SUBORDINATED NOTE 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 SUBORDINATED NOTE 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 Subordinated Note Subscription Agreement (the "Agreement") dated as of
April 27, 2011 is executed by [__________________] (the "Purchaser") in
connection with the subscription by the Purchaser for certain unsecured
subordinated promissory notes (the "Notes") of Environmental Solutions
Worldwide, Inc., a Florida corporation (the "Company"), which is offering an
aggregate face amount of $[______] (U.S.) of the Notes. The terms of the Notes
are set forth in the form of Note attached hereto as Exhibit A. The Purchaser
wishes to purchase the principal amount of the Notes set forth opposite the
Purchaser's name on the signature pages hereto in accordance with the terms and
conditions of this Agreement. It is agreed as follows:
1. OFFER TO SUBSCRIBE; PURCHASE PRICE
The Purchaser hereby offers to purchase and subscribe for the principal
amount of the Notes and at the price, set forth opposite the Purchaser's name on
the signature pages hereto. The Closing shall be deemed to occur when this
Agreement has been executed by both of the Purchaser and the Company (the
"Closing") and payment shall have been made by the Purchaser in the manner as
directed in writing by the Company.
2. PURCHASER REPRESENTATIONS AND COVENANTS; ACCESS TO INFORMATION INDEPENDENT
INVESTIGATION
The Purchaser represents and warrants to, and covenants with, the Company,
on his or its own behalf and on behalf of each person or entity for which the
Purchaser is acting as a fiduciary, as follows:
2.1 Exempt Transaction; Investment Intent. (a) The Purchaser is an
accredited investor as the term is defined in Rule 501(a) under the Act and (b)
the Purchaser is purchasing the Notes for its own account (or for beneficiaries'
accounts over which the Purchaser has investment discretion) and not with a view
of reselling the Notes in violation of the Securities Act.
2.2 Independent Investigation. The Purchaser, in offering to purchase the
Notes hereunder, has relied upon an independent investigation made by him or it
and, to his or its knowledge 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 Purchaser's ability to rely on the accuracy
of the representations and warranties of the Company set forth herein. The
Purchaser will keep confidential all non-public information regarding the
Company that the Purchaser receives from the Company unless disclosure of such
information is compelled by a court or other administrative body or, in the
opinion of the Purchaser's counsel, to comply with applicable law. In making the
investment decision to purchase the Notes the Purchaser 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, the public filings of the Company or in a document
executed by a duly authorized representative of the Company making reference to
this Agreement. The Purchaser 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 Purchaser is a sophisticated
investor, and an accredited investor as defined in Rule 501 of Regulation D. The
Purchaser has obtained and reviewed the copies of the Company's Form 10-K Annual
Report for the most recent year ended December 31, 2010, 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.
2.3 Economic Risk. The Purchaser understands and acknowledges that an
investment in the Notes involves a high degree of risk, including a possible
total loss of investment. The Purchaser represents that he or it is able to bear
the economic risk of the investment. In making this statement, the Purchaser
hereby represents and warrants that the Purchaser has adequate means of
providing for the Purchaser's current needs and contingencies. The Purchaser
further represents that the Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of the investment in the Notes to be received by the Purchaser.
Further, the Purchaser represents that it has no present need for liquidity in
the Notes.
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2.4 No Government Recommendation or Approval. The Purchaser 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 Notes.
2.5 No Registration. The Purchaser understands that the Notes 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 Purchaser contained herein.
2.6 No Public Solicitation. Without conducting any independent
investigation, the Purchaser knows of no public solicitation or advertisement of
an offer in connection with the proposed issuance and sale of the Notes.
2.7 Incorporation and Authority. The Purchaser, (a) if not a natural
person, has the full power and authority, and (b) if a natural person, has the
legal capacity, 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 Purchaser, as applicable, has been executed by persons
duly authorized by the Purchaser, and constitutes a valid and legally binding
obligation of the Purchaser, enforceable in accordance with its terms.
2.8 No Reliance on Tax Advice. The Purchaser 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 Purchaser 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 Purchaser (and not the Company) shall be responsible for
the Purchaser own income tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
2.9 Independent Legal Advice. The Purchaser 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.
2.10 Acknowledgment. The Purchaser understands that the Notes are being
offered and sold to it in reliance of 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 Purchaser set forth herein
in order to determine the applicability of such exemptions and the suitability
of the Purchaser to acquire the Notes.
