UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of Earliest Event Reported):   August 11 , 2015
 
 
DSG GLOBAL INC.
(Exact Name of Registrant as Specified in Charter)
 
Nevada
000-53988
26-1134956
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

214 - 5455 152nd Street
Surrey, British Columbia V3S 5A5
Canada
(Address of Principal Executive Offices)
 
(877) 589-8806
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c)) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
 

 

Item 1.01 Entry into a Material Definitive Agreement.
 
On August 11, 2015, our subsidiary, DSG TAG Systems Inc. (“ DSG TAG ”), entered into a Third Addendum to Subscription Agreement / Debt Settlement (the “ Addendum ”) with Westergaard Holdings Ltd. (“ Westergaard Holdings ”), an affiliate of Keith Westergaard, a member of our board of directors.  The Addendum amends that certain Subscription / Debt Settlement Agreement dated September 26, 2014 between DSG TAG and Westergaard Holdings, as previously amended by that certain Addendum to Subscription / Debt Settlement Agreement dated October 7, 2014 and that certain Second Addendum to Subscription / Debt Settlement Agreement dated April 29, 2015 (as previously amended, the “ Settlement Agreement ”).
 
Westergaard Holdings owns 4,309,384 shares (the “ Series A Shares ”) of Series A Convertible Preferred Stock of DSG TAG. Pursuant to the Settlement Agreement, DSG TAG has agreed that DSG Global Inc. will complete financings for gross proceeds of at least $10 million and use a portion of the proceeds to redeem all of the Series A Shares.  The Addendum modifies the redemption provisions, which now obligate us to raise capital and redeem the Series A Shares at a price of $1.25 per share as follows:
 
 
(i)
On or before August 31, 2015, we must complete a financing for gross proceeds of at least $2.5 million and use at least $1.125 million to redeem a minimum of 900,000 Series A Shares;
 
 
(ii)
On or before September 30, 2015, we must complete an additional financing for gross proceeds of at least $2.5 million and use at least $1.125 million to redeem a minimum of 900,000 additional Series A Shares; and
 
 
(iii)
On or before November 1, 2015, we must complete an additional financing for gross proceeds of at least $5.0 million and use at least $3.14 million to redeem the remaining 2,509,384 Series A Shares.
 
The foregoing summary of the Addendum does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Addendum and the Settlement Agreement filed as Exhibits 10.1 through 10.4 to this Current Report on Form 8-K, which are incorporated herein by reference.
 
Item 3.02 Unregistered Sales of Equity Securities.
 
On August 11, 2015, the board of directors of DSG Global Inc. approved the issuance by our subsidiary, DSG TAG Systems Inc., of a convertible promissory note (the “ Note ”), dated effective as of March 31, 2015, in the amount of $310,000 payable to Adore Creative Agency, Inc. (“ Adore ”) for advertising, branding and related services.  Rupert Wainwright, President and Creative Director of Adore, is a member of our board of directors.
 
The Note bears interest at the rate of 5% per annum and is due and payable on March 30, 2016.  The Note is convertible into shares of our common stock, par value $0.001 per share, at a conversion price of $1.25 per share at any time prior to its maturity, and can be pre-paid by DSG TAG at any time upon 10 business days’ advance notice Adore.  We granted Adore “piggyback” registration rights with respect to the shares of common stock that can be acquired upon conversion of the Note.
 
We believe the offer, sale and issuance of the Note was exempt from registration under the Securities Act of 1933, as amended (the “ Securities Act ”) by virtue of Section 4(a)(2) of the Securities Act as a transaction not involving a public offering. Adore represented its intention to acquire the Note and the shares of common stock issuable upon conversion thereof for investment only and not with a view to or for sale in connection with any distribution thereof, and an appropriate legend was placed on the Note and will be placed upon any stock certificates issued upon conversion thereof.  The Note was issued in payment for services rendered by Adore and did not involve any general solicitation or advertising.  Adore represented to us that it was an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.
 
 
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The foregoing summary of the Note does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Note filed as Exhibit 10.5 to this Current Report on Form 8-K, which is incorporated herein by reference.
 
