Oklahoma
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333-150332
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73-1518725
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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10.01
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Form of Subscription Agreement
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10.02
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Form of Summary of Terms
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10.03
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Form of Convertible Debenture
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10.04
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Form of Warrant
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MACROSOLVE, INC.
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Date: October 6, 2011
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By:
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/s/ KENDALL CARPENTER | |
Kendall Carpenter
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Chief Financial Officer
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1.
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Subscription. The undersigned, desiring to purchase Convertible Debentures Series [2011] and Series [B] Warrants to purchase common stock, par value $0.01 per share (the “Debentures” and “Warrants,” respectively, and collectively, the “Securities”) of MacroSolve, Inc., an Oklahoma corporation (the “Company”), hereby subscribes for and agrees to purchase Debentures and Warrants upon acceptance of this Subscription Agreement and Questionnaire (“Subscription Agreement”) by the Company. The undersigned is delivering with this Subscription Agreement a check payable to the order of the Company in the amount shown at page 4 below.
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2.
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Representations and Warranties. By executing this Subscription Agreement, the undersigned further:
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(a)
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Acknowledges that the undersigned (i) has received the Summary of Terms (“Summary”), the form of Debenture and Warrant and (ii) is familiar with and understands each of the foregoing including the risk factors and other considerations referred to in the Summary and in the reports filed by the Company with the Securities and Exchange Commission (“SEC”) as described in the Summary;
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(b)
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Represents and warrants that the undersigned in determining to purchase the Securities has relied solely upon the documents described herein and the advice of the undersigned’s legal counsel, accountants and other financial advisers with respect to the legal, tax, investment and other consequences involved in purchasing the Securities;
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(c)
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Acknowledges that the Securities being acquired will be governed by the terms and conditions therein, which the undersigned accepts and by which the undersigned agrees to be legally bound;
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(d)
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Represents and warrants that the Securities being acquired will be acquired for the undersigned’s own account without a view to public distribution or resale and that the undersigned has no contract, undertaking, agreement or arrangement to sell or otherwise transfer or dispose of any Securities or any portion thereof;
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(e)
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Represents and warrants that the undersigned (i) can bear the economic risk of the purchase of the Securities including the total loss of the undersigned’s investment and (ii) has such knowledge and experience in business and financial matters, including the analysis of or participation in offerings of privately issued investments, as to be capable of evaluating the merits and risks of an investment in the Securities, or that the undersigned is being advised by others (acknowledged by the undersigned as being the “Purchaser Representative(s)” of the undersigned) such that they and the undersigned together are capable of making such evaluation;
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(f)
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Represents and warrants, if subject to the Employee Retirement Income Security Act (“ERISA”), that the undersigned is aware of and has taken into consideration the diversification requirements of Section 404(a)(3) of ERISA in determining to purchase the Securities and that the undersigned has concluded that the purchase of Securities is prudent;
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(g)
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Understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Act”), or the securities laws of any state and are subject to substantial restrictions on transfer;
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(h)
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Agrees that the undersigned will not sell or otherwise transfer or dispose of any Securities or any portion thereof unless such Securities are registered under the Act and any other applicable state securities laws or, if sold or transferred under an exemption from registration, the undersigned obtains an opinion of counsel that it is satisfactory to the Company that the Securities may be sold in reliance on an exemption from the registration requirements;
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(i)
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Understands that (i) the Company has no obligation or intention to register any Securities for resale or transfer under the Act or any state securities laws or to take any action (including the filing of reports or the publication of information as required by Rule 144 under the Act) which would make available any exemption from the registration requirements of any such laws and (ii) the undersigned therefore may be precluded from selling or otherwise transferring or disposing of the Securities for an indefinite period of time or at any particular time;
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(j)
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Acknowledges that the undersigned has been encouraged to rely upon the advice of the undersigned’s legal counsel, accountants, investment or other financial advisers with respect to the tax and other considerations relating to the purchase of the Securities and has been offered, during the course of discussions concerning the purchase of the Securities the opportunity to ask such questions and inspect such documents concerning the Company and its business and affairs as the undersigned has requested so as to understand more fully the nature of the investment and to verify the accuracy of the information supplied;
