UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: August 9, 2010

Date of Earliest Event Reported: August 3, 2010

 

 

Toyzap.com, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Texas   000-53997   20-8592825

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

500 North Akard Street, Suite 2850,

Dallas, Texas

  75201
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (214) 758-8600

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Forward Looking Statements

This Form 8-K and other reports filed by Toyzap.com, Inc. (the “Company”) from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain forward looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. When used in the Filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to the Company’s industry, operations and results of operations and any businesses that may be acquired by the Company. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although the Company believes that the expectations reflected in the forward looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Item 3.02. Unregistered Sales of Equity Securities

On August 5, 2010, the Company completed a private placement of 10,450 shares of its Series A Convertible Preferred Stock (the “Series A Preferred”) at a price of $100 per share, for aggregate gross proceeds to the Company of $1,045,000, resulting in net proceeds to the Company of approximately $998,000. The shares were sold solely to accredited investors. The Company expects to use the net proceeds of this offering for general working capital and to fund acquisitions.

Terms of the Series A Preferred

Voting . The holders of shares of Series A Preferred have full voting rights and powers, and, except as may be otherwise provided by law, vote together with all other classes and series of the Company’s stock as a single class on all actions to be taken by the stockholders of the Company. Each holder of shares of Series A Preferred is entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series A Preferred held by such holder could be converted on the record date for the vote which is being taken.

Dividend Rights . The Company is prohibited from declaring, paying or setting aside any dividends on shares of any class or series of its capital (other than dividends on shares of Common Stock payable in shares of Common Stock) unless the holders of the Series A Preferred then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred in an amount equal to the dividend per share that such holders would have received had they converted their shares of Series A Preferred into shares of Common Stock immediately prior to the record date for the declaration of the Common Stock dividend.

Liquidation Rights . Upon any liquidation, dissolution or winding up of the Company, or any sale, merger, consolidation, reorganization or other transaction which results in a change of control, the holders of Series A Preferred have the right to receive $100.00 per share (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Preference Amount”), prior to and in preference over any liquidation payment on the Common Stock or any other class of preferred stock. After payment has been made to the holders of Series A Preferred of the full Preference Amount to which such holders shall be entitled, the remaining net assets of the Company available for distribution, if any, shall be distributed pro rata among the holders of Common Stock.

Mandatory Conversion . Effective as of May 27, 2011, each outstanding share of Series A Preferred will convert automatically into one share of the Company’s Common Stock (subject to adjustment) without any further action by the holders of such shares. Notwithstanding the foregoing, if upon such date the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, then such automatic conversion shall be delayed until the Company is so subject to such requirements.

The foregoing description of the Series A Preferred is qualified in its entirety by reference to the full description of the Series A Preferred set forth in (i) the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2010, and (ii) the Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock filed as Exhibit 3.1 to this Current Report on Form 8-K, each of which are incorporated herein by reference.

Arrangement with Placement Agent

Colorado Financial Service Corporation (“CFSC”) acted as the Company’s placement agent with respect to a portion of this offering. As compensation for acting as such, CFSC received total cash fees (including a non-accountable expense reimbursement) of $46,900 and five-year warrants (“Warrants”) to purchase a total of up to 32,501 shares of the Company’s common stock at an exercise price of $1.00 per share.

Laird Q. Cagan, a director and significant shareholder of the Company, acted as a registered representative of CFSC with respect to this offering and was allocated a portion of the compensation received by CFSC.

A total of 3,150 shares were acquired in the offering by members of the immediate family (as defined by the rules promulgated under the Securities Exchange Act of 1934) of Harold Montgomery, trusts for the benefit of certain members of the immediate family of Mr. Montgomery or for which Mr. Montgomery serves as trustee, and a limited partnership to which Mr. Montgomery is a limited partner. Mr. Montgomery is a significant shareholder of the Company, as well as its Chief Executive Officer and a member of its Board of Directors.

The Company’s issuance of the shares of Series A Preferred and Warrants and the Common Stock issuable upon conversion or exercise thereof was exempt from registration under the Securities Act of 1933 pursuant to exemptions from registration provided by Rule 506 of Regulation D and Sections 4(2) of the Securities Act of 1933, insofar as such securities were issued only to “accredited investors” within the meaning of Rule 501 of Regulation D. The recipients of these securities took such securities for investment purposes without a view to distribution. Furthermore, they each had access to information concerning the Company and its business prospects; there was no general solicitation or advertising for the purchase of the securities; and the securities are restricted pursuant to Rule 144.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Effective as of August 3, 2010, and in contemplation of the offering described above in Item 3.02, the Company amended its Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (the “Amendment”) to clarify that the Company’s 2-for-1 stock dividend that was effective as of June 1, 2010 would result in a corresponding change in the conversion rate of the Series A Preferred. The foregoing description of the Amendment is qualified in its entirety by reference to the full text thereof which is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits

 

3.1    Certificate of Amendment to Certificate of Designation of Preferences, Rights, and Limitations of Series A Convertible Preferred Stock of Toyzap.com, Inc.
4.1    Form of Placement Agent Warrant
10.1    Form of Subscription Agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

    TOYZAP.COM, INC.
Date: August 9, 2010     By:   / S /    H AROLD M ONTGOMERY        
      Harold Montgomery
      Chief Executive Officer

Exhibit 3.1

CERTIFICATE OF AMENDMENT TO

CERTIFICATE OF DESIGNATION OF

PREFERENCES, RIGHTS AND LIMITATIONS OF

SERIES A CONVERTIBLE PREFERRED STOCK OF

TOYZAP.COM, INC.

