SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is made and
entered into as of March 10, 2004, by and among VocalTec Communications Ltd.,
an Israeli company (the "Company"), and each of the purchasers listed on
Schedule A attached hereto (collectively, the "Purchasers" and individually, a
"Purchaser").
RECITALS
WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, up to two million four
hundred thousand (2,400,000) units (each, a "Unit"), each unit consisting of
one ordinary share, par value NIS 0.01 per share, of the Company (the
"Ordinary Shares") and a five year warrant (a "Warrant") to purchase one-half
(0.5) of one Ordinary Share, on the terms and conditions set forth in this
Agreement; and
WHEREAS, the Company and each Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act").
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO PURCHASE AND SELL SECURITIES.
(a) Authorization. The Company's Board of Directors has authorized
the issuance and sale, pursuant to the terms and conditions of this Agreement,
of up to two million four hundred thousand (2,400,000) Units, consisting in
the aggregate of up to two million four hundred thousand (2,400,000) Ordinary
Shares (the "Purchased Shares") and two million four hundred thousand
(2,400,000) Warrants, substantially in the form attached hereto as Exhibit A.
Each two Warrants included in the Units shall be exercisable to purchase one
Ordinary Share at $4.75 per share (the "Purchased Warrants" and together with
the Purchased Shares, the "Purchased Securities"). Subject to their terms and
conditions, the Purchased Warrants shall be exercisable at any time and from
time to time from and after September 11, 2004 through and including March 10,
2009.
(b) Agreement to Purchase and Sell Securities. Subject to the terms
and conditions of this Agreement, each Purchaser severally and not jointly
agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, at the Closing (as defined below), that number of Units set forth
opposite such Purchaser's name on Schedule A attached hereto. The purchase
price of each Unit, without giving effect to the exercise price of the
Warrants (the "Per Unit Price") shall be $4.10.
(c) Use of Proceeds. The Company intends to apply the net proceeds
from the sale of the Purchased Securities for working capital and general
corporate purposes as determined by the Company from time to time.
(d) Obligations Several Not Joint. The obligations of each Purchaser
under this Agreement are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under this Agreement.
The decision of each of the Purchasers to purchase the Purchased Securities
pursuant to this Agreement has been made by such Purchaser independently of
any other Purchaser. Nothing contained herein, and no action taken by any
Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or
as a group with respect to such obligations or the transactions contemplated
by this Agreement. Each Purchaser shall be entitled to independently protect
and enforce such Purchaser's rights, including without limitation the rights
arising out of this Agreement, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
2. CLOSING. The purchase and sale of the Purchased Securities shall
take place at the offices of
, local time, on March 10, 2004,
or at such other time and place as the Company and Purchasers representing a
majority of the Purchased Securities mutually agree upon (which time and place
are referred to in this Agreement as the "Closing"). At the Closing, the
Company shall, against delivery of full payment for the Purchased Securities
by wire transfer of immediately available funds in accordance with the
Company's instructions, (i) authorize its transfer agent to issue to each
Purchaser one or more stock certificates (the "Certificates") registered in
the name of each Purchaser (or in such nominee name(s) as designated by such
Purchaser in the Stock Certificate and Warrant Questionnaire attached hereto
as Appendix I (the "Stock Certificate Questionnaire")), representing the
number of Ordinary Shares set forth opposite the appropriate Purchaser's name
on Schedule A hereto, and bearing the legend set forth in Section 4(k)(i)
herein, and (ii) issue to each Purchaser the number of Purchased Warrants set
forth opposite the appropriate Purchaser's name on Schedule A hereto, and
bearing the legend set forth in Section 4(k)(ii) herein. Closing documents may
be delivered by facsimile with original signature pages sent by overnight
courier. The date of the Closing is referred to herein as the "Closing Date".
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that the statements in this Section
3 are true and correct, except as set forth in the SEC Documents (as defined
below):
(a) Organization, Good Standing and Qualification. The Company is a
corporation duly organized and validly existing under the laws of the State of
Israel and has all corporate power and authority required to (i) own, operate
and occupy its properties and to carry on its business as presently conducted
and (ii) enter into this Agreement and the other agreements, instruments and
documents contemplated hereby, and to consummate the transactions contemplated
hereby and thereby. The Company is qualified or authorized, as the case may
be, to do business and is in good standing in each jurisdiction in which the
failure to so qualify would have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means a material adverse effect on, or a
material adverse change in, or a group of such effects on or changes in, the
business, operations, financial condition, results of operations, assets or
liabilities of the Company and its subsidiaries, taken as a whole.
(b) Capitalization. The capitalization of the Company as of the date
hereof (excluding the Purchased Securities to be purchased pursuant to this
Agreement) is as follows:
(i) The authorized share capital of the Company consists of
30,000,000 Ordinary Shares.
(ii) As of March 3, 2004, the issued and outstanding share
capital of the Company consisted of 12,468,328 Ordinary Shares. The issued and
outstanding share capital of the Company have been duly authorized and validly
issued, are fully paid and nonassessable and are not subject to any preemptive
or other similar rights, except for such pre-emptive rights that have been
duly waived.
(iii) As of March 3, 2004, the Company had 2,429,895 Ordinary
Shares reserved for issuance upon exercise of outstanding options granted under
the Company's share option plans (the "Option Plans")
(iv) As of March 3, 2004, the Company had 2,279,749 Ordinary
Shares available for future grant under the Option Plans.
(v) With the exception of the foregoing in this Section 3(b),
there are no outstanding subscriptions, options, warrants, convertible or
exchangeable securities or other rights granted to or by the Company to
purchase Ordinary Shares or other securities of the Company and there are no
commitments, plans or arrangements to issue any Ordinary Shares or any
security convertible into or exchangeable for Ordinary Shares.
(c) Subsidiaries. Except as set forth in the SEC Documents, the
Company does not have any subsidiaries (the entities listed in the SEC
Documents or any exhibit thereto as the Company's subsidiaries are referred to
herein, collectively, as the "Subsidiaries"), and, except as set forth in
Section 3(c) of the Disclosure Letter attached hereto as Exhibit B (the
"Disclosure Letter"), the Company does not own any share capital of, assets
comprising the business of, obligations of, or any other interest (including
any equity or partnership interest) in, any person or entity. Each of the
Subsidiaries is duly organized and validly existing in good standing under the
laws of the jurisdiction of its incorporation or organization. Each of the
Subsidiaries has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and is
registered or qualified to do business and in good standing in each
jurisdiction in which it owns or leases property or transacts business and
where the failure to be so qualified would have a Material Adverse Effect.
(d) Due Authorization. All corporate actions on the part of the
Company necessary for the authorization, execution, delivery of and
performance of all obligations of the Company under this Agreement and the
authorization, issuance, reservation for issuance and delivery of all of the
Purchased Securities being sold under this Agreement and the Ordinary Shares
issuable upon the exercise of the Purchased Warrants (the "Warrant Shares")
have been taken; no further consent or authorization of the Company, the Board
or its shareholders is required (including with respect to NASD Rule
4350(i)(1)(D)), and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except (i) as may be limited by (1) applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or other similar laws of general application relating to or
affecting the enforcement of creditors' rights generally or (2) the effect of
rules of law governing the availability of equitable principles of general
application, or (ii) as rights to indemnity or contribution may be limited
under federal or state securities laws or by principles of public policy
thereunder.
(e) Valid Issuance of Purchased Securities.
(i) Purchased Securities. The Purchased Securities will be, upon
payment therefor by the Purchasers in accordance with this Agreement, and the
Warrant Shares will be, if and when issued in accordance with the terms of the
Purchased Warrants, duly authorized, validly issued, fully paid and
non-assessable, free from all liens, claims and encumbrances with respect to
the issuance of such Purchased Securities and Warrant Shares, as the case may
be, and will not be subject to any pre-emptive rights or similar rights which
shall not have been duly waived at the time of, and with respect to, the
issuance of the Purchased Securities and the Warrant Shares. No co-sale right,
right of first refusal or other similar rights exist with respect to the
Purchased Securities and the Warrant Shares or the issuance and sale thereof.
The issuance and sale of the Purchased Securities and the Warrant Shares will
not obligate the Company to issue Ordinary Shares or other securities to any
person and will not result in a right of any holder of the Company's
securities to adjust the exercise, conversion, exchange or reset price under
such securities.
