EXHIBIT 99.2
[FORM OF PURCHASE AGREEMENT]
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT") is made as of the 6th day of
August, 2007, by and between Metalink Ltd. (the "COMPANY"), a company organized
under the laws of the State of Israel, with its principal offices at Xxxxx
Xxxxxxxx Xxxx, Xxxxx 00000, Xxxxxx, and the purchaser whose name and address is
set forth on the signature page hereof (the "PURCHASER").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SECURITIES. Subject to the terms
and conditions of this Agreement, the Company has authorized the issuance and
sale of up to 3,200,000 ordinary shares (the "SHARES"), par value NIS 0.10 per
share (the "ORDINARY SHARES"), of the Company and (ii) redeemable warrants, in
the form of EXHIBIT A hereto (the "WARRANTS") to purchase up to 800,000 Ordinary
Shares (the "WARRANT SHARES") at an initial exercise price equal to $8.00 per
share, subject to adjustment. The Company reserves the right to increase or
decrease the number of Shares and Warrants sold in this private placement prior
to the Closing Date (as defined below) but not below $15 million in aggregate
gross proceeds to the Company at the Closing (as such term is defined in Section
3 below) from the sale of Securities pursuant to the Agreements (as defined
below). The Shares and the Warrants are hereinafter sometimes referred to
collectively as the "SECURITIES."
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SECURITIES. At the Closing,
the Company shall, subject to the terms of this Agreement, issue and sell to the
Purchaser and the Purchaser shall buy from the Company, upon the terms and
conditions hereinafter set forth, the number of Shares and Warrants (at the
purchase price) shown below for the total purchase price at the Closing shown
below (the "AGGREGATE PURCHASE PRICE"):
Total
Number of Ordinary Number of Warrants to Purchase
Shares to be be Price Per Share in Price in US
Purchased Purchased US Dollars Dollars
------------------ --------------------- ------------------ -----------
$6.00 $
The Company proposes to enter into this same form of purchase agreement
with certain other investors (the "OTHER PURCHASERS") and expects to complete
sales of the Securities to the Other Purchasers concurrently with the sale
thereof to the Purchaser. The Purchaser and the Other Purchasers are hereinafter
sometimes collectively referred to as the "PURCHASERS," and this Agreement and
the purchase agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "AGREEMENTS." The term "PLACEMENT
AGENT" shall mean Xxxxxx Brothers Inc.
SECTION 3. DELIVERY OF THE SECURITIES AT THE CLOSING.
3.1 THE CLOSING. The completion of the purchase and sale of the
Securities shall occur at the offices of Xxxxxxxx & Xxxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "CLOSING"). The
Closing shall include the number of Shares and Warrants set forth in
Section 2, which in any event, when aggregated with the Shares and Warrants
to be purchased by the Other Purchasers in connection with the closings
under their respective Agreements shall not exceed 19.99% (on a
pre-issuance basis) of the issued and outstanding shares of capital stock
of the Company, with the Warrants being calculated on an "as exercised"
basis.
3.2 CLOSING CONDITIONS. (a) The Closing shall occur, as agreed to by
the parties hereto, within three Business Days following the execution of
this Agreement, or on such later date or at such different location as the
parties shall agree in writing, but in any event not prior to the date that
the conditions for the Closing set forth below have been satisfied or
waived by the appropriate party (the "CLOSING DATE").
(b) At the Closing, the Purchaser shall deliver, in immediately
available funds, the amount set forth under "Total Purchase Price" set
forth in Section 2 for the Securities being purchased at the Closing by
wire transfer to an account designated by the Company and the Company shall
deliver to the Purchaser one or more stock certificates corresponding to
the number of Shares set forth in Section 2 above and one or more warrant
certificates corresponding to the number of Warrants set forth in Section 2
above, each registered in the name of the Purchaser, or, if so indicated on
the Securities Certificate Questionnaire attached hereto as APPENDIX I, in
such nominee name(s) as designated by the Purchaser and bearing the legend
contained in Section 5 of this Agreement. The Company will promptly
substitute one or more replacement certificates without the legend at such
time as the Registration Statement (as defined below) becomes effective; it
being understood that Company's counsel and its transfer agent may request
customary representations from the holder in order to effect the same. The
name(s) in which the stock certificate(s) and warrant certificate(s) are to
be registered are set forth in the Securities Certificate Questionnaire
attached hereto as part of APPENDIX I.
(c) The Company's obligation to complete the purchase and sale of the
Securities and deliver such stock certificate(s) and warrant certificates
to the Purchaser at the Closing shall be subject to the following
conditions, any one or more of which may be waived by the Company:
(i) receipt by the Company of same-day funds equal to the amount
set forth under "Total Purchase Price" in Section 2 for the Securities
being purchased at the Closing;
(ii) each of the representations and warranties of the Purchaser
made herein were accurate as of and when made;
(iii) the fulfillment of those undertakings of the Purchasers to
be fulfilled at or prior to the Closing; and
(iv) no judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any
bankruptcy court or judge, or any order of or by any governmental
authority, shall have been issued, and no action or proceeding shall
have been instituted by any governmental authority, in each case that
is in effect and enjoins or prevents the consummation of the
transactions contemplated hereby.
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(d) The Purchaser's obligation to accept delivery of such stock and
Warrant certificate(s) at the Closing and to pay for the Securities
evidenced thereby shall be subject to the following conditions, any one or
more of which may be waived by the Purchaser:
(i) the Company shall have received signed Agreements from
Purchasers for the purchase of an amount of Securities with an
aggregate purchase price of at least $15 million;
(ii) each of the representations and warranties of the Company
made herein were accurate as of and when made;
(iii) the fulfillment in all material respects of those
undertakings of the Company to be fulfilled at or prior to the
Closing;
(iv) the Company shall have delivered to the Purchaser evidence
satisfactory to the Purchaser that notification to list the Shares and
Warrant Shares on the Nasdaq Global Market has been appropriately
filed;
(v) the delivery to the Purchaser by each of the U.S. and Israeli
counsels to the Company of a legal opinion dated as of the Closing
Date in substantially the form of EXHIBIT B1 and EXHIBIT B2 attached
hereto, respectively, with such changes as may be agreed to by counsel
to the Placement Agent;
(vi) Xxxxxxxxx Almagor & Co. shall have delivered to the
Placement Agent a letter, in form and substance reasonably
satisfactory to the Placement Agent, confirming that Xxxxxxxxx Almagor
& Co. is an independent registered public accounting firm within the
meaning of the Securities Act of 1933, as amended (the "SECURITIES
ACT") and the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the applicable rules and regulations thereunder,
containing statements and information of the type ordinarily included
in an accountant's "comfort letters" to placement agents, delivered
according to Statement of Auditing Standards Nos. 72 and 76 (or any
successor bulletins), with respect to the audited and unaudited
financial statements and certain financial information contained in
the SEC Documents (as defined below);
(vii) no judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any
bankruptcy court or judge, or any order of or by any governmental
authority, shall have been issued, and no action or proceeding shall
have been instituted by any governmental authority, in each case that
is in effect and enjoins or prevents the consummation of the
transactions contemplated hereby and there shall be no current stop
order or ongoing suspension, the Securities and Exchange Commission
(the "COMMISSION") or any other governmental or regulatory body with
respect to public trading in the Ordinary Shares;
(viii) the Company shall have delivered a certificate, executed
on behalf of the Company by its Secretary or General Counsel, dated as
of the Closing Date, certifying the resolutions adopted by the Board
of Directors of the Company approving the transactions contemplated by
this Agreement and the issuance of the Securities and certifying as to
the signatures and authority of persons signing this Agreement, the
Warrants and any other related documents on behalf of the Company; and
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(ix) the delivery to the Purchaser of a certificate executed by
the chief executive officer and the chief financial or accounting
officer of the Company, dated as of the Closing Date, to the effect
that the representations and warranties of the Company set forth
herein are true and correct in all material respects as of the date of
this Agreement and that the Company has complied in all material
respects with all the agreements and satisfied all the conditions
herein on its part to be performed or satisfied on or prior to the
Closing Date.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents and warrants to, and covenants with, the Purchaser
that the representations, warranties and statements contained in this Section 4
are true and correct as of the date hereof.
4.1 ORGANIZATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing under the laws of the State of Israel
and the Company is duly qualified to do business as a foreign corporation
in each jurisdiction in which qualification is required, except where
failure to so qualify would not have a Material Adverse Effect (as defined
below). The Company's subsidiaries (each a "SUBSIDIARY" and collectively
the "SUBSIDIARIES") are listed on EXHIBIT C to this Agreement. Each
Subsidiary is a direct or indirect wholly-owned subsidiary of the Company.
Each Subsidiary is duly organized, validly existing and in good standing
(where applicable) under the laws of its jurisdiction of incorporation and
is duly qualified to do business as a foreign corporation in each
jurisdiction in which qualification is required, except where failure to so
qualify would not have a Material Adverse Effect.
4.2 REPORTING COMPANY; FORM F-3. The Company is not an "ineligible
issuer" (as defined in Rule 405 promulgated under the Securities Act) and
is eligible to register all of the Shares, the Warrant Shares and any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing (the "REGISTRABLE SECURITIES") for resale by the Purchaser on a
registration statement for secondary offerings on Form F-3 under the
Securities Act. The Company is subject to the reporting requirements of the
Exchange Act, and has filed all reports required thereby. Provided that (i)
none of the Purchasers is deemed to be an underwriter with respect to any
Shares and (ii) the Purchaser provides to the Company all information about
the Purchaser that is required to be included in a registration statement
on Form F-3 for the resale of the Shares and the Warrant Shares (upon
issuance thereof) by the Purchaser, to the Company's knowledge, there exist
no facts or circumstances (including without limitation any required
approvals or waivers or any circumstances that may delay or prevent the
obtaining of accountant's consents) that reasonably could be expected to
prohibit or delay the preparation and filing of a registration statement on
Form F-3 that will be available for the resale of the Shares and Warrant
Shares by the Purchaser.
