Exhibit 4.11
SHARE PURCHASE AGREEMENT
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This Share Purchase Agreement (this "Agreement") is entered into as of October
10, 2000, by and among SygMed Ltd. an Israeli private company no. 00-000000-0
having its principal place of business at 0 Xxxxxxxx Xx., XXX 0000, Xxxxxxx,
00000, Xxxxxx (the "Company"), Xxxxxx Xxxxx having Israeli ID #8628778, an
individual residing at 13 Etzion St., Even Xxxxxx (the "Founder") and Aryt
Industries Ltd. a company registered under the laws of the State of Israel
having its principal place of business at 7 Xxxxxxx Xx., XXX 000, Xx Xxxxxx,
00000, Xxxxxx (the "Investor").
WHEREAS, the Company is engaged in the development, marketing and sale of
medical robotics and various instruments, including mammography stereostatic
biopsy systems; and
WHEREAS, the Company wishes that the Investor shall invest in the Company and
to grant options to invest additional amounts in the Company, and the Investor
wishes to invest in the Company and to receive such options, upon the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations and warranties set forth herein, and intending to
be legally bound hereby, the parties hereto (the "Parties") agree as follows:
1. Interpretation; Definitions
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1.1 The Recitals and Exhibits hereto are an integral part hereof.
1.2 The headings of the sections and subsections of this Agreement are
for convenience of reference only and are not to be considered in
construing this Agreement.
1.3 In this Agreement, unless the context otherwise requires:
1.3.1 "Amended Articles of Association" or "Amended Articles" means
the Company's amended and restated Articles of Association in
the form attached hereto as Exhibit 1.3.1.
1.3.2 "Corporate Documents" means the Company's Memorandum of
Association and Amended Articles of Association.
1.3.3 "Existing Shareholders" means the Founder.
1.3.4 "Interested Party" means any "interested party", as such term
is defined in the Israeli Securities Law of 1968, or any
member of the family or affiliate of such Interested Party,
Person controlled by it, Person under common control or
Person controlling it, other than the Company.
1.3.5 "Liens" means all mortgages, liens, pledges, charges,
security interests, third party rights or other claims or
encumbrances of any kind whatsoever.
1.3.6 "Ordinary Shares" means the Ordinary Shares NIS 0.01 par
value of the Company.
1.3.7 "Person" means an individual, corporation, partnership, joint
venture, trust or unincorporated organization.
1.3.8 "Preferred A Shares" means the Series A Preferred Shares of
the Company NIS 0.01 par value, conferring all the rights set
forth in the Company's Amended Articles.
1.3.9 "Purchased Shares" means the Preferred A Shares issued to the
Investor at the Closing (as defined below) under this
Agreement.
1.3.10 "Option Shares" means the Preferred A Shares issued to the
Investor at any of the First and Second Option Closings (as
defined below) under this Agreement.
1.3.11 "Issued Shares" means the Purchased Shares and the Option
Shares, collectively.
2. Purchase and Issuance of Preferred A Shares
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2.1 Subject to the terms and conditions hereof, the Company shall issue
and allot to the Investor, and the Investor shall purchase from the
Company, Two Million Eight Hundred Nineteen Thousand and Five
Hundred and Ninety Eight (2,819,598) Preferred A Shares (the
"Purchased Shares"). As consideration for the issuance of the
Purchased Shares, the Investor shall pay the Company an aggregate
purchase price of Seven Hundred and Fifty Thousand U.S. Dollars (US
$750,000) (the "Purchase Price"), representing a price per share of
approximately US $ 0.266 for each of the Purchased Shares (the
"Price Per Share").
2.2 The Company represents and warrants to the Investor that immediately
following the Closing, the Purchased Shares shall represent 20% of
the Company's issued share capital on a fully diluted basis,
including all issued shares, all outstanding warrants, options and
convertible securities, including an option pool of 6.25% Ordinary
Shares which are reserved for allocation to existing and future
employees, consultants and directors of the Company.
2.3 The Purchased Shares, when issued and delivered in accordance with
this Agreement, and the Ordinary Shares into which the Purchased
Shares will be converted, will be duly authorized, validly issued,
fully paid, non-assessable and free of preemptive or similar rights;
and such Purchased Shares will be free and clear of any Liens, and
duly registered in the name of the Investor in the Company's
Shareholders Register.
2.4 Closing. The transactions contemplated hereby shall take place at a
closing (the "Closing") to be held at the offices of Efrati, Galili
& Co. - Law Offices, at 0 Xxxxxxxxx Xx., Xxx Xxxx 00000, at 11:00
a.m. on November 6, 2000, or such other date, time and place as the
parties shall mutually agree.
2.5 Deliveries and Transactions at Closing. At the Closing, the
following transactions shall occur simultaneously (no transaction
shall be deemed to have been completed or any document delivered
until all such transactions have been completed and all required
documents delivered):
2.5.1 The Company shall deliver to the Investor the following
documents:
2.5.1.1 Special Resolution of the Company's shareholders in
the form of Exhibit 2.5.1.1 hereto, by which the
share capital of the Company shall be modified and
the Articles of Association of the Company shall be
replaced with the Amended Articles, together with a
copy of the Amended Articles filed with, and
accepted by, the Israeli Registrar of Companies;
2.5.1.2 Resolution of the Board of Directors of the Company
approving the Company's execution of this Agreement
and any other document contemplated hereby, the
issuance of the Purchased Shares to the Investor
hereunder against payment of the Purchase Price to
the Company and the issuance of the Option Shares
against payment of the Option Price (as defined
above), all in the form attached hereto as Exhibit
2.5.1.2, together with a duly completed and signed
notice of such issuance of Purchased Shares to the
Investor in form and substance acceptable for
immediate filing with the Israeli Registrar of
Companies;
2.5.1.3 Validly executed Share Certificate reflecting the
Purchased Shares, issued in the name of the Investor
in the form attached as Exhibit 2.5.1.3 hereto;
2.5.1.4 Written certificate, in the form of Exhibit 2.5.1.4,
executed by the Company's Chief Executive Officer,
confirming and certifying that all conditions to
closing set forth in Section 2.6 herein have been
met, and all representations and warranties made by
the Company are true and correct, as of the Closing;
2.5.1.5 Opinion of special Israeli counsel to the Company,
Eitan, Pearl, Xxxxxx & Xxxxx-Xxxxx, , in the form
attached as Exhibit 2.5.1.5, addressed to the
Investor and dated as of the date of the Closing;
2.5.1.6 Written notices from all of the Company's
shareholders waiving any preemptive rights with
respect to the issuance of the Purchased Shares and
the Option Shares, as contemplated herein in the
form of Exhibit 2.5.1.6.
2.5.1.7 The Company shall register the issuance of the
Purchased Shares in its shareholders' register in
the form attahced as Exhibit 2.5.17 attached hereto.
2.5.1.8 The Company shall deliver to the Investor a duly
executed Registration Rights Agreement in the form
attached hereto as Exhibit 2.5.1.8 (the
"Registration Rights Agreement");
2.5.1.9 The Company shall deliver to the Investor a duly
executed Employment Agreement with the Founder in
the form attached hereto as Exhibit 2.5.1.9.
2.5.1.10 The Company shall deliver to the Investor a duly
executed Management Agreement in the form attached
hereto as Exhibit 2.5.1.10 (the " Management
Agreement").
2.5.1.11 The Company shall deliver to the Investor a duly
executed Lease Agreement in the form attahced hereto
as Exhibit 2.5.1.11 (the "Lease Agreement").
2.5.1.12 The Company will reimburse the Investor for its
expenses (including reasonable legal fees) incurred
in completing this transaction which shall not
exceed in aggregate US$15,000 plus VAT. This
reimbursement shall be paid to the Investor within
12 months from the Closing date.
