EXHIBIT 10.4
SUBSCRIPTION AGREEMENT
Agreement, made this 24th day of May, 2005, by and between FLEXIBLE
SOLUTIONS INTERNATIONAL INC., a Nevada corporation (the "Company"), and Pictet
International Management (the "Subscriber").
In consideration of the mutual promises and covenants herein contained,
the parties hereto agree as follows:
ARTICLE I
SUBSCRIPTION
1.01 Subscription Offer. Subject to the terms and conditions hereof and
to acceptance by the Company, Subscriber hereby irrevocably offers to purchase
87,400 units of common stock with warrant exercisable for four years at a price
of $4.50 (the "securities") at a price of US$ 3.75 per share, for a total price
of $327,750. The purchase price is payable in full by wire transfer to Flexible
Solutions International Inc retainage account and to be released to Flexible
Solutions International by written authorization from the subscriber to the bank
upon receipt of the purchased share certificate and warrant agreement in good
order.
1.02 Acceptance of Subscription. The Company reserves the right to
reject Subscriber's offer in whole or in part, for any reason, and to allocate
less than the maximum number of Securities the Subscriber hereby offers to
purchase. Any sale of Securities to Subscriber shall not be deemed to occur
until the Subscriber's offer is accepted in writing by the Company. Subscriber
shall not have any recourse against the Company if a purchase offer is rejected
in whole or in part. The Company shall reasonably notify the Subscriber in
writing of the acceptance of the purchase offer. If the purchase offer is
accepted, the Company will confirm in writing the Subscriber's purchase of the
Securities. If the purchase off is rejected in whole or in part, the Company
will promptly return to Subscriber, without deduction or interest, all or a
rateable portion of the subscription price, as the case may be, together with
all executed documents tendered by the Subscriber. If the purchase offer is
rejected in part only, Subscriber shall immediately complete, execute, and
deliver to the Company new subscription documents for the appropriate reduced
amount.
1.03 Restrictions on Securities. The Securities have not been
registered under the Securities Act of 1933 (the `Act") or any applicable state
securities laws.
1.04 Term Sheet. The term sheet immediately below shall govern the
specifics of the units subscribed for.
ISSUER Flexible Solutions International ("FSI" or the "Company')
ISSUE Common stock with Warrants
PRICING $3.75
WARRANTS. FSI will issue warrants to purchase 100% of the number of
shares of common stock that will be purchased at closing. The
warrants will have a 4 year life. The exercise price will be
120% ($4.50) percent of the Threshold Price. The shares
underlying the Warrants will be subject to the same
registration requirements as the Shares.
REGISTRATION FSI will agree to file a registration statement covering all
shares and warrants within 30 days of closing. A 1% per month
cash penalty will accrue for the first thirty days thereafter,
and then 1 % per month thereafter. FSI will use its best
efforts to have the registration statement declared effective
within 90 days of closing.
PRICE PROTECTION For the first 12 months following this financing, in the event
the Company issues common stock, or securities convertible or
exchangeable into common stock, at a price less than the
Purchase Price then the Purchase Price and the Warrant
Exercise Price will be changed to this price. Carve outs to be
provided for employee options and strategic financings. After
the Price Protection period standard weighted average
anti-dilution will apply to the warrants.
FUTURE FINANCINGS Investors shall have the right of participation in
any future equity or equity linked financings by the Company
for a period of 18 months following the closing in order to
maintain their percentage ownership in the Company.
ARTITCLE II
REPRESENTAIONS AND WARRANTIES
2.00 The Company warrants that it has the authority to accept the
subscription and issue the shares and warrants subscribed for.
2.01 The Company warrants that to its knowledge, no shares of common
stock are entitled to pre-emptive or similar rights.
2.02 The Company warrants that the shares will be issued as fully paid
for and nonassessable.
2.03 Status of Subscriber. Subscriber, if an individual, is at least 21
years of age. If an association, each individual member of the association is at
least 21 years of age.
2.04 Access to Information. Because of Subscriber's pre-existing
business or personal relationship with the Company or with the officers and
directors of the Company, or by reason of the business or financial experience
of Subscriber or his professional advisors who are unaffiliated with a and who
are not compensated by the Company, or an affiliate thereof, Subscriber had the
capacity to protect his own interests in connection with the offer and sale of
the Securities.
