Exhibit
99.1
DIGICORP,
INC.
SUBSCRIPTION
AGREEMENT
The
undersigned (hereinafter “Subscriber”) hereby confirms his/her/its subscription
for the purchase of shares of Common Stock, par value $0.001 per share
(the “Common Stock”), of Digicorp, Inc., a Delaware corporation (the “Company”).
The Common Stock is sometimes herein referred to as the
“Securities”.
In
connection with this subscription, the Subscriber and the Company agree as
follows:
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1.
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Sale and Purchase of
Securities.
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(a) The
Company hereby agrees to sell to the Subscriber and the Subscriber hereby agrees
to purchase from the Company the number of shares of Common Stock of the Company
set forth on the signature page hereof. The Subscriber has hereby delivered and
paid concurrently herewith the purchase price (the “Purchase Price”) set forth
on the signature page hereof required to purchase the shares subscribed for
hereunder which amount has been paid in U.S. Dollars by wire transfer or check,
subject to collection.
(b) The
Subscriber understands and acknowledges that this subscription is part of a
proposed placement (the “Private Placement”) by the Company of up to 13,333,334
shares of Common Stock at a purchase price of $0.03 per share ($400,000) which
offering is being made on a “best efforts, no minimum” basis. The Subscriber
understands that all funds for accepted subscriptions will be available for the
Company’s immediate use.
2. Representations and Warranties of
Subscriber. The Subscriber represents and warrants to the Company as
follows:
(a) The
Subscriber is an “accredited investor” as defined by Rule 501 under the
Securities Act of 2933, as amended (the “Act”), and the Subscriber is capable of
evaluating the merits and risks of the Subscriber’s investment in the Company
and has the capacity to protect the Subscriber’s own interests.
(b) The
Subscriber understands that the Securities to be purchased have not been, and
will not be, registered under the Act or the securities laws of any state by
reason of a specific exemption from the registration provisions of the Act and
the applicable state securities laws, the availability of which depends upon,
among other things, the bona fide nature of the investment intent and the
accuracy of the Subscriber’s representations as expressed herein.
(c) Subscriber
acknowledges and understands 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
the Securities for any particular price, or at any particular time, or upon the
happening of any particular event or circumstances, except selling,
transferring, or disposing the Securities made in full compliance with all.
applicable provisions of the Act, the rules and regulations promulgated by the
Securities and Exchange Commission (“SEC”) thereunder, and applicable state
securities laws; and that the Securities are not liquid investments. The Company
has no obligation or intention to register the Securities for resale at this
time, nor has the Company made any representations, warranties, or
covenants
regarding the registration of the Securities or compliance with Regulation A or
some other exemption under the Act, except as otherwise set forth
herein.
(d) The
Subscriber acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Act or unless an exemption from such
registration is available. The Subscriber is aware of the provisions of Rule 144
promulgated under the Act which permit investors who have satisfied a certain
holding period to resell under certain conditions such securities or a portion
of such securities purchased in a private placement. The Subscriber acknowledges
that the Subscriber is not relying on the Company in any way to satisfy the
conditions precedent for resale of securities pursuant to Rule 144 under the
Act.
(e) The
Subscriber acknowledges that the Subscriber has had the opportunity to ask
questions of, and receive answers from the Company or any person acting on its
behalf concerning the Company and its business and to obtain any additional
information, to the extent possessed by the Company (or to the extent it could
have been required by the Company without unreasonable effort or expense)
necessary to verify the accuracy of the information received by the Subscriber.
In connection therewith, the Subscriber acknowledges that the Subscriber has had
the opportunity to discuss the Company’s business, management and financial
affairs with the Company’s management or any person acting on its behalf. The
Subscriber has received and reviewed a Summary Memorandum dated March 10, 2008
relating to the Private Placement (the “Summary Memorandum”), and all the
information, both written and oral, that it desires. Without limiting the
generality of the foregoing, the Subscriber has been furnished with or has had
the opportunity to acquire, and to review, (i) copies of the Company’s most
recent Annual Report on Form 10-KSB filed with the SEC and any Form 10-Q/10-QSB
and Form 8-K filed thereafter (the “SEC Filings”), and other publicly available
documents, and (ii) all information, both written and oral, that it desires with
respect to the Company’s business, management, financial affairs and prospects.
