Contract
Exhibit
10.1
THIS
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SECURITIES
IN
AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN)
PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”).
NONE
OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE
“SUBSCRIPTION AGREEMENT”) RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR
ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED
OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS
DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER
THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933
ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE
WITH THE 1933 ACT.
CONFIDENTIAL
(Offshore
Subscribers)
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TO:
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TraceGuard
Technologies, Inc. (the “Company”)
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000
Xxxxxxx Xxxxxx
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Xxx
Xxxx
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XX
00000
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Purchase
of Shares and Warrants
1. Subscription
1.1 The
undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to
purchase from the Company (the “Offering”), on the basis of the representations
and warranties and subject to the terms and conditions set forth in this
agreement (the “Subscription Agreement”), _____ Units at the price of US$0.40
per Unit (the “Subscription Price”), for a total purchase price of US$_____,
each “Unit” consisting of one share of the Company's common stock (a “Share”),
and one warrant (a “Warrant”) exercisable for three years from the applicable
Payment Date (as defined below) to purchase one additional Share (a “Warrant
Share”) at a price of US$0.70 per Share, for the aggregate total purchase price
of US$______ (the “Subscription Proceeds”).
1.2 As
set
forth in Section 2.1 herein, Subscriber shall pay the Subscription Proceeds
to
the Company in three instalments with each instalment equal to 33.3%, 33.3%,
and
33.3% respectively of the Subscription Proceeds. In connection therewith, and
within 14 Business Days of such Payment Date, the Company shall deliver to
Subscriber a number of Units equal to the aggregate Units purchased hereunder,
for each instalment.
1.3 Upon
acceptance of this Subscription Agreement by the Company, Subscriber
acknowledges and agrees that Subscriber shall purchase the Units purchased
hereunder pursuant to the terms of this Subscription Agreement. Subscriber
covenants to make the applicable payment on each Payment Date.
2. Payment
2.1 The
Subscriber shall pay the Subscription Proceeds to the Company in equal
instalments in the following manner: (1) on or before January 20, 2008, the
Subscriber shall pay to the Company 33.3% of the Subscription Proceeds, (the
“First Payment Date); (2) on the one month anniversary of the First Payment
Date, the Subscriber shall pay to the Company 33.3% of the Subscription Proceeds
(the date of such payment, the “Second Payment Date”); and (3) on the two month
anniversary of the First Payment Date, the Subscriber shall pay to the Company
33.3% of the Subscription Proceeds (the date of such payment, the “Third Payment
Date,” and, collectively with the First Payment Date and the Second Payment
Date, each such date, a “Payment Date”).
2.2 Upon
the
First, Second and Third Payment Date the undersigned agrees to pay each
instalment of the Subscription Proceeds by wire transfer to:
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Name:
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TraceGuard
Technologies Inc.
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Bank:
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Account:
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SWIFT/ABA:
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2.3 The
Subscriber acknowledges and agrees that this Subscription Agreement, the
Subscription Proceeds and any other documents delivered in connection herewith
will be held on behalf of the Company until acceptance or rejection. In the
event that this Subscription Agreement is not accepted by the Company for
whatever reason, which the Company expressly reserves the right to do, within
30
days of the delivery of an executed Subscription Agreement by the Subscriber,
this Subscription Agreement, the Subscription Proceeds (without interest
thereon) and any other documents delivered in connection herewith will be
returned to the Subscriber at the address of the Subscriber as set forth in
this
Subscription Agreement.
3. Documents
Required from Subscriber
3.1 The
Subscriber must complete, sign and return to the Company an executed copy of
this Subscription Agreement.
3.2 The
Subscriber shall complete, sign and return to the Company as soon as possible,
on request by the Company, any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, and applicable
law.
4. Closing
4.1 If
the
Subscription Agreement and the Subscription are accepted by the Company, the
closing of each instalment of the offering of the Units (the “Closing”) shall
occur on each applicable Payment Date.
