring the securities offered, and (c) directed by a sophisticated person, defined as a person that has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment. | ¨ | ||
17. | The Subscriber is an entity in which all of the beneficial owners of the entity are individuals presently capable of answering (1), (2), (3) or (4) above in the affirmative. | ¨ |
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18. | The Subscriber is not an accredited investor, as defined in Rule 501 of Regulation D, C.F.R. § 230.501. | ¨ |
(d) If the undersigned individual is executing this document on behalf of a corporation, partnership or other entity, he or she has been duly authorized to execute this document and all other instruments in connection with the purchase of the Securities; his or her signature is binding upon such corporation, partnership, or other entity; and he or she represents and warrants that such corporation, partnership, or other entity was not organized for the purpose of acquiring the Securities subscribed for pursuant to this document and that the acquisition of the Securities is an authorized investment of the corporation, partnership, or other entity.
(e) The Securities will be acquired solely for the account of the Subscriber, for investment, and not with a view to, or in connection with, any resale or distribution of the Securities in violation of the registration requirements of applicable federal or state securities laws. The Subscriber has no contract, understanding or arrangement with any person to sell, transfer or pledge to such person, or anyone else, any of the Securities, and the Subscriber has no present plans or intentions to enter into any such contract, understanding or arrangement.
(f) Either the Subscriber acting alone, or the Subscriber with the assistance of the investment advisor described below, has the requisite knowledge, experience and sophistication in financial and business matters to enable the Subscriber and his/her advisor, if any, to evaluate the merits, risks and other factors bearing on a decision to invest in the Company and so as to qualify Subscriber as a sophisticated investor as established under relevant statutory, regulatory and judicial authority promulgated or created with regard to the Securities Act of 1933 (the Securities Act).
(g) The Subscriber and his/her investment advisor, if any, will have an opportunity to meet with representatives of the Company and to ask questions and receive answers to their satisfaction regarding the proposed business of the Company and its financial condition in order to assist them in evaluating the merits and risks of purchasing the Securities. All material documents and information pertaining to the Company and the investment therein will be made available to Subscriber.
(h) The Subscriber will rely upon the consultation and advice of the individual named below (the Purchaser Representative) in assessing the merits and risks of making an investment in the Company. Such individual has agreed to act as such investment advisor and such individual has represented to the Subscriber that he/she has no material relationship with the Company or any of its affiliates. [If no person was consulted, please insert the word None. If no person is named, None will be assumed.]
Advisors Name | Position | |
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(i) Subscriber has adequate net worth and annual income to provide for current needs and possible future contingencies and does not have an existing or foreseeable future need for liquidity of the investment in the Securities. Also, Subscriber is otherwise able to bear the economic risks of the proposed investment in the Securities, including loss of the entire investment, without impairing his ability to provide for himself and his family in the same manner as he is able to do at the present time, without regard to the funds proposed to be invested in the Securities.
(j) At no time was the Subscriber presented with or solicited by any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over radio or television or by any other form of general solicitation or general advertising.
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(k) In subscribing to the Securities, the Subscriber will not rely upon any information, other than the results of his own or Purchaser Representatives independent review of the written information provided to Subscriber at Subscribers request by the Company.
(l) Subscriber understands that none of the Company, its management, or any professional advisor of the Company has made or makes any representation or warranty to Subscriber with respect to, or assumes any responsibility for, the federal income tax consequences to Subscriber of an investment in the Securities.
(m) Subscriber is not subject to the fiduciary standards of the Employee Retirement and Income Security Act of 1974, as amended, and is not exempt from income tax under Section 501 of the Internal Revenue Code of 1986, as amended.
3. Additional Acknowledgments, Representations, Warranties and Agreements of Subscriber. In addition to the above representations and warranties, Subscriber represents, warrants and acknowledges to the Company that Subscriber is aware of and fully understands the following:
(a) Subscriber is aware that the purchase of the Securities sought to be acquired involves a speculative investment with a high degree of risk of loss to the Subscriber of his, her or its investment in the Securities.
(b) The financial information and certain other information regarding the Company set forth in written materials provided to Subscriber may contain forward-looking statements based on what the Company believes to be reasonable assumptions regarding the future operations of the Company and various other financial and economic conditions. Subscriber acknowledges that these statements are not intended and should not be viewed as anticipated performance or guarantees of future performance of the Company, and that the actual results of the Companys operations could differ materially from those assumed for purposes of such forward-looking statements.
(c) Subscriber is aware that the Securities have not been registered under the Securities Act or under any state securities law in reliance upon applicable federal or state transactional exemptions and further that he, she or it is purchasing an equity interest in the Company without being furnished any offering literature or prospectus other than as referenced herein.
