EXHIBIT 10.1
REMOTEMDx, INC.
PRIVATE PLACEMENT INVESTOR SUBSCRIPTION AGREEMENT
These securities have not been registered with the U.S. Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), and are being offered in reliance on exemptions from
registration provided in Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder and preemption from the registration or
qualification requirements (other than notice filing and fee provisions) of
applicable state laws under the National Securities Markets Improvement Act of
1996.
------------------------------
This Subscription Agreement ("Agreement") shall constitute the
irrevocable offer of the undersigned to purchase securities of RemoteMDx, Inc.
(the "Company"), subject to the terms and conditions set forth in this
Agreement. On execution by both parties, this Agreement shall become a bilateral
agreement binding on both the undersigned and the Company. Each part of this
Agreement must be completed by the undersigned and, by execution below, the
undersigned acknowledges that the undersigned understands that the Company is
relying on the accuracy and completeness hereof in complying with the
obligations under applicable securities laws.
On the foregoing, it is hereby agreed as follows:
1. Subscription. The undersigned hereby irrevocably subscribes for the
purchase of one share of the Company's common stock (the "Common Stock") at a
price of $0.70 per share, all as more particularly set forth in the signature
box below. The undersigned is tendering to the Company:
(a) an executed original Subscription Agreement including all required
attachments;
(b) subscription payments should be made payable to "RemoteMDx, Inc.,"
0000 Xxxx 0000 Xxxxx, Xxxx Xxxx Xxxx, Xxxx, 00000, account number 000-00000-0,
Zions First National Bank, Xxxxxxxx Blvd. Office, 0000 Xxxxxxxx Xxxx., Xxxxx,
Xxxx, 00000, ABA number 124 0000 54.;
2. General Representations of Subscriber. The undersigned hereby
represents and warrants as follows:
(a) The undersigned has such knowledge and experience in
business and financial matters that he or she is capable of evaluating
the Company, the proposed activities thereof, and the risks and merits
of this prospective investment and is not utilizing a purchaser
representative (as defined in Regulation D) in connection with the
evaluation of such risks and merits.
Yes _____ No _____
If "No," (i)-(iii) below must be completed:
1
(i) List all attorneys, accountants, investment and financial
advisors, or others ("Purchaser Representatives") who will assist the
undersigned in analyzing the risks and merits of a possible investment
in the Company and provide the following:
The undersigned's Purchaser Representatives are:
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
(ii) Provide a separate written statement from each Purchaser
Representative on the Purchaser Representative Acknowledgment form
available from the Company in which is disclosed (1) the relationship
of the Purchaser Representative with the Company, if any, which has
existed at any time during the previous two years, and Compensation
received or to be received as a result of such relationship, and (2)
the education, experience, and knowledge in financial and business
matters which enables the Purchaser Representative to evaluate the
relative merits and risks of an investment in the Company.
(iii) The undersigned and the Purchaser Representatives listed
above, together, have such knowledge and experience in financial and
business matters that they are capable of evaluating the Company and
the proposed activities of the Company and the merits and risks of this
prospective investment.
(b) The undersigned has adequate means of providing for his or her
current needs and possible personal contingencies and has no need in the
foreseeable future for liquidity of an investment in the Company.
Yes _____ No _____
(c) (i) FOR ACCREDITED INVESTORS. The undersigned confirms that he
or she is an "accredited investor" as defined under rule 501 of
regulation D promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), as checked below:
(1) Any 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;
any broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934; any insurance company as
defined in section 2(13) of the Securities Act; any 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; any 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; any 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,
if such plan has total assets in excess of $5,000,000; any
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
2
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;
Yes _____ No _____
(2) Any private business development company as
defined in section 202(a)(22) of the Investment Advisers Act
of 1940;
Yes _____ No _____
(3) Any 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;
Yes _____ No _____
(4) Any director, executive officer, or general
partner of the issuer of the securities being offered or sold,
or any director, executive officer, or general partner of a
general partner of that issuer;
Yes _____ No _____
(5) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his
or her purchase exceeds $1,000,000;
Yes _____ No _____
For purposes of category (5), the term "net worth" means the
excess of total assets over total liabilities. In computing
net worth for the purposes of category (5) above, the
undersigned's principal residence must be valued either at (A)
cost, including the cost of improvements, net of current
encumbrances upon the property or (B) the appraised value of
the property as determined upon a written appraisal used by an
institutional lender making a loan to the individual secured
by the property, including the cost of subsequent
improvements, net of current encumbrances upon the property.
