Exhibit 10.11
SETTLEMENT AND LICENSE AGREEMENT
BETWEEN
SAIFUN SEMICONDUCTORS, LTD.
AND
ADVANCED MICRO DEVICES, INC., AND
FUJITSU LIMITED
SETTLEMENT AND LICENSE AGREEMENT
THIS AGREEMENT is made as of the Effective Date (as hereinafter
defined) by and between SAIFUN SEMICONDUCTORS LIMITED, a corporation organized
and existing under the laws of Israel, having its principal place of business at
Xxxxx Xxxxxxxx, 00 Xxxxxxxx Xxxxxx, Sappir Industrial Park, Netanya 00000 Xxxxxx
("SAIFUN"), on the one part, and ADVANCED MICRO DEVICES, INC., a corporation
organized and existing under the laws of Delaware, having a its principle place
of business at Xxx XXX Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("AMD"), and FUJITSU
LIMITED, a corporation organized and existing under the laws of Japan, having a
principal place of business at 1-1, Xxxxxxxxxxxx 0-xxxxx, Xxxxxxxx-xx, Xxxxxxxx
000-0000, Xxxxx ("FUJITSU"), on the other part. Capitalized terms not otherwise
defined herein shall have the meanings set forth in Article I.
WITNESSETH
WHEREAS, SAIFUN has developed, owns or controls certain patents and
applications for patents, with the right to grant licenses under those patents
and applications for patents;
WHEREAS SAIFUN has developed, owns or controls certain technical
information which was provided to AMD and FUJITSU;
WHEREAS, AMD, FUJITSU and/or AMD & FUJITSU own or control certain
patents and applications for patents, with the right to grant licenses under
those patents and applications for patents;
WHEREAS, AMD and FUJITSU have developed, own or control certain
technical information which was provided to SAIFUN;
WHEREAS, AMD and FUJITSU wish to obtain licenses under SAIFUN's
patents, applications for patents and technical information and SAIFUN is
willing to grant such licenses to AMD and FUJITSU, subject to the terms and
conditions set forth herein;
WHEREAS, SAIFUN wishes to obtain licenses under the AMD, FUJITSU and
AMD & FUJITSU patents and applications for patents and technical information,
and AMD and FUJITSU are willing to grant such licenses to SAIFUN, subject to the
terms and conditions set forth herein;
WHEREAS, SAIFUN and AMD and/or FUJITSU have previously entered into a
series of agreements, as set forth in Appendix A, each of which is expressly
superceded by this Agreement pursuant to the terms set forth in Appendix A;
WHEREAS, SAIFUN, AMD and FUJITSU, have agreed to settle the litigation
between them filed in the United States District Court for the Southern District
of New York, Civil Action Case No. 02-CV-1481 (LTS) (the "Action"), based on the
terms herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement and the settlement of the Action, and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
I. DEFINITIONS
1.01 Definitions. As used in this Agreement, the following defined
terms shall have the meanings set forth below:
"AMD" means AMD and its Subsidiaries.
"AMD/FUJITSU Licensed Products" means any and all semiconductor
products.
"AMD/FUJITSU NROM Products" means non-volatile memory products (in
wafer, die, packaged or other form), that include memory cells having a
non-conductive, charge trapping layer that stores charge in one or more
localized regions, including without limitation, MirrorBit, MirrorFlash and "ONO
Floating Gate" products (AMD/FUJITSU NROM Products do not include conventional,
non-volatile floating gate products).
"AMD/FUJITSU Technology" means any of the information, presentations
and documentation that AMD and/or FUJITSU provided to SAIFUN prior to the
Effective Date of this Agreement, and/or that AMD and/or FUJITSU may provide to
SAIFUN pursuant to this Agreement.
"AMD Patents" means any and all patents and patent applications
world-wide, owned or controlled (without the obligation of payments to a third
party) by AMD (including those owned jointly with FUJITSU), including any and
all reissues and reexaminations of those patents, and any other patents issuing
from continuations, continuations-in-part and divisions of the applications on
which those patents are based, provided that such applications or patents have
an Effective Filing Date prior to ten (10) years after the Effective Date of
this Agreement.
"Cumulative Net Sales" means the combined Net Sales of AMD/FUJITSU
NROM Products by AMD and FUJITSU.
"Effective Date" means July 1, 2002.
"Effective Filing Date" means the earliest of the actual filing date
or the earliest date a claim of priority is based on.
"FUJITSU" means FUJITSU and its Subsidiaries.
"FUJITSU EDG" means Fujitsu Limited's Electronic Devices Group and any
divisions or Subsidiaries controlled by that group.
"FUJITSU EDG Patents" means any and all patents and patent
applications world-wide, controlled (without the obligation of payments to a
third party) by FUJITSU EDG (including those owned jointly with AMD), including
any and all reissues and reexaminations of those patents, and any other patents
issuing from continuations, continuations-in-part and divisions of the
applications on which those patents are based, provided that such applications
or patents have an Effective Filing Date prior to ten (10) years after the
Effective Date of this Agreement.
"FUJITSU Patents" means any and all patents and patent applications
world-wide, owned or controlled (without the obligation of payments to a third
party) by FUJITSU (including those owned jointly with AMD), including any and
all reissues and reexaminations of those patents, and any other patents issuing
from continuations, continuations-in-part and divisions of the applications on
which those patents are based, provided that such applications or patents have
an Effective Filing Date prior to ten (10) years after the Effective Date of
this Agreement.
"*** NROM Products" means non-volatile memory products (in wafer, die,
packaged or other form), that include memory cells having a non-conductive,
charge trapping layer that stores charge in one or more localized regions (***
NROM Products do not include conventional, non-volatile floating gate products).
"MLC NROM Products" means non-volatile memory products (in wafer, die,
packaged or other form), that include memory cells having a non-conductive,
charge trapping layer that stores charge in one or more localized regions, and
in which multiple bits of information using multiple levels of charge are stored
in each localized region.
"Net Sales" means:
(a) Arm's Length Transactions: Net Sales is the amount invoiced
by AMD and FUJITSU for the commercial sale of NROM Products under this
Agreement, calculated in accordance with accounting practices generally applied
by AMD and FUJITSU and in accordance with U.S. generally accepted accounting
principles (for AMD) and in accordance with Japanese Financial Accounting
Standards for Business Enterprises issued by the Business Accounting
Deliberation Council ("BADC"), together with accounting guidelines issued by the
Japanese Institute of Certified Public Accountants ("JICPA") (for Fujitsu), but
excluding amounts attributable to: bad debts (actually incurred, not doubtful
regarding payment), fees and commissions paid to sales representatives (not
including third party distributors), value-added, sales and use taxes (as may be
applicable), reasonable discounts actually allowed, deductions or returns,
import duties, costs of shipping insurance and freight;
(b) Other Sales (including internal sales): Net Sales is the
amount that would have been calculated according to section (a) of this
definition, for the same quantities of similar or substantially similar NROM
Products sold in contemporaneous, arm's length commercial transactions to
customers. If there is no
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
similar or substantially similar customer of AMD or FUJITSU to whom such sale
was made, then the fair market value thereof;
(c) All currency transactions shall be translated to United
States dollars using the average daily conversion rate at the end of each
semiannual period based upon published Wall Street Journal rates for AMD and the
Tokyo Mitsubishi Bank for FUJITSU;
(d) Net sales for embedded and multi-chip package non-volatile
memory products shall be based on the average Net Sales price for an
equivalent-density Stand-Alone NROM Product for the current reporting period,
and if there is no equivalent-density product, then the lowest Net Sales price
reported for a Stand-Alone NROM Product for that period.
"SAIFUN" means SAIFUN and its Subsidiaries.
"SAIFUN NROM Products" means non-volatile memory products (in wafer,
die, packaged or other form), that include memory cells having a non-conductive,
charge trapping layer that stores charge in one or more localized regions
(SAIFUN NROM Products do not include conventional, non-volatile floating gate
products).
"SAIFUN Patents" means any and all patents and patent applications
world-wide, owned or controlled (without the obligation of payments to a third
party) by SAIFUN, including any and all reissues and reexaminations of those
patents, and any other patents issuing from continuations, continuations-in-part
and divisions of the applications on which those patents are based, provided
that such applications or patents have an Effective Filing Date prior to ten
(10) years after the Effective Date of this Agreement.
"SAIFUN Technology" means any of the information, presentations, data,
samples and documentation that SAIFUN provided to AMD and/or FUJITSU prior to
the Effective Date of this Agreement, and/or that SAIFUN will provide to AMD
and/or FUJITSU pursuant to this Agreement.
"Spin-Off" means one and only one corporation, company or other
entity, initially owned or controlled by AMD and FUJITSU collectively, to which
AMD and FUJITSU transfer at least each of their Stand-Alone NROM Product
non-volatile business, and its Subsidiaries.
"Stand-Alone NROM Products" means AMD/FUJITSU NROM Products, including
code flash, data flash, data card and EEPROM that are AMD/FUJITSU NROM Products,
that are substantially dedicated to storing information and any logic
functionality therein is dedicated to memory access.
"Subsidiary (ies)" means any corporation, company or other entity (i)
in which more than fifty percent (50%) of whose outstanding shares or stock
(representing the right to vote in general meetings or for the election of
directors or other managing authority) are, on the date this Agreement is
executed or thereafter, owned or controlled,
directly or indirectly, by AMD, FUJITSU or SAIFUN, including, but not limited
to, Fujitsu AMD Semiconductor Limited, or (ii) which does not have outstanding
shares or stock but more than fifty percent (50%) of whose ownership interest
representing the right to make the decisions for such corporation, company or
other entity is, on the date this Agreement is executed or thereafter, owned or
controlled, directly or indirectly, by AMD, FUJITSU or SAIFUN. Such corporation,
company or other entity shall be deemed to be a Subsidiary for the purposes of
this Agreement only so long as such ownership or control exists.
1.02 Interpretation. Unless the context of this Agreement otherwise
requires, (i) words of any gender include each other gender; (ii) words using
the singular or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "whereby" and derivative or
similar words refer to this entire Agreement; and (iv) the term "Article" refers
to the specified Article of this Agreement. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless otherwise
specified.
II. GRANT OF RIGHTS
2.01 SAIFUN's Licenses to AMD and FUJITSU EDG. SAIFUN hereby grants to
each of AMD and FUJITSU EDG, a non-exclusive, world-wide, license under the
SAIFUN Patents and SAIFUN Technology to make, have made, use, offer to sell,
sell, lease, import and otherwise dispose of, anywhere in the world, any
AMD/FUJITSU Licensed Product.
2.02 AMD's License to SAIFUN. AMD hereby grants to SAIFUN, a
non-exclusive, world-wide, fully paid-up, license under the AMD Patents and
AMD/FUJITSU Technology to make, have made, use, offer to sell, sell, lease,
import and otherwise dispose of, anywhere in the world, any SAIFUN NROM Product
designed (in whole or part) by, manufactured by or for, and sold by or for
SAIFUN.
2.03 FUJITSU EDG's License to SAIFUN. FUJITSU EDG hereby grants to
SAIFUN, a non-exclusive, world-wide, fully paid-up, license under the FUJITSU
EDG Patents and AMD/FUJITSU Technology to make, have made, use, offer to sell,
sell, lease, import and otherwise dispose of, anywhere in the world, any SAIFUN
NROM Product designed (in whole or part) by, manufactured by or for, and sold by
or for SAIFUN.
2.04 SAIFUN Covenant to AMD. SAIFUN hereby covenants not to assert the
SAIFUN Patents and SAIFUN Technology against AMD and its respective
distributors, manufacturers, foundries, customers or other third parties for the
making, packaging, testing, using or selling any AMD/Fujitsu Licensed Products
that are the subject of this Agreement.
