EXHIBIT 1.1
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Execution Copy
Medis Technologies Ltd.
$38,000,000
6% Senior Convertible Notes due 2010
PURCHASE AGREEMENT
July 21, 2005
XXXXXXX SECURITIES CO. L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Medis Technologies Ltd., a Delaware corporation (the "Company"), hereby
confirms its agreement with you ("you" or the "Initial Purchaser"), as set forth
below.
1. The Transactions. (a) Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchaser
$38,000,000 aggregate principal amount of its 6% Senior Convertible Notes due
2010 (the "Firm Notes"). In addition, the Company has granted to the Initial
Purchaser an option to purchase up to an additional $7,000,000 aggregate
principal amount of its 6% Senior Convertible Notes due 2010 (the "Optional
Notes" and, together with the Firm Notes, the "Notes"). The Notes shall be
convertible into shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock" or "Conversion Shares"). The Notes will be issued
pursuant to the provisions of the Indenture (the "Indenture"), to be dated July
26, 2005, between the Company and Wachovia Bank, National Association, as
trustee (the "Trustee"). The Notes and the Conversion Shares are hereinafter
referred to collectively as the "Securities."
(b) The sale of the Notes to the Initial Purchaser (the
"Offering") will be made without registration of the Securities under
the Securities Act of 1933, as amended (together with the rules and
regulations of the Securities and Exchange Commission (the
"Commission") promulgated thereunder, the "Securities Act"), in
reliance upon the exemption therefrom provided by Section 4(2) of the
Securities Act.
(c) In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum, dated July 15, 2005 (the
"Preliminary Offering Memorandum"), and will prepare an offering
memorandum, dated the date hereof, in form and substance satisfactory
to you (the "Offering Memorandum"), setting forth information regarding
the Company, the Securities and the terms of the Offering and the
transactions contemplated by the Offering Documents (as defined below).
The Preliminary Offering Memorandum and the Offering Memorandum will
attach as Exhibits A
and B and incorporate by reference the Company's (i) Annual Report on
Form 10-K for the year ended December 31, 2004 ("Exhibit A") and (ii)
Quarterly Report on Form 10-Q for the quarter ended March 31, 2005
(collectively with Exhibit A, the "Exhibits"). The Offering Memorandum
will incorporate by reference the Company's Current Reports on Form 8-K
filed with the Commission on January 3, 2005, January 12, 2005, March
18, 2005, March 28, 2005, April 1, 2005, April 26, 2005, April 29,
2005, May 20, 2005, May 31, 2005 (Item 1.01 and Exhibit 99.1 of Item
9.01 only), June 3, 2005, June 7, 2005, June 22, 2005 and July 11, 2005
(all such documents and the Exhibits collectively, the "Attached and
Incorporated Documents"). Any references herein to the Preliminary
Offering Memorandum and the Offering Memorandum shall be deemed to
include, in each case, all amendments and supplements thereto and the
Attached and Incorporated Documents and any amendments thereto made
prior to the completion of the Offering. The Company hereby confirms
that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale
of the Notes by the Initial Purchaser.
(d) The Company understands that the Initial Purchaser
proposes to make an offering of the Notes only on the terms and in the
manner set forth in the Offering Memorandum and Sections 3 and 4 hereof
as soon as the Initial Purchaser deems advisable after this Agreement
has been executed and delivered, to persons whom the Initial Purchaser
reasonably believes to be qualified institutional buyers ("QIBs") as
defined in Rule 144A under the Securities Act, as such rule may be
amended from time to time ("Rule 144A"), in transactions under Rule
144A.
(e) The Initial Purchaser and its direct and indirect
transferees of the Notes will be entitled to the benefits of the
Registration Rights Agreement to be dated as of the Closing Date (as
hereinafter defined), among the parties hereto (the "Registration
Rights Agreement") pursuant to which the Company will agree, among
other things, to file (i) a registration statement (the "Registration
Statement") on the appropriate form with the Commission registering the
resale of the Securities under the Securities Act, and (ii) to use its
commercially reasonable efforts to cause any such Registration
Statement to be declared effective.
This Agreement, the Securities, the Registration Rights Agreement and
the Indenture are herein referred to as the "Offering Documents."
2. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with the Initial Purchaser that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum, as of the respective dates set forth on the front covers
thereof, as of the Closing Date and as of the Additional Closing Date,
if any (each as defined in Section 3 hereof), does not and will not,
and any supplement or
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amendment thereto will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided however, that the Company makes no
representation or warranty as to the information contained in or
omitted from the Preliminary Offering Memorandum or the Offering
Memorandum or any amendment or supplement thereto, in reliance upon or
in conformity with information furnished in writing to the Company by
the Initial Purchaser expressly for inclusion therein pursuant to
Section 15 hereof. The Offering Documents conform in all material
respects to the descriptions thereof contained in the Preliminary
Offering Memorandum and the Offering Memorandum.
(b) Subsequent to the respective dates as of which information
is given in the Offering Memorandum (or, if the Offering Memorandum is
not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum), except as disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated
as of the date hereof, the most recent Preliminary Offering
Memorandum), the Company has not declared, paid or made any dividends
or other distributions of any kind on or in respect of its capital
stock and there has been no material adverse change or any development
involving a prospective material adverse change, whether or not arising
from transactions in the ordinary course of business, in or affecting
(i) the business, condition (financial or otherwise), results of
operations, stockholders' equity, properties or prospects of the
Company and the subsidiaries of the Company listed on Exhibit A hereto
(each a "Subsidiary" and collectively, the "Subsidiaries"),
individually or taken as a whole; (ii) the long-term debt or capital
stock of the Company or the Subsidiaries; or (iii) the ability of the
Company to consummate the Offering or any of the other transactions
contemplated by the Offering Documents (any such change or development
being a "Material Adverse Effect"). Since the date of the latest
balance sheet included or incorporated by reference in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated
as of the date hereof, the most recent Preliminary Offering
Memorandum), neither the Company nor any Subsidiary has incurred or
undertaken any liabilities or obligations, whether direct or indirect,
liquidated or contingent, matured or unmatured, or entered into any
transactions, including any acquisition or disposition of any business
or asset, which are material to the Company and the Subsidiaries,
individually or taken as a whole, except for (1) liabilities,
obligations and transactions which are disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated
as of the date hereof, the most recent Preliminary Offering
Memorandum), (2) any such liabilities or obligations incurred in the
ordinary course of the Company's business or operations consistent with
past practice, (3) the execution and delivery of a real estate lease
for additional space at the Company's Israeli facilities and bank
guarantee thereto, and (4) the collateralization of certain obligations
by More Energy under an equipment lease in the amount of approximately
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(euro)36,000 by obtaining a bank guarantee in favor of the lessor,
which guarantee is secured by More Energy's deposits with the bank from
time to time.
(c) The authorized, issued and outstanding capital stock of
the Company as of March 31, 2005 is as set forth in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated
as of the date hereof, the most recent Preliminary Offering Memorandum)
under the caption "Capitalization" and, after giving effect to the
Offering, will be as set forth in the Offering Memorandum. Except as
disclosed in the Offering Memorandum, all of the issued and outstanding
shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and issued, in
compliance with all applicable federal, state and foreign securities
laws and are not in violation of or subject to any preemptive or
similar right that does or will entitle any person, upon the issuance
or sale of any security, to acquire from the Company or any Subsidiary
any Common Stock or other security of the Company or any Subsidiary or
any security convertible into, or exercisable or exchangeable for,
Common Stock or any other such security (any "Relevant Security").
(d) The Conversion Shares have been duly authorized and
reserved, and if and when issued upon conversion of the Notes in
accordance with their terms and the Indenture, will be validly issued,
fully paid and non-assessable, free of any preemptive or similar
rights; will have been issued in compliance with all applicable
federal, state and foreign securities laws; will not have been issued
subject to any right that does or will entitle any person to acquire
any Relevant Security from the Company or any Subsidiary upon issuance
or sale of the Notes or the Conversion Shares; and will not be subject
to any restriction upon the voting or, except as disclosed in the
Offering Memorandum (or, if the Offering Memorandum is not finalized
and dated as of the date hereof, the most recent Preliminary Offering
Memorandum), transfer thereof pursuant to applicable law or the
Company's certificate of incorporation, bylaws or governing documents
or any agreement to which the Company or any Subsidiary is a party or
by which any of them may be bound.
(e) The Common Stock (including the Conversion Shares)
conforms to the descriptions thereof contained in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated
as of the date hereof, the most recent Preliminary Offering
Memorandum). Except as disclosed in, and as of the date or dates
disclosed in, the Offering Memorandum (or, if the Offering Memorandum
is not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum), neither the Company nor any
Subsidiary has outstanding warrants, options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, or
any contracts or commitments to issue or sell, any Relevant Security.
Except (i) as disclosed in, and as of the date or dates disclosed in,
the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum), and (ii) with respect to the obligations of the
Company
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to grant 5,000 options to Pascal Goiuerec pursuant to a consulting
agreement between such party and the Company, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or rights related to or entitling any
person to purchase or otherwise to acquire any shares of, or any
security convertible into or exchangeable or exercisable for, the
capital stock of, or other ownership interest in, the Company or any
Subsidiary.
(f) The Subsidiaries are the only "significant subsidiaries"
of the Company within the meaning of Regulation S-X promulgated under
the Securities Act. All of the issued shares of capital stock of or
other ownership interests in the Subsidiaries directly or indirectly
owned by the Company have been duly and validly authorized and issued
and are fully paid and non-assessable and the shares of capital stock
or other ownership interests in the Subsidiaries directly or indirectly
owned by the Company are owned by the Company free and clear of any
lien, charge, mortgage, pledge, security interest, claim, equity, trust
or other encumbrance, preferential arrangement, defect or restriction
of any kind whatsoever (any "Lien").
(g) Each of the Company and each Subsidiary has been duly
organized and validly exists as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and
each Subsidiary has all corporate power and authority to carry on its
business as it is currently being conducted and as described in the
Offering Memorandum (or, if the Offering Memorandum is not finalized
and dated as of the date hereof, the most recent Preliminary Offering
Memorandum), and to own, lease and operate its respective properties.
