SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
June 10, 2004 among Top Image Systems Ltd., an Israeli company (the "COMPANY"),
and the purchasers identified on the signature pages hereto (each, a "PURCHASER"
and collectively, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the
Company, certain securities of the Company as more fully described in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each of the
Purchasers agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in and
construed under Rule 144 under the Securities Act. With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser
will be deemed to be an Affiliate of such Purchaser.
"BUSINESS DAY" means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York or Israel
are authorized or required by law to remain closed.
"CLOSING" means the closing of the purchase and sale of the
Shares pursuant to Section 2.1.
"CLOSING DATE" means the date of the Closing.
"CLOSING PRICE" means, for any date, the price determined by
the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on an Eligible Market or any other
national securities exchange, the closing price per share of the Common
Stock for such date (or the nearest preceding date) on the primary
Eligible Market or exchange on which the Common Stock is then listed or
quoted; (b) if prices for the Common Stock are then quoted on the OTC
Bulletin Board, the closing bid price per share of the Common Stock for
such date (or the nearest preceding date) so quoted; (c) if prices for
the Common Stock are then reported in the "Pink Sheets" published by
the National Quotation Bureau Incorporated (or a similar organization
or agency succeeding to its functions of reporting prices), the most
recent closing bid price per share of the Common Stock so reported; or
(d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith
by Purchasers holding a majority of the Securities.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the ordinary shares of the Company,
nominal value NIS 0.04 per share.
"COMMON STOCK EQUIVALENTS" means, collectively, Options and
Convertible Securities.
"COMPANY ISRAELI COUNSEL" means the Xxx-Xxx Xxxxx law firm,
Israeli counsel to the Company.
"COMPANY U.S. COUNSEL" means XxXxxxxxx, Will & Xxxxx, U.S.
counsel to the Company.
"CONVERTIBLE SECURITIES" means any stock or securities (other
than Options) convertible into or exercisable or exchangeable for
Common Stock.
"EFFECTIVE DATE" means the date that the Registration
Statement is first declared effective by the Commission.
"ELIGIBLE MARKET" means any of the New York Stock Exchange,
the American Stock Exchange, the NASDAQ National Market or the NASDAQ
SmallCap Market.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED STOCK" means the issuance of Common Stock (A) upon
exercise or conversion of any options or other securities described in
Schedule 3.1(f) that are outstanding on the date hereof, including the
Warrants (provided that such exercise or conversion occurs in
accordance with the terms thereof, without amendment or modification,
and that the applicable exercise or conversion price or ratio is
described in such schedule) or otherwise pursuant to any employee
benefit plan described in Schedule 3.1(f) or hereafter adopted by the
Company and approved by its shareholders; (B) in connection with any
issuance of shares or grant of options to employees, officers,
directors or consultants of the Company pursuant to a stock option plan
or other incentive stock plan duly adopted by the Company's board of
directors or in respect of the issuance of Common Stock upon exercise
of any such options; (C) in connection with a joint venture or
development agreement or strategic partnership or similar agreement
approved by the Company's board of directors, a primary purpose of
which is not to raise equity capital; (D) in connection with a
transaction involving a merger or acquisition of an entity, business or
assets (not principally for the purpose of obtaining cash); or (E)
pursuant to a bona fide firm commitment underwritten public offering
through a nationally recognized investment banker in an aggregate
offering amount greater than $10,000,000.
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"FILING DATE" means the 30th day following the Closing Date
with respect to the initial Registration Statement required to be filed
hereunder, and, with respect to any additional Registration Statements
that may be required pursuant to Section 6.1(f), the 15th day following
the date on which the Company first knows, or reasonably should have
known, that such additional Registration Statement is required under
such Section.
"LIEN" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.
"LOSSES" means any and all losses, claims, damages,
liabilities, settlement costs and expenses, including, without
limitation, costs of preparation and reasonable attorneys' fees, but
excluding any consequential losses, including lost profits.
"OPTIONS" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.
"PERSON" means any individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an
agency or subdivision thereof) or any court or other federal, state,
local or other governmental authority or other entity of any kind.
"PER UNIT PURCHASE PRICE" means $3.16.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes
any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of
any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus
including post effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
"PURCHASER COUNSEL" has the meaning set forth in Section
6.2(a).
"REGISTRABLE SECURITIES" means any Common Stock (including
Underlying Shares) issued or issuable pursuant to the Transaction
Documents, together with any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or
similar event with respect to the foregoing.
"REGISTRATION STATEMENT" means each registration statement
required to be filed under Article VI, including (in each case) the
Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
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"REQUIRED EFFECTIVENESS DATE" means (i) with respect to the
initial Registration Statement required to be filed hereunder, the 90th
day following the Closing Date (120th day in the event of a review by
the Commission), and (ii) with respect to any additional Registration
Statements that may be required pursuant to Section 6.1(f), the 75th
day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is
required under such Section.
"RULE 144," "RULE 415," and "RULE 424" means Rule 144, Rule
415 and Rule 424, respectively, promulgated by the Commission pursuant
to the Securities Act, as such Rules may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
"SECURITIES" means the Shares, Warrants and the Underlying
Shares.
"SHAREHOLDER APPROVAL CONDITION" means the Company shall have
obtained the Shareholder Approval on or before the date that is the
90th day following the date of this Agreement.
"SHARES" means an aggregate of 2,563,300 shares of Common
Stock, which are being issued and sold to the Purchasers at the
Closing.
"SUBSIDIARY" means any Person in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar
interest, provided that, for all purposes, (i) for all periods prior to
the date of consummation of the reorganization contemplated on Schedule
3.19a) (the "SUBSIDIARY REORGANIZATION"), the term Subsidiary shall not
include TIS-UK and TIS-Germany and for period subsequent to the
consummation of the Subsidiary Reorganization, the term Subsidiary
shall not include Top Image Systems, B.V., a Netherlands company.
"TRADING DAY" means (a) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, or (b) if
the Common Stock is not then listed or quoted and traded on any
Eligible Market, then a day on which trading occurs on the OTC Bulletin
Board (or any successor thereto), or (c) if trading ceases to occur on
the OTC Bulletin Board (or any successor thereto), any Business Day.
"TRADING MARKET" means the NASDAQ SmallCap Market or any other
Eligible Market, or any national securities exchange, market or trading
or quotation facility on which the Common Stock is then listed or
quoted.
"TRANSACTION DOCUMENTS" means this Agreement, the Warrants,
the Escrow Agreement, the Transfer Agent Instructions and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
"TRANSFER AGENT INSTRUCTIONS" means the Irrevocable Transfer
Agent Instructions, in the form of Exhibit D, executed by the Company
and delivered to and acknowledged in writing by the Company's transfer
agent.
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"UNDERLYING SHARES" means the shares of Common Stock issuable
upon exercise of the Warrants.
"UNIT" means one Share and a Warrant to acquire 0.50 shares of
Common Stock.