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
 
On August 11, 2015, our board of directors increased the size of the board from six to seven directors, and appointed Mr. Kenneth (Kim) Marsh, CAMS, CFE (age 62) as a director to fill the vacancy created upon the expansion in the size of the board.  Mr. Marsh has a distinguished record of achievement in the areas of international financial crime and anti-money laundering. As Executive Vice President, International Operations, of IPSA International, Inc., an investigative consulting services company and a subsidiary of Root9B Technologies, Inc. (OTCMKTS: RTNB), Mr. Marsh brings 40 years of investigative experience to corporate, legal, financial, and government clients throughout Europe, the Middle East, Africa, South America and Asia.  Based in Vancouver, Mr. Marsh specializes in multi-jurisdictional financial and due diligence investigations, as well as anti-money laundering assignments targeting offshore and onshore tax havens.  Mr. Marsh has worked with IPSA International, Inc. since 2002.  Prior to joining the private sector in 1998, Mr. Marsh served for 25 years with the Royal Canadian Mounted Police.
 
Prior to his appointment as a member of our board of directors, Mr. Marsh did not have any material relationship with us and no such relationship is currently proposed.  Mr. Marsh does not have any family relationships with any of our other directors or executive officers.  There are no understandings or arrangements between Mr. Marsh and any other person pursuant to which Mr. Marsh was selected as a director.
 
Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits .
 
The following exhibits are filed herewith:
 
Exhibit
   
Number
 
Description
     
10.1
 
Subscription Agreement / Debt Settlement (the “ Addendum ”), dated September 26, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.2
 
Addendum to Subscription Agreement / Debt Settlement (the “ Addendum ”), dated October 7, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.3
 
Second Addendum to Subscription Agreement / Debt Settlement (the “ Addendum ”), dated April 29, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.4
 
Third Addendum to Subscription Agreement / Debt Settlement (the “ Addendum ”), dated August 11, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.5
 
Convertible Note of DSG TAG Systems Inc., dated March 31, 2015, payable to Adore Creative Agency, Inc.
 

 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: August 14, 2015
DSG Global Inc.
   
   
By:  
/s/ Robert Silzer
 
 
Robert Silzer
 
President and Chief Executive Officer


 
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EXHIBIT INDEX
 
 
Exhibit
   
Number
 
Description
     
10.1
 
Subscription Agreement / Debt Settlement (the “ Addendum ”), dated September 26, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.2
 
Addendum to Subscription Agreement / Debt Settlement (the “ Addendum ”), dated October 7, 2014, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.3
 
Second Addendum to Subscription Agreement / Debt Settlement (the “ Addendum ”), dated April 29, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.4
 
Third Addendum to Subscription Agreement / Debt Settlement (the “ Addendum ”), dated August 11, 2015, between DSG TAG Systems Inc. and Westergaard Holdings Ltd.
     
10.5
 
Convertible Note of DSG TAG Systems Inc., dated March 31, 2015, payable to Adore Creative Agency, Inc.
 
 
 
 

 
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:
 
 
 
 

 

 
(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
 

 
8

 

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 26 th day of September, 2014.

DSG TAG SYSTEMS INC.
 


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

 
9

 

Exhibit 10.2
SECOND ADDENDUM
TO
SUBSCRIPTION AGREEMENT / DEBT SETTLEMENT
 
THIS ADDENDUM is made the 7th of October, 2014.
 
BETWEEN :
 
DSG TAG SYSTEMS INC . (the 'Company")
 
AND:
 
WESTERGAARD HOLDINGS LTD . (the "Subscriber")
 
WHEREAS the Parties entered in to a Subscription and Debt Settlement Agreement dated September 26, 2014 (the “ Agreement ") whereby the Subscriber agreed to convert (i) the principal portion of the Indebtedness owed to it by the Company into Series A Convertible Preferred Shares (the "Series A Shares") in the capital stock of the Company at a deemed price ofUS$1.25 per Series A Share, and (ii) the outstanding accrued interest portion of the Indebtedness into 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,
 
AND WHEREAS the Parties have agreed to amend the Agreement to reflect the calculated amount of the “Principal Amount" as defined in section 1.2 by adding thereto the costs incurred by the Subscriber in discharging the receiver formerly in place with respect to the Company; and in negotiating and settling the terms of the Agreement.
 
