DATED 19 July 2005
------------------
(1) INVESTEC BANK (UK) LIMITED
(2) ENOVA SYSTEMS, INC.
(3) THE DIRECTORS OF ENOVA SYSTEMS, INC.
PLACING AGREEMENT
in connection with an application to join
AIM
Xxxxxxxx Xxxxxx XXX
000 Xxxxxx
Xxxxxx XX0X 0XX
Tel: 000 0000 0000
Fax: 000 0000 0000
(JGE/I24/6)
CONTENTS
Clause Page
1. Definitions 1
2. Conditions 6
3. Placing and Underwriting obligations 7
4. Authorisations and capacity of Investec 7
5. Obligations prior to Admission 8
6. Undertakings prior to Admission 9
7. Completion of the Placing 10
8. Undertakings following Admission 11
9. Commissions, fees and expenses 14
10. Warranties 14
11. Disclaimer and indemnities 15
12. Termination 17
13. General and interpretation 18
14. Status of the Company 19
15. Notices 19
16. Counterparts 20
17. Governing Law 20
Schedule 1 - The Directors 22
Schedule 2 23
Part A - Warranties 23
Part B - Warranty confirmation letter 31
Part C - Deed of Adherence 32
Schedule 3 33
Part A - Documents to be delivered to Investec 33
Part B - Documents to be filed with the London Stock Exchange 35
Part C - Documents in the agreed form 35
PAGE 1
THIS AGREEMENT is made the 19th day of July 2005
BETWEEN:
(1) INVESTEC BANK (UK) LIMITED (incorporated in England and Wales with
registered no. 489604) whose registered office is at 0 Xxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX, acting through its divisions Investec Investment Banking
and Investec Securities ("Investec");
(2) ENOVA SYSTEMS, INC. (a corporation incorporated in California, USA with
corporation no. C0775424) whose principal offices are at 00000 Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, XXX (the "Company"); and
(3) THE SEVERAL PERSONS whose names and addresses are set out in Schedule 1
(the "Directors").
BACKGROUND:
(A) The Company has an authorised and issued share capital as set out in
paragraph 2 of Part 6 of the Admission Document.
(B) The existing issued shares of Common Stock are traded on the OTC Bulletin
Board in the US under the symbol `ENVA'.
(C) The Company wishes to obtain the Admission of its issued and to be issued
shares of common stock, no par value, to AIM, and wishes to raise
(pound)11.5 million pursuant to the Placing.
(D) The Board of Directors of the Company has approved a 1 for 45 stock
consolidation of the Common Shares of the Company due to become effective
prior to such Admission to AIM.
(E) Investec has agreed, on the terms and subject to the conditions of this
Agreement, to act as agent for the Company in respect of the Placing
Shares, to use its reasonable endeavours to procure Placees for an
aggregate of 5,350,000 Common Shares at the Placing Price, and to the
extent that it is in default thereof, itself to subscribe as principal for
such Placing Shares.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement, the following words and expressions have the following
meanings, unless the context requires otherwise:-
"'A' Preferred Stock" shares of series A convertible preferred
stock, no par value, in the capital of the
Company;
"Accounts" the audited balance sheet and the audited
profit and loss account of the Company for
the financial year ended on the Balance Sheet
Date;
"Accountants Report" the short form report on the results of the
Company for the three (3) years ended on the
Balance Sheet Date prepared by the Reporting
Accountants and addressed to the Company and
to Investec in the form set out in Section A
of Part 3 of the Admission Document;
"Admission" the admission to AIM of all the issued and to
be issued Common Shares (including the
Placing Shares) becoming effective as
provided for in Rule 6 of the AIM Rules;
"Admission Document" the document in the agreed form to be
published by the Company pursuant to the AIM
PAGE 2
Rules in connection with the Placing and
Admission and which comprises an `admission
document' under the AIM Rules;
"Admission Application" the application by the Company to the London
Stock Exchange for Admission in the form
required by the AIM Rules;
"Affiliate" any holding company of Investec or any
subsidiary of any such holding company and
the current and former directors, officers
and employees of each of such persons and of
Investec as the case may be;
"AIM" the market of that name operated by the
London Stock Exchange;
"AIM company" a company whose securities are admitted to
trading on AIM;
"AIM Rules" the `AIM Rules for Companies' (including the
guidance notes thereto) published by the
London Stock Exchange governing, inter alia,
admission to AIM and the continuing
obligations of AIM companies (in force with
effect from 1 July 2005, as may be amended
from time to time);
"'B' Preferred Stock" shares of series B convertible preferred
stock, no par value, in the capital of the
Company;
"Balance Sheet Date" 31 December 2004;
"Board" the Board of Directors of the Company from
time to time or a duly authorised committee
of the Board;
"Board Resolutions" the resolutions of the Board in the agreed
form approving, inter alia, the Placing,
authorising the Admission Application and
approving the Issue Documents;
"Business Day" any day on which banks in the City of London
are open for business (excluding Saturdays);
"California Corporations the California Corporations Code;
Code"
"Combined Code" the principles of good governance and code of
best practice appended to, but not forming
part of, the Listing Rules;
"Common Shares" shares of common stock, no par value, in the
capital of the Company;
"Company's UK Solicitors" Field Xxxxxx Xxxxxxxxxx of 00 Xxxx Xxxxxx,
Xxxxxx XX0X 0XX;
"Company's US Lawyers" Xxxx Xxxxx LLP of Xxx Xxxxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxxxx XX 00000, XXX;
"Conditions" the conditions set out in clause 2.1;
"Executive Directors" Xxxxx Xxxxxxx and Xxxxx Xxxxxxx;
"FSMA" the Financial Services and Markets Xxx 0000,
as amended (including pursuant to the Market
Abuse Regulations) and including any
regulations made pursuant thereto;
"Indemnified Person" Investec and/or any of its Affiliates;
PAGE 3
"IRS" the Internal Revenue Service of the
Department of the Treasury in the US;
"Issue Documents" the Press Announcement, the Admission
Document, the Presentation and the Placing
Letter;
"Lapse Date" 9 August 2005, if any of the Conditions has
not been fulfilled (or, where appropriate,
waived by Investec) by 5.00 pm on that date;
"Legal Due Diligence Report" the report in the agreed form on the Company
and its business, assets and liabilities
prepared by the Company's US Lawyers and
addressed to the Company and to Investec;
"Listing Rules" the Listing Rules from time
to time of the UK Listing Authority made by
it under Part VI of FSMA;
"Lock-In Deed" the deeds in the agreed form to be entered
into by Jagen Pty Limited in favour of the
Company and Investec in respect of its
holding of Common Shares;
"London Stock Exchange" London Stock Exchange plc;
"Long Form Report" the long form accountants report on the
Company prepared by the Reporting Accountants
in connection with the Placing and addressed
to Investec and to the Directors;
"Market Abuse Regulations" the Financial Services and Markets Xxx 0000
(Market Abuse) Regulations 2005;
"NASD" National Association of Securities Dealers in
the US;
"NASDAQ" the National Association of Securities
Dealers Automated Quotation System, a
national securities exchange in the US which
is owned and operated by National Stock
Markets, Inc.;
"Nominated Adviser and the agreement dated the date of this
Broker Agreement" Agreement between the Company (1) the
Directors (2) and Investec (3) relating to
the appointment of Investec as the Company's
Nominated Adviser and Broker;
"Non-Executive Directors" Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xx Xxxxxxx
Xxxxxx, Xxxxxx Xxxxxx and Xxxx Xxxxxxx;
"OTC Bulletin Board" the Over The Counter Bulletin Board quotation
medium that securities dealers may use to
enter, update and retrieve quotation
information for securities trading over the
counter that are neither listed on NASDAQ or
on a primary national securities exchange;
"OTC Bulletin Board Rules" the rules and regulations (including of the
NASD and the SEC) applicable to a company
whose shares are traded on the OTC Bulletin
Board in the US;
"'P' Proof" the placing proof dated 19 July 2005 of the
Admission Document in the agreed form sent by
Investec to prospective Placees with the
Placing Letter in connection with the
Placing;
PAGE 4
"Pathfinder Admission the pathfinder admission document in the
Document" agreed form used to market the Placing Shares
to Placees; "Placees" persons who subscribe
for Placing Shares pursuant to this
Agreement;
"Placing" the placing of the Placing Shares pursuant to
this Agreement;
"Placing Letter" the letter in the agreed form sent by
Investec to prospective Placees in connection
with the Placing;
"Placing List" has the meaning in clause 7.2.1;
"Placing Price" 215p per Placing Share;
"Placing Shares" 5,350,000 new Common Shares proposed to be
issued by the Company to Placees pursuant to
the Placing;
"Presentation" the Company's marketing presentation given to
certain potential institutional investors in
the Company;
"Press Announcement" the press announcement in the agreed form
containing details of the Placing;
"Registrars" Computershare Investor Services plc of 00
Xxxxx Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
"Regulation S" Regulation S of the US Securities Act;
"Regulatory Information any channel recognised as a channel for the
Service" or "RIS" dissemination of information as defined in
the glossary of terms in the AIM Rules;
"Reporting Accountants" Xxxxx Xxxxx of 0 Xxxxxxxxxx Xxxxxx, Xxxxxx
XX0 0XX;
"RestrictedShares" Common Shares or any interest in any Common
Shares which are (a) beneficially owned by
each Director at the date of this Agreement;
(b) derived from such shares; (c) purchased
by each Director; and (d) issued to each
Director on the exercise of share options or
other rights to subscribe;
"SEC" US Securities and Exchange Commission;
"SEC Regulations" the rules and regulations of the SEC in so
far as they apply to the Company;
"Specified Event" an event occurring or matter arising on or
after the date of this Agreement and before
Admission which if it had occurred before the
date of this Agreement would have rendered
any of the Warranties untrue or incorrect in
any material respect;
"Stock Consolidation" the 1 for 45 stock consolidation of the
Common Shares of the Company approved by the
Directors on 2 June 2005 and due to become
effective on or before 26 July 2005;
"tax" or" taxation" any form of taxation whenever created or
imposed and whether of the US (or any
individual State of the US), the United
Kingdom or elsewhere and, without prejudice
PAGE 5
to the generality of the foregoing, includes
income tax, corporation tax, capital gains
tax, value added tax, inheritance tax, stamp
duty, stamp duty reserve tax, withholding
tax, rates, customs and excise duties,
national insurance and any other taxes,
levies, duties or imposts similar to,
replaced by or replacing any of them and all
penalties, fines and interest included in or
relating to any tax assessment therefor,
regardless of whether such taxes, penalties,
charges and interest are directly or
primarily chargeable against or attributable
to the Company or any other person, firm or
company;
"Termination Date" the date (if any) on which Investec
terminates its obligations under this
Agreement pursuant to clause 12;
"VAT" United Kingdom value added tax;
"US" the United States of America;
"US Person" has the meaning given to it in Part 5 of the
Admission Document;
"US Securities Act" the US Securities Act of 1933 (as amended);
"Verification Notes" the verification notes in the agreed form
prepared by the Company's UK Solicitors
comprising questions and the answers to such
questions for the purpose of confirming the
accuracy of the information contained in the
Presentation, the Pathfinder Admission
Document and the Admission Document;
"Warranties" the warranties contained or referred to in
clauses 10.1 and 10.2, and Part A of Schedule
2;
"Working Capital Report" the report, in the agreed form, by the
Reporting Accountants addressed to the
Company and Investec on the cash flow and
working capital projections of the Company
for the period ending 31 December 2006.