5. Acknowledgements
of Subscriber
5.1 The
Subscriber acknowledges and agrees that:
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(a)
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none
of the Shares, Warrants or Warrant Shares have been registered under
the
Securities Act of 1933, as amended (“1933 Act”), or under any state
securities or “blue sky” laws of any state of the United States, and,
unless so registered, may not be sold or transferred except in accordance
with the provisions of Regulation S, promulgated under the 1933 Act
(“Regulation S”), pursuant to an effective registration statement under
the 1933 Act, or pursuant to an exemption from, or in a transaction
not
subject to, the registration requirements of the 1933 Act and in
each case
in accordance with applicable state and local securities
laws;
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(b)
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the
Subscriber acknowledges that the Company has not undertaken, and
will have
no obligation, to register any of the Shares, Warrants or Warrant
Shares
under the 1933 Act;
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(c)
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the
decision to execute this Subscription Agreement and acquire the Units
hereunder has not been based upon any oral or written representation
as to
fact or otherwise made by or on behalf of the Company, and such decision
is based entirely upon a review of the information filed by the Company
with the Unites States Securities and Exchange Commission (the “SEC
Filings”);
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(d)
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no
securities commission or similar regulatory authority has reviewed
or
passed on the merits of the Units;
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(e)
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there
are risks associated with an investment in the Units, as described
in the
SEC Filings;
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(f)
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the
Subscriber has not acquired the Units as a result of, and will not
itself,
directly or indirectly, engage in any “directed selling efforts” (as
defined in Regulation S) in the United States in respect of the Units
which would include any activities undertaken for the purpose of,
or that
could reasonably be expected to have the effect of, conditioning
the
market in the United States for the resale of the Units; provided,
however, that the Subscriber may sell or otherwise dispose of the
Units
pursuant to registration thereof under the 1933 Act, pursuant to
Regulation S, or under an exemption from such registration
requirements;
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(g)
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the
Subscriber and the Subscriber's advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from the Company
in
connection with the purchase of the Units hereunder, and to obtain
additional information, to the extent possessed or obtainable without
unreasonable effort or expense, necessary to verify the accuracy
of the
information about the Company;
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(h)
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the
Subscriber will indemnify and hold harmless the Company and, where
applicable, its directors, officers, employees, agents, advisors
and
shareholders, from and against any and all loss, liability, claim,
damage
and expense whatsoever (including, but not limited to, any and all
fees,
costs and expenses whatsoever reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative
proceeding or investigation whether commenced or threatened) arising
out
of or based upon any representation or warranty of the Subscriber
contained herein or in any document furnished by the Subscriber to
the
Company in connection herewith being untrue in any material respect
or any
breach or failure by the Subscriber to comply with any covenant or
agreement made by the Subscriber to the Company in connection
therewith;
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(i)
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the
Shares are not listed on any stock exchange or automated dealer quotation
system (other than the U.S. Over the Counter Bulletin Board (“OTC BB”))
and no representation has been made to the Subscriber that any of
the
Shares will become listed on any stock exchange or automated dealer
quotation system (other than OTC BB);
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(j)
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the
Company will refuse to register any transfer of the Units not made
in
accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act or pursuant to an available
exemption from the registration requirements of the 1933 Act and
in
accordance with applicable state and local securities
laws;
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(k)
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the
statutory and regulatory basis for the exemption claimed for the
offer of
the Units, although in technical compliance with Regulation S, would
not
be available if the offering is part of a plan or scheme to evade
the
registration provisions of the 1933 Act or any applicable state and
provincial securities laws;
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(l)
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the
Subscriber has been advised by the Company to consult the Subscriber's
own
legal, tax and other advisors with respect to the merits and risks
of an
investment in the Units and with respect to applicable resale
restrictions, and the Subscriber is solely responsible (and the Company
is
not in any way responsible) for compliance with:
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(i)
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any
applicable laws of the jurisdiction in which the Subscriber is resident
in
connection with the distribution of the Units hereunder,
and
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(ii)
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applicable
resale restrictions; and
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(m)
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this
Subscription Agreement is not enforceable by the Subscriber unless
it has
been accepted by the Company.
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6. Representations,
Warranties and Covenants of the Subscriber
6.1 The
Subscriber hereby represents and warrants to and covenants with the Company
(which representations, warranties and covenants shall survive the Closing)
that:
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(a)
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the
Subscriber has the legal capacity and competence to enter into and
execute
this Subscription Agreement and to take all actions required pursuant
hereto;
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(b)
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the
entering into of this Subscription Agreement and the transactions
contemplated hereby do not result in the violation of any of the
terms and
provisions of any law applicable to the Subscriber or of any agreement,
written or oral, to which the Subscriber may be a party or by which
the
Subscriber is or may be bound;
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(c)
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the
Subscriber has duly executed and delivered this Subscription Agreement
and
it constitutes a valid and binding agreement of the Subscriber enforceable
against the Subscriber in accordance with its terms;
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(d)
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the
Subscriber is acquiring the Units for such Subscriber's own account
and/or
benefit for investment and not as a nominee and not with a view to
the
distribution thereof.