"WARRANTS" means, collectively, the Common Stock purchase
warrants issued and sold under this Agreement, in the form of Exhibit
A, and any warrants issued upon exercise of such warrants.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Units indicated below such Purchaser's name on the signature page
of this Agreement at the Per Unit Purchase Price. The Closing shall take place
at the offices of Xxxxxxx Xxxxxxxxx LLP, as soon as possible following
satisfaction or waiver of each of the conditions set forth in Article V hereof
or at such other location or time as the parties may agree.
2.2 Signing Deliveries.
(a) Immediately prior to or simultaneously with the execution
of this Agreement, the Company shall deliver or cause to be delivered to each
Purchaser the following:
(i) an escrow agreement in the form of Exhibit E (the
"ESCROW AGREEMENT") executed by the Company; and
(ii) an agreement, dated as the date of this
Agreement, duly executed by Charter TiS L.L.C. and Xxxxx Xxxxx in the
form of Exhibit F attached hereto.
(b) Immediately prior to or simultaneously with the execution
of this Agreement, each Purchaser shall deliver or cause to be delivered the
following:
(i) to the Company, the Escrow Agreement executed by
such Purchaser; and
(ii) to the escrow agent under the Escrow Agreement
(the "ESCROW AGENT"), an amount equal to the Per Unit Purchase Price
multiplied by the number of Units indicated below such Purchaser's name
on the signature page of this Agreement (the "PURCHASE PRICE"), in
United States dollars and in immediately available funds, by wire
transfer to an account designated in writing to such Purchaser by the
Escrow Agent.
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2.3 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) one or more stock certificates, free and clear of
all restrictive and other legends (except as expressly provided in
Section 4.1(b) hereof), evidencing such number of Shares equal to the
number of Units indicated below such Purchaser's name on the signature
page of this Agreement, registered in the name of such Purchaser, and a
certificate from a duly authorized officer of the Company or its
transfer agent certifying that such Shares were registered in the share
registry of the Company in the name of such Purchaser;
(ii) a Warrant, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to
acquire such number of Underlying Shares indicated below such
Purchaser's name on the signature page of this Agreement under the
heading "Warrant Shares";
(iii) legal opinions of Company Israeli Counsel and
Company U.S. counsel, as to those matters set forth on Exhibit B,
executed by such counsel and delivered to the Purchasers, in form and
substance reasonably satisfactory to Purchaser Counsel;
(iv) duly executed Transfer Agent Instructions
acknowledged by the Company's transfer agent; and
(v) a certificate from a duly authorized officer
certifying on behalf of the Company that of the conditions set forth in
Section 5.1 has been satisfied.
(b) At the Closing after receipt of the items set forth in
Section 2.3(a), each Purchaser shall cause the Escrow Agent to deliver to the
Company the Purchase Price in United States dollars and in immediately available
funds, by wire transfer to an account designated in writing to such Purchaser by
the Company for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
(a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in
Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital
stock or comparable equity interests of each Subsidiary free and clear of any
Lien and all the issued and outstanding shares of capital stock or comparable
equity interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company and
the Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
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(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective memorandum or articles of association, certificate or articles
of incorporation, bylaws or other organizational or charter documents. Each of
the Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, does not and could not, individually or in the
aggregate, reasonably be expected to (i) have a material adverse effect the
legality, validity or enforceability of any Transaction Document, (ii) have or
result in a material adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole on a consolidated basis, or (iii) have a material
adverse effect or impairment on the Company's ability to perform fully on a
timely basis its obligations under any of the Transaction Documents (any of (i),
(ii) or (iii), a "MATERIAL ADVERSE EFFECT"); provided, however, that no Material
Adverse Effect shall be deemed to have occurred if such Material Adverse Effect
shall have been caused solely by (i) the public announcement of the transactions
contemplated by the Transaction Documents, (ii) the United States or Israeli
trading markets, (iii) a change in the trading price of the Common Stock on a
Trading Market, (iii) a short term increase in expenses as the result of the
Company's strategic plan as announced in the press release dated March 24, 2004,
or (v) any combinations of items (i), (ii), (iii) and (iv).
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. Except for the Shareholder Approval (as
defined below), and as set forth on Schedule 3.1(c), the execution and delivery
of each of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of the Company and no further consent or action
is required by the Company, its Board of Directors or its shareholders. Each of
the Transaction Documents has been (or upon delivery will be) duly executed by
the Company and is, or when delivered in accordance with the terms hereof will,
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
(d) No Conflicts. Except as set forth on Schedule 3.1(d), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of the
Company's or any Subsidiary's memorandum or articles of association, certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any Israeli or U.S. law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
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(excluding federal and state securities laws and regulations and the rules and
regulations of any self-regulatory organization to which the Company or its
securities are subject), or by which any property or asset of the Company or a
Subsidiary is bound or affected, except, in the case of clauses (ii) and (iii),
as could not reasonably be expected to have a Material Adverse Effect.
(e) Issuance of the Securities. Other than Israeli stamp tax
and withholding tax, there is no tax, levy, impost, duty, fee, assessment or
other governmental charge, or any deduction or withholding, imposed by any
governmental agency or authority in or of Israel either (A) on or by virtue of
the execution or delivery of the Transaction Documents to which Company is a
party, (B) the issuance of the Securities pursuant hereto or (C) on any payment
to be made by Company pursuant to the Transaction Documents. The Securities
(including the Underlying Shares) are duly authorized and, when issued and paid
for in accordance with the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens (other than
Liens arising solely by action of the Purchasers) and shall not be subject to
preemptive rights or similar rights of shareholders, except for such rights
shall have been waived as of the Closing. The Company shall reserve from its
duly authorized share capital the maximum number of shares of Common Stock
issuable upon exercise of the Warrants.
(f) Capitalization. The number of shares and type of all
authorized, issued and outstanding share capital, options and other securities
of the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth in
Schedule 3.1(f). All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable and have been issued in compliance
with all applicable securities laws. Except as disclosed in Schedule 3.1(f), or
as contemplated by the Transaction Documents, there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is bound
to issue additional shares of Common Stock, or securities or rights convertible
or exchangeable into shares of Common Stock. Except as disclosed in Schedule
3.1(f), or as contemplated by the Transaction Documents, there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) or in the
Company's Articles of Association and the issue and sale of the Securities
(including the Underlying Shares) will not obligate the Company to issue shares
of Common Stock or other securities to any Person (other than the Purchasers)
and will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such securities. To the
knowledge of the Company, except as disclosed in Schedule 3.1(f) or in the
Company's SEC Reports, no Person or group of related Persons beneficially owns
(as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right
to acquire, by agreement with or by obligation binding upon the Company,
beneficial ownership of in excess of 5% of the outstanding Common Stock.
(g) SEC Reports; Financial Statements. Except as set forth on
Schedule 3.1(g), the Company has filed all reports required to be filed by it
under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the
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Company was required by law to file such material) (the foregoing materials
(together with any materials filed by the Company under the Exchange Act,
whether or not required) being collectively referred to herein as the "SEC
REPORTS" and, together with this Agreement and the Schedules to this Agreement,
the "DISCLOSURE MATERIALS") on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. The Company has delivered to each Purchaser
true, correct and complete copies of all SEC Reports filed within the 10 days
preceding the date hereof. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with Israeli
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP") (and contain a reconciliation to U.S. GAAP),
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Company and its consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. All material agreements to which the Company or any
Subsidiary are subject are included as part of or specifically identified in the
SEC Reports or set forth on Schedule 3.1(g).