1.2 Any reference to a document being "in the agreed form" means in the form of
the draft or proof thereof signed for the purpose of identification by
Xxxxxxxx Xxxxxx LLP (on behalf of Investec) and the Company's UK Solicitors
(on behalf of the Company and the Directors) with such alterations (if any)
as may be agreed by or on behalf of Investec and the Company. A list of
documents in the agreed form is set out in Part C of Schedule 3.
1.3 Xxx Xxxxxxxxxxxxxx Xxx 0000 shall apply to this Agreement in the same way
as it applies to an enactment.
1.4 In this Agreement, the expressions "subsidiary undertaking", "subsidiary"
and "holding company" shall in relation to Investec have the meanings given
thereto in section 736 of the Companies Xxx 0000.
1.5 References in this Agreement to Recitals, clauses and Schedules are to
Recitals and clauses of and Schedules to this Agreement.
1.6 Headings are included in this Agreement for convenience only and shall be
disregarded in its interpretation.
1.7 A reference to a statute or statutory provision includes a reference:-
1.7.1 to that statute or provision as from time to time modified or
re-enacted (but in the case of a modification or re-enactment
effected after the date of Admission, only so far as it applies
in relation to a period before Admission);
PAGE 6
1.7.2 to any repealed statute or statutory provision which it re-enacts
(with or without modification); and
1.7.3 to any subordinate legislation made under the relevant statute.
1.8 All commissions, fees and other expenses payable under or pursuant to this
Agreement are stated exclusive of VAT, if any, payable thereon.
2. CONDITIONS
2.1 The obligations of Investec under this Agreement are conditional upon:-
2.1.1 the execution and delivery by the parties thereto of the
Nominated Adviser and Broker Agreement;
2.1.2 the execution and delivery by the parties thereto of the Lock-In
Deed;
2.1.3 the Admission Document having been published in accordance with
Rule 3 of the AIM Rules on the date of this Agreement;
2.1.4 the Stock Consolidation having become effective;
2.1.5 the fulfilment by the Company and the Directors of their
obligations under clauses 5.1 and 6;
2.1.6 the passing without any amendment not approved by Investec of the
Board Resolutions;
2.1.7 the authorities given in clause 4 remaining in full force and
effect;
2.1.8 any supplementary admission document which may be required
pursuant to the AIM Rules having been approved by Investec and
published before Admission;
2.1.9 none of the Warranties or undertakings provided by this Agreement
being or having become untrue, inaccurate or misleading in any
material respect at any time before Admission, and no fact or
circumstance having arisen which would constitute a material
breach of any of the Warranties or undertakings provided by this
Agreement or constitute a Specified Event;
2.1.10 this Agreement not having been terminated by Investec prior to
Admission pursuant to clause 12;
2.1.11 the delivery to Investec by no later than 5.00 pm on the Business
Day immediately preceding the date upon which Admission is to
occur of the duly signed warranty confirmation letter set out in
Part B of Schedule 2; and
2.1.12 Admission occurring by not later than 8.30 am on 26 July 2005;
provided that each of the parties to this Agreement shall perform its
obligations hereunder until such time (if any) as any of such conditions
shall have become incapable of being satisfied (or waived by Investec).
2.2 The Company and (so far as it is within their powers) the Directors will
use all reasonable endeavours to procure the fulfilment of the Conditions
by the times and dates stated therein and in particular, will provide such
information and documents, pay such fees, give such undertakings and do all
such acts and things as may be reasonably required to enable Admission to
take place.
2.3 If any of the Conditions is not fulfilled (or, where appropriate, waived by
Investec) by 5.00 pm on the Lapse Date, this Agreement shall cease and
determine and:-
PAGE 7
2.3.1 Investec shall return to prospective Placees in accordance with
the Issue Documents any monies received from them;
2.3.2 no party to this Agreement will have any claim against any other
party for costs, damages, compensation or otherwise except that:-
(a) such termination shall be without prejudice to any accrued
rights or obligations under this Agreement; and
(b) the provisions of clauses 2.3, 11, 13, 14, 15, 16 and 17 and
shall remain in full force and effect;
2.3.3 the Company shall pay to Investec the fee for its corporate
finance advice in connection with the Placing as stated in clause
9.1.1;
2.3.4 the Company shall reimburse to Investec all the costs and
expenses referred to in clause 9.2 below.
3. PLACING AND UNDERWRITING OBLIGATIONS
3.1 Subject to the terms and conditions of this Agreement, Investec shall:-
3.1.1 on behalf of and as agent for the Company (which appointment the
Company hereby confirms) use its reasonable endeavours to procure
Placees to subscribe for the Placing Shares at the Placing Price
and subject to the terms and conditions of, and on the basis of
the information contained in, the Issue Documents; and
3.1.2 subscribe as principal at the Placing Price, on the terms and
conditions and on the basis of the information contained in, the
Issue Documents for any Placing Shares which are not subscribed
for by Placees.
3.2 Investec shall effect the Placing by sending Placing Letters to all Placees
for completion and counter-signature by such Placees by way of confirmation
of the commitments of such Placees to subscribe for Placing Shares on the
basis set out therein.
3.3 The parties to this Agreement agree and acknowledge that the Placing Shares
have not been and will not be registered under the US Securities Act, and
may not be offered or sold within the US or to, or for the account or
benefit of, US Persons except in accordance with Regulation S or pursuant
to an exemption from the registration requirements of the US Securities
Act. Investec confirms that (except pursuant to an effective registration
statement or pursuant to an available exemption from the registration
requirement of the US Securities Act) it has not offered and sold and will
not offer and sell the Placing Shares, within the US or to, or for the
account or benefit of, US Persons.(i) as part of its distribution at any
time and (ii) otherwise until one (1) year after the later of the date of
commencement of the Placing and the closing date of the Placing. It is
acknowledged that the Placing Letters will contain a confirmation from
Placees (and share certificates for the Placing Shares will bear a legend
to the similar effect) to the following effect:
"The securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of their
distribution at any time and (ii) otherwise until one (1) year
after the later of the commencement of the Placing or the closing
date of the Placing, in either case except in accordance with
Regulation S under the Securities Act. Terms used above have the
meanings given to them by Regulation S under the Securities Act."
4. AUTHORISATIONS AND CAPACITY OF INVESTEC
4.1 The Company hereby irrevocably appoints Investec on the terms of this
Agreement as its agent in connection with the Placing and the application
for Admission, and to do all things on behalf of the Company which may be
reasonably necessary or desirable in connection with the Placing and
PAGE 8
Admission, including the power to appoint agents to act on its behalf in
connection with its obligations under with this Agreement, and:- 4.1.1
confirms that the foregoing appointment confers on Investec all powers,
authorities and discretions on behalf of the Company which are necessary
for or reasonably incidental to the making of the Placing on the basis set
out in this Agreement and in the Issue Documents;
4.1.2 as security for its obligations under this Agreement, the Company
hereby irrevocably appoints any director of Investec as its
attorney to sign, seal, execute and deliver, acknowledge and
register any document and do any act or thing which may be
necessary for or reasonably incidental to the Placing, provided
that such appointment as attorney shall terminate on the
termination of this Agreement or on such later date as may be
agreed in writing between the Company and Investec; and
4.1.3 hereby agrees to ratify and confirm everything that Investec
shall lawfully and properly do in the exercise of, and in
accordance with, such appointment as agent, appointment as
attorney, powers, authorities and discretions.
4.2 The Company and the Directors acknowledge that neither Investec nor any of
its Affiliates or advisers is responsible to the Company or to any
Directors for verifying the accuracy and/or fairness of any information
published in the Issue Documents or otherwise published by the Company,
unless it or any of its advisers has accepted specific responsibility in
writing for such verification.
4.3 Any transaction carried out by Investec pursuant to this Agreement will be
carried out at the request of the Company and as agent of the Company and
not in respect of Investec's own account (save pursuant to clause 3.1.2).
Investec shall be entitled to receive and/or retain and/or allow its agents
to retain any commission or brokerages paid to it or its agents in
connection with the implementation of any such transactions and shall not
be under any liability to account for any benefit or advantage derived from
such transaction by it or any company connected with it. Neither Investec
nor any of its Affiliates shall be responsible for any loss or damage to
any person arising from any such transaction or for any insufficiency or
alleged insufficiency of the terms on which any of the Placing Shares may
be procured to be subscribed by Investec or for the timing of any such
subscription unless such loss or damage was attributable to (i) the fraud,
bad faith, negligence or wilful default of Investec, (ii) the material
breach by Investec of its obligations under this Agreement or (iii) breach
by Investec of the FSMA, the AIM Rules or the conduct of business
provisions of the FSMA.
5. OBLIGATIONS PRIOR TO ADMISSION
5.1 The Company shall prior to publication of the Issue Documents:-
5.1.1 hold a meeting of the Board at which the Board Resolutions shall
be passed; and
5.1.2 deliver or cause to be delivered to Investec (to the extent that
Investec has not already received the same) or as it shall direct
the documents listed in Part A of Schedule 3, save that Investec
may, in its absolute discretion and subject to such conditions as
it may determine, extend the time for delivery or waive the
requirement for delivery of any of the documents listed in Part A
of Schedule 3.
5.2 The Company agrees to offer the Placing Shares on and subject to the terms
and conditions and on the basis of the information set out in the Admission
Document (or the 'P' Proof of the Admission Document) and the Placing
Letters.
