Exhibit 1
(DEL) U.S. ENVIRONMENTAL, INC.
SUBSCRIPTION AGREEMENT
1. General:
This Subscription Agreement sets forth the terms under which the
undersigned investor, KILGARVAN INVESTMENT & HOLDING COMPANY, LIMITED (the
"Investor"), will acquire 30,447,394 shares of the Common Stock, $.001 par value
per share (the "Shares"), subject to adjustment as provided for herein, for an
aggregate purchase price of $326,000 (U.S.) of (DE) U.S. ENVIRONMENTAL, INC., a
Delaware corporation (the "Company").
The Shares are being sold by the officers and directors of the
Company. There will be no sales commissions paid, and the Company will receive
the entire offering proceeds.
The Shares are being offered by the Company to a suitable Investor
pursuant to Rules 504 or 506 of Regulation D and Section 4(2) of the Securities
Act of 1933, as amended. Execution of this Subscription Agreement by the
Investor shall constitute an offer by the Investor to subscribe for the Shares
on the terms and conditions specified herein. The Company reserves the right to
reject such subscription offer, or, by executing a copy of this Subscription
Agreement, to accept such offer. If the Investor's offer is accepted, the
Company will execute this Subscription Agreement and issue the Shares. If the
Investor's offer is rejected, the payment accompanying this Subscription
Agreement will be returned to the Investor, with no interest thereon, with the
notice of rejection.
2. Acceptance of Subscription Agreement:
It is understood and agreed by the undersigned that the Company will
have the unconditional right to reject this subscription, in whole or in part,
if it believes that the undersigned is not a qualified purchaser under
Regulation D promulgated under the Securities Act of 1933, as amended, or for
any other reason.
3. Investor's Representations, Warranties and Covenants:
The Investor represents, warrants and covenants to the Company as
follows:
a. He acknowledges that he has been furnished with and has been given
access to all underlying documents in connection with this transaction as well
as such other information as he deems necessary or appropriate as a prudent and
knowledgeable investor in evaluating his investment in the Shares. He further
acknowledges that the Company has given him the opportunity to obtain additional
information and to evaluate the merits and risks of his investment. He
acknowledges that he has had the opportunity to ask questions of, and receive
satisfactory answers from, the officers and directors of the Company concerning
the terms and conditions of the offering.
b. He acknowledges that this transaction has not been scrutinized by
the United States Securities and Exchange Commission or by any state securities
commissions.
c. He has adequate means of providing for his current and future needs
and possible personal contingencies, and has no need for liquidity of his
investment in the Shares.
d. He can bear the economic risk of losing his entire investment in the
Shares.
e. He is acquiring the Shares for his own account, for investment only
and not with a view toward the resale, fractionalization, division or
distribution thereof and he has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution,
division or fractionalization thereof.
f. He does not have an overall commitment to investments which are not
readily marketable, including the Shares and other similar investments,
disproportionate to his net worth or gross income.
g. He understands that the offer and sale of the Shares is being made by
means of a private placement of Shares and that he has read or reviewed and is
familiar with this Subscription Agreement.
h. He and his agents or advisers have had an opportunity to ask
questions of and receive answers from the Company, or a person or persons acting
on its behalf, concerning the terms and conditions of this Subscription
Agreement and the transactions contemplated hereby and thereby, as well as the
affairs of the Company and related matters.
i. He has had an opportunity to obtain additional information necessary
to verify the accuracy of the information referred to in subparagraph (i)
hereof.
j. HE UNDERSTANDS THAT THE COMPANY HAS A LIMITED FINANCIAL AND OPERATING
HISTORY.
k. HE UNDERSTANDS THAT THE SHARES ARE A SPECULATIVE INVESTMENT WHICH
INVOLVES A HIGH DEGREE OF RISK OF LOSS BY HIM OF HIS ENTIRE INVESTMENT. CERTAIN
OF THE RISKS CONCERNING AN INVESTMENT IN THE SHARES ARE SET FORTH BELOW.