(h) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports or in Schedule 3.1(h), (i) there has been no event,
occurrence or development that, individually or in the aggregate, has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any material liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, except as disclosed in its SEC Reports, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
shareholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock-based plans.
(i) Absence of Litigation. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries that could, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect. Schedule 3.1(i) contains a complete
list and summary description of any pending or, to the knowledge of the Company
threatened proceedings against or affecting the Company or any of its
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Subsidiaries, without regard to whether it could, individually or in the
aggregate, have a Material Adverse Effect.
(j) Compliance. Except as disclosed in Schedule 3.1(j),
neither the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is in violation of any Israeli
or U.S. statute, rule or regulation of any governmental authority, including
without limitation laws relating to taxes, environmental protection,
occupational health and safety, product quality and safety and employment and
labor matters, except in each case as could not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
(k) Title to Assets. Neither the Company nor any Subsidiary
owns any real property. The Company and the Subsidiaries own or have the right
to use all personal property that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for Liens (i)
disclosed in Schedule 3.1(k), or (ii) as do not materially interfere with the
use made and proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in material compliance.
(l) Certain Fees. Except for the fees described in Schedule
3.1(l), all of which are payable to registered broker-dealers, no brokerage or
finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
this Agreement, and the Company has not taken any action that would cause any
Purchaser to be liable for any such fees or commissions.
(m) Private Placement. Neither the Company nor any Person
acting on the Company's behalf has sold or offered to sell or solicited any
offer to buy the Securities by means of any form of general solicitation or
advertising. Neither the Company nor any of its Affiliates nor any Person acting
on the Company's behalf has, directly or indirectly, at any time within the past
six months, made any offer or sale of any security or solicitation of any offer
to buy any security under circumstances that would (i) eliminate the
availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant to the
Transaction Documents to be integrated with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder approval provisions,
including, without limitation, under the rules and regulations of any Trading
Market. The Company is not, and is not an Affiliate of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. The
Company is not a United States real property holding corporation within the
meaning of the Foreign Investment in Real Property Tax Act of 1980. The Company
is not required to publish a prospectus in Israel under the laws of the State of
Israel in connection with the offer or sale of securities pursuant to the
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Transaction Documents. The Company has not offered or sold any shares of Common
Stock to any Israeli non-accredited investors during the 12-month period
immediately preceding the date hereof, other than pursuant to a prospectus
approved by the Israeli Securities Authority.
(n) Listing and Maintenance Requirements. The Company has not,
in the two years preceding the date hereof, received notice (written or oral)
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is in compliance
with all such listing and maintenance requirements.
(o) Registration Rights. Except as described in Schedule
3.1(o), the Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority that
have not been satisfied.
(p) Application of Takeover Protections. There is no control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company's charter documents that is applicable to any of the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including, without
limitation, as a result of the Company's issuance of the Securities and the
Purchasers' ownership of the Securities.
(q) Disclosure. Except as disclosed in Schedule 3.1(q), the
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any information
that constitutes or might constitute material, nonpublic information. The
Company understands and confirms that each of the Purchasers will rely on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Schedules to
this Agreement, furnished by or on behalf of the Company are true and correct in
all material respects and do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed. The
Company acknowledges and agrees that no Purchaser makes or has made (i) any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 or (ii) any
statement, commitment or promise to the Company or, to its knowledge, any of its
representatives which is or was an inducement to the Company to enter into this
Agreement or otherwise.
(r) Acknowledgment Regarding Purchasers' Purchase of
Securities. The Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
11
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Purchaser or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Purchasers'
purchase of the Securities. The Company further represents to each Purchaser
that the Company's decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
(s) Patents and Trademarks. To the Company's knowledge, the
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could reasonably be expected to have a
Material Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS").
Other than as disclosed in Schedule 3.1(s), neither the Company nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights of
any Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.
(t) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are, in the reasonably judgment of the Company, prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged. Neither the Company nor any Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business.
(u) Regulatory Permits. To the Company's knowledge, the
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect ("MATERIAL PERMITS"), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(v) Transactions With Affiliates and Employees. Except as set
forth in SEC Reports filed at least ten days prior to the date hereof, or in
Schedule 3.1(v), none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, consultants, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
12
(w) Form F-3 Eligibility. Except as disclosed in Schedule
3.1(w), the Company believes that it has a good faith argument that it is
eligible to register the resale of its Common Stock for resale by the Purchasers
under Form F-3 promulgated under the Securities Act.
(x) Solvency. Based on the financial condition of the Company
as of the Closing Date and after giving effect to the sale of the Securities and
receipt of the proceeds therefrom (i) the fair value of the Company's assets
(including goodwill and expected results of operations) exceeds the amount that
will be required to be paid on or in respect of the Company's existing debts and
other liabilities (including known contingent liabilities) as they mature; (ii)
the Company's assets do not constitute unreasonably small capital to carry on
its business for the current fiscal year as now conducted and as currently
proposed to be conducted; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, would be sufficient to pay all amounts on or in respect of its
debt when such amounts are required to be paid. The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in respect of its
debt)
(y) Internal Accounting Controls. The Company and the
Subsidiaries maintain internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(z) Xxxxxxxx-Xxxxx Act. The Company is in compliance with
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 and applicable rules
and regulations promulgated by the Commission thereunder in effect as of the
date of this Agreement, except where such noncompliance could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Shares and the Warrants hereunder has been duly authorized by all necessary
action on the part of such Purchaser. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the valid and binding obligation of
such Purchaser, enforceable against it in accordance with its terms.
13
(b) No Conflicts. The execution, delivery and performance of
the Transaction Documents by such Purchaser and the consummation by such
Purchaser of the transactions contemplated hereby and thereby do not and will
(i) not conflict with or violate any provision of such Purchaser's
organizational or charter documents or (ii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which such Purchaser is subject
(excluding Israeli law, federal and state securities laws and regulations and
the rules and regulations of any self-regulatory organization to which the
Company or its securities are subject).
(c) Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement, at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Nothing contained
herein shall be deemed a representation or warranty by such Purchaser to hold
Securities for any period of time.
(d) Purchaser Status. At the time such Purchaser was offered
the Shares and the Warrants, it was, and at the date hereof it is, an
"accredited investor" as defined in Rule 501(a) under the Securities Act.
(e) Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(f) Information. Such Purchaser has requested, received,
reviewed and considered all information it deemed relevant in making an informed
decision to purchase the Securities. Such Purchaser understands that its
acquisition of the Securities has not been registered under the Securities Act
or registered or qualified under any state securities law in reliance on
specific exemptions therefrom, which exemptions may depend upon, among other
things, the bona fide nature of such Purchaser's investment intent as expressed
herein.
(g) U.S. Domestic Offering. Each Purchaser not domiciled in
the United Stated acknowledges that the Company has represented that no action
has been or will be taken in any jurisdiction outside the United States by the
Company that would permit an offering of the Securities, or possession or
distribution of offering materials in connection with the issue of the
Securities, in any jurisdiction outside the United States where action for that
purpose is required. If such Purchaser is located or domiciled outside the
United States it agrees to comply with all applicable laws and regulations in
each foreign jurisdiction in which it purchases, offers, sells or delivers
Shares or has in its possession or distributes any offering material, in all
cases at its own expense.