Each of the Company and each Subsidiary is duly qualified to do
business as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified which
(individually and in the aggregate) could not reasonably be expected to
have a Material Adverse Effect.
(h) The Company has the corporate power and authority to
execute, deliver and perform its obligations under the Notes. The Notes
have been duly and validly authorized by the Company for issuance and,
when executed by the Company and authenticated by the Trustee in
accordance with the provisions of the Indenture and when delivered to
and paid for by the Initial Purchaser in accordance with the terms
hereof, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms except that the enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally, and (ii) general principles
of equity (regardless of whether such enforcement is considered in a
proceeding at law or in equity) ((i) and (ii) collectively, the
"Enforceability Exceptions") and will be convertible into the
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Conversion Shares in accordance with their terms. At the Closing Date,
the Notes will be in the form contemplated by the Indenture.
(i) The Company has the corporate power and authority to
execute, deliver and perform its obligations under the Indenture. The
Indenture has been duly and validly authorized by the Company and meets
the requirements for qualification under the Trust Indenture Act of
1939, as amended (the "TIA"), and, when executed and delivered by the
Company (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except that the enforcement thereof may be limited by the
Enforceability Exceptions.
(j) The Company has the corporate power and authority to
execute, deliver and perform its obligations under the Registration
Rights Agreement. The Registration Rights Agreement has been duly and
validly authorized by the Company and when executed and delivered by
the Company (assuming the due authorization, execution and delivery by
the Initial Purchaser), will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be limited by
the Enforceability Exceptions.
(k) The Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized by the Company and when
executed and delivered by the Company (assuming the due authorization,
execution and delivery by the Initial Purchaser), will constitute a
valid and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms, except that the enforcement
thereof may be limited by the Enforceability Exceptions.
(l) There exists as of the date hereof (after giving effect to
the transactions contemplated by each of the Offering Documents) no
event or condition that would constitute a default or an event of
default (in each case as defined in each of the Offering Documents)
under any of the Offering Documents.
(m) The execution, delivery, and performance of this
Agreement, the Indenture or the Registration Rights Agreement and
consummation of the transactions contemplated by the Offering Documents
do not and will not conflict with, require consent under or result in a
breach of any of the terms and provisions of, or constitute a default
(or an event which with notice or lapse of time, or both, would
constitute a default) under, violate or result in the creation or
imposition of any Lien upon any property or assets of the Company or
any Subsidiary pursuant to, (i) any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant, instrument, franchise,
license or permit to which
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the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or their respective properties, operations or assets may be
bound; (ii) any provision of the certificate or articles of
incorporation, bylaws or other organizational documents of the Company
or any Subsidiary; or (iii) any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or
other legal or governmental agency or body, domestic or foreign, having
jurisdiction over the Company, any Subsidiary or any of its or their
properties; except, in the case of clauses (i) and (iii) above, as
could not reasonably be expected to have a Material Adverse Effect.
(n) Each of the Company and each Subsidiary has all necessary
consents, approvals, authorizations, orders, registrations,
qualifications, licenses, filings and permits of, with and from all
judicial, regulatory and other legal or governmental agencies and
bodies and all third parties, foreign and domestic (collectively, the
"Consents"), to own, lease and operate its properties and conduct its
business as it is now being conducted and as it is contemplated to be
conducted, in each case as disclosed in the Offering Memorandum (or, if
the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum), except for
Consents the failure of which to obtain could not reasonably be
expected to have a Material Adverse Effect and the Consent which is
listed on Schedule 2(h) hereof which has been applied for, and each
such Consent received by the Company as of the date hereof is valid and
in full force and effect, and except as disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated
as of the date hereof, the most recent Preliminary Offering
Memorandum), neither the Company nor any Subsidiary has received notice
of any investigation or proceedings which results in or, if decided
adversely to the Company or any Subsidiary, could reasonably be
expected to result in, the revocation of, or imposition of a materially
burdensome restriction on, any Consent. Each of the Company and each
Subsidiary is in compliance with all applicable laws, rules,
regulations, ordinances, directives, judgments, decrees and orders,
foreign and domestic, except as disclosed in the Offering Memorandum
(or, if the Offering Memorandum is not finalized and dated as of the
date hereof, the most recent Preliminary Offering Memorandum) or where
failure to be in compliance could not reasonably be expected to have a
Material Adverse Effect. No Consent contains a materially burdensome
restriction not adequately disclosed in the Offering Memorandum (or, if
the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum).
(o) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign
or domestic, is required by the Company for the execution, delivery and
performance of this Agreement, the Indenture or the Registration Rights
Agreement, or consummation of the Offering and the other transactions
contemplated by the Offering Documents, including the issuance, sale
and delivery of the Notes (and the issuance of the Conversion Shares
upon
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conversion of the Notes), except such Consents as may be required under
state securities or "blue sky" laws and, in the case of the
transactions contemplated by the Registration Rights Agreement, such as
will be obtained under the Securities Act and applicable state
securities or "blue sky" laws. No consent, approval or authorization of
the stockholders of the Company is required in connection with the
issuance of the Securities, except as may be described in the Offering
Memorandum.
(p) Except as disclosed in the Offering Memorandum (or, if the
Offering Memorandum is not finalized and dated as of the date hereof,
the most recent Preliminary Offering Memorandum), there is no judicial,
regulatory, arbitral or other legal or governmental proceeding or other
litigation or arbitration, domestic or foreign, pending to which the
Company or any Subsidiary is a party or of which any property,
operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the
Company or any Subsidiary, could reasonably be expected to have a
Material Adverse Effect, and to the best of the Company's knowledge, no
such proceeding, litigation or arbitration is threatened or
contemplated.
(q) The financial statements, including the notes thereto,
included in the Offering Memorandum (or, if the Offering Memorandum is
not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum) present fairly, as of the dates and
for the periods specified, the financial position, cash flows and
results of operations of the Company and its consolidated subsidiaries
for which financial statements are included in the Offering Memorandum;
such financial statements have been prepared in conformity with United
States generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as otherwise noted
therein); and the selected consolidated financial data set forth under
the caption "Selected Financial Data," in Exhibit A present fairly, as
of the dates and for the periods specified, on the basis stated in
Exhibit A, the information included therein. No other financial
statements are required to be included in the Offering Memorandum (or,
if the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum) if the
Offering Memorandum were included in a registration statement filed
pursuant to the Securities Act. The other financial and statistical
information included in the Offering Memorandum (or, if the Offering
Memorandum is not finalized and dated as of the date hereof, the most
recent Preliminary Offering Memorandum) presents fairly the information
included therein and, if so required, has been prepared on a basis
consistent with that of the financial statements that are included in
the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum) and is derived from the books and records of the
respective entities presented therein and, to the extent such
information is a range, projection or estimate, is based on the good
faith belief and estimates of the management of the Company. The
financial information included in the Attached and
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Incorporated Documents, including the information under Item 1
("Business"), Item 7 ("Management's Discussion and Analysis of
Financial Condition and Results of Operations") and Item 7A
("Quantitative and Qualitative Disclosures About Market Risk") in
Exhibit A has been derived from the Company's consolidated financial
statements included in the Attached and Incorporated Documents or from
the Company's accounting books and records generally.
(r) Xxxx Xxxxx Xxxxx & Kasierer, a member of Ernst & Young
Global, which has examined certain of such financial statements as set
forth in its reports included in the Offering Memorandum (or, if the
Offering Memorandum is not finalized and dated as of the date hereof,
the most recent Preliminary Offering Memorandum), is an independent
registered public accounting firm as required by the Securities Act and
the Securities Exchange Act of 1934, as amended (together with the
rules and regulations of the Commission promulgated thereunder, the
"Exchange Act").
(s) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or 15(d) of the Exchange Act and
files reports with the Commission on the XXXXX System. The Common Stock
is registered pursuant to Section 12(g) of the Exchange Act and the
outstanding shares of Common Stock are listed for quotation on the
Nasdaq National Market, and the Company has taken no action designed
to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or de-listing the Common Stock
from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the Nasdaq National Market is
contemplating terminating such registration or listing.
(t) Since July 1, 2004, the Company has filed in a timely
manner each document or report required to be filed by it pursuant to
the Exchange Act, including, without limitation, the Attached and
Incorporated Documents; each such document or report (including any
financial statements) and any amendment thereto at the time it was
filed, conformed to the requirements of the Exchange Act; and none of
such documents or reports on the date of its filing contained an untrue
statement of any material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(u) There are no agreements, contracts, indentures, leases or
other instruments (including, without limitation, any voting
agreement), which are required to be filed as exhibits to the Attached
and Incorporated Documents, which are not so filed as required.
(v) The Company and each Subsidiary maintain a system of
internal accounting and other controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with United States
9
generally accepted accounting principles and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accounting for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(w) Neither the Company nor any of its affiliates (within the
meaning of Rule 144 under the Securities Act) has taken, directly or
indirectly, any action that constitutes or is designed to cause or
result in, or which could reasonably be expected to constitute, cause
or result in, the stabilization or manipulation of the price of any
security to facilitate the sale or resale of the Securities.
(x) Neither the Company nor any of its affiliates (within the
meaning of Rule 144 under the Securities Act) directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any "security" (as defined in the Securities
Act) which is or could be integrated with the sale of the Securities in
a manner that would require the registration under the Securities Act
of the Securities, or (ii) engaged in any form of general solicitation
or general advertising (as those terms are used in Regulation D under
the Securities Act) in connection with the offering of the Securities
or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act. The offer and sale of the Notes to
the Initial Purchaser and the Initial Purchaser's resale of the Notes
in the manner contemplated by this Agreement and the Offering
Memorandum does not require registration under the Securities Act and
the Indenture does not require qualification under the TIA.
(y) Except as described in the Offering Memorandum (or, if the
Offering Memorandum is not finalized and dated as of the date hereof,
the most recent Preliminary Offering Memorandum), no holder of any
Relevant Security has any rights to require registration of any
Relevant Security as part or on account of, or otherwise in connection
with the Offering and any of the other transactions contemplated by the
Offering Documents, and any such rights so disclosed have been
effectively waived by the holders thereof, and any such waivers remain
in full force and effect.