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of one Dollar ($1.00) now paid by each party hereto to the other and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows:
 
1.  
All capitalized words and phrases used herein, unless otherwise defined, have the meanings ascribed thereto in the Agreement.
 
2.  
Section 1.2(a) of the Agreement is hereby deleted in its entirety and replaced with the following:
 
'Principal Amount " means the sum of US$5,386,730.50, being the outstanding principal amount of the Indebtedness as of the date of the Agreement together with all amounts paid by the Subscriber toward the actual costs incurred in (i) discharging the receiver in place with respect to the Company; and (ii) negotiating and settling the terms of the Agreement and transactions involving the Company and Pubco;"
 
3.   Section 2.1 (a) of the Agreement is amended by deleting the reference therein to "US$7,602,711.75" and replacing it with "US$7,888,898.73".
 
4.   The Parties acknowledge that the number of Series A Shares subscribed for by the Subscriber pursuant to section 1.1 of the Agreement is increased proportionately to the increased Principal Amount.
 
5.   In all other regards, the Agreement remains unamended and in full force and effect.
 
IN WITNESS WHEREOF the parties hereto have duly executed this Addendum as of the date first above written.
 
DSG TAG SYSTEMS INC
WESTERGAARD HOLDINGS INC
by its authorized signatory:
by its authorized signatory:
   
   
   
/s/ Robert Silzer                    
/s/ Keith Westergaard                    
President and Chief Executive Officer
President


 
 

 

Exhibit 10.3

SECOND ADDENDUM
TO
SUBSCRIPTION AGREEMENT / DEBT SETTLEMENT
 
THIS ADDENDUM is made the 29th of April, 2015.
 
BETWEEN :
 
DSG TAG SYSTEMS INC . (the 'Company")
 
AND:
 
WESTERGAARD HOLDINGS LTD . (the "Subscriber")
 
WHEREAS the Parties entered in to a Subscription and Debt Settlement Agreement dated September 26, 2014 as amended by addendum dated October 7, 2014 (together the "Agreement");
 
AND WHEREAS the Parties have agreed to amend the Agreement in the .manner outlined herein.
 
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of one Dollar ($1.00) now paid by each party hereto to the other and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows:
 
1. All capitalized words and phrases used herein, unless otherwise defined, have the meanings ascribed thereto in the Agreement.
 
2.   Section 11 of the Agreement is hereby amended by adding the following as a second sentence thereto:
 
"The RTO shall be closed by June 1, 2015."
 
3.   The Subscriber hereby waives its rights under section 3.7 of the Agreement.
 
4.   A new section 3.8 is added, as follows:
 
"3.8   Until all of the Series A Shares have been redeemed in accordance with the above provisions, DSG agrees that it will not incur, pay or agree to incur or pay any expenses, disbursements or other amounts (including, without limitation, management, employee or consultant fees or bonuses, or dividends) other than in the ordinary course of its business, without the prior written consent of the Subscriber."
 
5. In all other regards, the Agreement remains unamended and in full force and effect.
 
The Company will reimburse the Subscriber for any and all legal costs attributed to the documentation of this agreement immediately upon receipt of an invoice from the Subscriber.
 
IN WITNESS WHEREOF the parties hereto have duly executed this Addendum as of the date first above written.
 
DSG TAG SYSTEMS INC
WESTERGAARD HOLDINGS INC
by its authorized signatory:
by its authorized signatory:
   
   
   
/s/ Robert Silzer                    
/s/ Keith Westergaard                    
President and Chief Executive Officer
President

 
 

 

Exhibit 10.4
 
Third ADDENDUM
TO
SUBSCRIPTION AGREEMENT / DEBT SETTLEMENT
 
THIS ADDENDUM is made the 11 day of August, 2015.
 
BETWEEN:
DSG TAG SYSTEMS INC. (the "Company")
AND:
 
WESTERGAARD HOLDINGS LTD. (the "Subscriber")
 
WHEREAS the Parties entered in to a Subscription and Debt Settlement Agreement dated September 26, 2014 as amended by addendum dated October 7, 2014 (together the "Agreement") and was further amended by addendum dated April 29, 2015 (together the "Agreement");
 
AND WHEREAS the Parties have agreed to further amend the Agreement in the manner outlined herein.
 
