PREFERRED STOCK PLACEMENT AGREEMENT
PREFERRED STOCK PLACEMENT AGREEMENT ("Agreement") dated as of the 28th day
of August, 1998, by and between EFFECTIVE MANAGEMENT SYSTEMS, INC., a Wisconsin
corporation (the "Company") and TAGLICH BROTHERS, X'XXXXXX, XXXXXX & COMPANY,
INCORPORATED ("Placement Agent").
W I T N E S S E T H :
WHEREAS, in reliance upon the representations, warranties, terms and
conditions hereinafter set forth, Placement Agent will use its best efforts to
privately place a minimum of 1,000 and a maximum of 5,000 shares of Series A 8%
convertible redeemable preferred stock (the "Preferred Stock") at $1000 per
share of Preferred Stock (the "Purchase Price") for an aggregate minimum
purchase price of $1 million ("Minimum Amount") and an aggregate maximum
purchase price of $5 million ("Maximum Amount"), with each share of the
Preferred Stock being convertible into shares of common stock, $.01 par value
per share (the "Common Stock"), of the Company at a price, subject to
adjustment, of $3.50 per share, and the persons and entities so purchasing the
Preferred Stock from time to time and the number of shares of Preferred Stock
being so purchased being as listed on Exhibit A to this Agreement (such persons
and entities being referred to individually as "Purchaser" and collectively, as
"Purchasers"); and
WHEREAS, the shares of Preferred Stock are being issued pursuant to the
Company's Confidential Private Placement Memorandum and Exhibits thereto dated
August 19, 1998, as the same may be amended and/or supplemented from time to
time (collectively, the "Memorandum"); and
WHEREAS, the shares of Preferred Stock are being issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act").
NOW, THEREFORE, in consideration of the premises and the respective
promises hereinafter set forth, the Company and the Placement Agent hereby agree
as follows:
1. Sale and Purchase of Preferred Stock.
(a) Subject to the terms and conditions of this Agreement, the Company
shall sell to the Purchasers a minimum of 1,000 and a maximum of 5,000 shares of
Preferred Stock at the Purchase Price per share for an aggregate purchase price
of not less than the Minimum Amount nor greater than the Maximum Amount,
respectively. The form of the Preferred Stock is included in the Memorandum.
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(b) The initial sale and purchase described in Paragraph 1(a) of this
Agreement shall take place at a closing (the "Closing") at the offices of
XXXXXXXX XXXXXXXXX XXXXXX XXXXXXXX & XXXXXX, LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 or such other place as shall be acceptable to the
Company and Placement Agent on such date or dates as Placement Agent shall
advise the Company on two (2) business days notice or such shorter notice as
shall be reasonably acceptable to the Company. In no event shall the Initial
Closing (as defined below) occur unless the Minimum Amount is sold. Subsequent
sale and purchase of Preferred Stock up to the Maximum Amount shall take place
at one or more Closings held on such dates as the Company and Placement Agent
shall mutually determine. All Closings pursuant to this Agreement shall occur
not later than September 30, 1998 unless such date is extended by the Company
and the Placement Agent to a date no later than October 30, 1998. The initial
Closing hereunder shall be referred to as "Initial Closing", the final Closing
hereunder shall be referred to as "Final Closing" and the date of the Final
Closing shall be referred to as the "Final Closing Date".
(c) All defined terms used in this Agreement which are not otherwise
defined shall have the meanings ascribed to them in the Memorandum.
2. Payment. At each Closing, the Company shall deliver to Placement
Agent, on behalf of the Purchasers, the original executed Preferred Stock
certificates being purchased by the Purchasers, against its receipt of payment
therefor by certified or bank check drawn on a bank located in the United
States, or by Federal wire transfer, in the amount of the aggregate purchase
price for such Preferred Stock being sold, less the amount of fees payable to
Placement Agent pursuant to Paragraph 10(a) of this Agreement. All Preferred
Stock being purchased by the Purchasers shall be issued in the respective names
of the Purchasers in accordance with instructions provided by Placement Agent
not later than the day of Closing.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to and covenants and agrees with the Placement Agent, as
of the date hereof and as of the date of each Closing, as follows:
(a) The Company is a corporation duly organized and validly existing
under the laws of the State of Wisconsin and is qualified and in good standing
as a foreign corporation in each jurisdiction in which the nature of the
business conducted by the Company or the property owned or leased by the Company
requires such qualification, except where the failure to be so qualified has not
had or will not have a material adverse effect on the business, financial
condition or results of operations of the Company or its subsidiaries, taken as
a whole ("Material Adverse Effect"). The Company has no subsidiaries and does
not own any equity interest and has not made any loans or advances to or
guarantees of indebtedness to any person, corporation, partnership or other
entity, except for EMS-East, Inc., Effective Management Systems of Illinois,
Inc. and EMS-China, Ltd, which are wholly-owned subsidiaries, Total Management
Systems, Inc., a 50% owned subsidiary (collectively, the "Subsidiaries") and
EMS-Asia Pacific, Ltd., a 20% owned corporation. Each Subsidiary is, to the
extent applicable, a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and, to the
extent applicable, each
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Subsidiary is qualified and in good standing as a foreign corporation in each
jurisdiction in which the nature of its business or the property owned or leased
by the Subsidiary requires such qualification, except where the failure to be so
qualified has not had or will not have a Material Adverse Effect. Except as
disclosed in the Memorandum, no Subsidiary has any subsidiary and no Subsidiary
owns any equity interest in any other entity and no Subsidiary has made any
loans or advances to or guarantees of indebtedness to any person, corporation,
partnership or other entity. Except as indicated in this Section 3(b), the
Company owns all of the issued and outstanding shares of common stock of each of
the Subsidiaries free and clear of any lien, claim, encumbrance, pre-emptive
rights or contractual rights of first refusal.