(z) Neither the Company nor any Subsidiary is now and,
immediately after the sale of the Notes as contemplated hereunder and
application of the net proceeds of such sale as described in the
Offering Memorandum under the caption "Use of Proceeds," will be an
"investment company" or be controlled by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(aa) No relationship, direct or indirect, exists between or
among the Company or any affiliate of the Company, on the one hand, and
any director, officer, stockholder, customer or supplier of the Company
or any
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affiliate of the Company, on the other hand, which is required by the
Exchange Act to be described in the Company's annual and/or quarterly
reports on Forms 10-K and 10-Q, as applicable, which is not so
described and described as required in such reports. There are no
outstanding loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the
executive officers or directors of the Company or any of their
respective family members. Neither Xxxxxxx Xxxxxxxxxxxx nor Xxxxxxxx
Xxxx is an executive officer of the Company.
(bb) Each of the Company and each Subsidiary owns or leases
all such properties as are necessary to the conduct of their respective
businesses as presently operated and as proposed to be operated as
described in the Offering Memorandum (or, if the Offering Memorandum is
not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum). The Company and each Subsidiary have
good and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them, in each
case free and clear of all Liens except such as are described in the
Offering Memorandum (or, if the Offering Memorandum is not finalized
and dated as of the date hereof, the most recent Preliminary Offering
Memorandum) or as described in Section 2(b)(4) of this Agreement, such
as could not reasonably be expected to have a Material Adverse Effect;
and any real property and buildings held under lease or sublease by the
Company and any Subsidiary are held by them under valid, subsisting and
enforceable leases or subleases with such exceptions as are not
material to, and do not interfere with, the use made and proposed to be
made of such property and buildings by the Company and such Subsidiary.
Neither the Company nor any Subsidiary has received any notice of any
claim adverse to its ownership of any real or personal property or of
any claim against the continued possession of any real property,
whether owned or held under lease or sublease by the Company or any
Subsidiary.
(cc) The Company and each Subsidiary (i) owns or possesses
adequate rights to use Company and Subsidiary patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses,
formulae, customer lists, and know-how and other intellectual property
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures,
"Intellectual Property") necessary for the conduct of its business as
being conducted and as proposed to be conducted as described in the
Offering Memorandum (or, if the Offering Memorandum is not finalized
and dated as of the date hereof, the most recent Preliminary Offering
Memorandum), (ii) owns or possesses adequate rights to use third party
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights,
licenses, formulae, customer lists, and know-how and other intellectual
property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures, "Third Party Intellectual Property") necessary for the
conduct of their respective
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businesses as being conducted and as proposed to be conducted as
described in the Offering Memorandum (or, if the Offering Memorandum is
not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum), and (iii) has no reason to believe
that the conduct of its business conflicts with, and has not received
any notice of any claim of conflict with, any such right of others,
except with respect to the prior use of the slogan "Socket in your
Pocket" by Charge 2 Go.
To the Company's knowledge, none of the patents owned or
licensed by the Company or any Subsidiary are invalid or unenforceable.
To the Company's knowledge, all technical information developed by and
belonging to the Company or any Subsidiary which has not been patented
has been kept confidential, except such information, the disclosure of
which could not reasonably be expected to have a Material Adverse
Effect. To the Company's knowledge, there is no infringement by third
parties of any Intellectual Property of the Company or any Subsidiary.
There is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's or any
Subsidiary's rights in or to any Intellectual Property or Third Party
Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim. There is no pending
or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others that the Company or any Subsidiary infringes or
otherwise violates any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any
facts which would form a reasonable basis for any such claim.
(dd) The Company has duly filed or caused to be filed with the
U.S. Patent and Trademark Office (the "PTO") and applicable foreign and
international patent authorities all patent applications described in
the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum) and owned by the Company. The Company has complied
with the PTO's duty of candor and disclosure, and complied with such
duty that any other applicable patent office may have, regarding
prosecution of the patent applications and made no misrepresentation in
the patent applications. The Company is not aware of any facts material
to a determination of patentability regarding the patent applications
not called to the attention of the PTO that would preclude the grant of
a patent for the patent applications; and the Company has secured with
appropriate legal instruments clear title to the patent applications
and has no knowledge of any facts which would adversely affect the
patent applications.
(ee) The Company and each Subsidiary maintain insurance in
such amounts and covering such risks as the Company considers adequate
for the conduct of its business and the value of its properties, all of
which insurance is in full force and effect. There are no claims by the
Company or any Subsidiary under any such policy or instrument as to
which any insurance company has indicated that it intends to deny
liability or to provide defense
12
under a reservation of rights clause. The Company believes that it will
be able to renew its existing insurance as and when such coverage
expires or will be able to obtain replacement insurance adequate for
the conduct of the business and the value of its properties at a cost
that could not reasonably be expected to have a Material Adverse
Effect.
(ff) The Company has in effect insurance covering the Company
and its directors and officers for liabilities or losses arising in
connection with this Offering, including, without limitation,
liabilities or losses arising under the Securities Act, the Exchange
Act and applicable foreign securities laws.
(gg) Each of the Company and each Subsidiary has prepared and
timely filed all federal, state, local, foreign and other tax returns
that are required to be filed by it and has paid or made provision for
the payment of all taxes, assessments, governmental or other similar
charges, including, without limitation, all sales and use taxes and all
taxes which the Company or the Subsidiary is obligated to withhold from
amounts owing to employees, creditors and third parties, with respect
to the periods covered by such tax returns (whether or not such amounts
are shown as due on any tax return). No deficiency assessment with
respect to a proposed adjustment of the Company's or any Subsidiary's
federal, state, local or foreign taxes is pending or, to the Company's
knowledge, threatened. The accruals and reserves on the books and
records of the Company and the Subsidiaries in respect of tax
liabilities for any taxable period not finally determined are adequate
to meet any assessments and related liabilities for any such period.
Neither the Company nor any Subsidiary have incurred any liability for
taxes other than in the ordinary course of its business. There is no
tax Lien, whether imposed by any federal, state, local, foreign or
other taxing authority, outstanding against the assets, properties or
business of the Company or any Subsidiary.
(hh) No collective bargaining agreement covering any employee
of the Company or any Subsidiary exists that is binding on either the
Company or any Subsidiary, and, to the Company's knowledge, no petition
has been filed or proceeding instituted by an employee or group of
employees of either the Company or any Subsidiary with the National
Labor Relations Board seeking recognition of a bargaining
representative. To the Company's knowledge, no organizational effort
currently is being made or threatened by or on behalf of any labor
union to organize any employees of either the Company or any
Subsidiary, and there currently is no labor strike or organized work
stoppage in effect by the employees of either the Company or any
Subsidiary.
(ii) No non-exempt "prohibited transaction" (as defined in
either Section 406 of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"), or Section 4975 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")),
"accumulated funding deficiency" (as defined
13
in Section 302 of ERISA) or other event of the kind described in
Section 4043(c) of ERISA (other than events with respect to which the
30-day notice requirement under Section 4043 of ERISA has been waived)
has occurred with respect to any employee benefit plan (as defined in
Section 3(3) of ERISA) established or maintained by the Company or any
Subsidiary for which the Company or any Subsidiary has incurred or
expects to incur any material liability; each employee benefit plan (as
defined in Section 3(3) of ERISA) established or maintained by Company
or any Subsidiary is in compliance in all material respects with
applicable law, including without limitation, ERISA and the Code; the
Company has not incurred and does not expect to incur material
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any "pension plan" (as defined in Section 3(2))
established or maintained by the Company; and each pension plan (as
defined in Section 3(2)) established or maintained by the Company or
any Subsidiary that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the Company's knowledge, nothing has
occurred, whether by action or by failure to act, which could cause the
loss of such qualification. For purposes of this Section 2(ii), the
terms "Company" and "Subsidiary" include any employer, trade, business
or corporation related to or under common control with the Company and
any Subsidiary under Section 414 of the Code, including, without
limitation, Sections 414(b), 414(c), 414(m) and 414(o) of the Code.
(jj) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of
any kind of toxic or hazardous substances or wastes regulated under
Environmental Laws ("Hazardous Substances") by the Company or any
Subsidiary (or, to the Company's knowledge, any other entity for whose
acts or omissions the Company is liable) upon any property now or
previously owned or leased by the Company or any Subsidiary or, to the
Company's or Subsidiary's knowledge, upon any other property, in
violation of any applicable law, rule, regulation, order, judgment,
decree or permit relating to pollution or protection of human health
and the environment ("Environmental Law"). There has been no disposal,
discharge, emission or other release of any kind onto such property of
any Hazardous Substances in violation of Environmental Laws. Neither
the Company nor any Subsidiary has agreed to assume, undertake or
provide indemnification for any liability of any other person under any
Environmental Law, including any obligation for cleanup or remedial
action. There is no pending or, to the Company's knowledge, threatened
administrative, regulatory or judicial action, claim or notice of
noncompliance or violation, investigation or proceedings pursuant to
any Environmental Law against the Company or any Subsidiary or, to the
Company's knowledge, any other party for which the Company or any
Subsidiary may be held liable.
(kk) Neither the Company, any Subsidiary, nor to the Company's
knowledge, any of its officers, directors, employees or agents has at
any time (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any
14
payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States.
(ll) Neither the Company nor any Subsidiary (i) is in
violation of its certificate of incorporation, bylaws, or other
organizational documents, or (ii) is in default under, and no event has
occurred which, with notice or lapse of time or both, would constitute
a default under or result in the creation or imposition of any Lien
upon any of its property or assets pursuant to, any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant,
instrument, franchise, license or permit to which it is a party or by
which it is bound or to which any of its property or assets is subject,
except (in the case of clause (ii) above) defaults or Liens disclosed
in the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum).
(mm) Except as described in the Offering Memorandum (or, if
the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum), none of the
Company or any Subsidiary is in default under any of the contracts
described in the Offering Memorandum (or, if the Offering Memorandum is
not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum) or has received a notice or claim of
any such default or has knowledge of any breach of such contracts by
the other party or parties thereto.
(nn) Neither the Company nor any Subsidiary has taken or will
take any action that would cause this Agreement or the issuance or sale
of the Securities to violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect or
as the same may hereafter be in effect, on the Closing Date (and, if
any Optional Notes are purchased, as of the Additional Closing Date).
(oo) No securities of the Company or of any Subsidiary are (i)
of the same class (within the meaning of Rule 144A under the Securities
Act) as the Notes, and (ii) listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated interdealer quotation system.
(pp) The statistical, industry-related and market-related data
included in the Offering Memorandum (or, if the Offering Memorandum is
not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum) are based on or derived from sources
which the Company reasonably and in good faith believes are reliable
and accurate, and such data agree with the sources from which they are
derived.
15
(qq) The Company has not distributed and, prior to the later
to occur of the (i) Closing Date, (ii) if any Optional Notes are
purchased, the Additional Closing Date, and (iii) completion of the
distribution of the Notes, will not distribute any offering material in
connection with the offer and sale of the Notes other than the
Preliminary Offering Memorandum and the Offering Memorandum.
(rr) The certificates for the shares of Common Stock
(including the Conversion Shares) conform to the requirements of
Delaware General Corporation Law.
(ss) The Company is in compliance with applicable provisions
of the Xxxxxxxx-Xxxxx Act of 2002 that are effective and is actively
taking steps to ensure that it will be in compliance with other
applicable provisions of the Xxxxxxxx-Xxxxx Act upon the effectiveness
of such provisions.
(tt) The Company has implemented the "disclosure controls and
procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) required in order for the Chief Executive Officer and
Chief Financial Officer of the Company to engage in the review and
evaluation process mandated by the Exchange Act. The Company's
"disclosure controls and procedures" are reasonably designed to ensure
that all information (both financial and non-financial) required to be
disclosed by the Company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within
the specified time periods, and that all such information is
accumulated and communicated to the Company's management as appropriate
to allow timely decisions regarding required disclosure and to make the
certifications of the Chief Executive Officer and Chief Financial
Officer of the Company required under the Exchange Act with respect to
such reports.
(uu) Since December 31, 2003, the Company has not informed its
auditors or the audit committee of the board of directors of the
Company (or persons fulfilling the equivalent function) of (i) any
significant deficiencies in the design or operation of internal
controls over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize
and report financial data nor any material weaknesses in internal
controls over financial reporting; or (ii) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal controls.
(vv) Except as disclosed in the Offering Memorandum (or, if
the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum), there are no
outstanding guarantees or other known contingent obligations of the
Company or any Subsidiary.
16
3. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase
from the Company, at 100% of their principal amount plus accrued
interest, if any, from July 26, 2005, the aggregate principal amount of
the Firm Notes set forth on Schedule 1 hereto.
(b) In addition, on the basis of the representations,
warranties, agreements and covenants herein contained and subject to
the terms and conditions herein set forth, the Company hereby grants an
option to the Initial Purchaser to purchase up to $7,000,000 in
aggregate principal amount of Optional Notes from the Company at the
same price as the purchase price to be paid by the Initial Purchaser
for the Firm Notes, plus accrued interest, if any, from the Closing
Date to the Additional Closing Date. The option granted hereunder may
be exercised at any time, on or before the thirtieth day following the
date of the Offering Memorandum (the "Option Exercise Period") upon
written notice by the Initial Purchaser to the Company, which notice
may be given from time to time on one or more occasions. Such notice
shall set forth (i) the amount (which shall be an integral multiple of
$1,000 in aggregate principal amount at issuance) of Optional Notes as
to which the Initial Purchaser is exercising the option, and (ii) the
time, date and place at which such Optional Notes will be delivered
(which time and date may be simultaneous with, but not earlier than,
the Closing Date and, in such case, the term "Closing Date" shall refer
to the time and date of delivery of the Firm Notes and the Optional
Notes). Such time and date of delivery, if subsequent to the Closing
Date, is called the "Additional Closing Date." The Additional Closing
Date shall be determined by the Initial Purchaser but, unless it is the
Closing Date, shall be no earlier than three and no later than eight
full business days after the date the Initial Purchaser exercises the
option. The Initial Purchaser may cancel the option at any time prior
to its expiration by giving written notice of such cancellation to the
Company.
(c) Delivery of and payment for the Firm Notes shall be made
at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at 9:00 a.m.,
New York time, on July 26, 2005, or at such other date as the Initial
Purchaser and the Company may agree upon, such time and date being
herein referred to as the "Closing Date." The Firm Notes shall be
delivered on the Closing Date against payment of the purchase price
therefore by wire transfer of immediately available funds to an account
specified in writing to the Initial Purchaser by the Company. If
requested by the Initial Purchaser, one or more global securities
representing the Firm Notes shall be registered by the Trustee in the
name of Cede & Co., the nominee of The Depository Trust Company
("DTC"), and credited to such accounts as the Initial Purchaser shall
request, upon notice to the Company at least 48 hours prior to the
Closing Date.
17
(d) Delivery to the Initial Purchaser of and payment for the
Optional Notes shall be made on the Additional Closing Date in the same
manner and in the same office as payment for the Firm Notes.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes to
make an offering of the Notes at the price and upon the terms set forth in the
Offering Memorandum as soon as practicable after this Agreement is entered into
and as in the judgment of the Initial Purchaser is advisable. The Initial
Purchaser may from time to time thereafter change the price and other selling
terms.
5. Certain Covenants. For purposes of this Section 5, "Closing Date"
shall refer to the Closing Date for the Firm Notes and any Additional Closing
Date for the Optional Notes. The Company covenants and agrees with the Initial
Purchaser that:
(a) The Company will not amend or supplement the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or
supplement thereto of which the Initial Purchaser shall not previously
have been advised and furnished a copy for a reasonable period of time
prior to the proposed amendment or supplement and as to which the
Initial Purchaser shall not have given its consent, other than by
filing documents under the Exchange Act that are incorporated by
reference therein, without the consent of the Initial Purchaser (which
consent shall not be unreasonably withheld). The Company will promptly,
upon the reasonable request of the Initial Purchaser or counsel to the
Initial Purchaser, make any amendments or supplements to the Offering
Memorandum that may be reasonably necessary or advisable in connection
with the resale of the Notes by the Initial Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification or exemption of the Notes for offer and
sale under the securities or "blue sky" laws of such jurisdictions as
the Initial Purchaser may designate and will continue any such
qualifications or exemptions in effect for as long as may be necessary
to complete the distribution of the Notes by the Initial Purchaser;
provided, however, that in connection therewith the Company shall not
be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or to take any other
action that would subject it to general service of process or to
taxation in respect of doing business in any jurisdiction in which it
is not otherwise subject.
(c) If, at any time prior to the completion of the resale by
the Initial Purchaser of the Notes, any event shall occur as a result
of which it is necessary, in the opinion of counsel for the Initial
Purchaser, to amend or supplement the Offering Memorandum in order to
make such Offering Memorandum not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or
if for any other reason it shall be necessary to amend or supplement
the Offering Memorandum in order to comply with applicable laws, rules
or regulations, the Company shall notify the Initial Purchaser of any
such event and (subject to Section 5(a)) forthwith amend or
18
supplement such Offering Memorandum at its own expense so that, as so
amended or supplemented, such Offering Memorandum will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading and will comply
with all applicable laws, rules or regulations.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel to the Initial Purchaser as many copies of
each of the Preliminary Offering Memorandum, Offering Memorandum or any
amendment or supplement thereto as the Initial Purchaser or its counsel
may reasonably request.
(e) During the period of three years from the Closing Date,
the Company will furnish to the Initial Purchaser (i) as soon as
practicable after mailing, a copy of each report and other
communication (financial or otherwise) of the Company mailed to the
Trustee or the holders of the Notes, stockholders or any national
securities exchange on which any class of securities of the Company may
be listed other than materials filed with the Commission via XXXXX, and
(ii) from time to time, subject to compliance with applicable
securities laws, such other information concerning the Company and any
Subsidiary as the Initial Purchaser may reasonably request.
(f) The Company will apply the net proceeds from the sale of
the Notes materially as set forth under "Use of Proceeds" in the
Offering Memorandum.
(g) None of the Company or any of its respective affiliates
(as defined in Rule 144(a) under the Securities Act) will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any "security" (as defined in the Securities Act) which could be
integrated with the sale of the Notes in a manner which would require
the registration under the Securities Act of the Notes.
(h) For so long as the Notes constitute "restricted"
securities within the meaning of Rule 144(a)(3) under the Securities
Act, the Company will not, and will not permit any Subsidiary to,
solicit any offer to buy or offer to sell the Notes by means of any
form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(i) For so long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and not able to be sold in their entirety by a seller
under Rule 144 under the Securities Act (or any successor provision),
the Company will make available, upon request, to any such seller of
such Notes the information
19
specified in Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act.
(j) During the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchaser, the Company will not, and will not permit any of its
"affiliates" (as defined in Rule 144(a) under the Securities Act) to,
resell any of the Securities which constitute "restricted securities"
under Rule 144 that have been reacquired by any of them.
(k) The Company will not take any action prohibited by
Regulation M under the Exchange Act in connection with the distribution
of the Securities contemplated hereby.
(l) The Company will (i) permit the Notes to be included for
quotation on the PORTAL Market, and (ii) permit the Notes to be
eligible for clearance and settlement through DTC.
(m) The Company will use its best efforts to list the
Conversion Shares for quotation on the Nasdaq National Market as
promptly as practicable but in no event later than the time that the
Registration Statement is declared effective in accordance with the
Registration Rights Agreement.
(n) The Company will, at all times, reserve and keep
available, free of preemptive rights, enough shares of Common Stock for
the purpose of enabling the Company to satisfy its obligations to issue
the Conversion Shares upon conversion of the Notes.
(o) During the period of 90 days from the date of the Offering
Memorandum, without the prior written consent of the Initial Purchaser,
the Company (i) will not, directly or indirectly, issue, offer, sell,
agree to issue, offer or sell, solicit offers to purchase, grant any
call option, warrant or other right to purchase, purchase any put
option or other right to sell, pledge, borrow or otherwise dispose of
any Relevant Security, or make any announcement of any of the
foregoing, (ii) will not establish or increase any "put equivalent
position" or liquidate or decrease any "call equivalent position" (in
each case within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder) with respect to any
Relevant Security, and (iii) will not otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to
another, in whole or in part, any economic consequence of ownership of
a Relevant Security, whether or not such transaction is to be settled
by delivery of Relevant Securities, other securities, cash or other
consideration, other than (1) the sale of Notes as contemplated by this
Agreement; (2) the issuance of the Conversion Shares; (3) the Company's
issuance of Common Stock upon the conversion or exchange of convertible
or exchangeable securities outstanding on the date hereof; (4) the
Company's issuance of Common Stock upon the exercise of currently
outstanding options and warrants; (5) the grant of
20
options, or the issuance and sale of shares upon exercise of options
granted, pursuant to the Company's 1999 Stock Option Plan as in effect
on the date hereof; and (6) the private placement (the "Subsequent
Private Placement") by the Company under Section 4(2) of the Securities
Act of securities aggregating not more than $22,000,000 less the
principal amount of Optional Notes the Initial Purchaser has agreed to
purchase during the Option Exercise Period of which not more than
$11,000,000 less the principal amount of Optional Notes the Initial
Purchaser has agreed to purchase during the Option Exercise Period may
be debt securities having identical terms to the Notes and issued
pursuant to the Indenture (and registered pursuant to the Registration
Rights Agreement) and the remainder shall be Common Stock; provided
that (x) any debt securities sold by the Company pursuant to this
clause (6) may only be issued to QIBs and, except with respect to an
aggregate of $4,000,000 of debt securities which may be sold by the
Company at any time during the Option Exercise Period, must be sold
within 18 days (or, if the 18th day is not a business day, the next
business day) after the expiration of the Option Exercise Period, and
(y) any Common Stock sold pursuant to this clause (6) shall be issued
at a price at least equal to 90% of the closing sales price of the
Common Stock on the NASDAQ National Market on the day immediately
preceding the date such Common Stock is sold. The Company will not file
a registration statement under the Securities Act during such 90 day
period in connection with any transaction by the Company or any person
that is prohibited pursuant to the foregoing, except for (A) the
Company's filing of registration statements pursuant to the
Registration Rights Agreement, (B) registration statements on Form S-8
relating to employee benefit plans, (C) the Company's filing of
registration statements pursuant to registration obligations
outstanding on the date hereof, and (D) the Company's filing of
registration statements covering Common Stock issued pursuant to the
Subsequent Private Offering; provided in the case of this clause (D)
that the initial registration statement relating to the resale of the
Notes and the Conversion Shares has been declared effective by the SEC.
(p) The Company will do and perform all things required to be
done and performed by it under this Agreement and the other Offering
Documents prior to or after the Closing Date and will use its best
efforts to satisfy all conditions on its part to the obligations of the
Initial Purchaser to purchase and accept delivery of the Notes.
6. Expenses. Whether or not the Offering is consummated or this
Agreement is terminated (pursuant to Section 11 or otherwise), the Company
agrees to pay the following costs and expenses and all other costs and expenses
incident to the performance by the Company of its obligations hereunder: (a) the
negotiation, preparation, printing, typing, reproduction, execution and delivery
of this Agreement and of the other Offering Documents, any amendment or
supplement to or modification of any of the foregoing and any and all other
documents furnished pursuant hereto or thereto or in connection herewith or
therewith; (b) the preparation, printing or reproduction of the each Preliminary
Offering Memorandum, the Offering Memorandum and each amendment or supplement to
it; (c) the delivery (including postage, air freight charges
21
and charges for counting and packaging) of such copies of each Preliminary
Offering Memorandum, the Offering Memorandum and all amendments or supplements
to any of them as may be reasonably requested for use in connection with the
offer and sale of the Notes; (d) the preparation, printing, authentication,
issuance and delivery of certificates for the Notes and the Conversion Shares,
including any stamp taxes in connection with the original issuance and sale of
the Securities; (e) the reproduction and delivery of this Agreement and the
other Offering Documents, the preliminary and supplemental "blue sky" memoranda
and all other agreements or documents reproduced and delivered in connection
with the offering of the Securities; (f) the exemption from, or registration or
qualification of the Securities for offer and sale under the securities or "blue
sky" laws of the several states (including filing fees and the reasonable fees,
expenses and disbursements of counsel to the Initial Purchaser relating to such
registration and qualification); (g) the reasonable travel and out-of-pocket
expenses and due diligence and other related expenses incurred by the Initial
Purchaser (other than the fees and disbursements of its counsel, which fees and
disbursements are covered by clause (f) above with respect to the matters
referred to therein and clause (h) below in all other respects) up to a maximum
aggregate amount of $25,000; (h) the reasonable fees and disbursements of
counsel to the Initial Purchaser in connection with the Offering Documents and
the transactions contemplated thereby, including the Offering; (i) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to and related communications
with prospective purchasers of the Notes; (j) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel, if any) for the Company; (k) fees and expenses of the Trustee
including fees and expenses of its counsel; (l) all expenses and listing fees
incurred in connection with the application for quotation of the Notes on the
PORTAL Market; (m) all expenses and listing fees incurred in connection with the
application for listing for quotation of the Common Stock on the Nasdaq National
Market; and (n) all expenses incurred in connection with the performance of the
Company's obligations under the Registration Rights Agreement, as set forth
therein.
7. Conditions of the Initial Purchaser's Obligations. For purposes of
this Section 7, "Closing Date" shall refer to the Closing Date for the Firm
Notes and any Additional Closing Date for the Optional Notes. The obligations of
the Initial Purchaser to purchase and pay for the Notes are subject to the
absence from any certificates, opinions, written statements or letters furnished
to the Initial Purchaser pursuant to this Section 7 of any misstatement or
omission and to the following additional conditions unless waived in writing by
the Initial Purchaser.
(A) The Initial Purchaser shall have received an opinion in
form and substance reasonably satisfactory to the Initial Purchaser,
dated the Closing Date, of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP, United
States and Securities counsel to the Company, and Meitar, Liquornik,
Geva & Leshem Xxxxxxxxx, Law Offices, Israeli counsel to the Company,
covering the matters set forth on Exhibit B hereto.
(B) The Initial Purchaser shall have received an opinion in
form and substance reasonably satisfactory to the Initial Purchaser,
dated
22
the Closing Date, of Xxxxx Xxxxx Zedek Xxxxxx and Dr. Xxxx Xxxxxxxx and
Xxxxxxxxx & Xxxxxxxxx, P.L.C., intellectual property counsels to the
Company, covering the matters set forth on Exhibit C hereto.
(C) The Initial Purchaser shall have received an opinion of
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the
Initial Purchaser, dated the Closing Date, with respect to the
sufficiency of certain legal matters relating to this Agreement and
such other related matters as the Initial Purchaser may require.
(D) The Initial Purchaser shall have received from Xxxx Xxxxx
Xxxxx & Kasierer, a member of Ernst & Young Global, independent public
registered accounting firm for the Company, on each of the date hereof
and the Closing Date, in form and substance reasonably satisfactory to
the Initial Purchaser and Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., counsel to the Initial Purchaser, letters dated the date
hereof and the Closing Date confirming that Xxxx Xxxxx Xxxxx & Kasierer
is an independent public registered accounting firm within the meaning
of the Exchange Act and the applicable published rules and regulations
thereunder and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the audited financial statements for the fiscal years
ended December 31, 2004 and 2003 and certain financial and statistical
information contained in the Offering Memorandum and the Annexes
thereto.
(E) The Initial Purchaser shall have received from each of the
officers and directors listed on Schedule 2 hereto an executed Lock-Up
Agreement in substantially the form of Exhibit D hereto.
(F) The representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the
Closing Date, and the Company shall have complied in all material
respects with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to the Closing Date.
(G) None of the issuance and sale of the Securities pursuant
to this Agreement or any of the transactions contemplated by this
Agreement or any of the other Offering Documents shall be enjoined
(temporarily or permanently) and no restraining order or other
injunctive order shall have been issued; and there shall not have been
any legal action, statute, order, decree or other administrative
proceeding enacted, instituted or overtly threatened against the
Company or against the Initial Purchaser relating to the issuance of
the Securities or the Initial Purchaser's activities in connection
therewith or any other transactions contemplated by this Agreement or
the Offering Memorandum or the other Offering Documents.
23
(H) Subsequent to the date of this Agreement and since the
date of the most recent financial statements in the Offering Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), there shall not have occurred (i) any change, or any
development involving a prospective change in, or affecting the
business, condition (financial or other), properties or results of
operations of, the Company or any Subsidiary not disclosed in the
Offering Memorandum that is, in the judgment of the Initial Purchaser,
so material and adverse as to make it impracticable or inadvisable to
proceed with the Offering on the terms and in the manner contemplated
by the Offering Memorandum, or (ii) any event or development relating
to or involving the Company or any Subsidiary or any of their
respective officers or directors that makes any statement of a material
fact made in the Offering Memorandum untrue or that, in the opinion of
the Company and its counsel or the Initial Purchaser and its counsel,
requires the making of any addition to or change in the Offering
Memorandum in order to state a material fact necessary in order to make
the statements made therein not misleading.
(I) The Initial Purchaser shall have received a certificate,
dated the Closing Date and signed by the President and the Chief
Executive Officer of the Company, to the effect that:
(i) All of the representations and warranties of the
Company set forth in this Agreement are true and correct as if made
on and as of the Closing Date and, as of the Closing Date, all
agreements, conditions and obligations of the Company to be
performed, satisfied or complied with hereunder on or prior the
Closing Date have been duly performed, satisfied or complied with.