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of one Dollar ($1.00) now paid by each party hereto to the other and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows:
 
1.  
All capitalized words and phrases used herein, unless otherwise defined, have meanings ascribed thereto in the Agreement.
 
2.  
3.2 of the Agreement is to be amended as follows:
 
On or before August 31, 2015 the Company and/or Pubco shall have completed a financing for gross proceeds of at least US$2,500,000. On closing of such financing a minimum of US$1,250,000 shall be paid to the Subscriber for the redemption of a minimum of 900,000 of the Series A Shares held by the Subscriber at the deemed redemption price of US$1.25 per share.
 
On or before September 30, 2015 the Company and/or Pubco shall have completed a second round of financing for gross proceeds of at least another US$2,500,000. On closing of such financing a minimum of US$1,250,000 shall be paid to the Subscriber for the redemption of a minimum of 900,000 of the Series A Shares held by the Subscriber at the deemed redemption price of US$1.25 per share.
 
3.  
3.3 of the Agreement is to be amended as follows:
 
On or before November 1, 2015 the Company and/or Pubco shall have completed a third round of financing for gross proceeds of at least another US$5,000,000. On the closing of such financing, the balance of Series A Shares held by the Subscriber will be redeemed at a redemption price of US$1.25 per share and all accrued interest shall be paid.
 
IN WITNESS WHEREOF the parties hereto have duly executed this Addendum as of the date first above written.
 
DSG TAG SYSTEMS INC
WESTERGAARD HOLDINGS INC
by its authorized signatory:
by its authorized signatory:
   
   
   
/s/ Robert Silzer                    
/s/ Keith Westergaard                    
President and Chief Executive Officer
President


 
 

 

Exhibit 10.5
 
THIS CONVERTIBLE NOTE (THIS “ NOTE ”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR THE SECURITIES LAWS OF ANY STATE, AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
 
DSG TAG SYSTEMS INC.
 
CONVERTIBLE NOTE
 
Issuance Date: March 31, 2015
 
Original Principal Amount: $310,000.00
 
FOR VALUE RECEIVED, DSG TAG SYSTEMS INC. , a Nevada corporation (the “ Company ”), hereby promises to pay to the order of Adore Creative Agency, Inc., or registered assigns (the “ Holder ”), the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to conversion or otherwise, the “ Principal ”) when due, whether upon the Maturity Date (as defined below), acceleration or otherwise (in each case in accordance with the terms hereof) and to pay interest (“ Interest ”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set forth above as the Issuance Date (the “ Issuance Date ”) until the same becomes due and payable, upon the Maturity Date or acceleration, conversion or otherwise (in each case in accordance with the terms hereof).
 
1.   General Terms .
 
(a)   Payment of Principal .  The “ Maturity Date ” shall be March 30, 2016.
 
(b)   Interest .  Interest on the unpaid Principal shall accrue at the rate of five percent (5%) per annum (the “ Interest Rate ”) commencing on the Issuance Date.
 
2.   Events of Default .
 
(a)   Event of Default .  An “ Event of Default ,” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
 
(i)   The Company’s failure to pay to the Holder any amount of Principal, Interest or other amounts when and as due under this Note;
 
(ii)   The Company or any Affiliate (as defined below) of the Company shall commence, or there shall be commenced against the Company or any Affiliate of the Company, under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Affiliate of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any Affiliate of the Company or there is commenced against the Company or any Affiliate of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty (60) days;
 
 
 
 

 
 
(iii)   The Company or any Affiliate of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due, or the Company or any Affiliate of the Company is adjudicated insolvent or bankrupt, or any order of relief or other order approving any such case or proceeding is entered;
 
(iv)   The Company or any Affiliate of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty (60) days;
 
(v)   The Company or any Affiliate of the Company makes a general assignment for the benefit of creditors, or the Company or any Affiliate of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or
 
(vi)   The Company or any Affiliate of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in, or any corporate or other action is taken by the Company or any Affiliate of the Company for the purpose of effecting, any of the actions or proceedings set forth in Sections 2(a)(ii) through (v) .
 
Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.  “ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
 
(b)   Cure Period .  Upon receiving a written notice of the occurrence of an Event of Default, the Company shall have a grace period of five (5) Business Days (as defined below) to cure such Event of Default.  “ Business Day ” means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the province of British Columbia or any day on which banking institutions in Vancouver, British Columbia are authorized or required by law or other governmental action to close.
 