(ii) Compliance with Securities Laws. Subject to the accuracy
of the representations made by the Purchasers in Section 4 hereof, the Purchased
Securities and the Warrant Shares (assuming no change in applicable law and no
unlawful distribution of the Purchased Securities or the Warrant Shares by the
Purchasers or other parties) will be issued to the Purchasers in compliance
with applicable exemptions from (1) the registration and prospectus delivery
requirements of the Securities Act and (2) the registration and qualification
requirements of all applicable securities laws of the states of the United
States.
(f) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, or notice to, any federal, state or local governmental authority
or self regulatory agency on the part of the Company is required in connection
with the issuance of the Purchased Securities or the Warrant Shares to the
Purchasers, or the consummation of the other transactions contemplated by this
Agreement, except (i) such filings as have been made prior to the date hereof,
(ii) the filings under applicable securities laws required to comply with the
Company's registration obligations under Section 5 of this Agreement, (iii)
the filing of a notification form with The Nasdaq National Market ("Nasdaq")
within five days after the Closing and (iv) such additional post-Closing
filings as may be required to comply with applicable state and federal
securities laws and the listing requirements of Nasdaq.
(g) Non-Contravention. The execution, delivery and performance of
this Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby (including issuance of the Purchased
Securities and Warrant Shares), do not (i) contravene or conflict with the
Articles of Association of the Company (the "Articles of Association") or
other organizational documents of the Company or any of the Subsidiaries (ii)
constitute a violation of any provision of any federal, state, local or
foreign law, rule, regulation, order or decree applicable to the Company or
any of the Subsidiaries; or (iii) constitute a default or require any consent
under, give rise to any right of termination, cancellation or acceleration of,
or to a loss of any material benefit to which the Company or any of the Subsid
iaries is entitled under, or result in the creation or imposition of any lien,
claim or encumbrance on any asset of the Company or any of the Subsidiaries
under, any material contract to which the Company or any of the Subsidiaries
is a party or any material permit, license or similar right relating to the
Company or any the Subsidiaries or by which the Company or any of the
Subsidiaries may be bound or affected.
(h) Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation ("Action") pending or, to the Company's actual
knowledge, threatened in writing: (i) against the Company, any of the
Subsidiaries, their activities, properties or assets, or any officer, director
or employee of the Company or any of the Subsidiaries in connection with such
officer's, director's or employee's relationship with, or actions taken on
behalf of, the Company or any of the Subsidiaries, that is reasonably likely
to have a Material Adverse Effect, or (ii) that seeks to prevent, enjoin,
alter, challenge or delay the consummation of the transactions contemplated by
this Agreement (including the issuance of the Purchased Securities and the
Warrant Shares). The Company is not a party to nor subject to the provisions
of, any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality that is reasonably expected to prevent, enjoin,
alter, challenge or delay the consummation of the transactions contemplated by
this Agreement or is reasonably likely to have a Material Adverse Effect. No
Action is currently pending nor does the Company currently intend to initiate
any Action that is reasonably likely to have a Material Adverse Effect. The
SEC has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under the
Exchange Act or the Securities Act.
(i) Compliance with Law and Charter Documents. The Company is not in
violation or default of any provisions of the Articles of Association. The
Company has complied and is currently in compliance with all applicable
statutes, laws, rules, regulations and orders of the United States of America
and all states thereof, foreign countries and other governmental bodies and
agencies having jurisdiction over the Company's business or properties, except
for any instance of non-compliance that has not had, and would not reasonably
be expected to have, a Material Adverse Effect. Neither the Company nor any of
the Subsidiaries is in default (and there exists no condition which, with or
without the passage of time or giving of notice or both, would constitute a
default) in any material respect in the performance of any bond, debenture,
note or any other evidence of indebtedness in any indenture, mortgage, deed of
trust or any other material agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or by which the properties of the Company are bound,
which default would be reasonably likely to have a Material Adverse Effect or
which would be reasonably likely to have a Material Adverse Effect on the
transactions contemplated by this Agreement.
(j) Material Non-Public Information. The Company has not provided,
and will not provide, to the Purchasers any material non-public information
other than information related to the transactions contemplated by this
Agreement, all of which information related to the transactions contemplated
hereby shall be disclosed by the Company pursuant to Section 9(m) hereof.
(k) SEC Documents.
(1) Reports. Since January 1, 2003, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder. The Company has made available to the
Purchasers prior to the date hereof copies of:
a) its Annual Report on Form 20-F for the fiscal year ended
December 31, 2002 (the "Form 20-F") filed by the Company with the SEC; and
b) all other documents, including exhibits thereto, filed or
submitted by the Company with the SEC since December 31, 2002, pursuant to the
reporting requirements of the Exchange Act, including, without limitation, any
Report on Form 6-K for events occurring since December 31, 2002 ("Form 6-Ks")
submitted by the Company to the SEC (the Form 20-F and the Form 6-Ks are
collectively referred to herein as the "SEC Documents").
Each of the SEC Documents, as of the respective dates thereof (or, if
amended or superseded by a filing or submission, as the case may be, prior to
the Closing Date, then on the date of such filing or submission, as the case
may be), (i) did not contain any untrue statement of a material fact nor omit
to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading and (ii) complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Document.
(2) Xxxxxxxx-Xxxxx. The Chief Executive Officer and the Chief
Financial Officer of the Company have signed, and the Company has furnished to
the SEC, all certifications required by Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act of 2002 from a foreign private issuer. Such certifications
contain no qualifications or exceptions to the matters certified therein
(other than such qualifications or exceptions that are permitted under the
Exchange Act and the rules promulgated thereunder) and have not been modified
or withdrawn, and neither the Company nor any of its officers has received
notice from any governmental entity questioning or challenging the accuracy,
completeness, form or manner of filing or submission of such certifications.
Without limiting the foregoing, the Company is in compliance with any
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 which apply to a
foreign private issuer and the rules and regulations promulgated thereunder,
as amended, that are currently in effect, except where such noncompliance
would not have or reasonably be expected to result in a Material Adverse
Effect or which would not reasonably be expected to have a Material Adverse
Effect on the transactions contemplated by this Agreement.
(3) Financial Statements. The financial statements of the
Company and the Subsidiaries included in the SEC Documents (i) comply in all
material respects with the rules and regulations of the SEC with respect thereto
as were in effect at the time of filing and (ii) present fairly, in accordance
with generally accepted accounting principles in the United States ("U.S.
GAAP"), consistently applied, the financial position of the Company as of the
dates indicated therein, and the results of its operations and cash flows for
the periods therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal, immaterial, year-end audit
adjustments.
(l) Absence of Certain Changes Since the Balance Sheet Date. Except
as set forth in Section 3(l) of the Disclosure Letter, since December 31, 2002
the business and operations of the Company have been conducted in the ordinary
course consistent with past practice, and there has not been:
(i) any declaration, setting aside or payment of any dividend
or other distribution of the assets of the Company with respect to any share
capital of the Company or any repurchase, redemption or other acquisition by
the Company or any subsidiary of the Company of any outstanding share capital
of the Company;
(ii) any damage, destruction or loss to the Company's business
or assets, whether or not covered by insurance, except for such occurrences,
individually and collectively, that have not had, and would not reasonably be
expected to have, a Material Adverse Effect;
(iii) any waiver by the Company of a valuable right or of a
material debt owed to it, except for such waivers, individually and
collectively, that have not had, and would not reasonably be expected to have,
a Material Adverse Effect;
(iv) any material change or amendment to, or any waiver of any
material right under a material contract or arrangement by which the Company
or any of its assets or properties is bound or subject;
(v) any change by the Company in its accounting principles,
methods or practices or in the manner in which it keeps its accounting books and
records, except any such change required by a change in U.S. GAAP or by the
SEC; or
(vi) any other event or condition of any character, except for
such events and conditions that have not resulted, and are not expected to
result, either individually or collectively, in a Material Adverse Effect.
(m) Intellectual Property. The Company owns or possesses sufficient
rights to use all patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names, licenses or copyrights (collectively,
"Intellectual Property"), which are necessary to conduct its businesses as
currently conducted, except where the failure to own or possess such
sufficient rights would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect. The Company
has not received any written notice of, and has no actual knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property which, either individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably be
expected to have a Material Adverse Effect, and to the Company's actual
knowledge, none of the patent rights owned or licensed by the Company are
unenforceable or invalid.
