SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
Of The Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): July 11, 1996
--------------------
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-37785 06-1361276
- ---------------- ------------ -----------------
(State or other (Commission (I.R.S. Employer
jurisdiction of file number) Identification No.)
incorporation or
organization)
372 Danbury Road, Wilton, Connecticut 06897
- ---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: 203-761-7900
------------
<PAGE>
Item 5. Other Events.
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On July 11, 1996 (the "Closing Date"), the Registrant
completed: (i) the offshore public offering (the "Regulation S
Transaction") of an aggregate of 4,963,500 shares of its common
stock, $.01 par value (the "Common Stock"), in accordance with
Regulation S under the Securities Act of 1933 (the "Securities
Act"), as a result of which the Registrant received gross proceeds
of approximately $11.2 million, and (ii) the contemporaneous
private placement (the "Private Placement") of an aggregate of
911,657 shares of Common Stock to subscribers, including certain
members of the Registrant's Board of Directors and their
affiliates, as a result of which the Registrant received gross
proceeds of approximately $2.1 million.
In connection with completion of such transactions, holders of
all 125,556 outstanding shares of the Registrant's Series A
Cumulative, Convertible Preferred Stock, $1.00 par value (the
"Series A Preferred Stock"), converted their shares, in accordance
with their terms, into an aggregate of 3,138,900 shares of Common
Stock, in exchange for payments aggregating $235,418 (the
"Preferred Stock Payments"). Upon conversion of the Series A
Preferred Stock, the Registrant effected the requisite filings
under Delaware law to eliminate the Series A Preferred Stock from
the Registrant's capitalization, thereby returning such shares to
the Registrant's authorized and unissued undesignated preferred
stock, $1.00 par value.
Following completion of such transactions, including the
issuance of 218,957 shares (the "Commission Shares") of Common
Stock as commissions in the Regulation S Transaction, the
Registrant had outstanding 21,033,062 shares of Common Stock. On
the Closing Date, the Common Stock was admitted to trading on the
Alternative Investment Market of the London Stock Exchange, Inc.
(the "AIM").
The aggregate net proceeds to the Registrant in such
transactions were in the estimated amount of approximately $12.0
million (approximately $10.2 million in the Regulation S
Transaction, and approximately $2.0 million in the Private
Placement, in the aggregate net of the Preferred Stock Payments),
which will be used as working capital for general corporate
purposes. Net expenses do not reflect non-cash expenses
represented by the Commission Shares but reflect finder's fees in
the amount of $198,903, which were applied to the acquisition of
shares in the Regulation S Transaction.
The agreement (the "Placing Agreement") pursuant to which
Henderson Crosthwaite Institutional Brokers Limited, as agent for
the Registrant (the "Agent"), committed to use reasonable endeavors
to procure subscribers in the Regulation S Transaction in
<PAGE>
compliance with the terms of a supplemental agreement (the
"Regulation S Agreement") governing compliance with Regulation S,
contains the indemnity from the Registrant, and warranties from the
Registrant and its directors, in favor of the Agent. Pursuant to
the Placing Agreement, the Registrant's directors have undertaken
that they will not, and will procure that their affiliates will
not, dispose of any shares of Common Stock until twelve months
following the Closing Date. In view of the admission of the Common
Stock to AIM, the Registrant has also undertaken to the Agent to
seek a UK-based director to join its Board of Directors.
In connection with the Private Placement, subscribers received
incidental registration rights in the event the Registrant
subsequently registers shares pursuant to the Securities Act.
The Registrant has filed, as Exhibit 5(a), to this Current
Report, an internally prepared, unaudited pro forma balance sheet
as and at May 31, 1996, giving effect to the completion of the
Regulation S Transaction and the Private Placement as if completed
on such date. In addition, reference is hereby made to the
Registrant's Certificate of Incorporation, as amended, filed
herewith as Exhibit 5(b) (eliminating therefrom the Series A
Preferred Stock), and to the full text of the Placing Agreement and
the Regulation S Agreement filed herewith, respectively, as
Exhibits 5(c) and 5(d), the finder's fee arrangement filed herewith
as Exhibit 5(e), the forms of subscription agreement with respect
to the Private Placement filed herewith as Exhibit 5(f), the form
of registration rights agreement with respect to the Private
Placement filed herewith as Exhibit 5(g), and the Registrant's
press releases dated July 8 and July 11, 1996 filed herewith as,
respectively, Exhibits 5(h) and 5(i), all of which are incorporated
in response to this item.
Item 7. Financial Statements and Exhibits.
----------------------------------
(c) Exhibits.
The exhibits filed as part of this Current Report on Form
8-K are listed in the attached Index to Exhibits.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Bruce F. Failing, Jr.
--------------------------------
Bruce F. Failing, Jr.
President
Dated: July 11, 1996<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
5(a) - Unaudited Pro Forma Balance Sheet as and at May 31,
1996
5(b) - Certificate of Incorporation, as amended, of the
Registrant
5(c) - Placing Agreement dated July 5, 1996 between the
Registrant and Henderson Crosthwaite Institutional
Brokers Limited
5(d) - Agreement with Respect to U.S. Securities Laws
dated July 2, 1996 between the Registrant and
Henderson Crosthwaite Institutional Brokers Limited
5(e) - Letter Agreement dated July 1, 1996 between the
Registrant and Richard Northcott
5(f) - Forms of Subscription Agreement accepted July 5,
1996 by the Registrant
5(g) - Registration Rights Agreement dated July 11, 1996
between the Registrant and the subscribers parties
thereto
5(h) - Press Release of the Registrant dated July 8, 1996
5(i) - Press Release of the Registrant dated July 11, 1996
EXHIBIT 5(a)
Electronic Retailing Systems International, Inc.
Consolidated Pro form and Projected Balance Sheet
(in thousands, except share and per share amount)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
May 31, Pro Forma May 31,
1996 Adjustments 1996
------- ----------- ---------
<S> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 942 $ 11,957(a) $ 12,899
Accounts receivable 1,500 1,500
Inventories 2,062 2,062
Prepayments and other
current assets 235 235
------- --------- ---------
Total current assets 4,739 11,957 16,696
======= ========= =========
Equipment 2,174 2,174
Accumulated depreciation (1,548) (1,548)
------- --------- ---------
Net equipment 626 626
------- --------- ---------
Other non-current assets 860 860
------- --------- ---------
Total Assets $ 6,225 $ 11,957 $ 18,182
======= ========= =========
Liabilities and Stockholders'
Equity
Current Liabilities
Accounts payable and accrued
expenses $ 1,701 $ $ 1,701
------- ---------- ---------
Total current liabilities 1,701 1,701
------- ---------- ---------
Long-term debt 4,986 4,986
------- ---------- ---------
Commitments -- --
------- ---------- ---------
Stockholders' equity
Preferred stock, undesignated
(par value $1.00 per share);
1,860,000 shares and 2,000,000
shares authorized, none
outstanding)
Series A Cumulative Con-
vertible Preferred Stock
(140,000 shares and no shares
authorized, 125,556 shares
and none outstanding) 126 (126)(b) --
Common stock (par value
$0.01 per share; 25,000,000
shares authorized;
11,800,048 and 21,033,062
shares issued and out-
standing) 118 92(c) 210
Additional paid-in capital 38,721 11,991(d) 50,712
Accumulated deficit (39,427) (39,427)
------- --------- ---------
Total stockholders' equity (462) 11,597 11,495
------- --------- ---------
Total Liabilities and
stockholders' equity $ 6,225 $ 11,957 $ 18,182
======= ========= =========
<PAGE>
Notes to Pro Forma Balance Sheet:
(a) Net proceeds from issuance of common stock
(b) Conversion of 125,556 shares of preferred stock, $1.00 par value, into 3,138,900
shares of common stock, $.01 par value
(c) Issuance of 9,233,014 shares of common stock, including conversion of preferred
stock into 3,139,900 shares of common stock
(d) Proceeds from issuance of common stock in excess of $.01 par value, net of
transaction costs of $1,741 (including commission shares)
</TABLE>
EXHIBIT 5(b)
CERTIFICATE OF INCORPORATION
OF
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
THE UNDERSIGNED, for the purpose of forming a corporation
pursuant to the provisions of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
FIRST: The name of the corporation is Electronic Retailing
Systems International, Inc. (the "Corporation").
SECOND: The address of the Corporation's registered office in
the State of Delaware is 32 Loockerman Square, Suite L-100, in the
City of Dover, in the County of Kent, 19901 and the name of the
Corporation's registered agent at such address is The Prentice Hall
Corporation System, Inc.
THIRD: The purpose for which the Corporation is organized is
to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of
Delaware.
FOURTH: the total number of shares of capital stock which
the Corporation shall have authority to issue is 2,000,000 shares
of preferred stock, $1.00 par value per share ("Preferred Stock"),
and 25,000,000 shares of common stock, $.01 par value per share
("Common Stock"). The powers, designations, preferences and
relative, participating, optional or other special rights,
qualifications, limitations or restrictions of the Preferred Stock
shall be as follows:
1. (a) The Preferred Stock may be issued from time to
time as shares of one or more series of Preferred Stock, and in the
resolution or resolutions providing for the issue of shares of each
particular series, before issuance the Board of Directors of the
Corporation is expressly authorized to fix:
(i) the distinctive designation of such series and the
number of shares which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors in creating such series) or decreased
(but not below the number of shares thereof then outstanding)
from time to time by like action of the Board of Directors;
(ii) the rate of dividends payable on such series,
whether or not dividends shall be cumulative, the date or
dates from which dividends shall accrue and, if cumulative,
shall be cumulative and the relationship which such dividends
shall bear to dividends payable on any other series;
<PAGE>
(iii) whether or not the shares of such series shall be
subject to redemption by the Corporation and, if so, the
times, prices and other terms and conditions of such
redemption;
(iv) whether or not the shares of such series shall be
subject to the operation of a sinking fund or a fund of a
similar nature and, if so, the terms thereof;
(v) the rights of the shares of each series in case of
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, or upon any distribution of
its assets;
(vi) whether or not the shares of such series shall be
convertible into or exchangeable for shares of any other
series or class of stock of the Corporation and, if so, the
terms of conversion or exchange;
(vii) whether or not the shares of such series shall have
voting rights in addition to the voting rights provided by law
and in paragraph 5 below and, if so, the nature and extent
thereof; and
(viii) the consideration to be received by the
Corporation for the shares of such series.
(b) The shares of the Preferred Stock of any one series shall
be identical with each other in all respects except as to the dates
from which dividends thereon shall accrue or be cumulative.
(c) In case the stated dividends and the amounts, if any,
payable on liquidation, dissolution or winding up of the
Corporation are not paid in full, the shares of each series of the
Preferred Stock, after the payment in full of such dividends and
amounts to all series of the Preferred Stock ranking senior to such
series and before any payment to any series ranking junior thereto,
shall share ratably in the payment of dividends, including
accumulations, if any, in accordance with the sums which would be
payable on said shares if all dividends were declared and paid in
full, and in any distribution of assets other than by way of
dividends in accordance with the sums which would be payable on
such distribution if all sums payable were discharged in full.
(d) Upon the issuance of any series of Preferred Stock, a
certificate setting forth the resolution or resolutions (including
the designation, description and terms of such series) adopted by
the Board of Directors with respect to such series shall be made
and filed in accordance with the then applicable requirements, if
any, of the laws of the State of Delaware, or, if no certificate is
then so required, such certificate shall be signed and acknowledged
on behalf of the Corporation by its President or a Vice President
and its corporate seal shall be affixed thereto and attested by its
<PAGE>
Secretary or an Assistant Secretary and such certificate shall be
filed and kept on file at the principal office of the Corporation
in the State of Delaware and in such other place or places as the
Board of Directors shall designate.
2. The holders of each series of the Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors, but only out of funds of the Corporation legally
available for the payment of dividends, dividends in cash at the
annual rate for such series provided by the Board of Directors in
the certificate made pursuant to subparagraph (d) of paragraph 1
with respect to such series, before any dividends shall be declared
and paid upon or set apart for the holders of any series of the
Preferred Stock ranking junior to such series as to dividends or of
any junior stock, payable in respect of each calendar quarter on a
date, which shall be provided by the Board of Directors in such
certificate with respect to such series, within fifty (50) days
following the end of such quarter. Such dividends on the Preferred
Stock shall be payable to holders of such series of record on the
date, not exceeding fifty (50) days preceding the dividend payment
date, fixed for the purpose by the Board of Directors with respect
to such series in advance of the payment of each particular
dividend.
3. If so provided by the Board of Directors in the certificate
made pursuant to subparagraph (d) of paragraph 1, the Corporation,
at the option of the Board of Directors (or in accordance with the
requirements of any sinking fund for any one or more series of
Preferred Stock established by the Board of Directors), may redeem
the whole or any part of the Preferred Stock at any time
outstanding, or the whole or any part of any series thereof, at
such time or times and from time to time and at such redemption
price or prices as may be provided by the Board of Directors in
such certificate together in each case with all dividends accrued
and accumulated but unpaid (other than non-cumulative dividends
from past dividend periods), but computed without interest, and
otherwise upon the terms and conditions fixed by the Board of
Directors for any such redemptions.
4. In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders
of each series of the Preferred Stock then outstanding shall be
entitled to receive, after the payment in full of all amounts to
which the holders of all series of the Preferred Stock ranking
senior thereto are entitled, out of the assets of the Corporation,
before any distribution or payment shall be made to the holders of
any series of the Preferred Stock ranking junior to such series
upon liquidation, dissolution or winding up of the Corporation or
of any junior stock, the amount, if any, for each share provided by
the Board of Directors in the certificate made pursuant to
subparagraph (d) of paragraph 1, plus, in respect of each such
share, all dividends accrued and accumulated but unpaid (other than
non-cumulative dividends from past dividend periods), but computed
<PAGE>
without interest. If payment shall have been made in full to the
holders of each series of the Preferred Stock, the remaining assets
of the Corporation shall be distributed among the holders of the
junior stock, according to their respective rights and preferences
and pro rata in accordance with their respective holdings.
5. On all matters with respect to which holders of the
Preferred Stock or of certain series thereof are entitled to vote
as a single class, each holder of Preferred Stock afforded such
class voting right shall be entitled to one vote for each share
held.
6. For purposes of this Article FOURTH, the term "junior
stock" shall mean the Common Stock and any other class of stock of
the Corporation hereafter authorized which shall rank junior to all
series of the Preferred Stock as to dividends or preference on
dissolution, liquidation or winding up of the Corporation.
FIFTH: Subject to the provisions of the General Corporation
Law of the State of Delaware, the number of Directors of the
Corporation shall be determined as provided by the By-Laws.
SIXTH: The Corporation shall indemnify and hold harmless any
director, officer, employee or agent of the Corporation from and
against any and all expenses and liabilities that may be imposed
upon or incurred by him in connection with, or as a result of, any
proceeding in which he may become involved, as a party or
otherwise, by reason of the fact that he is or was such a director,
officer, employee or agent of the Corporation, whether or not he
continues to be such at the time such expenses and liabilities
shall have been imposed or incurred, to the extent permitted by the
laws of the State of Delaware, as they may be amended from time to
time.
SEVENTH: No person who is or was at any time a director of
the Corporation shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary
duty by such person as a director; provided, however, that, unless
and except to the extent otherwise permitted from time to time by
applicable law, the provisions of this Article SEVENTH shall not
eliminate or limit the liability of a director (i) for breach of
the director's duty of loyalty to the Corporation or its
stockholders, (ii) for any act or omission by the director which is
not in good faith or which involves intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit. No amendment to or repeal of this shall apply to or have
any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any act or omission of such
director occurring prior to such amendment or repeal.
<PAGE>
EIGHTH: In furtherance and not in limitation of the general
powers conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized to make, alter or repeal the
By-Laws of the Corporation, except as specifically stated therein.
NINTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them
and/or between this Corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as
the case may be, to be summoned in such manner as the said Court
directs. If a majority in number representing three-fourths ln
value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the Court to which
the said application has been made, be binding on all the creditors
or class of creditors, and/or on all the stockholders or class of
stockholders of this Corporation, as the case may be, and also on
this Corporation.
TENTH: Except as otherwise required by the laws of the State
of Delaware, the stockholders and Directors shall have the power to
hold their meetings and to keep the books, documents and papers of
the Corporation outside of the State of Delaware, and the
Corporation shall have the power to have one or more offices within
or without the state of Delaware, at such places as may be from
time to time designated by the By-Laws or by resolution of the
stockholders or Directors. Elections of Directors need not be by
ballot unless the By-Laws of the Corporation shall so provide.
ELEVENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
TWELFTH: The name and address of the incorporator is Howard
Kailes, c/o Krugman, Chapnick & Grimshaw, Park 80 West - Plaza Two,
Saddle Brook, New Jersey 07662.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinabove named, does hereby execute this Certificate of
Incorporation this 12th day of February 1993.
s/Howard Kailes
--------------------------------
Howard Kailes
Incorporator
<PAGE>
<PAGE>
CERTIFICATE OF DESIGNATION
OF SERIES A CUMULATIVE, CONVERTIBLE PREFERRED STOCK
OF
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
We, Bruce F. Failing, Jr., President, and Norton Garfinkle,
Secretary of Electronic Retailing Systems International, Inc., a
corporation organized and existing under the General Corporation
Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by Paragraph Fourth of the Certificate of Incorporation
of said Corporation and in accordance with the provisions of
Section 151 of the General Corporation Law of the State of
Delaware, its Board of Directors on July 14, 1995, adopted the
following resolution designating a series of its Preferred Stock,
$1.00 par value, as Series A Cumulative, Convertible Preferred
Stock:
RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Corporation in accordance
with the provisions of Paragraph Fourth of its
Certificate of Incorporation, a series of Preferred
Stock, $1.00 par value, of this Corporation, be and it
hereby is created, and that the designation and amount
thereof and the voting powers, preferences, and other
special rights, qualifications, limitations and
restrictions thereof are as follows:
(A) Designation and Amount. An aggregate of
120,000 shares of Preferred Stock, $1.00 par value,
of the Corporation are hereby constituted as a
series designated as "Series A Cumulative,
Convertible Preferred Stock (the "Series A
Cumulative, Convertible Preferred Stock"). Such
number of shares may be increased or decreased by
resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares
of Series A Cumulative, Convertible Preferred Stock
to a number less than the number of shares then
outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options,
rights, or warrants or upon the conversion of any
<PAGE>
outstanding securities issued by the Corporation
convertible into Series A Cumulative, Convertible
Preferred Stock.
(B) Dividends.
(i) The holders of shares of Series A
Cumulative, Convertible Preferred Stock in prefer-
ence to the holders of common stock, $.01 par value
(the "Common Stock"), of the Corporation and of any
other junior stock (as hereinafter defined), shall
be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally
available for that purpose, quarterly dividends in
an amount per share equal to $1.875, payable on the
first day of January, April, July and October in
each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a
share of Series A Cumulative, Convertible Preferred
Stock, at the election of the Corporation (as
determined by the Board of Directors) in cash or in
additional shares of Series A Cumulative
Convertible Preferred stock having a value equal to
such amount (each such share, for purposes hereof,
to be deemed to have a value of $100).
(ii) Dividends shall begin to accrue and
be cumulative, whether or not earned or declared,
on outstanding shares of Series A Cumulative,
Convertible Preferred Stock from and after the date
of issue of such shares, unless the date of issue
of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the
determination of holders of shares of Series A
Cumulative, Convertible Preferred Stock entitled to
receive a Quarterly Dividend and before such
Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be
cumulative for such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A
Cumulative, Convertible Preferred Stock in an
amount less than the total amount of such dividends
at the time accrued and payable on such shares
shall be allocated pro-rata on a share-by-share
basis among all such shares at the time
outstanding. The Board of Directors may fix a
<PAGE>
record date for the determination of holders of shares of
Series A Cumulative, Convertible Preferred Stock entitled
to receive payment of a dividend declared, which record
date shall not be more than 50 days prior to the date
fixed for the payment thereof.
(C) Voting Rights. Holders of shares of Series
A Cumulative, Convertible Preferred Stock shall
have the following voting rights:
(i) Subject to the provisions for
adjustment hereinafter set forth, each share of
Series A Cumulative, Convertible Preferred Stock
shall entitle the holder thereof to one vote on all
matters submitted to a vote of the shareholders of
the Corporation. In the event the Corporation shall
at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolida-
tion of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in
each such case the number of votes per share to
which holders of shares of Series A Cumulative,
Convertible Preferred Stock were entitled
immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the
numerator of which is the number of shares of
Common Stock outstanding immediately after such
event and the denominator of which is the number of
shares of Common Stock that were outstanding
immediately prior to such event.
(ii) Except as otherwise provided herein,
in any other Statement of Resolution creating a
series of preferred stock or any similar stock, or
by law, the holders of shares of Series A
Cumulative, Convertible Preferred Stock and the
holders of shares of Common Stock and any other
capital stock of the Corporation having general
voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of
the Corporation.
(D) Conversion.
(i) Right to Convert. Subject to and upon
compliance with the provisions hereof, each holder
of record of shares of Series A Cumulative,
Convertible Preferred Stock shall have the right,
at such holder's option, at any time or from time
to time after the issuance, respectively, of the
<PAGE>
shares held by such holder (except that upon any
liquidation of the Corporation the right of conversion
shall terminate at the close of business on the last full
business day next preceding the date fixed for payment of
the amount distributable on the Series A Cumulative,
Convertible Preferred Stock), to convert any such shares
into such number of shares of Common Stock as is obtained
by multiplying the number of shares of Series A
Cumulative, Convertible Preferred Stock so to be
converted by $100.00 and dividing the result by the
applicable Conversion Price (as hereinafter defined).
(ii) Exercise. In order to exercise the
conversion privilege, the holder of Series A
Cumulative, Convertible Preferred Stock shall
surrender a certificate or certificates for the
shares so to be converted to the Corporation at the
principal executive offices of the Corporation at
372 Danbury Road, Wilton, Connecticut 06897 (or
such other office or agency of the Corporation as
the Corporation may designate by notice in writing
to the holders of record of Series A Cumulative,
Convertible Preferred Stock), accompanied by
written notice to the Corporation that the holder
elects to convert a stated number of shares of
Series A Cumulative, Convertible Preferred Stock
into Common Stock. Such notice shall also state the
name or names (with address or addresses) in which
the certificate or certificates for shares of
Common Stock which shall be issuable on such
conversion shall be issued, in each case subject to
the provisions of applicable law. As soon as
practicable after the receipt of such notice and
the surrender of the certificate or certificates
for the shares of Series A Cumulative, Convertible
Preferred Stock to be converted, the Corporation
shall issue and shall deliver at said offices to
the holder a certificate or certificates for the
number of full shares of Common Stock issuable upon
the conversion of such share or shares of Series A
Cumulative, Convertible Preferred Stock, and
provision shall be made for any fraction of a share
a provided in Paragraph (iii) hereof. Such
conversion shall be deemed to have been effected
immediately prior to the close of business on the
date on which such notice shall have been received
by the Corporation and conversion shall be at the
Conversion Price in effect at such time, and at
such time the rights of the holder of such share or
shares of Series A Cumulative, Convertible
Preferred Stock shall cease and the person or
persons in whose name or names any certificate or
certificates for shares of Common Stock shall be
<PAGE>
issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares of
Common Stock represented thereby.
(iii) Adjustment for Fractional Shares;
Dividends; Partial Conversions. No fractional
shares of Common Stock or scrip shall be issued
upon conversion of Series A Cumulative, Convertible
Preferred Stock, and no payment or adjustment shall
be made upon any conversion on account of any cash
dividends on the Common Stock issued upon such
conversion. In case the number of shares of Series
A Cumulative, Convertible Preferred Stock
represented by the certificate or certificates
surrendered pursuant to Paragraph (ii) exceeds the
number of shares converted, the Corporation shall,
upon such conversion, execute and deliver to the
holder thereof, at the expense of the Corporation,
a new certificate or certificates for the number of
shares of Series A Cumulative, Convertible
Preferred Stock represented by the certificate or
certificates surrendered which are not to be
converted. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon
conversion, the Corporation shall pay a cash
adjustment in respect of such fractional share of
Common Stock in an amount equal to the same
fraction of the then current fair value of a share
of Common Stock, as determined in good faith by the
Board of Directors of the Corporation.
(iv) Conversion Price. The Conversion
Price per share of Common Stock shall be $4.00,
subject to adjustment as herein provided. In the
event that, on or prior to March 31, 1996, the
Corporation from time to time enters into
definitive arrangements providing for, the delivery
of, or delivers, shares of Common Stock, or
Convertible Securities (as hereinafter defined)
convertible or exchangeable for Common Stock, or
Options (as hereinafter defined) for the purchase
of Common Stock or any Convertible Securities, in a
transaction providing for a price per share of
Common Stock that is less than the Conversion Price
then in effect, the Conversion Price shall in each
case forthwith be reduced to such lesser price per
share. The Corporation shall deliver prompt notice
to each holder of shares of Series A Cumulative,
Convertible Preferred Stock of each such
transaction and such reduction.