2.05 SAIFUN Covenant to FUJITSU. SAIFUN hereby covenants not to assert
the SAIFUN Patents and SAIFUN Technology against FUJITSU and its respective
distributors, manufacturers, foundries, customers or other third parties for the
making, packaging, testing, using or selling any AMD/FUJITSU Licensed Products
with the
express limitation that only FUJITSU EDG is authorized to sell Stand Alone NROM
Products and embedded NROM products. SAIFUN shall not be prohibited from
asserting the SAIFUN Patents and SAIFUN Technology against: (1) suppliers of
relevant semiconductor products to such divisions, groups and Subsidiaries other
than FUJITSU EDG; and (2) against any non-FUJITSU EDG entity for the sale of any
stand-alone NROM products or embedded NROM products in the form of semiconductor
parts.
2.06 AMD Covenant. AMD hereby covenants not to assert the AMD Patents
and AMD/FUJITSU Technology against SAIFUN, and its distributors, manufacturers,
foundries, customers or other third parties for the making, packaging, testing,
using or selling of any SAIFUN NROM Products that are licensed under this
Agreement.
2.07 FUJITSU Covenant. FUJITSU hereby covenants not to assert the
FUJITSU Patents, the FUJITSU EDG Patents and AMD/FUJITSU Technology against
SAIFUN, and its distributors, manufacturers, foundries, customers or other third
parties for the making, packaging, testing, using or selling of any SAIFUN NROM
Products that are the subject of this Agreement.
III. MLC PROJECT
3.01 General. SAIFUN will make a good faith effort toward the
development of an MLC NROM Product. To that end, SAIFUN shall provide AMD and
FUJITSU with an initial report and periodic updates on progress made toward the
development of an MLC NROM Product ("SAIFUN's MLC") generally in accordance with
the details set forth below in this Article III and as set forth in Appendix B.
The initial report shall describe the work performed by SAIFUN in the
development of an MLC NROM Product prior to the Effective Date. The MLC project
shall run from the Effective Date until the earlier of the end of ten (10)
quarters after the Effective Date or a commercial shipment of an MLC NROM
Product by either AMD or FUJITSU.
3.02 SAIFUN Deliverables. SAIFUN shall transfer to AMD and FUJITSU the
following deliverables:
(a) Updates. Starting at the third quarter of 2002 and throughout the
duration of the MLC project, SAIFUN will issue quarterly update reports
describing the progress made in the development of SAIFUN's MLC since the
previous update report. These updates may include periodic face-to-face meetings
which may be scheduled at the request of AMD or FUJITSU, but no more frequently
than once a quarter.
(b) Test Wafers. SAIFUN shall make a good faith effort to produce test
wafers for SAIFUN's MLC. If these test wafers ever become available during the
term of the MLC project, SAIFUN shall deliver to AMD and FUJITSU collectively a
total of (4) test wafers for each iteration of test wafers of SAIFUN's MLC
accompanied by "Test Chip Description Manual" documentation.
3.03 Presentation. Within a reasonable time after delivery of the test
wafers (if they become available during the term of the MLC Project) and the
Test Chip
Description manual, SAIFUN shall conduct a presentation to AMD and FUJITSU
summarizing the progress of development of SAIFUN's MLC.
3.04 AMD and FUJITSU Deliverables. AMD and FUJITSU are not obligated
to provide anything to SAIFUN pursuant to the MLC Project. AMD and FUJITSU may,
however, transfer to SAIFUN any of the following deliverables:
(a) Feedback. AMD and FUJITSU may provide feedback to SAIFUN in
response to the update reports delivered to AMD and FUJITSU by SAIFUN. Such
feedback may include internal reports, impressions, comments or any other work
done pursuant to the SAIFUN update reports.
(b) Test Wafers Analysis. AMD and FUJITSU may provide SAIFUN with
copies of any written document produced by AMD and FUJITSU in conjunction with
the test wafers and Test Chip Description Manual.
(c) Derivatives and Improvements. AMD and FUJITSU may provide SAIFUN
with work product, outcomes, and derivative works, such as modifications and
applications and test wafers, based on or relying or otherwise incorporating any
of the SAIFUN Deliverables.
3.05 Intellectual Property. All work product and outcomes, such as
modifications, applications and test wafers, and intellectual property based on,
arising out of, or relying or otherwise incorporating any of the SAIFUN
Deliverables shall be the property of the party that develops such work product
and outcomes. AMD, FUJITSU and SAIFUN each expressly agree, however, that the
rights granted under Article II of this Agreement shall apply to any AMD,
FUJITSU and SAIFUN Patents and any SAIFUN Technology or AMD/FUJITSU Technology.
Moreover, AMD and FUJITSU agree that, to the extent they intend to disclose
confidential information provided to them from SAIFUN pursuant to the MLC
project in patent applications, AMD and FUJITSU shall provide at least two (2)
months notice to SAIFUN of the intended disclosure.
3.06 Confidentiality. AMD, FUJITSU and SAIFUN each agree that, prior
to the exchange of any information pursuant to this Article III in connection
with the development of MLC NROM Products, the parties will enter into one or
more non-disclosure agreements which acknowledge the confidential nature of such
information and the need to protect it from public disclosure. If the parties
fail to execute a new non-disclosure agreement, the information disclosed under
this Article 3.06 shall be protected under the confidentiality obligations of
Article IX of this Agreement.
IV. PAYMENTS
4.01 Lump Sum Payment. AMD and FUJITSU shall, collectively, pay
SAIFUN a "lump sum" payment of *** United States dollars ($***) "Lump Sum
Payment." This payment shall be payable in *** equal, consecutive quarterly
installments of *** dollars ($***), the first of which shall be made within
three (3) business days of the effective date of the escrow agreement referred
to in Article 4.01(a)(i), or August 23, 2002, whichever is earlier, and the
parties shall each make a
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
good faith effort to complete the escrow agreement soon after all of the parties
have signed this Agreement. Each installment thereafter shall be made on the
last day of the relevant fiscal quarter for the purposes set forth in clauses
(a) and (b) of this Article 4.01:
(a) Equity in SAIFUN. AMD and FUJITSU hereby, collectively, purchase
938,470 Ordinary Shares (each having a par value of NIS 0.01) of stock in SAIFUN
representing four percent (4%) of the outstanding share capital of SAIFUN as of
the Effective Date of this Agreement (the "Shares"). The Shares shall be priced
at $*** per share, which equates to a total purchase price of *** dollars ($***)
(the "Purchase Price"). Notwithstanding the foregoing, the price and number of
shares to be purchased by AMD and FUJITSU shall be subject to proportional
adjustment in the event of any subdivision, reclassification or combination of
SAIFUN's then outstanding capital stock and any dividend or distribution on such
stock that is paid in shares of SAIFUN's capital stock.
(i) The parties shall, prior to the issuance of any Shares and
payment of any installments of the Lump Sum Payment, mutually agree to an escrow
agent and an escrow agreement. SAIFUN shall issue all of the Shares to, and in
the name of the escrow agent and deliver to the escrow agent the certificates
representing the Shares within ten (10) days after the Effective Date unless
agreement has not been reached, in which case the Shares shall be issued within
ten (10) days after agreement; provided, however, that SAIFUN shall deliver to
the escrow agent or AMD or FUJITSU, as applicable, revised certificates
representing the Shares in the event of any subdivision, reclassification,
combination or stock dividend as described in Article 4.01(a) above. All fees
charged by the escrow agent in connection with the Shares shall be paid by AMD
and FUJITSU. The Shares shall be assigned and the certificates delivered by the
escrow agent to AMD and FUJITSU in portions that correspond to each quarterly
installment payment provided for in this Article 4.01, such that the first
$*** of the Lump Sum Payment is applied to the purchase of the equity
position in SAIFUN. The delivery of each portion of Shares shall be made within
a reasonable time after the corresponding quarterly payment is made.
(ii) Acceleration. The parties agree that in case of an initial
public offering ("IPO") of SAIFUN's securities, merger or acquisition of SAIFUN
and/or sale of all or substantially all of the assets of SAIFUN (collectively
referred to as "Exit Events"), prior to full payment of the Purchase Price, AMD
and FUJITSU may undertake to accelerate and pay the balance of the Purchase
Price immediately. Once SAIFUN provides AMD and FUJITSU with notice at least
three (3) months in advance of an Exit Event, such notice not being permitted
within the first nine (9) months after the Effective Date, AMD and FUJITSU shall
choose one of the following options:
(a) accelerate any unpaid remaining portion of the first
$*** of the Lump Sum Payment no later than fifteen (15) days prior to
such Exit Event to get the balance of the Shares; or
(b) not accelerate, in which case AMD and FUJITSU will still
be obligated to pay the balance of the unpaid remaining portion of the
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
Lump Sum Payment when due, however, such payments shall be considered part
of the fees due for the MLC project, and SAIFUN shall be relieved of its
obligation to provide Shares corresponding to the non-accelerated balances,
in which case, the escrow agent shall immediately assign all of the
remaining Shares back to SAIFUN or to any other party designated by SAIFUN.
(iii) Other Rights. The Shares shall at all times have all other
rights, preferences and privileges as all other Ordinary Shares of SAIFUN.
(b) MLC Project Fees. The last *** dollars ($***) of the Lump Sum
Payment shall be paid to SAIFUN in connection with SAIFUN's services pursuant to
Article III.
4.02 Royalties. AMD and FUJITSU collectively agree to pay SAIFUN a
running royalty equal to *** percent (***%) of Cumulative Net Sales which is
subject to the following annual caps:
IF CUMULATIVE NET SALES IN A GIVEN THEN THE ANNUAL ROYALTY PAYMENT
YEAR ARE CANNOT EXCEED
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$*** to $*** $ ***
$*** to *** $ ***
Over $*** $ ***
Royalties shall be based solely on the sale of AMD/FUJITSU NROM Products and be
calculated from the first dollar, and then the annual cap is applied, if
applicable. For Example: for Cumulative Net sales of $***, the royalty
calculation is $***, but the middle cap applies to reduce the royalty to $***;
for Cumulative Net Sales of $***, the royalties would be $***. Any royalties
paid in excess of annual amounts owed shall be refunded. Royalties for any
annual royalty period shall not be carried forward to any subsequent annual
royalty period.
(a) Discount Years. AMD and FUJITSU shall have the option to select up
to *** years in which the running royalty shall be capped at *** dollars ($***)
subject to the following conditions:
(i) the selection of a Discount Year may only occur once during
the *** of this Agreement;
(ii) there cannot be consecutive Discount Years; and
(iii) AMD and FUJITSU shall provide notice to SAIFUN in writing
that a Discount Year has been selected in conjunction with the fourth
quarterly report for each annual period.
4.03 Taxes. If the government of Japan requires that taxes owed by
SAIFUN be withheld from any payment required under this Article IV and remitted
to such government authorities directly on behalf of them, FUJITSU shall be and
hereby is
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
allowed to do so. In such event, FUJITSU shall promptly transmit to SAIFUN tax
receipts issued by the appropriate tax authorities with respect to such taxes so
withheld and remitted so as to support SAIFUN in claiming for tax credit against
income taxes payable by SAIFUN in other countries, if any.
4.04 Internal Accounting. AMD and FUJITSU shall be responsible and
shall monitor and handle the collective accounting and managing of the
Cumulative Net Sales. Accordingly, AMD and FUJITSU shall be jointly and
severally liable for the royalties owed to SAIFUN.
4.05 Quarterly Reports. AMD and FUJITSU shall, provide SAIFUN, during
the ten (10) year period running from the Effective Date of this Agreement, with
a quarterly royalty report within thirty business days (30) after the end of
each fiscal quarter. The royalty reports shall set forth the Cumulative Net
Sales of AMD/FUJITSU NROM Products, the Net Sales of NROM Products by AMD, the
Net sales of NROM Products by Fujitsu and the royalty amounts due SAIFUN in
accordance with the terms of this Agreement with respect to the quarter just
ended, as well as the basis for AMD's and FUJITSU's calculations of such
royalties (in reasonable detail). The royalty reports shall include an
identification of each of the products that is subject to the royalty
calculation. Notwithstanding, no royalty reports shall be due for any quarter in
which the maximum royalty amount (in accordance with Articles 4.02 and 4.06(e))
will be paid, provided that AMD and FUJITSU deliver to SAIFUN a notification
(within the same time limit that the royalty report was due) that a maximum
royalty payment will be made within fifteen (15) days of the delivery of the
notification.
