EXHIBIT 10.4
VISUAL MANAGEMENT SYSTEMS, INC.
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SUBSCRIPTION DOCUMENTS
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GENERAL INFORMATION
INFORMATION REGARDING SUBSCRIPTION
The information contained herein is being furnished by the undersigned
investor to enable Visual Management Systems, Inc. (the "Company"), to determine
whether, under Sections 4(2) and/or 4(6) of the Securities Act of 1933, as
amended (the "Securities Act"), and Regulation D ("Regulation D") and Regulation
S ("Regulation S") promulgated thereunder, the undersigned investor meets the
qualification and suitability requirements for an investment in the Units (each
a "Unit" and collectively, the "Units") offered for sale by the Company at a
price of $2,500 per Unit. Each Unit consists of one (1) share of the Company's
Series A Preferred Stock (the "Preferred Stock") and one detachable four-year
warrant (the "Warrant") entitling the holder thereof to purchase 1,000 shares of
Common Stock at a purchase price of $3.50 per share. Each share of Preferred
Stock is convertible, at the option of the holder, into 1,000 shares of the
Company's Common Stock ("Common Stock").
By executing this document, the undersigned investor acknowledges that:
(i) the Company will rely upon the information contained herein for purposes of
the above determination; (ii) the Units will not be registered under the
Securities Act in reliance upon the exemption from registration provided by
Sections 3(b) and/or 4(2) of the Securities Act and Regulation D; and (iii)
purchase of the Units must be solely for the account of the undersigned
investor, and not for the account of any other person or with a view toward
resale, assignment, fractionalization or distribution thereof.
By executing this document, the undersigned investor represents to the
Company that the investor has adequate means of providing for current needs and
possible personal contingencies and has no need for liquidity of this
investment.
Terms used herein that are not otherwise defined herein shall have the
meaning ascribed to them as provided in the Confidential Private Placement
Memorandum dated March 30, 2007.
ALL INFORMATION PROVIDED BY PURCHASERS IN THESE SUBSCRIPTION DOCUMENTS
(INCLUDING THE INVESTOR QUESTIONNAIRE AND SUBSCRIPTION AGREEMENT) WILL BE
TREATED CONFIDENTIALLY. Each purchaser, however, agrees that the Company, the
Placement Agent and any finder or selling agent assisting in the sale of Units,
or any of their directors, officers and representatives may present the
information contained in the Subscription Documents to such parties as deemed
appropriate if called on to establish the availability of an exemption from
registration of the Units under the Securities Act or under applicable
securities laws of any state.
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VISUAL MANAGEMENT SYSTEMS, INC.
SUBSCRIPTION DOCUMENTS
INSTRUCTIONS
The following documents must be completed in accordance with the
instructions set forth below and must be executed in order to determine whether
you are an accredited investor and, if accredited, in order to subscribe for the
purchase of units ("Units"), each unit consisting of (i) one (1) share of Series
A Preferred Stock (the "Preferred Stock"), and (ii) a detachable, transferable
four-year warrant (the "Warrant") to purchase 1,000 shares of Common Stock, of
Visual Management Systems, Inc. (the "Company").
PLEASE PRINT THE ANSWERS TO ALL QUESTIONS.
1. ENCLOSED ARE THE FOLLOWING DOCUMENTS:
(a) SUBSCRIPTION AGREEMENT. Be sure to carefully and fully read the
Subscription Agreement, and execute the signature page which is
applicable to you. On the appropriate signature page of the
Subscription Agreement, the Subscriber must sign, print his, her
or its name, address and social security or tax identification
number where indicated, and indicate the number of Units
subscribed for, the date of execution, the method of payment of
the purchase price of the Units subscribed for, and the manner
in which title to the Preferred Stock and Warrants will be held.
(b) INVESTOR QUESTIONNAIRE. Be sure to carefully and fully read the
Investor Questionnaire, which can be found after the signature
pages to the Subscription Agreement. Complete the Investor
Question and execute the signature page of the Investor
Questionnaire where indicated.
A PROSPECTIVE SUBSCRIBER MUST BE SURE TO CAREFULLY AND FULLY READ THE
ACCOMPANYING CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM PRIOR TO RETURNING THE
SIGNED SUBSCRIPTION DOCUMENTS.
2. PAYMENT.
(a) Payment of the purchase price may be made by: (1) certified or
bank check made payable to "Corporate Stock Transfer, Inc. as
escrow agent for Visual Management Systems, Inc.," or (2) wire
transfer of immediately available funds, contemporaneously with
the execution and delivery of the Subscription Agreement, to
United Western Bank, as escrow bank for the Escrow Agent,
pursuant to the wire instructions below, or (3) a combination of
(1) and (2) above. The wire instructions to United Western Bank
are as follows:
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United Western Bank
278 University Blvd.
Denver, Colorado 80206
Tel. (720) 932-4305
ABA# 102 089 534
A/C# 31 00 100 928
FBO Corporate Escrow Services/Visual Management Systems Holding, Inc.
