EXHIBIT 10.1
POWERDSINE LTD.
AMENDED AND RESTATED RIGHTS AGREEMENT
DATED OCTOBER 31, 2001
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AMENDED AND RESTATED RIGHTS AGREEMENT
This Amended and Restated Rights Agreement (the "AGREEMENT"), is entered into as
of October 31, 2001, by and among PowerDsine Ltd., a company organized under the
laws of the State of Israel (the "COMPANY"), (i) each of Xxxx Xxxxx and Xxxx
Itias (the "FOUNDERS"), (ii) ITI and Argoquest (each as defined below) and (iii)
the holders of the Company's Series A Preferred Shares (as defined below), (the
"SERIES A HOLDERS"), (iv) the holders of the Company's Series B Preferred Shares
(as defined below) (the "SERIES B HOLDERS"), (v) the holders of the Company's
Series C Preferred Shares (as defined below) (the "SERIES C HOLDERS"), (vi) the
holders of the Company's Series D Preferred Shares (as defined below) (the
"SERIES D HOLDERS"), (vii) the holders of the Company's Series E Preferred
Shares (as defined below) (the "SERIES E HOLDERS"), (viii) the holders of the
Company's Series F Preferred Shares as defined below (as defined below) (the
"SERIES F HOLDERS"), (ix) the holders of the Company's Series G Preferred Shares
(as defined below) (the "SERIES G HOLDERS") and, (x) the holders of the
Company's Series H Preferred Shares (as defined below), (the "SERIES H HOLDERS"
or the "PURCHASERS"), each as listed in Schedule I hereto. The Founders, ITI,
Argoquest, the Series A Holders, the Series B Holders, the Series C Holders, the
Series D Holders, the Series E Holders, the Series F Holders, the Series G
Holders are collectively referred to as the "EXISTING SHAREHOLDERS").
Capitalized terms that are not defined in this Agreement shall have the meanings
ascribed to them in the Amended Articles of Association, adopted by the Company
on October 28, 2001 (the "AMENDED ARTICLES OF ASSOCIATION"). If any provision of
this Agreement shall conflict with a provision of the Amended Articles of
Association, the construction of the Amended Articles of Association shall
control both the Amended Articles of Association and this Agreement.
RECITALS
WHEREAS, the Company, the Founders, ITI-Interline Telecom International Ltd.
("ITI") and the Series A Holders entered into a Share Purchase Agreement dated
May 1, 1996 (the "SERIES A SPA"), pursuant to which the Company entered into
certain covenants and granted certain rights and the Series A Holders purchased
certain of the Company's Series A Preferred Shares presently of a nominal value
NIS 0.10 per share (the "SERIES A PREFERRED SHARES"), and options to purchase
additional shares of the Company's Series A Preferred Shares (the "SERIES A
OPTIONS");
WHEREAS, the Company, the Founders, ITI and the Series A Holders entered into an
Agreement dated January 15, 1997 (the "2ND SERIES A AGREEMENT"), pursuant to
which the Company granted certain rights and the Series A Holders exercised
their option to purchase certain of the Company's Series A Preferred Shares
presently of a nominal value NIS 0.10 per share, and additional options to
purchase additional preferred shares of the Company's share capital that were
exercised into Series D Preferred Shares in August 1998 (the "SERIES D
OPTIONS");
WHEREAS, the Company and the Series B Holders entered into a Share Purchase
Agreement dated August 3, 1997, (the "SERIES B SPA"), pursuant to which the
Company entered into certain covenants and granted certain rights, and the
Series B Holders purchased certain of the Company's Series B Preferred Shares of
nominal value NIS 0.10 per share at the date of purchase, (the "SERIES B
PREFERRED SHARES") and
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options to purchase certain of the Company's Series C Preferred Shares (the
"SERIES C OPTIONS");
WHEREAS, the Company and the Series E Holders entered into a Share Purchase
Agreement dated August 12, 1998, (the "SERIES E SPA"), pursuant to which the
Company entered into certain covenants and granted certain rights, and the
Series E Holders purchased certain of the Company's Series E Preferred Shares of
nominal value NIS 0.10 per share at the date of purchase, (the "SERIES E
PREFERRED SHARES") warrants to purchase certain of the Company's Series E
Preferred Shares (the "SERIES E WARRANTS") and options to purchase certain of
the Company's Series F Preferred Shares (the "SERIES F OPTIONS");
WHEREAS, the Series C Options were exercised in August 1998;
WHEREAS, in accordance with a share purchase and transfer agreement dated
October 26, 1998, between the Founders and Argoquest, the Founders have
transferred certain of their Ordinary Shares to Argoquest;
WHEREAS, the Series D Options were exercised in August 1998;
WHEREAS, the Series F Options were exercised in October 2000;
WHEREAS, the Series E Warrants were exercised in October and December 2000;
WHEREAS, the Company and certain of the Series G Holders entered into a Share
Purchase Agreement dated February 6, 2000, (the "SERIES G SPA"), pursuant to
which the Company entered into certain covenants and granted certain rights, and
the Series G Holders purchased certain of the Company's Series G Preferred
Shares of nominal value NIS 0.10 per share at the date of purchase, (the "SERIES
G PREFERRED SHARES");
WHEREAS, certain of the Series G Holders acquired their Series G Preferred
Shares by way of exercising their pre-emptive rights in connection with the
Series G SPA. Reference to Series G Preferred Shares shall include those share
purchased pursuant to the Series G SPA and those purchased as exercise of
pre-emptive rights in connection with the Series G SPA;
WHEREAS, the Company granted a warrant to Plenus Technologies Ltd. to purchase
Series H Preferred Shares of nominal value NIS 0.10 each ("SERIES H PREFERRED
SHARES") (the "PLENUS WARRANT") and further agreed to issue Xxxxxxxxx Xxxxxxxx
International ("RS") Series H Preferred Shares at each of the Initial Closing,
the 2001 Subsequent Closing and the 2002 Subsequent Closing, as defined in the
Series H SPA (the "RS PREFERRED H SHARES");
WHEREAS, the Company and the Series H Holders are entering into a Series H Share
Purchase Agreement dated October 15, 2001 (the "SERIES H SPA") pursuant to
which, INTER ALIA, the Purchasers will purchase Series H Preferred Shares.
Reference to the Series H Preferred Shares shall include those Series H
Preferred Shares issuable upon exercise of the Plenus Warrant, the Series H
Preferred Shares issuable upon exercise of the Series H Warrants (as defined in
the Series H SPA) and the RS Preferred H Shares;
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WHEREAS, the parties hereto acknowledge that upon exercise of the Plenus
Warrant, Plenus will be deemed to be a Series H Holder and will execute a
Counterpart Signature Page (as defined in the Series H SPA) in order to become a
party hereto or to any amendment hereto;
WHEREAS, together, the Series A Preferred Shares, the Series B Preferred Shares,
the Series C Preferred Shares, the Series D Preferred Shares, the Series E
Preferred Shares, the Series F Preferred Shares, the Series G Preferred Shares,
and the Series H Preferred Shares shall be referred to as the "PREFERRED
SHARES". Each Preferred Share is convertible or reclassifiable into Ordinary
Shares, of nominal value NIS 0.10 per share (the "ORDINARY SHARES") as provided
in the Amended Articles of Association. The holders of the Preferred Shares
shall be referred to both individually and collectively as (the "PREFERRED
SHAREHOLDERS");
WHEREAS, the Existing Shareholders and the Series H Holders have agreed to
amend, modify, restate and supercede the Registration Rights Agreement dated
February 24, 2000, the Co/No Sale Agreement dated as of February 6, 2000 (the
"CO SALE AGREEMENT"), and such covenants stated in any of the Prior Round SPA's
(as defined in Section 1.3 below) and/or any ancillary agreement, letter and/or
undertaking with this Agreement;
WHEREAS, the Company desires to grant, amend and/or restate certain registration
and other rights as set forth herein;
NOW THEREFORE, in reliance on the foregoing recitals the parties hereto agree as
follows:
I DEFINITIONS
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For purposes of this Agreement following terms:
1.1 The terms "REGISTER", "REGISTERED", and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the United States Securities Act of 1933, as
amended, or similar securities act in a jurisdiction other than the U.S. (the
"ACT"), and the declaration or ordering of effectiveness of such registration
statement and/or offering document.
