DATED 19 July 2005
(1) ENOVA SYSTEMS, INC.
(2) THE DIRECTORS OF ENOVA SYSTEMS, INC.
(3) INVESTEC BANK (UK) LIMITED
AGREEMENT
relating to the appointment of a
Nominated Adviser and Broker
Xxxxxxxx Xxxxxx LLP
000 Xxxxxx
Xxxxxx XX0X 0XX
Tel: 000 0000 0000
Fax: 000 0000 0000
(JGE/I24/6)
CONTENTS
Clause Page
1. Interpretation 1
2. Appointments 4
3. Fees 4
4. Duties of Investec 5
5. Undertakings and Authorities relating to Admission 6
6. Indemnity 7
7. AIM Rules 8
8. Announcements 9
9. Directors' dealings in securities 10
10. Termination 10
11. Change of Directors 12
12. Undertakings regarding Issues of Further Shares 12
13. Undertakings regarding US Securities and Other Legislation 12
14. Status of the Company 12
15. Notices 12
16. General 12
17. Counterparts 12
18. Governing Law 14
Schedule 1 - The Directors 16
Schedule 2 - Pre-Emption Rights 16
PAGE 1
THIS AGREEMENT is made the 19th of July 2005
BETWEEN:
(1) 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");
(2) THE SEVERAL PERSONS whose respective names and addresses are set out in
Schedule 1 to this Agreement, being all the directors of the Company (the
"Directors"); and
(3) 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").
WHEREAS:
(A) The existing shares of common stock of the Company are at the date of this
Agreement traded on the OTC Bulletin Board in the US (under the symbol
`ENVA').
(B) Application is proposed to be made to the London Stock Exchange for all the
existing and to be issued shares of common stock in the capital of the
Company to be admitted to trading on AIM.
(C) The Company wishes as separate appointments, to appoint Investec to be its
Nominated Adviser and Broker in respect of its proposed application for
Admission (as hereinafter defined) and thereafter.
(D) Investec has agreed to accept such appointments and to perform the
obligations and services to or for the Company described herein upon and
subject to the terms and conditions herein set out.
(E) The Directors have agreed to be parties to this Agreement to give, at the
request of Investec, certain undertakings.
(F) Investec is regulated by the FSA and is a member of the London Stock
Exchange.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement (including its Recitals) the following words and
expressions shall (save where the context otherwise requires) have the
following meanings:
"Admission" the admission of all the issued Common Shares
to trading on AIM becoming effective (as
described in Rule 6 of the AIM Rules);
"AdmissionDocument" the document published by the Company in
relation to Admission as required by and in
accordance with the AIM Rules;
"AIM" the market of that name operated by the
London Stock Exchange;
"AIMRules" the rules for AIM companies and their
nominated advisers published by the London
Stock Exchange from time to time;
PAGE 2
"AIMSecurity" a security which the London Stock Exchange
has admitted to trading on AIM pursuant to
the AIM Rules;
"AnnualRetainerFee" (pound)Nil for the first year following
Admission, (pound)45,000 for the second year
following Admission and increasing to
(pound)50,000 for the third and each
subsequent year following Admission;
"Broker" as defined in the AIM Rules;
"Business Day" any day on which banks in the City of London
are open for business (excluding Saturdays);
"Common Shares" shares of common stock, no par value, in the
capital of the Company;
"FSA" the Financial Services Authority;
"FSMA" the Financial Services & Markets Act 2000 as
amended (including pursuant to the Market
Abuse Regulations) and including any
regulations made pursuant thereto;
"London Stock Exchange" London Stock Exchange plc;
"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" as defined in the AIM Rules;
"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;
"Placing" the placing of 5,350,000 new Common Shares,
more particularly described in the Admission
Document;
"Placing Agreement" the agreement dated 19 July 2005 entered into
between Investec (1) the Company (2) and the
Directors (3) under which, inter alia,
Investec has (as agent for the Company)
undertaken the Placing;
"Regulation S" Regulation S of the US Securities Act;
"Regulatory Information as defined in the AIM Rules;
Service"
PAGE 3
"SEC" US Securities and Exchange Commission;
"SEC Regulations" the rules and regulations of the SEC in so
far as they apply to the Company;
"Termination Event" one of the events or circumstances mentioned
in clauses 10.1 or 10.2; and
"US Securities Act" the US Securities Act of 1933 (as amended).
1.2 In this Agreement unless the context requires otherwise, a reference to:-
1.2.1 "person" includes any company, unincorporated association or
partnership;
1.2.2 a "subsidiary" or "holding company" shall, in relation to
Investec, be construed in accordance with section 736 of the
Companies Xxx 0000;
1.2.3 clauses and schedules is a reference to clauses of and schedules
to this agreement;
1.2.4 a statutory provision shall be construed as a reference to those
provisions as respectively amended or re-enacted (whether before
or after the date of this agreement) from time to time and shall
include any provisions of which they are re-enactments (whether
with or without modification) and any subordinate legislation
made from time to time under such provisions, (but not so as to
produce any greater liability for any of the parties hereto than
would have existed under the relevant provision in the form which
it stood as at the date hereof);
1.2.5 an agreement or other document is a reference to that agreement
or document as from time to time supplemented or amended;
1.2.6 "writing" shall be construed so as to include any communications
effected by facsimile transmission or any comparable means
ordinarily legible and non-transitory but excluding writing
appearing only on the screen of a visual display unit or other
similar device.
1.3 The table of contents and headings in this Agreement are for convenience
only and shall not affect its construction.