(n) Registration Rights. Except as set forth in Section 3(n) of the
Disclosure Letter, the Company is not currently subject to any agreement
providing any person or entity any rights (including piggyback registration
rights) to have any securities of the Company registered with the SEC or
registered or qualified with any other governmental authority.
(o) Title to Property and Assets. The properties and assets of the
Company are owned by the Company free and clear of all mortgages, deeds of
trust, liens, charges, encumbrances and security interests except for (i)
statutory liens for the payment of current taxes that are not yet delinquent
and (ii) liens, encumbrances and security interests that arise in the ordinary
course of business and do not in any material respect affect the business of
the Company as currently conducted. With respect to the property and assets it
leases, the Company is in compliance with such leases in all material
respects.
(p) Taxes. The Company has filed or has valid extensions of the time
to file all necessary federal, state, and foreign income and franchise tax
returns due prior to the date hereof and has paid or accrued all taxes shown
as due thereon, and, other than as reflected in the Company's balance sheet
for the year ended December 31, 2003 (included in the Company's report on Form
6-K submitted to the SEC on January 29, 2004, the Company has no knowledge of
any material tax deficiency which has been or might be asserted or threatened
against it.
(q) Insurance. The Company and each of the Subsidiaries maintains
insurance of the types and in the amounts that the Company reasonably believes
are prudent and adequate for its business, all of which insurance is in effect
as of the date hereof.
(r) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(s) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with U.S. GAAP and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(t) Transactions With Officers and Directors. Except as set forth in
Section 3(t) of the Disclosure Letter, since January 1, 2002, none of the
officers or directors of the Company has entered into any transaction with the
Company or any Subsidiary that would be required to be disclosed in the
Company's Annual Report on Form 20-F.
(u) General Solicitation. Neither the Company nor any other person
or entity authorized by the Company to act on its behalf has engaged in any form
of general solicitation or general advertising (within the meaning of
Regulation D) of investors with respect to offers or sales of the Purchased
Securities.
(v) Registration Statement Matters. The Company currently meets the
eligibility requirements for use of a Form F-3 Registration Statement for the
resale of the Purchased Shares and the Warrant Shares by the Purchasers.
Assuming the completion and timely delivery of the Registration
Statement/Suitability Questionnaire (attached hereto as Appendix II) (the
"Registration Statement Questionnaire") by each Purchaser to the Company, the
Company is not aware of any facts or circumstances that would prohibit or
delay the preparation and filing of a registration statement with respect to
the Registrable Shares (as defined below).
(w) No Integrated Offering. Neither the Company, nor any Affiliate
(as hereafter defined) of the Company, nor, any person acting on its behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Purchased Securities to be integrated with prior
offerings by the Company for purposes of the Securities Act, any applicable
state securities laws or any applicable shareholder approval provisions,
including, without limitation, under Nasdaq rules and regulations, nor will
the Company take any action or steps that would cause the offering of the
Purchased Securities to be integrated with other offerings.
(x) Nasdaq Listing Matters. The Ordinary Shares are registered
pursuant to Section 12(g) of the Exchange Act and are listed on Nasdaq under
the ticker symbol "VOCL." The Company has not received any notice that it is
not currently in compliance with the listing or maintenance requirements of
Nasdaq. The issuance and sale of the Purchased Securities under this Agreement
do not contravene the rules and regulations of Nasdaq. The Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Ordinary Shares under the Exchange Act or de-listing the
Ordinary Shares from Nasdaq.
(y) No Manipulation of Stock. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Ordinary Shares to facilitate the sale or resale of the
Purchased Securities or the Warrant Shares.
(z) Investment Company. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and
the rules and regulations of the SEC thereunder.
(aa) Application of Takeover Protections. There is no control share
acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company's Articles of Association (or similar charter documents) that would
become applicable to the Purchasers as a result of the issuance of the
Purchased Securities and the Warrant Shares.
(bb) Disclosure. The Company's representations and warranties set
forth in this Agreement are true and correct in all material respects (except
for such representations and warranties that are qualified by a reference to
"Material Adverse Effect" or any other similar qualification, which are true
and correct) and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE
PURCHASERS. Each Purchaser hereby represents and warrants to the Company,
severally and not jointly, and agrees as follows:
(a) Organization, Good Standing and Qualification. Such Purchaser
has all corporate, limited liability company, partnership, trust or individual
power and authority required to enter into this Agreement and the other
agreements, instruments and documents contemplated hereby and consummate the
transactions contemplated hereby and thereby.
(b) Due Authorization. The execution, delivery and performance of
all obligations of such Purchaser under this Agreement have been duly authorized
by all necessary corporate, limited liability company, partnership, trust or
individual, as the case may be, action on the part of such Purchaser. This
Agreement constitutes such Purchaser's legal, valid and binding obligation,
enforceable against such Purchaser in accordance with its terms, except (i) as
may be limited by (1) applicable bankruptcy, insolvency, reorganization
moratorium, liquidation, conservatorship, receivership or other similar laws
of general application relating to or affecting the enforcement of creditors'
rights generally or other laws of general application relating to or affecting
the enforcement of creditors' rights generally or (2) the effect of rules of
law governing the availability of equitable principles of general application
or (ii) as rights to indemnity or contribution may be limited under federal or
state securities laws or by principles of public policy thereunder.
(c) Non-Contravention. The execution, delivery and performance of
this Agreement by such Purchaser, and the consummation by such Purchaser of
the transactions contemplated hereby, do not (i) contravene or conflict with
the organizational documents of such Purchaser; nor (ii) constitute a
violation of any provision of any federal, state, local or foreign law, rule,
regulation, order or decree applicable to such Purchaser.
(d) Litigation. Such Purchaser is not a party to or subject to the
provisions of, any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality that is reasonably likely to prevent,
enjoin, alter, challenge or delay the consummation of the transactions
contemplated by this Agreement.
(e) Purchase for Own Account. The Purchased Securities are being
acquired for investment for such Purchaser's own account, not as a nominee or
agent, in the ordinary course of business, and not with a view to the
distribution thereof in a manner which would violate the Securities Act. Such
Purchaser (if not an individual) also represents that it has not been formed
for the specific purpose of acquiring the Purchased Securities. Such Purchaser
does not have any agreement or understanding, whether or not legally binding,
direct or indirect, with any other person or entity, to sell or otherwise
distribute the Purchased Securities. Notwithstanding the foregoing, the
parties hereto acknowledge the Purchaser's right at all times to sell or
otherwise dispose of all or any part of such securities in compliance with
applicable federal and state securities laws and as otherwise contemplated by
this Agreement.
(f) Investment Experience. Such Purchaser understands that the
purchase of the Purchased Securities involves substantial risk. Such Purchaser
has experience as an investor in securities of companies and acknowledges that
such Purchaser is able to bear the economic risk of its investment in the
Purchased Securities and has such knowledge and experience in financial or
business matters to be capable of evaluating the merits and risks of this
investment in the Purchased Securities and protecting such Purchaser's own
interests in connection with this investment.
(g) Status of Purchaser. Such Purchaser is an "accredited investor,"
as such term is defined in Regulation D of the Securities Act ("Regulation
D"). Such Purchaser acknowledges that the Purchased Shares and the Warrant
Shares were not offered to such Purchaser by means of any form of general or
public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media, or broadcast over television or radio, or (ii) any seminar or meeting
to which such Purchaser was invited by any of the foregoing means of
communications.
(h) Reliance Upon Purchaser's Representations. Such Purchaser
understands that the issuance and sale of the Purchased Securities to it will
not be registered under the Securities Act on the ground that such issuance
and sale will be exempt from registration under the Securities Act pursuant to
Section 4(2) thereof, and that the Company's reliance on such exemption is
based on each Purchaser's representations set forth herein and in the
Registration Statement Questionnaire.
(i) Receipt of Information. Such Purchaser has had an opportunity
to ask questions and receive answers from the Company regarding the terms and
conditions of the issuance and sale of the Purchased Securities and the
business, properties, prospects and financial condition of the Company and to
obtain any additional information requested and has received and considered
all information such Purchaser deems relevant to make an informed decision to
purchase the Purchased Securities. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its
representatives or counsel thereof shall modify, amend or affect such
Purchaser's right to rely on the truth, accuracy and completeness of such
information and the Company's representations and warranties contained in this
Agreement.
