SHARE PURCHASE AND SHAREHOLDERS AGREEMENT
(The following are exhibits to the Share Purchase and Shareholders Agreement
that have not been filed previously, except for Exhibits 10.11 and 10.12
which represent an amended request for confidential treatment.)
OFFICERS' CERTIFICATE
OCTOBER 30, 1996
--------------------------
The undersigned, Avi Basher, hereby certifies as follows:
(a) I am the duly elected, qualified, acting and incumbent Vice
President of Finance and Chief Financial Officer of DSP Group, Inc. (the
"Company").
(b) Attached hereto are English translation summaries of Exhibits
4.2, 4.3, 4.4, 4.6, 4.10, 4.12, 4.15, 4.16, 4.17, 4.18, 4.19, 4.23, 7.1 and 7.2
(the "Exhibits") to the Share Purchase and Shareholders Agreement, dated as of
July 4, 1996, by and among Aptel Ltd., certain shareholders and DSP
Semiconductors, Ltd.
(c) To my knowledge, such summaries are fair and accurate
translations as required under Rule 306 of Regulation S-T promulgated by the
Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
on behalf of the Company as of the date first written above.
DSP GROUP, INC.
/s/ Avi Basher
-----------------------------------------
Avi Basher, Vice President of
Finance and Chief Financial Officer
EXHIBIT 3.2.2.2
Resolution of Board: Issuance of Shares
Unanimously resolved:
Under the Share Purchase and Shareholders Agreement between the Company
and DSP Semiconductors Ltd., to issue to the buyer 691,300 Ordinary Shares of
the Company and to register the buyer in the Registry of the Company.
EXHIBIT 4.2
INCORPORATION CERTIFICATE MEMORANDUM
&
ARTICLES OF INCORPORATION
1. Certificate of Registration of a Private Company (from the Registrar
of Companies):
Name of Company: Giltek Communication Works Ltd.
Incorporated and Approved as a Company of Limited Liability, on
October 24, 1993.
Company Number: 00-000000-0
2. Memorandum of Association: dated October 21, 1993
NAME OF THE COMPANY: Giltek Communication Works Ltd.
OBJECTS OF THE COMPANY:
(A) To manage a business of development, production, marketing
and running communications systems and communications services.
(B) To perform the actions necessary to the attainment of the
goals set forth, implicitly or explicitly, in this memorandum;
and to use all authority and power to attain these goals.
(C) To perform any action permitted to a company under the
Companies Ordinance (NV) 1983 and under any other law.
LIABILITY OF MEMBERS: Limited
SHARES CAPITAL: 20,000 NIS divided into 20,000 Ordinary Shares of 1
NIS par value each.
SIGNATORIES' NAMES AND ADDRESSES:
(i) AV-DAR TRUSTEES (Ramat-Gan 1992) Ltd.
# 00-000000-0
of 0 Xxx Xxxxxx Xxxx, Xxxxx Xxx, Xxxxxx
(ii) XXXXXX XXXXXX, ADV.
ID. No. 5122293
of 0 Xxx Xxxxxx Xxxx, Xxxxx Xxx, Xxxxxx
1
EXHIBIT 4.3
SPECIAL RESOLUTIONS
# DATE DESCRIPTION MATTER
--------------------------------------------------------------------------------
1 February 20, 1994 General Assembly Minutes Changing the Company name
from Giltek Communication
Works Ltd. to Aptel Ltd.;
changing the objects
clause in the memorandum
of association.
--------------------------------------------------------------------------------
2 April 13, 1994 Confirmation from the Changing the Company
Registrar of Companies + name.
certificate
--------------------------------------------------------------------------------
3 April 18, 1994 Confirmation from the No motions to dismiss
Company the resolution dated
Feb. 20, 1994 had been
filed.
--------------------------------------------------------------------------------
4 April 17, 1994 General Assembly Minutes Redistribution of share
capital (Ordinary shares
A, B, redeemable shares.)
Amendment of the Articles
of Association
--------------------------------------------------------------------------------
5 July 20, 1994 Confirmation by the Changing the objects of
Registrar of Companies + the Company.
certificate
--------------------------------------------------------------------------------
6 August 3, 1994 Confirmation by the Redistribution of share
Registrar of Companies capital, Amendment of the
Articles of Association.
--------------------------------------------------------------------------------
7 January 22, 1995 General Assembly Minutes Increase of capital:
1,000 additional ordinary
shares B
--------------------------------------------------------------------------------
8 July 27, 1995 Request for Extension of Notice of increase in
time capital to the Registrar
of Companies
--------------------------------------------------------------------------------
9 July 27, 1995 Form Increase in capital
--------------------------------------------------------------------------------
10 August 4, 1995 Confirmation by the Increase in capital
Registrar of Companies
--------------------------------------------------------------------------------
11 September 17, 1995 Special Resolution of the Conversion of diverse
September 28, 1995 General Assembly shares into ordinary
shares.
Increase in capital:
21,983 additional
ordinary shares, 7,500
ordinary shares A.
Amendment to the Articles
of Association
--------------------------------------------------------------------------------
12 September 28, 1995 Request from the Registrar Original documents of
of Companies the resolution dated
Sept. 17, 1995
--------------------------------------------------------------------------------
13 October 5, 1995 Confirmation by the Registration of special
Registrar of Companies resolution dated
August 28, 1995
(Amendment to Articles of
Association),
Request for Annual
Reports for 1993-1994
--------------------------------------------------------------------------------
14 September 19, 1995 Confirmation by the Registration of special
Registrar of Companies resolution dated
August 28, 1995 (increase
in capital)
--------------------------------------------------------------------------------
2
--------------------------------------------------------------------------------
15 September 17, 1995 Form Increase in capital
--------------------------------------------------------------------------------
16 September 27, 1995 Letter Power of Attorney
--------------------------------------------------------------------------------
17 May 30, 1996 Minutes of General Assembly Increase in registered
capital of the Company:
85,000 additional
ordinary shares, 15,000
additional ordinary
shares A.
Amendments to Articles of
Association and to
Memorandum: Ordinary
Shares A will confer the
same rights as all
Ordinary Shares, except
participation/voting in
the General Assembly.
Ordinary Shares A to be
converted to Ordinary
Shares concurrently with
IPO.
Cancellation of First
Refusal Rights in
transferal of Company
shares.
--------------------------------------------------------------------------------
17 June 2, 1996 Notice by BOD Special Resolutions dated
May 30, 1996
--------------------------------------------------------------------------------
18 June 2, 1996 Form Increase in capital
--------------------------------------------------------------------------------
19 June 9, 1996 Confirmation by Registrar of Amendments to Articles
Companies of Association dated
May 30, 1996
--------------------------------------------------------------------------------
20 June 9, 1996 Confirmation by Registrar of Companies Amendments to
Memorandum dated
May 30, 1996
--------------------------------------------------------------------------------
21 June 5, 1996 Confirmation by Registrar Increase in capital
of Companies
--------------------------------------------------------------------------------
3
EXHIBIT 4.4
APTEL LTD.
PRIVATE COMPANY NO. 00-000000-0
Minutes of the Meeting of the Board of Directors of the
Company duly convened and held on ___________
PRESENT: All Directors
AGENDA: Adoption of an Employee Stock Option Plan and Grant of Options
thereunder
CHAIRMAN OF THE MEETING: Xxxx Xxxxxx
THE FOLLOWING RESOLUTION WAS ADOPTED UNANIMOUSLY BY THE BOARD OF DIRECTORS:
RESOLVED, the Board of Directors resolved in March 1995 to adopt an Employee
Stock Option Plan; because of technical reasons such resolution was not
implemented to date. In addition, in August 1995 certain promises were made to
employees of the Company in connection with such options. In order to implement
such resolution, and fulfill such promises, the Board hereby resolves to adopt
the 1996 Employee Stock Option Plan in the form attached hereto as Exhibit A
(the "Plan"); and
FURTHER RESOLVED, to grant the employees whose names are set forth in Exhibit B
hereto such number of Options under the Plan set forth opposite their names; all
the Options shall vest with immediate effect on the Date of Grant, upon receipt
of the Grantees' (other than Xxxxxxxx Xxxxx and Xxxx Bar-Or) commitment to
continue their employment with the Company for at least one year from the Date
of Grant; the exercise price of all such Options shall be 50 US cents (based on
the representative rate of exchange). Such grant is subject to the terms and
conditions of the Plan, including the receipt of the approval of the Israeli tax
authorities thereto; and
FURTHER RESOLVED, that the Company shall reserve 6,222 Class A Ordinary Shares
par value NIS 1 each for issuance to employees pursuant to the Plan; and
FURTHER RESOLVED, that Xxxx Xxxxxx and Xxxx Xxxxxx are authorized to and
shall take all necessary actions on behalf of the Company for the
implementation of the Plan, including the appointment of a Trustee under the
Plan, filing an application for the approval of the Plan by the tax
authorities, giving the employees whose names are set forth in Exhibit B
hereto Notice of Grant (only after all required approvals for the Plan have
been obtained) and receiving therefrom the executed Grantee Agreements. The
Date of Grant for purposes hereof shall be the date on which the last Grantee
Agreement is executed by all of the aforesaid employees.
_______________
Xxxx Xxxxxx
EXHIBIT B
NAME OF EMPLOYEE TOTAL IMMEDIATE
NUMBER OF VESTING ON
OPTIONS THE DATE OF
GRANT
_____________________________________________________________
Xxxxxxxx Xxxxx 3,436 3,436
Ofer Bar Or 2,154 2,154
Xxx Xxxxx 158 158
Xxxx Xxxxxx 158 158
Xxxxxx Xxxxxx 158 158
Xxxxx Xxxxx 158 158
_____________________________________________________________
TOTAL 6,222 6,222
EXHIBIT A
APTEL LTD.
1996 EMPLOYEE STOCK OPTION PLAN
A. NAME AND PURPOSE
1. NAME: This plan, as amended from time to time, shall be known as the
"Aptel 1996 Employee Stock Option Plan" (the "PLAN").
2. PURPOSE: The purpose and intent of the Plan is to provide incentives to
employees of APTEL LTD. (the "COMPANY") by providing them with
opportunities to purchase Class A Ordinary Shares, nominal value 0.05 New
Israeli Shekels each (the "SHARES"), of the Company, pursuant to a plan
approved by the Board of Directors of the Company which is designed to
benefit from, and is made pursuant to, the provisions of Section 102 of the
Israeli Income Tax Ordinance [New Version], 1961, and the rules and
regulations promulgated thereunder.
B. GENERAL TERMS AND CONDITIONS OF THE PLAN
3. ADMINISTRATION:
3.1 The Plan will be administered by the Board of Directors of the Company
(the "BOARD") or by a committee appointed by the Board (the
"COMMITTEE"), which, if appointed, will consist of such number of
Directors of the Company as may be fixed, from time to time, by the
Board. If a Committee is not appointed, the term Committee, whenever
used herein, shall mean the Board. The Board shall appoint the members
of the Committee, may from time to time remove members from, or add
members to, the Committee and shall fill vacancies in the Committee
however caused.
3.2 The Committee shall select one of its members as its Chairman and
shall hold its meetings at such times and places as it shall
determine. Actions taken by a majority of the members of the
Committee, at a meeting at which a majority of its members is
present, or acts reduced to or approved in writing by all members
of the Committee, shall be the valid acts of the Committee. The
Committee may appoint a Secretary, who shall keep records of its
meetings and shall make such rules and regulations for the conduct
of its business as it shall deem advisable.
3.3 Subject to the general terms and conditions of this Plan, the
Committee shall have the full authority in its discretion, from time
to time and at any time, to determine (i) the persons ("GRANTEES") to
whom options to purchase Shares ("OPTION(S)") shall be granted, (ii)
the number of Shares to be covered by each Option, (iii) the time or
times at which the same shall be granted, (iv) the price, schedule and
conditions on which such Options may be exercised and on which such
Shares shall be paid for, and/or (v) any other matter which is
necessary or desirable for, or incidental to, the administration of
the Plan. In determining the number of Shares covered by the Option to
be granted to each Grantee, the Committee may consider, among other
things, the Grantee's salary and the duration of the Grantee's
employment by the Company.
3.4 The Committee may, from time to time, adopt such rules and regulations
for carrying out the Plan as it may deem necessary. No member of the
Board or of the Committee shall be liable for any act or determination
made in good faith with respect to the Plan or any Option granted
thereunder.
3.5 The interpretation and construction by the Committee of any provision
of the Plan or of any Option thereunder shall be final and conclusive
unless otherwise determined by the Board.
4. ELIGIBLE GRANTEES: The Committee, at its discretion, may grant Options
to any employee of the Company (including Directors who are employees of
the Company). Anything in this Plan to the contrary notwithstanding, all
grants of Options to Directors and Office Holders --"Nosei Misra" -- as
such term is defined in the Israeli Companies Ordinance (New Version),
1983, as amended from time to time (the "COMPANIES ORDINANCE") -- shall
be authorized and implemented only in accordance with the provisions of
the Companies Ordinance. The grant of an Option to a Grantee hereunder,
shall neither entitle such Grantee to participate, nor disqualify him
from participating, in any other grant of options pursuant to this Plan
or any other stock option plan of the Company.
5. GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST; DIVIDEND AND VOTING
RIGHTS:
5.1 GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST.
5.1.1 Subject to Section 7. 1 hereof, the effective date of the grant of an
Option (the "DATE OF GRANT") shall be the date specified by the
Committee in its determination relating to the award of such Option.
The Committee shall promptly give the Grantee written notice (the
"NOTICE OF GRANT") of the grant of an Option.
5.1.2 Anything herein to the contrary notwithstanding, all Options granted
under the Plan shall be granted by the Company to a trustee designated
by the Board and approved by the Israeli Commissioner of Income Tax
(the "TRUSTEE"), and the Trustee shall hold each such Option and the
Shares issued upon exercise thereof in trust (the "TRUST") for the
benefit of the Grantee in respect of whom such Option was granted (the
"BENEFICIAL GRANTEE"). All certificates representing Shares issued to
the Trustee under the Plan shall be deposited with the Trustee, and
shall be held by the Trustee until such time that such Shares are
released from the Trust as herein provided.
5.1.3 Anything herein to the contrary notwithstanding, no Options or Shares
shall be released from the Trust until the later of (i) two (2) years
after the Date of Grant, and (ii) the vesting of such Shares pursuant
to Section 7.3 hereof (such later date being hereinafter referred to
as the "RELEASE DATE").
5.1.4 Subject to the terms hereof, at any time after the Release Date with
respect to any Options or Shares the following shall apply:
5.1.4.1 Options granted, and/or Shares issued to the Trustee shall
continue to be held by the Trustee, on behalf of the
Beneficial Grantee. From and after the Release Date, upon the
written request of any Beneficial Grantee, the Trustee shall
release from the Trust the Options granted, and/or the Shares
issued, on behalf of such Beneficial Grantee, by executing and
delivering to the Company such instrument(s) as the Company
may require, giving due notice of such release to such
Beneficial Grantee, provided, however, that the Trustee shall
not so release any such Options and/or Shares to such
Beneficial Grantee unless the latter, prior to, or
concurrently with, such release, provides the Trustee with
evidence, satisfactory in form and substance to the Trustee,
that all taxes, if any, required to be paid upon such release
have, in fact, been paid.
5.1.4.2 Alternatively, from and after the Release Date, upon the
written instructions of the Beneficial Grantee to
sell any Shares issued upon exercise of Options, the Trustee
shall use its best efforts to effect such sale and shall
transfer such Shares to the purchaser thereof concurrently
with the receipt, or after having made suitable arrangements
to secure the payment of the proceeds, of the purchase price
in such transaction. The Trustee shall withhold from such
proceeds any and all taxes required to be paid in respect of
such sale, shall remit the amount so withheld to the
appropriate tax authorities and shall pay the balance thereof
directly to the Beneficial Grantee, reporting to such
Beneficial Grantee and to the Company the amount so withheld
and paid to said tax authorities.
5.2 DIVIDEND AND VOTING RIGHTS. The Class A Ordinary Shares issued upon
the exercise of Options granted under this Plan are entitled to the
same rights and privileges of the holders of the Ordinary Shares,
except that:
5.2.1 such Class A Ordinary Shares shall not have any rights to be
invited to, or participate in, the Company's general meetings
or to vote therein; and
5.2.2 such Class A Ordinary Shares shall be entitled to share
equally, on a per share basis, in such dividends as may be
declared by the Board of Directors of the Company only after
the holder of each Ordinary Share shall have been paid
dividends in an amount equal to twenty (15) US cents (0.15 US
dollars) in respect of such Share in each year in which
dividends were so declared; and
5.2.3 upon liquidation or dissolution of the Company, such Class A
Ordinary Shares shall be entitled to share equally, on a per
share basis, in the assets of the Company legally available
for distribution to shareholders, as set forth in the
Company's Articles of Association, only after the holder of
each Ordinary Share received such assets in an amount equal
to, in aggregate, two US dollars and 89 cents ($2.89), in
addition to any and all accumulated declared but unpaid
dividends, in respect of such Share;
provided, however, that upon closing of the Company's initial public
offering of its securities in Israel or abroad ("IPO") such Shares
shall automatically convert to Ordinary Shares of the Company.
For so long as Shares issued to the Trustee on behalf of a Beneficial
Grantee are held in the Trust, any dividends or asset distributions
paid or distributed with respect thereto shall be remitted to the
Trustee for the benefit of such Beneficial Grantee.
6. RESERVED SHARES: The number of authorized but unissued Shares for purposes
of the Plan shall be determined, from time to time, by the Board, and shall
be subject to adjustments as provided in Section 11 hereof. All Shares
under the Plan, in respect of which the right hereunder of a Grantee to
purchase the same shall, for any reason, terminate, expire or otherwise
cease to exist, shall again be available for grant through Options under
the Plan.
7. GRANT OF OPTIONS:
7.1 The Committee in its discretion may award to Grantees Options to
purchase Shares in the Company available under the Plan. Options may
be granted at any time after the passage of thirty (30) days following
the delivery by the Company to the appropriate income tax authorities
of a notice pertaining to the appointment of the Trustee and the
adoption of the Plan.
7.2 The Notice of Grant shall state, inter alia, the number of Shares
covered thereby, the dates when the Option may be exercised, the
exercise price, and such other terms and conditions as the Committee
at its discretion may prescribe, provided that they are consistent
with this Plan.
7.3 Without derogating from the rights and powers of the Committee under
Section 7.2 hereof, unless otherwise specified in the Notice of Grant
each Option under the Plan shall be for a term of eight (8) years, and
the schedule pursuant to which such Options shall vest, and the
Beneficial Grantee thereof shall be entitled to pay for, and acquire,
the Shares, shall be such that a third (1/3) of such Options shall
vest on each of the first, second and third anniversaries of the Date
of Grant.
7.4 Each Option granted hereunder shall be evidenced by a Grantee
Agreement, to be entered into by and between the Company and such
Grantee, in the form attached hereto as EXHIBIT A or in such other
form and substance as may be approved by the Committee from time to
time, which shall incorporate the provisions of this Plan. In the
event of any conflict between the terms and conditions of a Grantee
Agreement and the terms hereof, the terms hereof shall control.
8. EXERCISE PRICE: The exercise price per Share covered by each Option shall
be determined by the Committee in its sole and absolute discretion;
provided, however, that such exercise price shall not be less than the
nominal value of the Shares into which such Option is exercisable.
9. EXERCISE OF OPTIONS:
9.1 Options shall be exercisable pursuant to the terms under which they
were awarded and subject to the terms and conditions of the Plan.
9.2 The exercise of an Option shall be made by a written notice of
exercise (the "NOTICE OF EXERCISE") delivered by the Beneficial
Grantee (or, with respect to Options held in the Trust, by the Trustee
upon receipt of written instructions from the Beneficial Grantee) to
the Company at its principal executive office, specifying the number
of Shares to be purchased and accompanied by the payment therefor, and
containing such other terms and conditions as the Committee shall
prescribe from time to time.
9.3 Anything herein to the contrary notwithstanding, but without
derogating from the provisions of Section 10 hereof, if any Option has
not been exercised and the Shares covered thereby not paid for within
eight (8) years after the Date of Grant (or any shorter period set
forth in the Notice of Grant), such Option and the right to acquire
such Shares shall terminate, all interests and rights of the Grantee
in and to the same shall ipso facto expire, and, in the event that in
connection therewith any Options are still held in the Trust as
aforesaid, the Trust with respect thereto shall ipso facto expire and
the Trustee shall thereafter hold such Options in an unallocated pool
until instructed by the Company that some or all of such Options are
again to be held in trust for one or more Grantees.
9.4 Each payment for Shares shall be in respect of a whole number of
Shares, and shall be effected in cash or by a cashier's check payable
to the order of the Company, or such other method of payment
acceptable to the Company.
10. TERMINATION OF EMPLOYMENT:
10.1 In the event that a Grantee ceases, for any reason, to be employed by
the Company, all Options theretofore granted to such Grantee shall
terminate as follows:
(a) If the Grantee's termination of employment is due to such Grantee's
death or "Disability" (as hereinafter defined), such Options (to the
extent exercisable at the time of the Grantee's termination of
employment) shall be exercisable by the Grantee's legal
representative, estate of other person to whom the Grantee's rights
are transferred by will or by laws of descent or distribution for a
period of six (6) months following such termination of employment (but
in no event after the expiration date of such Option), and shall
thereafter terminate. For purposes hereof, "DISABILITY" shall mean the
inability, due to illness or injury, to engage in any gainful
occupation for which the individual is suited by education, training
or experience, which condition continues for at least six (6)
months.
(b) If the Grantee's termination of employment is for any other reason,
such Options (to the extent exercisable at the time of the Grantee's
termination of employment) shall be exercisable for a period of sixty
(60) days following such termination of employment, and shall
thereafter terminate; PROVIDED, HOWEVER, that if the Grantee dies
within such sixty-day period, such Options (to the extent exercisable
at the time of the Grantee's termination of employment) shall be
exercisable by the Grantee's legal representative, estate or other
person to whom the Grantee's rights are transferred by will or by laws
of descent or distribution for a period of six (6) months following
the Grantee's death (but in no event after the expiration date of such
Option), and shall thereafter terminate, and, PROVIDED FURTHER, that
in the event the employment of a Grantee is terminated by the Company
for "cause", as defined hereafter, such Grantee shall not be entitled
to exercise any such Options subsequent to the time of delivery of the
notice of discharge. For purposes of this Section, "CAUSE" shall
include the commitment of a serious breach of trust, including, but
not limited to, theft, embezzlement or self-dealing; the prohibited
disclosure to unauthorized persons or entities of confidential or
proprietary information of or relating to the Company; the engaging by
Grantee in any prohibited business competitive to the business of the
Company and/or its affiliates; or the failure to perform any of his or
her material duties and obligations as an employee of the Company as a
result of gross negligence or willful misconduct.
10.2. Notwithstanding the foregoing provisions of Section 10.1, the
Committee may provide, either at the time an Option is granted or
thereafter, that such Option may be exercised after the periods
provided for in Section 10.1, but in no event beyond the term of the
Option.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR CHANGE IN CONTROL:
11.1 Subject to any required action by the shareholders of the Company,
the number of Shares covered by each outstanding Option, and the
number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Shares covered by each
such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from
a stock split, reverse stock split, stock dividend, combination or
reclassification of the Shares or the payment of a stock dividend
(bonus shares) with respect to the Shares or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; PROVIDED, HOWEVER, that conversion of
any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such
adjustment shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares
subject to an Option.
11.2 In the event of the proposed dissolution or liquidation of the
Company, the Committee shall notify each Grantee at lease fifteen (15)
days prior to such proposed action. To the extent it has not been
previously exercised, each Option will terminate immediately prior to
the consummation of such proposed action. In the event of a
consolidation or the merger of the Company with or into another
corporation, each Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation.
