XODTEC GROUP USA, INC.
Exhibit 10.1
INVESTOR SUBSCRIPTION AGREEMENT (the
“Subscription Agreement”) dated September 29, 2009 between XODTEC GROUP USA, INC., a
Nevada corporation (the “Company”) and the person or persons executing this
Agreement on the last page (the “Subscriber”). All documents
mentioned herein are incorporated by reference.
1. Description of the
Offering. This Subscription Agreement is for shares of the
Company’s common stock, par value $.001 per share (the “Common
Stock”). This Offering (the “Offering”) is made only to accredited
investors who qualify as accredited investors pursuant to the suitability
standards for such investors described under Regulation D of the United States
Securities Act of 1933, as amended (the “Securities Act”), who have no need for
liquidity in their investments. Prior to this Offering there was no
public market for the Common Stock and no assurance can be given that a market
will develop, or if developed, that it will be maintained so that any
subscribers in this Offering may avail any benefit from the same.
THE
SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND
SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE, OR OTHER
JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH APPLICABLE LAWS. THESE
SECURITIES MAY NOT BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR ASSIGNED
EXCEPT AS PERMITTED UNDER SUCH ACT OR SUCH APPLICABLE LAWS PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
2. Terms of the
Subscription. The subscription is for One Million (1,000,000)
shares of the Company’s Common Stock (the “Shares”) at a purchase price of $0.70
per Share.
3. Other Terms of the
Offering. The execution of this Subscription Agreement shall
constitute an offer by the Subscriber to subscribe for the Shares in the amount
and on the terms specified herein. The Subscriber must also complete
and execute the Subscriber Questionnaire attached hereto. The Company
reserves the right, in its sole discretion, to reject in whole or in part, any
subscription offer. If the Subscriber’s offer is accepted, the
Company will execute a copy of this Subscription Agreement and return it to
Subscriber.
4. Covenants. The
Company agrees from the acceptance of the Subscriber’s subscription and for a
period of eighteen months thereafter, the Company will not issue
any class of debt or equity convertible into shares of the Company’s Common
Stock. If the Company issues Common Stock to any investor (“New
Investor”) at a price less than $0.70 per share, then the Company shall issue a
number of additional shares of Common Stock to the Subscriber equal to the
Subscriber’s subscription amount divided by the difference between $0.70 and the
New Investor’s purchase price per share of Common Stock.
5. Subscription
Payment. Subscription for the Shares requires a cash
investment and the subscription price will be payable in full upon acceptance of
the subscription. The Company reserves the right, in its sole
discretion, to accept fractional subscriptions.
5. The Company’s Representations and
Warranties. The Company hereby represents and warrants as
follows:
(a)
The Company is a corporation duly formed and in good
standing under the laws of the State of Delaware with full power and authority
to conduct its business as presently contemplated;
(b)
The Company warrants and covenants that there are no material
misstatements or material omissions in this Subscription Agreement;
and
(c)
The Company has the power to execute, deliver and perform this
Subscription Agreement and any other agreement contemplated herein;
6. Subscriber’s Representations,
Warranties and Covenants. The undersigned understands and
acknowledges that the Shares subscribed for herein are being offered and sold
under one or more of the exemptions from registration provided for in Section
3(b), 4(2) and 4(6) of the Securities Act including that found in Rule 506 of
Regulation D promulgated thereunder, that the undersigned acknowledges that the
Shares are being purchased without the undersigned being offered or furnished
any offering literature, prospectus or other material, financial or otherwise,
and that this action has not been scrutinized by the United States Securities
and Exchange Commission or by any regulatory authority charged with the
administration of the securities laws of any state or other
jurisdiction. The undersigned hereby further represents and warrants
as follows:
(a)
The undersigned confirms that he understands and
has fully considered, for purposes of this investment, the risks of an
investment in the Shares and understands that: (i) this investment is
suitable only for an investor who is able to bear the economic consequences or
losing his entire investment, (ii) the purchase of the Shares is a speculative
investment which involves a high degree of risk of loss by the undersigned of
his entire investment, and (iii) that there will be no public market for the
Shares and accordingly, it may not be possible for the undersigned to liquidate
an investment in the Shares in case of an emergency.