3. RETURN OF DOCUMENTS.
Copies of the signed Subscription Agreement and Investor Questionnaire
should be delivered to: Brookshire Securities Corporation, at 4 West Las Olas
Boulevard, 8th Floor, Ft. Lauderdale, FL 33301, Attention: Mr. Timothy B.
Ruggiero. If you should have any questions, please contact Mr. Ruggiero at tel:
(954) 714-9008 or fax: (954) 714-9131, or Ms Jennifer Koleser of Visual
Management Systems Holding, Inc., at tel: (732) 281-1355 x207.
* * *
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NAME OF SUBSCRIBER:_____________________________
Brookshire Securities Corporation
4 West Las Olas Boulevard
8th Floor
Ft. Lauderdale, FL 33301
Visual Management Systems, Inc.
1000 Industrial Way North, Suite C
Toms River, NJ 08755
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement") is being delivered to you
in connection with your investment in Visual Management Systems, Inc.(the
"Company"). Brookshire Securities Corporation is acting as the Placement Agent
(the "Placement Agent") in conducting a private placement (the "Private
Placement") of up to 2,000 units ("Units") of the Company (subject to an
increase in the number of units, if agreed to by the Company and the Placement
Agent, up to an aggregate of 2,300 Units). With respect to Units sold by the
Placement Agent and directly by the Company, the Company may pay fees to the
Placement Agent and any finders or other selling agents who assist it in the
sale of Units. Each Unit consists of: (1) one (1) share of the Company's Series
A Preferred Stock ("Preferred Stock"), and (ii) a detachable, four-year warrant
to purchase 1,000 shares of Common Stock of the Company at an exercise price of
$3.50 per share of Common Stock (a "Warrant"). The purchase price is $2,500 per
Unit. The Company reserves the right to sell up to an additional 300 Units at
$2,500 per Unit for an aggregate offering of up to 2,300 Units.
All subscriptions received will be deposited into an escrow account
which will be non-interest bearing and held at United Western Bank, as escrow
bank for Corporate Stock Transfer, Inc. (the "Escrow Agent"). All funds will be
held in such escrow account and distributed from the Escrow Account to the
Company as soon as practicable after the date that the following conditions (the
"Conditions") have been satisfied: (i) the Company has accepted subscriptions
for the sale of 1,000 Units or $2,500,000 (the "Minimum Offering"); and (ii) the
Company has complied with all federal and state securities laws for the issuance
of the Units (including, without limitation, making all necessary filings with
the SEC). Thereafter, additional closings may be held from time to time by the
Company and at such closings proceeds held in the Escrow Account shall be
transferred to, and made immediately available to, the Company.
1. SUBSCRIPTION AND PURCHASE PRICE
(a) SUBSCRIPTION. The undersigned hereby irrevocably subscribes for
and agrees to purchase that number of Units indicated on page 14
hereof on the terms and conditions described herein. The Company
may reject any subscription, in whole or in part, in its sole
and absolute discretion. Additionally, the Company may, in its
sole and absolute discretion, accept subscriptions for the
purchase of fractional Units.
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(b) PURCHASE OF SECURITIES. The undersigned understands and
acknowledges that the purchase price to be remitted to the
Escrow Agent in exchange for the Unit(s) shall be $2,500 per
Unit, for an aggregate purchase price of $2,500 multiplied by
the number of Units subscribed for (the "Aggregate Purchase
Price"), subject to the Company's discretion to accept
subscriptions for a fractional Unit. Payment of the Aggregate
Purchase Price shall be made by the undersigned, by: (1)
certified or bank check made payable to "Corporate Stock
Transfer, Inc., as escrow agent for Visual Management Systems,
Inc.," (2) wire transfer of immediately available funds,
contemporaneously with the execution and delivery of the
Subscription Agreement, to Western Bank, as escrow bank for the
Escrow Agent, pursuant to the wire instructions provided below,
or (3) a combination of (1) and (2) above. The wire instructions
to United Western Bank are as follows:
United Western Bank
278 University Blvd.
Denver, Colorado 80206
Tel. (720) 932-4305
ABA# 102 089 534
A/C# 31 00 100 928
FBO Corporate Escrow Services/Visual Management Systems Holding, Inc.
2. ACCEPTANCE AND CLOSING PROCEDURES
(a) Acceptance or Rejection.
The undersigned understands and agrees that this subscription may be
accepted or rejected by either the Company or the Placement Agent, in whole or
in part, in its sole and absolute discretion, and if accepted, the Units
(including the Preferred Stock and Warrants and Common Stock underlying the
Warrants or into which the Preferred Stock is convertible) purchased pursuant
hereto will be issued only in the name of the undersigned as specified on the
signature page of this Agreement. The undersigned hereby acknowledges and agrees
that this Agreement may not be canceled, revoked or withdrawn, and that this
Subscription Agreement and the documents submitted herewith shall survive: (a)
changes in the transactions, documents and instruments described in the
Memorandum that do not materially adversely affect the undersigned or the
undersigned's investment; and (b) the death or disability of the undersigned;
provided, however, that if the Company shall not have accepted this Subscription
Agreement within one hundred eighty (180) days of the date which the undersigned
executes the Subscription Agreement, this Subscription Agreement and all
documents submitted herewith shall automatically be cancelled, terminated and
revoked, and all funds heretofore or herewith paid shall be returned promptly to
the undersigned without interest.