<PAGE>
(v) Adjustment for Dividends. In case the
Corporation shall declare a dividend upon the
shares of Common Stock payable otherwise than out
of earned surplus or otherwise than in shares of
Common Stock or convertible securities of the
Corporation, the Conversion Price in effect
immediately prior to the declaration of such
dividend shall be reduced by an amount equal, in
the case of a dividend in cash, to the amount
thereof payable per share of Common Stock or, in
the case of any other dividend, to the fair value
thereof per share of Common Stock as determined in
good faith by the Board of Directors of the
Corporation. For the purposes of the foregoing, a
dividend other than in cash shall be considered
payable out of earned surplus only to the extent
that such earned surplus is charged an amount equal
to the fair value of such dividend as determined in
good faith by the Board of Directors of the
Corporation. For the purposes of the foregoing, a
dividend other than in cash shall be considered
payable out of earned surplus only to the extent
that such earned surplus is charged an amount equal
to the fair value of such dividend as determined in
good faith by the Board of Directors of the
corporation. Such reductions shall take effect as
of the date on which a record is taken for the
purpose of such dividend, or, if a record is not
taken, the date as of which the holders of shares
of Common Stock of record entitled to such dividend
are to be determined.
(vi) Subdivisions and Combinations; Stock
Dividends. In case the Corporation shall at any
time subdivide its outstanding shares of Common
Stock into a greater number of shares of Common
Stock, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding
shares of Common Stock of the Corporation shall be
combined into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately
prior to such combination shall be proportionately
increased. In case the Corporation shall declare a
dividend or make any other distribution upon any
stock of the Corporation payable in Common Stock,
or any other stock or securities convertible into
or exchangeable for Common Stock ("Convertible
Securities"), or options ("Options") for the
purchase of Common Stock or any Convertible
Securities, any Common Stock, Options or
Convertible Securities, as the case may be,
issuable in payment of such dividend or distribu
<PAGE>
tion shall be deemed to have been issued in a
subdivision of outstanding shares as provided in
this Sub-paragraph (vi). In case the Corporation
shall take a record of the holders of its Common
Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in
Common Stock, Options or Convertible Securities, or
(b) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record
date shall be deemed to be the date of such
dividend or the making of such other distribution
or the date of the granting of such right of
subscription or purchase, as the case may be.
(vii) Consolidation, Merger, Sale of
Assets, Reorganization or Reclassifications. If any
consolidation or merger of the Corporation with
another corporation, or the sale of all or substan-
tially all of its assets to another corporation
shall be effected, or in case of any capital
reorganization or reclassification of the capital
stock of the Corporation, then, as a condition of
such consolidation, merger or sale, reorganization
or reclassification, lawful and adequate provision
shall be made whereby each holder of record of the
Series A Cumulative, Convertible Preferred Stock
shall thereafter have the right to purchase and
receive upon the basis and upon the terms and
conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore
purchasable and receivable upon the conversion of
Series A Cumulative, Convertible Preferred Stock,
such shares of stock, securities or assets as may
be issuable or payable with respect to or in
exchange for a number of outstanding shares of
Common Stock of the Corporation equal to the number
of shares of Common Stock immediately theretofore
purchasable and receivable by such holder had such
consolidation, merger, sale, reorganization, or
reclassification not taken place, and in any such
case appropriate provision shall be made with
respect to the rights and interest of such holder
to the end that the provisions hereof (including
without limitation provisions for adjustment of the
Conversion Price) shall thereafter be applicable,
as nearly as may be, in relation of any shares of
stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
(viii) Notice of Adjustment of Conversion
Price. Upon any adjustment of the Conversion Price
then and in each such case the Corporation shall
give written notice thereof, by first class mail,
<PAGE>
postage prepaid, to each holder of record of
Series A, Cumulative Convertible Preferred Stock,
which notice shall state the Conversion Price
resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the
facts upon which such calculation is based.
(ix) Notice of Certain Actions. In case
at any time:
(a) the Corporation shall declare to
the holders of its shares of Common Stock any cash
dividend at a rate in excess of the rate of the
last cash dividend theretofore paid;
(b) the Corporation shall declare
any dividend upon its shares of Common Stock
payable in stock or make any special dividend or
other distribution (other than a cash dividend to
the holders of its shares of Common Stock);
(c) the Corporation shall offer for
subscription pro rata to the holders of its shares
of Common Stock any additional shares of stock of
any class or other rights;
(d) there shall be any capital
reorganization or reclassification of the capital
stock of the Corporation, or consolidation or
merger of the Corporation with, or sale of all or
substantially all its assets to, another
corporation; or
(e) there shall be a voluntary or
involuntary dissolution, liquidation or winding-up
of the Corporation;
then, in any one or more of said cases, the
Corporation shall give written notice, by first
class mail, postage prepaid, to each holder of
record of Series A Convertible Preferred Stock, of
the date on which (A) the books of the Corporation
shall close or a record shall be taken for such
dividend, distribution or subscription rights, or
(B) such reorganization, reclassification, consoli-
dation, merger, sale, dissolution, liquidation or
winding-up shall take place, as the case may be.
Such notice shall also specify the date as of which
the holders of shares of Common Stock of record
shall participate in such dividend, distribution or
subscription rights or shall be entitled to
exchange their shares of Common Stock for
securities or other property deliverable upon such
<PAGE>
reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-
up, as the case may be. Such written notice shall
be given at least 30 days prior to the action in
question and not less than 30 days prior to the
record date or the date on which the Corporation's
transfer books are closed in respect thereto.
(x) Reservation of Shares. The Corporation
shall at all times reserve and keep available out
of its authorized shares of Common Stock or its
treasury shares, solely for the purpose of issue
upon the conversion of shares of Series A
Cumulative, Convertible Preferred Stock, such
number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding
shares of Series A Cumulative, Convertible
Preferred Stock. The Corporation shall not take any
action which results in any adjustment of the
Conversion Price if the total number of shares of
Common Stock issued and issuable after such action
upon conversion of the Series A Cumulative,
Convertible Preferred Stock would exceed the total
number of shares of Common Stock then authorized by
the Articles of Incorporation of the Corporation.
(xi) Taxes. The issuance of certificates
of shares of Common Stock upon the conversions of
Series A Cumulative, Convertible Preferred Stock
shall be made without charge to the holders thereof
for any issuance tax in respect thereto; provided,
however, that the Corporation shall not be required
to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery
of any certificate in a name other than that of the
holders of record of Series A Cumulative,
Convertible Preferred Stock, respectively.
(xii) Closing of Books. The Corporation
will at no time close its transfer books against
the transfer of any shares of Common Stock issued
or issuable upon the conversion of any shares of
Series A Cumulative, Convertible Preferred Stock in
any manner which interferes with the timely
conversion of Series A Cumulative, Convertible
Preferred Stock.
(xiii) Miscellaneous. Notwithstanding any
other provision of this Section (D), conversion of
the Series A Cumulative, Convertible Preferred
Stock shall be subject to the requirement that if
at any time the Board of Directors shall determine
that the registration, listing or qualification of
<PAGE>
the shares of Common Stock covered thereby upon any
securities exchange or under any federal or state
law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a
condition of, or in connection with, the
acquisition of shares of Common Stock upon
conversion, no such conversion may be effected
unless and until such registration, listing,
qualification, consent or approval shall have been
effected or obtained free of any conditions not
acceptable to the Board of Directors. The Company
may require that any person converting Series A
Cumulative, Convertible Preferred Stock shall make
such representations and agreements and furnish
such information as it deems appropriate to assure
compliance with the foregoing or any other applic-
able legal requirement.
(E) Certain Restrictions.
(i) Whenever quarterly annual dividends
payable on the Series A Cumulative, Convertible
Preferred Stock as provided in Section B hereof are
in arrears, thereafter and until all accrued and
unpaid dividends, whether or not earned or
declared, on shares of Series A Cumulative,
Convertible Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(a) declare or pay dividends on any
shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or
winding up) to the Series A Cumulative, Convertible
Preferred Stock; or
(b) declare or pay dividends on any
shares ranking pari passu (either as to dividends
or upon liquidation, dissolution or winding up)
with the Series A Cumulative, Convertible Preferred
Stock, except dividends paid ratably on the Series
A Cumulative, Convertible Preferred Stock and all
such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to
which the holders of all such shares are then
entitled.
(ii) The Corporation shall not, as long
as any shares of Series A Cumulative, Convertible
Preferred Stock are outstanding, consolidate or
merge with any other corporation or entity unless:
(x) immediately after such consolidation or merger
the successor shall have stockholders' equity (or
the equivalent thereof), on a consolidated basis
<PAGE>
and determined in accordance with generally
accepted accounting principles, no less than the
Corporation's stockholders' equity, as so
determined, immediately prior to such transaction;
and (y) (I) the Corporation is the successor or, if
not (II) a Change in Control [as hereinafter
defined] shall occur as a result of such
transaction or the shares of Series A Cumulative
Convertible Preferred Stock shall be exchanged for
preferred securities of the successor having terms
substantially equivalent to the terms applicable to
the Series A Cumulative Convertible Preferred
Stock. For purposes hereof, "Change in Control"
shall mean a change in control of the Corporation
of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item
or any similar schedule or form) promulgated under
the Securities and Exchange Act of 1934, whether or
not the Corporation is then subject to such
reporting requirement.
(F) Reacquired Shares. Any shares of the
Series A Cumulative, Convertible Preferred Stock
purchased or otherwise acquired by this Corporation
in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof.
All such shares shall upon their cancellation
become authorized but unissued as shares of
Preferred Stock and may be reissued as Series A
Cumulative, Convertible Preferred Stock or as part
of a new series of Preferred Stock subject to the
conditions and restrictions of issuance set forth
herein, in the Certificate of Incorporation or as
otherwise required by law.
(G) Liquidation, Dissolution or Winding Up.
(i) Upon any liquidation, dissolution or
winding up of this Corporation, no distribution
shall be made to the holders of shares of stock
ranking junior (either as to dividends, or upon
liquidation, dissolution or winding up) to the
Series A Cumulative, Convertible Preferred Stock
unless prior thereto, the holders of shares of
Series A Cumulative, Convertible Preferred Stock
shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends thereon,
whether or not declared or earned, to the date of
such payment. After such payments to holders of
Series A Cumulative, Convertible Preferred Stock,
the holders thereof, as such, shall not have any
right to participate in any further distribution of
or payment out of the assets of the Corporation.
(ii) If upon any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation, the assets available for distribution
<PAGE>
to holders of shares of Series A Cumulative,
Convertible Preferred Stock shall be insufficient
to pay such holders the full preferential amount to
which they are entitled, then such assets shall be
distributed ratably among the shares of Series A
Cumulative, Convertible Preferred Stock in
accordance with the respective preferential
amounts, including unpaid cumulative dividends, if
any, payable with respect thereto.
(H) Optional Redemption. (i) Each share of
Series A Cumulative, Convertible Preferred Stock
shall, out of funds legally available for that
purpose, be subject to redemption, at the election
of the Corporation, on any date (the "Redemption
Date") subsequent to issuance, at a redemption
price of $100, plus an amount equal to all accrued
and unpaid dividends on such share, whether or not
declared or earned, to the Redemption Date, in each
case subject to the limitations of the immediately
succeeding sentence. Notice of each redemption
shall be mailed at least 30 days prior to the
Redemption Date with respect thereto, shall state
that the Series A Cumulative, Convertible Preferred
Stock, or part thereof, shall be redeemed, and the
date, place and purchase price of such redemption,
upon surrender of the certificates representing
shares of Series A Cumulative, Convertible
Preferred Stock, and shall be given to the holders
of record of the shares of Series A Cumulative,
Convertible Preferred Stock to be redeemed, by
first class mail, postage prepaid, at such holder's
address of record; provided, however, that no such
notice may be delivered unless the Market Price per
share (as hereinafter defined) shall be in excess
of 150% of the Conversion Price per share then in
effect on at least 20 of the 30 consecutive trading
days ending five days prior to date of notice (and,
provided, further that, on each of such 20 days the
average daily trading volume exceeds 1,000 shares);
and provided, further, that the Common Stock shall,
through the period of such calculation and on the
date of such notice, be listed or admitted to
trading on a national securities exchange or
reported on the NASDAQ National Market System or
otherwise reported by NASDAQ or The National
Quotation Bureau Incorporated (or similar reputable
quotation and reporting service, if not reported by
The National Quotation Bureau Incorporated).
(ii) For purposes hereof, "Market Price"
on any trading day shall be the last reported sales
price regular way of the Common Stock or, in case
no such reported sales took place on such day, the
average of the last reported bid and asked prices
regular way of the Common Stock, in either case on
the principal national securities exchange on which
<PAGE>
the Common Stock is listed or admitted to trading
(or if the Common Stock is not at the time listed
or admitted for trading on any such exchange, then
such price as shall be equal to the average of the
last reported sale price of the Common Stock, as
reported on the NASDAQ National Market System on
such day, or if the Common Stock is not so
reported, then such price as shall be equal to the
average of the last reported bid and asked prices
of the Common Stock, as reported by NASDAQ on such
day, or if, on any day in question, the security
shall not be quoted on NASDAQ, then such price
shall be equal to the average of the last reported
bid and asked prices of the Common Stock on such
day as reported by The National Quotation Bureau
Incorporated (or any similar reputable quotation
and reporting service, if such quotation is not
reported by the National Quotation Bureau
Incorporated).
(iii) In the event that the Corporation at
any particular time proposes to redeem fewer than
all of the then outstanding shares of Series A
Cumulative, Convertible Preferred Stock, the shares
of Series A Cumulative, Convertible Preferred Stock
to be redeemed shall be selected in such manner
that the number of shares of Series A Cumulative,
Convertible Preferred Stock (to the nearest full
share) to be redeemed from each holder of record of
Series A Cumulative, Convertible Preferred Stock
shall bear the same proportional relationship to
all shares of Series A Cumulative, Convertible
Preferred Stock held by such holder as the
aggregate number of shares to be redeemed bears to
all the shares of Series A Cumulative, Convertible
Preferred Stock then outstanding. On the Redemption
Date, all dividends on the shares to be redeemed
shall cease to accrue, all rights with respect to
such shares so to be redeemed shall forthwith on
such date cease and determine (except only the
right of the holder to receive the redemption price
therefor, but without any interest) and such shares
so called for redemption shall no longer be deemed
outstanding.
(iv) On or before the Redemption Date, the
respective holders of record of the Series A
Cumulative, Convertible Preferred Stock to be
redeemed shall deliver to the Corporation the
certificates for the shares to be redeemed. Such
certificates, if required by the Corporation, shall
be properly stamped for transfer and duly endorsed
in blank or accompanied by proper instruments of
assignment and transfer thereof duly executed in
blank, with all signatures appropriately guaranteed
by a national bank or a firm which is a member of
the New York Stock Exchange, Inc. If any holder of
<PAGE>
Series A Cumulative, Convertible Preferred Stock
shall fail to tender his shares of Series A
Cumulative, Convertible Preferred Stock as provided
above, the Corporation shall have the right to
cancel said shares upon its books and pay to such
stockholder the Redemption Price for such shares.
Any such cancelled shares shall for all purposes be
considered to have been redeemed as provided
herein.
(v) In case any shares of Preferred Stock
shall have been called for redemption by the giving
of notice as provided herein, the right of
conversion with respect to the shares so called for
redemption shall cease and terminate at the close
of business on the business day immediately
preceding the Redemption Date stated in the notice
of redemption. The right of conversion shall
thereafter be reinstated with respect to any share
or shares of Preferred Stock if the Corporation
shall have defaulted in payment of the redemption
price aforesaid for such share or shares.
(I) Junior Stock; Common Stock. For purposes
hereof: (a) the term "junior stock" shall mean the
Common Stock and any other class of stock of the
Corporation hereinafter authorized which shall rank
junior to the Series A Cumulative, Convertible
Preferred Stock as to all dividends or preference
on dissolution, liquidation or winding up of the
Corporation; and (b) the term "Common Stock" shall
mean shares of the common stock, $.01 par value, of
the Corporation and shall also include shares of
any capital stock of any class of the Corporation
hereinafter authorized which shall not be limited
to a fixed sum or percentage or par value in
respect of the rights of the holders thereof to
participate in dividends and in the distribution of
assets upon the voluntary liquidation, dissolution
or winding-up of the corporation; provided,
however, that the shares of Common Stock receivable
upon conversion of shares of Series A Preferred
Stock shall include only shares of Common Stock, as
constituted on July , 1995 (including ny stock
into which it may be changed, reclassified or
converted).
(J) No Pre-Emption; Amendment. No right to
subscribe for or to take any stock of any class or
any securities convertible to any stock, at any
time issued by the Corporation shall vest in or
accrue to any holder of shares of Series A
Cumulative, Convertible Preferred Stock with
respect to any shares which he holds. The Certi-
ficate of Incorporation of this Corporation shall
not be amended in any manner which would materially
alter or change the powers, preferences or special
<PAGE>
rights of the Series A Cumulative, Convertible
Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of
Series A Cumulative, Convertible Preferred Stock,
voting together as a single series.
This resolution was duly adopted by the Board of Directors of
this Corporation at a meeting thereof duly called and held on July
14, 1995, at which a quorum was present and acting throughout.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunder affixed and this Certificate of Designation to
be signed by Bruce F. Failing, Jr., its President and attested to,
by Norton Garfinkle, its Secretary, on the day of July, 1995.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Bruce F. Failing, Jr.
--------------------------------
Bruce F. Failing, Jr.
President
[Seal]
Attest:
s/Norton Garfinkle
- -----------------------------
Norton Garfinkle
Secretary
<PAGE>
<PAGE>
AMENDED
CERTIFICATE OF DESIGNATION OF
SERIES A CUMULATIVE, CONVERTIBLE PREFERRED STOCK OF
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
We, William B. Fischer, Vice-President, and Howard Kailes,
Assistant Secretary, of Electronic Retailing Systems International,
Inc., a corporation organized and existing under the laws of the
State of Delaware, in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That its Board of Directors on December 14, 1995 adopted the
following resolution authorizing and directing an increase in the
number of shares of the Series A Cumulative, Convertible Preferred
Stock set forth in the Certificate of Designation of Series A
Cumulative, Convertible Preferred Stock of Electronic Retailing
Systems International, Inc. filed with the Secretary of State of
the State of Delaware on July 21, 1995:
RESOLVED, that, pursuant to the authority vested in
the Board of Directors of this Corporation in accordance
with the provisions of Section 151(g) of the General
Corporation Law of the State of Delaware, the number of
shares of the Series A Cumulative, Convertible Preferred
Stock, $1.00 par value, of the Corporation be, and it
hereby is, increased from the current 120,000 shares to
140,000 shares, and that, in furtherance thereof, the
first sentence of Section (A) of the resolution of the
Board of Directors of the Corporation adopted on July 14,
1995 creating such Series A Cumulative, Convertible
Preferred Stock and set forth in the Certificate of
Designation of the Series A Cumulative, Convertible
Preferred Stock of Electronic Retailing Systems
International, Inc. be, and it hereby is, deleted in its
entirety, and the following sentence substituted in lieu
thereof:
"An aggregate of 140,000 shares of Preferred
Stock, $1.00 par value, of the Corporation are
hereby constituted as a series designated as
"Series A Cumulative, Convertible Preferred
Stock (the "Series A Cumulative, Convertible
Preferred Stock")."
; and the proper officer or officers of the Corporation
be, and each of them hereby is, authorized and empowered,
in the name and on behalf of the Corporation, to execute
and file or cause to be filed with the Secretary of State
of the State of Delaware, an appropriate certificate
<PAGE>
setting forth the foregoing amendment to the Certificate
of Designation of the Series A Cumulative, Convertible
Preferred Stock of Electronic Retailing Systems
International, Inc.
This resolution was duly adopted by the Board of Directors of
Electronic Retailing Systems International, Inc. at a meeting
thereof duly called and held on December 14, 1995, at which a
quorum was present and acting throughout.
IN WITNESS WHEREOF, the Company has caused this Certificate to
be signed by William B. Fischer, its Vice-President, and attested
by Howard Kailes, its Assistant Secretary, this 26th day of
December, 1995.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/William B. Fischer
-------------------------------
William B. Fischer
Vice-President
ATTEST:
s/Howard Kailes
- -----------------------------
Howard Kailes
Assistant Secretary
<PAGE>
<PAGE>
CERTIFICATE ELIMINATING REFERENCE TO
SERIES A CUMULATIVE, CONVERTIBLE PREFERRED STOCK
FROM THE CERTIFICATE OF INCORPORATION
OF
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
Pursuant to Section 151(g) of
the General Corporation Law of the State of Delaware
We, William B. Fischer, Vice President, and Howard Kailes,
Assistant Secretary, of Electronic Retailing Systems International,
Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That in accordance with the provisions of Section 151(g) of
the General Corporation Law of the State of Delaware, its Board of
Directors on July 11, 1996, adopted the following resolutions
eliminating its Series A Cumulative, Convertible Preferred Stock,
$1.00 par value:
WHEREAS, pursuant to a Certificate of Designation
filed on behalf of the Corporation with the Secretary of
State of Delaware on July 21, 1995, as amended by an
Amended Certificate of Designation filed on behalf of the
Corporation with the Secretary of State of Delaware on
December 26, 1995, this Corporation created its Series A
Cumulative, Convertible Preferred Stock, $1.00 par value
(the "Series A Preferred Stock"); and
WHEREAS, none of the authorized Series A Preferred
Stock so designated is outstanding; and
WHEREAS, none of the said Series A Preferred Stock
of the Corporation will be issued;
NOW THEREFORE, BE IT RESOLVED, that the appropriate
officers of the Corporation be and hereby are authorized
and directed to file a certificate setting forth this
resolution with the Secretary of State of the State of
Delaware pursuant to the provisions of Section 151(g) of
the General Corporation Law of the State of Delaware for
the purpose of eliminating from the certificate of
incorporation of the Corporation all reference to the
said Series A Cumulative, Convertible Preferred Stock.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunder affixed and this certificate to be signed by
William B. Fischer, its Vice President and attested to by Howard
Kailes, its Assistant Secretary, on the 11th day of July, 1996.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/William B. Fischer
-----------------------------
William B. Fischer, Vice President
Attest:
s/Howard Kailes
- ----------------------------------
Howard Kailes, Assistant Secretary
EXHIBIT 5(c)
DATED 5 July 1996
(1) HENDERSON CROSTHWAITE
INSTITUTIONAL BROKERS LIMITED
(2) ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
(3) THE DIRECTORS within mentioned
----------------------------------
CONFORMED COPY/
PLACING AGREEMENT
----------------------------------
HW(937)/668802
<PAGE>
<PAGE>
INDEX
CLAUSE
1. Interpretation
2. Conditions
3. Application for Admission
4. Authorities
5. Placing
6. Sale
7. Payment and Registration
8. Fees, Commissions and Expenses
9. Warranties
10. Indemnity
11. Termination
12. Announcements
13. Continuing Obligations
14. Restrictions on Sales
15. Notices
16. General
SCHEDULES
1. Directors
2. Documents to be delivered
3. Warranties
4. Warranty Certificate
AGREED FORM DOCUMENTS
Agreed Form Documents referred to in Schedule 2
Admission Document
Opinion
Press Announcement
<PAGE>
<PAGE>
THIS AGREEMENT is made on 5 July 1996
BETWEEN:
(1) HENDERSON CROSTHWAITE INSTITUTIONAL BROKERS LIMITED a
company registered in England and Wales with number
2155712 whose registered offices is at 32 St Mary at
Hill, London EC3P 3AJ ("Henderson Crosthwaite");
(2) ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC. whose
principal place of business is at 372 Danbury Road,
Wilton, CT 06897-2523, U.S.A. ("the Company"); and
(3) THE PERSONS whose names and addresses are set out in
Schedule 1 ("the Directors").
WHEREAS:
(A) The Company was incorporated in the State of Delaware,
U.S.A on 12 February 1993.
(B) At the date of this agreement the Company has an
authorised share capital of US$2,250,000 divided into
25,000,000 shares of Common Stock with a par value of
US$0.01 each, 1,860,000 shares of Preferred Stock,
undesignated, with a par value of US$1.00 each and
140,000 shares of Series A Preferred Stock with a par
value of US$1.00 each. The Company's issued share
capital at the date of this agreement is US$240,728.32
divided into 11,800,048 such shares of Common Stock and
125,556 such shares of Series A Preferred Stock, all of
which are fully paid.
(C) Subject to and upon the terms and conditions set out
below, the Company proposes to issue 4,963,500 shares of
Common Stock, being the Placing Shares, at the Placing
Price to Placees procured by Henderson Crosthwaite.
(D) Henderson Crosthwaite is willing as agent for the Company
to use reasonable endeavours to procure subscribers for
the Placing Shares.
(E) Application will be made for the admission to trading on
AIM of the Common Stock, issued and now being issued.
(F) Henderson Crosthwaite has been appointed as Nominated
Adviser and Nominated Broker to the Company.
IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this agreement (including the recitals and the
Schedules) the following words and expressions shall have
the following meanings (save where the context otherwise
requires):-
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"Accountants' Report" the report by the Reporting
Accountants set out in Part II
of the Admission Document;
"Admission" the admission of the Existing
Common Stock, the Placing
Shares, the Commission Shares,
the Conversion Shares and the
Private Placement Shares to
trading on AIM becoming
effective as provided in rule
16.6 of the Rules of the
Exchange and references to any
application for Admission shall
be construed accordingly;
"Admission Document" the document in the Agreed Form
relating to the Company prepared
in compliance with Chapter 16 of
the Rules of the Exchange, which
constitutes a prospectus for the
purposes of the POS Regulations
and which is to be dated with
the date of this agreement;
"AIM" the Alternative Investment
Market of the London Stock
Exchange;
"associated company" in relation to a company, any
subsidiary undertaking, parent
undertaking or any subsidiary
undertaking of such a parent
undertaking;
"Board" the board of directors of the
Company from time to time or a
duly authorised committee
thereof;
"Business Day" a day upon which dealings in
domestic securities may take
place on the London Stock
Exchange;
"CA 85" the Companies Act 1985 (as
amended by the Companies Act
1989);
"Commission Shares" the shares of Common Stock which
are to be issued to Henderson
Crosthwaite in accordance with
clause 8.1 and 8.2;
"Common Stock" shares of common stock in the
Company with a par value of
US$0.01 each;
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"Company's Solicitors" Lovell White Durrant of 65
Holborn Viaduct, London
EC1A 2DY;
"Company's US Counsel" Krugman, Chapnick and Grimshaw
of Park 80 West, Plaza Two,
Saddle Brook, New Jersey 07663
5895 USA;
"Conditions" the conditions set out in clause
2.1;
"Conversion Shares" the Common Stock issuable upon
conversion of the Series A
Preferred Stock;
"Existing Common Stock" the Common Stock in issue at the
date hereof;
"FSA" the Financial Services Act 1986;
"Gouldens" Gouldens, Solicitors, of 22
Tudor Street, London, EC4Y 0JJ;
"Group" the Partnership, Company and its
subsidiaries from time to time
and "member of the Group" shall
be construed accordingly;
"Indebtedness Report" the letter from the Reporting
Accountants dated with the date
of this agreement and addressed
to Henderson Crosthwaite
relating to the indebtedness
statement on the cover of the
Admission Document;
"Indemnity" the indemnity contained in
clause 10.2;
"Interim Statement" the unaudited condensed
consolidated financial
information of the Group as of
March 1996 for the three month
periods ended 31 March 1996 and
31 March 1995, together with the
notes thereto as set out in Part
III of the Admission Document;
"Issue Documents" the Admission Document, the
Placing Letters and the Press
Announcement;
"Last Accounts" the audited consolidated
financial statements (comprising
statement of operations for the
year to the Last Accounts Date,
<PAGE>
balance sheet at the Last
Accounts Date and statement of
cash flow for the year to the
Last Accounts Date) of the Group
for the year to the Last
Accounts Date together with the
notes thereto and the directors'
and auditors' reports thereon;
"Last Accounts Date" 31 December 1995;
"the London Stock
Exchange" London Stock Exchange Limited;
"Long Form Report" the long form report on the
Group addressed to Henderson
Crosthwaite which has been
prepared by the Reporting
Accountants and which is dated
on or about the date of this
agreement;
"Long Stop Date" 25 July 1996;
"NASDAQ" The Nasdaq National Market
operated by The Nasdaq Stock
Market;
"Nominated Adviser" has the meaning given to the
expression "nominated adviser"
in the Rules of the Exchange;
"Nominated Adviser
Letter" the agreement dated with the
date of this agreement under
which Henderson Crosthwaite has
been appointed as the Company's
Nominated Adviser and Nominated
Broker;
"Nominated Broker" has the meaning given to the
expression "nominated broker" in
the Rules of the Exchange;
"Opinion" an opinion in the Agreed Form
given by the Company's U.S
Counsel and addressed to
Henderson Crosthwaite;
"Partnership" has the meaning ascribed thereto
in the Admission Document;
"Placees" persons who agree conditionally
to subscribe for Placing Shares
pursuant to the Placing;
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"Placing" the placing of the Placing
Shares pursuant to the
provisions of this agreement;
"Placing Letters" the placing letters to be
delivered or sent to potential
Placees by Henderson Crosthwaite
in connection with the Placing;
"Placing Price" the price of 145p per Placing
Share;
"Placing Shares" the 4,963,500 new shares of
Common Stock which are to be
issued by the Company pursuant
to the provisions of this
agreement;
"POS Regulations" The Public Offers of Securities
Regulations 1995;
"Preferred Stock
Agreement" the agreements between the
Company (1) and respectively the
holders of the Series A
Preferred Stock (2) dated on or
about the date of this agreement
under which those holders have
agreed to convert such stock
subject to completion of the
Placing;
"Private Placement" the private placement, at the
Placing Price, of 911,657 new
shares of Common Stock which is
to be effected in the United
States in accordance with
subscription agreements dated on
or about the date of this
agreement between the Company
and certain subscribers;
"Private Placement
Shares" the 911,657 new shares of Common
Stock which are to be issued
pursuant to the Private
Placement;
"Press Announcement" the press announcement in the
Agreed Form containing details
of the Placing;
"Properties" the Company's offices at 372
Danbury Road, Wilton,
Connecticut, USA;
<PAGE>
"Registrars" the Company's US stock transfer
agent and registrar, being
American Stock Transfer and
Trust Company of 40, Wall
Street, 46th Floor, New York, NY
10005 USA and the Company's UK
Stock transfer agent being
Connaught St Michaels Limited
PO Box 30 Victoria Street
Luton Bedfordshire LU12 2PZ;
"Regulation S Agreement" the agreement dated 2 July 1996
between the Company and
Henderson Crosthwaite regarding
compliance with Regulation S;
"Relevant Person" Henderson Crosthwaite, and each
of the directors, officers,
employees, agents and advisers
of Henderson Crosthwaite and
each such associated company;
"Reporting Accountants" Price Waterhouse LLP of 300
Atlantic Street, Stamford,
CT06901, U.S.A.;
"Rules of the Exchange" the Rules of the London Stock
Exchange in force at the date of
this agreement or for the
purposes of Clause 13 only where
the context requires as further
amended or modified after the
date of this agreement;
"SEC" the United States Securities and
Exchange Commission;
"Securities Act" the Securities Act of 1933, as
amended, of the United States of
America;
"Series A Preferred
Stock" the Company's shares of Series A
Cumulative, Convertible
Preferred Stock, par value $1.00
each;
"SFA" The Securities and Futures
Authority Limited;
"Stock Option Plans" the Company's 1993 Employee
Stock Option Plan Stock Option
Plan and the Company's 1993
Director Stock Option Plan;
<PAGE>
"Specified Event" an event occurring or matter
arising on or after the date
hereof and before Admission
which if it had occurred or
arisen before the date hereof
would have rendered any of the
Warranties untrue or incorrect
in any respect;
"subsidiary" in relation to the Company, any
person controlled by the Company
directly, or indirectly through
one or more intermediaries (with
"control" having the meaning set
forth in SEC Rule 405 under the
Securities Act;
"Supplementary
Prospectus" a supplementary prospectus
prepared in relation to the
Company in accordance with
regulation 10 of the POS
Regulations;
"VAT" United Kingdom value added tax;
"Verification Notes" the verification notes relating
to the accuracy and completeness
of the information contained in
the Admission Document which are
dated on or about the date of
this agreement;
"United States" United States of America;
"Warranties" the representations warranties
and undertakings on the part of
the Company and Directors set
out in clause 9 and Schedule 3;
"Warranty Certificate" a certificate in the form set
out in Schedule 4;
"Working Capital Report" the report prepared by the
Reporting Accountants on the
working capital projections of
the Group for the period ending
31 December 1997 (including
those projections).
1.2 Any reference to a document being "in the Agreed Form"
means in the form of the draft or proof thereof signed
for the purpose of identification by Gouldens (on behalf
of Henderson Crosthwaite) and the Company's Solicitors
(on behalf of the Company and the Directors) with such
alterations (if any) as may subsequently be agreed by or
on behalf of the parties.
<PAGE>
1.3 The Interpretation Act 1978 shall apply to this agreement
in the same way as it applies to an enactment.
1.4 Save where the context otherwise requires and except as
expressly provided to the contrary, words and expressions
defined in CA 85 in force at the date of this Agreement
shall have the same meaning in this agreement.
1.5 References in this agreement to clauses, recitals and
Schedules are to clauses of and recitals and Schedules
to this agreement.
1.6 Headings are included in this agreement for convenience
only and shall be disregarded in its interpretation.
1.7 Any document referred to in this agreement as being
certified shall be certified as a true and complete copy
by either the Company's Solicitors or the Company's US
Counsel.
2. CONDITIONS
2.1 The obligations of Henderson Crosthwaite under this
agreement are conditional upon:-
(A) the Private Placement having become unconditional in
all respects (save for any condition relating to
Admission or to this agreement) and the Private
Placement Shares having been authorised for issue,
conditional only upon Admission, against receipt by
the Company of the subscription monies payable
therefor and for the Placing Shares;
(B) the delivery of two copies of the Admission Document
to the registrar of companies in England and Wales
as required by paragraph 4(2) of the POS Regulations
and the practice of the registrar of companies
before 12.00 midnight (London time) on the date of
this agreement;
(C) the delivery to Henderson Crosthwaite or to Gouldens
on its behalf of each of the documents referred to
in Schedule 2 by the times and otherwise as referred
to therein;
(D) this agreement not having been terminated in
accordance with clause 11;
(E) the quotation of the Existing Common Stock on the
NASDAQ system not having been suspended or cancelled
or otherwise terminated;
(F) the Preferred Stock Agreement not having lapsed or
been terminated;
<PAGE>
(G) any Supplementary Prospectus which the Company is
obliged to publish having been published in
accordance with the POS Regulations and the Rules of
the Exchange prior to Admission;
(H) the Warranty Certificate having been duly executed
and delivered to Henderson Crosthwaite or to
Gouldens on its behalf on the date immediately prior
to Admission; and
(I) Admission having become effective at or before 8.30
a.m. (London time) on 11 July 1996;
or (in the case of any time/date provided above) such
later time or date (being not later than 3.00pm on the
Long Stop Date) as the Company and Henderson Crosthwaite
may agree in writing PROVIDED THAT each of the parties
shall perform its obligations hereunder until such time
(if any) as any of the Conditions shall have become
incapable of being satisfied.
2.2 The Company shall procure due satisfaction of the
Conditions set out in sub-clauses 2.1, (B) and (C) and
shall use all reasonable endeavours to procure the
fulfilment of the other Conditions in each case by the
times and dates (if any) stated Clause 2.1 and in
particular shall provide such information, supply such
documents, pay such fees, and do all such acts and things
as may be reasonably required by Henderson Crosthwaite
for that purpose.
2.3 If any of the Conditions are not fulfilled (or waived in
writing by Henderson Crosthwaite) by 3.00 p.m. on the
Long Stop Date, this agreement shall cease and determine
and no party will have any claim against any other party
for costs, damages, compensation or otherwise except
that:-
(A) such termination shall be without prejudice to any
accrued rights or obligations under this agreement
except for any claim for breach of Warranty;
(B) the Company shall pay the fees and expenses
specified in clause 8.3; and
(C) the provisions of clauses 1, 2.3, 2.4, 10, 15 and 16
shall remain in full force and effect.
2.4 Any payment required to be made in accordance with clause
2.3 shall is subject to due compliance with the relevant
provisions of the clauses referred to therein be made
within three Business Days after the Long Stop Date.
<PAGE>
<PAGE>
3. APPLICATION FOR ADMISSION
3.1 The Company will with the assistance of Henderson
Crosthwaite where appropriate, use all reasonable
endeavours to obtain Admission including paying all fees
and executing and delivering all such documents as shall
be necessary in connection with such application and,
insofar as within its power, generally do and procure to
be done all such things as may properly be required by
the London Stock Exchange for the purposes of or in
connection with Admission so as to enable Admission to
take place by 8.30am (London time) on 11 July 1996.
3.2 The Company and the Directors shall procure the delivery
to Henderson Crosthwaite of the documents listed in
Schedule 2 in each case in such numbers and such form and
by the times set out in Schedule 2.
3.3 Henderson Crosthwaite is hereby given all such
authorities and powers by the Company and the Directors
as are required for the purposes of obtaining Admission
and Henderson Crosthwaite shall take all reasonable steps
to assist in the obtaining of Admission including
(without limitation) liaising with and dealing with any
requirements of the London Stock Exchange in connection
with the same and the preparation and (subject, where
appropriate, to due compliance by the Company and the
Directors with their respective obligations under this
agreement) delivery to the London Stock Exchange of the
documents necessary for that purpose.
3.4 The Company and the Directors shall procure that copies
of the Admission Document are made available free of
charge at the two addresses specified in the Admission
Document as required by rule 16.13 of the Rules of the
Exchange and regulation 4(1) of the POS Regulations.
3.5 The Company undertakes to ensure that the documents
stated in the Admission Document as being available for
inspection at the offices of the Company's Solicitors are
available as stated therein.
3.6 Each of the Directors confirms to Henderson Crosthwaite
that he has received advice and guidance from and has had
explained to him by the Company's Solicitors, the nature
of his responsibilities and obligations to ensure
compliance by the Company with Chapter 16 of the Rules of
the Exchange.
3.7 The Directors confirm to the Company, for the purposes of
rule 16.8 of the Rules of the Exchange, and to Henderson
Crosthwaite that they accept full responsibility,
collectively and individually for the Company's
compliance with Chapter 16 of the Rules of the Exchange.
<PAGE>
3.8 The Directors confirm to Henderson Crosthwaite, after
having made due and careful enquiry, that they have
established procedures which provide a reasonable basis
for them to make proper judgements as to the financial
position and prospects of the Company and the Group such
procedures being described in Part 5 of the Long Form
Report.
3.9 The Company confirms to Henderson Crosthwaite, after
having made due and careful enquiry, that the working
capital available to the Group is sufficient for its
present requirements.
3.10 Save as disclosed in the Admission Document each Director
confirms to the Company and Henderson Crosthwaite that he
is free of any conflict between his duties to the Company
and the Group and his private interests or other duties
other than transactions of an immaterial nature.
4. AUTHORITIES
4.1 The Company authorises and instructs Henderson
Crosthwaite to procure subscribers at the Placing Price
for the Placing Shares and for such purpose:-
(A) irrevocably appoints Henderson Crosthwaite as its
agent for the purpose of procuring Placees and
confirms its authority to Henderson Crosthwaite to
seek commitments from Placees by the distribution of
Placing Letters and copies or proofs (including
placing proofs) of the Admission Document and
ratifies the lawful distribution by Henderson
Crosthwaite of the approved pathfinder version of
the Admission Document;
(B) confirms that the foregoing appointment confers on
Henderson Crosthwaite all powers, authorities and
discretions on behalf of the Company which are
within its powers and are necessary to implement the
Placing; and
(C) agrees to ratify and approve all documents, acts and
things which Henderson Crosthwaite shall lawfully do
in the exercise of such appointment, powers,
authorities and discretions.
4.2 The Company shall give all such assistance and provide
all such information as Henderson Crosthwaite may
reasonably require for the making and implementation of
the Placing and will do (or procure to be done insofar as
it is able) all such things and execute (or procure to be
executed insofar as it is able) all such documents as may
be necessary to be done or executed by the Company or on
its behalf by its officers or employees in connection
therewith.
<PAGE>
4.3 The Company confirms that it will provide the Registrars
with all authorisations and information necessary to
enable them to perform their duties as stock transfer
agent and registrar in accordance with the terms of the
Admission Document and this agreement and has irrevocably
authorised and instructed them to act in accordance with
all reasonable instructions of Henderson Crosthwaite in
connection with the Placing.
5. PLACING
5.1 Pursuant to but without limiting the authority in clause
4.1, Henderson Crosthwaite agrees, as agent of the
Company and in reliance on the Warranties to use
reasonable endeavours to procure persons in compliance
with the Regulation S Agreement to subscribe for the
Placing Shares at the Placing Price and otherwise upon
the terms of the Issue Documents.
5.2 Henderson Crosthwaite shall hold all subscription monies
received by it from Placees in a separate designated
escrow account pending payment of sums due under clauses
7 and 8 or (if this agreement shall cease and determine
in accordance with clause 2.3 or shall be terminated
pursuant to clause 11) return of the same to the persons
entitled thereto.
6. SALE
As soon as practicable following this Agreement coming
into effect:-
(A) the Company shall deliver to Gouldens on behalf of
Henderson Crosthwaite the Warranty Certificate duly
signed;
(B) Henderson Crosthwaite shall provide the Company and
the Registrars with the names and addresses of the
Placees who have agreed conditionally to subscribe
Placing Shares together with details of the number
of Placing Shares to be subscribed by each such
Placee; and
(C) the Company shall authorise for issue Placing Shares
to the Placees notified to it by Henderson
Crosthwaite under clause 6(B), conditionally only
upon Admission and otherwise upon the terms set out
in the Issue Documents, and following such
authorisation for issue shall deliver to Gouldens or
to Henderson Crosthwaite a certified copy of the
resolution of the Board duly conditionally
authorising for issue selling the Placing Shares as
aforesaid.
<PAGE>
7. PAYMENT AND REGISTRATION
7.1 Upon Admission becoming effective, Henderson Crosthwaite
shall give notice to that effect to the Company and
(subject thereto and to satisfaction (or waiver as
provided in clause 2) of the other Conditions) Henderson
Crosthwaite will by no later than 1.00 pm (London time)
on the day of Admission (or if later) such date (not
being later than the Long Stop Date) as is agreed by the
Company and Henderson Crosthwaite, pay or cause to be
paid to the Company to the account specified in clause
7.4 or as the Company may direct a sum equal to the
aggregate amount received by Henderson Crosthwaite
pursuant to the Placing less the amounts referred to in
clause 8.1(A) and 8.1(C).
7.2 As soon as practicable following Admission, the Company
shall procure registration (without registration fees) of
the Placees (as indicated to it in accordance with clause
6(B)) as the holders of Placing Shares.
7.3 The Company shall procure that definitive share or stock
certificates in respect of the Placing Shares will be
prepared and delivered or posted to the persons entitled
thereto by the date for that purpose provided in the
Admission Document.
7.4 The account of the Company referred to in clause 7.1 is:-
Bank: Bank of New York, London
Swift Code: IRVT GB 2X
Sort-code: 70-02-25
For the Account of: The Bank of New York, New York
Account No. 4646008260
GLA Number 111363
for further credit to Account:
108583
Account Name: Electronic Retailing Systems
International, Inc
Contact: Janet Wolf (203) 359 4059
7.5 The Company irrevocably instructs Henderson Crosthwaite
to make payments receivable by the Company pursuant to
clause 7.1 by same day international electronic funds
transfer and such payments shall be deemed effective
forthwith upon irrevocable instructions being issued by
Henderson Crosthwaite or any such agent to any bank or
person obliged to comply with those instructions to
transfer the relevant amounts by electronic funds
transfer to the account of which details are set out in
clause 7.4.
<PAGE>
8. FEES, COMMISSIONS AND EXPENSES
8.1 In consideration of this agreement the Company shall pay
(together with VAT where applicable):-
(A) to Henderson Crosthwaite a corporate finance fee of
Pound 125,000 which shall be satisfied by the issue
to Henderson Crosthwaite, credited as fully paid, of
86,207 new shares of Common Stock;
(B) to Henderson Crosthwaite a commission of 3% of the
aggregate value at the Placing Price of the Placing
Shares (other than any Placing Shares subscribed for
by or on behalf of Mr Richard Northcott or any
person connected with him) which shall be satisfied
by the issue to Henderson Crosthwaite credited as
fully paid of 132,750 new shares of Common Stock;
and
(C) the expenses to be borne by the Company under clause
8.3.
8.2 As soon as practicable following this agreement coming
into effect, the Company shall authorise for issue the
Commission Shares to Henderson Crosthwaite, to be
credited as fully paid, conditional only upon Admission
and shall deliver to Gouldens or Henderson Crosthwaite a
certified copy of the resolution of the Board duly
conditionally authorising for issue the Commission Shares
as aforesaid and as soon as practicable following
Admission the Company shall procure registration(without
registration fees) of Henderson Crosthwaite as the holder
of such shares and as soon as practicable thereafter
shall procure that a definitive certificate in respect of
such shares shall be prepared and delivered to Henderson
Crosthwaite.
8.3 The Company will bear all expenses of or incidental to
the Placing and the issue of the Placing Shares
including, without limitation, the reasonable fees of its
professional advisers, the Reporting Accountants the fees
of Henderson Crosthwaite's professional advisers
(including the reasonable fees and out of pocket expenses
of Gouldens and Henderson Crosthwaite's U.S. counsel ),
the cost of printing and distribution of the Issue
Documents and all other documents connected with the
Placing, Registrar's fees, the fees payable to the London
Stock Exchange, all other reasonable out of pocket
expenses and disbursements of Henderson Crosthwaite and,
where applicable, against production of a VAT invoice
VAT. The Company will forthwith upon demand by Henderson
Crosthwaite reimburse to it the amount of any such
expenses which it may properly have paid on behalf of the
Company.
<PAGE>
8.4 Save where this agreement ceases and determines in
accordance with clause 2.3 or is terminated pursuant to
clause 11, the amounts payable pursuant to clause 8.1
shall become payable immediately following Admission and
may be withheld by Henderson Crosthwaite from any payment
to be made by it to the Company pursuant to clause 7.
8.5 Where pursuant to this clause 8 or any other provision of
this agreement a sum is reimbursed to Henderson
Crosthwaite the Company shall, in addition, pay to
Henderson Crosthwaite in respect of VAT to the extent
that any reimbursement is in respect of any supply of
services to the Company, such amount as equals the
proportion of any VAT charged to Henderson Crosthwaite in
respect of such expenses and which it, acting in good
faith, certified as being irrecoverable (whether by way
of credit or repayment) input tax in its hand is unable
to recover together with an amount representing any VAT
properly chargeable on the consideration for the supply
9. WARRANTIES
9.1 The Company and Mr Bruce Failing severally represent,
warrant and undertake subject to matters fairly disclosed
in the Admission Document to Henderson Crosthwaite (for
itself and as trustee or agent on behalf of and for the
benefit of each Placee and each other Relevant Person) in
the terms of Part 1 of Schedule 3 and acknowledge that
Henderson Crosthwaite is entering into this agreement in
reliance on the Warranties and that Placees will agree to
subscribe Placing Shares in reliance on the Warranties
having been given.
9.2 Each of the Directors other than Mr Bruce Failing
severally represents warrants and undertakes to Henderson
Crosthwaite (for itself and as trustee or agent on behalf
of and for the benefit of each Placee) in the terms of
Part 2 of Schedule 3 and acknowledges that Henderson
Crosthwaite is entering into this agreement in reliance
on the Warranties and that Placees will agree to
subscribe Placing Shares in reliance on the Warranties
having been given.
9.3 Without prejudice to clause 9.1 and 9.2, each of the
Directors severally warrants in relation to himself
alone, to the Company and Henderson Crosthwaite that all
information relating to him of the kind specified in rule
16.11(e) of the Rules of the Exchange has been included
in the Admission Document and that such information as
disclosed in the Admission Document is true and accurate
in all respects and not misleading and there is no
information not disclosed in the Admission Document
regarding him which would be likely to make any statement
in the Admission Document regarding him misleading,
untrue or inaccurate and that there is no information of
which he is aware concerning his present or past
activities which might reasonably be considered material
<PAGE>
and which has not been disclosed in writing to Henderson
Crosthwaite or in the Admission Document.
9.4 Where any of the Warranties is given to the best of the
knowledge, information and belief of the Company and/or
the Directors (or qualified by any similar expression)
the Company and/or the Directors (as the case may be) are
deemed also to warrant that such Warranty has been given
after it has or (as the case may be) they have made all
reasonable careful enquiries.
9.5 Acceptance of the terms of this agreement will constitute
an undertaking by the Company and each Director not
voluntarily and knowingly, or recklessly or negligently
to cause, and to use all reasonable endeavours (not
incurring the expenditure of personal financial resources
on behalf of, or for the benefit of the Group) not to
permit, any Specified Event to occur before Admission.
9.6 If any breach of Warranty or Specified Event shall occur
or come to the knowledge of the Company or of any
Director prior to Admission it or he shall forthwith give
notice of the same to Henderson Crosthwaite and provide
it with such information with regard thereto as it shall
reasonably require.
9.7 In the event that any claim is made against either of
Bruce Failing or Norton Garfinkle for breach of the
Warranties neither of them shall pursue any claim or
third party action to join in, claim against, seek a
contribution from or otherwise claim or seek damages or
compensation from the Company or any of its subsidiaries
provided that this sub-clause 9.7 shall not in any manner
limit or restrict their ability to rely on the Company's
insurance coverage for directors and officers in respect
of any liability which they may have in relation to such
claim.
9.8 Each of the Directors confirms to Henderson Crosthwaite
that save for directors and officers insurance coverage
and, save as provided in the Company's Certificate of
Incorporation, neither the Company nor any of its
subsidiaries has entered into any agreement or
arrangement concerning his liability for any breach of
the Warranties or in relation to any other provision of
this agreement which would involve the Company or any
subsidiary in making any payment in part or whole
satisfaction of his liability.