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(k)
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Acknowledges that the undersigned has not relied on any information, disclosures or statements by the Company in making this investment except for those in the Summary, the Debenture, the Warrant and the Company’s reports filed with the SEC;
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(l)
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Represents and warrants that (i) if an individual, the undersigned is at least 21 years of age; (ii) the undersigned has adequate means of providing for the undersigned’s current needs and personal contingencies; (iii) the undersigned has no need for liquidity in the undersigned’s investment; (iv) the undersigned maintains the undersigned’s principal residence at the address shown below; (v) all investments in and commitments to non-liquid investments are, and after the purchase of the Securities will be, reasonable in relation to the undersigned’s net worth and current needs; and (vi) any financial information that is provided herewith by the undersigned, or is subsequently submitted by the undersigned at the request of the Company, does or will accurately reflect the undersigned’s financial condition with respect to which the undersigned does not anticipate any material adverse change;
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(m)
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Understands that no Securities commission or authority has approved or disapproved the Securities passed upon or endorsed the merits of this offering or the accuracy or adequacy of the documents delivered by the Company, or made any finding or determination as to the fairness of the Securities for public investment;
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(n)
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Acknowledges that the Company has the unconditional right to accept or reject this subscription;
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(o)
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Understands that the Securities are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings set forth herein in order to determine the suitability of the undersigned to acquire the Securities;
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(p)
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Represents and warrants that the information set forth in this Subscription Agreement and Questionnaire concerning the undersigned is true and correct;
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(q)
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Represents, warrants and agrees that, if the undersigned is acquiring the Securities in a fiduciary capacity, (i) the above representations, warranties, agreements, acknowledgments and understandings shall be deemed to have been made on behalf of the person or persons for whose benefit such Securities are being acquired, (ii) the name of such person or persons is indicated below under the subscriber’s name and (iii) such further information as the Company deems appropriate shall be furnished regarding such person or persons;
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(r)
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Agrees to refrain from entering into a short position in the common stock of the Company, or a position through derivatives or other means that is the equivalent of a short position, while holding the Debentures.
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(s)
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Agrees that the Company may present the information contained herein to such persons as it deems appropriate if called upon to verify the information provided or to establish the availability of an exemption from registration under Section 4(2) of the Act, Regulation D or any state or other securities statutes or regulations or if the contents are relevant to any issue in any action, suit or proceeding which it is or may be bound; and
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(t)
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Agrees that any dispute concerning this investment, the Securities, the Summary or this Subscription Agreement and Questionnaire, including the issue of whether the dispute is subject to arbitration, will be resolved by arbitration in Tulsa, Oklahoma, under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) by a single arbitrator selected by the Company from the AAA’s panel of arbitrators.
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Dated: ______________ |
Signature of Investor (Additional Signature if required)
Print Name of Individual, Corporation, Partnership, Plan
Or Trust
Social Security Number or Tax I.D. Number under whichsecurities shall be registered
Mailing Address
City State Zip Code
Home Telephone Number Business Telephone Number
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1.
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Accredited Investor Status. Please complete each of the following certifications:
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(a)
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I certify that I have an individual net worth (or a joint net worth with my spouse) in excess of $1,000,000 (excluding homes, home furnishings and automobiles.
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Yes ________
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No___________
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(b)
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I certify that I had individual income (excluding any income of my spouse) of more than $200,000 in each of the previous two calendar years or joint income with my spouse in excess of $300,000 in each of those years and I reasonably expect to reach the same income level in the current year.
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Yes ________
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No __________
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1.
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The undersigned Trust has as its trustee a bank as defined in Section 3(a)(2) of the Securities Act of 1933.
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Yes ________
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No __________
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2.
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The undersigned Trust certifies that it has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring the Securities and is directed by a sophisticated person as defined in Rule 506(b)(2)ii) under the Securities Act of 1933.
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Yes _________
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No _________
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III.
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Accreditation for Corporate, Partnership or Limited Liability Company Investors.
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1.