3. RESALES
The Purchaser acknowledges and agrees that the Notes 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.
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4. LEGENDS.
The Notes 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:
"THIS UNSECURED SUBORDINATED PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933 (AS AMENDED, THE "SECURITIES ACT") UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THIS NOTE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PELDGED, OR HYPOTHECATED
ABSENT AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE PROPOSED TRANSFER MAY BE EFFECTED WITHOUT
REGISTRATION OR QUALIFICAITON UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS."
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
The Company represents and warrants to, and covenants with, the Purchaser
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 and its subsidiaries are duly qualified to transact business and are in
good standing as foreign corporations or other entities in each jurisdiction in
which the nature of the business conducted or property owned by them 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 or any of its subsidiaries (a "Material
Adverse Effect").
5.2 Corporate Condition. None of the Company's filings made with the
Securities and Exchange Commission (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 Purchaser in writing.
Further, all material non-public information (other than the specific
information respecting the sale of the Notes 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 Notes were otherwise being registered for sale by the
Company, has been so publicly reported or disclosed prior to the sale of the
Notes as contemplated herein.
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5.3 Authorization. The transaction contemplated by this Agreement and the
Transaction Documents (as hereinafter defined) have been approved by a majority
of disinterested directors. 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
and the Notes 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 the Notes. When executed and delivered in accordance
with the terms hereof for the consideration expressed herein, the Notes will
have been issued in compliance with all applicable U.S. federal securities laws.
Upon issue, the Purchaser will acquire good and marketable title to the Notes,
free and clear of all liens, claims and encumbrances. Subject in part to the
truth and accuracy of the Purchaser's representations set forth in this
Agreement, the offer, sale and issuance of the Notes contemplated by this
Agreement are exempt from the registration pursuant to any applicable 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 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 (12) 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 Purchaser has obtained
copies of the Company's Form 10-K Annual Report for the most recent year ended
December 31, 2010 and 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.
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 Purchaser nor
any distributor, if any, participating in the offering of the Notes 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 available to
investors, the holding of promotional seminars, the placement of advertisements
with radio or television stations which discuss the offering of the Notes.
5.7 No Conflicts. The execution and delivery of this Agreement and the
consummation of the issuance of the Notes 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, credit
agreement, mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of its
subsidiaries or any of its or any of its subsidiaries' 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 subsidiaries or any of
its or any of its subsidiaries' properties or assets.
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5.8 Issuance of Notes. The Company will issue the Notes in the name of the
Purchaser. Nothing in this section shall affect in any way the Purchaser's
obligations and agreement to comply with all applicable securities laws upon
resale of the Notes.
5.9 No Action. The Company has not taken and will not take any action that
will affect in any way the Purchaser's ability to resell the Notes in accordance
with applicable securities laws.
5.10 Compliance with Laws. As of the date hereof, the conduct of the
business of the Company and its subsidiaries complies (and has complied) in all
material respects with all statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto. The Company and its
subsidiaries have 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 Notes, 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.
5.11 Litigation. There is no action, 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 and
its subsidiaries, or any of the Company or its subsidiaries assets or
properties, which could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. The Company and its subsidiaries
are not the subject of any pending or, to their 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 or any state securities commission which have not been disclosed in
the reports referred to in Section 5.5.
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 Purchaser 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.
5.13 Capitalization. (a) The Company, as of the date of the Closing, will
have 250,000,000 shares of Common Stock, par value $0.001 per share ("Shares")
authorized pursuant to its Certificate of Incorporation and 129,463,767 Shares
issued and outstanding. 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.
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(b) Except as set forth on Exhibit B, (i) no subscription, warrant, option,
convertible security or other right (contingent or otherwise) to purchase or
acquire any shares of capital stock of the Company or any of its subsidiaries
that is authorized or outstanding, (ii) neither the Company nor any of its
subsidiaries has any obligation (contingent or otherwise) to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock or other
equity securities any evidences of indebtedness or assets of the Company or such
subsidiary, (iii) neither the Company nor any of its subsidiaries has any
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock (or other equity securities) or any interest
therein or to pay any dividend or make any other distribution in respect
thereof, and (iv) there are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company or any of its
subsidiaries.
(c) All of the issued and outstanding shares of the Company's and its
subsidiaries' capital stock (or other equity securities) have been offered,
issued and sold by the Company and such subsidiaries in compliance with
applicable Federal and state securities Laws.
