AMENDMENT AGREEMENT
Exhibit
4.1
AMENDMENT
AGREEMENT
(the
“Agreement”),
dated
as of March [__], 2006, by and between Arotech Corporation, a Delaware
corporation (the “Company”),
and
[NAME OF INVESTOR] (the “Investor”).
WHEREAS:
A.
The
Investor is the holder of, inter
alia,
warrants to purchase shares of the Company’s Common Stock par value $0.01 per
share (the “Common
Stock”)
as set
forth in Schedule
1
attached
hereto (collectively, the “Existing
Warrants”).
B.
The
Company and the Investor desire to enter into this Agreement, pursuant to which
upon satisfaction of certain conditions, among other things, (x) the Company
will (i) adjust the exercise price of the Existing Warrants to $0.40 (the
“Adjusted
Exercise Price”),
(ii)
issue warrants (the “Replacement
Warrants”),
in
the form attached hereto as Exhibit
A,
to
acquire up to [________]1
shares
(the “Replacement
Warrants Shares”)
of
Common Stock on the terms and conditions set forth in Exhibit
A;
and (y)
the Investor will exercise the Existing Warrants at the Adjusted Exercise
Price.
C.
The
proceeds from the Investor’s exercise of the Existing Warrants will be deposited
in an interest-bearing Cash Collateral Account (as defined below) to secure
the
Company’s obligations to repay the 8% Convertible Debenture due September 30,
2006 in the original principal amount of $[__________] issued to Investor (the
“Debenture”).
D.
The
parties hereto desire that the Replacement Warrants Shares be covered by
registration rights terms substantially identical, mutatis
mutandis,
to
those set forth in the Registration Rights Agreement, dated
as
of September 29, 2005, by and among the Company and certain investors thereto
(the “Registration
Rights Agreement”).
NOW,
THEREFORE,
the
Company and the Investor hereby agree as follows:
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ADJUSTMENT
OF EXERCISE PRICE AND ISSUANCE OF REPLACEMENT WARRANTS.
|
(a) Issuance
of Replacement Warrants.
Subject
to satisfaction (or waiver) of the conditions set forth in Sections 4, (i)
the
Company shall at the Closing (as defined below), (I) adjust the exercise price
of the Existing Warrants to the Adjusted Exercise Price and (II) issue to the
Investor the Replacement Warrants and (ii) the Investor shall exercise the
Existing Warrants at the Adjusted Exercise Price (the “Closing”).
(b) Closing
Date.
The
date and time of the Closing (the “Closing
Date”)
shall
be 10:00 a.m., New York Time, on the date of satisfaction (or waiver) of the
conditions to the Closing set forth in Sections 4 below (or such later date
as
is mutually agreed to by the Company and the Investor). The Closing shall occur
on the Closing Date at the offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
1 40%
of
the number of Existing Warrants being re-priced as listed on Schedule
1.
(c) Form
of Payment.
On the
Closing Date, the Investor shall pay an amount equal to the aggregate exercise
price of the Existing Warrants at the Adjusted Exercise Price (the “Exercise
Amount”)
by
wire transfer of immediately available funds in accordance with the Company’s
written wire instructions into the Cash Collateral Account.
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REPRESENTATIONS
AND WARRANTIES.
|
(a) Company
Bring Down.
The
Company represents and warrants to the Investor as set forth in Section 3 (other
than Section 3(z) thereto) of the Securities Purchase Agreement dated September
29, 2005, by and among the Company and certain investors thereto (the
“Securities
Purchase Agreement”)
as if
such representations and warranties were made as of the date hereof and set
forth in their entirety in this Agreement, including without limitation the
schedules referenced therein.
(b) Investor
Bring Down.
The
Investor hereby represents and warrants, as to itself only, as set forth in
Section 2 (other than Section 2(l) thereto) of the Securities Purchase Agreement
as if such representations and warranties were made as of the date hereof and
set forth in their entirety in this Agreement.