4.06 Payment Terms.
(a) Royalty payments shall be made on a semi-annual (following the
quarters ending on December 31 and June 30) basis based on the results of the
current and previous quarterly reports.
(b) AMD and FUJITSU shall take whatever steps they see fit so that the
total royalty due to SAIFUN for a given semi-annual period is paid within
fifteen (15) days of the delivery of the most recent associated quarterly
royalty report.
(c) All payments under this Agreement shall be made by electronic
transfer in U.S. dollars to a bank account to be designated in writing by
SAIFUN.
(d) In the event that a royalty payment is not made within fifteen
(15) days after the date of delivery of the associated quarterly royalty report
is due, AMD and FUJITSU shall be assessed a late charge set at the statutorily
maximum rate of interest in accordance with the laws of the State of New York.
SAIFUN shall notify AMD and FUJITSU in writing of the late charge in accordance
with the notice provision herein.
(e) The first semi-annual payment for each year will be based on the
following calculation:
(1) multiply the Cumulative Net Sales for the corresponding
semi-annual period by two;
(2) compare the result to Cumulative Nets Sales brackets under
Article 4.02 to determine a forecasted annual royalty; and
(3) royalties on actual Cumulative Net Sales are paid subject to
a cap of one-half the applicable bracket cap of Article 4.02.
(f) The determination of whether any annual cap to royalties applies,
as well as the selection of Discount Year status, shall be made in conjunction
with the second semi-annual payment each year. If, as a result of an annual cap
or Discount Year status, an overpayment of royalties has occurred, such
royalties shall be refunded within ten (10) days of the delivery of the last
quarterly report.
4.07 Records. For a period of three (3) years after each royalty or
other payment due is made to SAIFUN under this Agreement, AMD and FUJITSU each
agree to make and maintain such books, records and accounts as are reasonably
necessary to verify such royalty and other payments, provided that total annual
royalty for a given year is below the $[***] (or $[***] in a Discount Year)
maximum annual cap, otherwise, no records need be kept.
4.08 Audit. Upon at least thirty (30) days prior written notice to AMD
and/or FUJITSU, and no more than once a year, SAIFUN shall have the right, at
its own cost and expense, to authorize an internationally recognized certified
public accounting firm selected by SAIFUN and approved by AMD and/or FUJITSU, as
is appropriate, (which approval will not be unreasonably withheld), to audit
AMD's and/or FUJITSU's books, records, contracts as to the financial terms of
the contracts to the extent necessary to ensure compliance with this Article IV
and for the sole purpose of verifying royalties paid to SAIFUN under this
Agreement. AMD and FUJITSU will promptly make up any underpayment revealed by
such an audit. Any overpayments made shall be refunded to AMD and/or FUJITSU, as
appropriate. AMD and FUJITSU shall bear the costs of any audit that discloses an
underpayment of 5% or more between its records and any of its payments. The
information discovered during the audit performed in accordance with the
provisions of this Article IV shall be treated as confidential material of its
respective party and the auditor shall not disclose any of such information to
SAIFUN other than the level of overpayment or underpayment, and the auditor
shall agree to be bound by the confidentiality terms of this Agreement.
V. SPIN-OFF RIGHTS AND OBLIGATIONS
5.01 Spin-Off Rights. AMD and FUJITSU shall have the right to transfer
rights granted to them under this Agreement to the Spin-Off for Stand-Alone NROM
Products and to extend the rights granted to them under this Agreement for all
other products without the prior written consent of SAIFUN provided that: (i)
SAIFUN is given notice at least two (2) months prior to the transfer and
extension, and (ii) the Spin-Off agrees in writing to be bound by any and all
the obligations of AMD and FUJITSU in
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
this Agreement, including the grant of licenses and covenants. This Agreement
shall inure to the benefit of and bind the Spin-Off.
5.02 In the event that AMD and FUJITSU exercise their rights pursuant
to Article 5.01, all royalties collectively paid by AMD, FUJITSU and the
Spin-Off shall be subject to the annual caps of Article 4.02.
5.03 AMD and FUJITSU each agree and acknowledge that they shall be
jointly and severally liable for the obligations owed to SAIFUN hereunder by the
Spin-Off.
5.04 In the event AMD and FUJITSU exercise their rights under this
Article V, AMD and FUJITSU hereby covenant that they will not xxx for
infringement of or assert in any way, in or out of a legal proceeding, the AMD
Patents and FUJITSU Patents against [***] or any of its corresponding
distributors, customers or other third parties for any [***] NROM Product,
designed (in whole or part), manufactured by, and sold by or for [***].
Notwithstanding the provisions of this Article 5.04, in the event that [***]
undergoes a change of control or asserts any patent against AMD, FUJITSU or the
Spin-Off, the covenant granted in this Article 5.04 shall become null and void.
VI. RELEASE AND DISMISSAL OF THE ACTION
6.01 AMD and FUJITSU's Past Activities. SAIFUN herby releases and
forever discharges AMD and FUITSU, as well as AMD and FUJITSU's past and present
parent and subsidiary corporations and/or other legal entities, and AMD and
FUJITSU's manufacturers, distributors, customers, licensees, and others from any
and all claims demands, obligations, losses, causes of action, damages,
penalties, costs, expenses, attorney's fees, liabilities and indemnities of any
nature, whether based on contract, tort, statute or other legal or equitable
theory of recovery, whether known or unknown, which, as of the Effective Date,
SAIFUN had, now has, claims to have, or may hereafter have arising out of
anything occurring prior to the Effective Date of this Agreement, including,
without limitation, any and all claims in the Action. SAIFUN shall withdraw the
Action with prejudice within three (3) business days following the first
quarterly Lump Sum Payment to SAIFUN by AMD and FUJITSU. In addition, SAIFUN
shall not take any action to pursue the Action prior to August 23, 2002, the
last possible date that the first quarterly Lump Sum Payment could be due.
SAIFUN expressly waives and relinquishes all rights and benefits SAIFUN has or
may have had under Section 1542 of the California Civil Code and any similar
state or other law. Section 1542 provides as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
6.02 SAIFUN's Past Activities. AMD and FUJITSU herby release and
forever discharge SAIFUN, as well as SAIFUN's past and present parent and
subsidiary corporations and/or other legal entities, and SAIFUN's manufacturers,
distributors, customers, licensees, and others from any and all claims demands,
obligations, losses, causes of action, damages, penalties, costs, expenses,
attorney's fees, liabilities and
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
indemnities of any nature, whether based on contract, tort, statute or other
legal or equitable theory of recover, whether known or unknown, which as of the
Effective Date AMD and/or FUJITSU had, now has, claims to have, or may hereafter
have arising out of anything occurring prior to the Effective Date of this
Agreement. AMD and FUJITSU expressly waive and relinquish all rights and
benefits AMD and FUJITSU have or may have had under Section 1542 of the
California Civil Code and any state or other law. Section 1542 provides as
follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
VII. INVENTORSHIP INVESTIGATION
7.01 SAIFUN's Responsibility. SAIFUN shall, as it sees fit, provide
AMD and/or FUJITSU, as appropriate, with the identification of one or more
patents related to SAIFUN Technology that SAIFUN believes requires an amendment
to add one or more SAIFUN employees (or former employees) as a named inventor.
For each patent so identified, SAIFUN shall also provide an identification of at
least one claim SAIFUN believes it invented, and supporting documentation for
such assertion, which shall be maintained in confidence in accordance with
Article IX. During the period of ten (10) years from the Effective Date, and no
more than once every six (6) calendar months for each of AMD and FUJITSU, SAIFUN
shall make such identification within one (1) year of the issue date of each
patent except for patents that issued prior to the Effective Date, for which
SAIFUN shall make such identification prior to June 30, 2003.
7.02 AMD's and FUJITSU's Responsibilities. Within sixty (60) days of
receiving each patent identification and supporting documentation from SAIFUN,
AMD and/or FUJITSU, as appropriate, shall provide SAIFUN with a written response
for each individual claim asserted by SAIFUN, either agreeing or disagreeing.
For each individual claim that is disagreed to, AMD and/or FUJITSU, as
appropriate, shall provide SAIFUN with evidence supporting its claim of
ownership, which shall be maintained in confidence in accordance with Article
IX.
7.03 Independent Review. If, after reasonable negotiations lasting no
more than thirty (30) days, the parties disagree as to whether the list of
inventors for a specific patent should be amended, the parties agree to submit
the supporting documentation provided to each other to an independent patent
attorney approved by both parties involved in the dispute for a non-binding
review and recommendation.
7.04 Corrective Measures In the event that the parties agree that the
inventorship of an identified patent should be amended, AMD and/or FUJITSU, as
appropriate, shall have the necessary papers prepared and filed with the United
States Patent and Trademark Office (PTO) to amend the inventorship on that
patent. In addition, AMD and/or FUJITSU, as appropriate, shall prepare and file
with the PTO an assignment that provides SAIFUN with the proper ownership
interest. A copy of all such papers, which must be prepared at the cost of AMD
or FUJITSU, as appropriate, shall be provided to SAIFUN within ten (10) days
after they are filed.
7.05 Rights Reserved. Nothing in this Agreement shall prevent or
preclude SAIFUN from contesting in court anywhere in the world the inventorship
of any AMD or FUJITSU patent SAIFUN believes should have included SAIFUN
personnel as inventors. Notwithstanding this Article 7.05, the parties agree to
carry out the procedures set forth in Article 7.03 prior to exercising any
rights under this Article 7.05, unless a patent at issue is involved in
litigation, in which case, the parties may, after reasonable negotiations, skip
the independent review of Article 7.03. Nothing in this Agreement shall prevent
or preclude AMD and/or FUJITSU from contesting in court anywhere in the world
the inventorship of any SAIFUN Patents provided that such contest is made within
one (1) year of the issue date of each patent except for patents that issued
prior to the Effective Date, for which such contest shall be made prior to June
30, 2003. Furthermore, nothing in this Agreement shall be construed as an
admission by AMD and/or FUJITSU of inappropriateness of inventorship of their
respective patents which may be subject to this Article VII.
7.06 No other effect. In no event shall any result of the procedure
under this Article VII, whether the parties agree or disagree on the
inventorship, affect any other terms and conditions of this Agreement nor become
a trigger for or result in the termination of this Agreement.
VIII. TERM AND TERMINATION
8.01 Term. This Agreement shall run for ten (10) years from the
Effective Date. At the end of that period, all rights granted under Article II
shall be deemed fully paid-up and therefore, remain in full force and effect for
the duration of the last to expire patent (licensed under this Agreement) of a
party to this Agreement.
8.02 Dispute Resolution.
(a) Lump Sum Payments. In the event that all or part of any quarterly
payment described in Article 4.01 is not timely paid and SAIFUN has materially
complied with its obligations under Article 4.01(a) and Articles 10.01(d), (e)
and (i)-(m) with respect to the Purchase Price and Article III with respect to
MLC project fees, the following provisions apply:
(i) SAIFUN may provide written notice to AMD and FUJITSU
describing the deficiency;
(ii) AMD and FUJITSU shall have thirty (30) days from such notice
to resolve the deficiency by making the required payment;
(iii) If the deficiency is not resolved by AMD and FUJITSU prior
to the end of the thirty (30) day post-notice period, SAIFUN may bring an
enforcement action to force AMD and FUJITSU to make the deficient payment. AMD
and FUJITSU each agree that if SAIFUN prevails in such enforcement action,
SAIFUN shall be entitled to receive an amount equal to the deficiency in
addition to liquidated damages that shall also be equal to the deficiency
payment. AMD and FUJITSU each also agree that SAIFUN may amend the amount of
requested relief commensurate with
any additional non-payment of the Lump Sum Payment that occurs while such
enforcement action is pending by providing additional notice, and that such
additional non-payment shall also be subject to liquidated damages equal to the
amount of the additional non-payment, and AMD and FUJITSU shall pay SAIFUN its
attorneys fees. Liquidated damages paid by AMD and FUJITSU shall not be included
in the annual cap calculations set forth in Article 4.02;
(iv) If AMD and FUJITSU prevail in such action based on a failure
of SAIFUN to comply with its obligations in connection with the Shares, AMD and
FUJITSU shall have the right to specific performance to require SAIFUN to comply
with its obligations with respect to the Shares provided that all corresponding
payments are made to SAIFUN, and SAIFUN shall pay each of AMD and FUJITSU
one-half of their attorneys fees;
(v) If AMD and FUJITSU prevail in such action based on a failure
of SAIFUN to comply with its obligations in connection with the MLC Project, AMD
and FUJITSU shall have the right to cease paying on any portion of the $***
remaining unpaid, and SAIFUN shall pay each of AMD and FUJITSU one-half of their
attorneys fees. Any payments already made in connection with the MLC Project are
non-refundable.