(b) The authorized capital of the Company consists of 20,000,000
shares of Common Stock and 3,000,000 shares of preferred stock, of which, as of
the date of this Agreement, (i) 4,102,486 shares of Common Stock are issued and
outstanding, (ii) 12,625 shares of Common Stock are held in treasury, (iii) no
shares of preferred stock are issued and outstanding (other than as may be
issued at any prior Closing pursuant to the Memorandum), and (iv)1,205,606
shares of Common Stock have been reserved for issuance upon exercise of
outstanding debentures, options, warrants and other rights to acquire Common
Stock and upon the exercise of options granted pursuant to the Company's stock
option plans and pursuant to other agreements, excluding the shares of Common
Stock (the "Conversion Shares") issuable upon conversion of the Preferred Stock
and the shares of Common Stock (the "PAW Exercise Shares") issuable upon
exercise of the Placement Agent Warrants (as defined below). Except as set forth
in the Memorandum, the Company is not a party to any agreement to issue, nor has
it issued, any warrants, options or rights or preferred stock, notes or other
evidence of indebtedness or other securities, instruments or agreements upon the
exercise or conversion of which or pursuant to the terms of which additional
shares of capital stock of the Company may become issuable. No holder of any of
the Company's securities has preemptive rights or contractual rights of first
refusal.
(c) The Company has the full right, power and authority to execute,
deliver and perform under this Agreement, the Preferred Stock and the Placement
Agent Warrants. This Agreement has been duly executed by the Company and, at
each Closing, the Preferred Stock and the Placement Agent Warrants being issued
will have been duly executed by the Company, and this Agreement, the Preferred
Stock and the Placement Agent Warrants and the transactions contemplated by this
Agreement, the Preferred Stock and Placement Agent Warrants have been duly
authorized by all necessary corporate action and each constitute, the legal,
valid and binding obligations of the Company, enforceable in accordance with
their respective terms.
(d) All of the issued and outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are fully paid and
nonassessable (except as otherwise provided by Section 180.0622 (2)(b) of the
Wisconsin Business Corporation Law), with no personal liability attaching to the
holders thereof (except as otherwise provided in Section 180.0622 (2)(b) of the
Wisconsin Business Corporation Law), and such shares of Common Stock have not
been issued in violation of the preemptive rights or rights of first refusal of
any holder of securities of the Company. All of the issued and outstanding
shares of Common Stock of the
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Company have been issued pursuant to either a current effective registration
statement under the 1933 Act or an exemption from the registration requirements
of the 1933 Act and were issued in accordance with all applicable Federal and
state securities laws. All of the issued and outstanding shares of common stock
of each Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable (except as otherwise provided by Section 180.0622
(2)(b) of the Wisconsin Business Corporation Law), with no personal liability
attaching to the Company (except as otherwise provided by Section 180.0622
(2)(b) of the Wisconsin Business Corporation Law).
(e) The shares of Common Stock included in the Conversion Shares and
the PAW Exercise Shares have been validly authorized for issuance and, when
issued pursuant to this Agreement and the terms of the Preferred Stock and the
Placement Agent Warrants, as the case may be, will be duly and validly
authorized and issued, fully paid and nonassessable (except as otherwise
provided by Section 180.0622 (2)(b) of the Wisconsin Business Corporation Law)
and free from preemptive rights or rights of first refusal held by any person.
(f) The following financial statements of the Company (hereinafter
collectively, the "Financial Statements") are included in the Memorandum (i)
consolidated balance sheets as at November 30, 1997 and 1996, and consolidated
statements of operations, shareholders' equity and cash flows for the fiscal
years ended November 30, 1997 and 1996, and the related notes thereto, which
have been audited by Ernst & Young LLP, independent certified public
accountants, (ii) unaudited balance sheets as at February 28 and May 31, 1998,
and (iii) unaudited statements of operations and cash flows for the fiscal
quarters ended February 28 and May 31, 1998, and the related notes thereto,
which have been prepared by the Company. The Financial Statements, which are
included in the Company's Annual Report on Form 10-K for the year ended November
30, 1997 ("Form 10-K"), were prepared in accordance with generally accepted
accounting principles consistently applied and present and reflect fairly the
financial position of the Company at the respective balance sheet dates and the
results of its operations, changes in stockholders' equity and cash flows for
the periods then ended. During the period of Ernst & Young LLP's engagement as
the Company's independent certified public accountants, there has been no
material disagreements between the accounting firm and the Company on any
matters of accounting principles or practices, financial statement disclosure or
auditing scope or procedure and no reportable events relating to the
relationship between the Company and the accounting firm.
(g) The Company has good and marketable title to all of its material
property and assets and, except as set forth in the Memorandum or the Financial
Statements, none of such property or assets of the Company is subject to any
lien, mortgage, pledge, encumbrance or other security interest, other than such
liens, mortgages, pledges, encumbrances or other security interests which in the
aggregate would not have a Material Adverse Effect.
(h) Except as may be disclosed in the Memorandum, since November 30,
1997, there has not been any material adverse change in the financial condition
or in the operations, or business of the Company or any of the Subsidiaries from
that shown in the Financial Statements or
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any damage or destruction, not covered by insurance, which materially affects
the business, property or assets of the Company or any of the Subsidiaries.
(i) Except as set forth in the Exhibits to the Memorandum, the Company
has not filed any Current Reports on Form 8-K or other reports filed with the
Securities and Exchange Commission (the "SEC") subsequent to November 30, 1997.
