Exhibit 10.23
DATED 2004
(1) ELCOM INTERNATIONAL, INC.
(2) XXXXX & XXXXXXXXXX CORPORATE FINANCE LIMITED
(3) THE SEVERAL PERSONS NAMED AS INVESTORS
(4) TWO DIRECTORS OF THE COMPANY NAMED AS DIRECTORS
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AGREEMENT
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CONTENTS
CLAUSE PAGE
1 INTERPRETATION 2
2 PLACING COMMITMENT 3
3 INVESTORS' REPRESENTATIONS AND UNDERTAKINGS 6
4 DIRECTORS' REPRESENTATIONS 7
5 ANNOUNCEMENT 7
6 GENERAL 8
SCHEDULE 1 11
SCHEDULE 2 12
THIS AGREEMENT IS MADE ON 2004
BETWEEN
(1) ELCOM INTERNATIONAL, INC a Company incorporated under the laws of Delaware
having its principal office at 00 Xxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx
00000, Xxxxxx Xxxxxx (the "Company");
(2) XXXXX & XXXXXXXXXX CORPORATE FINANCE LIMITED (Registered No. 04533970)
having its registered office at Xx. 0 Xxxxxx Xxxxx Xxxxxx, Xxxxxx, X0X 0XX
("S&WCF");
(3) THE SEVERAL PERSONS whose names and addresses are set out in Schedule 1 to
this Agreement (the "Investors"); and
(4) TWO DIRECTORS OF THE COMPANY whose names and addresses are set out in
Schedule 2 to this agreement (the "Directors").
BACKGROUND
(A) The Company intends to raise not less than (pound)1.6 million (before
expenses) and not more than (pound)1.9 million (before expenses) (or such
other respective amounts as the parties may agree in writing) by way of
placement of new common shares in the Company, for which application is to
be made for admission to trading on AIM.
(B) The Company has engaged S&WCF to advise the Company in connection with the
above-mentioned placing and proposed admission to AIM.
(C) The parties have now agreed upon and subject to the terms and conditions
of this Agreement that the Investors shall pursuant to the above-mentioned
placing each subscribe for new common shares of the Company to a value not
less than the amount shown opposite his name in Schedule 1 and the
Directors shall, to the extent that placing commitments are not obtained
for (pound)1.9 million pursuant to the above-mentioned placing (but are
obtained for (pound)1.6 million), each subscribe for new 10% senior
convertible debentures (of the same class and on the same terms as the
Company's existing debentures) to a value of up to the amount shown
opposite his name in Schedule 2.
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OPERATIVE PROVISIONS
1. INTERPRETATION
1.1 In this Agreement the following expressions have the following meanings
unless inconsistent with the context:-
1.1.1 "Admission" means admission to trading on AIM of the existing and
new common shares of the Company to be subscribed by the
Investors and others pursuant to the Placing and such admission
becoming effective in accordance with paragraph 6 of the AIM
Rules;
1.1.2 "AIM" means the Alternative Investment Market of the London Stock
Exchange;
1.1.3 "AIM Rules" means the AIM Rules of the London Stock Exchange in
force from time to time;
1.1.4 "Conditions" means the conditions in clause 2.2 upon and subject
to which this Agreement has been exchanged;
1.1.5 "Directors" means those persons whose names and addresses appear
in column 1 of Schedule 2;
1.1.6 "Investors" means those persons whose names and addresses appear
in column 1 of Schedule 1;
1.1.7 "Investors Placing Commitment" means the aggregate of the UK
sterling amounts for which the Investors agree to subscribe
pursuant to clause 2.1;
1.1.8 "Placing" means the proposed conditional placing by S&WCF of new
common shares in the capital of the Company to raise not less
than (pound)1.6 million (before expenses) and not more than
(pound)1.9 million (before expenses) (or such other respective
amounts as the parties may agree in writing) on the terms and
subject to the conditions of the Placing Agreement;
1.1.9 "Placing Agreement" means the agreement proposed to be entered
into between inter alia the Company and S&WCF relating to the
Placing;
1.1.10 "Securities Act" means the US Securities Act of 1933, as amended;
and
1.1.11 "US Person" means any of the following: (i) a natural person
resident to the United States; (ii) a partnership or corporation
organised or incorporated
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under the laws of the United States; (iii) an estate of which
any executor or administrator is a US Person; (iv) a trust of
which any trustee is a US Person; (v) an agency or branch of a
foreign entity located in the United States; (vi) a
non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a US Person; (vii) a discretionary account
or similar account (other than an estate or trust) held by a
dealer or other fiduciary organised, incorporated, or (if an
individual) resident in the United States; and (viii) a
partnership or corporation if (A) organised or incorporated under
the laws of any foreign jurisdiction; and (B) formed by a US
Person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organised or
incorporated, and owned, by accredited investors (as defined in
Rule 501(a) of the Securities Act) who are not natural persons,
estates or trusts.