In determining whether to make this investment, the Subscriber has relied solely
on the Subscriber’s own knowledge and understanding of the Company and its
business based upon the Subscriber’s own due diligence investigations and the
information furnished pursuant to this paragraph. The Subscriber understands
that no person has been authorized to give any information or to make any
representations which were not furnished pursuant to this paragraph and the
Subscriber has not relied on any other representations or
information.
(f) The
Subscriber has all requisite legal and other power and authority to execute and
deliver this Subscription Agreement and to carry out and perform the
Subscriber’s obligations under the terms of this Subscription Agreement. This
Subscription Agreement constitutes a valid and legally binding obligation of the
Subscriber, enforceable in accordance with its terms, and subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
general principals of equity, whether such enforcement is considered in a
proceeding in equity or law.
(g) The
Subscriber has not, and will not, incur, directly or indirectly, as a result of
any action taken by the Subscriber, any liability for brokerage or finders’ fees
or agents’ commissions or any similar charges in connection with this
Subscription Agreement.
(h) To
the extent the Subscriber deems necessary, the Subscriber has reviewed with the
Subscriber’s own tax advisors the federal, state, local and foreign tax
consequences of this
investment
and the transactions contemplated by this Agreement. The Subscriber relies
solely on such advisors and not on any statements or representations of the
Company or any of its agents. The Subscriber understands that the Subscriber
(and not the Company) shall be responsible for the Subscriber’s own tax
liability that may arise as a result of this investment or the transactions
contemplated by this Subscription Agreement.
(i) This
Subscription Agreement does not contain any untrue statement of a material fact
concerning the Subscriber.
(j) There
are no actions, suits, proceedings or investigations pending against the
Subscriber or the Subscriber’s properties before any court or governmental
agency (nor, to the Subscriber’s knowledge, is there any threat thereof) which
would impair in any way the Subscriber’s ability to enter into and fully perform
the Subscriber’s commitments and obligations under this Agreement or the
transactions contemplated hereby.
(k) The
execution, delivery and performance of and compliance with this Subscription
Agreement, and the issuance of the Securities will not result in any material
violation of, or conflict with, or constitute a material default under, any of
Subscriber’s articles of incorporation or bylaws, if applicable, or any of the
Subscriber’s material agreements nor result in the creation of any mortgage,
pledge, lien, encumbrance or charge against any of the assets or properties of
the Subscriber or the Securities.
(l) Subscriber
acknowledges that the Securities are speculative and involve a high degree of
risk and that the Subscriber can bear the economic risk of the purchase of the
Securities, including a total loss of his/her/its investment. Subscriber
acknowledges that he/she/it has carefully reviewed and considered the risk
factors discussed in the Summary Memorandum under the caption “Risk Factors”, as
well as the factors described under “Risk Factors” in the Company’s SEC
Filings.
(m) The
Subscriber recognizes that no federal, state or foreign agency has recommended
or endorsed the purchase of the Securities.
(n) Subscriber
is aware that the Securities are and will be, when issued, “restricted
securities” as that term is defined in Rule 144 of the general rules and
regulations under the Act.
(o) Subscriber
understands that any and all certificates representing the Securities and any
and all securities issued in replacement thereof or in exchange therefor shall
bear the following legend, or one substantially similar thereto, which
Subscriber has read and understands:
“The
securities represented by this certificate have not been registered under the
Securities Act of 1933. The securities have been acquired for investment and may
not be sold, transferred or assigned in the absence of an effective registration
statement for these securities under the Securities Act of 1933 or an opinion of
the Company’s counsel that registration is not required under said
Act.”
(p) In
addition, the certificates representing the Securities, and any and all
securities issued in replacement thereof or in exchange therefor, shall bear
such legend as may be required
by the
securities laws of the jurisdiction in which the Subscriber
resides.
(q) Because
of the restrictions imposed on resale, Subscriber understands that the Company
shall have the right to note stop-transfer instructions in its stock transfer
records, and Subscriber has been informed of the Company’s intention to do so.
Any sales, transfers, or any other dispositions of the Securities by Subscriber,
if any, will be in compliance with the Act.
(r) Subscriber
acknowledges that Subscriber has such knowledge and experience in financial and
business matters that he/she/it is capable of evaluating the merits and risks of
an investment in the Securities and of making an informed investment
decision.
