SUPPLEMENTARY FUNDING AGREEMENT
EXHIBIT
10.5
This
Supplementary Funding Agreement
(the “Agreement”)
is made as of
this 26 day of July, 2007, by and between SCORPION SURGICAL
TECHNOLOGIES
LTD., an Israeli
company (company number 51-396950-1) with a business address at D.N. Xxxxxx,
00000, Xxxxxx (the
“Company”),
and Cell Kinetics
Ltd., a private
Israeli company (51-323862-6) from Lod, Israel (the “Investor”).
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WHEREAS,
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The
Company is a seed-stage company engaged in research and development
in the
field of curved spinal fixation implants (the “Field”),
and is currently operating within the framework of The Incubator
For
Managing Technology Entrepreneurship Misgav Ltd. (the
“Incubator”); and
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WHEREAS,
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The
Company has received funding from the Office of the Chief Scientist
in the
Ministry of Industry, Trade and Labor (“OCS”) to carry
out a research and development program within the Incubator (the
“Program”) in accordance with the approved project budget
attached hereto as Schedule A (the
“Approved Budget”);
and
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WHEREAS,
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As
a pre-condition to OCS funding of the Program, the Company must obtain
additional financing from a supplementary investor covering at least
15%
of the Approved Budget (the “Supplementary Funding”);
and
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WHEREAS,
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The
Investor is willing to provide the Investment Amount to the Company
on the
terms and conditions set forth in this Agreement in exchange for
an
issuance of shares of the Company as set forth
below.
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NOW,
THEREFORE, in consideration of their mutual covenants herein contained, the
parties hereby agree as follows:
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1.
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THE
SUPPLEMENTARY FUNDING
TRANSACTION
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1.1.
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General. The
Investor will invest the aggregate amount of $150,000 (the
“Investment Amount”) in the Company, subject to certain
milestones as more fully described below, in consideration for the
issuance to the Investor of such number of ordinary shares of the
Company,
par value NIS 0.1 each (“Ordinary Shares”) as specified
in Schedule
C.
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1.2.
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The
Investment Payment. The Investment Amount shall be
paid by the Investor to the Company in 3 (three) equal installments
(the
“Milestone Payments”) subject to the fulfillment of
certain milestones, all as described in Schedule
C.
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Each
Milestone Payment shall be made by wire transfer or check deposit to
the Company’s bank account, the particulars of which are as follows: Bank Leumi,
Karmiel Barnch (961) Acct. #191600/48, or by such other form of payment as
is
mutually agreed by the Company and the Investor.
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1.3.
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Issuance
of Shares. Upon each Milestone Payment
and as a condition thereto, the Company shall issue
and allot to the Investor
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such
number of Ordinary Shares set forth in Schedule C,
adding up to a total of 20,000 Ordinary Shares (the “Purchased
Shares”), which shall comprise 20% of the issued and outstanding
share capital of the Company on a fully-diluted basis, following
investment, based on the capitalization table as of this date
(Schedule
B).
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1.4.
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Conditions
Precedent – First Payment. The transfer of the
first Milestone Payment shall be subject to the following conditions
precedents of the Investor:
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1.4.1.
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Board
of Directors Resolutions and Shareholders Resolutions. The
Company shall deliver to the Investor the Company’s Board resolutions in
the form attached hereto as Schedule 1.4.1A,
(i) approving the Company’s execution and performance of
this Agreement, and the transactions contemplated hereby, including
issuing and selling the Purchased Shares to the Investor against
payment
of the Investment Amount pursuant to the provisions set forth in
this
Agreement, (ii) reserving 10,000 Ordinary Shares for
issuance to employees, consultants and others under an Employees
Stock
Option Plan to be adopted by the Company (the “Plan”),
which shares shall constitute 10.00% of the Company’s share capital on a
fully diluted basis, immediately following the issuance of all shares
issuable hereunder (without taking into account any additional issuances
between the first payment hereunder and the last payment hereunder)
and
(iii) approving the New Articles of Association in
the
form attached hereto as Schedule
1.4.5.
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The
Company shall deliver to the Investor the Company’s Shareholders resolutions in
the form attached hereto as Schedule 1.4.1B,
approving (a) the Company’s execution and performance of this
Agreement, and the transactions contemplated hereby, including issuing and
selling the Purchased Shares to the Investor against payment of the Investment
Amount pursuant to the provisions set forth in this Agreement, and (b) approving
the New Articles of Association in the form attached hereto as
Schedule 1.4.5.
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1.4.2.