(b) Royalty Payments. In the event that all or part of any semi-annual
royalty payment described in Article 4.02 is not timely paid, the following
provisions apply:
(i) SAIFUN may provide written notice to AMD and FUJITSU
describing the deficiency;
(ii) AMD and FUJITSU shall have thirty (30) days from such notice
to resolve the deficiency by making the required payment or to notify SAIFUN
that payment is not being made because AMD or FUJITSU believe that no royalty is
due because one or more particular products are not AMD/FUJITSU NROM Products
("Disputed Product Scenario");
(iii) If the deficiency is not resolved by AMD and FUJITSU prior
to the end of the thirty (30) day post-notice period or in the case of a
Disputed Product Scenario, if after good faith negotiations on whether or not
the disputed product is an AMD/FUJITSU NROM Product, a dispute remains and the
deficiency is not resolved by AMD and FUJITSU prior to the end of one hundred
twenty (120) days after notice was given by SAIFUN, SAIFUN may bring an
enforcement action to force AMD and FUJITSU to make the deficient payment.
Damages in such an action depend on which party(s) prevails.
(1) AMD and FUJITSU each agree that if SAIFUN prevails in
such enforcement action, SAIFUN shall be entitled to receive an amount equal to
the deficiency in addition to liquidated damages that shall be equal to ***
percent (***%) of the deficiency payment. AMD and FUJITSU each also agree that
SAIFUN may amend the amount of requested relief commensurate with any additional
non-
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
payment of the royalty payment that occurs while such enforcement action is
pending by providing additional notice, and that such additional non-payment
shall also be subject to liquidated damages equal to *** percent (***%) of the
amount of the additional non-payment. In addition, SAIFUN shall be entitled to
receive payment for its attorneys fees in connection with such enforcement
action. Liquidated damages paid by AMD and FUJITSU shall not be included in the
annual cap calculations set forth in Article 4.02.
(2) SAIFUN agrees that if AMD and FUJITSU prevail in such
enforcement action, AMD and FUJITSU collectively shall be entitled to receive
liquidated damages equal to *** percent (***%) of the total deficiency claimed
by SAIFUN at the time the enforcement action is resolved. In addition, AMD and
FUJITSU shall each be entitled to receive payment for one half (1/2) of their
respective attorneys fees in connection with such enforcement action.
(c) Royalty Reports. In the event that a royalty report described in
Article 4.05 is not provided to SAIFUN when it is due, the following provisions
apply:
(i) SAIFUN may provide written notice to AMD and FUJITSU
describing the deficiency;
(ii) AMD and FUJITSU shall have thirty (30) days from such notice
to resolve the deficiency by submitting the required report;
(iii) If the deficiency is not resolved by AMD and FUJITSU prior
to the end of the thirty (30) day post-notice period, SAIFUN may bring an
enforcement action to force AMD and FUJITSU to provide the missing royalty
report(s). AMD and FUJITSU agree that if SAIFUN prevails in such action, SAIFUN
shall be entitled to receive liquidated damages of *** dollars ($***) for each
report that is not delivered to SAIFUN in a timely manner, and SAIFUN shall be
entitled to receive payment for it attorneys fees in connection with such
enforcement action, unless one of AMD or FUJITSU delivers to SAIFUN a royalty
report that includes the Net Sales of NROM products for that party, in which
case, the reporting party is hereby absolved of all liability in connection with
this Article 8.02(c)(iii) and the non-reporting party is liable for the full
liquidated damages. Notwithstanding anything else in this Article 8.02(c)(iii),
AMD and FUJITSU agree that if Net Sales of AMD/FUJITSU NROM products reports are
available for both of them for a given quarter, they are required to provide
SAIFUN with a report of Cumulative Net Sales of AMD/FUJITSU NROM Products.
8.03 Survival. The provisions of Articles I, II, 3.05, 3.06, 5.01,
5.04, VI, VII, IX, X and XI shall survive any termination or expiration of this
Agreement, regardless of the reason for termination.
IX. CONFIDENTIALITY
9.01 AMD, FUJITSU and SAIFUN each agree that, without the prior
written consent of the other parties or unless required by law, it shall not
disclose to any third party the terms of this Agreement or any confidential
information regarding another
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
party or the business of another party which has been made available to it as a
result of or during the negotiations leading to this Agreement, except that the
terms of this Agreement may be disclosed to outside auditors and outside legal
counsel, provided that such outside auditors and outside legal counsel, agree to
maintain the contents of this Agreement in confidence.
9.02 Notwithstanding any other provision of this Article IX, if AMD,
FUJITSU or SAIFUN is required by statute, rule or regulation, including the
rules and regulations of the Securities and Exchange Commission, or under force
of process of law to disclose information related to this Agreement, such party
shall promptly notify the other party and seek an appropriate protective order
to preserve the confidential status of the Agreement. If, in the absence of a
protective order or the receipt of a waiver of the confidential status of this
Agreement from the other adverse parties, the disclosing party is nonetheless,
in the reasonable opinion of counsel, compelled to disclose information related
to this Agreement pursuant to a legal proceeding, such party after notice to the
other parties, may disclose such information pursuant to such legal proceeding,
and shall not be in breach of this Agreement. In addition, the terms of this
Agreement may be disclosed by any Party to any Court(s) and to opposing counsel
and outside experts in any subsequent legal proceeding to enforce any of the
patents licensed hereunder. In such proceedings, the Party disclosing the
Agreement shall seek an appropriate protective order to prevent disclosure of
the terms of this Agreement to anyone other than the Court, opposing counsel or
outside experts, and shall provide the other Parties with a copy of the
protective order at least fifteen (15) days prior to the disclosure occurring.
Disclosure of the terms of this Agreement in such proceedings shall take place
under the terms ordered by the Court.
9.03 Notwithstanding any other provision of this Article IX, SAIFUN
shall have the right to disclose the existence of this Agreement, AMD's and
FUJITSU's status as non-exclusive licensees of the SAIFUN Patents, and SAIFUN's
status as a non-exclusive licensee of the AMD Patents and the FUJITSU Patents
with rights to "have made," to any third party as is reasonably necessary; and
AMD and FUJITSU shall have the right to disclose the existence of this Agreement
and their status as a non-exclusive licensee of the SAIFUN Patents to customers
and potential customers as is reasonably necessary.
9.04 Notwithstanding any other provision of this Article IX, the
parties agree that they will treat the confidential information of each other as
they would treat their own confidential information.
X. WARRANTIES AND DISCLAIMERS
10.01 SAIFUN Warranties. SAIFUN represents and warrants to each of AMD
and FUJITSU that, as of the Effective Date:
(a) it has full power and authority to enter into this Agreement on
behalf of itself and its Subsidiaries;
(b) it has sufficient right and authority to carry out its own and its
Subsidiaries' obligations hereunder;
(c) it owns all right, title and interest in and to, or has the right
to grant sublicenses under, the SAIFUN Patents;
(d) all corporate actions necessary for entering into this Agreement
have been taken;
(e) the signatories on behalf of it have been duly authorized;
(f) if SAIFUN ever assigns or transfers any patent that falls within
the scope of this Agreement to a third party, that SAIFUN will not make such
transfer unless that third party shall be bound by all rights granted hereunder
by SAIFUN to AMD and FUJITSU with respect to that patent;
(g) if the ownership or control of any SAIFUN Subsidiary ever changes
such that such entity is no longer a Subsidiary, all rights granted to AMD and
FUJITSU by that Subsidiary pursuant to this Agreement shall remain in effect,
and all rights obtained by that Subsidiary from AMD and FUJITSU shall expire as
soon as the status of Subsidiary is lost pursuant to the definition of
Subsidiary set forth in Article 1.01;
(h) it is not aware of any existing third party trade secret claims
and/or copyright claims in connection with information to be transferred from
SAIFUN to AMD and/or FUJITSU pursuant to the MLC Project described in Article
III, and that SAIFUN shall not transfer any information to AMD and/or FUJITSU
that is subject to any such claims it becomes aware of, and that SAIFUN shall
indemnify AMD and FUJITSU from any such third party claims should they be made
in connection with such transferred information;
(i) the authorized share capital of SAIFUN, and the rights,
preferences and privileges of SAIFUN authorized capital stock, including the
Shares, are as set forth in the Articles of Association attached hereto as
Appendix D (and as may be amended from time to time); the issued and outstanding
capital stock of SAIFUN is as set forth in Appendix E attached hereto. Except
(i) as set forth on Appendix E, (ii) for the conversion privileges of SAIFUN's
outstanding Preferred Shares, and (iii) for the preemptive rights set forth in
Section 9 of SAIFUN's Articles of Association (attached hereto as Appendix D),
there are not any outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or acquisition, directly or
indirectly, from SAIFUN of any shares of its capital stock. Except as set forth
on Appendix E, SAIFUN has not reserved any shares of its capital stock for
issuance to its employees, officers, directors or consultants. As a result of
the foregoing, the Shares represent 3.6% of SAIFUN's outstanding capital stock
on a Fully Diluted Basis (as defined in the above-referenced Articles of
Association) on the Effective Date;
(j) the Shares, when issued, in accordance with the terms of this
Agreement, will be duly and validly issued, and will be free of preemptive
rights and any
other rights, claims or restrictions, other then restrictions on transfer under
applicable securities laws or in the Articles of Association. The Shares, upon
payment of the purchase price therefor as provided for in Article 4.01 above,
will be fully paid and nonassessable and not subject to call as set forth in
Saifun's Articles of Association (attached hereto as Appendix D) or otherwise;
(k) SAIFUN has obtained all consents, approvals, orders and
authorizations of, and shall have made any registrations, qualifications and
filings with, all applicable governmental authorities necessary for the issuance
and assignment of the Shares as contemplated by this Agreement, except for
registration of the Shares with the Registrar of Companies, which application
for registration has been filed or will be filed within three (3) business days
following the Effective Date;
(l) the Registration Rights Agreement attached hereto as Appendix F is
the sole agreement by which SAIFUN is obligated to register any shares of its
capital stock pursuant to the U.S. Securities Act of 1933, as amended, or any
similar law.
(m) All Preferred Shares are currently convertible into Ordinary
Shares on a 1-for-1 basis.
(n) it acknowledges that the warranties set out in Article 10.02 below
by AMD are the exclusive representations and warranties granted to SAIFUN, and
SAIFUN may not rely on any other or additional representations or warranties
made by or on behalf of AMD; and
(o) it acknowledges that the warranties set out in Article 10.03 below
by FUJITSU are the exclusive representations and warranties granted to SAIFUN,
and SAIFUN may not rely on any other or additional representations or warranties
made by or on behalf of FUJITSU.
