EXHIBIT 4.17
LOAN AGREEMENT
This "Loan Agreement" is entered into this 31st day of July, 2003 between
Smithfield Investments B.V., (the "Lender") and e-SIM Ltd., an Israeli company
having its principal place of business at 00 Xxxxxx Xxxxxx, XXX 00000, Xxxxxxxxx
00000, Xxxxxx (the "Borrower") (together the "Parties").
WHEREAS, The Lender and the Borrower wish that the Lender should provide the
Borrower a loan in the amount of $1,000,000 (the "Loan"), upon the terms and
conditions set out hereafter.
THEREFORE, the Parties agree as follows.
1. DEFINITIONS
All the capitalized terms used in the Loan Agreement and not
otherwise defined herein below shall have the meaning assigned to
them therein. The terms below shall have the following meanings:
"Business Day" means a day on which principal banking business is
transacted in Israel, and on which banking corporations customarily
conduct clearing of banking documents.
"Closing Date" means the date of this Loan Agreement.
"Loan Period" means the period until August 1, 2004.
"Holder" any person holding any of the Borrower's securities,
including; without limitation, shares, options, warrants or
convertible debentures.
"Material" means, unless otherwise specifically provided in the Loan
Agreement, a change and/or effect (including, without limitation, any
agreement) which gives rise to an expense, liability, obligation,
payment or damage in an aggregate amount in excess of USD 250,000
(two hundred and fifty thousand).
"USD" or "$" means United States Dollars.
2. LOAN TERM, AND INTEREST
2.1 The aggregate amount of the Loan shall be USD1,000,000 (one million),
that shall be made available on August 1, 2003 to the Borrower by
wire transfer to the Borrower's account no. 0000000, Branch 060 with
Israel Discount Bank Ltd.
2.2 Subject to Section 3, the Loan shall be repaid, without interest, in
one lump sum payment, on August 1, 2004 (the "Due Date");
2.3 The Loan will be granted in USD.
3. CONVERSION
3.1 The Loan may be converted into Ordinary Shares of the Borrower at any
time by the Lender until the Due Date by notice to the Borrower, at a
price per share of $0.18 (eighteen U.S. Cents) (the "Exercise
Price").
3.2 If the Lender elects to convert the entire amount of the Loan into
Ordinary Shares pursuant to Section 3.1, it will receive, upon such
exercise, a further Warrant to purchase shares on the terms of the
Warrant attached hereto. Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 14
and 16 of the Warrant shall apply to the exercise of the conversion
rights provided for in Section 3.1 herein and to any shares issued
pursuant to such exercise.
3.3 In the event the Borrower effects an equity raising in an amount of
at least $1,000,000 (One Million U.S. Dollars) at any time prior to
the Due Date, the Borrower may require the Lender to convert the
Loan, at the Exercise Price. Upon such exercise, the provisions of
Section 3.2 will apply as if the Lender had elected to convert the
Loan.
4. COVENANTS AND UNDERTAKINGS OF THE BORROWER
The Borrower undertakes towards the Lender that, from the Closing
Date and so long as any amounts are owing under the Loan Agreement,
it will:
4.1 inform the Lender, forthwith upon becoming aware thereof, of the
occurrence of an Event of Default (as specified in Clause 5 below),
or of the occurrence of any event which, with the giving of a notice
or the lapse of time or both, would constitute an Event of Default;
4.2 obtain or cause to be obtained, at any time and from time to time,
such registration, licenses, consents, approvals, authorizations and
exemptions as may be required by any applicable law or regulation, to
enable the Borrower to perform its obligations under the Loan
Agreement or required for the validity or enforceability of the Loan
Agreement;
4.3 be responsible for all stamp duty, if any, payable on the Loan
Agreement, any documents thereunder or any of the documents provided
by way of collateral;
4.4 fully and punctually fulfill all its debts and obligations to the
Lender;
4.5 notify the Lender of any breach or of any likely breach of any of the
conditions or undertakings whatsoever towards the Lender immediately
upon it becoming aware of the same;
4.6 maintain its corporate existence, rights, governmental approvals and
franchises necessary to the conduct of the Borrower's business;
4.7 promptly pay and discharge, or cause to be paid and discharged, when
due and payable, all lawful taxes, assessments and governmental
charges or levies imposed upon the income, profits, property or the
Borrower's business;
4.8 without derogating from the Lender's rights under law -
4.8.1 subject to prior notice and appointment, permit an
authorized representative of the Lender to visit and
inspect any of the properties of the Borrower during the
Borrower's regular business hours, including, without
limitation, its books of account, and to discuss its
affairs, finances and accounts with the Borrower's officers
and auditor, all at such reasonable times and as often as
the Lender may reasonably request, provided that inspection
of the Borrower's source code shall only be made by a third
party consultant acceptable to the Lender and the Borrower;
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4.8.2 deliver to the Lender the information and reports
described in this Sub-Clause 8 as follows:
4.8.2.1 immediately upon the occurrence of any event
likely to have a significant and/or Material
adverse impact upon the Borrower, a summary of
such event and its implications;
4.8.2.2 With reasonable promptness, such other
information and data with respect to the
Borrower, as the Lender may from time to time
request;
4.8.2.3 All information (including, without limitation,
all financial statements) provided by the
Borrower to other Holders and the press releases
of the Borrower to the press.