2.5.2 The Investor shall pay the Purchase Price to the Company, in
U.S. dollars or NIS according to the representative US
Dollar's rate published by the Bank of Israel and known on
the Closing date, by way of a bank transfer to the Company's
account, pursuant to wiring instructions given in writing by
the Company prior to Closing, or by such other form of
payment as is mutually agreed by the Company and Investor.
2.6 Conditions to Closing by the Investor. The obligations of the
Investor at the Closing are subject to the fulfillment at or before
the Closing of the following conditions precedent, any one or more
of which may be waived in whole or in part by the Investor, which
waiver shall be at the sole discretion of the Investor:
2.6.1 Representations and Warranties. The representations and
warranties made by the Company and the Founder in this
Agreement shall have been true and correct when made, and
shall be true and correct as of the Closing as if made on the
date of the Closing.
2.6.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed or complied with by Persons
other than the Investor before the Closing, or at the
Closing, shall have been performed or complied with by such
Persons before or at the Closing.
2.6.3 Consents, etc. The Company shall have secured before the
Closing all permits, consents and authorizations that shall
be necessary or required lawfully by them to consummate this
Agreement, and to issue the Purchased Shares to the Investor
at the Closing.
2.6.4 Delivery of Documents. All the documents to be delivered by
the Company at the Closing shall be in form and substance
satisfactory to the Investor.
2.6.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated
by this Agreement and all documents and instruments incident
to such transactions shall be reasonably satisfactory in
substance and form to the Investor, and the Investor shall
have received all such counterpart originals or certified or
other copies of such documents as the Investor may reasonably
request.
2.6.6 Absence of Adverse Changes. From the date hereof until the
Closing, there will have been no material adverse change in
the financial or business condition of the Company.
2.6.7 Accounting Due-Diligence. The Investor shall complete an
accounting due-diligence examination of the Company to its
satisfaction.
2.7 Conditions to Closing by the Company. The obligations of the Company
at the Closing are subject to the fulfillment at or before the
Closing of the conditions that: (a) all covenants, agreements and
conditions contained in this Agreement to be performed, or complied
with, by the Investor prior to the Closing, including without
limitation payment of the entire Purchase Price and all corporate
and other proceedings in connection with the transactions
contemplated by this Agreement, shall have been performed or
complied with by the Investor prior to or at the Closing, and (b)
the representations and warranties made by the Investor in this
Agreement shall have been true and correct when made, and shall be
true and correct as of the date of the Closing, which conditions may
be waived in whole or in part by the Company, and which waiver shall
be at the sole discretion of the Company
3. Options to Purchase Additional Preferred A Shares
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The Company hereby grants to the Investor two options (the "Options")
to purchase additional Preferred A Shares in the amounts, prices, terms
and conditions set forth below:
3.1 The Investor will have an option (the "First Option") for twelve
(12) months from the Closing (the "First Option Period") to purchase
Three Million Two Hundred and Fifty Three Thousands and Five Hundred
(3,253,500) Preferred A Shares for an aggregate purchase price of
Seven Hundred and Fifty Thousand U.S. Dollars (US$750,000),
representing a price per share of US $0.23 (the "First Option
Price"). The Company represents and warrants to the Investor that
immediately following exercise of the First Option, the Investor
shall hold 35% of the Company's issued share capital on a fully
diluted basis (provided however that no other investment have been
consummated during the First Option Period)
3.2 The Investor will have an option (the "Second Option") for
twenty-four (24) months from the Closing (the "Second Option
Period") to purchase One Million Four Hundred and Forty Five
Thousands and Eight hundred and Seventy nine (1,445,879) Preferred A
Shares for an aggregate purchase price of Five Hundred Thousand U.S.
Dollars (US $500,000), representing a price per share of
approximately US $0.35 (the "Second Option Price").
The Company represents and warrants to the Investor that immediately
following exercise of the Second Option, the Investor shall hold 40%
of the Company's issued share capital on a fully diluted basis
(provided however that no other investment have been consummated
during the First Option Period or the Second Option Period)
3.3 Any of the Options shall be exercisable, by delivery to the Company
of a written notice of exercise during the relevant Option Period
(the "Exercise Notice").
If during the First Option Period another investor invests in the
Company an amount of at least US$1,000,000 on a pre money company
valuation of at least US$ 8,000,000, the Investor shall be required
to exercise the First Option.
If the First Option was exercised, and during the Second Option
Period another investor invests in the Company an amount of at least
US$1,000,000 on a pre-money company value of at least US$12,500,000
the Investor shall be required to exercise the Second Option.
3.4 The Option Shares, when issued and delivered in accordance with this
Agreement, and the Ordinary Shares into which the Option Shares will
be converted, will be duly authorized, validly issued, fully paid,
non-assessable and free of preemptive or similar rights; and such
Option Shares will be free and clear of any Liens, and when issued
and delivered in accordance with this Agreement, duly registered in
the name of the Investor in the Company's Shareholders Register.
3.5 Options Closing. The transactions pursuant to the exercise of any of
the Options shall take place at a closing (the "Option Closing") to
be held at the offices of Efrati, Galili & Co. - Law Offices, at 0
Xxxxxxxxx Xxxxxx, Xxx Xxxx on the date which is fourteen (14) days
after delivery of notice of exercise any of the Options to the
Company, or such other date, time and place as the Parties shall
mutually agree.
3.6 Deliveries and Transactions at Option Closing. At any of the Option
Closings, the following transactions shall occur simultaneously (no
transaction shall be deemed to have been completed or any document
delivered until all such transactions have been completed and all
required documents delivered):
3.6.1 The Company shall deliver to the Investor the following
documents:
3.6.1.1 a validly executed Share Certificate reflecting the
Option Shares in a number specified in the Exercise
Notice, issued in the name of the Investor;
3.6.1.2 a duly completed and signed notice of the issuance
of Option Shares to the Investor in form and
substance acceptable for immediate filing with the
Israeli Registrar of Companies;
3.6.2 The Company shall register the issuance of the Option Shares
in its shareholders' register; and
3.6.3 The Investor shall pay the Option Price to the Company, in
U.S. dollars or NIS according to the representative US
Dollar's rate published by the Bank of Israel and known on
the date on the Closing date, by way of a bank transfer to
the Company's account, pursuant to wiring instructions given
in writing by the Company prior to the Option Closing, or by
such other form of payment as is mutually agreed by the
Company and Investor.
4. Representations and Warranties of the Company
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The Company and the Founder hereby represent and warrant to the
Investor that, as of the date hereof and as of the Closing, the
following representations and warranties are true and accurate in all
respects with regard to the Company, and acknowledges that the Investor
is entering into this Agreement in reliance thereon.
4.1 Authority. The Company has the full power and authority to execute
this Agreement and the other agreements contemplated hereby or which
are ancillary hereto, including the Registration Rights Agreement,
the Management Agreement, the Services Agreement and the Lease
Agreement, and to consummate the transactions contemplated thereby.
4.2 Organization. The Company is a company duly incorporated and validly
existing under the laws of the State of Israel. The Company has the
power to own and lease its properties and to carry on its business
as now being conducted and as proposed to be conducted. Attached
hereto in Exhibit 4.2 are (i) true copies of the current Corporate
Documents as in effect prior to the execution hereof, (ii) all
resolutions that have been adopted by the Company's shareholders
since its incorporation. The Company has not taken any action or
failed to take any action, which action or failure would preclude or
prevent the Company from conducting its business in the manner
heretofore conducted.
4.3 Share Capital, Capitalization. On the date hereof, the authorized
share capital of the Company is NIS two hundred and eighty thousand
(280,000), divided into twenty million (20,000,000) Ordinary Shares
of NIS 0.01 par value each, of which 9,010,000 Ordinary Shares are
issued and outstanding and eight million (8,000,000) Preferred A
Shares of NIS 0.01 par value each, all as set forth in the
Pre-Closing Capitalization Table attached as Exhibit 4.3a hereto.