In the event of rejection of the Subscription Agreement by the Company
or the Placement Agent, or if the sale of the Units is not consummated for any
reason, this Subscription Agreement and any other agreement entered into between
the undersigned, the Company, the Placement Agent or any finder or other selling
agent relating to this subscription shall thereafter have no force or effect,
and Company shall promptly return or cause to be returned to the
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undersigned the purchase price remitted to the Escrow Agent, without interest
thereon or deduction therefrom.
(b) Closings.
The initial closing of the purchase and sale of the Units (the "Initial
Closing") shall take place at the principal offices of Visual Management
Systems, Inc., or such other place as determined by the Company and Placement
Agent, as soon as practicable after the Conditions are satisfied. After the
Initial Closing, additional closings may be held from time to time by the
Company and at such closings proceeds held in the Escrow Account shall be
transferred to, and made immediately available to, the Company.
(c) Termination.
The subscription period for the Private Placement will terminate on May
31, 2007, unless extended by the Company and the Placement Agent, in their sole
discretion, without notice to the undersigned (the "Termination Date"). The
Company and the Placement Agent may terminate the Private Placement at any time
and without notice to the undersigned. If the Conditions have not been satisfied
on or before the Termination Date (as such may be extended), or if the Private
Placement is otherwise terminated or withdrawn, then the Escrow Agent will
return to each subscriber his, her or its subscription amount, without interest
or deduction therefrom.
3. INVESTOR'S REPRESENTATIONS AND WARRANTIES
The undersigned makes the following agreements, representations,
declarations, acknowledgments and warranties to the Company, the Placement Agent
and any finders, selling agents or other person who assists the Company in
making sales of Units with the intent that they be relied upon in determining
the undersigned's suitability as a purchaser of the Units:
(a) The undersigned has full power and authority to enter into this
Subscription Agreement, the execution and delivery of which has
been duly authorized, if applicable, and this Subscription
Agreement constitutes a valid and legally binding obligation of
the undersigned.
(b) The undersigned acknowledges that the offering and sale of the
Units is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by
virtue of Section 4(2) and/or 4(6) of the Securities Act and the
provisions of Regulation D and Regulation S promulgated
thereunder. In furtherance thereof, the undersigned represents
and warrants as follows:
(i) The undersigned realizes that the basis for the
exemption from registration may not be available if,
notwithstanding the undersigned's representations
contained herein, the undersigned is merely acquiring
the Units for a fixed or determinable period in the
future, or for a market rise, or for sale if the market
does not rise. The undersigned does not have any such
intention;
(ii) The undersigned is acquiring the Unit(s) solely for the
undersigned's own beneficial account, for investment
purposes, and not with view to, or
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resale in connection with, any distribution of the
securities comprising the Units, including the Preferred
Stock, the Warrants and such shares of Common Stock into
which the Warrants are exercised or into which the
Preferred Stock is convertible;
(iii) The undersigned has no contract, undertaking, agreement
or arrangement with any person to sell, transfer or
pledge all or any part of the Units (including the
Preferred Stock, the Warrants and the Common Stock
underlying the Warrants or into which the Preferred
Stock is convertible) for which the undersigned hereby
subscribes, and the undersigned has no present plans or
intentions to enter into any such contract, undertaking
or arrangement;
(iv) The undersigned has the financial ability to bear the
economic risk of the undersigned's investment, has
adequate means for providing for the undersigned's
current needs and contingencies, and has no need for
liquidity with respect to the undersigned's investment
in the Company;
(v) _______________________ [insert name of Purchaser
Representative: if none, so state] has acted as the
undersigned's Purchaser Representative for purposes of
the private placement exemption under the Securities
Act. If the undersigned has appointed a Purchaser
Representative (which term is used herein with the same
meaning as given in Rule 501(h) of Regulation D), the
undersigned has been advised by such Purchaser
Representative as to the merits and risks of an
investment in the Company in general, and the
suitability of an investment in the Units for the
undersigned in particular; and
(vi) The undersigned (together with the undersigned's
Purchaser Representative(s), if any) has such knowledge
and experience in financial and business matters as to
be capable of evaluating the merits and risks of the
prospective investment in the Units. If other than an
individual, the undersigned also represents it has not
been organized for the purpose of acquiring the Units.
(c) The information in the Investor Questionnaire completed and
executed by the undersigned (the "Investor Questionnaire") is
accurate and true in all respects, and the undersigned is an
"accredited investor," as that term is defined in Rule 501(a) of
Regulation D.