4.9 keep true records and books of account in which full, true and
correct entries will be made of all dealings or transactions in
relation to the Borrower's business and affairs.
4.10 no other facility shall derogate from any of the Lender's rights,.
4.11 without derogating from the Borrower's undertakings and obligations
under the Loan Agreement, observe and perform towards the Lender, all
of the Borrower's other undertakings and obligations that it has
undertaken towards any of the Borrower's Holders with respect to the
Borrower's conduct of the Borrower's business, including all the
undertakings to disclose information.
5. EVENTS OF DEFAULT AND ACCELERATION OF REPAYMENT OF THE LOAN
Notwithstanding anything herein contained, upon the occurrence of any
of the events set out hereunder and at any time thereafter, or if the
Borrower shall adopt any resolution and/or shall cause and/or allow
any such occurrence, the Lender shall be entitled without thereby
prejudicing any other right of the Lender under the Loan Agreement,
upon the Borrower's failure to cure such occurrence within 10 (ten)
days after the Lender's written notice to the Borrower to such
effect, to declare the Unpaid Balance of the Loan, in whole or in
part, to be immediately due and payable:
5.1 If on the Due Date, the Loan, has not entirely been paid, and is not
paid within 7 days of Lender sending a demand letter to the Borrower;
5.2 If, according to the Lender, the Borrower's rights have been
compromised or changed by its Documents of Incorporation, in a manner
that Materially damages the Lender's rights according to this Loan
Agreement and all remaining securities, guarantees, documents signed
and/or to be signed by the Borrower or anyone on its behalf regarding
the Loan and the securities and the guarantees.
5.3 If a receiver (permanent or temporary) or a receiver and manager
(permanent or temporary), or liquidator (permanent or temporary) is
appointed to the Borrower's Business and/or assets or any part of
thereof and the appointment has not been canceled within 45 days
and/or in case of settlement or composition of creditors according to
Section 350 of the Companies Law, 5759-1999 (the "Companies Law"),
excluding composition of creditors as aforementioned approved by the
Lender, or if an application is lodged for the appointment of a
receiver (permanent or temporary) or a receiver and manager
(permanent or temporary) or a liquidator (permanent or temporary) to
the Borrower's Business and/or assets or any part thereof and such
application is not withdrawn within 45 days or if an application is
lodged by the Borrower for a settlement or composition of creditors
without the Lender's consent which will not be unreasonably withheld
(and in the case of an application by the Borrower no notice to cure
need be given by the Lender).
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5.4 If the Borrower reaches a decision to dissolve, or if a liquidation
order is issued against it, and in such event, no 10 day period of
notice shall be required.
5.5 If any attachment is imposed on all the assets of the Borrower, or on
any material part of them or if any execution of court decision is
carried out on them, and the attachment or execution is be removed
within 45 days of the date attachment was imposed or date the
aforementioned execution was performed, as the case may be;
5.6 If the Borrower has defaulted or will not fulfill one or more of its
obligations under the terms and conditions of this Loan Agreement;
5.7 If the Lender deems that an incident has occurred that xxxxx or might
harm the financial ability of the Borrower to fulfill its commitments
or any Material part thereof and the effect of which is or will be to
materially adversely affect, in the reasonable opinion of the Lender,
the Borrower's ability to repay to the Lender any debt due to the
Lender under the Loan Agreement.
5.8 In any case that a stay or extension has been provided or if there is
a need of providing prior notice, that extension or stay will be
canceled automatically and will not apply and there will be no need
of prior notice if in the Lender's reasonable opinion it might
endanger the Lender's rights and/or the Borrowers ability to pay the
Loan or any part of it.
5.9 If any representation, warranty, certificate, statement or opinion
made or delivered pursuant to the Loan Agreement shall prove to have
been incorrect, inaccurate or untrue in any material respect when
made or delivered and the effect of which is or will be to materially
adversely affect, in the reasonable opinion of the Lender, the
Borrower's ability to repay to the Lender any debt due to the Lender
under the Loan Agreement;
5.10 If any representation, warranty, certificate, statement or opinion
made or delivered pursuant to the Loan Agreement, ceases to be
correct, accurate or true in any respect and the effect of which is
or will be to Materially adversely affect, in the reasonable opinion
of the Lender, any right to which the Lender is entitled under the
Loan Agreement, including the repayment of the Loan;
5.11 If any event defined as an Event of Default pursuant to any other
agreement executed between the Borrower and the Lender has occurred;
5.12 If any consent, authorization, license or approval of, registration
with or declaration to any government or public bodies or authorities
or courts, required to be obtained or made by the Borrower in
connection with the execution, delivery, validity, enforceability or
admissibility in evidence of the Loan Agreement or the performance by
the Borrower of its respective obligations under the Loan Agreement,
is not granted or is revoked or terminated or expires and is not
renewed or otherwise ceases to be in full force and effect.