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Waivers/Termination
and Release of any Participation Rights. The Company shall
deliver to the Investor a letter in the form attached hereto as
Schedule 1.4.2,
signed by each
shareholder of the Company holding preemptive rights or any similar
rights, by
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virtue
of which such shareholder may be entitled to purchase or receive
securities of the Company upon the consummation of the transactions
contemplated herein, including the rights granted to TIF according
to
section 6.2 of the Founders Agreement (collectively,
“Participation Rights”), pursuant to which he, she or it
has waived such Participation Rights with respect to all of the
transactions contemplated by this Agreement, including the Right
of First
Refusal granted to the Investor according to Section 2.3 below.
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1.4.3.
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Expandis’
Waiver. The Company shall deliver to the
Investor a certificate in the form attached hereto as Schedule
1.4.3,
signed by Expandis Ltd. (“Expandis”), pursuant to which
Expandis waives any rights and/or claim which they may have in connection
with any proprietary rights related to the Field and/or
necessary to enable the Company to carry on its
business
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1.4.4.
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Addendum
to Founders’
Agreement. The Company
shall deliver to the Investor an addendum to the Founders Agreement
in the
form attached hereto as Schedule 1.4.4.
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1.4.5.
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Adoption
of New Articles of Association. The Company
shall adopt new Articles of Association in the form attached hereto
as
Schedule 1.4.5,
which will
reflect the provisions of the Founders Agreement and this
Agreement.
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1.4.6.
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Share
Certificates and Registration. Simultaneously upon
the payment of first Milestone Payment, the Company shall deliver
to the
Investor a duly executed and valid share certificate in the name
of the
Investor representing the Ordinary Shares being issued to the Investor
with respect to the first Milestone, in the form attached hereto
as
Schedule 1.4.6. The
Company shall register the allotment of all such Ordinary Shares
issued to
the Investors upon payment of the first Milestone Payment in
the Company’s Shareholders Register and shall deliver a copy of the
Shareholders Register to the
Investor.
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1.4.7.
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Compliance
Certificate. The Company shall deliver to the Investor a
certificate (substantially in the form attached hereto as
Schedule 1.4.7)
duly executed on behalf of the Company by a director of the Company,
and
dated as of the first Milestone Payment
date.
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1.4.8.
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Notice
to the Registrar of Companies. The Company shall deliver to
the Investor a copy of the notice to be sent to the Israeli Registrar
of
Companies of the issuance of the Ordinary Shares issueable upon the
payment of the first Milestone Payment under this
Agreement.
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1.4.9.
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IP
Assignment. Asaf Xxx Xxxx and Yuval
Shazifi shall sign the IP Assignment Undertaking attached hereto
as
Schedule 1.4.9,
to the extant
that any such Entrepreneur contributed to the Intellectual Property
of the
Company.
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1.5.
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Conditions
Precedent – Second and Third Milestone
Payments. The transfer of each of the
remaining Milestone Payment shall be subject to the following conditions
precedents of the Investor:
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1.5.1.
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Share
Certificates and Registration. Simultaneously upon the
payment of the relevant Milestone Payment, the Company shall deliver
to
the Investor a duly executed and valid share certificate in the name
of
the Investor representing the Ordinary Shares being issued to the
Investor
upon each Milestone Payment, in the form attached hereto as
Schedule 1.4.6. The
Company shall register the allotment of all of the Ordinary Shares
issued
to the Investors upon each Milestone Payment in the Company’s Shareholders
Register and shall deliver a copy of the Shareholders Register to
the
Investor.
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1.5.2.
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Compliance
Certificate. The Company shall deliver to the Investor a
certificate (substantially in the form attached hereto as
Schedule 1.4.7)
duly executed on behalf of the Company by a director of the Company,
and
dated as of the relevant Milestone Payment
date.
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1.5.3.
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Notice
to the Registrar of Companies. The Company shall deliver to
the Investor a copy of the notice to be sent to the Israeli Registrar
of
Companies of the issuance of the Ordinary Shares issueable upon the
payment of each additional Milestone Payment under this
Agreement.
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1.5.4.
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MAC
Certificate. A certificate executed by a director
of the Company dated as of the date of the relevant Milestone Payment,
certifying that since the date of the Agreement, there has been no
material adverse change in the business, assets, liabilities, operation
or
condition (financial or otherwise) of the Company, other than changes
in
the ordinary course of business, which when taken together have a
material
adverse effect on the Company’s financial position or results of
operations.
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1.5.5.