14
(h) Affiliates. Except as set forth on Schedule 3.2(h), no
Purchaser is an affiliate of any other Purchaser or of Charter TiS, L.L.C.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Securities may only be disposed of, and each Purchaser
agrees to only transfer Securities, pursuant to an effective registration
statement under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in compliance with any
applicable state securities laws; provided however, that no Purchaser shall have
the right to dispose of any Warrant held by it to any Person without the prior
written consent of the Company (such consent not to be unreasonably withheld)
other than transfers or assignments of such Warrants to (i) such Purchaser's
Affiliates, (ii) a "qualified institutional buyer" as defined in Rule 144A(a)(1)
of the Securities Act or (iii) in the event of a dissolution or winding down of
the operations of such Purchaser, such Purchaser's equity owners. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company or pursuant to Rule 144(k), except as otherwise set
forth herein, the Company may require the transferor to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to
the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the
Company hereby consents to and agrees to register on the books of the Company
and with its transfer agent, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Company that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Each Purchaser hereby agrees
not to make any sale of the Securities without effectively causing any
applicable prospectus delivery requirement under the Securities Act to be
satisfied.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of the following legend on any certificate
evidencing Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING,
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
15
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act, or (ii) following any
sale of such Securities pursuant to Rule 144, or (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission). The
Company shall cause its counsel to issue the legal opinion included in the
Transfer Agent Instructions to the Company's transfer agent on or promptly
following the Effective Date but in no event greater than one Trading Day.
Following the Effective Date or at such earlier time as a legend is no longer
required for certain Securities, the Company will use commercially reasonable
efforts to, no later than three Trading Days following the delivery by a
Purchaser to the Company or the Company's transfer agent of a legended
certificate representing such Securities (together with all information and
certification in connection therewith as may be reasonably requested by the
Company), deliver or cause to be delivered to such Purchaser a certificate
representing such Securities that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
(c) The Company acknowledges and agrees that a Purchaser may
from time to time pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement or other loan or
financing arrangement secured by the Securities and, if required under the terms
of such agreement, loan or arrangement, such Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties. Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of the
pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the appropriate
Purchaser's expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities, including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of selling stockholders thereunder.
4.2 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any Purchaser, the Company shall deliver to
such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with paragraph (c) of Rule 144 such information as is required for
the Purchasers to sell the Securities under Rule 144. The Company further
covenants that it will take such further action as any holder of Securities may
reasonably request to satisfy the provisions of Rule 144 applicable to the
16
issuer of securities relating to transactions for the sale of securities
pursuant to Rule 144.
4.3 Integration. The Company shall not, and shall use its commercially
reasonable best efforts to ensure that no Affiliate of the Company shall, sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market.
4.4 Reservation of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents, the Company
shall promptly take such actions as may be required to increase the number of
authorized shares. The Company shall in the time and manner required by its
Trading Market, prepare and file with such Trading Market an additional shares
listing application covering the number of shares of Common Stock issuable under
the Transaction Documents and shall take all steps necessary to cause such
shares of Common Stock to be approved for listing on its Trading Market as soon
as possible.
4.5 Subsequent Placements.
(a) From the date hereof until the Effective Date, the Company
will not, directly or indirectly, offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or its Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life and
under any circumstances, convertible into or exchangeable or exercisable for
Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "SUBSEQUENT PLACEMENT").
(b) From the Effective Date until 30 Trading Days after the
Effective Date (the "BLOCKOUT PERIOD"), the Company will not, directly or
indirectly, effect any Subsequent Placement except as set forth in Section
4.5(e).
(c) The Blockout Period set forth in Section 4.5(b) above
shall be extended for the number of Trading Days during such period in which (i)
trading in the Common Stock is suspended by any Trading Market, (ii) the
Registration Statement is not effective, or (iii) the prospectus included in the
Registration Statement may not be used by the Purchasers for the resale of
Registrable Securities thereunder.
(d) From the end of the Blockout Period until the one year
anniversary thereof, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this
Section 4.5(d).
17
(i) The Company shall deliver to each Purchaser a
written notice (the "OFFER") of any proposed or intended issuance or
sale or exchange of the securities being offered (the "OFFERED
SECURITIES") in a Subsequent Placement, which Offer shall (x) identify
and describe the Offered Securities, (y) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the
number or amount of the Offered Securities to be issued, sold or
exchanged, and (z) offer to issue and sell to or exchange with each
Purchaser (A) a pro rata portion of the Offered Securities based on
such Purchaser's pro rata portion of the aggregate purchase price paid
by the Purchasers for all of the Shares purchased hereunder, subject
only to similar participation rights of other equity holders in the
Company outstanding on the date hereof (the "BASIC AMOUNT"), and (B)
with respect to each Purchaser that elects to purchase its Basic
Amount, any additional portion of the Offered Securities attributable
to the Basic Amounts of other Purchasers as such Purchaser shall
indicate it will purchase or acquire should the other Purchasers
subscribe for less than their Basic Amounts (the "UNDERSUBSCRIPTION
AMOUNT").
(ii) To accept an Offer, in whole or in part, a
Purchaser must deliver a written notice to the Company prior to the end
of the three (3) Trading Day period of the Offer, setting forth the
portion of the Purchaser's Basic Amount that such Purchaser elects to
purchase and, if such Purchaser shall elect to purchase all of its
Basic Amount, the Undersubscription Amount, if any, that such Purchaser
elects to purchase (in either case, the "NOTICE OF ACCEPTANCE"). If the
Basic Amounts subscribed for by all Purchasers are less than the total
of all of the Basic Amounts, then each Purchaser who has set forth an
Undersubcription Amount in its Notice of Acceptance shall be entitled
to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that
if the Undersubscription Amounts -------- ------- subscribed for exceed
the difference between the total of all the Basic Amounts and the Basic
Amounts subscribed for (the "AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each
Purchaser who has subscribed for any Undersubscription Amount shall be
entitled to purchase on that portion of the Available Undersubscription
Amount as the Basic Amount of such Purchaser bears to the total Basic
Amounts of all Purchasers that have subscribed for Undersubscription
Amounts, subject to rounding by the Board of Directors to the extent
its deems reasonably necessary.
(iii) If the Purchasers shall, in accordance with
clause (ii) of this Section 4.5(d) elect to purchase all, but not less
than all of the Offered Securities on the terms set forth in the Offer,
then the Company and the Purchasers shall negotiate definitive
agreements related thereto, and the Company shall not offer the Offered
Securities to any other Person, for a period of not less than thirty
(30) days. The purchase by the Purchasers of any Offered Securities is
subject in all cases to the preparation, execution and delivery by the
Company and the Purchasers of a purchase agreement relating to such
Offered Securities reasonably satisfactory in form and substance to the
Purchasers and their respective counsel.