5.3 The Company will procure that:-
5.3.1 the Admission Document is published as required by the AIM Rules;
PAGE 9
5.3.2 sufficient copies of the Admission Document are made available at
the registered office of the Company and at the other locations
and for the period(s) required by the London Stock Exchange; and
5.3.3 the Press Announcement is published via an RIS.
5.4 Subject to Investec receiving confirmation of fulfilment of the obligations
of the Company pursuant to clauses 5.1 and 5.3, Investec shall use its
reasonable endeavours to effect the Placing by procuring and seeking to
procure subscribers for the Placing Shares.
5.5 The Company hereby confirms its instructions to Investec to apply on behalf
of the Company to the London Stock Exchange for Admission, and in
connection with the Admission Application:-
5.5.1 the Company and each of the Directors will use its or his
reasonable endeavours to obtain Admission on or before 26 July
2005 (and in any event not later than the Lapse Date) and will,
at the Company's expense, supply or procure the supply of all
such information, give or procure the giving of all such
undertakings by the Company, and execute or procure the supply of
all such documents by the Company and do or procure to be done by
the Company, all such things as may be reasonably required to
obtain Admission, and comply with the requirements of the London
Stock Exchange, the AIM Rules and any requirements of law; and
5.5.2 Investec will use its reasonable endeavours to assist the Company
in connection with the Admission Application and in obtaining
Admission.
5.6 The Directors and the Company hereby authorise Investec to instruct the
Registrars in connection with the Placing.
6. UNDERTAKINGS PRIOR TO ADMISSION
6.1 The Company and the Directors hereby undertake that any publicity issued by
or on behalf of the Company in connection with the Placing and/or
Admission, including any statement to or interview with the media, shall be
consistent with the Issue Documents and shall be agreed with Investec in
advance (to the maximum practicable extent and subject to such conditions
as Investec may reasonably impose in the case of interviews or conferences
with journalists or other representatives of the media).
6.2 Save as expressly required hereunder by law or by the London Stock
Exchange, no public announcement or communication concerning the Company,
the Placing or this Agreement which is or may be material in relation to
the Placing or the issue of the Placing Shares may be made or despatched
between the date of this Agreement and Admission (both days inclusive) or
at any time in relation to the termination of this Agreement without the
consent of Investec as to the content, timing and manner of making or
despatch thereof.
6.3 The Company and the Directors hereby undertake that they will not prior to
Admission:-
6.3.1 enter into or terminate any commitment or agreement; or
6.3.2 put the Company in a position where it is obliged to announce
that any commitment or agreement may be entered into or
terminated;
which, in either case, is material in the context of the Company or the
Placing or the issue of the Placing Shares, without the prior written
consent of Investec.
6.4 The Company hereby undertakes that, if following publication of the
Admission Document and prior to Admission any significant change occurs
affecting any matter contained in the Admission Document whose inclusion
was required by the AIM Rules, or a significant new matter arises which
would have been required to have been included, in the Admission Document
or there is a significant inaccuracy in the Admission Document (in each
case as referred to or, in the case of `significant' as defined in, section
PAGE 10
87G(4) FSMA as if the Admission Document was a 'prospectus' within the
meaning of the FSMA and the Placing Shares were being offered to the public
in the United Kingdom, whether or not there is a breach of a Warranty),
then without prejudice to clauses 10 and 12:-
6.4.1 the Company shall notify Investec as soon as reasonably
practicable and shall, in conjunction with Investec, deal with
such change, new matter or inaccuracy as if the Admission
Document was a 'prospectus' within the meaning of the FSMA and
the Placing Shares were being offered to the public in the United
Kingdom; and
6.4.2 the Company shall, in conjunction with Investec, take all such
steps and make all such announcements and publish all such
documents (including, if required, a supplementary admission
document) as may be required by law, by the AIM Rules or by the
London Stock Exchange in the circumstances (any such steps or
documents to be in a manner or form approved by Investec).
6.5 The Company and each of the Directors severally undertakes in so far as
it/he is able not to cause and to use all reasonable endeavours not to
permit any Specified Event to occur before the earlier of Admission or
termination of this Agreement.
6.6 The Company and each of the Directors agrees that it or he (as the case may
be) shall notify Investec forthwith if it comes to its or his knowledge
that, at any time prior to Admission, any of the Warranties is or has
become untrue or inaccurate or misleading in any material respect, or would
have been untrue or inaccurate or misleading in any material respect by
reference to the facts and circumstances then existing, and/or that there
has been any material breach of any of the Warranties.
7. COMPLETION OF THE PLACING
7.1 Investec shall (following consultation with the Company) determine all
matters in respect of the Placing, including without limitation:-
7.1.1 the identity of Placees;
7.1.2 the validity of acceptances received for Placing Shares; and
7.1.3 the allocation of Placing Shares amongst Placees.
7.2 Subject to this Agreement having become unconditional (save as to
Admission) and not having been terminated pursuant to clause 12, the
Company shall not later than 5.00 p.m. on the day before Admission is due
to occur hold a meeting of the Board at which:-
7.2.1 Investec shall deliver a list of Placees for Placing Shares, with
the relevant registration details and numbers of shares
subscribed by each Placee ("Placing List");
7.2.2 the Company shall allot and issue the Placing Shares to Placees
in accordance with the Placing List subject to the bye-laws and
restated articles of incorporation of the Company, free from
liens, charges and encumbrances and ranking in full for all
dividends or other distributions declared, made or paid on the
ordinary share capital of the Company after the date of this
Agreement, and ranking pari passu in all other respects with the
existing issued Common Shares (immediately upon the Stock
Consolidation); and
7.2.3 the Company shall approve the registration (without registration
fee) of the Placees in the register of stockholders of the
Company, and the issue of definitive share certificates (in each
case bearing the legend set out in Part 5 of the Admission
Document) to the Placees, in accordance with the timetable for
such matters set out in the Admission Document.
PAGE 11
7.3 The Company shall:-
7.3.1 by no later than 25 July 2005, deliver to Investec a certified
copy of the resolutions of the Board referred to in clause 7.2;
and
7.3.2 provide all necessary instructions to the Registrars to enable
them to perform their duties as registrars as contemplated by
this Agreement and the Admission Document.
7.4 By no later than 3.00 pm on the second Business Day following the date of
Admission, Investec shall (to the extent that it has received the same)
transfer from the sums received from Placees in respect of their
subscription of Placing Shares to the Company an amount equal to the
aggregate value of the Placing Shares at the Placing Price less an amount
equal to the sums payable to Investec and any other fees relating to the
Placing payable by the Company pursuant to clause 9 together with any VAT
thereon (insofar as known at that date) by telegraphic transfer to account
no 6804-592442 routing no. 0000-0000-0 at Xxxxx Fargo Bank, Los Angeles
Main Office, 000 X. Xxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000. Payment in full of
such sums shall fully discharge Investec's payment obligations to the
Company.
7.5 The Company undertakes that following Admission it will not register any
transfer of Placing Shares in the register of stockholders of the Company
not made in accordance with the provisions of Regulation S, pursuant to
registration under the US Securities Act or pursuant to an available
exemption from the registration requirements under the US Securities Act.
8. UNDERTAKINGS FOLLOWING ADMISSION
8.1 The Company hereby undertakes that it will, and each of the Directors
hereby severally undertakes that he will use reasonable endeavours to
ensure that the Company will, apply the net proceeds of the Placing
received by the Company only for the purposes described in the Admission
Document and the Working Capital Report.
8.2 The Company will comply with all relevant obligations of the AIM Rules and
in particular (but without limitation) will ensure that each of its
Directors (including any future appointee) accepts responsibility for the
Company's compliance with the AIM Rules, seeks advice from Investec (while
it remains the Company's nominated adviser) regarding such compliance
whenever appropriate and takes that advice into account.
8.3 The Company hereby undertakes that, for a period of three (3) months
following Admission, it will not, without the prior written consent of
Investec (such consent not to be unreasonably withheld or delayed):-
8.3.1 enter into any agreement, commitment or arrangement or put itself
into a position where it is obliged to make any announcement
concerning any agreement, commitment or arrangement which might
be material in the context of the Placing or Admission; or
8.3.2 issue any shares or options to subscribe for any shares (other
than options granted pursuant to the stock option plan referred
to in the Admission Document) or securities convertible or
exchangeable into shares or enter into any agreement or
undertaking to do so.
8.4 The Company hereby undertakes that, for the period expiring on the date of
the preliminary announcement of the results of the Company for the
financial year ending 31 December 2005, it will notify Investec in advance
of and discuss with Investec:-
8.4.1 any proposed public statement or announcement in relation to the
financial position or affairs of the Company;
8.4.2 any proposed agreement or arrangement relating to a corporate
transaction requiring disclosure under the AIM Rules, the SEC
Regulations or the OTC Bulletin Board Rules;
8.4.3 any documents proposed to be sent to all shareholders of the
Company; and
PAGE 12
8.4.4 any information which is likely to affect the character or value
of the business of the Company or which may be necessary to be
made known to the public to enable the public to appraise the
position of the Company and to avoid the establishment of a false
market in the Common Shares.
PAGE 13
8.5 Each of the Directors hereby undertakes to each of the Company and Investec
that without the prior written approval of Investec:-
8.5.1 he will not at any time prior to the first anniversary of
Admission (the "Restricted Period"), transfer or dispose (or
permit the transfer or disposal) of, directly or indirectly, any
of his Restricted Shares;
8.5.2 he will use his reasonable endeavours to procure that any person
who is a connected person of his shall adhere to the provisions
of clause 8.5.1.
8.6 The provisions of clause 8.5 shall not apply:-
8.6.1 in the case of Xxxxxxx Xxxxxxxxx only, to the disposal (not
earlier than the date of the preliminary announcement of the
results of the Company for the financial year ending 31 December
2005) of such number of Restricted Shares as is necessary to
produce net sale proceeds of US$500,000;
8.6.2 in the case of Xxxxx Xxxxxxx only, to a disposal of such number
of Restricted Shares which are issued to such Director on the
exercise of share options granted to him (and which would
otherwise lapse during the Restricted Period) as is necessary to
produce net sale proceeds sufficient to pay the exercise price
payable by such Director in respect of such exercise and any
taxation liability of such Director in respect of such sale; or
8.6.3 to a disposal by the personal representatives of the Director if
he shall die (provided that the sale of any shares in the Company
by such personal representatives pursuant to this sub-clause
shall be effected in accordance with the reasonable requirements
of the Company so as to ensure an orderly market for the issued
share capital of the Company); or
8.6.4 to transfers or disposals of Restricted Shares pursuant to
acceptance of an offer to acquire all the shares, or all the
shares of any class or classes, in the Company (other than shares
which at the date of the offer are already held by the offeror),
being an offer on terms which are the same in relation to all the
shares to which the offer relates or, where those shares include
shares of different classes, in relation to all the shares of
each class and execution of an irrevocable commitment to accept
such an offer shall be deemed to be an acceptance of an offer for
the purposes of this clause 8.6.4; or
8.6.5 to transfers or disposals of Restricted Shares pursuant to any
sale or transfer required by an order made by a court with
competent jurisdiction;
8.6.6 to transfers or disposals of Restricted Shares by any Director to
any trust created for the benefit of that Director and his
immediate family, provided that such transferee, before
registration of any transfer of such shares to such transferee,
executes an undertaking in relation to such shares in the form of
the deed of adherence set out in Part C of Schedule 2 and
provided further that Investec has first given its written
consent to such a transfer or disposal (such consent not to be
unreasonably withheld or delayed).