(Pursuant to Sections 21.155 and 21.156 of the

Texas Business Organizations Code

of the State of Texas)

TOYZAP.COM, INC., a corporation organized and existing under the Texas Business Organizations Code of the State of Texas (the “ Corporation ”), in accordance with the provisions of Sections 21.155 and 21.156 thereof:

HEREBY CERTIFIES:

A. That no shares of Series A Convertible Preferred Stock of the Corporation have, as of the date of this Certificate of Amendment, been issued.

B. That pursuant to the authority conferred upon the Board of Directors by the Certificate of Formation of the Corporation, the Board of Directors on July 23, 2010 adopted the following resolution providing for an amendment to the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Corporation:

RESOLVED, that, pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Certificate of Formation, that the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Corporation, filed with the Texas Secretary of State on June 1, 2010, shall be amended by amending and restating the first sentence of Section 6.D thereof in its entirety as follows:

“Upon the happening of an Extraordinary Common Stock Event effective on or after June 1, 2010 (including the Common Stock dividend effective on such date), the Conversion Value shall, simultaneously with the happening of such Extraordinary Common Stock Event, be adjusted by multiplying the then-effective Conversion Value by a fraction, (1) the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such Extraordinary Common Stock Event; and (2) the denominator of which shall be the number of shares of Common Stock outstanding immediately after such Extraordinary Common Stock Event, and the product so obtained shall thereafter be the Conversion Value.”

C. That the above resolution was adopted by all necessary action on the part of the Corporation.

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate in the name and on behalf of ToyZap.com, Inc., on the 3rd day of August, 2010, and the statements contained herein are affirmed as true under penalty of perjury.

 

TOYZAP.COM, INC.
By:  

/s/ Harold Montgomery

 

Harold Montgomery

Chief Executive Officer

 

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Exhibit 4.1

WARRANT AGREEMENT

THIS WARRANT AGREEMENT (this “Agreement”) is made and entered into as of              , 2010, between TOYZAP.Com, Inc., a Texas corporation (the “Company”), and                              (“Holder”).

R E C I T A L S

WHEREAS, the Company proposes to issue to Holder                              (                      ) warrants (the “Warrants”), each such Warrant entitling the holder thereof to purchase one share of common stock, $0.001 par value, of the Company (the “Shares” or the “Common Stock”); and

WHEREAS, the Warrants which are the subject of this Agreement will be issued by the Company to Holder as part of consideration related to placement agent services rendered to the Company.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

A G R E E M E N T

1. Warrant Certificates . The warrant certificates to be delivered pursuant to this Agreement (the “Warrant Certificates”) shall be in the form set forth in Exhibit A , attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Warrant Agreement.

2. Right to Exercise Warrants . Each Warrant may be exercised from the date of this Agreement until 11:59 P.M. (Eastern Standard Time) on the date that is five (5) years after the date of this Agreement (the “Expiration Date”). Each Warrant not exercised on or before the Expiration Date shall expire.

Each Warrant shall entitle its holder to purchase from the Company one share of Common Stock (each an “Exercise Share”) at an exercise price of $1.00 per share, subject to adjustment as set forth below (“Exercise Price”).

The Company shall not be required to issue fractional shares of Common Stock upon the exercise of this Warrant or to deliver Warrant Certificates which evidence fractional shares of capital stock. In the event that a fraction of an Exercise Share would, except for the provisions of this paragraph 2, be issuable upon the exercise of this Warrant, the Company shall pay to the Holder exercising the Warrant an amount in cash equal to such fraction multiplied by the current market value of the Exercise Share. For purposes of this paragraph 2, the current market value shall be determined as follows:

(a) if the Shares are traded in the over-the-counter market and not on any national securities exchange and not in the NASDAQ Reporting System, the average of the last bid and asked prices per share, as reported by the National Quotation Bureau, Inc., or an equivalent generally accepted reporting service, for the last business day prior to the date on which the Warrant is exercised, or, if not so reported, the average of the closing bid and asked prices for a Share as furnished to the Company by any member of the National Association of Securities Dealers, Inc., selected by the Company for that purpose.

