SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER REGULATION D ("REGULATION D") PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR
SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND THOSE LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Securities Subscription Agreement (the "AGREEMENT" or the
"SUBSCRIPTION AGREEMENT") is executed by , (the "SUBSCRIBER") in connection with
the subscription by the Subscriber for shares of common stock, $.001 par value
of Environmental Solutions Worldwide, Inc. (the "COMMON STOCK" or the "SHARES");
three (3) year Warrants exercisable at $0.90 per share; three (3) year Warrants
exercisable at $2.00 per share; and three (3) year Warrants exercisable at $3.00
per share (collectively the "WARRANTS") of Environmental Solutions Worldwide,
Inc., a Florida corporation (the "COMPANY") for an aggregate face amount of $
(U.S.). The terms of the Warrants are set forth in the form of the Warrants
attached hereto as EXHIBIT A. The solicitation of this Subscription and, if
accepted by the Company, the offer and sale of Common Stock and Warrants, are
being made in reliance upon the provisions of the Securities Act of 1933, as
amended (the "ACT"). The Common Stock, Warrants and the Shares issuable upon
exercise thereof are sometimes referred to herein as the "SECURITIES". The
Subscriber wishes to subscribe for the principal amount of the Securities set
forth above and in Section 19 in accordance with the terms and conditions of
this Agreement. It is agreed as follows:
1. OFFER TO SUBSCRIBE; PURCHASE PRICE
The Subscriber hereby offers to purchase and subscribe for the principal
amount of Securities, and at the price, set out in Section 19 of this Agreement.
The Closing shall be deemed to occur when this Agreement has been executed by
both of the Subscriber and the Company (the "CLOSING") and payment shall have
been made by the Subscriber, by wire transfer, as directed in writing by the
Company on the day so directed, to an escrow agent in accordance with the Escrow
Agreement (as hereinafter defined), against the Company's delivery of
certificates for the Common Stock and Warrants subscribed for. If the Closing
does not occur, the funds of the Subscriber shall be returned from escrow. The
terms and conditions of the escrow are set forth in an Escrow Agreement, the
form of which is attached hereto as EXHIBIT B hereto (the "Escrow Agreement").
The payment shall be made by delivering same day funds in United States Dollars
as designated above.
2. SUBSCRIBER REPRESENTATIONS; ACCESS TO INFORMATION INDEPENDENT INVESTIGATION
The Subscriber represents and warrants to, and covenants with, the
Company, on its own behalf and on behalf of each person or entity for which the
Subscriber is acting as a fiduciary, as follows:
2.1 EXEMPT TRANSACTION. The Subscriber represents and warrants to the
Company that (i) the Subscriber is an accredited investor as the term is defined
in Rule 501(a) under the Act and (ii) the Subscriber is purchasing the
Securities for its own account and not with a view of reselling the Securities
in violation of the Act.
2.2 INDEPENDENT INVESTIGATION. The Subscriber, in offering to subscribe
for the Securities hereunder, has relied upon an independent investigation made
by it and has, prior to the date hereof, been given access to and the
opportunity to examine all books and records of the Company, and all material
contracts and documents of the Company; PROVIDED, that such investigation shall
not affect the Subscriber's ability to rely on the accuracy of the
representations and warranties of the Company set forth herein. The Subscriber
will keep confidential all non-public information regarding the Company that the
Subscriber receives from the Company unless disclosure of such information is
compelled by a court or other administrative body or, in the opinion of the
Subscriber's counsel, is necessary to comply with applicable law. In making the
investment decision to purchase the Common Stock and Warrants, the Subscriber is
not relying on any oral or written representations or assurances from the
Company or any other person or any representation of the Company or any other
person other than as set forth in this Agreement (inclusive of the exhibits
annexed hereto), public filings of the Company or in a document executed by a
duly authorized representative of the Company making reference to this
Agreement. The Subscriber has such experience in business and financial matters
that it is capable of evaluating the risk of its investment and determining the
suitability of its investment. The Subscriber is a sophisticated investor, and
an accredited investor as defined in Rule 501 of Regulation D. The Subscriber
has obtained and reviewed the copies of the Company's Form 10-KSB Annual Report
for the most recent year as reported, ended December 31, 2004, and Form 10-QSB
for the most recent fiscal quarter ended and copies of all Form 8-K Reports from
the beginning of the past fiscal year to the date hereof and is aware that the
Company has continued to sustain losses, has recently changed auditors and may
be a party to certain litigation concerning other matters as disclosed in detail
in the Company's periodic reports and filings with the Securities and Exchange
Commission (the "Commission" or the "SEC").