(c)   Remedies upon Event of Default .  In addition to any other remedies provided for herein, while an Event of Default occurs and is continuing, the outstanding Principal, plus accrued but unpaid Interest and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash.  Upon payment in full (including pursuant to conversion) the Holder shall promptly surrender this Note to or as directed by the Company.  In connection with the acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of this Note until such time, if any, as the Holder receives full payment pursuant to this Section 2(c) .  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
 
3.   Conversion of Note .  This Note shall be convertible into Conversion Shares (as defined below), on the terms and conditions set forth in this Section 3 .
 

 
2

 

(a)   Conversion Right .  At any time from and after the Issuance Date through the Maturity Date, the Holder shall be entitled to convert any portion of the Conversion Amount (as defined below) into fully paid and non-assessable Conversion Shares in accordance with Section 3(b) , at the Conversion Price (as defined below).  The number of Conversion Shares issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) shall be equal to the quotient obtained by dividing the Conversion Amount by the Conversion Price.  The Issuer (as defined below) of Conversion Shares shall not issue any fraction of a share upon the conversion of any Conversion Amount.  If the conversion of any Conversion Amount would result in the issuance of a fraction of a share, the Issuer shall round such fraction of a share up to the nearest whole share.  The Issuer shall pay any and all transfer agent fees, legal fees, costs and any other fees or costs that may be incurred or charged in connection with the issuance of Conversion Shares to the Holder arising out of or relating to the conversion of the Conversion Amount.
 
(i)   Conversion Amount ” means the sum of the outstanding and unpaid Principal, Interest and any other unpaid amounts due under this Note.
 
(ii)   Conversion Price ” means $1.25 (subject to adjustment as provided in this Note).
 
(iii)   Conversion Shares ” means shares of Pubco’s Common Stock, par value $0.001 per share (“ Pubco Common Stock ”).
 
(iv)   Issuer ” means Pubco.
 
(v)   Pubco ” means DSG Global Inc., the Company’s parent corporation.
 
(b)   Mechanics of Conversion . To convert any Conversion Amount into Conversion Shares on any date (a “ Conversion Date ”), the Holder shall transmit by email, facsimile or otherwise deliver, for receipt on or prior to 11:59 p.m., Pacific Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the “ Conversion Notice ”) to the Company.  Promptly following the date of receipt of a Conversion Notice, the Issuer shall issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of Conversion Shares to which the Holder shall be entitled which certificate shall bear the following restrictive legend:
 
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.”
 
If this Note is physically surrendered for conversion and the outstanding Principal is greater than the Principal portion of the Conversion Amount being converted, then the Company shall, upon request of the Holder, as soon as practicable after receipt of this Note and at its own expense, issue and deliver to the Holder a new Note representing the outstanding Principal not converted.  On or before the third (3 rd ) Business Day following the date of delivery of a Conversion Notice pursuant to which the entire Conversion Amount will be converted, the Holder shall physically surrender this Note to the Company.  The Person entitled to receive the Conversion Shares issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such Conversion Shares upon the transmission of a Conversion Notice.
 

 
3

 

(c)   Other Provisions.
 
(i)   Share Reservation.   The Issuer shall at all times reserve and keep available out of its authorized capital stock the full number of Conversion Shares issuable upon conversion of the Conversion Amount.
 
(ii)   Prepayment.   At any time prior to the Maturity Date, the Company shall have the option, upon ten (10) Business Days’ notice to the Holder, to pre-pay the entire remaining outstanding Principal plus accrued but unpaid Interest in cash, provided that (A) such amount must be paid in cash on the next Business Day following such ten (10) Business Day notice period, and (B) the Holder may still convert this Note pursuant to the terms hereof at all times until such prepayment amount has been paid in full.
 
(iii)   Registration .
 