(i) Limited Operating History. To date, the Company has not
generated profitable operations. There can be no assurance the Company will be
profitable or that it will be able to expand its operations. The Company's
success is dependent upon its ability to develop new sources of revenue and to
obtain adequate financing for the expansion of its business. There is no
assurance that the Company will be able to develop such revenue or obtain such
financing. The growth of the Company's operations are subject to all of the
risks inherent in development of any new business enterprise, including the lack
of an operating history. The likelihood or success of the Company should be
considered in light of the problems, expenses and delays which are frequently
encountered in the formation of a new business and the competitive environment
in which the Company will operate. See the attached Business Plan for further
information.
(ii) Commercial Acceptance. While the Company believes that a
commercial market exists for its products, there can be no guaranty that such a
market will develop or develop to the extent that the Company anticipates.
(iii) Technological Change. The Company's products are in an area
which may experience significant technological change. The Company expects that
its technology will continue to develop rapidly, and the Company's future
success will depend, in large part, on its ability to maintain a competitive
position with respect to its technology. Rapid technological change could result
in the Company's products becoming obsolete, which could adversely effect the
Company's operations in the future.
(iv) Dilution. The net tangible book value per share of the
Shares after the offering will be substantially less than the price of the
Shares offered hereby. Thus, Investor acquiring Shares in this offering will be
subject to immediate substantial dilution.
(v) Requirement for Additional Funds. It is anticipated that all
of the proceeds from the Shares will be utilized to fund the Company's projected
operating needs for the next 6 months. There is no assurance that the Company
will not require additional capitalization after expending all the proceeds of
this offering. In such event, the failure of the Company to secure additional
funds necessary to finance continued operations will have an adverse impact on
the financial position and growth of the Company, and could result in the loss
by Investor of the entire investment in the Company. The Company currently has
no alternative sources of financing available to it, and there can be no
assurance that alternative financing will be available or available on
acceptable terms when and if the Company requires such financing.
(vi) No Market. THERE IS CURRENTLY A LIMITED MARKET FOR THE
SHARES AND THERE CAN BE NO ASSURANCE THAT ONE MAY DEVELOP IN THE FUTURE.
BECAUSE THE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER UNDER
CERTAIN LAWS AND REGULATIONS, AND BECAUSE THERE IS NO MARKET FOR THE SHARES,
INVESTORS SHOULD PURCHASE THE SHARES ONLY AS A LONG-TERM INVESTMENT, AS THEY MAY
NOT BE ABLE TO LIQUIDATE THEIR INVESTMENT IN THE SHARES IN EVENT OF AN EMERGENCY
OR FOR ANY OTHER REASON.
(vii) Determination of Offering Price of Shares. The offering
price for the Shares has been determined arbitrarily and is not an indication of
the value of the Shares or the assets or earnings of the Company.
(viii) No Assurance of Dividends on the Shares; No Likelihood of
Future Dividends on Common Stock. The Company has never paid and does not expect
to pay in the foreseeable future any cash dividends on its Common Stock. It is
anticipated that any earnings which may be generated from operations of the
Company will be used to finance the growth of the Company.
(ix) Limitation on Officer and Director Liability;
Indemnification. In accordance with Delaware law, the Company's Articles of
Incorporation and Bylaws contain provisions providing for the maximum
indemnification provided under Delaware law for officers, directors, employees
and agents.
As a result of the inclusion of such provisions, neither the Company nor its
stockholders may be able to recover monetary damages against officers,
directors, employees and agents of the Company for actions taken by them, and,
with respect to directors, which actions are ultimately found not to have
violated the specific provisions enumerated above, although it may be possible
to obtain injunctive or other equitable relief with respect to certain actions.