1.4 Words denoting the singular shall include the plural and vice versa. Words
denoting any gender include all genders.
1.5 Words and expressions defined in the Admission Document shall apply to this
Agreement.
1.6 Any agreement, warranty, representation, indemnity, covenant or undertaking
on the part of two or more persons shall (except where the contrary is
stated) be deemed to be given or made by such persons jointly and severally
and where any such provision is qualified by words such as "to the best of
the belief of" the person giving the provision of "so far as a person is
aware", then there shall be deemed to be included within such qualification
the words "having made all reasonable enquiry".
1.7 References in this Agreement to "material" shall mean (unless otherwise
stated) material in the context of Admission in the reasonable opinion of
Investec.
PAGE 4
2. APPOINTMENTS
2.1 The Company hereby appoints and Investec hereby agrees to act as Nominated
Adviser to the Company. The Company hereby confirms that the appointment of
Investec as Nominated Adviser confers on Investec all powers, authorities
and discretions on behalf of the Company which are reasonably necessary
for, or reasonably incidental to, its role as the Company's Nominated
Adviser and the Company hereby agrees to ratify and confirm everything
which Investec may lawfully and properly do in that capacity and pursuant
to those powers, authorities and discretions. Such appointment shall
commence on the date of this Agreement and, subject to clauses 2.3 and 10
below, shall continue until terminated by either the Company or Investec
giving to the other not less than one (1) month's prior written notice,
such notice to expire not earlier than the first anniversary of the date of
Admission.
2.2 The Company hereby appoints and Investec hereby agrees to act as Broker to
the Company. The Company hereby confirms that the appointment of Investec
as Broker confers on Investec all powers, authorities and discretions on
behalf of the Company which are reasonably necessary for, or reasonably
incidental to, its role as Broker and the Company hereby agrees to ratify
and confirm everything which Investec may lawfully and properly do in that
capacity and pursuant to those powers, authorities and discretions. Such
appointment shall commence on the date of this Agreement and, subject to
clauses 2.3 and 10 below, shall continue until terminated by either the
Company or Investec giving to the other not less than thirty (30) days
prior written notice, such notice to expire not earlier than the first
anniversary of the date of Admission.
2.3 In the event that Admission shall not be effected by 26 July 2005 (or such
later date as Investec may agree, being not later than 9 August 2005), then
this Agreement shall be of no effect and no party shall have any rights or
liabilities pursuant to this Agreement.
3. FEES
3.1 In consideration of Investec agreeing to act as Nominated Adviser and
Broker, the Company shall, subject to and conditional upon Admission, pay
to Investec the Annual Retainer Fee in respect of its services under this
Agreement (together with VAT thereon and any out-of-pocket expenses which
it incurs in respect of such services). The Company shall pay the Annual
Retainer Fee in two equal instalments half yearly in advance beginning on
the first anniversary of Admission. Any instalment is subject to a
pro-rated adjustment in respect of termination occurring pursuant to the
terms of this Agreement.
3.2 Any payments due pursuant to clause 3.1 shall be in addition to any fees
payable in respect of any advice which Investec may be engaged to provide
on any specific transaction, event or situation on behalf of the Company,
subject to prior written agreement with the Company (including, for the
avoidance of doubt but without limitation, any advice on potential
acquisitions, future fund raisings, the approval of any document as a
`financial promotion' for the purposes of section 21 FSMA or any
requirement to give a 'fair and reasonable' opinion on a related party
transaction under the AIM Rules).
3.3 Unless expressly agreed to the contrary, the Company agrees to pay any fees
and expenses properly due and payable to Investec pursuant to this
Agreement from time to time within fourteen (14) days after the issue of
the invoice in respect thereof (together with any VAT properly charged
thereon upon production of an appropriate VAT invoice) and may be set off
against any sums which Investec may be holding for the Company's account
from time to time.
PAGE 5
4. DUTIES OF INVESTEC
4.1 The responsibilities of Investec in its capacity as Nominated Adviser are
owed solely to the London Stock Exchange and are set out in Rule 39 and
Schedule 6 of the AIM Rules. Investec generally agrees to provide
continuing advice and guidance as the Directors may reasonably and properly
request in relation to their responsibilities and obligations as directors
of a company whose shares are traded on AIM, and without prejudice to the
generality of the foregoing:-
4.1.1 Investec shall, subject to and conditional on Admission, act as
Nominated Adviser to the Company in relation to the publication
of the Admission Document and shall make the declaration required
by the London Stock Exchange for Admission;
4.1.2 Investec shall provide such advice and guidance to the Directors
of the Company as to their responsibilities and obligations to
ensure compliance by the Company on an ongoing basis with the AIM
Rules and as the Company may reasonably request from time to
time;
4.1.3 Investec shall liaise as required with the AIM team of the London
Stock Exchange on matters relating to the continued trading of
the Company's Common Shares on AIM;
4.1.4 Investec shall attend by telephone (when reasonably requested by
the Directors) at meetings of the Board of directors of the
Company and at general meetings of the Company; and
4.1.5 Investec shall regularly review with the Company the actual
trading performance and financial condition of the Company
against any profit forecast, estimate or projection included in
the Admission Document or otherwise made public, in order to
assist the Company in deciding whether an announcement is
necessary under the AIM Rules.