(b) if the Shares are listed or traded on a national securities exchange or in the NASDAQ Reporting System, the closing price on the principal national securities exchange on which they are so listed or traded or in the NASDAQ Reporting System, as the case may be, on the last business day prior to the date of the exercise of the Warrant. The closing price referred to in this Clause (b) shall be the last reported sales price or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case on the national securities exchange on which the Shares are then listed on in the NASDAQ Reporting System; or

 

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(c) if no such closing price or closing bid and asked prices are available, as determined in any reasonable manner as may be prescribed by the Board of Directors of the Company.

3. Mutilated or Missing Warrant Certificates . In case any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed prior to the Expiration Date, the Company shall issue and deliver, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and in substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent right or interest.

4. Reservation of Shares . The Company will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Shares or its authorized and issued Shares held in its treasury for the purpose of enabling it to satisfy its obligation to issue Exercise Shares upon exercise of Warrants, the full number of Exercise Shares deliverable upon the exercise of all outstanding Warrants.

The Company covenants that all Exercise Shares which may be issued upon exercise of Warrants will be validly issued, fully paid and non-assessable outstanding Shares of the Company.

5. Rights of Holder. The Holder shall not, by virtue of anything contained in this Warrant Agreement or otherwise, prior to exercise of this Warrant, be entitled to any right whatsoever, either in law or equity, of a shareholder of the Company, including without limitation, the right to receive dividends or to vote or to consent or to receive notice as a shareholder in respect of the meetings of shareholders or the election of directors of the Company of any other matter.

6. Investment Intent; Accredited Investor . Holder represents and warrants to the Company that Holder is acquiring the Warrants for investment purposes and with no present intention of distributing or reselling any of the Warrants. Holder represents that it is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act (the “Act”) and has executed and delivered the Investment Representation Statement that accompanies this Agreement.

7. Certificates to Bear Legend . The Warrants and the certificate or certificates therefore shall bear the following legend by which each holder shall be bound:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

The Exercise Shares and the certificate or certificates evidencing any such Exercise Shares shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.”

Certificates for Warrants or Exercise Shares, as the case may be, without such legend shall be issued if such Warrants or Exercise Shares are sold pursuant to an effective registration statement under the Act or if the Company has received an opinion from counsel satisfactory to counsel for the Company that such legend is no longer required under the Act.

 

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8. Adjustment of Number of Shares and Class of Capital Stock Purchasable . The number of Exercise Shares and class of capital stock purchasable under this Warrant are subject to adjustment from time to time as set forth in this Section 8.

(a) Adjustment for Change in Capital Stock. If the Company:

 

  (i) pays a dividend or makes a distribution on its Common Stock, in each case, in shares of its Common Stock;

 

  (ii) subdivides its outstanding shares of Common Stock into a greater number of shares;

 

  (iii) combines its outstanding shares of Common Stock into a smaller number of shares; or

 

  (iv) makes a distribution on its Common Stock in shares of its capital stock other than Common Stock.

then the number and classes of Exercise Shares purchasable upon exercise of each Warrant in effect immediately prior to such action shall be adjusted so that the holder of any Warrant thereafter exercised may receive the number and classes of shares of capital stock of the Company which such holder would have owned immediately following such action if such holder had exercised the Warrant immediately prior to such action.

For a dividend or distribution the adjustment shall become effective immediately after the record date for the dividend or distribution. For a subdivision, combination or reclassification, the adjustment shall become effective immediately after the effective date of the subdivision, combination or reclassification.

If after an adjustment the holder of a Warrant upon exercise of it may receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company shall in good faith determine the allocation of the adjusted Exercise Price between or among the classes of capital stock. After such allocation, that portion of the Exercise Price applicable to each share of each such class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to the Exercise Shares in this Agreement. Notwithstanding the allocation of the Exercise Price between or among shares of capital stock as provided by this Section 8(a), a Warrant may only be exercised in full by payment of the entire Exercise Price in effect at the time of such exercise.

(b) Consolidation, Merger or Sale of the Company . If the Company is a party to a consolidation, merger or transfer of assets which reclassifies or changes its outstanding Common Stock, the successor corporation (or corporation controlling the successor corporation or the Company, as the case may be) shall by operation of law assume the Company’s obligations under this Agreement. Upon consummation of such transaction, the Warrants shall automatically become exercisable for the kind and amount of securities, cash or other assets which the holder of a Warrant would have owned immediately after the consolidation, merger or transfer if the holder had exercised the Warrant immediately before the effective date of such transaction. As a condition to the consummation of such transaction, the Company shall arrange for the person or entity obligated to issue securities or deliver cash or other assets upon exercise of the Warrant to, concurrently with the consummation of such transaction, assume the Company’s obligations hereunder by executing an instrument so providing and further providing for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Section 8.

 

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9. Successors . All the covenants and provisions of this Agreement by or for the benefit of the Company or Holder shall bind and inure to the benefit of their respective successor and assigns hereunder.

10. Counterparts . This Agreement may be executed in any number of counterparts and each of such counterparts shall for all proposes be deemed to be an original, and such counterparts shall together constitute by one and the same instrument.