2.05 Understanding of Investment Risks. Subscriber understands that
there is a limited market for the Securities and no assurance that a wider
market will develop, and that realization of the objectives of the Company is
subject to significant economic and business risks.
2.06 Understanding of Nature of Securities. Subscriber understands
that:
a) The Securities have not been registered under the Act or any state
securities laws:
b) The Securities cannot be sold or transferred for value without
registration under the Act and applicable state laws or exemption therefrom:
c) Only the Company can register the Securities under the Act and
applicable state securities laws:
d) The Company has made representation to Subscriber that the Company
will register the Securities under the Act or any applicable state securities
laws by filing a registration statement within 30 days of receipt of the
subscription and will use its best efforts to ensure that the registration
statement becomes effective within 90 days of the subscription.
2.07 Investment Intent. Subscriber represents and warrants that:
a) Subscriber is acquiring the Securities for the Subscriber's own
account and not for or on behalf of any other person;
b) Subscriber is acquiring the Securities for investment and not for
distribution or with the intent to divide Subscriber's participation with others
or of reselling or otherwise distributing the Securities;
c) Neither Subscriber not anyone acting on Subscriber's behalf has paid
any commission or other remuneration to any person in connection with the
purchase of the Securities; and
d) Subscriber will not sell the Securities without registration under
the Act and any applicable state securities law or exemption there-from.
2.06 Residence of Subscriber. The residence of Subscriber set forth
below is the true and correct residence of Subscriber and he or she has no
present intention of becoming a resident or domiciliary of any other state,
county or jurisdiction.
2.07 Further Assurances. Subscriber will execute and deliver to the
Company any document, or do any other act or thing, which the Company may
reasonably request in connection with the acquisition of the Securities.
2.08 Non-disclosure. Subscriber has not distributed any written
materials furnished to Subscriber by the Company to anyone other than the
Subscriber's professional advisors.
2.09 Ability to Bear Economic Risk. Subscriber is able to bear the
economic risk of an investment in the Securities and to maintain his investment
in the Securities for an indefinite period of time, and, further, could bear a
total loss of the investment and not change his standard of living, which
existed at the time of such investment.
2.10 For Partnerships, Corporations, Trusts, or Other Entities Only. If
the Subscriber is a partnership, corporation, trust, or other entity,
a) Subscriber has enclosed with this agreement appropriate evidence of
the authority of the individual executing this agreement to act on its behalf .
b) Subscriber has the full power and authority to execute this
Subscription Agreement on behalf of such entity and to make the representation
and warranties made herein on its behalf and this investment in the Company has
been affirmatively authorized by the governing board of such entity and is not
prohibited by the governing documents of he entity.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.01 Captions and Headings. The Article and Section headings throughout
this Agreement are for convenience of reference only and shall in no way be
deemed to define, limit or add to any provision of this Agreement.
3.02 Entire Agreement; Amendment. This Agreement states the entire
agreement and understanding of the parties and shall supersede all prior
agreements and understanding. No Amendment of the Agreement shall be made
without the express written consent of the parties.
3.03 Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect any other provision hereof, which
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
3.04 Governing Law. This agreement shall be governed and construed in
accordance with the laws of the State of Nevada.
3.05 Notices. All notices, requests, demands, consents, and other
communications hereunder shall be transmitted in writing and shall be deemed to
have been duly given when hand delivered or sent by certified mail, postage
prepaid, with return receipt requested, addresses to the parties as follows: to
the Company, at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, and
to Subscriber, at the address indicated below. Any party may change its address
for purposes of this Section by giving notice as provided herein.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
"Company"
Flexible Solutions International Inc.
By: Xxx X'Xxxxx, President
Authorized Officer
"Subscriber(s)"
Name(s) exactly as you wish your interest
in the company to be registered 1) ______________________________
(please print)
2)
_________________________________
(please print)
Title, if Subscriber is not a person 1) _____________________________
2) _____________________________
Signatures 1) _____________________________
(signature)
2)
_________________________________
(signature)
Primary Address 1) _____________________________
2) _____________________________
Mailing Address (if different from above) 1) _____________________________
2) _____________________________
Contact Telephone Number(s) 1) _____________________________
2) _____________________________
Tax Identification Number 1) _____________________________
2) _____________________________