5.13 If the Borrower becomes obligated to indemnify any of its office
holders (within the meaning of Section 1 of the Companies Law), in an
amount exceeding USD 250,000 (two hundred and fifty thousand) or the
equivalent thereof in another currency which is not covered by
insurance.
Notwithstanding the aforesaid, in any of the events of default
specified in sections 5.2 to 5.13, the Lender shall not be entitled,
during the period until August 1, 2004, to declare the Unpaid Balance
of the Loan, in whole or in part, to be immediately due and payable
if such declaration would render the Borrower unable to continue as a
going concern.
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6. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender (which
representations and warranties shall remain true until the Loan is
repaid in full and for as long as the Lender is a Holder) that:-
6.1 The Borrower is a company duly organized and validly existing under
the laws of the State of Israel and has power and authority to own
its property and assets and to transact the business in which it is
engaged;
6.2 The Borrower has power to enter into and to perform its obligations
under the Loan Agreement and has taken all necessary corporate and
legal action to authorize the raising of the Loan upon the terms and
conditions of the Loan Agreement and to authorize the execution,
delivery and performance of the Loan Agreement;
6.3 The Loan Agreement constitutes a legal, valid and binding obligation
of the Borrower, enforceable in accordance with its terms and no
further actions or registrations are required to effect or maintain
such enforceability;
6.4 The execution, delivery and performance of the Loan Agreement will
not violate any provisions of any law or regulation or of any order
or decree of any court or authority to which the Borrower is subject
or the Certificate of Incorporation, the Memorandum or the Articles
of Association of the Borrower;
6.5 Subject to the Credit Agreements entered into with Israel Discount
Bank, Ltd. and Industrial Development Bank of Israel, as the case may
be, the Borrower has not created a presently valid floating charge
over any of its assets, and there is not in existence any undertaking
on the part of the Borrower in favor of any third party not to create
charges over any of its assets.
6.6 Each document delivered to and/or signed in favor of the Lender will
be in terms and conditions that are reasonably acceptable to the
Lender, accompanied, if required by the Lender, by confirmation of
the passing of the appropriate resolution and confirmation from a
lawyer that such resolution has been duly passed;
6.7 no material litigation or administrative proceedings before or of,
any court, arbitration or governmental authority, is pending or to
the knowledge of the Borrower, threatened against the Borrower or its
assets, which might have a Material adverse effect on the business,
assets or financial condition of the Borrower, or on the ability of
the Borrower to perform its obligations hereunder, other than a claim
by Gaio, Inc. against the Borrower.
6.8 it is unaware of any breach of any of the above conditions and/or any
of the conditions detailed in this document and that all
representations made by it or by any of its officers and attorney on
its behalf are correct.
7. MISCELLANEOUS
7.1 The Borrower and the Lender shall perform such further acts and
execute such further documents as may reasonably be necessary to
carry out and give full effect to the provisions of the Loan
Agreement.
7.2 No delay or omission to exercise any right, power, or remedy accruing
to either the Lender of the Borrower upon any breach or default under
the Loan Agreement, shall be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit,
consent, or approval of any kind or character on the part of the
Lender or the Borrower of any breach or default under the Loan
Agreement, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either
under the Loan Agreement or by law or otherwise afforded to the
Lender, shall be cumulative and not alternative.
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7.3 If any provision of the Loan Agreement is held by a court of
competent jurisdiction to be unenforceable under applicable law, then
such provision shall be excluded from the Loan Agreement and the
remainder of the Loan Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance
with its terms; provided, however, that in such event the Loan
Agreement shall be interpreted so as to give effect, to the greatest
extent consistent with and permitted by applicable law, to the
meaning and intention of the excluded provision as determined by such
court of competent jurisdiction.
7.4 Whether or not explicitly provided in the Loan Agreement -
7.4.1 The word "including" shall mean including, without
limitation.
7.4.2 Any reference to any law is deemed to refer to all
applicable and relevant and/or equivalent laws (including
case law), statutes, codes or ordinances and all rules and
regulations promulgated thereunder, unless the context
otherwise requires.
e-SIM Ltd. Smithfield Investments B.V.
/s/ Yaron Eldad /s/ Xxxx Xxxxxxxx
Name: Xxxxx Xxxxx Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer and Title: Director
Chief Operating Officer
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Date: July 31, 2003
To: Smithfield Investments B.V.
WARRANT
To purchase Ordinary Shares
of
E-SIM LTD.
VOID AFTER 24:00 p.m. (prevailing Israel time)
On the last day of the Warrant Period (defined below)
e-SIM Ltd., a company registered in Israel (the "COMPANY") hereby grants to
Smithfield Investments B.V. (the "Holder"), the right to purchase from the
Company fully paid and non-assessable Ordinary Shares of the Company, par value
NIS 0.1 per share in such number as is specified herein. The shares which are
purchasable pursuant to this Warrant are referred to herein as "Warrant Shares".
