Exhibit 10.1

 
THIS 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
REGULATIONS UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT").
 
NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION
AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933 (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 REGULATIONS 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 ADDITIONS HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.
 
SUBSCRIPTION AGREEMENT / DEBT SETTLEMENT
(Non-US Subscriber)
 
TO: DSG TAG Systems Inc. (the “Company")
 
Purchase of Common Shares and Series A Convertible Preferred Shares
 
WHEREAS:
A. The Company is indebted to the Westergaard Holdings Ltd. (the "Subscriber")
as a result of debts due under various- loans advanced by the Subscriber (the
aggregate amount defined herein as the Indebtedness"):

B.  
The Subscriber wishes to subscribe for:

(i)  
Series A Convertible Preferred Shares (the 'Series A Shares") in the capital
stock of the Company at a deemed price of US$125 per Series A Share. in
settlement of the principal portion of the Indebtedness: and

(ii)  
Shares of common stock (the “Common Shares") in the capital stock of the Company
at a deemed price of US$0.25 per Common Share, in settlement of the outstanding
accrued interest portion of the Indebtedness,

(collectively, the "Subscription Proceeds");

C. In lieu of receiving cash in payment of the Subscription Proceeds, the
Company is willing to apply the indebtedness in payment thereof.

NOW THEREFORE THIS AGREEMENT WITNESSES that, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1. Subscription

1.1 On the basis of the representations and warranties and subject to the terms
and conditions set forth herein the Subscriber hereby irrevocably subscribes for
and agrees to purchase Series A Shares and Common Shares. (the subscription and
agreement to purchase being the "Subscription"), as follows:

·  
Series A Shares at a deemed price of US$125 per share in settlement of the
Principal Amount of the indebtedness; and

 
·  
Common Shares (Interest Shares") at g deemed price of US$0.25 per share in
settlement of the   Interest Amount Of the. Indebtedness.

1.2 For purposes of this Agreement:

(a)  
"Principal Amount" means the outstanding principal amount of the Indebtedness as
of the date hereof (being US$5,100,543.52) together with all such additional
amounts paid by the Subscriber to and until the date of closing the RTO referred
to in section 3.1 toward the reasonable costs (i) incurred in discharging the
receiver currently in place with respect to the Company; and (ii) incurred in
negotiating and settling the terms of this Agreement and transactions involving
the Company and Pubco:

 
 
 
 

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(b)  
"Interest Amount" means the aggregate amount of accrued and unpaid interest
owing on the Principal Amount (being US$2,502.168.23 as of September 19, 2014)
together with a per diem amount of US$3.513.08 to and until the Closing Date;

(c)  
"Indebtedness" means the total of the Principal Amount and Interest Amount at
any time;

(d)  
"Closing Date" means the date of execution of this Agreement.

1.3 On the basis of the representations and warranties and subject to the terms
and conditions set forth herein, the Company hereby, irrevocably agrees to sell
the Series A Shares and Common Shares to the Subscriber in settlement of the
Indebtedness as of the Closing Date.

1.4 Subject to the terms hereof the Subscription will be effective upon its
acceptance by the Company.

2. Settlement of Indebtedness:

2.1 The Company and the Subscriber acknowledge that:

(a)  
the balance due from the Company to the Subscriber as of the date hereof
pursuant to the Indebtedness is an aggregate amount of US$7,602,711.75; and

(b)  
the Company and the Subscriber agree to apply the entire amount of the
Indebtedness on the Closing Date in payment of the Subscription Proceeds and, on
the Closing Date, upon delivery of a signed copy of this Subscription Agreement
to the Subscriber together With certificates evidencing the Series A Shares and
Common Shares registered as provided in this Subscription Agreement (the "Share
Certificates"), the Indebtedness shall be fully paid (and the date of repayment
shall he the date that the Share Certificates are issued) subject to the
conditions hereof and the rights provided for in the Series A Shares.