(c) For
purposes of Sections 2(a) and 2(b) hereto, (i)
the
term “Securities” and “Warrant” shall mean the Replacement Warrant, (ii) the
term “Warrant Shares” shall mean the Replacement Warrants Shares; (iii) all
references to the “Agreement”, the “Registration Rights Agreement”, the
“Security Agreements” and the “Transaction Documents” shall mean this Agreement,
and (iv) all references to the “Notes”, “Conversion Shares”, “Letter of Credit”,
shall be deemed deleted.
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CERTAIN
COVENANTS AND AGREEMENTS.
|
(a) Cash
Collateral Account. On
or
prior to the Closing, the Company shall establish with a bank acceptable to
the
Investor (the “Cash
Collateral Bank”)
a
deposit account (together with all monies on deposit in such deposit account
and
all certificates and instruments, if any, representing or evidencing such
deposit account, the “Cash
Collateral Account”),
and
shall cause the Cash Collateral Bank to execute and deliver such customary
agreements and instruments necessary to grant to the Investor a first priority
perfected security interest in the amounts on deposit in the Cash Collateral
Account to secure the obligations under the Debenture, in form and substance
reasonably satisfactory to the Investor. The Company agrees that it shall not
permit the Cash Collateral Account to be subject to any lien, pledge, charge,
security interest or other encumbrance other than as provided in the immediately
preceding sentence. The funds in the Cash Collateral Account shall be
distributed to the Investor on September 30, 2006.
(b) Stockholder
Approval.
The
Company shall provide each stockholder entitled to vote at a special or annual
meeting of stockholders of the Company (the “Stockholder
Meeting”),
which
shall be promptly called and held not later than June 30, 2006 (the
“Stockholder
Meeting Deadline”),
a
proxy statement, substantially in the form which shall have been previously
reviewed by the Investor and Xxxxxxx Xxxx & Xxxxx LLP (which review shall be
completed within five (5) Business Days of such counsel’s receipt of the proxy
statement and such review requirement shall be waived if such counsel has not
completed its review within such five (5) Business Day period), soliciting
each
such stockholder’s affirmative vote at the Stockholder Meeting for approval of
resolutions providing for the Company’s issuance of all of the
Replacement Warrants and the Replacement Warrants Shares issuable upon the
exercise thereof
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in
accordance with applicable law and the rules and regulations of the Principal
Market (such
affirmative
approval being referred to herein as the “Stockholder
Approval”),
and
the Company shall use its reasonable best efforts to solicit its stockholders’
approval of such resolutions and to cause the Board of Directors of the Company
to recommend to the stockholders that they approve such resolutions. The Company
shall be obligated to use its reasonable best efforts to obtain the Stockholder
Approval by the Stockholder Meeting Deadline. If, despite the Company’s
reasonable best efforts the Stockholder Approval is not obtained on or prior
to
the Stockholder Meeting Deadline, the Company shall cause an additional
Stockholder Meeting to be held every four (4) months thereafter until such
Stockholder Approval is obtained or the Notes are no longer outstanding. As
used
herein, “Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
(c) Registration
Rights.
Promptly after the Closing Date, the Company shall file a new registration
statement, with the Replacement Warrants Shares
being
treated as “Registrable Securities” in accordance with, and being governed by,
identical terms to the Registration Rights Agreement, which provisions and
terms
should be applicable hereto mutatis
mutandis,
as if
the Company and the Investor had executed such Registration Rights Agreement,
and as if the Investors were party thereto, as of the Closing Date; provided,
however,
that:
(i) “Registrable
Securities”
shall
mean (i) the Replacement Warrants Shares and (ii) any shares of capital stock
issued or issuable with respect to the Replacement Warrants Shares or the
Replacement Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to
any
limitations on exercise of the Replacement Warrants.
(ii) All
references to “Conversion Shares” and “Notes” shall be deemed
deleted.