9.9 The maximum liability of each Director under this
clause 9 shall not exceed:-
(A) in the case of Bruce Failing and Norton Garfinkle,
US$250,000 each; and
(B) in the case of each other Director, Pound 10,000 per
Director.
<PAGE>
9.10 No claim shall be made against the Company or any
Director under this clause 9 unless notice thereof is
served on the Company and/or the relevant Director as the
case may be on or before the publication of the audited
accounts of the Group for the year ending 31 December
1997.
10. INDEMNITY
10.1 No claim shall be made against any Relevant Person to
recover any loss, damage, costs, charges or expenses
which the Company or any other member of the Group or any
of the Directors or any other person may suffer or incur
by reason of or arising out of the performance by
Henderson Crosthwaite of its obligations under this
agreement or in connection with the Placing or the
publication or despatch of any of the Issue Documents
save to the extent that such loss, damage, costs, charges
or expenses arises as a result of the material breach by
Henderson Crosthwaite of its obligations hereunder or
under the Regulation S Agreement or the fraud, negligence
or wilful default of such Relevant Person or any material
contravention by that Relevant Person of the rules of the
SFA or the provisions of the FSA.
10.2 The Company undertakes to Henderson Crosthwaite (for
itself and on the basis that it shall enjoy absolute
discretion as to the enforcement of any claim under this
clause, as agent or trustee on behalf of and for the
benefit of any Relevant Persons) to indemnify and keep
indemnified each Relevant Person against all claims,
actions, demands, liabilities or judgments in any
jurisdiction which may be made, brought or established
against any of such persons and against all loss, damage,
costs, charges and expenses in any jurisdiction which any
such person may suffer or incur or which may be made
against any such Relevant Persons and which in any case
directly or indirectly results from or is attributable to
the transactions contemplated by this agreement including
without limitation:-
(A) the approval and/or publication of the Press
Announcement;
(B) the approval and/or despatch or publication of the
Issue Documents;
(C) the sale of the Placing Shares;
(D) any breach by the Company or Directors of any of the
Warranties or any of its or their other obligations
hereunder;
(E) the proper performance by Henderson Crosthwaite of
its obligations hereunder and otherwise in
connection with the Placing and/or Admission;
<PAGE>
(F) any failure or alleged failure to comply with any
legal, statutory or regulatory requirement whether
of the United Kingdom, the United States of America
or elsewhere in relation to the Placing and/or
Admission; and/or
(G) the Issue Documents or any of them not containing or
being alleged not to contain all information
required to be stated therein or any statement
therein being or being alleged to be defamatory,
untrue, inaccurate, incomplete or misleading in any
respect or as having been made negligently or
otherwise without the required standard of skill and
care
and which does not arise from the material breach by
Henderson Crosthwaite of its obligations hereunder or
under the Regulation S Agreement or the fraud, negligence
or wilful default of such Relevant Person or a material
contravention by such Relevant Person of the rules of the
SFA or the provisions of the FSA or any action by the SFA
in relation to such Relevant Person.
10.3 All sums payable under the Indemnity shall be paid free
and clear of all deductions or withholdings whatsoever
save only as may be required by law. If any such
deductions are required by law or if the United Kingdom
Inland Revenue or any other taxing authority in any
jurisdiction brings into any charge to taxation (or into
any computation of income, profits or gain for the
purpose of any charge to taxation) any sum payable under
the Indemnity then the Company shall pay such additional
sum or sums as will ensure that after deduction of the
taxation so chargeable the Relevant Person concerned
shall retain a sum equal to the amount that would
otherwise be payable pursuant to the Indemnity.
10.4 The Indemnity shall extend to include all reasonable
costs and expenses including legal fees and expenses
properly suffered or incurred by any Relevant Person in
connection with enforcing its rights under this clause 10
(together with any VAT thereon).
10.5 If Henderson Crosthwaite becomes aware of any claim
relevant for the purposes of the Indemnity which may be
made against it or any other Relevant Person, it shall
notify the same to the Company and shall (if the claim is
as a result of or in connection with a claim by or
liability to any third party) and subject to it or such
other Relevant Person being indemnified and secured to
its satisfaction by the Company against all losses,
liabilities, claims, costs, charges and expenses suffered
or incurred thereby, Henderson Crosthwaite shall take or
use all reasonable endeavours to procure to be taken such
action as the Company may reasonably request to avoid,
dispute, resist, appeal, compromise or defend such claim
and shall (insofar as it has the power to do so) provide
<PAGE>
the Company and its legal advisers with such information
and documentation relating to such claim as the Company
may reasonably require PROVIDED THAT nothing in this
clause shall oblige any Relevant Person to do, procure or
omit to do anything which in its reasonable opinion may
adversely affect its or his business reputation or
goodwill. If the Company fails so to indemnify and
secure Henderson Crosthwaite or such other Relevant
Persons to its reasonable satisfaction and to request it
or them to take action in respect of a claim within
twenty one days of the notification of such claim to the
Company, it or they may pay or settle or resist or
otherwise deal with the claim as it or they in its or
their absolute discretion think fit.
10.6 Save as expressly stated in the Verification Notes, no
Relevant Person has been responsible for or requested by
the Company to undertake any verification relating to the
information contained in the Admission Document.
11. TERMINATION
11.1 If before Admission it shall come to the notice of
Henderson Crosthwaite that:-
(A) any statement contained in the Issue Documents has
been discovered to be untrue, incorrect or
misleading in a manner which is material in the
context of the Placing; or
(B) there has been a breach of any of the Warranties or
of any other obligations on the part of the Company
or of the Directors or any of them under any other
provision of this agreement in a manner which is
material in the context of the Placing; or
(C) a Specified Event has occurred which is material in
the context of the Placing; or
(D) any of the Conditions shall have become incapable of
fulfilment before the latest time provided in clause
2.3 and has not been waived as provided in clause 2;
then, upon Henderson Crosthwaite giving notice thereof to
the Company, clause 11.3 shall apply.
11.2 If before Admission:-
(A) there shall have been, occurred, happened or come
into effect any event or omission which in the
reasonable opinion of Henderson Crosthwaite is, will
be or likely to be materially adverse to the Group
or which is otherwise material to the acquisition of
the Placing Shares under the Placing in accordance
with the Issue Documents; or
<PAGE>
(B) there shall have occurred any change in national or
international, financial, monetary, economic,
political or stock market conditions which in the
reasonable opinion of Henderson Crosthwaite is or
will or is likely to be materially adverse to the
Group or which is otherwise material to the
acquisition of the Placing Shares under the Placing
in accordance with the Issue Documents; or
(C) there shall have come to the attention of Henderson
Crosthwaite any financial or other information
relating to the Group which is material in the
context of the Placing and which is not fairly
disclosed in the Issue Documents, the Working
Capital Report, the Long Form Report or in the
answers to the Verification Notes or in any other
published information previously made available to
Henderson Crosthwaite
Henderson Crosthwaite will consult in good faith with the
Company with a view to resolving the matter
satisfactorily but Henderson Crosthwaite shall, at any
time before Admission, be entitled to give notice to the
Company that clause 11.3 shall apply.
11.3 Where this clause 11.3 applies, Henderson Crosthwaite may
in its absolute discretion:-
(A) allow the issue of Placing Shares to proceed on the
basis of the Issue Documents in which case no claim
shall be brought under the Warranties in respect of
any matter which causes this clause 11.3 to apply;
or
(B) give notice to the Company (at the same time as the
notice pursuant to clause 11.1 or, as the case may
be, clause 11.2 or at any time thereafter, but
before Admission) to the effect that this agreement
shall terminate and (subject to clause 11.5) cease
to have any effect.
11.4 If any notice is given to the Company pursuant to clause
11.3(B), Henderson Crosthwaite shall forthwith on behalf
of the Company withdraw any application that has been
made to the London Stock Exchange for Admission.
11.5 If this agreement is terminated pursuant to the
provisions of this clause 11, no party to this agreement
will have any claim against any other party for costs,
damages, compensation or otherwise except that:-
(A) such termination shall be without prejudice to any
accrued rights or obligations under this agreement
except that no claim shall be brought for accrued
fees or under the Warranties in respect of any
matter which causes this clause 11.3 to apply;
<PAGE>
(B) the Company shall pay the fees and expenses
specified in clause 8.3; and
(C) the provisions of clauses 1, 10, 11.5, 11.6, 15 and
16 shall remain in full force and effect.
11.6 Any payments required to be made in accordance with
clause 11.5 shall be made within three Business Days
after notification by Henderson Crosthwaite in accordance
with clause 11.3(B).
12. ANNOUNCEMENTS
12.1 Save for the issue and publication of the Issue Documents
and subject to clause 12.3, no public announcement or
communication concerning the Company or any of its
subsidiaries which is or might be material in the context
of the Placing or which relates to Admission shall be
published, made or despatched by or on behalf of the
Company or any of its subsidiaries or any of their
respective directors between the date of this agreement
becomes effective and the date ninety days after
Admission without the prior written consent of Henderson
Crosthwaite, such consent not to be unreasonably withheld
or delayed.
12.2 The Company will not and will procure that none of its
subsidiary undertakings will after this agreement becomes
effective and prior to Admission enter into any
commitment or agreement, and the Company will use all
reasonable endeavours to avoid and shall procure that all
its subsidiary undertakings use all reasonable endeavours
to avoid putting themselves in a position where the
Company is obliged to announce that any commitment or
agreement may be entered into (which is or might be
material in the context of the Placing or Admission or
the application therefor) or that any significant new
matter has arisen or issue any shares or options over
shares or securities convertible or exchangeable into
shares or enter into any agreement or undertaking to do
the same, without the prior written consent of Henderson
Crosthwaite, such consent not to be unreasonably withheld
or delayed.
12.3 The Company undertakes to make all such announcements as
shall be necessary or appropriate to comply with the POS
Regulations and the Rules of the Exchange or the
requirements of the SEC and NASDAQ and in determining
whether any such announcement is necessary or appropriate
and/or the contents thereof the Company shall take into
account the representations of Henderson Crosthwaite.
12.4 Without prejudice to the other provisions of this clause
12, if at any time prior to Admission the Company or any
of the Directors becomes aware of any fact or
circumstance (whether occurring before or after the date
of this agreement) which would or might cause any
<PAGE>
statement made in the Issue Documents to be inaccurate or
misleading in any material respect, or if any significant
new matter has arisen the inclusion of information in
respect of which would have been required in the
Admission Document if it had arisen when the Admission
Document was prepared or which otherwise gives rise to an
obligation to produce a Supplementary Prospectus, the
Company or the Director in question will inform Henderson
Crosthwaite immediately of such fact, circumstance or
matter and will consult with it as to the communication
or announcement (if any) to be made to persons to whom
the Issue Documents have been sent. The Company will
make or cause to be made such announcement and/or
despatch such Supplementary Prospectus or other
supplement to the Admission Document as is necessary to
inform such persons of such fact or circumstance (in each
case in such form as Henderson Crosthwaite shall, acting
reasonably, approve) and shall otherwise comply with
regulation 10 of the POS Regulations and shall cause such
Supplementary Prospectus or other supplement to be
delivered as necessary to the registrar of companies.
Thereafter, references in this agreement to the Issue
Documents shall include any such announcements and/or
Supplementary Prospectus or other supplement.
13. CONTINUING OBLIGATIONS
13.1 The Company shall use all reasonable endeavours to comply
in all material respects with all statements of intent
and undertakings contained in the Issue Documents during
the period from Admission and ending on the date of
announcement of the results of the Group for the
financial year ending 31 December 1996.
13.2 The Company shall whilst Henderson Crosthwaite remains
the Company's Nominated Adviser:-
(A) give advance notice to and discuss with Henderson
Crosthwaite any announcement of profits or losses
and dividends in respect of any financial period of
the Group;
(B) discuss with Henderson Crosthwaite any other
information which is likely to affect the general
character or nature of the business of the Company
or the Group or may be necessary to be made known to
the public in order to enable shareholders and the
public to appraise the position of the Company or
the Group and in order to avoid the establishment of
a false market in the Company's securities;
(C) forward to Henderson Crosthwaite for its prior
perusal and (unless required or appropriate to be
made by law or the Rules of the London Stock
Exchange or the requirements of the SEC or NASDAQ)
written approval (such approval not to be
unreasonably withheld or delayed) proofs of all
<PAGE>
documents to be despatched to holders of the
Company's securities and documents relating to
takeovers, mergers, reorganisations or other schemes
(including without limitation employee profit
sharing schemes or share option schemes) and all
press announcements (other than routine trade press
announcements); and
(D) provide to Henderson Crosthwaite such financial
information (including quarterly management
accounts, budgets and other relevant financial data)
relating to the Company and the Group as it may
reasonably require from time to time.
13.3 The Company undertakes that except with the prior written
consent of Henderson Crosthwaite (which consent shall not
be unreasonably withheld or delayed) it will not after
Admission and the earlier of the date of announcement of
the results of the Group for the financial year ending
31 December 1996 and the expiry of 30 days after
Henderson Crosthwaite will cease, for any reason, to the
Company's Nominated Adviser enter into or procure or
(insofar as reasonably within its power to prevent the
same) permit any company in the Group to enter into any
material commitment or agreement or arrangement or
knowingly do or permit to be done any other act or thing
which in any such case constitutes a significant change
to the nature of the business of the Group as described
in the Issue Documents or a significant new matter
affecting the assessment of the Placing.
13.4 The Company undertakes to Henderson Crosthwaite, whilst
it remains Nominated Adviser, and to any successor
Nominated Adviser if so required by that adviser, to
comply with the requirements of Chapter 16 of the Rules
of the Exchange and confirms that it has established a
proper system and nominated appropriate personnel to
monitor such compliance.
13.5 Each of the Directors severally undertakes to Henderson
Crosthwaite, whilst it remains Nominated Adviser, and to
any successor Nominated Adviser if so required by that
adviser, and the Company that:-
(A) he will at all times comply with and act in
accordance with the code on dealings required to be
adopted by the Company in accordance with rule
16.9(b) of the Rules of the Exchange so far as the
same apply or are intended to apply to a person
having the relationship to the Company which he for
the time being may have;
(B) he will comply with and, so far as he is able,
procure compliance by the Company and the other
directors of the Company with all the undertakings
and commitments made by the Company and/or those
<PAGE>
directors or on their behalf in the Admission
Document;
(C) he will, so far as he is able, procure that the
Company complies with the continuing obligations for
companies whose securities are traded on AIM as from
time to time prescribed by the London Stock
Exchange;
(D) he will disclose to the Company all information
which the Company needs in order to comply with rule
16.17 of the Rules of the Exchange (so far as that
information is known to the Director or could with
reasonable diligence be ascertained by the Director)
before the expiration of the period specified in
rule 16.17;
(E) he will procure that the Company invites a UK based
director, acceptable to Henderson Crosthwaite, to
join the Board of the Company as soon as possible
following Admission;
(F) he will procure that without the prior written
consent of Henderson Crosthwaite or successor
Nominated Adviser (as the case may be) the Company
will not sell any of the shares of preferred stock,
undesignated, par value $1.00 to any Director or any
spouse, child (under 18 years old) or any trust of
which the Director is a trustee or under which he is
or may be a beneficiary or under which his spouse or
children (under 18 years old) are or may be
beneficiaries; and
(G) he will seek advice and guidance from the Company's
Nominated Adviser when appropriate and will act
appropriately on such advice.
13.6 As soon as practicable following receipt of a request
from Henderson Crosthwaite the Company shall deliver to
Henderson Crosthwaite a copy of the supporting documents
referred to in the Verification Notes.
14. RESTRICTIONS ON SALES
14.1 Each of the Directors covenants with the Company and
Henderson Crosthwaite, in relation to clauses 14.1(A) and
(B), and with the Company and any successor Nominated
Adviser if so required by that adviser in relation to
clause 14.1(C), that:-
(A) save with the prior written consent of Henderson
Crosthwaite he will not, during the period beginning
on the date hereof and ending on the first
anniversary of Admission, dispose of or agree to
dispose of any shares of Common Stock or any
interest in such shares of the Company other than
<PAGE>
the exercise of options, warrants or shares
convertible into shares of Common Stock; and
(B) save with the prior consent of Henderson Crosthwaite
he will procure that no person with whom at the date
of Admission he is connected or associated for the
purpose of section 346 CA 85 and holds Common Stock
on the date of Admission will dispose or agree to
dispose of any shares of the Company or any interest
in such shares of the Company other than the
exercise of options, warrants or shares convertible
into shares of Common Stock during the period
beginning on the date hereof and ending on the first
anniversary of Admission; and
(C) at any time after expiry of the periods specified in
paragraphs (A) and (B) above whilst he remains a
Director he will, and will procure in so far as he
is able that any such person as aforesaid will,
before disposing of any such shares or interest or
rights they will consult with the Nominated Broker
for the time being of the Company at least one
Business Day before they intend to make any such
disposal.
14.2 The restrictions contained in clause 14.1 shall not apply
to the disposal of any shares of Common Stock or of any
interest therein:-
(A) pursuant to acceptance of an offer made by any
person, including the Company, to holders of the
same class of shares as the Common Stock (or to all
such shareholders other than the offeror and/or any
body corporate controlled by the offeror and/or any
persons acting in concert with the offeror) to
acquire the whole or any part of the shares of such
class which offer has become or been declared
unconditional in all respects; or
(B) pursuant to a court order; or
(C) after the death of the Director.
14.3 The restrictions contained in clause 14.1(B) and 14.1(C)
shall not apply to the disposal of any shares of Common
Stock or of any interest therein to any relative being
the spouse, former spouse, parent or remoter forebear or
child or remoter issue or brother or sister of such
Director or to trustees for such Director and/or for
aforementioned relatives of such Director or any of them
or to the trustees of any trust established for any claim
of discretionary beneficiary which may include any of the
foregoing provided that such transferee, before
registration of any transfer of shares in the capital of
the Company to such transferee, executes an undertaking
in relation to such shares in similar terms to that
<PAGE>
contained in this clause 14 in a form reasonably
satisfactory to the Company and Henderson Crosthwaite;
14.4 Notwithstanding any provision of this clause 14
permitting the disposal of any shares of Common Stock or
of any interest therein for such period as the Company's
Common Stock shall be admitted to trading on AIM or one
year from Admission (whichever is the longer), no
disposal by any of the Directors shall be made in breach
of the Model Code set out in the Rules of the Exchange or
any code adopted by the Company in substitution for the
minimum standards imposed by such Model Code.
14.5 The provisions of this clause 14.1(B) and (C) may from
time to time be amended in relation to any Director by
agreement between the Company, Henderson Crosthwaite (or
the successor Nominated Adviser where appropriate) and
such Director.
15. NOTICES
15.1 Any notice or other communication requiring to be given
or served under or in connection with this agreement
shall be in writing and shall be sufficiently given or
served if delivered:-
(A) In the case of the Company or any of the Directors
to:-
Address: 372 Danbury Road,
Wilton, CT 06897-2523, U.S.A.
Fax: 001 2037618875
Attention: The Company Secretary/Director
concerned with copy to
Krugman, Chapnick & Grimshaw,
Park 80 West-Plaza Two,
Saddle Brook, New Jersey, USA
Fax: 001 201 845 9627
Attention: Howard Kailes;
(B) In the case of Henderson Crosthwaite to:-
Address: 32 St Mary at Hill, London EC3P 3AJ
Fax: 0171 7727083
Attention: Nigel Tose
15.2 Any notice shall be delivered by hand or sent by legible
facsimile transmission or pre-paid first class post
(airmail if sent to or from an address outside the United
Kingdom) and if delivered by hand or sent by legible
facsimile transmission shall conclusively be deemed to
have been given or served at the time of despatch and if
sent by post aforesaid shall conclusively be deemed to
have been received 48 hours from the time of posting (or
72 hours if sent to or from an address outside the United
Kingdom).
<PAGE>
15.3 Any notice given by Henderson Crosthwaite under clauses
11.1, 11.2 or 11.3 may also be given by any director
thereof to any Director either personally or by telephone
(to be confirmed immediately in writing) and shall have
immediate effect from such personal or telephone
notification.
16. GENERAL
16.1 Any time, date or period referred to in any provision of
this agreement may be extended by mutual agreement
between the parties hereto but as regards any time, date
or period originally fixed or any time, date or period so
extended time shall be of the essence.
16.2 The obligations and liabilities of any party hereto shall
not be prejudiced released or affected by any time or
forbearance or indulgence release or compromise given or
granted by any person to whom such obligations and
liabilities are owed or by any other person to such party
or any other party so obliged or liable, nor by any other
matter or circumstance which (but for this provision)
would operate to prejudice release or affect any such
obligations except an express written release by all the
parties to whom the relevant obligations and liabilities
are owned or due.
16.3 Subject as provided herein and in particular to clauses
2.3(A), 11.3 and 11.5, Henderson Crosthwaite may take
action for any breach or non-fulfilment of any warranties
undertakings agreements and representations on behalf of
the Company and/or Directors before or after completion
hereof notwithstanding that such breach or non-fulfilment
was known to or discoverable by it before completion and
notwithstanding that it shall delay or otherwise fail to
exercise its rights hereunder or generally in such
regard.
16.4 The rights and remedies reserved to Henderson Crosthwaite
under any provision of this agreement or in any document
to be executed pursuant hereto shall be in addition and
without prejudice to any other rights or remedies
available to it or any of them whether under this
agreement or any such document by statute common law or
otherwise.
16.5 Where any covenant undertaking agreement representation
warranty or indemnity is given herein or stated to be for
the benefit of the Placees or any Relevant Person the
same shall be directly enforceable by the Placees or such
Relevant Person or by Henderson Crosthwaite on their
behalf as if they were named as a party hereto and had
duly executed this agreement. In exercising any right or
power as trustee or agent hereunder, Henderson
Crosthwaite shall be entitled to act in such manner as it
shall in its absolute discretion consider appropriate and
<PAGE>
shall not be responsible in any way to any holder of
shares in the Company for so acting.
16.6 The provisions of this agreement (including without
limitation, the Warranties, the Indemnity and the
provisions of clauses 12, 13, 14 and this clause 16)
which are capable of having effect following Admission
shall remain in full force and effect, save as provided
in this Agreement, notwithstanding the completion of all
matters, arrangements and transactions referred to in or
contemplated by this agreement.
16.7 The obligations of individuals who are party hereto shall
be binding on their respective estates and legal
representatives. Obligations and liabilities which are
undertaken or assumed under this agreement by more than
one person shall be joint and several unless otherwise
stated.
16.8 This agreement shall be governed by and construed in
accordance with English Law and the parties hereby
irrevocably submit themselves to the non-exclusive
jurisdiction of the English Courts.
16.9 Henderson Crosthwaite acknowledges that all matters
relating to the Placing are governed by this Agreement
and to the extent that there is a conflict between the
terms of this Agreement the terms of the Engagement
Letter entered into on 20 June 1996 the terms of this
Agreement shall prevail.
IN WITNESS WHEREOF this agreement has been duly executed, as a
deed in the case of each of the Directors and under hand by
the other parties, and delivered on the day and year first
before written.<PAGE>
<PAGE>
SCHEDULE 1
Directors
<TABLE>
<CAPTION>
Name Address
<S> <C>
Bruce F Failing Jr all of 372 Danbury
Road,
Norton Garfinkle Wilton, CT 06897-2523
USA
Paul A Biddelman
David Diamond
Jerry E Morton
George B Weathersby
Donald E Zilkha
</TABLE>
<PAGE>
<PAGE>
SCHEDULE 2
Documents to be Delivered
<TABLE>
<CAPTION>
Document No. Form
Latest time for
delivery
<S> <C> <C>
<C>
Minutes of the Board:- 1 Certified
Copy With this
agreement
- - approving and authorising
the execution of, inter
alia, agreement;
- - approving the Placing;
- - approving and authorising
the application for Admission;
- - approving and authorising
the publication of the Issue
Documents and such other
documents as may be properly
required in connection with
the Placing;
- - adopting a code on dealings
in accordance with rule 16.9(b)
of the Rules of the Exchange;
and
- - approving the issue of the
Placing Shares, the Private
Placement Shares, the Commission
Shares and the Conversion Shares
Admission Document 1 Original
As soon as
practicable on
the date of
this agreement
Press Announcement 2 Copy
With this
agreement
Long Form Report 1 Original
agreed With this
by Reporting
agreement
Accountants
Letter relating to the Accountant's 1 Original
signed With this
Report contained in the Admission by Reporting
agreement
Document Accountants
Reporting Accountants' written 2 Original
signed With this
consent and authorisation for the by the
Reporting agreement
purposes of regulation 13(g) of Accountants
the POS Regulations
Nominated Adviser and Nominated 1 Original
signed With this
Broker Letter by the
Company agreement
Working Capital Report 1 Original
signed With this
by the
Reporting agreement
Accountants
/TABLE
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
<C>
Letter from the Reporting Accountants 1 Original
signed With this
dated with the date of this agreement by the
Reporting agreement
relating to (a) the Proforma Statement Accountants
of Net Assets set out in Part IV of
the Admission Document, (b) the Interim
Statement, (c) the Accountants' Report
and (d) indebtedness and working capital
Opinion 1 Original
signed With this
by the
Company's agreement
US Counsel
Preferred Stock Agreement 1 Certified
copy With this
agreement
Letters dated with the date of this 1 of Original
signed
agreement from the Company's Solicitors each by each firm
With this
confirming, inter alia, compliance with
agreement
the requirements referred to in rule
16.30(a)(i) of the Rules of the Exchange
Letter dated on or before the date 1 Original
signed With this
of this agreement from the Reporting by the
Reporting agreement
Accountants to Henderson Crosthwaite Accountants
giving confirmation that nothing has
come to their attention which ought
to be included in the Admission
Document and which has been omitted
Letter dated on or before the date 1 Original
signed With this
of this agreement from the Reporting by the
Reporting agreement
Accountants relating to the financial Accountants
reporting procedures of the Group
Responsibility letters and powers of 1 of Original or
With this
attorney dated on or before the date each certified
copy agreement
of this agreement of each of the
Directors.