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2.3 ECONOMIC RISK. The Subscriber understands and acknowledges that an
investment in the Common Stock and Warrants involves a high degree of risk,
including a possible total loss of investment. The Subscriber represents that it
is able to bear the economic risk of the investment. In making this statement,
the Subscriber hereby represents and warrants that the Subscriber has adequate
means of providing for the Subscriber's current needs and contingencies; the
Subscriber is able to afford to hold the Securities for an indefinite period and
the Subscriber further represents that the Subscriber has such knowledge and
experience in financial and business matters that the Subscriber is capable of
evaluating the merits and risks of the investment in the Securities to be
received by the Subscriber. Further, the Subscriber represents that it has no
present need for liquidity in such Common Stock and Warrants.
2.4 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Subscriber understands
that no United States federal or state agency or similar agency of any other
country has passed upon or made any recommendation or endorsement of the
Company, this transaction or the subscription of the Securities.
2.5 NO REGISTRATION. The Subscriber understands that the Securities and
the common stock issuable upon exercise of the Warrants have not been registered
under the Act and are being offered and sold pursuant to an exemption from
registration contained in the Act based in part upon the representations of the
Subscriber contained herein. The Shares issuable upon exercise of the Warrants
and the Common Stock, however, carry certain registration rights as set forth in
the Registration Rights Agreement executed by the parties hereto in the form
attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT").
2.6 NO PUBLIC SOLICITATION. Without conducting any independent
investigation, the Subscriber knows of no public solicitation or advertisement
of an offer in connection with the proposed issuance and sale of the Securities.
2.7 INVESTMENT INTENT. The Subscriber is acquiring the Securities to be
issued and sold hereunder (and the Shares issuable upon exercise) for the
Subscriber's own account (or for beneficiaries' accounts over which the
Subscriber has investment discretion). The Subscriber has made no predetermined
arrangements to sell the Common Stock, Warrants, or Shares other than as
provided in the Registration Rights Agreement, and the offering by the Company
of the Securities to the Subscriber, as contemplated in this Subscription
Agreement (the "OFFERING"), together with any subsequent resale by the
Subscriber of the Common Stock, Warrants or the Shares underlying the Warrants,
is not part of a plan or scheme to evade the registration provisions of the Act
by the Subscriber. The Subscriber currently has no short position in the Shares.
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2.8 [INTENTIONALLY DELETED]
2.9 INCORPORATION AND AUTHORITY. The Subscriber has the full power and
authority to execute, deliver and perform this Agreement and to perform its
obligations hereunder. This Agreement has been duly approved by all necessary
action of the Subscriber, including any necessary shareholder approval, has been
executed by persons duly authorized by the Subscriber, and constitutes a valid
and legally binding obligation of the Subscriber, enforceable in accordance with
its terms.
2.10 NO RELIANCE ON TAX ADVICE. The Subscriber has reviewed with his, her
or its own tax advisors the foreign, federal, state and local tax consequences
of this investment, where applicable, and the transactions contemplated by this
Agreement. The Subscriber is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents and
understands that the Subscriber (and not the Company) shall be responsible for
the Subscriber own income tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
2.11 INDEPENDENT LEGAL ADVICE. The Subscriber and the Company acknowledge
that each has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement and has consulted with its own legal counsel, and
other advisors prior to execution of the within Agreement, and that the Company
will pay the fees and expenses with respect to the Offering, including all
filing fees.
2.12 ACKNOWLEDGMENT. The Subscriber understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of Federal and State Securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Subscriber set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Subscriber to acquire the Securities.
3. RESALES
The Subscriber acknowledges and agrees that the Securities may and will
only be resold (a) pursuant to a Registration Statement under the Act; or (b)
pursuant to an exemption from registration under the Act.
4. LEGENDS; SUBSEQUENT TRANSFER OF SECURITIES
4.1 LEGENDS. The certificate(s) representing the Common Stock and Warrants
shall bear a legend similar to the legend set forth below and any other legend,
if such legend or legends are reasonably required to comply with state, federal
or foreign law. Assuming that there are no changes in the material facts set
forth in Section 2 of this Agreement or applicable law from the date hereof
until the date of exercise, and subject to the Company's transfer agent's
receipt of a legal opinion from legal counsel, all certificates representing the
Common Stock or Shares into which the Warrants are exercisable shall bear a
legend.