Exhibit 4.3 hereto contains a true and correct description of the
identity of each holder of shares or rights (vested or contingent)
to acquire shares in the Company, including the number and class of
such shares, as of immediately prior to the Closing. Except as set
forth in Exhibit 4.3, there are no rights or agreements to subscribe
for, or to purchase, any shares or other securities of the Company,
nor are there outstanding any warrants, options, convertible
instruments, or any other rights, agreements, undertakings, promises
or commitments, written or oral, to sell or acquire shares from the
Company. Subsequent to the Closing and all Option Closings, the
ownership of the share capital of the Company, both issued and
outstanding and on a fully diluted basis, shall be as set forth in
the Post-Closing Capitalization Table attached as Exhibit 4.3b
hereto. The rights and privileges of the Ordinary Shares and the
Preferred A Shares are as set forth in the Corporate Documents.
4.4 Authorization of Shares; No Public Offer. All of the issued and
outstanding share capital of the Company has been duly authorized
and is validly issued, fully paid and non-assessable. Neither the
Company, nor to its knowledge any one acting on its behalf, has
offered securities of the Company, including the Issued Shares, for
issuance or sale to, or solicited any offer to acquire any of the
same from, anyone so as to make issuance and sale of the Issued
Shares and the Option Shares not exempt from the registration
requirements of the securities laws of the State of Israel or of any
other jurisdiction.
4.5 No Obligations to Register Securities. Other than as set forth in
Exhibit 4.5 hereto and the Registration Rights Agreement, the
Company is not under any obligation to register for trading on any
securities exchange any of its currently outstanding securities or
any of its securities which may hereafter be issued.
4.6 No Voting Agreements Other than as set forth in Exhibit 4.6 hereto,
there are no agreements, understandings, trusts or other
collaborative arrangements or understandings concerning the voting
of the shares of the Company, and there are no agreements,
understandings, trusts or other understandings concerning transfers
of the shares of the Company.
4.7 Board of Directors. The directors of the Company are Xx. Xxxxx Xxxxx
Sari Xxxxxxxx Xxxxx and Xxxx Xxxxxx, each of whom has been duly and
lawfully appointed to such position.
4.8 Election and Compensation of Directors. Except as set forth in
Exhibit 4.8 hereto, neither the Company nor its respective
shareholders are party to any agreement, obligation or commitment
with respect to (i) the election of individual or individuals to the
Board or (ii) any compensation to be paid to any of the Company's
directors or officers.
4.9 No Dividends or Distributions. Since its incorporation, there has
been no declaration or payment of dividends, or any distribution by
the Company of any assets of any kind to any of its shareholders, in
redemption of or as the purchase price for, any of the Company's
securities.
4.10 Financial Statements. The audited financial statements of the
Company for the year ended December 31, 1999, a true and complete
copy of which is attached hereto in Exhibit 4.10a, are true and
accurate and present correctly the financial condition, transactions
in and dispositions of the assets of the Company, and the results of
operations of, and the cash flows of the Company for the year ending
on December 31, 1999.
The reviewed trial balance sheet of the Company for the period ended
June 30, 2000, a true and complete copy of which is attached hereto
in Exhibit 4.10b, is true and accurate and present correctly the
financial condition, , the results of operations of, and the cash
flows of the Company for such period ending on June 30, 2000.
(the trial balance sheet together with the December 31, 1999,
financial statements attached in Exhibit 4.10a, the "Financial
Statements"). The Financial Statements were prepared in accordance
with Israel generally accepted accounting principles applied on a
consistent basis ("GAAP").
4.11 Changes Since Financial Statements Since December 31, 1999, the
Company has conducted its business in the ordinary course consistent
with past practice and except as set forth in Exhibit 4.11 attached
hereto, there has not been: (i) any material change in the assets,
liabilities, condition or business of the Company from that
reflected in the Financial Statements (the "Condition of the
Company"); (ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock of the Company; (iii) any damage, destruction or other
casualty or loss (whether or not covered by insurance) materially
affecting the Condition of the Company; (iv) any material change in
any method of accounting or accounting practice by the Company; (v)
any transaction, including any change of terms of an existing
transaction, between any of the Company and any Interested Party;
(vi) any waiver by the Company of any valuable right, or of a
material debt, owed to it(vii) any material change or amendment to
material agreement or arrangement by which the Company or any of its
assets are bound; (viii) any sale, transfer or lease of or mortgage
or pledge or imposition of a Lien, on any of the assets of the
Company; or (ix) any material change in any compensation or other
arrangement with any of the employees of the Company; (x) any
satisfaction or discharge of any material Lien, material claim or
material encumbrance or payment of any material obligation by the
Company, except in the ordinary course of business and that is not
individually or in the aggregate adverse to the assets, properties,
condition (financial or otherwise), operating results or business of
the Company; or (xi) any agreement or arrangement made by the
Company to do any of the foregoing.
4.12 Indebtedness. Except as fully reflected and disclosed in the
Financial Statements or in Exhibit 4.12 hereto, the Company does not
have any indebtedness or liability, whether absolute, accrued,
fixed, contingent or otherwise. Except as disclosed in Exhibit 4.12
herein, the Company is not a guarantor of any debt or obligation of
any other Person, the Company has not given any indemnification,
loan, security or otherwise agreed to become directly or
contingently liable for any obligation of any Person, and no Person
has given any guarantee of, or security for, any obligation of the
Company.
4.13 Taxes. Other than as set forth in the Financial Statements, the
Company has not made any elections under applicable laws or
regulations relating to taxation (other than elections that relate
solely to methods of accounting, depreciation or amortization).
Other than as set forth in the Financial Statements, to the best
knowledge of the Company and the Founder, the Company is not
currently liable for any tax (whether income tax, capital gains tax,
or otherwise). The Company has timely filed all tax returns and
reports required by applicable laws. All tax returns and reports of
the Company are true and correct in all material respects.
4.14 Ownership of Assets. A list of the material tangible assets of the
Company is set forth in Exhibit 4.14a. Except as set forth in
Exhibit 4.14b, the Company holds all of its tangible or intangible
assets free and clear of all Liens. No Person, apart from the
Company, including, but not limited to the directors, the
shareholders of the Company or any of its or their affiliates, owns
or possesses, in their individual or any other capacities, any
property, whether tangible or intangible, which is material,
individually or in the aggregate, to the financial condition,
operations or business of the Company.
4.15 Intellectual Property Rights.
4.15.1 Exhibit 4.15.1 contains a complete and accurate list of all
Israeli and foreign patents, trademarks (both common law and
registered), trade names, service marks, copyrights and
applications or registrations of any of the foregoing
(collectively, "Intellectual Property Rights") as to which
the Company is the owner or licensee (indicating exclusive or
non-exclusive). Exhibit 4.15, together with all technology,
information, ideas, know how and trade secrets related
thereto or otherwise owned by the Company or in which the
Company has any interest, is collectively referred to as the
"Company Intellectual Property".
Other than as listed in Exhibit 4.15.1(b) no Intellectual
Property Rights of any kind other than the Company
Intellectual Property are necessary for the Company to
conduct its business as currently conducted or as proposed to
be conducted within the Company's business plan.
4.15.2 The Company exclusively owns or licenses free and clear of
any Lien, the Company Intellectual Property . Except to the
extent specifically set forth in Exhibit 4.15.2, no claim has
been asserted or, to the knowledge of the Company and the
Founder, threatened by any person, and, to the Company's
knowledge, no basis for any claim exists, with respect to the
use of the Company Intellectual Property or challenging or
questioning the validity or effectiveness of any license or
agreement with respect thereto. To the best knowledge of the
Company and the Founder, the use of the Company Intellectual
Property by the Company in the present conduct of its
business does not infringe the intellectual property rights
of any person or entity.