(s) Subscriber
represents that (i) Subscriber is able to bear the economic risks of an
investment in the Securities and to afford the complete loss of the investment;
and (ii) (A) Subscriber could be reasonably assumed to have the capacity to
protect his/her/its own interests in connection with this subscription; or
(8)Subscriber has a pre-existing personal or business relationship with either
the Company or any affiliate thereof of such duration and nature as would enable
a reasonably prudent purchaser to be aware of the character, business acumen and
general business and financial circumstances of the Company or such affiliate
and is otherwise personally qualified to evaluate and assess the risks, nature
and other aspects of this subscription.
(t) Subscriber
further represents that the address set forth below is his/her principal
residence (or, if the Subscriber is a corporation, partnership or other entity,
the address of its principal place of business); that Subscriber is purchasing
the Securities for Subscriber’s own account and not, in whole or in part, for
the account of any other person; Subscriber is purchasing the Securities for
investment and not with a view to public resale or distribution; a d that
Subscriber has not formed any entity for the purpose of purchasing the
Securities.
(u) Subscriber
understands that the Company shall have the unconditional right to accept or
reject this subscription, in whole or in part, for any reason or without a
specific reason, in the sole and absolute discretion of the Company (even after
receipt and clearance of Subscriber’s funds), This Subscription Agreement is not
binding upon the Company until accepted by an authorized officer of the Company
(the “Acceptance Date”). In the event that the subscription is rejected, then
Subscriber’s subscription funds will be returned without interest thereon or
deduction therefrom.
(v) The
Subscriber represents that Subscriber has not received any general solicitation
or general advertising regarding the purchase of the Securities.
(w) The
Subscriber represents that he/she/it bas accurately completed the Purchaser
Questionnaire.
3. Representations and Warranties of the
Company. The Company represents and warrants to the Subscriber as
follows:
(a) The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware.
(b) The
Company has all such corporate power and authority to enter into, deliver and
perform this Subscription Agreement.
(c) At
or prior to the Acceptance Date, all necessary corporate action will have been
duly and validly taken by the Company to authorize the execution, delivery and
performance of this Subscription Agreement by the Company, and the issuance and
sale of the Securities to be sold by the Company pursuant to this Subscription
Agreement, and this Agreement shall have been duly and validly authorized,
executed and delivered by the Company and shall constitute the legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles.
4. Indemnification. The
Subscriber agrees to indemnify and hold harmless the Company, its officers,
directors, employees, shareholders and affiliates, and any person acting on
behalf of the Company, from and against any and all damage, loss, liability,
cost and expense (including reasonable attorneys’ fees) which any of them may
incur by reason of the failure by the Subscriber to fulfill any of the terms and
conditions of this Subscription Agreement, or by reason of any breach of the
representations and warranties made by the Subscriber herein, or in any other
document provided by the Subscriber to the Company. All representations,
warranties and covenants of each of the Subscriber and the Company contained
herein shall survive the acceptance of this subscription.
5. Incidental
Registration.
(a) If
the Company at any time proposes to file on its behalf and/or on behalf of any
of its security holders a Registration Statement under the Act on any form
(other than a Registration Statement on Form S-4 or S-8 or any successor form
thereto) for the general registration of Common Stock to be sold for cash, the
Company will give written notice to the Holder (as hereinafter defined) at least
thirty (30) days before the initial filing with the SEC of such Registration
Statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by the Company.
(b) Upon
the written request of the Holder given within fifteen (15) days after the date
of receipt of such notice from the Company, the Company shall thereupon include
in such filing the number of shares of Common Stock for which registration is so
requested by the Holder, subject to subparagraph (c) below, and shall use its
best efforts to effect registration under the Act of such shares. Anything
contained herein to the contrary notwithstanding, the Company shall have the
right to withdraw and discontinue registration of the Holder’s shares of Common
Stock at any time prior to the effective date of such Registration Statement if
such Registration Statement is withdrawn or discontinued.