(b)
The Subscriber is an
“Accredited Investor” as defined in Rule 501(a) of Regulation D under the
Securities Act. This representation is based on the fact that the
Subscriber, inter alia, is an accredited individual who, together with the
Subscriber’s spouse, have a net worth of at least $1,000,000 or the Subscriber,
individually, has had income of not less than $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;
(c)
If the Subscriber is a corporation, partnership, trust or any unincorporated
association: (i) the person executing this Subscription Agreement does so with
full right, power and authority to make this investment; (ii) that such entity
was not formed for the specific purpose of making an investment in the Company;
and (iii) that all further representations and warranties made herein are true
and correct with respect to such corporation, partnership, trust and
unincorporated association;
(d)
The address set forth below is the Subscriber’s true and correct residence or
place of business, and the Subscriber has no present intention of becoming a
resident of any other state or jurisdiction;
(e)
The Subscriber understands and agrees that the Company prohibits the investment
of funds by any persons or entities that are acting, directly or indirectly, (i)
in contravention of any U.S. or international laws and regulations, including
anti-money laundering regulations or conventions, (ii) on behalf of terrorists
or terrorist organizations, including those persons or entities that are
included on the List of Specially Designated Nationals and Blocked Persons
maintained by the U.S. Treasury Department’s Office of Foreign Assets
Control1 (“OFAC”), as such list may be amended from
time to time, (iii) for a senior foreign political figure, any member of a
senior foreign political figure’s immediate family or any close associate of a
senior foreign political figure2, unless the Company, after being specifically
notified by the Subscriber in writing that it is such a person, conducts further
due diligence, and determines that such investment shall be permitted, or (iv)
for a foreign shell bank3 (such persons or entities in (i) – (iv) are
collectively referred to as “Prohibited Persons”).
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(f)
The Subscriber represents, warrants and covenants
that: (i) it is not, nor is any person or entity controlling, controlled by or
under common control with the Subscriber, a Prohibited Person, and (ii) to the
extent the Subscriber has any beneficial owners4, (a) it has carried out thorough due diligence
to establish the identities of such beneficial owners, (b) based on such due
diligence, the Subscriber reasonably believes that no such beneficial owners are
Prohibited Persons, (c) it holds the evidence of such identities and status and
will maintain all such evidence for at least five years from the date of the
Subscriber’s complete withdrawal from the Company, and (d) it will make
available such information and any additional information requested by the
Company that is required under applicable regulations.
(g)
If any of the foregoing representations, warranties or
covenants cease to be true or if the Company no longer reasonably believes that
it has satisfactory evidence as to their truth, notwithstanding any other
agreement to the contrary, the Company may, in accordance with applicable
regulations, freeze the Subscriber’s investment, either by prohibiting
additional investments, declining or suspending any withdrawal requests and/or
segregating the assets constituting the investment, or the Subscriber’s
investment may immediately be involuntarily withdrawn by the Company, and the
Company may also be required to report such action and to disclose the
Subscriber’s identity to OFAC or other authority. In the event that
the Company is required to take any of the foregoing actions, the Subscriber
understands and agrees that it shall have no claim against the Company or the
Placement Agent, and the respective affiliates, directors, members,
partners, shareholders, officers, employees and agents of each for any form of
damages as a result of any of the aforementioned actions.
(h)
The Subscriber agrees to indemnify and hold harmless the Company, its
respective affiliates, directors, members, partners, shareholders, officers,
employees and agents from and against any and all losses, liabilities, damages,
penalties, costs, fees and expenses (including legal fees and disbursements)
which may result, directly or indirectly, from any inaccuracy in or breach of
any representation, warranty, covenant or agreement set forth in this
Agreement.
______________________________
2
Senior foreign political figure means a senior official in the executive,
legislative, administrative, military or judicial branches of a foreign
government (whether elected or not), a senior official of a major foreign
political party, or a senior executive of a foreign government-owned
corporation. In addition, a senior foreign political figure includes
any corporation, business or other entity that has been formed by, or for the
benefit of, a senior foreign political figure. The immediate family
of a senior foreign political figure typically includes the political figure’s
parents, siblings, spouse, children and in-laws. A close associate of
a senior foreign political figure is a person who is widely and publicly known
internationally to maintain an unusually close relationship with the senior
foreign political figure, and includes a person who is in a position to conduct
substantial domestic and international financial transactions on behalf of the
senior foreign political figure.
3
Foreign shell bank means a foreign bank without a physical presence in any
country, but does not include a regulated affiliate. A post office
box or electronic address would not be considered a physical
presence. A regulated affiliate means a foreign shell bank that: (1)
is an affiliate of a depository institution, credit union, or foreign bank that
maintains a physical presence in the United States or a foreign country, as
applicable; and (2) is subject to supervision by a banking authority in the
country regulating such affiliated depository institution, credit union, or
foreign bank.