4.15.3 Except to the extent specifically disclosed on Exhibit
4.15.3, no current or former shareholder, employee, officer,
director or consultant of the Company has any rights in or to
any of the Company Intellectual Property. All Company
Intellectual Property listed on Exhibit 4.15.1 has the status
indicated therein. Except to the extent specifically
disclosed on Exhibit 4.15.1: (i) the Company has taken
reasonable actions to protect its rights, in the Company
Intellectual Property; (ii) to the best knowledge of the
Company and the Founder, no person or entity nor such
person's or entity's business or products has infringed,
misused or misappropriated the Company Intellectual Property
or currently is infringing, misusing or misappropriating the
Company Intellectual Property; and (iii) Other than the Chief
Scientist Office, to the best knowledge of the Company and
the Founder, no other person or entity has any right to
receive or any obligation to pay a royalty with respect to
any of the Company Intellectual Property.
4.15.4 The Company and the Founder are not aware that any employee,
contractor or consultant of the Company is obligated under
any agreement (including licenses, covenants or commitments
of any nature) or subject to any judgment, decree or order of
any court or of an administrative agency, or any other
restriction, that would interfere with the use of his or her
best efforts to carry out his or her duties for the Company,
or to promote the best interests of the Company, or that
would conflict with the Company's business.
4.15.5 The Company and the Founder are not aware that the carrying
on of the Company's business by the employees, contractors
and consultants of the Company and the conduct of the
Company's business will conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a
default under, any contract or agreement under which to the
best knowledge of the Company and the Founder any of such
employees, contractors or consultants of the Company is now
obligated.
4.15.6 Except as explicitly and specifically set forth in Exhibit
4.15.6, at no time during the conception of or reduction to
practice of any of the Intellectual Property Rights was any
developer, inventor or other contributor to such Intellectual
Property Rights operating under any grants from any
governmental entity or agency, performing research sponsored
by any governmental entity or agency or private source. The
Company and the Founder are not aware that at any time during
the conception of or reduction to practice of any of the
Intellectual Property Rights, any such developer, inventor or
other contributor was operating or subject to any employment
agreement, or invention assignment or nondisclosure
agreement, or other obligation with any third party that
could adversely affect the rights of the Company in such
Intellectual Property Rights.
4.15.7 The Company takes security measures to protect the
confidentiality and value of all the Company Intellectual
Property, which measures are, reasonable and customary in the
industry in which the Company operates. Each of the key
officers, employees and consultants of the Company has
entered into written agreements with the Company assigning to
the Company all rights to intellectual property developed in
the course of their employment with and/or service to the
Company.
4.15.8 Except as set forth in Exhibit 4.15.8, the Company has not
received any communications alleging that the Company has
violated or by conducting its business as proposed, would
violate, patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of
other persons or entities, nor is the Company aware of any
similar violation of its Intellectual Property by others.
4.16 Material Contracts. A list of all material contracts (including
descriptions of all material oral contracts, if any) of the Company
appears in Exhibit 4.16 attached hereto. To the Company's best
knowledge and subject to applicable laws, all such agreements and
contracts are valid, in full force and effect and binding upon the
Company. Neither the Company, nor to the best of the Company's
knowledge any other party thereto, is in breach thereof, which
breach may have a material adverse effect on the Company.
4.17 Interested Party Transactions. Except as set forth in Exhibit 4.17
attached hereto, there are no transactions or proposed transactions
between the Company and any entity that is at the date of such
transaction or at the date of this Agreement an Interested Party
thereof, and no Interested Party, employee, shareholder, officer or
director of the Company is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee
credit) to any of them.
4.18 Employees. A list detailing the names and positions of all employees
of the Company, and a summary of their material terms of employment,
has been delivered to the Investor in writing prior to the execution
of this Agreement. Exhibit 4.18 attached hereto lists all
employment, non-competition and confidentiality agreements between
the Company and its employees. To the Company's best knowledge, the
Company is in compliance in all material respects with all
applicable laws, policies, procedures and agreements relating to
employment, terms and conditions of employment and to the proper
withholding and remission to the proper tax authorities of all sums
required to be withheld from employees or Persons deemed to be
employees, under applicable tax laws. Except as set forth in Exhibit
4.18, the Company has paid all of its employees all wages, salaries,
commissions, bonuses, benefits and other compensation due and
payable to such employees on or prior to the date hereof. Except as
set forth in Exhibit 4.18, the Company has made sufficient actual
reserves for all of the payments and obligations due or payable with
respect to its employees, including, but not limited to, national
security payments, income tax withholdings, severance payments, all
as required by any applicable law.
4.19 Compliance. The Company has all permits, licenses and any similar
authority necessary for the conduct of its business or ownership of
property, other than as would not have a material effect on the
Company. The Company is not in violation (i) to its best knowledge,
of any applicable law, regulation, order, decree or judgment of any
court or any governmental body applicable to it, or (ii) under its
Corporate Documents, or under any agreement, instrument or document
to which it is a party or by which it or any of its property is
bound or affected, which violation, in any such case, may adversely
affect the Company. The Company is not a party or subject to the
provisions of any specific order, writ, injunction, judgment or
decree of any court or governmental body.
4.20 Litigation. Other than as set forth in Exhibit 4.20, the Company is
not aware of any action, proceeding or governmental inquiry or
investigation, pending or threatened against the Company or any of
its officers, directors or employees (in their capacity as such)
before any court, arbitration board or tribunal or administrative or
other governmental agency, nor is the Company aware, or has
reasonable grounds to be aware, of any fact which would result in
any such proceedings. There is no action, suit, proceeding or
investigation by the Company currently pending or that the Company
intends to initiate.
4.21 Intentionally Deleted.
4.22 Consents. All consents, approvals, authorizations or permits which
are required by the Company in connection with the consummation by
the Company of the transactions contemplated by this Agreement are
listed in Exhibit 4.22 attached hereto and have been obtained as of
the date hereof or shall be obtained at the Closing.
4.23 Brokers. Except as disclosed in Exhibit 4.23 herein, no agent or
broker or any Person 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 similar commission or fee in
connection with the transactions contemplated hereby.
4.24 Business Plan. The Business Plan provided by the Company to the
Investor has been prepared in good faith and with professional care
by the Company. The Company is not aware of any information that
materially changes the business prospects of the Company as set
forth in such Business Plan. Neither the Company nor the Founder
provides any guaranty regarding the financial projections included
in such Business Plan.
4.25 No Breach. Neither the execution of this Agreement and the
performance of the terms hereof nor the consummation of the
transactions contemplated hereby will conflict with, or result in a
violation of, or constitute a default under the Corporate Documents
of the Company, or any agreement or other instrument to which the
Company is a party or by which it is bound, or to which any of its
properties is subject, nor will the performance by the Company of
its obligations hereunder violate any law, consent, permit, rule,
regulation or order of any court, or any governmental agency or body
having jurisdiction over the Company or any of its properties. Such
execution and compliance will not give to others any rights,
including, but not limited to, rights of termination, cancellation
or acceleration, in or with respect to any agreement or commitment
referred to in this Section, or to any of the properties of the
Company.
4.26 Authorization. This Agreement, and the other agreements contemplated
hereby or which are ancillary hereto, including the Registration
Rights Agreement, the Management Agreement, the Services Agreement
and the Lease Agreement, have been duly and validly authorized and
executed by the Company and constitute valid and binding obligations
of the Company, and subject to all applicable laws are enforceable
against the Company in accordance with their respective terms.
4.27 Full Disclosure. There is no material fact in the Company's
possession or knowledge which relates to the Company that has not
been disclosed in writing to the Investor. This Agreement and the
Exhibits and other documents delivered to the Investor in connection
herewith do not contain any material untrue statement and to the
Company's best knowledge do not omit to state a material fact
necessary in order to make the statements contained therein and
herein not misleading.
4.28 Records. The minutes of the Company which have been provided to the
Investor contain accurate and complete copies of the minutes of
every meeting of the Company's shareholders and Board of Directors
(and any committee thereof) which are, or may be, material to the
Company in any way. No resolutions have been passed, enacted,
consented to or adopted by the directors (or any committee thereof)
or shareholders of the Company, except for those contained in such
minutes. The corporate records of the Company have been maintained
in accordance with all applicable statutory requirements and are
complete and accurate in all material respects.