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"THE (COMMON STOCK OR WARRANTS) OF ENVIRONMENTAL
SOLUTIONS WORLDWIDE, INC. (THE "ISSUER") REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO REGULATION
D, PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND HAVE NOT BEEN REGISTERED UNDER
THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS. THESE
SHARES MAY NOT BE OFFERED OR SOLD EXCEPT WITH AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES OR AN
APPLICABLE EXEMPTION UNDER THE SECURITIES ACT."
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
The Company represents and warrants to, and covenants with, the Subscriber
as follows:
5.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to so qualify would not, individually or in
the aggregate, have a material adverse effect on the business, condition
(financial or otherwise), earnings, properties, prospects or results of
operations of the Company taken as a whole (a "MATERIAL ADVERSE EFFECT"). The
Company is not the subject of any pending or, to its knowledge, threatened
investigation or administrative or legal proceeding by the Internal Revenue
Service, the taxing authorities of any state or local jurisdiction, or the
Commission which have not been disclosed in the reports referred to in Section
5.5 below.
5.2 CORPORATE CONDITION. None of the Company's filings made with the
Commission (such filings, the "SEC REPORTS"), including, but not limited to,
those reports referenced in Section 5.5 below, contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading. There have been no material adverse changes in the Company's
business, properties, results of operations, condition (financial or otherwise)
or prospects since the date of those reports which have not been disclosed to
the Subscriber in writing; PROVIDED, that the Subscriber is aware that the
Company has continued to sustain losses since the date of the most recent Report
on Form 10-QSB and the Company's prior auditors Xxxxxxxxx and Xxxxxx Certified
Public Accountants resigned and subsequently discontinued its public practice of
accounting, the Company from time to time may be a party to various litigation
proceedings among other matters as set forth in detail in the Company's periodic
filings with the Commission. Further, all material non-public information (other
than the specific information respecting the sale of the Securities themselves)
respecting the Company, its business and its financial condition, as the same
would be required to be disclosed in an SEC Report or registration statement (or
corresponding prospectus) if the Securities were otherwise being registered for
sale by the Company, has been so publicly reported or disclosed prior to the
sale of the Securities as contemplated herein.
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5.3 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of the Transaction Documents (as hereinafter defined), and the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance (or reservation for issuance) and delivery of the Shares
issuable upon exercise of Warrants have been taken, and the Transaction
Documents constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms. "TRANSACTION DOCUMENTS"
means, collectively, this Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Warrants and each of the other documents entered into or
delivered by the parties hereto in connection with the transactions contemplated
by this Agreement.
5.4 VALID ISSUANCE OF WARRANT AND COMMON STOCK. When executed and
delivered in accordance with the terms hereof for the consideration expressed
herein, the Common Stock and Warrants will have been issued in compliance with
all applicable U.S. federal and state securities laws. Upon issue, the
Subscriber will acquire good and marketable title to the Common Stock, free and
clear of all liens, claims, encumbrances and pre-emptive rights. Upon issue, the
Subscriber will acquire good and marketable title to the Warrants, free and
clear of all liens, claims, encumbrances and pre-emptive rights. The Shares
issuable upon exercise of Warrants, as applicable, when issued in accordance
with the respective terms thereof, shall be duly and validly issued and
outstanding, fully paid and non-assessable, free and clear of any, liens claims,
encumberances and pre-emptive rights, and will have been issued in compliance
with all applicable U.S. federal and state securities laws. Subject in part to
the truth and accuracy of the Subscriber's representations set forth in the
Subscription Agreement, the offer, sale and issuance of the Securities
contemplated by this Agreement are exempt from the registration of any
applicable state and federal securities laws, and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
5.5 CURRENT PUBLIC INFORMATION. The Company represents and warrants to the
Subscriber that the Company is a "reporting issuer" and it has a class of
securities registered under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and has filed all the materials required
to be filed as reports pursuant to the Exchange Act for a period of at least
twelve months preceding the date hereof (or for such shorter period as the
Company was required by law to file such material). All such reports (including,
without limitation, the SEC Reports) complied in all material respects with all
applicable requirements of Federal securities laws and the rules and regulations
promulgated thereunder. The Subscriber has obtained copies of the Company's Form
10-KSB Annual Report for the most recent completed and reported fiscal year
ended December 31, 2004 and Form 10-QSB for the most recent fiscal quarter
ended, copies of all Form 8-K Reports from the beginning of the Company's past
fiscal year to the date of execution of the within Agreement as well as all
press releases.