1.2 The headings to this Agreement are inserted for ease of reference only and
shall not affect its interpretation or construction.
1.3 The Introduction and the Schedules form part of this Agreement.
1.4 References to clauses, recitals and the Schedules are to the clauses
recitals and Schedules to this Agreement.
2. PLACING COMMITMENT
2.1 The Investors hereby each agree, subject always to the Conditions, to
subscribe for an amount of not less than that shown opposite his name in
Schedule 1 to this Agreement for new common shares of the Company to be
issued at a price of the UK sterling equivalent (calculated by reference
to the UK sterling/US $ spot exchange rate shown on the website of the
Financial Times at the close of business in London on the day prior to the
date on which the Placing Agreement is signed) of US $0.1246 per common
share on and subject to the terms of the Placing Agreement. Provided
always that an Investor's obligations to subscribe for common shares of
the Company may at his option be discharged in whole or in part by means
of a subscription made on like terms by a fund manager who manages
investments on his behalf, in which event the amount of the commitment set
opposite his name in the Schedule will be reduced by the amount of the
fund manager's subscription.
2.2 The obligations incurred by the Investors under this Agreement shall be
conditional in all respects upon:-
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2.2.1 the Placing Agreement being entered into by the parties thereto
and such agreement becoming unconditional in all respects and not
having been terminated prior to Admission;
2.2.2 Admission in relation to the existing and new common shares of
the Company having become effective in accordance with the AIM
Rules;
2.2.3 placing commitments on the terms of the Placing Agreement being
obtained:
2.2.3.1 from persons other than the Investors to a total value
of at least the amount by which the Investors Placing
Commitment is less than (pound)1.6 million; and
2.2.3.2 to a total value of not more than (pound)1.9 million,
(or such other respective amounts as the parties may agree in
writing);
2.2.4 the Inland Revenue confirming that the Company would represent a
qualifying company for the purposes of the Enterprise Investment
Scheme and the Admission document containing a statement to the
effect that the directors of the Company will seek to maintain
the conditions required for the Company to continue to be a
qualifying company for such purposes; and
2.2.5 there having been no unforeseen material adverse change in the
trading of the Company since the date of Company's last published
results, being 30 September 2003, to the date of Admission,
in each case (except in relation to clause 2.2.4) by no later than 3pm
(BST) on 31 May 2004 or such later time and/or date as the parties may
agree in writing.
2.3 The Directors hereby each agree subject always to the conditions set out
in clause 2.4 to subscribe for the amount (on a pro rata basis, if
applicable) by which the placing commitments pursuant to the Placing
amount in aggregate to less than (pound)1.9 million but more than
(pound)1.6 million subject to the maximum amount shown opposite his name
in Schedule 2 to this Agreement for new 10% senior convertible debentures
(of the same class and on the same terms as the Company's existing
debentures) issued at par.
2.4 The obligations incurred by the Directors under this Agreement shall be
conditional in all respects upon:-
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2.4.1 the Placing Agreement being entered into by the parties thereto
and such agreement becoming unconditional in all respects and not
having been terminated prior to Admission;
2.4.2 Admission in relation to the existing and new common shares of
the Company having become effective in accordance with the AIM
Rules;
2.4.3 placing commitments on the terms of the Placing Agreement being
obtained to a total value of not less than (pound)1.6 million (or
such other amount as the parties may agree in writing) pursuant
to the Placing; and
2.4.4 the Investors complying fully with their obligation in clause
2.1,
in each case by no later than 3pm (BST) on 31 May 2004 or such later time
and/or date as the parties may agree in writing.