(j) Restricted Securities. Such Purchaser understands that the
Purchased Securities have not been, and will not upon issuance be, registered
under the Securities Act and such Purchaser will not sell, offer to sell,
assign, pledge, hypothecate or otherwise transfer any of the Purchased
Securities unless (i) pursuant to an effective registration statement under
the Securities Act, (ii) such Purchaser provides the Company with an opinion
of counsel, in a form reasonably acceptable to the Company, to the effect that
a sale, assignment or transfer of the Purchased Securities may be made without
registration under the Securities Act and the transferee agrees to be bound by
the terms and conditions of this Agreement, or (iii) such Purchaser provides
the Company with reasonable assurances (in the form of seller and broker
representation letters) that the Purchased Shares or the Warrant Shares, as
the case may be, can be sold pursuant to (A) Rule 144 promulgated under the
Securities Act, as such rule may be amended from time to time ("Rule 144") or
(B) Rule 144(k) promulgated under the Securities Act, in each case following
the applicable holding period set forth therein. Notwithstanding anything to
the contrary contained in this Agreement, including but not limited to in
Section 5(c)(i) below, such Purchaser may transfer (without restriction and
without the need for an opinion of counsel) the Purchased Shares or the
Warrant Shares, as the case may be, to its Affiliates (as defined below)
provided that each such Affiliate is an "accredited investor," as such term is
defined in Regulation D and such Affiliate agrees to be bound by the terms and
conditions of this Agreement.
For the purposes of this Agreement, an "Affiliate" of any specified
Purchaser means any other person or entity which directly or indirectly
through one or more intermediaries controls, is controlled by or is under
common control with, such specified Purchaser. For purposes of this
definition, "control" as used with respect to any person or entity means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of such person or entity, whether through the
ownership of voting securities, by contract or otherwise.
(k) Legends.
(i) Purchased Shares and Warrant Shares. Such Purchaser agrees that
the certificates representing the Purchased Shares and the Warrant Shares
shall bear a legend in substantially the following form (in addition to any
legend required by applicable state securities or "blue sky" laws):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR WITH ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (I) A REGISTRATION
STATEMENT COVERING SUCH SECURITIES EFFECTIVE UNDER THE SECURITIES
ACT OR (II) THE TRANSACTION IS EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AND, IF THE COMPANY REQUESTS, AN OPINION
SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN RENDERED
BY COUNSEL."
The Company acknowledges and agrees that the Purchasers may from time
to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Purchased
Securities and Warrant Shares to a financial institution that is an
"accredited investor" as defined in Rule 501(a) under the Securities Act and,
if required under the terms of such arrangement, the Purchasers may transfer
pledged or secured Purchased Securities and Warrant Shares to the pledgees or
secured parties. Such a pledge or transfer would not be subject to approval of
the Company and no legal opinion of legal counsel of the pledgee, secured
party or pledgor shall be required in connection therewith. Further, no notice
shall be required of such pledge. Following (i) the exercise by the plegee or
other secured party of its rights with respect to such pledged Purchased
Securities and/or Warrant Shares and (ii) the receipt by the Company of a
written request from such pledgee or other secured party to prepare and file
any prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act required to appropriately amend the
list of selling shareholders thereunder to include in such list such pledgee
or other secured party, the Company will, at the expense of the Purchaser who
shall have pledged or otherwise granted a security interest in its Purchased
Securities and/or Warrant Shares to such pledgee or other secured party,
execute and deliver such reasonable documentation as such pledgee or secured
party may reasonably request in connection with such pledge or transfer of the
Purchased Securities and/or Warrant Shares, including the preparation and
filing of such required prospectus supplement.
In addition, such Purchaser agrees that the Company may place stop
transfer orders with its transfer agent with respect to such certificates in
order to implement the restrictions on transfer set forth in this Agreement.
The appropriate portion of the legend and the stop transfer orders will be
removed promptly upon delivery to the Company of such satisfactory evidence as
reasonably may be required by the Company that such legend or stop orders are
not required to ensure compliance with the Securities Act.
(ii) Purchased Warrants. Such Purchaser agrees that the
Purchased Warrants shall bear the following legend:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR WITH ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (I) A
REGISTRATION STATEMENT COVERING SUCH SECURITIES IS EFFECTIVE UNDER
THE SECURITIES ACT OR (II) THE TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND, IF THE COMPANY REQUESTS,
AN OPINION SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN
RENDERED BY COUNSEL."
(l) Restrictions on Transfer.
(i) Prior to any proposed transfer of the Purchased Securities
or the Warrant Shares, as the case may be, unless there is in effect a
registration statement under the Securities Act covering such Purchased
Securities or Warrant Shares, as the case may be, such Purchaser shall give
written notice to the Company of such Purchaser's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall be accompanied by either (i)
a written opinion of legal counsel who shall be reasonably satisfactory to the
Company addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer
of the Purchased Securities or the Warrant Shares, as the case may be, may be
effected without registration under the Securities Act or (ii) a "no action"
letter from the U.S. Securities and Exchange Commission (the "SEC") to the
effect that the transfer of the Purchased Securities or the Warrant Shares, as
the case may be, without registration will not result in a recommendation by
the staff of the SEC that enforcement action be taken with respect thereto,
whereupon such Purchaser shall be entitled to transfer the Purchased
Securities or the Warrant Shares, as the case may be, in accordance with the
terms of notice delivered by such Purchaser to the Company.
(ii) Notwithstanding the provisions of Section 4(l)(i) above,
no registration statement, opinion of counsel or "no action" letter shall be
necessary for a transfer (i) by a Purchaser that is a partnership to a partner
of such partnership or a retired partner of such partnership who retires after
the date of this Agreement, (ii) by a Purchaser that is a limited liability
company to a member of such limited liability company, (iii) by a Purchaser
that is a partnership or limited liability company to the estate of any
partner, retired partner, or member thereof, (iv) by any partner or member of
a Purchaser that is a partnership or limited liability company by gift, will
or intestate succession to such partner or member's spouse or to the siblings,
lineal descendants, ancestors of such partner or member or his or her spouse
or (v) by a Purchaser that is a corporation to its shareholders or Affiliates,
if the transferee agrees in writing to be subject to the terms and conditions
hereof to the same extent as if he or she were an original Purchaser
hereunder.
(m) Questionnaires. Such Purchaser has completed or caused to be
completed the Stock Certificate Questionnaire and the Registration Statement
Questionnaire for use in preparation of the Registration Statement (as defined
in Section 5(a)(ii) below), and the answers to such questionnaires are true
and correct as of the date of this Agreement; provided, that such Purchaser
shall be entitled to update such information by providing written notice
thereof to the Company before the effective date of the Registration
Statement.
(n) Restrictions on Short Sales. Such Purchaser represents, warrants
and covenants that neither such Purchaser nor any Affiliate of such Purchaser
which (x) has knowledge of the transactions contemplated hereby, (y) has or
shares discretion relating to such Purchaser's investments or trading or
information concerning such Purchaser's investments, including in respect of
the Purchased Securities, or (z) is subject to such Purchaser's review or
input concerning such Affiliate's investments or trading, has or will,
directly or indirectly, during the period beginning on the date on which X.X.
Xxxxxxxxx, Towbin, a financial advisor to the Company, first contacted such
Purchaser regarding the transactions contemplated by this Agreement (and
involving the Company) and ending on the Closing Date, engage in (i) any
"short sales" (as such term is defined in Rule 3b-3 promulgated under the
Exchange Act) of the Purchased Shares and/or the Warrant Shares, including,
without limitation, the maintaining of any short position with respect to,
establishing or maintaining a "put equivalent position" (within the meaning of
Rule 16a-1(h) under the Exchange Act) with respect to, entering into any swap,
derivative transaction or other arrangement (whether any such transaction is
to be settled by delivery of Ordinary Shares, other securities, cash or other
consideration) that transfers to another, in whole or in part, any economic
consequences or ownership, or otherwise dispose of, any of the Purchased
Securities by such Purchaser or (ii) any hedging transaction which establishes
a net short position with respect to the Purchased Securities (clauses (i) and
(ii) together, a "Short Sale"); except for (A) Short Sales by such Purchaser
or an Affiliate of such Purchaser which was, prior to the date on which such
Purchaser was first contacted regarding the
transactions contemplated by this Agreement, a market maker for the Ordinary
Shares, provided that such Short Sales are in the ordinary course of business
of such Purchaser or Affiliate of such Purchaser and are in compliance with
the Securities Act, the rules and regulations of the Securities Act and such
other securities laws as may be applicable, (B) Short Sales by such Purchaser
or an Affiliate of such Purchaser which by virtue of the procedures of such
Purchaser are made without knowledge of the transactions contemplated by this
Agreement or (C) Short Sales by such Purchaser or an Affiliate of such
Purchaser to the extent that such Purchaser or Affiliate of such Purchaser is
acting in the capacity of a broker-dealer executing unsolicited third-party
transactions.