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5.6 NO DIRECTED SELLING EFFORTS IN REGARD TO THIS TRANSACTION. The Company
has not, and, to the best of the Company's knowledge, neither the Subscriber nor
any distributor, if any, participating in the offering of the Securities nor any
person acting for the Company or any such distributor has conducted any
"directed selling efforts" as that term is defined under the Act. Such activity
includes, without limitation, the making of printed material to investors, the
holding of promotional seminars, the placement of advertisements with radio or
television stations which discuss the offering of the Securities. The Company
represents and warrants that the Offering is not part of a plan or scheme to
evade the registration provisions of the Act.
5.7 NO CONFLICTS. The execution and delivery of this Agreement and the
consummation of the issuance of the Securities and the transactions contemplated
by this Agreement do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under, the
Certificate of Incorporation or bylaws of the Company, or any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company is
a party or by which it or any of its properties or assets are bound, or any
existing applicable decree, judgment or order of any court, Federal or State
regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.
5.8 ISSUANCE OF SECURITIES. The Company will issue one or more
certificates representing the Common Stock and Warrants in the name of the
Subscriber in such denominations to be specified by the Subscriber prior to
closing. Upon exercise of Warrants in accordance with their terms, the Company
will issue one or more certificates representing Shares in the name of the
Subscriber and in such denominations to be specified by the Subscriber prior to
exercise. The Shares to be issued upon exercise of the Warrants shall bear
restrictive legends unless subject to an effective registration or exemption
under the Act. Nothing in this section shall affect in any way the Subscriber's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities.
5.9 NO ACTION. The Company has not taken and will not take any action that
will affect in any way the Subscriber's ability to resell the Securities in
accordance with applicable securities laws.
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5.10 COMPLIANCE WITH LAWS. As of the date hereof, the conduct of the
business of the Company complies in all material respects with all material
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. The Company has not received notice of any alleged violation
of any statute, law, regulations, ordinance, rule, judgment, order or decree
from any governmental authority. The Company shall comply with all applicable
securities laws with respect to the sale of the Securities, including, but not
limited to, the filing of all reports required to be filed in connection
therewith with the Commission or any other regulatory authority. Further,
assuming the accuracy of the representations of the Subscriber, the offer and
sale by the Company of the Securities (including, without limitation, the Shares
issuable upon exercise of the Warrants) is exempt from registration under the
Securities Act.
5.11 LITIGATION. There are no known actions, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now pending
or, to the knowledge of the Company, threatened, against or affecting the
Company, or any of its properties, which could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
5.12 DISCLOSURES. There is no fact known to the Company (other than
general economic conditions known to the public generally) that has not been
disclosed in writing to the Subscriber or set forth in the Company's periodic
reports and filings with the SEC that (a) could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or (b) could
reasonably be expected, individually or in the aggregate, to materially and
adversely affect the ability of the Company to perform its obligations pursuant
the Transaction Documents and the issuance of the Common Stock and Warrants
hereunder.
5.13 CAPITALIZATION. The Company, as of the date of the Closing, will have
outstanding the number of shares of Common Stock, convertible debentures and
Warrants as set forth on EXHIBIT D. All of the issued and outstanding shares of
capital stock of the Company and each of its subsidiaries have been duly
authorized and are validly issued, fully paid and non-assessable. No personal
liability attaches to the registered holders of the Common Stock by reason of
their being registered holders thereof.
5.14. MATERIAL CHANGES. Except as disclosed in the SEC Reports, since
December 31, 2004: (i) the Company and its subsidiaries have not incurred any
material liabilities or obligations, indirect, or contingent, or entered into
any material oral or written agreement or other transaction which is not in the
ordinary course of business or which could reasonably be expected to result in a
material reduction in the future earnings or prospects of the Company and its
subsidiaries; (ii) each of the Company and its subsidiaries have not sustained
any material loss or interference with its businesses or properties from fire,
flood, windstorm, accident or other calamity not covered by insurance; (iii)
except as described in the SEC Reports, the Company and its subsidiaries have
not paid or declared any dividends or other distributions with respect to its
capital stock and neither the Company nor any of its subsidiaries is in default
in the payment of principal or interest on any outstanding debt obligations;
(iv) there has not been any change in the capital stock of the Company or any of
its subsidiaries other than the sale of the Securities hereunder, shares or
options issued pursuant to stock option plans or purchase plans approved by the
Company's Board of Directors and repurchases of shares or options pursuant to
repurchase plans already approved by the Company's Board of Directors, or
indebtedness material to the Company or any of its subsidiaries (other than in
the ordinary course of business); and (v) there has not been any other event or
change that would have, individually or in the aggregate, a Material Adverse
Effect.