1.2 The term "REGISTRABLE SECURITIES" means: (1) Ordinary Shares, issued or
to be issued to any of the Shareholders, as defined below, or issuable or issued
upon the conversion and/or reclassification of the Preferred Shares (or issuable
upon the conversion or exercise of any warrant, right or other securities); (2)
any Ordinary Shares of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other securities) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Ordinary Shares, (excluding in all cases any Registrable Securities sold by a
person in a transaction in which its rights under this Agreement are not
assigned); and all Ordinary Shares and/or Ordinary Shares issued upon conversion
of any preferred shares that the Preferred Shareholders may hereafter purchase
pursuant to their preemptive rights, rights of first refusal or otherwise.
1.3 The number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall
be the number of Registrable Securities calculated on an as-converted basis.
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1.4 The term "HOLDER(S)" means any person owning or holding rights to
purchase Registrable Securities. The term "PREFERRED HOLDER(S)" means any person
and/or entity owning or holding the rights to purchase Registrable Securities
other than the Argoquest, ITI and the Founders.
1.5 The term "FORM F-3" means such form under the Act as in effect on the
date hereof or substantially similar thereto and available to the Company and/or
the Holders as non-United States entities or any registration form under the Act
subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
1.6 Argoquest Holdings LLC ("ARGOQUEST");
1.7 Courses Investments in Technology Ltd. ("COURSES");
1.8 Clal Venture Capital Fund Limited Partnership ("CLAL");
1.9 Ampal Industries Inc., Ampal Industries (Israel) Ltd., Achidim Holdings
Ltd., Shoham Investments Ltd., Shikma Anefa Ltd., Vertex Investment (III) Pte.
Ltd., Vertex-Yozma Limited Partnership, Vertex-Discount L.P., Xxxxx Xxxx
(collectively the "AMPAL GROUP");
1.10 Jerusalem Venture Partners (Israel) L.P., Jerusalem Venture Partners
L.P., Poalim Capital Markets Technologies Ltd. (collectively the "JVP GROUP");
and
1.11 Gadish Kranot Gmulim Ltd.; Kineret Keren Hishtalmut Ltd.; Keren Merkazit
Lepitzuyei Piturim Ltd.; Tagmulim Ltd.; Keren Or Kupat Tagmulim Upitzuim Ltd.;
Katzir Kupat Tagmulim Upitzuim Ltd.; Xxxx Xxxxx Gmulim Ltd.; Yeter Kranot Gmulim
Ltd.; Bar Keren Gmulim Ltd.; and Xxxxx Xxxxx Gmulim Le'atzmaim Ltd.
(collectively the "PROVIDENT FUNDS")
1.12 The Provident Funds, together with, The Challenge Fund-Etgar II, L.P.,
Clal Electronics Industries Ltd., Xxxx Xxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxx,
Catalyst Investments L.P., Acquirex BVBA, Eventorin Investments Ltd. and Ampal
Industries (Israel) Ltd., with respect to certain of its Series G Preferred
Shares (collectively the "CHALLENGE GROUP").
1.13 The Series A SPA, 2nd Series A Agreement, Series B SPA, Series E SPA and
the Series G SPA shall collectively be referred to as the "PRIOR ROUND SPA'S".
(the Founders, ITI, Argoquest and the Preferred Shareholders shall be
collectively referred to, for the purposes of Sections 1.2 and 3 hereof, as the
"SHAREHOLDERS").
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II INFORMATION RIGHTS
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2.1 DELIVERY OF FINANCIAL STATEMENTS.
With respect to each Preferred Shareholder, ITI and Argoquest (collectively, the
"QUALIFYING ENTITY(IES)"), for as long as each such Qualifying Entity,
individually, holds shares of the Company, the Company shall deliver to each
such Qualifying Entity the following reports of the Company and of the U.S.
Subsidiary, in English:
2.1.1 as soon as practicable, but in any event within forty-five (45)
days after the end of each fiscal year of the Company, an income statement,
balance sheet and cash flow statement for such fiscal year, and statement of
Qualifying Entity's equity holdings and percentage holdings as of the end of
such year, such year-end financial reports to be in reasonable detail, audited
and certified by independent public accountants of the Company, prepared in U.S.
Dollars in accordance with US GAAP and approved by the majority of the Company's
shareholders.
2.1.2 revised twelve-month forward monthly prospective budget and
operating plans including an income statement with a breakdown of revenues and
costs by product line, balance sheet, cash flow statement (the "BUDGET"), not
later than December 15 of each year;
2.1.3 three-year forward financial plan with a supporting strategy
document, including an income statement, balance sheet, cash flow statement, and
a breakdown of revenues and costs by product line, produced on a monthly basis
for the first year covered by it, a quarterly basis for the second year, and an
annual basis for the third year (the "BUSINESS PLAN"), not later than December
15 of each year;
2.1.4 within thirty (30) days of the end of each quarter, a reviewed
unaudited profit and loss statement, balance sheet and schedule as to cash flow,
and a general description of the state of affairs of the Company including all
operating and financial developments, in reasonable detail;
2.1.5 within fifteen (15) days of the end of each month, an unaudited
profit and loss statement, balance sheet and schedule as to cash flow, in
reasonable detail including a breakdown of revenues and costs by product line;
2.1.6 such other information relating to the financial condition,
business, prospects or corporate affairs of the Company, or material
developments related thereto, as a Qualifying Entity may from time to time
request, including without limitation such information as is necessary to allow
it to timely comply with disclosure requirements it may be subject to, provided,
however, that the Company shall not be obligated under this subsection 2.1.6 or
any other subsection of Section 2.1 to provide information which it deems in
good faith to be a trade secret or similar confidential information, to the
Qualifying Entity, but shall provide such information to the board of directors
of the Company (the "BOARD").
2.2 The Company shall deliver to each member of the Board a "board pack"
containing such materials pertaining to the matters to be discussed at the Board
meeting for which the board pack is being provided as soon as practicable prior
to each Board meeting.
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2.3 The format of all periodical reporting (including the monthly reports,
the Business Plan, the Budget and the Board pack) shall be agreed by the Board
within 2 months from the Initial Closing of the Series H SPA.
2.4 The Company will permit DBAG (as such term is defined in the Amended
Articles of Association) ("DBAG") and each Qualifying Investor (as such term in
defined in the Amended Articles of Association) and their authorized
representatives full and free access, at all reasonable times and upon
reasonable notice, to any of the properties of the Company, including its books
and records, and to discuss its affairs, finances and accounts with the
Company's officers and auditor, subject to the provisions of Section 6A
(Confidentiality) below.