10.02 AMD Warranties. AMD represents and warrants to SAIFUN that, as
of the Effective Date:
(a) it has full power and authority to enter into this Agreement on
behalf of itself and its Subsidiaries;
(b) it has sufficient right and authority to carry out its own and its
Subsidiaries' obligations hereunder;
(c) it owns all right, title and interest in and to, or has the right
to grant sublicenses under, the AMD Patents, except for those patents co-owned
with FUJITSU, to which AMD warrants that AMD jointly owns all right, title and
interest;
(d) all corporate actions necessary for entering into this Agreement
have been taken;
(e) the signatories on behalf of it have been duly authorized;
(f) if AMD ever assigns or transfers any patent that falls within the
scope of this Agreement to a third party, that AMD will not make such transfer
unless that third party shall be bound by all rights granted hereunder by AMD to
SAIFUN with respect to that patent;
(g) if the ownership or control of any AMD Subsidiary (other than the
Spin-Off) ever changes such that such entity is no longer a Subsidiary, all
rights granted to SAIFUN by that Subsidiary pursuant to this Agreement shall
remain in effect, and all rights obtained by that Subsidiary from SAIFUN shall
expire as soon as the status of Subsidiary is lost pursuant to the definition of
Subsidiary set forth in Article 1.01;
(h) it is not aware of any existing third party trade secret claims
and/or copyright claims in connection with information that may be transferred
from AMD to SAIFUN pursuant to the MLC Project described in Article III, and
that AMD shall not transfer any information to SAIFUN that is subject to any
such claims it becomes aware of, and that AMD shall indemnify SAIFUN from any
such third party claims should they be made in connection with such transferred
information;
(i) it has been so informed by SAIFUN and therefore must assume that
it has received from SAIFUN all material information and materials requested by
it pursuant to Article 4.01(a). AMD has received an opportunity to ask questions
of, and receive answers from, SAIFUN concerning the terms and conditions of its
Equity in SAIFUN. AMD has knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of its investment in
SAIFUN. AMD acknowledges that this Agreement and the issuance of shares
hereunder do not constitute a promise or guaranty by SAIFUN or its shareholders
or directors as to the financial or commercial success of SAIFUN or the future
value of its shares;
(j) it acknowledges that the offer and sale of the Shares have not
been registered under United States Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder, or under the Israeli Securities
Act of 1968, as amended, or the rules and regulations promulgated thereunder, or
under any equivalent securities act, rules or regulations in a jurisdiction
other than Israel or the USA;
(k) it confirms that: (a) all the Shares will be acquired for its own
account and not on behalf of any other entity in a manner which would violate,
or cause the violation of, any Securities Act; and (b) all of the Shares will be
acquired solely for investment purposes; and
(l) it acknowledges that the warranties set out in Article 10.01 above
by SAIFUN are the exclusive representations and warranties granted to AMD, and
AMD may not rely on any other or additional representations or warranties made
by or on behalf of SAIFUN.
10.03 FUJITSU Warranties. FUJITSU represents and warrants to SAIFUN
that, as of the Effective Date:
(a) it has full power and authority to enter into this Agreement on
behalf of itself and its Subsidiaries, including, without limitation, FUJITSU
EDG;
(b) it has sufficient right and authority to carry out its own and its
Subsidiaries' obligations hereunder, including those of FUJITSU EDG;
(c) it owns all right, title and interest in and to, or has the right
to grant sublicenses under, the FUJITSU Patents, except for those patents
co-owned with AMD, to which FUJITSU warrants that FUJITSU (or FUJITSU EDG)
jointly owns all right, title and interest, and that FUJITSU EDG has control of,
including the right to grant sublicenses under, all of the FUJITSU Patents
and/or FUJITSU EDG Patents that could be asserted against SAIFUN NROM Products;
(d) all corporate actions necessary for entering into this Agreement
have been taken;
(e) the signatories on behalf of it have been duly authorized;
(f) if FUJITSU or FUJITSU EDG ever assigns or transfers any patent
that falls within the scope of this Agreement to a third party, that FUJITSU or
FUJITSU EDG will not make such transfer unless that third party shall be bound
by all rights granted hereunder by FUJITSU and FUJITSU EDG to SAIFUN with
respect to that patent;
(g) if the ownership or control of any FUJITSU Subsidiary, including
FUJITSU EDG, (other than the Spin-Off) ever changes such that such entity is no
longer a Subsidiary, all rights granted to SAIFUN by that Subsidiary pursuant to
this Agreement shall remain in effect, and all rights obtained by that
Subsidiary from SAIFUN shall expire as soon as the status of Subsidiary is lost
pursuant to the definition of Subsidiary set forth in Article 1.01;
(h) it is not aware of any existing third party trade secret claims
and/or copyright claims in connection with information that may be transferred
from FUJITSU to SAIFUN pursuant to the MLC Project described in Article III, and
that FUJITSU shall not transfer any information to SAIFUN that is subject to any
such claims it becomes aware of, and that FUJITSU shall indemnify SAIFUN from
any such third party claims should they be made in connection with such
transferred information.;
(i) it has been so informed by SAIFUN and therefore must assume that
it has received from SAIFUN all material information and materials requested by
it pursuant to Article 4.01(a). FUJITSU has received an opportunity to ask
questions of, and receive answers from, SAIFUN concerning the terms and
conditions of its Equity in SAIFUN. FUJITSU has knowledge and experience in
financial and business matters and is capable of evaluating the merits and risks
of its investment in SAIFUN. FUJITSU acknowledges that this Agreement and the
issuance of shares hereunder do not constitute a promise or guaranty by SAIFUN
or its shareholders or directors as to the financial or commercial success of
SAIFUN or the future value of its shares;
(j) it acknowledges that the offer and sale of the Shares have not
been registered under United States Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder, or under the Israeli Securities
Act of 1968, as amended, or the rules and regulations promulgated thereunder, or
under any equivalent securities act, rules or regulations in a jurisdiction
other than Israel or the USA;
(k) it confirms that: (a) all the Shares will be acquired for its own
account and not on behalf of any other entity in a manner which would violate,
or cause the violation of, any Securities Act; and (b) all of the Shares will be
acquired solely for investment purposes; and
(l) it acknowledges that the warranties set out in Article 10.01 above
by SAIFUN are the exclusive representations and warranties granted to FUJITSU,
and FUJITSU may not rely on any other or additional representations or
warranties made by or on behalf of SAIFUN.
10.04 No Implied Warranties. Each party hereby disclaims any implied
warranties with respect to the test wafers or other Deliverables in connection
with Article III above including, without limitation, the warranties of
merchantability or fitness for a particular purpose.
10.05 Miscellaneous. Without limiting the foregoing, nothing contained
in this Agreement shall be construed as:
(a) a warranty or representation by any of the Parties to this
Agreement as to the validity, enforceability or scope of a Patent licensed
herein under;
(b) except as expressly warranted or represented, a warranty or
representation that any manufacture, sale, lease, use or other disposition of
products licensed hereunder will be free from infringement of any patent or
other intellectual property rights of any third party;
(c) an agreement to bring or prosecute actions or suits against third
parties for infringement or conferring any right to bring or prosecute actions
or suits against third parties for infringement;
(d) conferring by implication, estoppel or otherwise, upon any party
licensed hereunder, any license or other right under any Patent, copyright, mask
work, trade secret, trademark other intellectual property right except the
licenses and rights expressly granted hereunder; or
(e) an obligation to furnish any technical information or know-how not
explicitly provided for in this Agreement.
10.06 Limitation on Liability. Under no circumstances shall any party
be liable to any other party under contract, strict liability, tort (including,
without limitation, negligence), or other legal or equitable theory, for any
indirect, incidental or
consequential damages or lost profits in connection with the subject matter of
this Agreement, even if such party has been advised of the possibility of such
damages.
XI. GENERAL
11.01 Force Majeure. No Party shall be responsible for delay or
failure in performance caused by any government act, law, regulation, order or
decree, by communication line or power failures beyond its reasonable control,
or by fire, flood or other natural disasters or by other causes beyond its
reasonable control, nor shall any such delay or failure be considered to be a
breach of this Agreement. In any such event, performance shall take place as
soon thereafter as is reasonably feasible.
11.02 Assignment. No Party shall assign its rights and obligations
under this Agreement, in whole or in part, without the prior written consent of
the other Parties; provided however, that a Party hereto may assign this
Agreement and its respective rights and obligations hereunder, to a successor or
assignee to substantially all of the assets of the business that relates to this
Agreement in connection with any merger, consolidation, reorganization or
restructuring, or the sale of substantially all of its assets, as long the
successor or assignee of this Agreement agrees in writing to be bound by this
Agreement. This Agreement shall inure to the benefit of and bind any successors
or permitted assigns of each Party.
11.03 Announcement of Relations. AMD, FUJITSU and SAIFUN shall make a
mutual press announcement, for release within five (5) business days of the last
execution date of this Agreement, which is attached hereto as Appendix C.
11.04 Notices. Any required or permitted notices hereunder must be
given in writing at the address of each party set forth below, or to such other
address as any party may substitute by written notice to the others in the
manner contemplated herein, by one of the following methods: hand delivery;
registered, express, or certified mail, return receipt requested, postage
prepaid; nationally-recognized private express courier; or facsimile. Notices
will be deemed given on the date when hand delivered or transmitted by
facsimile, five (5) working days after being sent by express mail or
nationally-recognized private express courier, and ten (10) working days after
being sent by registered or certified mail.
If to AMD: If to FUJITSU:
Advanced Micro Devices, Inc. Fujitsu Limited
One AMD Place Akiruno Technology Center
Xxxxxxxxx, Xxxxxxxxxx 00000 50 Fuchigami, Akiruno
Attention: Xxxxxxx Xxxxxxx Xxxxx, 000-0000, Xxxxx
Phone: (000) 000-0000 Attention: Technology Development & IP Div
Fax: (000) 000-0000 General Manager
Phone: 00-00-000-0000
Fax: 00-00-000-0000
If to SAIFUN:
Saifun Semiconductors Limited
Xxxxx Xxxxxxxx
00 Xxxxxxxx Xxxxxx
Sappir Industrial Park
Netanya 42505, Israel
Attention: Xxxx Xxxxxxxxxxx - COO
Phone: 000-0-0000000
Fax: 000-0-0000000
11.05 Governing Law. This Agreement shall be governed by and construed
in accordance with the substantive and procedural law of the State of New York,
without giving effect to the conflict of laws principles thereof. Each party
hereto hereby irrevocably submits to the jurisdiction of the United States
District Court for the Southern District of New York with respect to any claim
arising out of this Agreement, and agrees that any and all actions relating to
this Agreement or the patents defined in Article 1.01 will be brought in New
York.
11.06 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and supersedes all previous communications,
representations, agreements or understandings, either oral or written, between
the parties with respect to the subject matter hereof, except that any and all
confidentiality obligations previously made between the parties in writing shall
survive and not be superseded by this Agreement. Accordingly, the parties
expressly agree that this Agreement supersedes each of the agreements set forth
in Appendix A, which are hereby terminated. Moreover, this Agreement may be
amended supplemented or modified only by a written instrument duly executed by
or on behalf of each party hereto, which specifically refers to this Agreement.
11.07 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be held invalid or
unenforceable, the remainder of this Agreement shall remain in full force and
effect and be interpreted so as best to reasonably effect the intention of the
Parties.
11.08 Agency. The relationship of the parties under this Agreement is
that of independent contractors. No party shall be deemed to be the agent of the
other, and no party is authorized to take any action binding upon any other
party.
11.09 Counterparts and Headings. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but both together
will constitute one and the same instrument. All headings in this Agreement are
inserted for convenience of reference only and shall not affect its meaning or
interpretation.