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The undersigned Corporation, Partnership or Limited Liability Company certifies that EACH of its shareholders, partners, or members meets at least ONE of the following conditions:
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(a)
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Each shareholder, partners, or member is a natural person whose individual net worth (or joint net worth with his/her spouse) exceeds $1,000,000 (excluding home, home furnishings and personal property).
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¨ Yes ¨ No
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(b)
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Each shareholder, partner, or member is a natural person who had an individual income in excess of $200,000 in each of the previous two calendar years or joint income with such person’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level for the current calendar year.
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¨ Yes ¨ No
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(c)
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The shareholder, partner, or member is a corporation, partnership, or limited liability company and all of the shareholders, partners, or members of such corporation, partnership, or limited liability company can answer yes to statement III.1(a) or (b) above.
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¨ Yes ¨ No
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2.
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The undersigned Corporation, Partnership or Limited Liability Company certifies that it has total assets in excess of $5,000,000 and that it was not formed for the specific purpose of investing in the Securities.
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¨ Yes ¨ No
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3.
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The undersigned Corporation, Partnership or Limited Liability Company certifies that it is a broker, or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 and purchasing the Securities for its own account.
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¨ Yes ¨ No
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4.
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The undersigned Corporation, Partnership or Limited Liability Company certifies that is it an organization described in Section 501(c)(3) of the Internal Revenue Code with total assets in excess of $5,000,000.
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¨ Yes ¨ No
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Company:
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MacroSolve, Inc., an Oklahoma corporation (the “Company”).
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Company Symbol:
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MCVE (OTC Bulletin Board).
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Capital Structure:
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As of March 31, 2011, the Company had 200,000,000 shares of common stock, $.01 par value per share (“Common Stock”), authorized with 98,402,190 shares issued and outstanding. The Company also had outstanding warrants and options to purchase 52,873,517 and 5,774,765 shares, respectively. The assets of the Company are pledged to secure a $200,000 revolving line of credit with Arvest Bank.
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Securities:
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Convertible Debentures Series 2011 (“Debentures”) and Series B Warrants (“Warrants”) to purchase Common Stock. Unless the context otherwise requires, references to the Debentures include references to the Warrants and the Common Stock issuable by the Company upon prepayment, conversion or exercise of the Debentures, as the case may be.
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Investors:
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Investors must be “Accredited Investors” as defined by the federal securities laws (the “Investors” or “Holders”).
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Investment:
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$100,000 unless otherwise determined by the Company in its sole discretion. The Company in its discretion may exchange its previously issued debentures for Debentures.
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Offering Amount:
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The Company has not established a minimum or maximum offering size. The Company’s goal is $1,000,000 in aggregate subscriptions exclusive of the exchange of previously issued debentures. Because there is no minimum for the offering, a subscription from a prospective investor will be irrevocable when accepted by the Company and the subscription proceeds will to be immediately available for use by the Company.
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Use of Proceeds:
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The proceeds from this offering will be used by the Company for working capital to increase its market share from the sale of mobile apps in dining and other vertical markets and may include working capital for acquired companies.
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And Closing Date:
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The offering will commence on August 1, 2011, and will continue until December 31, 2011, unless terminated by the Company at an earlier date. Subscriptions for Debentures will be reviewed and accepted or rejected as they are received.
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Face Amount:
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$1,000 and even multiples thereof.
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Maturity:
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December 31, 2016.
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Interest:
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The Debentures will earn interest at the rate of 12 percent per annum. Interest will be paid quarterly exclusively from the Debenture Account described below. The Company will not be obligated to use other cash available to it for interest payments. If sufficient funds are not in the Debenture Account when an interest payment is due, interest will accrue and be paid in a future quarter or at maturity.
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Principal:
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Principal on the Debentures will be prepaid in cash on a quarterly basis as the Debenture Account permits. The Company will have discretion in determining the amount of and to whom the quarterly payments are made. Any remaining principal and accrued but unpaid interest will be paid in cash at maturity to the extent the Debenture Account permits. The remainder of the Company’s obligation not satisfied by a cash payment at maturity will be satisfied by the delivery of shares of Common Stock using the weighted average price for the five-day trading period before the maturity date.
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Account: | To provide for the prepayment of the Debentures, the Company will set aside in a separate account with a financial institution (“Debenture Account”) for the deposit of 25% of any recovery it receives from any judgment or settlement in any infringement case or claim it prosecutes. |
Conversion: | The Debentures may be converted into Common Stock at any time other than a period beginning 10 days following the notification of a prepayment by the Company and ending 30 days past such notice. Upon conversion the holder will be entitled to receive the number of shares of Common Stock that could be purchased with 200% of the principal amount of the Debenture, together with accrued and unpaid interest, and with the Common Stock valued using the weighted average price for the five-day trading period preceding the debenture investment (the “Conversion Price”) provided however, that the Conversion Price shall not be less than ten cents per share at any time and the Conversion Price shall not be more than 10 cents per share for investments made prior to October 1, 2011. |
Purchase and
Distribution Rights:
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The holders of Debentures are entitled to participate in any grant or sale of options, warrants, convertible securities and property distributed on a pro rata basis to shareholders of the Company as if the Debentures had been converted immediately before the distribution. During 2011, the holders of Debentures will have the right to participate in any new offerings of securities of the Company if the securities are offered for cash and are shares of Common Stock or securities convertible in shares of Common Stock. The right to purchase is not triggered under certain circumstances such as grant or exercise of options under employee stock option plans or the conversion of securities that are outstanding. The holders of the Debentures have certain rights upon the pro rata distribution to shareholders of property of the Company. |
Terms: | The exercise price (“Exercise Price”) of this Warrant shall be $.10 per share for debenture investments made prior to October 1, 2011. On and after October 1, 2011, the conversion price shall be equal to the Debenture Conversion Price. |
Other Terms | |
Working Capital
Requirements:
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The Company has working capital requirements of $5,000,000 over the next 24 months. Working capital will come from this offering, from future offerings of securities, from current operations and from the patent recently issued to the Company. The Company has been issued a patent on its mobile information collection system as set forth in the Company’s Current Report of Form 8-K filed with the Securities and Exchange Commission (“SEC”) on October 29, 2010. The importance of the patent in the mobile apps market has yet to be fully proven but its scope and value to the Company from future licensing agreements require the Company to initiate infringement claims as a business strategy to protect its intellectual property. This strategy will not require any significant amount of working capital but is expected to generate revenues from successful infringement litigation and settlements. |
No Shorting: | Each prospective investor must agree to not engage in any short sales of the Company’s securities while holding the Debentures. |
Confidentiality: | This Summary is confidential and none of its provisions or terms shall be disclosed except upon mutual agreement. Investors shall refrain from trading in the stock of the Company on the basis of information in this Summary until such information is publicly disclosed by the Company. |
Risk Factors: | There are substantial risks associated with an investment in the Company and in this offering. Before investing, prospective investors should review the Risk Factors Section in the Company’s Annual Report of Form 10-K filed with the SEC for the year ended December 31, 2010, as well as the Cautionary Note Regarding Forward Looking Statements in that Report. |
The Company experienced a net loss in 2010 which increased its accumulated deficit and caused the Company’s auditor to qualify its opinion for the Company’s December 31, 2010 financial statements due to doubt about the Company’s ability to continue as a going concern. The Company’s plan to continue as a going concern includes the sale of securities in offerings like this one. | |
Prospective investors should not rely on any information about the Company or this investment that is not included in the written information provided by the Company or in the Company’s reports filed with the SEC. | |
The Debentures are illiquid investments and are subject to restrictions on transfer. Each Debenture will bear a restrictive legend and the Company will limit transfers except as provided by applicable securities laws. |
Information:
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Prospective investors and their advisers may contact James C. McGill, Chairman of the Board of Directors, for additional information about the Company and this offering. The Company files annual, quarterly and current reports with the SEC. The Company’s business, capital structure, financial condition and management, among other things, are disclosed in the reports. Such reports are available on the Company’s website and from the SEC at www.sec.gov and should be reviewed by prospective investors when evaluating this investment.
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Dispute Resolution:
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Disputes concerning the Debentures, the Warrants and this offering are to be resolved by arbitration under the Commercial Arbitration Rules of the American Arbitration Association.
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Subscription:
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Investors should carefully read this Summary, the Debenture, the Warrant and the Subscription Agreement, as well as the information referred to in “Risk Factors” and “Additional Information” above before making this investment.
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MacroSolve, Inc.
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August 1, 2011
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$_______________ |
Registered Holder of the Debenture:
_______________________
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Date: _______________
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(1)
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If at any time the Company grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of Common Stock (the "Purchase Rights"), then the holder of this Debenture shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the holder could have acquired if the holder had held the number of shares of Common Stock acquirable upon conversion of this Debenture immediately before the date on which a record shall be taken for the grant, issuance or sale of such Purchase Rights or, if no such record shall be taken, the date as of which the record holders of Common Stock shall be determined for the grant, issue or sale of such Purchase Rights.
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(2)
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Except as provided herein, in addition to the Purchase Rights if at any time during 2011 the Company offers, issues or sells any shares of Common Stock or securities convertible into shares of Common Stock, the Company will offer the holder of this Debenture the right to purchase a portion of such securities equivalent to the percentage of Debentures in this offering acquired by the holder of this Debenture. This provision shall apply to securities offered, issued and sold by the Company for cash consideration and shall not apply to offers and sales of the Debentures of this series or to securities of the Company outstanding on the date of this Debenture, securities issued upon the exercise, conversion or payment of other securities, or options issued pursuant to existing option plans adopted by the Company.
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(1) | Interest shall not be paid when the balance in the Debenture Account was sufficient for payment in accordance with the terms of this Debenture; | |
(2) | Principal shall not be prepaid to the extent of the available balance in the Debenture Account in accordance with the terms of this Debenture; | |
(3) | The principal or interest owed on this Debenture shall not be paid at maturity; | |
(4) | The Company shall not establish or maintain the Debenture Account in accordance with Section 5; | |
(5) | The Company shall be in breach of any other covenant or warranty of the Company in this Debenture for at least thirty (30) days after there has been given to the Company by the holder, a written notice specifying such breach and requiring it to be remedied and stating that such notice is a "notice of default" hereunder; or | |
(6) |
A decree or order by a court having jurisdiction in the premises shall have been entered adjudicating the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company under the Bankruptcy Code or any other similar applicable federal or state law, and such decree or order shall have been in effect for a period of sixty (60) days; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of any property of the Company or for the winding up or liquidation of its affairs shall be in effect and shall have been in effect for a period of sixty (60) days.
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MacroSolve, Inc. | |||
Dated: ______________ | By: ___________________________ | ||
Name: Steve Signoff | |||
Title: Chief Executive Officer |
Holder of the Debenture: | ______________________________ | ||
Address: | ______________________________ | ||
Dated: ___________ | ______________________________ | ||
______________________________ |
Issuer: | MacroSolve, Inc. | ||||
Class of Stock: | Common Stock | ||||
Issue Date: | _____, 2011 | ||||
Expiration Date: | December 31, 2016 | ||||
Holder: | ________________________ |
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Where: X = the number of shares of Common Stock to be issued to Holder pursuant to this Section 2.
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Y = the number of shares of Common Stock covered by this Warrant in respect of which the net issue election is made pursuant to this Section 2.
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A = the Fair Market Value (defined below) of one share of Common Stock, as determined at the time the net issue election is made pursuant to this Section 2 (the “Determination Date”).
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B = the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 2.
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(i)
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the volume weighted average price per share of the Common Stock determined by calculating the dollars traded in every transaction in the Common Stock for the five-day trading period as reported on the OTCBB (or any other recognized securities market on which the Common Stock is traded if not then quoted on the OTCBB) divided by the total number of shares of Common Stock traded during that five-day period; or
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(ii)
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If there is no public market for the Common Stock, then Fair Market Value shall be determined in good faith by the Company’s Board of Directors.
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MacroSolve, Inc.
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By: Steve Signoff
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Title: Chief Executive Officer
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