2.5 For any year in which DBAG or any of its affiliates owns (directly,
indirectly or constructively) shares at any time during the year, the Company
shall provide DBAG and its beneficial owners that are subject to United Sates
taxation (each a "US INVESTOR") with such co-operation and information as such
US Investors may reasonably request for the purposes of filing any tax return,
amended tax return or claim for refund, determining a liability for taxes or a
right to a refund of taxes, participating in or conducting any audit or other
proceeding in respect of taxes, or claiming the benefit of any double tax treaty
under which any withholding tax can be eliminated or reduced, or under which a
refund of a tax credit may be claimed in each case relating to its subscription
or holding of or enjoyment of rights attaching to their shares and including
without limitation:
(i) all information necessary for such US Investors to determine
whether the Company is a "passive foreign investment company" (a "PFIC")
within the meaning of the applicable sections of the US Internal Revenue
Code, as amended (the "CODE"); and
(ii) for each year that the Company is or may be a PFIC, information
(including complying with applicable reporting requirements) necessary
in order to enable such US Investor to make a timely "qualified electing
fund" election pursuant to the Code or to make any similar election
under any successor provision or legislation.
III REGISTRATION RIGHTS
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3.1 DEMAND REGISTRATIONS
3.1.1 If the Company shall receive at any time after the earlier of:
(i) four (4) years from the date of this Agreement; or (ii) six (6) months after
the effective date of the first registration statement for a public offering of
securities of the Company, other than a registration statement relating to the
sale of securities to employees of the Company pursuant to a stock option plan,
stock purchase plan or other similar plan ("IPO"), a written request from: (I)
the Holders of a majority in interest of the Registrable Securities which are
issued or issuable to Clal, Courses, the Ampal Group, the JVP Group and the
Challenge Group (collectively the "NON H PREFERRED DEMANDING SHAREHOLDERS");
(II) the holders of the majority of the Series H Preferred Shares (the "H
PREFERRED DEMANDING SHAREHOLDERS"); or (III) the Holders of at least fifty
percent (50%) of the Registrable Securities then outstanding (in each case the
"INITIATING HOLDERS"), that the Company file a registration statement under the
Act
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covering the registration of Registrable Securities having an aggregate offering
price, net of the underwriting discounts and commissions, in excess of
USD$5,000,000 (five million), then the Company shall, within ten (10) days of
the receipt thereof, give written notice of such request to all other Holders.
If Holders other than the Initiating Holders ("JOINING HOLDERS") intend to
participate in the registration under this subsection, they shall notify the
Company in writing (the "REPLY") within twenty (20) days following receipt of
the Company's notice and shall include in their Reply the number of Registrable
Securities they desire to register. The Company shall effect as soon as
practicable, and in any event shall use its best efforts to effect within sixty
(60) days of the receipt of such request of the Initiating Holders, the
registration under the Act of all Registrable Securities which the Holders
requested to be registered as aforesaid. No more than three (3) requests shall
be made pursuant to this Section 3.1: (a) one (1) of which is reserved for the
Non H Preferred Demanding Shareholders as a group; (b) one (1) of which is
reserved for the majority of the Holders of Registrable Securities; and (c) one
(1) of which is reserved for the holders of the majority of the Series H
Preferred Shares. Subject to the prior approval of the Board the provisions of
Section 3 shall also apply in the event that the Initiating Holders request to
participate in the IPO by selling any or all of their shares provided that the
underwriters determine, in their sole discretion, that such participation will
not materially and adversely affect the success of the offering by the Company.
Such inclusion shall not be treated as a demand for the purposes of Section 3.
3.1.2 (a) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 3.1 and the Company shall include such information in the notice to
the other Holders pursuant to Section 3.1.1 above. The underwriter will be
selected by a majority in interest of the Initiating Holders and any Joining
Holders, provided such underwriter shall be reasonably acceptable to the
Company. In such event, the right of any Joining Holder to include his
Registrable Securities in such registration shall be conditioned upon such
Joining Holder's participation in such underwriting and the inclusion of such
Joining Holder's Registrable Securities in the underwriting (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and such
Joining Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriter shall enter into an
underwriting agreement in customary form with the underwriter(s) selected for
such underwriting. If any Holder disapproves of the terms of the underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holders. The Registrable Securities so
withdrawn from such underwriting shall also be withdrawn from such registration;
provided that if by the withdrawal of such Registrable Securities, a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum limitations imposed by the underwriters), then
the Company shall offer to all Holders who have included Registrable Securities
in the registration, the right to include additional Registrable Securities on a
pro rata basis based on the number of Registrable Securities held by all such
Holders (including the Initiating Holders).
(b) If the underwriter of such offering determines, in its
sole discretion, that the number of shares requested by the Initiating Holders
and the Joining Holders is greater than the number of shares that may be
underwritten, the number of Registrable Securities that may be included in the
registration shall be allocated among first, the holders of the Registrable
Securities held by the majority of the Preferred Holders, and thereafter to all
other Initiating Holders and Joining Holders at a ratio of four (4) shares
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of the Preferred Shareholders to every one (1) share of all other Holders, based
with respect to the distribution between such other Holders, upon the number of
Registrable Securities requested by them to register, and based, with respect to
the distribution between the H and Non H Demanding Preferred Shareholders, on
the number of Registrable Securities then outstanding held by each of them,
PROVIDED, HOWEVER, that if such registration is the registration initiated by
the H Preferred Demanding Shareholders according to the provisions of Section
3.1.1(II) above and reserved for the H Preferred Demanding Shareholders
according to the provisions of Section 3.1.1(c) above, the securities held by
the Series H Preferred Shareholders shall be included in the registration prior
and in preference to any of the securities held by the other Demanding Preferred
Shareholders and if such registration is the registration initiated by the Non H
Demanding Shareholders according to the provisions of Section 3.1.1(I) above and
reserved for the Non H Demanding Shareholders according to the provisions of
Section 3.1.1(a) above, the securities held by the Non H Preferred Shareholders
shall be included in the registration prior to and in preference to any of the
securities held by the other Demanding Preferred Shareholders.
3.1.3 Notwithstanding the foregoing, if within ten (10) days of
receipt of a request for the registration of Registrable Securities as set forth
in subsection 3.1.1, the Company shall furnish to the Initiating Holders a
certificate signed by the Chief Executive Officer (the "CEO") of the Company
stating that a letter of intent with an underwriter relating to the public sale
of the Company's shares has been signed, then, subject to Section 3.3, if the
Company shall furnish the Initiating Holders a certificate signed by the
Chairman of the Board stating that in the good faith judgment of the Board, it
would be seriously detrimental to the Company and its shareholders for such
registration of Registration Securities to be effected at such time, in which
event the Company shall have the right to defer taking action with respect to
such a request for a period of not more than six (6) months after receipt of the
request of the Initiating Holders under subsection 3.1.1, provided however, that
such right to delay a request shall be exercised by the Company not more than
once in any twelve (12) month period.
3.2 REGISTRATION ON FORM F-3
(a) Beginning at such time as the Company first becomes eligible to
register securities for resale by the Holders on a Registration Statement on
Form F-3 or any similar short form registration ("SHORT FORM REGISTRATION")
under the Securities Act, the Holders may at any time request Short Form
Registration of all or part of the Registrable Securities issued to such Holders
which have not been previously registered under the Securities Act; provided
however, that the Company shall not be required to effect more than one (1)
Short Form Registration during any 180-day period. The requests for registration
pursuant to this Section 3.2 must specify the number of Registrable Securities
requested to be registered and the minimum desired price per share in such
offering, and the shares so requested to be registered must have an anticipated
offering price (net of underwriters' discounts and commissions) of at least one
million US Dollars ($1,000,000). Notwithstanding the foregoing, if the Company
shall furnish the Holders a certificate signed by the Chairman of the Board
stating that in the good faith judgment of the Board, it would be seriously
detrimental to the Company and its shareholders for such Short Form Registration
to be effected at such time, in which event the Company shall have the right to
defer taking action with respect to such a request for a period of not more than
four (4) months after receipt of the request of the Holders under this Section
3.2, provided however, that such right to
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delay a request shall be exercised by the Company not more than once in any
twelve (12) month period.