(o) Independent Investment. Such Purchaser has not agreed to act
with any other Purchaser for the purpose of acquiring, holding, voting or
disposing of any of the Purchased Securities or the Warrant Shares for purposes
of Section 13(d) under the Exchange Act, and such Purchaser is acting
independently with respect to its investment in the Purchased Securities.
(p) Confidentiality. Such Purchaser agrees to use any information it
receives in the course of and in connection with this transaction for the sole
purpose of evaluating a possible investment in the Purchased Securities and
such Purchaser hereby acknowledges that it is prohibited from reproducing or
distributing any such information, this Agreement, or any other offering
materials provided by the Company in connection with such Purchaser's
consideration of its investment in the Company, in whole or in part, or
divulging or discussing any of their contents except to its advisors and
representatives for the purpose of evaluating such investment. The foregoing
agreements shall not apply to any information that (a) is or becomes publicly
available through no fault of such Purchaser, (b) was already known to such
Purchaser prior to its disclosure by the Company to the Purchasers, as
evidenced by documentation or other evidence reasonably satisfactory to the
Company, (c) is or becomes available to such Purchaser on a non-confidential
basis from a source other than the Company (so long as such Purchaser is not
aware such disclosure is in breach of a confidentiality obligation to the
Company), as evidenced by documentation or other evidence reasonably
satisfactory to the Company, (d) is independently developed by such
Purchaser's personnel without access to or use of the confidential information
received from the Company, as evidenced by documentation or other evidence
reasonably satisfactory to the Company or (e) is legally required to be
disclosed by such Purchaser under operation of law or judicial or other
governmental order; provided, however, that if such Purchaser is requested or
ordered to disclose any such information pursuant to any judicial or other
governmental order or any other applicable legal procedure, it shall provide
the Company with reasonably prompt notice of any such request or order to
enable the Company to seek an appropriate protective order and shall provide
the Company with reasonable assistance in obtaining such protective order at
the Company's sole expense. The covenant in this Section 4(p) shall expire on
the second anniversary of the Closing Date.
5. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT.
(a) Form D Filing; Registration of the Purchased Shares and Warrant
Shares. The Company hereby agrees that it shall:
(i) file in a timely manner a Form D relating to the sale of the
Purchased Securities under this Agreement, pursuant to Regulation D;
(ii) prepare and file with the SEC as soon as practicable and
in no event later than thirty (30) days following the Closing Date, a
registration statement on Form F-3 (the "Registration Statement"), to enable the
resale of the Purchased Shares and the sale of the Warrant Shares (together with
any Ordinary Shares issued or issuable as a dividend or other distribution with
respect to, or in exchange for, or in replacement of, the Purchased Shares or
the Warrant Shares, the "Registrable Shares") by the Purchasers from time to
time on Nasdaq and use all commercially reasonable efforts to cause such
Registration Statement to be declared effective as promptly as possible after
filing, but in any event, within ninety (90) days following the Closing Date
or, in the event of a review of the Registration Statement by the SEC, within
one hundred twenty (120) days following the Closing Date, and to remain
continuously effective until the earlier of (1) the second anniversary of the
effective date of the Registration Statement, (2) the date on which all
Registrable Shares purchased by the Purchasers pursuant to this Agreement have
been sold thereunder or (3) the date on which the Registrable Shares can be
sold by holders thereof pursuant to Rule 144(k) promulgated under the
Securities Act (the "Registration Period"). If the Company receives
notification from the SEC that the Registration Statement will receive no
action or review from the SEC, then the Company will use its commercially
reasonable efforts to cause the Registration Statement to become effective
within five (5) business days after such SEC notification. In the event that,
following the Closing Date and prior to the end of the Registration Period,
the Company does not meet the requirements for the use of Form F-3, the
Company shall use such other form as is available for the registration of the
Purchased Shares and the Warrant Shares, and shall convert such other form
into Form F-3, or file a replacement registration statement on Form F-3,
promptly after the first date on which it meets such requirements;
(iii) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the Prospectus (as defined below) used in connection therewith as may be
necessary to keep the Registration Statement effective at all times until the
end of the Registration Period;
(iv) furnish to the Purchasers, with respect to the Registrable
Shares registered under the Registration Statement, such reasonable number of
copies of any prospectus in conformity with the requirements of the Securities
Act and such other documents as any Purchaser may reasonably request in
writing, in order to facilitate the public sale or other disposition of all or
any of the Registrable Shares by such Purchasers;
(v) use its commercially reasonable efforts to file documents
required of the Company for normal blue sky clearance in states specified in
writing by the Purchasers; provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(vi) take all such action as is required of it to cause the
Registrable Shares to be listed on Nasdaq prior to or on the Closing Date;
(vii) promptly notify the Purchasers in writing of the
effectiveness of the Registration Statement on the same day the Registration
Statement has been declared effective;
(viii) promptly notify the Purchasers in writing of the
existence of any fact or the happening of any event, during the Registration
Period (but not as to the substance of any such fact or event), that makes any
statement of a material fact made in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein, untrue, or that requires the making of any additions to or changes in
the Registration Statement or the Prospectus in order to make such statements
not misleading (provided, however, that no notice by the Company shall be
required pursuant to this subsection (viii) in the event that the Company
either contemporaneously files a prospectus supplement to update the
Prospectus or submits a Form 6-K or files another Exchange Act report that is
incorporated by reference into the Registration Statement, which, in either
case, contains the requisite information with respect to such material event
that results in such Registration Statement no longer containing any such
untrue or misleading statements);
(ix) furnish to each Purchaser, upon written request, from the
date of this Agreement until the end of the Registration Period, one copy of its
annual report on Form 20-F and any Form 6-Ks filed with the SEC pursuant to
the Exchange Act and the rules and regulations promulgated thereunder; and
(x) bear all expenses in connection with the procedures
described in paragraphs (i) through (ix) of this Section 5(a) and the
registration of the Registrable Shares pursuant to the Registration Statement
other than fees and expenses, if any, of legal counsel or other advisers to the
Purchasers or underwriting discounts, brokerage fees and commissions incurred
by the Purchasers, if any.
It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Section 5(a) with respect to Registrable
Shares held by a Purchaser that such Purchaser shall timely furnish to the
Company a completed Registration Statement Questionnaire on or before the
Closing Date and such other written information regarding such Purchaser, the
Registrable Shares to be sold by such Purchaser, and the intended method of
disposition of the Registrable Shares as the Company may deem necessary or
advisable to effect the registration of the Registrable Shares. The Purchasers
shall update such information as and when necessary by written notice to the
Company.
(b) Liquidated Damages.
(i) Delay in Filing or Effectiveness of Registration Statement.
In the event that the Registration Statement is not declared effective within
ninety (90) days following the Closing Date or, in the event of a review of
the Registration Statement by the SEC, within one hundred twenty (120) days
following the Closing Date, the Company shall pay to each Purchaser (except
for any Purchaser whose failure to provide information as required hereunder
causes a delay in filing or in obtaining effectiveness) liquidated damages, in
cash, in an amount equal to one percent (1%) of the total purchase price of
the Purchased Securities purchased by such Purchaser pursuant to this
Agreement (a "Liquidated Damages Payment"). For each successive thirty day
period (or portion thereof) thereafter, until the Registration Statement is
filed or becomes effective, as the case may be, the Company shall pay to each
Purchaser (except for any Purchaser whose failure to provide information as
required hereunder causes a delay in filing or in obtaining effectiveness) an
additional Liquidated Damages Payment in cash; provided, however, that in the
case of any such successive period of less than thirty days, the additional
Liquidated Damages Payment shall be calculated on a pro rata basis based on
the number of days actually elapsed in such period. Each Liquidated Damages
Payment payable in respect of a successive thirty-day period (or portion
thereof) shall be payable at the end of such successive thirty-day period (or
portion thereof).