A.   Notice and Election .  On or before the Maturity Date, if the Issuer shall determine, in its sole discretion, to register for sale any of its securities for its own account or for the account of others (each a “ Piggyback Registration ”), other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, directors, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their family members (including a registration on Form S-8), or (ii) a registration relating solely to a Rule 145 transaction (under the Securities Act) or a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization, or similar event, the Issuer shall promptly give to the Holder written notice thereof (and in no event shall such notice be given less than ten (10) Business Days prior to the filing of such registration statement), and the Issuer shall include in such Piggyback Registration (and any related qualification under blue sky laws or other compliance), the Conversion Shares issued to the Holder upon conversion (which shall occur no later than five (5) calendar days after receipt of such written notice from the Company) of this Note (or any other securities of the Issuer issued to the Holder in lieu of such Conversion Shares or thereafter acquired by the Holder pursuant to a stock split, stock dividend, recapitalization, reverse merger or similar transaction in connection with such Conversion Shares) (the “ Registrable Securities ”), specified in a written request or requests, made within five (5) calendar days after receipt of such written notice from the Company, by the Holder.  It shall be a condition precedent to the obligations of the Issuer to complete the registration pursuant to this Agreement with respect to the Registrable Securities that the Holder shall furnish to the Issuer such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Issuer may reasonably request.  However, the Issuer may, without the consent of the Holder, withdraw such registration statement prior to its becoming effective if the Issuer has elected to abandon the proposal to register the securities proposed to be registered thereby.
 
B.   Underwriting Requirements .  The Issuer shall not be required to include any of the Holder’s Registrable Securities in any Piggyback Registration involving an underwriting unless the Holder accepts the terms of the underwriting as agreed upon between the Issuer and its underwriters.
 
C.   Indemnification .
 
I.   The Issuer will indemnify and hold the Holder and its directors, officers, shareholders, partners, employees and agents (each, a “ Holder Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs, and reasonable attorneys’ fees and costs of investigation (collectively, “ Losses ”) that any such Holder Party may suffer or incur as a result of or relating to any misrepresentation, breach, or inaccuracy of any representation, warranty, covenant, or agreement made by the Issuer in any Piggyback Registration in which the Holder is participating and any other documents delivered in connection therewith.
 
 
 
4

 
 
II.   In connection with any Piggyback Registration in which the Holder is participating, the Holder agrees to indemnify and hold the Issuer, the Company and each of their directors, officers, shareholders, partners, employees and agents (each, a “ Company Party ”) harmless from any and all Losses that such Company Party may suffer or incur as a result of any misrepresentation, breach, or inaccuracy of any representation, warranty, covenant, or agreement made by the Holder in any document delivered by the Holder in connection therewith.
 
4.   Adjustments to Conversion Price; Fundamental Transactions .  The Conversion Price and the number and kind of securities issuable upon conversion of this Note shall be subject to adjustment from time to time as set forth in this Section 4 .
 
(a)   Stock Dividends and Splits .   If at any time while this Note is outstanding the Issuer (i) declares or pays a stock dividend on its common stock or otherwise makes a distribution on any class of capital stock (or securities convertible into or exercisable or exchangeable for capital stock) that is payable in shares of its common stock, (ii) subdivides outstanding shares of its common stock into a larger number of shares, (iii) combines (including, without limitation, by way of reverse stock split) outstanding shares of its common stock into a smaller number of shares, or (iv) issues by reclassification of shares of its common stock any shares of its capital stock (including, without limitation, in connection with any merger or consolidation), then in each such case the Conversion Price then in effect shall be adjusted by multiplying such Conversion Price by a fraction of which (A) the numerator shall be the number of shares of its common stock outstanding immediately before such event, and (B) the denominator shall be the number of shares of its common stock outstanding immediately after such event.  Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for such dividend or distribution, and any adjustment made pursuant to clauses (ii), (iii) or (iv) of this paragraph shall become effective immediately after the effective date of such subdivision, combination or reclassification.
 