(b) If the Company shall receive from any Holder(s) of Registrable
Securities a written request for such Short Form Registration, then the Company
shall promptly give written notice of the proposed registration to all other
Holders of Registrable Securities and include in such registration all
Registrable Securities held by such Holders that wish to participate in such
registration and provide the Company with written request for inclusion therein
within 15 days after the receipt of the Company's notice.
3.3 OBLIGATIONS OF THE COMPANY. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
3.3.1 Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to six (6) months or, if sooner, until
the distribution contemplated in the registration statement has been completed;
3.3.2 Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement;
3.3.3 Furnish to the Holders and each duly authorized underwriter such
numbers of authorized copies of a prospectus, including copies of a preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by the Holder;
3.3.4 Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that, the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions other than the specific
consent to service of process as may be required or necessary to sell securities
in such states or jurisdictions pursuant to a registration statement;
3.3.5 In any underwritten public offering, to enter into and perform
its obligations under an underwriting agreement, including indemnification and
other customary provisions, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement. The
Company undertakes to support underwritten offerings of secondary shares and if
requested by the underwriters the Company shall conduct road shows (provided
however that the Company shall not be required to conduct such road shows more
than once in any 18 (eighteen) month period) and support other marketing
activities that may be reasonably necessary to successfully support the
placement of such shares of the Preferred Shareholders as contemplated herein;
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3.3.6 Notify each Holder of Registrable Securities covered by such
registration statement:
(i) promptly after the Company shall receive notice thereof, of the
time when such registration statement becomes effective or when any amendment or
supplement or any prospectus forming a part of such registration statement has
been filed;
(ii) promptly of any request by the SEC for the amendment or
supplement of such registration statement or prospectus for additional
information;
(iii) at any time when a prospectus relating thereto is required to be
delivered under the Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
3.3.7 Advise each Holder whose Registrable Securities are included in
such registration statement promptly after the Company shall receive notice or
otherwise obtain knowledge of the issuance of any order by the SEC suspending
the effectiveness of such registration statement or amendment thereto or of the
initiation or threatening of any proceeding for that purpose; and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal promptly if a stop order should be issued;
3.3.8 Cause all Registrable Securities registered pursuant hereto to
be listed on each securities exchange on which similar securities issued by the
Company are then listed;
3.3.9 Provide a transfer agent and register for all Registrable
Securities registered pursuant hereto and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;
3.3.10 Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, on the date that the registration statement with
respect to such securities becomes effective: (i) an opinion, dated such date,
of the counsel representing the Company for the purposes of such registration,
in form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities; and (ii) a letter dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
3.4 COMPANY REGISTRATION. At any time after an IPO that the Company proposes
to register (including for this purpose a registration effected by the Company
for shareholders other than the Holders) any of its shares or other securities
under the Act in connection with the public offering of such securities solely
for cash (other than registration relating solely to the sale of securities to
participants in a Company stock
12
plan, or a registration on any form which does not include substantially the
same information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after receipt of
such notice from the Company in accordance with the notice provision of this
Agreement, the Company shall cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
3.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company, upon its written request, such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as shall be reasonably and customarily
required to effect the registration of such Holder's Registrable Securities.
3.6 EXPENSES OF DEMAND REGISTRATION. All expenses (other than underwriting
discounts and commissions, which shall be borne by the Holders participating in
such registration in proportion to the number of such Holder's Registrable
securities over the total number of Registrable Securities included in such
registration) incurred in connection with registrations, filings or
qualifications pursuant to Sections 3.1 or 3.2, including without limitation,
all registration, filing and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one (1) counsel for the selling Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to subsection 3.1.1
or Section 3.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (provided such majority includes a majority of the Registrable
Securities held by the Preferred Shareholders), in which case all participating
Holders shall bear such expenses, unless the Holders of a majority of the
Registrable Securities (provided such majority includes a majority of the
Registrable Securities held by the Preferred Shareholders) agree to forfeit
their right to the demand registration pursuant to subsection 3.1.1 or Section
3.2; provided further, however that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business or
prospects of the Company from that known to the Holders at the time of their
request and have withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the Holders
shall not be required to pay any of such expenses and shall retain all of their
rights pursuant to subsection 3.1.1.
3.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with registrations pursuant to Section 3.4 for
each Holder, including without limitation, all registration, filing, and
qualification fees, printers, legal fees and accounting fees relating or
apportionable thereto but excluding underwriting discounts and commissions
relating to Registrable Securities with respect to which each of the
participating Holders shall pay its pro rata portion (based upon the number of
such Holder's Registrable Securities over the total number of Registrable
Securities sold in such registration).
13
3.8 UNDERWRITING REQUIREMENTS IN COMPANY'S REGISTRATION.
(a) In connection with any offering involving an underwriting of
shares of the Company's share capital, the Company shall not be required under
Section 3.4 to include any of the Holder's securities in such underwriting
unless such Holder accepts the terms of the underwriting, in customary form, as
agreed upon between the Company and the underwriters selected by a majority in
interest of the Initiating Holders and any Joining Holders, and then only in
such quantity as the underwriters determine, in their sole discretion, will not
materially and adversely affect the success of the offering by the Company. In
the case of any registration the Board shall have the right to designate and
appoint the managing underwriter in any underwritten offering.
(b) If such underwriters determine, in their sole discretion, that
the total amount of securities, including Registrable Securities, requested by
Holders to be included in such offering could materially adversely affect the
success of such offering, then the Company shall be required to include in such
offering only that number of such securities, including Registrable Securities,
which the underwriters determine, in their sole discretion, will not materially
adversely affect the success of such offering, the securities so included to be
apportioned first to the Company and thereafter to the Preferred Shareholders
and all other Holders requesting to include Registrable Securities in such
registration at a ratio of four (4) shares of the Preferred Shareholders to
every one (1) share of all other Holders, based with respect to the distribution
between such other Holders, upon the number of Registrable Securities requested
by them to register, and based, with respect to the distribution between the H
and Non H Demanding Preferred Shareholders, on the number of Registrable
Securities then outstanding held by each of them.
3.9 INDEMNIFICATION. If any Registrable Securities are included in a
registration statement pursuant to this Agreement:
3.9.1 To the fullest extent permitted by law, the Company will
indemnify and hold harmless, each Holder, any underwriter (as defined in the
Act) for such Holder, each of its directors, shareholders, partners, officers,
its legal counsel and independent accountants, and each person, if any, who
controls such Holder within the meaning of the Act (collectively and
individually referred to as the "INDEMNIFIED PARTY") against all claims, losses,
damages and liabilities (joint or several), costs and expenses (or actions in
respect thereof) arising out of or based on any of the following statements,
omissions or violations: (I) untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document as amended and supplemented; or (II) or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; or (III) any
violation (or alleged violation) by the Company of the Act or any other
securities laws, and will reimburse such Indemnified Party for any legal or any
other expenses reasonably incurred in connection with investigating, preparing
or defending any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the indemnity agreement contained in this subsection 3.9.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld.
3.9.2 To the fullest extent permitted by law, each Holder whose
Registrable Securities are included in such registration will indemnify and hold
harmless the
14
Company, each of its directors and officers and its legal counsel and
independent accountants, each underwriter, if any, of the Company's securities
covered by such registration statement, each person who controls the Company or
such underwriter within the meaning of the Act, and each other such Holder, each
of its officers and directors and each person controlling such Holder within the
meaning of the Act (collectively and individually the "INDEMNIFIABLE PARTIES"),
against all claims, losses, damages, liabilities, costs and expenses (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Indemnifiable Parties for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder, and
stated to be specifically for use therein; provided, however, that the
obligations of each Holder hereunder shall be limited to an amount equal to the
net proceeds received by such Holder from the sale of Registrable Securities
sold by such Holder pursuant to such registration and provided further that the
indemnity agreement contained in this subsection 3.9.2 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld. The foregoing indemnity agreement is subject
to the condition that, insofar as it relates to any such untrue statement (or
alleged untrue statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended prospectus at
the time the registration statement becomes effective or in the final
prospectus, such indemnity agreement shall not inure to the benefit of the
Indemnifiable Parties, if a copy of the final prospectus was not furnished to
the person or entity asserting the loss, liability, claim or damage at or prior
to the time such furnishing is required by the Act. PROVIDED HOWEVER, that this
indemnity shall not be deemed to relieve any underwriter of any of its due
diligence obligations. Such indemnity shall survive the transfer of securities
by a selling shareholder.