4.29 Subsidiaries. The Company has no subsidiaries and does not, directly
or indirectly, own any interest in any corporation, partnership,
joint venture or other business venture.
4.30 Survival. Each representation and warranty herein is deemed to be
made on the date of this Agreement and at the Closing, and shall
survive and remain in full force and effect for 2 years after the
Closing provided however, that each representation and warranty
herein shall terminate upon the earlier to occur of (i) the closing
of the sale of the Ordinary Shares of the Company to the public in a
bona fide firm commitment underwriting pursuant to a registration
statement under the Securities Act, or (ii) consummation of the sale
of all share capital of the Company by a merger, or a sale of all or
substantially all of the assets of the Company.
5. Representations and Warranties of the Investor
----------------------------------------------
The Investor hereby represents and warrants to the Company as of the
date hereof and as of the Closing, acknowledging that the Company is
entering into this Agreement in reliance thereon, as follows:
5.1 It has the full power and authority to execute this Agreement and to
consummate the transactions contemplated hereby to be consummated by
such Investor. This Agreement and the other agreements contemplated
hereby or which are ancillary hereto, has been duly executed by such
Investor, and this Agreement constitutes the valid and binding
obligation of such Investor, enforceable against it in accordance
with its respective terms.
5.2 It is duly organized and validly existing in the country of its
organization or incorporation.
5.3 Without derogating from the representations and warranties set forth
in Section 4 above or the Company's liability therefor as predicated
under this Agreement, the Investor has been given access to
information regarding the Company and the Preferred A Shares it has
requested. The Investor further represents that it had an
opportunity to ask questions and receive answers from the Company's
representatives, concerning the Company and the Preferred A Shares
as well as regarding written information that it received.
5.4 The Investor has not made any agreement with any broker, finder or
similar agent or any person or firm, providing for the payment of
any finder's fee, brokerage fees or commission or similar payment in
connection with the transactions contemplated hereby
5.5 The Investor has the requisite knowledge and experience in financial
and business matters to be capable of evaluating the merits and
risks of such an investment, and of investing, in the Company. The
Investor can bear the risk of its investment hereunder and a
complete loss thereof.
5.6 The Investor acquiring the Issued Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof. The Investor
understands that the Issued Shares to be purchased hereby, have not
been, and will not be, registered under the Securities Act by reason
of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the
accuracy of the Investor's representations as expressed herein.
5.7 Each representation and warranty herein is deemed to be made on the
date of this Agreement and at the Closing, and shall survive and
remain in full force and effect for 2 years after the Closing
provided however, that each representation and warranty herein shall
terminate upon the earlier to occur of (i) the closing of the sale
of the Ordinary Shares of the Company to the public in a bona fide
firm commitment underwriting pursuant to a registration statement
under the Securities Act, or (ii) consummation of the sale of all
share capital of the Company by a merger, or a sale of all or
substantially all of the assets of the Company.
6. Rights of Preferred A Shares
----------------------------
The rights, preferences and privileges of the Preferred A Shares shall
be as set forth in the Corporate Documents of the Company, as amended
hereunder, which rights are hereby incorporated by reference into this
Agreement and constitute an integral part hereof, and which include
without limitation, the following:
6.1 Liquidation Preference. In the event of (i) any dissolution or
liquidation of the Company; (ii) the commencement by or against the
Company of any bankruptcy, winding-up or insolvency proceeding under
any bankruptcy or insolvency or similar law, whether voluntary or
involuntary; or (iii) the appointment of a receiver or liquidator to
all or substantially all of the Company's assets (collectively, a
"Liquidation Event"), any assets of the Company available for
distribution shall be distributed pursuant to the following order of
preference:
6.1.1 The holders of the Preferred A Shares shall be entitled to
receive, prior to and in preference to any payments to any of
the holders of any other classes of shares of the Company, an
amount per Preferred A Share equal to the Preference Amount
(as defined herein). As used herein the "Preference Amount"
shall mean the original issue price of a Preferred A Share
(adjusted for share combination or subdivision, bonus shares
or any other recapitalization of the Company's shares (a
"Recapitalization Event")), plus an amount equal to accrued
but unpaid dividends declared by the Board of Directors, if
any. If the assets thus distributed among the holders of
Preferred A Shares shall be insufficient to permit the
payment to such holders of the full Preference Amount, then
the assets available for distribution shall be distributed
pro-rata among the holders of Preferred A Shares, in
proportion to the Preference Amount each of them is otherwise
entitled to receive.
6.1.2 After payment in full of the Preference Amount, the remaining
assets of the Company then available for distribution, if
any, shall be distributed pro-rata among all the shareholders
of the Company, including the holders of Preferred A Shares,
in proportion to their respective shareholdings in the
Company on an as-converted basis.
6.1.3 Notwithstanding sub-sections 6.1.1 and 6.1.2., in the event
the total assets available for distribution exceeds five
times the original issue price of the Preferred A Shares
(adjusted for Recapitalization Event), then no liquidation
preference shall apply, i.e. the total assets available for
distribution shall be distributed pro-rata among all the
shareholders of the Company, irrespective of the class of
shares they hold, in proportion to their respective
shareholdings in the Company on an as-converted basis.
A merger or a consolidation of the Company into another
corporation, in which the Company's shareholders did not
retain a majority of the voting power in the surviving
corporation, or a sale of all or substantially all of the
Company's assets or all or substantially all of the Company's
issued and outstanding shares, or other transaction which
would result in a change of control of the Company (a "Change
in Control"; for this purpose the term "Control" shall have
the same meaning as in Section 1 of the Securities Law -
1968), shall each be deemed a Liquidation Event ("Deemed
Liquidation Event"). For the avoidance of doubt it is
clarified that merger, consolidation of the Company with or
into one or more other corporations, in which the Investor
has a Control, shall not be regarded as a Liquidation Event
for the purpose of allocation of proceeds among the Company's
shareholders.
6.2 Distribution of Dividends. In the event that any dividends or other
distributions, whether in cash or in securities or other assets,
have been declared or distributed by the Company, the holders of the
Preferred A Shares shall be entitled to an equal distribution per
share as the holders of any other classes of shares of the Company
with respect to such distribution on an as converted basis, without
any preference.
The Company and the Founder undertake that no dividends shall be
distributed until the end of 24 months from Closing.
6.3 Conversion of Preferred A Shares.
6.3.1 Conversion at the option of the Investor. Each Preferred A
Share shall, at any time and at the sole discretion of its
holder, be convertible into Ordinary Shares upon twenty (20)
days written notice to the Company. Initially, the conversion
ratio shall be one-to-one, but such conversion ratio shall be
adjusted: (i) in accordance with any Recapitalization Event
and (ii) pursuant to the anti-dilution provisions set forth
herein.
6.3.2 Conversion at the option of the Company. Each Preferred A
Share shall be convertible into Ordinary Shares as aforesaid
at the election of the Company upon (i) the closing of a
firmly underwritten public offering of Ordinary Shares
pursuant to a registration statement under the United States
Securities Act of 1933, as amended or any other registration
statement in other accepted jurisdiction ("IPO").