(c) If
the managing underwriter of a proposed public offering shall advise the Company
in writing that, in its opinion, the distribution of the Common Stock requested
to be included by the Holder in the registration, together with the shares of
Common Stock of other persons who have exercised their right to include their
shares in the Registration Statement (collectively referred to as the “Aggregate
Shares”), concurrently with the other securities being registered by the Company
would materially and adversely affect the distribution of such securities by the
Company, then the Holder shall be entitled to register a proportion, as
determined in subsection (c)(i) below, of such number of Aggregate Shares as the
managing underwriter determines may be included without such adverse effects
(“Aggregate Underwriter
Shares”),
subject to the terms, exceptions and conditions of this Section 5.
(i) The
proportion of the Aggregate Underwriter Shares which the Holder shall be
entitled to register shall be equal to the ratio which the number of shares
requested to be registered by the Holder bears to the Aggregate
Shares.
(d) It
shall be a condition precedent to the obligation of the Company to take any
action pursuant to this Section 5 in respect of the securities which are to be
registered at the request of any of the Holders (as hereinafter defined) that
(i) such Holders shall furnish to the Company such information regarding the
securities held by such Holders and the intended method of disposition thereof
as the Company shall reasonably request and as shall be required in connection
with the action taken by the Company, and (ii) such Holders shall enter into
such agreements and undertakings (including indemnity agreements) with the
Company and any underwriter of such offering as may be reasonably requested or
as may be customary in connection with such an offering. For purposes hereof,
the term “Holder” or “Holders” shall mean holders of the Company’s Common Stock
who hold fully paid shares acquired in or as a result of the private offering
described in the Summary Memorandum and persons who acquired such shares from
such holders.
(e) In
the event of any registration of any of the Common Stock under the Act pursuant
to this Section 5, the Company shall indemnify and hold harmless the Holders of
such Common Stock, against any losses, claims, damages or liabilities, joint or
several, to which such Holders may become subject under the Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any alleged
untrue statement of any material fact contained, on the effective date thereof,
in any Registration Statement under which such securities were registered under
the Act, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (ii) any alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse such Holders for any
legal or any other expenses reasonably incurred by such Holders in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided. however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any alleged untrue statement or alleged omission made in such
Registration Statement, preliminary prospectus, prospectus or amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Holders specifically for use therein. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Holders and shall survive the transfer of such securities by
such Holders.
(f) Each
of the Holders, by acceptance thereof, agrees to indemnify and hold harmless the
Company, its directors and officers and each other person, if any, who controls
the Company against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or any such person
may become subject under the Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon information in writing provided to the Company by
such Holder specifically for use in the following documents and contained, on
the effective date thereof, in any Registration Statement under which securities
were registered under the Act at the request of such Holder, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto.
(g) Notwithstanding
the other provisions of Section 5, (i) the Company shall not be obligated to
register the Common Stock of any of the Holders if, in the opinion of counsel to
the Company, the sale or other disposition of such Holder’s Common Stock, in the
manner proposed by such Holder, may be effected without registering such Common
Stock under the Act; and (ii) the Company shall not be obligated to register the
Common Stock of any Holder if the Company has had a registration statement,
under which such Holder had a right to have its Common Stock included pursuant
hereto, declared effective within six months prior to the date of the request
pursuant to this Section.
6. Right of First
Offer.
(a) The
Holders shall have the right of first offer to purchase all or part of its pro
rata share of equity or equity linked securities other than Excluded Securities
(as defined below) which the Company may, from time to time, propose to sell and
issue in a contemplated private financing. For purposes of this right of first
offer, a pro rata share for a Holder is the ratio that the number of shares of
Common Stock acquired in or as a result of the private offering described in the
Summary Memorandum and which are then held by such Holder bears to the sum of
the total number of shares of Common Stock then outstanding.
(b) The
right of first offer will not be applicable to securities (the “Excluded
Securities”) (i) offered to the public generally pursuant to a registration
statement under the Act; (ii) issued in connection with any stock split, stock
dividend or recapitalization by the Company; (iii) issued to officers,
directors, employees or consultants of the Company pursuant to stock grants,
stock purchase and stock option plans or other stock incentive programs,
agreements or arrangements approved by the Board of Directors; (iv) issued
pursuant to the acquisition of all or part of another company by the Company by
merger or other reorganization or by purchase of all or part of the assets of
another company (including but not limited to the acquisition of technology or
other rights) or pursuant to joint venture, strategic partnership or similar
relationship; and (v) issued to lenders, lessors, licensors and other parties in
non-equity financing transactions.