11.3 In the event of a "Change in Control" of the Company, as defined
below, then the following provisions shall apply:
11.3.1 For purposes of this Section 11.3, a "Change in Control" means
when any person or entity (the "Purchaser") becomes the owner,
directly or indirectly, of securities of the Company
representing more than 95% of the combined voting power of the
Company's then outstanding securities entitled to vote
generally in the Company's general meetings.
11.3.2 Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control
all outstanding Options, to the extent they are exercisable
and vested, shall be exercised by the Grantee thereof
(otherwise they shall expire) and the underlying Class A
Ordinary Shares, together with any Class A Ordinary Shares
owned by such Grantee as a result of the earlier exercise of
Options granted hereunder, shall be subject to purchase by the
Purchaser, which shall be mandatory if the Purchaser purchases
more than 95% of the combined voting power of the Company's
then outstanding securities entitled to vote generally in the
Company's general meetings, on the same terms and conditions on
which such Purchaser purchased shares in the Company as part
of the Change in Control event, and any unvested Options shall
remain in full force and effect except if the terms of such
Change in Control provide that the same be exchanged for
options of the Purchaser on the terms and conditions set forth
therein.
11.3.3 Notwithstanding anything to the contrary contained herein, in the
event of the exercise of an Option, as set forth in Section
11.3.2, the Grantee of such Option shall pay to the Company,
as a condition to such exercise, the applicable exercise
price, or, at the Grantee's discretion, he shall be entitled
to request that the Purchaser shall pay to the Company such
exercise price and, upon such request, the Purchaser shall pay
to the Company such exercise price and shall deduct the same
from the consideration paid to the Grantee for the transfer of
the Grantee's shares to the Purchaser.
11.3.4 The Committee shall determine the specific adjustments to be
made under this paragraph 11.3, and its determination shall be
conclusive.
12. NON-TRANSFERABILITY:
12.1 No Option shall be assignable or transferable by the Grantee to whom
granted otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of
the Grantee only by such Grantee or by such Grantee's guardian or
legal representative. The terms of such Option shall be binding upon
the beneficiaries, executors, administrators, heirs and successors of
such Grantee.
12.2 No shares purchasable hereunder which were not fully paid for, shall
be assignable or transferable by the Grantee. In addition, and without
derogating from the rights and powers of the Committee to provide
otherwise hereunder, until the closing the IPO, the following
provisions shall apply to all transfers of shares of the Company by
any of the Grantees or the Trustee on their behalf (the "TRANSFEROR"):
12.2.1 The Transferors shall sell, assign or transfer (collectively,
"TRANSFER") all or any part of the Shares owned by them only
in compliance with the terms of this Section 12.2.
12.2.2 RIGHT OF REFUSAL ON TRANSFERS.
(a) If at any time any Transferor wishes to Transfer any or all
Shares owned by him ("OFFEROR") pursuant to the terms of a
bona fide offer received from a third party, he shall submit a
written offer (the "OFFER") to sell such Shares (the "OFFERED
SHARES") to all other shareholders of the Company other than
shareholders solely as a result of grant hereunder or under a
similar plan ("OFFEREES") on terms and conditions, including
price, identical to those proposed by such third party.
The Offer shall disclose the identity of the proposed
purchaser or transferee, the Shares proposed to be sold or
transferred and the agreed terms of the sale or transfer.
(b) Each Offeree shall have the right to purchase that number of the
Offered Shares as shall be equal to the aggregate Offered
Shares multiplied by a fraction, the numerator of which is the
number of Shares then owned by such Offeree and the
denominator of which is the aggregate number of Shares then
issued and outstanding and held by all of the Offerees (such
fraction is hereinafter referred to as the "PRO RATA FRACTION"
of each Offeree).
(c) Each Offeree shall have the right to accept the Offer only as to
all of the Pro Rata Fraction. In the event an Offeree does not
wish to purchase his Pro Rata Fraction of the Offered Shares,
then any other Offeree who so elects shall have the right to
purchase, on a pro rata basis with other Offerees who so
elect, any Pro Rata Fraction of Offered Shares not purchased
by an Offeree. If the Offerees do not elect to purchase all of
the Offered Shares, then there shall be no right to purchase
Shares pursuant to this Section 12.2.
(d) Within 14 days from the date of receipt of the Offer, each of the
Offerees shall give written notice to the Offeror (the
"RESPONSE NOTICE") whether he wishes to purchase his Pro Rata
Fraction of the Offered Shares, and whether he wishes to
purchase, in addition, his applicable Pro Rata Fraction of
Offered Shares not purchased by other Offerees, all pursuant
to the Proposed Terms. If such Response Notice has not been
given by an Offeree within the aforesaid time period, he shall
be deemed to have refused to purchase his Pro Rata Fraction of
the Offered Shares.
(e) At the expiration of the said 14 days: (i) if notices of
Offerees who expressed their wish to purchase Offered Shares
have been received by the Offeror in respect of all of the
Offered Shares, the Offered Shares shall be Transferred by the
Offeror to such Offerees pursuant to the Proposed Terms; (ii)
in the event that the Offerees do not elect to purchase all of
the Offered Shares, then such Offered Shares may be
Transferred by such Offeror at any time within 90 days
thereafter. Any such Transfer shall be not less than the price
and upon other terms and conditions, if any, not more
favorable to the purchaser than the Proposed Terms. Any Shares
not sold within such 90-day period shall continue to be
subject to the requirements of a prior offer and right of
first refusal pursuant to this Section 12.2.2. In the event of
a sale of Shares to any of the Offerees hereunder, each of the
Grantees covenants that those Shares transferred by him or her
hereunder shall be, when transferred, duly authorized and
validly issued, fully paid and nonassessable, free and clear
of all mortgages, liens, pledges, charges, security interests,
or other claims or encumbrances of any kind whatsoever
("LIENS").
(f) Anything herein to the contrary notwithstanding, the provisions
of paragraphs (a) through (e) above shall not apply to: (a) any
transfer of Shares by an Offeror to, or for the benefit of,
any member or members of his immediate family (which shall be
deemed to include a mother-in-law, father-in-law,
brother-in-law and/or sister-in-law); (b) any transfer by an
Offeror to a corporation controlled by it. In the event of any
such transfer, the transferee of the Shares shall hold the
Shares so acquired with all the rights conferred by, and
subject to all the restrictions imposed by, this Plan.
(g) For avoidance of doubt, the foregoing shall not be deemed to
restrict the transfer of a Grantee's rights in respect of
Option Awards or Shares purchasable pursuant to the exercise
thereof upon the death of such Grantee to his estate or other
successors by operation of law or will, whose rights therein
shall be governed by Section 10.2 hereof.
12.3 Other than a Transfer permitted hereunder, until the closing of the
Company's IPO Grantee shall not grant any warrants, options, or other
rights whatsoever with respect to his or her Options granted
hereunder, or shares of the Company resulting from the exercise
thereof, and shall not pledge, hypothecate, grant security interest,
subject to a lien, mortgage or in any other way encumber all or any
part of such Options or shares or allow such Options or shares to be
under any lien or attachment.
12.4 The Company shall not register any transfer of Shares not made in
accordance with the provisions of this Plan, the Company's Articles of
Association and any applicable law.
13. TERM AND AMENDMENT OF THE PLAN:
13.1 The Plan was authorized by the Board on __________, 1996, and shall
expire on ________ __, 2004 (except as to Options outstanding on that
date), but such expiration shall not affect the instructions contained
herein or in any applicable law with respect to the Options and Shares
held in the Trust at such time of expiration.
13.2 Subject to applicable laws, the Board may, at any time and from time
to time, terminate or amend the Plan in any respect. In no event may
any action of the Company alter or impair the rights of a Grantee,
without his consent, under any Option previously granted to him.
14. TAX CONSEQUENCES: All tax consequences arising from the grant or exercise
of any Option, from the payment for, or the subsequent disposition of,
Shares covered thereby or from any other event or act (of the Company or
the Grantee) hereunder, shall be borne solely by the Grantee, and the
Grantee shall indemnify the Company and the Trustee and hold them harmless
against and from any and all liability for any such tax or interest or
penalty thereon, including without limitation, liabilities relating to the
necessity to withhold, or to have withheld, any such tax from any payment
made to the Grantee.
15. MISCELLANEOUS:
15.1 CONTINUANCE OF EMPLOYMENT: Neither the Plan nor the grant of an Option
thereunder shall impose any obligation on the Company to continue the
employment of any Grantee, and nothing in the Plan or in any Option
granted pursuant thereto shall confer upon any Grantee any right to
continue in the employ of the Company, or restrict the right of the
Company to terminate such employment at any time.
15.2 GOVERNING LAW: The Plan and all instruments issued thereunder or in
connection therewith, shall be governed by, and interpreted in
accordance with, the laws of the State of Israel.
15.3 APPLICATION OF FUNDS: The proceeds received by the Company from the
sale of Shares pursuant to Options granted under the Plan will be used
for general corporate purposes of the Company.
15.4 MULTIPLE AGREEMENTS: The terms of each Option may differ from other
Options granted under the Plan at the same time, or at any other time.
The Committee may also grant more than one Option to a given Grantee
during the term of the Plan, either in addition to, or in substitution
for, one or more Options previously granted to that Grantee. The grant
of multiple Options may be evidenced by a single Notice of Grant or
multiple Notices of Grant, as determined by the Committee.
15.5 NON-EXCLUSIVITY OF THE PLAN: The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any
limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific
cases.
APTEL 1996 (NO. 2) EMPLOYEE STOCK OPTION PLAN
GRANTEE AGREEMENT
APTEL LTD.
0 Xx'xxxxxx Xxxxxx
Xxxxxxx 00000
Re: GRANT OF OPTIONS
As an employee of APTEL LTD. (the "Company") entitled to receive certain options
to purchase shares of the Company, I confirm and undertake as follows:
1. The aforesaid options (the "Options") are granted to me pursuant to the
terms and conditions set forth in that certain resolution of the board of
directors of the Company dated _________, 1996, adopting the APTEL 1996
(No. 2) Employee Stock Option Plan (the "Plan")
2. The Plan is designed to benefit from, and was made pursuant to, the
provisions of Section 102 of the Israeli Income Tax Ordinance [New
Version], 1961, and the rules and regulations promulgated thereunder.
3. All tax consequences arising from the grant or exercise of the Options to
me, from the payment for, or the subsequent disposition of, Shares covered
thereby or from any other event or act (of the Company or of me) under the
Plan or hereunder, shall be borne solely by me, and I will indemnify the
Company and the Trustee under the Plan and hold them harmless against and
from any and all liability for any such tax or interest or penalty thereon,
including without limitation, liabilities relating to the necessity to
withhold, or to have withheld, any such tax from any payment made to me. I
hereby irrevocably authorize the Company to deduct from my salary and any
other payment due to me from the Company any amount I owe to the Company
hereunder or under the Plan.
4. In connection with Section 11.3 of the Plan I confirm that I have been
informed that the company, D.S.P. Semiconductor Ltd. ("Purchaser") and some
of the company's shareholders have entered on _____, 1996 into a Share
Purchase and Shareholders Agreement (the "DSP Agreement") and an Escrow
Agreement appointing an escrow agent (the "Escrow Agreement" and the
"Escrow Agent", respectively) under which, among other things, the
Purchaser shall have an option (the "Purchaser's Option") to purchase,
pursuant to all terms and conditions set form in Section 9 - and,
specifically, Section 9.8 - of the DSP Agreement, a copy of which is
attached hereto in EXHIBIT A, all of the Shares owned by me as a result of
the exercise of Options granted under the Plan. I agree to such provisions
and, in the event of the exercise of the Purchaser's Option, I hereby
convenant that those Shares transferred by me to the Purchaser thereunder
shall be, when transferred, duly authorized and validly issued, fully paid
and nonassessable, free and clear of all liens, mortgages, security
interests and any other third party rights. In addition, I confirm that
under the earlier of: (i) the exercise or expiration of the Purchaser's
1
Option, or (ii) the closing of the Company's initial public offering,
I shall not be entitled to have the Options, or any underlying shares
resulting from their exercise, released or transferred by the Trustee
pursuant to Sections 5.1.4.1 or 5.1.4.2 of the Plan, except to the
Escrow Agent and on the condition that I, if the same is released by the
Trustee, or the transferee, if the same is transferred by the Trustee,
shall confirm in writing my or its agreement to be bound by the provisions
of the Escrow Agreement as a "Beneficial Owner" thereunder.
---------------------------
Name of Employee:
-----------------------
Address:
------------------------
ID No.:
------------------------
Date:
------------------------
2
APTEL LTD.
0 Xx'xxxxx Xxxxxx, Xxxxxxx
Xxxx: _________
_______________
_______________
_______________
Dear Sir/Madam:
We are very happy to inform you that, in deep appreciation of your contribution
to the company, the board of directors of Aptel Ltd. (the "Company") has
approved the issuance to you of options to purchase Class A Ordinary Shares of
the Company pursuant to the terms and conditions set forth in the Aptel 1996
(No. 2) Employee Stock Option Plan (the "Plan"), a copy of which is attached
hereto.
Pursuant to the resolution of the board, you will be entitled to _______ options
(the "Options"), each exercisable into one Class A Ordinary Share, par value
0.05 New Israeli Shekels, of the Company. The Options shall vest as follows:
_____ Options shall vest immediately upon grant; ____ options shall vest in the
future, such that one third (1/3) of such number of Options shall vest on each
of the first, second and third anniversaries of the Date of Grant. The exercise
price of all such Options shall be US$0.50 per Share.
The grant of the Options hereunder is subject to the terms and conditions of the
Plan, including receiving the approval of the Israeli tax authorities thereto
and your execution of the Grantee's Agreement, a form of which is also attached
hereto.
Sincerely yours,
___________________
Aptel Ltd.
CONVERTIBLE DEBENTURES
1.1 ACCORDING TO THE BOARD RESOLUTION OF APTEL LTD. (THE "Company") DATED
5/30/96:
(A) Resolved that the Company will issue convertible debentures, according
to a conversion rate of US $12.82 for one ordinary share bearing a par
value of NIS 1.00, as follows:
DEBENTURE HOLDER'S NAME AMOUNT (US$)
----------------------- ------------
Dovrat, Xxxxx Yozma- Polaris Fund 132,334
Adasha Ltd. 30,705
Al Kanit Ltd. 6,611
Dovrat Xxxxx & Co. LTD 16,013
Lidar Ltd. 14,337
TOTAL 200,000
TERMS OF THE DEBENTURE:
SECURITY: (SECTION 3)
3.1 The Company shall nominally encumber 1 NIS to the benefit of the
investors.
3.2 The Company shall have the right to sell and/or transfer and/or
encumber at any level and/or mortgage at any level any of its assets
of any kind, as they are today or will be in the future, or any part
of its assets to another or perform any other transaction regarding
its assets, without the approval of the investors.
3.3 Without limiting the generality of the aforementioned, the
Company reserves the right to issue any shares, additional debentures
or other securities, carrying whatever terms it sees fit that are
equal to or inferior to the terms of this debenture.
REPAYMENT OF THE DEBENTURE: (SECTION 4)
4.1 In the event that the negotiations with DSP Group concerning
DSP's investment in the Company and joint development project with it
are successful, and a final agreement is signed between DSP and the
Company before the conversion date of the debentures, the Company
shall repay the loan received by this debenture in such a way that
each investor shall receive from the Company the amount of the
principal of the debenture, linked to the US Dollar from the signing
date of the debenture to the date of repayment and carrying an annual
US Dollar interest rate of LIBOR + 1%. After the date of repayment,
this debenture shall be totally void, and will not confer any rights
on the investors.
4.3 The debenture shall be repaid to the investors only if all of the
conditions of this section have been fulfilled by the conversion date.
Otherwise, the debenture shall automatically be converted to shares of
the Company, as described in section 5 below.
4.4. Despite the aforesaid in section 4.3, in the occurrence of one
of the following events before the conversion date, the debenture
shall be repaid immediately by the Company:
4.4.1 Issuance of a temporary or permanent court order for the
liquidation of the Company, or a valid decision made to
that effect, except for liquidation for the purpose of a
merger with another Company or structural changes in
Company.
4.4.2 Appointment of a temporary or permanent receiver for all
of the Company's assets or a significant part thereof.
1
4.4.3 Realization by other debtors, by court order, of
encumbrances on all of the Company's assets or on a
significant part thereof.
4.4.4 Placement of a lien for the securement of a debt greater
than US $100,000 on significant assets of the Company, or
performance of repossession due to a debt greater than
said sum, if the said lien or repossession is not
overturned or canceled within 45 days.
4.4.5 Cessation of activity by the Company.
CONVERSION OF THIS DEBENTURE INTO SHARES (SECTION 5)
5.1 If all of the conditions of section 4 have not been fulfilled by
the conversion date, the debenture shall be converted automatically
and in its entirety into ordinary shares of the Company at the
conversion rate of one Ordinary Share, registered in the name of
holder and bearing a nominal value of NIS 1.00, for each US $12.82
face value of the debenture.
5.2 No fractions of shares will be issued; the precise number will be
rounded to the nearest whole number.
5.4 The converted shares will be identical in every way in the rights
they confer upon their holders, and will entitle their holders to
fully participate in any dividend or other distribution the effective
date of which is subsequent to the conversion date.
5.5 From the conversion date onward this debenture shall be null and
void, and shall confer no right on the investor to repayment of the
loan.
ADJUSTMENTS PURSUANT TO ISSUANCE OF BONUS SHARES AND PARTICIPATION IN
RIGHTS OFFERING (SECTION 6)
Between the signature date of this debenture and its conversion date:
6.1 In the event of issuance of bonus shares, the holder of this
debenture will have the right to such bonus shares on the conversion
day as if he was an ordinary Shareholder on the day of the
distribution of the bonus shares.
6.2 If after the signature date of this debenture the Company is to
offer any form of securities to any of its Shareholders by way of
rights, the same offer will stand for holders of this debentures as if
they were holders of ordinary shares on the date of the offer.
MISCELLANEOUS (SECTION 7)
7.1 The Company will raise its registered capital so that it will have
enough ordinary shares of 1 NIS to carry out the conversion of these
debentures.
7.2 The Company will refrain from issuing bonus shares or issuance by
way of a rights offering, in a way which may reasonably be expected to
bring about issuance of converted shares at a value below the nominal
value.
7.3 If the Company groups the ordinary shares of 1 NIS in its issued
capital into shares of a higher value or divides them into shares of a
lower value, the number of shares issued to investors on the
conversion date will decrease or increase, respectively.
(SECTION 8) The rights accompanying this debenture may be amended only by
consent of all of the investors in this debenture.
(Section 10) Neither this debenture nor any of the rights conferred by it
may be transferred.
2
(B) By decision of the Board from March 4 and May 6, 1996, the Company
issued to the following Shareholders convertible debentures, at a
total value of US $85,000, as follows:
DEBENTURE HOLDER'S NAME AMOUNT (US$)
----------------------- ------------
Dovrat, Xxxxx Yozma- Polaris Fund 53,516
Adasha Ltd. 13,050
Al Kanit Ltd. 2,810
Dovrat Xxxxx & Co. LTD 6,476
Lidar Ltd. 9,148
-----
TOTAL 85,000
Resolved: that the debentures terms would be amended, such that the
debentures will be converted immediately to shares of the Company,
with the approval of the general assembly of Shareholders.
---------------------------------------------------------------------
(C) Resolved:
1. to approve an offer to Shareholders by which the Shareholders would
pay to the Company US $2,000,000 in return for shares of the Company,
at an estimated Company value of $3,000,000 (before the investment).
2. that a Shareholder who has accepted this offer may transfer shares
in the Company together with the right to purchase shares according to
the offer; and if such transfer occurs, the transferee shall enjoy the
rights and be bound by the obligations arising from this offer and the
transferred shares, according to the notice sent by the transferring
Shareholder to the Company.
3. that a meeting of the general assembly of Shareholders shall be
called for the approval of the above two resolutions.
----------------------------------------------------------------------
1.2 Offer to Purchase Debentures
1.3 Reply Form from Investor to the Company
1.4 Debenture Agreement (as specified above, 1.1)
1.5 Amendment to the Debenture Agreement ("SECTION 5A"): Debenture Holders are
entitled to convert their debentures into shares before the conversion date,
upon notice to the Company.
EXHIBIT 4.6
FOUNDERS AGREEMENT
SUMMARY OF AGREEMENT - APTEL LTD. (hereinafter, the "Company")
The Parties:
1. Giltek Industries Ltd. P.C. 00-000000-0
(hereinafter, "Giltek")
2. Poria Systems (1989) Ltd. P.C. 00-000000-0
(hereinafter, "Poria")
3. Aptel Ltd. P.C. 00-000000-0
(hereinafter, the "Company")
Date of Agreement: April 17, 1994
1. GOALS OF THE PARTIES TO THE AGREEMENT: The parties are interested in
working together within the framework of a private company, limited by
shares, which will be involved in the development, production and marketing
of wireless personal communications systems.
2. REGISTERED SHARE CAPITAL: 20,000 shares, nominal value of NIS 1 each,
according to the following specifications:
a. Class A Ordinary Shares (18,000) - provide the following rights:
invitation to, participation in and voting at general meetings,
participation in profits, receipt of bonus shares, receipt of
Company's remaining assets upon dissolution, appointment of directors
and their dismissal and substitution.
b. Class B Ordinary Shares (5,000) - provide the same rights as Class A
Ordinary Shares, except for the rights pertaining to the appointment,
dismissal and substitution of directors.
c. Redeemable Shares (5,000) - the same rights as Class B Ordinary
Shares.
3. ISSUED SHARE CAPITAL PRIOR TO THE EXECUTION OF THE PROVISIONS OF THE
AGREEMENT: 3030 Class A Ordinary Shares held by Giltek, of which 182 shares
are held by Giltek in trust for the benefit of X. Xxxxxx Xxxxxx and 1 share
is held in trust by Giltek Communications for the benefit of Giltek.
4. ISSUANCE OF SHARES PURSUANT TO THE AGREEMENT:
Shares will be issued as follows:
To Poria: 3030 Class A Ordinary Shares
To the Employees: 345 Class B Ordinary Shares
483 Redeemable Shares
828 Total for employees, of which 138 shares are held
in trust for their benefit.
Total: 3858 shares which will be issued in this issuance in
consideration of payment of the nominal value of the shares.
5. SHARES HELD IN TRUST: Poria shall hold the shares issued to it in trust for
the benefit of: Dovrat Xxxxx - Yozma - Polaris Fund Limited Partnership
(hereinafter, "Polaris"), Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxx Xxxx and Xxxx Bar
Or (hereinafter, collectively referred as the "Beneficiaries"), at least
until the Company's shares are offered to the public. According to the
Trust Agreement: Poria shall not exercise any right which it possesses by
virtue of the shares, including the appointment of directors, other than
according to the prior written instructions of the beneficiary; transfer of
shares shall be implemented according the beneficiary's demand; monies paid
for the shares will be transferred to the beneficiary, and Poria shall not
be responsible for any action which it takes in accordance with the
provisions of the Trust Agreement. Poria is responsible for the fulfillment
of all of the obligations of the trustees in accordance with the agreement.
6. TRANSFER OF SHARES SUBJECT TO RIGHT OF FIRST REFUSAL: A transfer of shares
by any of the parties will only be implemented after the shares are offered
to the other parties pro-rata to their holdings in the Company. If the
parties refuse to purchase the offered shares, then the shares may be
transferred to a third party on condition that such party accepts the
obligations of the transferor according to this agreement, subject to the
approval of the Board of Directors.
7. ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS: Resolutions which are not
special require a majority of 75% of those who are participating in the
vote, either on their own behalf or by an attorney in fact.