1. DEFINITIONS
For the purpose of this Warrant:
1.1 "PUBLIC OFFERING" shall mean the next underwritten public
offering of the Company's shares, pursuant to an effective
registration statement under the Securities Act of 1933,
as amended, (the "SECURITIES ACT") or pursuant to the
corresponding securities laws of any other jurisdiction
(other than a registration statement effected solely to
implement an employee benefit plan).
1.2 "LIQUIDITY EVENT" shall mean (a) the sale of all or
substantially all of the Company's shares, property and/or
assets (including by way of share swap); or (b) the merger
or consolidation of the Company with or into another
company following which more than fifty percent (50%) of
the Company's shares are held by persons who, prior to the
said transaction, held, in the aggregate, less than five
percent (5%) of the Company's shares, other than a merger,
share swap or other re-organization that is carried out in
order for the Company to become a subsidiary of a company
(newly-organized or otherwise) which is registered outside
of Israel (provided that in such merger, share swap or
other re-organization, all shareholders and option holders
receive a pro-rata share of the shares and options issued
in the non-Israeli company).
1.3 "EXIT TRANSACTION" shall mean a Public Offering or a
Liquidity Event.
1.4 "EFFECTIVE DATE" shall mean the date of execution of this
Warrant.
1.5 "WARRANT AMOUNT" shall mean Three Million United States
Dollars (US $3,000,000).
1.6 "WARRANT PERIOD" shall mean the period for exercise of
this Warrant, as determined pursuant to Section 3.
1.7 "EXERCISE PRICE" shall mean the exercise price of each
Warrant Share purchasable hereunder, which shall be $0.54,
subject to modification pursuant to Section 9.
1.8 "ARTICLES" shall mean the articles of association of the
Company, as they may be amended from time to time.
1.9 "LOAN" shall mean a loan of $1,000,000 granted by the
Holder to the Company in accordance with an agreement
between the Company and the Holder of even date.
2. NUMBER OF SHARES AVAILABLE FOR PURCHASE
Provided the Holder has converted the Loan in full into Ordinary
Shares of the Company, this Warrant may be exercised to purchase that
number of Warrant Shares determined by dividing the Warrant Amount by
the Exercise Price.
3. WARRANT PERIOD.
The Warrant may be exercised, in whole or in part, and on one or more
occasions, during the period commencing from date of conversion of
the Loan and ending three (3) years following the Effective Date. If
the Loan is not converted in accordance with the loan agreement
between the Holder and the Company, the Warrant may not be exercised.
4. NOTICE OF EVENTS.
Notwithstanding the foregoing or any other rights of the Holder
pursuant to the provisions of this Warrant, if at any time the
Company shall offer for subscription to the holders of Ordinary
Shares any additional shares of any class, other rights or any equity
security of any kind, or there shall be any capital reorganization or
reclassification of the capital shares of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all of its assets to another person or there shall be a
voluntary or involuntary dissolution, liquidation or winding-up of
the Company, then, in any one or more of said cases, the Company
shall give the Holder written notice, by first class mail, postage
prepaid, addressed to the Holder at the address of the Holder as
shown on the books of the Company, of the date on which (i) a record
shall be taken for such subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up shall take place, as the case
may be. Such notice shall also specify the date as of which the
holders of record of Ordinary Shares shall participate in such
subscription rights, or shall be entitled to exchange their Ordinary
Shares for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, as the case may be. Such
written notice shall be given by not later than seven (7) business
days prior to the action in question and by not later than seven (7)
business days prior to the record date in respect thereto.
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5. EXERCISE OF WARRANT
5.1 EXERCISE. Subject to the provisions hereof, this Warrant
may be exercised in whole or in part, on one or more
occasions at any time during the Warrant Period. This
Warrant shall be exercised by presentation and surrender
hereof to the Company at the principal office of the
Company or at such other office or agency as the Company
may designate in writing, accompanied by a written notice
of exercise in the form attached hereto as EXHIBIT 5.1 and
for the purpose of determining the relevant Exercise
Price, the Warrant shall be deemed to have been exercised
at such time.
5.2 EXERCISE FOR CASH. If the Holder, at its sole discretion,
elects to make a cash payment for the Warrant Shares it
shall make such payment by not later than seven (7) days
from giving the Exercise Notice to the Company in an
amount equal to the Exercise Price multiplied by the
number of Warrant Shares specified in such notice. The
Exercise Price for the number of Warrant Shares specified
in the notice shall be payable in immediately available
funds, in U.S. dollars, or the NIS equivalent thereof,
according to the Company's preference, based on the
Representative Rate of Exchange last published by the Bank
of Israel prior to the time of payment.
5.3 PARTIAL EXERCISE, ETC. If this Warrant should be exercised
in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder to purchase
the balance of the shares purchasable hereunder.
5.4 ISSUANCE OF THE WARRANT SHARES. Upon presentation and
surrender of the notice of exercise and after the payment
of the Exercise Price pursuant to section 5.2, the Company
shall issue promptly to the Holder the shares to which the
Holder is entitled.