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(e)
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the
Subscriber is not acquiring the Units for the account or benefit
of,
directly or indirectly, any U.S. Person;
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(f)
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the
Subscriber is not a U.S. Person (as defined in Regulation
S);
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(g)
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the
Subscriber is resident in the jurisdiction set out under the heading
“Name
and Address of Subscriber” on the signature page of this Subscription
Agreement;
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(h)
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the
sale of the Units to the Subscriber as contemplated in this Subscription
Agreement complies with or is exempt from the applicable securities
legislation of the jurisdiction of residence of the
Subscriber;
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(i)
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the
Subscriber is acquiring the Units for investment only and not with
a view
to resale or distribution and, in particular, it has no intention
to
distribute either directly or indirectly any of the Units in the
United
States or to U.S. Persons;
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(j)
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the
Subscriber is outside the United States at the time of the offer
and sale
of the Units and when receiving and executing this Subscription Agreement
and is acquiring the Units as principal for the Subscriber's own
account,
for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalisation thereof, in whole or in part, and
no
other person has a direct or indirect beneficial interest in such
Units;
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(k)
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the
Subscriber is not an underwriter of, or dealer in, the common shares
of
the Company, nor is the Subscriber participating, pursuant to a
contractual agreement or otherwise, in the distribution of the
Units;
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(l)
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the
Subscriber (i) is able to fend for him/her/itself in the Subscription;
(ii) has such knowledge and experience in business matters as to
be
capable of evaluating the merits and risks of its prospective investment
in the Units; and (iii) has the ability to bear the economic risks
of its
prospective investment and can afford the complete loss of such
investment;
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(m)
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the
Subscriber is not aware of any public solicitation or advertisement
of an
offer in connection with any of the Units; and
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(n)
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no
person has made to the Subscriber any written or oral
representations:
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(i)
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that
any person will resell or repurchase any of the Units;
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(ii)
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that
any person will refund the purchase price of any of the
Units;
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(iii)
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as
to the future price or value of any of the Units; or
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(iv)
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that
any of the Shares will be listed and posted for trading on any stock
exchange or automated dealer quotation system or that application
has been
made to list and post any of the Shares of the Company on any stock
exchange or automated dealer quotation system; except that the Company’s
common shares are currently approved for trading on OTC
BB.
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(o)
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The
Subscriber will not engage in hedging transactions with respect to
the
Units unless in compliance with the 1933
Act.
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7. Acknowledgement
and Waiver
7.1 The
Subscriber has acknowledged that the decision to purchase the Units was solely
made on the basis of information contained in the SEC Filings, which is publicly
available and filed on XXXXX. The Subscriber hereby waives, to the fullest
extent permitted by law, any rights of withdrawal, rescission or compensation
for damages to which the Subscriber might be entitled in connection with the
distribution of the Units.
8. Legending
of Subject Units
8.1 The
Subscriber hereby acknowledges that upon the issuance thereof, and until such
time as the same is no longer required under the applicable securities laws
and
regulations, the certificates representing any of the Shares, Warrants and
Warrant Shares will bear a legend in substantially the following
form:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN AN OFFSHORE
TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION
S
PROMULGATED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”))
PURSUANT TO REGULATION S. ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE
DISPOSED OF (I) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
S, (II)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (III)
PURSUANT
TO AN EXEMPTION FROM THE ACT WHICH IS CONFIRMED IN AN OPINION OF COMPANY
COUNSEL. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED
BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE
ACT.”
8.2 The
Subscriber hereby acknowledges and agrees to the Company making a notation
on
its records or giving instructions to the registrar and transfer agent of the
Company in order to implement the restrictions on transfer set forth and
described in this Subscription Agreement.
9. Anti-Dilution
Protection
9.1 In
the
event the Company issues Shares for cash consideration pursuant to a financing
primarily for capital raising purposes during the Anti-Dilution Protection
Period (as defined below) for a per share price that is less than the
Subscription Price in effect immediately prior to such sale, then, and in each
such case, the Subscription Price shall be adjusted, as of the close of business
on the date of such sale, to the amount obtained by multiplying such
Subscription Price by a fraction, the numerator of which shall be the sum of
(x)
the total number of Shares outstanding (exclusive of any treasury shares)
immediately prior to such sale multiplied by the Subscription Price on the
date
of such sale plus (y) the consideration received by the Company upon such sale,
and the denominator of which shall be the product of (A) the total number of
Shares outstanding (exclusive of treasury shares) immediately after such sale
multiplied by (B) the Subscription Price on the date of such sale. Such adjusted
Subscription Price shall hereinafter be referred to as the “Adjusted
Subscription Price”. For purposes of this Section 9, if the Company issues debt
securities or preferred stock, in each case convertible into Shares with a
conversion price less than the Subscription Price, the number of Shares issuable
upon the conversion of such debt securities or preferred stock shall be deemed
to have been issued at such conversion price on the date of issuance of such
debt securities or preferred stock and the Subscription Price shall be adjusted
in accordance with the provisions hereof.