Memorandum prepared by the Company's 1 Copy
With this
Solicitors explaining the nature of
agreement
responsibilities and obligations of
directors of a public company whose
securities are traded on AIM.
Letters from the Company's insurance 1 Original
With this
brokers
agreement
Directors responses to the Directors' 1 Original
signed With this
questionnaire by each
Director agreement
The rules of the Stock Option Plans 1 of Copy
With this
each
agreement
Verification Notes 1 Original
signed With this
by each party
agreement
responsible
therefor
Application for Admission in the 1 Original
signed With this
form prescribed by rule 16.4 of by a Director
agreement
the Rules of the Exchange.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
<C>
Every other document stated in the 1 Certified
Copy With this
Admission Document as being available
agreement
for inspection.
Specimen Definitive Common Stock 1 Copy
As soon as
Certificate.
practicable
Such evidence as Henderson Crosthwaite - -
Prior to
shall reasonably request of
Admission
satisfaction of each of the Conditions.
/TABLE
<PAGE>
<PAGE>
SCHEDULE 3
Warranties
Part 1 - Warranties given by the Company and Mr Bruce Failing ("Mr
Failing")
1. Admission Document
1.1 All statements of fact contained in the Admission
Document
are true and accurate in all material respects and
not
misleading in any material respect and all
expressions of
opinion, intention or expectation contained therein
are made
on reasonable grounds, are truly and honestly held
and are
made after due and careful consideration and
enquiry.
1.2 There are no facts or matters known or which on
reasonably
enquiry could have been known to the Company or Mr
Failing
which have not been disclosed in the Admission
Document,
the omission of which makes any statement therein
misleading
in any material respect or which would be material
for
disclosure therein.
1.3 The Admission Document contains all such information
as
investors and their professional advisers would
reasonably
require and reasonably expect to find there, for the
purpose
of making an informed assessment of the assets,
liabilities,
financial position, profits and losses and prospects
of the
Company and the rights attaching to the Common
Stock.
1.4 The Admission Document contains all particulars and
information required by and in accordance with the
Rules of
the Exchange, the POS Regulations, the FSA and all
other
relevant requirements of the London Stock Exchange
and any
other relevant law or regulation in the United
Kingdom.
1.5 The working capital statement contained in the
Admission
Document has been made after due and careful
consideration
and after taking into account all relevant
information
currently available to the Vice President Finance
and Mr
Failing.
1.6 The statements contained in the Admission Document
relating
to the Company's and the Group's indebtedness and
liabilities are true and accurate in all material
respects
and not misleading in any material respect and there
has
been no change in such indebtedness and liabilities
since
May 1996 which is material in the context of the
Placing.
1.7 All material information requested by the Reporting
Accountants from the Company and the Directors for
the
purposes of the preparation by them of the Long Form
Report,
the Accountants' Report, the Indebtedness Report and
the
Working Capital Report, has been supplied to them
and such
information was when supplied and is true and
accurate in
all material respects and was given in good faith.
<PAGE>
1.8 To the best of the Company's and Mr Failing's
knowledge,
information and belief, all statements of fact
contained in
the Long Form Report, the Accountants' Report, the
Indebtedness Report and the Working Capital Report,
are true
and accurate in all material respects and there is
no
statement either of fact or opinion in any such
report or
review or any omission therefrom which presents a
view of
the Company and the Group or its businesses or
circumstances
which is inaccurate in any material respect or which
is
misleading in any material respect or with which the
Company
or Mr Failing disagrees in any material respect and
any
such opinion attributed to the Company or the
Directors is
truly and honestly held by the Company or, as the
case may
be, Mr Failing and either fairly based upon facts
within the
knowledge of the Company or, as the case may be, Mr
Failing,
(having made all reasonable enquiries) or made on
reasonable grounds.
1.9 The working capital forecast contained in the
Working
Capital Report has been approved by the Board and
has been
made after due and careful enquiry, all statements
of fact
therein are true and accurate in all material
respects and
not misleading in any material respect, all
expressions of
opinion or intention or expectation contained
therein are
made on reasonable grounds and are truly and
honestly held
by the Company and Mr Failing, there are no other
facts
known or which could on reasonable enquiry have been
known
to the Vice-President, Finance the Company or Mr
Failing the
omission of which would make any such statement or
expression misleading in any material respect, all
the
assumptions on which that forecast and report are
based are
reasonable assumptions and as far as Mr Failing is
aware,
there are no other assumptions on which that
forecast or
Report ought to have been based which have not been
made.
1.10 All reasonable enquiries have been made to ascertain
and
verify the accuracy of all statements of fact and
the
reasonableness of all other statements contained in
the
Admission Document and in particular the replies to
the
Verification Notes have been prepared or approved by
persons
having appropriate knowledge and responsibility to
enable
them properly to provide such replies and the
replies
therein for which any officer or employee of the
Company or
the Group is responsible have been provided with due
care
and attention are true, complete and accurate in all
material respects and not misleading in any material
respect
and do not omit any material matter and all
statements of
opinion or intention in, or referred to in, such
replies are
honestly held and based on reasonable grounds.
1.11 The Directors' expectations as to the prospects of
the
Company and the Group and as to future dividends as
set out
in the Admission Document are honestly held beliefs
and are
based on reasonable grounds.
<PAGE>
2. Share Capital and Authority
2.1 The authorised and issued share capital of the
Company at
the date hereof and upon Admission is or will be as
stated
in Part V of the Admission Document and such issued
share
capital is or will upon Admission be fully paid and
is not
and will not at Admission be subject to any lien,
encumbrance, equity, charge or third party right or
restriction on transfer either imposed by the
Company or of
which the Company or Mr Failing is aware and will
confer
upon any acquiror thereof pursuant to the Placing
the rights
and restrictions set out or referred to in the
Admission
Document. The other facts set out in the recitals
to this
agreement are true.
2.2 All sums due in respect of the issued share capital
of the
Company and every other member of the Group have
been paid
to and received by the Company or as the case may be
such
member of the Group and save as referred to in the
Admission
Document there are no allotted but unissued shares
or
outstanding options or other rights to subscribe for
or call
for the allotment of any shares or securities
convertible
into shares or loan capital of the Company or any
other
member of the Group.
2.3 The Company has power under its Bylaws and
Certificate of
Incorporation to sell the Placing Shares, the
Private
Placement Shares and the Commission Shares in the
manner
proposed in this agreement and/or the Admission
Document and
all necessary steps have been, or will prior to
Admission be
taken (subject only to Admission) to permit and
implement
such sales of shares as are referred to in the
Admission
Document and the issue of the Placing Shares, the
Private
Placement Shares and the Commission Shares so as to
enable
full effect to be given to the terms of this
agreement, the
Placing and the Private Placement.
2.4 The sale of the Placing Shares, the Private
Placement Shares
and the Commission Shares will not infringe any
limits,
powers or restrictions to which the Company is
subject or
the terms of any contract, obligation or commitment
whatsoever of the Company nor give rise to any
obligation or
commitment whatsoever of the Company nor give rise
to any
obligation under any such contract, obligation or
commitment
which is inconsistent with the acquisition by any
subscriber
of valid unencumbered title to the Placing Shares,
the
Private Placement Shares and the Commission Shares
or any of
them.
2.5 The entry into this agreement and the performance of
the
Company's obligations hereunder and full
implementation of
the matters stated as proposed to be undertaken as
referred
to in the recitals hereto are, or will prior to
Admission
be, within the power of the Company without the need
for any
further sanction, approval, licence or consent of
members of
the Company or any class of them or of any other
person and
will comply with all or, as the case may be will not
<PAGE>
contravene any relevant requirements of the Rules
of the
Exchange, the FSA, the requirements of the SEC,
NASDAQ or
the Securities Act and all other applicable laws,
rules and
regulations of any jurisdiction and with all
agreements to
which the Company or any other member of the Group
is a
party or by which it or its property is bound and
will not
infringe any limits, restrictions, obligations or
commitments of the Company or any other member of
the Group
howsoever arising or result in the imposition on or
variation of any rights or obligations of the
Company or any
other member of the Group, in any such case in a
manner
which is material in the content of the Placing.
3. Financial Position
3.1 The audited consolidated financial information of
the Group
for each of the periods reported on reviewed in the
Accountants' Report was prepared in accordance with
United
States generally accepted accounting principles
consistently
applied and gives a true and fair view of the state
of
affairs of the Group at December 31 1993, December
31 1994
and December 31 1995 and of the losses and cash
flows of the
Group for the three years then ended.
3.2 All statements of fact contained in the Last
Accounts and
the Interim Statement concerning the financial or
trading
position or prospects of the Group were true and
accurate in
all material respects and were not misleading when
made and
all expressions of opinion, intention or expectation
therein
were truly and honestly held and either fairly based
upon
facts within the knowledge of Mr Failing (having
made all
due enquiries) or made on reasonable grounds and,
since the
Last Accounts Date;
(A) the operations of the Group have been
carried on in
the ordinary and usual course and there
has been no
material adverse change in the financial
or trading
position or prospects of the Group;
(B) no member of the Group has otherwise than
in the
ordinary course of business of the Group
as a whole
entered into or assumed or incurred any
contract,
commitment (whether in respect of capital
expenditure or otherwise) borrowing,
indebtedness in
the nature of borrowing, guarantee,
liability
(including contingent liability) or other
obligation
of a long term, unusual or onerous nature
or which
involves or is likely to involve an
obligation of a
material nature or magnitude in the
context of the
Group as a whole;
(C) no dividend or other distribution has been
declared,
paid or made by the Company or any other
member of
the Group;
<PAGE>
(D) no debtor has been released by any member
of the
Group to an extent which is material in
relation to
the Group on terms that he pays less than
the book
value of his debt and no debt of such
material
amount owing to any member of the Group
has been
deferred, subordinated or written-off or
is now
thought likely to prove to any material
extent
irrecoverable;
(E) no member of the Group has incurred any
liability
for taxation in any jurisdiction or
entered into any
transaction which will give rise to any
liability to
taxation in any jurisdiction other than in
the
ordinary course of business which is
material to the
Group as a whole;
(F) no member of the Group is involved in any
claim or
dispute with the any taxation or excise
authorities
(in the United States or elsewhere) which
could
reasonably be considered material to the
Group and
to the best of the knowledge information
and belief
of the Vice President, Finance and Mr
Failing based
on facts know to Mr Failing today there is
no
significant risk that such a claim or
dispute will
be made or arise following Admission;
3.3 Since the Last Accounts Date, the business of the
Group has
not been materially and adversely affected by the
loss of
any important customer or source of supply or any
abnormal
factor(s) not affecting similar businesses to a
similar
extent and to the best of the knowledge and belief
of the
Company and Mr Failing there are no facts or
circumstances
now exist which one likely to give rise to any such
effect
whether before or after Admission.
3.4 The Interim Statement was prepared in accordance
with the
United States generally accepted accounting
principles
consistently applied as far as Mr Failing is aware
having
consulted the Vice-President, and requires no
material
modifications for it to be in conformity with United
States
generally accepted accounting principles.
3.5 Proper provision, reserve or note has been made in
the Last
Accounts for all taxation (including deferred
taxation)
payable as at the Last Accounts Date or which is
likely to
be assessed on or to become payable by any member of
the
Group or for which the Company any such member is or
may be
contingently liable.
3.6 All necessary information, notices, computations and
returns
which ought to have been made have been properly and
duly
submitted by all relevant members of the Group to
the
Internal Revenue Service of the United States of
America and
any other relevant taxation or excise authorities,
the
failure to have made which would be materially
adverse to
the Group and such information, notices,
computations and
returns are true and accurate in all material
respects and
<PAGE>
are not the subject of any material dispute with the
Internal Revenue Service of the United States of
America or
other taxation or excise authorities and all
taxation of any
nature whatsoever for which any member of the Group
is
liable or for which any member of the Group is
liable to
account has been duly paid (insofar as such taxation
ought
to have been paid) or in so far as the same is not
yet
payable, has been provided for in the Last Accounts,
in each
event except in so far as not material to the Group.
3.7 No notice has been received and, to the best of the
knowledge, information and belief of the Company and
Mr
Failing no circumstances have arisen or are about to
arise
such that any person is, or would with the giving of
notice
and/or lapse of time, become entitled to require
payment of
indebtedness in respect of any monies borrowed by
the any
member of the Group before its stated maturity and
to the
best of the knowledge, information and belief of the
Company
and Mr Failing no person to whom any indebtedness is
owed in
respect of monies borrowed by any member of the
Group which
are payable on demand proposes to demand repayment
of such
indebtedness at present.
3.8 No event has occurred and is subsisting or to the
best of
the knowledge, information and belief of the Company
and Mr
Failing is about to occur (including, for the
avoidance of
doubt, the entry into this agreement and the
performance of
the Company's obligations thereunder and full
implementation
of the matters stated as proposed to be undertaken
as
referred to in the Admission Document or the
recitals
hereto) which constitutes or would constitute or
would with
the giving of notice and/or the lapse of time
constitute an
infringement or default, of any obligation under any
arrangement to which any member of the Group is a
party or
by which it or any of its interests, properties,
revenues or
assets are bound which would in any such case have
a
material adverse effect on the overall business,
assets,
prospects or condition of the Group.
3.9 No member of the Group is liable under any guarantee
or
indemnity or similar obligation in favour of any
third party
which is material to the Group nor has it agreed to
give or
enter into any such guarantee or indemnity or
similar
obligation.
3.10 No member of the Group nor any person for whom such
a member
is vicariously liable has any claim outstanding
against it
nor is it engaged in or affected by any legal or
arbitration
proceedings (or in any proceedings with any
governmental or
other body or any other governmental, revenue or
regulatory
investigations or enquiries) material in the context
of the
Placing and no such proceedings, investigations or
enquiries
are threatened or pending nor, to the best of the
knowledge,
information and belief of the Company and Mr Failing
are
there any circumstances now in existence which are
likely to
give rise to any such proceedings, investigations or
enquiries.
<PAGE>
3.11 No material member of the Group has taken any action
nor
have any proceedings been served on or notified to
any
member of the Group, nor to the best of the
knowledge,
information and belief of the Company and Mr Failing
have
any steps been taken or proceedings started or
threatened
against any material member of the Group for its
winding up
or dissolution or for it to enter into any
arrangement or
composition for the benefit of creditors, or the
appointment
of a receiver, administrative receiver, trustee or
similar
officer of any material member of the Group or any
of their
respective interests, properties, revenues or assets
nor has
any distress, execution or other similar process
been
commenced or undertaken in respect of any material
member of
the Group nor is there any unfulfilled or
unsatisfied
judgment or court order outstanding against any
material
member of the Group.
3.12 To the best of the knowledge, information and belief
of the
Company and Mr Failing there are no pending
statutory or
regulatory requirements or changes to any existing
such
requirements or changes to any codes of practice to
which
any member of the Group currently adheres (by law,
contract
or as a result of market practice not applicable
generally
in the industry in which the Group operates) that
will or is
likely to have a material adverse effect on the
business or
the financial position of the Group.
4. Group Operations
4.1 The Company and each other member of the Group has
been duly
incorporated and has full corporate power and
authority to
carry on its business as at the date hereof and has
carried
on such business in compliance in all material
respects with
all legal and regulatory requirements applicable to
such
business and the Company and each other member of
the Group
holds all licences, permissions, authorisations and
consents
necessary to enable it to carry on the same in all
material
respects, and all such licences, permissions,
authorisations
and consents are in full force and effect and, no
circumstances currently exist which indicate that
any of
them are likely to be revoked, rescinded, avoided or
repudiated or not renewed in whole, or in part, in
the
ordinary course of events.
4.2 (A) The Company has not offered the Placing
Shares to
any person in the United States, any
identifiable
group of US citizens abroad, or to, or for
the
account or benefit of, any US Person (as
defined in
Regulation S).
(B) The Company reasonably believes that the
sales of
Placing Shares have not been pre-arranged
with any
buyer in the United States.
<PAGE>
(C) The Company has not conducted any Directed
Selling
Efforts (as defined in Regulation S) with
respect to
the Placing Shares nor has the Company
conducted any
general solicitation (as that term is used
in
Regulation D under the Securities Act)
with respect
to any of the Placing Shares.
4.3 Each member of the Group has at all material times
complied
in all material respects with all legal and other
requirements applicable to its business and
activities in
each event where failure to do so would have a
material
adverse effect on the Group.
4.4 The Group has all intellectual property rights
necessary to
enable it to operate its business lawfully and, to
the best
of the knowledge, information and belief of the
Company and
Mr Failing none of the operations of the businesses
of any
member of the Group infringes any right of any kind
vested
in any other party in a manner that would have a
material
adverse effect on the Group.
4.5 Neither the Company nor any other member of the
Group has
disclosed or permitted to be disclosed or undertaken
or
arranged to disclose to any person any of its
know-how,
secrets, confidential information or lists of
customers or
suppliers relating to the businesses of the Group in
a
manner that would have a material adverse effect on
the
Group.
4.6 The Group has taken all steps reasonably necessary
to
protect all patent rights, know-how, trade-marks,
trade
names, designs, copyrights or other similar rights
("intellectual property") currently in use by any of
them or
which is material to the Group's business which the
Company
or Mr Failing believes are, or could through
registration or
the taking of any other steps become, the Group's
property
and without limitation the Group are, and will
following
Admission continue to be, entitled to supply
products under
the name "ERS Shelf Net System" and all agreements
(if any)
whereby any member of the Group is authorised to use
any
such intellectual property are in full force and
effect and
all fees and royalties due thereunder have been paid
and, to
the best of the knowledge, information and belief of
the
Company and Mr Failing no event has occurred or is
about to
occur which would or could entitle any third party
to
terminate any such agreement prematurely nor has any
member
of the Group received notice of any infringement by
any
member of the Group of intellectual property rights
held by
third parties which would in either case have a
material
adverse effect on the businesses, assets or
prospects of the
Group.
4.7 All statements of fact contained in the Admission
Document
relating to the Property and the other premises
currently
occupied by members of the Group are true and
accurate in
all material respects and not misleading in any
material
respect.
<PAGE>
4.9 No member of the Group is under any obligation to
purchase,
lease, sub-lease or otherwise occupy or acquire any
rights
of any nature whatsoever in respect of any land or
building
which would be material to the Group.
4.10 No member of the Group has received nor is Mr
Failing aware
of any claim, demand or other notice in relation to
any
material actual or contingent liability of such
member as an
original contracting party, or as a guarantor of any
party
or as covenantor (express or implied) or as being
contractually liable in respect of any estate,
interest or
contractual right or obligation in relation to any
land,
building or other real property in a manner that
would have
a material adverse effect on the Group.
4.11 The businesses, undertakings and other assets
whatsoever of
the Group are insured to levels and against risks
which the
Company and the Directors reasonably consider to be
prudent
having regard to the businesses carried on by the
Group and
to the best of the knowledge, information and belief
of the
Company and Mr Failing no circumstances currently
exist
which could render any of such insurances void or
voidable
and there is no material insurance claim made by or
against
any member of the Group pending, threatened or
outstanding.
4.12 To the best of the knowledge, information and belief
of the
Company and Mr Failing, neither the Company nor any
other
member of the Group has any environmental
liabilities which
would have a material adverse effects on the Group
and no
facts or circumstances exist which would give rise
to such
material environmental liabilities.
4.13 All contracts for the supply by the Group of the ERS
Shelf
Net System and any supply contracts with
manufacturers and
any assembly contract with subcontractors which have
been
entered into by members of the Group and disclosed
in the
Admission Document are in full force and effect and
no
member of the Group has received nor to the best of
the
Company's and Mr Failing's knowledge and belief does
it
expect to remove any notice or threat of termination
nor to
the best of the Company's and Mr Failing's knowledge
and
belief is currently aware any reason why any such
contract
should be terminated as a result of the Placing .
4.14 No member of the Group carries on business in any
country
other those disclosed in the Admission Document
which is
material to the Group.
5. General
5.1 There is not outstanding:
(A) save for expenses or advances of
immaterial amount,
any loan made by any member of the Group
to, or debt
owing to any member of the Group by, any
of the
Directors or any spouse, child (under 18)
or any
trust of which the Director is a trustee,
or under
<PAGE>
which he is, or may be a beneficiary or
under which
his spouse or children under 18 are or
maybe
beneficiaries ("Connected Persons"); and
(B) any agreement or arrangement to which any
member of
the Group is a party and in which any of
the
Directors or any Connected Person is
interested.
5.2 There are no agreements or understandings (whether
legally
enforceable or not) between any member of the Group
and any
Director or Connected Person relating to the
management of
the Group's business or the appointment or removal
of any
director of any member of the Group or the ownership
or
transfer of ownership of any of its assets or which
concerns
the provision (otherwise than on an arms length (or
better
for that member) terms) of any finance, goods,
services or
other facilities to or by any member of the Group or
otherwise howsoever relating to any member of the
Group or
the affairs of any member of the Group.
5.3 The Company is the beneficial owner free from all
liens,
charges, equities, encumbrances and other third
party rights
of all of the issued shares of common stock of the
subsidiaries referred to in paragraph 7 of Part V of
the
Admission Document.
6. Competition
6.1 There is not in existence in connection with the
businesses
of any member of the Group any agreement or
arrangement
which infringes, or of which particulars have or
should have
been delivered to any relevant governmental or other
authority in any jurisdiction under any relevant
legislation
in any territory regarding anti-competitive or
restrictive
trade or business practices incumbrances which are
likely to
have a material adverse effect on the Group.
6.2 To the best of the knowledge, information and belief
of the
Company and Mr Failing, no member of the Group is or
has in
connection with its businesses been engaged in any
practice
which is or may contravene any such legislation as
is
referred to in the preceding paragraph and which is
under
investigation by any relevant authority or which is
the
subject of undertakings to any such authority and,
none of
the practices carried on by any member of the Group
in
connection with its businesses contravene any such
legislation or are likely to be subject to such
investigation which are likely to have a material
adverse
effect on the Group.
6.3 No member of the Group has received any process,
notice or
communication, formal or informal, which is
outstanding by
or on behalf of any authority of any country, or any
political or administrative sub-division thereof,
having
jurisdiction in anti-trust matters in relation to
any
material aspect of its businesses or to any material
agreement or arrangement to which any member of the
Group
<PAGE>
is, or is alleged to be, a party in connection with
its
businesses which is likely to have a material
adverse effect
on the Group; and, to the best of the knowledge,
information
and belief of the Company and Mr Failing, no such
process,
notice or communication is likely to be received
following
Admission.
<PAGE>
<PAGE>
Part 2
Warranty to be given by the Directors other
than
Mr Bruce Failing ("the Relevant Directors")
1. Admission Document
1.1 Having read the Admission Documents as far as each
of the
Relevant Directors is aware (a) all statements of
fact
contained in the Admission Document are true and
accurate in
all material respects and not misleading in any
material
respect, (b) all expressions of opinion, intention
or
expectation contained therein are made on reasonable
grounds, are truly and honestly held and (c) there
are no
facts or matters known to each Relevant Director
which have
not been disclosed in the Admission Document, the
omission
of which makes any statement therein misleading in
any
material respect or which would be material for
disclosure
therein.
<PAGE>
<PAGE>
SCHEDULE 4
Warranty Certificate
Henderson Crosthwaite Institutional Brokers Limited ("Henderson
Crosthwaite")
32 St Mary At Hill
London EC3P 3AJ
1996
Dear Sirs
We refer to the placing agreement dated 1996 between
Henderson Crosthwaite (1), the Company (2) and its directors (3)
("the Placing Agreement"). Words and expressions defined in the
Placing Agreement have the same meaning in this letter.
We hereby confirm to you that:-
(A) each of the Conditions (other than Admission) has been, or
will,
upon delivery of this letter, have been satisfied or
fulfilled in
accordance with its terms;
(B) none of the Warranties was breached, or untrue, or inaccurate
or
misleading at the date of the Placing Agreement and no
Specified
Event has occurred.
This letter, which has been delivered to you prior to the date of
Admission, is to be released to you immediately prior to Admission
and
is to be dated with the date of such release.