11.10 Two-Party Agreement. In the event that this Agreement is only
executed by AMD and SAIFUN, the following apply:
(a) FUJITSU, including any and all FUJITSU Subsidiaries (and
specifically including Fujitsu AMD Semiconductor Limited "FASL"), do not obtain
any rights under this Agreement to the SAIFUN Patents or SAIFUN Technology, and
are not released in any way from any obligations and/or liabilities to SAIFUN;
(b) AMD shall not be liable in any way for any of FUJITSU's
liabilities or obligations owed to SAIFUN (e.g., the statement in Article 4.04
above that "AMD and FUJITSU shall be jointly and severally liable for the
royalties owed to SAIFUN" shall not apply);
(c) SAIFUN agrees that AMD's "have-made" rights permit AMD to have
FASL make products for AMD under this Agreement, but that such "have made"
rights do not extend to AMD/FUJITSU NROM Products made for FUJITSU to be sold by
FUJITSU as a semiconductor product end product;
(d) AMD shall only be obligated to provide a Net Sales Report for and
pay royalties on AMD sales (and not Cumulative Net Sales );
(e) All financial obligations and caps previously allocated to AMD and
FUJISTU jointly shall be allocated solely to AMD at one-half (1/2) the value
indicated herein, except that the royalty rate shall remain at one and
one-quarter percent (1 1/4%);
(f) SAIFUN shall be responsible solely to AMD for all obligations
hereunder;
(g) SAIFUN shall be liable to AMD for full payment of attorneys fees
should the provisions of Articles 8.02(a)(iv), 8.02(a)(v), or 8.02(b)(iii)(2),
apply;
(g) AMD shall still have Spin-Off rights and obligations as set forth
in Article V, except that in the event the Spin-Off acquires the Stand-Alone
NROM Products business of FUJITSU, AMD and the Spin-Off, collectively, shall be
obligated to pay SAIFUN fifteen million U.S. dollars ($15,000,000), which shall
be paid in five (5) quarterly payments of $3,000,000 following the inclusion of
FUJITSU's Stand-Alone Products business, and that the caps of Article 4.02 shall
be set at a value of twice the two-party agreement value;
(h) The press release attached hereto as Appendix C shall be modified
so that all reference to FUJITSU is removed; and
(i) The provisions of this Article 11.10 shall only take effect after
SAIFUN provides written notice to AMD that it is invoking the Article, such
notice not to be provided before thirty (30) days after the Effective Date. In
the event that the provisions of this Article 11.10 take effect, AMD and SAIFUN
shall amend this Agreement in accordance with the provisions of this Article
11.10 and to delete references to FUJITSU, as appropriate.
IN WITNESS WHEREOF, SAIFUN, AMD and FUJITSU have caused this Agreement
to be executed by their duly authorized representatives as of the Effective
Date.
SAIFUN SEMICONDUCTORS LTD. ADVANCED MICRO DEVICES, INC.
/s/ Xxxx Xxxxx /s/ Xxxxx Xxxxx
------------------------------------- ----------------------------------------
Name: Xx. Xxxx Xxxxx Name: Xxxxx Xxxxx
Title: President & CEO Title: Vice President
Date: July 12, 2002 Date: July 16, 2002
FUJITSU LIMITED
/s/ Xxxxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Corporate Senior Vice Presidnet
Date: July 22, 0000
XXXXXXXX A
Prior Agreements Between The Parties
Date Title Parties
---- ----- -------
June 1, 1998 Confidential Disclosure Agreement Saifun & Fujitsu
August 14, 1998 Non-Disclosure Agreement Saifun & AMD
November 19, 1998 Wafer Evaluation Agreement Saifun & AMD
February 5, 1999 Memorandum of Understanding Saifun, AMD & Fujitsu
March 29, 1999 Patent Application Confidentiality Saifun, AMD & Fujitsu
Agreement
APPENDIX B
MLC PROJECT PROJECTED GOALS
Time Period
-----------
Q1-Q2 [***]
Q2-Q3 [***]
Q4-Q5 [***]
Q5-Q6 [***]
Q6-Q7 [***]
Q7-Q8 [***]
SAIFUN shall make a good faith effort to accomplish these
projected goals within the time period of the MLC Project,
however, nothing in this Agreement or this Appendix B shall be
construed as an obligation that SAIFUN must meet.
Each of the quarters referred to by QX above is based on starting from
the Effective Date of this Agreement.
----------------------
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
APPENDIX C
PRESS RELEASE
AMD, FUJITSU AND SAIFUN SEMICONDUCTORS, LTD. ANNOUNCE COLLABORATION
- COMPANIES ANNOUNCE PATENT CROSS-LICENSE AND SETTLE ALL
PENDING LITIGATION -
- THREE COMPANIES TO COLLABORATE ON COMMERCIALIZING INDUSTRY-LEADING
FLASH TECHNOLOGY -
Sunnyvale, California-July 1, 2002-AMD, Fujitsu and Saifun Semiconductors, Ltd.
today announced a comprehensive collaboration under which the three companies
have agreed to cross-license patents and technology, settle all pending
litigation and collaborate in the development of future generations of
non-volatile memory (NVM) technology. As part of the collaboration, AMD and
Fujitsu will also take an equity stake in Saifun.
"By combining our long-standing expertise in Flash memory with Saifun's
capabilities and intellectual property we will focus on developing the
industry's most cost-effective storage solutions," said Xx. Xxxxxxxx Xxxxxx,
Group Vice President of AMD's Memory Group. "AMD and Fujitsu, will now be able
to not only license Saifun's NROM technology but also leverage its world class
engineering resources."
Xx. Xxxxx Xxxxxxx, General Manager of Fujitsu's System Memory Division added
that " The combination of Fujitsu's and AMD's leading edge non-volatile memory
technology and Saifun's innovative NROM technologies will cement the companies
position as market leaders in non-volatile memory."
"Saifun is excited to collaborate with AMD and Fujitsu, two innovative companies
that have revolutionized the Flash memory business. Together, we will be able to
leverage our respective strengths to create ultra-high density Flash with the
world's leading cost-structure based on Saifun's NROM technology. The
recognition of our technology and
intellectual property by these industry leaders validates Saifun as a leader in
non-volatile memory technology" stated Xx. Xxxx Xxxxx, President and CEO of
Saifun Semiconductors, Ltd.
About AMD
AMD is a global supplier of integrated circuits for the personal and networked
computer and communications markets with manufacturing facilities in the United
States, Europe, Japan and Asia.
AMD, a Fortune 500 and Standard & Poor's 500 company, produces microprocessors,
flash memory devices, and support circuitry for communications and networking
applications. Founded in 1969 and based in Sunnyvale, California, AMD had
revenues of $3.9 billion in 2001. (NYSE: AMD).
About Fujitsu
Fujitsu is a leading provider of customer-focused IT and communications
solutions for the global marketplace. Pace-setting technologies,
high-reliability/performance computing and telecommunications platforms, and a
worldwide corps of systems and services experts make Fujitsu uniquely positioned
to unleash the infinite possibilities of the broadband Internet to help its
customers succeed. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported
consolidated revenues of 5 trillion yen (about US$38 billion) for the fiscal
year ended March 31, 2002. For more information, please
see:xxxx://xxx.xxxxxxx.xxx/
About Saifun
Saifun Semiconductors Ltd. has developed a leading-edge NVM technology
named Saifun NROM Technology. The technology places two physical bits per memory
cell, enabling production of the most cost-effective, high performance NVM
products in the market. The Saifun NROM utilizes one concept, suitable for all
NVM applications (Code Flash, Data Storage Flash, EEPROM and Embedded NVM).
Saifun was founded in 1998 by Xx. Xxxx Xxxxx. For more information, please see:
xxxx://xxx.xxxxxx.xxx
XXXXXXXX X
XXX XXXXXXXXX XXX - 0000
A COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
SAIFUN SEMICONDUCTORS LTD.
PRELIMINARY
1. The regulations contained in the Second Supplement to the Companies
Ordinance shall not apply to this Company.
2. In these Articles, unless the context otherwise requires, the terms below
shall have the following meaning attached to them:
2.1. AGREEMENT A means the Share Purchase and Shareholders Agreement by and
between the Company, the Founder and the investors listed in Schedule
A to these Articles.
2.2. AGREEMENT B means The Share Purchase Agreement by and between the
Company and the investors listed on Schedule B to these Articles.
2.3. AS CONVERTED BASIS means as if all classes of shares of the Company
have been converted into Ordinary Shares.
2.4. THE COMPANY means the Company whose name is set forth above.
2.5. THE COMPANIES ACT means the Israeli Companies Xxx 0000, as may be
amended from time to time.
2.6. FOUNDER means Xx. Xxxx Eitan.
2.7. FULLY DILUTED BASIS means as if all outstanding options and warrants
and convertible instruments or any other similar rights, agreements or
commitments and all other similar rights of any Person to receive
shares in the Company have been exercised in full, all ungranted
options under the
ESOP deemed granted and exercised; and after conversion of all
shareholders' loans to equity (to the extent there are any such
loans).
2.8. INTERESTED PARTY means any "Interested party" as such term is defined
in the Israeli Securities Law of 1968 (the "SECURITIES LAW") and any
officer or director of the Company or any Person owning shares of the
Company (excluding employees solely under stock option or share
purchase plans) or any member of the family or affiliate of such
officer, director or shareholder, Person controlled by it or Person
controlling it or Person under common control with it.
2.9. IPO means an initial public offering of the Company's securities.
2.10. THE OFFICE means the registered office of the Company, as may be form
time to time.
2.11. OFFICER shall be taken to include any Director, General Manager,
Managing Director, Assistant Managing Director, Assistant General
Manager, any person actually holding such powers in the Company
regardless of their title, and any other functionary in the Company,
regardless of his formal title, as long as he is defined in the Act as
an officer of the Company.
2.12. ORDINARY SHARES means the Ordinary Shares of the Company, NIS 0.01
par value each.
2.13. PERSON means an individual, corporation, partnership, joint venture,
trust or unincorporated organization.
2.14. PREFERRED A SHARES means the Class A Preferred Shares of the Company,
NIS 0.01 par value each.
2.15. PREFERRED B SHARES means the Class B Preferred Shares of the Company,
NIS 0.01 par value each.
2.16. PREFERRED SHARES means the Class A Preferred Shares and the Class B
Preferred Shares of the Company.
2.17. THE REGISTER means the register of shareholders to be kept in
accordance with Section 127 of the Companies Act, or, if the Company
shall have any branch register(s) - any such branch register(s) as the
case may be.
2.18. SHAREHOLDERS means Preferred A shareholders, Preferred B shareholders
and Ordinary shareholders.
2.19. SPECIAL RESOLUTION means a vote approved by 75% of the voting
Shareholders, where a legal quorum is present.
2.20. STRATEGIC INVESTOR means any business entity, which adds to the
prospects of the Company a material value beyond the purchase price of
its shares.,
2.21. TOWER means Tower Semiconductor Ltd.
2.22. TOWER AGREEMENT means the Agreement between the Company and Tower
dated October 9, 1997.
2.23. ORIGINAL ISSUE PRICE means the price actually paid by each respective
shareholder for each Preferred Share of the Company held by such
shareholder.
2.24. MAJOR SHAREHOLDERS means (i) thirty four (34) Shareholders with the
highest percentage of shareholding in the Company, excluding
Shareholders falling within Section 15A (b)(1), (2) and (3) of the
Securities Law; and (ii) any Shareholders falling within Section 15A
(b)(1), (2) and (3) of the Securities Law; but excluding in any event
holders of Ordinary shares
holding less than 1% of the Company's issued and outstanding share
capital.
2.25.
Words and expressions defined in the Memorandum of Association of the
Company shall have the meanings therein defined.
Subject to the provisions of this Article 2, in these Articles, unless the
context otherwise requires, expressions defined in the Companies Act, or
any modifications or amendments thereof in force at the date at which these
Articles become binding upon the Company, shall have the meanings so
defined; and words importing the singular shall include the plural, and
vice versa, and words importing the masculine gender shall include females,
and words importing persons shall include bodies corporate.
SHARE CAPITAL
3. [Intentionally Omitted]
4. The share capital of the Company is NIS 400,000 (four hundred thousand New
Israeli Shekels) divided into 33,600,000 Ordinary Shares par value NIS 0.01
each, 4,000,000 Preferred A Shares of NIS 0.01 par value each and 2,400,000
Preferred B Shares of NIS 0.01 par value each.
5. The rights and privileges attached to the shares of the Company are as
follows:
5.1. The Ordinary Shares of the Company shall have the following rights:
(a) To receive notices of meetings;
(b) To attend the Company's general meeting and vote thereat,
either in person or by a proxy;
(c) To receive dividends, subject to the terms and conditions
of Article 5.2.3 herein;
(d) To participate in the residue of the Company's assets
remaining after liquidation, winding up or Deemed Liquidation,
subject to the terms and conditions of Article 5.2.1 herein.