3. Exchange and Redemption of the Series A Shares

3.1 Within 60 days from the date of this Agreement the Company shall enter into
an agreement for a reverse take-ever transaction (the "RTO") with a company
whose shares of common stock are quoted for trading on the over-the-counter
market in the United States ("Pubco"), pursuant to which all of the issued and
outstanding common shares of the Company shall be exchanged for Shares of common
stock of Pubco ("Pubco Shares"), with the shareholders of the Company then
holding a majority of the issued and outstanding Pubco Shares, prior to any
concurrent financing. Concurrently with the closing of the RTO the Subscriber
shall exchange the Interest Shares for Pubco Shares on the basis that the actual
price per Pubco Share is not more than US$1.25. The Series A Shares, the
interest Shares, together with the Pubco Shares, are collectively referred to
herein as the "Securities.”

3.2 Within 60 days of the closing of the RTO, the Company and/or Pubco Shall
have completed a financing for gross proceeds of at least US$5,000,000. On the
closing of such financing, at least US$2,500,000 shall be
paid to the Subscriber for the redemption of 2,000,000 of the Series A Shares
held by the Subscriber at the deemed redemption price of USSI.25 per share.

 
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3.3 Within 150 days of the closing of the R.TO, the Company and/or Pubco shall
have completed a second financing for gross proceeds of at least US$5,000.000.
On the closing of such financing, the balance of the Series A Shares held by the
Subscriber will be redeemed at a redemption price of $1.25 per share.

3.4 Until such time as all Series A Shares have, been redeemed by the company
the Subscriber may convert any or all of its remaining Series A Shares and
accrued interest into Pubco Shares at US$1.25 per share.

3.5 The Series A Shares will accrue interest at the simple rate of 5.0% per
annum.

3.6. In the event that the Company intends to redeem any Series A Shares, it
shall provide the Subscriber with 30 days written notice of such intention,
during which time the Subscriber may convert some or all of its Series A Shares
in accordance with section 3.4 above.

3.7 Should all the Series A Shares not be redeemed in accordance with the above
provisions, the Subscriber may declare the outstanding balance due under the
remaining Series A Shares immediately due and payable, and all outstanding
Series A Shares shall be deemed cancelled. With the remaining Principal Amount
of the Indebtedness reinstated and due and owing.

4. Acknowledgements of Subscriber

4.1 The Subscriber acknowledges and agrees that:

(a)  
none of the Securities have been or will be registered under the 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 offered or sold in the United States or, directly or
indirectly, to U.S. Persons, as that term is defined in Regulation S under the
1933 Act ("Regulation S"), except in accordance with the provisions or
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 ease only in accordance
with applicable securities laws;

(b)  
the Company has not undertaken, and will have no obligation, to register any of
the Securities under the 1933 Act or any other securities legislation;

(c)  
the Subscriber has been advised to consult the Subscribers own legal, tax and
other advisors with respect to the merits and risks of an investment in the
Securities and with respect to applicable resale restrictions, and it is solely
responsible (and the Company is not in any way responsible) for compliance with;

(i)  
any applicable laws of the jurisdiction in which the Subscriber is resident in
connection with the distribution of the Securities hereunder, and

(ii)  
applicable resale restrictions;

(d)  
none of the Series A Shares are listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber that any
of the Series A Shares will become listed on any stock exchange or automated
dealer quotation system:

(e)  
none of the Securities may be offered or sold by the Subscriber to a U.S. Person
(as defined in Section 5.2, below, or for the account or benefit of a U.S.
Person (other than a distributor) prior to the end of the Distribution
Compliance Period (as defined herein);

(f)  
neither the US Securities and Exchange Commission (“SEC”) nor any other
securities commission or similar regulatory authority has reviewed or passed on
the merits of the Securities:

 
 
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(g)  
no documents in connection with the sale of the Securities hereunder have been
reviewed by the SEC or any state securities administrators;

(h)  
the Subscriber is purchasing the Securities pursuant to an exemption from the
registration and the prospectus requirements of applicable securities
legislation on the basis that the Subscriber is not a resident of United States
and, as a consequence:

(i)  
is restricted from using most of the civil remedies available under U.S. and
Canadian securities legislation,

(ii)  
may not receive information that would otherwise be required to be provided
under U.S. or Canadian securities legislation, and

(iii)  
the Company is relieved from certain obligations that would otherwise apply
under U.S.

 
and Canadian securities legislation:

(i)  
the statutory and regulatory basis for the exemption claimed for the offer and
sale of the

 
securities, 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 1933 Act; and

(j)  
this Subscription Agreement is not enforceable by the Subscriber unless it has
been accepted by the Company.