(ii) The issuance and sale of the Notes pursuant to this
Agreement and the Offering Memorandum and the consummation of the
transactions contemplated by the Offering Documents have not been
enjoined (temporarily or permanently) and no restraining order or
other injunctive order has been issued and there has not been any
legal action, order, decree or other administrative proceeding
instituted or, to such officers' knowledge, threatened against the
Company relating to the issuance of the Securities or the Initial
Purchaser's activities in connection therewith or in connection with
any other transactions contemplated by this Agreement or the
Offering Memorandum or the other Offering Documents.
(iii) Subsequent to the date of this Agreement and since
the date of the most recent financial statements in the Offering
Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), there has not occurred (1) any change, or any
development involving a prospective change, in or affecting the
business, condition (financial or other), properties or results of
operations of the Company or any Subsidiary, not contemplated by the
Offering
24
Memorandum, or (2) any event or development relating to or involving
the Company or any Subsidiary or any of their respective officers or
directors that makes any statement of a material fact made in the
Offering Memorandum untrue or that requires the making of any
addition to or change in the Offering Memorandum in order to state a
material fact necessary in order to make the statements made therein
not misleading.
(iv) At the Closing Date and after giving effect to the
consummation of the transactions contemplated by the Offering
Memorandum, there shall exist no Default or Event of Default (as
defined in the Indenture).
(J) Each of the Offering Documents and each other agreement or
instrument executed in connection with the transactions contemplated
thereby shall be satisfactory in form and substance to the Initial
Purchaser and shall have been executed and delivered by all the
respective parties thereto (other than the Initial Purchaser) and shall
be in full force and effect, and there shall have been no amendments,
alterations, modifications or waivers of any provision thereof since
the date of this Agreement.
(K) All proceedings taken in connection with the issuance of
the Notes and the transactions contemplated by this Agreement, the
other Offering Documents and all documents and papers relating thereto
shall be satisfactory to the Initial Purchaser and counsel to the
Initial Purchaser. The Initial Purchaser and counsel to the Initial
Purchaser shall have received copies of such papers and documents as
they may reasonably request in connection therewith, all in form and
substance reasonably satisfactory to them.
(L) The Notes shall have been approved for trading on PORTAL.
(M) On or before the Closing Date, the Initial Purchaser shall
have received the Registration Rights Agreement executed by the
Company, and such agreement shall be in full force and effect.
(N) The Company shall have furnished or caused to be furnished
to the Initial Purchaser such further certificates and documents as the
Initial Purchaser shall have reasonably requested.
(O) At the Closing Date, the Company and the Trustee shall
have entered into the Indenture and the Initial Purchaser shall have
received counterparts, conformed as executed, thereof and the Notes
shall have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
All such opinions, certificates, letters, schedules, documents or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof
25
only if they are satisfactory in all material respects to the Initial Purchaser
and counsel to the Initial Purchaser. The Company shall furnish to the Initial
Purchaser such conformed copies of such opinions, certificates, letters,
schedules, documents and instruments in such quantities as the Initial Purchaser
shall reasonably request.
8. Indemnification.
(a) The Company shall indemnify and hold harmless (i) the
Initial Purchaser, (ii) each person, if any, who controls the Initial
Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and (iii) the respective officers,
directors, partners, employees, representatives and agents of the
Initial Purchaser or any controlling person, from and against any and
all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including, but not limited to, reasonable attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they
or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are
based upon (1) any untrue statement or alleged untrue statement of a
material fact contained in (A) the Preliminary Offering Memorandum or
the Offering Memorandum, or (B) any materials or information provided
to investors by the Company, or with the written approval of the
Company, in connection with the marketing of the Securities, including
any road show or investor presentations made to investors by the
Company (whether in person or electronically) ("Marketing Materials"),
(2) the omission or alleged omission to state in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any Marketing
Materials, a material fact necessary to make the statements therein not
misleading, or (3) any breach of any representation, warranty, covenant
or agreement made by the Company in this Agreement, any of the other
Offering Documents or any certificate, letter, schedule, document or
instrument delivered in connection herewith or therewith; provided,
however, that in the case of clauses (1) and (2) hereof, the Company
will not be liable in any such case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by
or on behalf of the Initial Purchaser expressly for use therein. The
parties acknowledge and agree that such information provided by or on
behalf of the Initial Purchaser consists solely of the material
identified in Section 15 hereof. This indemnity agreement will be in
addition to any liability that the Company may otherwise have,
including under this Agreement.
(b) The Initial Purchaser shall indemnify and hold harmless
(i) the Company, (ii) 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,
26
and (iii) the officers, directors, partners, employees, representatives
and agents of the Company, from and against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred
(including, but not limited to, attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending
against any investigation or litigation, commenced or threatened, or
any claim whatsoever and any and all amounts paid in settlement of any
claim or litigation), joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or arise out of or are based upon the omission or alleged
omission to state in the Preliminary Offering Memorandum or the
Offering Memorandum a material fact necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by
or on behalf of such Initial Purchaser expressly for use therein;
provided, however, that in no case shall the Initial Purchaser be
liable or responsible for any amount in excess of the discounts and
commissions received by such Initial Purchaser in connection with the
sale of the Notes. The parties acknowledge and agree that such
information provided by or on behalf of the Initial Purchaser consists
solely of the material identified in Section 15 hereof. This indemnity
will be in addition to any liability that the Initial Purchaser may
otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
each party against whom indemnification is to be sought in writing of
the commencement thereof (but the failure so to notify an indemnifying
party shall not relieve it from any liability which it may have under
this Section 8). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate, at its own expense in the defense of such action, and to
the extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; provided, however, that counsel
to the indemnifying party shall not (except with the written consent of
the indemnified party) also be counsel to the indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the
27
indemnifying parties shall not have employed counsel to take charge of
the defense of such action within a reasonable time after notice of
commencement of the action, (iii) the indemnifying party does not
diligently defend the action after assumption of the defense, or (iv)
such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from
or additional to those available to one or all of the indemnifying
parties (in which case the indemnifying party or parties shall not have
the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses of one such counsel and any local counsel shall be borne by
the indemnifying parties. No indemnifying party shall, without the
prior written consent of the indemnified parties, effect any settlement
or compromise of, or consent to the entry of judgment with respect to,
any pending or threatened claim, investigation, action or proceeding in
respect of which indemnity or contribution may be or could have been
sought by an indemnified party under this Section 8 or Section 9 hereof
(whether or not the indemnified party is an actual or potential party
thereto), unless (x) such settlement, compromise or judgment (A)
includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or
proceeding and (B) does not include a statement as to or an admission
of fault, culpability or any failure to act, by or on behalf of the
indemnified party, and (y) the indemnifying party confirms in writing
its indemnification obligations hereunder with respect to such
settlement, compromise or judgment.
9. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 8 is for any reason held to
be unavailable from an indemnifying party or is insufficient to hold harmless a
party indemnified thereunder, the Company, on the one hand, and the Initial
Purchaser, on the other hand, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, liabilities, claims, damages and expenses suffered by the Company, any
contribution received by the Company from persons, other than the Initial
Purchaser, who may also be liable for contribution, including persons who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) to which the Company and the Initial Purchaser
may be subject, in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Initial Purchaser, on
the other hand, from the offering of the Notes or, if such allocation is not
permitted by applicable law in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company, on the one hand, and the Initial Purchaser, on the other hand, in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Initial Purchaser, on the other hand, shall be deemed to be in
the same proportion as (a) the total proceeds from the offering of the Notes
(net of discounts but before deducting expenses) received by the
28
Company bear to (b) the discounts and commissions received by the Initial
Purchaser, respectively. The relative fault of the Company, on the one hand, and
of the Initial Purchaser, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Initial Purchaser and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Initial
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 9 were determined by pro rata allocation (even if the Initial
Purchaser were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above in Section 8
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 9,
(i) in no case shall the Initial Purchaser be required to contribute any amount
in excess of the amount by which the discounts and commissions received by the
Initial Purchaser in respect of the Notes resold by such Initial Purchaser in
the initial placement of such Notes exceeds the amount of any damages which the
Initial Purchaser has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission, or alleged omission and (ii) 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. For purposes of this Section 9,
(A) each person, if any, who controls the Initial Purchaser within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, and (B)
the respective officers, directors, partners, employees, representatives and
agents of the Initial Purchaser or any controlling person shall have the same
rights to contribution as such Initial Purchaser, and (C) each person, if any,
who controls any Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and (D) the officers, directors, employees,
representatives and agents of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 9. Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another party
or parties under this Section 9, notify such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 9 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its prior written consent, provided that such written consent shall not
be unreasonably withheld or delayed.
10. Survival Clause. The respective representations, warranties,
agreements, covenants and indemnities of the Company and the Initial Purchaser
set forth in this Agreement shall remain in full force and effect, regardless of
(a) any investigation
29
made by or on behalf of officers, directors, partners, employees, agents,
representatives or controlling persons referred to in Sections 8 and 9 hereof,
and (b) delivery of and payment for the Notes, and shall, subject to Section 13
hereof, be binding upon and shall inure to the benefit of, any successors,
permitted assigns, heirs and legal representatives of the Company, the Initial
Purchaser and the indemnified parties referred to in Section 8 hereof. The
respective agreements, covenants and indemnities set forth in Sections 6, 8, 9,
10 and 11 hereof shall remain in full force and effect, regardless of any
termination of this Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchaser by notice to the Company given in the event
that (i) the Company has failed, refused or been unable to satisfy all
conditions and obligations on its part to be performed or satisfied hereunder on
or prior to the Closing Date, or (ii) if at or prior to the Closing Date or at
or prior to the Additional Closing Date, as the case may be:
(A) any domestic or international event or act or
occurrence has materially disrupted, or in the opinion of the
Initial Purchaser will in the immediate future materially disrupt,
the market for the Company's securities or securities in general;
(B) trading on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market, shall have been suspended
or made subject to material limitations, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required, on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq Stock
Market, or by order of the Commission or other regulatory body or
governmental authority having jurisdiction;
(C) a banking moratorium has been declared by any state
or federal authority or if any material disruption in commercial
banking or securities settlement or clearance services shall have
occurred; or
(D) (1) there shall have occurred any outbreak or
escalation of hostilities or acts of terrorism involving the United
States or there is a declaration of a national emergency or war by
the United States, or (2) there shall have been any other calamity
or crisis or any change in political, financial or economic
conditions if the effect of any such event in (1) or (2), in the
judgment of the Initial Purchaser, makes it impracticable or
inadvisable to proceed with the offering, sale and delivery of the
Notes or the Optional Notes, as the case may be, on the terms and in
the manner contemplated by the Offering Memorandum.