5.2. The Company covenants that the Preferred Shareholders shall have the
following rights and privileges:
(a) Liquidation Preference. (A) In the event of (i) any
dissolution or liquidation of the Company; (ii) any bankruptcy,
insolvency or creditors' arrangement proceeding, under any
companies, bankruptcy or insolvency
or similar law, whether voluntary or involuntary, is commenced by
or against the Company; or (iii) a receiver, a liquidator or a
trustee in a creditors' arrangement has been appointed to
Company's assets; or (B) unless otherwise agreed by the holders
of at least two thirds (2/3) of the Preferred Shares, upon any
event of sale of all or substantially all of the assets or shares
of the Company or a merger or acquisition of the Company pursuant
to which the shareholders of the Company will not be the majority
shareholders of the surviving entity (a "DEEMED LIQUIDATION
EVENT"), any assets of the Company available for distribution
(including securities or any other assets received by the Company
or its shareholders in such Deemed Liquidation Event)
("DISTRIBUTABLE ASSETS") shall be distributed pursuant to the
following order of preference:
(b) The holders of the Preferred B Shares shall be entitled to
receive, prior to and in preference to any payments to any of the
holders of any other classes of shares including Ordinary Shares
and Preferred A Shares, an amount in US Dollars per Preferred B
Share calculated as follows (the "PREFERRED B LIQUIDATION
AMOUNT"): (A) if the value of the Distributable Assets ("COMPANY
VALUE") is less than US $500 million, then each holder of the
Preferred B Shares shall be entitled to receive at its
discretion, for each Preferred B Share, prior to and in
preference to payments to all other shareholders, an amount equal
to either: (i) the Original Issue Price (adjusted for any event
of share combination or subdivision, issuance of bonus shares,
stock splits or any other recapitalization of the Company's
shares (a "RECAPITALIZATION EVENT") plus of 28% (twenty eight
percent) or (ii) its pro rata share among all shareholders of the
Company (B) if the Company Value is between US$500 million and
US$750 million, each holder of the Preferred B Shares shall be
entitled to receive for each Preferred B Share, prior to and in
preference to payments to the holders of Preferred A Shares and
Ordinary Shares, an amount equal to 128% (one hundred twenty
eight percent) of the amount reflecting its proportionate holding
in the Company (for example, assuming the holders of the
Preferred B Shares hold 10% of the share capital of the Company
and the Company Value is US$500 million, they will be entitled to
receive US$64 million); (C) if the Company Value exceeds US$750
million, each holder of the Preferred B Shares shall be entitled
to receive, prior to and in preference to payments to the holders
of Preferred A Shares and Ordinary Shares, an amount reflecting
its
proportionate holding in the Company but in any event not less
than the maximum amount to which it is entitled under sub-clause
(B) above, i.e not more than US$96 million.
(i) If after payment of the Preferred B Liquidation Amount is
paid in full to the holders of Preferred B Shares there
remain any Distributable Assets, they shall be distributed
to the holders of Preferred A Shares as follows (the
"PREFERRED A LIQUIDATION AMOUNT"): (A) If by the time of the
Deemed Liquidation Event the holders of Preferred A Shares
have not exercised the options granted to them under the
agreement dated March 24 1998 ("Options"), the following
will apply: (i) if the value of the Distributable Assets is
less than US$ 50 million, the holders of the Preferred A
Shares shall be entitled to receive prior to and in
preference to payments to the holders of Ordinary Shares a
sum which shall be the lower of US$6 million or all of the
remaining Distributable Assets. (ii) if the value of the
Distributable Assets is between US$50 million and US$100
million, the holders of the Preferred A Shares shall be
entitled to receive prior to and in preference to payments
to the holders of Ordinary Shares a sum which shall be 12%
of the remaining Distributable Assets, or (B ) If by the
time of the Deemed Liquidation Event, the holders of
Preferred A Shares have exercised the Options, the following
will apply: (i) if the value of the Distributable Assets is
less than US$50 million, the holders of the Preferred A
Shares shall be entitled to receive prior to and in
preference to payments to the holders of Ordinary Shares a
sum which shall be the lower of US$9 million or all of the
remaining Distributable Assets; (ii) if the value of the
Distributable Assets is between US$50 million and US$100
million, the holders of the Preferred A Shares shall be
entitled to receive prior to and in preference to payments
to the holders of Ordinary Shares a sum which shall be the
combination of US$3 million plus 12% of all the remaining
Distributable Assets
(ii) Any remaining Distributable Assets or securities shall be
distributed pro-rata to the holders of Ordinary Shares of
the Company to the exclusion of the holders of Preferred A
Shares and Preferred B Shares.
(iii) Notwithstanding the provisions of sub-Article 5.2.1.3 above,
the Preferred A Shareholders may elect (by decision of
majority f the Preferred A Shareholders) to forgo the
provisions of sub-Article 5.2.1.2 above, and in such case
all of the remaining Distributable Assets of the Company
then available for distribution shall be distributed
pro-rata among the holders of the Preferred A Shareholders
and Ordinary Shares, in proportion to their respective
shareholdings in the Company on an as-converted basis to the
exclusion of the holders of Preferred B Shares.
(c) Voting Rights. The holders of the Preferred Shares shall be
entitled to vote in all shareholders meetings, and each of them
shall have votes in the number of Ordinary Shares into which such
Preferred Shares held by it could then be converted, calculated
on an As Converted basis.
(d) Dividend Participation. In the event that any dividends or other
distributions, whether in cash or in securities or other assets,
shall be declared or distributed by the Company, each holder of
the Preferred B Shares shall be entitled to receive for each
Preferred B Share, prior to and in preference to distributions to
any of the other Shareholders, an amount equal to the amount to
which such Preferred B Shares holder is entitled pursuant to the
provisions of Section 5.2.1 above. Subject to such preference,
the holders of Preferred A Shares shall be entitled to
participate in any such distribution pro-rata on an as converted
basis.
(e) The holders of the Preferred Shares shall have conversion rights
as follows (the "CONVERSION RIGHTS"):
(i) Right to Convert
(f) (a) Each Preferred Share shall be convertible, at the option of
the holder of such share, at any time after the date of issuance
of such share, into such number of fully paid and non-assessable
Ordinary Shares of the Company as is determined by dividing the
applicable Original Issue Price for such share by the Conversion
Price at the time in effect for such share. The initial
Conversion Price per Preferred Share shall be the Original Issue
Price
for such share. The Conversion Price for the Preferred Shares
shall be subject to adjustment as set forth in Sections 5.2.4.3 -
5.2.4.6, as applicable.
(g) (b) Each Preferred Share shall automatically be converted into
fully paid and non-assessable Ordinary Shares: (i) at any time,
by the vote of the holders of majority holders of that same
certain class of Preferred Shares, as applicable; or (ii)
automatically upon an IPO or a merger or acquisition of the
Company pursuant to which the shareholders of the Company will
not be the majority shareholders of such new entity.
(i) Mechanics of Conversion
(h) Upon conversion by any holder of Preferred Shares of the same
into Ordinary Shares the holder shall surrender the certificate
or certificates thereof at the office of the Company and shall
give written notice to the Company of the election to convert the
same. The Company shall, as soon as practicable thereafter, issue
and deliver to such holder of Preferred Shares a certificate or
certificates for the number of Ordinary Shares to which such
holder is entitled. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of
such surrender of the Preferred Shares to be converted, and the
person or persons entitled to receive the Ordinary Shares
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such Ordinary Shares as of
such date.
(i) Conversion Price Adjustments of Preferred B Shares.
(1) The Conversion Price of each Preferred B Share shall be
subject, from time to time, to
the following Anti Dilution adjustment: Until the
earlier of (i) 24 months after the Closing of Agreement
B or (ii) IPO, upon each issuance by the Company of any
Additional Shares (as defined below), after the date
upon which any of the Preferred B Shares were first
issued (the first issuance date is referred to as the
"Purchase Date"), without consideration or for a
consideration per share less than the Conversion Price
for the Preferred B Shares in effect immediately prior
to the issuance of such Additional Shares, the
Conversion Price for the Preferred B Shares in effect
immediately prior to each such issuance shall be
reduced to a price determined on a "weighted average"
basis, as set forth in EXHIBIT A hereto.
(2) In the case of the issuance of options to purchase or
rights to subscribe for Additional Shares, or
securities by their terms convertible into or
exchangeable for Additional Shares or options to
purchase or rights to subscribe for such convertible or
exchangeable securities (collectively, "Options"), the
aggregate maximum number of Additional Shares
deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability, including without
limitation the passage of time, but without taking into
account potential anti dilution adjustments),
conversion or exchange, as the case may be, of such
Options, shall be deemed to have been issued at the
time of the actual issuance of the shares deliverable
upon exercise, conversion or exchange, as the case may
be, of such Options at a consideration equal to the
consideration, if any, received by the Company for such
Options upon the issuance of such Options plus any
additional consideration payable to the Company
pursuant to the terms of such Options (without taking
into account potential anti dilution adjustments) for
the Additional Shares covered thereby.
(3) "Additional Shares" shall mean shares of any class
issued (or deemed to have been issued pursuant to
Article 5.2.4.3.2.) by the Company after the Purchase
Date other than shares issued: (i) to employees,
consultants and directors (excluding the Founder) in
the framework of the ESOP approved by the Board; (ii)
issuances of shares constituting up to 10% of the
issued and outstanding share capital of the Company to
a strategic investor (which means any business entity,
which adds to the prospects of the Company a material
value beyond the purchase price of its shares, which,
has entered or simultaneously with the investment in
the Company enters into a commercial agreement with the
Company, which agreement is deemed by the Board as
materially contributing to the Company's research &
development, marketing, distribution or sales); (iii)
in exchange for the acquisition of another entity, line
of business or technology; or (vi) a Recapitalization
Event of the Company's shares capital.
(ii) Conversion Price Adjustments of Preferred Shares. Without
derogating from any of the aforesaid, the Conversion Price
of each Preferred Share shall be subject, from time to time,
to the following adjustment:
(1) In the case of the issuance of Additional Shares for a
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be an
integral part of the consideration paid and shall be
deemed to be the fair value thereof.
(2) If the Company shall subdivide or combine its Ordinary
Shares, the Conversion Price shall be proportionately
reduced, in case of subdivision of shares, or shall be
proportionately increased in the case of combination of
shares.
(3) If the Company at any time shall pay a dividend payable
in additional Ordinary Shares or other securities or
rights convertible into, or entitling the holder
thereof to receive directly or indirectly, additional
Ordinary Shares (hereinafter referred to as "Ordinary
Share Equivalents"), then the Conversion Price shall be
adjusted as at the date the Company shall fix as the
record date for the purpose of receiving such dividend
(or if no such record date is fixed, as at the date of
such payment), to that price determined by multiplying
the Conversion Price in effect immediately prior to
such record date (or if no such record date is fixed
then immediately prior to such payment) by a fraction,
(a) the numerator of which shall be the total number of
Ordinary Shares outstanding and those issuable with
respect to such Ordinary Share Equivalents being
determined from time to time in the manner provided for
deemed issuance in Article 5.2.4.3.2.) immediately
prior to such dividend, and (b) the denominator
of which shall be the total number of Ordinary Shares
outstanding and those issuable with respect to such
Ordinary Share Equivalents (determined as aforesaid)
immediately after such dividend (plus, in the event
that the Company paid cash for fractional shares, the
number of additional shares which would have been
outstanding had the Company issued fractional shares in
connection with such dividend).
(4) No adjustments of the Conversion Price for the
Preferred Shares shall be made in an amount less than
one cent per share.
(5) No adjustment of the Conversion Price shall be made
pursuant to Article 5.2.4.3 if it has the effect of
increasing the Conversion Price above the Conversion
Price in effect immediately prior to such adjustment.
(iii) Other Distributions
(i) In the event the Company shall declare a distribution payable in
securities of other Persons, evidence of indebtedness issued by
the Company or other Persons, assets (including cash dividends)
or options or rights then, in each such case for the purpose of
this Article 5.2.4.5., the holders of the Preferred Shares shall
be entitled to receive such distribution in respect of their
holdings, on an As Converted Basis as of the record date for such
distribution.