 
5. Representations, Warranties and Covenants of the Subscriber

5.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations warranties and covenants shall survive the
Closing) that:

(a)  
the Subscriber is not a U.S. Person;

(b)  
the Subscriber is not acquiring the Securities- for the account or benefit of,
directly or indirectly,

 
any U.S. Person;

(c)  
the Subscriber is resident in the jurisdiction set out on the signature page of
this Subscription Agreement and the sale of the Securities 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;

(d)  
the Subscriber has the legal capacity and competence to enter into and execute
this Subscription

 
Agreement and to take all actions required pursuant hereto and, if the
Subscriber is a corporation, it is duly incorporated and validly subsisting
under the laws of its jurisdiction of incorporation and all necessary approvals
by its directors, shareholders and others have been obtained to authorize
execution and performance of this Subscription Agreement on behalf of the
Subscriber;

(e)  
if the Subscriber is a corporation or other entity, the entering into of this
Subscription Agreement

 
and the transactions contemplated hereby do not and will not result in the
violation of any of the terms and provisions of any law applicable to, or the
constating documents of, 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;

(f)  
the Subscriber is acquiring the Securities as principal for its own account for
investment purposes only and not for the account of any other person and not for
distribution, assignment or resale to others, and no other person has a direct
or indirect beneficial interest in such Securities, and it has not subdivided
its interest in the Securities with any other person;

 
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(g)  
the Subscriber is outside the United States when receiving and executing this
Subscription Agreement;

(h)  
the Subscriber is aware that an investment in the Company and Pubco is
speculative and involve certain risks, including the possible loss of the entire
investment;

(i)  
the Subscriber (i) has adequate net worth and means of providing for its current
financial needs

 
and possible personal contingencies, (ii) has no need for liquidity in this
investment, and (iii) is able to bear the economic risks of an investment in the
Securities for an indefinite period of time;

(j)  
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 any of the Securities;

(k)  
the Subscriber understands and agrees that none of the Securities have been or
will be registered

 
under the 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 offered or sold in
the United States or directly or indirectly to U.S. Persons, except in
accordance With the provisions of Regulation S ("Regulation “S” promulgated
under the 1933 Act, 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 only in
accordance with applicable state securities laws;

(l)  
the Subscriber understands and agrees that offers and sales of any of the
Securities prior to the expiration of a restricted period after the data of
original issuance of the Securities (such period hereinafter referred to as the
“Distribution Compliance Period") shall only be made in compliance with the safe
harbor provisions set forth in Regulation S. pursuant to the registration
provisions or the 1933 Act or an exemption therefrom, and that all offers and
sales after the Distribution Compliance Period shall be made only in compliance
with the registration provisions of the 1933 Act or an exemption therefrom and
in each Case only in accordance with applicable state securities laws;

(m)  
the Subscriber has not acquired the Securities as a result of, and it covenants
that it will not itself  engage in, any "directed selling efforts" (as defined
in Regulation S) in the United States in respect of any of the Securities 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 any of the Securities; provided, however, that
the Subscriber may sell or otherwise dispose of any of the Securities pursuant
to registration of any of the Securities pursuant to the 1933 Act and any
applicable state securities laws or under an exemption from such registration
requirements and as otherwise provided herein;

(n)  
the Subscriber agrees not. to engage in any hedging transactions involving any
of the Securities unless such transactions are in compliance with the provisions
of the 1933 Act and in each case only in accordance with applicable state
securities laws;

(o)  
the Subscriber will indemnify the Company against, and will hold the Company
and, where applicable, its respective directors, officers, employees, agents,
advisors and Shareholders harmless from, 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 breath 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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(p)  
the Subscriber is not aware orally advertisement of any of the Securities and is
not acquiring the Securities as a result of any form of general solicitation or
general advertising including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising; and

(q)  
no person has made to the Subscriber any written or oral representations:

(i)  
that any person will resell or repurchase any of the Securities,

(ii)  
that any person will refund the purchase price of any of the Securities,

(iii)  
as to the future price or value of any of the Securities, or

(iv)  
that any of the Securities 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 Securities on any stock exchange or automated dealer
quotation system, except that the shares of common stock of Pubco shall be
quoted on the Over-The-Counter Bulletin Board operated by FINRA.