4.2 Investec shall act as the Company's Broker as required by Rule 35 of the
AIM Rules and perform the services appropriate and customary to that role
and without prejudice to the generality of the foregoing:-
4.2.1 Investec shall provide advice and guidance and co-ordination of
an appropriate investor liaison programme for the Company;
4.2.2 Investec, when requested, shall co-ordinate all transactions in
Common Shares, with a view to maintaining an orderly market in
the UK in Common Shares;
4.2.3 Investec shall advise the Company on investment conditions in the
UK and the pricing of the Company's securities and monitor and
report to the Company where appropriate on the trading of its
shares and significant movements in share price;
4.2.4 Investec shall provide advice to the Company on anticipated
market reactions to new corporate initiatives (including, without
limitation, acquisitions, disposals and finance raising); and
4.2.5 Investec shall provide advice to the Company on a preliminary
basis, where requested, relating to potential offers,
acquisitions, disposals and finance raising.
PAGE 6
4.3 Investec shall treat as strictly confidential, and shall procure that its
officers, servants, agents and advisers (collectively, the "Investec
Parties") shall treat as strictly confidential, all information received or
obtained by it in relation to the Company, its subsidiaries, their
respective directors and employees and the businesses and investments (both
actual and prospective) of the Company and such subsidiaries (the
"Confidential Information"). Investec shall use such information and shall
procure that its officers, servants, agents and advisers use such
information, solely for the purpose of carrying out its duties properly in
accordance with this Agreement and in no event shall such Confidential
Information be used directly or indirectly to trade in the Common Shares.
In the event of the termination of this Agreement for any reason, Investec
shall, immediately on being so requested, return any such information in
its possession, or in the possession of its officers, servants and agents,
to the Company, together with written confirmation signed by a director of
Investec that it has not retained copies thereof. Notwithstanding the
foregoing, upon termination of this Agreement, the Investec Parties shall
maintain the confidentiality of the Confidential Information for a period
of two (2) years after such termination.
4.4 The obligations of Investec contained in Clause 4.3 shall be without
prejudice to duties and obligations imposed on Investec in its capacity as
Nominated Adviser or Broker under the AIM Rules or generally by law.
4.5 Any advice rendered by Investec will, save as required by the AIM Rules, be
confidential to the Company and solely for its benefit. Such advice may not
be disclosed to any third party other than the Company's other professional
advisers or unless the Company comes under a legal or regulatory obligation
to disclose it nor may such advice be used by or relied on by any third
party, without Investec's express prior written consent.
4.6 The Company and each of the Directors acknowledges that Investec is acting
solely for the Company in relation to the subject matter of this Agreement
and for no one else and accordingly, that Investec will not be responsible
to anyone other than the Company for providing the protections afforded to
customers of or providing advice in relation to or in connection with such
subject matter.
4.7 The Company acknowledges that Investec is not responsible for providing any
legal advice to the Company or the Directors (or any of them) in respect of
any applicable laws and regulations and the Company shall (if requested)
communicate to Investec any legal advice it has obtained that is relevant
to carrying out Investec's services hereunder.
5. UNDERTAKINGS AND AUTHORITIES RELATING TO ADMISSION
5.1 The Company and each of the Directors undertakes to Investec for a period
of one (1) year commencing on Admission to at all times comply with all
statements of intent and undertakings contained in the Admission Document
unless Investec agrees otherwise (such agreement not to be unreasonably
withheld or delayed).
5.2 The Company and each of the Directors undertakes in favour of Investec to
execute or to use all reasonable endeavours to procure the execution of all
such documents and to do or procure the doing of all such things as may
reasonably be required by, or be reasonably necessary to comply with the
requirements of the London Stock Exchange for the purposes of or in
connection with Investec's continuing roles as Nominated Adviser and Broker
to the Company. 5.3 The Company and each of the Directors (in the case of
each of the Directors, so far as is within his or her powers) undertakes to
Investec that they will for so long as the Common Shares are AIM Securities
(and insofar as the same relate thereto) use all reasonable endeavours to
comply with and abide by all relevant laws and regulations including the
AIM Rules, the FSMA and the Criminal Justice Xxx 0000.
5.4 The Company and each of the Directors undertakes promptly to provide
Investec or procure (so far as he is able) that Investec is as soon as
practicable following a request from Investec provided with all
information, confirmations and evidence which Investec may reasonably
require for the proper performance of its duties hereunder and/or as may be
required by the London Stock Exchange in order to comply fully with all
relevant provisions of AIM Rules, the FSMA and any other laws or
PAGE 7
regulations (whether or not having the force of law). The Company and each
of the Directors undertakes that all such information, confirmations and
evidence provided by it to Investec will, so far as it/he is aware, be true
and accurate in all material respects and not materially misleading.
Furthermore, if anything occurs within a reasonable time thereafter which
renders any such information, confirmation, evidence and/or statements of
opinion untrue or inaccurate or misleading in any material respect, the
Company will as soon as practicable notify Investec and take all reasonable
steps necessary to amend the information, confirmation, evidence or
statement of opinion so as to rectify the matter.
5.5 The Company undertakes to Investec not to alter, revise, amend or release
or agree to any alteration, revision, amendment or release of any material
terms or conditions of any service agreements of senior executives of the
Company without the prior written consent of Investec (such consent not to
be unreasonably withheld or delayed), provided that this clause shall not
restrict any revisions to the salary or benefits payable under such service
agreements which have been approved by the Board of Directors of the
Company (or a duly appointed and authorised remuneration committee of the
Board).
5.6 For so long as Investec shall be Nominated Adviser or Broker to the
Company, the Company shall not appoint any other nominated adviser or any
other broker.