4.3 AUTHORIZED CAPITAL STOCK. The Company had duly authorized and
validly issued outstanding capitalization as set forth in the Section
entitled "Capitalization" in the PPM (as defined below) as of the date set
forth therein; the issued and outstanding Ordinary Shares have been duly
authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance with all Israeli, federal and state securities laws in
all material respects, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities,
and conform in all material respects to the description thereof contained
in the SEC Documents. Except for options to purchase 3,853,632 Ordinary
Shares outstanding as of August 5, 2007 under the Company's equity
incentive plans, and except for Securities issuable under the Agreements,
the Company does not have outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. With respect to each Subsidiary (i)
all the issued and outstanding shares of such Subsidiary's capital stock
have been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with all Israeli, federal,
state and other applicable foreign securities laws in all material
respects, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and (ii)
there are no outstanding options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares
of such Subsidiary's capital stock or any such options, rights, convertible
securities or obligations.
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4.4 ISSUANCE, SALE AND DELIVERY OF THE SECURITIES. The Securities have
been duly authorized and, when issued, delivered and paid for in the manner
set forth in this Agreement, will be validly issued, fully paid and
nonassessable, free and clear of all liens (other than liens imposed by the
Purchaser and restrictions on transfer provided for in this Agreement or
the Warrant), and will conform in all material respects to the description
thereof set forth in the SEC Documents. The Warrant Shares have been duly
authorized and, when issued, delivered and paid for in the manner to be set
forth in the Warrants, will be validly issued, fully paid and
nonassessable, free and clear of all liens (other than liens imposed by the
Purchaser and restrictions on transfer provided for in this Agreement or
the Warrant), and will conform in all material respects to the description
thereof set forth in the SEC Documents. No preemptive rights or other
rights to subscribe for or purchase any Ordinary Shares of the Company
exist with respect to the issuance and sale of the Securities by the
Company pursuant to this Agreement, or the Warrant Shares pursuant to the
Warrants, which have not been waived or complied with. No shareholder of
the Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company's intention
to file the Registration Statement) to require the Company to register the
sale of any capital stock owned by such shareholder under the Registration
Statement.
4.5 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company has full legal right, corporate power and authority to enter into
this Agreement and the Warrant and perform the transactions contemplated
hereby and thereby. This Agreement has been duly authorized, executed and
delivered by the Company. This Agreement constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to
the availability of remedies, and except as rights to indemnity or
contribution, including but not limited to, indemnification provisions set
forth in Section 7.3 of this Agreement may be limited by Israeli, federal
or state securities law or the public policy underlying such laws. The
execution and performance of this Agreement by the Company and the
consummation of the transactions herein contemplated will not violate (i)
any provision of the Articles of Association or Memorandum of Association
of the Company or the organizational documents of any Subsidiary and will
not result in the creation of any lien, charge, security interest or
encumbrance upon any material property or assets of the Company or any
Subsidiary pursuant to the terms or provisions of, or will not conflict
with, result in the breach or violation of, or constitute, either by itself
or upon notice or the passage of time or both, a default under any material
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which either of the Company or any Subsidiary
is a party or by which any of the Company or any Subsidiary or their
respective properties may be bound or affected and, in each case that would
have a Material Adverse Effect, or (ii) any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory
body, administrative agency or other governmental agency or body applicable
to the Company or any Subsidiary or any of their respective properties and
in each case that would have a Material Adverse Effect. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental agency or body is required for
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement other than such consents,
approvals or authorizations which have been obtained or will be obtained
prior to the Closing, except for compliance with federal and state
securities or "blue sky" laws, including the securities laws of the State
of Israel, applicable to the offering of the Securities. For the purposes
of this Agreement the term "MATERIAL ADVERSE EFFECT" shall mean a material
adverse effect on the condition (financial or otherwise), properties,
business or results of operations of the Company and its Subsidiaries,
taken as a whole other than any effect arising from or relating to (A)
general economic conditions, (B) the negotiation, execution, announcement
or performance of this Agreement or the consummation of the transactions
contemplated hereunder or (C) any change in the Company's stock price or
trading volume in and of itself (but not excluding the underlying cause of
any such change pursuant to this clause (C)).
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4.6 ACCOUNTANTS. Xxxxxxxxx Almagor & Co., which has expressed its
opinion with respect to the consolidated financial statements contained in
the Company's Annual Report on Form 20-F for the year ended December 31,
2006 (the "2006 20-F"), which will be incorporated by reference into the
Registration Statement and the Prospectus (as defined herein), are
registered independent public accountants as required by the Securities Act
and the rules and regulations promulgated thereunder (the "1933 ACT RULES
AND REGULATIONS") and by the rules of the United States Public Accounting
Oversight Board.
4.7 NO DEFAULTS OR CONSENTS. Neither the execution, delivery and
performance of this Agreement and the Warrants by the Company nor the
consummation of any of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale by the Company of the
Shares and the Warrant Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, except such defaults that individually or in the aggregate
would not cause a Material Adverse Effect, or require any consent or waiver
under any material agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which either
the Company or its Subsidiaries or any of its or their respective
properties or businesses is bound, or any material franchise, license,
permit, judgment, decree, order, statute, rule or regulation applicable to
the Company or any of its Subsidiaries, except for such consents or waivers
which have already been obtained or will be obtained prior to the Closing.
4.8 CONTRACTS. The material contracts to which the Company is a party
have been duly and validly authorized, executed and delivered by the
Company and constitute the legal, valid and binding agreements of the
Company or any of its Subsidiaries, enforceable by and against the Company
or any one of its Subsidiaries, as applicable, in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to enforcement of creditors' rights generally, and general
equitable principles relating to the availability of remedies, and except
as rights to indemnity or contribution may be limited by Israeli, federal
or state securities laws and the public policy underlying such laws.
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4.9 NO ACTIONS. Except as described in Item 8A of the 2006 20-F, there
are no legal or governmental actions, suits or proceedings pending or, to
the Company's knowledge, threatened against the Company or any Subsidiary
before or by any court, regulatory body or administrative agency or any
other governmental agency or body, domestic or foreign, which actions,
suits or proceedings, individually or in the aggregate, are reasonably
expected to have a Material Adverse Effect; and no labor disturbance by the
employees of the Company exists or is imminent, that is reasonably expected
to have a Material Adverse Effect. Neither the Company nor any Subsidiary
is a party to or subject to the provisions of any injunction, judgment,
decree or order of any court, regulatory body, administrative agency or
other governmental agency or body that is reasonably expected to have a
Material Adverse Effect.
4.10 PROPERTIES. The Company and each Subsidiary has valid and
marketable title to all the properties and assets (except for Intellectual
Property which is covered under Section 4.12 below) described as owned by
it in the consolidated financial statements included in the SEC Documents,
free and clear of all liens, mortgages, pledges, or encumbrances of any
kind except (i) those, if any, reflected in such consolidated financial
statements or (ii) those that do not materially adversely affect the use
made and proposed to be made of such property by the Company or its
Subsidiaries. The Company and each Subsidiary holds its leased properties
under valid and binding leases. Either the Company or any Subsidiary owns
or leases all such properties as are necessary to the operations of the
Company and its Subsidiaries as now conducted in all material respects.
4.11 NO MATERIAL ADVERSE CHANGE. Since December 31, 2006: (i) the
Company and its Subsidiaries have not incurred any material liabilities or
obligations, indirect, or contingent, or entered into any material
contract, agreement or other transaction that is not in the ordinary course
of business or that could reasonably be expected to result in a Material
Adverse Effect; (ii) the Company and its Subsidiaries have not sustained
any material loss or interference with their businesses or properties from
fire, flood, windstorm, accident or other calamity; (iii) neither the
Company nor its Subsidiaries have paid or declared any dividends or other
distributions with respect to their capital stock and none of the Company
or any Subsidiary is in a default in the payment of principal or interest
on any material outstanding debt obligations; (iv) there has not been any
change in the capital stock of the Company or its Subsidiaries other than
the sale of the Securities hereunder and shares or options issued pursuant
to equity incentive plans or purchase plans for employees, directors,
advisors and consultants approved by the Company's Board of Directors, or
indebtedness material to the Company or its Subsidiaries (other than in the
ordinary course of business and any required scheduled payments); and (v)
except as set forth in the Item 8A of the 2006 20-F under the heading
"Legal Proceedings or in the SEC Documents filed with the Commission
thereafter, there has not occurred any event that has caused or could
reasonably be expected to cause a Material Adverse Effect.
