Contract
Exhibit
10.1
THIS
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SECURITIES
TO
PERSONS WHO ARE “ACCREDITED INVESTORS” (AS DEFINED HEREIN) PURSUANT TO
REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“1933
ACT”).
THE
SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE
“SUBSCRIPTION AGREEMENT”) RELATES HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT,
OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT 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.
CONFIDENTIAL
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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
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1.
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Subscription
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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”), 7,333,333 Units at the price of
US$0.15 per Unit (the “Subscription Price”), each “Unit” consisting of one share
of the Company's common stock, par value $0.001 per share (each share of common
stock, a “Share”), and one warrant (a “Warrant”), in the form attached hereto as
Appendix A, exercisable for three years from the Closing (as defined below)
to
purchase one additional Share (a “Warrant Share”) at a price of US$0.80 per
Share, for the aggregate total purchase price of US$1,100,000 (the “Subscription
Proceeds”).
1.2 As
set
forth in Section 2.1 herein, Subscriber shall pay the Subscription Proceeds
to
the Company in four instalments as set forth in Section 2.1, 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 installment.
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.
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2.
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Payment
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2.1 The
Subscriber shall pay the Subscription Proceeds to the Company in four
installments in the following manner: (1) upon
acceptance of this Subscription Agreement by the Company (the “First
Payment Date), the Subscriber shall pay to the Company 18.18% of the
Subscription Proceeds,($200,000); (2) on or before July 5, 2008 (the “Second
Payment Date), the Subscriber shall pay to the Company 18.18% of the
Subscription Proceeds;($200,000) and (3) on or before July 22, 2008 (the “Third
Payment Date,”), the Subscriber shall pay to the Company 18.18% of the
Subscription Proceeds ($200,000) (and (4) on or before August 31, 2008 (the
“Fourth Payment Date”) the Subscriber shall pay to the Company 45.46% of the
Subscription Proceeds ($500,000) Each of the First Payment Date, the Second
Payment Date, the Third Payment Date and the Fourth Payment Date shall be
defined for purposes of this Agreement as a a “Payment Date”).
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2.2 Upon
each
Payment Date the undersigned agrees to pay each installment of the Subscription
Proceeds by wire transfer to:
Name:
TraceGuard
Technologies Inc.
Bank:
______________________
Account:
______________________
SWIFT/ABA:
______________________
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 by 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.
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3.
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Documents
Required from
Subscriber
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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 or applicable
law.
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4.
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Closing
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4.1 If
the
Subscription Agreement and the Subscription are accepted by the Company, the
closing of each installment of the offering of the Units (the “Closing”) shall
occur on each applicable Payment Date.
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5.
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Acknowledgements
of Subscriber
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5.1 The
Subscriber acknowledges and agrees that:
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(a)
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the
Shares, Warrants or Warrant Shares are “restricted securities,” have not
been registered under the Securities Act of 1933, as amended (“1933 Act”),
or under any securities or “blue sky” law of any state of the United
States, and may not be sold or transferred except 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 undertake, 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 documents filed by the Company
with
the 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 is not purchasing the Units as a result of any advertisement,
article, notice or other communication regarding the Units published
in a
newspaper, magazine or similar media, or broadcasted over television,
radio or similar media, or presented at any seminar, or disseminated
through any general solicitation or general
advertisement;
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(g)
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the
Subscriber and the Subscriber's representative(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 Shares, Warrants
or
Warrant Shares made other than pursuant to an effective registration
statement under the 1933 Act or an available exemption from the
registration requirements of the 1933 Act and in accordance with
any
applicable state securities laws;
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(k)
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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 applicable resale
restrictions; and
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(l)
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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.
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Representations,
Warranties and Covenants of the
Subscriber
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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 as principal for such Subscriber's
own
account and is not acquiring the Units with a view to or for distributing
or reselling the Units or any part thereof in violation of 1933 Act
or any
applicable state securities laws or with any direct or indirect
arrangements or understandings with any other persons to distribute,
or
regarding the distribution of, the Units in violation of 1933 Act
or any
applicable state securities laws.
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(e)
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At
the time that the Units were offered to the Subscriber, the Subscriber
was
an “accredited investor” as such term is defined in Rule 501 promulgated
pursuant to the 1933 Act. As of the date hereof, the Subscriber is
an
“accredited investor.” On each date in which the Subscriber exercises any
Warrants, the Subscriber covenants that the Subscriber will be an
“accredited investor.”