6. INDEMNITY
6.1 Investec, its officers, servants, agents and advisers shall not be liable
to the Company for any claim, liability, loss, damages, costs, charges or
expenses made, suffered or incurred by the Company or the Directors
directly or indirectly arising out of the due performance by Investec of
its obligations or services hereunder unless the same shall arise from (i)
a material breach of this Agreement, (ii) the fraud, negligence or wilful
default of Investec, its officers, servants, agents or advisers or (iii)
the breach by Investec of its duties under the FSMA, the AIM Rules or the
FSA's Handbook of Rules and Guidance.
6.2 The Company undertakes with Investec (for itself and as trustee for its
officers, servants, agents and advisers (the "Indemnified Persons")) that
it will hold Investec, and the Indemnified Persons fully and effectively
indemnified against all actions, liabilities, losses, damages and expenses
arising out of any claim which may be brought or threatened against
Investec or any of the Indemnified Persons (whether such claim is
substantiated, dismissed, compromised or withdrawn) in each case directly
or indirectly arising out of in relation to or by reason of:-
6.2.1 the due and proper performance by Investec of its role as
Nominated Adviser and Broker in the manner contemplated by this
Agreement and/or any breach of the warranties, representations,
undertakings or other obligations undertaken or given by the
Company or the Directors hereunder; or
6.2.2 any failure by the Company to comply with the FSMA, the US
Securities Act, the SEC Regulations, the OTC Bulletin Board Rules
or any other applicable requirement of statute or statutory
regulation of the United Kingdom, the USA or any other
jurisdiction and/or any relevant rules of a self-regulating
organisation of which Investec is a member in relation to any
document duly and properly issued or published by Investec in or
towards the performance of the role as Nominated Adviser and/or
Broker hereunder; or
PAGE 8
6.2.3 any misrepresentation or alleged misrepresentation (by whomsoever
made, except the Indemnified Persons) contained in any document
issued or published by the Company; or
6.2.4 the approval by Investec for the purposes of section 21 of FSMA
of any material issued or caused to be issued by the Company in
connection with the issue of any financial promotion or any other
document issued or published by Investec with the consent of the
Company in or towards the performance of the role as Nominated
Adviser hereunder arising by reason of the contents of such
document or material not being accurate or being unfair or
misleading or infringing any applicable statute or the rules of
the FSA; or
6.2.5 any letter or report required by the AIM Rules to be given or
made by Investec in connection with any document issued or
published by Investec with the consent of the Company in or
towards the performance of the role as Nominated Adviser
hereunder being incorrect or misleading;
including without limitation in any such case all proper costs, charges and
expenses (including without prejudice to the generality of the foregoing,
all reasonable and proper legal fees and expenses incurred on a solicitor
and own client basis) which Investec or any of the Indemnified Persons may
suffer or reasonably incur in disputing any such claim or in establishing
any claim for indemnity under the foregoing provisions of this clause 6.
6.3 The indemnities contained in clause 6.2 shall not extend to any actions,
liabilities, losses, damages or expenses to the extent that the same arise
from the misrepresentation (other than as referred to in clause 6.2.4
above), fraud, negligence or wilful default of Investec or the Indemnified
Persons or any material breach by Investec of the terms of this Agreement
or its duties under the FSMA, the AIM Rules or the FSA's Handbook of Rules
and Guidance.
6.4 As soon as reasonably practicable after Investec becomes aware of any claim
made or threatened within the scope of the indemnities set out in this
clause 6 (and Investec shall use its reasonable endeavours to ensure that
any Indemnified Person notifies Investec of any such claim as soon as
reasonably practicable) Investec will at the cost of the Company and
following full consultation with the Company and/or its advisers upon such
terms as Investec may require take such reasonable steps in relation to any
proceedings, actions, claims and demands which become the subject of this
indemnity as the Company requests in writing.
6.5 All sums payable under this indemnity shall be paid free and clear of all
deductions or withholdings whatsoever save only as may be required by law.
6.6 The indemnities contained in this clause 6 shall remain in full force and
effect notwithstanding Admission.
7. AIM RULES
7.1 The Company and each of the Directors hereby acknowledge that:-
7.1.1 Investec owes responsibilities to the London Stock Exchange as
Nominated Adviser and Broker, and if at any time a conflict
arises between the duties of Investec to the Company and to the
London Stock Exchange, Investec shall (after reasonable
consultation with the Company if practicable) be entitled to act
so as to fulfil its obligations to the London Stock Exchange
without incurring any liability to the Company arising out of
such action; and
PAGE 9
7.1.2 the London Stock Exchange may review Investec's registration as
Nominated Adviser and/or Broker and/or impose sanctions upon
Investec depending upon the conduct of the Company in relation to
the AIM Rules.
7.2 The Company hereby undertakes to Investec that it shall (and each of the
Directors severally undertakes, for so long as he remains a director of the
Company, to use his reasonable endeavours to procure that the Company
shall), provided that the same shall not violate any US laws or
regulations:-
7.2.1 upon becoming aware of the same, to comply forthwith with all
reasonable directions given by Investec in relation to compliance
with the AIM Rules;
7.2.2 to inform Investec forthwith upon becoming aware of any breach by
the Company and/or any Director of the AIM Rules and to request
the advice and guidance of Investec in relation to all material
matters relevant to the Company's compliance with the AIM Rules;
and
7.2.3 that arrangements will be made for transfers of the Company's
shares to be registered within fourteen (14) days of receipt
(save where the Directors refuse to register a transfer pursuant
to the provisions of the restated articles of incorporation of
the Company or where such registration would violate or fail to
comply with any US securities laws or regulations) and if
appropriate for certificates to be dispatched without delay.