(d) The undersigned (and the undersigned's Purchaser Representative,
if any) has been furnished with a copy of the Confidential
Private Placement Memorandum, dated March 30, 2007, together
with all annexes thereto (as such documents may be amended or
supplemented, the "Memorandum"), relating to the private
placement by the Company of the Units. The undersigned
acknowledges that the Company has made available to the
undersigned (and the undersigned's Purchaser Representative, if
any) or provided the undersigned (and/or the undersigned's
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Purchaser Representative, if any) the opportunity to review all
documents pertaining to the investment opportunity described in
the Memorandum and this Subscription Agreement, and has allowed
the undersigned (and the undersigned's Purchaser Representative,
if any) an opportunity to ask questions and receive answers
thereto and to verify and clarify any information contained in
the Memorandum, this Subscription Agreement or related
documents. The undersigned further acknowledges that the
undersigned has received all information concerning the Company,
the Company's business, and all other information necessary for
the undersigned to invest in the Company.
(e) The undersigned is not relying on the Placement Agent, the
Company, or any finder or selling agent with respect to economic
considerations involved in this investment. The undersigned has
relied on the advice of, or has consulted with only the
person(s), if any, named as Purchaser Representative(s) herein.
Each Purchaser Representative, if any, is capable of evaluating
the merits and risks of an investment in the Units as such are
described in the Memorandum, and each Purchaser Representative,
if any, has disclosed to the undersigned 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 undersigned, the Placement Agent, the
Company, or any finder or selling agent engaged to sell Units.
(f) The undersigned represents, warrants and agrees that he will not
sell or otherwise transfer the shares of Preferred Stock, the
Warrants or the shares of Common Stock into which the Warrants
are exercisable or into which the Preferred Stock is convertible
without registration under the Securities Act or an exemption
therefrom, and fully understands and agrees that the undersigned
must bear the economic risk of the purchase of Units because,
among other reasons, neither the shares of Preferred Stock, the
Warrants nor the Common Stock underlying the Warrants or into
which the Preferred Stock is convertible have 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 undersigned is aware that the
shares of Preferred Stock, Warrants and Common Stock into which
the Warrants are exercisable or into which the Preferred Stock
is convertible 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 undersigned also
understands that, except as otherwise provided herein, the
Company is under no obligation to register the shares of
Preferred Stock, Warrants or the Common Stock underlying the
Warrants or into which the Preferred Stock is convertible on the
undersigned's behalf or to assist the undersigned in complying
with any exemption from registration under the Securities Act or
applicable state securities laws. The undersigned understands
that any sales or transfers of the shares of Preferred Stock,
Warrants and Common
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Stock underlying the Warrants or into which the Preferred Stock
is convertible are further restricted by state securities laws
and the provisions of this Agreement.
(g) No representations or warranties have been made to the
undersigned by the Company, the Placement Agent, or any other
finder or selling agent engaged to sell Units, or any of their
respective officers, employees, agents, affiliates or
subsidiaries, other than any representations contained herein
and in the Memorandum, and in subscribing for Units the
undersigned is not relying upon any representations other than
any contained herein or in the Memorandum.
(h) The undersigned understands and acknowledges that the
undersigned's purchase of the Units is a speculative investment
that involves a high degree of risk and the potential loss of
the undersigned's entire investment in the Units. The
undersigned is able to bear the loss of the undersigned's entire
investment in the Units.
(i) The undersigned's overall commitment to investments that are not
readily marketable is not disproportionate to the undersigned's
net worth, and an investment in the Units will not cause such
overall commitment to become excessive.
(j) The undersigned understands and agrees that the certificates for
the shares of Preferred Stock, Warrants and Common Stock
underlying the Warrants or into which the Preferred Stock is
convertible 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
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.
(k) FOR FOREIGN INVESTORS ONLY. If the undersigned is a foreign
(non-U.S.) investor, the undersigned represents and warrants:
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(i) Neither the undersigned nor any person or entity for
whom the undersigned is acting as fiduciary is a U.S.
Person. A U.S. Person means any one of the following:
(1) any natural person resident in the United States
of America;
(2) any partnership or corporation organized or
incorporated under the laws of the United
States;
(3) any estate of which any executor or
administrator is a U.S. Person;
(4) any trust of which any trustee is a U.S. Person;
(5) any agency or branch of a foreign entity located
in the United States;
(6) any non-discretionary account or similar account
(other than an estate or trust) held by a dealer
or other fiduciary for the benefit or account of
a U.S. person;
(7) any discretionary account or similar account
(other than an estate or trust) held by a dealer
or other fiduciary organized, incorporated or
(if an individual) resident in the United
States; and
(8) any partnership or corporation if:
a. organized or incorporated under the laws
of any foreign jurisdiction; and
b. formed by a U.S. Person principally for
the purpose of investing in securities
not registered under the Securities Act,
unless it is organized or incorporated,
and owned, by accredited investors (as
defined in Rule 501(a) under the
Securities Act) who are not natural
persons, estates or trusts.
(ii) At the time the agreement to purchase was originated,
the undersigned was outside the United States and is
outside of the United States as of the date of the
execution and delivery of this Agreement. No offer to
purchase Units was made in the United States.
(iii) The undersigned is purchasing the Units for its own
account or for the account of beneficiaries for whom the
undersigned has full investment discretion with respect
to the Units and from whom the undersigned has full
authority to bind so that each such beneficiary is bound
hereby as if such beneficiary were a direct investor
hereunder and all representations, warranties and
agreements herein were made directly by such
beneficiary. The undersigned is not purchasing the Units
on behalf of any U.S. Person
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and the sale has not been prearranged with a purchaser
in the United States.