3.9.3 Promptly after receipt by an Indemnified and/or Indemnifiable
Party under this Section 3.9 of notice of the commencement of any action
(including any governmental action), such Indemnified and/or Indemnifiable Party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 3.9, deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an Indemnified and/or Indemnifiable Party (together with all other
Indemnified and/or Indemnifiable Parties which may be represented without
conflict by one (1) counsel) shall have the right to retain one (1) separate
counsel, with the fees and expenses to be paid by indemnifying party, if
representation of such Indemnified and/or Indemnifiable Party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified and/or Indemnifiable
Party and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, shall not relieve the
15
indemnifying party of its obligations hereunder, except to the extent such
failure results in a lack of timely actual notice by the indemnifying party and
the indemnifying party suffers actual damages as a result thereof or actual
prejudice to its ability to defend such action. No indemnifying party will
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation.
3.9.4 The obligations of the Company and Holders under this Section
3.9 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
3.10 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. If the Company becomes
subject to reporting under the Securities Exchange Act of 1934 as amended, or
any federal statute or code which is a successor thereto (the "1934 ACT"), then
with a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form F-3, the Company
agrees to:
3.10.1 make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
3.10.2 take such action, including the voluntary registration of its
Ordinary Shares under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form F-3 for the sale of their Registrable Securities.
3.10.3 file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
3.10.4 furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form F-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
3.11 FOREIGN OFFERINGS. The registration rights provisions of this Agreement
shall apply, mutatis mutandis, to any registration of the Company's securities
outside of the United States of America.
3.12 LOCK-UP. In the event that an underwriter to the IPO or the QIPO (as
defined in the Amended Articles of Association) of the Company so requests, all
Holders agree that any sale of Registrable Securities may be subject to a
`lock-up' period restricting such sales for up to one hundred and eighty (180)
days beginning on the effective date
16
of the registration statement pursuant to which an IPO was effected (except as
part of such underwritten registration and excluding securities acquired in open
market transactions after completion of the IPO); provided however, that all
officers and directors of the Company, and holders of at least one percent (1%)
of the Company's registration rights shall be subject to and enter into similar
`lock-up' provisions, as referred to herein.
IV AFFIRMATIVE COVENANTS
---------------------
The Company hereby covenants to the Preferred Shareholders as follows:
4.1 PATENTS. The Company will take all reasonable steps necessary to
initiate or continue the prosecution of its patent applications and to maintain
any patents granted thereon as the Board may direct from time to time.
4.2 SUFFICIENCY OF CONVERSION SHARES. The Shareholders agree that, if at any
time the number of authorized Ordinary Shares of the Company shall be
insufficient to permit the conversion or conversion by reclassification of all
Preferred Shares into Ordinary Shares in accordance with the conversion
provisions of the Amended Articles of Association, the Shareholders shall vote
in favor of or execute written consents to effect such increase or
reclassification in the Company's registered share capital as may be necessary
and shall take all steps as are legally required to give full effect to such
conversion or conversion by way of reclassification.
4.3 WORK-PLANS; MONTHLY REPORT. The management of the Company shall
establish a Budget and a Business Plan in consultation with the Board. The form
of all the format of all periodical reporting (as are listed in Section 2 above)
shall be agreed by the Board within two months from the Initial Closing of the
Series H SPA.
4.4 CONFIDENTIALITY AND ASSIGNMENT OF IP. The Company will not employ or
continue to employ, any person who will have access to confidential information
with respect to the Company and its subsidiaries unless such person has executed
an employment agreement or other agreements that contain adequate
confidentiality and invention assignment provisions. The Company will not engage
any consultant or any person, or continue to engage any consultant or any person
who will have access to confidential information with respect to the Company and
its subsidiaries unless such person has executed and delivered agreements and/or
undertakings with respect to confidentiality and the assignment of intellectual
property to the Company.
4.5 REVENUE RECOGNITION POLICY. The Company shall adopt a written revenue
recognition policy within 2 months from the Initial Closing as such term is
defined in the Series H SPA.
V CO-SALE NO-SALE PROVISIONS
--------------------------
5.1 CO-SALE RIGHTS
5.1.1 GRANT. All Preferred Shareholders (which for the purposes of
this Section 5 shall be referred to as the "INVESTORS"), in addition to the
rights of first refusal and other rights granted hereunder and under the Amended
Articles of Association in the event of a transfer of securities, are hereby
granted the right of co-sale with respect to any proposed sale or other transfer
of the securities held by either one of the Founders,
17
until the earlier to occur of: (i) September 10, 2002; or (ii) the closing of an
IPO, as defined in the Amended Articles of Association.
5.1.2 NOTICE OF INTENDED DISPOSITION. If either of the Founders
desires to accept a bona fide third-party offer to purchase any or all of their
securities of the Company that it owns (which Founders, solely for the purposes
of this Section 5.1, shall each be referred to as a "SELLER", the third party
offeree shall be referred to as the "3RD PARTY PURCHASER" and the securities
subject to such offer to be hereinafter called, solely for the purposes of this
Section 5.1, the "TARGET SHARES" which has the same meaning as "OFFERED SHARES"
under Article 33 of the Amended Articles of Association), it shall, promptly
following the conclusion of the right of first refusal procedure as set forth in
such Article 33, deliver to the Board and to each of the Investors a written
notice of the offer and the basic terms and conditions thereof, including the
proposed purchase price and identity of the 3rd Party Purchaser.
5.1.3 EXERCISE OF RIGHT. If the Target Shares are not acquired by an
Investor pursuant to the rights of first refusal set forth in the Amended
Articles of Association, such Investor (hereinafter the "OFFEREE"), shall, for a
period of thirty (30) calendar days following receipt of the notice of intended
disposition to a 3rd Party Purchaser, have the right to notify the Seller of its
intention to exercise its rights hereunder and to add the Company securities it
holds to the Target Shares being sold to such 3rd Party Purchaser by the Seller,
upon the same terms and conditions specified in such notice, and in an amount
equal to the product obtained by multiplying (i) the aggregate number of Target
Shares by (ii) a fraction, the numerator of which is the number of Company
securities held by the Offeree and the denominator of which is the total number
of shares of the Company (the product shall hereinafter be referred to as the
"INVESTOR'S OFFERED SHARES"). If any Investor exercised its rights hereunder,
the Seller must cause the 3rd Party Purchaser to add such Investor's Offered
Shares to the Target Shares to be purchased by the 3rd Party Purchaser, as part
of the sale agreement, or include the Investor's Offered Shares in and reduce
accordingly the number of Seller's securities from the number of Target Shares
and conclude the transaction thereby or withdraw from the contemplated
transaction.
5.2 FOUNDERS NO SALE UNDERTAKING
5.2.1 Until the closing of an IPO (as defined in the Amended Articles
of Association), each of the Founders and/or each Controlled Entity (as defined
below) shall not make transfer or otherwise dispose of the Company's securities
held by him/it. The aforesaid limitations shall not apply to a Founder, whose
employment has been terminated by the Company.