7.3 The Company undertakes to Investec to comply on a timely basis with all
obligations imposed on AIM companies from time to time by the London Stock
Exchange and each Director severally undertakes that for so long as he is a
director of the Company he will do everything reasonably within his power
as such at the Company's cost to procure that the Company complies with
such obligations (provided that the same shall not violate any US laws or
regulations).
7.4 The Company undertakes to Investec that it shall (and each of the Directors
severally undertakes, for so long as he remains a director of the Company,
to use all reasonable endeavours to procure that the Company shall):-
7.4.1 supply to Investec forthwith upon Investec requesting the same
complete and accurate copies of any document or information
relating to the Company which Investec may reasonably require for
the purpose of carrying out its duties hereunder and under the
AIM Rules including, without prejudice to the generality of the
foregoing, copies of minutes of any board meetings;
7.4.2 supply Investec with copies of the audited consolidated annual
accounts of the Company and its subsidiaries, approved by the
auditors for the time being of the Company, for the financial
period to which they relate, together with a draft preliminary
statement of such results, and to supply copies of the interim
results within the timescale laid down by the AIM Rules; and
7.4.3 supply to Investec, on a timely basis so as to give Investec
reasonable opportunity to comment on such, copies of all
documents before their despatch to shareholders generally and
announcements and other documents required to be submitted by the
Company to the London Stock Exchange.
8. ANNOUNCEMENTS
8.1 The Company undertakes to Investec (and each of the Directors undertakes to
Investec, for so long as he remains a director of the Company, to use his
reasonable endeavours to procure) that, for so long as Investec shall
continue as the Company's Nominated Adviser and/or Broker, the terms,
method and timing of any publicity by or on behalf of the Company in
connection with the application for Admission, including any statement to
or interview with the media, shall if practicable be agreed in advance with
Investec (such agreement not to be unreasonably withheld or delayed by
Investec).
PAGE 10
8.2 The Company shall notify Investec in advance of and discuss with Investec:-
8.2.1 any event or matter the occurrence of which will give rise
directly or indirectly to a requirement under the AIM Rules, the
SEC Regulations or the OTC Bulletin Board Rules for a public
announcement (including without prejudice to that generality, any
contractual or other commitment or agreement which may require
such announcement, or the issue or creation of any shares or
options or securities convertible into shares in the capital of
the Company); and
8.2.2 any announcement of profits or losses or dividends of the Company
or any other information which is likely to affect the assessment
of the character or value of the business of the Company or which
may be necessary to be made known to the public being a major new
development in the Company's sphere of activities which is not
public knowledge and which may, by virtue of its effect on the
Company's assets and liabilities or financial position or in the
general course of the Company's business, lead to any substantial
movement in the price of the Common Shares.
8.3 The Company undertakes to Investec (and each of the Directors undertakes to
Investec, for so long as he remains a director of the Company, to use his
reasonable endeavours to procure) that, for so long as Investec shall
continue as the Company's Nominated Adviser and/or Broker, any announcement
made by the Company to comply with legal or regulatory requirements of NASD
or any other market in the US (or otherwise outside the UK) on which the
Common Shares of the Company may be traded, quoted, listed or otherwise
dealt in from time to time shall be released simultaneously to a Regulatory
Information Service in the UK or (if such time is prior to the start of
trading in equities on the London Stock Exchange) immediately upon the
commencement of trading in equities on the London Stock Exchange.
9. DIRECTORS' DEALINGS IN SECURITIES
The Company undertakes to Investec (and each of the Directors undertakes to
Investec, for so long as he remains a director of the Company, to use his
reasonable endeavours to procure) that the Company shall ensure that the
Directors comply with the AIM Rules in so far as they relate to dealings in
the securities of a company whose securities have been admitted to trading
on AIM (and, in particular, Rules 17 and 21 thereof).
10. TERMINATION
10.1 The Company may terminate either or both of the appointments herein
contained forthwith by giving written notice to Investec (as the case may
be) following:-
10.1.1 the appointment of a liquidator, receiver, administrative
receiver or administrator over the whole or substantially the
whole of Investec's assets (except for the purposes of a solvent
reconstruction, amalgamation, reorganisation, merger or
consolidation);
10.1.2 a material breach by Investec of any of the terms and conditions
of this Agreement, which breach (if capable of remedy) remains
unremedied within fourteen (14) days' service of a notice
specifying the breach and requiring it to be remedied;
10.2 Investec may terminate either or both of its appointments forthwith by
giving written notice to the Company in any one of the following events or
circumstances:
PAGE 11
10.2.1 the Company does not pay any sum payable under this Agreement
after having received seven (7) days' written notice that it
remains unpaid (and subject to there being no dispute concerning
the amount of such sum);
10.2.2 either the Company or any of the Directors commits any material
breach of any of the other terms and conditions of this
Agreement, which breach (if capable of remedy) remains unremedied
within fourteen (14) days of service of a notice specifying the
breach and requiring it to be remedied;
10.2.3 any Director of the Company commits a fraudulent act, or the
Company or any Director commits any material breach of the
California Corporations Code, the FSMA, the AIM Rules or any
other laws or regulations to which the Company and/or the
Directors are subject from time to time;
10.2.4 the Company fails to comply with advice given to the Company
and/or the Directors by Investec such that, in the reasonable
opinion of Investec, such failure could jeopardise or damage the
reputation of Investec;
10.2.5 any warranty or representation given in the Placing Agreement is
found to be untrue or misleading in any respect which is material
in the context of the Placing (as defined in the Placing
Agreement);
10.2.6 the Company stops or suspends or threatens to stop or suspend
payment of all or a material part of (or a particular type of)
its debts (which failure to pay is not subject to a valid
defence) or is unable to pay its debts or is deemed unable to do
so under applicable law;
10.2.7 the Directors make any proposal under applicable law or the
Company proposes or makes any agreement for the deferral,
resettling or other readjustment (or proposes or makes a general
assignment of or arrangement or composition or for the benefit of
the relevant creditors) or all of (or all of a particular type)
its debts, or a moratorium is agreed or declared in respect of or
affecting all or a material part of (or of a particular type of)
the debts of the Company;
10.2.8 the appointment of a receiver, administrative receiver, manager
or similar person to enforce a security given by the Company;
10.2.9 any step is taken by the Company with a view to its winding-up or
any person presents a winding-up petition (other than for
frivolous or vexatious reasons) which is not dismissed within
fourteen (14) days or the Company ceases or threatens to cease to
carry on all or a material part of its business (except for the
purposes of and followed by reconstruction, amalgamation,
reorganisation, merger or consolidation on terms approved by
Investec before that step is taken);
10.2.10 the Company terminates one (but not the other) appointment of
Investec contained in this Agreement.