(j) Neither the execution or delivery of this Agreement, the Preferred
Stock or the Placement Agent Warrants by the Company nor the performance by the
Company of the transactions contemplated by this Agreement, the Preferred Stock
or the Placement Agent Warrants: (i) requires the consent, waiver, approval,
license or authorization of or filing with or notice to any person, entity or
public authority (except any filings required by Federal or state securities
laws); (ii) violates or constitutes a default under or breach of any law, rule
or regulation applicable to the Company; or (iii) conflicts with or results in a
breach or termination of any provision of, or constitutes a default under, or
will result in the creation of any lien, charge or encumbrance upon any of the
property or assets of the Company with or without the giving of notice, the
passage of time or both, pursuant to (A) the Company's restated articles of
incorporation or by-laws, (B) any mortgage, deed of trust, indenture, note, loan
agreement, security agreement, contract, lease, license, alliance agreement,
joint venture agreement, or other agreement or instrument, or (C) any order,
judgment, decree, statute, regulation or any other restriction of any kind or
character to which the Company is a party or by which any of the assets of the
Company may be bound, except in any case set forth above where the failure to
obtain such consent or the like, or such violation or breach would not have a
Material Adverse Effect.
(k) Neither the Company nor any of the Subsidiaries (other than for
inter-company debt) has any indebtedness to any officer, director, 5%
stockholder or other Affiliate (as defined in the Rules and Regulations of the
SEC under the 0000 Xxx) of the Company.
(l) The Company and each of the Subsidiaries is in compliance with all
laws, rules and regulations of all Federal, state and local government agencies
having jurisdiction over the Company and each of the Subsidiaries or affecting
the business, assets or properties of the Company or any of the Subsidiaries,
except where the failure to comply has not and will not have a Material Adverse
Effect. The Company and each of the Subsidiaries possess all licenses, permits,
consents, approvals and agreements which are required to be issued by any and
all applicable Federal, state or local authorities necessary for the operation
of their respective business and/or in connection with their respective assets
or properties, except where the failure to possess such licenses, permits,
consents, approvals or agreements has not and will not have a Material Adverse
Effect.
(m) Neither the Company nor any of the Subsidiaries is in default
under any note, loan agreement, security agreement, mortgage, contract,
franchise agreement, distribution agreement, lease, alliance agreement, joint
venture agreement, agreement, license, permit, consent, approval or instrument
to which it is a party, and no event has occurred which, with or without the
lapse of time or giving of notice, or both, would constitute such default
thereof by the Company or any of the
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Subsidiaries or would cause acceleration of any obligation of the Company or any
of the Subsidiaries or would adversely affect the business, operations or
financial condition of the Company or any of the Subsidiaries, except where such
default or event, whether with or without the lapse of time or giving of notice,
or both, has not and will not have a Material Adverse Effect. To the best of the
knowledge of the Company and except for the cases in which it would not have a
Material Adverse Effect, no party to any note, loan agreement, security
agreement, mortgage, contract, franchise agreement, distribution agreement,
lease, alliance agreement, joint venture agreement, agreement, license, permit,
consent, approval or instrument with or given to the Company or any of the
Subsidiaries is in default thereunder and no event has occurred with respect to
such party, which, with or without the lapse of time or giving of notice, or
both, would constitute a default by such party or would cause acceleration of
any obligations of such party.
(n) To the best of the Company's knowledge, except as set forth in the
Memorandum, no officer, director or 5% stockholder of the Company and no
Affiliate of any such person either (i) holds any interest in any corporation,
partnership, business, trust, sole proprietorship or any other entity which is
engaged in a business substantially similar to that conducted by the Company or
any of the Subsidiaries (other than a passive immaterial interest in a public
company engaged in any such business) or (ii) engages in business with the
Company or any of the Subsidiaries.
(o) Except as set forth in the Memorandum, there are no material
(i.e., involving an asserted liability that reasonably could be expected to
result in a judgement in excess of four hundred thousand dollars ($400,000))
claims, actions, suits, proceedings or labor disputes, inquiries or
investigations (whether or not purportedly on behalf of the Company or any of
the Subsidiaries), pending or, to the best of the Company's knowledge,
threatened, against the Company or any of the Subsidiaries, at law or in equity
or by or before any Federal, state, county, municipal or other governmental
department, SEC, National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), board, bureau, agency or instrumentality, domestic or
foreign, whether legal or administrative or in arbitration or mediation, nor is
there any basis for any such action or proceeding. Neither the Company, any of
the Subsidiaries nor any of their respective assets are subject to, nor is the
Company or any of the Subsidiaries in default with respect to, any order, writ,
injunction, judgment or decree that could have a Material Adverse Effect.
(p) The accounts receivable of the Company and the Subsidiaries
represent receivables generated from the sale of goods and services in the
ordinary course of business. The Company knows of no material disputes
concerning accounts receivable of the Company and the Subsidiaries not disclosed
in the Memorandum.
(q) Except as set forth in the Memorandum or as set forth on Schedule
3(q), hereof, neither the Company nor any of the Subsidiaries has (i) any
written employment contracts and no oral employment contracts not terminable at
will by the Company or any Subsidiary, as applicable, with any 5% percent
shareholder, officer or director of the Company or any Subsidiary, as
applicable, (ii) any consulting agreement or other compensation agreement with
any 5% percent
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shareholder, officer or director of the Company or any Subsidiary, as
applicable, or (iii) any agreement or contract with any 5% percent shareholder,
officer or director of the Company or any Subsidiary, as applicable, that will
result in the payment by the Company or any Subsidiary, as applicable, or the
creation of any commitment or obligation (absolute or contingent), of the
Company or any Subsidiary, as applicable, to pay any severance, termination,
"golden parachute", or similar payment to any present or former personnel of the
Company or any Subsidiary, as applicable, following termination of employment.
No director or executive officer of the Company or any Subsidiary, as
applicable, has advised the Company that he or she intends to resign as director
and/or executive officer of the Company or any Subsidiary, as applicable, or to
terminate his or her employment with the Company or the Subsidiary, as
applicable.