8. APPOINTMENT OF A DIRECTOR: Ownership of at least a 12.5% block of the
issued Class A Ordinary Shares entitles one to appoint a director (for the
purpose of creating the block, the holdings of several shareholders may be
aggregated). The appointing shareholder (or the assignee in connection with
the relevant shares) is entitled to dismiss the director.
9. THE BOARD OF DIRECTORS: The Board of Directors will be comprised of a
maximum of 8 directors. Each director may appoint a substitute for
himself. The first chairman of the Board of Directors will be a person who
is recommended by Giltek (for one year from the date of execution of the
agreement). The second chairman will be a person recommended by Poria
(for the following year), and alternately in accordance with and subject
to the ratio of the holdings between Giltek and Poria. The chairman will
not have a casting vote. Regarding voting by the Board of Directors,
each director will have that number of votes equal to the number of
Class A Ordinary Shares on account of which he has been appointed.
Resolutions will be accepted by a regular majority, other than vital
decisions which require 75% of the voting power of the board of Directors
which relate to, among other things, the issuance of shares and the
approval of share transfers, broadening of the Company's operations,
distributions of profits, acquisition of shares, entering into non-
standard transactions and taking on non-standard obligations and employing
senior employees.
10. ASSETS: The assets of the Company also include all of Giltek's and Poria's
knowledge in the field of the Company's operations, which knowledge has
been transferred to the Company.
11. INVESTMENTS AND FINANCING:
a. The Company owes a debt to Giltek in the amount of $400,000 for the
expenses of Giltek and Giltek Communications Ltd. on behalf of the
Company for the period of September 1, 1993 - December 31, 1993,
including a loan by Giltek to the Company in the amount of $46,000.
b. Poria shall pay $400,000 to the Company as a shareholders' loan.
Both of the loans will be in Shekels, linked to the index, and will bear
annual linked interest of 3%. They will be repaid pro-rata, taking the
Company's cash flow into consideration and according to the procedures and
calculations set forth in the agreement.
c. Subsequent to the approval of the agreement by Giltek Communications,
the expenses and investments made by Giltek and Poria in the period
from January 1, 1994 through the date of the approval will be repaid
to them with the addition of financing costs in the amount of 3%.
d. The parties undertake that until financing is obtained for the Company
(private placement, public offering or receipt of credit), they will
invest in the Company on a pro-rata basis, by providing shareholders'
loans and/or guarantees and/or capital investment.
e. Subsequent to the obtainment of financing, $400,000 will be paid to
Giltek and $100,000 to Poria + VAT, for expenses, starting up,
promoting the project, preparation of a business plan and other
investments made during the course of 1992-1993.
f. Regarding shares which will be issued to employees, these shareholders
will not be required to participate in the financing of the Company
until the Company does a private or public issuance or an amount equal
to $1.6 million is invested in the Company.
g. A party which does not invest, other than the employees as stated
above, will have its share of the share capital diluted (however,
there will be no claims or suits against it due to not investing). A
party that invests will be issued additional Class A Ordinary Shares
commensurate with its investment.
h. The distribution of profits will be made after the repayment of the
shareholders' loans and the removal of the guarantees and the security
which were provided to or for the benefit of the Company.
12. OPTION REGARDING ADDITIONAL SHARE ISSUANCES: Polaris will have an option
to acquire up to an additional 1,232 Class A Ordinary Shares of the Company
solely in consideration for the payment of their nominal value, for a
period of three years from the date of the execution of the agreement or
until the Class A Ordinary Shares are transferred from Poria to the
Beneficiaries, whichever is earlier. It can exercise the option all at once
or in several pieces, by written notice together with a check in the amount
of the exercise price. If bonus shares are issued by the Company, then the
number of shares which it requested to exercise will increase in accordance
therewith and the price will be adjusted. At the time that the option is
exercised, the Company will issue shares to all the rest of the
shareholders in the Company at the time of the exercise, excluding Poria or
its transferees, of the same type which they hold at the time of the
issuance, in an amount which will prevent dilution, in consideration of
payment of their nominal value.
13. NON-COMPETITION, CONFIDENTIALITY AND LOYALTY: The parties undertake not to
compete with the business of the Company, either directly or indirectly, so
long as they own or are entitled to receive at least 5% of the issued
shares and for a period of one year thereafter. This undertaking will not
fully apply to Polaris. The parties undertake not to disclose to others
trade and commercial secrets which will be revealed to them about each
other or the Company, due to their joint work within the framework of the
Company. These undertakings also apply to the Beneficiaries. Also, the
parties undertake to act loyally as regards the Company, by keeping
confidential its trade secrets, operations and business.
14. FINANCIAL REPORTS: Financial reports and other reports will be provided to
the parties, taking into consideration that Giltek is a public company and
its shares are traded on the Tel-Aviv Stock Exchange.
15. ARBITRATION: Disagreements in connection with the agreement will be
brought before an agreed upon arbitrator for final resolution.
16. BECOMING A PUBLIC COMPANY: If the Board of Directors of the Company
decides to become a public company, then the parties will cooperate with
the Company for such purpose; and also in the case where a company which is
a party to the agreement or a company which is controlled by a party to the
agreement decide to issue shares to the public. In the case of the
issuance of the Company's shares to the public, an option is given to one
of the employees who will receive shares as described above, Xxxxxxxx
Xxxxxx, of 138 Class B Ordinary Shares at a price discount of 20%, which
will be determined according to the effective value of the Company at that
time.
17. RIGHTS TO LISTING OF SHARES AFTER A PUBLIC OFFERING IN THE US: After the
Company makes an offering as described above, the Company's shareholders
are entitled to demand, in writing, the listing of the Ordinary Shares
which were issued but which are not listed, in accordance with the 1933
Securities Act, as amended (hereinafter, the "Act"). The Company shall do
everything in its ability, in accordance with the Act, in order to list
those shares which it was asked to list, on the condition that the Company
will not be obligated to do more than two listings in any fiscal year. The
Company is obligated to list the shares for incidental trade.
18. CONDITION PRECEDENT TO THE AGREEMENT: The agreement is conditioned upon
the approval of the Board of Directors, the audit committee, and the
general meeting of Giltek Communications Ltd., within 45 days from the date
of execution of the agreement.
19. MODIFICATION OF THE AGREEMENT: Modification of the Agreement or a waiver
of the fulfillment of any of its provisions requires a document signed by
the parties.
20. ALL PRE-EXISTING AGREEMENTS BETWEEN THE PARTIES ARE VOID.
EXHIBIT 4.7
Agreements regarding Voting and Transfer of Shares
As set forth in the Company's Articles of Association
EXHIBIT 4.10
FINANCIAL STATEMENTS OF THE COMPANY
(December 31, 1995)
APTEL LTD.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995
Contents
PAGE
----
2 Auditor's Report
Financial Statements in Adjusted NIS:
3-4 Balance Sheet
5 Income (Loss) Statement
6 Statement on Changes in Shareholder's Equity
7-8 Statement of Cash Flows
9-15 Notes to Financial Statements
1
APTEL LTD.
BALANCE SHEET IN ADJUSTED NIS
AS OF DECEMBER 1995
As of December 31
---------------------------------
1994 1995 Note
---- ---- ----
NIS NIS
CURRENT ASSETS
96,288 612,307 Cash and Cash Equivalents
59,146 165,115 3 Accounts Receivable
---------- -----------
155,434 777,422
- - - - - - - - - - -
4 FIXED ASSETS
764,370 1,054,005 Cost
(68,491) (173,770) Less Depreciation
---------- -----------
695,879 880,235
- - - - - - - - - - -
851,313 1,657,657
---------- -----------
---------- -----------
2
APTEL LTD.
BALANCE SHEET IN ADJUSTED NIS
AS OF DECEMBER 1995
(CONTINUED)
As of December 31
------------------------------------
1994 1995 Note
---- ---- ----
NIS NIS
--- ---
CURRENT LIABILITIES
--- 6,900 Short-term Credit From Banking
Institutions
--- 261,167 6 Short-term Loans From Related
Parties
268,918 376,639 Supplies and Service Providers
396,629 465,836 Accounts Payable
---------- -----------
665,547 1,110,542
- - - - - - - - - - - -
- - - - - - - - - - - -
--- 37,937 5 LIABILITIES FOR SEVERANCE PAY
- - - - - - - - - - - -
- - - - - - - - - - - -
3,797,133 --- LOANS FROM RELATED PARTIES
- - - - - - - - - - - -
SHAREHOLDERS EQUITY
8,138 31,174 7 Nominal Capital
--- 7,585,218 Capital Surplus
(3,619,505) (7,107,214) Accumulated Loss
----------- -----------
----------- -----------
(3,611,367) 509,178
851,313 1,657,657
----------- -----------
----------- -----------
____________________________ ____________________________
General Manager Director
3
APTEL LTD.
INCOME (LOSS) STATEMENT
IN ADJUSTED NIS AS OF DECEMBER 1995
For Period Ending For Year Ending
------------------- -----------------
December 31
---------------------------------------
1994 1995 Note
---- ---- ----
NIS NIS
--- ---
1,696,182 1,914,051 12 R&D Expenses
698,918 1,530,606 General, Selling and Administrative
--- 43,117 Other Expenses
9 Related Party Expenses for Period Before
1,120,743 Commencement of Operations
3,515,843 3,487,774 Loss Before Financial Costs
- - - - - - - - - - - - - - - - - - -
103,662 (65) Net Financial Expenses (Revenues)
------------------- -----------------
3,619,505 3,487,709 Loss For Period
------------------- -----------------
------------------- -----------------
4
APTEL LTD.
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
IN ADJUSTED NIS AS OF DECEMBER 1995
Accumulated Capital Nominal
Total Losses Surplus Capital
----------------------------------------------------------------------
8,138 --- --- 8,138 Issuance of Shares
(3,619,505) (3,619,505) --- --- Loss for Period
------------------ ----------- --------- --------
(3,611,367) (3,619,505) --- 8,138 BALANCE AS OF 12/31/94
7,608,254 --- 7,585,218 23,036 Issuance of Shares
(3,487,709) (3,487,709) --- --- Loss for Period
------------------ ----------- --------- --------
509,178 (7,107,214) 7,585,218 31,174 BALANCE AS OF 12/31/95
------------------ ----------- --------- --------
------------------ ----------- --------- --------
5
APTEL LTD.
STATEMENT OF CASH FLOW
AS OF DECEMBER 1995
As of December 31
-----------------------------------
1994 1995
---- ----
CASH FLOW FROM CURRENT OPERATIONS
(3,619,505) (3,487,709) Loss for Period
752,431 296,644 Required Adjustments for Presentation of Cash
------------- ---------------
(2,867,074) (3,191,065) Net Cash Uses for Current Operations
- - - - - - - - - - - - - - -
CASH FLOW FROM INVESTMENT ACTIVITY
(764,370) (419,871) Purchase of Fixed Assets
--- 67,397 Proceeds From Sale of Fixed Assets
------------- ---------------
(764,370) (352,474) Net Cash Used for Investment Activity
- - - - - - - - - - - - - - -
CASH FLOWS FROM FINANCIAL ACTIVITY
--- 6,900 Increase in Short-term Credit From Bank
8,138 1,453,772 Net Proceeds From Issuance of Shares
--- 261,167 Short-term Loans From Interested Parties
3,719,594 2,337,719 Loans From Interested Parties
------------- ---------------
3,727,732 4,059,558 Net Cash From Financial Activity
- - - - - - - - - - - - - - -
96,288 516,019 Increase in Cash
--- 96,288 Cash Balance at Beginning of Period
------------- ---------------
96,288 612,307 Cash Balance at End of Period
------------- ---------------
------------- ---------------
6
EXHIBIT 4.12
MATERIAL DEBTS AND LIABILITIES
AS OF JUNE 30, 1996
--------------------------------------------------------------------
Accumulative
Balance Income Expense Description Date
--------------------------------------------------------------------
179,201.15 Balance 6/9/96
Checks to be Sent 5/10/96
137,968.15 41,233.00
134,341.15 3,627.00
124,354.15 9,987.00
101,905.15 22,449.00
86,071.15 15,834.00
78,043.15 8,028.00
75,044.15 2,999.00
71,366.72 3,677.43
60,858.72 10,508.00
46,747.22 14,111.50
Outstanding Checks 6/8/96
46,446.52 300.70
46,280.27 166.25
46,136.27 144.00
37,011.27 9,125.00
21,785.27 15,226.00
15,753.92 8,031.35
Bills to be Paid 6/10/96
9,247.55 6,506
8,475.55 772.00
6,720.55 1,755.00
720.55 6,000.00
-6,632.85 7,353.00
-8,965.85 2,333.00
-27,732.85 18,767.00
-29,732.85 2,000.00
-31,742.07 2,009.22
-39,163.07 7,421.00
-40,288.07 1,125.00
-44,744.07 4,456.00
-48,650.02 3,905.95
-55,650.02 7,000.00
--------------------------------------------------------------------
1
--------------------------------------------------------------------
Accumulative
Balance Income Expense Description Date
--------------------------------------------------------------------
-57,090.02 1,440.00
-59,437.87 2,347.85
-59,931.87 494.00
-60,114.87 183.00
-61,255.87 1,141.00
-61,739.87 484.00
-62,061.87 322.00
-62,580.87 519.00
-64,048.87 1,468.00
-64,279.87 231.00
-67,993.87 3,714.00
-69,241.87 1,248.00
-73,225.87 3,984.00
-75,461.87 2,236.00
-86,505.87 11,044.00
-89,040.87 2,535.00
-99,033.87 9,993.00
-99,325.87 292.00
-100,553.87 1,228.00
-102,792.87 2,239.00
-114,250.87 11,458.00
-116,026.87 1,776.00
-116,158.87 132.00
-121,309.87 5,151.00
-122,074.87 765.00
-123,578.87 1,504.00
-124,163.87 585.00
-134,130.87 9,967.00
-137,130.87 3,000.00
-153,418.87 16,288.00
-170,107.87 16,689.00
Employment Benefits
-186,910.87 18,803.00
-211,983.87 25,073.00
-268,941.87 56,958.00
-307,729.60 38,787.73
----------- ---------
----------- ---------
-307,729.60 488,930.75 6/31/96 Total Expended
2
160,000.00 Open Orders
Debt to Suppliers
10,039 10/7/96
15,119
1,341
670
875
454
160
140
4,731
11,458.00
---------
---------
44,986.60 7/31/96 Expected Supplier Expenses
EXHIBIT 4.15
DEBTS TO INTERESTED PARTIES
1. Debt to Dovrat, Xxxxx/Yozma-Polaris Fund(Bridge Loan) dated April 1, 1996,
in the amount of US$50,000.
2. Allocation of Debentures Issued March 14, 1996 ($85,000) and May 8, 1996
($200,000) as described in Exhibit 4.4.
3. Debt to Dovrat, Xxxxx/Yozma-Polaris Fund (Bridge Loan) dated June 5, 1996,
in the amount of US$100,000.
EXHIBIT 4.16
PERSONAL PROPERTY; LIENS
1. List from the Income Tax Authority of Aptel's depreciable assets.
Income Tax file number: 511869562, for the 1995 tax year.
------------------------------------------------------------------------------------------------------------------------------------
ASSETS ORIGINAL CHANGES DEPRE- DEPRECIATION TOTAL TOTAL DEPRECIABLE
PRICE THIS YEAR CIABLE DEMANDED ACCRUED DEPRE- REMAINDER
ASSETS THIS YEAR DEPRE- CIATION
CIATION
------------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT, GEN. (TOTAL) $1200 $0 $1200 $120 $42 $162 $1038
EQUIPMENT, ELECTRONIC (TOTAL): 363218 3179 366397 54544 32324 86868 279529
COMPUTERS (TOTAL): 139034 44074 183108 33833 12794 46627 136481
AUTOMOBILES (TOTAL): 0 (Sold) 0 0 5005 0 0 0
FURNITURE (TOTAL): 42598 19191 61789 3003 1416 4419 57370
ELECTRONIC EQUIPMENT -
CHIEF SCIENTIST (TOTAL): 0 170543 170543 3717 0 3717 166826
COMPUTERS - CHIEF
SCIENTIST (TOTAL): 0 172823 172823 9227 0 9227 163596
TOTAL: $546050 $409810 $955860 $109443 $46576 $151020 $804840
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
___________________________________________________________________________
2. List of Encumbrances on Gilteks Assets, from the Registrar of Companies,
dated January 28, 1996.
Summary of Encumbrances of Company No. 00-000000-0:
----------------------------------------------
Number of Unlimited Encumbrances: 3
Number of Liquidated Encumbrances: 2
ENCUMBRANCE NO. 1: Created: Jan. 9, 1995 Liquidated: April 23, 1995
ENCUMBRANCE NO. 2: Created: Jan. 22, 1995 Liquidated: Aug. 16, 1995
1
ENCUMBRANCE NO. 3: Created: Aug. 21, 1995 Registered: Aug. 25, 1995
- Guaranteed Sum: Unlimited
- Description: Debenture
- Creditor/ Trustee: Albar Financial Services Ltd.,
Co. Number 00-000000-0
- Encumbered Assets: Peugot #00-000-00 and Mazda #00-000-00, including
all accessories.
- Special Terms: May not be encumbered or transferred without Creditor's
approval.
ENCUMBRANCE NO. 4: Created: Oct. 20, 1995 Registered: Oct. 27, 1995
- Guaranteed Sum: Unlimited
- Description: Debenture
- Creditor/ Trustee: Albar Financial Services Ltd.,
Co. Number 00-000000-0
- Encumbered Assets: Mazda #00-000-00.
- Special Terms: May not be encumbered or transferred without Creditor's
approval.
ENCUMBRANCE NO. 5: Created: Oct. 20, 1995 Registered: Oct. 27, 1995
- Guaranteed Sum: Unlimited
- Description: Debenture
- Creditor/ Trustee: Albar Financial Services Ltd.,
Co. Number 00-000000-0
- Encumbered Assets: Mitsubishi Super Lancer #00-000-00.
- Special Terms: May not be encumbered or transferred without Creditor's
approval.
--------------------------------------------------------------------------------
3. Accounts Regarding Lease-Sell Deals with Albar Financial Services.
ACCOUNT DATED DECEMBER 31, 1995:
- Peugot 205 #00-000-00
- Number of Monthly Installments: 60
- Total Cost: $34,451.00
- Duration of Lease: 61 Months
- Currency: NIS, as attached to Consumer Index
- Paid: NIS 3,340.00 + VAT and Index attachment
- Lease Balance Remaining: $36,740.00
- Estimated Real Lease Balance Remaining: $38,422.29
ACCOUNT DATED DECEMBER 31, 1995:
- Peugot 205 #00-000-000
- Number of Monthly Installments: 60
- Total Cost: $35,429.00
- Duration of Lease: 60 Months
- Currency: NIS, as attached to Consumer Index
- Paid: NIS 2,748.00 + VAT and Index attachment
- Lease Balance Remaining: $38,472.00
2
- Estimated Real Lease Balance Remaining: $40,004.62
ACCOUNT DATED DECEMBER 31, 1995:
- Mitsubishi Super Lancer #00-000-00
- Number of Monthly Installments: 60
- Total Cost: $70,211.00
- Duration of Lease: 61 Months
- Currency: NIS, as attached to Consumer Index
- Paid: NIS 4,086.00 + VAT and Index attachment
- Lease Balance Remaining: $77,634.00
- Estimated Real Lease Balance Remaining: $80,726.74
ACCOUNT DATED DECEMBER 31, 1995:
- Mitsubishi Super Lancer #00-000-00
- Number of Monthly Installments: 60
- Total Cost: $73,670.00
- Duration of Lease: 61 Months
- Currency: NIS, as attached to Consumer Index
- Paid: NIS 4,287.00 + VAT and Index attachment
- Lease Balance Remaining: $81,453.00
- Estimated Real Lease Balance Remaining: $84,697.87
ACCOUNT DATED DECEMBER 31, 1995:
- Mazda 323 #00-000-00
- Number of Monthly Installments: 60
- Total Cost: $49,584.00
- Duration of Lease: 61 Months
- Currency: NIS, as attached to Consumer Index
- Paid: NIS 4,810.00 + VAT and Index attachment
- Lease Balance Remaining: $52,910.00
- Estimated Real Lease Balance Remaining: $55,332.69
ACCOUNT DATED DECEMBER 31, 1995:
- Mazda 323 #00-000-00
- Number of Monthly Installments: 60
- Total Cost: $48,288.00
- Duration of Lease: 60 Months
- Currency: NIS, as attached to Consumer Index
- Paid: NIS 2,811.00 + VAT and Index attachment
- Lease Balance Remaining: $53,409.00
- Estimated Real Lease Balance Remaining: $54,867.56
3
EXHIBIT 4.17
INTELLECTUAL PROPERTY
1. Although the Agreement itself refers in section 4.17.1. to a list of
intellectual property in Exhibit 4.17, such exhibit does not contain such
list.
EXHIBIT 4.18
MATERIAL AGREEMENTS
1. Agreement, dated January 1995, between Xxxxxx-Xxxxx, Xxxxx Xxxxxx,
Xxxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxx Bar-Or and Aptel Ltd.
2. Loan Agreement, dated January 22, 1995, between Xxxxxx-Xxxxx and Aptel
Ltd.
3. Agreement between Xxxxxx-Xxxxx, Aptel Ltd., Giltek Industries Ltd.,
Poria Systems and Polaris Fund L.P. dated January 22, 1995.
4. Memorandum of Understanding between Nippon Electric Corporation ("NEC")
and Aptel Ltd., dated March 8, 1996.
5. Non-Disclosure Agreement between Aptel Ltd. and NEC Corporation, dated
August 28, 1995.
6. Memorandum of Agreement between Utilicom, Inc. and Aptel Ltd., dated
September 13, 1995.
7. Sale Contract between Chi Investment and Development, Ayalot Asset
Investments (Xxxxxxx) 1993 Ltd. and Giltek Communications Ltd., dated December
20, 1993.
8. Certificate of Approval from the Ministry of Commerce and Industry,
Office of the Chief Scientist, dated December 7, 1995.
9. Non-Disclosure and Non-Use Agreement between Aptel Ltd. and Groupe-
Acces Communications, dated November 21, 1995.
10. ASIC Development Agreement between Sharp Electronics (Europe) GmbH and
Aptel, dated January 8, 1996.
11. Non-Disclosure and Non-Use Agreement between Multitone Communications
International and Aptel Ltd., dated November 23, 1995.
12. Lease-Sell Agreement between Aptel Ltd. and Xxxxx Financial Services
Ltd., dated August 17, 1995.
13. Lease-Sell Agreement between Aptel Ltd. and Xxxxx Financial Services
Ltd., dated June 21, 1995.
14. Lease-Sell Agreement between Aptel Ltd. and Xxxxx Financial Services
Ltd., dated August 25, 1995.
15. Lease-Sell Agreement between Aptel Ltd. and Xxxxx Financial Services
Ltd., dated September 12, 1995.
16. Lease-Sell Agreement between Aptel Ltd. and Xxxxx Financial Services
Ltd., dated June 21, 1995.
17. Purchase Orders:
17.1 Utilicom, dated January 23, 1995;
17.2 Xxxxx Xxx-Xxxxxx Engineering Services, dated November 26, 1995,
January 6, 1996, January 28, 1996 and January 29, 1996; and
17.3 Hewlett Packard, dated February 1, 1996.
EXHIBIT 4.19
INSURANCE POLICIES
Ararat Insurance Co., Policy No. 1029002913/95:
Content Insurance: 480,000 NIS
Burglary/Robbery: 200,000 NIS
Building: 600,000 NIS
Third Party: 1,500,000 NIS
Employer Liability: 15,000,000 NIS
Electronic Office
Equipment: 10,000 NIS
Earthquakes: 847,000 NIS
Storms/Floods/etc.: 1,180,400 NIS
EXHIBIT 4.23
LITIGATION
1. A suit was filed against Aptel by Xxxx Xxxxx, a person with whom the
Company had connections in the past, for the amount of US $10,764. A Request for
the Right to Defend was delivered, and set for hearing on July 7, 1996, at the
Netanya Lower Court. Negotiations have begun between the sides.