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4.12 INTELLECTUAL PROPERTY. Except as disclosed in item 3D (Risk
Factors) and Item 4B (Business Overview) of the 2006 20-F: (i) the Company
and each Subsidiary owns or has obtained valid and enforceable licenses or
options for the inventions, patent applications, patents, trademarks (both
registered and unregistered), trade names, copyrights (both registered and
unregistered), trade secrets and other intellectual property (including
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective
business as currently conducted (collectively, the "INTELLECTUAL
PROPERTY"); and (ii) (a) to the Company's knowledge, there are no third
parties who have any ownership rights to any Intellectual Property that is
owned by, or has been licensed to, the Company or each Subsidiary for the
products described in the SEC Documents that would preclude the Company or
any Subsidiary from conducting its business as currently conducted and are
reasonably expected to result in a Material Adverse Effect, except for the
ownership rights of the owners of the Intellectual Property licensed or
optioned by the Company or any Subsidiary or where such rights permit the
grantor thereof to terminate such rights, (b) to the Company's knowledge,
there are currently no sales of any products that would constitute an
infringement by third parties of any Intellectual Property owned, licensed
or optioned by the Company or any Subsidiary; (c) there is no pending or,
to the Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company or any Subsidiary in or to any
Intellectual Property owned, licensed or optioned by the Company or any
Subsidiary; (d) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
validity or scope of any Intellectual Property owned, licensed or optioned
by the Company or any Subsidiary; and (e) there is no pending or, to the
Company's knowledge, threatened material action, suit, proceeding or claim
by others that the Company or any of any Subsidiaries infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary right of others, in each case of clauses (b), (c) and (d),
other than such actions, suits, proceedings and claims as would not
reasonably be expected to have a Material Adverse Effect.
4.13 COMPLIANCE. None of the Company nor its Subsidiaries have been
advised, nor do any of them have any reason to believe, that it is not
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business,
including, without limitation, all applicable local, state and federal
environmental laws and regulations, including but not limited to applicable
laws of the State of Israel, except where failure to be so in compliance
could not have a Material Adverse Effect.
4.14 TAXES. The Company and each Subsidiary has filed on a timely
basis (giving effect to extensions) all material required Israeli, federal,
state and foreign income and franchise tax returns and has paid or accrued
all taxes shown as due thereon, and none of the Company or any Subsidiary
has knowledge of a tax deficiency that has been or is reasonably likely to
be asserted or threatened against it that, if determined adversely, could
have a Material Adverse Effect.
4.15 TRANSFER TAXES. On the Closing Date, all stock transfer or other
taxes (other than income taxes) that are required to be paid in connection
with the sale and transfer of the Securities to be sold to the Purchaser
hereunder will have been fully paid or provided for by the Company and all
laws imposing such taxes will have been complied with.
4.16 INVESTMENT COMPANY. The Company is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
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4.17 OFFERING MATERIALS. Except for the Confidential Private Placement
Memorandum (the "PPM") and the Management Presentation delivered to the
Purchaser, each of the Company, its officers and directors has not
distributed and will not distribute prior to the Closing Date any offering
material, including any "free writing prospectus" (as defined in Rule 405
promulgated under the Securities Act), in connection with the offering and
sale of the Securities. The Company has not in the past nor will it
hereafter take any action independent of the Placement Agent to sell, offer
for sale or solicit offers to buy any securities of the Company that could
reasonably expected to result in the initial sale of the Securities not
being exempt from the registration requirements of Section 5 of the
Securities Act.
4.18 INSURANCE. The Company maintains insurance underwritten by
insurers of recognized financial responsibility, of the types and in the
amounts that the Company reasonably believes is adequate for its business
as currently conducted and as is customary for similarly sized companies
engaged in similar businesses in similar industries, all of which insurance
is in full force and effect. The Company maintains director's and officer's
liability insurance with an aggregate coverage limit of $5 million.
4.19 ADDITIONAL INFORMATION. The information contained in the PPM and
in each of the following documents (the "SEC DOCUMENTS"), which the
Placement Agent has furnished to the Purchaser, or will furnish prior to
the Closing, as of the dates thereof, did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading , as of their
respective filing dates or, if amended, as so amended:
(a) the 2006 20-F;
(b) the Company's Report of Foreign Private Issuer on Form 6-K
dated January 3, 2007;
(c) the Company's Report of Foreign Private Issuer on Form 6-K
dated January 30, 2007;
(d) the Company's Report of Foreign Private Issuer on Form 6-K
dated March 19, 2007;
(e) the Company's Report of Foreign Private Issuer on Form 6-K
dated March 29, 2007;
(f) the Company's Report of Foreign Private Issuer on Form 6-K
dated May 1, 2007;
(g) the Company's Report of Foreign Private Issuer on Form 6-K
dated June 5, 2007;
(h) the Company's Report of Foreign Private Issuer on Form 6-K
dated July 2, 2007;
(i) the Company's Report of Foreign Private Issuer on Form 6-K
dated July 16, 2007; and
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(j) all other documents, if any, filed by the Company with the
Commission since December 31, 2006 pursuant to the reporting
requirements of the Exchange Act.
The SEC Documents and the documents incorporated by reference
therein or attached as exhibits thereto, at the time they became
effective or were filed with the Commission, as the case may be,
complied in all material respects with the requirements of the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder (the "1934 ACT RULES AND REGULATIONS" and,
together with the 1933 Act Rule and Regulations, the "RULES AND
REGULATIONS"). In the past 12 calendar months, the Company has filed
all documents required to be filed by it prior to the date hereof with
the Commission pursuant to the reporting requirements of the Exchange
Act.
4.20 PRICE OF ORDINARY SHARES. The Company has not taken, and will not
take, directly or indirectly, any action designed to cause or result in, or
that has constituted or that would reasonably be expected to constitute,
the stabilization or manipulation of the price of the Ordinary Shares to
facilitate the sale or resale of the Securities.
4.21 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Securities as described in the Section entitled "Use of Proceeds" in
the PPM.
4.22 USE OF PURCHASER NAME. Except as otherwise required by applicable
law or regulation, the Company shall not use the Purchaser's name or the
name of any of its affiliates in any advertisement, announcement, press
release or other similar public communication unless it has received the
prior written consent of the Purchaser for the specific use contemplated
which consent shall not be unreasonably withheld.
4.23 RELATED PARTY TRANSACTIONS. No transaction has occurred between
or among the Company, on the one hand, and its affiliates, officers or
directors on the other hand, that is required to have been described under
applicable securities laws in its Exchange Act filings and is not so
described in such filings.
4.24 OFF-BALANCE SHEET ARRANGEMENTS. There is no transaction,
arrangement or other relationship between the Company and an unconsolidated
or other off-balance sheet entity that is required to be disclosed by the
Company in its Exchange Act filings and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect.
There are no such off-balance sheet transactions, arrangements or other
relationships with the Company that may create material contingencies or
liabilities that are not otherwise disclosed by the Company in its Exchange
Act filings.
4.25 GOVERNMENTAL PERMITS, ETC. The Company and each Subsidiary has
all permits, consents, approvals, orders, registrations, qualifications,
franchises, licenses, certificates and other authorizations from such
Israeli, federal, state or local government or governmental or regulatory
agency, department or body that are currently necessary for the operation
of the business of the Company as currently conducted ("PERMITS"), except
where the failure to posses currently such Permits is not reasonably
expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such Permit that, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected to
have a Material Adverse Effect.
10
4.26 FINANCIAL STATEMENTS. The consolidated financial statements of
the Company and the related notes and schedules thereto included in its
Exchange Act filings comply as to form in all material respects with the
applicable requirements of the Exchange Act and fairly present the
financial position, results of operations, shareholders' equity and cash
flows of the Company and its consolidated Subsidiaries at the dates and for
the periods specified therein. Such financial statements and the related
notes and schedules thereto have been prepared in accordance with generally
accepted accounting principles in the United States consistently applied
throughout the periods involved (except as otherwise noted therein);
PROVIDED, HOWEVER, that the unaudited financial statements are subject to
normal year-end audit adjustments (which are not expected to be material)
and do not contain all footnotes required under generally accepted
accounting principles.
4.27 LISTING COMPLIANCE. The Company is in compliance with the
requirements of the Nasdaq Global Market for continued listing of the
Ordinary Shares thereon. The Company has taken no action designed to, or,
to the Company's knowledge, likely to have the effect of, terminating the
registration of the Ordinary Shares under the Exchange Act or the listing
of the Ordinary Shares on the Nasdaq Global Market, nor has the Company
received in the past two years any notification that the Commission or the
Nasdaq Global Market is contemplating terminating such registration or
listing. The transactions contemplated by this Agreement will not
contravene the rules and regulations of the Nasdaq Global Market. The
Company will comply with all requirements of the Nasdaq Global Market with
respect to the issuance of the Securities and shall use its best efforts to
cause the Registrable Securities to be listed on the Nasdaq Global Market
and listed on any other exchange on which the Company's Ordinary Shares is
listed on or before the Closing Date.
4.28 INTERNAL CONTROL OVER FINANCIAL REPORTING; XXXXXXXX-XXXXX
MATTERS. The Company maintains internal controls over financial reporting
(as such term is defined in paragraph (f) of Rule 13a-15 under the Exchange
Act) as required by Rule 13a-15 under the Exchange Act. The Company is in
compliance in all material respects with all applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and regulations
promulgated thereunder. To the best of the Company's knowledge, since the
end of the Company's most recent audited fiscal year, there has been no
material weakness in the design or operation of the Company's internal
control over financial reporting (whether or not remediated) which are
reasonably likely to adversely affect the Company's ability to record,
process, summarize and report financial information.
4.29 DISCLOSURE CONTROLS AND PROCEDURES. (i) The Company and each of
its Subsidiaries have established and maintain disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the Exchange Act),
(ii) such disclosure controls and procedures are designed to ensure that
the information required to be disclosed by the Company and its
subsidiaries in the reports they will file or submit under the Exchange Act
is accumulated and communicated to management of the Company and its
subsidiaries, including their respective principal executive officers and
principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure to be made and (iii) such disclosure controls
and procedures are effective in all material respects to perform the
functions for which they were established.