8.7 Each of the Executive Directors severally undertakes to Investec in the
terms set out in the provisions of their respective service agreements
dealing with post termination obligations as if such provisions were set
out herein and repeated mutatis mutandis.
8.8 Each of the Executive Directors acknowledges and agrees with Investec that
the duration, extent and application of the restrictions contained in
clause 8.7 are no greater than is necessary for the protection of the
goodwill and trade connections of the business of the Company and value of
the Placing Shares.
PAGE 14
9. COMMISSIONS, FEES AND EXPENSES
9.1 In consideration of Investec's services under this Agreement, the Company
shall pay (together with VAT where applicable) to Investec:-
9.1.1 a fee of (pound)210,000 for its corporate finance advice in
connection with the Placing; and
9.1.2 conditional on Admission, a commission equal to five per cent.
(5%) of the aggregate value at the Placing Price of all the
Placing Shares.
9.2 The Company will bear all expenses of or incidental to the Placing, the
issue of the Placing Shares and Admission including, without limitation,
the fees of its accountancy, legal and other professional advisers, the
cost of printing and distribution of all the Issue Documents, Registrars'
fees, London Stock Exchange fees, the fees of the legal advisers of
Investec (not exceeding (pound)65,000 plus VAT and disbursements), the
amount of any expenses which Investec may have paid on behalf of the
Company and (where applicable) VAT.
9.3 The amounts payable pursuant to clauses 9.1 and 9.2 together with any other
amounts outstanding from the Company to Investec may, subject to receipt by
the Company of appropriate invoices therefor, be withheld by Investec from
any payment to be made by Investec to the Company pursuant to clause 7.4.
Any amounts payable pursuant to clauses 9.1 and 9.2 not so withheld by
Investec shall be paid within three (3) Business Days after receipt by the
Company of the relevant invoices for such amounts.
10. WARRANTIES
10.1 The Company and each of the Directors jointly and severally warrant to
Investec (in each case for itself and, on the basis that Investec shall
enjoy an absolute discretion as to the enforcement of any claim for breach
of Warranty, for the benefit of each Placee) in the terms of the
Warranties, but so that in the case of the Non-Executive Directors, the
Warranties are given to the best of their knowledge and belief.
10.2 Each of the Directors hereby severally (and not jointly) warrants to
Investec that he has taken all reasonable care to ensure that the
information in the Issue Documents is in accordance with the facts and does
not omit anything likely to affect the import of such information, and that
he is not aware of any matters which are inconsistent with the Issue
Documents.
10.3 Each of the Directors hereby severally (and not jointly) warrants and
undertakes to Investec that all information in respect of himself
(including, where applicable any information relating to his past
employment and past or present activities or business interests) and any
person connected with him with which Investec has been furnished in writing
and the contents of any directors' questionnaire, are true and accurate in
all material respects and not misleading in any material respect and do not
omit anything likely to affect the import of such information.
10.4 Where any Warranty is expressed to be qualified by reference to the
awareness and/or knowledge and belief of the Company or of the Directors,
that Warranty shall be deemed to include an additional statement that it
has been made after all reasonable enquiry and, for the avoidance of doubt,
the awareness, knowledge and/or belief of the Directors in the context of
any Warranty shall mean their collective awareness (so that the Directors
shall be deemed to have the relevant awareness, knowledge and/or belief if
any of the Directors has/have the relevant awareness, knowledge and/or
belief).
10.5 The Warranties shall be deemed to be repeated, on the basis set out in
clause 10.1, at the time of the publication of the Admission Document.
10.6 The Warranties given in this clause 10 shall remain in full force and
effect notwithstanding the completion of all matters and arrangements
referred to in or contemplated by this Agreement.
PAGE 15
10.7 Investec shall, to the extent that it suffers any loss in respect thereof,
be entitled to the same remedies and rights of action against the Company
and the Directors as any person acquiring any Placing Shares on the basis
of the Admission Document (or the `P' Proof of the Admission Document) and
the Warranties shall be in addition to and shall not be construed as
limiting or prejudicing those or any other rights or remedies available to
Investec.
10.8 The Company agrees, for the benefit of each Placee, that the Company will
be liable to pay compensation to any Placee for any loss which the Placee
suffers in respect of any Placing Shares acquired by it under the Placing
as a result of (or as a result of any circumstances which cause or give
rise to or are the reason for or represent or constitute):-
10.8.1 any untrue or misleading statement included in the Admission
Document (or included in the Pathfinder Admission Document or any
placing proof of the Admission Document and, in either case,
reproduced in the Admission Document) or in any supplementary
admission document; or
10.8.2 any omission from the Admission Document (or any omission from
the Pathfinder Admission Document or from any placing proof of
the Admission Document that is, in either case, also an omission
from the Admission Document) or from any supplementary admission
document of any matter that would have been required to be
included in it had it been a `prospectus' within the meaning of
the FSMA and the Placing Shares were being offered to the public
in the United Kingdom; and
(provided that the exemptions from liability set out in Schedule 10 to the
FSMA shall apply in relation to the liability of the Company under this
Clause 10.8).
10.9 The maximum liability of each of the Directors for breach of the Warranties
contained in clauses 10.1 and 10.2 shall be that sum set opposite his name
in column (3) of Schedule 1, save where any such breach is the consequence
of fraud or wilful concealment by the Director concerned. No Director shall
be liable for breach of the Warranties unless notice of a claim is given by
Investec to the Company (giving reasonable details of the basis of such
claim) by no later than three (3) months of the date of publication of the
audited accounts of the Company for the financial year ending 31 December
2005.
10.10 Each of the Directors hereby waives any right of contribution or payment
they may have, whether by statute, common law or otherwise, against the
Company in respect of any claim made against them under the warranties or
undertakings set out herein.
11. DISCLAIMER AND INDEMNITIES
11.1 Neither the Company nor any of the Directors shall make any claim against
any Indemnified Person to recover any damage, cost, charge, expense, loss
or liability which the Company or any of the Directors may suffer or incur
by reason of or arising out of the carrying out by any Indemnified Person
on their behalf of their obligations and services hereunder or otherwise in
connection with or incidental to the Placing, the distribution of the Issue
Documents or the issue or transfer of the Placing Shares unless such
damage, cost, charge, expense, loss or liability arises from (i) the fraud,
bad faith, negligence or wilful default of an Indemnified Person; or (ii)
from a material breach of the terms of this Agreement by Investec; or (iii)
from a contravention by an Indemnified Person of the regulatory system (as
defined in the handbook and rules of the Financial Services Authority) or
breach or contravention of the provisions of the FSMA or the AIM Rules; or
(iv) is of such a nature that liability may not be excluded pursuant to the
FSMA.
11.2 The Company undertakes to Investec (for itself and as trustee for each
Indemnified Person) that it will indemnify and hold harmless against and at
all times keep each Indemnified Person fully and effectively indemnified
against all losses, claims, expenses, liabilities, actions, demands,
proceedings and judgements whatsoever and all reasonable costs, charges and
expenses which any Indemnified Person may suffer or incur or which may be
made against or incurred by any Indemnified Person in any jurisdiction by
any subscriber or Placee in respect of the Placing Shares (including but
without limitation all such reasonable costs, charges and expenses
PAGE 16
including any value added tax thereon) as any Indemnified Person may pay or
properly incur in responding to, disputing any such actual or potential
actions, claims or demands or in enforcing the rights of any Indemnified
Person hereunder) and which in any such case arises directly or indirectly
out of or in connection with or results from or is attributable to:-
11.2.1 the preparation, approval, issue and circulation of the
Pathfinder Admission Document or the `P' Proof of the Admission
Document and the approval, publication and/or posting of any of
the Issue Documents;
11.2.2 the Pathfinder Admission Document or the `P' Proof of the
Admission Document or any of the Issue Documents (i) not
containing, or being alleged not to contain, all information
required to be stated therein or any statement therein (whether
of fact, opinion, expectation or intention), being or being
alleged to be untrue, inaccurate, incomplete, defamatory or
misleading or having been made negligently or otherwise without
the required standard of skill and care or reasonableness or (ii)
containing or being alleged to contain any misrepresentation; or
11.2.3 the proper performance by Investec or any of its Affiliates of
its or their obligations and services hereunder in accordance
with this Agreement or otherwise in connection with the subject
matter hereof including the issue of any material by, or after
having been approved by, Investec, whether as a 'financial
promotion' (as defined in section 21(1) of FSMA and the Financial
Services and Markets Xxx 0000 (Financial Promotion) Order 2005)
or otherwise; or
11.2.4 the release of the Press Announcement, the making of the Placing
and the preparation and distribution of the Issue Documents; or
11.2.5 any breach or alleged breach by the Company or the Directors of
any of the Warranties, or by the Company or any of the Directors
of any of the undertakings or obligations of the Company or any
such Directors; or
11.2.6 the creation, allotment and issue and placing of any of the
Placing Shares; or
11.2.7 any breach or alleged breach of or failure or alleged failure to
comply with, the laws or regulations of any country (including,
in particular, the United Kingdom and the US) or the regulations
of the London Stock Exchange or NASD, the SEC Regulations or the
OTC Bulletin Board Rules, resulting from either the Placing, the
release of the Press Announcement or the distribution of the
Issue Documents;
and which does not, in any such case, arise from (i) the fraud, bad faith,
negligence or wilful default of an Indemnified Person; or (ii) a material
breach of the terms of this Agreement by Investec; or (iii) a contravention
by an Indemnified Person of the regulatory system (as defined in the
handbook and rules of the Financial Services Authority) or breach or
contravention of the provisions of the FSMA, the AIM Rules or any
applicable law. This indemnity shall be without prejudice to any other
rights of any Indemnified Person.