(r) The accounts payable of the Company and the Subsidiaries represent
bona fide payables to third parties incurred in the ordinary course of business
and represent bona fide debts for services and/or goods provided to the Company
and the Subsidiaries.
(s) Except as set forth in the Memorandum, neither the Company nor any
of the Subsidiaries is a party to a labor agreement with respect to any of their
respective employees with any labor organization, union, group or association
and there are no employee unions (nor any similar labor or employee
organizations). There is no labor strike or labor stoppage or slowdown pending,
or, to the best knowledge of the Company, threatened against the Company or any
of the Subsidiaries nor has the Company or any of the Subsidiaries experienced
in the last five (5) years any work stoppage or other labor difficulty. The
Company is in compliance with all applicable laws, rules and regulations
regarding employment practices, employee documentation, terms or conditions of
employment and wage and hours and the Company is not engaged in any unfair labor
practices, except where the failure to comply has not and will not have a
Material Adverse Effect. There are no unfair labor practices charges or
complaints against the Company or any of the Subsidiaries pending before the
National Labor Relations Board or any other governmental agency.
(t) Except as disclosed in the Memorandum, there are no employee
pension, retirement or other benefit plans, maintained, contributed to or
required to be contributed to by the Company or any of the Subsidiaries covering
any employee or former employee of the Company or any of the Subsidiaries.
Neither the Company nor any of the Subsidiaries has any material liability or
obligation of any kind or nature, whether accrued or contingent, matured or
unmatured, known or unknown, under any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or any provision of the
Internal Revenue Code of 1986, as amended, specifically relating to persons
subject to ERISA.
(u) The Company and each of the Subsidiaries has timely filed with the
appropriate taxing authorities all returns in respect of taxes required to be
filed through the date hereof and each has timely paid all taxes that each is
required to pay or has established an adequate reserve therefor, except where
the Company or the Subsidiary, as applicable, has timely filed for extensions.
There are no pending or, to the best knowledge of the Company, threatened
audits,
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investigations or claims for or relating to any liability of the Company or any
of the Subsidiaries in respect of taxes.
(v) There are no finder's fees or brokerage commissions payable with
respect to the transactions contemplated by this Agreement, except as provided
in Paragraph 10 of this Agreement, and the Company agrees to indemnify and hold
harmless the Placement Agent from and against any and all cost, damage,
liability, judgment and expense (including reasonable fees and expenses of
counsel) arising out of or relating to claims for such fees or commissions.
(w) Except as set forth in the Memorandum, the Company is not
currently and has not during the past four (4) months been engaged in
substantive negotiations (as compared with informal discussions) with respect
to: (i) any merger or consolidation of the Company where the Company would not
be the surviving entity; or (ii) the sale of the Company, any of its
Subsidiaries or any of their assets other than sales in the ordinary course of
business.
(x) The Company and each of the Subsidiaries has the right to conduct
their respective business in the manner in which their respective business has
been heretofore conducted. To the best knowledge of the Company, the conduct of
such businesses by the Company and each of the Subsidiaries does not violate or
infringe upon the patent, copyright, trade secret or other proprietary rights of
any third party, other than any such violation or infringement that would not
have a Material Adverse Effect, and neither the Company nor any of the
Subsidiaries has received any notice of any claim of any such violation or
infringement.
(y) The Company and each of the Subsidiaries are currently in
compliance in all respects with all applicable Environmental Laws (as defined
below), including, without limitation, obtaining and maintaining in effect all
permits, licenses, consents and other authorizations required by applicable
Environmental Laws and the Company and each Subsidiary are each currently in
compliance with all such permits, licenses, consents and other authorizations,
except where the failure to comply has not and will not have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has received notice from
any property owner, landlord, tenant or Governmental Authority (as defined
below) that Hazardous Wastes (as defined below) are being improperly used,
stored or disposed of at any property currently or formerly owned or leased by
the Company or any of its Subsidiaries or that any soil or ground water
contamination has emanated from any such property. For purposes hereof, the term
"Environmental Laws" means, collectively, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Toxic Substances Act, as amended, the Clean Air Act, as
amended, the Clean Water Act, as amended, any other "Superfund" or "Superlien"
law or any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect. For purposes
hereof, the term "Governmental Authority" shall mean the Federal Government of
the United States of America, any state or any political
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subdivision of the Federal Government or any state, including but not limited to
courts, departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities. For purposes hereof, the term "Hazardous Waste" shall mean
any regulated quantity of hazardous substances as listed by the United States
Environmental Protection Agency ("EPA") and the list of toxic pollutants
designated by the United States Congress and/or the EPA or defined by any other
Federal, state or local statute, law, ordinance, code, rule, regulation, order,
or decree regulating, relating to or imposing liability for standards of conduct
concerning any hazardous, toxic substance or material.
(z) The information contained in the Financial Statements and the
Memorandum, taken together, does not contain any misstatement of a material fact
or omit to state a material fact necessary to make the information not
misleading.
4. Survival of Representations and Warranties and Indemnification. The
representations and warranties of the Company set forth in Section 3 of this
Agreement shall survive the execution and delivery of the Preferred Stock. The
indemnification obligations of the Company as set forth in the indemnification
rider identified as Exhibit B (the "Indemnification Rider") to the August 14,
1998 engagement letter between the Company and the Placement Agent, as same
shall be supplemented and/or amended, is hereby incorporated herein by reference
in its entirety as if more fully set forth herein and the provisions of the
Indemnification Rider shall apply and be applicable to, among other things, all
representations and warranties of the Company contained herein.
5. Use of Proceeds. The net proceeds from the sale of the Preferred
Stock will be used by the Company as disclosed in the Memorandum.