5.14. Material Changes. Except as disclosed in the SEC Reports: (a) 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; (b)
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; (c) 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; (d) there has not
been any change in the capital stock of the Company or any of its subsidiaries
other than the sale of the Notes 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 (e) there has not been any other event or change that would have,
individually or in the aggregate, a Material Adverse Effect.
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 and
each of its subsidiaries have fully complied with the Xxxxxxxx-Xxxxx Act of
2002; however auditor attestation of the Company's compliance is not currently
required.
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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 Notes.
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 Purchaser relating to this Agreement or the transactions contemplated
hereby.
5.18 Consents. Except 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 or any of its subsidiaries 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 or any of its subsidiaries 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.
5.19 Intellectual Property. To the Company's knowledge, the Company or its
subsidiaries own, or have the right to use, all patents, trademarks, service
marks, trade names, copyrights, licenses, trade secrets or other proprietary
rights necessary to their business as now conducted without conflicting with or
infringing upon the right or claimed right of any person or entity 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 and its
subsidiaries are 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 and its subsidiaries have not received any
communications alleging that the Company or any of its subsidiaries have
violated the patents, trademarks, service marks, trade names, copyrights or
trade secrets or other proprietary rights of any other person or entity. The
Company and its subsidiaries are not aware of any violation by a third party of
any of the Company's or its subsidiaries patents, trade marks, service marks,
trade names, copyrights, trade secrets or other proprietary rights.
5.20 Foreign Corrupt Practices Act. Neither the Company or any of its
subsidiaries nor any director, officer, agent, or other person acting on behalf
of the Company or any of its subsidiaries has, in the course of his or its
actions for or on behalf of the Company or any of its subsidiaries violated any
provision of the United States Foreign Corrupt Practices Act of 1977, as
amended, or the regulations there under.
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5.21 Other Subscription Agreements. The Company may simultaneously, with
the execution of this Agreement, enter into one or more subscription agreements
with other purchasers of Notes (the "Other Purchasers") with substantially the
same terms and conditions as this Agreement; and no Other Purchaser is
purchasing any securities of the Company on the Closing with terms and
conditions different from the terms and conditions of this Agreement.
6. ADDITIONAL COVENANTS OF COMPANY
6.1 Corporate Existence and Taxes. For as long as any Notes remain
outstanding, the Company and its subsidiaries shall, maintain their corporate
existence in good standing, and shall pay all taxes when due except for taxes
which the Company or its subsidiaries dispute in good faith and for which
adequate reserves are established on the Company's or its subsidiaries books and
records.
6.2 Use of Proceeds. The Company and/or its subsidiaries shall use all of
the net proceeds from the sale of all Notes for the funding of working capital,
planned capital investments and other general corporate purposes.
6.3 Publicity. Except as may be required by applicable law or regulation,
the Company shall not use, directly or indirectly, the Purchaser'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 Purchaser for the specific use contemplated or as otherwise required by
applicable law or regulation.
6.4 Reports. 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.
7. CONDITIONS TO CLOSING; DELIVERIES AT CLOSING
7.1 Conditions to Purchaser's Obligations to Close. The obligations of the
Purchaser to purchase the Notes offered hereunder are conditioned on the
fulfillment or waiver of the following:
(a) the execution and delivery of the Transaction Documents by the Company
and the execution and delivery of such other documents, opinions, certificates
and instruments that the Purchaser 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 and its subsidiaries shall have performed all agreements
which the Transaction Documents provide shall be performed on or before the date
of the Closing;
(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;
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(e) no order, judgment or decree of any court, arbitrator or governmental
authority shall enjoin or restrain the Purchaser from purchasing the Notes 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 debt.
7.2 Conditions to the Company's Obligations to Close. The obligations of
the Company to issue the Notes offered hereunder are conditioned on the
fulfillment or waiver of the following:
(a) the execution and delivery of this Agreement by the Purchaser;
(b) all representations and warranties of the Purchaser 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 Purchaser shall have performed all actions required
hereunder; and
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 constitute the full and entire understanding and agreement
between the parties hereto with regard to the subject matter hereof and thereof,
and no party hereto shall be able or bound to any other party hereto 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 hereto 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 Purchaser pursuant to the terms of this Agreement shall be in
writing and shall be deemed given when delivered personally, by facsimile,
electronic mail (or similar electronic transmission) with a hard copy to follow
by two day courier addressed to the intended recipient thereof at the addresses
of the parties hereto in the books and records of the Company or such other
address as a party hereto may request by notifying the other in writing.