11.3 Investec shall, on becoming aware of any action or claim or other matter in
respect of which indemnity may be sought by any Indemnified Persons
pursuant to clause 11.2, give written notice and reasonable details thereof
to the Company as soon as reasonably practicable thereafter and thereafter
keep the Company informed of all material matters relating thereto.
11.4 If any Indemnified Person is separately indemnified and secured to its
reasonable satisfaction by the Company against all claims, actions, losses,
liabilities, costs, charges and expenses, such Indemnified Person shall
take or procure to be taken such action as the Company may reasonably
request to avoid, dispute, resist, appeal, compromise or defend any claim
which any of the Indemnified Persons have notified to the Company as
arising under this clause 11 (such notice to be in the terms required by
this Agreement). If the Company fails to secure any Indemnified Person to
such Indemnified Person's reasonable satisfaction within 30 days of the
PAGE 17
notification of the claim to the Company or to give appropriate
instructions in relation to any claim within thirty (30) days of being
requested to do so, the Indemnified Person may pay or settle or resist or
otherwise deal with the claim as it in its absolute discretion thinks fit.
No Indemnified Person shall be obliged to take any action under this clause
if the action requested would adversely affect the reputation of Investec.
11.5 Subject to clause 11.7, where any claim of the kind envisaged by clause
11.2 is brought or alleged against the Company and/or one or more
Indemnified Persons:-
11.5.1 the Company will provide to such Indemnified Persons all such
information in its possession and reasonable assistance
(including access to and the right to copy any documents or
records of the Company) for the purpose of avoiding, disputing,
resisting, appealing, compromising or contesting any such claim
as it may reasonably request (subject to any reasonably required
undertaking as to confidentiality). The Company shall keep each
such Indemnified Person fully informed as to the progress of any
such claim and the defence thereof;
11.5.2 Investec will provide the Company with all such information in
its possession for the purpose of avoiding, disputing, resisting,
appealing, compromising or contesting any such claim as it may
reasonably request (subject to any reasonably required
undertaking as to confidentiality);
11.5.3 in a case where an Indemnified Person wishes to dispute or appeal
such a claim, it shall be entitled to require the Company also to
dispute or appeal such a claim;
11.5.4 the Company shall not settle or compromise any such claim where
such action would affect Investec without the prior written
approval of Investec;
11.6 If any deduction or withholding is required by law to be made from any
payment under this clause 11 or if any sum payable under this clause 11 is
subject to taxation in respect of such payment the amount so payable shall
be increased by such amount as will ensure that Investec and its affiliates
are placed in the same net of tax position they would have been in had the
sum payable under this clause 11 not been subject to any deduction or
withholding or taxation.
11.7 No provision of this clause 11 shall take effect in a manner which would
thereby result in a breach by Investec or any its Affiliates of the FSMA
including, for the avoidance of doubt, any purported exclusion of liability
which would be prohibited thereunder.
11.8 The indemnities set out in clause 11 shall remain in full force and effect
notwithstanding the completion of all matters and arrangements referred to
in or contemplated by this Agreement.
12. TERMINATION
12.1 If prior to Admission it shall come to the notice of Investec that:-
12.1.1 any of the Warranties was not true or accurate, or was misleading
(i) when given or deemed given or (ii) at any time if they were
to be repeated (by reference to the facts and circumstances in
each case then existing) would no longer be true and accurate, or
would be misleading, in each case in a respect which is material
in the context of the Placing; or
12.1.2 the Company or the Directors have failed in any material respect
to comply with its or their obligations under this Agreement, the
California Corporations Code, the FSMA or the AIM Rules; or
12.1.3 any statement contained in the Issue Documents has become or been
discovered to be untrue, inaccurate or misleading in any material
respect (where such statement is not corrected pursuant to any
supplementary admission document published by the Company, the
form of which has been approved by Investec); or
PAGE 18
12.1.4 a Specified Event has occurred;
then Investec will consult (so far as such consultation is practicable)
with the Company and may forthwith give notice to the Company pursuant to
clause 12.3.
12.2 If prior to Admission:-
12.2.1 there shall have been, occurred, happened or come into effect any
event or omission which materially and adversely affects the
financial position and/or prospects of the Company, or which in
the reasonable opinion of Investec is or will be or may be
materially prejudicial to the Company or to the Placing or to the
acquisition of the Placing Shares by Placees; or
12.2.2 there shall have occurred any change in national or international
financial, monetary, economic, political or stock market
conditions which in the reasonable opinion of Investec is or will
or is likely to be materially prejudicial to the Company or to
the Placing or to the acquisition of the Placing Shares by
Placees;
then Investec will forthwith consult with the Company and may, during or as
soon as practicable following such consultation, give notice to the Company
pursuant to clause 12.3.
12.3 Where this clause applies, Investec may in its absolute discretion:-
12.3.1 elect, by giving notice to the other parties to this Agreement
prior to Admission, to terminate this Agreement whereupon the
provisions of clause 2.3 shall apply as if the Conditions had not
been fulfilled (but so that the fee payable by the Company to
Investec for its corporate finance in connection with the Placing
as stated in clause 9.1.1 shall be reduced to (pound)100,000 if
Investec terminates this Agreement in the circumstances described
in clause 12.2), and the provisions of clause 12.4 shall apply;
or
12.3.2 allow the Placing to proceed on the basis of the Issue Documents
subject, if Investec require or the Company so requests, to the
publication of any supplementary admission document and to any
relevant requirements of the FSMA, the London Stock Exchange
and/or the AIM Rules.
12.4 If any notice is given by Investec to the Company pursuant to clause
12.3.1, Investec shall on behalf of the Company withdraw the Admission
Application.
13. GENERAL AND INTERPRETATION
13.1 The parties to this Agreement will give all such assistance to each other
and provide all such information as shall reasonably be required for the
purposes of this Agreement and will execute and do all such documents, acts
and things as may be reasonably required in order to give effect to the
terms of this Agreement.
13.2 The parties shall use all reasonable endeavours to procure that any
necessary third party shall do and shall themselves execute and perform all
such further deeds, documents, assurances, acts and things as any of them
may reasonably require by notice in writing to give effect to the terms of
this Agreement.
13.3 Any time, date or period mentioned in this Agreement may be extended by
mutual agreement between the parties hereto but, as regards any time, date
or period originally fixed or any time, date or period so extended, time
shall be of the essence.
13.4 This Agreement shall be binding upon and enure for the benefit of the
personal representatives and successors of the parties as the case may be.
PAGE 19
13.5 No party shall be entitled to assign his or its rights under this Agreement
without the prior written consent of each of the other parties.
13.6 Except as provided in clause 13.7, this Agreement constitutes the entire
and the only legally binding agreement between the parties relating to the
Placing and no variations of this Agreement shall be effective unless made
in writing signed by or on behalf of the parties and expressed to be such a
variation.
13.7 For the avoidance of doubt, the provisions of the terms of engagement
between Investec and the Company dated 16 May 2005 shall remain in full
force and effect notwithstanding the entering into of this Agreement. If
there is any inconsistency between the provisions of this Agreement and
such terms of engagement, this Agreement shall prevail.
13.8 Each Indemnified Person shall have the rights under the Contracts (Rights
of Third Parties) Act 1999 (which shall apply to this Agreement) to enforce
the terms of clause 11 of this Agreement (subject to clauses 13.10 and
13.14), as amended from time to time, provided that an Indemnified Person
must obtain the written consent of Investec (which Investec may give or
refuse in its absolute discretion) before it may bring proceedings to
enforce the terms of clause 11 and, save to the extent notified in writing
by Investec to the Indemnified Person, Investec (without obligation) shall
have the sole conduct of any such action on behalf of the Indemnified
Person.
13.9 Save as provided in clause 13.8, no one other than the parties to this
Agreement shall be entitled to directly enforce rights under this Agreement
under the Contracts (Rights of Third Parties) Xxx 0000. Investec shall have
no responsibility to any Indemnified Person under or as a result of clause
13.8. The parties to this Agreement do not require the consent of any
person (other than the Company, the Directors and Investec or as otherwise
provided for in this Agreement) to rescind, vary or terminate this
Agreement (including, without limitation, any release or compromise in
whole or in part of any liability) at any time.
13.10 The invalidity, illegality or unenforceability of any provision of this
Agreement shall not affect the other provisions of this Agreement.
13.11 No failure or delay by any party in exercising any remedy, right, power
or privilege under or in relation to this Agreement shall operate as a
waiver thereof nor shall any single or partial exercise of any remedy,
right, power or privilege preclude any further exercise thereof or the
exercise of any other remedy, right, power or privilege.
13.12 No waiver by any party of any of the requirements of this Agreement or
of any of their rights under this Agreement shall have effect unless
given in writing. No waiver of any particular breach of the provisions
of this Agreement shall operate as a waiver of any repetition of such
breach.
13.13 Any release, waiver or compromise or any other arrangement of any kind
whatsoever which Investec may agree to or effect as regards one or more
of the Directors in connection with this Agreement shall not affect the
rights and remedies of Investec as regards any other of the Directors or
the liabilities of any of such Directors under this Agreement.
13.14 Any remedy or right conferred upon Investec for breach of this Agreement
shall be in addition to and without prejudice to all other rights and
remedies available to it.
14. STATUS OF THE COMPANY
14.1 The Company warrants to Investec that:-
14.1.1 it is a company incorporated in the State of California, USA and
under the laws of the State of California and it has been in
continuous existence since its incorporation;
14.1.2 it has full power and authority to enter into this Agreement and
to perform its obligations under this Agreement and such
obligations will be binding on it in accordance with their terms;
and
PAGE 20
14.1.3 no order has been made or petition presented or resolution passed
for its winding-up or administration and no receiver or
administrator or administrative receiver has been appointed by
any person in relation to its business or assets or any part
thereof.
15. NOTICES
15.1 Any notice required to be given hereunder shall be deemed to be duly served
if:-
15.1.1 delivered by hand at or sent by overnight courier delivery to the
registered office or principal address being that set out herein
or such other address as shall have been notified by one party to
the others in accordance herewith of the party to be served. Any
such notice shall be deemed to be served when left at the
relevant office and, if served by overnight courier delivery, on
the next business day in the UK or USA (as the case may be)
following the day of despatch. In proving the giving of a notice,
it shall be sufficient to prove that the notice was left or that
the envelope containing such notice was properly addressed; or
15.1.2 sent by fax as follows:-
(a) to the Company and the Directors:-
Fax No: 000 000 000 0000
For the attention of: Xx Xxxxxxx
(b) to Investec:-
Fax No: 000 0000 0000
For the attention of: Xxxxxxx Xxxxxx
14.2 The address or fax numbers and the name of the person for whose attention
faxes are to be addressed may be changed from time to time by the relative
party by written notice hereunder addressed to the others.