(b)   Fundamental Transactions .   If at any time while this Note is outstanding, (i) the Issuer effects any merger or consolidation of the Issuer with or into another Person, (ii) the Issuer effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Issuer or another Person) is completed pursuant to which holders of the Issuer’s common stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Issuer effects any reclassification of its common stock or any compulsory share exchange pursuant to which its common stock is effectively converted into or exchanged for other securities, cash or property (each, a “ Fundamental Transaction ”), then the Holder shall have the right thereafter to receive, upon any conversion of this Note, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same amount and kind of securities, cash and property as the Holder would have been entitled to receive upon the occurrence of such Fundamental Transaction if the Holder had been the record holder of one Conversion Share immediately prior to such Fundamental Transaction (without regard to any limitations or restrictions on conversion or acquisition of Conversion Shares and whether or not this Note was then convertible) (the “ Alternate Consideration ”), and the Conversion Price shall be appropriately and equitably adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Conversion Share in such Fundamental Transaction relative to the then Conversion Price.  The Issuer shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Conversion Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this
 
 
 
5

 
 
Note following such Fundamental Transaction.  In case of any such Fundamental Transaction, any successor to the Issuer, acquirer or surviving entity (if other than the Issuer) shall expressly assume the due and punctual observance and performance of each and every covenant, obligation, liability and condition under this Note to be performed and observed by the Issuer, subject to such modifications as may be reasonably deemed appropriate (as determined in good faith by resolution of the board of directors of the Issuer) in order to provide for adjustments of the number and kind of Conversion Shares for which this Note is convertible which shall be as nearly equivalent as practicable to the adjustments provided for in this section.  Such assumption shall be pursuant to a written agreement in form and substance reasonably satisfactory to the Holder.  At the Holder’s request, any successor to the Issuer, acquirer or surviving entity in such Fundamental Transaction shall issue to the Holder a new note from such entity substantially similar in form and substance to this Note and consistent with the foregoing provisions, which new note shall be reasonably satisfactory to the Holder and include, without limitation, (A) the outstanding Principal and Interest owed to the Holder under this Note, (B) an interest rate equal to the Interest Rate, (C) similar ranking to this Note, and (D) the right to convert the new note into Alternate Consideration.  The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor, acquirer or surviving entity to comply with the provisions of this section and ensuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
 
5.   Assignment; Replacement .
 
(a)   Assignability .  No party may assign this Note without the prior written consent of the Company and the Holder, provided, however, that the Holder may assign this Note to Adore Creative Productions, Inc. or Rupert Wainwright without any other party’s prior written consent.
 
(b)   Lost, Stolen or Mutilated Note .  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company and Pubco in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note representing the outstanding Principal.
 
6.   Notices .  Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (c) upon receipt, when sent by email; or (d) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be those set forth below or at such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.
 

 
6

 

The addresses for such communications shall be:
 
  If to the Company or Pubco, to:
If to the Holder:
   
DSG TAG Systems Inc.
Adore Creative Agency, Inc.
214 -5455 152nd Street
8033 Sunset Boulevard, Suite 5750
Surrey, BC V3S 5A5, Canada
Los Angeles, CA 90046
Attn:  Bob Silzer
Attn:  Rupert Wainwright
Facsimile:  778-574-2268
Facsimile:
Email:  bob@dsgtag.com
Email:  rupert@adorecreative.com
 
7.   Representations and Warranties .
 
(a)   Company .  In connection with the transactions provided for herein, the Company hereby represents and warrants to the Holder and Pubco that all corporate action has been taken on the part of the Company necessary for the authorization, execution and delivery of this Note.  The Company has taken all corporate action required to make all the obligations of the Company reflected herein the valid and enforceable obligations they purport to be, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to availability of specific performance, injunctive relief or other equitable remedies.
 
(b)   Pubco .  In connection with the transactions provided for herein, Pubco hereby represents and warrants to the Company and the Holder that all corporate action has been or will be taken on the part of Pubco necessary for the authorization, execution and delivery of this Note.  Pubco has taken all corporate action required to make all the obligations of Pubco reflected herein the valid and enforceable obligations they purport to be, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to availability of specific performance, injunctive relief or other equitable remedies.
 
(c)   Holder .  In connection with the transactions provided for herein, the Holder hereby represents and warrants to each of the Company and Pubco that: (i) this Note constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (A) applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights and (B) laws relating to availability of specific performance, injunctive relief or other equitable remedies; (ii) the Note and the Conversion Shares will be acquired for investment for the Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof; (iii) the Holder is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in this Note and the Conversion Shares; and (iv) the Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D, as presently in effect, as promulgated by the Securities and Exchange Commission under the Securities Act.
 