4
Beneficial owners will include, but not be limited to: (i)
shareholders of a corporation; (ii) partners of a partnership; (iii) members of
a limited liability company; (iv) investors in a fund-of-funds; (v) the grantor
of a revocable or grantor trust; (vi) the beneficiaries of an irrevocable trust;
(vii) the individual who established an ▇▇▇; (viii) the participant in a
self-directed pension plan; (ix) the sponsor of any other pension plan; and (x)
any person being represented by the Subscriber in an agent, representative,
intermediary, nominee or similar capacity. If the beneficial owner is
itself an entity, the information and representations set forth herein must also
be given with respect to its individual beneficial owners. If the
Subscriber is a publicly-traded company, it need not conduct due diligence as to
its beneficial owners.
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(k)
The Subscriber will be acquiring the Shares,
solely for the Subscriber’s own account, for investment and not with a view
toward the resale, distribution, subdivision or fractionalization thereof; and
the Subscriber has no present plans to enter into any such contract,
undertaking, agreement or arrangement;
(l)
The Subscriber acknowledges and understands that prior to this
Offering there was no public market for the Shares and no assurance can be given
that a public market will develop for the Shares offered hereby, or if
developed, that it will be maintained so that any subscribers in this Offering
may avail any benefit from the same;
(m) The
Subscriber’s compliance with the terms and conditions of this Subscription
Agreement will not conflict with any instrument or agreement pertaining to the
Shares or the transactions contemplated herein; and will not conflict in, result
in a breach of, or constitute a default under any instrument to which the
Subscriber is a party;
(n)
The Subscriber will seek its own legal, tax and investment advice
concerning tax implications attendant upon the purchase of the Shares and
understands and accepts that the Company is relying upon this representation
insofar as disclosure of tax matters is concerned;
(o)
The Subscriber hereby acknowledges and represents that the Subscriber is
aware of the information set forth in this document and in any exhibits attached
hereto; and
(p)
The foregoing representations and warranties are true and accurate as of the
date hereof and shall be true and accurate as of the date of delivery of the
subscription to the Company and shall survive such delivery. If, in
any respect, such representations and warranties shall not be true and accurate,
the Subscriber shall give written notice of such fact to the Company, specifying
which representations and warranties are not true and accurate and the reasons
therefor.
7. Risk Factors. THE
SUBSCRIBER ACKNOWLEDGES THAT THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH THE
PURCHASE OF THE SHARES AND THAT SUCH SHARES ARE HIGHLY SPECULATIVE AND SHOULD
NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD A TOTAL LOSS OF HIS OR HER ENTIRE
INVESTMENT. The Subscriber represents and warrants that he or she has
carefully considered and reviewed the following risks in reaching a
determination to purchase the Shares:
We have a limited operating
history and may never achieve profitability. If we are unable to achieve
profitability, our stock price would decline.
We have
only recently commenced operations and are still in the development
stage. Our short existence, coupled with a lack of working capital,
makes it difficult to evaluate our business and prospects or to accurately
predict future revenue or results of operations. Our revenue and income
potential continue to be unproven, and our business model is
evolving. Accordingly, we are subject to all of the risks,
uncertainties, expenses and difficulties frequently encountered by companies
seeking to break into a difficult-to-penetrate industry segment.
Potential Dilutive Effect of
Future Offerings
The
Company expects to engage in future financings over the next several
years. It is likely that such financings will involve a dilution of
the interests of the Company’s shareholders upon the issuance of additional
shares of equity securities and/or the Company’s recapitalization.
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It is unlikely the
Subscriber will have any liquidity in their investment in the
Shares
The
Shares offered hereby will not be registered under the Securities Act or under
the securities laws of any state or other jurisdiction. As a result,
such securities cannot be transferred without registration under the Securities
Act or, if applicable, the securities laws of any state or other jurisdiction or
if such registration is not then required because of an applicable exemption
therefrom. Compliance with the criteria for securing exemptions under
the Securities Act and the securities laws of various states is extremely
complex, especially in respect to those exemptions affording flexibility and the
elimination of trading restrictions in respect to securities received in exempt
transactions and subsequently disposed of without registration under the
Securities Act or state securities laws. Therefore, investors should
be aware that investment in this offering is not likely to be a liquid
investment in the foreseeable future.
Our shares may be “▇▇▇▇▇
Stocks,” and there may be difficulty selling them in secondary market
trading.
Federal
regulations under the U.S. Exchange Act regulate the trading of so-called “▇▇▇▇▇
▇▇▇▇▇,” which are generally defined as any security not listed on a national
securities exchange or Nasdaq, priced at less than $5.00 per share and offered
by an issuer with limited net tangible assets and revenues. If we are able to
commence trading of our Common Stock, we anticipate that it will trade at less
than $5.00 per share. Therefore, our shares would be deemed “▇▇▇▇▇
stocks” and may not be traded unless a disclosure schedule explaining the ▇▇▇▇▇
stock market and the risks associated therewith is delivered to a potential
purchaser prior to any trade.
