SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made as of this day
of January, 2002, by and among I.D. SYSTEMS, INC., a Delaware corporation (the
"Company"), and ___________________________ (the "Investor").
W I T N E S S E T H:
WHEREAS, the Investor desires to subscribe for, purchase and acquire
from the Company and the Company desires to sell and issue to the Investor
________ shares (the "Shares") of the Company's Common Stock, par value $0.01
per share (the "Common Stock"), upon the terms and conditions and subject to the
provisions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Investor subscribes for and agrees to purchase
and acquire from the Company and the Company agrees to sell and issue to the
Investor the Shares, in the manner set forth in Section 2 hereof, at a purchase
price of $8.00 per Share, yielding an aggregate purchase price of $
($____________) (the "Purchase Price").
2. TERMS OF PURCHASE AND SALE OF THE SHARES. The closing of the
transactions contemplated hereby (the "Closing") shall take place immediately
following the execution of this agreement at the offices of Sanders Morris
Harris Inc., or at such other time and place as the parties may agree upon. At
the Closing, the Investor shall deliver to the Company $___________ by wire
transfer of immediately available funds pursuant to wire transfer instructions
given to the Investor by the Company, and the Company shall deliver to the
Investor a certificate, registered in the name of the Investor, representing
_________ shares of Common Stock. At the Closing, the Company shall accept
subscriptions for a minimum of 500,000 shares of Common Stock at a purchase
price of $8.00 per share.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In order to induce
the Investor to enter into this Agreement, the Company represents and warrants
the following:
(a) Authority. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has all requisite right, power and authority to execute,
deliver and perform this Agreement.
(b) Enforceability. The execution, delivery and performance of
this Agreement by the Company have been duly authorized by all
requisite corporate action. This Agreement has been duly executed and
delivered by the Company, and, upon its execution by the Investor,
shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except to the
extent that its enforcement is limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement
of creditors' rights generally and by general principles of equity.
(c) No Violations. The execution, delivery and performance of
this Agreement by the Company do not and will not violate or conflict
with any provision of the Company's Certificate of Incorporation or
Bylaws and do not and will not, with or without the passage of time or
the giving of notice, result in the breach of, or constitute a
default, cause the acceleration of performance, or require any consent
under, or result in the creation of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, any material
instrument or agreement to which the Company is a party or by which
the Company or its properties may be bound or affected.
(d) Capitalization. The authorized capital stock of the Company
consists of: 15,000,000) shares of common stock, par value $0.01 per
share, and 5,000,000 shares of preferred stock, par value $0.01 per
share. As of the Closing, 5,871,000 shares of Common Stock (prior to
giving effect to the issuance of the Shares) will be issued and
outstanding. Upon issuance in accordance with the terms of this
Agreement against payment of the Purchase Price therefor the Shares
will be duly and validly authorized and issued, fully paid and
nonassessable, and, assuming the accuracy of the representations and
warranties of the Investor, will be issued in accordance with a valid
exemption from the registration or qualification provisions of the
Securities Act of 1933, as amended (the "Securities Act"), and any
applicable state securities laws (the "State Acts").
(e) Exchange Act Filing. All reports and statements required to
be filed by the Company under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations
thereunder, due at or prior to the date of this Agreement have been
made. Such filings, together with all documents incorporated by
reference therein, are referred to as "Exchange Act Documents." Each
Exchange Act Document, as amended, conformed in all material respects
to the requirements of the Exchange Act and the rules and regulations
thereunder, and no Exchange Act Document, as amended, at the time each
such document was filed, included any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) Company Financial Statements. The audited financial
statements, together with the related notes of the Company at December
31, 2000 and 1999, and for the years then ended, and the unaudited
financial statements of the Company at September 30, 2001, and for the
nine months then ended, (collectively, the "Company Financial
Statements") included in the Company's Annual Report on Form 10-KSB
for the year 2000 and its Quarterly Report on Form 10-QSB for the
third quarter of 2001, respectively, fairly present in all material
respects, on the basis stated therein and on the date thereof, the
financial position of the Company at the respective dates therein
specified and its results of operations and cash flows for the periods
then ended. To the best knowledge of the Company, such statements and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis except as
expressly noted therein.
(g) No Material Liabilities. Except as disclosed on Schedule
2(iii) to the Placement Agent Agreement, since September 30, 2001, the
Company has not incurred any material liabilities or obligations,
direct or contingent, except in the ordinary course of business, and
there has not been any material adverse change, or to the knowledge of
the Company, any development involving a prospective material adverse
change (so far as the Company may now foresee), in the condition
(financial or otherwise), business, or results of operations of the
Company or any change in the capital or increase in the long-term debt
of the Company, nor has the Company declared, paid, or made any
dividend or distribution of any kind on its capital stock.
(h) No Disputes against Company. Except as disclosed in the
Exchange Act Documents or as described on Schedule 2(vii) to the
Placement Agent Agreement, there is no material pending or, to the
knowledge of the Company, threatened (a) action, suit, claim,
proceeding, or investigation against or affecting the Company, at law
or in equity, or before or by any Federal, state, municipal, or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (b) arbitration proceeding
against or affecting the Company, (c) governmental inquiry against or
affecting the Company, or (d) any action or suit by or on behalf of
the Company pending or threatened against others.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. In order to induce
the Company to enter into this Agreement, the Investor represents and warrants
the following:
(a) Authority. The Investor has all requisite right, power and
authority to execute, deliver and perform this Agreement.