2. Nexus has, in a letter dated November 1, 1994 from Nexus's Israeli Attorney
Xxxx Xxxx, alleged that Aptel Ltd. has used commercial secrets which it
allegedly exposed to Giltek, and that in so doing Aptel has infringed upon
Nexus's rights.
The allegations refer to agreements between Giltek and Nexus at the end
of 1992 regarding possible cooperation in the development of an Automatic
Vehicle Location (AVL) System for the location of stolen cars.
After negotiations with Nexus failed, Giltek decided to develop a two-way
paging ("beeper") system, which would broadcast in wide spectrum through up-
link and thus be exempt from licensing in the United States. To this end,
Giltek turned to Poria Systems (1989) Ltd., ("Poria"), for assistance in the
technical development of the system; and for the purpose of this common
activity a joint company was formed--Aptel. In April 1994 an Agreement of
Cooperation was signed between Aptel, Poria, and Giltek (The "Founders
Agreement"). Poria holds independent knowledge in the area of wide-spectrum
broadcasting and direct sequence.
Aptel's development works on a direct sequence system, and as such is
different, according to patent and other public documents, from the technology
used by Nexus (alternating sequence). Aptel believes the information used by it
was independently developed in cooperation with Poria, and that no such secret
information of commercial value as alleged by Nexus exists, was transferred to
Giltek, or was used by Aptel.
EXHIBIT 4.27
Required Consents
1. Approval of the General Meeting of the Shareholders
2. The absence of the exercise of any of the shareholders' preemptive rights
EXHIBIT 4.31
SUBSIDIARIES
Aptel Communication Services (1996) Ltd.
EXHIBIT 7.1
RESOLUTION OF SHAREHOLDERS; AMENDED ARTICLES
RESOLUTION:
1. Invitation to a Special Meeting of the General Assembly of the Company:
On the agenda:
a) special resolution regarding spliting each share of par value 1 NIS
to twenty shares of par value 0.05 NIS each;
b) special resolution regarding replacement of the Articles of
Association;
c) appointment of directors;
d) appointment of accountants; and
e) approval of the Company's entrance into the Share Purchase and
Shareholders Agreement with DSP Semiconductors Ltd. and others.
2. Minutes of the above Special Meeting of the General Assembley:
Resolved:
a) to approve special resolution of (a) above;
b) to appoint Xxxx Xxxxxx, Xxxx Xxxxxx Sharyahu Shapira, Xxxxx Xxxxxxx
and Xxx Xxxxx as directors;
c) to appoint Doron and Co. as accountants to the Company and to
authorize the Board of Directors to decide the conditions of their
employment; and
d) to authorize the Share Purchase and Shareholders Agreement with DSP
Semiconductors Ltd. and others.
THE COMPANIES ORDINANCE [NEW VERSION], 5743-1983
A COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION OF
APTEL LTD.
INTERPRETATION; GENERAL
1. In these Articles, unless the context otherwise requires:
1.1 The "Company" means the company whose name is set forth above.
1.2 The "Directors" means the Board of Directors of the Company.
1.3 The "Law" means the Ordinance and any other law that shall be in
effect from time to time with respect to companies and that shall
apply to the Company.
1.4 The "Memorandum" means the Memorandum of Association of the Company.
1.5 The "Office" means the registered office of the Company.
1.6 The "Ordinance" means the Companies Ordinance [New Version], 5743-
1983.
1.7 The "Register" means the Register of Members that is to be kept
pursuant to the Ordinance's provisions.
1.8 A "Shareholder" or "Member" shall mean any person or entity that is
the owner of a share or shares in the Company, as registered in the
Register.
1.9 These "Articles" shall mean the Articles of Association of the
Company, as shall be in force from time to time.
1.10 "Writing" or any term of like import includes words typewritten,
printed, painted, engraved, lithographed, photographed or represented
or reproduced by any mode of reproducing words in a visible form,
including telex, facsimile, telegram, cable or other form of writing
produced by electronic communication.
2. Subject to the aforesaid, in these Articles, words and expressions defined
in the Memorandum of Association of the Company shall have the meanings
defined therein, and all other terms used herein and not otherwise defined
herein shall have the meanings defined in the Ordinance, as in effect on
the day on which these Articles become binding on the Company.
3. The articles in the Second Schedule to the Ordinance shall not apply to the
Company.
4. Headings to Sections herein are for convenience only, and shall not affect
the meaning or interpretation of any provision hereof.
PRIVATE COMPANY
5. The Company is a private company, and therefore:
5.1 The right to transfer shares is restricted in the manner hereinafter
provided;
5.2 The number of members of the Company is limited to fifty (50);
5.3 Any invitation to the public to subscribe for any shares or debentures
of the Company is prohibited.
CAPITAL
6. The authorized share capital of the Company shall be NIS 150,000 (One
Hundred Fifty Thousand New Israeli Shekels), divided into 2,550,000
Ordinary Shares of NIS 0.05 par value each and 450,000 Class A Ordinary
Shares of NIS 0.05 par value each.
7. The holders of Ordinary Shares are entitled to receive notices of, and to
attend, general meetings of the Shareholders; to one vote for each Share
held at all Shareholders' meetings for all purposes, and to share equally,
on a per share basis and in preference to the Class A Ordinary Shares as
set forth below, in such dividends as may be declared by the Board of
Directors out of funds legally available therefor, and upon liquidation or
dissolution - in the assets of the Company legally available for
distribution to shareholders after payment of all debts and other
liabilities of the Company (in each case, proportionally to the number of
Ordinary Shares outstanding and the amounts paid by Shareholders on account
of their Shares, if not paid in full, before calls for payment were made).
8. The holders of the Class A Ordinary Shares are entitled to the same rights
and privileges of the holders of the Ordinary Shares, except that:
8.1 such Class A Ordinary Shares shall not have any rights to be
invited to, or participate in, the Company's general meetings or to
vote therein; and
8.2 such Class A Ordinary Shares shall be entitled to share equally, on
a per share basis, in such dividends as may be declared by the
Board of Directors only after the holder of each Ordinary Share has
been paid dividends in an amount equal to twenty (15) US cents
(0.15 US dollars) in respect of such Share in each year in which
dividends were so declared; and
8.3 upon liquidation or dissolution of the Company, such Class A
Ordinary Shares shall be entitled to share equally, on a per share
basis, in the assets of the Company legally available for
distribution to shareholders, as aforesaid, only after the holder
of each Ordinary Share received such assets in an amount equal to,
in aggregate, two US dollars and 89 cents ($2.89), in addition to
any and all accumulated declared but unpaid dividends, in respect
of such Share;
provided, however, that upon closing of the Company's initial public
offering of its securities in Israel or abroad such Class A Ordinary Shares
shall automatically convert to Ordinary Shares of the Company.
SHARES
9. Subject to the provisions of these Articles, the unissued shares of the
Company shall be at the disposal of the Directors who may without limiting
or affecting any rights previously conferred on the holders of any existing
shares or class of shares offer, allot, grant options over or otherwise
dispose of shares to such persons, at such times and upon such terms and
conditions as the Company may by resolution of Directors determine.
10. The Company may issue shares having the same rights as the existing shares,
or having preferred or deferred rights, or rights of redemption, or
restricted rights, or any other special right in respect of dividend
distributions, voting, appointment or dismissal of Directors, return of
share capital, distribution of Company's property, or otherwise, all as
determined by the Company from time to time by a special resolution,
subject to the provisions of its Memorandum and without infringing on any
special right previously granted to a Shareholder.
11. Subject to the provisions of the Ordinance, the Memorandum and these
Articles, the Company may issue redeemable shares and redeem them.
12. The Company may issue from time to time share warrants whose terms and
conditions shall be determined by the Board of Directors.
13. No funds belonging to the Company may be used for the purpose of acquiring
shares in the Company or for granting loans that will be secured by shares
in the Company. However, nothing herein contained shall prohibit redemption
of redeemable shares or the transactions permitted under Section 139 of the
Ordinance.
14. The Company shall be permitted to pay any person a commission, not
exceeding the maximum amount permitted under the Ordinance, in
consideration of his subscribing or agreeing to subscribe (whether
absolutely or conditionally) for shares in the Company.
15. At the time of issuance of shares for the purposes of obtaining money to
pay for the cost of equipment or of setting up an enterprise or building
which is not expected to produce a profit during an extended period of
time, the Company may pay interest on the paid-up portion of such share
capital for that period, and to charge the amount paid as interest on the
capital as part of the price paid for the equipment or the setting up of
the enterprise or building, all pursuant to the conditions set forth in
Section 140 of the Ordinance.
16. The Company shall not be bound to recognize any equitable, contingent,
future or partial interest in any share or any other right whatsoever in
any share other than an absolute right to the entirety thereof in the
registered holder.
17. If two or more persons are registered as joint holders of a share:
17.1 They shall be jointly and severally liable for any calls or any other
liability with respect to such share. However, with respect to voting,
power of attorneys and furnishing of notices, the one registered first
in the Register shall be deemed to be the sole owner of the share
unless all the registered joint holders notify the Company in writing
to treat another one of them as the sole owner of the share.
17.2 Each one of them shall be permitted to give receipts binding all the
joint holders for dividends or other moneys or property received from
the Company in connection with the share and the Company shall be
permitted to pay all the dividend or other moneys or property due with
respect to the share to one or more of the joint holders, as it shall
choose.
LIEN
18. The Company shall have a lien and first pledge on every share that was not
paid up in full, in respect of money due to the Company on calls for
payment or payable at fixed times, whether or not presently payable, or the
fulfillment and performance of the obligations and commitments to which the
Company is entitled in respect of the share. The lien on a share shall also
apply to dividends and other distributions payable on it. The directors may
exempt any share, in full or in part, temporarily or permanently, from the
provisions of this Section.
19. The Company may sell any share on which it has a lien in any manner the
Directors see fit, but such share shall not be sold before the date of
payment of the amount in respect of which the lien exists, or the date of
fulfillment and performance of the obligations and commitments in
consideration of which the lien exists, has arrived, and until 14 days have
passed after written notice has been given to the registered holder at that
time of the share, or to whoever is entitled to it upon the registered
owner's death or bankruptcy, demanding payment of the amount against which
the lien exists, or the fulfillment and performance of the obligations and
commitments in consideration of which the lien exists, and such payment or
fulfillment and performance have not been made.
20. The net proceeds of the sale shall be applied in payment of the amount due
to the Company or the fulfillment and performance of the obligations and
commitments as aforesaid in the preceding Section, and the remainder, if
any, shall be paid to whoever is entitled to the share on the day of the
sale, subject to a lien on amounts the date of payment of which has not yet
arrived, similar to the lien on the share before its sale.
21. After the execution of a sale of pledged shares as aforesaid, the Directors
shall be permitted to sign or to appoint someone to sign a deed of transfer
of the sold shares and to register the purchaser's name in the Register as
the owner of the shares so sold, and it shall not be the obligation of the
buyer to supervise the application of the purchase price nor will his right
in the shares be affected by any fault or error in the procedure of sale.
The sole remedy of one who has been aggrieved by the sale shall be in
damages only and against the Company exclusively.
CALLS FOR PAYMENT
22. A Member, whether he is the sole holder of shares or holds the shares
together with another person, shall not be entitled to receive dividends
nor to use any other right a Member has unless he has paid all the calls by
the Company that shall be made from time to time.
23. The directors may make calls for payment from Members of the amount not yet
paid up on their shares as the Directors shall see fit, provided that the
Company gives the Member prior notice of at least 14 days on every call and
that the day of payment set forth in such notice be not less than one month
after the last call for payment. Each Member shall pay the amount called to
the Company on the date and at the place prescribed in the Company's
notice.
24. The joint holders of a share shall be jointly and severally liable to pay
the calls for payment on such share in full.
25. If the amount called is not paid by the prescribed date, the person from
whom it is due shall be liable to pay such index linkage differentials and
interest as the Directors shall determine, from the date on which payment
was prescribed until the day on which it is paid, but the Directors may
forego the payment of such linkage differentials or interest, in whole or
in part.
26. Any amount that, according to the conditions of issuance of a share, must
be paid at the time of issuance or at a fixed date, whether on account of
the par value of the share or premium, shall be deemed for the purposes of
these Articles to be a call for payment that was duly made. In the event of
non-payment of such amount all the provisions of these Articles shall apply
in respect of such amount as if a proper call for its payment has been made
and an appropriate notice thereof given.
27. At the time of issue of shares the Directors may make arrangements that
differentiate between shareholders, in respect of the amounts of calls for
payment, their dates of payment or the rate of interest.
28. The Directors may, if they think fit, accept from any Member for his shares
any amount of money the payment of which has not yet been called and paid,
and to pay him (i) interest for that advance until the day on which payment
of that amount would have been due had he not paid it in advance, at a rate
agreed between the Company and such Member, and (ii) any dividends that may
be paid for that part of the shares for which the Member has paid in
advance.
FORFEITURE OF SHARES
29. If a Member fails to pay any call or installment of a call on the day
appointed for payment thereof, the Directors may, at any time thereafter
during such time as any part of such call or installment remains unpaid,
serve a notice on him requiring payment of so much of the call or
installment as is unpaid, together with any interest which may have accrued
and any expenses that were incurred as a result of such non-payment.
30. The notice shall specify a date not less than 7 days from the date of the
notice, on or before which the payment of the call or installment or part
thereof is to be made together with interest and any expenses incurred as a
result of such non-payment. The notice shall also state the place the
payment is to be made and that in the event of non-payment at or before the
time appointed, the share in respect of which the call was made will be
liable to forfeiture.
31. If the requirements of any such notice as aforesaid are not complied with,
any share in respect of which the notice has been given may at any time
thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. The forfeiture
shall apply to those dividends that were declared but not yet distributed
with respect to the forfeited shares.
32. A share so forfeited shall be deemed to be the property of the Company and
can be sold or otherwise disposed of, on such terms and in such manner as
the Directors think fit. At any time before a sale or disposition the
forfeiture may be canceled on such terms as the Directors think fit.
33. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall notwithstanding remain liable to
pay to the Company all moneys which, at the date of forfeiture, were
presently payable by him to the Company in respect of the shares, but his
liability shall cease if and when the Company receives payment in full of
the nominal amount of the shares.
34. The forfeiture of a share shall cause, at the time of forfeiture, the
cancellation of all rights in the Company and of any claim or demand
against the Company with respect to that share, and of other rights and
obligations between the share owner and the Company accompanying the share,
except for those rights and obligations which these Articles exclude from
such a cancellation or which the Law imposes upon former Members.
35. A declaration in writing by two Directors that a share in the Company has
been duly forfeited on the date stated in the declaration shall be
conclusive evidence of the facts therein stated against all persons
claiming to be entitled to the share. That declaration, together with the
receipt of the Company for the consideration, if any, given for the share
on the sale or disposition thereof, shall constitute gootitle to the share.
The person to whom the share is sold or disposed of shall be registered as
the holder of the share and shall not be bound to see to the application of
the purchase money, if any, nor shall his title to the share be affected by
any irregularity of invalidity in the proceedings in reference to the
forfeiture, sale or disposal of the share.
36. The provisions of these Articles as to forfeiture shall apply in the case
of non-payment of any sum which, by the terms of issue of a share, becomes
payable at a fixed time, whether on account of the par value of the share
or by way of premium, as if the same had been payable by virtue of a call
duly made and notified.
TRANSFER OF SHARES
37. Any transfer of shares in the Company shall require the consent of the
Directors, which shall not be unreasonably withheld.
38. Each transfer of shares shall be made in writing in the form appearing
hereinbelow, or in a similar form, or in any form approved by the Directors
from time to time:
"Share Transfer Deed
I, _____________ , of __________________, for valuable
consideration paid to me by ______________ of
___________________ ("Transferee"), do hereby transfer to
the Transferee _____ share(s), par value NIS 1 each,
numbered ________ to _________ (inclusive), in the company
called _________________ to hold unto the Transferee, his
executors, administrators and assigns, subject to the same
terms and conditions on which I held the same at the time of
the execution hereof; and I, the said Transferee, do hereby
agree to take the said share(s) subject to the aforesaid
terms and conditions.
In witness whereof we have hereunto set our hands this ____
day of _______, ____.
___________________ _________________
Transferee Transferor"
___________________ _________________
Witness Witness
Such form shall be executed both by the transferor and transferee, and
delivered to the Office together with the transferred share certificates,
if share certificates have been issued with respect to the shares to be
transferred, and any other proof of the transferor's title that the
Directors may require. The share transfer deed with respect to a share that
has been fully paid may be signed by the transferor only. A deed of
transfer that has been registered, or a copy thereof, as shall be decided
by the Directors, shall remain with the Company; any deed of transfer that
the Directors shall refuse to register shall be returned, upon demand, to
the person who furnished it to the Company, together with the share
certificate, if furnished.
39. The transferor shall be deemed to remain a holder of the shares until the
name of the transferee is entered into the Register in respect thereof.
40. The Company may impose a fee for registration of a share transfer, at a
reasonable rate as may be determined by the Directors from time to time.
41. The Register shall be closed for a period of 14 days before every ordinary
general meeting of the Company and at other dates and for such other
periods as are determined by the Directors from time to time, provided,
however, that the Register shall not be closed for a total of more than 30
days in any calendar year.
42. Upon the death of a Member, the remaining partners, in the event that the
deceased was a partner in a share, or the administrators or executors or
heirs of the deceased, in the event the deceased was the sole holder of the
share or was the only one of the joint holders of the share to remain
alive, shall be recognized by the Company as the sole holders of any title
to the shares of the deceased. However, nothing aforesaid shall release the
estate of a joint holder of a share from any obligation to the Company with
respect to the share that he held in partnership.
43. Any person becoming entitled to a share as a consequence of the death or
bankruptcy or liquidation of a Member shall, upon such evidence being
produced as may from time to time be required by the Directors, have the
right either to be registered as a Member in respect of the share, or,
instead of being registered himself, to transfer such share to another
person, in either instance subject to the Directors' power hereunder to
refuse or delay registration as they would have been entitled to do if the
deceased or the bankrupt had transferred his share before his death or
before his bankruptcy, and subject to all other provisions hereof relating
to transfers of shares.
44. A person becoming entitled to a share because of the death of a Member
shall be entitled to receive, and to give receipts for, dividends or other
payments paid or distributions made, with respect to the share, but shall
not be entitled to receive notices with respect to company meetings or to
participate or vote therein with respect to that share, or to use any other
right of a Member, until he has been registered as a Member with respect to
that share.
CHANGING SHARE RIGHTS
45. If at any time the share capital is divided into different classes of
shares, the Company may, unless otherwise provided by the terms of issue of
the affected shares, change, convert, broaden, add or vary in any other
manner the rights, advantages, restrictions or provisions related to or
unrelated at that time to one or more of the classes, if it received the
consent in writing of the holders of three fourths of the issued shares of
the affected class, or if sanctioned by a special resolution adopted by a
separate special general meeting of the holders of those shares; the
provisions of these Articles regarding general meetings shall apply,
mutatis mutandis, to such separate special general meeting, but the
required quorum shall be at least two Shareholders who own one third of the
issued shares of the affected class, or their proxies.
MODIFICATION OF CAPITAL
46. The Company may, from time to time, by special resolution:
(a) consolidate and divide its share capital or a part thereof into shares
of greater value than its existing shares;
(b) cancel any shares which have not been purchased or agreed to be
purchased by any person;
(c) by subdivision of its existing shares, or any of them, divide the
whole, or any part, of its share capital into shares of lesser value
than is fixed by the Memorandum, subject, however, to the provisions
of Section 144 of the Ordinance, and in a manner so that with respect
to the shares created as a result of the division it will be possible
to grant to one or more shares a right of priority, preference or
advantage with respect to dividend, capital, voting or otherwise over
the remaining or similar share;
(d) reduce its share capital, and any fund reserved for capital
redemption, in the manner that it shall deem to be desirable, and in
particular to use the rights, all or a part thereof, contained in
section 151 of the Ordinance;
(e) increase its share capital, regardless of whether or not all of its
shares have been issued, or whether the shares issued have been paid
in full, by the creation of new shares, divided into shares in such
par value, and with such preferred or deferred or other special rights
(subject always to the special rights conferred upon any existing
class of shares), and subject to any conditions and restrictions with
respect to dividends, return of capital, voting or otherwise, as shall
be directed by the special resolution.
47. The Company shall have the right, by a special resolution in a general
meeting, to set out regulations with respect to issuance and allotment of
other types of securities, aside from shares, including but without
derogating from the generality of the above, debentures, options and
warrants, and to determine that the aforesaid shall be convertible at a
specified rate or some other
predetermined formula. Absent such regulations, the Directors shall be
authorized to issue and allot such other types of securities to such
persons, at such times and upon such terms and conditions as the Company
may by resolution of Directors determine.
48. Subject to any provision to the contrary in the resolution authorizing the
increase in share capital pursuant to these Articles, the new share capital
shall be deemed to be part of the original share capital of the Company and
shall be subject to the same provisions with reference to payment of calls,
liens, title, forfeiture, transfer and otherwise as apply to the original
share capital.
CONVERSION OF SHARES TO STOCK
49. The Directors may, with the prior approval of the Company in a general
meeting, convert paid up shares into stock and to reconvert stock into paid
up shares of any par value.
50. A holder of stock may transfer it, in whole or in part, in the same manner
and in accordance with the same regulations, or as closely as possible to
them under the circumstances, under which it was possible, before their
conversion, to transfer the shares from which the stock was created;
however, the Directors may fix a minimum amount of stock that can be
transferred, and they may forbid or restrict transfers of parts of that
minimum, provided that the minimum be no larger than the par value of the
shares from which the stock was created.
51. Holders of stock shall, in proportion to the stock they hold, have the same
privileges and advantages, in regard to dividends, voting at meetings of
the Company and other matters, as if they were owners of the shares of
which the stock was created, but whoever holds a part of the stock out of
shares that do not give their owners a certain right shall not enjoy that
right by virtue of the stock, provided that the right to profits and the
Company's dividends is maintained.
52. The Company's regulations concerning paid up shares shall also apply to
stock, and accordingly the terms "share" and "shareholders" shall include
stock and stock holder.
GENERAL MEETINGS
53. A general meeting shall be held once in every year, at such place and time
as may be prescribed by the Directors but in any event not being more than
fifteen months after the last preceding general meeting. The aforesaid
general meetings shall be called ordinary general meetings; all other
general meetings shall be called extraordinary general meetings.
54. The Directors, whenever they think fit, may, and upon a demand in writing
by members holding at least ten percent of the paid-up share capital as
provided for in Section 109 of the Ordinance - shall, convene an
extraordinary general meeting. Every such demand shall include the objects
for which the meeting should be convened, shall be signed by those making
the demand (the "Petitioners") and shall be delivered to the Office. The
demand may contain a number of documents similarly worded each of which is
signed by one or more of the Petitioners. If the Directors do not convene a
meeting within 21 days from the date of the delivery of the demand as
aforesaid, the Petitioners may convene by themselves an extraordinary
general meeting upon 7 days' notice to all shareholders; if two months have
passed since the date of the delivery of the demand, however, such a meeting
shall not be held.
55. Notices of general meetings shall be given as follows:
55.1 A prior notice of at least 7 days (not including the day of delivery
but including the day of the meeting) of any general meeting shall be
given with respect to the place, date and hour of the meeting and the
nature of every subject on its agenda.
55.2 In the event that a special resolution is to be proposed at a general
meeting, a prior notice of at least 21 days (not including the day of
delivery but including the day of the meeting) shall be given with
respect to such meeting.
55.3 The notice shall be given as hereinafter provided to the Members
entitled pursuant to these Articles to receive notices from the
Company.