If equitable remedies are found not to be available to stockholders in any
particular case, stockholders may not have an effective remedy against the
challenged conduct.
m. He understands all aspects of and risks associated with this
investment or has consulted with his own financial adviser who has advised him
thereof and he has no further questions with respect thereto.
n. HE UNDERSTANDS THAT THERE WILL BE NO MARKET FOR THE SHARES AND
THAT NONE IS LIKELY TO DEVELOP AND THAT THERE ARE SUBSTANTIAL RESTRICTIONS ON
THE SALE OR OTHER TRANSFERABILITY OF THE SHARES; the Shares will not be, and the
Investor has no right to require, that the Shares be registered under the
Securities Act of 1933 or under any state securities laws; there will be no
public market for the Shares and the undersigned may not be able to avail
himself of the provisions of Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act with respect to the resale of the Shares
and, accordingly, THE INVESTOR MAY HAVE TO HOLD THE SHARES INDEFINITELY AND
POSSIBLY MAY NOT BE ABLE TO LIQUIDATE HIS INVESTMENT OR TRANSFER ANY SHARE
WITHOUT POTENTIAL ADVERSE FINANCIAL CONSEQUENCES; THEREFORE, THE SHARES SHOULD
NOT BE PURCHASED UNLESS THE INVESTOR HAS LIQUID ASSETS SUFFICIENT TO ASSURE THAT
SUCH PURCHASE WILL CAUSE NO UNDUE FINANCIAL DIFFICULTIES AND UNLESS THE INVESTOR
CAN OTHERWISE PROVIDE FOR HIS CURRENT NEEDS AND POSSIBLE PERSONAL CONTINGENCIES.
o. He will not transfer or assign this subscription, the Shares or any
interest therein without the prior written consent of the Company. If this
subscription is accepted, he agrees that the assignment and transferability of
the Shares subscribed for and acquired by him will be governed by all applicable
laws.
p. He understands that the Shares have not been registered under the
Securities Act of 1933 or under any state securities laws on the grounds that
the issuance and sale of the Shares to the Investor is exempt as not involving a
public offering. He further acknowledges his understanding that the Company's
reliance on such exemption is, in part, based upon the representations,
warranties and covenants of the Investor set forth herein.
q. He is knowledgeable and experienced in financial and business
matters. He and/or his financial or business advisers, if any, are capable of
evaluating the merits and risks of an investment in the Shares.
r. All information which he has provided to the Company concerning his
financial position and knowledge of financial and business matters is correct
and complete as of the date set forth at the end of this Subscription Agreement,
and if there should be any material change in such information prior to
acceptance of this Subscription Agreement by the Company, he will immediately
provide the Company with such information.
s. If he is executing this Subscription Agreement on behalf of a
corporation, partnership, trust or other entity, he has been duly authorized by
such entity to execute this Subscription Agreement and all other instruments in
connection with the purchase of the Shares, his signature is binding upon such
corporation, partnership, trust or other entity and he represents and warrants
that such corporation, partnership, trust or other entity was not organized for
the purpose of acquiring the Shares subscribed for pursuant to this Subscription
Agreement and that the acquisition of the Shares is an authorized investment of
the corporation, partnership, trust or other entity.
4. Anti-Dilution Rights:
The funding obligation of Investor under the Stock Purchase Agreement
entered into between the Investor and the Company dated September ___, 1996 is
hereby terminated. The number of shares of the Company's Common Stock issued to
the Investor hereunder is based upon the Investor's current understanding of the
capitalization of the Company. Notwithstanding anything to the contrary, it is
the understanding of the Investor and the Company that upon the issuance of the
30,447,394 shares to the Investor pursuant to this Subscription Agreement that
the Investor shall own 51% of the outstanding fully diluted equity securities of
the Company. Notwithstanding anything to the contrary, if the capitalization of
the Company is such that the Investor does not own at least 51% of the fully
diluted equity securities of the Company up to a total authorized capital of
100,000,000 shares, then the number of shares issued to the Investor shall be
adjusted so that the Investor shall own at least 51% of the outstanding fully
diluted equity securities of the Company through the issuance of 100,000,000
shares.