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5.15 FINANCIAL STATEMENTS. The consolidated financial statements of the
Company and the related notes contained in the SEC Reports present fairly, in
accordance with generally accepted accounting principles, the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated, and the results of their operations, cash flows and the changes in
shareholders' equity for the periods therein specified, subject, in the case of
unaudited financial statements for interim periods, to normal year-end audit
adjustments. Such consolidated financial statements (including the related
notes) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods therein
specified, except that unaudited financial statements may not contain all
footnotes required by generally accepted accounting principles. The Company has
to the extent required fully complied with the Xxxxxxxx-Xxxxx Act of 2002.
5.16 STABILIZATION. Neither the Company nor any of its subsidiaries has
taken, directly or indirectly, any action which was designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities, the Warrants, and the Shares
issuable upon exercise of the Warrants.
5.17 BROKERS. The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, finders' fees or similar payments
by the Subscriber relating to this Subscription Agreement or the transactions
contemplated hereby.
5.18 CONSENTS. Except as to waivers from certain holders of convertible
debentures and warrants as issued by the Company in September 2004, and as to
filings which may be required under applicable state securities regulations, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or other
governmental authority or of any court or other tribunal is required by the
Company in connection with the transactions contemplated hereby. No consent of
any party to any contract, agreement, instrument, lease, license, arrangement,
or understanding to which the Company is a party, or by which any of its
properties or assets is bound, is required for the execution, delivery, or
performance by the Company of the transactions contemplated by the Transaction
Documents.
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5.19 INTELLECTUAL PROPERTY. To the best of the Company's knowledge, the
Company owns, or has the right to use, all patents, trademarks, service marks,
trade names, copyrights, licenses, trade secrets or other proprietary rights
necessary to its business as now conducted without conflicting with or
infringing upon the right or claimed right of any person under or with respect
to any of the foregoing. Except for hardware and software licenses entered into
in the ordinary course of business, the Company is not bound by or a party to
any options, licenses or agreements of any kind with respect to patents,
trademarks, service marks, trade names, copyrights, licenses, trade secrets or
other proprietary rights of any other person or entity. The Company has not
received any communications alleging that the Company has violated the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware of
any violation by a third party of any of the Company's patents, trade marks,
service marks, trade names, copyrights, trade secrets or other proprietary
rights.
5.20 FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any director,
officer, agent, or other person acting on behalf of the Company has, in the
course of his or its actions for or on behalf of the Company violated any
provision of the United States Foreign Corrupt Practices Act of 1977, as
amended, or the regulations thereunder.
5.21 OTHER SUBSCRIPTION AGREEMENTS. The Company may simultaneously, with
the execution of this Subscription Agreement, enter into one or more
subscription agreements with other purchasers of Securities (the "OTHER
PURCHASERS") with substantially the same terms and conditions as this
Subscription Agreement; and no Other Purchaser is subscribing for any securities
of the Company on the Closing with terms and conditions different from the terms
and conditions of this Subscription Agreement.
6. ADDITIONAL COVENANTS OF COMPANY
6.1 CORPORATE EXISTENCE AND TAXES. For as long as any Warrants remain
outstanding, the Company shall, maintain its corporate existence in good
standing, and shall pay all its taxes when due except for taxes which the
Company disputes in good faith and for which adequate reserves are established
on the Company's books and records.
6.2 RESERVED SHARES AND LISTINGS; EXCHANGE ACT. For so long as any
Warrants remain outstanding:
(a) the Company will reserve from its authorized but unissued shares
of Common Stock, a sufficient number of Shares to permit the full exercise of
Warrants; and
(b) the Company will maintain the listing of its Shares on the Over
the Counter Bulletin Board or other exchange; and
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(c) the Company shall timely file all reports required to be filed
with the Commission pursuant to the Exchange Act and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination.