55.4 Non-receipt of a notice given as aforesaid shall not invalidate the
resolution passed or the proceedings held at that meeting.
55.5 With the consent of all the Members who are entitled at that time to
receive notices, it shall be permitted to convene meetings and to
resolve all types of resolutions, upon shorter notice or without any
notice and in such manner, generally, as shall be approved by the
Members.
PROCEEDINGS OF GENERAL MEETINGS
56. Subject to the provisions of these Articles, the function of the general
meeting shall be to receive and to deliberate with respect to the profit
and loss statements, the balance sheets, the ordinary reports and the
accounts of the Directors and auditors; to declare dividends, to appoint
auditors and to fix their salaries. Every other matter shall be deemed to
be special, and shall be discussed at an extraordinary general meeting.
57. No matter shall be discussed at a general meeting unless a quorum is
present at the time when the general meeting starts its discussions. Two
Members present, personally or by proxy, who hold or represent 33% of the
voting rights in the Company, shall be deemed to be a quorum.
58. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the demand of Members, shall be
dissolved; in any other case, it shall stand adjourned to the same day in
the next week at the same place and time, or any other day, hour or place
as the Directors shall notify the Members, so long as the adjourned meeting
is neither less than 7 nor more than 14 days from the time of the original
meeting. If a notice of the adjourned meeting has been given to the
Members, and quorum is not present at the adjourned meeting within half an
hour from the time appointed for the meeting, any Member present personally
or by proxy, holding at least 15% of the voting rights in the Company,
shall be a quorum, and shall be entitled to deliberate and to resolve in
respect of the matters for which the meeting was convened.
59. The chairman of the Board of Directors shall preside as chairman at all
general meetings. If there is no chairman, or if he is not present within
15 minutes from the time appointed for the meeting, or if he shall refuse
to preside at the meeting, the Members present shall elect one of the
Directors to act as chairman, and if only one Director is present, he shall
act as chairman. If no Directors are present, or if they all refuse to
preside at the meeting, the Members present shall elect one of the Members
present to preside at the meeting.
60. The chairman may, with the consent of any meeting at which a quorum is
present, and shall - if so directed by such meeting, adjourn the meeting
from time to time and from place to place, as the meeting shall decide. If
the meeting shall be adjourned for 14 days or more, a notice shall be given
of the adjourned meeting as in the case of an original meeting. Except as
aforesaid, no Member shall be entitled to receive any notice of an
adjournment or of the business to be transacted at the adjourned meeting.
At an adjourned meeting, no matters shall be discussed except for those
which could properly have been discussed at the meeting which decided upon
the adjournment.
VOTE BY MEMBERS
61. Every resolution put to a vote at a meeting of shareholders shall be
decided by a show of hands, unless before or upon the declaration of the
result of the show of hands a count of votes is demanded by any Members
present. Unless a count of votes is demanded as aforesaid, the chairman's
declaration of the result of the show of hands shall be final, and an entry
to that effect in the minute book of the Company shall be conclusive
evidence of the fact, without the necessity of proving the number or
proportion of the votes recorded in favor or against such a resolution.
A special resolution of the general meeting of the Shareholders shall
require a majority of 75% of the participating votes. Except with respect
to a special resolution, and subject to any provision in this regard in the
Ordinance requiring a higher majority, a resolution shall be deemed to be
adopted at a general meeting if it received a majority of the parvotes;
provided, however, that until the earlier of: (i) in respect of the rights
of Purchaser (as defined below) hereunder - it ceases to hold at least 20%
of the outstanding share capital of the Company; (ii) in respect of the
rights of the Existing Shareholders (as defined below) hereunder - they
cease to hold collectively at least 20% of the outstanding share capital of
the Company, or (iii) the closing of an initial public offering of the
Company's securities, the Company shall not take any of the following
decisions or actions except if the Minority (as defined below), voting as a
separate class, voted in favor of such decision or consented to such action:
61.1 Approving any transaction with any Interested Party (as defined below)
or in which an Interested Party has a personal interest.
61.2 Liquidation, dissolution or winding-up the business of the Company.
61.3 Appointment of accountants to the Company.
For purposes hereof: the term "Purchaser" means D.S.P. Semiconductors Ltd.;
the term "Existing Shareholders" means Dovrat Xxxxx/Yozma Polaris Fund
L.P., Dovrat Xxxxx & Co. Ltd., Leader Underwriters Ltd., Adasha Yizum
Proyektim (Tel Aviv) Ltd., El Kanit Development Ltd., Xxxxxxxx Xxxxx and
Ofer Bar Or; the term "Interested Party" means any (i) director, office
holder or shareholder of the Company, (ii) any person which is a director,
office holder or shareholder in any of the above, (iii) any person which
directly, or indirectly through one or more intermediaries, "Controls", or
is Controlled by, or is under common Control with, any of the above, or
(iv) any "Family Member" of any of the above (the capitalized terms herein
shall have the meanings ascribed to them in the Israeli Securities Law of
1968); and the term "Minority" means the Purchaser - before it holds 51% of
the Company's share capital, or the Existing Shareholders - after the
Purchaser holds 51% of the Company's share capital, provided, however, that
if the term "Minority" refers herein to the Existing Shareholders or any of
them, clause 61.3 shall not apply to the appointment of an established firm
in Israel which is associated with an international firm of accountants and
auditors.
62. If a count of votes is duly demanded, it shall be taken in such manner as
the chairman directs, and the results of the count shall be deemed to be a
resolution of the meeting wherein the vote was demanded.
63. At a vote by show of hands, every member present in person or by proxy
shall have one vote.
64. At a vote by count of votes, each Member present at a meeting, personally
or by proxy, shall be entitled, subject to and without derogating from any
rights or restrictions existing at that time with respect to a certain
class of shares forming part of the capital of the Company, to one vote for
each share held by him; provided that no Member shall be permitted to vote
at a general meeting or to appoint a proxy to vote therein unless he has
paid all calls for payment and all moneys due to the Company from him with
respect to his shares.
65. If the number of votes for and against is equal, whether by show of hands
or by count of votes, the chairman of the meeting shall have no casting
vote, and the resolution proposed shall be deemed rejected.
66. In the case of joint holders of a share, the vote of the senior holder who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders. The appointment of a
proxy to vote on behalf of a share held by joint holders shall be executed
by the signature of the senior of the joint holders. For the purposes of
this Section, seniority shall be determined by the order in which the names
of the joint holders stand in the Register of Members.
67. An objection to the right of a Member or a proxy to vote in a general
meeting must be raised at such meeting or at such adjourned meeting wherein
that person was supposed to vote, and every vote not disqualified at such a
meeting shall be valid for each and every matter. The chairman of the
meeting shall decide whether to accept or reject any objection raised at
the appointed time with regard to the vote of a Member or proxy, and his
decision shall be final.
68. A Member of unsound mind, or in respect of whom an order to that effect has
been made by any court having jurisdiction, may vote, whether on a show of
hands or by a count of votes, only through his legal guardian or such other
person, appointed by the aforesaid court, who performs the function of a
representative or guardian. Such representative, guardian, or other person
may vote by proxy.
69. A Member of the Company which is a corporation shall be entitled, by a
decision of its board of directors, or by a decision of a person or other
body, according to a resolution of its board of directors, to appoint a
person who it shall deem fit to be its representative at every meeting of
the Company. The representative appointed as aforesaid shall be entitled to
perform on behalf of the corporation he represents all the powers that the
corporation itself might perform as if it were a person.
70. In every vote a Member shall be entitled to vote either personally or by
proxy. A proxy present at a meeting shall also have the same right as a
Member to request a count of votes. A proxy need not be a Member of the
Company.
71. A letter of appointment of a proxy, power of attorney or other instrument
pursuant to which the appointee is acting shall be in writing. An
instrument appointing a proxy, whether for a specific meeting or otherwise,
may be in the following form or in any other similar form prescribed by the
Directors:
"I, _______________, of ____________________ , a Member
holding shares in _______________ Ltd. hereby appoint
_____________ of __________________ as my proxy to vote in
my name and place at the [ordinary, extraordinary, adjourned
- as the case may be] general meeting of the Company to be
held on _________, and at any adjournment thereof.
In witness whereof signed by me this day of ______, ____ .
__________________
Appointor's Signature"
Such instrument or a copy thereof shall be deposited at the Office, or at
such other place as the Directors may direct from time to time, at least 48
hours before the time appointed for the meeting or adjourned meeting
wherein the person referred to in the instrument is appointed to vote,
otherwise that person shall not be entitled to vote that share. An
instrument appointing a proxy which is not limited in time shall expire 12
months after the date of its execution; if the appointment shall be for a
limited period, whether in excess of 12 month or not, the instrument shall
be for the period stated therein.
72. A vote pursuant to an instrument appointing a proxy shall be valid
notwithstanding the death of the appointor, or the appointor becoming of
unsound mind, or the cancellation of the proxy or its expiration in
accordance with any law, or the transfer of the shares with respect to
which the proxy was given, unless a notice in writing of any such event was
received at the Office before the meeting took place.
73. A Member is entitled to vote by a separate proxy with respect to each share
held by him, provided that each proxy shall have a separate letter of
appointment containing the serial number of share(s) with respect to which
such proxy is entitled to vote. If a specific share is included by the
holder in more than one letter of appointment, that share shall not entitle
any of the proxy holders to a vote.
74. Subject to the provisions of any Law, a resolution in writing signed by the
holder or holders of shares, entitling their holders to a majority, or, as
the case may be, 75% of the voting rights of the shares outstanding at that
time, and entitled to vote with respect to such shares at general meetings,
or a resolution as aforesaid agreed upon by telex, telegram or facsimile,
and in each case - after a copy of which has been sent to all Sharehand any
required consent pursuant to Section 61 has been received, shall have the
same validity as any ordinary resolution or special resolution, as
applicable, carried in a general meeting of the Company duly convened and
conducted for the purpose of passing such a resolution. If all the
shareholders shall consent in writing, or by telex, telegram, or facsimile
to any action to be taken by the shareholders, such action shall be as
valid as though it had been unanimously authorized at a duly convened
general or extraordinary meeting of the shareholders.
DIRECTORS
75. The number of the members of the Board of Directors shall be five.
76. The directors shall be elected and appointed by the general meeting of the
shareholders.
77. If any member of the Board of Directors is not elected or appointed, or if
the office of any member of the Board of Directors is vacated, the other
members of the Board of Directors may act in every way and manner provided
for under these Articles and the Law as long as their number does not fall
below the quorum required by these Articles for a Board of Directors'
meeting. If their number does fall below the number required for a quorum,
they shall not be permitted to act.
78. Any Director may appoint a substitute to himself (the "Substitute"),
pursuant to the following provisions:
78.1 Any person, whether or not a member of the Board of Directors, may
serve as a Substitute. One person may serve as the substitute for a
number of Directors.
78.2 The appointment or removal of a Substitute shall be done in a written
document, signed by the Director who appointed him. The document shall
be furnished to the Company.
78.3 A substitute shall have, in addition to his vote, if he himself is a
member of the Board of Directors, the number of votes equal to the
number of Directors for whom he is serving as a Substitute.
78.4 A Substitute shall have, subject to the provisions of the instrument
by which he was appointed, all the powers and authorities that the
Director for whom he is serving as Substitute has, and in the event
the Substitute is himself a Director, such powers and authorities
shall be in addition to his powers as a member of the Board of
Directors and shall not in any way derogate therefrom. A Substitute
shall be subject to all the duties and obligations of a member of the
Board of Directors under these Articles or the Law.
78.5 The office of a Substitute shall be automatically vacated if his
appointment is terminated by the Director who appointed him in
accordance with these regulations, or upon the occurrence with respect
to the Substitute of one of the events described in Section 82 or, if
the office of the member of the Board of Directors with respect to
whom he serves as a Substitute shall be vacated for any reason
whatsoever.
79. A Director may appoint any person as his proxy, to vote on his behalf at
any meeting of the Directors, pursuant to the following provisions:
79.1 The appointment of a proxy shall be in writing signed by the Director
making the appointment. Such writing shall be furnished to the
Company. A proxy shall not be entitled to vote in place of the
Director who appointed him at a meeting of the Directors in which such
Director is present.
79.2 A Director that has appointed a proxy shall be entitled to revoke the
proxy at any time by a written document signed by the Director and
submitted to the Company. The appointment of a proxy shall be
automatically vacated upon the occurrence of any of the events that
would result in the automatic vacation of the office of a Substitute,
as set forth in the preceding Section.
79.3 If a Director has duly appointed both a Substitute and a proxy with
respect to any meeting of the Directors, then only the person
appointed as a proxy shall be entitled to act on behalf of the
Director at said meeting.
80. A Director shall not be required to hold qualifying shares in the Company.
81. A Director may hold another paid position or function, except as auditor,
in the Company, or in any other company of which the Company is a
shareholder or in which the Company has some other interest, or that has an
interest in the Company, together with his position as a Director, upon
such conditions with respect to salary and other matters as determined by
the Directors.
82. Subject to the provisions of these Articles, or to the provisions of an
existing contract, the tenure of office of a Director shall automatically
be terminated upon the occurrence of one of the following:
82.1 If he becomes bankrupt;
82.2 If he is declared insane or becomes of unsound mind;
82.3 If he resigns by an instrument in writing delivered to the Company.
82.4 With his death;
82.5 With the liquidation of the Company;
83. The Directors' remuneration shall be set from time to time at the Company's
general meeting. In addition, the Directors, their Substitutes and proxies
shall be entitled to reimbursement of their reasonable expenses for travel,
board and lodging that have been expended in the course of their
performance of their duties as Directors, including actual and reasonable
travel expenses to and from Board of Directors' meetings, all as decided by
the general meeting. If one of the Directors shall perform services or
tasks aside from his regular duties as a Director, whether as a result of
his particular profession or by a trip or stay abroad or otherwise, the
Directors may decide to pay him a special wage. Such a wage may be paid by
way of salary, commission, participation in profits or otherwise, and shall
be in addition to his regular fee, if there is any, or in place thereof, as
shall be decided.
POWERS AND DUTIES OF DIRECTORS
84. The management of the business of the Company shall be vested in the Board
of Directors, and they may pay all expenses incurred in connection with the
establishment and registration of the Company as they shall see fit. They
shall be entitled to perform all of the Company's powers and authorities,
and to perform in its name all the acts that it is entitled to do pursuant
to the Memorandum and/or these Articles and/or any Law, except for those
acts which pursuant to Law or these Articles are vested in the general
meeting of the Company, and subject to any provision in Law, or in these
Articles, or the regulations that the Company shall adopt by special
resolution in its general meeting (insofar as they do not contradict the
Law or these Articles). However, any regulation adopted by the Company in
its general meeting as aforesaid shall not affect the legality of any prior
act of the Directors that would be legal and valid but for that regulation.
85. Without limiting the generality of the preceding provision, the Directors
may from time to time, in their discretion, borrow or secure the payment of
any sum of money for the purposes of the Company, and they may raise or
secure the repayment of such sum of sums in such manner, at such times and
upon such terms and conditions in all respects as they think fit, and, in
particular, by the issue of bonds, perpetual or redeemable debentures,
debenture stock, or any mortgages, charges, or other securities on the
whole or any part of the property of the Company, both present and future,
including its uncalled capital for the time being and its called but unpaid
capital.
FUNCTIONS OF THE DIRECTORS
86. The Directors may meet in order to transact business, to adjourn their
meetings or to organize them otherwise as they shall deem fit.
87. Quorum for meetings of the Board of Directors shall be 3 Directors, present
personally or by proxy. Notwithstanding the above, if written notice of
more than 7 days has been given of a board meeting, specifying the issues
on the meeting's agenda, and such meeting is not quorate, such meeting may
be postponed for the same day and time one week later, and, if written
notice has been given of the adjourned meeting, quorum for meeting shall be
two Directors.
88. The Directors may delegate any of their powers to committees; the
provisions of these Articles applying to the Board of Directors shall
apply, mutatis mutandis, to any such committee.
89. Members of the Board of Directors may participate in a meeting of the Board
of Directors by means of a conference telephone call or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to
this Section shall constitute presence in person at such meeting.
90. Subject to any resolution to the contrary adopted by the Board of
Directors, any Director may at any time call a Board of Directors' meeting
and the Chairman shall call such a meeting upon such request.
91. Any notice of a Board of Directors' meeting can be given orally, by
telephone, in writing, or by telegram, facsimile or telex. Notice shall be
given at least 7 days before the time appointed for the meeting, unless all
of the Directors at that time agree to a shorter notice, or waive notice
altogether.
92. Issues raised before all meetings of the Board of Directors shall be
decided by majority vote, provided, however, that until the earlier of: (i)
in respect of the rights of Purchaser hereunder - it ceases to hold at
least 20% of the outstanding share capital of the Company; (ii) in respect
of the rights of the Existing Shareholders hereunder - they cease to hold
collectively at least 20% of the outstanding share capital of the Company,
or (iii) the closing of an initial public offering of the Company's
securities, the Company shall not take any of the following decisions or
actions except if at least one director designated by the Minority voted in
favor of or consented to such decision or action (provided, however, that
if the term Minority refers herein to the Existing Shareholders or any of
them, clause 92.1 hereof shall not apply):
92.1 Approval of a material deviation from the Company's current business
plan.
92.2 Merger with or consolidation into any corporation, firm or entity.
92.3 Sale, lease, or other disposition of all or substantially all of the
Company's assets.
92.4 Approving any transaction with any Interested Party or in which an
Interested Party has a personal interest.
92.5 Appointment of any committee of the Board of Directors.
92.6 Making a material change in the business of the Company.
All capitalized terms used herein shall have the meaning ascribed to them
in Section 61.
93. A resolution in writing signed or agreed to in writing or by telephone,
telex or facsimile by all of the Directors shall be valid for every purpose
as a resolution adopted at a Board of Directors' meeting that was duly
convened and held. In place of a Director the aforesaid resolution may be
signed and delivered by his Substitute or his proxy or his Substitute's
proxy.
94. All actions performed bona fide by the Board of Directors or by any person
acting as Director or as a Substitute shall be as valid as if each and
every such person were duly and validly appointed and fit to serve as a
Director or Substitute, as the case may be, even if at a later date a flaw
shall be discovered in the appointment of such a Director or such a person
acting as aforesaid, or in his qualifications so to serve.
95. The Directors shall cause minutes to be taken of all general meetings of
the Company, of the appointments of officers of the Company, and of Board
of Directors' meetings, which minutes shall include the following items, if
applicable: the names of the persons present; the matters discussed at the
meeting; the results of votes taken; resolutions adopted at the meeting;
and directives given by the meeting. The minutes of any meeting, signed or
appearing to be signed by the chairman of the meeting, shall serve as a
prima facie proof of the truth of the contents of the minutes.
96. The Directors shall comply with all provisions of the Ordinance, and
especially with the provisions in respect of -
96.1 Registration in the Company's books of all liens that affect the
Company's assets;
96.2 Keeping a register of Directors;
96.3 Delivery to the Registrar of Companies of all notices and reports that
are required to be so delivered.
PERSONAL INTEREST
97. All transactions in which an Office Holder (as such term is defined in the
Ordinance) in the Company has a personal interest shall be approved in
accordance with the provisions of the Ordinance.
98. Whenever the Ordinance requires approval pursuant to these Articles, the
following provisions shall apply:
98.1 The Company may approve an action of an Office Holder of the type
listed in Section 96-27(a) of the Ordinance if the Board of Directors
determined that all of the conditions for such approval, as set forth
in the Ordinance, have been fulfilled and approved such action.
98.2 The Company may approve a transaction with another person, in which an
Office Holder has, directly or indirectly, a personal interest, if (i)
the Office Holder disclosed to the Company in advance all of the
relevant facts, and (ii) the Board of Directors: (a) determined that
the transaction shall not be contrary to the Company's best interests,
(b) determined that the Office Holder acted in good faith in
connection with such transaction, and (c) approved the transaction.
98.3 The Company may approve a transaction with an Office Holder, in which
such Office Holder has, directly or indirectly, a personal interest,
if (i) the Office Holder disclosed to the Company in advance all of
the relevant facts, and (ii) the Board of Directors: (a) determined
that the transaction shall not be contrary to the Company's best
interests, (b) determined that the Office Holder acted in good faith
in connection with such transaction, and (c) approved the transaction.
98.4 If a majority of the Directors have a personal interest in a
transaction under subsections (2) or (3) above, approval of such
transaction by the general meeting of the Company shall also be
required.
98.5 If a transaction under subsections (2) or (3) above is an "Unusual
Transaction", as defined in the Ordinance, approval of such
transaction by the general meeting of the Company shall also be
required.
LOCAL MANAGEMENTS
99. The Directors may organize from time to time arrangements for the
management of the Company's business in any particular place, whether in
Israel or abroad, as they shall see fit.
100. Without derogating from the general powers granted to the Board of
Directors pursuant to the preceding Section, the Directors may from time to
time convene any local management or agency to conduct the business of the
Company in any particular place, whether in Israel or abroad, and may
appoint any person to be a member of such local management, or to be a
director or agent, and may decide his manner of compensation. The Directors
may from time to time grant a person so appointed any power, authority, or
discretion that the Directors have at that time, and may authorize any
person acting at that time as a member of a local management to continue in
his position notwithstanding that some position has been vacated there, and
any such appointment or authorization may be made upon such conditions as
the Directors deem fit. The Directors may from time to time relieve any
person so appointed or revoke or change any such authorization.
BRANCH REGISTER
101. The Company may, subject to the provisions of Sections 71 to 80 inclusive
of the Ordinance and any order given or to be given pursuant to those
Sections or any one of them, keep in every other country where those
provisions shall apply a register or registers of Members living in that
other country, and exercise any other powers referred to in the Law with
respect to such branch registers.
GENERAL MANAGER, SECRETARY, OTHER OFFICERS AND ATTORNEYS
102. The Director may from time to time appoint one or more persons, whether or
not he is a member of the Board of Directors, as the Chief Executive
Officer and General Manager of the Company. The appointment may be either
for a fixed period of time or without limiting the time that the General
Manager will stay in office. The Directors may, from time to time, subject
to any provision in any contract between the General Manager and the
Company, release him from his office and appoint another or others in his
or their place. The Directors may from time to time grant and bestow upon
the General Manager those powers and authorities that it exercises pursuant
to these Articles, as it shall deem fit, and may grant those powers and
authorities for such period, and to be exercised for such objectives and
purposes, in such time and conditions, and on such restrictions, as it
shall decide; and it can from time to time revoke, repeal, or change any
one or all of those powers or authorities.
103. The Directors may from time to time appoint a Secretary to the Company, a
Treasurer and/or Comptroller or Chief Financial Officer as well as other
officers, personnel, agents and servants, including management companies,
for fixed, provisional or special duties, as the Directors may from time to
time deem fit, and may from time to time, in their discretion, suspend
and/or dismiss any one or more of such persons. The Directors may determine
the powers and duties of such persons, and may demand security in such
cases and in such amounts as they deem fit.
104. The wages and any other compensation of the General Manager and other
managers, officers or personnel shall be determined from time to time by
the Board of Directors (subject to any provision in any contract between
the Company and any such General Manager, manager, officer or personnel),
and it may be paid by way of a fixed salary or commission, or a percentage
of profits or of the Company's turnover or of any other company that the
Company has an interest in, or by participation in such profits, or in any
combination of the aforementioned methods, or such other method as the
Directors shall determine.
105. The Directors may from time to time directly or indirectly authorize any
company, firm, person or group of people to be the attorneys in fact of the
Company for purposes and with powers and discretion which shall not exceed
those conferred upon the Directors or which the Directors can exercise
pursuant to these Articles, and for such a period of time and upon such
conditions as the Directors may deem proper. Every such authorization may
contain such directives as the Directors deem proper for the protection and
benefit of the persons dealing with such attorneys. The Directors may also
grant such an attorney the right to transfer to others, in part or in
whole, the powers, authorities and discretions granted to him, and may
terminate and revoke the appointments or revoke all or any part of the
powers granted to them.