11. Notices. All notices or other communications under this Agreement shall be in writing and shall be deemed to have been given if delivered by hand or mailed by certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company: TOYZAP.Com, Inc., 500 N. Akard, Suite 2850, Dallas, TX 75201, Attention: Chief Executive Officer, and to the Holder: at the address of the Holder appearing on the books of the Company or the Company’s transfer agent, if any. Either the Company or the Holder may from time to time change the address to which notices to it are to be mailed hereunder by notice in accordance with the provisions of this Paragraph 11.

12. Supplements and Amendments. The Company may from time to time supplement or amend this Agreement without the approval of any Holders in order to cure any ambiguity or to be correct or supplement any provision contained herein which may be defective or inconsistent with any other provision, or to make any other provisions in regard to matters or questions herein arising hereunder which the Company may deem necessary or desirable and which shall not materially adversely affect the interest of the Holder.

13. Severability. If for any reason any provision, paragraph or term of this Agreement is held to be invalid or unenforceable, all other valid provisions herein shall remain in full force and effect and all terms, provisions and paragraphs of this Agreement shall be deemed to be severable.

14. Governing Law and Venue. This Agreement shall be deemed to be a contract made under the laws of the State of Texas and for all purposes shall be governed and construed in accordance with the laws of said State. Any proceeding arising under this Agreement shall be instituted in the State of Texas.

15. Taxes . The acquisition of the Warrants (and common stock issuable thereunder) may result in adverse tax consequences to the Holder. The Holder understands that he may suffer adverse tax consequences as a result of his acquisition or disposition of the Warrants (and common stock issuable thereunder). Holder represents that he has consulted any tax consultants Holder deems advisable in connection with the acquisition or disposition of the Warrants (and common stock issuable thereunder) and that Holder is not relying on the Company or Company’s legal counsel for any tax advice. Acquisitions or dispositions of cash or equity made under this Agreement may be subject to reduction to reflect taxes or other charges required to be withheld by law.

16. Headings. Paragraphs and subparagraph headings, used herein are included herein for convenience of reference only and shall not affect the construction of this Agreement nor constitute a part of this Agreement for any other purpose.

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed, as of the date and year first above written.

 

COMPANY:

TOYZAP.Com, Inc.

    HOLDER:
      By:  

 

By:  

 

    Tax ID:  

 

  Craig Jessen, President      

 

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Exhibit A

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

WARRANT TO PURCHASE SHARES

OF COMMON STOCK OF

TOYZAP.COM, INC

 

Initial Number of Shares:                        
Exercise Price:    $1.00 per share
Date of Grant:    August 5, 2010
Expiration Date:    August 4, 2015

THIS CERTIFIES THAT,                              , or any person or entity to whom the interest in this Warrant is lawfully transferred (“Holder”) is entitled to purchase the above number (as adjusted pursuant to Section 4 hereof) of fully paid and non-assessable shares of the Common Stock (the “Shares”) of TOYZAP.Com, Inc., a Texas corporation (the “Company), having an Exercise Price as set forth above, subject to the provisions and upon the terms and conditions set forth herein and in the Warrant Agreement dated                      . The exercise price, as adjusted from time to time as provided herein, is referred to as the “Exercise Price.”

1. Term . The purchase right represented by this Warrant is exercisable, in whole or in part, at any time commencing on the Date of Grant and ending on the Expiration Date, after which time the Warrant shall be void.

2. Method of Exercise; Payment; Issuance of New Warrant . Subject to Section 1 hereof, the right to purchase Shares represented by this Warrant may be exercised by Holder, in whole or in part, for the total number of Shares remaining available for exercise by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company and by the payment to the Company, by check made payable to the Company drawn on a United States bank and for United States funds, or by delivery to the Company of evidence of cancellation of indebtedness of the Company to such Holder, of an amount equal to the then applicable Exercise Price per share multiplied by the number of Shares then being purchased or by net exercise pursuant to Section 6 hereof. In the event of any exercise of the purchase right represented by this Warrant, certificates for the Shares so purchased shall be promptly delivered to Holder and, unless this Warrant has been fully exercised or has expired, a new Warrant representing the portion of the Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be promptly delivered to Holder.

3. Exercise Price . The Exercise Price at which this Warrant may be exercised shall be the Exercise Price, as adjusted from time to time pursuant to Section 4 hereof.

4. Reclassification, Reorganization, Consolidation or Merger . In the case of any reclassification of the Shares, or any reorganization, consolidation or merger of the Company with or into another corporation (other than a merger or reorganization with respect to which the Company is the continuing corporation and which does not result in any reclassification of the Shares), the Company, or such successor corporation, as the case may be, shall execute a new warrant providing that the Holder shall have the right to exercise such new warrant and upon such exercise to receive, in lieu of each Share theretofore issuable upon exercise of this Warrant, the number and kind of securities, money and property receivable upon such reclassification, reorganization, consolidation or merger by a holder of Shares for each Share. Such new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4 including, without limitation, adjustments to the Exercise Price and to the number of Shares issuable upon exercise of this Warrant. The provisions of this Section 4 shall similarly apply to successive reclassifications, reorganizations, consolidations or mergers.