(b) Enforceability. The execution, delivery and performance of
this Agreement by the Investor have been duly authorized by all
requisite partnership or corporate action, as the case may be. This
Agreement has been duly executed and delivered by the Investor, and,
upon its execution by the Company, shall constitute the legal, valid
and binding obligation of the Investor, enforceable in accordance with
its terms, except to the extent that its enforcement is limited by
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by
general principles of equity.
(c) No Violations. The execution, delivery and performance of
this Agreement by the Investor do not and will not, with or without
the passage of time or the giving of notice, result in the breach of,
or constitute a default, cause the acceleration of performance, or
require any consent under, or result in the creation of any lien,
charge or encumbrance upon any property or assets of the Investor
pursuant to, any material instrument or agreement to which the
Investor is a party or by which the Investor or its properties may be
bound or affected, and, do not or will not violate or conflict with
any provision of the articles of incorporation or bylaws, partnership
agreement, operating agreement, trust agreement or similar
organizational or governing document of the Investor, as applicable.
(d) Knowledge of Investment and its Risks. The Investor has
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of Investor's investment in
the Shares. The Investor understands that an investment in the Company
represents a high degree of risk and there is no assurance that the
Company's business or operations will be successful. The Investor has
considered carefully the risks attendant to an investment in the
Company, and that, as a consequence of such risks, the Investor could
lose Investor's entire investment in the Company.
(e) Investment Intent. The Investor hereby represents and
warrants that (i) the Shares are being acquired for investment for the
Investor's own account, and not as a nominee or agent and not with a
view to the resale or distribution of all or any part of the Shares,
and the Investor has no present intention of selling, granting any
participation in or otherwise distributing any of the Shares within
the meaning of the Securities Act and (ii) the Investor does not have
any contracts, understandings, agreements or arrangements with any
person and/or entity to sell, transfer or grant participations to such
person and/or entity, with respect to any of the Shares.
(f) Accredited Investor. The Investor is an "Accredited Investor"
as that term is defined by Rule 501 of Regulation D promulgated under
the Securities Act.
(g) Disclosure. The Investor has reviewed information provided by
the Company in connection with the decision to purchase the Shares,
including the Company's publicly-available filings with the SEC. The
Company has provided the Investor with all the information that the
Investor has requested in connection with the decision to purchase the
Shares. The Investor further represents that Investor has had an
opportunity to ask questions and receive answers from the Company
regarding the business, properties, prospects and financial condition
of the Company. All such questions have been answered to the full
satisfaction of the Investor.
(h) No Registration. The Investor understands that Investor must
bear the economic risk of Investor's investment in the Company for an
indefinite period of time. The Investor further understands that (i)
neither the offering nor the sale of the Shares has been registered
under the Securities Act or any applicable State Acts in reliance upon
exemptions from the registration requirements of such laws, (ii) the
Shares must be held by he, she or it indefinitely unless the sale or
transfer thereof is subsequently registered under the Securities Act
and any applicable State Acts, or an exemption from such registration
requirements is available, (iii) except as set forth in the
Registration Rights Agreement between the Company and the Investor,
the Company is under no obligation to register any of the Shares on
the Investor's behalf or to assist the Investor in complying with any
exemption from registration, and (iv) the Company will rely upon the
representations and warranties made by the Investor in this
Subscription Agreement in order to establish such exemptions from the
registration requirements of the Securities Act and any applicable
State Acts.
(i) Transfer Restrictions. The Investor will not transfer any of
the Shares unless such transfer is registered or exempt from
registration under the Securities Act and such State Acts, and, if
requested by the Company in the case of an exempt transaction, the
Investor has furnished an opinion of counsel reasonably satisfactory
to the Company that such transfer is so exempt. The Investor
understands and agrees that (i) the certificates evidencing the Shares
will bear appropriate legends indicating such transfer restrictions
placed upon the Shares, (ii) the Company shall have no obligation to
honor transfers of any of the Shares in violation of such transfer
restrictions, and (iii) the Company shall be entitled to instruct any
transfer agent or agents for the securities of the Company to refuse
to honor such transfers.
(j) Principal Address. The Investors principal residence, if an
individual, or principal executive office, if an entity, is set forth
on the signature page of this Subscription Agreement.
5. FURTHER ASSURANCES. The parties will, upon reasonable request,
execute and deliver all such further assignments, endorsements and other
documents as may be necessary in order to perfect the purchase by the Investor
of the Shares.
6. ENTIRE AGREEMENT; NO ORAL MODIFICATION. This Agreement contains the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings with respect
thereto and may not be amended or modified except in a writing signed by both of
the parties hereto.
7. BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, successors
and assigns; however, nothing in this Agreement, expressed or implied, is
intended to confer on any other person other than the parties hereto, or their
respective heirs, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the United States of America and
the State of Delaware, both substantive and remedial. Exclusive venue and
jurisdiction for any action arising hereunder shall lie in the court of
competent jurisdiction located in New Castle County, Delaware, and the parties
specifically agree to submit to such jurisdiction and waive any objections to
such venue.
10. PREVAILING PARTIES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party shall be entitled to receive and the
nonprevailing party shall pay upon demand reasonable attorneys' fees in addition
to any other remedy.
11. HEADINGS. The section headings herein are included for convenience
only and are not to be deemed a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
I.D. SYSTEMS, INC., a Delaware corporation
By:
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Name:
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Its:
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INVESTOR
By:
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Principal Residence or Executive Office