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EXHIBIT 10.12
SUBSCRIPTION AGREEMENT
AND
INVESTMENT LETTER
DATED AS OF
FEBRUARY 4, 2000
Corpas Investments, Inc.
2931 3rd Street
Santa Monica, California 90405
Dear Sirs:
This will acknowledge that the undersigned hereby irrevocably
subscribes to purchase (i) a $__________(1) principal amount ten and one-half
percent (10.5%) redeemable promissory note (the "Note") of Corpas Investments,
Inc. (the "Company") (in the form attached hereto as Exhibit A), and (ii) a
Warrant to purchase 1 share of the Company's $.001 par value common stock (the
"Common Stock") for each $3.00 of principal amount of the Note (such number of
shares to be rounded up in the case of fractional amounts). The exercise price
of the Warrant shall be $2.00 (subject to adjustments, all as provided in the
form of Warrant attached hereto as Exhibit B) for an aggregate purchase price
of $_________(1). The Notes and Warrants may hereinafter collectively be
referred to as the "Securities." The Company is offering an aggregate of
$2,000,000 principal amount of Notes to Accredited Investors and is requesting
investments in Units of $25,000 with each Unit consisting of a separate Note in
the Principal amount of $25,000 and a separate Warrant. With the permission of
the Company fractional Units (in multiples) of $5,000 will be permitted for
subscriptions over minimum amounts to be determined by the Company.
Upon receipt of the executed Subscription Agreement and Investment
Letter (the "Subscription Agreement" or "Agreement") (including the
Confidential Purchaser Questionnaire), the Company will deposit the
accompanying check, if payment is by check, into its checking account. Within
10 business days after the receipt by the Company of good funds from the sale
of the Note and Warrants, the Company will evidence its acceptance by
countersigning and mailing a copy of the Subscription Agreement and an original
Note and Warrant certificate to the subscriber (the "Closing").
The undersigned acknowledges that neither the Notes nor the Warrants
purchased hereby have been registered under the Securities Act of 1933, as
amended (the "Act"), or the securities laws of any state, that the Securities
are being purchased for investment purposes and not with a view to distribution
or resale, nor with the intention of selling,, transferring or otherwise
disposing of all or any part of such Securities for any particular price, or at
any particular time, or
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(1) This amount is the total amount of the investment.
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upon the happening of any particular event or circumstances, except selling,
transferring, or disposing of said Securities made in full compliance with all
applicable provisions of the Act, the Rules and Regulations promulgated by the
Securities and Exchange Commission thereunder, and applicable state securities
laws; and that such Securities must be held indefinitely unless they are
subsequently registered under the Act, or an exemption from such registration
is available, and will require an opinion of counsel that registration is not
required under the Act or such state securities laws, and that the certificates
to be issued will bear a legend indicating that transfer of the Securities have
not been so registered and the legend may bear the following or similar words:
The Securities represented hereby have not been registered
under the Securities Act of 1933, as amended (the "Act") and
the securities laws of any state. These Securities have been
acquired for investment purposes and not with a view to
distribution or resale, and may not be sold, assigned, made
subject to a security interest, pledged, hypothecated,
transferred or otherwise disposed of without an effective
Registration Statement for such Securities under the Act, and
applicable state securities laws, or an opinion of counsel
satisfactory to Corpas Investments, Inc. to the effect that
registration is not required under such Act and such state
securities laws.