10.3 The parties shall notify the other parties promptly upon the occurrence of
a Termination Event or any event or circumstance which may reasonably be
expected to give rise to the occurrence of a Termination Event.
10.4 Upon the occurrence of a Termination Event, the non-defaulting parties
shall be entitled to terminate this Agreement forthwith by written notice
to the other party.
10.5 Subject to any earlier termination pursuant to the provisions of clauses
10.1 and 10.2, either of the appointments of Investec as the Company's
Nominated Adviser and as the Company's Broker shall continue for an initial
minimum period of twelve (12) months following Admission and thereafter
unless and until terminated (with or without cause) by either the Company
or Investec giving to the other not less than one (1) month's notice of
termination expiring at any time after such minimum twelve (12) month
period.
PAGE 12
10.6 Upon termination of either of the appointments of Investec contained in
this Agreement:-
10.6.1 the rights and obligations of the parties under this Agreement
shall terminate in relation to such appointment and be of no
further effect, except that clauses 1, 3.1, 3.3 (to the extent
that fees have accrued at termination), 6 (for a period of one
(1) year after termination), 12 and 16 (inclusive) shall remain
in full force and effect in relation to such appointment;
10.6.2 any rights or obligations to which any of the parties to this
Agreement may be entitled or be subject in relation to such
appointment before such termination shall remain in full force
and effect;
10.6.3 the termination of such appointment shall not affect or prejudice
any right to damages or other remedy which the terminating party
may have in respect of the Termination Event which gave rise to
the termination of such appointment or any other right to damages
or other remedy which any party may have in respect of any breach
of this Agreement which existed at or before the date of
termination; and
10.6.4 the termination of such appointment shall not affect or prejudice
the other appointment of Investec pursuant to this Agreement
(unless it shall also be terminated).
11. CHANGE OF DIRECTORS
Following a request by Investec, the Company shall procure that each new
director of the Company appointed after the date of this Agreement as a
director of the Company shall enter into an Agreement by which he agrees to
be bound by the terms of this Agreement which are then binding upon any of
the Directors (save that he shall not be liable for any antecedent breaches
by any of them).
12. UNDERTAKINGS REGARDING ISSUES OF FURTHER SHARES
12.1 The Company undertakes to Investec that it will not (and each of the
Directors undertakes, so far as he is lawfully able and for so long as he
remains a director of the Company, that he will procure that the Company
will not) at any time during the period of five (5) years commencing on
Admission (and notwithstanding whether Investec is still the Company's
Nominated Adviser or not during that period):-
12.1.1 issue any further shares of series A convertible preferred stock
in the Company or shares of series B convertible preferred stock
in the Company, without the prior consent in writing of Investec
(such consent not to be unreasonably withheld or delayed); or
12.1.2 issue any other shares or securities in the Company ranking ahead
of the Common Shares for entitlement to any dividend or other
distribution made by the Company, without the prior approval of
the holders of the requisite majority of the Common Shares (and,
if necessary, of the requisite majority of the shares of series A
convertible preferred stock and of the requisite majority of the
shares of series B convertible preferred stock).
12.2 Without prejudice to the provisions of clause 12.1, the Company undertakes
to Investec in the terms set out in Schedule 2 to this Agreement and each
of the Directors undertakes (so far as he is lawfully able and for so long
as he remains a director of the Company) to Investec to use all reasonable
endeavours to procure that the Company complies with the provisions of
Schedule 2 strictly in accordance with its terms.
PAGE 13
13. UNDERTAKINGS REGARDING US SECURITIES AND OTHER LEGISLATION
13.1 The Company and each of the Directors undertakes to Investec that it or he
will at all times during the continuance of the appointment of Investec as
the Company's Nominated Adviser or as the Company's Broker comply with:-
13.1.1 all US securities legislation and other US legislation (federal,
state or whatsoever) applicable to the Company, its directors,
its shareholders and/or its shares, including (but without
limitation) the US Securities Act, the US Securities Exchange Act
of 1934, the US Xxxxxxxx-Xxxxx Act of 2002 and the SEC
Regulations; and
13.1.2 the OTC Bulletin Board Rules and any other rules and regulations
of NASD applicable to the Company, its directors, its
shareholders and/or its shares.
