AGREEMENT
This Agreement (this "Agreement") is entered into as of the 18th day of
August, 1997, by and among APTEL Ltd., an Israeli company (the "Company"),
D.S.P. Semiconductors Ltd., an Israeli company ("DSP"), and the persons and
entities whose names and addresses appear on Exhibit A and who are signatories
hereto (collectively, the "Existing Shareholders").
WHEREAS, the parties have entered into that certain Share Purchase and
Shareholders Agreement dated July 4, 1996 (the "Original Agreement"), under
which, inter alia, DSP invested US$2,000,000 in the Company pursuant to the
terms and conditions set forth therein; and
WHEREAS, the Company requires additional funding, and consequently the
Company's Board of Directors resolved on June 24, 1997, to propose a rights
offering (the "Rights Offering") under which the shareholders of the Company
were invited to purchase for up to US$500,000 of convertible debentures of the
Company, based on a conversion price of US$1.247 per one Ordinary Share par
value NIS 0.05 (the "Price Per Share"); and
WHEREAS, after the resignation of the two directors appointed by DSP from
the Company's Board of Directors due to DSP's refocus on other businesses, DSP
indicated that it will not participate in the Rights Offering; and
WHEREAS, certain other shareholders of the Company have agreed, upon the
terms and conditions set forth hereof, to purchase debentures in the Rights
Offering for more of their proportional share in the Company's outstanding share
capital, so that the Company shall receive the full amount of its required
financing; and
WHEREAS, in light of such willingness on the part of such shareholders, and
in light of the changes in the Company's Board of Directors and DSP's revised
position, the parties have agreed upon certain amendments to the Original
Agreement and to the Company's Articles of Association, as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, and intending to be legally bound hereby, the parties agree as
follows:
1. Purchase of Convertible Debentures
Dovrat Xxxxx/Yozma Polaris Fund L.P., Dovrat Xxxxx & Co. Ltd., Leader
Underwriters Ltd., Adasha Yizum Proyektim (Tel-Aviv) Ltd. and El Kanit
Development Ltd. (the "Principal Shareholders") shall, upon execution of this
Agreement, commit to purchase the entire amount of convertible debentures
proposed in the Rights Offering not purchased by other shareholders, to be
allocated pro rata among them or as otherwise they shall inform the Company in
writing.
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2. Amendment of Original Agreement
Sections 10.1, 10.2, 10.4, 10.6, 10.9 (solely in respect of first refusal
rights governed by Section 4 of Exhibit 10.9 to the Agreement, but not including
co-sale rights governed by the other Sections of Exhibit 10.9), 10.10, 10.11 and
10.12 of the Original Agreement are hereby terminated in their entirety. In
addition, the parties agree that in respect of the Existing Shareholders Right
of Co-Sale governed by Section 3 of Exhibit 10.9 to the Agreement, the term
"Existing Shareholders Co-Sale Pro Rata Percentage" defined therein shall be
amended to mean from the date hereof one fourth (25%) of the "Transaction
Shares", as defined therein.
3. Termination of Option and Additional Option; Termination of Escrow
Agreement; Amendment of Employee Stock Option Plans
Upon the conversion into equity of the Company of all convertible
debentures purchased by the Principal Shareholders pursuant to the Rights
Offering, whether voluntarily or automatically as set forth in such debentures:
3.1. Sections 8 and 9 of the Original Agreement, granting DSP the "Option"
and the "Additional Option", as such terms are defined therein, shall
be immediately terminated, with no further action of any of the
parties required, and shall have no further force or effect.
3.2. The Escrow Agreement dated August 6, 1996 (the "Escrow Agreement"),
among certain shareholders of the Company and X. Xxxxxxx & Co.
Trustees Ltd. (the "Escrow Agent") shall be immediately terminated,
and the Escrow Agent is irrevocably instructed by the parties hereto
to release immediately upon such termination all Ordinary Shares of
the Company held by it in escrow (the "Escrowed Shares") to the
beneficial owners thereof (the "Beneficial Owners"), as follows:
3.2.1. To Dovrat Xxxxx/Yozma Polaris Fund L.P. - 574,520 Ordinary
Shares;
3.2.2. To Dovrat Xxxxx & Co. Ltd. - 69,520 Ordinary Shares;
3.2.3. To Leader Underwriters Ltd. - 67,480 Ordinary Shares;
3.2.4. To Adasha Yizum Proyektim (Tel-Aviv) Ltd. - 140,100 Ordinary
Shares;
3.2.5. To El-Kanit Development Ltd. - 30,160 Ordinary Shares;
3.2.6. To Ofer Bar-Or - 8,760 Ordinary Shares;
3.2.7. To Xxxxxxxx Xxxxx - 3,860 Ordinary Shares.
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Upon such transfer by the Escrow Agent, all proxies granted by the Escrow
Agent to the Beneficial Owners in respect of the Escrowed Shares shall
immediately expire and be of no further force or effect.
The parties acknowledge that the Company has approved such transfer of the
Escrowed Shares to the Beneficial Owners and shall register the Beneficial
Owners as the holders of the Escrowed Shares in its books.