6. Unregistered Securities. Neither the Preferred Stock, Conversion
Shares, Placement Agent Warrants nor PAW Exercise Shares have been registered
under the 1933 Act, in reliance upon the applicability of Section 3(b), 4(2),
4(6) and/or Regulation D of the 1933 Act to the transactions contemplated
hereby. The certificates representing the Preferred Stock and Placement Agent
Warrants will bear an investment legend and the certificates representing the
Conversion Shares and PAW Exercise Shares issued prior to their respective
registration under Section 3 of the Preferred Stock Purchase Agreement (a copy
of which is annexed as an exhibit to the Memorandum) and Section 7 below will
also bear investment legends.
7. Registration Rights and "Piggy-Back" Registration Rights.
(a) As soon as possible after the Final Closing Date, but in no event
later than forty-five (45) days after the Final Closing Date (regardless of
whether the maximum number of shares of Preferred Stock shall have been sold),
the Company shall, at its sole cost and expense, file a registration statement
on the appropriate form with the SEC covering all of the PAW Exercise Shares and
such additional shares of Common Stock that may be issued pursuant to the
anti-dilution rights contained in the Placement Agent Warrants and as set forth
below in this Section 7(a) (collectively, the "Registrable Securities"), time
being of the essence. The Company will use its best efforts to have such
registration statement declared effective as soon as possible after filing, and
shall
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keep such registration statement current and effective for at least three (3)
years from the effective date thereof or until such earlier date as all of the
Registrable Securities registered pursuant to such registration statement shall
have been sold. Notwithstanding anything to the contrary contained herein, if
such registration statement shall not be filed with the SEC within forty-five
(45) days after the Final Closing Date or the Registration Statement shall not
be declared effective within one hundred eighty (180) days after the Final
Closing Date (regardless of whether the maximum number of shares of Preferred
Stock shall have been sold), then the exercise price for the Placement Agent
Warrants shall be reduced by the percentage resulting from multiplying 3% by the
number of thirty (30) day periods, or any part thereof, beyond said forty-five
(45) day or one hundred eighty (180) day period, as applicable, until the
initial registration statement described herein covering the Registrable
Securities is filed or declared effective, as applicable. The maximum reduction
pursuant to this provision shall be eighteen (18%) percent.
(b) In the event the Company effects any registration under the 1933
Act of any Registrable Securities pursuant to Paragraphs 7(a) above or 7(g)
below, the Company shall indemnify, to the extent permitted by law, and hold
harmless any registered holder whose Registrable Securities are included in such
registration statement (each, a "Seller"), any underwriter, any officer,
director, employee or agent of any Seller or underwriter, and each other person,
if any, who controls any Seller or underwriter within the meaning of Section 15
of the 1933 Act, against any losses, claims, damages or liabilities, judgment,
fines, penalties, costs and expenses, joint or several, or actions in respect
thereof (collectively, the "Claims"), to which each such indemnified party
becomes subject, under the 1933 Act or otherwise, insofar as such Claims arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or prospectus or any
amendment or supplement thereto or any document filed under a state securities
or blue sky law (collectively, the "Registration Documents") or insofar as such
Claims arise out of or are based upon the omission or alleged omission to state
in any Registration Document a material fact required to be stated therein or
necessary to make the statements made therein not misleading, and will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in investigating or defending any such Claim; provided
that the Company shall not be liable in any such case to a particular
indemnified party to the extent such Claim is based upon an untrue statement or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact made in any Registration Document in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such indemnified party specifically for use in the preparation of such
Registration Document.
(c) In connection with any registration statement in which any Seller
is participating, each Seller, severally and not jointly, shall indemnify, to
the extent permitted by law, and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
other person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act, each other Seller and each underwriter, any officer, director,
employee or agent of any such other Seller or underwriter and each other person,
if any, who controls such other Seller or underwriter within the meaning of
Section 15 of the 1933 Act against any Claims to
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which each such indemnified party may become subject under the 1933 Act or
otherwise, insofar as such Claims (or actions in respect thereof) are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Document, or insofar as any Claims are based upon the
omission or alleged omission to state in any Registration Document a material
fact required to be stated therein or necessary to make the statements made
therein not misleading, and will reimburse any such indemnified party for any
legal or other expenses reasonably incurred by such indemnified party in
investigating or defending any such claim; provided, however, that such
indemnification or reimbursement shall be payable only if, and to the extent
that, any such Claim arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Registration Document in reliance upon and in conformity with written
information furnished to the Company by the Seller specifically for use in the
preparation thereof.
(d) Any person entitled to indemnification under Paragraphs 7(b) or
7(c) above shall notify promptly the indemnifying party in writing of the
commencement of any Claim if a claim for indemnification in respect thereof is
to be made against an indemnifying party under this Paragraph 7(d), but the
omission of such notice shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under
Paragraph 7(b) or 7(c) above, except to the extent that such failure shall
materially adversely affect any indemnifying party or its rights hereunder. In
case any action is brought against the indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it chooses, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified party;
and, after notice from the indemnifying party to the indemnified party that it
so chooses, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the Claim within twenty
(20) days after receiving notice from the indemnified party that the indemnified
party believes it has failed to do so; (ii) if the indemnified party who is a
defendant in any action or proceeding which is also brought against the
indemnifying party reasonably shall have concluded that there are legal defenses
available to the indemnified party which are not available to the indemnifying
party; or (iii) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct, the
indemnified party shall have the right to assume or continue its own defense as
set forth above (but with no more than one firm of counsel for all indemnified
parties, except to the extent any indemnified party or parties reasonably shall
have concluded that there are legal defenses available to such party or parties
which are not available to the other indemnified parties or to the extent
representation of all indemnified parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct) and the
indemnifying party shall be liable for any reasonable expenses therefor;
provided, that no indemnifying party shall be subject to any liability for any
settlement of a Claim made without its consent (which may not be unreasonably
withheld, delayed or conditioned). If the indemnifying party assumes the defense
of any Claim hereunder, such indemnifying party shall not enter into any
settlement without the consent of the indemnified party if such settlement
attributes liability to the indemnified party.