(iv) All subsequent offers and sales of the Units (including
the Preferred Stock, Warrants and Common Stock
underlying the Warrants or into which the Preferred
Stock is convertible) will be made (a) outside the
United States in compliance with Rule 903 or Rule 904 of
Regulation S, (b) pursuant to registration of the Units
under the Securities Act, or (c) pursuant to an
exemption from such registration.
(l) The foregoing representations, warranties, and agreements shall
survive the Closing.
4. THE COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company hereby acknowledges, agrees with and represents and warrants
to the undersigned, 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 Preferred Stock and Warrants to be issued to the undersigned
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 nonassessable.
(c) The Common Stock issuable to the undersigned upon exercise of
the Warrants, or into which the Preferred Stock is convertible
when issued and delivered in accordance with this Agreement and
the Warrant and the Preferred Stock, will, upon receipt by the
Company of the applicable cash exercise price therefor, be
validly issued and fully paid and nonassessable.
(d) Neither the execution and delivery nor the performance of this
Agreement by the Company will conflict with the Company's
Articles of Incorporation, as amended, or By-laws, 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.
(e) The information contained in the Memorandum is true and correct
in all material respects as of its date.
5. COVENANTS FOLLOWING THE CLOSING; REGISTRATION RIGHTS
(a) The Company shall use its commercially reasonable best efforts
to file a "resale" registration statement (the "Registration
Statement") with the SEC registering all shares of Common Stock
issuable to the undersigned upon conversion of the
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Preferred Stock or exercise of the Warrants (the "Registrable
Shares"), no later than 60 days following the final closing of
the Private Placement (the "Final Closing Date"). The Company
shall file such amendments and furnish such information as may
be required for such purpose and to comply with such laws so as
to continue to maintain the effectiveness of the Registration
Statement from the effective date through and until the earlier
of four (4) years or the date upon which all of the Registrable
Shares may be sold pursuant to Rule 144(k), subject to Section
5(b) below. In the event the Registration Statement is not filed
with the SEC on or prior to the date which is sixty (60) days
following the Final Closing Date or if the Registration
Statement is not declared effective by the SEC on or prior to
the date which is one hundred twenty (120) days following the
Final Closing Date, the total number of shares of Common Stock
issuable upon the conversion of the Preferred Stock sold as part
of the Units in the Private Placement and to be covered by the
Registration Statement for each investor in the Private
Placement and their permitted transferees, successors, executors
or administrators (each such party, a "Holder") shall be
increased by two percent (2%) per month for each month (or
portion thereof) that the Registration Statement is not so filed
or is not effective. Furthermore, the Company shall use its
reasonable best efforts to respond to any SEC comments to the
Registration Statement on or prior to the date which is twenty
(20) business days from the date such comments are received. In
the event that the Company fails to respond to such comments
within twenty (20) business days, the total number of shares of
Common Stock issuable upon conversion of the Preferred Stock
sold as part of the Units in the Private Placement and to be
covered by the Registration Statement for each Holder shall be
increased by two percent (2%) per month for each month (or
portion thereof) that a response to the comments to the
Registration Statement has not been submitted to the SEC.
Notwithstanding anything contained in this Section 5(a) to the
contrary, the aggregate increases in shares of Common Stock
issuable upon conversion of the Preferred Stock pursuant to this
paragraph shall not exceed twenty percent (20%). The Company
shall use its reasonable best efforts to have such Registration
Statement declared effective by the SEC as soon as possible
after the initial filing date. The Company shall have no
liability to the undersigned for failure to maintain the
effectiveness of the Registration Statement due to any Stop
Order issued by the SEC, but shall use its commercially
reasonable best efforts in such event to cause the Stop Order to
be removed
(b) If at any time or from time to time after the effective date of
the Registration Statement, the Company notifies holders of the
Registrable Shares in writing of the existence of a potential
material event (as defined below), holders of the Registrable
Shares securities may not offer or sell any of the registered
securities or engage in any other transaction involving or
relating to the Registrable Shares , from the time of the giving
of notice with respect to a potential material event until the
Company notifies holders of the Registrable Shares that such
potential material event either has been disclosed to the public
or no longer constitutes a potential material event, but the
Company may not issue such a suspension for more than sixty (60)
days in the aggregate in any calendar year. The Company
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shall not be required to maintain the effectiveness of the
Registration Statement during any such suspension period.
"Potential material event" means the possession by the Company
of material information regarding a potential transaction not
ripe for disclosure in a registration statement, which will be
evidenced by determinations in good faith by the Board of
Directors of the Company that disclosure of such information in
the registration statement would be detrimental to the business
and affairs of the Company.
(c) The Company shall notify the undersigned at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the happening
of any event as a result of which, the prospectus included in
such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing. At the request of the undersigned,
the Company shall also prepare, file and furnish to the
undersigned a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. The
undersigned agrees not to offer or sell any shares covered by
the Registration Statement after receipt of such notification
until the receipt of such supplement or amendment.