(iii) “Effectiveness
Date”
shall
mean with respect to the Registration Statement required to be filed thereunder
relating to the Replacement Warrants Shares, the earlier of (1) (i) in the
event
that the Registration Statement is not subject to a full review by the SEC,
60
days after the Closing Date or (ii) in the event that the Registration Statement
is subject to a full review by the SEC, 90 days after the Closing Date, and
(2)
the fifth Business Day following the date on which the Company is notified
by
the SEC that such Registration Statement will not be reviewed or is no longer
subject to further review and comments.
(iv) “Filing
Date”
shall
mean with respect to the Registration Statement required to be filed hereunder
relating to the Warrant Shares, the 15th day following the earlier of (i) the
date on which the Company’s annual report on Form 10-K for the year ended
December 31, 2005 is required to be filed (after any extensions under Rule
12b-25 under the Securities Exchange Act of 1934, as amended) or (ii) the date
on which the Company’s annual report on Form 10-K for the year ended December
31, 2005 is filed.
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(v) The
“aggregate principal amount of Notes, then held by such Holder” referenced in
Section 2(b)(x) and 2(b)(y) of the Registration Rights Agreement shall be
replaced with the “Exercise Amount.”
(vi) In
no
event shall the aggregate amount of liquidated damages payable by the Company
pursuant to Section 2(b) exceed 10% of the Exercise Amount.
(d) Disclosure
of Transactions and Other Material Information.
On or
before 8:30 a.m., New York Time, on the
first
Business Day following the date hereof, the Company shall file a Current Report
on Form 8-K describing the terms of the transactions contemplated by this
Agreement and by any documents relating to the issuance of the Replacement
Warrants in the form required by the Securities Exchange Act of 1934, as
amended, and attaching the material transaction documents (including, without
limitation, this Agreement and the form of the Replacement Warrants) as exhibits
to such filing (including all attachments, the “8-K
Filing”,
and
the description and attachments, the “8-K
Materials”).
From
and after the filing of the 8-K Filing with the SEC, the Investors shall not
be
in possession of any material, nonpublic information received from the Company,
any of its Subsidiaries or any of its respective officers, directors, employees
or agents, that is not disclosed in the 8-K Filing. The Company shall not,
and
shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees and agents, not to, provide the Investor with
any
material nonpublic information regarding the Company or any of its Subsidiaries
from and after the filing of the 8-K Filing with the SEC without the express
written consent of such Investor. Subject to the foregoing, neither the Company
nor the Investor shall issue any press releases or any other public statements
with respect to the transactions contemplated hereby; provided,
however,
that
the Company shall be entitled, without the prior approval of the Investor,
to
make any press release or other public disclosure with respect to such
transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations, including the applicable rules and regulations of the Trading
Market (as such term is defined in the Securities Purchase Agreement) (provided
that in the case of clause (i) the Investor shall be consulted by the
Company in connection with any such press release or other public disclosure
prior to its release).
(e) Fees
and Expenses.
At the
Closing, the Company shall reimburse the Investor for its reasonable legal
and
due diligence fees and expenses in connection with the preparation and
negotiation of this Agreement and the related documents by paying such amount
to
Xxxxxxx Xxxx & Xxxxx LLP (the “Investor
Counsel Expense”).
Except as otherwise set forth in this Agreement or pursuant to the registration
rights pursuant to Section 3(c) hereof, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other non-income taxes and duties levied in connection
with the issuance (but not the exercise) of the Replacement
Warrants.
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COMPANY’S
CLOSING DELIVERIES.
|
(a) At
the
Closing, the Company shall deliver or cause to be delivered to the Investor
the
following:
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(b). The
Replacement Warrants registered in the name of the Investor, pursuant to which
the Investor shall have the right to acquire the Replacement Warrants
Shares.
(i) The
legal
opinion of Company Counsel, in agreed form, addressed to the
Investor.
(ii) The
Company shall use its best efforts to have delivered to the Investor within
five
business days after the Closing Date a letter from the Company’s transfer agent
acknowledging that the Irrevocable Transfer Agent Instructions delivered to
the
transfer agent on September 29, 2005, shall also apply to the shares of common
stock underlying the Replacement Warrants.