6.4 Anti-Dilution Rights. Until the earlier of (i) IPO; (ii) the
occurrence of Liquidation Event or Deemed Liquidation Event; or
(iii) the elapse of 2 years from Closing (the "First Period"), in
the event that the Company shall issue new Ordinary Shares, any
other class of equity shares, or any securities exercisable into,
convertible into or exchangeable for Ordinary Shares, at a price per
share lower than the Price Per Share applicable to the Preferred A
Shares purchased hereunder or the price per share under the First or
Second Option Prices, as relevant (and as may be adjusted from time
to time), the conversion ratio of the Preferred A Shares shall be
adjusted on a full ratchet basis, for no additional consideration,
as set forth in the Amended Articles. Thereafter, Until the earlier
of (i) IPO; (ii) the occurrence of Liquidation Event or Deemed
Liquidation Event; or (iii) the elapse of 2 years from the end of
the First Period, the Investor shall have a weighted average anti
dilution protection. The aforesaid shall not apply to the issuance
of shares, options or securities convertible into shares, (i) to
employees, officers, consultants or directors of the Company,
pursuant to a stock purchase agreement or stock option plan or
agreement or other incentive stock arrangement, approved by the
Board of Directors or (ii) upon conversion of shares of Preferred A
Shares or (iii) upon distribution on Preferred A Shares or as
dividends distributed equally on all shares of the Company or (iv)
to Strategic Investor. "Strategic Investor" for the purpose of this
Section means: an investor which, in addition to its investment by
capital in the Company in an amount equal or greater than the amount
invested by the Investor, shall simultaneously enter into a material
commercial transaction with the Company.
6.5 Voting Rights. All holders of Preferred A Shares shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders
meeting in accordance with the Amended Articles and to attend such
meetings.
The holder of each Preferred A Share shall have the right to one
vote for each share of Ordinary Shares into which such Preferred A
Shares could then be converted (with any fractional share determined
on an aggregate conversion basis being rounded to the nearest whole
share), and with respect to each vote, such holder shall have full
voting rights and powers equal to the voting rights and powers of
the holders of Ordinary Shares, and shall be entitled to vote,
together with the Ordinary Shares as one class, with respect to any
question upon which holders of Ordinary Shares have the right to
vote.
7. Conduct of Business Through Closing.
-----------------------------------
From the date hereof through the Closing, and except as set forth
herein, the Company (a) will conduct its business solely in the
ordinary course as is conducted on the date hereof and in such manner
as to preserve, to the extent possible in the ordinary course of
business, the accuracy of the representations and warranties made
hereunder; (b) shall not declare or pay any dividends or make any other
distributions with respect to its share capital; (c) shall not issue
any shares nor grant any option, warrant, convertible debenture or any
other form of security exercisable into or convertible to shares of the
Company (other than as provided for herein); (d)shall not repay any
indebtedness for which any of the Company's shareholders are
guarantors; and (e) shall not enter into or renew any agreement with an
Interested Party (including an employment agreement with any employee
or director), or increase the remuneration of any employee or director.
8. Management of the Company; Covenants of the Parties
---------------------------------------------------
The Parties agree that, from and after the Closing:
8.1 Board of Directors. The Company's Board of Directors shall consist
of up to seven (7) directors that shall be elected as follows:
8.1.1 The holders of the Preferred A Shares shall be entitled to
appoint, replace and remove two (2) directors (the
"Investor's Directors"). In the event that the First Option
is exercised in whole by the end of the First Option Period ,
the Investor shall be entitled to appoint, replace and remove
3 directors. In the event the Investor's shareholdings are
reduced below 10% of the outstanding share capital of the
Company the Investor shall be entitled to appoint, replace
and remove only one director. Initially, such appointees
shall be Xx. Xxxxxx Xxxxxx and Xx. Xxxx Xxxxx.
In addition the holders of the Preferred A Shares shall be
entitled to appoint one non-voting observer to the Board of
Directors. Initially, such appointee shall be Mr. Yoav
Bar-Nes.
The Directors (except for the Founder) shall be each entitled
to receive from the Company reasonable out-of-pocket expenses
for attending meetings of the Board of Directors.
Each of the Investor's Directors shall be entitled to
communicate to the Investor all information received in its
capacity as a member of the Board, and such information may
be used by the Investor in connection with its investment in
the Company, and in discussions with other shareholders in
the Company provided that such information will be used
solely for the purpose of monitoring the Investor's
investment in the Company and for inclusion of financial
information in reports to governmental authorities or stock
exchanges if required by law or stock exchange rule and will
not be used for any other purpose or disclosed to any person
without the prior written consent of the Company.
8.1.2 The Founder shall be entitled to appoint the remaining
directors to the Board of Directors of the Company. Initially
such appointees shall be the Founder himself and Xx. Xxxx
Xxxxxx who shall serve in office for at least three (3) years
from Closing
The directors appointed by the Founder will be professionals
experienced in the field of operation of the Company or in
financial matters.
8.1.3 As long as the holders of the Preferred A Shares hold at
least 10% of the outstanding share capital of the Company,
the Chairman of the Board shall be Xxxxxx Xxxxxx or any other
Investor Director at the choice of the Investor. In the event
of an equality of votes (except in respect of the matters
which are subject to veto rights pursuant to Section 8.2.2
below), the Chairman of the Board will not have a casting
vote and the decision shall be regarded as not approved by
the Board of Directors of the Company.
8.1.4 It is the intention of the Company to recruit a new CEO, who
shall be appointed by mutual consent of the Parties.
8.1.5 As of the Closing Date the Company's CFO, on a part time
basis, shall be Mr. Ran Xxxxxxx. At the time it is required
to appoint a full time CFO, the Investor shall be entitled to
propose a candidate, who shall be subject to the reasonable
approval of the Company.
8.2 Board and Shareholders Decisions.
8.2.1 Subject to any applicable mandatory law, all resolutions and
actions of the Board of Directors and of the shareholders of
the Company shall be taken by a majority vote.
8.2.2 Notwithstanding the aforesaid, until the IPO and as long as
the Investor holds at least 15% of the outstanding share
capital of the Company, a consent of the holders of the
Preferred A Shares or of the directors appointed by them
shall be required for any action of the Company's general
meetings or of the Company's Board of Directors (or any
committee thereof), as applicable, regarding any of the
following issues: (1) amendment to the Corporate Documents of
the Company that adversely effects the rights of the
Preferred A Shares; (2) a material change in the business of
the Company; (3) issuance of capital stock, rights, options
or warrants to purchase capital stock, or other securities
convertible into capital stock; (4) merger, consolidation of
the Company with or into one or more other corporations,
other than corporation in which the Investor has Control, in
which the shareholders of the Company immediately after such
merger or consolidation hold stock representing less than the
majority of the voting power of the outstanding stock of the
surviving corporation (5) the sale, lease or other
disposition of all or substantially all of the Company's
assets, or technology, (6) transactions with any officer,
director, shareholder or other interested party, or any other
party related, directly or indirectly, to any of them; (7)
liquidation, dissolution or winding-up of the Company; (8)
the constitution of any committee of the Board of Directors
or of the board of directors of any subsidiary of the
Company; (9) appointment, dismissal and determination and
changes of remuneration of the Company's senior management;
(10) any transaction, other than with a corporation in which
the Investor has Control, of the Company exceeding $75,000 or
which is not in the Company's ordinary course of business;
(11) distribution of dividends (other than a dividend payable
solely in Shares distributed equally to all shareholders of
the Company on an as converted basis); (12) increase the
number of members of the Board of Directors; and (13)
determination and changes in the scope and terms of any stock
option plan for employees, consultants, directors or
subcontractors of the Company, and grant of options pursuant
thereto.
Notwithstanding the provisions of this Section, until the
IPO, and as long as the Investor holds between 7% to 15% of
the outstanding share capital of the Company, the following
decisions shall require the consent of the holders of the
Preferred A Shares or of the directors appointed by them in
the Company's general meetings or of the Company's Board of
Directors (or any committee thereof), as applicable: 8.2.2
(1), (2), (3), (4), (5), (6), (7), (10), (11) and (12),
provided that with respect to 8.2.2 (3) the consent of the
holders of the Preferred A Shares or of the directors
appointed by them shall not be required for issuance of
securities at a higher Company valuation than the Investor
has incurred plus 15% of such valuation annualy.