5.2.2 (a) Notwithstanding anything to the contrary in this
Agreement, a transfer by any one of the Founders of any of their Company
securities to any one of: (i) an entity controlled by such Founder; or (ii) an
entity controlled by both Founders in equal parts (either type of entity
hereinafter, a "CONTROLLED ENTITY"), is permitted, provided however, that each
of the Founders and/or each Controlled Entity shall be subject to the following
conditions:
(i) The Controlled Entity shall be prohibited from taking
any action whatsoever (including but not limited to the issuance
of additional securities, the approval of a transfer of its
securities, the creation of a pledge, lien, charge or
encumbrance on its securities), which will cause
18
the Founders not to have control in the Controlled Entity; and
(ii) The Founders shall be prohibited from taking any action
whatsoever (including but not limited to the transfer of their
securities, the creation of a pledge, lien, charge or
encumbrance on their securities or otherwise dispose of their
securities), which will cause them not to have control in the
Controlled Entity; and
(iii) The Founders and the Controlled Entity shall cause the
incorporation documents of the Controlled Entity to include the
provisions set forth in paragraphs (i) and (ii) above; and
(iv) Without derogating from Section 5.1 above and in
addition to any other restrictions imposed on shareholders of
the Company, the Controlled Entity shall be prohibited from
transferring the Company securities held by it, without first
obtaining a written undertaking from such proposed transferee to
be subject to and bound by the provisions of this Section V.
(b) It is hereby further agreed that any such transfer to a
Controlled Entity as described in this Section 5.2, by any one of the
Founders, shall not be deemed to be a transfer in breach of the
provisions of this Section 5, nor shall it be deemed a transfer giving
rise to the co-sale rights appearing in Section 5.1 of this Agreement.
(c) For the purpose of this Section 5, `control' shall mean
aggregate holdings of not less than eighty percent (80%) of: (i) such
entity's issued and outstanding share capital; and (ii) the voting
rights in such entity; and (iii) the rights to receive distributed
profits of such entity; and (iv) the right to appoint members of the
board of directors of such entity.
5.3 SUCCESSORS AND ASSIGNS. The provisions of this Section V shall inure to
the benefit of and be binding upon the Investors and their respective successors
and assigns. Nothing in this Section V, express or implied, is intended to
confer upon any party other than the Investors or their respective successors
and assigns any rights, obligations, or liabilities under or by reason of this
Section V, except as expressly provided herein. The rights under this Section V,
may be assigned (but only with all related obligations) by an Investor to a
transferee or assignee of the securities held by such Investor, provided the
Company and each of the Founders, are, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such Co Sale and
No Sale rights are being assigned.
VI INCORPORATION BY REFERENCE OF CERTAIN RIGHTS AND/OR OBLIGATIONS
ATTACHED TO THE PREFERRED SHARES AND/OR THEIR HOLDERS
---------------------------------------------------------------
6.1 In addition to the rights, privileges and/or obligations of the
Preferred Shareholders attached and/or associated with their Series A Preferred
Shares, the Series B Preferred Shares, the Series C Preferred Shares, the Series
D Preferred Shares, the Series E Preferred Shares, the Series F Preferred
Shares, the Series G Preferred Shares, the Series H Preferred Shares and/or the
conversion shares received upon conversion or reclassification thereof or
conveyed to their holders pursuant to the Amended Articles of Association, the
following Articles of the Amended Articles of Association are hereby
19
incorporated by reference herein as contractual rights and/or obligations, and
form an integral part hereof: (i) Articles 6 (Rights, Preferences and
Restrictions of Preferred Shares), 7 (Dividend Provisions), 8 (Liquidation
Preferences), and 9 (Conversion); including without limitation, the conversion
rights of the Preferred Shares, the liquidation and/or distribution preferences
of the Preferred Shares, anti-dilution protection and/or rights of the Preferred
Shares, and the dividend rights attached to the Preferred Shares; (ii) Article
11 (Voting Rights); including, without limitation, the voting rights attached to
or associated with the Preferred Shares incorporated elsewhere in the Articles
of Association; (iii) Article 14 (Preemptive Rights); including, without
limitation, the preemptive rights of the Preferred Shareholders; (iv) Article 17
(Protective Provisions); including, without limitation, the rights of certain
holders of the Preferred Shares and the veto rights of DBAG and the DB Director;
(v) Article 56 including the quorum provisions; (vi) Article 33 (Rights of First
Refusal); relating, INTER ALIA, to the transfer of shares; and (vii) the rights
of certain holders of Preferred Shares as described in Articles 69 (Directors)
and 78 (Functions of the Directors and Quorum for Board Meetings), including
without limitation, the rights of certain Preferred Shareholders to appoint
directors and/or observers and the composition of the Board and committees
thereof and quorums. Should any of the Articles incorporated herein refer to any
other Articles of the Amended Articles of Association, such Articles are also
incorporated by reference herein to the extent necessary to give full effect to
those Articles expressly incorporated by reference herein. If any Article
incorporated herein by reference, is amended by the shareholders of the Company
after the date of the Initial Closing of the Series H SPA, such amendment shall
only be implied and incorporated by reference herein if done so in accordance
with the Amended Articles of Association as may be amended from time to time in
conformity therewith, and such amendment shall be deemed to be implied and
incorporated by reference herein without any further action and/or approval
required on behalf of the parties hereto.
VI(A) CONFIDENTIALITY
---------------
6A.1 Each of the parties hereto will hold in confidence all documents and
information concerning the Company (which as used in this Section 6A shall read
to include PowerDsine Inc., the Company's U.S. Subsidiary), the Company's
business, financial and/or commercial information, operations, sales, marketing,
customers, suppliers and all information pertaining to any Intellectual Property
rights of the Company and any other proprietary information of the Company
whatsoever (all hereinafter referred to as the "CONFIDENTIAL INFORMATION"), by
taking all reasonable measures to maintain the confidentiality of such
Confidential Information, which will in no event be less than the measures they
use to maintain the confidentiality of their own information of similar
importance. Each of the parties also undertakes not to use the Confidential
Information in any way, directly or indirectly, for purposes other than for the
Company and/or for fulfilling its obligations and exercising its rights under
this Agreement. A party may disclose such Confidential Information, to its
officers, directors, consultants and their representatives, in connection with
the transactions contemplated by this Agreement and the Series H SPA, only: (i)
on a need to know basis; and (ii) under a duty of confidence or upon
confidentiality undertakings consistent with the obligations set forth in this
section in connection with such Confidential Information.
The obligations hereunder shall not apply as to any Confidential Information
which is reasonably shown or demonstrated by the party receiving the information
(the "RECEIVING PARTY") to be: (i) known by the Receiving Party at the time of
receiving
20
such information without breach of confidentiality undertaking; (ii) in the
public domain through no fault of the Receiving Party; (iii) later acquired by
the Receiving Party, lawfully and without breach of confidentiality undertaking
from sources other than the Company (such as independent development, third
parties, etc.); (iv) furnished by the Company to third parties without
restriction on disclosure; or (v) independently conceived, discovered or
developed by natural persons at the Receiving Party who have not had access to
the Confidential Information. Disclosure of any Confidential Information
pursuant to any compelling judicial or administrative order or proceeding or as
required by law, shall not be deemed a breach hereof.
6A.2 The terms and conditions of the financing round in connection with which
this Agreement is being executed, including the existence of this Agreement,
will be deemed Confidential Information and shall not be disclosed to any third
party by the Company or the Shareholders except as provided below: (i) the
Company shall be able to disclose the existence of the financing contemplated
herein and its terms to the Company's investors, lenders, accountants, legal
counsel, and bona fide prospective investors and lenders, in each case only
where such persons or entities are under appropriate nondisclosure obligations;
(ii) if disclosure is required by law, including by the Securities and Exchange
Commission, the disclosing party shall use all reasonable efforts (and cooperate
with the other party's efforts) to obtain confidential treatment of any
materials so disclosed; and (iii) in connection with its periodic reports to its
partners, members or shareholders, each Shareholder may make general statements,
not containing technical information, regarding the nature and progress of the
Company's business. The provisions of this Section VI(A) shall be in addition
to, and not in substitution for, the provisions of any separate nondisclosure
agreement executed by the parties hereto with respect to the transactions
contemplated hereby.