(d)   General .  Each party hereto agrees and acknowledges that Pubco shall have no obligation to repay any Principal or Interest under this Note, other that pursuant to a conversion thereof into shares of Pubco Common Stock pursuant to Section 3 .
 

 
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8.   Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of Nevada, without regard to the principles of conflict of laws thereof.
 
9.   Arbitration.
 
(a)   Any claim or controversy arising or related to this Note shall be resolved by final, binding arbitration in Clark County, Nevada, in accordance with the JAMS Comprehensive Arbitration Rules & Procedures in effect on the date of the execution of this Note, except as modified by this Agreement.  The arbitration shall be conducted before a retired judge, justice or other neutral person affiliated with JAMS in Las Vegas.  Either side may make a written demand for arbitration.  If the parties are unable to agree on an arbitrator within five (5) days of the written demand for arbitration, each side will name one arbitrator from JAMS within five (5) days thereafter, and the two named persons will select, within five (5) additional days, a third who will act as the sole arbitrator.  If either side fails or refuses to name an arbitrator as set forth above, the arbitrator identified by the other side shall conduct the arbitration.
 
(b)   The parties agree to use commercially reasonable efforts to cause the arbitration hearing to be conducted within sixty (60) days after the appointment of the arbitrator, and to use commercially reasonable efforts to cause the decision of the arbitrator to be furnished within fifteen (15) Business Days after the conclusion of the arbitration hearing.  The parties shall be entitled to take discovery in accordance with the provisions of the Nevada Rules of Civil Procedure, but either party may request that the arbitrator limit the amount or scope of such discovery, and in determining whether to do so, the arbitrator shall balance the need for the discovery against the parties’ mutual desire to resolve disputes expeditiously and inexpensively.
 
(c)   The arbitration shall be governed by Nevada law without regard to its conflict of law rules, and the arbitrator shall apply and follow Nevada law.  The arbitrator’s authority shall be confined to determining: (i) whether a party to the dispute is entitled to recover the contested damages (or a portion thereof), and the portion of the contested damages such party is entitled to recover; and (ii) whether such party is the prevailing party.  The final decision of the arbitrator shall include the dollar amount of the award to such party, if any, and the findings of fact and conclusions of law on which it is based shall be furnished to the parties to the dispute in writing and shall constitute a conclusive determination of the issues in question, binding upon such parties.  Judgment upon the arbitration award may be entered in any court having jurisdiction thereof.  The arbitrator shall have no power to commit errors of law or legal reasoning, and the arbitration award may be vacated or corrected by a court of competent jurisdiction for any such error.
 
10.   Waiver . Any waiver of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of any party to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver by any party must be in writing.
 
11.   Severability .  If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any Interest or other amount deemed Interest due hereunder violates the applicable law governing usury, the Interest Rate shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.
 
12.   Next Business Day .  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
 

 
[Signature Page Follows]
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Note, effective as of the Issuance Date.
 
 
DSG TAG SYSTEMS INC.
   
   
 
By:  /s/ Robert Silzer                    
 
Name: Robert Silzer
 
Title: President and Chief Executive Officer
   
   
 
DSG GLOBAL INC.
   
   
 
By:  /s/ Robert Silzer                    
 
Name: Robert Silzer
 
Title: President and Chief Executive Officer
   
   
 
ADORE CREATIVE AGENCY, INC.
   
   
 
By:  /s/ Rupert Wainwright                
 
Name: Rupert Wainwright
 
Title: President and Chief Executive Officer
 
 
 
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EXHIBIT A
 
NOTICE OF CONVERSION
 
The undersigned hereby elects to convert the Conversion Amount set forth below under the Convertible Note (the “ Note ”) due March 30, 2016 issued by DSG TAG Systems, Inc., a Nevada corporation (the “ Company ”), into Conversion Shares according to the conditions of the Note, as of the date written below.
 
Conversion calculations:
Date to Effect Conversion:
 
     
 
Principal to be Converted:
 
     
 
Interest to be Converted:
 
     
 
Other Amounts to be Converted:
 
     
 
Conversion Amount:
 
     
 
Issuable Conversion Shares:
 

 
Holder Signature:
 
   
Signatory Name and Title (if applicable):
 
   
Name in which to Issue Certificate:
 
   
Address for Delivery of Certificate:
 
   
   

 

 
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