 

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5. Transferability and Negotiability of Warrant . This Warrant may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions satisfactory to the Company, if requested by the Company). Subject to the provisions of this Section 5, title to this Warrant may be transferred in the same manner as a negotiable instrument transferable by endorsement and delivery.

6. Net Exercise . In lieu of exercising this Warrant for cash, the Holder may elect to exchange this Warrant for Shares equal to the value of this Warrant by surrender of this Warrant, together with notice of such election, at the principal office of the Company, in which event the Company shall issue to the holder a number of Shares computed using the following formula:

X = Y (A-B)

A

Where:

X= the number of Shares to be issued to the holder.

Y= the number of Shares purchasable under this Warrant.

A= value per share of one Share determined in accordance with Section 2 of the Warrant Agreement.

B= the Exercise Price (as adjusted).

7. Miscellaneous . The Company covenants that it will at all times reserve and keep available, solely for the purpose of issue upon the exercise hereof, a sufficient number of Shares to permit the exercise hereof in full. Such Shares, when issued in compliance with the provisions of this Warrant and the Company’s Certificate of Incorporation, will be duly authorized, validly issued, fully paid and non-assessable. No Holder of this Warrant, as such, shall, prior to the exercise of this Warrant, be entitled to vote or receive dividends or be deemed to be a shareholder of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon Holder, as such, any rights of a shareholder of the Company or any right to vote, give or withhold consent to any corporate action, receive notice of meetings, receive dividends or subscription rights, or otherwise. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like date and tenor. The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder hereof and their respective successors and assigns. This Warrant shall be governed by and construed under the laws of the State of California.

 

Holder:     Company:
                                  TOYZAP.com, Inc., a Texas Corporation
By:  

 

    By:  

 

Name:  

 

    Craig Jessen, President

 

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NOTICE OF EXERCISE

TO: TOYZAP.COM, INC.

1. The undersigned hereby elects to purchase                      shares of the Common Stock of TOYZAP.COM, INC. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full, together with all applicable transfer taxes, if any.

2. The undersigned hereby elects to purchase                      shares of the Common Stock of TOYZAP.COM, INC. pursuant to the terms of the attached Warrant on a net exercise basis in accordance with Section 6.

3. Please issue a certificate or certificates representing said shares of the Common Stock in the name of the undersigned or in such other name as is specified below:

 

Name:

 

 

Tax ID:

 

 

Address:

 

 

 

 

 

 

 

 

Email:

 

 

Signed:

 

 

Date:

 

                    

 

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INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER    :                                     
COMPANY    :    TOYZAP.COM, INC.
SECURITY    :    COMMON STOCK
AMOUNT    :                         SHARES
DATE    :                 , 2010

In connection with the purchase of the above-listed Securities, I, the Purchaser, represent to the Company the following:

(a) I am aware of the Company’s business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (“Securities Act”). I further represent that I am an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act.

(b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.

(c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Purchaser satisfactory to the Company or receipt of a no-action letter from the Securities and Exchange Commission.

(d) I am aware of the provisions of Rule 144, promulgated under the Securities Act, and that the Company previously was a shell company, therefore the exemption offered pursuant to Rule 144 is not currently available. I understand that if the Company: (i) has become subject to the reporting requirements of section 13 or 15(d) of the Exchange Act; (ii) has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months; and (iii) has filed current “Form 10 information” with the SEC reflecting its status as an entity that is no longer a shell company, then the securities issued in connection herewith may possibly be sold subject to Rule 144 and other applicable securities laws after one year has elapsed from the date that we file “Form 10 information” with the SEC.

(e) I further understand that at the time I wish to sell the Securities there may be no public market upon which to make such a sale, and that, even if such a public market then exists, the Company may not be satisfying the current public information requirements of Rule 144, and that, in such event, I may be precluded from selling the Securities under Rule 144 even if the one-year minimum holding period described above had been satisfied.

(f) I further understand that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.

 

Date:              , 2010

 

 

  Purchaser

 

4 of 4

Exhibit 10.1

TOYZAP.COM, INC.

(TO BE RENAMED “CALPIAN, INC.”)

SUBSCRIPTION AGREEMENT

Series A Convertible Preferred Stock at $100.00 per Share

1. Subscription:

(a) The undersigned (individually and/or collectively, the “ Participant ”) hereby applies to purchase shares of restricted Series A Convertible Preferred Stock (the “ Shares ” or the “ Preferred Stock ”) of Toyzap.com, Inc., a Texas corporation (to be renamed “Calpian, Inc.”) (the “ Company ”), in accordance with the terms and conditions of (1) this Subscription Agreement (the “ Subscription ”), which is attached as Exhibit A to the Company’s Confidential Private Placement Memorandum, “), dated May 4, 2010 (the “ Memorandum ”); (2) the Company’s Certificate of Formation (the “ Certificate ”), which is attached to the Memorandum as Exhibit B ; and (3) the Certificate of Designation (“ Certificate of Designation ”), which is attached to the Memorandum as Exhibit C .