14.3 Any notice or other communication by fax shall be deemed to have been
received immediately upon duly obtaining the print out of advice of
transmission for the transmitting fax machine, indicating that the
transmission has been successfully completed, subject to a copy being put
in the post, or delivered or couriered, to the addressee on the same day
(or if not a business day in the despatching location the next business day
there).
15.4 Any notice given by Investec under clause 12 may be given by any director
of Investec to any Director of the Company either personally or by
telephone and shall have effect immediately.
16. COUNTERPARTS
This Agreement may be entered into in any number of counterparts and by the
parties to it on separate counterparts, each of which when executed and
delivered shall be an original, but all the counterparts shall together
constitute one and the same document. This Agreement may be validly
exchanged by fax.
17. GOVERNING LAW
17.1 This Agreement shall be governed by English law and the parties hereby
submit to the non-exclusive jurisdiction of the English Courts for all
purposes relating to this Agreement but this Agreement may be enforced in
any court of competent jurisdiction.
17.2 The Company and each of the Directors hereby irrevocably appoints the
Company's UK Solicitors as its or his agent to receive on its or his behalf
service of proceedings issued out of the English Courts in any action or
proceedings arising out of or in connection with this Agreement. The
Company and each of the Directors warrants that the Company's UK Solicitors
have agreed to act as its or his agent as aforesaid and agrees that failure
PAGE 21
by such agent to notify the Company or any of such Directors of such
service shall not adversely affect the validity of such service or any
judgement based on it. Such service shall become effective seven (7) days
after despatch. Nothing contained in this Agreement shall affect the right
to serve process in any other manner permitted by law.
IN WITNESS WHEREOF this Agreement has been signed by or on behalf of Investec
and the Company and executed as a deed by each of the Directors the day and year
first above written.
PAGE 22
SCHEDULE 1
THE DIRECTORS
(1) (2) (3)
Name and address Position Maximum individual liability
XXXXXXX XXXX XXXXXXXXX Chairman US$50,000
XXXXX XXXXX XXXXXXX Chief Executive Officer, US$416,000
President & Director
XXXXX XXXXXXXX Director US$50,000
XX. XXXXXXX XXXXXXXX XXXXXX Director US$50,000
XXXXXX X XXXXXX Director US$50,000
XXXX XXXXXX XXXXXXX Director US$50,000
XXXXXXXX (XXXXX) XXXXX XXXXXXX Chief Financial Officer & US$290,000
Director
all of 00000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, XXX
PAGE 23
SCHEDULE 2
PART A
WARRANTIES
All references in this Schedule to the "Admission Document" shall include the
'P' Proof of the Admission Document.
The Warranties referred to in clause 10.1 of the foregoing Agreement are that:-
1. INFORMATION IN THE ADMISSION DOCUMENT
1.1 The Admission Document contains all the information required to be set out
therein under the AIM Rules
1.2 The Admission Document contains all such information as investors would
reasonably require and reasonably expect to find there, for the purpose of
forming a full understanding of:-
1.2.1 the assets and liabilities, financial position, profits and
losses and prospects of the Company; and
1.2.2 the Common Shares and the rights attaching to the Common Shares;
and
1.2.3 any other matter contained in the Admission Document;
consideration of the Company and the Directors having been given to the
relevance of any information specified in paragraph (b) of Schedule Two of
the AIM Rules.
1.3 The information contained in the Admission Document is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
1.4 All statements of fact in the Admission Document are true and accurate in
all material respects and are not misleading in any material respect to a
prospective purchaser or subscriber of the Placing Shares and all
forecasts, estimates, expressions of opinion, intention and expectation in
the Admission Document are truly and honestly held and either fairly based
upon facts within the knowledge of the Directors or made on reasonable
grounds after due and careful consideration and to the extent that they are
based on assumptions, have regard to the facts which are known to the
Company and to the Directors.
1.5 There are no facts known or which would on reasonable enquiry have been
known to the Directors or to the Company which are not disclosed in the
Admission Document and which either by their omission would make any
statement in the Admission Document false or misleading in any material
respect or are material for disclosure to a prospective subscriber of
shares in the Company or which should be taken into account by Investec in
deciding whether or not to act as nominated adviser to the Company and in
considering the suitability of the Common Shares for listing on AIM.
1.6 Save for the Presentation, neither the Company nor any of its agents has
distributed any `financial promotion' (as defined in section 21 FSMA) in
connection with or in anticipation of the Placing.
2. VERIFICATION, LONG FORM REPORT AND DUE DILIGENCE REPORT
2.1 The replies to the Verification Notes have been prepared or approved by
persons reasonably believed by the Directors to have appropriate knowledge
and responsibility to enable them properly to provide such replies.
2.2 The statements of fact contained in the replies to the Verification Notes
are true and accurate in all material respects and the statements of
opinion contained in the replies to the Verification Notes are fair and
reasonable.
PAGE 24
2.3 All information requested from the Company by the Reporting Accountants for
the purpose of the preparation of the Long Form Report was, when provided,
true and accurate, no further information has been withheld the absence of
which would make misleading the information so provided, and the opinions
attributed to the Directors in the Long Form Report are honestly held and
are fairly based upon facts within the knowledge of the Directors.
2.4 All statements of fact and financial information contained in the Long Form
Report are true, complete and accurate and are not misleading and the
Company and the Directors do not disagree with any of the Company's
statements of intention or expectation or with any of the comments,
conclusions and recommendations of the Reporting Accountants contained in
the Long Form Report.
2.5 All information requested from the Company for the purposes of the Legal
Due Diligence Report was, when provided, true and accurate in all material
respects and no further information has been withheld the absence of which
would make misleading in any material respect the information so provided.
All statements of fact contained in the Legal Due Diligence Report are true
and accurate and are not misleading, and the Directors do not disagree with
any aspect of the Legal Due Diligence Report.
3. DIRECTORS
3.1 The Directors have had explained to them the nature of their
responsibilities and obligations as directors of an AIM company.
3.2 None of the Directors has (save to the extent set out in the Admission
Document):-
3.2.1 at any time been adjudged bankrupt or entered into an individual
voluntary arrangement in the United Kingdom or elsewhere;
3.2.2 at any time been party to a deed of arrangement or made any other
form of composition with his creditors, or suffered a
receivership of any asset in which he had any interest;
3.2.3 any unsatisfied judgement outstanding against him;
3.2.4 been a director of any company or other body corporate which went
into receivership, compulsory liquidation, creditors' voluntary
liquidation, administration, company voluntary arrangement or any
composition or arrangement with its creditors generally or any
class of its creditors while he was a director or within 12
months after he ceased to be one;
3.2.5 been a partner of any partnership which went into compulsory
liquidation, administration or partnership voluntary arrangement
or suffered a receivership of any asset while he was a partner or
within 12 months after he ceased to be one;
3.2.6 ever been publicly censured or criticised by or refused admission
by any professional, statutory or regulatory authority (including
recognised professional bodies); or
3.2.7 any unspent convictions for any indictable criminal offence.
3.3 The information provided to Investec by each Director in response to the
Directors' questionnaire and declaration of business activities is true and
accurate in all respects and no information has been withheld which would
make such answers misleading.
3.4 The Admission Document contains true and accurate information at the date
of this Agreement and immediately following Admission concerning:-
3.4.1 the interests of each Director in any contracts entered into by
the Company;
3.4.2 the interests of each Director in the share capital of the
Company; and
PAGE 25
3.4.3 the respective business interests, qualifications and experience
of each Director.
3.5 The Admission Document contains all information concerning any actual or
potential conflicts of interest between the Company and any Director or any
company of which any Director is a director or in which he has a material
interest and all statements contained in the Admission Document concerning
such conflict or concerning the future relationship between such Director
or any of such companies are truly and honestly made and are not misleading
and there are no other facts concerning the same the omission of which
makes any statement therein false or misleading in any respect.
4. WORKING CAPITAL
4.1 The cash flow and working capital projections of the Company for the period
ending 31 December 2006 and the statement as to the adequacy of the
Company's working capital included in the Admission Document have, in each
case, been accurately compiled on the basis of the assumptions stated
therein, after due and careful enquiry and on a reasonable basis, and there
are no facts known to the Company or any of the Directors which have not
been taken into account in the preparation or making of such projections or
statement and which would reasonably be expected to have a material impact
thereon.
4.2 The Working Capital Report has been approved by the Board and the Directors
do not disagree with any aspect of such report.
4.3 The Company will, after the issue of the Placing Shares, have sufficient
working capital for its present requirements, namely for at least 12 months
after Admission; and each Director confirms that the statement regarding
working capital set out in paragraph 11 of Part 6 of the Admission Document
represents the true and honest belief of the Directors, arrived at after
due and careful consideration.
5. FINANCIAL INFORMATION
5.1 The audited balance sheet and profit and loss account and the statements of
cash flow (including the notes thereon) of the Company for the three (3)
year period ended on the Balance Sheet Date as set out in the Accountants'
Report (the "2002, 2003 and 2004 Financial Statements") have (except as
therein disclosed) been prepared in accordance with the Statements of
Investment Circular Reporting Standards issued by the Auditing Practices
Board of the United Kingdom, and within the terms of such Statements, give
a true and fair view of the financial position at the end of, and profits
and cash flow of the Company for such periods.
5.2 The unaudited results of the Company for the three months ended 31 March
2005 (the "2005 First Quarter Results") have been compiled by the Company
with all due care and attention and on the accounting bases and assumptions
consistent with or not materially different from those adopted in the
preparation of the 2002, 2003 and 2004 Financial Statements.
5.3 The Company did not at the Balance Sheet Date or at 31 March 2005 have any
material liability (whether actual, deferred, contingent or disputed) or
commitment which, in accordance with generally accepted accounting
principles and practice (on the basis on which the 2002, 2003 and 2004
Financial Statements have been prepared), should have been disclosed or
provided for in the Accountants Report or the First Quarter Results and
which has not been so treated therein or in the Admission Document.