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9.2 The
Company shall within ten (10) Business Days after the close of such sale, issue
to each Subscriber a number of Shares equal to (a) the Subscription Proceeds
divided by the Adjusted Subscription Price, minus (b) the Subscription Proceeds
divided by the Subscription Price in effect immediately prior to such sale.
For
purposes of clarity, in connection with the Adjusted Subscription Price and
additional issuances of Shares in connection therewith, the Company shall in
no
event be obligated to issue additional Warrants to the Subscriber.
9.3 For
purposes of this Section 9, the term “Anti-Dilution Protection Period” means a
period of twelve (12) months after the date of this Agreement.
9.4 For
sake
of clarity, a financing for cash to a strategic investor shall not be deemed
to
be subject to Section 9. Any issuance for property, services, intangible rights,
or other non-cash consideration shall not be deemed to be subject to Section
9.
10. Additional
Investment Right
10.1
At
any
time on or prior to February 20, 2008, and upon written notice from Subscriber
to the Company, Subscriber shall have the right, but not the obligation, to
purchase from the Company a number of Units equal to 100% of the Units purchased
hereunder. Such additional purchase of Units by the Subscriber shall occur
pursuant to a Private Placement Subscription Agreement with terms identical
(including with respect to Payment Dates) to the terms set forth in this
Subscription Agreement, mutatis
mutandis,
which
Private Placement Subscription Agreement shall be provided by the Company to
Subscriber as soon as possible using commercially reasonable
efforts.
11. Costs
11.1 The
Subscriber acknowledges and agrees that all costs and expenses incurred by
the
Subscriber (including any fees and disbursements of any special counsel retained
by the Subscriber) relating to the purchase of the Units shall be borne by
the
Subscriber.
12. Governing
Law
12.1 This
Subscription Agreement is governed by the laws of the state of Nevada. The
Subscriber, in its personal or corporate capacity and, if applicable, on behalf
of each beneficial purchaser for whom it is acting, irrevocably consents to
the
jurisdiction of the courts of the state of New York to resolve any disputes
arising hereunder.
13. Survival
13.1 This
Subscription Agreement, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Units by the Subscriber pursuant
hereto.
14. Assignment
14.1 This
Subscription Agreement is not transferable or assignable.
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15. Severability
15.1 The
invalidity or unenforceability of any particular provision of this Subscription
Agreement shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription Agreement.
16. Entire
Agreement
16.1 Except
as
expressly provided in this Subscription Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Subscription Agreement contains the entire agreement between the parties with
respect to the sale of the Units and there are no other terms, conditions,
representations or warranties, whether expressed, implied, oral or written,
by
statute or common law, by the Company or by anyone else.
17. Notices
17.1
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form
of
telecommunication. Notices to the Subscriber shall be directed to the address
on
the signature page of this Subscription Agreement and all notices to the Company
shall be delivered by facsimile to: TraceGuard Technologies, Inc., 000 Xxxxxxx
Xxxxxx Xxx Xxxx, XX 00000, Attention: Xxxxx Xxx-Xxxx, Chief Financial Officer,
facsimile number: 011-972-57-797-5364, with a copy to Moses & Singer LLP,
000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000, Attention: Xxxxx Xxxxxxxx, Esq., facsimile number (000)
000-0000.
18. Counterparts
and Electronic Means
18.1 This
Subscription Agreement may be executed in any number of counterparts, each
of
which, when so executed and delivered, shall constitute an original and all
of
which together shall constitute one instrument. Delivery of an executed copy
of
this Subscription Agreement by electronic facsimile transmission or other means
of electronic communication capable of producing a printed copy will be deemed
to be execution and delivery of this Subscription Agreement as of the date
hereinafter set forth.
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IN
WITNESS WHEREOF
the
Subscriber has duly executed this Subscription Agreement as of the date of
acceptance by the Company.
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(Name
of Subscriber – Please type or print)
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(Signature
and, if applicable, Office)
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(Address
of Subscriber)
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(City,
State or Province, Postal Code of Subscriber)
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(Country
of Subscriber)
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A
C C E P T A N C E
The
above-mentioned Subscription Agreement in respect of the Units is hereby
accepted by __________________.
DATED
at
the __ day of December, 2007.
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Per:
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David
Ben Yair, Chief Financial Officer
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