.............................
duly authorised on
behalf of Electronic Retailing Systems International Inc.<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
SIGNED by )
for and on behalf of HENDERSON ) Nigel
Tose
CROSTHWAITE INSTITUTIONAL )
BROKERS LIMITED in the presence of:- )
Stephen Anstee
32 St Mary at Hill
London EC3P 3AJ
Corporate Finance Manager
SIGNED by )
for and on behalf of ELECTRONIC )
RETAILING SYSTEMS ) Bruce
Failing
INTERNATIONAL, INC in the )
presence of:- )
Leigh G Failing
237 Round Hill Rd
Greenwich
SIGNED and DELIVERED as a deed )
by or for and on behalf of )
BRUCE F FAILING JNR in the ) Bruce
Failing
presence of:- )
Leigh G Failing
SIGNED and DELIVERED as a deed )
by or for and on behalf of ) Bruce
Failing
NORTON GARFINKLE in the ) as
attorney for
presence of:- )
Norton Garfinkle
Leigh G Failing
SIGNED and DELIVERED as a deed )
by or for and on behalf of ) Bruce
Failing
PAUL A BIDDELMAN in the ) as
attorney for Paul
presence of:- )
Biddelman
Leigh G Failing
SIGNED and DELIVERED as a deed )
by or for and on behalf of ) Bruce
Failing
DAVID DIAMOND in the ) as
attorney for David
presence of:- )
Diamond
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Leigh G Failing
237 Round Hill Rd
Greenwich
SIGNED and DELIVERED as a deed )
by or for and on behalf of ) Bruce
Failing
JERRY E MORTON in the ) as
attorney for Jerry
presence of:- )
Morton
Leigh G Failing
SIGNED and DELIVERED as a deed )
by or for and on behalf of ) Bruce
Failing
GEORGE B WEATHERSBY in the ) as
attorney for George
presence of:- )
Weathersby
Leigh G Failing
SIGNED and DELIVERED as a deed )
by or for and on behalf of ) Bruce
Failing
DONALD E ZILKHA in the ) as
attorney for Donald
presence of:- )
Zilkha
Leigh G Failing
</TABLE>
EXHIBIT 5(d)
AGREEMENT IN RESPECT TO U.S. SECURITIES LAWS
THIS AGREEMENT is made on July 2, 1996
BETWEEN:
HENDERSON CROSTHWAITE INSTITUTIONAL BROKERS LIMITED, a company
registered in England and Wales with number 2155712 whose
registered offices are at 32 St Mary at Hill, London EC3P 3AJ
("Henderson Crosthwaite"); and
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a Delaware
corporation whose principal office is at 372 Danbury Road, Wilton,
CT 06897-2523 U.S.A. (the "Company").
WHEREAS:
A) Subject to and upon the terms and conditions of the Placing
Agreement to be entered into between Henderson Crosthwaite,
the Company and the directors of the Company (the "Placing
Agreement"), the Company proposes to issue shares of its
common stock, par value $0.01 per share (the "Placing
Shares"), to placees procured by Henderson Crosthwaite (the
"Placees").
B) The proposed placing of the Placing Shares is to be made
pursuant to an exemption from the registration requirements of
the United States securities laws set forth in Regulation S
promulgated under the United States Securities Act of 1933, as
amended ("Regulation S").
C) Henderson Crosthwaite will receive as part of its
consideration under the Placing Agreement certain shares of
the Company's common stock (the "Commission Shares", and
together with the Placing Shares, the "Shares").
<PAGE>
D) Application will be made for the admission to trading on the
Alternative Investment Market in London, England of the
Shares, and other shares of the Company's common stock, par
value $0.01 per share.
NOW, THEREFORE, in consideration of the premises and the
obligations of the Company contemplated by the Placing Agreement,
Henderson Crosthwaite hereby represents and warrants to, and agrees
with, the Company, as follows:
1. Henderson Crosthwaite acknowledges that the Shares have not
been and will not be registered under the United States
Securities Act of 1933, as amended (the "Securities Act") or
the securities laws of any state of the United States (a
"State Act") and may not be offered, sold or delivered,
directly or indirectly, in the United States or to, or for the
account or benefit of, any U.S. Person. Capitalized terms
used in this paragraph and elsewhere in this Agreement and not
otherwise defined shall have the meanings given to them in
Regulation S.
2. All offers and sales of the Shares by Henderson Crosthwaite
(x) as part of its distribution (which shall include any offer
or sale of the Commission Shares) at any time and
(y) otherwise prior to the expiration of 40 days after the
later of the closing date and the date upon which the Placing
Shares were first offered to persons other than Distributors
have been and will be made only in accordance with Rule 903 of
Regulation S under the Securities Act or pursuant to
registration under the Securities Act or another exemption
therefrom.
3. Neither Henderson Crosthwaite nor any persons acting on their
behalf, have engaged or will engage in the offer, sale or
delivery, directly or indirectly, of the Shares (i) within the
United States or (ii) to, or for the account or benefit of,
any U.S. Person or any Distributor of the Shares (or otherwise
as a part of any continuous offering of the Shares).
Henderson Crosthwaite has not entered into any agreement or
arrangement with respect to any resale by them of the
Commission Shares.
<PAGE>
4. Neither Henderson Crosthwaite nor any persons acting on their
behalf, have engaged or will engage in any "directed selling
efforts" within the meaning of Rule 902(b) of Regulation S
with respect to the Shares.
5. Henderson Crosthwaite and all persons acting on their behalf
(i) have complied and will comply with the "offering
restrictions" requirements set forth in Section 902(h) of
Regulation S (except that the Company is responsible for
ensuring that the Pathfinder Prospectus, any placing proof of
the Prospectus and the final form of the Prospectus comply
with such requirements) and (ii) have not offered or sold, and
will not offer or sell, the Shares in the United States by
means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the
Securities Act, including, but not limited to (x) any
advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or
broadcast over television or radio or (y) any seminar or
meeting whose attendees have been invited by any general
solicitation or general advertising.
6. Henderson Crosthwaite will obtain from each Placee that it
procures and each person to which it sells Placing Shares, if
any, a signed statement certifying that:
a) Such person was outside the United States at the time
its subscription or buy order was originated and such
person was not at such time and is not a U.S. Person
(and was not and is not acting on behalf of, or
purchasing for the account or benefit of, a U.S.
Person) within the meaning of Regulation S promulgated
under the United States Securities Act of 1933, as
amended ("Regulation S").
b) Such person acknowledges that prior to the expiration
of 40 days after the later of the closing date or the
date upon which the Placing Shares were first offered
to persons other than Distributors as defined in
Regulation S (the "Restricted Period"), such shares
will:
<PAGE>
i) bear a legend substantially to the following
effect:
"THE SHARES RECORDED IN THIS CERTIFICATE (THE
"RELEVANT SHARES") HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
(A "STATE ACT") AND MAY NOT BE OFFERED, SOLD OR
DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND ALL APPLICABLE STATE ACTS. PRIOR TO THE
EXPIRATION OF 40 DAYS AFTER THE LATER OF THE
CLOSING DATE OR THE DATE UPON WHICH THE RELEVANT
SHARES WERE FIRST OFFERED TO PERSONS OTHER THAN
DISTRIBUTORS, THE RELEVANT SHARES WILL BE
TRANSFERABLE ONLY IN A TRANSACTION EXECUTED THROUGH
THE ALTERNATIVE INVESTMENT MARKET IN LONDON,
ENGLAND AND ONLY IF THE TRANSFEREE DELIVERS A
CERTIFICATE TO THE COMPANY'S TRANSFER AGENT
CERTIFYING THAT THE TRANSFEREE IS NEITHER A U.S.
PERSON NOR A PERSON ACQUIRING THE RELEVANT SHARES
FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON WITHIN
THE MEANING OF REGULATION S PROMULGATED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
("REGULATION S"). TERMS USED HEREIN HAVE THE
MEANINGS GIVEN TO THEM IN REGULATION S."; and
ii) be transferable only in a transaction executed
through the Alternative Investment Market in
London, England and only if the transferee
delivers a certificate to the Company's transfer
agent certifying that the transferee is neither a
U.S. Person (nor a person acquiring the Relevant
Shares for the account or benefit of a U.S.
Person) within the meaning of Regulation S
promulgated under the United States Securities Act
of 1933, as amended.
c) Such person acknowledges that (1) the legend described
in paragraph (b)(i) above will not be removed upon
transfer of the Relevant Shares (as defined in the
legend) or otherwise until the expiration of the
Restricted Period and (2) after the expiration of the
<PAGE>
Restricted Period, a transferee may require that the
legend be removed upon submission of the Relevant
Shares to the Company's transfer agent together with a
certification by the transferee that such person (x) is
neither a U.S. Person (nor a person acquiring the
Shares for the account or benefit of a U.S. Person)
within the meaning of Regulation S promulgated under
the United States Securities Act of 1933, as amended,
or (y) is a U.S. Person within the meaning of
Regulation S who acquired the Relevant Shares after the
expiration of the Restricted Period, with respect to
such shares.
7. Henderson Crosthwaite acknowledges and agrees that:
a) Henderson Crosthwaite was outside the United States at
the time its subscription or buy order for the
Commission Shares was originated and Henderson
Crosthwaite was not at such time and is not a U.S.
Person (and was not and is not acting on behalf of, or
purchasing for the account or benefit of, a U.S.
Person) within the meaning of Regulation S promulgated
under the United States Securities Act of 1933, as
amended ("Regulation S").
b) Each Commission Share will, during the period (the
"Applicable Share Restricted Period") ending on the
later of (i) the expiration of the Restricted Period
with respect to the Placing Shares (the "Placing Shares
Restricted Period") and (ii) immediately after the sale
of such Commission Share by Henderson Crosthwaite:
i) bear a legend substantially to the following
effect:
"THE SHARES RECORDED IN THIS CERTIFICATE (THE
"RELEVANT SHARES") HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES (A "STATE ACT") AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR
<PAGE>
INDIRECTLY, IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ALL
APPLICABLE STATE ACTS. PRIOR TO THE LATER OF
(I) THE EXPIRATION OF THE RESTRICTED PERIOD WITH
RESPECT TO THE PLACING SHARES AND (II) IMMEDIATELY
AFTER THE SALE OF THE RELEVANT SHARES BY HENDERSON
CROSTHWAITE, THE RELEVANT SHARES WILL BE
TRANSFERABLE ONLY IN A TRANSACTION EXECUTED
THROUGH THE ALTERNATIVE INVESTMENT MARKET IN
LONDON, ENGLAND AND ONLY IF THE TRANSFEREE
DELIVERS A CERTIFICATE TO THE COMPANY'S TRANSFER
AGENT CERTIFYING THAT THE TRANSFEREE IS NEITHER A
U.S. PERSON NOR A PERSON ACQUIRING THE RELEVANT
SHARES FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
WITHIN THE MEANING OF REGULATION S PROMULGATED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED ("REGULATION S"). TERMS USED HEREIN HAVE
THE MEANINGS GIVEN TO THEM IN REGULATION S."; and
ii) be transferable only in a transaction executed
through the Alternative Investment Market in
London, England and only if the transferee
delivers a certificate to the Company's transfer
agent certifying that the transferee is neither a
U.S. Person (nor a person acquiring the Relevant
Shares for the account or benefit of a U.S.
Person) within the meaning of Regulation S
promulgated under the United States Securities Act
of 1933, as amended.
c) the legend described in paragraph (b)(i) above will not
be removed upon transfer of the Relevant Shares (as
defined in the legend) or otherwise until the
expiration of the Applicable Share Restricted Period,
with respect to such share, and that, after the
expiration of such period, a transferee may require
that the legend be removed upon submission of the
Relevant Shares to the Company's transfer agent
together with a certification by the transferee that
such person (x) is neither a U.S. Person (nor a person
acquiring the Relevant Shares for the account or
benefit of a U.S. Person) within the meaning of
Regulation S promulgated under the United States
Securities Act of 1933, as amended, or (y) is a U.S.
Person within the meaning of Regulation S who acquired
the Relevant Shares after the expiration of the
<PAGE>
Applicable Share Restricted Period, with respect to
such shares.
8. Henderson Crosthwaite will obtain from each person to which it
sells Commission Shares a signed statement certifying that:
a) Such person was outside the United States at the time
its subscription or buy order was originated and such
person was not at such time and is not a U.S. Person
(and was not and is not acting on behalf of, or
purchasing for the account or benefit of, a U.S.
Person) within the meaning of Regulation S promulgated
under the United States Securities Act of 1933, as
amended ("Regulation S").
b) With respect solely to persons acquiring Commission
Shares prior to the expiration of the Placing Shares
Restricted Period, such person acknowledges that prior
to the expiration of the Placing Shares Restricted
Period, such shares will:
i) bear a legend substantially to the following
effect:
"THE SHARES RECORDED IN THIS CERTIFICATE (THE
"RELEVANT SHARES") HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
(A "STATE ACT") AND MAY NOT BE OFFERED, SOLD OR
DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
ANY U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ALL APPLICABLE STATE ACTS.
PRIOR TO THE EXPIRATION OF [DATE OF EXPIRATION OF
THE PLACING SHARES RESTRICTED PERIOD], THE
RELEVANT SHARES WILL BE TRANSFERABLE ONLY IN A
TRANSACTION EXECUTED THROUGH THE ALTERNATIVE
INVESTMENT MARKET IN LONDON, ENGLAND AND ONLY IF
THE TRANSFEREE DELIVERS A CERTIFICATE TO THE
COMPANY'S TRANSFER AGENT CERTIFYING THAT THE
<PAGE>
TRANSFEREE IS NEITHER A U.S. PERSON NOR A PERSON
ACQUIRING THE RELEVANT SHARES FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON WITHIN THE MEANING OF
REGULATION S PROMULGATED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED ("REGULATION
S"). TERMS USED HEREIN HAVE THE MEANINGS GIVEN TO
THEM IN REGULATION S."; and
ii) be transferable only in a transaction executed
through the Alternative Investment Market in
London, England and only if the transferee
delivers a certificate to the Company's transfer
agent certifying that the transferee is neither a
U.S. Person (nor a person acquiring the Relevant
Shares for the account or benefit of a U.S.
Person) within the meaning of Regulation S
promulgated under the United States Securities Act
of 1933, as amended.
c) the legend described in paragraph (b)(i) above will not
be removed upon transfer of the Relevant Shares (as
defined in the legend) or otherwise until the
expiration of the Applicable Share Restricted Period,
with respect to such shares, and that, after the
expiration of such period, a transferee may require
that the legend be removed upon submission of the
Relevant Shares to the Company's transfer agent
together with a certification by the transferee that
such person (x) is neither a U.S. Person (nor a person
acquiring the Relevant Shares for the account or
benefit of a U.S. Person) within the meaning of
Regulation S promulgated under the United States
Securities Act of 1933, as amended, or (y) is a U.S.
Person within the meaning of Regulation S who acquired
the Relevant Shares after the expiration of the
Applicable Share Restricted Period, with respect to
such shares.
9. In connection with any sale of the Shares by Henderson
Crosthwaite or any person acting on their behalf prior to the
termination of the Restricted Period or the Applicable Share
Restricted Period, as the case may be, to a Distributor,
dealer (as defined in Section 2(12) of the Securities Act) or
other person receiving a selling concession, fee or other
remuneration in respect of such Shares, Henderson Crosthwaite
<PAGE>
shall send to such person a confirmation or notice
substantially to the following effect:
"The securities that you are purchasing (the "Relevant
Shares") have not been and will not be registered under
the United States Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any State of
the United States (a "State Act") and may not be offered,
sold or delivered, directly or indirectly, in the United
States or to, or for the account or benefit of, any U.S.
Person except pursuant to an exemption from the
registration requirements of the Securities Act and all
applicable State Acts. Prior to the expiration of 40
days after the later of the closing date and the date
upon which the Relevant Shares were first offered to
persons other than Distributors (the "Restricted
Period"), the Relevant Shares will be transferable only
in a transaction executed through the Alternative
Investment Market in London, England and only if the
transferee delivers a certificate to the Company's
transfer agent certifying that the transferee is neither
a U.S. Person nor a person acquiring the Relevant Shares
for the account or benefit of a U.S. Person within the
meaning of Regulation S promulgated under the United
States Securities Act of 1933, as amended ("Regulation
S"). If prior to the termination of the Restricted
Period you offer or sell the Relevant Shares to a dealer
as defined in Section 2(12) of the Securities Act or
other person receiving a selling concession, fee or other
remuneration in respect of such shares, you must send the
purchaser a copy of this notice. Terms used herein have
the meanings given to them in Regulation S."
No officer or director of Henderson Crosthwaite shall offer or
sell any Shares and receive a selling concession, fee or other
remuneration other than the usual and customary broker's
commission that would be received by a person executing such
transaction as agent.
10. The provisions of this Agreement shall be and remain in full
force and effect and be binding on Henderson Crosthwaite
immediately upon the execution hereof and irrespective of
whether or not the parties hereto enter into the Placing
Agreement. Nothing in this Agreement shall oblige either of
the parties to enter into the Placing Agreement.
<PAGE>
11. The Company warrants to Henderson Crosthwaite that:
i) The Company is a "Domestic Issuer" and a "Reporting
Issuer", as such terms are defined by Rule 902 of
Regulation S under the Securities Act. The Company has
registered its existing common stock pursuant to
Section 12(g) of the Securities Exchange Act of 1934,
as amended, of the United States of America (the
"Exchange Act"), has made all filings required to be
made under the reporting requirements of either
Section 13(a) or 15(d) of the Exchange Act and has been
so in compliance during the twelve months prior to the
date hereof and its common stock is quoted on the
NASDAQ System and the Company is in compliance with the
terms of the listing of its existing common stock on
NASDAQ;
ii) The Company has furnished Henderson Crosthwaite with
copies of its most recent Annual Report on Form 10-K
filed with the SEC and all Forms 10-Q and 8-K filed
thereafter;
iii) Without reference to any activities by Henderson
Crosthwaite, the Company has not offered the Placing
Shares to any person in the United States, any
identifiable group of US citizens abroad, or to, or for
the account or benefit of, any U.S. Person (as defined
in Regulation S);
iv) Without reference to any activities by Henderson
Crosthwaite, the Company reasonably believes that the
sales of Placing Shares have not been pre-arranged with
any buyer in the United States; and
v) Without reference to any activities by Henderson
Crosthwaite, the Company has not conducted any Directed
Selling Efforts (as defined in Regulation S) with
respect to the Placing Shares nor has the Company
conducted any general solicitation (as that term is
used in Regulation D under the Securities Act) with
respect to any of the Placing Shares or the Commission
Shares.
<PAGE>
12. This Agreement shall be governed and construed in accordance
with English Law and the parties hereby irrevocably submit
themselves to the non exclusive jurisdiction of the English
Courts.
IN WITNESS WHEREOF, this Agreement has been duly executed under
hand by the parties hereto on the day and year first before
written.
ELECTRONIC RETAIL SYSTEMS HENDERSON CROSTHWAITE
INTERNATIONAL, INC. INSTITUTIONAL BROKERS
LIMITED
BY: s/Bruce F. Failing, Jr. BY: s/Nigel Tose
------------------------ --------------------------
Name: Bruce F. Failing, Jr. Name: Nigel Tose
Title: Chief Executive Officer Title: Director Corporate
Finance
EXHIBIT 5(e)
July 1, 1996
Mr. P. Richard Northcott
21 Arlington Street
St. James's
London SW1A 1RN
England
Dear Richard:
I am writing to confirm our agreement in connection with our
proposed application to the Alternative Investment Market ("AIM")
established by the London Stock Exchange Limited, that in
consideration of you agreeing to introduce Electronic Retailing
Systems International, Inc. ("ERS") to an authorized person (as
that term is defined in the Financial Services Act 1986) to act as
Nominated Advisor and Nominated Broker (together the "Advisor") for
the purposes of the rules of AIM, ERS will pay you a fee equal to
2% of the value at the placing price of the shares placed by
Henderson Crosthwaite Institutional Brokers Limited ("HCIB") at the
time of our admission to AIM (as set out in the Prospectus expected
to be issued by us on or around 5 July 1996), excluding any shares
the Advisor or HCIB or any associated company (an "Associate") may
receive in payment, or partial payment, for its services to ERS and
excluding any shares which are the subject of any placing which is
not effected by the Advisor, HCIB or an Associate of any such
company and excluding any shares subscribed for as part of the
placing by you or on your behalf or on your account or by any
person connected with you.
The fee will be applied by you in subscribing for new shares of
common stock, par value US$0.01 each, which will be issued at the
placing price, in addition to any further shares for which you may
subscribe as part of the placing.
This letter supersedes any prior agreement or arrangements (whether
written or otherwise) which may exist between us, but in addition
to this letter, you will be required to execute a placing letter in
relation to the shares for which you subscribe, to ensure
compliance with US and UK securities legislation.
<PAGE>
Mr. P. Richard Northcott July 1, 1996
Page Two
Please confirm your agreement by signing, dating and returning the
accompanying copy of this letter.
Yours truly,
s/Bruce F. Failing, Jr.
- -----------------------------------
Bruce F. Failing, Jr.
President & Chief Executive Officer
AGREED:
s/Richard Northcott
- ----------------------------
Richard Northcott
Dated:
EXHIBIT 5(f)
SUBSCRIPTION AGREEMENT
Electronic Retailing Systems International, Inc.
372 Danbury Road
Wilton, Connecticut 06897-2523
Gentlemen:
1. The undersigned hereby subscribes for
shares (the "Shares") of the common stock, $.01 par value ("Common
Stock"), of Electronic Retailing Systems International, Inc., a
Delaware corporation (the "Corporation"). The undersigned shall, on
or prior to July 8, 1996, tender payment in full for the foregoing
Shares, in the amount of $2.25 per share of Common Stock, or an
aggregate of $ (the "Purchase Price"), in the manner set
forth in Paragraph 8 hereof. The Corporation, in its sole
discretion, may elect to cancel the offering of Common Stock at any
time prior to acceptance of this subscription, and in such event
neither party hereto shall have any further obligation hereunder
and all funds delivered as aforesaid shall be returned to the
undersigned, together with interest thereon, if any, under the
escrow arrangements hereinafter described. In the event the
Corporation shall not have accepted this subscription on or prior
to July 31, 1996 (or the shares of Common Stock subject hereto
shall not have been issued prior to such date), neither party shall
have any further obligation hereunder and all funds delivered as
aforesaid shall be returned to the undersigned, together with
interest thereon, if any, under the escrow arrangements hereinafter
described.
2. To induce the acceptance of this subscription by the
Corporation, the undersigned hereby represents, warrants, agrees
and confirms to the Corporation that:
(a) Simultaneously with the acceptance of this
subscription by the Corporation, and by completing, executing and
delivering the Subscriber Signature Page and Power of Attorney
accompanying this Subscription Agreement, the undersigned will be
bound by all of the terms and conditions hereof and be a party to
the Registration Rights Agreement (as hereinafter defined), and
will appoint the Corporation as attorney-in-fact of the undersigned
to, among other things, execute the Registration Rights Agreement
on behalf of the undersigned.
(b) The information which the undersigned has provided
to the Corporation is true and correct in all respects as of the
date hereof (or, if there have been any changes in such information
since the date such information was furnished, the undersigned has
advised the Corporation in writing of such changes).
(c) The address set forth below is the true and correct
residence of the undersigned, the undersigned has reached the age
of majority in such state or jurisdiction, and the undersigned has
<PAGE>
no present intention of becoming a resident of any other state,
country or jurisdiction. (If a corporation, trust or partnership,
the undersigned has its principal place of business at the address
set forth below, and was not organized for the specific purpose of
acquiring the Common Stock subscribed for herein).
(d) The undersigned is a sophisticated investor familiar
with the types of risks inherent in the purchase of the Common
Stock, and has such business or financial experience that the
undersigned is capable of protecting his own interests in
connection with an investment in the Corporation.
(e) The undersigned has examined, or has had an
opportunity to examine, and make copies of, before the date hereof,
all information concerning the Corporation and the offering of the
Common Stock requested by the undersigned, and all material
documents relating to this offering, and on the basis of such
examination is thoroughly familiar with the business and affairs of
the Corporation. Without limiting the generality of the foregoing,
the undersigned has received a copy of the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1995, as
amended by Amendment No. 1 thereto on Form 10-K/A, the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 and the Corporation's Current Report on Form 8-K
dated June 30, 1996. The undersigned has had an opportunity to ask
questions of and receive answers from the Corporation, or a person
or persons acting on its behalf, concerning the terms and
conditions of this investment, and to obtain any additional
information necessary to verify the accuracy of the information
furnished, and all such questions have been answered to the full
satisfaction of the undersigned.
(f) No representations or warranties have been made to
the undersigned by or on behalf of the Corporation, or any of its
agents, employees or affiliates, and in entering into this
transaction the undersigned is relying only on the results of his
own independent investigation, including the information furnished
by the Corporation.
(g) The undersigned does not intend or anticipate that
this investment be a source of income, the undersigned is able to
bear the substantial economic risks of the investment in the Common
Stock being made by him, and at the present time the undersigned
could afford a complete loss of such investment.