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Legal
Opinion. Legal opinion to Investor’s reasonable satisfactory
that there are no patent or other claims that would or may reasonably
be
expected to interfere or adversely affect the business of the Company
as
concluded or supposed to be concluded as of the date of the
opinion.
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2.
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RIGHTS
AND OBLIGATIONS OF THE
INVESTOR
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2.1.
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In
the event of an inconsistency between the terms of this Agreement
and the
Founders Agreement, the terms of this Agreement shall prevail.
Board of
Directors.
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2.1.1.
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Composition. The
Board of Directors of the Company shall consist of up to six (6)
directors
to be appointed as follows:
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(a)
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One
(1) director shall be appointed by the
Incubator;
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(b)
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One
(1) director be appointed by TIF;
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(c)
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Two
directors shall be appointed by the Entrepreneurs;
and
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(d)
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The
Investor will have the right to appoint one (1) director to the Company’s
Board of Directors until the later of: (a) its shareholding percentage
in
the Company falls below 10% or (b) the Company ceases to work within
the framework of the Incubator.
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(e)
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One
external director appointed by agreement of the remaining
directors.
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2.1.2.
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Quorum. The
presence of a majority of directors, including at least one director
appointed by the Incubator or TIF, one director appointed by the
Entrepreneurs and the director appointed by the Investor, shall constitute
a quorum for meeting of the Board.
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2.2.
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Negative
Covenants. Following the second transfer of a
Milestone Payment by the Investor to the Company, and until any of
the
following occur (i) the Company ceases to work within the framework
of the
Incubator, (ii) March 31,2009 or (iii) the Investor’s share of the
Company, on a fully-diluted basis, falls below 10%; any Board
decision regarding one of the following issues, shall require the
consent
of the director appointed by the Investor. The New Articles of Association
shall be amended in accordance with this
section.
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2.2.1.
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Any
issuance of shares, options to purchase shares or any other securities
of
the Company at a price per share lower than the price per share payable
by
the Investor hereunder;
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2.2.2.
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Any
adoption, amendment or modification of the
ESOP;
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2.2.3.
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The
approval of any material transaction of the Company or any transaction
out
of the ordinary course of business;
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2.2.4.
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Any
transaction with an interested party, as defined in the Securities
Law of
1968;
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2.2.5.
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Approval
of the annual budget of the Company and/or effects any deviation
therefrom;
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2.2.6.
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Incurrence,
assumption, or creation of any indebtedness for borrowed money in
excess
of NIS 50,000 per annum, or guaranteed any indebtedness for borrowed
money
of any other person, or capital contribution to or investment in
any
person.
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2.3.
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Right
of First Refusal with respect to the next round. In the event
that, during the 24 month period commencing on the Effective Date,
the
Company shall decide to raise additional funds through issuance of
any
type of securities of the Company, then, it shall give the
Investor a written notice of its intention to do so (the “Rights
Notice”), describing the securities, the price and the general
terms upon which the Company proposes to issue them. The
Investor shall have ten (10) business days from delivery of the Rights
Notice to agree to purchase up to 75% of such securities, for the
price
and upon the terms specified in the Rights Notice, except that,
the price-per-share payable by the Investor shall be calculated according
to a pre-money valuation which is the lower of: (i) the pre-money
valuation set forth in a bona fide offer made to the Company by a
third
party, as shall be set forth in a certificate signed by the Company’s
Board of Directors, or (ii) US$3,500,000 (three million five hundred
United States dollars).
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2.4.
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Information
Rights. The Company shall deliver to the Investor,
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2.4.1.
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as
soon as practicable, but in any event within sixty (60) days after
the end
of each fiscal year of the Company, a consolidated balance sheet
of the
Company as of the end of such year, and statements of income and
statements of cash flow of the Company for such year, and statements
of
shareholders equity, setting forth in each case in comparative form
the
figures for the previous fiscal year, all in reasonable detail, United
States dollar-denominated, prepared in accordance with Israeli generally
accepted accounting principles (“GAAP”), audited by a
firm of Independent Certified Public Accountants in the State of
Israel
who are members of the Israeli Institute of Certified Public Accountants,
and accompanied by an opinion of such firm which opinion shall state
that
such balance sheet, statements of income and cash flow and statements
of
shareholders equity have been prepared in accordance with GAAP applied
on
a basis consistent with that of the preceding fiscal year, and present
fairly and accurately the financial position of the Company as of
their
date, and that the audit by such accountants in connection with such
financial statements has been made in accordance with generally accepted
auditing standards; In addition, the Company will provide the Investor
with all information and certifications required in light of Investor’s or
the Investors’ affiliates’ status as a publicly traded company and in the
timeframes required as a result of such
status.
