EXHIBIT 10.42
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 Ledelle Holdings Limited
(the
"Subscriber") in connection with the subscription by the Subscriber
for 9%
Convertible Debentures (the "Convertible Debentures") of
Environmental Solutions
Worldwide, Inc., a Florida corporation (the "Company"). The Company
is offering
an aggregate face amount of up to $15 million (U.S.) of Convertible
Debentures
convertible into common stock $0.001 par value per share, of the
Company
("Shares"). The terms of the Convertible Debentures, including the
terms on
which the Convertible Debentures may be converted into Shares, are
set forth in
the form of Convertible Debentures attached hereto as Exhibit A.
The
solicitation of this Subscription and, if accepted by the Company,
the offer and
sale of Convertible Debentures are being made in reliance upon the
provisions of
the Securities Act of 1933, as amended (the "Act"). The Convertible
Debentures
and the Shares issuable upon conversion or exercise thereof are
sometimes
referred to herein as the "Securities". The Subscriber wishes to
subscribe for
the principal amount of the Convertible Debentures set forth 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 Convertible Debentures 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 to the Company on the day so
directed,
against the Company's delivery of Convertible Debentures subscribed
for.
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 Securities 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, to comply with applicable law. In making the
investment
decision to purchase the Convertible Debentures 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, 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 ended December 31, 2007, and
Form 10-Q
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.
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2.3 Economic Risk. The Subscriber
understands and acknowledges that an
investment in the Convertible Debentures 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 Convertible Debentures.
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 conversion of the Convertible
Debentures 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
conversion of the Convertible Debentures do, 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 conversion
or exercise
as the case may be) 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 Convertible
Debentures or
Shares other than as provided in the Registration Rights Agreement
and that 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 Convertible Debentures or the
Shares, 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.
2.8 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 (if
necessary), 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.
2.9 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.
2.10 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.
2.11 Acknowledgment. The Subscriber
understands that the Securities 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
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 Convertible Debentures
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 conversion, and subject to the Company's transfer
agent's
receipt of a legal opinion from legal counsel, all certificates
representing the
Shares into which the Convertible Debentures are converted shall
bear a legend.
2
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"THE CONVERTIBLE DEBENTURES 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
Securities and Exchange Commission (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-Q. 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.
5.3 Authorization. Except for the
possible need to obtain shareholder
approval to increase available Shares in treasury for issuance, 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 (except as set
forth
herein) issuable upon conversion of the Convertible Debentures have
been taken,
and the Transaction Documents constitute valid and legally binding
obligations
of the Company, enforceable in accordance with their respective
terms. It is
expressly understood that in the event the Company should have
insufficient
shares available in treasury upon conversion of a Debenture, it
will use its
best efforts to obtain shareholder approval to increase its
authorized and
unissued Shares. "Transaction Documents" means, collectively, this
Agreement,
the Registration Rights Agreement, the Escrow Agreement and the
Convertible
Debentures 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 Convertible
Debenture and Common Stock. When
executed and delivered in accordance with the terms hereof for the
consideration
expressed herein, the Convertible Debentures 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
Convertible Debentures,
free and clear of all liens, claims, encumbrances and pre-emptive
rights. The
Shares issuable upon conversion of the Convertible Debentures, 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 year ended December 31,
2007 and Form
10-Q 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
dat