11
4.30 EMPLOYEE RELATIONS. Neither the Company nor any Subsidiary is a
party to any collective bargaining agreement or, to its knowledge, employs
any member of a union. The Company and each Subsidiary believe that their
relations with their employees are good. No executive officer of the
Company (as listed in Item 6A of the 2006 20-F) has notified the Company
since January 1, 2007 that such officer intends to leave the Company or
otherwise terminate such officer's employment with the Company. To the
Company's knowledge, no executive officer of the Company is, or is now
expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other agreement or any restrictive
covenant, and to the Company's knowledge, the continued employment of each
such executive officer does not subject the Company or any Subsidiary to
any material liability with respect to any of the foregoing matters.
4.31 ERISA. The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under: (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan"; or (ii) Sections 412 or 4971 of the Internal Revenue Code
of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "Pension Plan" for which
the Company would have liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would
cause the loss of such qualification.
4.32 ENVIRONMENTAL MATTERS. There has been no storage, disposal,
generation, manufacture, transportation, handling or treatment of toxic
wastes, hazardous wastes or hazardous substances by the Company or to its
knowledge, any Subsidiary (or, to the knowledge of the Company, any of
their predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or any Subsidiary in material
violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit or that would require material remedial action
under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit; to the Company's knowledge, there has been no material
spill, discharge, leak, emission, injection, escape, dumping or release of
any kind into such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any
Subsidiary or with respect to which the Company or any Subsidiary have
knowledge; the terms "hazardous wastes", "toxic wastes", "hazardous
substances" and "medical wastes" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with
respect to environmental protection; there are no proceedings that are
pending, or known to be contemplated, against the Company or any of its
Subsidiaries under any applicable laws, regulations, ordinances, rules,
orders, judgments, decrees, permits or other legal requirements of any
governmental or regulatory authority, including without limitation any
international, national, state, provincial, regional or local authority
relating to the protection of human health or safety, the environment or
natural resources or to hazardous or toxic substances or wastes, pollutants
or contaminants in which a governmental authority is also a party which
would, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
12
4.33 INTEGRATION; OTHER ISSUANCES OF SECURITIES. Neither the Company
nor its Subsidiaries or any affiliates, nor any Person acting on its or
their behalf, has issued any Ordinary Shares or shares of any series of
preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire
Ordinary Shares which would be integrated with the sale of the Securities
to such Purchaser for purposes of the Securities Act or of any applicable
shareholder approval provisions, including, without limitation, under the
rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated. The
Company and its subsidiaries will not, and the Company will use its best
efforts to cause its affiliates not to, take any action or steps that would
require registration of any of the Securities under the Securities Act or
cause the offering of the Securities to be integrated with other offerings.
Assuming the accuracy of the representations and warranties of Purchasers,
the offer and sale of the Securities by the Company to the Purchasers
pursuant to this Agreement will be exempt from the registration
requirements of the Securities Act.
4.34 FOREIGN CORRUPT PRACTICES. Neither the Company, nor any
Subsidiary, nor, to the knowledge of the Company, any director, officer,
agent, employee or other Person acting on behalf of the Company or any
Subsidiary has, in the course of its actions for, or on behalf of, the
Company: (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
4.35 NO MONEY LAUNDERING. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance in all
material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all applicable
jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced
by any governmental agency (collectively, the "MONEY LAUNDERING LAWS") and
no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its Subsidiaries with respect to the Money Laundering Laws is pending or,
to the knowledge of the Company, threatened, except, in each case, as would
not reasonably be expected to have a Material Adverse Effect.
4.36 OFFICE OF FOREIGN ASSETS CONTROL. Neither the Company nor any of
its Subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company or of any of its
Subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC");
and the Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person that, to the Company's
knowledge, is currently subject to any U.S. sanctions administered by OFAC.
13
4.37 APPROVED ENTERPRISE STATUS. The Company is in compliance in all
material respects with all conditions and requirements stipulated by the
instruments of approval granted to it with respect to the "Approved
Enterprise" status of any of the facilities of the Company as well as with
respect to the other tax benefits received by the Company as described in
the 2006 20-F and by Israeli laws and regulations relating to such
"Approved Enterprise" status and the aforementioned other tax benefits
received by the Company. Since January 1, 2006, the Company has not
received any notice of any proceeding or investigation relating to
revocation or modification of any "Approved Enterprise" status granted with
respect to any of the Company's facilities.
4.38 OFFICE OF CHIEF SCIENTIST. The Company has satisfied, and will
continue to satisfy in all material respects, all conditions and
requirements of the instruments of approval granted to it by the Office of
Chief Scientist of the Israeli Ministry of Industry, Trade and Labor (the
"OCS") and any applicable laws and regulations, including the Law for the
Encouragement of Industrial Research and Development, 1984, with respect to
any research and development grants given to it by such office, and is in
compliance with the repayment of all royalties, interest and penalties due
under such laws and regulations.
4.39 PASSIVE FOREIGN INVESTMENT COMPANY. The Company was not, for the
taxable year ended December 31, 2006, and upon the consummation of the
transactions described hereby and the application of the proceeds as
described in the Section entitled "Use of Proceeds" in the PPM is not
expected to become for the taxable year ending December 31, 2007, a passive
foreign investment company within the meaning of Section 1297 of the Code.
4.40 CONTROLLED FOREIGN CORPORATION. The Company believes based on its
current ownership that it is not a controlled foreign corporation within
the meaning of Section 957 of the Code. To the Company's knowledge, no
shareholder of the Company is, as of the date of this Agreement, considered
a United States shareholder within the meaning of Section 957 of the Code.
4.41 NO GENERAL SOLICITATION. Neither the Company, nor any of its
Subsidiaries or affiliates, nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale
of the Securities.
4.42 ACKNOWLEDGEMENT REGARDING PURCHASER'S TRADING ACTIVITY. Without
derogating from the Purchaser's representations in Section 5 hereof, it is
understood and acknowledged by the Company (i) that none of the Purchasers
have been asked by the Company or its Subsidiaries to agree, nor has any
Purchaser agreed with the Company or its Subsidiaries, to desist from
purchasing or selling, long and/or short, securities of the Company, or
"derivative" securities based on securities issued by the Company (other
than in compliance with applicable laws) or to hold the Securities for any
specified term; (ii) that any Purchaser, and counterparties in "derivative"
transactions to which any such Purchaser is a party, directly or
indirectly, presently may have a "short" position in the Ordinary Shares,
and (iii) that each Purchaser shall not be deemed to have any affiliation
with or control over any arm's length counterparty in any "derivative"
transaction. The Company further understands and acknowledges that (a) one
or more Purchasers may engage in hedging and/or trading activities at
various times during the period that the Securities are outstanding and (b)
such hedging and/or trading activities, if any, can reduce the value of the
existing stockholders' equity interest in the Company both at and after the
time the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do
not constitute a breach of this Agreement or any of the documents executed
in connection herewith.
14
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The
Purchaser represents and warrants to, and covenants with, the Company that:
5.1 EXPERIENCE. (i) The Purchaser is knowledgeable, sophisticated and
experienced in financial and business matters, in making, and is qualified
to make, decisions with respect to investments in shares representing an
investment decision like that involved in the purchase of the Securities,
including investments in securities issued by the Company and comparable
entities, and the Purchaser has undertaken an independent analysis of the
merits and the risks of an investment in the Securities, based on the
Purchaser's own financial circumstances; (ii) the Purchaser has had the
opportunity to request, receive, review and consider all information it
deems relevant in making an informed decision to purchase the Securities
and to ask questions of, and receive answers from, the Company concerning
such information; (iii) the Purchaser is acquiring the number of Shares and
Warrants set forth in Section 2 above in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of such Securities or any arrangement or
understanding with any other persons regarding the distribution of such
Securities (this representation and warranty not limiting the Purchaser's
right to sell pursuant to the Registration Statement or in compliance with
the Securities Act and the Rules and Regulations, or, other than with
respect to any claims arising out of a breach of this representation and
warranty, the Purchaser's right to indemnification under Section 7.3); (iv)
the Purchaser will not directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Securities, nor will the
Purchaser engage in any short sale that results in a disposition of any of
the Securities by the Purchaser, except in compliance with current
interpretation of the Securities Act and the Rules and Regulations and any
applicable state securities or "blue sky" laws; (v) the Purchaser has
completed or caused to be completed the Registration Statement
Questionnaire attached hereto as part of APPENDIX I, for use in preparation
of the Registration Statement, and the answers thereto are true and correct
as of the date hereof, and will be true and correct as of the effective
date of the Registration Statement; the Purchaser will notify the Company
immediately of any material change in any such information provided in the
Registration Statement Questionnaire until such time as the Purchaser has
sold all of its Securities or until the Company is no longer required to
keep the Registration Statement effective; (vi) the Purchaser has, in
connection with its decision to purchase the number of Shares and Warrants
set forth in Section 2 above, relied solely upon the SEC Documents and the
representations and warranties of the Company contained herein, and the
Purchaser has not relied on the Placement Agent in negotiating the terms of
its investment in the Securities and, in making a decision to purchase the
Securities, the Purchaser has not received or relied on any communication,
investment advice or recommendation from the Placement Agent; (vii) the
Purchaser has had an opportunity to discuss this investment with
representatives of the Company and ask questions of them; (viii) the
Purchaser is an institutional "accredited investor" within the meaning of
Rule 501(a) of Regulation D promulgated under the Securities Act; and (ix)
if the Purchaser is an Israeli resident or if the Purchaser received an
offer to purchase the Securities in Israel, it is an "investor" within the
meaning of the First Addendum to the Israeli Securities Law, 5728-1968.