(ii) Lapse in Effectiveness of Registration Statement. In the
event that the Registration Statement is filed and declared effective but,
during the Registration Period, ceases to be effective or useable or the
prospectus included in the Registration Statement (the "Prospectus", as amended
or supplemented by any prospectus supplement and by all other amendments thereto
and all material incorporated by reference in such Prospectus) ceases to be
usable, in either case, in connection with resales of Registrable Shares,
without such lapse being cured within ten (10) business days (the "Cure
Period") by a post-effective amendment to the Registration Statement, a
supplement to the Prospectus or a report filed with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such lapse,
then the Company shall pay to each Purchaser liquidated damages (in addition
to the rights and remedies available to each Purchaser under applicable law
and this Agreement), for the period from and including the first day following
the expiration of the Cure Period until, but excluding, the earlier of (1) the
date on which such failure is cured and (2) the date on which the Registration
Period expires, at a rate equal to one percent (1%) for each successive
thirty-day period (or portion thereof) of the total purchase price of the
Purchased Securities purchased by such Purchaser pursuant to this Agreement;
provided, however, that in the case of any such successive period of less than
thirty days, the additional liquidated damages shall be calculated on a pro
rata basis based on the number of days actually elapsed in such period. Such
liquidated damages shall be payable in cash at the end of such successive
thirty-day period (or portion thereof).
(c) Transfer of Registrable Shares After Registration; Suspension.
(i) The Purchasers agree that they will not offer to sell or
make any sale, assignment, pledge, hypothecation or other transfer with respect
to the Registrable Shares that would constitute a sale within the meaning of the
Securities Act except pursuant to either (1) the Registration Statement, (2)
Rule 144 or (3) any other exemption from registration under the Securities
Act, and that they will promptly notify the Company of any changes in the
information set forth in the Registration Statement after it is prepared
regarding such Purchaser or its plan of distribution to the extent required by
applicable law.
(ii) In addition to any suspension rights under paragraph (iii)
below, upon the happening of any pending corporate development, public filing
with the SEC or similar event, that, in the judgment of the Company's Board of
Directors, renders it advisable to suspend the use of the Prospectus or upon
the request by an underwriter in connection with an underwritten public
offering of the Company's securities, the Company may, on not more than two
(2) occasions for not more than thirty (30) days on each such occasion,
suspend use of the Prospectus, on written notice to each Purchaser (which
notice will not disclose the content of any material non-public information
and will indicate the date of the beginning and end of the intended period of
suspension, if known), in which case each Purchaser shall discontinue
disposition of Registrable Shares covered by the Registration Statement or
Prospectus until copies of a supplemented or amended Prospectus are
distributed to the Purchasers or until the Purchasers are advised in writing
by the Company that sales of Registrable Shares under the applicable
Prospectus may be resumed and have received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such Prospectus; provided, however, that the Company may not exercise
its right under this paragraph (ii) prior to the three month anniversary of
the date of this Agreement. The suspension and notice thereof described in
this Section 5(c)(ii) shall be held by each Purchaser in strictest confidence
and shall not be disclosed by such Purchaser.
(iii) Subject to paragraph (iv) below, in the event of: (1) any
request by the SEC or any other federal or state governmental authority during
the Registration Period for amendments or supplements to a Registration
Statement or related prospectus or for additional information, (2) the
issuance by the SEC or any other federal or state governmental authority of
any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (3) the receipt by the Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose, or (4) any
event or circumstance which necessitates the making of any changes in the
Registration Statement or Prospectus, or any document incorporated or deemed
to be incorporated therein by reference, so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or any omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of the Prospectus, it will not contain any untrue statement of a material fact
or any omission to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, then the Company shall deliver a
certificate in writing to the Purchasers (the "Suspension Notice") to the
effect of the foregoing (which notice will not disclose the content of any
material non-public information and will indicate the date of the beginning
and end of the intended period of suspension, if known), and, upon receipt of
such Suspension Notice, the Purchasers will discontinue disposition of
Registrable Shares covered by the Registration Statement or Prospectus (a
"Suspension") until the Purchasers' receipt of copies of a supplemented or
amended Prospectus prepared and filed by the Company, or until the Purchasers
are advised in writing by the Company that the current Prospectus may be used,
and have received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such prospectus. In
the event of any Suspension, the Company will use its commercially reasonable
efforts to cause the use of the Prospectus so suspended to be resumed as soon
as possible after delivery of a Suspension Notice to the Purchasers. The
Suspension and Suspension Notice described in this Section 5(c)(iii) shall be
held by each Purchaser in strictest confidence and shall not be disclosed by
such Purchaser.
(iv) Provided that a Suspension is not then in effect, the
Purchasers may sell Registrable Shares under the Registration Statement,
provided that the selling Purchaser arranges for delivery of a current
Prospectus to the transferee of such Registrable Shares to the extent such
delivery is required by applicable law.
(v) In the event of a sale of Registrable Shares by a Purchaser,
such Purchaser must also deliver to the Company's transfer agent, with a copy to
the Company, a certificate of subsequent sale reasonably satisfactory to the
Company, so that ownership of the Registrable Shares may be properly
transferred. The Company will cooperate to facilitate the timely preparation
and delivery of certificates (unless otherwise required by applicable law)
representing Registrable Shares sold.
(d) Indemnification. For the purpose of this Section 5(d), the term
"Registration Statement" shall include any preliminary or final Prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 5(a).
(i) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each of the Purchasers, their respective officers,
directors, agents and employees, and each person, if any, who controls any
Purchaser within the meaning of the Securities Act, to the fullest extent
permitted by law, against any and all losses, claims, damages, liabilities or
expenses, joint or several, to which such Purchasers, such officers,
directors, agents or employees, or such controlling persons may become
subject, under the Securities Act, the Exchange Act or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof as contemplated below) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them, in light of the
circumstances under which they were made, not misleading, or (ii) any
inaccuracy in or breach of the representations, warranties or covenants made
by the Company herein, and will reimburse each Purchaser, each of its
respective directors, officers, agents and employees, and each such
controlling person for any reasonable out-of-pocket legal and other expenses
incurred by such Purchaser, such director, officer, agent or employee, or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage, liability, expense or
action arises out of or is based upon (1) an untrue statement or alleged
untrue statement or omission or alleged omission in the Registration
Statement, the Prospectus or any amendment to or supplement of the
Registration Statement or the Prospectus made in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of the Purchaser demanding such indemnification expressly for use in the
Registration Statement or the Prospectus, (2) the failure of such Purchaser to
comply with the covenants and agreements contained in this Agreement
respecting resale of the Purchased Shares or the sale of the Warrant Shares,
or (3) any untrue statement or omission of a material fact required to make
such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to such Purchaser before the
pertinent sale or sales by such Purchaser.
(ii) Indemnification by each Purchaser. Each Purchaser will
severally and not jointly indemnify and hold harmless the Company, each of its
directors, officers, agents and employees, and each person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages, liabilities or expenses to which the Company, its
directors, officers, agents and employees, or any controlling persons may
become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with the written consent of such Purchaser, which consent shall not be
unreasonably withheld) insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon (i) any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement to the Registration Statement or Prospectus, or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Purchaser expressly for use therein, or
(ii) any inaccuracy in or breach of the representations, warranties or
covenants made by such Purchaser herein and such Purchaser will reimburse the
Company, each of its directors, officers, agents and employees, and any
controlling persons for any reasonable legal and other expense incurred by the
Company, its directors, officers, agents and employees, and any controlling
persons, in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action;
provided, however, that such Purchaser shall not be liable for any such untrue
or alleged untrue statement or omission or alleged omission with respect to
which such Purchaser has delivered to the Company in writing a correction of
such untrue or alleged untrue statement or omission or alleged omission before
the occurrence of the event from which such loss, claim, damage, liability or
expense was incurred. Notwithstanding the provisions of this Section 5(d),
such Purchaser shall not be liable for any indemnification obligation under
this Agreement in excess of the aggregate amount of net proceeds received by
such Purchaser from the sale of the Registrable Shares pursuant to the
Registration Statement.
(iii) Indemnification Procedure.
(1) Promptly after receipt by an indemnified party under
this Section 5(d) of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 5(d), promptly notify the indemnifying
party in writing of the claim and provide to the indemnifying party copies of
all written documents relating to such threatened or commenced action; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise under the indemnity agreement contained in this Section 5(d) or
otherwise, to the extent it is not prejudiced as a result of such failure.
(2) In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it or other indemnified parties
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 5(d) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless:
a) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party, representing all of the
indemnified parties who are parties to such action); or
b) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action against
the indemnified party,
in each of which cases the reasonable out-of-pocket fees and expenses
of counsel for the indemnified party shall be at the expense of the
indemnifying party.