(iv) If the Purchasers shall not have elected to
purchase all of the Offered Securities pursuant to clause (ii) of this
Section 4.5(d), or the Company and the Purchasers (notwithstanding the
Company's good faith efforts to do so) are not able to agree on
18
definitive agreements regarding such purchase, then the Company shall
have sixty (60) calendar days from the expiration of the period set
forth in Section 4.5(d)(ii) above to enter into definitive agreements
to issue, sell or exchange all of such Offered Securities to any
person, provided that the terms of such transactions shall be no less
favorable to the Company (as determined in the reasonable judgment of
the Board of Directors of the Company) than as set forth in the Offer
("THIRD PARTY OFFERING"); provided, however, upon the completion of
definitive documents for the Third Party Offering and at --------
------- least 5 Trading Days prior to the closing thereof, the Company
shall re-offer to the Purchasers the right to participate in the Third
Party Offering up to an amount equal to the aggregate purchase price of
the Third Party Offering multiplied by the fraction equal to the number
of Shares and Warrant Shares (exercised and unexercised, ignoring any
limitations on exercise therein for purposes of such calculation)
divided by the Company's outstanding Common Stock on a fully diluted
basis. Such Offer shall otherwise be made pursuant to the terms of
Sections 4.5(d)(i) and 5.4(d)(ii), including each Purchaser's right to
any Available Undersubscription Amount (in respect of the securities
offered to Purchasers pursuant to this clause (v)) and, in addition to
the information required pursuant o Section 4.5(d)(i), the Company
shall identify the Persons or entities to which or with which the
Offered Securities are to be offered, issued, sold or exchanged.
(v) Any Offered Securities not acquired by the
Purchasers or other persons in accordance with Section 4.5(d)(iv) above
may not be issued, sold or exchanged until they are again offered to
the Purchasers under the procedures specified in this Agreement.
(e) The restrictions contained in this Section 4.5 shall not
apply to Excluded Stock.
4.6 Securities Laws Disclosure; Publicity. The Company shall, on or
before 8:30 a.m., New York City time on June 10, 2004, issue a press release
reasonably acceptable to Purchaser Counsel disclosing all material terms of the
transactions contemplated hereby. On the Closing Date, the Company shall file a
Current Report on Form 6-K with the Commission (the "6-K FILING") describing the
terms of the transactions contemplated by the Transaction Documents, in the form
required by the Exchange Act. Thereafter, the Company shall timely file any
filings and notices required by the Commission or applicable law with respect to
the transactions contemplated hereby and provide copies thereof to the
Purchasers promptly after filing. Except with respect to the 6-K Filing and the
press release referenced above, a copy of which will be provided to the
Purchasers for their review as early as practicable prior to filing), the
Company shall, at least two Trading Days prior to the filing or dissemination of
any disclosure required by this paragraph, provide a copy thereof to the
Purchasers and Purchaser Counsel for their review. The Company and the
Purchasers shall consult with each other in issuing any press releases or
otherwise making public statements or filings and other communications with the
Commission or any regulatory agency or Trading Market with respect to the
transactions contemplated hereby, and neither party shall issue any such press
release or otherwise make any such public statement, filing or other
communication without the prior consent of the other party, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement, filing or
19
other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except to the
extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure. The
Company shall not, and shall cause each of its Subsidiaries and its and each of
their respective officers, directors, employees and agents not to, provide any
Purchaser with any material nonpublic information regarding the Company or any
of its Subsidiaries from and after the filing of the 6-K Filing without the
express written consent of such Purchaser. In the event of a breach of the
foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to any
other remedy provided herein or in the Transaction Documents, a Purchaser shall
have the right to cause the Company to make a public disclosure, in the form of
a press release, public advertisement or otherwise, of such material nonpublic
information without the prior approval by the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees or agents. Subject to
the foregoing, neither the Company nor any Purchaser shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 6-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) each Purchaser shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release, provided further
that if a Purchaser does not approve any such press release or other public
disclosure within 24 hours of receipt thereof, such Purchaser shall be deemed to
have provided consent). Each press release disseminated during the 12 months
preceding the date of this Agreement did not at the time of release contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
4.7 Use of Proceeds. Except as set forth on Schedule 4.7, the Company
shall use the net proceeds from the sale of the Securities hereunder for working
capital purposes and not (i) for the satisfaction of any portion of the
Company's debt (other than payment of trade payables and accrued expenses in the
ordinary course of the Company's business and consistent with prior practices),
(ii) to redeem any Company equity or equity-equivalent securities, or (iii) to
settle any outstanding litigation.
4.8 Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED PERSON") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of the transactions contemplated by the Transaction Documents, the
Company will indemnify and hold harmless such Purchaser or Related Person for
its reasonable legal and other expenses (including the costs of any
investigation, preparation and travel) and for any Losses incurred in connection
therewith, as such expenses or Losses are incurred, excluding only Losses that
result directly from such Purchaser's or Related Person's negligence or willful
misconduct or a breach by a Purchaser of the representations, warranties or
covenants of such Purchaser as set forth in Section 3.2 of this Agreement (other
than Section 3.2(f)). In addition, the Company shall indemnify and hold harmless
20
each Purchaser and Related Person from and against any and all Losses, as
incurred, arising out of or relating to any breach by the Company of any of the
representations, warranties or covenants made by the Company in this Agreement
or any other Transaction Document, or any allegation by a third party that, if
true, would constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.4(c) below. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability that the Company may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. If the Company breaches its obligations under any Transaction
Document, then, in addition to any other liabilities the Company may have under
any Transaction Document or applicable law, the Company shall pay or reimburse
the Purchasers on demand for all costs of collection and enforcement (including
reasonable attorneys fees and expenses). Without limiting the generality of the
foregoing, the Company specifically agrees to reimburse the Purchasers on demand
for all costs of enforcing the indemnification obligations in this paragraph.
4.9 Shareholder Approval. The Company shall seek, and use commercially
reasonable efforts to obtain, on before the date that is the 90th day following
the date of this Agreement, shareholder approval of the transactions
contemplated hereby, which approval shall meet the requirements of Nasdaq's Rule
4350(i) of Nasdaq set forth in the NASD Manual (the "SHAREHOLDER APPROVAL"). The
Company shall use commercially reasonable efforts to call a meeting of
shareholders (the "SHAREHOLDER MEETING") to be held within 75 days after the
date of this Agreement. The Company shall mail and distribute its proxy
materials for the Shareholder Meeting to its shareholders at least 30 days prior
to the date of the Shareholder Meeting, shall actively solicit proxies to vote
on the matters submitted for approval. The Company shall provide the Purchasers
an opportunity to review and comment on such proxy materials by providing (which
may be by e-mail) copies of such proxy materials and any preliminary proxy
materials to the Purchasers a reasonable period of time prior to their
distribution to shareholders of the Company (the Company shall redact any
material non-public information contained in the Proxy). The Company shall
provide the Purchasers (which may be by e-mail) copies of all correspondence
from any regulatory authority concerning the proxy materials for the Shareholder
Meeting promptly after the same is sent or received by the Company. The Company
shall furnish to the Purchasers and Purchaser Counsel (which may be by e-mail) a
copy of its definitive proxy materials for the Shareholder Meeting and any
amendments or supplements thereto promptly after the same are first used, mailed
to shareholders and shall inform the Purchasers of any adjournment of the
Shareholder Meeting and shall report the result of the vote of shareholders on
such proposition at the conclusion of the Shareholder Meeting.