(b) Subject to paragraph (c) below, termination of this
Agreement pursuant to this Section 11 shall be without liability of any
party to any other party except as provided in Section 10 hereof.
30
(c) If this Agreement shall be terminated pursuant to any of
the provisions hereof, or if the sale of the Notes provided for herein
is not consummated because any condition to the obligations of the
Initial Purchaser set forth herein is not satisfied or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will,
subject to demand by the Initial Purchaser, reimburse the Initial
Purchaser for all out-of-pocket expenses (including the reasonable fees
and the expenses of its counsel), incurred by the Initial Purchaser in
connection herewith.
12. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing, shall be delivered by hand
delivery, by telecopier, by courier guaranteeing overnight delivery or by
first-class mail, return receipt requested, and shall be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier
(provided notice is also given by some other means permitted by this Section
12), (iii) one Business Day after being deposited with such courier, if made by
overnight courier or (iv) on the date indicated on the notice of receipt, if
made by first-class mail, to the parties as follows: to the Initial Purchaser
c/o McMahan Securities Co. L.P., 000 X. Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
Attention: Xxxx Xxxxxxxx, Senior Managing Director, facsimile number: (203)
618-3401, and with a copy to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx
X. Xxxxxxx, Xx., Esq., facsimile number: (000) 000-0000, and if sent to the
Company, to Medis Technologies Ltd., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxxxxx, facsimile number: (000) 000-0000, and with a copy to
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP, Attention: Xxx X. Xxxxxxx, Esq., facsimile
number: (000) 000-0000.
13. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser and the Company and their respective
successors, permitted assigns and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (a) the indemnities of the Company contained in Section 8 of this Agreement
shall also be for the benefit of any person or persons who control the Initial
Purchaser within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and the respective officers, directors, partners, employees,
agents and representatives of the Initial Purchaser and any such person or
persons, and (b) the indemnities of the Initial Purchaser contained in Section 8
of this Agreement shall also be for the benefit of the directors, officers,
employees, agents and representatives of the Company and any person or persons
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act. No purchaser of Notes from the Initial
Purchaser will be deemed a successor or an assign because of such purchase.
Prior to the closing on the Closing Date, no party may assign this Agreement or
any of its rights hereunder without the prior written consent of the other party
or parties.
31
14. No Waiver; Modifications in Writing. No failure or delay on the
part of the Company or the Initial Purchaser in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or the Initial Purchaser at law or
in equity or otherwise. No waiver of or consent to any departure by the Company
or the Initial Purchaser from any provision of this Agreement shall be effective
unless signed in writing by the party entitled to the benefit thereof; provided
that notice of any such waiver shall be given to each party hereto as set forth
below. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of the Company and the Initial Purchaser. Any
amendment, supplement or modification of or to any provision of this Agreement,
any waiver of any provision of this Agreement, and any consent to any departure
by the Company or the Initial Purchaser from the terms of any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances.
15. Information Supplied by the Initial Purchaser. The statements set
forth in the third paragraph, third sentence of the tenth paragraph and eleventh
paragraph in the Offering Memorandum under the heading "Plan of Distribution"
constitute the only information furnished by the Initial Purchaser to the
Company for purposes of Sections 2(a), 8(a) and 8(b) hereof.
16. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto and supersedes all prior agreements, representations,
warranties, understandings and arrangements, oral or written, among the parties
hereto with respect to the subject matter hereof.
17. APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THE
VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET
FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO
CONFLICTS OF LAW. The Company agrees that any suit, action or proceeding against
the Company arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in any state or federal court in The City
of New York, New York, and waives any objection which it may now or hereafter
have to the laying of venue of any such proceeding, and irrevocably submits to
the non-exclusive jurisdiction of such courts in any suit, action or proceeding.
The Company expressly accepts the non-exclusive jurisdiction of any such court
in respect of any such suit, action or proceeding. The Company agrees that a
final judgment in any such proceeding brought in any such court shall be
conclusive and binding thereupon and may be enforced in any other court in the
jurisdiction to which the
32
Company is or may be subject by suit upon such judgment. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING
OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE IN
COUNTERPARTS FOLLOWS]
33
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Initial Purchaser.
Very truly yours,
MEDIS TECHNOLOGIES LTD.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXXX SECURITIES CO. L.P.
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxx
Title: Senior Managing Director
34
Schedule 1
----------
Principal Amount
Initial Purchaser of Notes
----------------- --------
XxXxxxx Securities Co. L.P.............................. $38,000,000
-----------
Total..................................... $38,000,000
===========
35
Schedule 2
----------
Israel Aircraft Industries Ltd.
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx
CVF, LLC
Xxx Xxxxxx
Xxxxxx Xxxx Trust of which Xxxxxx X. Xxxxxx is a trustee
36
Schedule 2(n)
-------------
In December 2004, the Company moved to its new facilities in Lod, Israel. As
part of the moving process, the Company applied for a business permit from the
municipality of Lod. The Company has paid all necessary fees and undertaken all
necessary administrative activities relating thereto. The Company has not yet
been issued the permit but under city ordinance is permitted to conduct business
while the permit application is pending.
37
Exhibit A
---------
Jurisdiction of
Subsidiary Incorporation
--------------------------------------------------- ------------------------
Medis, Inc. Delaware
Medis El Ltd. Israel
More Energy Ltd. Israel
As used in this Agreement, the term "Subsidiary" does not include Cell Kinetics
Ltd., Medis CellScan Ltd. and New Devices Engineering A.K.O. Ltd. The Company
represents and warrants that none of such companies owns any securities of any
Subsidiary, conducts any business or owns any assets, except that New Devices
Engineering A.K.O. Ltd. owns two patents, neither of which is used in the
business of the Company or any of its Subsidiaries as currently conducted or as
proposed to be conducted or is otherwise material to the Company in any respect.
38
Exhibit B
---------
Form of Opinion of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
----------------------------------------------------
1. Each of the Company and each U.S. Subsidiary has been incorporated and
validly exists as a corporation in good standing under the laws of its
respective jurisdiction of incorporation, with the requisite corporate power and
authority to own its properties and conduct its businesses as described in the
Offering Memorandum. Each of the Company and each U.S. Subsidiary is duly
qualified as a foreign corporation in the specified jurisdictions set forth on
Schedule A annexed to this opinion letter.
2. The Company has the authorized capitalization as set forth in the Offering
Memorandum, and all of the authorized shares of capital stock of the Company
conform in all material respects to the descriptions thereof contained in the
Offering Memorandum in the section entitled "Description of Capital Stock". All
shares of Common Stock outstanding on the date of the Offering Memorandum have
been duly and validly authorized and issued, are fully paid and non-assessable.
To such counsel's knowledge, except as disclosed and as of the date or dates
disclosed in the Offering Memorandum and in the Purchase Agreement, there are
(i) no outstanding securities of the Company convertible into or evidencing the
right to subscribe for any shares of capital stock of the Company, (ii) no
outstanding or authorized options, warrants, calls, subscriptions, rights,
commitments or any other instruments or agreements of any character obligating
the Company to issue any shares of its capital stock or any securities
convertible into or evidencing the right to subscribe for any shares of such
stock, and (iii) no agreements or arrangements with respect to the voting, sale
or transfer of any shares of capital stock of the Company to which the Company
is a party, and, to such counsel's knowledge, subsequent to the date or dates
disclosed in the Offering Memorandum, no other securities described in clauses
(i) and (ii) were issued or granted, other than options which were granted or
exercised under, or shares of Common Stock which were issued or sold pursuant
to, the Company's employee and director stock option plan, which plan is
described in the Offering Memorandum.
3. All of the outstanding shares of capital stock or other equity securities of
each U.S. Subsidiary held by the Company, to such counsel's knowledge, are held
free and clear of all Liens and limitations on voting rights and are duly
authorized, validly issued, fully paid and non-assessable.
4. The Company has the requisite corporate power and authority to execute and
deliver the Purchase Agreement, the Registration Rights Agreement and the
Indenture, to perform its obligations thereunder, to issue and sell and deliver
the Notes to the Initial Purchaser and to issue and deliver the Conversion
Shares.
5. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and (assuming that the Registration Rights Agreement is
the valid and legally binding obligation of the Initial Purchaser) constitutes a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its
39
terms, except that the enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws and court decisions
now or hereafter in effect relating to or affecting creditors' rights generally;
and (ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding at law or in equity) (clauses (i) and (ii) together,
the "Enforceability Exceptions"); and (iii) the fact that any rights to
indemnity or contribution thereunder may be limited by federal or state
securities laws and public policy considerations.
6. The Purchase Agreement has been duly authorized, executed and delivered by
the Company and (assuming that the Purchase Agreement is the valid and legally
binding obligation of the Initial Purchaser) constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be limited by the
Enforceability Exceptions and the fact that any rights to indemnity or
contribution thereunder may be limited by federal or state securities laws and
public policy considerations.
7. The Indenture has been duly authorized, executed and delivered by the Company
and (assuming that the Indenture is the valid and legally binding obligation of
the Trustee) constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be limited by the Enforceability Exceptions.
8. The Notes have been duly authorized, executed and issued by the Company and,
when duly authenticated by the Trustee in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchaser in accordance
with the terms of the Purchase Agreement, will constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except that the enforcement thereof may be limited
by the Enforceability Exceptions, and will be entitled to the benefits of the
Indenture and the Registration Rights Agreement.
9. The Conversion Shares have been duly authorized and reserved for issuance
upon conversion of the Notes and, when issued upon conversion of the Notes in
accordance with the terms of the Notes and the Indenture, will be validly
issued, fully paid and non-assessable, and such issuance of the Conversion
Shares will not be subject to any preemptive rights under (i) the Company's
Certificate of Incorporation or By-laws, (ii) Delaware General Corporation Law,
or (iii) to such counsel's knowledge, under the express terms or provisions of
any material agreement or other instrument to which the Company is a party.