(b) Before this Subscription is considered, the Participant must complete, execute and deliver to the Company’s placement agent, Chadbourn Securities, Inc. (the “ Placement Agent ”) the following:

(i) This Subscription;

(ii) The Certificate of Accredited Investor Status, attached hereto as Exhibit D ; and

(iii) The Participant’s check in the amount of $              in exchange for              Shares purchased, or wire transfer sent according to the Placement Agent’s instructions:

(c) This Subscription is irrevocable by the Participant.

(d) This Subscription is not transferable or assignable by the Participant.

(e) This Subscription may be rejected in whole or in part by the Company in its sole discretion prior to the Closing Date (as defined in Section 1(g) hereof), regardless of whether Participant’s funds have theretofore been deposited by the Company). Participant’s execution and delivery of this Subscription will not constitute an agreement between the undersigned and the Company until this Agreement has been accepted and executed by the Company. In the event this Subscription is rejected by the Company, all funds and documents tendered by the Participant shall be returned and the parties’ obligations hereunder, shall terminate.

(f) The Company’s Placement Agent, and/or other advisors, placement agents, broker dealers and/or finders, will be paid commissions, fees and other consideration by the Company equal to: (i) Eight Percent (8%) of Participant’s investment amount with respect to investments originated by the Placement Agent in this Offering, (ii) and a warrant to purchase shares of Common Stock of the Company equal to Ten Percent (10%) of the total Shares of Preferred Stock purchased by Participants introduced by Placement Agent, at an exercise price equal to $1.00 per share (as adjusted to reflect the Proposed Split, defined below) with respect to investments originated by the Placement Agent in this Offering, and (iii) a 2% of Participant’s investment amount as an unallocated expense fee. It is also currently contemplated that the Company will effectuate a forward split of its outstanding common stock in the form of a stock dividend of one (1) share of Company Common Stock for every one (1) share of Company Common Stock outstanding (the “ Proposed Split ”). Although the number of shares of Series A Convertible Preferred Stock (and the per share purchase price) will not change upon consummation of the Proposed Split, the conversion ratio will change. Accordingly, if Participant purchases shares of Series A Convertible Preferred Stock prior to effectiveness of the Proposed Split, each such share that Participant purchases will initially be convertible into 50 shares of Common Stock and, if and when the Proposed Split is consummated, will then automatically be convertible into 100 shares of Common Stock.

 

                     Subscription Agreement

Participant’s Initials

  1   Toyzap.com, Inc.

(g) This Offering, as defined in the Memorandum, is scheduled to close no later than July 30, 2010 at 5:00 P.M. Pacific Standard Time (the “ Closing Date ”), provided, however , that the Company, at its sole election, may extend this offering up to an additional ninety days. The target offering is for up to 40,000 shares of Series A Convertible Preferred Stock (subject to an additional over-allotment of 10,000 additional shares of Series A Convertible Preferred Stock), but this offering has no prescribed minimum amount and the Company may accept lessor amounts from investors or have multiple closings of this Offering.

(h) Participant hereby agrees not to, and will cause its affiliates not to, enter into any “put equivalent position” as such term is defined in Rule 16a-1 under the Securities Exchange Act of 1934, as amended, or short sale position with respect to the Series A Convertible Preferred Stock.

2. Representations by Participant. In consideration of the Company’s acceptance of the Subscription, Participant makes the following representations and warranties to the Company and to its principals, jointly and severally, which warranties and representations shall survive any acceptance of the Subscription by the Company:

(a) Prior to the time of purchase of any Shares, Participant received a copy of the Memorandum, the Certificate of Formation, and the Certificate of Designation. Participant has reviewed the Memorandum, the Certificate of Formation, and the Certificate of Designation, and Participant has had the opportunity to ask questions and receive any additional information from persons acting on behalf of the Company to verify Participant’s understanding of the terms thereof and of the Company’s business and status thereof. Participant acknowledges that no officer, director, broker-dealer, placement agent, finder or other person affiliated with the Company has given Participant any information or made any representations, oral or written, other than as provided in the Memorandum, the Certificate of Formation, and the Certificate of Designation, on which Participant has relied upon in deciding to invest in the Shares, including without limitation, any information with respect to future acquisitions, mergers or operations of the Company or the economic returns which may accrue as a result of the purchase of the Shares.

(b) Participant acknowledges that Participant has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, newspaper or magazine article or advertisement, radio or television advertisement, or any other form of advertising or general solicitation with respect to the Shares.

 

                     Subscription Agreement

Participant’s Initials

  2   Toyzap.com, Inc.

(c) The Shares are being purchased for Participant’s own account for long-term investment and not with a view to immediately re-sell the Shares. No other person or entity will have any direct or indirect beneficial interest in, or right to, the Shares.