4.10 Trading Restrictions. Each Purchaser agrees that beginning on the
date hereof until the earlier to occur of (a) 90 days from the Closing Date and
(b) the effective date of the Registration Statement to be filed in connection
with the sale of the Company Shares, it will not enter into any Short Sales. For
purposes of this Section 3.2(f), a "SHORT SALE" by a Purchaser means a sale of
Common Stock that is marked as a short sale or has the effect of a short sale
and that is executed at a time when such Purchaser has no equivalent offsetting
long position in the Common Stock. For purposes of determining whether a
Purchaser has an equivalent offsetting long position in the Common Stock, all
Common Stock and all Common Stock that would be issuable upon conversion or
exercise in full of all Options then held by such Purchaser (assuming that such
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Options were then fully convertible or exercisable, notwithstanding any
provisions to the contrary, and giving effect to any conversion or exercise
price adjustments scheduled to take effect in the future) shall be deemed to be
held long by such Purchaser.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction or waiver by such Purchaser, at or before the Closing, of each
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date;
(b) Performance. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing;
(c) Shareholder Approval. The Shareholder Approval Condition
shall have been satisfied;
(d) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
(e) Adverse Changes. Since the date of execution of this
Agreement, no event or series of events shall have occurred that reasonably
would be expected to have or result in a Material Adverse Effect;
(f) Consents. Each of the consents listed on Schedule 5.1(f)
shall have been obtained; and
(g) No Suspensions of Trading in Common Stock; Listing.
Trading in the Common Stock shall not have been suspended by the Commission or
any Trading Market (except for any suspensions of trading of not more than three
Trading Days (whether or not consecutive) solely to permit dissemination of
material information regarding the Company) at any time since the date of
execution of this Agreement, and the Common Stock shall have been at all times
since such date listed for trading on an Eligible Market.
5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
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(a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date;
(b) Performance. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Purchasers at or prior to the Closing;
(c) Shareholder Approval. The Shareholder Approval Condition
shall have been satisfied;
(d) Consents. Each of the consents listed on Schedule 5.2(f)
shall have been obtained; and
(e) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Registration
(a) As promptly as possible, and in any event on or prior to
the Filing Date, the Company shall prepare and file with the Commission a
Registration Statement covering the resale of all Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form F-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form F-3, in which case such
registration shall be on another appropriate form in accordance herewith as the
Purchasers may consent) and shall contain (except if otherwise directed by the
Purchasers) the "Plan of Distribution" attached hereto as Exhibit C.
(b) The Company shall use commercially reasonable efforts to
cause the Registration Statement to be declared effective by the Commission as
promptly as possible after the filing thereof, but in any event prior to the
Required Effectiveness Date, and to keep the Registration Statement continuously
effective under the Securities Act until the fifth anniversary of the Effective
Date or such earlier date when all Registrable Securities covered by such
Registration Statement have been sold pursuant thereto (the "EFFECTIVENESS
PERIOD").
(c) The Company shall notify each Purchaser in writing
promptly (and in any event within one Trading Day) after receiving notification
from the Commission that the Registration Statement has been declared effective.
(d) If: (i) any Registration Statement is not filed on or
prior to the Filing Date, or (ii) the-Company fails to file with the Commission
a request for acceleration in accordance with Rule 461 promulgated under the
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Securities Act, within five Trading Days after the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or will not be subject to further
review, or (iii) a Registration Statement filed hereunder is not declared
effective by the Commission by the Required Effectiveness Date, or (iv) after a
Registration Statement is filed with and declared effective by the Commission,
such Registration Statement ceases to be effective as to all Registrable
Securities to which it is required to relate at any time prior to the expiration
of the Effectiveness Period without being succeeded within 10 Trading Days by an
amendment to such Registration Statement or by a subsequent Registration
Statement filed with and declared effective by the Commission, or (v) an
amendment to a Registration Statement is not filed by the Company with the
Commission within ten Trading Days after the Commission's having notified the
Company that such amendment is required in order for such Registration Statement
to be declared effective or (vi) the Common Stock is not listed or quoted, or is
suspended from trading on the Nasdaq Small Cap Market for a period of three
Trading Days (which need not be consecutive Trading Days) (any such failure or
breach being referred to as an "Event," and for purposes of clause (i) or (iv)
the date on which such Event occurs, or for purposes of clause (ii) the date on
which such five Trading Day period is exceeded, or for purposes of clauses
(iii), (v) or (vi) the date which such ten Trading Day-period is exceeded, or
for purposes of clause (vii) the date on which such three Trading Day period is
exceeded, being referred to as "`EVENT DATE"), then: on each such Event Date and
on each monthly anniversary of the Event Date thereafter (if the applicable
Event shall not have been cured by such date) until the earlier of (A) the date
on which the applicable Event is cured or (B) the second anniversary of the
Event Date, the Company shall pay to each Purchaser an amount in cash, as
partial liquidated damages and not as a penalty, equal to 1% of the aggregate
purchase price paid by such Purchaser pursuant to the Purchase Agreement. Such
payments shall be in partial compensation to the Purchasers and shall not
constitute the Purchaser's exclusive remedy for such events. If the Company
fails to pay any liquidated damages pursuant to this Section in full within
seven days after the date payable, the Company will pay interest thereon at a
rate of 18% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Purchaser, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full.
(e) Except as set forth on Schedule 6.1(e), the Company shall
not, prior to the Effective Date of the Registration Statement, prepare and file
with the Commission a registration statement relating to an offering for its own
account or the account of others (other than as contemplated in the Transaction
Documents) under the Securities Act of any of its equity securities.
(f) If the Company issues to the Purchasers any Common Stock
pursuant to the Transaction Documents that is not included in the initial
Registration Statement, then the Company shall file an additional Registration
Statement covering such number of shares of Common Stock on or prior to the
Filing Date and shall use it best efforts, but in no event later than the
Required Filing Date, to cause such additional Registration Statement to become
effective by the Commission.
(g) Notwithstanding any provision in this Agreement to the
contrary, following the 30th Trading Day following the Effective Date, the
Company's obligations hereunder to file, achieve effectiveness of, or maintain
24
effectiveness of a registration statement continuously in effect under the
Securities Act shall be suspended and all penalties and other effects thereof
hereunder shall not be applicable during any period (each such period, a
"SUSPENSION PERIOD") if, in the good faith judgment of the Company's Board of
Directors, it is advisable to suspend the use of the Prospectus included therein
for a discrete period of time due to pending material corporate developments or
similar material events that have not yet been publicly disclosed and as to
which the Company believes that public disclosure would be prejudicial to the
Company or its stockholders; provided, that the Registration Statement shall be
suspended for a total of no more than two times or for a period of more than, in
the aggregate, twenty (20) days in any twelve (12) month period. Immediately
after the end of any Suspension Period under this Section 6.1(g), the Company
shall take all actions necessary (including filing any required supplemental
prospectus) to restore the effectiveness of the applicable Registration
Statement and the ability of the Purchasers to publicly resell their Registrable
Securities pursuant to such effective Registration Statement.