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(f)
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the
Subscriber is resident of the jurisdiction set forth under the heading
“Name and Address of Subscriber” on the signature page of this
Subscription Agreement;
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(g)
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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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(h)
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the
Subscriber, either alone or together with its representatives, (i)
is able
to fend for him/her/itself in the Subscription; (ii) has such knowledge,
sophistication and experience in business and financial 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, at the present time, can afford the complete
loss of such investment;
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(i)
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the
Subscriber is not aware of any general solicitation or advertisement
of an
offer in connection with any of the Units;
and
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(j)
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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 stock is currently approved for trading on OTC
BB.
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7.
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Covenants
of the Company and the
Subscriber
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7.1 The
Company hereby covenants that, promptly following the date hereof, the Company
shall use commercially reasonable efforts to appoint the Subscriber as a
director on the Company’s board of directors (the “Board”). The Company further
covenants that, in connection with each annual meeting or special meeting of
stockholders of the Company at which the election of directors is a matter
to be
acted upon, the Company shall use commercially reasonable efforts to cause
the
Board to nominate the Subscriber for election or reelection to the Board and
to
recommend in any proxy statement for each such annual meeting or special meeting
that the stockholders of the Company vote for the Subscriber as a candidate
for
director. Notwithstanding the foregoing, the Company shall no longer be bound
by
the covenants described in the two preceding sentences if the Subscriber fails
to satisfy the Condition (as defined below).
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7.2
As used
herein, “Condition” means (i) for the period commencing on the date hereof and
terminating on the 2 year anniversary of the date hereof, the Subscriber,
together with the Subscriber Affiliates (as defined below), shall own 50% or
more of the Shares purchased by the Subscriber pursuant to this Subscription
Agreement (subject to proportional adjustment for splits, dividends, and similar
events), provided that, for purposes of clarity, the Shares referenced in this
Section 7.2(i) shall not include any Warrant Shares, and (ii) for the period
commencing on the 2 year anniversary of the date hereof, the Subscriber,
together with the Subscriber Affiliates, shall own 5% or more of the issued
and
outstanding shares of the Company on a non-diluted basis, as such number of
issued and outstanding shares of the Company shall be reported from time to
time
in an SEC Filing or as shall be certified by the Chief Financial Officer of
the
Company. The Subscriber hereby covenants that, upon the failure of the
Subscriber to satisfy the Condition, the Subscriber shall, within 3 calendar
days of a request by the Company, tender his resignation as a member of the
Board, which resignation shall be immediately effective. The Subscriber hereby
grants to any officer of the Company an irrevocable power of attorney to tender
the Subscriber’s resignation as a member of the Board if the Subscriber fails to
tender his resignation as required by the preceding sentence. As used herein,
“Subscriber Affiliate” means any corporation, partnership, trust, limited
liability company, joint stock company, incorporated or unincorporated
association or other entity in which the Subscriber holds 50% or more of both
(i) the economic ownership and (ii) the voting control.
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8.
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Acknowledgement
and Waiver
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8.1 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.
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9.
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Legending
of Subject Units
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9.1 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:
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“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN RELIANCE
UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED
(THE “1933 ACT”). ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED
OR OTHERWISE DISPOSED OF OTHER THAN PURSUANT TO (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT OR (II) AN EXEMPTION FROM
THE
1933 ACT WHICH IS CONFIRMED IN AN OPINION OF, OR IS REASONABLY ACCEPTABLE
TO, COMPANY COUNSEL.”
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9.2 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.
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10.
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Costs
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10.1 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.
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11.
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Governing
Law
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11.1 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.
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12.
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Survival
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12.1 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.
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13.
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Assignment
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13.1 This
Subscription Agreement is not transferable or assignable.
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14.
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Severability
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14.1 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.
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15.
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Entire
Agreement
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15.1 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.
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16.
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Notices
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16.1 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.
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17.
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Counterparts
and Electronic Means
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17.1 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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XXXXXX
XXXXXXXX
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(Name
of Subscriber - Please type or print)
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/s/
Xxxxxx Xxxxxxxx
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(Signature
and, if applicable, Title)
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00
XXXXXXXX XX, XXXXX 000
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(Address
of Subscriber)
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XXX
XXXXXXXX 00000, XX
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(Xxxx,
Xxxxx or Province, Postal Code, and 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 Xxxxx Xxx-Xxxx.
DATE:
the
30th day of June, 2008.
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Per:
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/s/
Xxxxx Xxx-Xxxx
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Xxxxx
Xxx-Xxxx, Chief Financial Officer
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