6A.3 Notwithstanding the foregoing, but subject to any applicable laws, rules
or regulations, each of the Shareholders will have the right to list the name of
the Company and to make general references to the basic nature of the
relationship between such Shareholder and the Company under this Agreement in
such Shareholders' promotional and marketing materials, in its oral or visual
presentations to third parties, in interviews conducted by the news media or
securities analysts and in or through any other available media channels,
including print, Internet, radio, cable and broadcast mediums.
VII MISCELLANEOUS
-------------
7.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. The rights under this Agreement, may be
assigned (but only with all related obligations) by a party hereto to a
transferee or assignee of the securities held by such assigning party, provided
the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned,
all subject to and in accordance with the provisions concerning transfer of
shares in the articles of association of the Company as may be in effect from
time to time
21
7.2 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Israel without regard to provisions of conflicts of
laws, except for the clauses regarding registration rights, which will be
interpreted in accordance with U.S. federal law.
7.3 NOTICES. Unless otherwise provided, any notice or other document
required or permitted under this Agreement shall be given in writing and if: (i)
served or sent by post shall be deemed to have been served or delivered ten (10)
days after the time when the letter was deposited in the Israeli mail, postage
prepaid for first class mail or airmail, as applicable, and addressed to the
party to be notified at the address set forth in SCHEDULE I attached herein, or
(ii) sent via facsimile or electronic mail, shall be deemed to have been served
or delivered on the first business day following the date that the electronic
mail or facsimile was sent and addressed to the party to be notified at the
address set forth in SCHEDULE I attached herein, provided that, if no electronic
mail confirmation is delivered by the recipient of such notice to the sender
thereof within 24 hours following the delivery of such notice, such notice has
to be resent via facsimile and shall be deemed to have been served or delivered
on the first business day following the date that such notice was resent via
facsimile.
7.4 TERMINATION OF PREVIOUS AGREEMENT.
(a) The Registration Rights Agreement in effect immediately prior to
the date of this Agreement and dated February 24, 2000 is hereby terminated and
of no further force and effect except as specifically provided for herein.
(b) The Co Sale Agreement in effect immediately prior to the date of
this Agreement and dated February 6, 2000 is hereby terminated and of no further
force and effect.
(c) Sections 6.1, 6.2, 6.3 and 7 of the Series G SPA are hereby
terminated and of no further force and effect.
(d) The letters of undertaking from certain of the Company's
shareholders given in connection with the Series E SPA and the Series G SPA are
hereby terminated and of no further force and effect.
(e) Sections 6.1, 6.2, 7, 8, 9 and 10 of the Series E SPA are hereby
terminated and of no further force and effect.
(f) Sections 6.1, 6.2, 7, 8, 9 and 10 of the Series B SPA are hereby
terminated and of no further force and effect.
(g) Sections 6.1, 6.2, 7, 8, 9 and 11 of the Series A SPA are hereby
terminated and of no further force and effect.
7.5 INTEGRATION, AMENDMENTS AND WAIVERS
7.5.1 This Agreement along with the Amended Articles of Association
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and supersedes in their entirety
all prior agreements among the parties with respect to the subject matters
hereof without derogating from the representations, warranties and covenants of
the Company set forth
22
in the Series H SPA. Except for the provisions of the Amended Articles of
Association incorporated by reference in Section VI of this Agreement and as may
be amended in conformity therewith, any other amendment hereto must be in
writing and signed by an authorized representative of the parties, and except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than with the written consent of
the holders of at least (eighty) 80% of the Preferred Shares calculated on an as
converted basis in conformity with the Amended Articles of Association (i.e. 80%
of the Ordinary Shares into which the Preferred Shares could be converted into).
7.5.2 The waiver by any party of any breach or alleged breach of
provision hereunder shall not be construed to be a waiver of any concurrent,
prior or succeeding breach of said provision or any other provision herein.
7.5.3 Should any portion of this Agreement be held invalid, or
unlawful, the remainder of the Agreement shall continue to be binding on both
parties.
7.6 CONSENTS. By executing this Agreement each of the Series A Holders, the
Series B Holders, the Series C Holders, the Series D Holders, the Series E
Holders, the Series F Holders, the Series G Holders, ITI, Argoquest and each of
the Founders hereby consents to the issuance of the Series H Preferred Shares,
the Series H Warrants and the Warrant Shares in accordance with the Series H
SPA, this Agreement and the Amended Articles of Association and waives any
notice requirements, pre-emptive, anti-dilution rights such holder may have in
connection with the RS Preferred H Shares or similar rights that it or he/she
may have with respect to the issuance of the Series H Preferred Shares pursuant
to the abovementioned agreements to the extent not taken up under the Series H
SPA.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
23
SIGNATURE PAGE OF THE AMENDED RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
POWERDSINE LTD. DEUTSCHE BANK AG LONDON
---------------------------------------- --------------------------------------
By: Xxxx Xxxxx By:
----------------------------- ---------------------------
Title: C.E.O. Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
---------------------------------------- --------------------------------------
By: Xxxx Xxxxx By:
----------------------------- ---------------------------
Title: President Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
24
SIGNATURE PAGE OF THE AMENDED RIGHTS AGREEMENT
DRW VENTURE PARTNERS L.P.
By Xxxx Xxxxxxxx Corporation, its General Partner
---------------------------------------- --------------------------------------
By:
----------------------------- ---------------------------
Title:
----------------------------- ---------------------------
Date:
----------------------------- ---------------------------
XXXX XXXXX XXXX XXXXX
---------------------------------------- --------------------------------------
Date: Date:
----------------------------- ---------------------------
XXXXX XXXX XXXX XXXX
---------------------------------------- --------------------------------------
Date: Date:
----------------------------- ---------------------------
XXXX XXXXXXX XXXXXX XXXXXX
---------------------------------------- --------------------------------------
Date: Date:
----------------------------- ---------------------------
ITI-INTERLINE TELECOM INTERNATIONAL LTD. ACQUIREX BVBA
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
AMPAL INDUSTRIES INC. AMPAL INDUSTRIES (ISRAEL) LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
25
SIGNATURE PAGE OF THE AMENDED RIGHTS AGREEMENT
ACHIDIM HOLDINGS LTD. SHOHAM INVESTMENTS LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
AVANTORIN INVESTMENTS LTD. SHIKMA ANEFA LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
VERTEX - YOZMA L.P. VERTEX - DISCOUNT L.P.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
VERTEX INVESTMENTS (III) PTE. LTD. POALIM CAPITAL MARKETS TECHNOLOGIES LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
JERUSALEM VENTURE PARTNERS L.P. JERUSALEM VENTURE PARTNERS (ISRAEL) L.P.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
CATALYST INVESTMENTS, L.P. CLAL ELECTRONICS INDUSTRIES LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
26
SIGNATURE PAGE OF THE AMENDED RIGHTS AGREEMENT
THE CHALLENGE FUND - ETGAR II, L.P. COURSES INVESTMENTS IN TECHNOLOGY LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
CLAL VENTURE CAPTIAL X.X. XXXXXX KRANOT GMULIM LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
KINERET KEREN HISHTALMUT LTD. KEREN MERKAZIT LEPITZUYEI PITURIM LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
TAGMULIM LTD. KEREN OR KUPAT TAGMULIM UPITZUIM LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
KATZIR KUPAT TAGMULIM UPITZUIM LTD. XXXX XXXXX GMULIM LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
27
SIGNATURE PAGE OF THE AMENDED RIGHTS AGREEMENT
YETER KRANOT GMULIM LTD. BAR KEREN GMULIM LTD.