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(e) If for any reason the indemnity provided in Paragraphs 7(b) or
7(c) above is unavailable, or is insufficient to hold harmless, an indemnified
party, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of any Claim in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other from the
transactions contemplated by this Agreement. If, however, the allocation
provided in the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable in
respect of any Claim shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such Claim. Notwithstanding the foregoing, no underwriter or
controlling person thereof, if any, shall be required to contribute, in respect
of such underwriter's participation as an underwriter in the offering, any
amount in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligation of any underwriters to contribute pursuant to
this paragraph (e) shall be several in proportion to their respective
underwriting commitments and not joint.
(f) The provisions of Paragraphs 7(b) through 7(e) of this Agreement
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party and shall survive the
transfer of the Registrable Securities by any such party.
(g) The Sellers shall have certain "piggy-back" registration rights
with respect to the Registrable Securities as hereinafter provided:
A. If at any time after the Final Closing Date and prior to the
date that the Registered Securities are registered under the 1933 Act pursuant
to Section 7(a) above, the Company shall file with the SEC a registration
statement under the 1933 Act (other than a registration statement on Form S-4 or
Form S-8 or any successor thereof, or filed in connection with an exchange offer
or an offer of securities solely to the Company's existing shareholders)
registering any shares of Common Stock, the Company shall give written notice to
each Seller thereof prior to such filing.
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B. Within fifteen (15) days after such notice from the Company,
each Seller shall give written notice to the Company whether or not the Seller
desires to have all of the Seller's Registrable Securities included in the
registration statement. If a Seller fails to give such notice within such
period, such Seller shall not have the right to have Seller's Registrable
Securities registered pursuant to such registration statement. If a Seller gives
such notice, then the Company shall include such Seller's Registrable Securities
in the registration statement, at the Company's sole cost and expense, subject
to the remaining terms of this Paragraph 7(g); provided, however, that each
Seller shall pay all underwriting discounts, commissions, and transfer taxes
relating to the sale of such Seller's Registered Securities, as well as his, her
or its own counsel fees, if any, relating to the sale of the Seller's Registered
Securities.
C. If the registration statement relates to an underwritten
offering, and the underwriter in its sole discretion shall determine in writing
that the total number of shares of Common Stock to be included in the offering,
including the Registrable Securities, shall exceed the amount which the
underwriter in its sole discretion deems to be appropriate for the offering, the
number of shares of the Registrable Securities shall be reduced pro rata (based
on the number of Registered Securities requested to be included). The Sellers
shall enter into such agreements as may be reasonably required by the
underwriters.
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D. The holders of Placement Agent Warrants shall have two (2)
opportunities to have the Registrable Securities registered under this Paragraph
7(g).
E. Seller shall furnish in writing to the Company such
information as the Company shall reasonably require in connection with a
registration statement.
F. The Company may, at any time and in its sole discretion,
decide not to proceed with the filing of a registration statement which may have
given rise to "piggy-back" rights under this Section 7(g) or may at any time
terminate or suspend such registration, in which event each Seller's rights
under this Section 7 as to the number of opportunities to "piggy-back" shall be
reset.
(h) If and whenever the Company is required by the provisions of
Paragraph 7(a) to use its best efforts to register any Registrable Securities
under the 1933 Act, the Company shall, as expeditiously as possible under the
circumstances and subject to the terms of this Section 7:
A. Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective as soon as possible after filing and
remain effective.
B. Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement current and effective
and to comply with the provisions of the 1933 Act, and any regulations
promulgated thereunder, with respect to the sale or disposition of all
Registrable Securities covered by the registration statement required to effect
the distribution of the securities, but in no event shall the Company be
required to do so for a period of more than three (3) years following the
effective date of the registration statement.
C. Furnish to the Sellers participating in the offering, copies
(in reasonable quantities) of summary, preliminary, final, amended or
supplemented prospectuses, in conformity with the requirements of the 1933 Act
and any regulations promulgated thereunder, and other documents as reasonably
may be required in order to facilitate the disposition of the securities, but
only while the Company is required under the provisions hereof to keep the
registration statement current.
D. Use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions of the United States as the Sellers
participating in the offering shall reasonably request, and do any and all other
acts and things which may be reasonably necessary to enable each participating
Seller to consummate the disposition of the Registrable Securities in such
jurisdictions.
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E. Notify each Seller selling Registrable Securities, at any time
when a prospectus relating to any such Registrable Securities covered by such
registration statement is required to be delivered under the 1933 Act, of the
Company's becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and promptly prepare and furnish to each such Seller selling
Registrable Securities a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
F. As soon as practicable after the effective date of the
registration statement, and in any event within eighteen (18) months thereafter,
make generally available to Sellers participating in the offering an earnings
statement (which need not be audited) covering a period of at least twelve (12)
consecutive months beginning after the effective date of the registration
statement which earnings statement shall satisfy the provisions of Section 11(a)
of the 1933 Act, including, at the Company's option, Rule 158 thereunder. To the
extent that the Company files such information with the SEC in satisfaction of
the foregoing, the Company need not deliver the above referenced earnings
statement to Sellers.
G. Upon request, deliver promptly to counsel of each Seller
participating in the offering copies of all correspondence between the SEC and
the Company, its counsel or auditors and all memoranda relating to discussions
with the SEC or its staff with respect to the registration statement and permit
each such Seller to do such investigation at such Seller's sole cost and
expense, upon reasonable advance notice, with respect to information contained
in or omitted from the registration statement as it deems reasonably necessary.
Each Seller agrees that it will use its best efforts not to interfere
unreasonably with the Company's business when conducting any such investigation
and each Seller shall keep any such information received pursuant to this
Paragraph 7(h)G confidential.