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2.4.2.
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As
long as the Investor’s share of the Company, on a fully-diluted basis,
does not fall below 10%, the Company shall deliver to the Investor,
as
soon as practicable, but in any event within thirty (30) days after
the
end of each quarter of each fiscal year of the Company, an unaudited
consolidated balance sheet of the Company as at the end of each such
period and unaudited consolidated statements of (i) income and (ii)
cash
flow of the Company for such period and, in the case of the first,
second
and third quarterly periods, for the period from the beginning of
the
current fiscal year to the end of such quarterly period, setting
forth in
each case in comparative form the figures for the corresponding period
of
the previous fiscal year, all in reasonable detail, United States
dollar-denominated. In addition, the Company will provide the Investor
with all information and certifications required in light of Investor’s or
the Investors’ affiliates’ status as a publicly traded company and in the
timeframes required as a result of such
status.
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2.4.3.
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Additional
Information. As long as the Investor’s share of
the Company, on a fully-diluted basis, does not fall below 10%, the
Company shall deliver to the Investor, the Company will permit the
authorized representative of the Investor 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, for any
purpose whatsoever. In addition, the Company will deliver to
the Investor with reasonable promptness, such other information and
data
with respect to the Company, as the Investor may from time to time
reasonably request. In addition, the Company will provide the Investor
with all information and certifications required in light of Investor’s or
the Investors’ affiliates’ status as a publicly traded company and in the
timeframes required as a result of such
status.
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This
Section 2.4 shall not be in limitation of any
rights, which the Investor or the director designated by the Investor, may
have
under applicable law.
In
addition, and not as a limitation on any of the foregoing, the Company covenants
that it will provide full disclosure and information regarding all of the
Company’s material affairs at meetings of the Company’s Board of Directors and,
to the extent required under applicable law, at annual general meetings of
the
shareholders, and extraordinary general meetings of the
shareholders.
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3.
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REPRESENTATIONS
AND
WARRANTIES OF THE
INVESTOR
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Investor
hereby represents and warrants to the Company as
follows:
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3.1.
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Authority.
The Investor has the full power and authority to execute, deliver
and
perform this Agreement and the Schedules hereto, the obligations
of the
Investor hereunder have been duly authorized by all necessary corporate
action, and this Agreement and all Schedules hereto, when executed
by the
Investor, will constitute valid and legally binding obligations of
such
Investor.
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3.2.
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Purchase
Entirely for Own Account. This Agreement is made with the
Investor in reliance upon such Investor’s representation to the Company,
which by Investor’s execution of this Agreement such Investor hereby
confirms, that the Purchased Shares will be acquired for investment
for
Investor’s own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that the Investor
has
no present intention of selling, granting any participation in, or
otherwise distributing the same.
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3.3.
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Investment
Experience. The Investor is knowledgeable and experienced in
business and financial matters, and therefore it is capable of evaluating
the merits and risks of an investment in the Company and has the
capacity
to protect its own interests in connection with the transactions
contemplated by this Agreement. The Investor acknowledges that the
issuance of Purchased Shares hereunder does not constitute a promise
or
guaranty by the Company, its shareholders, officers or directors
as to the
financial, technological or commercial success of the Company or
the
future value of its shares.
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3.4.
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Consideration
of Risks. The Investor confirms that it has fully considered
the risks of the contemplated investment in the Company and understands
that (i) this investment is suitable only for an investor who is able
to bear the economic consequences of losing its investment, (ii)
the
purchase of the Purchased Shares is a speculative investment which
involves a high degree of risk, and (iii) there are substantial
restrictions on the transferability of, and there will be no immediate
public market for the Purchased Shares, and no guarantee that such
market
will exist in the future, and accordingly, it may not be possible
for the
Investor to liquidate its investment in case of emergency. Moreover,
the
Investor acknowledges that due to the inherent risk involved in such
investment, the Investor’s investment may be substantially or totally
lost.
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3.5.
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Brokers. No
agent, broker, investment banker, person or firm acting in a similar
capacity on behalf of or under the authority of the Investor is or
will be
entitled to any broker’s or finder’s fee or any other commission or
similar fee, directly or indirectly, on account of any action taken
by the
Investor in connection with any of the transactions contemplated
under
this Agreement. The Investor agrees to indemnify and hold the
Company harmless from and against any claim or liability resulting
from
any party claiming any such commission or fee, if such claims shall
be
contrary to the foregoing
statement.