(h) The undersigned is acquiring the Shares for his own
account, for investment purposes only, and not with a view to the
sale or other distribution thereof, in whole or in part. In order
to induce the Corporation to issue and sell the Shares subscribed
for herein to the undersigned, it is agreed that the Corporation
will have no obligation to recognize the ownership, beneficial or
otherwise, of the Shares by anyone other than the undersigned.
<PAGE>
(i) The undersigned understands that:
(i) The Shares are a speculative investment and may
involve a high degree of risk.
(ii) There are substantial restrictions on the
transferability of the Shares; the undersigned will not
initially be able to avail himself of the provisions of Rule
144 adopted by the Securities and Exchange Commission under
the Securities Act of 1933 (the "Securities Act") with respect
to the resale of Shares; and, accordingly, it may not be
possible for the undersigned to liquidate his investment in
the Corporation.
(j) The undersigned understands that the Common Stock
sold hereunder has not been registered under the Securities Act in
reliance on an exemption thereunder for transactions not involving
any public offering and that the Common Stock sold hereunder has
not been approved or disapproved by the Securities and Exchange
Commission or by any other federal or state agency.
(k) The undersigned will not sell, transfer, pledge or
otherwise dispose of any Shares or any interest therein, until
either of the following events has occurred: (i) he has received an
opinion in form and substance reasonably acceptable to the
Corporation of counsel reasonably acceptable to the Corporation
that registration thereof under the Securities Act is not required;
or (ii) a registration statement under the Securities Act covering
such securities, or interest therein and the disposition thereof
has become effective under the Securities Act. Stock certificates
evidencing the Shares shall be endorsed with a legend to the
foregoing effect, and stop transfer instructions shall be issued
with respect to the Shares, so long as the Shares are subject to
such restrictions on disposition.
(l) The undersigned is an "accredited investor" as
defined under Regulation D promulgated pursuant to the Securities
Act.
(m) If the undersigned is a corporation or trust, the
officer or trustee executing this Subscription Agreement represents
and warrants that he is authorized to so sign; that the corporation
or trust is authorized by the articles (or certificate) of
incorporation and by-laws of the corporation or by the trust
agreement, as the case may be, to make this investment and to enter
into this Subscription Agreement and, in the case of a corporation,
the undersigned will, upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing the undersigned to make such investment, as well as a
copy (certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment, and in the case of a trust, the undersigned will, upon
<PAGE>
request of the Corporation, furnish to the Corporation a true and
correct copy of the provisions of the trust agreement authorizing
the trustee to make such investment.
(n) If the undersigned is a partnership, by signing
below, the partner executing this Subscription Agreement represents
and warrants that each one of the foregoing representations or
agreements or understandings set forth herein applies to each
partner; that he is authorized to so sign; upon request of the
Corporation, the undersigned will furnish to the Corporation a true
and correct copy of the provisions of the undersigned's partnership
agreement authorizing the executing partner to make such
investments; in the case of any partner that is a trust, a trustee
(or co-trustee) of the trust is authorized by the trust agreement
to make this investment and to enter into this Subscription
Agreement; and in the case of any partner that is a corporation,
such corporation, will upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing such corporation to make such investment, and a copy
(certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment; and in the case of a partner that is a trust, the
undersigned will, upon request of the Corporation, furnish to the
Corporation a true and correct copy of the provisions of the trust
agreement authorizing the trustee to make such investment.
3. The undersigned understands the meaning and legal
consequences of the representations and warranties contained in
paragraph 2 hereof, and the undersigned hereby agrees to indemnify
and hold harmless the Corporation and each officer and director
thereof from and against any and all loss, damage or liability due
to or arising out of a breach of any representation or warranty of
the undersigned.
4. The undersigned understands that this subscription
is not binding on the Corporation until the Corporation accepts it,
which acceptance is at the sole discretion of the Corporation, by
executing this Subscription Agreement where indicated. Subject to
such acceptance, all shares subscribed hereunder shall be issuable
upon satisfaction of the conditions described under Paragraph 8.
5. By its acceptance of this subscription, the
Corporation hereby represents, warrants, agrees and confirms to the
undersigned that:
(a) The officer executing this Subscription Agreement is
authorized to so sign; the Corporation is authorized by its
certificate of incorporation and by-laws to accept this
Subscription Agreement; and the execution and delivery hereof by
the Corporation and the consummation by the Corporation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action.
<PAGE>
(b) The Corporation is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority
to own and operate its properties and to carry on its business as
now conducted and proposed to be conducted.
(c) The authorized capital stock of the Corporation
consists of 25,000,000 shares of Common Stock, of which 11,800,048
shares are issued and outstanding, and 2,000,000 shares of
preferred stock, $1.00 par value, of which 140,000 shares are
designated as Series A Cumulative, Convertible Preferred Stock
("Series A Preferred Stock"), 125,556 shares of which are issued
and outstanding. There are no subscriptions, warrants, options,
calls, commitments by or agreements to which the Corporation is
bound relating to the issuance or purchase of any shares of Common
Stock, except for: (i) warrants (the "CDA Warrants"), exercisable
with respect to an aggregate of 699,724 shares of Common Stock, and
a 7.4% Convertible Note (the "CDA Note") in the original principal
amount of up to $5,000,000, convertible with respect to shares of
Common Stock as set forth therein, held by the Connecticut
Development Authority (the "CDA"); (ii) options, exercisable with
respect to an aggregate of 614,619 shares of Common Stock issuable
pursuant to the Corporation's 1993 Employee Stock Option Plan;
(iii) options, exercisable with respect to an aggregate of 85,000
shares of Common Stock issuable pursuant to the Corporation's 1993
Director Stock Option Plan; (iv) warrants issuable to Advest, Inc.,
exercisable with respect to 50,000 shares of Common Stock; (v) an
aggregate of 3,138,900 shares of Common Stock issuable upon
conversion of the outstanding Series A Preferred Stock; and (vi) an
aggregate of up to 8,500,000 shares of Common Stock issuable
pursuant to certain placing arrangements between the Corporation
and Henderson Crosthwaite Institutional Brokers Limited ("HCIBL"),
to be evidenced by a placing agreement (the "Placing Agreement")
between the Corporation and HCIBL, and the fee and related
compensation arrangements in connection therewith, and a
contemporaneous private placement (the "Private Placement") of
Common Stock to subscribers including certain directors of the
Corporation or their affiliates. In furtherance of the transactions
described under clause (vi) immediately preceding, and if the
authorized capitalization of the Corporation is insufficient for
the Corporation's outstanding Common Stock and shares reserved for
issuance, the CDA has agreed to a moratorium on conversion of the
CDA Warrants and the CDA Note pending approval of an increase in
the authorized capitalization of the Corporation at its next annual
meeting of stockholders. The Shares shall be duly authorized,
validly issued and fully paid and non-assessable shares of Common
Stock.
6. (a) This subscription is not transferable or
assignable by the undersigned.
<PAGE>
(b) All notices or other communications to be given
or made hereunder shall be in writing and shall be delivered
personally or mailed, by registered or certified mail, return
receipt requested, postage prepaid, to the undersigned or to the
Corporation, as the case may be, at the respective addresses set
forth herein.
(c) Notwithstanding the place where this
Subscription Agreement may be executed by any of the parties
hereto, the parties expressly agree that all the terms and pro-
visions hereof shall be construed in accordance with and governed
by the laws of the State of Connecticut, USA.
(d) This Subscription Agreement, and the agreements
referred to herein, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by the parties.
(e) The Corporation shall pay all of its expenses
in connection with this Agreement and the transactions contemplated
hereby.
7. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
8. On or prior to July 8, 1996, the undersigned shall
deliver, by certified check made payable to Krugman, Chapnick &
Grimshaw, as escrow agent, or wire transfer to the account
hereinafter designated, an amount equal to the Purchase Price. Any
such check should be delivered to such escrow agent, Attention:
Howard Kailes, at Park 80 West - Plaza Two, Saddle Brook, New
Jersey 07663. Any such wire transfer shall be to the account of
such escrow agent, in accordance with the following instructions:
Name of Bank Interchange State Bank
Address of Bank Park 80 West - Plaza Two
Saddle Brook, New Jersey 07663
ABA # of Bank 021205871
Account Name Krugman, Chapnick & Grimshaw
Attorney Trust Account
Account No. 11 30323
The Purchase Price shall be held by said escrow agent,
pursuant to the terms of an escrow agreement, as amended,
substantially in the form heretofore delivered to the undersigned,
until: (i) acceptance of this subscription and (ii) the
contemporaneous occurrence of closing under the Placing Agreement
<PAGE>
and admission of the Common Stock for trading on the Alternative
Investment Market of the London Stock Exchange, whereupon such
funds, together with interest thereon, if any, under such escrow
arrangements, shall be delivered to the Corporation. This
Subscription Agreement, and related documentation, should be
delivered to the Corporation at 372 Danbury Road, Wilton,
Connecticut 06897, Attention: President, and shall be held thereby
pending release of funds in the manner hereinabove set forth.
9. The undersigned herewith authorizes the execution
and delivery of the Registration Rights Agreement (the
"Registration Rights Agreement") among the Corporation and the
subscribers parties thereto, in the form heretofore submitted to
the undersigned, in the name and on behalf of the undersigned (it
being acknowledged and agreed that all subscribers to the Private
Placement shall be identified on Schedule 1 thereto and become
signatories thereof, the date thereof shall be the date of closing
under this Subscription Agreement, and a reference to "up to
2,000,000 shares" shall be inserted in the first recital thereof),
which shall be held in the same manner as the Subscription
Agreement.
IN WITNESS WHEREOF, the undersigned executes and agrees
to be bound by this Subscription Agreement by executing the
Subscriber Signature Page and Power of Attorney attached hereto
this day of July, 1996.
<PAGE>
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
SUBSCRIBER SIGNATURE PAGE AND POWER OF ATTORNEY
The undersigned, desiring to subscribe to shares of the common
stock, $.01 par value, of Electronic Retailing Systems
International, Inc., a Delaware corporation (the "Corporation"),
hereby adopts and agrees to be bound by all of the terms and
provisions of (i) the foregoing Subscription Agreement (the
"Subscription Agreement") and (ii) the Registration Rights
Agreement (the "Registration Rights Agreement") among the
Corporation and the subscribers parties thereto. The undersigned,
by his execution hereof, hereby makes, constitutes and appoints the
Corporation as his true and lawful agent and attorney-in-fact, with
full power of substitution and full power and authority in his
name, place and stead to make, execute, sign, acknowledge, swear
to, record and file the Subscription Agreement and the Registration
Rights Agreement. The power of attorney hereby granted shall be
deemed to be coupled with an interest and shall be irrevocable and
survive death, incapacity, insolvency, dissolution or termination
of the undersigned or any delivery by the undersigned of an
assignment of the whole or any portion of the interest of the
undersigned. The undersigned hereby confirms all of the terms and
representations made by the undersigned in the Subscription
Agreement hereby executed and delivered by the undersigned to the
Corporation.
PLEASE PROVIDE ALL INFORMATION REQUESTED BELOW
(Type or print clearly using black ink)
X X
---------------------------- -----------------------------
Signature of Subscriber Signature of Joint Subscriber
(if any)
<PAGE>
<PAGE>
A. Check if individual If Fiduciary, Corporation or
-- ownership. Partnership, check if one and
indicate capacity of signature under
signature line:
If Joint Ownership, Check one:
B. Joint Tenants with F. Trust - attach a copy
-- Rights of Survivorship -- of trust agreement
C. Tenants in Common G. Power of Attorney - attach
-- -- original
D. Community Property H. Custodian under Uniform
-- -- Gifts to Minors Act
E. Tenants by Entirety I. Partnership-attach a copy
-- -- of partnership agreement
J. Corporation-attach a copy
-- of corporate resolution
authorizing signature and
purchase
K. Other-Please specify be
-- low and supply evidence of
authority to sign and pur-
chase:
----------------------------------
- ------------------------- or -------------------------
Social Security Number of Identification Number of
Individual Subscriber Corporate Subscriber
---------------------
Social Security Number
of Individual Joint Subscriber (if any)
<PAGE>
<PAGE>
Subscriber Name
First Name - Initial Not Acceptable M.I. Last Name
Joint Subscriber Name (if any)
First Name - Initial Not Acceptable M.I. Last Name
Partnership or Corporate Subscriber Name
Jurisdiction of Incorporation of Corporate Subscriber
Residence Address, or Principal Place of Business if Corporate
Subscriber (Important: P.O. Box Numbers not acceptable for
Residence Address)
- -----------------------------------------------------------------
Street Number Street Name Apt. No.
- -----------------------------------------------------------------
Bldg. No. City State Zip Code
Mailing Address (if other than address above)
- -----------------------------------------------------------------
Street Number Street Name Apt. No.
- -----------------------------------------------------------------
Bldg. No. City State Zip Code
Home Telephone Office Telephone
---------------- ----------------
Area Code Number Area Code Number
<PAGE>
<PAGE>
The foregoing subscription is hereby accepted by the
Corporation this ____ day of ______, 1996.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Delaware corporation
By
---------------------------------
<PAGE>
<PAGE>
SUBSCRIPTION AGREEMENT
(Delayed Funding)
Electronic Retailing Systems International, Inc.
372 Danbury Road
Wilton, Connecticut 06897-2523
Gentlemen:
1. The undersigned hereby subscribes for
shares (the "Shares") of the common stock, $.01 par value ("Common
Stock"), of Electronic Retailing Systems International, Inc., a
Delaware corporation (the "Corporation"). The undersigned shall,
contemporaneously with closing under the Placing Agreement (as
hereinafter defined) and admission of the Common Stock for trading
on the Alternative Investment Market of the London Stock Exchange,
tender payment in full for the foregoing Shares, in the amount of
$2.25 per share of Common Stock, or an aggregate of $
(the "Purchase Price"), in the manner set forth in Paragraph 8
hereof, subject to prior acceptance hereof by the Corporation. The
Corporation, in its sole discretion, may elect to cancel the
offering of Common Stock at any time prior to acceptance of this
subscription, and in such event neither party hereto shall have any
further obligation hereunder. In the event the Corporation shall
not have accepted this subscription on or prior to July 31, 1996
(or the shares of Common Stock subject hereto shall not have been
issued prior to such date), neither party shall have any further
obligation hereunder.
2. To induce the acceptance of this subscription by the
Corporation, the undersigned hereby represents, warrants, agrees
and confirms to the Corporation that:
(a) Simultaneously with the acceptance of this
subscription by the Corporation, and by completing, executing and
delivering the Subscriber Signature Page and Power of Attorney
accompanying this Subscription Agreement, the undersigned will be
bound by all of the terms and conditions hereof and be a party to
the Registration Rights Agreement (as hereinafter defined), and
will appoint the Corporation as attorney-in-fact of the undersigned
to, among other things, execute the Registration Rights Agreement
on behalf of the undersigned.
(b) The information which the undersigned has provided
to the Corporation is true and correct in all respects as of the
date hereof (or, if there have been any changes in such information
since the date such information was furnished, the undersigned has
advised the Corporation in writing of such changes).
(c) The address set forth below is the true and correct
residence of the undersigned, the undersigned has reached the age
of majority in such state or jurisdiction, and the undersigned has
no present intention of becoming a resident of any other state,
<PAGE>
country or jurisdiction. (If a corporation, trust or partnership,
the undersigned has its principal place of business at the address
set forth below, and was not organized for the specific purpose of
acquiring the Common Stock subscribed for herein).
(d) The undersigned is a sophisticated investor familiar
with the types of risks inherent in the purchase of the Common
Stock, and has such business or financial experience that the
undersigned is capable of protecting his own interests in
connection with an investment in the Corporation.
(e) The undersigned has examined, or has had an
opportunity to examine, and make copies of, before the date hereof,
all information concerning the Corporation and the offering of the
Common Stock requested by the undersigned, and all material
documents relating to this offering, and on the basis of such
examination is thoroughly familiar with the business and affairs of
the Corporation. Without limiting the generality of the foregoing,
the undersigned has received a copy of the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1995, as
amended by Amendment No. 1 thereto on Form 10-K/A, the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 and the Corporation's Current Report on Form 8-K
dated June 30, 1996. The undersigned has had an opportunity to ask
questions of and receive answers from the Corporation, or a person
or persons acting on its behalf, concerning the terms and
conditions of this investment, and to obtain any additional
information necessary to verify the accuracy of the information
furnished, and all such questions have been answered to the full
satisfaction of the undersigned.
(f) No representations or warranties have been made to
the undersigned by or on behalf of the Corporation, or any of its
agents, employees or affiliates, and in entering into this
transaction the undersigned is relying only on the results of his
own independent investigation, including the information furnished
by the Corporation.
(g) The undersigned does not intend or anticipate that
this investment be a source of income, the undersigned is able to
bear the substantial economic risks of the investment in the Common
Stock being made by him, and at the present time the undersigned
could afford a complete loss of such investment.
(h) The undersigned is acquiring the Shares for his own
account, for investment purposes only, and not with a view to the
sale or other distribution thereof, in whole or in part. In order
to induce the Corporation to issue and sell the Shares subscribed
for herein to the undersigned, it is agreed that the Corporation
will have no obligation to recognize the ownership, beneficial or
otherwise, of the Shares by anyone other than the undersigned.
<PAGE>
(i) The undersigned understands that:
(i) The Shares are a speculative investment and may
involve a high degree of risk.
(ii) There are substantial restrictions on the
transferability of the Shares; the undersigned will not
initially be able to avail himself of the provisions of Rule
144 adopted by the Securities and Exchange Commission under
the Securities Act of 1933 (the "Securities Act") with respect
to the resale of Shares; and, accordingly, it may not be
possible for the undersigned to liquidate his investment in
the Corporation.
(j) The undersigned understands that the Common Stock
sold hereunder has not been registered under the Securities Act in
reliance on an exemption thereunder for transactions not involving
any public offering and that the Common Stock sold hereunder has
not been approved or disapproved by the Securities and Exchange
Commission or by any other federal or state agency.
(k) The undersigned will not sell, transfer, pledge or
otherwise dispose of any Shares or any interest therein, until
either of the following events has occurred: (i) he has received an
opinion in form and substance reasonably acceptable to the
Corporation of counsel reasonably acceptable to the Corporation
that registration thereof under the Securities Act is not required;
or (ii) a registration statement under the Securities Act covering
such securities, or interest therein and the disposition thereof
has become effective under the Securities Act. Stock certificates
evidencing the Shares shall be endorsed with a legend to the
foregoing effect, and stop transfer instructions shall be issued
with respect to the Shares, so long as the Shares are subject to
such restrictions on disposition.
(l) The undersigned is an "accredited investor" as
defined under Regulation D promulgated pursuant to the Securities
Act.
(m) If the undersigned is a corporation or trust, the
officer or trustee executing this Subscription Agreement represents
and warrants that he is authorized to so sign; that the corporation
or trust is authorized by the articles (or certificate) of
incorporation and by-laws of the corporation or by the trust
agreement, as the case may be, to make this investment and to enter
into this Subscription Agreement and, in the case of a corporation,
the undersigned will, upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing the undersigned to make such investment, as well as a
copy (certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment, and in the case of a trust, the undersigned will, upon
<PAGE>
request of the Corporation, furnish to the Corporation a true and
correct copy of the provisions of the trust agreement authorizing
the trustee to make such investment.
(n) If the undersigned is a partnership, by signing
below, the partner executing this Subscription Agreement represents
and warrants that each one of the foregoing representations or
agreements or understandings set forth herein applies to each
partner; that he is authorized to so sign; upon request of the
Corporation, the undersigned will furnish to the Corporation a true
and correct copy of the provisions of the undersigned's partnership
agreement authorizing the executing partner to make such
investments; in the case of any partner that is a trust, a trustee
(or co-trustee) of the trust is authorized by the trust agreement
to make this investment and to enter into this Subscription
Agreement; and in the case of any partner that is a corporation,
such corporation, will upon request of the Corporation, furnish to
the Corporation a true and correct copy of the provisions of the
articles (or certificate) of incorporation or by-laws, or both,
authorizing such corporation to make such investment, and a copy
(certified by the secretary or other authorized officer) of
appropriate corporate resolutions authorizing this specific
investment; and in the case of a partner that is a trust, the
undersigned will, upon request of the Corporation, furnish to the
Corporation a true and correct copy of the provisions of the trust
agreement authorizing the trustee to make such investment.
3. The undersigned understands the meaning and legal
consequences of the representations and warranties contained in
paragraph 2 hereof, and the undersigned hereby agrees to indemnify
and hold harmless the Corporation and each officer and director
thereof from and against any and all loss, damage or liability due
to or arising out of a breach of any representation or warranty of
the undersigned.
4. The undersigned understands that this subscription
is not binding on the Corporation until the Corporation accepts it,
which acceptance is at the sole discretion of the Corporation, by
executing this Subscription Agreement where indicated. Subject to
such acceptance, all shares subscribed hereunder shall be issuable
upon satisfaction of the conditions described under Paragraph 8.
5. By its acceptance of this subscription, the
Corporation hereby represents, warrants, agrees and confirms to the
undersigned that:
(a) The officer executing this Subscription Agreement is
authorized to so sign; the Corporation is authorized by its
certificate of incorporation and by-laws to accept this
Subscription Agreement; and the execution and delivery hereof by
the Corporation and the consummation by the Corporation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action.
<PAGE>
(b) The Corporation is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority
to own and operate its properties and to carry on its business as
now conducted and proposed to be conducted.
(c) The authorized capital stock of the Corporation
consists of 25,000,000 shares of Common Stock, of which 11,800,048
shares are issued and outstanding, and 2,000,000 shares of
preferred stock, $1.00 par value, of which 140,000 shares are
designated as Series A Cumulative, Convertible Preferred Stock
("Series A Preferred Stock"), 125,556 shares of which are issued
and outstanding. There are no subscriptions, warrants, options,
calls, commitments by or agreements to which the Corporation is
bound relating to the issuance or purchase of any shares of Common
Stock, except for: (i) warrants (the "CDA Warrants"), exercisable
with respect to an aggregate of 699,724 shares of Common Stock, and
a 7.4% Convertible Note (the "CDA Note") in the original principal
amount of up to $5,000,000, convertible with respect to shares of
Common Stock as set forth therein, held by the Connecticut
Development Authority (the "CDA"); (ii) options, exercisable with
respect to an aggregate of 614,619 shares of Common Stock issuable
pursuant to the Corporation's 1993 Employee Stock Option Plan;
(iii) options, exercisable with respect to an aggregate of 85,000
shares of Common Stock issuable pursuant to the Corporation's 1993
Director Stock Option Plan; (iv) warrants issuable to Advest, Inc.,
exercisable with respect to 50,000 shares of Common Stock; (v) an
aggregate of 3,138,900 shares of Common Stock issuable upon
conversion of the outstanding Series A Preferred Stock; and (vi) an
aggregate of up to 8,500,000 shares of Common Stock issuable
pursuant to certain placing arrangements between the Corporation
and Henderson Crosthwaite Institutional Brokers Limited ("HCIBL"),
to be evidenced by a placing agreement (the "Placing Agreement")
between the Corporation and HCIBL, and the fee and related
compensation arrangements in connection therewith, and a
contemporaneous private placement (the "Private Placement") of
Common Stock to subscribers including certain directors of the
Corporation or their affiliates. In furtherance of the transactions
described under clause (vi) immediately preceding, and if the
authorized capitalization of the Corporation is insufficient for
the Corporation's outstanding Common Stock and shares reserved for
issuance, the CDA has agreed to a moratorium on conversion of the
CDA Warrants and the CDA Note pending approval of an increase in
the authorized capitalization of the Corporation at its next annual
meeting of stockholders. The Shares shall be duly authorized,
validly issued and fully paid and non-assessable shares of Common
Stock.
6. (a) This subscription is not transferable or
assignable by the undersigned.
(b) All notices or other communications to be given
or made hereunder shall be in writing and shall be delivered
<PAGE>
personally or mailed, by registered or certified mail, return
receipt requested, postage prepaid, to the undersigned or to the
Corporation, as the case may be, at the respective addresses set
forth herein.
(c) Notwithstanding the place where this
Subscription Agreement may be executed by any of the parties
hereto, the parties expressly agree that all the terms and pro-
visions hereof shall be construed in accordance with and governed
by the laws of the State of Connecticut, USA.
(d) This Subscription Agreement, and the agreements
referred to herein, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by the parties.
(e) The Corporation shall pay all of its expenses
in connection with this Agreement and the transactions contemplated
hereby.
7. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
8. Contemporaneously with closing under the Placing
Agreement, and admission of the Common Stock for trading on the
Alternative Investment Market of the London Stock Exchange, the
undersigned shall deliver to the Corporation an amount equal to
the Purchase Price, by certified check, wire transfer, or offset
against amounts payable to the undersigned under a certain
Conversion Agreement entered into by the Corporation and the
undersigned. This Subscription Agreement, and related
documentation, should be delivered to the Corporation at 372
Danbury Road, Wilton, Connecticut 06897, Attention: President, and
shall be held thereby pending delivery of funds in the manner
hereinabove set forth.