2.5 The Company shall enter into the Placing Agreement and use its reasonable
endeavours to procure the fulfilment of clause 2.2.2 of the Conditions by
no later than 3 pm (BST) on 31 May 2004 (or such later time and/or date as
the parties may agree in writing) and shall take all such reasonable steps
and give such reasonable undertakings as S&WCF may reasonably require in
that regard.
2.6 The Company agrees that under the Placing the Investors will be allotted
on or after 6 April 2004 (and in no event before such date) new common
shares in the Company equivalent in full (rounded up to the nearest 100
shares) at the placing price to the amounts shown opposite their names in
Schedule 1 to this Agreement.
2.7 The Investors hereby each acknowledge that the new common shares of the
Company for which each of the Investors hereby subscribes: (i) have not
been registered under the Securities Act; (ii) are being placed outside
the United States to non-US Persons in "offshore transactions" in reliance
on Regulation S of the Securities Act; (iii) are "restricted securities"
as defined in Rule 144 of the Securities Act; and (iv) shall be
represented by a certificate which shall bear a legend which shall read
exactly as follows:
"THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS IT IS ESTABLISHED TO THE SATISFACTION OF THE COMPANY
THAT SUCH TRANSFER IS EFFECTED (1) IN A TRANSACTION MEETING THE
REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT (2) PURSUANT TO AN
EFFECTIVE REGISTRATION
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STATEMENT UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS. HEDGING
TRANSACTIONS INVOLVING THE COMMON SHARES OF THE COMPANY MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
2.8 If any of the Conditions are not fulfilled (and are not waived by S&WCF
and the Investors) or shall cease to be capable of being satisfied (and
are not waived by S&WCF and the Investors) by 3 pm (BST) on 31 May 2004
(or such later time and/or date as the parties may agree in writing), this
Agreement shall cease and terminate as regards the proposed Placing and no
party will have any claim against any other party in relation thereto save
in respect of any antecedent breach provided always that none of the
Investors or S&WCF (as the case may be) shall have the right (i) to rely
on the preceding provisions of this clause to the extent that any failure
to fulfil any of the Conditions is the result of his/its own act or
omission; or (ii) to waive any Condition without the prior written consent
of the Company if he/it is under an obligation to fulfil that Condition
pursuant to this Agreement.
2.9 The Investors, subject to the Conditions, shall approve and execute all
such applications, placing letters, documents and agreements as may be
required to give effect to the subscriptions referred to in clause 2.1 in
accordance with the terms of the Placing.
3. INVESTORS' REPRESENTATIONS AND UNDERTAKINGS
3.1 The Investors each hereby represents and warrants in relation to himself
that:-
3.1.1 the Investor has full power and capacity to enter into and
deliver this Agreement and to the extent relevant or applicable,
all documents and agreements relating thereto and to consummate
and complete his proposed subscription for common shares of the
Company as envisaged by this Agreement;
3.1.2 this Agreement and all documents and agreements to be entered
into in relation thereto will when executed constitute valid and
binding obligations of the Investor, enforceable against him in
accordance with their terms;
3.1.3 the Investor (if not a distributor) is not a US Person and is not
subscribing for new common shares of the Company for the account
or benefit of a US Person (other than a distributor);
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3.1.4 the Investor is not relying on any information in relation to the
Company other than that which is publicly available; and
3.1.5 the Investor is not relying on any representations or warranties
of the Company or S&WCF or of any director, employee or agent
thereof.
3.2 Each of the Investors undertakes to resell any new common shares of the
Company for which it subscribes, if at all, only in accordance with the
provisions of Regulation S of the Securities Act, pursuant to registration
under the Securities Act, or pursuant to an available exemption from
registration under the Securities Act.
3.3 Each of the Investors undertakes not to engage in hedging transactions
with regard to any new common shares of the Company for which it
subscribes, unless in compliance with the Securities Act.
3.4 Each of the Investors undertakes not to enter into any agreement or do or
execute any deed, act or thing or otherwise omit to do anything that is
inconsistent with any obligation on his part under this Agreement or which
may cause any of the Conditions not to be satisfied or fulfilled by 3 pm
(BST) on 31 May 2004 or such later time and/or date as the parties may
agree in writing.