(d) Neither the United States Securities and Exchange Commission nor any other federal or state agency has reviewed the Offering or made any finding or determination as to the suitability or fairness of an investment in the Securities, nor has any such agency made any recommendation or endorsement with respect to the Securities.
(e) There exist substantial restrictions on the transferability of the Securities, under federal and state law; there will be no public market for the Securities; the undersigned may not be able to rely upon the provisions of Rule 144 adopted by staff of the United States Securities and Exchange Commission under the Act with respect to the resale of the Securities and, accordingly, the Subscriber may have to hold the Securities indefinitely and may not be able to liquidate his, her or its investment in the Company.
(f) The Securities will be issued pursuant to applicable exemptions from the registration requirements of the Securities Act, including those provided by Section 4(2) of the Securities Act and/or rules promulgated thereunder (including, without limitation, Rule 506 under Regulation D), and applicable state securities laws, including the Florida Act. Subscriber agrees to provide such additional information, certifications and assurances to the Company as reasonably requested by the Company to assure the suitability of the investment for Subscriber and Subscribers eligibility to purchase Securities hereunder.
(g) None of the following has ever been represented, guaranteed or warranted to the Subscriber by the Company, its founder(s), agents or employees, or other persons, expressly or by implication:
(1) the approximate or exact length of time that the Subscriber will be required to remain as owner of the Securities;
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(2) the amount or type of consideration, profit or loss (including tax benefits) which reasonably may be expected to be realized, if any, as a result of the activities of the Company; or
(3) that the past performance or experience of any entity or other person associated with this investment, directly or indirectly, will in any way indicate the predictable results of the ownership of the Securities or of the Companys intended activities. There is and likely will be no public market for the Securities; it will likely not be possible for the Subscriber to liquidate the investment readily in case of an emergency. Accordingly, Subscriber understands that he should consider the investment in the Securities illiquid and that he is prepared to maintain his investment in the Company indefinitely.
(h) THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FLORIDA ACT AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION IN SUCH ACT. ANY SALES OF SECURITIES TO FIVE OR MORE PERSONS IN FLORIDA MADE IN RELIANCE UPON SECTION 517.061(11)(A) OF THE FLORIDA ACT ARE VOIDABLE BY THE PURCHASER WITHIN THREE (3) DAYS AFTER THE LATER OF (A) THE DATE THAT THE AVAILABILITY OF THIS PRIVILEGE IS COMMUNICATED TO THE PURCHASER, OR (B) THE DATE THAT SUCH PURCHASER TENDERS CONSIDERATION TO THE ISSUER, AN AGENT OF THE ISSUER OR AN ESCROW AGENT. UPON DELIVERY OF THE PRIVATE PLACEMENT MEMORANDUM AND THE SUBSCRIPTION AGREEMENT, THE COMPANY SHALL HAVE BEEN DEEMED TO HAVE PROVIDED NOTICE TO THE PURCHASER OF THIS PRIVILEGE. The Subscriber acknowledges this right granted by the Florida Act and further acknowledges that if the Subscriber is to exercise this right, the Subscriber must do so in writing within the applicable time period and that such writing must be received by the Company within such time period.
(i) The Subscriber acknowledges that:
(1) a legend will be placed on any certificates issued by the Company to evidence the interest of the undersigned in Securities of such Company, in such form as the Company may deem appropriate to describe the restrictions which are imposed upon any resale effort;
(2) a notation in the appropriate records of the Company will be made with respect to any restrictions on transfer of the Securities.
4. Covenants and Further Agreements. In order to induce the Company to accept his, her, or its subscription, the Subscriber hereby covenants and agrees as follows:
(a) The Subscriber agrees not to dispose, or attempt to dispose, of any of the Securities except in compliance with the requirements of this Document, the Securities Act, the Florida Act, and any other applicable state securities laws, and the applicable rules and regulations promulgated thereunder, and unless and until the Company shall have received from the Subscriber an opinion of counsel satisfactory to it that any proposed disposition of any of the Securities may be effected without violation thereof.
(b) The Subscriber agrees to furnish promptly to the Company and its counsel such information and material with respect to the manner and circumstances of any proposed disposition of any of the Securities as the Company or its counsel may reasonably request. The Company is not required to provide any information or assistance to any person desiring to effectuate the sale or other disposition of any of the Securities acquired hereunder.
(c) The Subscriber understands that the Company is relying upon the representations and warranties of the Subscriber in claiming the exemptions described above. Accordingly, the Subscriber agrees to
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indemnify the Company and to hold the Company harmless, in respect of any and all claims, losses and expenses (including costs and reasonable attorneys fees) that it may incur in connection with or arising out of any breach of any of the representations, warranties, covenants or agreements of the Subscriber set forth in this Document.