H. Provide a transfer agent located in the United States for all
such Registrable Securities covered by such registration statement not later
than the effective date of such registration statement.
I. List the Registrable Securities covered by such registration
statement on such exchanges and/or on the NASDAQ as the Common Stock is then
currently listed upon.
J. Pay all Registration Expenses (as defined below) incurred in
connection with a registration of Registrable Securities, whether or not such
registration
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statement shall become effective; provided that each Seller shall pay all
underwriting discounts, commissions and transfer taxes, and their own counsel
fees, if any, relating to the sale or disposition of such Seller's Registrable
Securities pursuant to a registration statement. As used herein, "Registration
Expenses" means any and all reasonable and customary expenses incident to
performance of or compliance with the registration rights set forth herein,
including, without limitation, (i) all SEC and stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
fees and expenses of complying with state securities or blue sky laws (including
reasonable fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities but no other expenses
of the underwriters or their counsel), (iii) all printing, messenger and
delivery expenses, and (iv) the reasonable fees and disbursements of counsel for
the Company and the Company's independent public accountants.
(i) The Company acknowledges that there is no adequate remedy at law
for failure by it to comply with the provisions of this Paragraph 7 and that
such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Paragraph 7 may be specifically
enforced. In the event that the Company shall fail to file such registration
statement when required pursuant to Paragraph 7(a) above or to keep any
registration statement effective as provided in this Paragraph or otherwise
fails to comply with its obligations and agreements in this Paragraph 7, then,
in addition to any other rights or remedies Sellers may have at law or in
equity, including without limitation, the right of rescission, the Company shall
indemnify and hold harmless each holder of Placement Agent Warrants from and
against any and all manner or loss which they may incur as a result of such
failure. In addition, the Company shall also reimburse such holders for any and
all reasonable legal fees and expenses incurred by them in successfully
enforcing their rights pursuant to this Paragraph 7, regardless of whether any
litigation was commenced; provided, however, that the Company shall not be
liable for the fees and expenses of more than one law firm, which firm shall be
designated by the Placement Agent.
8. Conditions. The following obligations of the Company shall be
satisfied or fulfilled on or prior to the date of each Closing, unless otherwise
agreed to in writing by the Placement Agent:
(a) The Company shall have delivered to the Placement Agent, at the
Initial Closing, (i) a currently-dated long-form good standing or comparable
certificate or telegram from the Secretary of State or other appropriate
authority where the Company and each U.S.- based Subsidiary is incorporated and
each other jurisdiction in which the Company and any of the Subsidiaries is
qualified to do business as a foreign corporation; (ii) the certificate of
incorporation of the Company and each Subsidiary, as currently in effect,
certified by the Secretary of State or other appropriate authority of the state
where the Company and each Subsidiary is incorporated; (iii) a certified copy of
the filed Articles of Amendment setting forth the designation, preference
rights, qualifications, limitations or restrictions of the Preferred Stock; (iv)
by-laws of the Company certified by the secretary of the Company; and
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(v) certified resolutions of the Board of Directors of the Company approving
this Agreement, the execution of the Preferred Stock and the Placement Agent
Warrants, the registration of the Registerable Securities and the other
transactions contemplated by the Preferred Stock.
(b) There shall have occurred no material adverse event affecting the
Company or the Subsidiaries or any of their respective businesses or assets or
the Company's securities since the date of this Agreement which has had or will
have a Material Adverse Effect.
(c) No litigation or administrative proceeding shall have been
threatened or commenced against the Company or any of the Subsidiaries which (i)
seeks to enjoin or otherwise prohibit or restrict the consummation of the
transactions contemplated by this Agreement or (ii) if adversely determined,
would have a Material Adverse Effect or have a material adverse effect on the
Company's securities.
(d) The Company shall have delivered to the Placement Agent a
certificate of its principal executive and financial officers as to the matters
set forth in Paragraphs 8(a), (b) and (c) of this Agreement and to the further
effect that (i) neither the Company nor any Subsidiary is in default, in any
respect, under any note, loan agreement, security agreement, mortgage, deed of
trust, indenture, contract, alliance agreement, lease, license, joint venture
agreement, agreement or other instrument to which it is a party, except as
disclosed in the Financial Statements or the Memorandum and except where such
default has not and will not have a Material Adverse Effect; (ii) the Company's
representations and warranties contained in this Agreement are true and correct
in all material respects on such date with the same force and effect as if made
on such date; (iii) there has been no amendment or changes to the Company's or
Subsidiaries' charter or by-laws or authorizing resolutions from those delivered
pursuant to Paragraph 8(a) of this Agreement; and (iv) no event has occurred
which, with or without the lapse of time or giving of notice, or both, would
constitute a material breach or default thereof by the Company or any Subsidiary
or would cause acceleration of any material obligation of the Company or any
Subsidiary, or could materially and adversely affect the business, operations or
financial condition of the Company.
(e) The Placement Agent shall have received the opinion of Xxxxx &
Xxxxxxx, counsel for the Company, dated as of the closing date in form and
substance reasonably satisfactory to the Placement Agent and its counsel.
(f) The Company shall have prepared and filed or delivered to counsel
for filing with the SEC and any states in which such filing is required, a Form
D relating to the sale of the Preferred Stock and such other documents and
certificates as are required.
(g) Subscriptions for at least the Minimum Amount of Preferred Stock
shall have been accepted by the Company.