(6) Any natural person who had an individual income
in excess of $200,000 in each of the two most recent years or
joint income with that person'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;
Yes _____ No _____
In determining income, the undersigned should add to his or
her adjusted gross income any amounts attributable to tax
exempt income received, losses claimed as a limited partner in
any limited partnership, deductions claimed for depletion,
contributions to an XXX or Xxxxx retirement plan, alimony
payments, and any amount by which income from long-term
capital gains has been reduced in arriving at adjusted gross
income.
3
(7) Any 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
sophisticated person as described in section
230.506(b)(2)(ii); and
Yes _____ No _____
(8) Any entity in which all of the equity owners are
accredited investors.
Yes _____ No _____
(ii) FOR NONACCREDITED INVESTORS. The undersigned is not an
accredited investor, and has completed the Nonaccredited Investor
Questionnaire, attached hereto as Attachment A.
(d) The undersigned acknowledges that neither the SEC nor the
securities commission of any state or other federal agency has made any
determination as to the merits of purchasing the Securities.
(e) The undersigned has received and read the Company's confidential
private placement memorandum respecting the Company's products, marketing and
financing plan, management and related matters, as well as certain historical
financial statements and certain forecasts, events, and results. The undersigned
further acknowledges that the Company's annual report for the fiscal year ended
September 30, 2004, and all other reports filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since September
30, 2004 (together, the "Company Reports"), are available at the web site of the
SEC (xxx.xxx.xxx) or from the Company at the undersigned's request. The
undersigned understands and acknowledges that the private placement memorandum,
the Company Reports and related information contain certain forward-looking
statements and information relating to the Company that are based on the beliefs
of management, as well as assumptions made by and information currently
available to management, and that when used in such private placement
memorandum, the words "anticipate," "believe," "estimate," "expect," and
"intend" and similar expressions, as they relate to the Company or its
management, are intended to identify forward-looking statements. The undersigned
understands and acknowledges that such statements reflect the current view of
the Company respecting future events and are subject to certain risks,
uncertainties, and assumptions, including the risks and uncertainties noted and
that, should one or more of such risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in the private placement memorandum as anticipated, believed,
estimated, expected, or intended. The undersigned understands the risks
associated with investing in a development-stage business enterprise with
limited capitalization in a highly competitive business characterized by rapid
technological change.
(f) The undersigned acknowledges that an investment in the Company
involves a high degree of risk. The undersigned acknowledges that, except as
specifically set forth in the private placement memorandum, no representations
or warranties have been made to him or her, or to his or her advisors, by the
Company, or by any person acting on behalf of the Company, with respect to the
business of the Company or any other aspects or consequences of the purchase of
the Securities and/or an investment in the Company, and that he or she has not
relied upon any information concerning the offering, written or oral, other than
that contained in the private placement memorandum provided to the undersigned.
4
(g) The undersigned, either alone or with the assistance of one or more
advisers selected and engaged by him or her, has such knowledge and experience
in business and financial matters that he or she is capable of evaluating the
Company, its business operations, and the risks and merits of an investment in
the Company.
(h) The undersigned has been provided with all materials and
information requested by the undersigned or his or her representatives,
including any information requested to verify any information furnished, and the
undersigned has been provided the opportunity for direct communication with the
Company and its representatives regarding the purchase made hereby, including
the opportunity to ask questions of and receive answers from executive officers
and directors of the Company.
(i) All information that the undersigned has provided to the Company or
its agents or representatives concerning the undersigned's suitability to invest
in the Company is complete, accurate, and correct as of the date of the
signature on the last page of this Agreement. Such information includes, but is
not limited to, information concerning the undersigned's personal financial
affairs, business position, and the knowledge and experience of the undersigned
and the undersigned's advisers.