Notwithstanding the provisions of this Section, until the IPO
in the event of exercise of the First and Second Options, a
consent of the holders of the Preferred A Shares or of the
directors appointed by them shall be required for any action
of the Company's general meetings or of the Company's Board
of Directors (or any committee thereof), as applicable,
regarding the terms and conditions of an IPO.
8.3 Preemptive Rights. If at any time prior to the IPO, the Company
proposes to issue and sell any capital stock of the Company, whether
or not now authorized, rights, options or warrants to purchase
capital stock, or securities of any type whatsoever that are, or may
become, convertible into capital stock (excluding securities (i)
issued in an IPO, (ii) issued upon the conversion of Preferred Stock
or exercise of the options to acquire shares of the Company which
are in existence on the date of the Closing, or (iii) issued to
employees, officers, consultants or directors of the Company
pursuant to stock option plans or agreements or other incentive
stock arrangements, approved by the Board of Directors or (iv)issued
in connection with the acquisition by the Company of, or business
combination with, another company or entity by merger or purchase of
substantially all of its stock or assets ("New Securities")) it
shall enable each of the Preferred A Share holders to purchase their
pro rata share, of the fully diluted outstanding share capital of
the Company, on an as-converted basis, of any such New Securities,
all according to the terms and conditions set forth in the Amended
Articles.
8.4 Co-Sale, No Sale Rights, Right of First Refusal
8.4.1 If the right of first refusal set forth in the Amended
Articles is not exercised and any of the Existing
Shareholders (in this Section 8.4, the "Selling Shareholder")
intends to sell any shares, other than to a Permitted
Transferee (as defined in the Amended Articles), such Selling
Shareholder shall so notify the holders of the Preferred A
Shares (in this Section 8.4, the "Holders"), describing in
such notification the material terms of such proposed sale.
Upon receipt of such notice, the Holders shall have the right
to exercise the option contained in 8.4.2 below.
8.4.2 The Holders shall have the option, exercisable by written
notice to the Selling Shareholder within ten (10) business
days after receipt of the notice described in 8.4.1 above, to
require the Selling Shareholder to provide as part of his
proposed sale that the Holders be given the right to
participate in the sale pro rata in proportion to the
respective numbers of Shares owned by any of the Holders (on
an as converted basis) and the Selling Shareholder at such
time, on the same terms and conditions as the Selling
Shareholder. If such option is exercised by the Holders, the
Selling Shareholder shall not proceed with such sale unless
the Holders are given the right to participate.
8.4.3 Notwithstanding the aforesaid, in the event that any
shareholder or group of shareholders proposes to sell shares
in a transaction or series of transactions which result in a
change in control of the Company, then the Holders shall be
entitled to participate in such transaction and to sell all
of their shares in the Company prior to the inclusion of any
shares of the Selling Shareholder(s). For purposes of this
Section 8.4, the term "change in control" shall mean the
transfer of (i) 50% or more of the equity of the Company or
(ii) shares entitling the holder to appoint 50% or more of
the directors of the Company.
8.4.4 The Existing Shareholders agree and declare that they will
not sell any of their shares in the Company as of the date of
this Agreement, whether held directly or indirectly, prior to
the end of eighteen (18) months from Closing. Thereafter and
prior to an IPO the Existing Shareholders may sell up to: (i)
3% of their shares in the Company, whether held directly or
indirectly, prior to the end of 24 months from Closing; (ii)
additional 5% of their shares in the Company, whether held
directly or indirectly prior to the end of 36 months from
Closing; (iii) additional 5% in the aggregate of their shares
in the Company, whether held directly or indirectly, prior to
the end of 48 months from Closing; (iv) additional 5% in the
aggregate of their shares in the Company, whether held
directly or indirectly, prior to the end of 60 months from
Closing; and (v) 25% of their shares in the Company, whether
held directly or indirectly, in each year from the
commencement of the sixth year.
Transfer of shares by the Existing Shareholders pursuant to
this subsection 8.4.4(i), (ii) (iii) and (iv) above shall not
be subject to the right of co sale as set forth in Section
8.4.1 above.
8.4.5 The Investor shall be entitled to a right of first refusal to
purchase any shares which will be sold or transferred in any
other way by the Existing Shareholders, according to the
terms specified in the Amended Articles
8.4.6 The rights established by this Section 8.4 shall not apply
to, and shall terminate upon the effective date of the IPO.
8.5 Accounts and Records. The Company will keep true records and books
of account in which full, true and correct entries will be made of
all dealings or transactions in relation to its business and affairs
in accordance with generally accepted principles applied on a
consistent basis.
8.6 Access to Information. A representative of the Investor who has
signed a non-disclosure agreement (so long as the Investor holds at
least 5% of the outstanding share capital of the Company) shall
have, upon reasonable notice, full access to all books and records
of the Company, shall be entitled to review at its discretion, and
shall be entitled to inspect the properties of the Company and
consult with management of the Company.
8.7 Information Rights. Prior to an IPO, the Company shall deliver to
the Investor, for as long as it holds at least 5% of the outstanding
share capital of the Company in the Company (i) within 60 days after
the end of each fiscal year, a consolidated balance sheet of the
Company, as at the end of such fiscal year, and a consolidated
statement of income and a consolidated statement of cash flows of
the Company, for such year, all prepared in accordance with GAAP and
setting forth in each case in comparative form the figures for the
previous fiscal year and to the Company's operating plan then in
effect and approved by its Board of Directors, all in reasonable
detail. Such financial statements shall be accompanied by a report
and opinion thereon by independent public accountants of national
standing as one of the five major accounting firms in Israel,
selected by the Company's Board of Directors (the "Accountants"),
(ii) within 45 days from the end of each quarter, a consolidated
balance sheet of the Company, as of the end of each such quarterly
period, and consolidated statements of income and cash flows of the
Company for such period and for the current fiscal year to date,
prepared in accordance with GAAP and setting forth in comparative
form the figures for the corresponding periods of the previous
fiscal year and to the Company's operating plan then in effect and
approved by its Board of Directors, subject to changes resulting
from normal year-end audit adjustments, all in reasonable detail and
reviewed by the Accountants; and (iii) monthly management reports
(in a form mutually agreed) and unaudited monthly financial
statements within 30 days from the end of each month, and (iv) an
annual budget, within 30 days prior to the end of each fiscal year.
Following the IPO, the Company shall deliver to each holder of
Preferred A Shares or Ordinary Shares issued upon conversion of
Preferred A Shares, copies of the Company's filings with the
Securities and Exchange Commission and Annual Reports to
shareholders as soon as practicable after such documents were filed
with the Securities and Exchange Commission. For the Purpose of this
Section GAAP shall mean Israeli GAAP and adjustment to US GAAP,
provided that the Investor shall pay for the expenses associated
with the adjustment to US GAAP.
Notwithstanding anything herein the Company shall deliver to the
Investor any information which the Investor is required to file
pursuant to Israeli and USA securities laws or any request of the
securities authorities in these jurisdictions. Such delivery by the
Company shall be made at least 14 days before the date on which the
Investor is required to file such information, provided that the
Company has such information and provided further that the Investor
has notified the Company in due time on such requests.
8.8 Internal Reporting Requirements. The Company's management shall
submit to the Board of Directors for its approval, annually, an
annual operating plan and budget, in such format as the directors
shall require, at least 30 days prior to the first day of the year
covered by such plan. In addition, the Company's management shall
submit to the Board of Directors monthly and other reports in such
format, and containing such information, as the directors shall
require.
8.9 Registration Rights. Effective as of the Closing, the Company hereby
grants to the holders of Preferred A Shares and the Ordinary Shares
registration rights as more fully set forth in the Registration
Rights Agreement attached hereto.
8.10 Employment Agreements and Employee Vesting. The Company hereby
undertakes to use its best efforts to ensure that all future key
officers, employees and consultants of the Company enter into a
confidential information and invention assignment agreement with the
Company, the terms of which shall be acceptable to Investor. The
Company shall not issue, as of the Closing, options to employees,
directors and consultants, which are not subject to vesting unless
otherwise decided by the Board of Directors.