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(h) In addition to the right of the Placement Agent to terminate this
Agreement and not consummate the transactions contemplated by this Agreement as
a result of the failure of the Company to comply with any of its obligations set
forth in this Agreement, this Agreement may be terminated by the Placement Agent
by written notice to the Company at any time prior to the Initial Closing if, in
the Placement Agent's sole judgment, (i) the Company and/or Subsidiaries shall
have sustained a loss that is material to the Company or its Subsidiaries, taken
as a whole, whether or not insured, by reason of fire, earthquake, flood,
accident or other calamity, or from any labor dispute or court or government
action, order or decree; (ii) trading in securities on any exchange or system
shall have been suspended or limited either generally or specifically with
respect to the Common Stock; (iii) material governmental restrictions have been
imposed on trading in securities generally or specifically with respect to the
Common Stock (not in force and effect on the date of this Agreement); (iv) a
banking moratorium shall have been declared by Federal or New York State
authorities; (v) an outbreak of major international hostilities or other
national or international calamity shall have occurred; (vi) the Congress of the
United States or any state legislative body shall have passed or taken any
action or measure, or such bodies or any governmental body or any authoritative
accounting institute, or board, or any governmental executive shall have adopted
any orders, rules or regulations, which the Placement Agent reasonably believes
is likely to have a material adverse effect on the business, financial condition
or financial statements of the Company or the market for the Preferred Stock;
(vii) the Common Stock shall have been delisted from NASDAQ; or (viii) there
shall have been, in the Placement Agent's judgment, a material decline in the
Dow Xxxxx Industrial Index or the market price of the Common Stock at any time
subsequent to the date of this Agreement.
9. Covenants of the Company. The Company agrees at all times as long
as the Preferred Stock and the Placement Agent Warrants may be converted or
exercised, to keep reserved from the authorized and unissued Common Stock, such
number of shares of Common Stock as may be, from time to time, issuable upon
conversion of the Preferred Stock and exercise of the Placement Agent Warrants.
10. Fees.
(a) Upon the receipt by the Company of the payments from the
Purchasers, the Company shall pay to the Placement Agent a fee equal to 8% of
the gross proceeds from the Preferred Stock sold pursuant to this Agreement, a
portion of which may be paid by the Placement Agent to other registered
broker-dealers; provided, however, that the Company shall have no obligation
with respect to payments that may be due such broker-dealers. Such amount may be
deducted by the Placement Agent from the payment being made to the Company
pursuant to Paragraph 2 of this Agreement. In addition, the Company shall issue
at the Final Closing, five (5) year warrants to purchase an amount of Common
Stock equal to 10% of the shares of Common Stock that the Preferred Stock could
be converted into, at an exercise price of 120% of the Conversion Price, subject
to adjustment (the "Placement Agent Warrants"), a portion of which may be
allotted by the Placement Agent to other registered
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broker-dealers; provided, however, that the Company shall have no obligation
with respect to the allocation of the Placement Agents Warrants to such
broker-dealers. The persons in whose name the Placement Agent Warrants are
issued shall all be "accredited investors" as defined in the regulations
promulgated under the 1933 Act and such persons shall acquire such warrants for
investment purposes only and not with a view towards the redistribution thereof.
The Company shall reimburse the Placement Agent for up to $32,500 of its
reasonable costs and expenses, including the reasonable fees and expenses of
counsel to the Placement Agent, if and when a closing occurs.
(b) The Company shall pay any fees required in connection with the
qualification of the sale of the Preferred Stock under the state securities or
blue sky laws of any state which the Placement Agent reasonably deems necessary
and any other out-of-pocket expenses incurred by the Company in connection with
the transaction contemplated by this Agreement.
(c) All payments in connection with the sale of the Preferred Stock
shall be made pursuant to the terms and conditions of the escrow agreement dated
as of August 17, 1998 between Placement Agent and American Stock Transfer &
Trust Company, an executed copy of which has been delivered to and acknowledged
by the Company.
11. Notices. All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally or sent
by overnight courier or messenger against receipt thereof or sent by registered
or certified mail, return receipt requested, or by facsimile transmission, if
confirmed by mail as provided in this Paragraph 11. Notices shall be deemed to
have been received on the date of personal delivery or facsimile or, if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the third business day after the date of mailing. Notices shall be
sent to the following addresses:
To the Company:
EFFECTIVE MANAGEMENT SYSTEMS, INC.
00000 Xxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
With a copy to:
XXXXX & XXXXXXX
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
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Telecopier: (000) 000-0000
Attention: Xxx X. Xxxxxxx, Esq.
To Placement Agent:
TAGLICH BROTHERS, X'XXXXXX, XXXXXX
& COMPANY, INCORPORATED
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx
With a copy to:
XXXXXXXX XXXXXXXXX XXXXXX XXXXXXXX
& XXXXXX LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
or to such other address as any party shall designate in the manner provided in
this Paragraph 11.
12. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof, superseding any and all prior or
contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing which expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all parties with respect to a
modification or amendment or the party granting the waiver with respect to a
waiver. No course of conduct or dealing and no trade custom or usage shall
modify any provisions of this Agreement.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such state. Each party hereby consents to the
exclusive jurisdiction of the Federal and State Courts situated in New York
County, New York in connection with any action arising out of or based upon this
Agreement and the transaction contemplated by this Agreement.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective personal representatives, successors
and permitted assigns.
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(d) In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
(e) Each party shall, without payment of any additional consideration
by any other party, at any time on or after the date of any Closings take such
further action and execute such other and further documents and instruments as
the other party may request in order to provide the other party with the
benefits of this Agreement.
(f) The captions and headings contained herein are solely for
convenience and reference and do not constitute a part of this Agreement.
(g) All references to any gender shall be deemed to include the
masculine, feminine or neuter gender, the singular shall include the plural and
the plural shall include the singular.
(h) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first aforesaid.
EFFECTIVE MANAGEMENT TAGLICH BROTHERS, X'XXXXXX, XXXXXX
SYSTEMS, INC. & COMPANY, INCORPORATED
By: /S/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx Xx
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxxx Xx
Title: Secretary Title: Vice President