(j) The undersigned has no present intention of selling any of the
Securities or of reselling or otherwise disposing of all or any portion of the
Securities, either currently or after the passage of a fixed or determinable
period of time, or on the occurrence or nonoccurrence of any predetermined event
or circumstance.
(k) The undersigned has adequate means of providing for his or her
current needs and possible personal contingencies and has no need now, and
anticipates no need in the foreseeable future, to sell any of the Securities for
which the undersigned hereby subscribes. The undersigned is able to bear the
economic risks of this investment, and, consequently, without limiting the
generality of the foregoing, is able to hold the Securities for an indefinite
period of time, and has a sufficient net worth to sustain a loss of the entire
investment, in the event such loss should occur.
(l) The undersigned is a resident of the state identified below the
undersigned's signature to this Agreement.
(m) The undersigned acknowledges that this Agreement may be accepted or
rejected in whole or in part by the Company and that, to the extent the
subscription may be rejected, the accompanying subscription payment will be
refunded without payment of interest and without deduction of expenses.
3. Representations Regarding Exemptions and Restrictions on Transfer.
(a) In connection with the acquisition by the undersigned of the
Securities, the undersigned represents that the Securities are being acquired
without a view to, or for, resale in connection with any distribution of such
Securities or any interest therein without registration or other compliance
under the Securities Act and that the undersigned has no direct or indirect
participation in any such undertaking or in the underwriting of such an
undertaking.
(b) The undersigned acknowledges that the Securities must be held and
may not be sold, transferred, or otherwise disposed of for value unless
subsequently registered under the Securities Act or an exemption from such
5
registration is available; the Company is under no obligation to register the
Securities under the Securities Act or under Section 12 of the Securities
Exchange Act of 1934, as amended, except as expressly agreed to in writing by
the Company; if Rule 144 is available, and no assurance is given that it will
be, initially only routine sales of such Securities in limited amounts can be
made in reliance on Rule 144 in accordance with the terms and conditions of that
rule; the Company is under no obligation to the undersigned to make Rule 144
available, except as may be expressly agreed to by it in writing; in the event
Rule 144 is not available, compliance with Regulation A or some other exemption
may be required before the undersigned can sell, transfer, or otherwise dispose
of such Securities without registration under the Securities Act; the Company's
registrar and transfer agent will maintain a stop transfer order against the
registration of transfer of the Securities; and the certificate representing the
Securities will bear a legend so restricting the sale of such Securities.
(c) The undersigned understands that the shares of Securities have not
been registered, but are being acquired by reason of a specific exemption under
the Securities Act, as well as under certain state statutes for transactions by
an issuer not involving any public offering, and that any disposition of the
Securities may, under certain circumstances, be inconsistent with this exemption
and may make the undersigned an "underwriter" within the meaning of the
Securities Act.
(d) The undersigned understands that (i) after one year from the later
of the date the shares of Securities are acquired from the Company or an
affiliate of the Company and the full purchase price or other consideration is
paid, all as calculated in accordance with Rule 144(d), sales of the Securities
in reliance on Rule 144 can only be made in limited amounts in accordance with
the terms and conditions of that rule; (ii) after two years from the date the
shares of Securities are fully paid for, as calculated in accordance with Rule
144(d), Securities can generally be sold without meeting these conditions
provided the holder is not (and has not been for the preceding three months) an
affiliate of the Company; (iii) the Company may refuse to register transfer of
the Securities in the absence of compliance with Rule 144 unless the undersigned
furnishes the Company with a "no-action" or interpretative letter from the SEC
or an opinion of counsel reasonably acceptable to the Company stating that the
transfer is proper; further, unless such letter or opinion states that the
shares of Securities are free of any restrictions under the Securities Act, the
Company may refuse to transfer the Securities to any transferee who does not
furnish in writing to the Company the same representations and agree to the same
conditions with respect to such Securities as are set forth herein; and (iv) the
Company may also refuse to transfer the Securities if any circumstances are
present reasonably indicating that the transferee's representations are not
accurate.