6.2 Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company and the Purchasers, in respect
of Section 6.2(m) hereof, shall:
(a) Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish to each
Purchaser and any counsel designated by any Purchaser ( each a "Purchaser
Counsel", and Vertical Ventures, LLC has initially designated Xxxxxxx Xxxxxxxxx
LLP as their Purchaser Counsel) copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Purchasers and
Purchaser Counsel, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such reasonable inquiries
as shall be necessary, in the reasonable opinion of respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall not file a Registration Statement or any such Prospectus or any
amendments or supplements thereto to which Purchasers holding a majority of the
Registrable Securities shall reasonably object, provided that in the event any
Purchaser objects to the substance of the Registration Statement, the Company
shall file such Registration Statement within three Trading Days of receiving
consent to the filing of such Registration Statement by the Purchasers holding a
majority of the Registrable Securities.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible , and in any event within ten days,
to any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and as promptly as reasonably practicable
25
provide the Purchasers true and complete copies of all correspondence from and
to the Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Purchasers thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Purchasers and Purchaser Counsel reasonably
promptly, and (if requested by any such Person) confirm such notice in writing
no later than one Trading Day thereafter, of any of the following events: (i)
the Commission notifies the Company whether there will be a "review" of any
Registration Statement; (ii) the Commission comments in writing on any
Registration Statement (in which case the Company shall deliver to each
Purchaser a copy of such comments and of all written responses thereto); (iii)
any Registration Statement or any post-effective amendment is declared
effective; (iv) the Commission or any other Federal or state governmental
authority requests any amendment or supplement to any Registration Statement or
Prospectus or requests additional information related thereto; (v) the
Commission issues any stop order suspending the effectiveness of any
Registration Statement or initiates any Proceedings for that purpose; (vi) the
Company receives notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction, or the
initiation or threat of any Proceeding for such purpose; or (vii) the financial
statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(d) Use commercially reasonable efforts to avoid the issuance
of or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of any Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as possible.
(e) Furnish to each Purchaser and Purchaser Counsel, without
charge, at least one copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(f) Promptly deliver to each Purchaser and Purchaser Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Purchasers in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
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(g) (i) In the time and manner required by each Trading
Market, prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) use commercially
reasonable efforts to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as possible thereafter; (iii) provide to
the Purchasers evidence of such listing; and (iv) use commercially reasonable
efforts to maintain the listing of such Registrable Securities on each such
Trading Market or another Eligible Market.
(h) Prior to any public offering of Registrable Securities,
use commercially reasonable efforts to register or qualify or cooperate with the
selling Purchasers and each applicable Purchaser Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Purchaser reasonably requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement.
(i) Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by this Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Purchasers may request.
(j) Upon the occurrence of any event described in Section
6.2(c)(vii), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(k) Reasonably cooperate with any reasonable due diligence
investigation undertaken by the Purchasers in connection with the sale of
Registrable Securities, including, without limitation, by making available any
documents and information; provided that the Company will not deliver or make
available to any Purchaser material, nonpublic information unless such Purchaser
specifically requests in advance to receive material, nonpublic information in
writing.
(l) Comply with all applicable rules and regulations of the
Commission.
(m) Complete a questionnaire (in customary form) and to
provide such additional information and assistance as shall be reasonably
requested by the Company in order to effect registration of the Securities to be
purchased by such Purchaser hereunder.
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6.3 Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company, (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, and (f) all listing fees to be paid
by the Company to the Trading Market.
6.4 Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, the officers, directors, partners, members, agents, Affiliated
investment advisors and employees of each of them, each Person who controls any
such Purchaser (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, partners, members,
agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all Losses, as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, 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 (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i)
such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Purchaser furnished
in writing to the Company by such Purchaser expressly for use therein, or to the
extent that such information relates to such Purchaser or such Purchaser's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an event
of the type specified in Section 6.2(c)(v)-(vii), the use by such Purchaser of
an outdated or defective Prospectus after the Company has notified such
Purchaser in writing that the Prospectus is outdated or defective and prior to
the receipt by such Purchaser of the Advice contemplated in Section 6.5. The
Company shall notify the Purchasers promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.
(b) Indemnification by Purchasers. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses arising solely out of any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out of
28
any omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of prospectus
or supplement thereto, in the light of the circumstances under which they were
made) not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Purchaser to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (i) such untrue statements or
omissions are based upon information regarding such Purchaser furnished in
writing to the Company by such Purchaser expressly for use therein, or to the
extent that such information relates to such Purchaser or such Purchaser's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an event
of the type specified in Section 6.2(c)(v)-(vii), the use by such Purchaser of
an outdated or defective Prospectus after the Company has notified such
Purchaser in writing that the Prospectus is outdated or defective and prior to
the receipt by such Purchaser of the Advice contemplated in Section 6.5. In no
event shall the liability of any selling Purchaser hereunder be greater in
amount than the dollar amount of the net proceeds received by such Purchaser
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the
Person 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 (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party, provided, the Indemnifying Party shall only be required
to pay the reasonable fees and expenses of one separate counsel). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
29
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
(d) Contribution. If a claim for indemnification under Section
6.4(a) or (b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6.4(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6.4(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.4(d), no Purchaser
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Purchaser from the sale
of the Registrable Securities subject to the Proceeding exceeds the amount of
any damages that such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6.5 Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(v), (vi) or (vii), such Purchaser will discontinue disposition of such
Registrable Securities under the Registration Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 6.2(j), or until it is advised in writing (the
"ADVICE") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
30
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
6.6 No Piggyback on Registrations. Except as set forth on Schedule 6.6,
neither the Company nor any of its security holders (other than the Purchasers
in such capacity pursuant hereto) may include securities of the Company in the
Registration Statement other than the Registrable Securities, and the Company
shall not after the date hereof enter into any agreement providing any such
right to any of its security holders.
6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form F-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Purchaser written notice of
such determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the 91st Trading Day following the date of this Agreement;
provided that no such termination will affect the right of any party to xxx for
any breach by the other party (or parties).
7.2 Fees and Expenses. At the Closing, the Company shall pay to
Vertical Ventures, LLC an aggregate of $30,000 for their legal fees and expenses
incurred in connection with the preparation and negotiation of this Agreement,
of which amount $10,000 has been previously paid by the Company. In lieu of the
foregoing remaining payment, Vertical Ventures, LLC may retain such amount at
the Closing. At the Closing, the Company shall pay to Xxxx Capital Partners Fund
LLC ("XXXX") an aggregate of up to $7,500 for their reasonable legal fees and
expenses incurred in connection with the preparation and negotiation of this
Agreement. In lieu of the foregoing remaining payment, Xxxx may retain up to
such amount at the Closing. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of any Securities.
31
7.3 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company will execute
and deliver to the Purchasers such further documents as may be reasonably
requested in order to give practical effect to the intention of the parties
under the Transaction Documents. Notwithstanding anything to the contrary
herein, Securities may be assigned to any Person in connection with a bona fide
margin account or other loan or financing arrangement secured by such Company
Securities.