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3.6.
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Disclosure
of Information. The Investor represents that it
has had an opportunity to ask questions and receive answers from
the
Company regarding the terms and conditions of the offering of the
Purchased Shares, and the business, affairs, properties, prospects
and
financial condition of the Company.
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4.
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Representations
and Warranties of the Company
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The
Company hereby represents and warrants to the Investor as follows, and
acknowledges that the Investor is entering into this Agreement in reliance
thereon:
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4.1.
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Founders
Agreement. The Company hereby represents and warrants to the
Investor that the various representations and warranties made by
it under
the Founders Agreement shall be incorporated, mutatis mutandis, into
this
Agreement, as though such representations and warranties had been
made
directly to the Investor pursuant to this
Agreement.
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4.2.
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Incorporation;
Authority. The Company is a corporation duly incorporated and
validly existing under the laws of the State of Israel and has corporate
power to own or lease its property and to carry on its business as
now
conducted and as proposed to be conducted. The Company has obtained
all
necessary corporate authorizations and approvals to carry out its
business
as now conducted and as currently proposed to be conducted. The
Articles of Association of the Company, as currently in effect, are
attached hereto as Schedule 4.2 (the
“Corporate
Documents”).
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4.3.
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Authorization.
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution and delivery
of this Agreement, the performance of all obligations of the Company
hereunder and the authorization, issuance, sale and delivery of the
Purchased Shares has been taken.
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4.4.
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Governmental
or Third Party Consents. Except as otherwise detailed in
Schedule 4.4, the Company does not need to give
any notice to, make any filing with, or obtain any authorization,
consent,
qualification, order or approval from any governmental authority
or
agency, or any third party, in order to consummate the transactions
contemplated by this Agreement, including the issuance of the Purchased
Share.
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4.5.
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Shares;
Capitalization. The authorized capital of the Company
immediately prior to the Closing is NIS 100,000 divided to 1,000,000
shares nominal value NIS 0.1 per share, of which 64,728 Ordinary
Shares
are issued and outstanding, 5,272 are reserved for warrants to be
granted,
and 10,000 are reserved for issuance to employees under the Plan,
of which
2,000 options have been promised to the Company’s project manager, Xx.
Xxxxx Xxxxxxx and 2,000 options have been promised to the Company’s
external director Xx. Xxxxx XxXxxxxxx. The outstanding shares
and options of the Company are owned by the shareholders named in
and in
the numbers specified in the capitalization table attached hereto
as
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Schedule
4.5. The Purchased Shares when issued and allotted in accordance
with this
Agreement will be duly authorized, validly issued, fully paid and
non-assessable. Except as described in Schedule
4.5, (a) the Company has not issued options, warrants,
purchase rights, subscription rights, Participation Rights, rights
of
first refusal, conversion rights, anti-dilution rights, exchange
rights,
or other rights or securities, of any nature whatsoever, or other
contracts, agreements, undertakings, promises or commitments that
could
require the Company or, to the Company’s knowledge, a shareholder of the
Company, to issue, sell, or otherwise cause to become outstanding
any of
its share capital; and (b) no rights to purchase shares of the
Company were granted by the Company, the Founders, and to the Company’s
best knowledge, by other shareholders of the Company and to the
Company’s
knowledge, there are no claims possessed by any person (other than
as
specifically set forth in this Section) enforceable against the
Company
or, to the Company’s best knowledge, against a shareholder of the Company
in law or in equity to compel such an issuance, adjustment or transfer
of
the Company’s shares (or any options, warrants, preemptive rights or other
rights or securities, of any nature whatsoever, convertible into
or
exchangeable for shares of the Company) by reason of the execution,
closing or performance of this Agreement or by any other
reason.
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4.6.
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Subsidiaries.
The Company does not own or control, directly or indirectly, any
interest
in any other corporation, association, or other business
entity.
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4.7.
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No
prior resolutions. No meeting of the Company’s shareholders
and no meeting of the Company’s board of directors has taken place since
the Company’s incorporations, and no resolutions of the Company’s
shareholders and no resolutions of the Company’s board of directors have
been adopted since the Company’s incorporation
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4.8.
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Material
agreements. Except as otherwise detailed in
Schedule 4.7,
since it’s
incorporation, the Company has not entered into any
agreement.
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4.9.
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Intellectual
Property.
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4.9.1.
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General. Except
as otherwise detailed in Schedule 4.9.1
the Company owns
or has the right to use pursuant to written license, sublicense,
agreement, or permission, free and clear of any security interest
and
royalties (except as set forth in Schedule 4.9.1)
all patents,
trademarks, service marks, trade names, mask works, and copyrights
and all
trade secrets, including know-how, invention, designs, methods, drawing,
computer programs, algorithms, firmware and technical data, as set
forth
in Schedule 4.7.1 currently
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used
and/or necessary for the operation of the businesses of the Company
as
presently conducted and as currently proposed to be conducted
(collectively: “Intellectual Property”). The
Company’s registered or registrable Intellectual Property rights,
including all patents, trademarks, service marks, trade names,
and all
applications therefore and all registered copyrights, are listed
on
Schedule 4.9.1. With
respect to each item of Intellectual Property required to be
identified as
set forth in this Section 4.9.1
(i) the Company possess all right, title, and interest in and to
the
item, free and clear of any security interest, license, royalty,
commission or similar arrangements or other restriction; (ii) the
item is not subject to any outstanding injunction, judgment,
order,
decree, ruling, or charge; (iii) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is
pending or,
to the Company’s best knowledge, is threatened, which challenges in a
material manner the legality, validity, enforceability, use,
or ownership
of the item; (iv) the Company has never agreed to indemnify any
person for or against any interference, infringement, misappropriation,
or
other conflict with respect to the item (other than indemnification
obligations arising from purchase, sale or license agreements
entered into
by the Company as set forth in Schedule 4.9.1);
and
(v) except as set forth in Schedule 4.9.1,
the Company has
not granted, and there are not outstanding, any options, licenses
or
agreements of any kind relating to the Intellectual Property,
nor is the
Company bound by or a party to any option, license or agreement
of any
kind with respect to any of the Intellectual Property. The
Company is the owner, free and clear of any and all Security
Interests, of
all the domain names used by or on behalf of the Company, which
pertain to
its business.
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4.9.2.
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No
Need for Other IP. Each item of Intellectual
Property owned or used by the Company immediately prior to the Effective
Date will be owned or available for use by the Company on substantially
the same terms and conditions immediately subsequent to
the
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Effective
Date and each Milestone Payment. Except for readily and
commercially available off-the-shelf software and hardware, to
the best of
the Company’s knowledge, no other Intellectual Property of any kind is
required by the Company to conduct its business, as currently conducted
and as currently proposed to be conducted, is owned by a third
party or
would require the payment of any fee or
royalty.
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4.9.3.
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No
Infringement. Except as set forth in Schedule
4.9.3 (i) To the Company’s best knowledge, the Company
has not interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any intellectual property rights of any third
party, nor, to the Company’s best knowledge, will the conducting by it of
its business, or use of the Intellectual Property, as presently conducted
and as currently proposed to be conducted interfere, infringe upon,
misappropriate or otherwise come into conflict with any intellectual
property rights of any third party; (ii) the Company has never
received any charge, complaint, claim, demand, or notice alleging
any such
interference, infringement, misappropriation, or violation (including
any
claim that the Company must license or refrain from using any intellectual
property rights of any third party) and to the Company’s best knowledge
there is no basis for such; and (iii) to the
Company’s knowledge, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any
Intellectual Property of the
Company.
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4.9.4.
|
Assignment
of Entrepreneurs IP. All Intellectual Property developed by
the Entrepreneurs prior to the incorporation of the Company which
relates
to the Company’s business as currently conducted and as currently proposed
to be conducted (“Founder IP”) was duly assigned by the
Entrepreneurs at the time of, or following, the incorporation of
the
Company, free and clear of any Security Interest, and neither the
Entrepreneurs, nor any other person, has any interest in or rights
to any
of the Founders IP. The Company undertakes to make its best effort
to
protect the
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Founder
IP, register it, obtain the consent and signatures of the Entrepreneurs,
and to take any further actions which may be required or appropriate
in
order to assign and protect the Founder IP. The
Entrepreneurs are the sole inventors and developers of the Founder
IP
(including the inventions, methods and devices described and claimed
in
the patents which are part of such Founder IP) without any contribution,
assistance or participation of any third party. Schedule
4.9.4 contains
correct and complete copies of all assignment documents of Founder
IP to
the Company.
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4.10.
|
Litigation. There
is no litigation, proceeding or governmental investigation in progress,
pending, threatened or contemplated against or relating to the
Company.
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4.11.
|
No
Default. The Company is not in default or breach
of any material contracts, agreements, written or oral, indentures
or
other instruments to which it is a party, and there exists no state
of
facts after which notice or lapse of time or both would constitute
such a
default or breach and all such contracts, agreements, indentures
or other
instruments are now in good standing and the Company is entitled
to all
benefits thereunder.
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4.12.
|
No
Impediment. Neither the execution nor delivery of the
Agreement, nor the carrying on of the Company’s business as now conducted,
conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or instrument
under which the Company is now
obligated.
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4.13.
|
Use
of Proceeds. The Company undertakes to use the proceeds from
the Supplementary Funding contemplated hereunder to finance its research
and development activities, day to day operation and growth of its
business.
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4.14.
|
Restrictions
by Law. The Company was incorporated under the Incubator
Program and therefore the Company is subject to certain rules and
conditions provided under the Program. In addition, due to the receipt
of
financing from the OCS by the Company, the Company is subject to
the
provisions of the Law for Encouragement of Research and Development
in the
Industry, 1984-5744, and the regulations promulgated
therefore.
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4.15.
|
Brokers. No
agent, broker, investment banker, person or firm acting in a similar
capacity on behalf of or under the authority of the Company is or
will be
entitled to any broker’s or finder’s fee or any other commission or
similar fee, directly or indirectly, on account of any action taken
by the
Company in connection with any of the transactions contemplated under
this
Agreement. The Company agrees to indemnify and hold the
Investor harmless from and against any claim or liability resulting
from
any party claiming any such commission or fee, if such claims shall
be
contrary to the foregoing
statement.
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4.16.
|
Full
Disclosure. The Company has provided the Investor with all
information that the Investor has requested in connection with its
evaluation of the transactions contemplated hereunder. There is no
material fact or information relating to the Company (including without
limitation to its business, financial conditions or otherwise), which
reasonable experienced investors (such as the Investor), had it been
aware
of such material fact, would have refrained from investing in the
Company
on the terms set forth herein, that has not been disclosed to the
Investor
in writing by the Company. The representations and warranties
of the Company set forth in this Section 4
are, to the best of the Company’s knowledge, each accurate, correct and
complete in all material respects. Neither this Agreement nor any
instrument made or delivered by the Company in connection herewith
contains any untrue statement of a material fact or omits to state
a
material fact necessary to make the statements herein or therein
not
misleading, in view of the circumstances in which they were
made.
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5.
|
Further
Covenants of the
Parties
|
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5.1.
|
Confidentiality. Each
of the parties hereto acknowledges that such party and/or its
representative shall have access, in the course of its duties or
position
as a shareholder, director, or employee of the Company, to confidential
and proprietary information of the Company including, without limitation,
trade secrets, data, know-how, processes, formulas, methods, designs,
inventions, ideas, experimental work, and all information concerning
the
business affairs of the Company (hereinafter, the “Confidential
Information”). Each party undertakes to maintain in confidence such
Confidential Information, and not to disclose such Confidential
Information to any person or organization whatsoever, or to make
use of
such Confidential Information for its own purposes or for the benefit
of
any person or organization other than the Company. Each party shall
further ensure that any of its representatives who have access to
Confidential Information shall abide by the obligation to maintain
in
confidence, and not to disclose or use, such Confidential Information
in
accordance with the foregoing. It is further agreed that
“Confidential Information” shall not include information which (a) is, or
becomes public domain without fault on the part of the receiving
party;
(b) is lawfully obtained from a source other than the disclosing
party,
free of any obligation to keep it confidential; (c) was previously
known
to the receiving party without an obligation to keep it confidential
(d)
is expressly released in writing from such obligations by the party
that
owns or has the rights to such information; or (e) is required to
be
disclosed pursuant to law, regulation, judicial or administrative
order,
or request by a governmental or other entity authorized by law to
make
such request.
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5.2.
|
Information
Rights. Immediately upon Investor’s request, the
Company shall provide Investor with any information required by it
with
respect to the Company including but not limited to financial information
names of shareholders and any other information as required by competent
authorities and banking institutes. To the extent required, the Investor
shall be entitled to disclose such information upon the request of
such
competent authorities and banking
institutes.
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6.
|
Indemnification
|
The
Company agrees to indemnify, defend and hold the Investor, including any
affiliate, officer, director, shareholder, employee or agent thereof (each
an
“Indemnified Party”), harmless against any and all damages,
costs, liabilities, expenses (including reasonable legal fees and expenses)
or
losses suffered by such Indemnified Party, as a result of, or in connection
with, (i) any breach or misrepresentation contained in this Agreement;
(ii) the failure by the Company to fulfill any obligation,
agreement or covenant pursuant to this Agreement; or (iii) any
cost or expense, including reasonable legal fees incurred in connection with
enforcing the rights of the Indemnified Party hereunder, all for a period of
twelve (12) months following the date of the execution of this
Agreement. Except with respect to claims based on fraud and/or
willful misrepresentation, the Company’s liability under this Section 6 shall be limited to the amount actually paid
by the
Investor to the Company hereunder.