As of and from the close of business on the date of
receipt by the Company of the notice of exercise and the
Exercise Price, if applicable, the Holder shall be deemed
to be the Holder of the shares issuable upon such
exercise, notwithstanding that the share transfer books of
the Company shall then be closed and that certificates
representing such shares shall not then be actually
delivered to the Holder. The Company shall pay the stamp
duty that may be payable in connection with the issuance
of the shares and the preparation and delivery of share
certificates pursuant to this Section 5 in the name of the
Holder. No fractions of shares shall be issued in
connection with the exercise of this Warrant and the
number of shares shall be rounded to the nearest whole
number.
All Warrant Shares issued shall be fully paid and
non-assessable.
5.5 CONDITIONAL EXERCISE. Any purchase of Warrant Shares by
the Holder in connection with the receipt of a notice of
an anticipated Exit Transaction or equity-raising event
may be made conditional upon the consummation and closing
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of such Exit Transaction or equity-raising event of the
Company.
6. RESERVATION OF SHARES AND PRESERVATION OF RIGHTS OF HOLDER
The Company hereby agrees that promptly following the Effective Date,
it will convene a general meeting of its shareholders at which it
will bring to a vote an increase of the Company's share capital such
that this Warrant may be exercised without additional authorization
of Warrant Shares. Following the abovementioned increase of share
capital, the Company will at all times maintain and reserve, free
from preemptive rights, lien or other third party rights, such number
of authorized but un-issued shares in its capital so that this
Warrant may be exercised without additional authorization of Warrant
Shares after giving effect to all other options, warrants,
convertible securities and other rights to acquire shares of the
Company. The Company further agrees that it will not, by charter
amendment or through reorganization, voluntary liquidation,
consolidation, merger, dissolution, winding up or sale of assets, or
by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by the Company.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Holder that as of
the Effective Date:
7.1. The grant of this Warrant shall require approval of the
board of directors, the audit committee, and shareholders
of the Company. The Company will apply for all necessary
approvals, but does not warrant that such approvals will
be obtained.
7.2. The Warrant Shares when paid for and issued in accordance
with the terms hereof shall be duly authorized, will be
validly issued, fully paid and nonassessable, not subject
to any preemptive rights (other than preemptive rights
waived prior to the issue of this Warrant or shortly
thereafter) and issued free and clear of all debts, liens,
encumbrances, taxes, charges, equities, claims, any rights
of third parties and any other liabilities, other than any
such liability created by the Holder, and other than tax
liabilities in connection with: (i) this Warrant and the
Holder's rights set forth herein, (ii) the exercise of
this Warrant and/or the rights set forth herein, (iii) the
issuance of the Warrant Shares (other than any stamp tax,
which shall be borne by the Company only), and/or (iv) the
disposition of the Warrant Shares. If the Company is
subject to a withholding requirement in connection with an
exercise of this Warrant, it may postpone any issuance of
Warrant Shares until the Holder sufficiently proves that
the applicable tax has been paid by the Holder or provides
exemption from such withholding obligation.
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8. INVESTMENT REPRESENTATION
Neither this Warrant nor the Warrant Shares issuable upon the
exercise of this Warrant have been registered under the Securities
Act, or any other securities laws. The Holder acknowledges by
acceptance of this Warrant that (a) it has acquired this Warrant for
investment and not with a view to distribution; (b) it has either a
pre-existing personal or business relationship with the Company, or
its executive officers, or by reason of its business or financial
experience, it has the capacity to protect its own interests in
connection with the transaction; and (c) it is an accredited investor
as that term is defined in Regulation D promulgated under the
Securities Act. The Holder agrees that any Warrant Shares issuable
upon exercise of this Warrant will be acquired for investment and not
with a view to distribution, that such Warrant Shares will not be
registered under the Securities Act and applicable state securities
laws or any other securities laws and that such Warrant Shares may
have to be held indefinitely unless they are subsequently registered
or qualified under the Securities Act and applicable state securities
laws, or an exemption from such registration and qualification is
available. The Holder, by acceptance hereof, consents to the
placement of legend(s) on all securities hereunder as to the
applicable restrictions on transferability in order to ensure
compliance with the Securities Act, unless in the opinion of counsel
for the Company such legend is not required in order to ensure
compliance with the Securities Act. The Company may issue stop
transfer instructions to its transfer agent in connection with such
restrictions.
9. ADJUSTMENT
The number and kind of securities purchasable initially upon the
exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the occurrence of certain events,
as follows:
9.1. ADJUSTMENT FOR SHARES SPLITS AND COMBINATIONS. If the
Company at any time or from time to time effects a
subdivision of the outstanding shares, the number of
shares issuable upon exercise of this Warrant immediately
before the subdivision shall be proportionately increased,
and conversely, if the Company at any time or from time to
time combines the outstanding shares, the number of shares
issuable upon exercise of this Warrant immediately before
the combination shall be proportionately decreased. Any
adjustment under this Section 9.19.1 shall become
effective at the close of business on the date the
subdivision or combination becomes effective.