7.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (local time of the recipient) on a
Business Day, (b) the next Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Business Day or later than 6:30
p.m. (local time of the recipient) on any Business Day, (c) the Business Day (or
second Business Day in the case of a recipient outside the United States)
following the date of deposit with a nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is required
to be given. The addresses and facsimile numbers for such notices and
communications are those set forth on the signature pages hereof, or such other
address or facsimile number as may be designated in writing hereafter, in the
same manner, by any such Person.
7.5 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Purchasers under Article VI and that does not directly or indirectly affect the
rights of other Purchasers may be given by Purchasers holding at least a
majority of the Registrable Securities to which such waiver or consent relates.
7.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
7.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser (in
32
accordance with the provisions hereof) assigns or transfers any Securities,
provided such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions hereof that apply to the "Purchasers."
Notwithstanding anything to the contrary herein, Securities may be assigned to
any Person in connection with a bona fide margin account or other loan or
financing arrangement secured by such Securities.
7.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.
7.9 Governing Law; Venue; Waiver Of Jury Trial. all questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the state of new york. THE COMPANY AND PURCHASERS Hereby Irrevocably
Submit To The Exclusive Jurisdiction Of The State And Federal Courts Sitting In
The CITY OF NEW YORK, BOROUGH OF MANHATTAN For The Adjudication Of Any Dispute
BROUGHT BY THE COMPANY OR ANY PURCHASER Hereunder, In Connection Herewith Or
With Any Transaction Contemplated Hereby Or Discussed Herein (Including With
Respect To The Enforcement Of Any Of The Transaction Documents), And Hereby
Irrevocably Waive, And Agree Not To Assert In Any Suit, Action Or ProceedinG
BROUGHT BY THE COMPANY OR ANY PURCHASER, Any Claim That It Is Not Personally
Subject To The Jurisdiction Of Any Such Court, OR That Such Suit, Action Or
Proceeding Is Improper. Each party Hereby Irrevocably Waives Personal Service Of
Process And Consents To Process Being Served In Any Such Suit, Action Or
Proceeding By Mailing A Copy Thereof Via Registered Or Certified Mail Or
Overnight Delivery (With Evidence Of Delivery) To Such Party At The Address In
Effect For Notices To It Under This Agreement And Agrees That Such Service Shall
Constitute Good And Sufficient Service Of Process And Notice Thereof. Nothing
Contained Herein Shall Be Deemed To Limit In Any Way Any Right To Serve Process
In Any Manner Permitted By Law. The Company AND PURCHASERS Hereby Waive All
Rights To A Trial By Jury.
7.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and/or
exercise of the Securities, as applicable.
7.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
33
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
7.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
7.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
7.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages but other than
in respect of Events, each of the Purchasers and the Company will be entitled to
specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
7.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser hereunder or pursuant to the Warrants or any
Purchaser enforces or exercises its rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company by a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
7.17 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
34
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. The Company hereby confirms that it understands and agrees
that the Purchasers are not acting as a "group" as that term is used in Section
13(d) of the Exchange Act. Each Purchaser acknowledges that no other Purchaser
has acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser represents that it has been represented by its own separate legal
counsel in its review and negotiations of this Agreement and the Transaction
Documents and that Xxxxxxx Xxxxxxxxx LLP represents only Vertical Ventures, LLC
in connection with this Agreement and the Transaction Documents.
[Signature pages to follow]
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
TOP IMAGE SYSTEMS LTD.
By: /s/ Xxx Xxxxxxxxx
Name: Xxx Xxxxxxxxx
Title: CEO
Address for Notice:
0 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx 00000
Facsimile No.: 972.3.6442587
Telephone No.:000.0.0000000
Attn: Xxx Xxxxxxxxx
With a copy to: XxXxxxxxx Will & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxx Xxxxxxx
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
VERTICAL VENTURES, LLC
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Partner
Number of Units: 474,683
Warrant Shares: 237,342
Address for Notice:
Vertical Ventures, LLC
000 Xxxxxxxxx Xxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxx
With a copy to: Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxxxxx LLP
The Graybar Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone No: (000) 000-0000
Facsimile No.: (000) 000 0000
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.: 00-0000000
Telephone No.: 000-00000
Attn:
By: /s/Xxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
XX Xxx 00000
Xxxxxxxxxx Xxxx
Xxxx Hefer 38800
Facsimile No.: 046222
Telephone No.: 000-00000
Attn:
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.: 02 5374103
Telephone No.: 00 0000000
Attn:
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
By: /s/ Ran Xxx Xxxxxx
Name: Ran Xxx Xxxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
XXXX INVESTMENTS, LTD.
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
0, Xxxxxxx Xxxxxx
Xxxx-Xxxx 00000
Xxxxxx
Facsimile No.: 0-6190723
Telephone No.: 0-0000000
Attn: Xxxx Xxxxx
OMEGA TRADING SA
By: /s/ Avi Shaked
Name: Avi Shaked
Title:
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.: 44 870 763 0093
Telephone No.: 000 0 000 000
Attn: Avi Shaked
APPLETEC LTD.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: General Manager
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
KESTRAL S.A.
By: /s/
Name:
Title:
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
E.S.D. Ltd.
By: /s/
Name:
Title:
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
IBI--ISRAELI BROKERAGE & INVESTORS LTD.
By: /s/
Name:
Title:
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
GACHELET INV. LTD.
By: /s/
Name:
Title:
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
D. TOMBAY LTD.
By: /s/
Name:
Title:
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Facsimile No.:
Telephone No.:
Attn:
OMICRON MASTER TRUST
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Managing Partner
Number of Units: 158,228
Warrant Shares: 79,114
Address for Notice:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000 000 0000
Telephone No.: 000 000 0000
Attn: Xxxxx Xxxx
XXXX CAPITAL PARTNERS, LLC
By: /s/ Xxxxx XxXxxx
Name: Xxxxx XxXxxx
Title: General Partner
Number of Units: [ ]
Warrant Shares: [ ]
Address for Notice:
Xxxx Capital Partners, LLC
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Facsimile No.: 000 000 0000
Telephone No.: 000 000 0000
Attn: Xxxxxx Xxxxxx
SMITHFIELD FIDUCIARY LLC
By: /s/ Xxxx X. Chill
Name: Xxxx X. Chill
Title: Authorized Signatory
Number of Units: 158,228
Warrant Shares: 79,114
Address for Notice:
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 212 751-0755
Telephone No.: 000 000-0000
Attn: Xxx X. Xxxxxx/Xxxx X. Chill
WFG SELECT TECHNOLOGY OVERSEAS FUND
By: /s/ Xxxxxxxx Xxxxx Xxxxxx
Name: Xxxxxxxx Xxxxx Xxxxxx
Title: Managing Director
Number of Units: 290,680
Warrant Shares: 145,340
Address for Notice:
c/x Xxxxx, Xxxx & Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000 000-0000
Telephone No.: 000 000-0000
Attn: Xxxx Xxxxxxxxx
Exhibits:
--------
A Form of Warrant
B Opinion of Company Counsel
C Plan of Distribution
D Transfer Agent Instructions
E Form of Escrow Agreement
F Voting Agreement