9. The undersigned herewith authorizes the execution
and delivery of the Registration Rights Agreement (the
"Registration Rights Agreement") among the Corporation and the
subscribers parties thereto, in the form heretofore submitted to
the undersigned, in the name and on behalf of the undersigned (it
being acknowledged and agreed that all subscribers to the Private
Placement shall be identified on Schedule 1 thereto and become
signatories thereof, the date thereof shall be the date of closing
under this Subscription Agreement, and a reference to "up to
2,000,000 shares" shall be inserted in the first recital thereof),
which shall be held in the same manner as the Subscription
Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned executes and agrees
to be bound by this Subscription Agreement by executing the
Subscriber Signature Page and Power of Attorney attached hereto
this day of July, 1996.
<PAGE>
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
SUBSCRIBER SIGNATURE PAGE AND POWER OF ATTORNEY
The undersigned, desiring to subscribe to shares of the common
stock, $.01 par value, of Electronic Retailing Systems
International, Inc., a Delaware corporation (the "Corporation"),
hereby adopts and agrees to be bound by all of the terms and
provisions of (i) the foregoing Subscription Agreement (the
"Subscription Agreement") and (ii) the Registration Rights
Agreement (the "Registration Rights Agreement") among the
Corporation and the subscribers parties thereto. The undersigned,
by his execution hereof, hereby makes, constitutes and appoints the
Corporation as his true and lawful agent and attorney-in-fact, with
full power of substitution and full power and authority in his
name, place and stead to make, execute, sign, acknowledge, swear
to, record and file the Subscription Agreement and the Registration
Rights Agreement. The power of attorney hereby granted shall be
deemed to be coupled with an interest and shall be irrevocable and
survive death, incapacity, insolvency, dissolution or termination
of the undersigned or any delivery by the undersigned of an
assignment of the whole or any portion of the interest of the
undersigned. The undersigned hereby confirms all of the terms and
representations made by the undersigned in the Subscription
Agreement hereby executed and delivered by the undersigned to the
Corporation.
PLEASE PROVIDE ALL INFORMATION REQUESTED BELOW
(Type or print clearly using black ink)
X X
-------------------------- -----------------------------
Signature of Subscriber Signature of Joint Subscriber
(if any)
<PAGE>
<PAGE>
A. Check if individual If Fiduciary, Corporation or
-- ownership. Partnership, check if one and
indicate capacity of signature under
signature line:
If Joint Ownership, Check one:
B. Joint Tenants with F. Trust - attach a copy
-- Rights of Survivorship -- of trust agreement
C. Tenants in Common G. Power of Attorney - attach
-- -- original
D. Community Property H. Custodian under Uniform
-- -- Gifts to Minors Act
E. Tenants by Entirety I. Partnership-attach a copy
-- -- of partnership agreement
J. Corporation-attach a copy
-- of corporate resolution
authorizing signature and
purchase
K. Other-Please specify be
-- low and supply evidence of
authority to sign and pur-
chase:
---------------------------
- ------------------------- or ---------------------------
Social Security Number of Identification Number of
Individual Subscriber Corporate Subscriber
------------------------
Social Security Number
of Individual Joint Subscriber (if any)
<PAGE>
<PAGE>
Subscriber Name
- -----------------------------------------------------------------
First Name - Initial Not Acceptable M.I. Last Name
Joint Subscriber Name (if any)
- -----------------------------------------------------------------
First Name - Initial Not Acceptable M.I. Last Name
Partnership or Corporate Subscriber Name
- -----------------------------------------------------------------
Jurisdiction of Incorporation of Corporate Subscriber
Residence Address, or Principal Place of Business if Corporate
Subscriber (Important: P.O. Box Numbers not acceptable for
Residence Address)
- -----------------------------------------------------------------
Street Number Street Name Apt. No.
- -----------------------------------------------------------------
Bldg. No. City State Zip Code
Mailing Address (if other than address above)
- -----------------------------------------------------------------
Street Number Street Name Apt. No.
- -----------------------------------------------------------------
Bldg. No. City State Zip Code
Home Telephone Office Telephone
---------------- ----------------
Area Code Number Area Code Number
<PAGE>
<PAGE>
The foregoing subscription is hereby accepted by the
Corporation this day of , 1996.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Delaware corporation
By
------------------------------
EXHIBIT 5(g)
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of July 11, 1996,
among ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a
corporation duly organized and validly existing under the laws of
the State of Delaware (hereinafter referred to as the
"Corporation"), and each of the parties (hereinafter referred to,
collectively, as the "Stockholders" and, individually, as a
"Stockholder") identified on Schedule 1 attached hereto who are
signatories hereto.
W I T N E S S E T H :
WHEREAS, each of the Stockholders is party to a Subscription
Agreement with the Corporation (hereinafter referred to,
collectively, as the "Subscription Agreements"), pursuant to which
the Corporation shall issue to the Stockholders an aggregate of up
to 2,000,000 shares (hereinafter refereed to, collectively, as the
"Shares") of its common stock, $.01 par value (as the same may be
constituted from time to time hereinafter referred to as the
"Common Stock");
WHEREAS, in connection with effectuating the transactions
contemplated by the provisions of the Subscription Agreements the
Corporation and the Stockholders are entering into this Agreement;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following additional terms
shall have the following respective meanings:
The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
The term "Incidental Registration" shall have the meaning set
forth in Paragraph B of Article III.
The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
The term "Prior Registration Rights Agreement" shall mean the
Registration Rights Agreement dated March 12, 1993 among the
Corporation and the limited partners of ERS Associates Limited
Partnership, a Connecticut limited partnership.
<PAGE>
The term "Prospectus" shall mean the prospectus included in
any Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by the
Registration Statement and all other amendments and supplements to
the Prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
The term "Registration Expenses" shall have the meaning set
forth in Article VI.
The term "Registrable Securities" shall mean (i) the Shares,
and (ii) any securities issued or issuable with respect to the
Shares referred to in clause (i) immediately preceding by way of a
stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other
reorganization; provided, however, that a security ceases to be a
Registrable Security when it is no longer a Restricted Security.
The term "Registration Statement" shall mean any registration
statement of the Corporation which covers Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments (including post-effective amendments) and
supplements to such Registration Statement, all exhibits and all
material incorporated by reference in such Registration Statement.
The term "Restricted Securities" shall mean any security
unless or until: (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration
Statement covering it; (ii) it is distributed to the public
pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; (iii) it is eligible for sale pursuant to
rule 144(k) (or any similar provisions then in force) under the
Securities Act, or (iv) it has otherwise been transferred and a new
certificate or other evidence of ownership for it not bearing a
restrictive legend pursuant to the Securities Act and not subject
to any stop transfer order has been delivered by or on behalf of
the Corporation and no other restriction on transfer exists.
The term "Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
The term "Selling Expenses" shall have the meaning set forth
in Article VI.
The term "SEC" shall mean the Securities and Exchange
Commission.
The term "underwritten registration" or "underwritten
offering" shall mean a registration in which securities of the
Corporation are sold pursuant to a firm commitment underwriting to
an underwriter at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with an underwriter.
<PAGE>
ARTICLE II
SECURITIES SUBJECT TO THIS AGREEMENT
A. Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities.
B. Holders of Registrable Securities. A Person is deemed to
be a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such Registrable
Securities, whether or not such acquisition has actually been
effected, and disregarding any legal restrictions upon the exercise
of such right. Without limiting the generality of the foregoing,
each holder of Shares shall be deemed a holder of Registrable
Securities.
ARTICLE III
INCIDENTAL REGISTRATIONS
A. Notice and Request for Incidental Registration. Whenever
the Corporation proposes to register any of its securities under
the Securities Act, other than pursuant to a registration on Forms
S-4 or S-8 or comparable forms (hereinafter referred to as an
"Incidental Registration"), the Corporation shall give written
notice to all holders of Registrable Securities of its intention to
effect such a registration not later than the earlier of (i) the
tenth day following receipt by the Corporation of notice of any
demand registration rights or (ii) 30 days prior to the anticipated
effectiveness of such registration. Subject to the provisions of
Paragraphs C and D of this Article III, the Corporation shall
include in such Incidental Registration all Registrable Securities
with respect to which the Corporation has received written requests
for inclusion therein within 15 days after the mailing or delivery.
If an Incidental Registration is an underwritten offering effected:
(i) under Paragraph C of this Article III, all Persons
whose securities are included in the Incidental Registration
shall be obligated to sell their securities on the same terms
and conditions as apply to the securities being issued and
sold by the Corporation; or
(ii) under Paragraph D of this Article III, all Persons
whose securities are included in the Incidental Registration
shall be obligated to sell their securities on the same terms
and conditions as apply to the securities being sold by the
Person or Persons who initiated the Incidental Registration
under said paragraph.
B. Incidental Registration Expenses. The Corporation shall
pay all Registration Expenses related to such registration, or
incurred as a result of the participation in an Incidental
Registration of the holders of Registrable Securities, whether or
<PAGE>
not the Registration Statement with respect to such registration
has become effective, and all other expenses incurred by the
Corporation in complying with this Article III. All Selling
Expenses related to such registration shall be borne by the
participating sellers (including the Corporation, if a seller), in
proportion to the number of shares sold by each, or by such sellers
as they may agree.
C. Priority on Underwritten Primary Registration. If an
Incidental Registration is an underwritten primary registration on
behalf of the Corporation, and the managing underwriters advise the
Corporation in writing that in their opinion the total number or
dollar amount of securities requested to be included in such
registration exceeds the number or dollar amount of securities
which can be sold in such offering without materially adverse
effect on the proposed sale by the Corporation, the Corporation
shall include in such registration:
(i) first, all securities the Corporation proposes to
sell; and
(ii) second, the Registrable Securities and such other
securities (provided such securities are of the same class as
the securities being sold by the Corporation) requested to be
included in such registration in excess of the number of
securities the Corporation proposes to sell which, in the
opinion of such underwriters, can be sold without materially
adverse effect on the proposed sale by the Corporation
(allocated pro rata among the holders of such Registrable
Securities and other securities on the basis of the number of
securities requested to be included therein by each such
holder);
except, in the event any party to the Prior Registration Agreement
exercises any rights thereunder with respect to such Incidental
Registration, the provisions of Article IV, Section F of the Prior
Registration Agreement with respect to such allocation to such
party shall supersede the provisions of clause (ii) immediately
preceding insofar as relating to the ERS Group (as defined in the
Prior Registration Agreement).
D. Priority on Underwritten Secondary Registration. If an
Incidental Registration is an underwritten secondary registration
on behalf of holders of the Corporation's securities, and the
managing underwriters advise the Corporation in writing that in
their opinion the number of securities requested to be included in
such registration exceeds the number of securities which can be
sold in such offering without materially adverse effect on the
proposed sale by such holders, the Corporation shall include in
such registration:
<PAGE>
(i) first, all securities requested to be included in
such registration by the securityholders initiating such
registration; and
(ii) second, up to the full number of Registrable
Securities and such other securities (provided such securities
are of the same class as the securities being sold by the
Corporation) requested to be included in such registration in
excess of the number of securities the securityholders
initiating such registration propose to sell which, in the
opinion of such underwriters, can be sold without materially
adverse effect on the proposed sale by such holders (allocated
pro rata among the holders of such Registrable Securities and
other securities on the basis of the number of securities
requested to be included therein by each such holder);
except, in the event any party to the Prior Registration Agreement
exercises any rights thereunder with respect to such Incidental
Registration, the provisions of Article IV, Section F of the Prior
Registration Agreement with respect to such allocation to such
party shall supersede the provisions of clause (ii) immediately
preceding insofar as relating to the ERS Group (as defined in the
Prior Registration Agreement).
E. Selection of Underwriters. If any Incidental Registration
is an underwritten offering, the Corporation shall have the right
to select the investment banker or investment bankers and manager
or managers to administer the offering.
ARTICLE IV
HOLDBACK AGREEMENTS
Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant
to Article III hereof agrees, if requested by the managing
underwriters, not to effect any public sale or distribution of
securities of the Corporation of the same class as the securities
included in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such
underwritten registration) during the ten-day period prior to, and
during the 180-day period beginning on, the closing date of each
underwritten offering of Registrable Securities made pursuant to
such Registration Statement, to the extent timely notified in
writing by the Corporation or the managing underwriters. The
foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or
regulation from entering into any such agreement; provided,
however, that any such holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any
public sale or distribution of the applicable class of Registrable
Securities commencing on the date of sale of such applicable class
of Registrable Securities unless it has provided 45 days' prior
<PAGE>
written notice of such sale or distribution to the underwriter or
underwriters.
ARTICLE V
REGISTRATION PROCEDURES
Whenever the holders of Registrable Securities have requested
that any Registrable Securities be registered pursuant to this
Agreement, the Corporation shall use its best efforts to effect
such registration to permit the sale of such Registrable Securities
in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Corporation shall as
expeditiously as possible:
A. prepare and file with the SEC a Registration Statement on
a form for which the Corporation then qualifies which is
satisfactory to the Corporation and the holders of a majority of
the Registrable Securities being registered (unless the offering is
made on an underwritten basis, including on a best efforts
underwriting basis, in which event the managing underwriter or
underwriters shall determine the form to be used) and which form
shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution
thereof, and use its best efforts to cause such Registration
Statement to be come effective;
B. prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for a period
of not less than six months, or such shorter period which will
terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
C. notify the selling holders of Registrable Securities and
the managing underwriters, if any, promptly, and (if requested by
any such Person) confirm such advice in writing,
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment,
when the same has become effective;
<PAGE>
(ii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; and
(iii) of the receipt by the Corporation of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose.
D. make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
E. if requested by the managing underwriters or a holder of
Registrable Securities being sold, incorporate in a Prospectus
supplement or post-effective amendment such information as the
managing underwriters and the holders of a majority of the
Registrable Securities being sold and their respective counsel
reasonably conclude should be included in the Registration
Statement, so that such Registration Statement conforms in both
form and substance to the requirements of the Securities Act,
including without limitation with respect to the number of
Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
F. promptly prior to the filing of any document which is to
be incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement)
provide copies of such document to counsel to the selling holders
of Registrable Securities and to the managing underwriters, if any,
and make the Corporation's representatives available for discussion
of such document;
G. prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of
Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any
seller or underwriter reasonably requests in writing and do any and
all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the
Corporation shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or
to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
<PAGE>
H. cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any
sale of Registrable Securities to the underwriters;
I. upon the happening of any event which makes any statement
made in the Registration Statement, the Prospectus or any document
incorporated therein by reference untrue or which requires the
making of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order to make
the statements therein not misleading, prepare a supplement or
post-effective amendment to the Registration Statement or the
Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus
shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading;
J. cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Corporation are then listed
if requested by the holders of a majority of such Registrable
Securities or the managing underwriters, if any;
K. provide a transfer agent and registrar for all
Registrable Securities and a CUSIP number for all Registrable
Securities, in each case not later than the effective date of such
registration statement;
L. enter into such agreements (including an underwriting
agreement satisfactory to the Corporation, containing customary
representations, warranties and agreements) and take all such other
actions in connection therewith in order reasonably to expedite or
facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(i) make such representations and warranties to the
holders of such Registrable Securities and the underwriters,
if any, in such form, substance and scope as are customarily
made by issuers to underwriters in primary underwritten
offerings;
(ii) obtain opinions of counsel to the Corporation and
updates thereof (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority
<PAGE>
of the Registrable Securities being sold) addressed to the
underwriters, if any;
(iii) obtain "cold comfort" letters and updates thereof
from the Corporation's independent certified public
accountants addressed to the underwriters, if any, such
letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters to
underwriters in connection with primary underwritten
offerings; and
(iv) deliver such documents and certificates as may be
requested by the holders of a majority of the Registrable
Securities being sold and the managing underwriters, if any,
to evidence compliance with clause (i) of this Paragraph K and
with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Corporation.
The obligations under this Paragraph L above shall be performed at
each closing under such underwriting or similar agreement or as and
to the extent required thereunder.
M. make available for inspection by a representative of the
sellers of Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement, and any
attorney, accountant or other agent retained by the sellers or
underwriters, all financial and other records, pertinent corporate
documents of the Corporation, and cause the Corporation's officers,
directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney,
accountant or agent solely for use in connection with such
registration statement; provided, however, that any records,
information or documents that are designated by the Corporation in
writing as confidential shall be kept confidential by such Persons
pursuant to such reasonable confidentiality agreements as the
Corporation may request;
N. otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, earnings statements satisfying
the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of any twelve-month period (or 90 days,
if such period is a fiscal year): (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to
underwriters in an underwritten offering, or, if not sold to
underwriters in such an offering; and (ii) beginning with the first
month of the Corporation's first fiscal quarter commencing after
the effective date of the Registration Statement, which statements
shall cover said twelve-month periods.
<PAGE>
ARTICLE VI
REGISTRATION AND SELLING EXPENSES
For purposes of this Agreement, all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities (all such expenses being herein referred to as "Selling
Expenses"), and all expenses incident to the Corporation's
performance of or compliance with this Agreement, including without
limitation:
A. all registration and filing fees (including with respect
to filings required to be made with the National Association of
Securities Dealers, Inc.);
B. fees and expenses of compliance with securities or blue
sky laws (including fees and disbursements of counsel for the
underwriters in connection with domestic blue sky qualifications of
the Registrable Securities and determination of their eligibility
for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities
being sold may designate);
C. printing, messenger, telephone and delivery expenses;
D. fees and disbursements of counsel for the Corporation;
E. fees and disbursements of all independent certified
public accountants of the Corporation (including the expenses of
any "cold comfort" letters required by or incident to such
performance);
F. fees and expenses of other Persons retained by the
Corporation;
(all such expenses being herein called "Registration Expenses")
shall be borne as provided in this Agreement; it being understood
and agreed that the Corporation shall, in any event, pay its
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit conducted at
the end of the Corporation's fiscal year in the ordinary course of
business, and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities
exchange and securities association.
ARTICLE VII
INDEMNIFICATION
A. Indemnification by Corporation. The Corporation agrees to
indemnify, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees and
<PAGE>
agents and each Person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Corporation by such
holder expressly for use therein or by such holder's failure to
deliver a copy of the Registration Statement or Prospectus after
the Corporation has furnished such holder with a sufficient number
of copies of the same. The Corporation shall also indemnify
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of the Securities Act) to
the same extent as hereinabove provided with respect to the
indemnification of the holders of Registrable Securities.
B. Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a holder of
Registrable Securities is participating, each such holder will
furnish to the Corporation in writing such information and
affidavits as the Corporation reasonably requests for use in
connection with any Registration Statement or Prospectus and agrees
to indemnify, to the full extent permitted by law, the Corporation,
its directors and officers and each Person who controls the
Corporation (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from
any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary
Prospectus or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information or affidavit
so furnished in writing by such holder to the Corporation
specifically for inclusion in such Registration Statement or
Prospectus. In no event shall the liability of any selling holder
of Registrable Securities hereunder be greater in amount than the
dollar amount of the proceeds received by such holder upon the sale
of the Registrable Securities giving rise to such indemnification
obligation. The Corporation shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to
information so furnished in writing by such Persons specifically
for inclusion in any Prospectus or Registration Statement.
C. Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to
<PAGE>
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at
the expense of such Person unless (a) the indemnifying party has
agreed to pay such fees or expenses, or (b) the indemnifying party
shall have failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such Person, or (c) in the
reasonable judgment of any such Person and the indemnifying party,
based upon advice of their respective counsel, a conflict of
interest may exist between such Person and the indemnifying party
with respect to such claims (in which case, if the Person notifies
the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense
of such claim on behalf of such Person). If such defense is not
assumed by the indemnifying party, the indemnifying party shall not
be subject to any liability for any settlement made without its
consent (but such consent will not be unreasonably withheld). No
indemnifying party shall be required to consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in
respect to such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with
respect to such claim.
ARTICLE VIII
RULE 144
The Corporation covenants that it shall file the reports
required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC
thereunder, and it shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from time
to time, or (ii) any similar rule or regulation hereafter adopted
by the SEC. Upon the request of any holder of Registrable Secu-
rities, the Corporation shall deliver to such holder a written
statement as to whether it has complied with such information and
requirements.
<PAGE>
ARTICLE IX
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any underwritten registration
hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, representations and warranties,
underwriting agreements and other certificates and documents, and
provides such opinions of counsel, required under the terms of such
underwriting arrangements or otherwise deemed necessary or
appropriate by the Corporation or counsel to the Corporation.
ARTICLE X
MISCELLANEOUS
A. Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, shall be entitled
to specific performance of its rights under this Agreement. The
Corporation agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law
would be adequate.
B. Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally or sent by registered
or certified mail, postage prepaid, as follows:
(1) if to the Corporation:
372 Danbury Road
Wilton, Connecticut 06897
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West - Plaza Two
Saddle Brook, New Jersey 07662
(2) if to any Stockholders, at its address set forth on
Schedule 1.
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt.
<PAGE>
C. Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement of the parties
hereto with respect to the transactions contemplated hereby, and
supersede all prior understandings, arrangements, and agreements
with respect to the subject matter hereof. No modification hereof
shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
D. Further Action. Each of the parties hereto shall use such
party's best efforts to take such actions as may be necessary or
reasonably requested by the other party hereto to carry out and
consummate the transactions contemplated by this Agreement.
E. Successors and Assigns. The registration rights granted
to the Stockholders under Article III may be transferred to a
transferee who acquires any Shares, which transfer shall be
effective when the Corporation is given written notice by the
transferor at the time of such transfer stating the name and
address of the transferee and identifying the securities with
respect to which the rights under Article III are being assigned.
F. Notice of Shares. All references herein to numbers of
shares of Registrable Securities shall be subject to appropriate
adjustment for stock splits, stock dividends and recapitalizations
of the Corporation.
G. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable in the case of agreements made and to be performed
entirely within such State.
H. Captions. The captions appearing herein are for the
convenience of the parties only and shall not be construed to
affect the meaning of the provisions of this Agreement.
I. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/William B. Fischer
-----------------------------------
STOCKHOLDERS:
By: ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a Delaware
corporation, as Attorney-in-Fact for
the Stockholders named in Schedule 1
annexed hereto
By s/William B. Fischer
-----------------------------------
<PAGE>
<PAGE>
SCHEDULE 1
Names and Address
- -----------------
Garfinkle Limited Partnership II
133 East 62nd Street
New York, NY 10021
Bruce F. Failing, Jr.
237 Round Hill Road
Greenwich, CT 06831
Donald E. Zilkha
993 Fifth Avenue
Apartment 8
New York, NY 10028
Selim K. Zilkha Trust
750 Lausanne Road
Los Angeles, CA 90077
Joseph M. Schell
3983 Happy Valley Road
Lafayette, CA 94549
EXHIBIT 5(h)
CONTACT: Bruce F. Failing, Jr.
President & CEO
Electronic Retailing Systems
International, Inc.
203-761-7900
FOR IMMEDIATE RELEASE
Wilton, Connecticut - July 8, 1996 - Electronic Retailing
Systems International, Inc. (NASDAQ:ERSI) (the "Company") announced
today that subscriptions to an aggregate of 4,963,500 shares of its
common stock, $.01 par value (the "Common Stock"), had been made by
investors outside the United States pursuant to a public offering
of such shares made in accordance with Regulation S under the
Securities Act of 1933. The Company has also entered into
agreements with subscribers, including certain members of the
Company's Board of Directors and their affiliates, to place an
additional 911,657 shares of Common Stock concurrently with the
closing of the offshore offering, which is expected in the second
week of July. The net proceeds from these transactions will be used
as working capital for general corporate purposes.
The Company has entered into additional agreements under
which, immediately prior to closing, holders of the Company's
outstanding Series A Cumulative, Convertible Preferred Stock, $1.00
par value, will convert their shares, in accordance with their
terms, into an aggregate of 3,138,900 shares of Common Stock.
The securities to be offered by the Company pursuant to
Regulation S have not been and will not be registered under the
Securities Act of 1933 and may not be offered or sold in the United
States, or to or for the account or benefit of any U.S. person,
except pursuant to an exemption from the registration requirements
of the Securities Act.
corp\ers\press.r\7-8.96
Exhibit 5(i)
Contact: Bruce F. Failing, Jr.
President & CEO
Electronic Retailing Systems International, Inc.
(203) 761-7900
Wilton, Connecticut--July 11, 1996--Electronic Retailing
Systems International, Inc. (NASDAQ:ERSI) (the "Company") announced
today the completion of its offshore public offering of an
aggregate of 4,963,500 shares of its common stock, $.01 par value
(the "Common Stock"), made in accordance with Regulation S under
the Securities Act of 1933, and a contemporaneous private placement
with subscribers, including certain members of the Company's Board
of Directors and their affiliates, with respect to an additional
911,657 shares of Common Stock. In connection with closing,
holders of the Company's Series A Cumulative, Convertible Preferred
Stock, $1.00 par value, converted their shares, in accordance with
their terms, into an aggregate of 3,138,900 shares Common Stock.
The net proceeds from these transactions, in the aggregate amount
of approximately $12.0 million, will be used as working capital for
general corporate purposes.
The securities offered by the Company pursuant to Regulation
S have not been and will not be registered under the Securities Act
of 1933 and may not be offered or sold in the United States, or to
or for the account or benefit of any U.S. person, except pursuant
to an exemption from the registration requirements of said Act.