15
5.2 RELIANCE ON EXEMPTIONS. The Purchaser understands that the
Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of the Securities Act, the
Rules and Regulations and state securities or "blue sky" laws and that the
Company is relying upon the truth and accuracy of, and the Purchaser's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in
order to determine the availability of such exemptions and the eligibility
of the Purchaser to acquire the Securities.
5.3 CONFIDENTIALITY. For the benefit of the Company, the Purchaser
previously agreed with the Placement Agent to keep confidential all
information concerning this private placement. The Purchaser is prohibited
from reproducing or distributing this Agreement or any other offering
materials or other information provided by the Company in connection with
the 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
financial, investment or legal advisors in connection with its proposed
investment in the Securities. Further, the Purchaser understands that the
existence and nature of all conversations and presentations, if any,
regarding the Company and this offering must be kept strictly confidential.
The Purchaser understands that the federal securities laws impose
restrictions on trading based on information regarding this offering. This
obligation will terminate upon the filing by the Company of a press release
or press releases and/or a Form 6-K describing this offering and disclosing
certain financial and other information for the quarter ended June 30, 2007
and any other material nonpublic information that may have been provided to
the Purchaser. In addition to the above, the Purchaser shall maintain in
confidence the receipt and content of any notice of a Suspension (as
defined in Section 5.9 below). The foregoing agreements shall not apply to
any information that is or becomes publicly available through no fault of
the Purchaser, or that the Purchaser is legally required to disclose;
PROVIDED, HOWEVER, that if the Purchaser is requested or ordered to
disclose any such information pursuant to any court or other government
order or any other applicable legal procedure, it shall provide the Company
with prompt notice of any such request or order in time sufficient to
enable the Company to seek an appropriate protective order.
5.4 INVESTMENT DECISION. The Purchaser understands that nothing in the
Agreement or any other materials presented to the Purchaser in connection
with the purchase and sale of the Securities constitutes legal, tax or
investment advice. The Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Securities. The
Purchaser is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
5.5 RISK OF LOSS. The Purchaser understands that its investment in the
Securities involves a significant degree of risk, including a risk of total
loss of the Purchaser's investment, and the Purchaser has full cognizance
of and understands all of the risk factors related to the Purchaser's
purchase of the Securities, including, but not limited to, those set forth
under the caption "Risk Factors" in certain SEC Documents. The Purchaser
understands that the market price of the Ordinary Shares has been volatile
and that no representation is being made as to the future value of the
Ordinary Shares.
16
5.6 LEGEND. The Purchaser understands that, (i) at all times the
Warrants and (ii) until such time as the Registration Statement has been
declared effective or the Shares and the Warrant Shares may be sold
pursuant to Rule 144 under the Securities Act without any restriction as to
the number of securities as of a particular date that can then be
immediately sold, the Shares and the Warrant Shares will bear a restrictive
legend in substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR
(2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, THE SHARES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN OR FINANCING ARRANGEMENT WITH A
FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT."
5.7 STOP TRANSFER. The certificates representing the Shares and the
Warrant Shares will be subject to a stop transfer order with the Company's
transfer agent that restricts the transfer of such shares until the Company
has filed the Registration Statements and so notified the transfer agent.
5.8 RESIDENCY. The Purchaser's principal executive offices are in the
jurisdiction set forth immediately below the Purchaser's name on the
signature pages hereto.
5.9 PUBLIC SALE OR DISTRIBUTION. The Purchaser hereby covenants with
the Company not to make any sale of the Registrable Securities under the
Registration Statement without complying with the provisions of this
Agreement and without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied (whether physically or
through compliance with Rule 172 under the Securities Act or any similar
rule). The Purchaser acknowledges that there may occasionally be times when
the Company must suspend the use of the prospectus (the "PROSPECTUS")
forming a part of the Registration Statement (a "SUSPENSION") until such
time as an amendment to the Registration Statement has been filed by the
Company and declared effective by the Commission, or until such time as the
Company has filed an appropriate report with the Commission pursuant to the
Exchange Act. Without the Company's prior written consent, which consent
shall not unreasonably be withheld or delayed, the Purchaser shall not use
any written materials to offer the Registrable Securities for resale other
than the Prospectus, including any "free writing prospectus" as defined in
Rule 405 under the Securities Act. The Purchaser covenants that it will not
sell any Shares or Warrant Shares pursuant to said Prospectus during the
period commencing at the time when Company gives the Purchaser written
notice of the suspension of the use of said Prospectus and ending at the
time when the Company gives the Purchaser written notice that the Purchaser
may thereafter effect sales pursuant to said Prospectus. Notwithstanding
the foregoing, the Company agrees that no Suspension shall be for a period
of longer than 15 consecutive days, any one or more Suspensions shall not
be for a period longer than 30 days in the aggregate in any 365-day period,
and there shall be a period of at least 5 Trading Days between any such
Suspension period. The Purchaser further covenants to notify the Company
promptly of the sale of all of its Shares or Warrant Shares.
17
5.10 ORGANIZATION; VALIDITY; ENFORCEMENT. The Purchaser further
represents and warrants to, and covenants with, the Company that (i) the
Purchaser has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has
taken all necessary action to authorize the execution, delivery and
performance of this Agreement, (ii) the making and performance of this
Agreement by the Purchaser and the consummation of the transactions herein
contemplated will not violate any provision of the organizational documents
of the Purchaser or conflict with, result in the breach or violation of, or
constitute, either by itself or upon notice or the passage of time or both,
a default under any material agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Purchaser is a party or, any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental agency or body applicable to
the Purchaser, (iii) no consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental
agency or body is required on the part of the Purchaser for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, (iv) upon the execution and delivery of
this Agreement, this Agreement shall constitute a legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or the enforcement of creditor's rights and the application of
equitable principles relating to the availability of remedies, and except
as rights to indemnity or contribution, including, but not limited to, the
indemnification provisions set forth in Section 7.3 of this Agreement, may
be limited by federal or state securities laws or the public policy
underlying such laws and (v) there is not in effect any order enjoining or
restraining the Purchaser from entering into or engaging in any of the
transactions contemplated by this Agreement.
5.11 SHORT SALES. Since the time the Purchaser was first contacted
about the offering of the Securities and the transactions contemplated
hereby, the Purchaser has not taken, and prior to the public announcement
of the transaction to be made after the Closing the Purchaser shall not
take, any action that has caused or will cause the Purchaser to have,
directly or indirectly, sold or agreed to sell any Ordinary Shares,
effected any short sale, whether or not against the box, established any
"put equivalent position" (as defined in Rule 16a-1(h) under the Exchange
Act with respect to the Ordinary Shares, granted any other right
(including, without limitation, any put or call option) with respect to the
Ordinary Shares or with respect to any security that includes, relates to
or derived any significant part of its value from the Ordinary Shares.
18
5.12 DISCLOSURE. The Purchaser acknowledges and agrees that the
Company does not make nor has made any representations or warranties with
respect to the transactions contemplated hereby other than those
specifically set forth in Section 4.
5.13 OCS UNDERTAKINGS. The Purchaser acknowledges that it will be
required to execute and deliver to the Company, as a condition to the
Company's obligation to consummate the Closing, an undertaking to the OCS,
in customary form, if, at or following either the Closing, the Purchaser
shall hold a number of Ordinary Shares (with warrants on an as exercised
basis) equal to 5% or more of the issued and outstanding Ordinary Shares.
SECTION 6. SURVIVAL OF AGREEMENTS; NON-SURVIVAL OF COMPANY REPRESENTATIONS
AND WARRANTIES. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants and agreements made by the
Company and the Purchaser herein and in the certificates for the Securities
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Securities being purchased and the payment
therefor. All representations and warranties, made by the Company and the
Purchaser herein and in the certificates for the Shares and Warrants delivered
pursuant hereto shall survive after the Closing until the expiration of the
period of time specified in the applicable statute of limitations.