9.2. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Company at any time, or from time to time makes,
or fixes a record date for the determination of holders of
shares entitled to receive a dividend or other
distribution payable in additional shares of the Company,
then and in each such event the number of shares issuable
upon exercise of this Warrant shall be increased as of the
time of such issuance or, in the event such a record date
is fixed, as of the close of business on such record date,
by multiplying the number of shares issuable upon exercise
of this Warrant by a fraction: (i) the numerator of which
shall be the total number of shares of the Company issued
and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus
the number of shares issuable in payment of such dividend
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or distribution, and (ii) the denominator of which is the
total number of shares of the Company issued and
outstanding immediately prior to the time of such issuance
or the close of business on such record date; provided,
however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not
fully made on the date fixed thereof, the number of shares
issuable upon exercise of this Warrant shall be recomputed
accordingly as of the close of business on such record
date and thereafter the number of shares issuable upon
exercise of this Warrant shall be adjusted pursuant to
this Section 9.2 as of the time of actual payment of such
dividends or distributions.
9.3. FUNDAMENTAL TRANSACTIONS. If, at any time while this
Warrant is outstanding, (1) a Liquidity Event occurs, (2)
any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders
of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (3) the
Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged
for other securities, cash or property (in any such case,
a "FUNDAMENTAL TRANSACTION"), then the Holder shall have
the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or
property as it would have been entitled to receive upon
the occurrence of such Fundamental Transaction if it had
been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable
upon exercise in full of this Warrant (the "ALTERNATE
CONSIDERATION"). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on
the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise
Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any
successor to the Company or surviving entity in such
Fundamental Transaction shall issue to the Holder a new
warrant substantially in the form of this Warrant and
consistent with the foregoing provisions and evidencing
the Holder's right to purchase the Alternate Consideration
for the aggregate Exercise Price upon exercise thereof.
9.4. OTHER TRANSACTIONS. In the event that the Company shall
issue shares to its shareholders as a result of a
split-off, spin-off or the like, then the Company shall
only complete such issuance or other action if, as part
thereof, allowance is made to protect the economic
interest of the Holder either by increasing the number of
Warrant Shares, adjusting the Exercise Price, and/or by
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procuring that the Holder shall be entitled, on
economically proportionate terms, determined in good faith
by the Company's Board of Directors, to acquire additional
shares of the spun-off or split-off entities, in the event
of an exercise of this Warrant.
9.5. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the preceding Sections 9.1 through 9.4 are not
strictly applicable but as to which the failure to make
any adjustment would not fairly protect the rights to
receive shares represented by this Warrant in accordance
with the essential intent and principles hereof, then, in
each such case, the Company's Board of Directors shall, in
good faith, determine what adjustments are necessary to
preserve the rights of the Holder to receive shares
represented by this Warrant.
9.6 ADJUSTMENT OF EXERCISE PRICE. Upon each adjustment in the
number of Warrant Shares purchasable hereunder, the
Exercise Price shall be proportionately increased or
decreased, as the case may be, in a manner that is the
inverse of the manner in which the number of Warrant
Shares purchasable hereunder shall be adjusted.
10. NOTICE OF CHANGES AND EXCHANGE OR LOSS OF WARRANT
10.1 Whenever the number of Warrant Shares for which this
Warrant is exercisable is adjusted as provided in Sections
4 and 9, the Company shall promptly compute such
adjustment and deliver to the Holder a certificate, signed
by a principal financial officer of the Company, setting
forth the number of Warrant Shares for which this Warrant
is exercisable and the Exercise Price as a result of such
adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such
adjustment has or will become effective.
10.2 Upon receipt by the Company of a declaration by an officer
of the Holder of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss,
theft or destruction) of a declaration that the Holder
will provide indemnification, and reimbursement to the
Company of all reasonable expenses incidental thereto and
surrender and cancellation of this Warrant, if mutilated,
the Company will execute and deliver a new Warrant of like
tenor and date.
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11. ASSIGNMENT
The Holder may offer, sell or otherwise dispose of this Warrant, in
whole or in part and on one or more occasions, to any party
controlled, controlling or under common control of more than 25% with
the Holder provided such assignee does not compete with the Company
and provided that such assignment may only be made after conversion
of the Loan into Ordinary Shares in the Company.
12. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any rights of
a shareholder in the Company, unless specifically stated herein.
13. TERMINATION
This Warrant and the rights conferred hereby shall terminate at the
aforementioned time on the last day of the Warrant Period.
14. REGISTRATION RIGHTS
The following provisions govern the registration of the Company's
securities:
14.4. DEFINITIONS. As used herein, the following terms have the
following meanings:
14.4.1. "REGISTRABLE WARRANT SHARES": means (i) all
Warrant Shares, to be issued to Holder upon the
exercise thereof; and (ii) any securities
issued or issuable with respect to the shares
described in (i) above by way of bonus share
distributions, share splits or other
recapitalizations or share conversions; and all
shares that Holder may hereafter purchase
pursuant to its preemptive rights, rights of
first refusal or otherwise, or shares issued on
conversion or exercise of other securities so
purchased. Registrable Warrant Shares, if
transferred in accordance with the Articles of
Association of the Company, will remain
Registrable Warrant Shares for the purpose of
the Warrant.