3.3. Upon the termination of the Option and Additional Option, as set forth
in Section 3.1 above, the Company's Board of Directors shall amend the
terms and conditions of the Company's 1996 Employee Stock Option Plan,
adopted by the Board of Directors on July 1, 1996, and of the
Company's 1996 (no. 2) Employee Stock Option Plan, adopted by the
Board of Directors on August 6, 1996, by deleting Section 11.3 of such
Employee Stock Option Plans, and amending accordingly all Grantee
Agreements executed by the Company and its employees pursuant thereto.
4. DSP's Required Consent for Certain Further Financings
Notwithstanding anything to the contrary herein, the parties agree that,
until the Company shall raise, in the aggregate, US$2 million dollars (including
through the conversion of the convertible debentures purchased in the Rights
Offering), at an applicable price per share not lower than the Price Per Share
(to be measured also in light of the other monetary terms of such financing
(e.g., the type of security purchased, options included, etc.) and as adjusted
for any changes in the capitalization of the Company) (the "Release Event"), the
Company shall not raise additional funds through the issuance of any equity
securities, or securities exercisable into or convertible to equity securities,
at a price per share which is lower than the Price Per Share unless the Company
has obtained DSP's prior written consent to the same. Any breach of this
Section 5 is deemed to be a fundamental breach.
DSP agrees that, upon the occurrence of the Release Event, the Company
shall be entitled to convene a general meeting of the shareholders and to
propose the amendment of the Company's Articles of Association by deleting the
addition to Article 84 adopted hereunder (as set forth in paragraph 5.3 below)
from the Articles, and that it will vote all its shares for such a proposal.
DSP irrevocably appoints Xx. Xxxx Xxxxxx as its proxy, to vote, upon the
occurrence of a Release Event, all of its shares in the Company for such an
amendment to the Company's Articles of Association.
5. Amendments of Corporate Documents
The parties agree to amend the Company's Articles of Association as set
forth below, and irrevocably appoint Xx. Xxxx Xxxxxx as their proxy to vote for
such amendments in the extraordinary general meeting of the shareholders
convened for the purposes of approving such amendment:
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5.1. In Article 61 of the Articles of Association, after the word
"participating votes" in the 12th line there shall come a period, and
the remainder of the Section, beginning with the words ". . .
provided, however, that until . . ." shall be deleted.
5.2. In Article 74 of the Articles of Association, the words ". . . and any
required consent pursuant to Section 61 has been received, . . ."
shall be deleted.
5.3. In Article 84, at its end, the following shall be added:
"Notwithstanding the aforesaid, until the Company shall raise, in
the aggregate, US$2 million dollars from the date this paragraph
is adopted, at an applicable price per share not lower than
US$1.247 (to be measured also in light of the other monetary
terms of such financing (e.g., the type of security purchased,
options included, etc.), and as adjusted for any changes in the
capitalization of the Company), the Company shall not raise
additional funds through the issuance of any equity securities,
or securities exercisable into or convertible to equity
securities, at a price per share which is lower than the
aforesaid price unless the Company has obtained the prior written
consent of DSP Semiconductors Ltd. to the same."
5.4. In Article 92 of the Articles of Association, after the words "decided
by a majority vote" in the 2nd line there shall come a period, and the
remainder of the Section, beginning with the words ". . . provided,
however . . ." shall be deleted.
6. Survival
Other than as amended specifically and expressly herein, the Original
Agreement shall continue in full force and effect pursuant to its terms and
conditions.
7. Mutual Release
Each of the parties hereto confirms that it has no claims, demands, suits,
actions or other rights whatsoever against the other parties hereto in
connection with or related to the Original Agreement, the Company's business or
affairs to date or the provisions set forth above (except in connection with the
enforcement of this Agreement), and that it waives and relinquishes any such
claims, demands, suits, actions or other rights whatsoever which they have or
may have.
8. Approval by Board and Shareholders
This Agreement is subject to the approval of the Board of Directors and of
the shareholders of the Company. The parties undertake to vote their shares in
the Company
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to approve this Agreement and will otherwise make their best efforts to have the
agreement approved.
IN WITNESS WHEREOF the parties have signed this Agreement as of the date
first herein above set forth.
/s/ Xxxxxxxx Xxxxx /s/ Avi Basher
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APTEL Ltd. D.S.P. Semiconductors Ltd.
By: Xxxxxxxx Xxxxx, CEO By: Avi Basher, CFO
---------------------------
WE AGREE:
/s/ Xxxx Xxxxxx
------------------------------
DSP Group, Inc.
By: Xxxx Xxxxxx, Chairman
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EXHIBIT A
Dovrat Xxxxx/Yozma Polaris Fund L.P.
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Dovrat Xxxxx & Co. Ltd.
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Leader Underwriters Ltd.
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Adasha Yizum Proyektim (Tel-Aviv) Ltd.
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El Kanit Development Ltd.
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Xxxxxxxx Xxxxx
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Ofer Bar Or
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