SECTION 7. REGISTRATION OF THE REGISTRABLE SECURITIES; COMPLIANCE WITH THE
SECURITIES ACT; ADDITIONAL COVENANTS.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) within 15 days of the Closing Date (the "INITIAL FILING
DEADLINE"), prepare and file with the Commission a Registration
Statement (the "INITIAL REGISTRATION STATEMENT") relating to the
resale of the sum of (i) the number of Shares issued hereunder and
(ii) 120% of the number of Warrant Shares issued and issuable pursuant
to the Warrants (the "REQUIRED REGISTRATION AMOUNT"). The Initial
Registration Statement shall be on Form F-3 (unless the Company is not
then eligible to register for resale the Registrable Securities on
Form F-3, in which case such registration shall be on another
appropriate form). Notwithstanding anything herein to the contrary, if
the Commission prevents the Company from including the Required
Registration Amount of Registrable Securities on the Initial
Registration Statement due to limitations on the use of Rule 415 of
the Securities Act for the resale of the Registrable Securities by the
Purchasers (the Registrable Securities not included on such
Registration Statement, the "CUTBACK SHARES"), the Initial
Registration Statement shall register the resale of a number of
Registrable Securities which is equal to the maximum number of shares
as is permitted by the Commission. In such event, the number of
Registrable Securities to be registered for each Purchaser in the
Initial Registration Statement shall be reduced PRO RATA among all
Purchasers. With respect to the Cutback Shares, the Company shall
continue to use reasonable best efforts to file a Registration
Statement covering all such remaining Registrable Securities (the
"ADDITIONAL REGISTRATION STATEMENT" and with the Initial Registration
Statement, a "REGISTRATION STATEMENT") as promptly as possible, but in
no event later then the later of (i) the date sixty (60) days after
the date substantially all of the Registrable Securities registered
under the immediately preceding Registration Statement are sold and
(ii) the date six (6) months from the Initial Effective Date or the
last Additional Effective Date (each as defined below), as applicable
(the "ADDITIONAL FILING DEADLINE") and to cause such Additional
Registration Statement to be declared effective by the Commission as
promptly as possible, but not later than the date 60 days after the
Additional Filing Deadline (90 days if the Additional Registration
Statement is reviewed by the Commission) (the "ADDITIONAL EFFECTIVE
DEADLINE"). If the Commission does not allow all of the Cutback Shares
to be covered on such Additional Registration Statement, the Company
shall file Additional Registration Statements successively trying to
register on each such Additional Registration Statement the maximum
number of remaining Cutback Shares until all of the Required
Registration Amount of Registrable Securities have been registered
with the Commission. As used herein, "ADDITIONAL EFFECTIVE DATE" means
the date the Additional Registration Statement is declared effective
by the Commission;
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(b) use its reasonable commercial efforts, subject to receipt of
necessary information from the Purchasers, to cause the Commission to
declare the Initial Registration Statement effective within 60 days
after the Closing Date (120 days if the Registration Statement is
reviewed by the Commission) (the "INITIAL EFFECTIVE DEADLINE", and the
date the Initial Registration Statement is declared effective by the
Commission , the "INITIAL EFFECTIVE DATE");
(c) promptly prepare and file with the Commission such amendments
and supplements to any Registration Statement filed pursuant to this
Section 7.1 and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until the
earliest of (i) such time as all of the Registrable Securities have
been sold pursuant to the Registration Statement, or (ii) such time
all of the Registrable Securities become eligible for resale by
non-affiliates pursuant to Rule 144(k) (including for purposes of this
Agreement, any successor rule that may be adopted following the date
hereof) under the Securities Act or any other rule of similar effect
(the "EFFECTIVENESS PERIOD");
(d) furnish to the Purchaser with respect to the Registrable
Securities registered under any Registration Statement (and to each
underwriter, if any, of such Registrable Securities) such number of
copies of prospectuses and such other documents as the Purchaser may
reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Registrable Securities by the
Purchaser;
(e) (i) register and qualify, unless an exemption from
registration and qualification applies, the resale by Investors of the
Registrable Securities covered by a Registration Statement under such
other securities or "blue sky" laws of all applicable jurisdictions in
the United States, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x)
qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 7.1(e), (y)
subject itself to general taxation in any such jurisdiction, or (z)
file a general consent to service of process in any such jurisdiction;
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(f) bear all expenses in connection with the procedures in
paragraphs (a) through (i) of this Section 7.1 and the registration of
the Registrable Securities pursuant to any Registration Statement,
other than fees and expenses, if any, of counsel or other advisers to
the Purchaser or the Other Purchasers or underwriting discounts,
brokerage fees and commissions incurred by the Purchaser or the Other
Purchasers, if any in connection with the offering of the Shares
pursuant to any Registration Statement;
(g) file a Form D with respect to the Securities as required
under Regulation D and to provide a copy thereof to counsel to the
Placement Agent promptly after filing;
(h) file Form Ds and any other required documents with each
applicable state or jurisdiction under applicable state securities or
"blue sky" laws and regulations and to provide a copy thereof to
counsel to the Placement Agent promptly after filing;
(i) issue a press release describing the transactions
contemplated by this Agreement on or before 9:00 a.m. New York City
time on the business day following the execution of this Agreement,
which shall be followed by a Form 6-K on the same date containing such
press release and disclosing any material nonpublic information that
may have been provided to the Purchasers, including with respect to
financial and other information for the quarter ended June 30, 2007
and except as may be required to comply with the terms and conditions
of this Agreement, the Company covenants and agrees that, neither it
nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement
regarding the confidentiality and use of such information;
(j) in order to enable the Purchasers to sell the Registrable
Securities under Rule 144 to the Securities Act, for a period of two
years from the Closing Date, use its commercially reasonable efforts
to comply with the requirements of Rule 144, including without
limitation, use its commercially reasonable efforts to comply with the
requirements of Rule 144(c) with respect to public information about
the Company and timely file all reports required to be filed by the
Company under the Exchange Act;
(k) if, at any time during the Effectiveness Period, there is not
an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of
any of its equity securities, other than on Form F-4/S-4 or Form S-8
(each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with the Company's stock option or
other employee benefit plans, deliver to each holder of unregistered
Registrable Securities a written notice of such determination and, if
within 15 days after the date of the delivery of such notice, any such
holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities
such holder requests to be registered; PROVIDED, HOWEVER, that the
Company shall not be required to register any Registrable Securities
pursuant to this Section 7.1(k) that are eligible for resale pursuant
to Rule 144(k) promulgated by the Commission pursuant to the
Securities Act or that are the subject of a then effective
registration statement;
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(m) if requested by the Placement Agent in writing, use its
reasonable best efforts to file each Registration Statement with the
National Association of Securities Dealers, Inc. (the "NASD") pursuant
to Rule 2710 of the NASD's Conduct Rules and receive from the NASD a
conditional no objections letter;
(n) permit the Purchaser to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its
filing with the Commission and (ii) all amendments and supplements to
all Registration Statements (except for Annual Reports on Form 20-F
and Current Reports on Form 6-K and any similar or successor reports)
within five (5) Business Days prior to their filing with the
Commission; it being understood that the Effective Deadline or the
Additional Effective Deadline, as the case may be, shall be extended
(if applicable) until five (5) Business Days after delivery of the
Registration Statement or amendments and supplements, as the case may
be, to the Purchaser;
(o) submit to the Commission, within three (3) Business Days
after the Company learns that no review of a particular Registration
Statement will be made by the staff of the Commission or that the
staff of the Commission has no further comments on a particular
Registration Statement, as the case may be, a request for acceleration
of effectiveness of such Registration Statement to a time and date not
later than two (2) Business Days after the submission of such request;
and
(p) on the business day date following the effective date of a
Registration Statement, the Company shall file with the SEC in
accordance with Rule 424 under the 1933 Act the final prospectus to be
used in connection with sales pursuant to such Registration Statement.
The Company understands that the Purchaser disclaims being an
underwriter, but the Purchaser being deemed an underwriter shall not
relieve the Company of any obligations it has hereunder. A draft of
the proposed form of the questionnaire related to the Registration
Statement to be completed by the Purchaser on the date hereof is
attached hereto as APPENDIX I. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to Section
7 with respect to the Registrable Securities of the Purchaser that
such Purchaser shall furnish to the Company the said questionnaire.
7.2 TRANSFER OF REGISTRABLE SECURITIES AFTER REGISTRATION. The
Purchaser agrees that it will not effect any disposition of the Registrable
Securities or its right to purchase the Registrable Securities that would
constitute a sale within the meaning of the Securities Act or pursuant to
any applicable state securities or "blue sky" laws, except as contemplated
in the Registration Statement referred to in Section 7.1 or as otherwise
permitted by law, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement
regarding the Purchaser or its plan of distribution.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3: (i) the term
"PURCHASER/AFFILIATE" shall mean any affiliate of the Purchaser, including
a transferee who is an affiliate of the Purchaser, and any person who
controls the Purchaser or any affiliate of the Purchaser within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act; and
(ii) the term "REGISTRATION STATEMENT" shall include any preliminary
prospectus, final prospectus, free writing prospectus, exhibit, supplement
or amendment included in or relating to, and any document incorporated by
reference in, the Registration Statement referred to in Section 7.1.
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(a) The Company agrees to indemnify and hold harmless the
Purchaser and each Purchaser/Affiliate, against any losses, claims,
damages, liabilities or expenses, joint or several, to which the
Purchaser or Purchaser/Affiliates may become subject, under the
Securities Act, the Exchange Act or any other Israeli, 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), insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a
part thereof, as amended at the time of effectiveness of the
Registration Statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A, or pursuant to Rules 430B, 430C or 434, of the Rules and
Regulations, or the Prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Regulations, or filed as
part of the Registration Statement at the time of effectiveness if no
Rule 424(b) filing is required 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 the Registration Statement or any
amendment or supplement thereto not misleading or in the Prospectus or
any amendment or supplement thereto not misleading in light of the
circumstances under which they were made, or arise out of or are based
in whole or in part on any inaccuracy in the representations or
warranties of the Company contained in this Agreement, or any failure
of the Company to perform its obligations hereunder or under law, and
will promptly reimburse each Purchaser and each Purchaser/Affiliate
for any legal and other expenses as such expenses are reasonably
incurred by such Purchaser or such Purchaser/Affiliate in connection
with investigating, defending or preparing to defend, settling,
compromising or paying any such loss, claim, damage, liability,
expense or action; PROVIDED, HOWEVER, that the Company will not be
liable for amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Company, which consent shall not be unreasonably withheld, and
the Company will not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is
based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission 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 the Purchaser expressly for use therein, (ii) the failure
of such Purchaser to comply with the covenants and agreements
contained in Sections 5.10 or 7.2 hereof respecting the sale of the
Shares and the Warrant Shares, (iii) the inaccuracy of any
representation or warranty made by such Purchaser herein or (iv) any
statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser prior to the
pertinent sale or sales by the Purchaser.