DIVIDENDS
106. The Company, at a general meeting and upon the recommendation of the
Directors, may declare a dividend to be paid to the Members, according to
their rights and benefits in the profits, and to decide the time of
payment. A dividend may not be declared in excess of that recommended by
the Directors, although the Company at a general meeting may declare a
smaller dividend.
107. The Directors may from time to time pay to the Members, on account of a
forthcoming dividend, such interim dividend as shall be deemed just with
regard to the condition of the Company.
108. A notice of the declaration of a dividend, whether an interim dividend or
otherwise, shall be given to the Members registered in the Register, in the
manner provided for in these Articles.
109. Subject to the provisions of these Articles, and subject to any rights or
conditions attached at that time to any share in the capital of the Company
granting preferential, special or deferred rights or not granting any
rights with respect to dividends, the profits of the Company which shall be
declared as dividends shall be distributed according to the proportion of
the nominal value paid up to account of the shares held at the record date
fixed by the Company, without regard to premium paid in excess of the
nominal value, if any. No amount paid or credited as paid on a share in
advance of calls shall be treated for purposes of this Article as paid on a
share.
110. The Directors may issue any share upon the condition that a dividend shall
be paid at a certain date, or that a portion of the declared dividend for a
certain period shall be paid, or that the period for which a dividend shall
be paid shall commence at a certain date, or any similar condition; In
every such case, subject to any provision mentioned in Section the
preceding Section, the dividend shall be paid in respect of such a share in
accordance with such a condition.
111. At the time of declaration of a dividend the Company may decide that such a
dividend shall be paid in whole or in part by way of distribution of
certain properties, including by means of distribution of fully paid up
shares or debentures or debenture stock of the Company, or by means of
distribution of fully paid up shares or debentures or debenture stock of
any other company, or in one or more of the aforesaid ways.
112. The Company shall have a lien on any dividend paid in respect of a share on
which the Company has a charge, and may use it to pay any debts,
obligations or commitments to which the charge applies.
113. The persons registered in the Register as Members on the record date for
declaration of the dividend shall be entitled to receive the dividend. A
transfer of shares shall not transfer the right to a dividend which has
been declared after the transfer but before the registration of the
transfer.
114. A dividend may be paid by, inter alia, check or payment order to be mailed
to the address of a Member or person entitled thereto as registered in the
Register, or in the case of joint owners - to the address of one of the
joint owners as registered in the Register. Every such check shall be made
out to the person to whom it is sent. The receipt of the person who on the
record date in respect of the dividend is registered as the holder of any
share or, in the case of joint holders, of one of the joint holders, shall
serve as a release with respect to payments made in connection with that
share.
115. If at any time the share capital is divided into different classes of
shares, the distribution by way of dividend, of fully paid up shares, or
from funds, shall be made in one of the two following manners as to be
determined by the Directors:
115.1 All holders of shares entitled to fully paid up shares shall receive
one uniform class of shares; or
115.2 Each holder of shares entitled to fully paid up shares shall receive
shares of the class of shares held by him and entitling him to fully
paid up shares.
116. If the Company has redeemed redeemable preference shares, then all funds
reserved for redemption of such shares may be used, in whole or in part,
according to a resolution of the Company, to pay in full or in part for any
new share issues or any shares not yet issued to the Members of the Company
and to distribute such fully paid up shares, as shall be decided upon by
the Board of Directors, up to the sum equal to the nominal value of the
shares to be issued.
117. In order to give effect to any resolution in connection with distribution
of dividends, or distribution of property, fully paid-up shares or
debentures, the Board of Directors may resolve any difficulty that shall
arise with respect to such distribution in such way as it shall deem
proper, including the issuance of certificates for fractional shares, and
the determination of the value of certain property for purposes of
distribution. The Board of Directors may further decide that payment in
cash shall be made to a Member on the basis of value decided for that
purpose, or that fractions value of which is less than one New Israeli
Shekel shall not be taken into account for the purpose of adjusting the
rights of all the parties. The Board of Directors shall be permitted in
this regard to grant cash or property to trustees in escrow for the
benefit of persons entitled thereto, as the Directors shall see fit.
Wherever required, an agreement shall be submitted to the Registrar of
Companies and the Directors may appoint a person to execute such an
agreement in the name of the persons entitled to any dividend, property,
fully paid-up shares or debentures as aforesaid, and such an appointment
shall be valid and binding on the Company.
118. The Board of Directors may, with respect to all dividends not demanded
within 30 days after their declaration, invest or use them in another way
for the benefit of the Company, until they shall be demanded.
119. The Company shall not be obligated to pay interest on any dividend,
including in the circumstances set forth in the preceding Section.
RESERVES
120. The Directors may set aside from the profits of the Company the sums they
deem proper, as a reserve fund or reserve funds for extraordinary uses, or
for special dividends or other funds or for the purpose of preparing,
improving or maintaining any property of the Company, and for such other
purposes as shall in the discretion of the Board of Directors be beneficial
to the Company, and the Directors may invest the various sums so set aside
in such investments as they deem proper, and from time to time deal in,
change, or transfer such investments, in part or in whole, for the benefit
of the Company. The Board of Directors may also divide any reserve
liability fund to special funds as it shall deem proper, transfer moneys
from fund to fund and use every fund or any part thereof in the business of
the Company, without being required to keep such sums separate from the
rest of the Company's property. The Directors may, from time to time, also
transfer to the next year profits out of such sums which are, in their
discretion, beneficial to the Company. The Directors may generally create
funds as they deem necessary, either those resulting from profits of the
Company or from re-evaluation of property, or from premiums paid for shares
or from any other source, and use them in their discretion as they deem fit
so long as the creation, changes or uses of such funds do not exceed any
provision of the Law or accepted accounting principles and practices.
121. All premiums received from the issue of shares shall be capital funds, and
they shall be treated for every purpose as capital and not as profits
distributable as dividends. The Board of Directors may organize a reserve
capital liability account
and transfer from time to time all such premiums to the reserve capital
liability account, or use such premiums and moneys to cover depreciation or
doubtful loss. All losses from sale of investments or other property of the
Company shall be debited to the reserve account, unless the Directors
decide to cover such losses from other funds of the Company. The Board of
Directors may use moneys credited to the capital reserve liability account
in any manner that these Articles or the Law permit.
122. Any amounts transferred and credited to the account of income and expense
fund or general reserve liability account or capital liability reserve
account, may, until otherwise used in accordance with these Articles, be
invested together with such other moneys of the Company in the day to day
business of the Company, without having to differentiate between these
investments and the investment of other moneys of the Company.
CAPITALIZATION OF RESERVE FUNDS
123. The Company may from time to time resolve at a general meeting that any
sum, investment or property not required as a source for payment of fixed
preferential dividends and (i) standing credited at that time to any fund
or to any reserve liability account of the Company, including also premiums
received from issuance of shares, debentures, or debenture stock of the
Company, or (ii) being net profits not distributed and remaining in the
Company, shall be capitalized, and that such amount shall be distributed as
dividends on shares, in the manner so directed by such resolution. The
Board of Directors shall use such investment, sum or property, according to
such a resolution, for full payment of such shares of the Company's capital
not issued to the Shareholders, and to issue such shares and to distribute
them as fully paid shares among the Shareholders according to their pro
rata right for payment of the value of the shares and their rights in the
amount capitalized. The Directors may also use such investment, sum or
property, or any part thereof, for the full payment of the Company's
capital issued and held by such Shareholders, or such investment, sum or
property in any other manner permitted by such a resolution. If any
difficulty shall arise with respect to such a distribution, the Directors
may act, and shall have all the powers and authorities, as set forth in
Section 121 above, mutatis mutandis.
REGISTERED OFFICE
124. The Directors shall determine the location of the Company's Office.
SEAL, STAMP AND SIGNATURES
125. The Directors shall cause the Company's seal, if the Company shall have a
seal, and the Company's rubber stamp, of which the Company shall have at
least one, to be kept in safekeeping, and it shall be forbidden to use the
seal or the rubber stamp in violation of any instructions the Directors may
give in connection with the use thereof.
126. The Board of Directors may designate any person or persons (even if they
are not members of the Board of Directors) to act and to sign in the name
of the Company, and to apply the Company's seal or rubber stamp; the acts
and signature of such a person or persons shall bind the Company, insofar
as such person or persons have acted and signed within the limits of their
authority.
127. The printing of the name of the Company by any means next to the signatures
of the authorized signatories of the Company, as aforesaid, shall be valid
as if the rubber stamp of the Company was affixed.
128. The Company may exercise the authorities granted to a company in Section
102 of the Ordinance with respect to the keeping of a seal for use outside
of Israel, and such authorities shall be granted to the Directors.
ACCOUNTS AND AUDIT
129. The Directors shall cause correct accounts to be kept:
(1) Of the assets and liabilities of the Company;
(2) Of moneys received or expended by the Company and the matters for
which such moneys are expended or received;
(3) Of all purchases and sales made by the Company.
The account books shall be kept in the Office or at such other place as the
Directors deem fit, and they shall be open for inspection by the Directors.
130. The Directors shall determine from time to time, in any specific case or
type of cases, or generally, whether and to what extent, and at what times
and places, and under what conditions or regulations, the accounts and
books of the Company, or any of them, shall be open for inspection by the
Members. No Member other than a Director shall have any right to inspect
any account book or document of the Company except as conferred by Law or
authorized by the Board of Directors or by the Company in a general
meeting.
131. Auditors shall be appointed and their function shall be set out in
accordance with the Law.
132. Not less than once a year, the Directors shall submit before the Company at
a general meeting a balance sheet and profit and loss statement for the
period after the previous statement. The statement shall be prepared in
accordance with the relevant provisions of the Ordinance. A report of the
auditor shall be attached to the statements, and it shall be accompanied by
a report from the Directors with respect to the condition of the Company's
business, the amount (if any) they propose as a dividend, and the amount
(if any) that they propose to set aside for the fund accounts.
NOTICES
133. A notice or any other document may be served by the Company upon any Member
either personally or by sending it by mail, telegram, facsimile or telex
addressed to such Member at his registered address as appearing in the
Register of Members. If the address of a Member is outside of Israel, then
any notice sent by mail shall be sent by airmail.
134. All notices with respect to any share to which persons are jointly entitled
may be given to one of the joint holders, and any notice so given shall be
sufficient notice to all the holders of such share.
135. Any Member registered in the Register who shall from time to time furnish
the Company with an address at which notices may be served, shall be
entitled to receive all notices he is entitled to receive according to
these Articles at that address. However, except for the aforesaid, no
Member whose address is not registered in the register shall be entitled to
receive any notice from the Company.
136. A notice may be given by the Company to the persons entitled to a share in
consequence of the death or bankruptcy of a Member by sending it through
the mail in a prepaid airmail letter or telegram or telex or facsimile
addressed to them by name, at the address, if any, furnished for the
purpose by the persons claiming to be so entitled or, until such an address
has been so furnished, by giving the notice in any manner in which the same
might have been given if the death or bankruptcy have not occurred.
137. Any notice or other document, (i) if delivered personally, shall be deemed
to have been served upon delivery, (ii) if sent by mail, shall be deemed to
have been served 14 days after the delivery thereof to the post office, if
sent by airmail, and 7 days after the delivery thereof to the post office,
if sent by domestic post, and (iii) if sent by telex, confirmed facsimile
or telegram, shall be deemed to have been served 24 hours after the time
such telex, facsimile or telegram was sent.
In proving such service it shall be sufficient to prove that the letter or
telegram containing the notice was properly addressed and delivered at the
post office, or sent by telex or confirmed facsimile, as the case may be.
REORGANIZATION OF THE COMPANY
138. In case of a sale of substantially all of the Company's assets the
Directors may, or in case of liquidation the liquidators may, if authorized
by a special resolution of the Company, receive shares paid in full or in
part, debentures, or other securities of any other company, whether already
existing or about to be established for the purpose of acquiring the
property of the Company, or a part thereof.
The Directors (if the profits of the Company so permit) or the liquidators
(at the time of liquidation) may distribute among the Members the shares or
aforesaid securities or any other property of the Company without realizing
them, or may deposit them with trustees for the Members. The Company may,
by special resolution, resolve as to the distribution or the setting aside
of cash, shares, or other securities and the rights or property of the
Company in a manner not entirely identical with the legal rights of the
Members of the Company, or its participants. Such a resolution may value
the securities or property aforesaid at such price and in such manner as
the meeting shall decide. All Shareholders shall be required to accept any
valuation or distribution decided as aforesaid and to waive all their
rights in this regard, except when the Company is at a liquidation stage or
in the process of liquidation, with respect to such legal rights (if any)
which under Law can not be altered or renounced.
OFFICE HOLDERS' INDEMNITY AND INSURANCE
139. Subject to the provisions of any Law, the Company may indemnify its Office
Holders with respect to any of the following:
139.1 A monetary liability imposed on him in favor of a third party in any
judgment, including any settlement confirmed as judgment and an
arbitrator's award which has been confirmed by the court, in respect
of an act performed by him by virtue of him being an Office Holder of
the Company;
139.2 Reasonable litigation expenses, including legal fees paid for by the
Office Holder, or which he is obligated to pay under a court order,
in a proceeding brought against him by the Company, or on its behalf,
or by a third party, or in a criminal proceeding in which he is found
innocent, all in respect of an act performed by him by virtue of him
being an Office Holder of the Company.
140. Subject to the provisions of any Law, the Company may procure, for the
benefit of any of its Office Holders, office holders' liability insurance
with respect to any of the following.
140.1 A breach of the duty of care owed to the Company or any other person;
140.2 A breach of the fiduciary duty owed to the Company, provided that
such Office Holder acted in good faith and had reasonable grounds to
assume that the action would not injure the Company;
140.3 A monetary liability imposed on such Office Holder in favor of a
third party, in respect of an act performed by him by virtue of him
being an Office Holder of the Company.
WINDING UP
141. In the event of a winding up of the Company, the Company's property
distributable among the Members shall be distributed in proportion to the
sum paid on account of the nominal value of the shares held by them, of any
class, without taking into account premiums paid in excess of the nominal
value. The provisions of Section 141 with regard to the possibility of a
distribution not identical to the legal rights shall apply to this
distribution as well.
142. If the Company is voluntarily wound up, the liquidators may, with the
approval of a special resolution, divide the property as is among the
Members, or deposit any part of the Company's property with trustees in
escrow for the benefit of Members, as they deem proper. A resolution
approving such a distribution may also approve a distribution in a manner
other than in accordance with the legal rights of the Members, and may
grant special rights to any class of Members. However, in the event of the
adoption of a resolution authorizing a distribution not in accordance with
the legal rights of the Members, Members adversely affected thereby shall
have the same right to object, and any rights attached thereto, as if such
a resolution was a special resolution passed pursuant to Section 334 of the
Ordinance.
143. If, at the time of liquidation, the Company's property available for
distribution among the Members shall not suffice to return all the paid up
capital, and subject to, and without derogating from, any rights or surplus
rights or existing restrictions at that time of any special class of shares
forming part of the capital of the Company, such property shall be divided
so that the losses shall as much as possible be borne by the Members in
proportion to the paid up capital or that which shall have been paid at the
commencement of the liquidation on the shares held by each of them. If, at
the time of liquidation, the Company's property designated for distribution
among to Members is in excess of the amount necessary for the return of
capital paid up at the beginning of the liquidation, it shall belong and be
delivered to the Members pro rata to the amount paid on the nominal value
of each share held by each of them at the commencement of the liquidation.
EXHIBIT 7.2
NOTICE OF PRE-EMPTIVE RIGHT
I hereby accept the offer to buy shares of the Company dated _______ (the
"Offer"). In connection with this Offer, I hereby notify you as follows [please
check]:
/ / 1. I would like to purchase the shares offered to me, according to
the table in section one of the Offer, but I do not want to
purchase any additional shares (as defined in the Offer).
/ / 2. I would like to purchase the shares offered to me, according to
the table in section one of the Offer, and I would like to
purchase additional shares.
/ / 3. I do not want to purchase any of the shares offered to me.
If I have checked option 1 or 2 above, I will transfer a check to the Company
for the amount due according to the table in section 1 of the Offer; and I
promise to pay to the Company all fees due for additional shares issued to me,
if any.
In any case, I hereby consent to the abbreviation of the 7-day period set forth
in the Articles of Association, for the purpose of execution of the said shares
offer, to the period in which the company will receive responses of all of the
Shareholders to this offer.
EXHIBIT 10.11
BUDGET (USE OF PROCEEDS)
APTEL LTD.
BUDGET Q3-Q4/96, 1997
PREPARED BY:
XXXX XXXX / FINANCIAL MANAGER DSP GROUP
XXXXXXXX XXXXX / GENERAL MANAGER APTEL
TABLE OF CONTENTS
ACTIVITIES
2-Way paging:
Telemetry:
Cordless:
POTENTIAL PARTNERS / CUSTOMERS
2-Way paging:
Telemetry:
Cordless:
BURN RATE
Personnel:
REVENUES
2-Way paging:
Telemetry:
Cordless:
P&L
ASSUMPTIONS
ACTIVITIES
2-WAY PAGING:
APTEL Ltd. has developed a two way paging concept which allows paging
operators to offer full coverage service from the very first day of
operation. This approach is made possible by the use of very large
cells ( receiving base stations ), which operate in Direct Sequence
Spread Spectrum modulation. The capacity of the system can be
increased as the number of subscribers grows, so both capital
investment and operating expenses increase only when revenue grow.
APTEL designs the receiving base stations, the center control
management station, and the 2-way pagers hand sets.
TELEMETRY:
Paging operators worldwide are seeking to diversify their services
from man-to-man, to man-to-machine and machine-to-man. A modification
of the APTEL 2-way pager will allow paging operators to penetrate a
whole new array of services including:
vending machines inventory and route control, traffic, elevators
maintenance, train gates, earthquake sensors and many more.
The commonality in the R&D effort if very high between with the
2-way pager and telemetry project. The receive base station are
literally the same, and major parts of the network management center
can be utilized in telemetry projects.
From a marketing point of view, both 2-way pagers as well as
telemetry transceivers will be marketed through paging operators.
CORDLESS:
APTEL has developed unique expertise in Spread Spectrum Direct
Sequence modulation, a method which became the preferred
implementation in 900 MHz spread spectrum cordless telephones. DSP
Group Inc., a leading TAD chip provider and a major share holder in
APTEL, has submitted an application to BIRD F for the design of a DSP
chip as well as an RF module for cordless application. The companies
expect to sell a DSP chip which will include [ * ] functions as well
as [ * ].
[ * ] Confidential Treatment Requested
POTENTIAL PARTNERS / CUSTOMERS
2-WAY PAGING:
[ * ]:
APTEL is now building, together with [ * ], a [ * ] 2-way pager
which is based on APTEL's technology and circuitry. The pager
layout and construction will be done by [ * ] while each party
will bear its own cost. Once the pager is ready, [ * ], its
performance will be demonstrated on a [ * ] network which will
be constructed by APTEL in [ * ], together with [ * ] and in
collaboration with [ * ].
APTEL expects to sell a small number of components to [ * ] for
the production of each 2-way pager. In addition, APTEL expects
to sell and maintain the receive base stations.
[ * ] and [ * ] are promoting the APTEL concept with [ * ], the
[ * ] standards body, and with [ * ], the [ * ] frequencies
authority.
[ * ]:
[ * ] is probably the first company to manufacture pagers world
wide. It is a fairly small company which mainly sells on-site
paging systems, and recently has taken a decision to widen its
involvement in [ * ] paging.
A similar deal (to that [ * ]) is planed with [ * ]. In this
case, however, a [ * ] 2-way pager will be developed, and APTEL
is expected to provide entire modules.
TELEMETRY:
PAGING OPERATORS:
Telemetry transceivers can be promoted to the same organizations
which buy 2-way pagers (or regular pagers). The same decision
makers which contract with paging operators for the supply of
pagers for their service personnel, may contract to install
telemetry transceiver on each of their vending machines, traffic
lights, elevators or any other remote machinery.
VERTICAL APPLICATIONS:
Transceivers may be sold to vertical applications directly,
thereby creating private networks. Target customers may be
utility companies, security organizations, etc.
[ * ] Confidential Treatment Requested
CORDLESS:
DSP GROUP INC.
APTEL and DSP Group hope to promote the [ * ] cordless chip and RF
module through DSP Group existing customer base. Further, the
definition of the some of the chip set features is planned to take
place in accordance with one or more potential customers which will
be visited in the very near future.
[ * ] Confidential Treatment Requested
BURN RATE
PERSONNEL:
R&D:
12 engineers are now employed in APTEL. In order to fulfill its tasks,
APTEL plans to add engineers at a rate of [ * ] per month to a total
of [ * ] in mid 97. The average expense per engineer per year as
estimated at $ [ * ] US. Hence the current R&D expense of $[ * ] is
expected to rise to $[ * ], linearly, by 97.
G&A:
Current G&A expense are $ [ * ]. As APTEL starts selling and
manufacturing, its G&A expenses are expected to reach about
$ [ * ]
MARKETING:
Today, the marketing department includes one manager. It is projected
that the following functions will be added during the course of the
next 12 months:
[ * ]
.
OPERATIONS:
APTEL plans to recruit [ * ] individuals to supervise the
following functions:
[ * ]
[ * ] Confidential Treatment Requested
REVENUES
2-WAY PAGING:
First revenues are expected in [ * ] assuming that APTEL will
conclude a business deal with either [ * ] or similar major paging
vendor. In the case of [ * ], quantities in 97 are expected to
reach [ * ] 2-way pagers, for which APTEL expects to receive between
[ * ] dollars for each pager produced.
APTEL is also hoping to receive revenues from licensing of its
technology, however such revenues are more likely to be accepted after
a deal with [ * ] is signed.
TELEMETRY:
First revenues are expected in [ * ] assuming that APTEL will invest
in its production capabilities. Each transceiver is expected to sell
for approximately $ [ * ] US. in the first year of sales, APTEL
expects to sell about [ * ] units which may result in gross revenues
over $[ * ] and a gross profit of $ [ * ] .
CORDLESS:
[ * ] .
[ * ] Confidential Treatment Requested
P&L
---
Q3-Q4 1996 Q1-Q4 1997
----------- ----------
$ $
- -
REVENUES
2-way paging [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Telemetry [ * ] [ * ]
----------- ----------
Total Revenues [ * ] [ * ]
----------- ----------
EXPENSES
OPERATIONS
Salaries [ * ] [ * ]
Other [ * ] [ * ]
----------- ----------
[ * ] [ * ]
----------- ----------
R&D
SALARIES [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
Period 7-12/97 [ * ]
MATERIALS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
SUBCONTRACTORS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
TRAVEL [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist
PATENTS [ * ] [ * ]
Other [ * ] [ * ]
----------- ----------
[ * ] [ * ]
----------- ----------
GENERAL, ADMIN & MARKETING
Salaries & related expenses [ * ] [ * ]
Rent & related expenses [ * ] [ * ]
Office expenses [ * ] [ * ]
Travel [ * ] [ * ]
Professional fees [ * ] [ * ]
Marketing expenses -travel [ * ] [ * ]
Other [ * ] [ * ]
----------- ----------
[ * ] [ * ]
----------- ----------
----------- ----------
Total Expenses [ * ] [ * ]
----------- ----------
[ * ] Confidential Treatment Requested
----------- ----------
Profit/(Loss) [ * ] [ * ]
----------- ----------
----------- ----------
[ * ] Confidential Treatment Requested
REFUND FROM CHIEF SCIENTIST /BIRD FOUNDATION
SALARIES [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
MATERIALS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
SUBCONTRACTORS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
TRAVEL
BIRD F (Cordless) [ * ] [ * ]
PATENTS
Chief Scientist [ * ] [ * ]
-------- --------
[ * ] [ * ]
-------- --------
-------- --------
Net Results [ * ] [ * ]
-------- --------
-------- --------
[ * ] Confidential Treatment Requested
ASSUMPTIONS
1. The direct cost of an engineer is in the region of $[ * ] per year.
2. [ * ] engineers are going to be added during the next [ * ] months. [ * ]
production personnel will be added within [ * ] months. [ * ] marketing
personnel will be added. [ * ] G&A personnel will be added.