In
addition, because our Common Stock is not listed on Nasdaq or any national
securities exchange and would trade at less than $5.00 per share, trading in our
Common Stock would be subject to Rule 15g-9 under the U.S. Exchange
Act. Under this rule, broker-dealers must take certain steps prior to selling a
“▇▇▇▇▇ stock,” which steps include, but are not limited to:
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obtaining
financial and investment information from the
investor;
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obtaining
a written suitability questionnaire and purchase agreement signed by the
investor; and
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providing
the investor a written identification of the shares being offered and the
quantity of the shares.
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If these
▇▇▇▇▇ stock rules are not followed by the broker-dealer, the investor has no
obligation to purchase the shares. The application of these comprehensive rules
will make it more difficult for broker-dealers to sell our Common Stock and our
shareholders, therefore, may have difficulty in selling their shares in the
secondary trading market.
Our Directors and Executive
Officers own or control a significant number of shares of our Common Stock and
control our Company, which could discourage or prevent a takeover, even if an
acquisition would be beneficial to our shareholders.
Our
Directors and Executive Officers own or control approximately 75% of our
outstanding voting control. Accordingly, these shareholders, individually and as
a group, may be able to influence the outcome of shareholder votes, involving
votes concerning the election of directors, the adoption or amendment of
provisions in our articles of incorporation and bylaws and the approval of
certain mergers or other similar transactions, such as sales of substantially
all of our assets. Such voting control by existing shareholders could have the
effect of delaying, deferring or preventing a change in control of our
company.
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We do not intend to pay any
cash dividends in the foreseeable future.
We do not
intend to pay any cash dividends in the foreseeable future and, therefore, any
return on an investment in our capital stock must come from increases in the
fair market value and trading price of the capital stock.
IT
IS NOT POSSIBLE TO FORESEE ALL RISK FACTORS WHICH MAY AFFECT THE
COMPANY. MOREOVER, THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL
SUCCESSFULLY EFFECTUATE ITS BUSINESS PLAN. EACH PROSPECTIVE INVESTOR
SHOULD CAREFULLY ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN THE SHARES AND
SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHERS, THE RISK
FACTORS DISCUSSED ABOVE.
8. Responsibility. The
Company or its officers and directors shall not be liable, responsible or
accountable for damages or otherwise to any Subscriber for any act or omission
performed or omitted by them in good faith and in a manner reasonably believed
by them to be within the scope of the authority granted to them by this
Subscription Agreement and in the best interests of the Company, provided they
were not guilty of gross negligence, willful or wanton misconduct, fraud, bad
faith or any other breach of fiduciary duty with respect to such acts or
omissions.
9. Miscellaneous.
(a) The
Company and the Subscriber hereby covenant that this Subscription Agreement is
intended to and does contain and embody herein all of the understandings and
agreements, both written or oral, of the Company and the Subscriber with respect
to the subject matter of this Subscription Agreement, and that there exists no
oral agreement or understanding, express or implied liability, whereby the
absolute, final and unconditional character and nature of this Subscription
Agreement shall be in any way invalidated, empowered or
affected. There are no representations, warranties or covenants other
than those set forth herein.
(b) The
headings of this Subscription Agreement are for convenient reference only and
they shall not limit or otherwise affect the interpretation or effect of any
terms or provisions hereof.
(c) This
Subscription Agreement shall not be changed or terminated except as set forth
herein. All of the terms and provisions of this Subscription
Agreement shall be binding upon and inure to the benefit of and be enforceable
by and against the successors and assigns of the Company and the heirs,
executors, administrators and assigns of the Subscriber.
(d) A
modification or waiver of any of the provisions of this Subscription Agreement
shall be effective only if made in writing and executed by all parties with the
same formality as this Subscription Agreement. The failure of either
the Company or the Subscriber to insist upon strict performance of any of the
provisions of this Subscription Agreement shall not be construed as a waiver of
any subsequent default of the same or similar nature, or of any other nature or
kind.
(e) The
various provisions of this Subscription Agreement are severable from each other
and from the other provisions of this Agreement, and in the event that any
provision in this Subscription Agreement shall be held invalid or unenforceable
by a court of competent jurisdiction, the remainder of this Subscription
Agreement shall be fully effective, operative and enforceable.
(f)
Pronouns used herein are to be interpreted as referring to both the masculine
and feminine gender.