5. Responsibility and Indemnification:
The Company will exercise its best judgment in the conduct of all
matters arising under this Subscription Agreement. The undersigned acknowledges
that he understands the meaning and legal consequences of the representations
and warranties contained herein, and he hereby agrees to indemnify and hold
harmless the Company, its officers, directors, shareholders and employees, and
any of their affiliates and their officers, directors, shareholders and
employees, or any professional advisor or entity thereto, from and against any
and all loss, damage, liability or expense, including costs and reasonable
attorney's fees, to which said entities and persons may be put or which they may
incur by reason of, or in connection with, any misrepresentation made by the
Investor, any breach of any of his warranties, or his failure to fulfill any of
his covenants or agreements under this Subscription Agreement.
6. Company Solely Responsible for Disclosure; No Independent Review or
Opinions.
The Company has assumed sole responsibility for compliance with the
disclosure requirements of federal and state securities laws in connection with
the offer and sale of the Shares. No law firm, accounting firm, securities
broker/ dealer or other third party has conducted any due diligence review of
the Company and its business and affairs or any disclosures with respect
thereto, written or oral, made by the Company or others. The Company has agreed
to indemnify and hold harmless its law firm for any claim, loss, damage or
liability incurred as a result of violation of federal or state securities laws
in connection with the disclosure obligations thereof. Notwithstanding the
preparation of any documents or agreements related to the Company or this
investment, the Company's law firm has not rendered any legal opinions
concerning any aspect of the Company's business and affairs, including but not
limited to, the validity or enforceability of any contracts, agreements,
obligations or security interests related to an investment in the Company. By
execution of this Subscription Agreement, the undersigned acknowledges that the
Company is solely responsible for all disclosures to potential Investors
concerning the Company and its business and affairs and that no legal opinions
have been rendered by the Company's law firm as described above. For value
received, the undersigned does hereby release the Company's law firm and its
officers, directors, shareholders and employees from any claim, loss, liability
or damage with respect to the foregoing.
7. Survival of Representations, Warranties, Covenants and Agreements:
The representations, warranties, covenants and agreements contained
herein shall survive the delivery of, and the payment for, the Shares.
8. Notices:
Any and all notices, designations, consents, offers, acceptances or
any other communication provided for herein shall be given in writing by
registered or certified mail which shall be addressed to, in the case of the
Company, [Swiss American Capital Management, Inc.]; and in the case of the
Investor, to the address set forth in this Subscription Agreement or otherwise
appearing on the books of the Company or his residence or to such other address
as may be designated by him in writing.
9. Miscellaneous:
This Subscription Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, both substantive
and remedial. The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Subscription Agreement. This Subscription Agreement shall be enforceable in
accordance with its terms and be binding upon and shall inure to the benefit of
the parties hereto and their respective successors, assigns, executors and
administrators, but this Subscription Agreement and the respective rights and
obligations of the parties hereunder shall not be assignable by any party hereto
without the prior written consent of the other. This Subscription Agreement
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof; supersedes all prior negotiations,
letters and understandings relating to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed by
the party against whom enforcement of any such amendment, supplement or
modification is sought. In the event of any litigation between the parties to
this Subscription Agreement relating to, or arising out of, this Subscription
Agreement, the prevailing party shall be entitled to an award of reasonable
attorney's fees and costs, whether incurred before, during or after trial or at
the appellate level. The failure or finding of invalidity of any provision of
this Subscription Agreement shall in no manner affect the right to enforce the
other provisions of same, and the waiver by any party of any breach of any
provision of this Subscription Agreement shall not be construed to be a waiver
by such party of any subsequent breach of any other provision.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 29th day of April, 1997.
KILGARVAN INVESTMENT &
HOLDING COMPANY, LIMITED
/s/ Xx. X. Xxxxxx
Print Name: Xx. X. Xxxxxx
Title: Director
/s/ X. Xxxxxxxxx
Print Name: X. Xxxxxxxxx
Title: Director
SUBSCRIPTION ACCEPTED:
(DE) U.S. ENVIRONMENTAL, INC.,
a Delaware corporation
By: /s/ Xxx Xxxxxx
Print Name: Xxx Xxxxxx, President