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
XXXXX XXXXX GMULIM LE'ATZMAIM LTD. ARGOQUEST HOLDINGS LLC
---------------------------------------- --------------------------------------
By: By:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
Date: Date:
----------------------------- ---------------------------
SCHEDULE I
----------
ADDRESSES OF PARTIES FOR NOTICE PURPOSES
FOR THE COMPANY, XXXX XXXXX FOR SHOHAM INVESTMENTS LTD.:
AND XXXX XXXXX: 000 Xxxx Xxx Xxx. Xxx. 0X
0 Xxxxxxx Xxxxxx Xxx Xxxx, XX 00000
Industrial Zone Xxxxx Xxxxxx B USA
Hod Hasharon Attn: Xxxxx Xxxx
Israel Fax: 1- 212 - 000 0000
Attn: Xxxx Xxxxx and/or Xxxx Xxxxx Email: xxxxx@xxxxx.xxx.xxx
Fax: 000-0-0000000
Email: xxxxx@xxxxxxxxxx.xxx;
xxxxx@xxxxxxxxx.xxx
FOR ACHIDIM HOLDINGS LTD. FOR AVANTORIN INVESTMENTS LTD.:
AND SHIKMA ANEFA LTD.: Xxxxxx Xxxxxx, 26th Fl.,
C/o Aurom Management & Consulting Ltd. 1 Ehad Haam Street
Aurec Building PO Box 29161
00 Xxxx Xxxxxx Xxxxxx Xxxx Xxx Xxxx 00000
Ramat Gan 00000 Xxxxxx
Israel Attn: Xxxx Xxxxxx
Attn: Xxxx Xxxxx Fax: 000-0-0000000
Fax: 000-0-0000000 Email: xxxx@xxx.xx.xx
Email: xxxx@xxxxx-xxx.xxx
FOR THE VERTEX ENTITIES: FOR JERUSALEM VENTURE PARTNERS ENTITIES:
C/o Vertex Management (III) Ltd. Technology Park, Building 1
1 Hashikma Street, POB 144 Xxxxx, Xxxxxxxxx 00000
Savyon 00000 Xxxxxx
Israel Attn: Xxxxx Xxxxx
Attn: Xxxxxxxx Yaakubovitch Fax: 000-0-00000000
Fax: 000-0-0000000 Email: xxxxx@xxxxx.xxx
Email: xxxxxxxx@xxxxxxxxx.xx.xx
FOR XXXXX XXXX: FOR ARGOQUEST:
000 Xxxx Xxx Xxx. Xxx. 0X 00000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxxxxx, Xxxxxxxxxx 00000
XXX XXX
Attn: Xxxxx Xxxx Attn: Xxxxx Xxxxxxxx
Fax: 1- 212 - 000 0000 Fax: 1-310 - 000 0000
Email: xxxxx@xxxxx.xxx.xxx Email: xxxxxxxxx@xxxxxxxxx.xxx
28
FOR CLAL ELECTRONICS INDUSTRIES LTD. FOR AMPAL INDUSTRIES ENTITIES:
AND XXXXXX XXXXXX: 000 Xxxxxxxxx Xxxxxx
3 Azrieli Center, Triangular Tower Tel Aviv 62098
45th Floor Israel
Tel Aviv Attn: Xxxxxx Xxxxxxxx
Israel Fax: 000-0-0000000
Attn: Xxxxxxxx Xxxxxx Email: xxxxxx@xxxxx.xxx
Fax: 000-0-0000000
Email: xxxxxx@xxx.xx.xx
FOR ITI: FOR COURSES AND XXXX XXXX:
000 Xxxx Xxxxx Xxxxxx Xxxxxx Xxxxxx, 26th Fl.,
00 Xxxxxxxxx Xxxx 1 Ehad Xxxx Xxxxxx
Xxxxxxxxxxx Xxxx XX Xxx 00000
Xxxxxxx Xxx Xxxx 00000
Xxxx Xxxx Xxxxxx
Attn: Xxx Xxxxxx Attn: Xxxx Xxxx
Fax: 00-00000000 Fax: 000-0-0000000
Email: xxx@xxxxx.xx.xx Email: xxxx@xxxxx-xxxxxxxx.xxx
FOR CLAL: FOR THE POALIM ENTITIES:
3 Azrieli Center, Triangular Tower, 00 Xxxxxxxxxx Xxxx.
00xx Xxx. Xxx Xxxx
Xxx Xxxx Xxxxxx
Israel Attn: Xxxx Xxxxxx
Attn: Xxxxxx Xxxx Fax: 000-0-0000000
Fax: 000-0-0000000 Email: xxxxxxx@xxx.xx.xx
Email: xxxxxx.xxxx@xxx.xx.xx
FOR THE CHALLENGE FUND-ETGAR II, L.P.: FOR THE PROVIDENT FUNDS:
Xxxxxxxxxx House Provident Fund Asset Management Xxxx
00 Xxxxxxx Xxxxxx, 20th Flr. Bank Hapoalim Ltd.
Xxx Xxxx 00000 000 Xxxxxxx Xxxxxx
Xxxxxx Tel Aviv
Attn: Xxxxx Xxxxxxxx, VP Israel
E-mail: xxxx@xxxxxxxxx.xx.xx Attn: Barak Soreni
Fax: 000-0-0000000 E-mail: xxxxxx@xxxxxx.xx.xx
Fax: 000-0-0000000
FOR ACQUIREX BVBA: FOR XXXX XXXXXXX:
X/x Xxxxxx Xxxxxxxxxxx Xxx. 00 Xxxxxxxx Xxx.
0 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxxx Xxxxx Xxxxx XX 00000
Xxx Xxxx 00000, Xxxxxx U.S.A
Attn: Xxxxx Xxxxxxxx Attn: Xxxx Xxxxxxx
Fax: 972-3- 0000000 E-mail: xxxxxxxxxxx@xxx.xxx
Email: xxxxxx@xxxxxx.xx.xx Fax: 0-000 000 0000
29
FOR DEUTSCHE BANK AG LONDON: FOR CATALYST INVESTMENTS L.P.:
Tower 42, Xxxxx 00 0 Xxxxxx Xxxxx Xxxxxx
00 Xxx Xxxxx Xxxxxx Xxx Xxxx 00000
Xxxxxx XX0X 0XX Israel
Fax: 44 -20- 0000 0000 Attn: Xxxxxx Xxxxx, VP
Attn: Xxxxxxx Xxxxxx and Xxxxx Ulcoq E-mail: xxxx@xxxxxxxx-xxxx.xxx
E-mail: xxxxxxx.xxxxxx@xx.xxx; Fax: 000-0-0000000
xxxxx.xxxxx@xx.xxx
WITH A COPY TO: FOR DRW VENTURE PARTNERS L.P.:
X. Xxxxxxxx & Co. Advocates 00 Xxxxx 0xx Xxxxxx
00 Xxxxxxx Xxxxxx Xxxxxxxxxxx, XX 00000
Xxx Xxxx 00000 X.X.X
Xxxxxx Attn: Xxxx Xxxxxx
Attn: Xxxxxxx X. Xxxxxxxx, Adv. E-mail: xxxx.xxxxxx@xxxxx.xxx
E-mail: xxxxxxxxx@xxxxxxxx.xx.xx and Fax: 0-000-000 1610
xxxxxxxxx@xxxxxxxxx.xxx
Fax: 000-0-0000000