3. All expenses besides salaries have been based on the level of expenses
incurred during the 1995 year, taking into account adjustments for staff
increases.
4. The refund from the Chief Scientist in 1996 has been calculated at a
rate of $ [ * ] per man month for salaries of R&D engineers and [ * ] of
cost of materials and subcontractors.
5. Revenues are based on assumption that the above resources are put into
place.
[ * ] Confidential Treatment Requested
Exhibit 10.12
BIRD Application
PROPOSAL
To: ISRAEL-U.S. BINATIONAL RESEARCH AND DEVELOPMENT FOUNDATION
From: APTEL LTD, XXXXXX XXXXXX NEW IND. PARK
NETANYA, ISRAEL
Tel: 00-000000 Fax:00-000000
DSPG INC. 0000 XXXXX XXXXXXXXX XXXXX XXXXX
XX 00000, XXX
Tel 000-000-0000: Fax 000-000-0000
PROJECT TITLE: Digital cordless
PROJECT BUDGET: First
Project
Period
Project Duration: [*] months
Project Cost: $[*]m
submitted by: Israeli Company Officer U.S. Company Officer
Signature /s/ XXXXXXXX XXXXX /s/ OFFER RONEN
----------------------- --------------------
Printed Name Xxxxxxxx Xxxxx Offer Ronen
Date Submitted: March 31st, 1996
Preferred date for project funding(1): July 1st, 1996
[*] Confidential Treatment Requested
Full Scale BIRD F. Project Proposal
March 31st, 1996
DSP Group - APTEL
Digital Cordless
Digital Cordless - Table Of Contents
1. EXECUTIVE SUMMARY (C)
1.1 GENERAL BACKGROUND
1.1.1 DSP GROUP AND APTEL
1.1.2 PROJECT SUMMARY
1.2 DIGITAL CORDLESS - THE INNOVATION
1.2.1 PROJECT OBJECTIVES (C1)
1.2.2 COLLABORATIVE RELATIONSHIP
1.2.3 NON BIRD FUNDING
1.3 COMMERCIAL POTENTIAL (C2)
1.3.1 WORLDWIDE MARKET
1.3.2 DSP & RF CHIP SET PRICES
1.3.3 PROJECTED REVENUES
1.4 CAPABILITIES AND PERFORMANCES OF DSPG & APTEL IN RELATED AREAS. (C3)
1.4.1 DSP GROUP, INC.
1.4.2 APTEL, LTD.
1.4.3 COMPETITIVE EDGE
1.5 PREVIOUS BIRD PROJECTS (C4)
1.5.1 APTEL
1.5.2 DSP GROUP
Date Project No. Project Name Money Received Repayment
[*] DSP Based TAD [*] Telephone Answering Device
[*] DSP Based Chipset for an [*] Integrated Fax/Speakerphone/TAD Machine
2. THE INNOVATION (D)
2.1 THE CURRENT SOLUTIONS (D1)
2.2 THE CURRENT DEFICIENCIES (D2)
2.3 THE DSP GROUP - APTEL APPROACH (D3)
2.4 THE UNIQUENESS (D4)
2.5 BUDGET AND XXXXX (D5)
2.6 PATENTS (D6)
2.7 STANDARDS (D7)
3. PROPOSED R&D PROGRAM (E)
3.1 ANALYSIS OF THE PROBLEM (E1)
3.1.1.1 DSP CHIP SPECIFICATION (E.1.a)
3.1.1.2 DSP COMMUNICATION MODULE SPECIFICATION (E.1.a)
3.1.1.3 [*] RF MODULE SPECIFICATION (E.1.a)
3.1.2 KEY TECHNOLOGICAL ISSUES PERTAINING TO 3.1.1 (E.1.b)
3.2 PROPOSED APPROACH (E.2)
3.2.1 WORK PLAN ( TASKS DESCRIPTION ) (E.2.a)
3.2.2 RELEVANT TECHNOLOGIES IN DSP GROUP AND APTEL (E.2.b)
3.2.3 TECHNICAL AND/OR ECONOMICAL CONSTRAINTS (E.2.c)
3.2.4 IDENTIFICATION AND DETAILED DESCRIPTION OF EACH TASK (E.2.d)
4. PROGRAM PLAN (F)
[*] Confidential Treatment Requested
4.1 BLOCK DIAGRAM
4.1.1 CHIP SET BLOCK DIAGRAM
4.1.2 DETAILED ASIC PART BLOCK DIAGRAM
4.2 XXXXX CHART
4.2 MANPOWER LOADING CHART
5. THE MARKET (G)
5.1 GENERAL (G1)
5.1.1 MARKET NEEDS
5.1.2 SIMILAR PRODUCT LINES OF DSP GROUP AND APTEL SOLD TO THIS MARKET
5.1.3 THE BASIS FOR THIS MARKET NEED
5.2 PRICE PERFORMANCE AND ASSOCIATED MANUFACTURING COSTS (G2)
5.2.1 FEATURES & PRICES
5.2.2 PRODUCTION COST
5.2.3 COMPETITIVE PRICES
5.3 MARKETING ASPECTS (G3)
5.3.1 WORLDWIDE MARKET
5.3.2 CURRENT MARKETING CHANNELS OF DSPG
5.3.3 MARKET GROWTH PATTERN
5.3.4 MARKET SHARE AND NUMBER OF UNITS SOLD PER ANNUM
5.3.5 UNITS SELLING PRICE GRAPH
5.4 REGULATORY ISSUES (G4)
5.5 COMPETITION (G5)
5.5.1 CURRENT PLAYERS
5.5.2 COMPETITION IMPACT ON DSP GROUP-APTEL PRODUCT
6. COMMERCIALIZATION - PLANS AND PROSPECTS (H)
6.1 PRODUCTION (H1)
6.2 MARKETING CHANNELS (H2)
6.3 CURRENT DISTRIBUTION NETWORK (H3)
6.4 FINANCIAL RESOURCES (H4)
7. COOPERATION AND BENEFITS (I)
8. ORGANIZATION AND MANAGEMENT PLAN (J)
8.1 PROCEDURES AND MEETINGS (J1)
8.2 PROJECT ORGANIZATION STRUCTURE (J2)
8.3 STAFF (J3)
9. THE COMPANIES AND PROJECT PERSONNEL (K)
9.1 COMPANIES' BACKGROUNDS, OWNERSHIP, & MAIN BUSINESS
9.2 THE SYNERGISM OF THIS PROJECT WITH THE COMPANIES' ACTIVITIES
9.3 DESCRIPTION OF PREVIOUS BIRD PROJECTS
9.4 FINANCIAL RECORDS ( ANNUAL REPORTS)
9.5 KEY PERSONNEL ( RESUME)
10. PROJECT BUDGET (L)
10.1 CASH FLOW:
10.2 PROPOSED PROJECT BUDGET
1. EXECUTIVE SUMMARY (C)
1.1 GENERAL BACKGROUND
1.1.1 DSP GROUP AND APTEL
-------------------------------------------------------------------------------
ISRAELI COMPANY US COMPANY
--------------- ----------
-------------------------------------------------------------------------------
COMPANY NAME APTEL Ltd. DSP Group, Inc.
-------------------------------------------------------------------------------
Year Established 1993 1987
-------------------------------------------------------------------------------
Revenues; Most recent
fiscal year Has not started to sell yet $ 50 M
-------------------------------------------------------------------------------
Increase/ (decrease)
over previous year N/A 75 %
-------------------------------------------------------------------------------
Number of employees 15 106
-------------------------------------------------------------------------------
Ownership Private Public
-------------------------------------------------------------------------------
Number of previous
BIRD Projects None Two
-------------------------------------------------------------------------------
1.1.2 Project Summary
-------------------------------------------------------------------------------
EXPECTED PROJECT TITLE: Digital Cordless Chip Set
-------------------------------------------------------------------------------
ESTIMATED PROJECT BUDGET: $ [*] M
-------------------------------------------------------------------------------
EXPECTED PROJECT DURATION: [*] Months
-------------------------------------------------------------------------------
[*] Confidential Treatment Requested
1.2 Digital Cordless - The Innovation
1.2.1 Project Objectives (C1)
APTEL and DSP Group will join forces and resources to provide
solutions to the rapidly growing digital cordless market. Initially
the companies will target the [*] Cordless Market [*], however second
phase activities in the [*] as well as [*] are being considered as
well.
This project proposal includes the definition & development of a cost-
effective DSP chip(s) and radio frequency (RF) unit for the [*]
Cordless Market.
The DSP chip will perform the following functions: [*].
The RF module, developed by Aptel, will perform the [*].
The technology and capabilities developed as a result of this project
will lead APTEL and DSP Group into a number of other adjacent markets
including the rapidly growing PCS DECT, PHS, CT2 markets.
The DSP chip and the RF module will be sold to cordless telephone
vendors who seek to migrate to [*] cordless phones which include [*]
features.
1.2.2 Collaborative Relationship
The project responsibilities will be shared between the companies as
follows:
APTEL will be responsible for the development of the [*]. APTEL will
also test the DSP chip developed by DSP Group with other manufacturers
chip sets. In addition, APTEL will define the RF functionality of
the DSP chip developed. APTEL focus will be on product management
and R&D aspects of the project.
DSP Group will lead the development of the DSP chips and will take
the lead in overseeing the production of both the DSP chip and the RF
unit. DSP Group will also be responsible for marketing both the DSP
chip and the RF components developed by APTEL.
[*] Confidential Treatment Requested
1.2.3 Non BIRD Funding
The non BIRD funding will be matched by APTEL and DSP Group. DSP Group
plans to invest in APTEL for an equity stake in the company. In
addition, DSP will allocate and hire additional people to develop the
DSP chip. APTEL will invest in the development of the Spread Spectrum
algorithms, RF interfaces and RF unit. During commercialization, APTEL
will receive from DSP Group a per unit [*] royalty for each unit sold.
[*] Confidential Treatment Requested
1.3 Commercial Potential (C2)
1.3.1 Worldwide Market
Forward Concepts, a market research firm, estimates that
in 1996, [*] cordless phones will represent [*]% of the US market
and that [*] phones will represent [*]%. The average selling price
("ASP") of a [*] cordless phone is roughly $[*], the ASP of a
[*] phone is - $ [*], and that of a [*] phone is $[*]. ASP doesn't
vary much because added functionality is provided
through software which doesn't impact product cost.
Worldwide cordless sales are predicted to grow dramatically,
and [*] phones market share is predicted to grow from [*]%
in 1995 to roughly [*]% in year 1999.
The DSP chip market for [*] cordless telephony will be total $[*]
in year 2000, while the [*] chip market will be total $[*]
in the same year.
This forecast does not include other cordless technologies and
standards, such as [*] which will function at [*]. We
expect that our involvement in the [*] cordless
business will allow an easier migration into [*].
[*] Confidential Treatment Requested
1.3.2 DSP & RF Chip Set Prices
Each phone will contain [*]. Our target prices for each DSP
chip and RF unit are $ [*] respectively. Obviously, these prices will
drop over time. Some of our customers will buy both RF and DSP
chips while others who have their own RF will purchase only
the DSP chip.
ESTIMATED PRICES OF THE DSPG/APTEL CHIPS:
[*]
Based on previous experience in chip manufacturing, we have estimated
that our total manufacturing cost would be approximately [*]% of our
selling price.
1.3.3 Projected Revenues
Assuming a market share of roughly [*]% in year 2000 and the above
chip price, DSP and APTEL predict that revenues from selling DSP
chips and RF components will grow according to the following table:
PROJECTED REVENUES FROM SELLING DSP CORDLESS CHIPS AND RF COMPONENTS
[*]
Note:
The repayment to BIRD Foundation will be based on Actual Revenues on
the sale of both RF and DSP sales.
[*] Confidential Treatment Requested
1.4 Capabilities and performances of DSPG & APTEL in related areas. (C3)
1.4.1 DSP Group, Inc.
Founded in 1986, DSP Group is a global leader in the development and
marketing of high-performance, cost-effective digital signal
processing (DSP) solutions for the consumer telephone, computer
telephony and personal computer industries. By combining three key
technologies -- speech processing algorithms, telephony algorithms and
digital signal processors -- the company has delivered a wide range of
DSP based products to manufacturers of telephones, computers and
consumer electronics.
DSP Group pioneered low-power digital signal processing for telephone
answering devices (TAD), which has become a major aspect of the
company's business. In addition to the chips for the TAD market, DSP
Group has recently introduced three new speech co-processors for the
PC market. DSP Group also licenses its internally developed DSP cores
(PineDSPCore-TM- and OakDSPCore-TM-) and the TrueSpeech compression
algorithms to a variety of PC software, hardware and semiconductor
manufacturers.
1.4.2 APTEL, Ltd.
APTEL specializes in the design of low-power RF circuitry for mobile
applications.
Since its inception in 1993, the company developed unique expertise in
the design of miniaturized RF devices which require complex power
management in the [*]. Much of APTEL's technology rests in
the implementation of Direct Sequence Spread Spectrum modulation
which is the method most frequently employed in [*] cordless
telephones.
APTEL's RF capabilities supplement the strength which DSP Group
brings to this joint project, and will facilitate the introduction of
a [*] cordless phone.
1.4.3 Competitive Edge
1.4.3.1 Integrated, low-cost, low-power solution:
Both DSP Group and APTEL have low-cost, low-power solutions. The
combination of DSP Group's DSP and VLSI expertise coupled with APTEL's
RF and Spread Spectrum expertise will, facilitate the introduction of
a very competitive low-power, low cost offering for the cordless
market. This will allow us to introduce integrated chip sets for
prices which are at least [*]% lower than the competition.
1.4.3.2 Strong marketing and sales channels:
DSP Group will market these products through its existing TAD
(Telephone Answering Device) channels. DSP Group has the largest
market share (over [*]%) of the digital TAD chip market and is
recognized as the technology leader in this market.
Most of DSPG's TAD customers have already introduced or are
considering introducing cordless phones. Currently, over [*]% of
DSPG's TAD chips are incorporated with cordless phone units. The
feedback DSP has received from its customers is that by [*] many of
its customers plan to develop [*] cordless phones.
[*] Confidential Treatment Requested
DSP has already contacted several of its major customers regarding the
proposed DSP/APTEL solution and received a very positive response that
indicates strong sales potential.
1.4.3.3 Proven, leading technologies
DSP and APTEL intend to use their advanced technologies in the
proposed cordless product. These include the DSP core architecture,
and telephony and speech algorithms (including [*] offered by DSP,
as well as the [*] technologies from Aptel.
[*] Confidential Treatment Requested
1.5 Previous BIRD Projects (C4)
1.5.1 APTEL
APTEL was not involved in BIRD projects in the past. The company has
informed the BIRD foundation of potential projects in the past, and
meetings have been held with third parties.
Individuals within APTEL management have worked before with the BIRD
F. in their previous capacities and successfully defined and completed
BIRD projects.
1.5.2 DSP Group
DATE PROJECT NO. PROJECT NAME MONEY RECEIVED REPAYMENT
$ $
--------------------------------------------------------------------------------
01/10/88 434 DSP Based TAD [*] [*]
(Telephone
Answering Device)
01/11/89 475 DSP Based Chip Set [*] [*]
for an Integrated
Fax/Speakerphone/
TAD Machine
[*] Confidential Treatment Requested
2. The Innovation (D)
Cordless telephones provide phone users the freedom to carry on
a conversation, while walking around within and outside their
home or office. New digital cordless telephone technologies-
which use acronyms like DECT, PHS and CT2+, and PCS in the near
future, shall provide even more freedom. These technologies will
facilitate phone conversations as we walk the streets or shopping
centers through base stations which are similar to those of
cellular telephones.
The above application for cordless telephone suggests a very
large future market, however there exists a much larger
application for digital cordless telephone technology. Most of
the world's population has no access to basic telephone service.
The cost of running wires to all of the homes and offices that
need telephone service is beyond the financial capability of
many developing countries, and new telephones installations are
falling farther and farther behind the demand for service.
Cordless telephones eliminate the need to wire every location
that needs telephone service. Strategically placed base
stations will allow all residents within range of the base
station to access the telephone network using a system that is
known as wireless local loop. The market for cordless
telephones for wireless local loop services will be immense.
2.1 The Current Solutions (D1)
Prior to 1984, cordless telephones in the US used five channels
in the 49-MHz rage paired with five channels near 1.6 MHz.
Because these two widely separated frequency bands have very
different characteristics, performance was less than
satisfactory. Analog cordless in the US are permitted a maximum
bandwidth of 20 KHz and use frequency modulation (FM) for voice
transmission and an effective power (ERP) of only 20
micro-xxxxx. Federal regulations require cordless telephones to
use digital signaling for security.
From 1984 to 1995, analog cordless phones operated on ten
channels in the 46.6 to 47 MHz range for base station
transmission and 49.6 to 50 MHz for handset transmission (the
46/49 band). These ten channels could not serve highly populated
areas, so the FCC allocated 15 additional channels in 1995. The
new channels allow base stations transmit at 44MHz and handset
at 49 MHz. New telephones may utilize all 25 bands.
In Europe, most countries use the CEPT/CT1 standard, which
provides forty 25 KHz channel pairs in the bands of 914 to 915
MHz and 959 to 960 MHz. The UK uses the MPT1233 which allows for
eight channel pairs, and France uses a similar unsatisfactory
standard.
Most cordless telephones sold today are analog, but digital
cordless telephones are also available. Sales of digital
cordless telephones have been slow due to the large price
difference. Digital phones in the US use proprietary standards.
The handset and base station are sold as one unit, so there is
no need for compatibility with other manufacturers. Worldwide,
several digital cordless open standards have been developed
including CT2 and DECT, in Europe, CT2+ for Canada, PHS for
Japan, and PACS for the US. (see table below).
In the US and Canada, 900MHz cordless telephones are permitted
to operate in the 902-to-928 FCC Part 15 band.
Current 900 MHz phones operate through Spread Spectrum. Cordless
phones which use either frequency hopping or direct sequence
techniques, are permitted up to 1 watt of transmit power in this
band. There are no standards which govern phones operating in
the ISM band.
Spread Spectrum has become a desirable solution, as it allows
more communication sessions to be carried in parallel. In
addition, this technology provides the cordless communication
a higher level of security. Today's ISM band Spread Spectrum
cordless phone solutions generally consist of the following
units:
a. Spreader chip -
Frequency hopping or direct sequence spread spectrum chip. This
is the Modem chip which includes FSK modulation and demodulation,
b. Audio chip -
This chip implements the audio encoding and decoding. It is
usually a DSPG processor that runs ADPCM or another speech
algorithm. The same chip is also used in the base station,
which also provdided the host interface and telephone line
interface.
c. RF unit -
The RF part can be either an integrated chip or a separate.
This unit serves as the transmitter and receiver between the
base station and handset.
d. TAD chip -
Some but not all units include a Telephone Answering Device (TAD).
e. MCU unit -
Micro controller which is the host that controls the Cordless
phone.
Existing solutions are illustrated in the following figure :
[Graphic illustrating parts of typical handset and baseset]
[*]% of the cordless market today is in 46/49 MHz, [*]%
is 900 Mhz and [*]% of the market is 900MHz Spread Spectrum.
A few companies, most prominently [*]
have recently announced [*] chip sets, which
perform [*]. Those solutions use a costly, complex
design and are very expensive. In addition, they do not include a
[*] such as those are available from DSP Group.
Other suppliers that have already entered the cordless market include
[*]. Other competitors targeting the same market with partial
solutions include: [*].
[*] Confidential Treatment Requested
2.2 The Current Deficiencies (D2)
Digital phones currently carry high retail prices (up to three
times analog prices), which have limited sale volumes. Lack of open
standards in the [*], and to the home and/or office has also
limited sales.
Customers, however, are prepared to pay a premium for better
voice quality delivered by an analog cordless telephone. We
believe the customer is prepared to pay a premium for digital
but won't pay a price that is three times analog price. An [*]
cordless telephone, which delivers clean voice transmission
would receive strong market acceptance. Furthermore, chips
designed to allow easy migration from the [*] to [*] Digital
Cordless Standards, allowing multiple handsets use, would be
well accepted by the market.
As mentioned earlier, RF implementation tends to be more complex than
digital sections implementation and therefore more time consuming.
As of yet, no vendor offers [*].
2.3 The DSP Group - APTEL Approach (D3)
DSP Group and APTEL have joined forces to develop a cordless
telephone chipset which can support [*].
Initially, the companies aim to produce a chip which will support
[*]. This chip [*] will support [*]. DSPG and APTEL will
provide application notes and reference designs.
The [*] design will take into account digital technologies such as
[*] to allow easy migration to those protocols.
The design of the RF section will be more involved than that of the
[*] chip. DSP Group and APTEL will consider providing the
customer with [*]. This would dramatically reduce the cycle time of
the RF chipset implementation. This project proposal pertains to the
development of the DSP chip and a design of an RF module which will
sell it. It corresponds to stage 1 and stage 2 of section 3.2.
2.4 THE UNIQUENESS (D4)
APTEL expertise in wireless mobile communications, coupled with DSP
Group's capabilities in DSP design, create an opportunity to
introduce a smart digital cordless chipset solution which will
be unique in the marketplace.
Most vendors provide either [*] and
leave the integration phase to the OEM customer. This approach creates
a long time-to-market factor which could be eliminated by the DSP
Group-APTEL approach.[*]
DSP Group has DSP expertise in speech and telephony algorithms. In
addition, DSP has developed proprietary DSP cores, PineDSP Core and
OakDSP Core, which are state of the art DSP processors with wide
endorsement in the DSP marketplace. (See appendix B.) DSPG'S
[*] Confidential Treatment Requested
licensee list consist of more than 24 licensees including - Siemens,
NEC, Samsung, LSI Logic, VLSI Technology, GEC Plessey and TEMIC. The
OakDSPCore is a second generation DSP from DSPG. It is a 16 bit,
fixed point DSP which reaches over 40 MIPS in a 0.6u process. Both the
Pine and Oak cores have smart power management which lends itself to
the high demands of the cordless market. See attachment Appendix B on
PINE and OAK specifications.
DSP Group's ability to include TAD and voice compression features in
the same chip set, facilitates the introduction of a uniquely powerful
chipset. DSP Group possesses over [*]% of the world digital TAD
chipset market. The chips are based on the Pine and Oak cores and
employ TrueSpeech, a DSP voice compression algorithm licensed to
leading computer and telephony suppliers worldwide.
2.5 BUDGET AND XXXXX (D5)
The R&D phase is expected to last [*] months, and upon its completion
DSPG and APTEL expect to introduce a [*] for [*] cordless telephones.
The estimate cost of the project is $[*] million, derived from the
xxxxx chart and budget described in later sections.
2.6 PATENTS (D6)
Neither DSP Group nor APTEL have applied for specific patents
pertaining to cordless telephones in the [*]. However, some of
the existing technologies to be incorporated in the new product
[*] are based on existing intellectual properties belonging to DSPG
and APTEL. Other patented features which may be included in this
chipset solution may provide addition protection, and potential new
patent filings will be reviewed.
2.7 STANDARDS (D7)
There are no standards governing the use of cordless telephones within
the [*]. The phones need to comply with [*]. However, no rules apply
to of communications protocol.
Digital cordless standards are emerging which provides an opportunity
to develop a chipset which will be compatible with the new digital
standards. This approach will allow the sale of chips along with other
vendors chipsets.