5.2 In this Subscription Agreement the term "U.S. Person- shall have the meaning
ascribed thereto in Regulation S.

6. Representations anti Warranties will be Relied Upon by the Company

6.1 The Subscriber acknowledges that the representations and warranties
contained herein are made by it with the intention that such representations and
warranties may be relied upon by the Company and its legal counsel in
determining the Subscriber's eligibility to purchase the Securities under
applicable securities legislation. The Subscriber further agrees that by
accepting delivery of the certificates representing the Securities, it will be
representing and warranting that the representations and warranties contained
herein are true and correct as at the Closing Date with the same force and
effect as if they had been made by the Subscriber on the date of this
Subscription Agreement and that they will survive the purchase by the Subscriber
of the Securities and will continue in fall force and effect notwithstanding any
subsequent disposition by the Subscriber thereof.

7. Resale Restrictions

7.1 The Subscriber acknowledges that any resale of any of the Securities will be
subject to resale restrictions contained in the securities legislation
applicable to each Subscriber or proposed transferee. The Subscriber
acknowledges that the Securities have not been registered under the 1933 Act or
the securities laws of any State of the United States and that none Of the
Securities may be offered or sold in the United States unless registered in
accordance with United States federal securities laws and all applicable state
securities laws or exemptions from such registration requirements are available.

7.2 The Subscriber acknowledges that restrictions on the transfer sale or other
subsequent disposition of the Securities by the Subscriber may be imposed by
securities laws in addition to any restrictions referred to in Section 7.1
above, and, in particular, the Subscriber acknowledges and agrees that none of
the Securities may be offered or sold to a U.S. Person or for the account or
benefit of a U.S. Person (other than a distributor) prior to the end of the
Distribution Compliance Period.

 
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8. Legending of Subject Securities

8.1 The Subscriber hereby acknowledges that 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
Securities will bear a legend in substantially the following form:

“THESE SECURITIES WERE ISSUED 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"). ACCORDINGLY, NONE OF
THE SECURITIES TO WHICH THIS CERTIFICATE 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 IN THE UNITED STATES OR, DIRECTLY OR, INDIRECTLY TO U.S.
PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN 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.”

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. Costs

9.1 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 Securities shall be
borne by the Company.

10. Governing Law

10.1 This Subscription Agreement is governed by the laws of the State of Nevada
and the laws applicable therein.

11 Survival

11.1 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 Securities by the
Subscriber pursuant hereto.

12. Assignment

12.1 This Subscription Agreement is not transferable or assignable.

13.  Severability

13.1 The invalidity or unenforceability of any particular provision of this
Subscription Agreement shall not affect or limit the validity or enforceability
of the remaining previsions of this Subscription Agreement.

14. Notices

14.1 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.

 
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15. Counterparts and Electronic Means

5.1 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.

16. Delivery Instructions

16.1 The Subscriber hereby directs the Company to deliver the Share Certificates
issued pursuant to this
Subscription Agreement to:

Address:  12757 – 54 Avenue, Surrey, BC, V3X 1C3

16.2 The Subscriber hereby directs the Company to cause the Series A Shares and
Common Shares issued pursuant to this Subscription Agreement to be registered on
the books of the Company as follows:

Name:  Westergaard Holding Ltd.

Address:  12757 – 54 Avenue, Surrey, BC, V3X 1C3

16.3 The undersigned hereby acknowledges that it will deliver to the Company all
such additional completed forms in respect of the Subscriber's purchase or the
Securities as may be required for filing with the appropriate securities
commissions and regulatory authorities.

IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement
as of the date of acceptance by the Company.

 
WESTERGAARD HOLDINGS LTD
         
Per: /s/ Keith Westergaard               
 
Name: Keith Westergaard
 
Title: President
     
Address: 12757 – 54 Avenue
 
Surrey, BC
 
V3X 1C3

 

 
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ACCEPTANCE

The above mentioned Subscription Agreement in respect of the Series A Shares and
Common Shares is hereby accepted by DSG TAG Systems Inc.

DATED at Surrey, BC as of the 26th day of September, 2014.

DSG TAG SYSTEMS INC.
 

Per: /s/ Robert Silzer            
Robert Silzer
President and Chief Executive Officer

 
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