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(b) Each Purchaser will severally, but not jointly, indemnify and
hold harmless the Company, each of its directors, each of its officers
who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages, liabilities or expenses to which the Company, each of
its directors, each of its officers who signed the Registration
Statement or controlling person 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, but only if such settlement is
effected with the written consent of such Purchaser) 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 failure to comply with the covenants and agreements contained
in Sections 5.9 or 7.2 hereof respecting the sale of the Shares and
the Warrant Shares, (ii) the inaccuracy of any representation or
warranty made by such Purchaser herein or (iii) any untrue 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 therein a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any
amendment or supplement thereto not misleading or in the Prospectus or
any amendment or supplement thereto not misleading in the light of the
circumstances under which they were made, 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; and will reimburse the Company, each of its directors, each
of its officers who signed the Registration Statement or controlling
person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER,
that each Purchaser's aggregate liability under this Section 7 shall
not exceed the net proceeds to the Purchaser on the sale of the Shares
and Warrant Shares pursuant to the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 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 7.3, promptly
notify the indemnifying party in writing thereof, but the omission to
notify the indemnifying party will not relieve it from any liability
that it may have to any indemnified party for contribution or
otherwise under the indemnity agreement contained in this Section 7.3
to the extent it is not prejudiced as a result of such failure. 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, if the defendants in any such action include
both the indemnified party, and the indemnifying party and the
indemnified party, shall have reasonably concluded, based on an
opinion of counsel reasonably satisfactory to the indemnifying party,
that there may be a conflict of interest 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
and/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 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 7.3 for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) 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, reasonably satisfactory to such indemnifying party,
representing all of the indemnified parties who are parties to such
action) or (ii) 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 action, in each of which cases the reasonable fees and
expenses of counsel shall be at the expense of the indemnifying party.
In no event shall any indemnifying party be liable in respect of any
amounts paid in settlement of any action unless the indemnifying party
shall have approved in writing the terms of such settlement; PROVIDED,
that such consent shall not be unreasonably withheld or delayed. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have
been a party and indemnification could have been sought hereunder by
such indemnified party from all liability on claims that are the
subject matter of such proceeding.
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(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to
or otherwise insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) of this Section 7.3 in respect to any
losses, claims, damages, liabilities or expenses referred to herein,
then each applicable 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 herein (i) in
such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the private placement
of the Securities hereunder or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but the relative fault of the Company
and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement
and/or the Registration Statement that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The 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 paid by such
Purchaser to the Company pursuant to this Agreement for the Shares
purchased by such Purchaser that were sold pursuant to the
Registration Statement bears to the difference (the "DIFFERENCE")
between the amount such Purchaser paid for the 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 on the one
hand and each Purchaser on the other shall be determined by reference
to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material
fact or the inaccurate or the alleged inaccurate representation and/or
warranty 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
paragraph (c) of this Section 7.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in paragraph
(c) of this Section 7.3 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 paragraph (d); PROVIDED,
HOWEVER, that no additional notice shall be required with respect to
any threat or action for which notice has been given under paragraph
(c) for purposes of indemnification. The Company and the Purchaser
agree that it would not be just and equitable if contribution pursuant
to this Section 7.3 were determined solely by pro rata allocation
(even if the Purchaser 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 7.3, 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 was not guilty of such fraudulent misrepresentation. The
Purchasers' obligations to contribute pursuant to this Section 7.3 are
several and not joint.
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7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The restrictions
imposed by Section 5.9 or Section 7.2 upon the transferability of the
Registrable Securities shall cease and terminate as to any particular
number of the Shares or Warrant Shares upon the earlier of (i) the passage
of two years from the effective date of the Registration Statement covering
such Registrable Securities and (ii) at such time as an opinion of counsel
satisfactory in form and substance to the Company shall have been rendered
to the effect that such conditions are not necessary in order to comply
with the Securities Act.
7.5 INFORMATION AVAILABLE. During the Effectiveness Period, the
Company, at the reasonable written request of the Purchaser, shall make
available for inspection by each Purchaser and any attorney, accountant or
other agent or representative retained by the Purchaser, all financial and
other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, employees and independent accountants to
reasonably cooperate with the Purchaser or any such attorney, accountant,
agent or representative in connection with the Registration Statement;
provided such information is relevant for disclosure in the Registration
Statement covering the Registrable Securities and subject to appropriate
confidentiality limitations.
7.6 DELAY IN FILING OR EFFECTIVENESS OF REGISTRATION STATEMENT. If the
Initial Registration Statement is not filed by the Company with the
Commission on or prior to the Filing Deadline, then for each day following
the Filing Deadline, until but excluding the date the Registration
Statement is filed, or if the Registration Statement is not declared
effective by the Commission by the Effective Deadline, then for each day
following the Effective Deadline, until but excluding the date the
Commission declares the applicable Registration Statement effective, the
Company shall, for each such day, pay the Purchaser with respect to any
such failure, as liquidated damages and not as a penalty, an amount per
30-day period equal to 1.0% of the purchase price paid by such Purchaser
for its Securities pursuant to this Agreement (pro rata on a 30 day basis)
(the "LIQUIDATED DAMAGES"); and for any such 30-day period, such payment
shall be made no later than seven Business Days following such 30-day
period. If the Purchaser shall be prohibited from selling Registrable
Securities under a Registration Statement as a result of a Suspension of
more than 15 consecutive days, Suspensions of more than an aggregate of 30
days in any 365-day period or less than 5 Trading Days elapse between any
Suspension period, then for each day on which a Suspension is in effect
that exceeds the maximum allowed period for a Suspension or Suspensions,
but not including any day on which a Suspension is lifted, the Company
shall pay the Purchaser, as liquidated damages and not as a penalty, an
amount per 30-day period equal to 1.0% of the purchase price paid by such
Purchaser for its Securities pursuant to this Agreement for each such day
(pro rata on a 30 day basis), and such payment shall be made no later than
the first Business Day of the calendar month next succeeding the month in
which such day occurs. For purposes of this Section 7.6, a Suspension shall
be deemed lifted on the date that notice that the Suspension has been
lifted is delivered to the Purchaser pursuant to Section 5.9.
Notwithstanding the foregoing provisions, in no event shall the Company be
obligated (i) to pay any Liquidated Damages pursuant to this Section 7.6 to
more than one Purchaser in respect of the same Securities for the same
period of time and (ii) to pay to Purchaser Liquidated Damages pursuant to
this Section 7.6 of more than 10% of the Aggregate Purchase Price. In the
event the Company fails to make such Liquidated Damages payments in a
timely manner, such Liquidated Damages shall bear interest at the rate of
one percent (1.0%) per month (prorated for partial months) until paid in
full.
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7.7 RESTRICTION ON ADDITIONAL REGISTRATION. In no event shall the
Company include any securities other than Registrable Securities on any
Registration Statement (as defined hereinabove) without the prior written
consent of Purchasers holding at least a majority of the Registrable
Securities.
7.8 ADDITIONAL REGISTRATION STATEMENTS. Until the date that is thirty
(30) calendar days after the effective date of the Initial Registration
Statement, the Company shall not file a registration statement under the
Securities Act relating to securities that are not the Securities, other
than registration statements on Form S-8 or Form S-4/F-4.
7.9 LISTING. The Company shall promptly secure the listing of all of
the Registrable Securities upon each national securities exchange and
automated quotation system, if any, upon which the Ordinary Shares are then
listed (subject to official notice of issuance) and shall maintain such
listing of all Registrable Securities from time to time issuable under the
terms of the Warrant. During the Reporting Period (as defined below), the
Company shall maintain the Ordinary Shares' authorization for quotation on
the NASDAQ Global Market (the "PRINCIPAL MARKET") and neither the Company
nor any of its Subsidiaries shall take any action which would be reasonably
expected to result in the delisting or suspension of the Ordinary Shares on
the Principal Market.
7.10 REPORTING STATUS. Until the date on which the Purchaser shall
have sold all the Shares and Warrant Shares (the "REPORTING PERIOD"), the
Company shall timely file all reports required to be filed with the
Commission pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination.
7.11 CORPORATE EXISTENCE. So long as any Purchaser beneficially owns
any Securities, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company's assets and shall
not be party to any Fundamental Transaction (as defined in the Warrants)
unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Warrants.
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7.12 RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 120% of the maximum number of Ordinary Shares
issuable upon exercise of the Warrants (without taking into account any
limitations on the exercise of the Warrants set forth in the Warrants).
7.13 DILUTIVE ISSUANCES. For so long as any Warrants remain
outstanding, the Company shall not, in any manner, enter into or affect any
Dilutive Issuances (as defined in the Warrants) if the effect of such
Dilutive Issuance is to cause, or but for the Securities Limitations (as
defined below) would cause, the Company to be required to issue upon
exercise of any Warrant any shares of Common Stock in excess of that number
of shares of Common Stock which the Company may issue upon exercise of the
Warrants without breaching the Company's obligations under the rules or
regulations of The NASDAQ Global Market without giving effect to the
limitations on exercise contained in Section 1(g) of the Warrants (the
"SECURITIES LIMITATIONS").
SECTION 8. LEGENDS.
8.1 Upon the earlier of (i) one Business Day following the
effectiveness date of the Registration Statement or (ii) Rule 144(k)
becoming available for the resale of any Registrable Securities, the
Company shall (A) deliver to the transfer agent for the Ordinary Shares
(the "TRANSFER AGENT") irrevocable instructions that the Transfer Agent
shall reissue a certificate representing Ordinary Shares without legends
upon receipt by such Transfer Agent of the legended certificates for such
Ordinary Shares, together with either (1) a customary representation by the
Purchaser that Rule 144(k) applies to the Ordinary Shares represented
thereby or (2) a statement by the Purchaser that such Purchaser has sold or
will sell the Ordinary Shares represented thereby in accordance with the
Plan of Distribution contained in the Registration Statement and, if
applicable, in accordance with any prospectus delivery requirements, and
(B) cause its counsel to deliver to the Transfer Agent one or more blanket
opinions to the effect that the removal of such legends in such
circumstances may be effected under the Securities Act. Nothing in this
Section shall prevent the Company from suspending the effectiveness of the
instructions to the Transfer Agent if sales under the Registration
Statement are not permissible for any reason. From and after the earlier of
such dates, upon the Purchaser's written request, the Company shall
promptly cause certificates evidencing the Purchaser's Securities to be
replaced with certificates which do not bear such restrictive legends, and
Warrant Shares subsequently issued upon due exercise of the Warrants shall
not bear such restrictive legends provided the provisions of either clause
(i) or clause (ii) above, as applicable, are satisfied with respect to such
Warrant Shares.