(d) The Company may request the undersigned to furnish the Company
such information with respect to the undersigned and the
undersigned's proposed distribution of shares of Common Stock
pursuant to the Registration Statement as the Company may from
time to time reasonably request in writing or as shall be
required by law or by the SEC in connection therewith, and the
undersigned agrees to furnish the Company with such information.
6. USE OF PROCEEDS
The Company intends to use the available net proceeds of this offering
of Units for the purposes described in the Memorandum including, without
limitation, for investor relations and as working capital. A significant portion
of the proceeds is allocated to working capital and may be used by the Company
to, among other things, acquire strategic businesses and technologies. The
Company has not yet determined all of its expected expenditures, and cannot
estimate the amounts to be used for each purpose set forth above. Accordingly,
management will have significant flexibility in applying a substantial portion
of the net proceeds of this offering. Pending use of the net proceeds as
described above, Company may invest the net proceeds of the offering in
short-term, interest-bearing, investment-grade securities or accounts.
10
7. INSIDER TRADING PROHIBITION; INDEMNITY
(a) Commencing on the date of execution of this Subscription
Agreement by the undersigned and continuing through the date of
the Initial Closing, the undersigned 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 which
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,
the Placement Agent, and any finder or selling agent assisting
in the sale of Units, and their respective officers and
directors, employees and affiliates and each other person, if
any, who controls any of the foregoing, against any loss,
liability, claim, damage and expense whatsoever (including, but
not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any
litigation commenced or threatened or any claim whatsoever)
arising out of or based upon any violation of this Section 7(a)
by the undersigned.
(b) The undersigned agrees to indemnify and hold harmless the
Company, the Placement Agent, the Escrow Agent, and any other
finder or selling agent assisting in the sale of Units and their
respective officers and directors, employees and affiliates and
each other person, if any, who controls any of the foregoing,
against any loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or
defending against any litigation commenced or threatened or any
claim whatsoever) arising out of or based upon any false
representation or warranty by the undersigned, or the
undersigned's breach of, or failure to comply with, any covenant
or agreement made by the undersigned herein or in any other
document furnished by the undersigned to the Company, its
officers and directors, employees and its affiliates and each
other person, if any, who controls any of the foregoing in
connection with this transaction.
8. LEGENDS
FOR ALL INVESTORS:
- ------------------
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND ITS SUBSIDIARIES AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THE UNITS (INCLUDING THE PREFERRED STOCK AND WARRANTS
AND COMMON STOCK UNDERLYING THE WARRANTS OR INTO WHICH THE PREFERRED STOCK IS
CONVERTIBLE) HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE
NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE MEMORANDUM OR ANY
OTHER DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
11
THESE UNITS (INCLUDING THE PREFERRED STOCK AND WARRANTS AND COMMON STOCK
UNDERLYING THE WARRANTS OR INTO WHICH THE PREFERRED STOCK IS CONVERTIBLE) ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
FOR NEW YORK RESIDENTS ONLY:
- ----------------------------
THE PRIVATE OFFERING AND THE MEMORANDUM HAVE NOT BEEN REVIEWED BY THE
ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE
STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE PRIVATE OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF
A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENT
MADE, NOT MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF
DOCUMENTS PURPORTED TO BE SUMMARIZED IN THE PRIVATE OFFERING MEMORANDUM.
9. MISCELLANEOUS PROVISIONS
(a) 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.
(b) NOTICES. Any party may send any notice, request, demand, claim
or other communication hereunder to the intended recipient at
the address set forth above using any other means (including
personal delivery, expedited courier, messenger service, fax or
ordinary 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 notice in the manner
herein set forth.
(c) 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.
(d) 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
12
the undersigned is more than one person or entity, the
obligation of the undersigned 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.
(e) ASSIGNABILITY. This Agreement is not transferable or assignable
by the undersigned. This Agreement shall be transferable or
assignable by the Placement Agent to the Company.
(f) ENFORCEMENT. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without
giving effect to conflicts of law principles. Any action with
respect to the subject matter of this Agreement otherwise
related to the undersigned's investment in or ownership of the
Company shall be litigated in the state or federal courts
situated in Palm Beach County, Florida, to which jurisdiction
and venue all parties consent; any such action shall be by bench
trial, with each party waiving its right to trial by jury to
adjudicate the matter.
13
ALL SUBSCRIBERS MUST COMPLETE THIS PAGE
The undersigned hereby subscribes for the Units in the amount indicated
below, acknowledges that the information contained in the Investor Questionnaire
is true and correct and agrees to be bound by the terms of the Subscription
Agreement to which this signature page is a part.
The undersigned desires to purchase __________________ (INSERT NUMBER)
Units at $2,500 per Unit for a total purchase price of $_________________
(number of Units x $2,500). The undersigned will pay the purchase price of the
Units by (CHECK ONE):
________ delivering a certified or bank check payable to "Corporate
Stock Transfer, Inc., as escrow agent for Visual Management
Systems, Inc.," together with this Subscription Agreement and
the Investor Questionnaire.