13.2 It is understood and acknowledged by the Company and each of the Directors
that Investec shall not be under any obligation or duty to advise the
Company or any of the Directors in relation to any US legal, regulatory or
market matters whether relating to issues of securities under any US
legislation (whether federal, state or whatsoever), the SEC Regulations,
the OTC Bulletin Board Rules, any other rules and regulations of NASD or
otherwise howsoever.
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
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 notices or other communication requiring to be given or served under or
in connection with the Agreement shall be in writing and shall be
sufficiently given or served if delivered:-
15.1.1 if to the Company to the Chief Executive Officer at the address
set out at the front of this document;
15.1.2 if to the Directors, their respective addresses set out in
Schedule 1;
15.1.3 if to Investec, its address set out at the front of this
document;
(or to such other addresses as any of the parties may specify by notice in
writing to each other party to this Agreement).
15.2 Any such notice shall be delivered by hand or sent by facsimile
transmission or overnight courier delivery and if delivered by hand or sent
by facsimile shall conclusively be deemed to have been given or served at
the time of despatch and if sent by overnight courier delivery shall
conclusively be deemed to have been received the next business day in the
USA or the UK (as the case may be).
PAGE 14
15.3 Any notice or document shall be deemed served:-
15.3.1 if delivered, at the time of delivery;
15.3.2 if sent by overnight courier delivery, the business day following
such despatch; and
15.3.3 if sent by facsimile transmission, at the time of transmission if
between the hours of 9.00 a.m. and 5.00 p.m. on Monday to Friday
(other than statutory holidays) or otherwise at 9.00 a.m. on the
next succeeding business day.
15.4 In proving service (without prejudice to any other means):-
15.4.1 by overnight courier delivery, it shall only be necessary to
prove that the notice or document was contained in an envelope
properly despatched as provided in this clause;
15.4.2 by facsimile transmission, it shall be necessary to prove that
the notice or document was duly received by production of a copy
fax bearing the addressee's automatic records of correct
transmission.
16. GENERAL
16.1 Any time, date or period mentioned in this Agreement may be extended by
mutual agreement between the parties in writing but, as regards any time,
date or period originally fixed or any time, date or period so extended,
time shall be of the essence.
16.2 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.
16.3 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.
16.4 The invalidity, illegality or unenforceability of any provision of this
Agreement shall not affect the other provisions of this Agreement.
16.5 No failure or delay by Investec or the Company or the Directors 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.
16.6 No waiver by Investec or the Company or the Directors of any of the
requirements of this Agreement or of any of their rights under this
Agreement shall have effect unless given in writing signed by one of its
directors. No waiver of any particular breach of the provisions of this
Agreement shall operate as a waiver of any repetition of such breach.
16.7 No person who is not a party to this Agreement shall have any right under
the Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of
this Agreement.
16.8 Any remedy or right conferred upon Investec or the Company or the Directors
for breach of this Agreement shall be in addition to and without prejudice
to all other rights and remedies available to it.
16.9 Each party shall provide all such assistance and supply all such
information as the other parties shall reasonably require for the purposes
of this Agreement.
PAGE 15
17. 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.
18. GOVERNING LAW
18.1 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.
18.2 The Company and each of the Directors hereby irrevocably appoints Field
Xxxxxx Waterhouse (Solicitors) of 00 Xxxx Xxxxxx, Xxxxxx XX0X 0XX 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 Field Xxxxxx Xxxxxxxxxx have agreed to act as its or his
agent as aforesaid and agrees that failure 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 executed this day and year first
above written.
PAGE 16
SCHEDULE 1
THE DIRECTORS
Name Position
---- --------
Xxxxxxx Xxxx Xxxxxxxxx Chairman
Xxxxx Xxxxx Xxxxxxx Chief Executive Officer, President & Director
Xxxxx Xxxxxxxx Director
Xx. Xxxxxxx Xxxxxxxx Xxxxxx Director
Xxxxxx X Xxxxxx Director
Xxxx Xxxxxx Xxxxxxx Director
Xxxxxxxx (Xxxxx) Xxxxx Chief Financial Officer & Director
Lombard
all of 00000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, XXX
PAGE 17
SCHEDULE 2
PRE-EMPTION RIGHTS
1. In this Schedule, the following additional words and expressions shall
(save where the context otherwise requires) have the following meanings:-
"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);
"allot for cash" an allotment of securities where the
consideration for the allotment is cash
received by the Company, or is a cheque
received by the Company in good faith which
the Directors of the Company have no reason
for suspecting will not be paid, or is a
release of a liability of the Company for a
liquidated sum, or is an undertaking to pay
cash to the Company at a future date;
"employees' share scheme" the Company's 1996 Stock Option Plan and any
other scheme for encouraging or facilitating
the holding of shares in the Company by or
for the benefit of:-
(a) the bona fide employees or former employees, directors or
consultants of the Company; or
(b) the wives, husbands, widows, widowers or children or
step-children under the age of 18 of such employees or
former employees, directors or consultants;
"equity securities" a relevant share in the Company (other than a
bonus share), or a right to subscribe for, or
to convert securities into, relevant shares
in the Company;
"Indemnified Person" Investec and/or any of its Affiliates;
"relevant shares" all shares in the Company (which shall, for
the avoidance of any doubt, include the
Common Shares, the shares of series A
convertible preferred stock, no par value, in
the Company and the shares of series B
convertible preferred stock, no par value, in
the Company) other than:-
(a) shares (if any) which as respects dividends and capital
carry a right to participate only up to a specified amount
in a distribution; and
(b) shares which are held by a person who acquired them in
pursuance of an employees' share scheme or, in the case of
shares which have not been allotted, are to be allotted in
pursuance of such a scheme; and
(c) shares issued to non-executive board directors in accordance
with the September 1999 Board of Directors compensation
package for outside directors.