8.11 Confidentiality and Non-Disclosure. No disclosure regarding the
Investor's terms of investment in the Company in a press conference,
in any professional or trade publication, in any marketing materials
or otherwise to the general public may be made by the Parties,
without the prior written consent of the Investor, which consent may
be reasonably withheld at the sole discretion of the Investor.
Notwithstanding the foregoing, the Investor shall be able to
disclose its relationship with the Company/Investor, its investment
in the Company and the terms thereof to third parties or to the
public after first notifying in writing the Company 7 days in
advance. In the event of a disclosure 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 materials so disclosed.
8.12 Use of Proceeds. The Company shall use the Purchase Price and the
proceeds generated from the Options exercise to finance the
Company's general corporate purposes as set forth in the budget
attached hereto as Exhibit 8.12 (the "Budget") and subject to the
term and conditions thereof. The Company may modify and update the
Budget from time to time with the approval of the Board of Directors
including the affirmative consent of at least two of the Investors'
Directors.
8.13 Signatory Rights. As of Closing and until otherwise resolved by the
Board of Directors, including the affirmative consent of at least
one of the Investors' Directors the signatory rights on behalf of
the Company shall be as specified in Exhibit 8.13 attached hereto.
8.14 Insurance. The Company shall prior to the Closing introduce three
proposals of insurance policies to the Investor as listed in Exhibit
8.14 attached hereto, with coverage customary in the industry for
Companies' with similar scope and activities. The Company shall ,
following consultation with the Investor, promptly following the
Closing purchase such insurance policies out of the proposal which
it founds the most suitable for the Company.
9. Indemnification
---------------
The Company and the Founder shall indemnify the Investor and its
successors from and against all claims, actions, suits, losses,
liabilities, damages, judgments, settlements, costs of investigation or
other expenses (including but not limited to interest, penalties and
reasonable attorneys' fees and disbursements incurred in connection
with enforcing this indemnification or otherwise in connection with any
of the foregoing) (collectively, "Losses") based upon, arising out of
or in respect of a material breach of any representation or warranty or
covenant of the Company and the Founder contained in this Agreement
without regard to any independent examination of the Company conducted
by the Investor, provided, however, that except in cases of willful
misrepresentation or fraud the liability of the Company and the Founder
to the Investor pursuant to this Section 9 which may be raised only if
the Investor's Losses exceed in the aggregate a sum of US$15,000, shall
in no event exceed the respective aggregate Purchase Price paid by the
Investor for the Issued Shares purchased by it hereunder and provided
further, (i) the liability for damages paid in cash of the Founder
under this Section 9,shall not exceed, in the aggregate $50,000 and
(ii) the Founder may satisfy his obligations hereunder through the
tender of his shares of the Company's Ordinary Shares valued at their
then fair market value.
10. Confidentiality
---------------
Without derogating from any other agreement or undertaking to which any
of the Parties hereto is subject, and in addition to any such agreement
or undertaking, the Investor undertakes to keep in strict confidence,
and not to use for any purpose whatsoever except for internal purposes
related to its investment in the Company, any and all information
relating, in any way, to the Company which had been provided to the
Investor by the Company or was otherwise obtained by such Investor,
except information which may be clearly and convincingly (a) was in the
Investor's possession prior to its disclosure; (b) is or becomes
available in the public domain through no fault of the Investor; (c)
was disclosed by operation of law; (d) is rightfully received by the
Investor from a third party without a duty of confidentiality, to the
best of the Investor's knowledge; or (e) is independently developed by
the Investor. In the event of a disclosure required of the Investor
according to any law, including by the Securities and Exchange
Commission, the Investor shall use all reasonable efforts to obtain
confidential treatment of materials required to be disclosed.
11. Governing Law and Jurisdiction
------------------------------
This Agreement shall be governed by and construed according to the laws
of the State of Israel, without regard to the conflict of law
provisions thereof. Any dispute arising under or in relation to this
Agreement shall be resolved in the competent court in Tel Aviv, Israel,
and each of the Parties hereby submits irrevocably to the exclusive
jurisdiction of such court.
12. Miscellaneous
-------------
12.1 This Agreement and its Exhibits including the Non- Disclosure
Agreement constitute the full and entire understanding and agreement
between the Parties with regard to the subject matters hereof and
thereof, and supersedes all prior agreements between the Parties
hereof with regard to such subject matter.
12.2 Each of the Parties shall take such actions, including the execution
of further instruments and voting its shares in the Company, as may
be necessary to give full effect to the provisions hereof and to the
intent of the Parties hereto.
12.3 Any term of this Agreement may be amended only with the written
consent of the Parties hereto.
12.4 None of the rights, privileges, or obligations set forth in, arising
under, or created by this Agreement may be assigned or transferred
without complying with the limitations on transfers of shares
imposed by the Amended Articles, with the exception of: (i)
assignments by the Investor or the other shareholders of the Company
to Permitted Transferees (as defined below) of shares of such
Investor or other shareholder, as applicable; (ii) assignments and
transfers from the Investor or the Existing Shareholders to any
other entity which controls, is controlled by or is under common
control with, such Investor or Existing Shareholder; (iii)
assignments and transfers of shares (if any) in accordance with the
Agreement dated January 1, 2000 and its amendment dated October 10,
2000, attached as Exhibit 4.3 to this Agreement; provided, however,
that that no such assignment or transfer shall become effective
unless each such transferee has provided the Company and the
Investor with a confirmation in writing that it is bound by all
terms and conditions of this Agreement as if it were an original
party to it. The Company shall not be entitled to assign any of its
rights or obligations hereunder (other than as provided for herein),
absent prior written consent of the Investor.
12.5 A Party may waive any of its rights hereunder provided, however,
that such waiver shall be in writing and shall apply exclusively to
such Party's rights hereunder.
12.6 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
therefore 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 provision of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such
writing.
12.7 All remedies either under this Agreement or by law or otherwise
afforded to any of the Parties, shall be cumulative and not
alternative.
12.8 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.
12.9 All notices or other communications hereunder shall be in writing
and shall either be given in Person, sent by registered mail
(registered international air mail if mailed internationally), sent
by an overnight courier service which obtains a receipt to evidence
delivery, or transmitted by facsimile transmission (provided that
written confirmation of receipt is provided), addressed as set forth
below:
If to Company: SygMed Ltd.
X.X. Xxx 0000
Xxxxxxx 00000, Xxxxxx
Att: Xx. Xxxxx Xxxxx
Fax: 000-00000000
With a copy to: Eitan, Pearl, Xxxxxx &Xxxxx Xxxxx
0 Xxxxxxx Xx., Xxxxxxx 00000 Xxxxxx
Att: Xxx Xxxxx-Xxxxxxx, Adv., Xxxx Xxxxxxxx, Adv.
Fax: 000-0-0000000
If to Investor: Aryt Industries Ltd.
7 Xxxxxxx Xx.
XXX 000
Xx Xxxxxx 00000, Xxxxxx
Fax: 000-0-0000000
Attn: Mr. Yoav Bar-Nes
With a copy to: Efrati, Galili & co.
0 Xxxxxxxxx Xxxxxx.
Xxx Xxxx 00000
Fax: 972 - 0 - 000 0000
Attn: Xxx Xxxxxxxxx, Adv., Xxxx Xxx-Xxx, Adv.
12.10 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.
IN WITNESS WHEREOF the Parties have signed this Agreement as of the date first
hereinabove set forth.
-------------------------------
SYGMED LTD.
By: /s/ Xxxxx Xxxxx
----------------
Title: CEO
----------------------
-------------------------------
XXXXXX XXXXX
/s/ Xxxxxxx Xxxxxx
--------------------
/s/ Ram Xxxxxxx
-----------------
ARYT INDUSTRIES LTD.
By: _________________________
Title: _________________________