14.4.2. "OTHER SECURITIES" means the shares of the
Company held by other shareholders who were
granted registration rights with respect to
such securities pursuant to any agreements
between the Company and such shareholders.
14.1.3 "COMPANY REGISTRATION" means a registration
statement or similar document filed with the
United States Securities and Exchange
Commission or any other relevant securities
authority in another jurisdiction with respect
8
to the registration of any of the Company's
securities under the Securities Act or any
other applicable securities law, other than
pursuant to a registration of securities
issuable on Form S-8 or any similar form
available for non-United States companies such
as the Company, or any successor form thereto,
or pursuant to an employee stock option, stock
purchase or similar benefit plan.
14.2 DEMAND REGISTRATION - Subject to the conditions of this
Section 14.2, if the Company shall receive a written
request from the Holder that the Company file a
registration statement under the Securities Act then the
Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all
holders of Other Securities having a right to a demand
registration, and use its best efforts to effect, as soon
as practicable, the registration under the Securities Act
of all Registrable Warrant Shares that the Holders
requests to be registered.
The Company shall not be required to effect a registration
pursuant to this Section 14.2 (i) prior to the effective
date of the registration statement pertaining to the IPO;
(ii) after the Company has effected one (1) registration
pursuant to this Section 14.3, and such registration have
been declared or ordered effective; (iii) during the
period starting with the date of filing of, and ending on
the date one hundred eighty (180) days following the
effective date of the registration statement pertaining to
a public offering; provided that the Company makes
reasonable best efforts to cause such registration
statement to become effective; (iv) if within thirty (30)
days of receipt of a written request from the Holder, the
Company gives notice to the Holder of the Company's
intention within ninety (90) days to make a public
offering or file a draft or final registration statement
preparatory to a public offering; or (v) if the Company
shall furnish to the Holder a certificate signed by the
Chairman of the Board stating that in the good faith
judgment of the Board of Directors of the Company, it
would be materially detrimental to the Company or its
shareholders for such registration statement to be
effected at such time, in which event the Company shall
have the right to defer such filing for a period of not
more than one hundred twenty (120) days after receipt of
the request of the Holder.
14.3 PIGGYBACK REGISTRATION - At least thirty (30) days prior
to the filing of a Company Registration, the Company will
give written notice to the holders of the Registrable
Warrant Shares of its intention to effect such a
registration. The Company will include in such Company
Registration all Registrable Warrant Shares and, subject
to the provisions of Section 14.4 below, all Other
Securities with respect to which the Company has received
written requests for inclusion therein within thirty (30)
days after the Company gives such notice ("Piggyback
Requests"). The foregoing notwithstanding, subject to the
provisions of Section 14.5 the holders of the Registrable
Warrant Shares will not be permitted to piggyback rights
on the IPO if the managing underwriters for the Company
advise such holders in writing, as well as to all other
shareholders with similar rights, that such IPO piggyback
rights must be waived in order for the Company to effect
the IPO.
14.4 ALLOCATION - If the managing underwriters advise the
Company in writing that, in their opinion, the number of
Registrable Warrant Shares and Other Securities requested
in Piggyback Requests to be included in a Company
Registration exceeds the number that can be sold in such
offering without adversely affecting such underwriters'
ability to effect an orderly distribution of such
9
securities, the Company will include in such Company
Registration: (i) first, the Company's securities; (ii)
second, the number of Registrable Warrant Shares requested
to be included that, in the opinion of such underwriters,
can be sold, as well as any Other Securities with a right
to request participation on a pro rata basis; and (iii)
third, any Other Securities without a right to request
participation on a pro rata basis requested to be included
which, in the opinion of the managing underwriters, can be
sold in such offering pro rata among the respective
holders thereof on the basis of the number of shares then
owned by each such holder.
14.5 TERM - The rights granted hereunder shall terminate when
all Registrable Warrant Shares have been effectively
registered, or can be sold freely without registration,
under the Securities Act or any other applicable
securities law or otherwise without limitation with
respect to offerees or the size or timing of the
transaction.
14.6 REGISTRATION EXPENSES - The Company shall be responsible
for all registration expenses incurred by holders of
Registrable Warrant Shares in connection with any Company
Registration, including, (a) the fees of one legal counsel
for the holders of Registrable Warrant Shares
participating in the registration; and (b) all expenses
incident to the Company's performance of or compliance
with this Agreement, including without limitation,
expenses incurred in connection with the preparation of a
prospectus and the procedures set forth herein.
Notwithstanding the foregoing, however, underwriters'
discounts, fees and commissions in respect of the sale of
Registrable Warrant Shares or Other Securities shall be
paid by the sellers, pro rata in accordance with the
number of shares sold in the offering.
14.7 PRECONDITIONS TO PARTICIPATION IN UNDERWRITTEN
REGISTRATIONS - No holder of Registrable Warrant Shares or
Other Securities may participate in any underwritten
registration hereunder unless such person, (a) agrees to
the sale of (including any restriction on the sale of) its
securities on the basis provided in any customary
underwriting arrangements, including customary lock-up
periods as required by the underwriters with respect to
any shares, applicable law, or stock exchanges; and (b)
provides any relevant information and completes and
executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, and other documents
required under the terms of such underwriting
arrangements.