In connection with the purchase of the Securities, I acknowledge that
the Company will be relying on the information and on the representations set
forth herein, and I hereby represent, warrant, agree and acknowledge that:
(a) I have not received any general solicitation or general
advertising regarding the purchase of the securities;
(b) There is no finder in connection with this transaction;
(c) I have sufficient knowledge and experience of financial and
business matters so that I am able to evaluate the merits and risks of
purchasing the Securities and I have had substantial experience in previous
private and public purchases of securities;
(d) I do not require for my liquidity needs the funds being used
to purchase the Securities, I have adequate means to provide for my personal
needs, and possess the ability to bear the economic risk of holding the
Securities purchased hereunder indefinitely, and can afford a complete loss on
the purchase of these Securities;
(e) Prior to purchase I have read this Subscription Agreement and
have had full opportunity to ask questions of and receive answers from the
Company and its officers and authorized representatives regarding the terms and
conditions of this Agreement, and the transactions contemplated hereby, as well
as the affairs of the Company and related matters. I understand that I may have
access to whatever additional information or documents concerning the Company,
its financial condition, its business, its prospects, its management, its
capitalization, and other similar matters that I desire. In addition, I
understand that I may have,
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at the offices of the Company, at any reasonable hour, after reasonable prior
notice, access to all documents and information concerning the Company. I
confirm that I do not desire to receive any further information;
(f) I understand that a restrictive legend will be placed upon
the certificates representing the Securities purchased hereunder, and that
instructions will be placed upon the Company's records for the Securities
prohibiting the transfer of the Securities absent full compliance with the Act
and applicable state securities laws;
(g) I understand that the Company intends to use the proceeds
from the sale of the Securities for the development of its proposed business
and to finance the costs of future offerings of its securities;
(h) I understand that the purchase price of the Securities being
purchased hereby has been arbitrarily determined and bears no relationship to
the assets or book value of the Company, or other customary investment
criteria;
(i) I understand that this Subscription Agreement is subject to
the Company's acceptance and may be rejected by the Company at any time prior
to a Closing, in its sole discretion, for any reason or no reason at all,
notwithstanding prior receipt by me of notice of acceptance of my subscription;
(j) There is no contract, undertaking, agreement or arrangement
with any person to sell, transfer or pledge to such person or anyone else the
Securities or any part thereof, and I have no present plans to enter into any
such contract, undertaking, agreement or arrangement; and
(k) The Company has advised me and I understand that the Company
is currently a development stage company. The Company currently intends to
utilize the proceeds from this offering to continue to develop its proposed
business and to finance the costs of future offerings of its securities. I
further understand and have been advised by the Company that the business
activities of the Company and an investment in the Company are subject to
substantial risks.
(l) The undersigned acknowledges:
(i) having received and carefully read the accompanying
Confidential Private Offering Memorandum of the Company dated October
25, 1999 pursuant to which the Company received net proceeds of
approximately $2,000,000;
(ii) having received and carefully read the accompanying
Company's 10QSB dated September 30, 1999;
(iii) having received and read the accompanying November
29, 1999, December 21, 1999 and January 26, 2000 press releases of the
Company;
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(iv) having received and read the accompanying Executive
Summary dated February 1, 2000;
(v) that with respect to the UFO Video, Inc. matter the
Company has paid $30,000 and is committed to expend an additional
$20,000;
(vi) that in connection with the purchase of the assets
of Planet Extreme and Planet Extreme Distributions the Company has
agreed to issue $70,000 in cash and 3,500,000 shares;
(vii) that Mr. Fein (the principal shareholder of Planet
Extreme) is to be employed by the Company as the Company's President
at an annual salary of $120,000 and an option grant of 1,500,000
shares of Common Stock of the Company (with vesting to occur 500,000
shares per annum); and
(viii) that the Company had approximately 10,360,000 shares
outstanding as of February 4, 2000 and in connection with
acquisitions, employee stock option pools and consulting arrangements
has plans to issue a significant amount of options and warrants (for
the purchase of up to 20,000,000 shares).
(m) The undersigned acknowledges having read and reviewed the
risk factors set forth in the aforementioned Private Placement
Memorandum.
(n) The undersigned acknowledges that investment in the
Securities is risky and that the Company may not be able to repay the
Note.
I hereby agree to indemnify and hold harmless the Company, its
officers, directors, stockholders, employees, agents and attorneys against any
and all losses, claims, demands, liabilities and expenses (including reasonable
legal or other expenses) incurred by each such person in connection with
defending or investigating any claims or liabilities, whether or not resulting
in any liability to such person to which any such indemnified party may become
subject under the Act, under any other statute, at common law or otherwise,
insofar as such losses, claims, demands, liabilities and expenses (a) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact made by an investor in this Subscription Agreement and Investment
Letter or (b) arise out of or are based upon any breach by the investor of any
representation, warranty or agreement contained herein.
This Subscription Agreement, prior to its acceptance by the Company at
the Closing of the offering, is not transferable or assignable by the
undersigned. Following the acceptance of this agreement by the Company at the
Closing of the offering and the purchase of the Securities subscribed for
thereat, this Subscription Agreement and the rights thereunder may be
transferred or assigned by the subscriber and/or its successors and assigns, in
whole or in part, to any person to whom all or any portion of the Securities
are transferred or assigned.
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This Subscription Agreement shall be governed by and construed in
accordance with the laws of the State of Florida applicable to contracts made
and to be performed entirely within such state.
This instrument contains the entire agreement of the parties, and
there are no representations, covenants or other agreements except as stated or
referred to herein. Neither this Agreement nor any provision hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
FOR ALL SUBSCRIBERS
THE SECURITIES OF THE COMPANY WHICH MAY BE PURCHASED PURSUANT TO THIS
SUBSCRIPTION AGREEMENT AND INVESTMENT LETTER HAVE NOT BEEN REGISTERED OR
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS THE COMMISSION OR ANY
SUCH AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THESE SECURITIES ARE BEING OFFERED HEREBY IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, WHICH EXEMPTION
DEPENDS UPON THE EXISTENCE OF CERTAIN FACTS, INCLUDING BUT NOT LIMITED TO THE
REQUIREMENTS THAT THE SECURITIES ARE NOT BEING OFFERED THROUGH GENERAL
ADVERTISING OR GENERAL SOLICITATION, ADVERTISEMENTS OR COMMUNICATIONS IN
NEWSPAPERS, MAGAZINES OR OTHER MEDIA, OR BROADCASTS ON RADIO OR TELEVISION, AND
THAT THE OFFERING DOCUMENTS SHALL BE TREATED AS CONFIDENTIAL BY THE PERSONS TO
WHOM IT IS DELIVERED. ANY DISTRIBUTION OF THE OFFERING DOCUMENTS OR ANY PART
HEREOF OR DIVULGENCE OF ANY OF ITS CONTENTS SHALL BE UNAUTHORIZED.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES 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 OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THESE SECURITIES 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, THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION, THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE
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REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
THE OFFERING DOCUMENTS CONSTITUTE AN OFFER ONLY IF A NAME APPEARS ON
THE APPROPRIATE SPACE ON THE FRONT COVER. ANY REPRODUCTION OR DISTRIBUTION OF
THE OFFERING DOCUMENTS, IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF ITS
CONTENTS TO ANY PERSON OTHER THAN THE PERSON NAMED ON THE COVER PAGE OR HIS OR
HER REPRESENTATIVE (S), WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY IS
PROHIBITED. THE COMPANY HAS THE RIGHT TO REJECT SUBSCRIPTIONS IN WHOLE OR IN
PART.
THE OFFERING DOCUMENTS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN
ANY STATE OR OTHER JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR OTHER SOLICITATION.
JURISDICTIONAL NOTICES
FOR RESIDENTS OF ALL STATES:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATES AND ARE
BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR
ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
FLORIDA RESIDENTS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES
ACT IN RELIANCE UPON EXEMPTION PROVISIONS
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CONTAINED THEREIN. ANY SALE MADE PURSUANT TO SUCH EXEMPTION PROVISIONS IS
VOIDABLE BY THE PURCHASER WITHIN THREE (3) BUSINESS DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY THE PURCHASER TO THE COMPANY, AN AGENT OF THE ISSUER
OR AN ESCROW AGENT. A WITHDRAWAL WITHIN SUCH THREE (3) DAY PERIOD WILL BE
WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL, A
SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY, AT THE ADDRESS
SET FORTH IN THIS MEMORANDUM, INDICATING THE SUBSCRIBER'S INTENTION TO WITHDRAW.
SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END
OF THE THIRD BUSINESS DAY AS DESCRIBED IN THE PRIOR PARAGRAPH. IT IS ADVISABLE
TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT
IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME IT WAS MAILED. IF THE REQUEST IS
MADE ORALLY, IN PERSON OR BY TELEPHONE TO AN OFFICER OF THE COMPANY, A WRITTEN
CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED BY THE
SUBSCRIBER TO EVIDENCE THE REQUEST.
GEORGIA RESIDENTS:
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
NEW YORK RESIDENTS:
THIS MEMORANDUM HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL OF THE
STATE OF NEW YORK 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.
Dated: _____________________, 2000
ENTITY SUBSCRIBERS SIGN HERE: INDIVIDUAL SUBSCRIBERS SIGN HERE:
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Print Name of Subscriber Print Name of Subscriber
By:
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Signature
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Print Name and Title of Signature of Joint Subscriber,
Signing Person if any
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Taxpayer Identification Number Social Security Number
Mailing Address: Resident Address:
(No P.O. Box Numbers):
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* * * * * * * * * * * * * * * * * * * * * *
Principal Amount of Note and Number of Warrants Subscribed For:
Note: $__________
Warrants: ___________(2)
Total Purchase Price: $__________
Payment Tendered Herewith: $__________
(Check One)
________ Individual
________ Tenants-in-Common
________ Joint tenants with right of survivorship (each must sign)
________ Community Property*
________ In Partnership
________ As custodian, trustee or agent for Corporation
* If the Investor(s), is a resident of a community property state the
subscription should indicate whether the Securities will be owned as separate or
community property and are to be registered jointly in the name of more than one
person, the nature of the joint ownership should be indicated (i.e., tenants in
common, joint tenants with right of survivorship, tenants by the entirety, or
other designation as may be permitted by law of the Investor's domicile).
INDIVIDUAL ACKNOWLEDGEMENT
STATE OF _________
ss:
COUNTY OF _________
On the _____ day of __________, 2000, before me personally came
____________________ and _______________________ to me known to be the
individual doing business under the trade name _________________________
described in and who executed the foregoing instrument and acknowledged that
(he)(she)(they) executed the same.
[Notary Seal] ___________________________________________
Notary Public
My Commission Expires:_____________________
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(2) This number to equal one-third of the principal amount, rounded up to the
nearest whole number; e.g., $100,000 divided by 3 = 33,334 Warrants.
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CORPORATE ACKNOWLEDGEMENT
STATE OF _________
ss:
COUNTY OF ________
On the _____ day of ___________, 2000, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that deponent resides at ______________________________; deponent is
________________ of ___________________________, the corporation described in
and which executed the foregoing instrument; and that deponent signed (his)
(her) name by order of the Board of Directors of said corporation.
[Notary Seal] ___________________________________________
Notary Public
My Commission Expires:_____________________
PARTNERSHIP ACKNOWLEDGEMENT
STATE OF _________
ss:
COUNTY OF ________
The foregoing instrument was sworn to and acknowledged before me on
______________, ____, by _____________________ of _______________________, a
__________________________ partnership, on behalf of the partnership.
[Notary Seal] ___________________________________________
Notary Public
My Commission Expires:_____________________
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TRUST ACKNOWLEDGEMENT
STATE OF _________
ss:
COUNTY OF ________
The foregoing instrument was sworn to and acknowledged before me on
______________, 2000, by ________________________________ as Trustee of the
_______________________ Trust.
[Notary Seal] ___________________________________________
Notary Public
My Commission Expires:_____________________
* * * * * * * * * * *
The foregoing subscription is hereby accepted by Corpas Investments,
Inc. this ____ day of February, 2000 for an aggregate of (i) $_________
principal amount redeemable ten and one-half (10.5%) percent promissory note of
the Company, and (ii) ________ Warrants. Corpas Investments, Inc., by its
execution hereof, hereby confirms its agreement to be bound by the provisions of
this Subscription Agreement.
CORPAS INVESTMENTS, INC.
By: /s/
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Ross A. Love, Chief Executive Officer
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