(d) Participant acknowledges that the Shares have not been registered under the Securities Act of 1933, as amended (the “ Securities Act ”), or qualified under the California Securities Law, or any other applicable blue sky laws, in reliance, in part, on Participant’s representations, warranties and agreements made herein.

(e) Other than the rights specifically set forth in this Subscription, the Certificate of Formation, and the Certificate of Designation, Participant represents, warrants and agrees that the Company and the officers of the Company (the “ Company’s Officers ”) are under no obligation to register or qualify the Shares under the Securities Act or under any state securities law, or to assist the undersigned in complying with any exemption from registration and qualification.

(f) Participant represents that Participant meets the criteria for participation because: (i) Participant has a pre-existing personal or business relationship with the Company or one or more of its partners, officers, directors or controlling persons; or (ii) by reason of Participant’s business or financial experience, or by reason of the business or financial experience of its financial advisors who are unaffiliated with, and are not compensated, directly or indirectly, by the Company or any affiliate or selling agent of the Company, Participant is capable of evaluating the risk and merits of an investment in the Shares and of protecting its own interests;

(g) Participant represents that Participant is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act and Participant has executed the Certificate of Accredited Investor Status, attached hereto as Exhibit D .

(h) Participant understands that the Shares are illiquid, and until registered with the Securities Exchange Commission, or an exemption from registration becomes available, cannot be readily sold as there will not be a public market for them, and that Participant may not be able to sell or dispose of the Shares, or to utilize the Shares as collateral for a loan. Participant must not purchase the Shares unless Participant has liquid assets sufficient to assure Participant that such purchase will cause it no undue financial difficulties, and that Participant can still provide for current and possible personal contingencies, and that the commitment herein for the Shares, combined with other investments of Participant, is reasonable in relation to its net worth.

(i) Participant understands that the right to transfer the Shares will be restricted unless the transfer is not in violation of the Securities Act, the California Securities Law, and any other applicable state securities laws (including investment suitability standards), that the Company will not consent to a transfer of the Shares unless the transferee represents that such transferee meets the financial suitability standards required of an initial participant, and that the Company has the right, in its absolute discretion, to refuse to consent to such transfer.

(j) Participant has been advised to consult with its own attorney or attorneys regarding all legal matters concerning an investment in the Company and the tax consequences of purchasing the Shares, and have done so, to the extent Participant considers necessary.

(k) Participant acknowledges that the tax consequences of investing in the Company will depend on particular circumstances, and neither the Company, the Company’s officers, any other investors, nor the partners, shareholders, members, managers, agents, officers, directors, employees, affiliates or consultants of any of them, will be responsible or liable for the tax consequences to Participant of an investment in the Company. Participant will look solely to and rely upon its own advisers with respect to the tax consequences of this investment

 

                     Subscription Agreement

Participant’s Initials

  3   Toyzap.com, Inc.

(l) All information which Participant has provided to the Company concerning Participant, its financial position and its knowledge of financial and business matters, and any information found in the Certificate of Accredited Investor Status, is truthful, accurate, correct, and complete as of the date set forth herein.

(l) Each certificate or instrument representing securities issuable pursuant to this Agreement will be endorsed with the following legend:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

3. Representations and Warranties by the Company. The Company represents and warrants that:

(a) Due Incorporation . The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have a material adverse effect on the business, operations or financial condition of the Company.

(b) Outstanding Stock . All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable.

(c) Authority; Enforceability . This Subscription, the Certificate of Formation, and the Certificate of Designation delivered together with this Subscription or in connection herewith have been duly authorized, executed, and delivered by the Company and are valid and binding agreements, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity; and the Company has full corporate power and authority necessary to enter into this Subscription, the Certificate of Formation, and the Certificate of Designation and to perform its obligations hereunder and under all other agreements entered into by the Company relating hereto.

(d) No General Solicitation . Neither the Company, nor any of its affiliates, nor to its knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Shares.

 

                     Subscription Agreement

Participant’s Initials

  4   Toyzap.com, Inc.

4. Agreement to Indemnify Company. Participant hereby agrees to indemnify and hold harmless the Company, its principals, the Company’s officers, directors attorneys, and agents, from any and all damages, costs and expenses (including actual attorneys’ fees) which they may incur: (i) by reason of Participant’s failure to fulfill any of the terms and conditions of this Subscription; (ii) by reason of Participant’s breach of any of representations, warranties or agreements contained herein (including the Certificate of Accredited Investor Status); or (iii) with respect to any and all claims made by or involving any person, other than Participant personally, claiming any interest, right, title, power, or authority in respect to the Shares. Participant further agrees and acknowledges that these indemnifications shall survive any sale or transfer, or attempted sale or transfer, of any portion of the Shares.

5. Subscription Binding on Heirs, etc. This Subscription, upon acceptance by the Company, shall be binding upon the heirs, executors, administrators, successors and assigns of the Participant. If the undersigned is more than one person, the obligations of the undersigned shall be joint and several and the representations and warranties shall be deemed to be made by and be binding on each such person and his or her heirs, executors, administrators, successors, and assigns.