________ sending by wire transfer the purchase price of the Units to
United Western Bank as escrow bank for the Escrow Agent
contemporaneously with signing and delivering this Subscription
Agreement and the Investor Questionnaire.
________ a combination of those listed above. If the undersigned checks
this method of payment, please describe below, the methods
elected:
MANNER IN WHICH TITLE TO THE UNITS IS TO BE HELD (CHECK ONE):
__ Individual __ Partnership
__ Tenants by the Entireties* __ Limited Liability Partnership
__ Joint Tenants with Rights of Survivorship* __ Corporation
__ Community Property* __ Uniform Gift to Minors Act
State:__________________
Custodian's Name:_______
Minor's Name:___________
__ Tenants in Common* __ Trust/Date of Trust
__ Individual Retirement Account(IRA)* __ Limited Liability Company
__ Keogh Plan __ Pension Plan/Name:
*Two signatures required.
INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 15.
SUBSCRIBERS THAT ARE ENTITIES MUST COMPLETE PAGE 16.
14
SIGNATURE PAGE FOR INDIVIDUAL SUBSCRIBERS
This Subscription Agreement is dated as of this _________ day of
_______________, 2007 at (city) _____________________, (state) _______________.
- --------------------------------------------------------------------------------
Exact Name in Which Title is to be Held (Please Print)
- ----------------------------------- -----------------------------------------
Name (Please Print) Name of Additional Purchaser
- ----------------------------------- -----------------------------------------
Address of Principal Residence Address of Additional Purchaser
- ----------------------------------- -----------------------------------------
City, State and Zip Code City, State and Zip Code
- ----------------------------------- -----------------------------------------
Country Country
- ----------------------------------- -----------------------------------------
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)
- ----------------------------------- -----------------------------------------
(Signature) (Signature of Additional Purchaser)
ACCEPTANCE
This Subscription Agreement is accepted as of this __________ day of
_________________, 2007 for the purchase of __________ Units.
The Company:__________________
By: __________________________
Its: _________________________
15
SIGNATURE PAGE FOR SUBSCRIBERS THAT ARE ENTITIES
(Corporation, Partnership, Trust, Etc.)
This Subscription Agreement is dated as of this _________ day of
_______________, 2007 at (city) _____________________, (state) _______________.
- --------------------------------------------------------------------------------
Name of Entity in Which Title is to be Held (Please Print)
Date of Incorporation or Organization:__________________________________________
State of Principal Office:______________________________________________________
Federal Taxpayer Identification Number:_________________________________________
- --------------------------------------------
Principal Address
- --------------------------------------------
City, State and Zip Code
- --------------------------------------------
Country
- --------------------------------------------
Telephone Number
- --------------------------------------------
Fax Number (if available)
- --------------------------------------------
E-Mail (if available)
By:
--------------------------------
Name:
Title:
[seal]
Attest:
--------------------------------- --------------------------------
(If Entity is a Corporation)
--------------------------------
Address
16
ACCEPTANCE
This Subscription Agreement is accepted as of this __________ day of
_________________, 2007 for the purchase of __________ Units.
The Company:___________________
By: ___________________________
Its: __________________________
17
INVESTOR QUESTIONNAIRE
PART I: INFORMATION TO BE PROVIDED BY ALL INVESTORS.
A. NAME OF PURCHASER:
-----------------------------------------------------------
B. ACCREDITATION. Check all boxes which correctly describe you:
_____ You are a natural person whose individual net worth, or joint
net worth with your spouse, at the time of purchase, exceeds
$1,000,000.
_____ 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 those years,
and has a reasonable expectation of reaching the same income
level in the current year.
_____ You are a director or officer of the Company.
_____ You have total assets in excess of $5,000,000 and were not
formed for the specific purpose of acquiring the Units offered
and are any of the following: a corporation, a partnership, a
Massachusetts or similar business trust, or an organization
described in Section 501(c)(3) of the Internal Revenue Code.
_____ You are a bank or savings and loan association or other
institution acting in your individual or fiduciary capacity.
_____ You are a broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934.
_____ You are an insurance company.
_____ You are an investment company or a business development company
under the Investment Company Act of 1940.
_____ You are a private business development company under the
Investment Advisers Act of 1940.
_____ You are a Small Business Investment Company licensed by the U.S.
Small Business Administration under 301(c) or (d) of the Small
Business Investment Act of 1958.
_____ You are a trust, not formed for the specific purpose of
acquiring the Units offered, with total assets in excess of
$5,000,000 and whose purchase is directed by a sophisticated
person.
_____ You are an employee benefit plan whose investment decision is
being made by a plan fiduciary, which is either a bank, savings
and loan association, insurance company or registered investment
adviser or an employee benefit plan whose total assets are in
excess of $5,000,000 or a self-directed employee benefit plan
whose investment decisions are made solely by persons that are
"accredited investors" (i.e., they meet any of the standards
listed above).
1
_____ You are an entity as to which all the equity owners (or, in the
case of a trust, all of the income beneficiaries) are
"accredited investors" (i.e., they meet the standards listed
above).