5.4 Adequate provision or, as appropriate, disclosure in accordance with
generally accepted accounting principles and practice (on the basis on
which the 2002, 2003 and 2004 Financial Statements have been prepared) has
been made in the Accountants Report and in the 2005 First Quarter Results
for taxation payable by the Company.
5.5 The Directors have established procedures that provide a reasonable basis
for them to make proper judgements as to the financial position and
prospects of the Company.
PAGE 26
5.6 Gross revenue of the Company for the six month period ended 30 June 2005
was at least $1.8 million.
6. TAXATION
6.1 Since the Balance Sheet Date, the Company has not incurred any liability in
respect of any taxation which is material in the context of the Placing,
other than any such liabilities arising in the ordinary course of the
business of the Company since that date and any such liabilities arising
since that date as a result of any transactions entered into by or
affecting the Company which are disclosed in the Admission Document.
6.2 All corporation tax returns made by the Company since the Balance Sheet
Date have been made correctly in all material respects and, except as
provided for or, as the case may be, disclosed in the Accountants' Report,
there are no material questions of taxation which are or are, so far as the
Directors are aware, likely to become the subject of dispute with the IRS
or other taxing authorities.
6.3 All tax that has become due and payable from the Company or for which the
Company has become obliged to account has been paid or accounted for in
full.
6.4 No claim or dispute involving the Company has been made by or arisen with
the IRS or any other tax authority (in the US or elsewhere) which could
reasonably be considered material in the context of the Placing; and so far
as the Company and each of the Directors is aware, there is no significant
risk that such a claim will be made or that such a dispute will arise.
7. INDEBTEDNESS
7.1 No circumstances have arisen or, so far as the Directors are aware (having
made reasonable enquiries), are reasonably expected to arise, such that any
person is, or would with the giving of notice and/or lapse of time become
entitled to require payment of any material indebtedness (other than
indebtedness which it is proposed should be repaid out of the proceeds of
the placing of the Placing Shares) (including for the avoidance of doubt,
pursuant to finance leases) of the Company before its stated maturity and
the Company has not received any notice from any person to whom any
material indebtedness (other than indebtedness which is to be repaid out of
the proceeds of the placing of the Placing Shares) of the Company is
payable on demand that such person now proposes to demand repayment.
7.2 No event has occurred or is subsisting or, so far as the Directors are
aware, is reasonably expected to occur, which constitutes or results in, or
would with the giving of notice and/or lapse of time, would be reasonably
expected to constitute or result in, a default or the acceleration or
breach of any material obligation under any agreement, instrument or
arrangement to which the Company is a party or by which it or any of its
properties, revenues or assets are bound and which would, in any such case,
have a material adverse effect on the business, assets or prospects of the
Company.
8. TRADING POSITION
8.1 Since the Balance Sheet Date (and save as disclosed in 2005 First Quarter
Results and in the Admission Document):-
8.1.1 the Company has carried on its business in the ordinary and usual
course;
8.1.2 there has been no significant change in the financial or trading
position of the Company;
8.1.3 the Company has not entered into or assumed or incurred any
contract, commitment, borrowings, indebtedness in the nature of
borrowing, guarantee, liability (including contingent liability)
or other obligation which, in any such case, has not been
discharged at the date of this Agreement or will not be
discharged prior to Admission and the disclosure of which to a
potential subscriber of Placing Shares is required in order to
prevent the Admission Document being inaccurate or misleading in
any material respect;
PAGE 27
8.1.4 the Company has not declared, made or paid any dividend or other
distribution;
8.1.5 no agreement or commitment has been entered into by the Company
which is of a long term or unusual nature which involves or could
involve an obligation of a material nature; and
8.1.6 no agreement or commitment has been entered into by the Company
for the acquisition or disposal of any business or material asset
or any material liabilities (including contingent liabilities)
otherwise than in the ordinary course of business.
9. BUSINESS
9.1 All material licences, consents and other permissions and approvals
required for carrying on the business now carried on by the Company have
been obtained and are in full force and effect and, so far as the Directors
are aware, there is no circumstance which indicates that any such licence,
consent, permission or approval is likely to be revoked or incapable of
renewal.
9.2 The Company is not in breach of any laws, regulations, orders, directives,
guidelines and codes which relate to the Company, the ownership and use of
the assets of the Company and all business operations undertaken by the
Company which is material in the context of the Placing.
9.3 The Company is not a party to, nor affected by, any contract or arrangement
which is of material importance to the business of the Company otherwise
than on arm's length terms.
9.4 So far as the Directors are aware, there is no agreement, arrangement or
transaction material to the business and/or financial position and/or
prospects of the Company which is invalid or which may be rescinded,
avoided or repudiated, and the Company has not received written notice of
any intention to terminate, repudiate or disclaim any such agreement,
arrangement or transaction, in each case which is material in the context
of the Placing.
10. INSURANCE
The Company carries insurance cover at the levels and for the risks
normally insured against by persons carrying on the same or similar
business as that carried on by the Company and all such insurances are in
full force and effect and not voidable and there is no material insurance
claim made by or against the Company pending or outstanding or, so far as
the Directors are aware, threatened and all premiums due and payable in
respect of all insurances have been duly paid and the Company reasonably
considers such cover to be adequate.
11. INTELLECTUAL PROPERTY
11.1 For the purposes of this paragraph 11, "Intellectual Property Rights" means
any and all trade marks, service marks, patents, registered designs,
unregistered design rights, copyright, rights in confidential information
and any other similar intellectual property rights of any nature
whatsoever, whether or not registered or capable of registration, and all
applications and rights to apply for the same, together with all goodwill
relating or attached thereto.
11.2 No activities of the Company infringe or, so far as the Directors are
aware, are likely to infringe any Intellectual Property Rights of any third
party, and no claim has been made against the Company in respect of any
such infringement in the three years prior to the date of this Agreement.
PAGE 28
11.3 The Company has disclosed to Investec all Intellectual Property Rights
material to the business activities of the Company, all reasonable steps
have been taken to protect such Intellectual Property Rights by
registration, patent application or otherwise in all jurisdictions in which
the Company operates or intends to operate; and all such Intellectual
Property Rights as are owned by the Company are owned free of all
encumbrances and there are no proceedings, actions or claims pending or, so
far as the Directors are aware, threatened which impugn the title, validity
or subsistence of any Intellectual Property Rights owned by the Company.
11.4 The know how comprised in the Intellectual Property Rights has been
adequately documented and to the extent that it is of a confidential nature
or the confidentiality of such information is of material importance to the
Company, no part of such confidential information has been disclosed to any
third party except subject to arrangements to protect such confidentiality.
11.5 As far as the Directors are aware:-
11.5.1 nothing has been done or omitted to be done by the Company which
would jeopardise the validity or subsistence of any Intellectual
Property Rights owned by the Company; and
11.5.2 there has been no unauthorised use by any person of any
Intellectual Property Rights or confidential information of the
Company;
in both instances which are material in the context of the Placing.
12. LITIGATION
12.1 Neither the Company nor any person for whom it or they may be liable,
vicariously or otherwise, is engaged in any litigation or legal or
arbitration proceedings which, individually or collectively, are material
and may have or have had during the last twelve (12) months a significant
adverse effect on the financial position of the Company and, so far as the
Directors are aware, no such litigation or legal or arbitration proceedings
are threatened or pending and (so far as aforesaid) there are no
circumstances which may reasonably be expected to give rise to any such
litigation or legal or arbitration proceedings.
12.2 The Company has not taken any action nor have any other steps been taken or
legal proceedings started or, so far as the Directors are aware, threatened
against the Company for the winding-up or dissolution of it or for it to
enter into any arrangement or composition for the benefit of creditors, or
for the appointment of a receiver, trustee or similar officer of its
properties, revenues, undertakings or assets.
13. SHARE CAPITAL
13.1 Save as disclosed in the Admission Document and/or pursuant to the
Company's stock option plan, there are not in force any options or other
agreements which call for the issue of, or accord to any person the right
to call for the issue of, any Common Shares or shares in the capital or
other securities of the Company; and the Company has no current intention
to grant options or rights to subscribe for shares in the Company.
13.2 The creation, issue and allotment of the Placing Shares in the manner
proposed:-
13.2.1 will comply with the AIM Rules, the California Corporations Code,
the FSMA, the SEC Regulations, the OTC Bulletin Board Rules and
all other statutes and governmental and regulatory authorities
and regulations applicable to the Placing; and
13.2.2 will not infringe any borrowing limits, powers or restrictions
of, or the terms of any agreement, security, commitment or
arrangement binding on the Company, or will result in the
imposition or variation of any rights or obligations of the
Company.
PAGE 29
13.3 The Company has power under its bye-laws and restated articles of
incorporation to create, allot and issue the Placing Shares and to effect
the Placing in the manner proposed and to enter into and perform this
Agreement without any further sanction or consent by members of the Company
or any class of them and, subject as aforesaid, there is no consent
required by the Company for the issue of the Placing Shares and to effect
the Placing which has not been unconditionally and irrevocably obtained.
13.4 The creation, allotment and issue of the Placing Shares and the Admission
will not exceed or infringe any restrictions or the terms of any contract,
obligation or commitment by or binding upon the Company or result in the
imposition or variation of any rights or obligations of the Company.
13.5 There have been given to Investec (or its advisers) details of all current
agreements (whether written or unwritten) between the Company and any one
or more of the shareholders in the Company relating to any rights of
pre-emption over or rights to require a sale or purchase of any shares in
the capital of the Company and, so far as the Directors are aware, there
have been given to Investec (or its advisers) details of all current
agreements (whether written or unwritten) between any one or more of the
shareholders in the Company relating to any rights of pre-emption over or
rights to require a sale or purchase of any shares in the capital of the
Company.
13.6 The Placing Shares will be allotted and issued free from all claims,
charges, liens, encumbrances, equities and third party rights and will rank
pari passu in all respects with the existing issued Common Shares including
the right to receive all dividends declared, made or paid after the date of
this Agreement.
14. SUBSIDIARIES
The Company has no subsidiaries or subsidiary undertakings within the
meaning of the UK Companies Xxx 0000 (as amended).
15. RELATIONSHIPS WITH SHAREHOLDERS AND DIRECTORS
15.1 The Company is independent of its shareholders.
15.2 None of the shareholders of the Company has any rights, in their capacity
as such, in relation to the Company other than at law or as set out in the
bye-laws and restated articles of incorporation of the Company in force at
the date of this Agreement or contained in the agreements referred to in
the Admission Document.