6. Execution Authorized. If this Subscription is executed on behalf of a corporation, partnership, trust or other entity, the undersigned has been duly authorized and empowered to legally represent such entity and to execute this Subscription and all other instruments in connection with the Shares and the signature of the person is binding upon such entity.

7. Adoption of Terms and Provisions. The Participant hereby adopts, accepts and agrees to be bound by all the terms and provisions hereof.

8. Governing Law. This Subscription shall be construed in accordance with the laws of the State of California.

 

                     Subscription Agreement

Participant’s Initials

  5   Toyzap.com, Inc.

9. Investor Information: (This must be consistent with the form of ownership selected below and the information provided in the Certificate of Accredited Investor Status ( Exhibit A , included herewith.)

 

Name (please print):   

 

If entity named above,    By:   

 

   Its:   

 

Social Security or Taxpayer I.D. Number:   

 

Business Address (including zip code):   

 

 

     
Business Phone:   

 

Residence Address (including zip code):   

 

 

Email Address:   

 

Residence Phone:   

 

All communications to be sent to:   
             Business or                      Residence Address                      Email

 

                     Subscription Agreement

Participant’s Initials

  6   Toyzap.com, Inc.

Please indicate below the form in which you will hold title to your interest in the Shares. PLEASE CONSIDER CAREFULLY. ONCE YOUR SUBSCRIPTION IS ACCEPTED, A CHANGE IN THE FORM OF TITLE CONSTITUTES A TRANSFER OF THE INTEREST IN THE SHARES AND MAY THEREFORE BE RESTRICTED BY THE TERMS OF THIS SUBSCRIPTION, AND MAY RESULT IN ADDITIONAL COSTS TO YOU. Participants should seek the advice of their attorneys in deciding in which of the forms they should take ownership of the interest in the Shares, because different forms of ownership can have varying gift tax, estate tax, income tax, and other consequences, depending on the state of the investor’s domicile and his or her particular personal circumstances.

             INDIVIDUAL OWNERSHIP (one signature required)

             JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON (both or all parties must sign)

             COMMUNITY PROPERTY (one signature required if interest held in one name, i.e., managing spouse; two signatures required if interest held in both names)

             TENANTS IN COMMON (both or all parties must sign)

             GENERAL PARTNERSHIP (fill out all documents in the name of the PARTNERSHIP, by a PARTNER authorized to sign)

             LIMITED PARTNERSHIP (fill out all documents in the name of the LIMITED PARTNERSHIP, by a GENERAL PARTNER authorized to sign)

             LIMITED LIABILITY COMPANY (fill out all documents in the name of the LIMITED LIABILITY COMPANY, by a member authorized to sign)

             CORPORATION (fill out all documents in the name of the CORPORATION, by the President or other officer authorized to sign)

             TRUST (fill out all documents in the name of the TRUST, by the Trustee, and include a copy of the instrument creating the trust and any other documents necessary to show the investment by the Trustee is authorized. The date of the trust must appear on the Notarial where indicated.)

 

                     Subscription Agreement

Participant’s Initials

  7   Toyzap.com, Inc.

Subject to acceptance by the Company, the undersigned has completed this Subscription Agreement to evidence his/her subscription for participation in the Shares of the Company, this              day of              , 2010.

 

PARTICIPANT

 

(Signature

By:

 

 

Its:

 

 

The Company has accepted this subscription this              day of                                                  

 

“COMPANY”

TOYZAP.COM, INC.,

a Texas corporation

By:  

 

  Harold Montgomery
  Chief Executive Officer
Address for notice:

Toyzap.com, Inc.

c/o Colorado Financial Service Corporation

20400 Stevens Creek Blvd., Suite 700
Cupertino, CA 95104
Attn: Corporate Counsel

 

                     Subscription Agreement

Participant’s Initials

  8   Toyzap.com, Inc.

Exhibit D

CERTIFICATE OF ACCREDITED INVESTOR STATUS

Except as may be indicated by the undersigned below, the undersigned is an “accredited investor,” as that term is defined in Regulation D under the Securities Act of 1933, as amended (the “ Securities Act ”). The undersigned has initialed the box below indicating the basis on which he is representing his status as an “accredited investor”:

             a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “ Securities Exchange Act ”); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, and such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are “accredited investors”;

             a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

             an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

             a natural person whose individual net worth, or joint net worth with the undersigned’s spouse, at the time of this purchase exceeds $1,000,000 (excluding the value of the undersigned’s primary residence);

             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 the undersigned’s 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;

             a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment;

             an entity in which all of the equity holders are “accredited investors” by virtue of their meeting one or more of the above standards; or

             an individual who is a director or executive officer of Toyzap.com, Inc.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited Investor Status effective as of                      , 2010.

 

 

Name of Participant

 

                     Subscription Agreement

Participant’s Initials

  1   Toyzap.com, Inc.