_____ None of the above, but you are a "non-U.S. Person" as that term
is defined in paragraph 5(l)(i) of the Subscription Agreement.
_____ None of the above.
C. PROVIDE ANSWERS TO THE FOLLOWING QUESTIONS:
1. Are you directly or indirectly an AFFILIATE or ASSOCIATE of any member
firm of the National Association of Securities Dealers, Inc. (the "NASD")?
YES _____ NO _____
An "affiliate" of a specified person is a person that directly or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with the specified person.
The term "associate" means (1) any corporation or organization (other
than the Company or any majority-owned subsidiary) of which you are an
officer or partner, or of which you are, directly or indirectly, the
owner beneficially of 10% or more of any class of equity securities, (2)
any trust or other estate in which you have a substantial beneficial
interest or as to which you serve as trustee or in a similar fiduciary
capacity, or (3) any relative or spouse of such person, or any relative
of such spouse, who has the same home as such person or who is a
director or officer of the Company or any of its subsidiaries.
If yes, please describe your affiliation or association:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
2. Have you made any subordinated loan to any member of the NASD?
YES _____ NO _____
If yes, please set forth the details of the loan including the original
amount(s), date(s), interest rate(s), other material terms, and
amount(s) outstanding as of the date hereof.
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
2
PART II: INFORMATION TO BE PROVIDED BY INDIVIDUAL INVESTORS:
List the state in which you maintain your principal residence:
------------------
Occupation:
--------------------------------------------------------------------
Employer:
-----------------------------------------------------------------------
IF SELF-EMPLOYED, PROVIDE THE FOLLOWING INFORMATION:
Name of business:
---------------------------------------------------------------
Length of time engaged in current business: ________ years.
The current value of my liquid assets (cash, marketable securities, cash
surrender value of my life insurance and other items easily convertible into
cash) is sufficient to provide for my current needs and possible personal
contingencies:
____ Yes ____ No
EDUCATION:
YEAR SCHOOL FIELD OF STUDY DEGREE DATE CONFERRED
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Please indicate the frequency of your investment in marketable securities, i.e.,
those where prices are quoted regularly on exchanges or the over-the-counter
market:
_____ often _____ occasionally _____ seldom ____ never
Do you consider yourself to be an experienced and sophisticated investor?
____ Yes ____ No
Do you alone, or with your Purchaser Representative, have such knowledge and
experience in financial and business matters that you are capable of evaluating
the risks and merits of this investment and feel that you can afford the loss of
my entire investment in the Units?
____ Yes ____ No
3
PART III: INFORMATION TO BE PROVIDED BY INVESTORS OTHER THAN INDIVIDUALS
Identify type of entity (corporation, trust, limited liability company,
partnership or other entity):
- --------------------------------------------------------------------------------
Identify jurisdiction under the laws of which the entity is organized:
----------
Identify jurisdiction when the entity was organized:
----------------------------
Identify jurisdiction where your principal place of business is located:
--------
Describe principal business conducted:
------------------------------------------
(YOU MAY BE ASKED TO FURNISH A COPY OF A PROPERLY CERTIFIED
COMPANY RESOLUTION AND ORGANIZATIONAL DOCUMENTS AUTHORIZING THE
INVESTOR TO MAKE AN INVESTMENT OF THIS TYPE.)
PART IV: SIGNATURE
The undersigned 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 Units.
- --------------------------------- -------------------------------------
Name of Purchaser [please print] Name of Co-Purchaser [please print]
- --------------------------------- -------------------------------------
Signature of Purchaser (Entities Signature of Co-Purchaser
please provide signature of
Purchaser's duly authorized
signatory.)
- ---------------------------------
Name of Signatory (Entities only)
- ---------------------------------
Title of Signatory (Entities only)
4
PRIVACY POLICY
It is the policy of Brookshire Securities Corporation (BSC) to respect
the privacy of customers who subscribe to transactions underwritten by BSC.
Whether its own brokers introduce Customers to BSC or the introduction
was made through Selling Agents, (hereinafter referred to as "Subscribers")
nonpublic personal information is protected by BSC.
BSC does not disclose any nonpublic personal information about
Subscribers to anyone, except as required or permitted by law and to effect,
administer, or enforce transactions requested by Subscribers in the ordinary
processing, servicing or maintaining their accounts. Furthermore, BSC does not
reserve the right to disclose Subscriber's nonpublic personal information in the
future without first notifying the Subscriber of a change in privacy policy and
providing a convenient opportunity for Subscriber to opt out of information
sharing with nonaffiliated third parties.
Under the USA PATRIOT Act of 2001 (Public Law 107-56)(together with all
rules and regulations promulgated hereunder, the "Patriot Act"), BSC and/or your
broker may be required or requested to disclose to one or more regulatory and/or
law enforcement bodies certain information regarding transactions relating to
your account involving transactions with foreign entitles and individuals, other
transactions in your account as required in the Patriot Act and other activities
described in the Patriot Act as "suspicious activities". Neither BSC nor your
broker shall have any obligation to advise you of any such disclosures or
reports made in compliance with the Patriot Act.
5