10. The execution and delivery by the Company of the Purchase Agreement, the
Registration Rights Agreement and the Indenture, the issuance of the Notes and
the performance by the Company of its obligations thereunder do not and will not
(i) conflict with or result in a breach of any of the express terms and
provisions of, or constitute a default (or an event that with notice or lapse of
time, or both, would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries pursuant to, any indenture,
40
mortgage, deed of trust, loan agreement or any other agreement or instrument
filed or incorporated by reference as an exhibit to the Form 10-K for the year
ended December 31, 2004 or the Form 10-Q for the three months ended March 31,
2005, or any franchise, license or permit known to such counsel to which the
Company or any of the U.S. Subsidiaries is a party or by which the Company or
any of the U.S. Subsidiaries or their respective properties or assets are
otherwise bound, or (ii) violate or conflict with any provision of the
certificate of incorporation or by-laws of the Company or any of the U.S.
Subsidiaries or, to such counsel's knowledge, any judgment, decree, order,
statute, rule or regulation of any court or any judicial, regulatory or other
legal or governmental agency or body.
11. No consent, approval, authorization or qualification of or with any federal,
New York or Delaware State court, governmental agency or body is required for
the issue and sale of the Notes and the issuance of the Conversion Shares, the
execution and delivery by the Company of the Purchase Agreement, the
Registration Rights Agreement or the Indenture, the consummation by the Company
of the transactions contemplated thereby or the performance by the Company of
its obligations thereunder, except such as may be required (i) in connection
with the Company registering the Securities for resale pursuant to the
Registration Rights Agreement, (ii) under applicable state securities or "blue
sky" laws in connection with the purchase and sale of the Securities or in
connection with the resale of the Notes or the underlying Conversion Shares, or
(iii) in connection with the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended.
12. To such counsel's knowledge, except as set forth in the Offering Memorandum,
there are no judicial, regulatory or other legal or governmental proceedings
pending to which the Company or any of the Subsidiaries is a party or of which
any property of the Company or any of the Subsidiaries is the subject that are
required to be described in the Offering Memorandum and are not so described
and, to such counsel's knowledge, no such proceedings are threatened by
governmental authorities or others.
13. Assuming (i) all of the representations and warranties of the Initial
Purchaser and the Company set forth in the Purchase Agreement are true and
correct, (ii) compliance by the Initial Purchaser and the Company with their
respective covenants set forth in the Purchase Agreement and (iii) all of the
representations and warranties made in accordance with the Offering Memorandum
by the purchasers to whom the Initial Purchaser initially resells the Notes are
true and correct, it is not necessary in connection with the offer, sale and
delivery of the Notes to the Initial Purchaser pursuant to the Purchase
Agreement or the offer, sale and delivery of the Notes by the Initial Purchaser
to the initial purchasers therefrom, in the manner contemplated by the Purchase
Agreement and as described in the Offering Memorandum, to register the
Securities under the Securities Act of 1933, as amended, or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
14. The Company is not and, immediately after giving effect to the offering and
sale of the Notes and the application of the proceeds thereof as described in
the Offering
41
Memorandum, will not be required to register as an "investment company," as
defined in the Investment Company Act of 1940, as amended.
15. When the Notes are issued and delivered pursuant to the Purchase Agreement,
such Notes will not be of the same class (within the meaning of Rule 144A under
the Securities Act) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that are
quoted on a United States automated inter-dealer quotation system.
16. The statements in the Offering Memorandum under the captions "Description of
the Notes", "Description of Capital Stock," insofar as such statements purport
to summarize the provisions of the Indenture, the Registration Rights Agreement,
the Notes and the Common Stock (including the Conversion Shares), fairly
summarize such provisions.
17. The statements in the Offering Memorandum under the caption "Certain U.S.
Federal Income Tax Considerations," insofar as they purport to constitute
summaries of matters of United States federal income and, in the case of
non-resident aliens, estate tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters described therein
in all material respects.
18. Each document incorporated by reference in the Offering Memorandum (except
for the financial statements and related schedules included therein as to which
such counsel need express no opinion) complied, when filed with the Commission,
as to form, in all material respects with the Exchange Act and the rules and
regulations of the Commission promulgated thereunder.
In addition, such opinion shall also contain a statement that such
counsel has participated in conferences with officers and representatives of the
Company, representatives of the independent auditors for the Company and the
Initial Purchaser at which the contents of the Offering Memorandum (including
the documents incorporated by reference therein) and related matters were
discussed and, no facts have come to the attention of such counsel that causes
such counsel to believe that the Offering Memorandum (including the documents
incorporated by reference therein), as of its date (or any amendment thereof or
supplement thereto made prior to the Closing Date as of the date of such
amendment or supplement) and as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief or opinion with
respect to the financial statements, including the related notes, and schedules
and all other financial data included or incorporated by reference therein).
42
Exhibit C
---------
Form of Opinion of IP Counsel
-----------------------------
1. We have disclosed or intend to disclose to the United States Patent
and Trademark Office any references known by us to be material to the
patentability of the claimed inventions of the United States patent applications
of the Company being prosecuted by us listed on Schedule A in accordance with 37
C.F.R. ss. 1.56.
2. To our knowledge, the Company is the sole assignee of each of the
United States patent applications of the Company being prosecuted by us listed
on Schedule A as pending for which a serial number has been issued; or to our
knowledge all inventors on such patent applications are under an obligation to
assign all of their rights in such applications to the Company, except for the
cases listed on Schedule B.
3. To our knowledge, the Company has not received any notice of
infringement with respect to any patent, trademark or copyright or any notice of
misappropriation of trade secrets in relation to the Company's currently
contemplated [describe product].
4. Based on our knowledge of the Company's currently contemplated
[describe product] as described to us by the Company, the Company is not
currently violating any patent right of a third party which we are aware of.
5. We are not aware of any pending or threatened legal or governmental
proceedings relating to patent rights, copyrights trademark rights, trade
secrets or other proprietary rights of the Company (other than the patent
prosecution or trademark proceedings themselves).
6. Nothing has come to our attention which would lead us to believe
that the statements under the caption entitled "RISK FACTORS", found on pages 30
and 21 of the Company's most recent Form 10-K and pertaining to Intellectual
Property" as of the date thereof and at any Closing Date, contain any untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, not misleading.
43
Exhibit D
---------
Form of Lock-Up Agreement
July ___, 2005
XxXxxxx Securities Co. L.P.
000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Medis Technologies Ltd. Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed
offering (the "Offering") by Medis Technologies Ltd., a Delaware corporation
(the "Company"), of its 6% Senior Convertible Notes due 2010 (the "Notes") in an
aggregate principal amount of up to $[__] million (including your option to
purchase additional Notes in the aggregate principal amount of up to [$5.0
million]).
In order to induce you (the "Initial Purchaser") to purchase Notes in
the Offering, the undersigned hereby agrees that, without your prior written
consent, during the period from the date hereof until ninety days from the date
of the Offering Memorandum (the "Lock-Up Period"), the undersigned (a) will not,
directly or indirectly, issue, offer, sell, agree to issue, offer or sell,
solicit offers to purchase, grant any call option, warrant or other right to
purchase, purchase any put option or other right to sell, pledge, borrow or
otherwise dispose of any Relevant Security (as defined below), and (b) will not
establish or increase any "put equivalent position" or liquidate or decrease any
"call equivalent position" (in each case within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder) with respect to any Relevant Security, or otherwise
enter into any swap, derivative or other transaction or arrangement that
transfers to another, in whole or in part, any economic consequence of ownership
of a Relevant Security, whether or not such transaction is to be settled by
delivery of Relevant Securities, other securities, cash or other consideration.
The foregoing sentence shall not apply to: (1) the transfer of shares of a
Relevant Security by the undersigned as a gift or gifts; (2) the transfer of
shares of a Relevant Security by the undersigned to its affiliates, as such term
is defined in Rule 405 under the Securities Act; [and] (3) the exercise of stock
options granted pursuant to the Company's or its subsidiary's stock option
plans[; and (4) the sale of any common stock received by the undersigned upon
the exercise of stock options currently held by the undersigned which were
granted to the undersigned under the Company's 1999 Stock Option Plan and are
scheduled to expire during the Lock-Up Period]. [(4) ONLY FOR XXX XXXXXX]
Notwithstanding the foregoing, the undersigned may transfer Relevant Securities
pursuant to (1) or (2) above, provided that, each resulting transferee of
Relevant Securities executes and delivers to you an agreement satisfactory to
you certifying that such transferee is bound by the terms of this Agreement and
has been in compliance with
44
the terms hereof since the date first above written as if it had been an
original party hereto. As used herein "Relevant Security" means the common
stock, par value $0.01 per share of the Company ("Common Stock"), any other
equity security of the Company or any of its subsidiaries and any security
convertible into, or exercisable or exchangeable for, any Common Stock or other
such equity security.
The undersigned hereby authorizes the Company during the Lock-Up Period
to cause any transfer agent for the Relevant Securities to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Relevant Securities. The undersigned hereby further agrees
that, without your prior written consent, during the Lock-up Period the
undersigned (x) will not file or participate in the filing with the Securities
and Exchange Commission of any registration statement, or circulate or
participate in the circulation of any preliminary or final prospectus or other
disclosure document with respect to any proposed offering or sale of a Relevant
Security, and (y) will not exercise any rights the undersigned may have to
require registration with the Securities and Exchange Commission of any proposed
offering or sale of a Relevant Security [; provided, however, that clauses (x)
and (y) above shall not act to prevent the Company from relying on Rule 429
promulgated under the Securities Act of 1933, as amended, to include in a Form
S-3 to be filed by the Company during the Lock-Up Period any shares owned by the
undersigned currently registered on a Registration Statement on Form S-1
(Registration No. 333-116360)]. [PROVISO ONLY FOR ISRAEL AIRCRAFT INDUSTRIES
LTD. AND CVF, LLC]
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By: _____________________________
Print Name: _______________________
45