(iv) Contribution. If the indemnification provided for in this
Section 5(d) is required by its terms but is for any reason held to be
unavailable to, or is otherwise insufficient to hold harmless, an indemnified
party under this Section 5(d) with respect to any losses, claims, damages,
liabilities or expenses referred to in this Agreement, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred
to in this Agreement:
(1) in such proportion as is appropriate to reflect the
relative faults of the Company and the Purchasers in connection with the
statements or omissions or inaccuracies in the representations and warranties
in this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations, or
(2) if the allocation provided by clause (1) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative faults referred to in clause (1) above but also the
relative benefits received by the Company and the Purchasers from the sale of
the Purchased Securities.
The respective relative benefits received by the Company on the one
hand and each Purchaser on the other shall be deemed to be in the same
proportion as the amount to which the consideration paid by such Purchaser to
the Company pursuant to this Agreement for the Registrable Shares that were
sold pursuant to the Registration Statement bears to the difference (the
"Difference") between the amount such Purchaser paid for such Registrable
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company
and each Purchaser shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate material fact relates to information supplied by the
Company or by such Purchaser and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 5(d)(iii), any
reasonable out-of-pocket legal or other fees or expenses incurred by such
party in connection with investigating or defending any such action or claim.
The provisions set forth in Section 5(d)(iii) with respect to the notice of
the threat or commencement of any threat or action shall apply if a claim for
contribution is to be made under this Section 5(d)(iv); provided, however,
that no additional notice shall be required with respect to any threat or
action for which notice has been given under Section 5(d)(iii) for purposes of
indemnification. The Company and each Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 5(d)(iv) were
determined solely by pro rata allocation (even if the Purchasers were treated
as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in this
paragraph. Notwithstanding the provisions of this Section 5(d)(iv), no
Purchaser shall be required to contribute any amount in excess of the amount
by which the Difference exceeds the amount of any damages that such Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute
pursuant to this Section 5(d)(iv) are several and not joint.
(e) Rule 144 Information. For two years after the date of this
Agreement, the Company shall file in a timely manner all reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder and shall use reasonably commercial efforts
to the extent required to enable the Purchasers to sell the Purchased Shares
and the Warrant Shares pursuant to Rule 144.
6. ADVISORY FEE. The Purchasers acknowledge that the Company intends
to pay to , as financial advisor, a fee in respect of
the sale of the Purchased Securities. Each of the parties to this Agreement
hereby represents that, on the basis of any actions and agreements by it,
there are no other brokers or finders entitled to compensation in connection
with the sale of the Purchased Securities to the Purchasers. The Company shall
indemnify and hold harmless the Purchasers from and against all fees,
commissions or other payments owing by the Company to
or any other person or firm acting on behalf of the Company hereunder.
7. CONDITIONS TO THE PURCHASERS' OBLIGATIONS TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREIN. The obligations of the Purchasers to
consummate the transactions contemplated herein are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions:
(a) Representations and Warranties True. Each of the representations
and warranties of the Company contained in Section 3 shall be true and correct
in all material respects on and as of the date hereof (provided, however, that
such qualification shall only apply to representations or warranties not
otherwise qualified by materiality).
(b) Performance. The Company shall have performed and complied in
all material respects with all of its agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing and shall have obtained all approvals, consents
and qualifications necessary to complete the purchase and sale described
herein; provided, however, that the Company may furnish to each Purchaser a
facsimile copy of the Warrants and of the stock certificate representing the
Purchased Shares, with the original Warrant and original stock certificate
held in trust by counsel for the Company until delivery thereof on the next
business day.
(c) Compliance Certificate. The Company will have delivered to each
of the Purchasers a certificate signed on its behalf by its Chief Executive
Officer or Chief Financial Officer certifying that the conditions specified in
Sections 7(a) and 7(b) hereof have been fulfilled.
(d) Agreement. The Company shall have executed and delivered to the
Purchasers this Agreement.
(e) Securities Exemptions. The offer and sale of the Purchased
Securities to each of the Purchasers pursuant to this Agreement shall be
exempt from the registration requirements of the Securities Act and the
registration and/or qualification requirements of all applicable state
securities laws.
(f) No Suspension of Trading or Listing of Ordinary Shares. The
Ordinary Shares (i) shall be designated for quotation or listed on Nasdaq and
(ii) shall not have been suspended from trading on Nasdaq.
(g) Secretary's Certificate. The Company shall have delivered to the
Purchasers a certificate of the Company executed by the Company's Secretary
(or other authorized officer) attaching and certifying to the truth and
correctness of (1) the Articles of Association, and (2) the resolutions
adopted by the Board in connection with the transactions contemplated by this
Agreement.
(h) Opinion of Company Counsel. Each of the Purchasers will have
received an opinion, dated as of Closing Date, from (i) Meitar, Liquornik,
Geva & Leshem, Brandwein, Israeli counsel to the Company, in the form attached
hereto as Exhibit C, and (ii) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, U.S.
counsel to the Company, in the form attached as Exhibit D.
(i) No Statute or Rule Challenging Transaction. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or
any self-regulatory organization or Trading Market or the staff of any of the
foregoing, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
(j) Amount Invested. The Purchasers under this Agreement shall have
tendered at closing not less than $3,000,000 in the aggregate for the
Purchased Securities.
(k) Reservation of Ordinary Shares. The Company shall have reserved
out of its authorized and unissued Ordinary Shares, solely for the purpose of
facilitating the exercise of the Warrants, a number of Ordinary Shares equal
to the aggregate number of Warrant Shares issuable upon exercise of the
Purchased Warrants assuming such Purchased Warrants were granted on the
Closing Date (after giving effect to the Purchased Shares and the Purchased
Warrants to be issued on the Closing Date and assuming all such Purchased
Warrants were fully convertible or exercisable on such date regardless of any
limitation on the timing or amount of such conversions or exercises).
(l) Other Actions. The Company shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Purchasers in
writing in connection with the transactions contemplated hereby.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREIN. The obligations of the Company to consummate
the transactions contemplated herein are subject to the fulfillment or waiver,
on or before the Closing, of each of the following conditions:
(a) Representations and Warranties True. Each of the representations
and warranties of the Purchasers contained in Section 4 shall be true and
correct in all material respects on and as of the date hereof (provided,
however, that such qualification shall only apply to representations and
warranties not otherwise qualified by materiality).
(b) Performance. The Purchasers shall have performed and complied in
all material respects with all of their agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by them on or before the Closing and shall have obtained all approvals,
consents and qualifications necessary to complete the purchase and sale
described herein.
(c) Agreement. Each Purchaser shall have executed and delivered to
the Company this Agreement (and the Registration Statement Questionnaire).
(d) Securities Exemptions. The offer and sale of the Purchased
Securities to the Purchasers pursuant to this Agreement shall be exempt from
the registration requirements of the Securities Act and the registration
and/or qualification requirements of all applicable state securities laws.
(e) Payment of Purchase Price. The Purchasers shall have delivered
to the Company by wire transfer of immediately available funds full payment of
the purchase price for the Purchased Securities as specified in Section 1(b).
(f) No Statute or Rule Challenging Transaction. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or
any self-regulatory organization or Trading Market or the staff of any of the
foregoing, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
(g) Other Actions. The Purchasers shall have executed such
certificates, agreements, instruments and other documents, and taken such
other actions as shall be customary or reasonably requested in writing by the
Company in connection with the transactions contemplated hereby.
9. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior
written consent of the Purchasers holding at least a majority of the total
aggregate number of Purchased Shares and Warrant Shares then outstanding
(excluding any Purchased Shares or Warrant Shares then already sold to the
public pursuant to Rule 144 or otherwise). Any Purchaser may assign its rights
under this Agreement to any person to whom such Purchaser assigns or transfers
any Purchased Securities, provided that such transferee agrees in writing to
be bound by the terms and provisions of this Agreement, and such transfer is
in compliance with the terms and provisions of this Agreement and permitted by
federal and state securities laws.
(b) No Consideration. No consideration shall be offered or paid to
any person to amend or consent to a waiver or modification of any provision of
any of this Agreement, the Warrants or any other document executed in
connection with the Purchased Securities (the "Transaction Documents") unless
the same consideration is also offered to all of the parties to the
Transaction Documents or holders of Purchased Securities, as the case may be.