[*] Confidential Treatment Requested
3. Proposed R&D Program (E)
3.1 ANALYSIS OF THE PROBLEM (E1)
Numerous issues need to be addressed:
- Marketing Channels - DSP Group has a comprehensive distribution
network for its current products. We need to
examine the importance of including features
or products from DSP Group's current
offerings in this chipset, to ensure easier
penetration to the existing install base of
customers. We expect to determine the
appropriate set of features during the first
two months of the project.
- Digital Standards - The implementation of a standard protocol
has clear advantages over a proprietary are
[*] currently appears to be the most
promising standard. It seems [*] could
be obtained from vendors who have already
implemented this protocol.
- RF Chipset - What level of RF chipset should be designed
and provided?
3.1.1.1 DSP CHIP SPECIFICATION (E.1.a)
[*]
[*] Confidential Treatment Requested
3.1.1.2 DSP COMMUNICATION MODULE SPECIFICATION (E.1.a)
[*]
[*] Confidential Treatment Requested
3.1.1.3 [*] RF MODULE SPECIFICATION (E.1.a)
[*]
3.1.2 KEY TECHNOLOGICAL ISSUES PERTAINING to 3.1.1 (E.1.b)
- The implementation of the DSP chip using the Pine and/or Oak DSP
cores.
- The inclusion of a [*] cordless protocol in
the DSP chip
(Technical tasks are reasonable straight forward)
[*] Confidential Treatment Requested
3.2 PROPOSED APPROACH (E.2)
The [*] cordless chipset development will involve three stages:
STAGE 1 - The development of a [*] Solution (included in BIRD
Project):
- The main functions implemented initially will be:
[*]
- Advantages of [*] approach
[*]
STAGE 2 - Offer Total Solution with [*] (Included in BIRD Project)
Includes all features as stated in Stage 1, coupled with the
following:
[*]
STAGE 3 - [*] solution (Not Included in this BIRD Project)
[*]
[*] Confidential Treatment Requested
3.2.1 Work Plan (Tasks Description ) (E.2.a)
The H/W developed in the first stage of the project will be the base
for all stages. The work includes [*]. The chip design will
include [*]. The software will include [*].
Stage 1 will include the following tasks:
DEFINITION - [*] MONTHS
[*]
Participants - [*]
HIGH LEVEL LOGIC DESIGN (VERILOG) - [*] MONTHS
This stage includes writing the [*].
Participants - [*].
CIRCUIT & LAYOUT - [*] MONTHS -
Circuit design includes [*].
Layout includes [*].
This stage can run in parallel with Logic design.
Participants - [*].
CHIP INTEGRATION - [*] MONTHS.
This involved integrating the various pieces [*].
Participants - [*].
DSP SOFTWARE DEVELOPMENT - [*] MONTHS (THROUGH ALL H/W DESIGN
STAGES)
Software development needs to integrate [*].
This work can run in parallel with the H/W design.
Participants - [*].
[*] Confidential Treatment Requested
MILESTONES
[*]
[*] Confidential Treatment Requested
3.2.2 RELEVANT TECHNOLOGIES IN DSP GROUP AND APTEL (E.2.b)
APTEL
[*] [*]
Power Supply [*]
DSP GROUP
DSP Design [*]
Voice Compression [*]
Other TAD / Telephony Algorithms
[*]
3.2.3 Technical and/or Economical Constraints (E.2.c)
The target chip-set has to meet the following constraints:
[*]
Advanced power management (in standby mode)
The RF module will be designed from discrete components and will be
used as a reference design in the first design stage. A commercial
RF module will be designed in the second stage. It will marketed to
customers without RF design capabilities. A more integrated solution,
which will include a hybrid implementation of the [*] is considered
as a future project.
Concerning economical issues, the non BIRD funding will be matched by
APTEL and DSP Group. DSP Group plans to invest in APTEL for an equity
stake in the company. In addition, DSP will allocate and hire
additional people to develop the DSP Chip. APTEL will invest in the
development of the Spread Spectrum algorithms, RF interfaces and RF
unit. During commercialization, APTEL will receive from DSP Group a
per unit [*] royalty for each unit sold.
[*] Confidential Treatment Requested
3.2.4 IDENTIFICATION AND DETAILED DESCRIPTION OF EACH TASK (E.2.d)
(see Program Section)
Chip Design stages and tools :
Definition :
This stage starts with defining [*].
It includes-
[*]
CHIP BASIC PARTITION :
[*]
[*] Confidential Treatment Requested
[*]
[*] Confidential Treatment Requested
LOGIC DESIGN :
[*]
CIRCUIT DESIGN :
[*]
LAYOUT DESIGN :
[*]
TAPEOUT :
[*]
[*] Confidential Treatment Requested
[*]
SW DESIGN :
[*]
DETAILED TASK DESCRIPTION
[*]
[*] Confidential Treatment Requested
[*]
[*] Confidential Treatment Requested
[*]
[*] Confidential Treatment Requested
4. Program Plan (F)
4.1 Block Diagram
4.1.1 Chip set Block diagram
The product proposed by DSP Group and APTEL will look like that:
[ * ]
[ * ] Confidential Treatment Requested
The [ * ] is capable of handling most of the control functions needed in
the system.
The part called [*] in the block diagram is actually the [*] mentioned
before. This is the part that will consume major development efforts.
4.1.2 Detailed [ * ] block diagram
THESE ARE THE FUNCTIONAL BLOCKS TO BE DEVELOPED:
[ * ]
[ * ] Confidential Treatment Requested
4.2 Xxxxx Chart
[ * ]
[ * ] Confidential Treatment Requested
4.2 Manpower Loading Chart
[ * ]
[ * ] Confidential Treatment Requested
5. THE MARKET (G)
5.1 General (G1)
The basic need for this project arises from the poor allocation of
frequencies for the analog cordless phones, and the consequent low voice
quality. New [*] phones can operate in the [*], and deliver much
improved art voice performance.
Current analog solutions do not provide well secured communications
system. Many users complain that conversations are not secure and can be
tapped into by neighbors. In addition, conversations are hinded by strong
background noises, and are not easily conveyed due to interference
problems. [*] solutions are designed to handle the above issues of
security, clarity and distance. However, today's [*] solutions are
expensive and are based on complex unintegrated designs. DSP
Group - Aptel's solution is designed to meet the need for a low cost and
integrated solution for [*].
5.1.1 Market Needs
The market today requires superior voice quality, security and
extended mobility at a cost close to the current cost of the present
solutions.
5.1.2 Similar Product lines of DSP Group and APTEL sold to this market
DSP Group's TAD chips are currently being sold to vendors of
cordless telephones and are integrated in their current products as an
add-on function to the cordless product. The decision makers in these
organizations are known to our marketing personnel, and related
products can be promoted through the same channels.
[ * ] Confidential Treatment Requested
5.1.3 The Basis for this market need
According to a Wireless Logic document, published Jan 1996, [*]
cordless phones will represent [*]% of the US cordless market and
that [*] cordless phones will represent [*]%. The average selling
price ("ASP") of a [*] cordless phone is roughly $[*], the
ASP of a [*] phone is - $[*], and that of a [*] phone is $[*]. ASP
doesn't vary much because added functionality is provided through
software which doesn't impact product cost.
Worldwide cordless sales are predicted to grow dramatically, and
[ * ] phones market share is predicted to grow from [ * ]% in 1995
to roughly [ * ]% in year 1999.
Worldwide Cordless Units Sales & [*] Market Share (In Million Units):
[ * ]
Note: The last row in the above table describes the target market of this
project
[ * ] Confidential Treatment Requested
5.2 PRICE PERFORMANCE AND ASSOCIATED MANUFACTURING COSTS (G2)
see chapter 10
5.2.1 FEATURES & PRICES
see 5.1.3
5.2.2 PRODUCTION COST
Based on previous experience in chip manufacturing and RF module pricing,
we have assumed that our total manufacturing cost would be approximately
[ * ]% of our selling price.
5.2.3 COMPETITIVE PRICES
[ * ] is the only vendor to provide a similar complete solution and it is
currently sold at a very high price (over $[ * ] for total solution).
No other vendor offers a complete [ * ].
5.3 MARKETING ASPECTS (G3)
5.3.1 WORLDWIDE MARKET
Please refer to section 5.1.3.
[ * ] Confidential Treatment Requested
5.3.2 CURRENT MARKETING CHANNELS OF DSPG
DSP Group sales offices in the USA, Israel Japan and Europe. The sales uses
local distributors and representatives such as Tomen, KEC in Japan, DSP
Technology in Korea, DSP Solutions in Hong Kong and DSP Applications in
Taiwan. With this mixture of direct sales and distributors/reps, DSPG has
built a very long, reliable list of world class customers including:
JAPAN EUROPE SOUTH EAST ASIA USA & CANADA
----- ------ --------------- ------------
Panasonic Philips Samsung VTech
Sharp Siemens Xxxxx XX
Sanyo Alcatel LG AT&T
Sony Sagem Hyundai Xxxx South
NEC Ascom
Uniden Matra
5.3.3 Market Growth Pattern
Please refer to section 5.1.3.
5.3.4 Market Share and Number of units sold per Annum
See section 1.3.3
5.3.5 Units Selling Price Graph
See section 1.3.2
5.4 Regulatory Issues (G4)
There are no protocols or standards governing the communications
between the [*] except for [*].
All FCC and UL rules which refer to regular phones pertain to the
[*] unit as well.
[ * ] Confidential Treatment Requested
5.5 Competition (G5)
5.5.1 Current Players
A few companies, most prominently [*] have recently announced [ * ] chip
sets, which perform all [ * ] functions and integrate the [ * ] functions.
Those solutions use a costly, complex design and thus are very expensive
([*]'s solution is offered for over $[*]). In addition, they do not include
[ * ] such as those available from DSP Group.
Other suppliers that have already entered the cordless market include
[ * ]. Other competitors targeting the same market and have partial
solutions include [ * ].
5.5.2 Competition Impact on DSP Group-APTEL Product
Since the market share of [ * ] cordless phones is still modest,
we feel that other vendors interest in this market will help build and
expand the market. Our design will have cost advantage and more attractive
in features so that we should be very competitive in this market.
As DSP Group represent over [ * ]% of the total TAD chipset market, we
have an effective distribution network at our disposal. This will be a
remarkable benefit that will help us to play a significant role in that
market.
[ * ] Confidential Treatment Requested
6. COMMERCIALIZATION - PLANS AND PROSPECTS (H)
The project responsibilities will be shared between the companies as
follows:
APTEL will be responsible for the development of the [*]. APTEL will
also test the DSP chip developed by DSP Group with other manufacturers chip
sets. In addition, APTEL will define the RF functionality of the DSP chip
developed. APTEL focus will be on product management and R&D aspects of the
project.
DSP Group will lead the development of the DSP chips and will take the
lead in overseeing the production of both the DSP chip and the RF unit. DSP
Group will also be responsible for marketing both the DSP chip and the RF
components developed by APTEL.
6.1 Production (H1)
Production of DSP chips will be done by outside contractors (fabs).
Similar, successful, production arrangements as used today.
The RF board will be manufactured by sub-contractors, and/or licensed to
OEMs.
6.2 Marketing Channels (H2)
DSP Group will market the products via its existing TAD channels. DSP
Group has the largest market share (over [*]%) of the digital TAD market
and is recognized as the technology leader in this market.
Most of DSP Group's TAD customers have already introduced or considered
introducing cordless phones. Currently, at least [*]% of DSP Group's TAD
chips are shipped to cordless phone units as a separate TAD module. The
feedback DSP has received from its channels is that by 1997 most of the
customers plan to develop a cordless phone that integrates [*].
DSP Group has already contacted several of its major customers regarding
the proposed DSP/APTEL solution and received a very positive response that
indicates strong sales potential.
6.3 Current Distribution Network (H3)
Please refer to section 5.3.2.
6.4 Financial Resources (H4)
The accumulative cash-flow deficit that could reach as much as $[*] in the
middle of [ * ], together with the participation of the BIRD foundation we
are confident that DSPG will have sufficient internal resources to fund the
project.
[ * ] Confidential Treatment Requested
The non BIRD funding will be matched by APTEL and DSP Group. DSP Group
plans to invest in APTEL for an equity stake in the company. In addition,
DSP Group will allocate and hire additional people to develop the DSP
chip. APTEL will invest in the development of the Spread Spectrum
algorithms, RF interfaces and RF unit. During commercialization, APTEL
will receive from DSP Group a per unit [ * ] royalty for each unit sold.
[ * ] Confidential Treatment Requested
7. COOPERATION AND BENEFITS (I)
The project responsibilities will be shared between the companies as
follows:
APTEL will be responsible for the development of the Spread Spectrum
algorithms and for the development of the RF unit which will reside in
[*]. APTEL will also test the DSP chip developed by DSP Group with other
manufacturers chip sets. In addition, APTEL will define the RF
functionality of the DSP chip developed. APTEL focus will be on product
management and R&D aspects of the project.
DSP Group will lead the development of the DSP chips and will take the
lead in overseeing the production of both the DSP chip and the RF unit.
DSP Group will also be responsible for marketing both the DSP chip and
the RF components developed by APTEL.
APTEL Ltd. will manage the project. A project manager will be
appointed in APTEL whose responsibility will be to manage both
the DSP chip as well as the RF development. The development team of this
project will report to this project manager for the duration
of the project, regardless whether the employees are on DSP
Group or APTEL payroll.
In the product management (definition) phase, the APTEL
project manager will travel to meet DSP current client base.
Some meetings have already been arranged in the U.S., and we
predict to base much of our design specification on customer
requirements.
[ * ] Confidential Treatment Requested
8. ORGANIZATION AND MANAGEMENT PLAN (J)
8.1 Procedures and Meetings (J1)
A WEEKLY PROJECT DEVELOPMENT TEAM has been set for every Wednesday at
16:00. All participating team members will be present. Meetings will take
place either in the APTEL offices in Netanya or in DSP Group facilities in
Givat Xxxxxx.
A MONTHLY MARKETING MEETING has been set to take place in the California
offices of DSP Group. The primary goal is to ensure that development is
done according to the varying demands of potential customers. These meeting
will always include discussions with one or more potential clients.
PDRs and advance design reviews will take place as stated in the project
xxxxx chart. We expect that customer inputs may influence the project
specifications, time to market and overall chipset performance.
8.2 Project Organization Structure (J2)
In order to ensure that the development team will function as one, all the
team leaders in both companies will report to the project manager for the
full duration of the project development cycle.
8.3 Staff (J3)
The Project will managed by the following individuals:
Xxxxxxxx Xxxxx / General Manager of APTEL Ltd.
Ofer Bar-or / VP R&D APTEL
Xxxxx Xxxxx / VP Business Development DSP Group Inc.
Xxx Xxx Xxxxx / Project Manager DSP Group Inc.
9. THE COMPANIES AND PROJECT PERSONNEL (K)
9.1 Companies' backgrounds, ownership, & Main Business
Founded in 1986, DSP Group is a global leader in the development and
marketing of high-performance, cost effective digital signal processing
(DSP) solutions for the consumer telephone, computer telephony and
personal computer industries. By combining three key technologies -- speech
processing algorithms, telephony algorithms and digital signal
processors -- the company has delivered a wide range of DSP based products
to manufacturers of telephones, computers and consumer electronics.
DSP Group pioneered low-power digital signal processing for telephone
answering devices (TAD), which has become a major aspect of the company's
business. In addition to the chips for the TAD market, DSP Group has
recently introduced three new speech co-processors for the PC market. DSP
Group also licenses its internally developed DSP cores (PineDSPCore-TM- and
OakDSPCore-TM-) and the TrueSpeech compression algorithms to a variety of
PC software, hardware and semiconductor manufacturers.
History: APTEL was founded in September, 1993, with a
vision of developing superior products for "two-way paging"
and "telemetry" (also known as "SCADA") applications. In the
past two years, the company has developed products based on a
technology known as "direct sequence spread spectrum". In the
Spring 1995, APTEL conducted successful field tests for the
application of its products. The tests were conducted in
Atlanta in a partnership with MobileComm, which is the second
largest paging subscriber system in the U.S. with 1.8 million
subscribers. (Note: in September, 1995, MobileComm's parent
company, BellSouth, announced the sale of MobileComm to
MobileMedia. APTEL maintains continuous contact with
MobileCOmm and with MobileMedia). As a follow-up to these test
with MobileCOmm, APTEL is a commercializing the technology be
designing products in which the technology will be applied to
both the telmetry and the two-way paging markets.
Ownership: APTEL is owned primarily by the Xxxxxx Xxxxx Group,
one of the most respected investment groups operating in
Israel today. Xxxxxx Xxxxx today owns approximately 65% of the
company. The other 35% is owned by founders, senior employees,
and other investors.
APTEL specializes in the design of low power RF circuitry for mobile
applications.
Since its inception in 1993, the company developed unique
expertise in the design of miniaturized RF devices which require
complex power management in the [*]. Much of APTEL's know-how rests in
the implementation of Direct Sequence Spread Spectrum modulation which
happens to be the method most frequently employed in [*] cordless
telephones.
APTEL's RF capabilities supplement the assets which DSP Group brings to
this joint project, and facilitate the introduction of a [ * ] cordless
phone.
[ * ] Confidential Treatment Requested
-------------------------------------------------------------------------------
ISRAELI COMPANY US COMPANY
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
COMPANY NAME APTEL LTD. DSP GROUP, INC.
-------------------------------------------------------------------------------
Year Established 1993 1987
-------------------------------------------------------------------------------
Revenues; Most recent Has not started to sell $50 M
fiscal year yet
-------------------------------------------------------------------------------
Increase/(decrease) N/A 75%
over previous year
-------------------------------------------------------------------------------
Number of employees 15 106
-------------------------------------------------------------------------------
Ownership Private Public
-------------------------------------------------------------------------------
Number of previous BIRD None Two
Projects
-------------------------------------------------------------------------------
9.2 The Synergism of this project with the companies' activities
Both DSP Group and APTEL have low cost, low power solutions. The
combination of the DSP and VLSI expertise of the DSP Group coupled with
[ * ] of APTEL, facilitates the introduction of an integrated
solution with a very competitive low power, low cost offering for the
[ * ] market. This fact will allow us to introduce integrated chip sets
for prices lower by at least [ * ] compared to competition.
DSP and APTEL intend to use some of their state-of-the-art technologies
that are essential and strongly fit the proposed [ * ] product. These
include the DSP cores, and the telephony and speech algorithms (such
[ * ]) offered by DSP as well as the leading edge [ * ]
technologies from APTEL.
9.3 Description of Previous BIRD Projects
DSP Group has already completed several BIRD projects. The TAD component
may be used in this project:
1. DSP - based TAD / project #434
2. Chipset for fax / speakerphone / project # 475
3. Digital Hearing Aid / project # 384
4. Digital Vox for HF Radio Communication / project # 402
5. DSP Based Speech Processing Modules / project # 459
for Cellular Telephones
[ * ] Confidential Treatment Requested
APTEL was not involved in BIRD projects in the past. The company has
informed the BIRD foundation of potential projects in the past, and
meetings have been held with third parties.
Individuals within APTEL management have worked before with the BIRD F. in
their previous capacities and successfully defined and completed BIRD
projects.
9.4 FINANCIAL RECORDS (ANNUAL REPORTS)
AUDITED FINANCIAL STATEMENTS FOR DSP GROUP INC. AND APTEL LTD. WILL BE
FOLLOWING SHORTLY.
9.5 KEY PERSONNEL (RESUME)
APTEL
XX. XXXXXXXX XXXXX. General Manager
Born: 1959
Education:
1987: M. Sc. Industrial Engineering, S.U.N.Y. New York.
1985: B. Sc. in economics & Applied Math, and Statistics S.U.N.Y.
1978: Electronic Technician Computer and Communications, Israel
Defense Forces.
1977: Electronics Technician Diploma in Computers,
Microprocessors, and Communications, School for Certified
Technicians, Tel-Aviv.
Experience:
1995: President of APPALL
1993-1995: Vice President for Business Development and
marketing, APTEL
1992-1993: Vice President for Marketing & Sales, Nice Systems
Group
1987-1992: Marketing Manager for Northern Europe, Africa, and
Pacific Rhn, RAD data Communications.
1985-1987: M.I.S. Manager, Tadiran Electronics, Inc. (N.Y.)
1982-1984: Air Freight Coordinator, Burlington Air Freight. JFK
Airport, N.Y.
1977-1982: Communications Team Office, Israel Defense Forces
Languages:
Hebrew, English, Spanish
MR. OFER BAR-OR, Vice President of Engineering
Born: 1965
Education:
1992: M. Sc. in Physics with Honors from Tel Aviv University,
School of Physics and Astrophysics; Thesis Title: "a
radiometric Method for Investigating Infra Rad Optical Fiber
Properties"
1986: B. Sc. in Physics and Mathematics with honors from Hebrew
University School of Physics, Jerusalem
1986: Graduate of "Talpiot", a special course offered by the
Israel Defense Forces which combines academic studies and
military service.
Experience:
1995: Vice President of Engineering, APTEL
1993-1995: Software Manager, APTEL
1990-1993: Satellite Integration Group manager, Israel Aircraft
Industries, Space Department
1986-1990: A variety of engineering roles in electronics,
software, and satellite integration, Israel Aircraft
Industries, Space Department
Languages:
Hebrew, English
XX. XXXXX XXXXXXXXX, Vice President of Marketing
Born: 1954
Education:
1984: MBA in Marketing, Finance, and Management Policy, X.X.
Xxxxxxx Graduate School of Management, Northwestern
University, Evanston, Illinois, U.S.A.
1979: Juries Doctorate, University of Chicago Low School, Chicago
Illinois, U.S.A.
1976: B.A. in Literature, Harvard University, Cambridge,
Massachusetts, U.S.A.
Experience:
1995: Vice President of Marketing, APTEL
1993-1995: Attorney, Xxxxx Xxxx & Xx. Xxx Xxxx
0000-0000: Articled Legal Clerk
1988-1992: Immigration to Israel, Hebrew Language Studies,
religious studies
1984-1988: Strategic Planning Manager, Motorola Inc. Land Mobile
Communication Products, Xxxxxxxxxx, Xxxxxxxx, X.X.X.
0000-0000: Attorney, Xxxxx, Lincoln & Xxxxx, Chicago, Illinois.
U.S.A.
Languages:
English, Hebrew
DSPG
XXXXX XXXXX Vice president of business Development
Education:
1989-1991: MBA, Harvard Business School
1985-1987: X.Xx. Industrial engineering, Tel Aviv University
Experience:
1995- Vice President of Licensing and Business
Development, DSP Group Inc.
1993-1995: Assistant to Sr. Vice President, Business Development,
Intel Corporation
1992-1993: Marketing Manager, Intel Corporation
1991-1992: Program Manager, Operations, KLA Instruments
1987-1989: Production Planning & Control, Scitex Corporation Ltd.
1981-1985: Company Commander, Artillery Corps, IDF
XXXXXX XXXXX Technical Marketing Support Manager Semiconductors
Division.
Born 1958
EDUCATION
1984: BSEE from Ben-Gurion University, Beer Sheva, Israel.
EXPERIENCE :
1990 - 1996 DSP group - Semiconductors division.
Since 9/95 - Current position marketing
1992-1995 - Circuit group manager.
1990-1992 - Participated in the start up of the Semiconductors
division
1987 - 1990 Digital Equipment - VLSI design center, Jerusalem,
Israel. Testing engineer and Chip Design
1984 - 1987 El-Op - Electro Optics industry, Rehovot, Israel,
Laser Department
10. PROJECT BUDGET (L)
10.1 Cash Flow:
CASH FLOW - SAMPLE CALCULATION
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10.2 Proposed Project Budget
PROPOSED PROJECT BUDGET
DSP GROUP, INC.
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PROPOSED PROJECT BUDGET
APTEL LTD.
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