"related party" as defined in the AIM Rules;
PAGE 18
"relevant employee shares" shares of the Company which would be relevant
shares but for the fact that they are held by
a person who acquired them in pursuance of an
employees' share scheme;
"securities" shares, stock, debentures, debenture stock,
loan stock, bonds and other securities of any
description;
"Shareholder Majority" holders of 75% of the voting rights at the
relevant time;
"voting rights" all the voting rights attributable to the
share capital of the Company which are
exerciseable at the relevant time;
and references to:-
(a) the "allotment" of equity securities or of equity securities
consisting of relevant shares of a particular class includes
the grant of a right to subscribe for, or to convert any
securities into, relevant shares in the Company or (as the
case may be) relevant shares of a particular class; but such
a reference does not include the allotment of any relevant
shares pursuant to such a right; and
(b) a "class of shares" is to shares to which the same rights
are attached as to voting and as to participation, both as
respects dividends and as respects capital, in a
distribution; and
(c) to the "holder of shares" of any description is to whoever
was at the close of business on a date, to be specified in
the offer and to fall in the period of twenty-eight (28)
days immediately before the date of the offer, the holders
of shares of that description.
2. The Company undertakes to Investec that for the period of five (5) years
commencing on Admission (and notwithstanding whether Investec is still the
Company's Nominated Adviser or not during that period), where the Company
is proposing to allot for cash new equity securities the voting rights
attaching to which would (together with any other allotment(s) for cash of
equity securities within the previous twelve (12) month period following
Admission (or part thereof if Admission has taken place less than twelve
(12) months prior to such allotment)) exceed ten per cent. (10%) of the
total voting rights attached to all the equity securities of the Company in
issue, it shall not (without the prior consent in writing of Investec or
the prior approval by a Shareholder Majority):-
2.1 allot any of them on any terms to a person unless it has made an offer to
each person who holds relevant shares or relevant employee shares to allot
to him on the same or more favourable terms a proportion of those
securities which is as nearly as practicable equal to the proportion held
by him of the aggregate of the issued relevant shares and relevant employee
shares; and
2.2 allot any of those securities to a person unless the period during which
any such offer may be accepted (as referred to in paragraph 4.3 below) has
expired or the Company has received notice of the acceptance or refusal of
every offer so made.
3. The undertaking in paragraph 2 does not apply to:-
3.1 a particular allotment of equity securities if these are, or are to be,
wholly or partly paid up otherwise than in cash; and securities which the
Company has offered to allot to a holder of relevant shares or relevant
employee shares may be allotted to him, or anyone in whose favour he has
renounced his right to their allotment, without contravening paragraph 2.2;
or
PAGE 19
3.2 the allotment of securities which would, apart from the renunciation or
assignment of the right to their allotment, be held under an employee share
scheme.
4. In relation to an offer for the purposes of paragraph 2.1 above, such
offer:-
4.1 shall be in writing and shall be made to a holder of shares either
personally or by sending it by post (that is to say, prepaying and posting
a letter containing the offer) to him or to his registered address [and if
sent by post, the offer shall be deemed to be made at the time at which the
letter would be delivered five (5) days following posting;
4.2 where shares are held by two or more persons jointly, may be made to the
joint holder first named in the Company's register of members in respect of
the shares;
4.3 must state a period of not less than twenty one (21) days during which it
may be accepted; and such offer may not be withdrawn before the end of that
period;
unless otherwise agreed in writing with Investec.
5. Neither the Company nor any of the Directors shall make any claim against
Investec or 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 exercise by Investec of
its discretion as regards the consent referred to in paragraph 2 above.
6. The Company undertakes to Investec (for itself and as trustee for each
Indemnified Person) that it will indemnify and hold harmless, 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 Investec or any Indemnified Person may suffer or incur or
which may be made against or incurred by Investec or any Indemnified Person
in any jurisdiction by shareholders of the Company (or any of them) whether
in their personal capacities, by way of derivative action on behalf of the
Company, or otherwise (including, but without limitation, all such
reasonable costs, charges and expenses including any value added tax
thereon) as Investec or 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 Investec or any Indemnified Person
under paragraph 5 above and this paragraph 6) and which in any such case
arises directly or indirectly out of or in connection with or results from
or is attributable to the exercise by Investec of its discretion as regards
the consent referred to in paragraph 2 above.
PAGE 20
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
SIGNED by
XXXXXXX XXXX XXXXXXXXX
/s/ Xxxxxxx Xxxx Xxxxxxxxx
..............................................
(Director)
SIGNED by
XXXXX XXXXX XXXXXXX
/s/ Xxxxx Xxxxxxx
..............................................
(Director)
SIGNED by
XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
..............................................
(Director)
PAGE 21
SIGNED by
XX XXXXXXX XXXXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxxxx Xxxxxx
..............................................
(Director)
SIGNED by
XXXXXX X XXXXXX
/s/ Xxxxxx X Xxxxxx
..............................................
(Director)
SIGNED by
XXXX XXXXXX XXXXXXX
/s/ Xxxx Xxxxxx Xxxxxxx
..............................................
(Director)
SIGNED by
XXXXXXXX XXXXX XXXXXXX
/s/ Xxxxxxxx Xxxxx Xxxxxxx
..............................................
(Director)