6.3 USE OF PROCEEDS. The Company shall use all of the net proceeds from
the sale of all Securities for due diligence and investigating compliance issues
and the like for the potential listing of the Company's Common Stock on new
exchanges and for general corporate purposes.
6.4 Intentionally Omitted.
6.5 FURTHER FINANCINGS. If within six months from the date of Closing, the
Company enters into or closes another financing or other transaction (which for
securities law purposes would be integrable with the offer and sale of the
Securities) on terms and conditions more favorable to another purchaser than
this Subscription Agreement, the Warrants and the Registration Rights Agreement
(in each case, such determination to be made by the Subscriber), then the terms
and conditions of this Offering as same relate to the Common Stock and Warrants
exercisable at $0.90 per share shall be adjusted to reflect the more favorable
terms to such purchaser (including, at the Subscriber's option, the issuance of
additional Securities or other securities of the Company). The foregoing shall
apply to successive financings or successive other transactions within six
months of the date of the Closing.
6.6 PUBLICITY. Except as may be required by applicable law or regulation,
the Company shall not use, directly or indirectly, the Subscriber's name or the
name of any of its affiliates in any advertisement, announcement, press release
or other similar communication unless it has received the prior written consent
of the Subscriber for the specific use contemplated or as otherwise required by
applicable law or regulation.
7. CONDITIONS TO CLOSING; DELIVERIES AT CLOSING
7.1 CONDITIONS TO SUBSCRIBER'S OBLIGATIONS TO CLOSE. The obligations of
the Subscriber to purchase the Warrants offered hereunder are conditioned on the
fulfillment or waiver of the following:
(a) the execution and delivery of the Transaction Documents and such
other documents, opinions, certificates and instruments that the Subscriber may
reasonably request;
(b) all the representations and warranties of the Company in this
Agreement as of the date hereof shall be true and correct at the Closing as if
made on such date, and the Company shall have performed all actions required
hereunder;
(c) the Company shall have performed in all material respects all
agreements which the Transaction Documents provide shall be performed on or
before the date of the Closing;
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(d) no event shall have occurred and be continuing or would result
from the consummation of the transactions contemplated by the Transaction
Documents which would, individually or in the aggregate, constitute a Material
Adverse Effect;
(e) no order, judgment or decree of any court, arbitrator or
governmental authority shall enjoin or restrain the Subscriber from purchasing
the Securities or consummating the transactions contemplated by the Transaction
Documents and there shall not be existing, or, to the knowledge of the Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Company or any of its subsidiaries which
would reasonably be expected to result in such an order, judgment or decree; and
(f) the Company shall not have defaulted on any long-term debt.
7.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS TO CLOSE. The obligations of
the Company to issue the Common Stock and the Warrants offered hereunder are
conditioned on the fulfillment or waiver of the following:
(a) the execution and delivery of this Agreement, the Registration
Rights Agreement and the Escrow Agreement by the Subscriber;
(b) all representations and warranties of the Subscriber made in
this Agreement as of the date hereof shall be true and correct at the Closing as
if made on such date, and the Subscriber shall have performed all actions
required hereunder; and
(c) the execution of all Officer Certificates and special
representations reasonably required by the Subscriber.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, applicable to agreements made in and wholly to be
performed in that jurisdiction without regard to the choice of law rules of such
state, except for matters arising under the Act or the Exchange Act which
matters shall be construed and interpreted in accordance with such laws. Any
action brought to enforce, or otherwise arising out of, this Agreement shall be
heard and determined in either a Federal or state court sitting in the County of
New York, State of New York, and the parties consent to jurisdiction in the
State of New York.
9. ENTIRE AGREEMENT; AMENDMENT
This Agreement, the Transaction Documents and the other documents
delivered pursuant hereto and thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be able or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
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10. NOTICES, ETC.
Any notice, demand or request required or permitted to be given by either
the Company or the Subscriber pursuant to the terms of this Agreement shall be
in writing and shall be deemed given when delivered personally or by facsimile,
with a hard copy to follow by two day courier, addressed to the parties at the
addresses of the parties set forth at the end of this Agreement or such other
address as a party may request by notifying the other in writing.