(c) In
the event the Company proposes to undertake a private offering of equity or
equity linked securities other than the Excluded Securities in a private
offering, it shall give each Holder written notice of its intention, describing
the type of securities, and the price and terns upon which the Company proposes
to issue the same. Each Holder shall have ten (10) calendar days from the date
of receipt of any such notice to agree to purchase up to its respective pro rata
share of such securities for the price and upon the applicable terms specified
in the notice by giving written notice to the Company and stating therein the
quantity of the securities to be purchased.
(d) In
the event a Holder fails to exercise the right of first offer within said ten
(10) calendar day period, the Company shall have one hundred eighty days (180)
days thereafter to sell the securities not elected to be purchased by the
Holders at the price and upon the terms no more favorable to the purchasers of
such securities than specified in the Company’s notice. In the event the Company
has not sold the securities within said one hundred eighty (180) day period, the
Company shall not thereafter issue or sell any other such securities, except the
Excluded Securities, in a private offering without first offering such
securities in the manner provided above.
(e) The
right of first offer granted under this Section shall expire upon the earlier of
(i) one year from the completion or earlier termination of the private offering
contemplated by the Summary Memorandum, (ii) the acquisition of all or
substantially all the assets of the Company, or (iii) an acquisition of the
Company by another corporation or entity by consolidation, merger or other
reorganization in which the holders of the Company’s outstanding voting stock
immediately prior to such transaction own, immediately after such transaction,
securities representing less than fifty percent (50%) or more of the voting
power of the corporation or other entity surviving such
transaction.
(f) If
the Board of Directors of the Company determines it to be in the best interests
of the Company, it may authorize completion of any private offering of equity or
equity linked securities pursuant to which the right of first offer shall be
applicable without first offering the Holders the opportunity to exercise their
rights pursuant to this Section as long as promptly following such issuances the
Company offers each Holder the opportunity to purchase such securities as it
would have been entitled to purchase pursuant to this Section.
7. Miscellaneous.
(a) The
Subscriber agrees not to transfer or assign this Subscription Agreement, or any
of the Subscriber’s interest herein, and further agrees that the transfer or
assignment of the Securities acquired pursuant hereto shall be made only in
accordance with all. applicable laws.
(b) The
Subscriber agrees that the Subscriber cannot cancel, terminate, or revoke this
Subscription Agreement or any agreement of the Subscriber made hereunder, and
this Subscription Agreement shall survive the death or legal disability of the
Subscriber and shall be binding upon the Subscriber’s heirs, executors,
administrators, successors, and permitted assigns.
(c) The
Subscriber has read and has accurately completed this entire Subscription
Agreement.
(d) This
Subscription Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and may be amended only by a written
execution by all parties.
(e) This
Subscription Agreement shall be enforced, governed and construed in all respects
in accordance with the laws of the State of California.
(f) Subscriber
acknowledges that it has been advised to consult with his/her/its own attorney
regarding this subscription and Subscriber has done so to the extent that
Subscriber deems appropriate.
(g) This
Subscription Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the
Subscriber has caused this Subscription Agreement to be executed as of the date
indicated below.
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Individuals:
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10,000,000
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$0.03
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Number
of Shares
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Purchase
Price
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DENNIS
PELINO
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Print
or Type Name
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Print
or Type Name
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/s/
Dennis Pelino
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Signature
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Signature
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3/26/08
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Date
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Date
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[NOT
PUBLIC INFORMATION]
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Soc.
Sec. No. (if applicable)
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Soc.
Sec. No. (if applicable)
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400
Alton Road, Suite 3107, Miami Beach, FL 33139
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Address
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__________
Joint Tenancy
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________
Tenants in Common
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Partnerships,
Corporations or Other Entities:
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Number
of Shares
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Purchase
Price
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Print
or Type Name
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Address
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Taxpayer
I.D. No. (if
applicable)
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Date
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Signature
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Print
or Type Name and Indicate
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Title
or Position with Entity
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*
* * * * * * *
Disposition
of Subscription Agreement
IN WITNESS WHEREOF, the
Company has caused this Subscription Agreement to be executed, and the foregoing
subscription accepted, as of the date indicated below.
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DIGICORP,
INC.
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By:
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/s/Jay
Rifkin
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CEO
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Name
and Title of Authorized Officer
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Date:
3/26/08
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