4. DIRECTORS' REPRESENTATIONS
The Directors each hereby represents and warrants in relation to himself
that:
4.1 the Director has full power and capacity to enter into and deliver this
Agreement and to the extent relevant or applicable, all documents and
agreements relating thereto and to consummate and complete his proposed
subscription for new 10% senior convertible debentures in the Company as
envisaged by this Agreement; and
4.2 this Agreement and all documents and agreements to be entered into in
relation thereto will when executed constitute valid and binding
obligations of the Director, enforceable against him in accordance with
their terms.
5. ANNOUNCEMENT
None of the parties to this Agreement shall make or authorise any
announcement concerning the terms or any matters contemplated by or
ancillary to this Agreement except with the prior consent of the other
parties, not to be unreasonably withheld or delayed. If and in the event
that any announcement is nonetheless required by law or any securities
exchanged or regulatory or governmental body (whether or not such
requirement has the force of law), the parties agree that any such
announcement shall
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only be made after prior consultation between the parties save where not
reasonably practicable.
6. GENERAL
6.1 Time shall be of the essence of this Agreement both as regards dates and
times specified herein and as to any other times or dates which may by
mutual agreement between the parties in writing be substituted.
6.2 Nothing contained in this Agreement shall exclude any liability for fraud.
6.3 The rights powers and remedies provided by this Agreement are cumulative
and subject as otherwise provided in this Agreement are not exclusive of
any rights, powers and remedies provided by law.
6.4 It is not intended by the parties to this Agreement that any term of it
shall be enforceable under the Contracts (Rights of Third Parties) Xxx
0000 by any person who is not a party to this Agreement.
6.5 This Agreement may be executed in any number of counterparts, but it shall
not take effect until each party has executed at least one counterpart.
Each counterpart shall constitute an original but all counterparts
together shall constitute a single agreement.
6.6 This Agreement shall be governed and construed in accordance with the laws
of England and the parties hereto have agreed to submit to the
non-exclusive jurisdiction of the English courts.
IN WITNESS whereof this Agreement has been signed by the parties or their duly
authorised representatives on the day first set out above.
SIGNED by XXXXXX XXXXXXX )
for and on behalf of )
ELCOM INTERNATIONAL, INC. )
SIGNED by AZHIC BASIROV )
for and on behalf of )
XXXXX & XXXXXXXXXX )
CORPORATE FINANCE LIMITED )
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SIGNED by XXXXXX XXXXXXX )
(Print name) )
in the presence of: )
Witness
Signature ______________________
Name ______________________
Occupation ______________________
Address ______________________
______________________
SIGNED by XXXXXXX XXXXX )
(Print name) )
in the presence of: )
Witness
Signature ______________________
Name ______________________
Occupation ______________________
Address ______________________
______________________
SIGNED by _____________________ )
(Print name) )
in the presence of: )
Witness
Signature ______________________
Name ______________________
Occupation ______________________
Address ______________________
______________________
SIGNED by _____________________ )
(Print name) )
in the presence of: )
Witness
Signature ______________________
Name ______________________
Occupation ______________________
Address ______________________
______________________
SIGNED by _____________________ )
(Print name) )
in the presence of: )
Witness
Signature ______________________
Name ______________________
Occupation ______________________
Address ______________________
______________________
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SIGNED by _____________________ )
(Print signatory name))
for and on behalf of )
_________________________________ )
(Print company name) )
SIGNED by _____________________ )
(Print signatory name))
for and on behalf of )
_________________________________ )
(Print company name) )
SIGNED by _____________________ )
(Print signatory name))
for and on behalf of )
_________________________________ )
(Print company name) )
SIGNED by _____________________ )
(Print signatory name))
for and on behalf of )
_________________________________ )
(Print company name) )
SIGNED by _____________________ )
(Print signatory name))
for and on behalf of )
_________________________________ )
(Print company name) )
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SCHEDULE 2
DIRECTORS
NAME AND ADDRESS DEBENTURE SUBSCRIPTION ($)
------------------ --------------------------
Xxxxxx X. Xxxxxxx 150,000
Xxxxxxx X. Xxxxx 50,000
NOTE: THE DEBENTURE INVESTMENT REFERRED TO ABOVE IS NOT PART OF THE PLACING AND,
IF THE DEBENTURE INVESTMENT IS MADE, SUCH INVESTMENT WOULD BE MADE SOLELY IN THE
US AND WOULD BE A SEPARATE TRANSACTION FROM THE PLACING.
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