28
8.2 If the Company shall fail for any reason or for no reason to issue
to the Purchaser unlegended certificates or issue such Shares or Warrant
Shares to such Purchaser by electronic delivery at the applicable balance
account at The Depository Trust Company ("DTC") within three (3) Trading
Days (as defined below) after the receipt from the Purchaser of documents
necessary for the removal of the legend set forth above (such date, the
"REMOVAL DATE"), then in addition to all other remedies available to the
Purchaser, if on or after the Trading Day immediately following such three
Trading Day period, the Purchaser purchases (in an open market transaction
or otherwise) Ordinary Shares to deliver in satisfaction of a sale by the
Purchaser of such Ordinary Shares or Warrant Shares that the Purchaser
anticipated receiving without legend from the Company (a "BUY-IN"), then
the Company shall, within three (3) Business Days after the Purchaser's
request and in the Purchaser's discretion, either (i) pay cash to the
Purchaser in an amount equal to the Purchaser's total purchase price
(including customary brokerage commissions, if any) for the Ordinary Shares
so purchased (the "BUY-IN PRICE"), at which point the Company's obligation
to deliver such unlegended Ordinary Shares or Warrant Shares shall
terminate, or (ii) promptly honor its obligation to deliver to the
Purchaser such unlegended Ordinary Shares or Warrant Shares as provided
above and pay cash to the Purchaser in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of Ordinary
Shares, times (B) the Closing Sale Price on the Removal Date. For purposes
hereof, "CLOSING SALE PRICE" means, for any security as of any date, the
last closing trade price for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing trade price then
the last trade price of such security prior to 4:00:00 p.m., New York time,
as reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last trade
price of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or
if the foregoing do not apply, the last trade price of such security in the
over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no last trade price is reported for such
security by Bloomberg, the average of the ask prices of any market makers
for such security as reported in the "pink sheets" by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.). If the Closing Sale Price
cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Sale Price of such security on such date shall
be the fair market value as mutually determined by the Company and the
holder of Securities. All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.
SECTION 9. BROKER'S FEE. The Purchaser acknowledges that the Company
intends to pay to the Placement Agent a fee in respect of the sale of the
Securities to the Purchaser. The Purchaser and the Company agree that the
Purchaser shall not be responsible for such fee and that the Company will
indemnify and hold harmless the Purchaser and each Purchaser/Affiliate against
any losses, claims, damages, liabilities or expenses, joint or several, to which
such Purchaser or Purchaser/Affiliate may become subject with respect to such
fee. Each of the parties hereto 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 Securities to the Purchaser.
SECTION 10. INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of the 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 the
Agreements. The decision of each Purchaser to purchase the Securities pursuant
to the Agreements has been made by such Purchaser independently of any other
Purchaser. Nothing contained in the Agreements, and no action taken by any
Purchaser pursuant thereto, 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 the
Agreements. Each Purchaser acknowledges that no other Purchaser has acted as
agent for such Purchaser in connection with making its investment hereunder and
that no Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its 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.
29
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, e-mail, confirmed facsimile or nationally
recognized overnight express courier postage prepaid, and shall be deemed given
on the earliest of (a) the next Business Day after the date of transmission, if
such notice or communication is delivered via facsimile with confirmation of
receipt at the facsimile number set forth below prior to 5:00 p.m. (Israel time)
on a Trading Day, (b) two Trading Days after the date of transmission, if such
notice or communication is delivered via facsimile with confirmation of receipt
at the facsimile number set forth on the signature pages attached hereto on a
day that is not a Trading Day or later than 5:00 p.m. (Israel time) on any
Trading Day, (c) the second Trading Day following the date of mailing (fifth
Trading Day if sent internationally), if sent by a nationally recognized
overnight courier service in the United States or (d) upon actual receipt by the
party to whom such notice is required to be given, and shall be delivered as
addressed as follows:
if to the Company, to:
Metalink Ltd.
Xxxxx Xxxxxxxx Xxxx
Xxxxx 00000, Xxxxxx
Attention: Yuval Ruhama and Xxxxx Xxxxx
Facsimile: x000-0-000-0000; x000-0-000-0000
With a copy by E-mail: xxxxxx@xxxx.xxx; xxxxxx@xxxx.xxx
with a copy (which shall not constitute a notice) to:
Goldfarb, Levy, Eran, Meiri & Co.
0 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx
Attention: Xxxxx Xxxxxxxxxxxxx, Adv. and Xxx Xxxxxx, Adv.
Facsimile: x000-0-000-0000
E-mail: xxxxx.xxxxxxxxxxxxx@xxxxxxxx.xxx; xxx.xxxxxx@xxxxxxxx.xxx
Xxxxxx Xxxxxxx & Xxxxxxx LLP
0 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
E-mail: xxxxxxxx@xxx.xxx
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
if to the Purchaser, at its address as set forth at the end of this
Agreement, or at such other address or addresses as may have been furnished to
the Company in writing.
30
SECTION 12. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Purchaser.
Any amendment or waiver effected in accordance with this Section 12 shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.
SECTION 13. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 14. SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 15. GOVERNING LAW; VENUE. This Agreement is to be construed in
accordance with and governed by the federal law of the United States of America
and the internal laws of the State of New York without giving effect to any
choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of New York to the rights
and duties of the parties. Each of the Company and the Purchaser submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby. Each of the Company and the
Purchaser irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
SECTION 16. AGENT FOR SERVICE OF PROCESS. The Company designates and
appoints Metalink Inc., which currently maintains an office at Peachtree Pointe
Office Park 0000 Xxxxxx Xxxxxxx, Xxxxx 000 Xxxxxxxx, XX 00000, as its authorized
agent in the State of New York upon which process may be served in any such suit
or proceeding, and agrees that service of process upon such agent, and written
notice of said service to the Company by the person serving the same to the
address provided in Section 11 shall be deemed in every respect effective
service of process upon the Company in any such suit or proceeding. Such
designation and appointment shall be irrevocable, unless and until a successor
authorized agent shall have been appointed by the Company, such successor shall
have accepted such appointment and written notice thereof shall have been given
to the Purchaser. The Company further agrees to take any and all actions as may
be necessary to maintain such designation and appointment of such agent in full
force and effect for a period of three years from the date of this Agreement.
SECTION 17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other parties. Facsimile signatures shall be deemed original signatures.
31
SECTION 18. ENTIRE AGREEMENT. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. Each party
expressly represents and warrants that it is not relying on any oral or written
representations, warranties, covenants or agreements outside of this Agreement.
SECTION 19. FEES AND EXPENSES. Except as set forth herein, each of the
Company and the Purchaser shall pay its respective fees and expenses related to
the transactions contemplated by this Agreement.
SECTION 20. PARTIES. This Agreement is made solely for the benefit of and
is binding upon the Purchaser and the Company and to the extent provided in
Section 7.3, any person controlling the Company or the Purchaser, the officers
and directors of the Company, and their respective executors, administrators,
successors and assigns and subject to the provisions of Section 7.3, no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successor and assigns" shall not include any subsequent purchaser, as such
purchaser, of the Securities sold to the Purchaser pursuant to this Agreement.
SECTION 21. FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurance as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
SECTION 22. CONSTRUCTION. (a) For purposes of this Agreement, whenever the
context requires: the singular number shall include the plural, and vice versa;
the masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation".
(d) Except as otherwise indicated, all references in this Agreement to
"Sections", "Schedules" and "Exhibits" are intended to refer to Sections of
this Agreement and Schedules and Exhibits to this Agreement.
(e) The term "BUSINESS DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
32
(f) The term "TRADING DAY" means any day on which the Ordinary Shares
are traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Ordinary Shares, then on the principal
securities exchange or securities market on which the Ordinary Shares is
then traded; PROVIDED, that "Trading Day" shall not include any day on
which the Ordinary Shares is scheduled to trade on such exchange or market
for less than 4.5 hours or any day that the Ordinary Shares is suspended
from trading during the final hour of trading on such exchange or market
(or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at
4:00:00 p.m., New York Time).
[signature page follows]
33
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
METALINK LTD.
By: __________________________________________
Name:
Title:
Print or Type:
________________________________________________
Name of Purchaser
(Individual or Institution)
________________________________________________
Jurisdiction of Purchaser's Executive Offices
________________________________________________
Name of Individual representing
Purchaser (if an Institution)
________________________________________________
Title of Individual representing
Purchaser (if an Institution)
Signature by:
Individual Purchaser or Individual
representing Purchaser:
_________________________________
Address: ___________________________
Telephone: ___________________________
Facsimile: ___________________________
E-mail: ___________________________
Signature Page
34
EXHIBIT A
[FORM OF WARRANT]
35
EXHIBIT B1
[FORM OF U.S. COUNSEL LEGAL OPINION]
36
EXHIBIT B2
[FORM OF ISRAELI COUNSEL LEGAL OPINION]
37
EXHIBIT C
Company's Subsidiaries
STATE OR OTHER JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION/ORGANIZATION
------------------ ------------------------------
Metalink Inc. United States
Metalink Asia Pacific Ltd. Korea
Metalink International Ltd. Republic of Seychelles
Metalink Japan K.K. Japan
38