11. INDEMNIFICATION
11. 1 COMPANY INDEMNIFICATION. In consideration of the Subscriber's
execution and delivery of the Transaction Documents to which it is a party and
acquiring the Securities hereunder and thereunder and in addition to all of the
Company's other obligations under the Transaction Documents to which it is a
party, the Company shall defend, protect, indemnify and hold harmless the
Subscriber and each other holder of the Securities and all of their
shareholders, trustees, partners, members, officers, directors, employees and
direct or indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"SUBSCRIBER INDEMNITEES") from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages
(other than consequential damages), and expenses in connection therewith
(irrespective of whether any such Subscriber Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "SUBSCRIBER INDEMNIFIED LIABILITIES"),
incurred by any Subscriber Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents, (b) any breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents, or (c) any cause of action, suit or claim brought or made against
such Subscriber Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from (i) other than those arising from or resulting from a
misrepresentation or breach of any representation or warranty made by such
Subscriber Indemnitee contained in the Transaction Documents to which it is a
party, the execution, delivery, performance or enforcement of the Transaction
Documents, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities, or
(iii) the status of the Subscriber or holder of the Securities as an investor in
the Company.
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11.2 SUBSCRIBER INDEMNIFICATION. In consideration of the Company's
execution and delivery of the Transaction Documents and issuance of the
Securities hereunder and thereunder and in addition to all of each Subscriber's
other obligations under the Transaction Documents, the Subscriber shall,
severally and not jointly, defend, protect, indemnify and hold harmless the
Company and all of the Company's officers, directors, agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"COMPANY INDEMNITEES") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages (other
than consequential damages), and expenses in connection therewith (irrespective
of whether any such Company Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "COMPANY INDEMNIFIED LIABILITIES"), incurred by any
Company Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Subscriber in the Transaction Documents to which it is a party, (b) any breach
of any covenant, agreement or obligation of the Subscriber contained in the
Transaction Documents to which it is a party or (c) any cause of action, suit or
claim brought or made against such Company Indemnitee by a third party and
arising out of or resulting from, other than those arising from or resulting
from a misrepresentation or breach of any representation or warranty made by
such Company Indemnitee contained in the Transaction Documents or a breach of
any covenant, agreement or obligation by such Company Indemnitee contained in
the Transaction Documents or from the gross negligence, willful misconduct or
bad faith of such Company Indemnitee, the execution, delivery, performance or
enforcement of the Transaction Documents.
11.3 CONTRIBUTION; MECHANICS AND PROCEDURES. To the extent that the
foregoing undertaking by the Company and the Subscriber may be unenforceable for
any reason, the Company or the Subscriber, as the case may be, shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 11 shall be the same as those set forth in
Section 4(c) of the Registration Rights Agreement.
12. NO STRICT CONSTRUCTION
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
13. NO THIRD PARTY BENEFICIARIES
This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person or entity.
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14. SURVIVAL
All covenants, agreements, representations and warranties made by the
Company and the Subscriber herein the Transaction Documents shall survive the
execution of this Subscription Agreement, the delivery to the Subscriber of the
Common Stock and the Warrants being purchased and the payment therefor.
15. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, including any purchasers of
the Common Stock or the Warrants. The Company shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
Subscriber, including by merger or consolidation, except in accordance with the
applicable provisions of the Warrants with respect to which the Company is in
compliance with such respective provisions of the Warrants. The Subscriber may
assign, without the consent of the Company, some or all of its rights hereunder
to any person to whom the Subscriber assigns or transfers Securities, or the
right to acquire Securities, in accordance herewith; PROVIDED, that such
transferee agrees in writing to be bound with respect to the transferred
Securities to the provisions hereof that apply to the transferring Subscriber,
in which event such assignee shall be deemed to be a Subscriber hereunder with
respect to such assigned rights.
16. COUNTERPARTS
This Agreement may be executed in two or more identical counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party; PROVIDED, that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with the same force
and effect as if the signature were an original, not a facsimile signature.
17. HEADINGS
The headings of this Agreement are for convenience of reference and shall
not form part of, or affect the interpretation of, this Agreement.
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18. SEVERABILITY
If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
19. AMOUNT
The undersigned Subscriber hereby subscribes for Units in the principal
amount of $ representing shares of Common Stock and three (3)
year Warrants exercisable at $0.90 per share; three (3) year Warrants
exercisable at $2.00 per share; and three (3) year Warrants exercisable
at $3.00 per share.
The undersigned Subscriber acknowledges that this subscription shall not
be effective unless accepted by the Company as indicated below.
This Subscription is accepted by the Company on the ____ day of [ ], 2005.
Environmental Solutions Worldwide, Inc.
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Subscriber:
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Name:
Title:
Address for Notice:
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