11. INDEMNIFICATION
11. 1 Company Indemnification. In consideration of the Purchaser's
execution and delivery of the Transaction Documents to which it is a party and
acquiring the Notes 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
Purchaser and each other holder of the Notes and all of their affiliates,
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
"Purchaser 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 Purchaser Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Purchaser Indemnified Liabilities"), incurred by any
Purchaser 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 Purchaser 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 Purchaser 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 Notes, or (iii) the status of the Purchaser or
holder of the Notes as an investor in the Company.
11.2 Contribution; Mechanics and Procedures. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
12. EXPENSES
Any expenses of the Purchaser reasonably incurred in connection with the
Purchaser's prior, present and future investments in or otherwise relating to
the Company, including, without limitation, the transactions contemplated under
this Agreement, the Notes and any future financing of the Company, including,
without limitation, any and all advisory, legal, filing and other fees incurred
in connection therewith, whether incurred prior to or after the date hereof,
shall in each case be paid by the Company.
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13. NO STRICT CONSTRUCTION
The language used in this Agreement will be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rules of
strict construction will be applied against any party hereto.
14. 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.
15. SURVIVAL
All covenants, agreements, representations and warranties made by the
Company and the Purchaser herein and in the Transaction Documents shall survive
the execution of this Agreement, the delivery to the Purchaser of the Notes
being purchased and the payment therefor.
16. 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 Notes. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser,
including by merger or consolidation, except in accordance with the applicable
provisions of the Notes with respect to which the Company is in compliance. The
Purchaser may assign, without the consent of the Company, some or all of its
rights hereunder to any person to whom the Purchaser assigns or transfers Notes,
or the right to acquire Notes, in accordance herewith; provided, that such
transferee agrees in writing to be bound with respect to the transferred Notes
to the provisions hereof that apply to the transferring Purchaser, in which
event such assignee shall be deemed to be a Purchaser hereunder with respect to
such assigned rights.
17. 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 hereto and delivered
to the other party hereto; provided, that a facsimile or PDF 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
or PDF signature.
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18. HEADINGS
The headings of this Agreement are for convenience of reference and shall
not form part of, or affect the interpretation of, this Agreement.
19. 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.
* * * * *
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first written above.
COMPANY:
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
By:__________________________________
Name:
Title:
Price and Principal Amount of Notes: PURCHASER:
$_________ [____________________]
By:__________________________________
Name:
Title:
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EXHIBIT A
FORM OF NOTE
(see attached)
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EXHIBIT B
Pursuant to one or more Securities Subscription Agreements entered into on or
about March 23, 2010 (the transactions contemplated therein, the "March
Offering"), the Company issued 9% convertible debentures, which each contain
three-year terms and are convertible into shares of the Company's common stock
(the "Debentures"). The terms of the March Offering are subject to a "most
favored nations" clause which provides, that if the Company consummates a
subsequent financing or other transaction on terms and conditions more favorable
to another purchaser than the purchaser of such Debentures, the terms and
conditions of the March Offering shall be adjusted to reflect the more favorable
terms to such purchaser (including, at the Debenture subscriber's option, the
issuance of additional securities of the Company).
Pursuant to one or more Securities Subscription Agreements entered into on or
about November 9, 2010 and December 8, 2010 (the transactions contemplated
therein, the "November/December Offering"), the Company issued units, with each
unit comprising of (a) one share of the Company's common stock and (b) a
two-year warrant to purchase one share of the Company's common stock,
exercisable for (i) $0.55 per share if exercised in the first year following
such issuance date and (ii) $0.65 per share if exercised in the second year
following such issuance date (the "Units"). The terms of the November/December
Offering are subject to a "most favored nations" clause which provides that if
the Company consummates a subsequent financing or other transaction on terms and
conditions more favorable to another purchaser than the purchaser of such Units,
the terms and conditions of the November/December Offering shall be adjusted to
reflect the more favorable terms to such purchaser (including, at the Unit
subscriber's option, the issuance of additional securities of the Company).
The "most favored nations" clauses granted under the March Offering and the
November/December Offering are subject to the terms of one or more
Acknowledgements executed by the purchasers in such offerings on or about
February 14, 2011.
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