(c) Governing Law; Enforcement of Judgment and Related Matters.
(i) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without regard to
conflicts of laws principles thereof. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and Federal courts sitting in the City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
(ii) Each party hereby agrees that in any suit (whether in a
court in the United States, Israel or elsewhere) seeking enforcement of this
Agreement or provisions of this Agreement (i) no defense (other than a
procedural defense) given or allowed by the laws of any other state or country
shall be interposed by any party in any such suit, action or proceeding unless
such defense is also given or allowed by the laws of the State of New York or
of the United States, (ii) if the plaintiffs therein seek a judgment in either
United States dollars or Israel currency, subject to Israel foreign currency
control regulations, no party will interpose any defense or objection to or
otherwise oppose judgment, if any, being awarded in such currencies, except to
the extent that such judgment would violate the laws of Israel, and (iii) if
the plaintiffs therein seek to have any judgment (or any aspect thereof)
awarded in Israel currency linked, for a period from entry of such judgment
until actual payment thereof in full has been made, to either or both the
consumer price index of Israel and changes in the Israel currency-United
States dollar exchange rate, no party will interpose any defense or objection
to or otherwise oppose inclusion of such linkage in any judgment except to the
extent that such judgment would violate the laws of Israel.
(iii) Each party agrees that if any payment or sum due under
this Agreement is made to or received by the party entitled to such payment or
sum (the "Payee") in a currency other than freely transferable United States
dollars, whether by judicial judgment or otherwise, the obligations of the
payor of such payment or sum (the "Payor") shall be discharged only to the
extent of the net amount of freely transferable United States dollars that the
Payee, in accordance with normal bank procedures, is able to lawfully purchase
with such amount of such other currency. To the extent the Payee are not able
to purchase sufficient United States dollars with such amount of such other
currency to discharge the obligations of the Payor, the obligations of the
Payor shall not be discharged with respect to such difference, and any such
undischarged amount will be due as a separate obligation and shall not be
affected by payment of or judgment being obtained for any other sums due under
or in respect of this Agreement. To the extent that the Payee receives any
payments with respect to such separate obligation in freely transferable
United States dollars (or currency which can be used to purchase freely
transferable United States dollars in the manner set forth above), the Payee
will return to the Payor a corresponding amount of the other currency. This
Agreement shall not be interpreted or construed with any presumption against
the party causing this Agreement to be drafted.
(d) Survival. Notwithstanding any investigation made by any party
to this Agreement, all agreements, representations and warranties of the Company
and the Purchasers contained in Sections 3 and 4 of this Agreement shall
survive until the first anniversary of the Closing Date.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(f) Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by reference.
(g) Notices. Any notices and other communications required or
permitted under this Agreement shall be in writing and shall be delivered (i)
personally by hand or by courier, (ii) mailed by United States first-class
mail, postage prepaid or (iii) sent by facsimile directed (A) if to any
Purchaser, at such Purchaser's address or facsimile number set forth on
Schedule A to this Agreement, or at such address or facsimile number as such
Purchaser may designate by giving at least ten (10) days' advance written
notice to the Company or (b) if to the Company, to its address or facsimile
number set forth below, or at such other address or facsimile number as the
Company may designate by giving at least ten (10) days' advance written notice
to the Purchasers. All such notices and other communications shall be deemed
given upon (i) receipt or refusal of receipt, if delivered personally, (ii)
three days after being placed in the mail, if mailed, or (iii) confirmation of
facsimile transfer, if faxed.
The address and facsimile number of the Company for the purpose of
this Section 9(f) are as follows:
VocalTec Communications Ltd.
0 Xxxxxx Xxxxxx
Xxxxxxxx 00000
Xxxxxx
Fax: (000) 0-000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Meitar, Liquornik, Geva & Leshem, Xxxxxxxxx
00 Xxxx Xxxxxx Xxxxxx Xx.
Xxxxx Xxx 00000
Israel
Fax: (000) 0-000-0000
Attention: Xxx Xxxxxxx
The address and facsimile number of each Purchaser is set forth on
Schedule A.
(h) Amendments and Waivers. This Agreement may be amended and the
observance of any term of this Agreement may be waived only with the written
consent of the Company and the Purchasers holding at least seventy-five
percent (75%) of the total aggregate number of Purchased Securities then
outstanding (excluding any Purchased Shares and/or Warrant Shares then already
sold to the public pursuant to Rule 144 or otherwise). Any amendment effected
in accordance with this Section 9(g) will be binding upon the Purchasers, the
Company and their respective successors and assigns.
(i) Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its
terms.
(j) Entire Agreement. This Agreement, together with all exhibits
and schedules hereto constitute the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersede any and all
prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties with respect to the subject matter hereof.
(k) Further Assurances. From and after the date of this Agreement,
upon the request of the Company or the Purchasers, the Company and the
Purchasers will execute and deliver such instruments, documents or other
writings, and take such other actions, as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
(l) Meaning of "Include" and "Including". Whenever in this Agreement
the word "include" or "including" is used, it shall be deemed to mean
"include, without limitation" or "including, without limitation," as the case
may be, and the language following "include" or "including" shall not be
deemed to set forth an exhaustive list.
(m) Fees, Costs and Expenses. Except as otherwise provided for in
this Agreement, all fees, costs and expenses (including attorneys' fees and
expenses) incurred by any party hereto in connection with the preparation,
negotiation and execution of this Agreement and the exhibits and schedules
hereto and the consummation of the transactions contemplated hereby and
thereby (including the costs associated with any filings with, or compliance
with any of the requirements of any governmental authorities), shall be the
sole and exclusive responsibility of such party.
(n) 6-K Submission and Publicity. On the Closing Date, the Company
shall submit a Report on Form 6-K with the SEC describing the terms of the
transactions contemplated by this Agreement and attaching this Agreement and
the press release referred to below as exhibits to such submission (the "6-K
Submission" including all attachments). Neither the Company nor any Purchaser
shall issue any press releases or any other public statements with respect to
the transactions contemplated by this Agreement; provided, however, that the
Company shall be entitled, without the prior approval of any Purchaser, to
issue any press release or make any other public disclosure (including a press
release (concerning the offering of the Purchased Securities) pursuant to Rule
135(c) under the Securities Act) with respect to such transactions (i) in
substantial conformity with the 6-K Submission and (ii) as is required by
applicable law, regulations, and Nasdaq rules; and, provided further, that no
such release may identify a Purchaser unless such Purchaser has consented
thereto in writing, or as required by law.
(o) Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provisions,
condition or requirement hereof, nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
(p) Stock Splits, Dividends and other Similar Events. The provisions
of this Agreement shall be appropriately adjusted to reflect any stock split,
stock dividend, reorganization or other similar event that may occur with
respect to the Company after the date hereof.
(q) Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each
Purchaser and the Company will be entitled to specific performance under this
Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action
for specific performance of any such obligation the defense that a remedy at
law would be adequate.
(r) Replacement of Shares. If any certificate or instrument
evidencing any Ordinary Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary
and reasonable indemnity, if requested. The applicants for a new certificate
or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Ordinary
Shares.
(s) Payment Set Aside. To the extent that the Company makes a
payment or payments to any Purchasers pursuant to this Agreement or any
Purchaser enforces or exercises its rights hereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
(t) Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated below:
"business day" means any day except Saturday, Sunday and any
day which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law
or other governmental action to close.
"Trading Market" means the following markets or exchanges on
which the Ordinary Shares listed or quoted for trading on the date in
question: the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market.
[Remainder of page intentionally left blank.]
* * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
VocalTec Communications Ltd.
By:____________________________________
Name: ______________________________
Title:______________________________
[PURCHASER SIGNATURE PAGES TO FOLLOW]
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF MARCH , 2004
BY AND AMONG
VOCALTEC COMMUNICATIONS LTD.
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to VocalTec
Communications Ltd. the Securities Purchase Agreement (the "Agreement") to
which this signature page is attached effective as of the date of the
Agreement, which Agreement and signature sage, together with all counterparts
of such Agreement and signature pages of the other Purchasers named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.
Number of Ordinary Shares: __________
Number of Warrant Shares: ___________
_____________________________________
"Purchaser"
Signature: __________________________
Name:________________________________
Title: ______________________________
Address: ____________________________
____________________________
____________________________
____________________________
Telephone: __________________________
Facsimile: __________________________
E-mail: _____________________________
Tax ID Number: ______________________