15.3 Save as disclosed in the Admission Document, there are no agreements,
arrangements or understandings (whether legally binding or not) between the
Company and any person who is a shareholder, or the beneficial owner of any
interest, in the Company or in any company in which the Company is
interested, or any person connected with any such person relating to the
management of the business of the Company or the appointment or removal of
any directors of the Company or the ownership or transfer of ownership of
any of their respective assets or which concerns the provision of any
finance, goods, services or facilities to or by the Company.
15.4 The Admission Document contains the name of any person (other than
professional advisers disclosed in the Admission Document and trade
suppliers) who has received, directly or indirectly, from the Company
within the twelve (12) months preceding the date of this Agreement, or
entered into any contractual arrangements to receive, directly or
indirectly, from the Company on or after Admission fees totalling
(pound)10,000 or more, securities in the Company with a value of
(pound)10,000 or more calculated by reference to the Placing Price or any
other benefit with a value of (pound)10,000 or more at the date of
Admission and the Admission Document gives all material details of the
relationship of such person with the Company and of the fees, securities or
other benefit received or to be received.
PAGE 30
16. CORPORATE GOVERNANCE
The Directors have given due consideration to and intend to observe the
requirements of the Combined Code to the extent they consider appropriate
having regard to the Company's size, stage of development and resources.
17. US SECURITIES LEGISLATION
17.1 None of the Company, its affiliates or any persons acting on its or their
behalf have engaged or will engage in any 'directed selling efforts', as
defined in Regulation S, with respect to the Placing Shares.
17.2 None of the Company, its affiliates or any persons acting on its or their
behalf, directly or indirectly, (a) has made or will make offers or sales
of any of the Placing Shares, (b) has solicited or will solicit offers to
buy any of the Placing Shares or (c) otherwise has negotiated or will
negotiate in respect of any of the Placing Shares, in any case, under
circumstances that would require the registration of the Placing Shares
under the US Securities Act.
17.3 The Company, its affiliates and any persons acting on its or their behalf
have and will comply with the offering restrictions requirement of
Regulation S.
17.4 The offering of the Placing Shares to Placees pursuant to the Placing in
the manner contemplated in this Agreement and in the Admission Document
will not cause the Company or any of the Directors to be in violation or
breach of any provision of the US Securities Act or of the SEC Regulations
or the OTC Bulletin Board Rules.
PAGE 31
SCHEDULE 2
PART B
WARRANTY CONFIRMATION LETTER
The Directors
Investec Bank (UK) Limited
0 Xxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
19 July 2005
Dear Sirs
Enova Systems, Inc. (the "Company")
Placing of 5,350,000 Common Shares and application for Admission
We refer to the Placing, and to the Placing Agreement dated 19 July 2005
between Investec Bank (UK) Limited (1) the Company (2) and the Directors of
the Company (3) (the "Placing Agreement"). Words and expressions defined in
the Placing Agreement have the same meanings in this letter.
We confirm that:-
1. we have complied with all our obligations under the Placing Agreement which
we have been required to perform to date;
2. [save as previously notified pursuant to clause 6.4.1 and/or 6.6 of the
Placing Agreement,] none of the warranties and undertakings contained in
the Placing Agreement has been breached or is unfulfilled or was untrue or
inaccurate or misleading when made, and none of such warranties or
undertakings would be breached or unfulfilled or be untrue or inaccurate or
misleading in any respect were it to be repeated by reference to the facts
subsisting at the date of this letter, and no Specified Event has come to
the knowledge of the Company or of any Director which in any such case is
material in the context of the Placing;
3. neither the Company nor any of the Directors is aware of any circumstances
which could give rise to Investec having the right to terminate the Placing
Agreement pursuant to clause 12 of the Placing Agreement.
Yours faithfully
Director
for and on behalf of
Enova Systems, Inc.
PAGE 32
SCHEDULE 2
PART C
DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made on 2005
by o of o (the "Covenantor") in favour of Enova Systems, Inc. whose principal
offices are at 00000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, XX 00000, XXX (the
"Company") and Investec Bank (UK) Limited whose registered office is at 0
Xxxxxxx Xxxxxx, Xxxxxx XX0X 0XX ("Investec") and is supplemental to the Placing
Agreement dated 19 July 2005 and made between Investec, the Company and the
Directors of the Company (the "Placing Agreement"), a copy of which is attached
to this Deed.
NOW THIS DEED WITNESSES as follows:-
The Covenantor hereby covenants with each of the Company and Investec to
observe, perform and be bound by the provisions of clauses 8.5 to 8.6 of the
Placing Agreement as if he were a party to the Placing Agreement and named
therein in place of a Director.
THIS DEED has been executed as a Deed by the Covenantor and delivered on the
date stated at the beginning of this Deed
PAGE 33
SCHEDULE 3
Part A
DOCUMENTS TO BE DELIVERED TO INVESTEC
1. The Admission Application duly signed on behalf of the Company together
with such other letters or documents as may be required by the AIM Rules to
support the application and a cheque made payable to the London Stock
Exchange in respect of the London Stock Exchange charges.
2. Two copies of the Admission Document.
3. One original of the responsibility letters signed by each of the Directors.
4. A certified copy of the powers of attorney executed by each of the
Directors.
5. The Verification Notes duly signed by or on behalf of each of the Directors
together with a copy of the annexures referred to therein.
6. A certified copy of the Board Resolutions.
7. An original signed copy of the Accountants' Report, together with any
related statement of adjustments and letters of consent.
8. A letter from the Reporting Accountants addressed to Investec and to the
Company confirming the accuracy of the financial information relating to
the Company set out in the Admission Document.
9. A letter from the Reporting Accountants addressed to Investec and to the
Company confirming the accuracy of the taxation sections set out in the
Admission Document.
10. An original signed copy of the Working Capital Report.
11. One original signed copy of the Long Form Report.
12. One original signed copy of the Legal Due Diligence Report.
13. A letter, in the agreed form, from the Directors addressed to Investec
confirming that the Directors understand the nature of their
responsibilities and obligations as directors of an AIM company and that,
having made due and careful enquiry, the Directors have established
procedures which provide a reasonable basis for the Directors to make
proper judgements as to the financial position and prospects of the Company
and that the Directors have been advised accordingly by the Reporting
Accountants.
14. A letter, in the agreed form, from the Reporting Accountants addressed to
Investec reporting on the Working Capital Report and confirming that the
Company has sufficient working capital for its present requirements.
15. A certified copy of the Board memorandum on financial reporting procedures.
16. A letter, in the agreed form, from the Reporting Accountants addressed to
Investec confirming that in their opinion the Directors have established
procedures which provide a reasonable basis for them to make proper
judgements as to the financial position and prospects of the Company and
that the confirmations given by the Company and referred to in paragraph 13
above has been given after due and careful enquiry.
17. A letter, in the agreed form, from the Reporting Accountants addressed to
Investec confirming that there has been no significant change in the
financial or trading position of the Company since 31 March 2005.
PAGE 34
18. Letters, in the agreed form, addressed to Investec from the Company's UK
Solicitors, the Company's US Lawyers and the Reporting Accountants
confirming, for the purposes of AIM Rule 39, that they have no knowledge of
any matter not included in the Admission Document which should be so
included.
19. A certified copy of the written consent of the Reporting Accountants
addressed to Investec and to the Company consenting to the inclusion in the
Admission Document of the Accountants Report and respective references
thereto in the form and context in which they appear and making the
declaration required by paragraph 1.2 of Annex I to the Prospectus Rules.
20. Opinion Letter, in the agreed form, from the Company's US Lawyers.
PAGE 35
SCHEDULE 3
PART B
DOCUMENTS TO BE FILED WITH THE LONDON STOCK EXCHANGE
1. Admission Document, six copies.
2. Application form.
PART C
DOCUMENTS IN THE AGREED FORM
1. Pathfinder Admission Document
2. Board Resolutions
3. Lock-In Deed
4. Placing Letter
5. Press Announcement
6. Admission Document
7. Verification Notes
8. Working Capital Report
9. Letter from the Directors to Investec pursuant to paragraph 13 of Part A of
this Schedule 3
10. Letters from the Reporting Accountants to Investec pursuant to paragraphs
8, 14, 16, 17 and 19 of Part A of this Schedule 3
11. Letters from the Company's UK Solicitors, the Company's US Lawyers and the
Reporting Accountants to Investec pursuant to paragraph 18 of Part A of
this Schedule 3
PAGE 36
SIGNED by
duly authorised for and on behalf of
INVESTEC BANK (UK) LIMITED
/s/ Xxxxxxx Xxxxxx
..............................................
Director
SIGNED by
duly authorised for and on behalf of
ENOVA SYSTEMS, INC.
/s/ Xxxxx Xxxxxxx
..............................................
Director
EXECUTED as a deed by
XXXXXXX XXXX XXXXXXXXX ... /s/ Xxxxx Xxxxxxx, attorney in fact..
In the presence of:-
Witness signature ..........................................
Witness name ..........................................
Address ..........................................
..........................................
..........................................
EXECUTED as a deed by
XXXXX XXXXXX XXXXXXX ... /s/ Xxxxx Xxxxxxx, attorney in fact..
In the presence of:-
Witness signature ..........................................
Witness name ..........................................
Address ..........................................
..........................................
..........................................
PAGE 37
EXECUTED as a deed by
XXXXX XXXXXXXX ... /s/ Xxxxx Xxxxxxx, attorney in fact..
In the presence of:-
Witness signature ..........................................
Witness name ..........................................
Address ..........................................
..........................................
..........................................
EXECUTED as a deed by
XX XXXXXXX XXXXXXXX XXXXXX ... /s/ Xxxxx Xxxxxxx, attorney in fact..
in the presence of:-
Witness signature ..........................................
Witness name ..........................................
Address ..........................................
..........................................
..........................................
EXECUTED as a deed by
XXXXXX X XXXXXX ... /s/ Xxxxx Xxxxxxx, attorney in fact..
in the presence of:-
Witness signature ..........................................
Witness name ..........................................
Address ..........................................
..........................................
..........................................
EXECUTED as a deed by
XXXX XXXXXX XXXXXXX ... /s/ Xxxxx Xxxxxxx, attorney in fact..
in the presence of:-
Witness signature ..........................................
Witness name ..........................................
Address ..........................................
..........................................
..........................................
PAGE 38
EXECUTED as a deed by
XXXXXXXX XXXXX XXXXXXX ... /s/ Xxxxxxxx X. Xxxxxxx .............
in the presence of:-
Witness signature ..........................................
Witness name ..........................................
Address ..........................................
..........................................
..........................................