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(g) This
Subscription Agreement shall be construed and interpreted in accordance with the
laws of the State of New York without reference to conflict of laws
principle. The parties agree that in the event of a laws controversy
arising out of the interpretation, construction, performance or breach of this
Subscription Agreement, any and all claims arising out of, or relating to, this
Subscription Agreement shall be submitted by arbitration according to the
Commercial Arbitration Rules of the American Arbitration Association located in
New York City before a single arbitrator. Notwithstanding the prior
sentence, any other action commenced by either party herein shall be venued in
the appropriate court of competent jurisdiction located in the county of New
York, State of New York.
(h) This
Subscription Agreement may be executed in one or more counterparts each of which
shall be deemed an original and all of which together shall be deemed to be one
and the same instrument.
THE SUBSCRIBER ACKNOWLEDGES THAT,
EXCEPT AS SET FORTH IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE
BEEN MADE TO IT, OR TO ITS ADVISORS, BY THE COMPANY AND / OR THE PLACEMENT
AGENT, OR BY ANY PERSON ACTING ON BEHALF OF THE COMPANY, WITH RESPECT TO THE
SHARES, THE PROPOSED BUSINESS OF THE COMPANY, THE DEDUCTIBILITY OF ANY ITEM FOR
TAX PURPOSES, AND/OR THE ECONOMIC, TAX, OR ANY OTHER ASPECTS OR CONSEQUENCES OF
A PURCHASE OF AN INTEREST AND/OR ANY INVESTMENT IN THE COMPANY, AND THAT IT HAS
NOT RELIED UPON ANY INFORMATION CONCERNING THE OFFERING, WRITTEN OR ORAL, OTHER
THAN THAT CONTAINED IN THIS AGREEMENT.
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SIGNATURE
PAGE
The
Subscriber hereby offers to purchase and subscribe to 1,000,000 Shares and
encloses payment of $0.70 per
Share for an aggregate investment of $700,000.
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Signature
of Subscriber
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Name
of Subscriber
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(Print)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -
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(▇▇▇▇▇)
▇▇▇▇, ▇▇▇▇▇ and Zip Code
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Social
Security/Taxpayer I.D. Number:
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AGREED
TO AND ACCEPTED:
As
of________________, 2009
By: /s/ Yao-Ting ▇▇
▇▇▇-▇▇▇▇ Su, Chairman
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COMPLETE
“SUBSCRIBER QUESTIONNAIRE” BELOW;
PROVIDE
REQUISITE ADDITIONAL INFORMATION
SUBSCRIBER
QUESTIONNAIRE
PERSONAL
DATA.
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Full
Name
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Residence
Telephone (Area Code Number)
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Business
Telephone (Area Code Number)
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Residence
or Principal Address (Street/City/State/Zip Code)
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Birth
Date
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Mailing
Address (if other than residence)
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Citizenship
(U.S./Other)
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Marital
Status
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Social
Security/Taxpayer I.D. Number
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Spouse’s
Full Name
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E-mail
Address
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Spouse’s
Social Security Number
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Facsimile
Number (Area Code/Number)
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ACCREDITED
INVESTOR. If Subscriber (or the entity on behalf of which
Subscriber is acting) is an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D promulgated under the Act, and, as such, falls
within at least one of the following categories, then please INITIAL each applicable
category.
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(a)
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A
bank or savings and loan association or other institution (acting either
in an individual or fiduciary capacity), registered broker-dealer,
insurance company, registered investment company, or business development
company, or licensed “small business investment company,” or an employee
benefit plan which either is represented in a fiduciary capacity by a
bank, savings and loan association, insurance company or registered
investment advisor, has total assets in excess of $5,000,000 or is
self-directed and the plan’s business investments are made solely by
accredited investors.
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(b)
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A
trust (i) with total assets in excess of $5,000,000, (ii) which was not
formed for the specific purpose of acquiring the subject securities, and
(iii) whose purchase is directed by a person who has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of the prospective
investment.
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(c)
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An
organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation or similar business trust, or partnership, not formed for the
specific purpose of acquiring the subject securities, with total assets in
excess of $5,000,000.
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(d)
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An
entity in which all of the equity owners are “accredited
investors.”
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(e)
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A
director or an executive officer of the Company.
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(f)
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A
natural person whose individual net worth, or joint net worth with spouse
(if any), exceeds $1,000,000
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(g)
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A
natural person whose income in each of the two most recent calendar years
exceeded $200,000 individually, or $300,000 jointly with spouse (if any),
and who reasonably expects to reach that income level in the current
year.
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Signature of Subscriber