(iii) A
certificate, executed by the Chief Executive Officer of the Company, dated
as of
the Closing Date, to the effect that the Company shall have taken all corporate
action and obtained all governmental, regulatory or third party consents and
approvals, if any, necessary for the issuance of the Replacement
Warrant.
(iv) An
amount
in United States dollars and in immediately available funds, by wire transfer
to
an account designated in writing by the Investor for such purpose, equal to
the
Investor Counsel Expense.
(v) Such
other documents relating to the transactions contemplated by this Agreement
as
the Investor or its counsel may reasonably request.
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INVESTOR’S
CLOSING DELIVERIES.
|
(a) At
the
Closing, the Investor shall deliver or cause to be delivered to the Company
in
United States dollars and in immediately available funds, by wire transfer
to
the Cash Collateral Account, an amount equal to the Exercise Amount.
Notwithstanding
the foregoing, the Company agrees that the Investor shall not be required to
deliver or caused to be delivered to the Company an amount equal to the Exercise
Amount until promptly after the Company delivers an account control agreement
in
form and substance reasonably satisfactory to the Investor pursuant to Section
3(a) of this Agreement.
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MISCELLANEOUS.
|
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.
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Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This
Agreement may be executed in one or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement; Effect on Prior Agreements; Amendments.
This
Agreement, the documents referenced herein and any agreements entered into
on
the date hereof in connection with the transactions contemplated by this
Agreement supersede all other prior oral or written agreements between the
Investors, the Company, their affiliates and Persons acting on their behalf
with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Investor makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be amended other than by an instrument in
writing signed by signed by the party against whom enforcement is sought. No
provision hereof may be waived other than by an instrument in writing signed
by
the party against whom enforcement is sought. The Company has not, directly
or
indirectly, made any agreements with any of the Investors relating to the terms
or conditions of the transactions contemplated hereby except as set forth or
referenced herein as amended or cancelled by this Agreement.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The addresses
and
facsimile numbers for such communications shall be:
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-
If
to the
Company:
Arotech
Corporation
000
Xxxxxxxx
Xxxxx
Xxxxxx,
Xxxxxxx
00000
Facsimile
No.: (000)
000-0000
Telephone
No.: (000)
000-0000
Attention:
Chief
Executive Officer
with
a
copy to:
Electric
Fuel
(E.F.L.) Ltd.
One
HaSolela Street,
POB 000
Xxxxxxx
Xxxxxxxxxx
Xxxx
Xxxx
Xxxxxxx 00000,
Xxxxxx
Telephone:
000-000-0-000-0000
Facsimile:
011-972-2-990-6688
Attention:
General
Counsel
If
to the
Investor:
To
the
address set forth under the Investor’s name on the signature page
hereof
With
a copy to:
Xxxxxxx
Xxxx
& Xxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx, Xxx Xxxx
00000
Facsimile
No.: (000)
000-0000
Telephone
No.: (000)
000-0000
Attention:
Xxxxxxx
Xxxxx, Esq.
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any assignees of the
Replacement Warrants.
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
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(i) Survival.
The
representations and warranties of the Company and the Investors contained
herein, and the agreements and covenants set forth herein, shall survive the
Closing.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(k) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(l) Remedies.
The
Investors shall have all rights and remedies which such holders have been
granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages
by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the
event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Investor. The Company therefore agrees that the Investor shall
be
entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and without posting a bond
or
other security.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
AROTECH
CORPORATION
By:
Name:
Title:
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE OF INVESTOR FOLLOWS]
-
9
-
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
[NAME
OF INVESTOR]
By:_____________________________________
Name:
Title:
Address
for Notice:
EXHIBITS
Exhibit
A
- Form
of
Replacement Warrant
SCHEDULE
1
List
of Existing Warrants
|
Holder
|
Date
Exercisable
|
Expiration
Date
|
Number
|
Original
Price
|
New
Price
|