The Company and the Holder will provide each other
customary indemnities in respect of any representations or
claims made in any registration statement or for any
violations of any securities laws.
14.8 RULE 144 - With a view to making available the benefits of
Rule 144 under the Securities Act or similar rule then in
effect ("Rule 144") available to the holders of
Registrable Warrant Shares and Other Securities, after the
initial public offering of any securities of the Company,
the Company shall (i) make and keep available adequate
current public information with respect to the Company
within the meaning of Rule 144(c) or similar rule then in
effect ("Rule 144(c)"); (ii furnish to any holder of
Registrable Warrant Shares upon request, (i) a written
statement by the Company as to its compliance with the
informational requirements of Rule 144(c); or (ii) a copy
of the most recent annual or quarterly report of the
Company; and (iii) comply with all other necessary filings
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and other requirements so as to enable the holders of
Registrable Warrant Shares to sell Registrable Warrant
Shares under Rule 144.
14.9 ASSIGNMENT OF REGISTRATION RIGHTS - Any of the holders of
the Registrable Warrant Shares may assign its rights to
cause the Company to register Registrable Warrant Shares
pursuant to this Warrant to a transferee of the majority
of its Registrable Warrant Shares.
14.10 FOREIGN OFFERINGS - The provisions of this Section 14
shall apply, mutatis mutandis, to any registration of the
securities of the Company outside of the United States.
15. GOVERNING LAW
This Warrant shall be governed by, and interpreted in accordance
with, the laws of the State of Israel, without giving effect to the
rules respective conflict of law, and the parties hereto irrevocably
submit to the exclusive jurisdiction of the Courts of Tel Aviv in
respect of any dispute or matter arising out of or connected with
this Warrant.
16. INDEMNIFICATION
16.1 INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement,
indemnify and hold harmless the Holder, the officers,
directors, agents, investment advisors and employees of
the Holder, any person who controls the Holder (as defined
in the Companies Law, 5759-1999 (the "COMPANIES LAW")) to
the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities,
costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses
(collectively, "LOSSES"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a
material fact contained in the registration statement or
arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein
or necessary to make the statements therein not
misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely
upon information regarding the Holder furnished in writing
to the Company by the Holder expressly for use therein, or
to the extent that such information relates to the Holder
or the Holder's proposed method of distribution of
Registrable Warrant Shares and was reviewed and expressly
approved in writing by the Holder expressly for use in the
registration statement. The Company shall notify the
Holder promptly of the institution, threat or assertion of
any proceeding of which the Company is aware in connection
with the transactions contemplated by this Warrant.
16.2 INDEMNIFICATION BY HOLDER. The Holder shall indemnify and
hold harmless the Company, its directors, officers, agents
and employees, each person who controls the Company (as
defined in the Companies Law), and the directors,
officers, agents or employees of such controlling persons,
to the fullest extent permitted by applicable law, from
and against all Losses, as incurred, arising solely out of
or based solely upon any untrue statement of a material
fact contained in any registration statement or arising
solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary
to make the statements therein not misleading to the
11
extent, but only to the extent, that such untrue statement
or omission is contained in any information so furnished
in writing by the Holder to the Company specifically for
inclusion in such registration statement or to the extent
that such untrue statements or omissions are based solely
upon information regarding the Holder furnished in writing
to the Company by the Holder expressly for use therein, or
to the extent that such information relates to the Holder
or the Holder's proposed method of distribution of
Registrable Warrant Shares and was reviewed and expressly
approved in writing by the Holder expressly for use in the
registration statement. In no event shall the liability of
the Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by the Holder upon the
sale of the Registrable Warrant Shares giving rise to such
indemnification obligation.
16.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any proceeding
shall be brought or asserted against any party entitled to
indemnity hereunder (an "INDEMNIFIED PARTY"), such
Indemnified Party shall promptly notify the party from
whom indemnity is sought (the "INDEMNIFYING PARTY") in
writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection
with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except to the extent that it
shall be finally determined by a court of competent
jurisdiction that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.
e-SIM Ltd.
/s/ Yaron Eldad
By: Yaron Eldad
Title: Chief Financial Officer and
Chief Operating Officer
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Exhibit 5.1
NOTICE OF EXERCISE
To: e-SIM Ltd.
1. The undersigned hereby elects to purchase _________ Shares of e-SIM
Ltd., pursuant to the terms of the attached Warrant.
2. In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Shares are being acquired solely for the
account of the undersigned and not as a nominee for any other party,
or for investment, and that the undersigned will not offer, sell or
otherwise dispose of any such Shares except under circumstances that
will not result in a violation of the Securities Act of 1933, as
amended, or any other securities laws.
3. Please issue a certificate representing said Shares in the name of
the undersigned, at the following address:
4. Please issue a new Warrant for the unexercised portion of the
attached Warrant (if any) in the name of the undersigned.
---------------------- -------------------------
(Date) (Print Name of Holder)
-------------------------
(Signature)
Name:
Title:
Telephone:
