FIRST AMENDMENT TO OPTION AGREEMENT
Exhibit 2
FIRST AMENDMENT TO OPTION AGREEMENT
THIS FIRST AMENDMENT TO OPTION AGREEMENT (the “Agreement”) is made and entered into as of this First day of February, 2007 by and between (a) Xxx Xxxxxxxxx (“Gad”) and (b) Emblaze Ltd. (the “Company”).
WHEREAS, on November 20, 2006 the parties entered into an option agreement, pursuant to which the Company granted to Gad the option to sell to the Company up to 325,000 ordinary shares, par value NIS 1.00 per share (the “Formula Shares”), of Formula Systems (1985) Ltd. (“Formula”), an Israeli public company whose American Depositary Receipts, each representing one ordinary share, are listed on the NASDAQ Stock Market (“Nasdaq”) and whose ordinary shares are listed on the Tel-Aviv Stock Exchange (the “TASE”), at a price per share of $16.00, during the period from January 1, 2007 through December 31, 2007; and
WHEREAS, the parties wish to set forth the terms and conditions of the Option (as defined below).
NOW, THEREFORE, the parties hereto agree as follows:
| Gad hereby grants to the Company the right (the “Option”), during the Exercise Period (as defined below) and subject to applicable law, to purchase from Gad the Formula Shares, and subject to the provisions hereof, Gad hereby undertake to sell to the Company the Formula Shares. As consideration for the Formula Shares sold by Gad to the Company (the “Purchased Shares”), the Company shall pay Gad, for each Purchased Share, $16.00 (the “Price Per Share”), which Price Per Share may be adjusted pursuant to reverse or forward stock splits, recapitalizations and similar events (which for the avoidance of doubt, shall exclude distribution of dividends); provided that Gad shall not be obligated to sell to the Company more than 325,000 Formula Shares (which amount may be adjusted pursuant to reverse or forward stock splits, recapitalizations and similar events). |
The Option may be exercised by the Company during the period commencing on the date hereof and through March 31, 2007 (the “Exercise Period”). If the Option is not exercised in full by the Company by March 31, 2007, it shall immediately terminate and be of no force and effect with respect to any portion of the Formula Shares underlying the Option not sold by Gad to the Company by such time.
3.1 The Option is exercisable by the Company by delivery of a written notice of exercise to Gad, stating the number of Purchased Shares, which notice shall be in substantially the form attached hereto as Exhibit A (the “Notice of Exercise”), such Notice of Exercise to be delivered to Gad no later than the last day of the Exercise Period at 4:00 p.m. Israel time.
The sale and purchase of Purchased Shares shall take place at a closing (the “Closing”) to be held at the offices of the Company, 00 Xxxxxx Xxxxxx, Ra’anana, at 10:00 a.m. Israel time, on such date as the Company will notify Gad, which shall not be later than April 1, 2007.
At the Closing:
| (a) Gad will deliver to the Company written approval from Gad’s broker that all of the Purchased Shares sold by Gad to the Company pursuant to the Notice of Exercise have been transferred in an ‘off-market’ transaction to the Company’s securities account No. 47746 at Bank Hapoalim, Hagalim Branch- 584. |
| (b) The Company shall deliver to Gad the aggregate consideration for the Purchased Shares sold by Gad to the Company, by wire transfer of immediately available funds (which shall be denominated in US Dollars) to the following bank account: Account No. 150045 at Israeli Discount Bank Ltd., Branch No. 008 Shenkin Tel Aviv. |
Gad represents as follows:
| (a) The execution of this Agreement by Gad and the exercise of the Option under this Agreement in accordance with its terms, will not, with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of or a default under any agreement to which Gad is a party, will not trigger any right of first refusal, tag-along rights or other rights in respect of the Purchased Shares, or result in the creation (except by the Company or by any person on its behalf) of any Encumbrance (as defined below) on any of the Purchased Shares, and will not require any consent or approval of any third party (other than by the Company or on its behalf), nor will Gad be required to conduct any filings or registrations with, or provide any notification to, any third party (including, but not limited to, governmental agencies or regulatory authorities) in connection with the execution or performance by Gad of this Agreement.. |
2
| (b) (1) Gad has good and valid title to all of the 325,000 Formula Shares referred to in the preamble to this Agreement, subject only to the provisions of subsection (4) below. Gad is the sole beneficial owner of all of the Formula Shares referred to in the preamble to this Agreement. (2) At the Closing, Gad shall deliver to the Company good title to, and all rights to vote as defined in Formula’s Articles of Association, all of the Purchased Shares sold by Gad to the Company, free and clear of any legal or security interest of a third party, including but not limited to any lien, mortgage, pledge, charge, title retention, right to acquire, hypothecation, option, right of first refusal, restriction by way of security of any kind or nature, community property interest, equitable interest, proxy, right of preemption, transfer or retention of title agreement, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership, or any other third party right (“Encumbrances”), other than as set forth in subsection (4) below. (3) None of the Formula Shares referred to in the preamble to this Agreement is subject to any transfer restrictions under the Israeli Securities Law, 1968 and the rules promulgated thereunder, including but not limited to volume limitations, and all of the Formula Shares referred to in the preamble to this Agreement are freely transferable via the TASE. (4) All of the Formula Shares referred to in the preamble to this Agreement are “restricted securities”, as defined in Rule 144 under the U.S. Securities Act of 1933, as amended. |