(d) The Subscriber agrees that, except for the three day right of rescission referred to in this Document, the Subscriber is not entitled to cancel, terminate or revoke his, her, or its Subscription Agreement or any agreements of the Subscriber thereunder and that his, her, or its Subscription Agreement and the agreements of the Subscriber thereunder shall survive (i) changes in the transactions, forms of documents and instruments related to the Offering that are not materially adverse to the Subscriber and (ii) the death or disability of the Subscriber.
The representations and warranties set forth in this Subscription Document are complete and correct as of the date hereof and shall be complete and correct and deemed restated up to and including the date of closing by the Subscriber of his, her or its purchase of any Securities sold by the Company (the Date of Closing), and the same shall survive such date. If such representations and warranties shall not be complete and correct in all respects and at all times from the date hereof up to and including the Date of Closing, the Subscriber represents and covenants that he, she or it shall give written notice of such fact to the Company, specifying which representations and warranties are not complete and correct and the reasons therefor.
5. Miscellaneous.
(a) Notice. Any notice that either party is required or may desire to give to the other under or in conjunction with this Document shall be in writing, and shall be given by addressing the same to such other party at the address set forth at the end of this Document, and by depositing the same so addressed, postage prepaid, in the United States mail, or by delivering the same personally or by courier, or by Federal Express or comparable overnight courier. Any notice mailed shall be deemed to have been given three (3) United States Post Office delivery days following the date of mailing or, otherwise, on the date of actual delivery to the receiving party. Either party may change the address for the service of notice upon it by written notice given to the other in the manner herein provided for the giving of notice.
(b) Amendments. No change, modification or termination of any of the terms, provisions, or conditions of this Document shall be effective unless made in writing and signed or initialed by all parties hereto, their successors and assigns.
(c) Governing Law. This Document shall be construed and enforced under and in accordance with the laws of the State of Florida. Any litigation arising from a dispute hereunder shall be litigated solely in the Circuit Court of the State of Florida in Hillsborough County, Florida, or in the Federal District Court for the Middle District of Florida, Tampa Division, and the parties hereto submit to the jurisdiction of such courts and agree that such courts shall be the sole situs of venue for the resolution of any such dispute through litigation.
(d) Severability. If any paragraph, subparagraph or other provision of this Subscription Document, or the application of such paragraph, subparagraph or provision, is held invalid, then the remainder of the Subscription Document, and the application of such paragraph, subparagraph or provision to person or circumstances other than those with respect to which it is held invalid, shall not be affected thereby.
(e) Binding Effect on Successors and Assigns. This Document shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, personal representatives, heirs and assigns.
(f) Continuance of Agreement. The rights, responsibilities, duties, representations and warranties of the parties hereto, and the covenants and agreements herein contained, shall survive any closing and the execution hereof, and shall continue to bind the parties hereto, and shall continue in full force and effect until each and every obligation of the parties hereto pursuant to this Document and any document or agreement incorporated herein by reference shall have been fully performed.
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(g) Assignment. This Subscription Document is not transferable or assignable by Subscriber.
(h) Effective Date. This Document shall be effective as to Subscriber as of the date of execution by Subscriber or, if the date of execution is not inserted by Subscriber, then upon receipt of such Document by the Company, which shall then be authorized to insert the date of receipt. This Document shall be effective as to the Company as the date of its acceptance of the subscription, such acceptance being indicated by execution of this Document by the President of the Company or other duly authorized representative of the Company.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned has executed this Subscription Document this day of , 2006.
If Individual Subscriber(s) | ||
Number of Common Shares: | ||
(Signature) | ||
(Signature) | ||
Print Name(s) | ||
Print Name(s) | ||
If Corporate or Other Non-Individual Subscriber | ||
Subscriber: | ||
[please print] | ||
By: | ||
Name: | ||
Title: | ||
SUBSCRIPTION DOCUMENT ACCEPTED | ||
AS OF , , 2006. | ||
DISCOVER SCREENS, INC. | ||
Robin Hoover, Chief Executive Officer |
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INVESTOR INFORMATION
If Investor is an Individual, then please
complete following information:
Social Security Number: | Residence Address (street address): | |
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E-mail Address: | Business Address: | |
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Telephone Number(s): | ||
Residence: | ||
Business: | ||
Send mail to: Business | ||
(check one) | ||
Residence |
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If Investor is a Company or
other Artificial Entity, then
please complete the following information:
Tax Identification Number: | Business Address (street address): | |
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State of Organization: | ||
| Contact Person: | |
Email Address: | Telephone Number: | |
| Business: |
Type of Entity:
¨ | corporation |
¨ | general partnership |
¨ | limited partnership |
¨ | business trust |
¨ | personal trust |
¨ | other form of entity (please specify) . |
No. of Beneficial Owners:
How many beneficial owners are:
¨ | corporations |
¨ | partnerships |
¨ | trusts |
¨ | other entities |
¨ | individuals |
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