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7.
|
Miscellaneous
|
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7.1.
|
Further
Assurances. Each of the parties hereto shall perform such
further acts and execute such further documents as may reasonably
be
necessary to carry out and give further effect to the provisions
of this
Agreement and the intentions of the parties as reflected
thereby.
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7.2.
|
Governing
Law. This Agreement shall be governed by and be construed
according to the laws of Israel, without regard to the conflict of
laws
provisions thereto. Any dispute arising under or in relation to this
Agreement shall be resolved in the competent courts of Tel-Aviv
- Jaffa
District, and each of the parties hereby, submits irrevocably to
the jurisdiction of such courts.
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7.3.
|
Further
Assurances. Each of the parties hereto
shall perform such further acts and execute such further documents
as may
reasonably be necessary to carry out and give full effect to the
provisions of this Agreement and the intentions of the parties as
reflected thereby.
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7.4.
|
Successors
and Assigns; Assignment. Except as
otherwise expressly limited herein, the provisions hereof shall inure
to
the
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benefit
of, and be binding upon, the successors, assigns, heirs, executors,
and
administrators of the parties hereto. None of the rights,
privileges, or obligations set forth in, arising under, or created
by this
Agreement may be assigned or transferred without the prior consent
in
writing of each party to this
Agreement.
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7.5.
|
Entire
Agreement: Amendment and Waiver. This Agreement and the
Schedules hereto, together with the provisions of the Founders Agreement
that are incorporated by reference herein, constitute the full and
entire
understanding and agreement between the parties with regard to the
subject
matters hereof. Any term of this Agreement may be amended and the
observance of any term hereof may be waived (either prospectively
or
retroactively and either generally or in a particular instance) only
with
the written consent of all of the parties to this
Agreement.
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7.6.
|
Notices.
Any notice given under this Agreement must be in writing to the address
indicated herein below (or such other address as may be indicated
from
time to time by the relevant party by giving notice thereof)
and shall be effective: (i) if mailed by registered mail return receipt
requested, five (5) business days after mailing; (ii) if sent by
messenger, upon delivery; and (iii) if sent via telecopier, one (1)
business day after transmission and electronic confirmation of receipt,
when followed by a hard copy sent by first class
post.
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7.7.
|
Delays
or Omissions. No delay or omission to exercise any right,
power, or remedy accruing
to any party upon any breach or default under this Agreement, shall
be
deemed a waiver of any other breach or default thereto or thereafter
occurring. Any waiver permit, consent, or approval of any kind or
character on the part of any party of any breach or default under
this
Agreement, or any waiver on the part of any party of any provisions
or
conditions of this Agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any
of the
parties, shall be cumulative and not
alternative.
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7.8.
|
Severability.
If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, then such
provision
shall be excluded from this Agreement and the remainder of this Agreement
shall be interpreted as if such provision were so excluded and shall
be
enforceable in accordance with its terms; provided, however, that
in such
event this Agreement shall be interpreted so as to give effect to
the
greatest extent consistent with and permitted by applicable law,
to the
meaning and intention of the excluded provision as determined by
such
court of competent jurisdiction.
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7.9.
|
Counterparts. This
Agreement may be executed in any number of counterparts, each of
which
shall be deemed an original and enforceable against the parties actually
executing such counterpart, and all of which together shall constitute
one
and the same instrument.
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7.10.
|
Recitals,
Schedules and Headings. The recitals and schedules to this
Agreement shall constitute an integral part thereof. Headings are
provided
for the sake of convenience only, and shall not be used in the
interpretation of this Agreement.
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Signature page follows -
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above-written.
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SCORPION
SURGICAL TECHNOLOGIES LTD.
|
||||||
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By:
|
/s/ Xxxxx Xxxxxx |
By:
|
/s/ Xxxxx Xxxxx | |||
|
Name:
|
Xxxxx Xxxxxx |
Name:
|
Xxxxx Xxxxx | |||
|
Title:
|
Director |
Title:
|
Chairman | |||
|
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|
|||||
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By:
|
/s/ Xxxxxx Xxxxxx | ||||
|
|
Name:
|
Xxxxxx Xxxxxx | ||||
|
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Title:
|
CFO | ||||
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