6. Termination.
This Agreement may be terminated at any time prior to the Closing Date:
(a) by the mutual written agreement of the Company and Gad;
(b) by written notice from the Company to Gad, if there shall have been a breach of any covenant or agreement set forth herein on the part of Gad, which is material to this Agreement or if any representation or warranty of Gad set forth in this Agreement shall have become materially untrue, provided that if such breach or misrepresentation is curable by Gad, then the Company shall give written notice of such breach or misrepresentation to Gad, and it shall only be entitled to give the notice of termination if such breach or misrepresentation shall not have been cured within 10 (ten) days from the date of the Company’s notice of such breach or misrepresentation;
(c) by written notice by Gad to the Company, if there shall have been a breach of any covenant or agreement on the part of the Company set forth in this Agreement which is material to this Agreement, or if any representation or warranty of the Company set forth in this Agreement shall have become materially untrue, provided that if such breach or misrepresentation is curable by the Company, then Gad shall give written notice of such breach or misrepresentation to the Company, and he shall only be entitled to give the notice of termination if such breach or misrepresentation shall not have been cured within 10 (ten) days from the date of notice from Gad of such breach or misrepresentation; or
3
(d) if at the time of delivery by the Company of the Notice of Exercise hereunder, or at any time following such delivery by the Company of the Notice of Exercise and prior to such time that Gad is required hereunder to sell to the Company the Purchased Shares, there shall be any law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or any ruling, judgment, injunction, order or decree of any governmental authority having competent jurisdiction enjoining the Company and/or Gad from consummating this Agreement is entered and the ruling, judgment, injunction, order or decree shall have become final and nonappealable and, prior to that termination, the parties shall have used reasonable efforts to resist, resolve or lift, as applicable, any such law, ruling, judgment, injunction, order or decree; provided, however, that the right to terminate this Agreement pursuant to this Section 6(d) shall not be available to any party whose breach of any provision of this Agreement or other action results in the imposition of such ruling, judgment, injunction, order or decree or the failure of such ruling, judgment, injunction, order or decree to be resisted, resolved or lifted, as applicable.
In the event of the termination of this Agreement pursuant to this Section 6, this Agreement shall thereafter become void and have no effect, without any liability on the part of any party in respect thereof (except as set forth herein).
7.1. Taxes. Each party shall bear tax payments due from that party under any law in respect of the sale of shares under this Agreement. Without limiting the foregoing, all taxes imposed upon Gad as a result of the sale of any Purchased Shares to the Company (including any taxes on income or capital gains on such) will be borne and paid by Gad. The Company shall be entitled to deduct and withhold from any amounts payable for any Purchased Share such amounts as the Company in good faith determines may be required to be deducted or withheld therefrom under the Income Tax Ordinance of Israel [New Version], 1961, as amended or under the regulations promulgated thereunder; provided that with respect to any such withholding, the Company shall act in accordance with any tax withholding ruling or exemption from the Israeli Tax Authority, if obtained and delivered to the Company prior to Closing. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to Gad.
7.2. Governing Law; Jurisdiction. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Israel without regard to the conflict of laws provisions thereof. Any dispute arising under or with respect to this Agreement shall be resolved exclusively in the appropriate court in Tel Aviv, Israel and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such court.
7.3. Further Assurances. The parties hereto shall execute and deliver such additional documents and shall take such additional actions as may be reasonably necessary or appropriate to effect the provisions of this Agreement and the consummation of the sale of Purchased Shares contemplated hereby.
4
7.4. Manner of Payment. Payments that are paid to Gad pursuant to this Agreement shall be paid in U.S. Dollars to Gad’s bank account as more fully set forth above. All payments shall be initiated on a banking day, before 11:00 a.m., Israel time, by bank wire transfer in immediately available funds.
7.5 Successors and Assigns. Except as otherwise expressly stated to the contrary herein, each of the parties hereto shall not assign or transfer any of its rights or obligations hereunder without the written consent of the other party and the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns under law, heirs, executors, and administrators of the parties.
7.6 Notices. All notices required or permitted hereunder to be given to a party pursuant to this Agreement shall be in writing and shall be deemed to have been duly given to the addressee thereof (i) if hand delivered on a business day, on the day of delivery and if not on a business day on the following business day, (ii) if given by facsimile transmission on a business day, on the day on which such transmission is sent and confirmed and if not on a business day on the following business day, (iii) if mailed by registered mail, return receipt requested, five business days following the date it was mailed, to such Party’s address as set forth below or at such other address in Israel as such Party shall have furnished to the other Party in writing in accordance with this provision:
| If to Gad: | |
| c/o Formula Systems (1985) Ltd. | |
| 3 Abba Even Street Herzliya, Israel | |
| Facsimile: +972--09-9598877 | |
| If to the Company: | |
| 00 Xxxxxx Xxxxxx | |
| Xx'xxxxx, Xxxxxx | |
| Facsimile: x000-0-000-0000 | |
| Attn.: Chief Financial Officer | |
| With a copy to: | |
| Xxx Xxxxxxx, Adv. | |
| Meitar Liquornik Geva & Leshem Xxxxxxxxx | |
| 00 Xxxx Xxxxxx XxxxXxxxx Xxx 00000, Israel | |
| Facsimile: x000-0-000-0000 |
7.7 Entire Agreement. This Agreement constitutes the entire agreement among the parties and supersede any other agreement that may have been made or entered into by the parties.
5
_____________________
Xxx Xxxxxxxxx
By: _________________
Name: _________________
Title: _________________
6
Exhibit A
Notice of Exercise
| To: | Xxx Xxxxxxxxx |
The undersigned hereby exercises its right to purchase from Xxx Xxxxxxxxx _________ ordinary shares of Formula Systems (1985) Ltd. for a purchase price of $16.00 per share, pursuant to and in accordance with terms set forth in the First Amendment to Option Agreement dated as of February [1], 2007 by and between the undersigned and Xxx Xxxxxxxxx
The sale and purchase of the foregoing shares shall be consummated in accordance with the terms of the foregoing agreement.
Emblaze Ltd.
By: _______________________________
Name:
Title:
Date: ________________________
7