(e) The undersigned understands that the resale of the Securities must
be effected in reliance on exemptions from registration under the Securities Act
and applicable state securities laws. The undersigned understands that such an
exemption may not be available and, in such case, he or she would not be able to
resell the Securities held.
4. Indemnity. The undersigned hereby agrees to indemnify the Company, its
controlling persons, persons who participated in the preparation of the private
placement memorandum, and any person participating in the offering and to hold
them harmless from and against any and all liability, damage, cost, or expense
(including, but not limited to, reasonable attorneys' fees) incurred on account
of or arising out of:
(a) any inaccuracy in his or her declarations, representations, and
warranties set forth herein or made by the undersigned to the Company in
connection with his or her subscription;
(b) the disposition of any of the Securities that he or she will
receive, contrary to his or her declarations, representations, and warranties
set forth herein; and
6
(c) any action, suit, or proceeding based on (i) the claim that said
declarations, representations, or warranties made by the undersigned were
inaccurate or misleading or otherwise cause for obtaining damages or redress
from the Company, (ii) the disposition of any of the Securities or any part
thereof contrary to the terms hereof, or (iii) the breach by the undersigned of
any part of this Agreement.
5. Setoff. Notwithstanding the provisions of the last preceding section or the
enforceability thereof, the undersigned hereby grants to the Company the right
to setoff against any amounts payable by the Company to the undersigned, for
whatever reason, of any and all damages, costs, or expenses (including, but not
limited to, reasonable attorneys' fees) that are incurred on account of or
arising out of any of the items referred to in clauses (a) through (c) of the
last preceding section.
6. Miscellaneous. The undersigned further understands, acknowledges, and agrees
that:
(a) This Agreement is registered in the name of the undersigned on the
books of the Company at its principal offices, and no transfer hereof shall be
valid and binding on the Company unless made at such offices by the registered
holder or his or her attorney-in-fact duly authorized in writing. The Company
may deem and treat the person in whose name this Agreement is registered as the
absolute owner hereof for the purpose of receiving any Securities issuable
pursuant hereto and for all other purposes.
(b) This Agreement shall be construed in accordance with and governed
by the laws of the state of Utah.
(c) This Agreement constitutes the entire agreement between the parties
respecting the subject matter hereof.
(d) Notwithstanding any of the representations, warranties,
acknowledgments, or agreements made herein by the undersigned, the undersigned
does not waive any rights granted to the undersigned under federal or state
securities laws.
8
(e) This Agreement does not entitle the undersigned to any rights as a
holder of the Company's common stock or warrants with respect to any Securities
purchasable hereunder that have not been fully paid for.
(f) All subscription payments should be made payable to RemoteMDx, Inc.
or wire transferred. Contemporaneously with acceptance of this subscription to
purchase the Units, the Company will deposit the accompanying subscription
payment directly into its operating account and will thereafter deliver
certificates representing the Securities subscribed for pursuant to this
Agreement.
7
The Company will notify the subscriber of the acceptance of this subscription by
returning a copy of this Agreement properly executed by the Company below
indicating such acceptance.
Number of Shares of Common Stock _____________
Aggregate Dollar amount $_____________
Subscriber:
---------------------------------------- ---------------------------------
Full Name of Person or Entity Date
---------------------------------------- ---------------------------------
Signature of Person or Entity Authorized Title of Authorized Representative
Representative Signing for Entity
---------------------------------------- ---------------------------------
Number and Street Signature of Joint Subscriber, If
Any
---------------------------------------- ---------------------------------
City, State and Zip Tax Identification or Social
Security Number
---------------------------------------- ---------------------------------
Business Address (number and street) Daytime telephone number
---------------------------------------- ---------------------------------
City, State and Zip Facsimile telephone number
---------------------------------------- ---------------------------------
E-mail address Cellular telephone number
ACCEPTANCE OF SUBSCRIPTION
The foregoing subscription is hereby accepted this ____ day of October, 2005.
RemoteMDx, Inc.
By ___________________
Duly authorized officer
8