(i) Recapitalization
(j) If at any time or from time to time there shall be a
Recapitalization of the Ordinary Shares, provision shall be made
so that the holders of the Preferred
Shares shall thereafter be entitled to receive upon conversion of
the Preferred Shares the number of Ordinary Shares or other
securities or property of the Company or otherwise, to which a
holder of Ordinary Shares deliverable upon conversion of the
Preferred Shares would have been entitled immediately prior to
such Recapitalization. In any such event all Conversion Rights
shall be adjusted as applicable.
(i) No Impairment
(k) The Company will not, by amendment of its Articles of Association
or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all the provisions of
this Article 5.2.4. and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Preferred Shares against impairment.
(i) No Fractional Shares and Certificates as to Adjustments
(l) (a) No fractional shares shall be issued upon conversion of the
Preferred Shares, and the number of Ordinary Shares to be issued
shall be rounded to the nearest whole share.
(m) (b) Upon the occurrence of each adjustment of the Conversion
Price of Preferred Shares pursuant to this Article 5.2.4, the
Company, at its expense, shall promptly compute such adjustment
in accordance with the terms hereof and prepare and furnish to
each holder of Preferred Shares a certificate setting forth each
adjustment and
showing in detail the facts upon which such adjustment is based.
The Company shall furnish or cause to be furnished to such holder
a like certificate setting forth (i) such adjustment, (ii) the
Conversion Price at the time in effect, and (iii) the number of
Ordinary Shares and the amount, if any, of other property which
at the time would be received upon the conversion of a Preferred
Share.
(i) Reservation of Shares Issuable Upon Conversion
(n) The Company shall at all times reserve and keep available out of
its authorized but unissued Ordinary Shares, solely for the
purpose of effecting the conversion of the Preferred Shares, such
number of its Ordinary Shares as shall from time to time be
sufficient to effect the conversion of all outstanding Preferred
Shares.
SHARES
6. Subject to Article 106 herein, the Company may issue shares with such
preferred or deferred rights of redemption or other special rights or such
restrictions, whether in regard to dividends, voting, repayment of share
capital or otherwise, all such rights to be determined by the Company from
time to time by special resolution.
7. Subject to Article 106 herein, if at any time the share capital of the
Company is divided into different classes of shares, the rights attached to
any class, unless otherwise provided by the terms of issue of the shares of
that class, may be modified, abrogated or otherwise dealt with by the
Company, with the consent in writing of the holder(s) of three-fourths
(3/4) of the issued shares of that class.
8. The provisions of these Articles relating to General Meetings and to the
convening thereof and to notices in respect thereof and to resolutions to
be passed thereat shall mutatis mutandis apply to every separate General
Meeting referred to in Article 7; The provision of Articles 64 and 66 below
with regard to quorums at General Meetings shall apply as well to such
separate General Meetings.
9. The shares of the Company shall be under the control of the Board of
Directors, who may allot them or otherwise dispose of them to such persons,
on such terms and conditions, and either at a premium or at
par, or subject to the provisions of the Companies Law, at a discount and
at such times as the Board of Directors may deem fit, and with full power
to give to any person the call of any shares either at par or at a premium
or, subject as aforesaid, at a discount, during such time and for such
consideration as the Board of Directors may deem fit, provided, however,
that unless otherwise agreed by the Board of Directors of the Company:
9.1. Prior to an IPO, prior to issuance of any shares by the Company,
except as provided below, the Company shall offer to the Major
Shareholders to participate in such issue, and each Major Shareholder
shall be granted the preemptive right to purchase a number of shares
from the new issue - on equal terms of allotment - so as to maintain
its percentage shareholding in the Company, always provided that such
shareholder is not in default of payment due from it in respect of the
shares held by it.
9.2. The above preemptive right shall not apply in case of issuance of
shares to: (i) employees, consultants and directors (excluding the
Founder) in the framework of an incentive stock option plan, and (ii)
a Strategic Investor.
9.3. The details of every new offer of shares shall be delivered to all of
the Major Shareholders ("Offerees"), which are entitled to receive an
offer in accordance with Article 9.1. above ("Issuance Notice"). Each
of the Offerees shall notify the Company within 14 days of receipt of
the Issuance Notice, whether it/he wishes to purchase the shares to
which it is entitled and whether it/he wishes to participate in the
purchase of the surplus shares that are not taken by a party entitled
to them and who did not deliver to the Company a notice of his desire
to purchase them.
10. If by the conditions of allotment of any share, the whole or any part of
the price thereof shall be payable by installments, every such installment
shall, when due, be paid to the Company by the registered holder of the
share for the time being or from time to time or by his administrators.
11. [Intentionally Reserved]
12. Save as herein otherwise provided, the Company shall be entitled to treat
the registered holder of any share as the absolute owner thereof, and,
accordingly, shall not, except as ordered by a Court of competent
jurisdiction, or as by statute required, be bound to recognize any
equitable or other claim to or interest in such share on the part of any
other person.
SHARE CERTIFICATES
13. The certificates of title to shares shall be issued under the seal of the
Company if the same exists and shall bear the signatures of
two Directors, or of any other person or persons authorized by the Board of
Directors.
14. Every shareholder shall be entitled to one certificate for all the shares
of each class registered in his name, and if the Board of Directors so
approves (upon payment of the amount which may from time to time be fixed
by the Board of Directors), to several certificates, each for one or more
of such shares. Every certificate of shares shall specify the denoting
numbers of the shares in respect of which it is issued and may also state
the amount paid-up thereon.
15. The certificate of shares registered in the names of two or more persons
shall be delivered to the person first named on the Register in respect of
such co-ownership.
16. If a share certificate is defaced, lost or destroyed, it may be renewed on
payment of such fee, if any, and on such terms as to evidence such lost or
destruction, as the Board of Directors may reasonably think fit.
CALLS
17. The Board of Directors may from time to time make such calls as it deems
fit upon the shareholders in respect of all moneys unpaid on the shares
held by them respectively, and not by the conditions of allotment thereof
made payable at fixed times, and each shareholder shall pay the amount of
every call so made to him to the persons and at the time and place
appointed by the Board of Directors.
18. A call may be made payable by installments and/or under other terms, and
shall be deemed to have been made when the resolution of the Board of
Directors authorizing such call was passed.
19. Seven days' notice of any call shall be given, specifying the time and
place of payment, and to whom such call shall be paid, provided that before
the time for payment of such call the Board of Directors may, by notice in
writing to the shareholders, revoke the same or extend the time for payment
thereof.
20. If by the terms of issue of any share or otherwise any amount is made
payable at any fixed time or by installments at fixed times, whether on
account of the amount of the share or by way of premium, every such amount
or installment shall be payable as if it were a call duly made by the Board
of Directors and of which due notice had been given, and all the provisions
herein contained in respect of such calls shall apply to such amount or to
such installment.
21. Joint holders of a share shall be jointly and severally liable to pay all
calls in respect of such share.
22. If the amount of any call or installment is not paid on or before the due
date for payment thereof, then the person who is for the time being the
owner of the share on which the call was made or the
installment became due shall pay interest on the said amount at the maximum
rate permissible under the law for the time being, or at such lesser rate
as may be fixed by the Board of Directors from time to time and linkage
differentials to a foreign currency or other index, as determined by the
Board of Directors, all as from the date of payment until the sum is
actually paid. The Board of Directors shall, however, be at liberty to
waive the payment of interest and/or linkage, wholly or in part.
23. If the Board of Directors thinks fit, it may receive from any shareholder
willing to advance the same, any amounts due on account of all or any of
his shares which have not yet been called or in respect of which the date
of payment has not yet fallen due, and, unless otherwise agreed with such
shareholder, the Board of Directors may pay him interest on all or any of
the amounts so advanced, up to the date when same would, if not paid in
advance, have fallen due at such rate of interest as may be agreed upon
between the Board of Directors and such shareholder, and the Board of
Directors may at any time repay any amount so advanced by giving such
shareholder a three months' prior notice in writing.
FORFEITURE AND LIEN
24. If any shareholder fails to pay any call or installment or any other
payment towards the Company in respect of shareholders' loan or other
financing provided by the shareholders on or before the day appointed for
payment of the same, the Board of Directors may at any time thereafter, as
long as the said call or installment or payment remains unpaid, serve a
notice on such shareholder requiring him to pay the same, together with any
interest and Linkage differentials as aforesaid that may have accrued and
all expenses that may have been incurred by reason of such non-payment.
25. The notice shall name a day (not being less than seven days from the date
of the notice) and a place or places on and at which such call or
installment and such interest, said linkage differentials and expenses as
aforesaid are to be paid. The notice shall also state that in the event of
non-payment at or before the time and at the place appointed, the shares in
respect of which the call was made or installment is payable as well as the
shares held by the shareholder at that time or thereafter will be liable to
be forfeited.
26. If the requisitions of any such notice as aforesaid are not complied with,
any share in respect of which such notice has been given may, at any time
thereafter, before payment of all calls or installments, interest, said
linkage differentials and expenses, due in respect thereof, be forfeited by
a resolution of the Board of Directors to that effect. Such forfeiture
shall include all dividends declared in respect of the forfeited shares and
not actually paid before the forfeiture.
27. Any share so forfeited shall be the property of the Company, and the Board
of Directors may, subject to the provisions hereof, sell, reallot and
otherwise dispose of the same as it may deem fit.
28. Any shareholder whose shares have been forfeited shall cease to be a
shareholder in respect of the forfeited shares, but shall, notwithstanding,
be liable to pay, and shall forthwith pay, to the Company, all calls,
installments, interest and expenses owing upon or in respect of such shares
at the time of forfeiture, together with interest and said linkage
differentials thereon from the time of forfeiture until payment, at the
maximum rate of interest permissible under the law for the time being, and
the Board of Directors may enforce the payment of such moneys, or any part
thereof, if it so thinks fit, but shall not be under any obligation to do
so.
29. The Board of Directors may at any time, before any share so forfeited shall
have been sold, reallotted or otherwise dispose of, annul the forfeiture on
such conditions as it thinks fit.
30. The Company shall have a first and paramount lien upon all the shares
registered in the name of each shareholder, and upon the proceeds of sale
thereof, for his debts, liabilities and engagements arising from any cause
whatsoever, solely or jointly with any other person, to or with the
Company, whether the period for the payment fulfillment or discharge
thereof shall have actually arrived or not and no equitable interest in any
share shall be created except upon the footing and condition that Article
11 hereof is to have full effect. Such lien shall extend to all dividends
from time to time declared in respect of such shares. Unless otherwise
provided, the registration by the Company of a transfer of shares shall be
deemed to be a waiver on the part of the Company of the lien (if any) on
such shares.
31. For the purpose of enforcing such lien, the Board of Directors may sell the
shares subject thereto in such manner as it thinks fit; but no sale shall
be made until the period for the fulfillment or discharge of the debts,
liabilities and engagements as aforesaid shall have arrived, and until
notice in writing of the intention to sell shall have been served on such
shareholder, his executors or administrators, and default shall have been
made by him or them in the payment, fulfillment or discharge of such debts,
liabilities or engagements for seven days after such notice.
32. The net proceeds of any such sale, after payment of the costs thereof,
shall be applied in or towards satisfaction of the debts, liabilities or
engagements of such shareholder (including debts, liabilities and
engagements which have not yet fallen due for payment or satisfaction) and
the residue (if any) shall be paid to the shareholder, his executors,
administrators or assigns.
33. Upon any sale after forfeiture or for enforcing a lien in exercise of the
powers hereinbefore given, the Board of Directors may appoint some person
to execute an instrument of transfer of the shares
sold and cause the purchaser' s name to be entered in the register in
respect of the shares sold, and the purchaser shall not be bound to see to
the regularity of the proceedings, or to the application of the purchase
money, and after his name has been entered in the register in respect of
such shares, the validity of the sale shall not be impeached by any person,
and the remedy of any person aggrieved by the sale shall be in damages only
against the Company exclusively.
TRANSFER AND TRANSMISSION
34. Any transfer of shares in the Company shall be subject to the following
provisions:
SALE OF SHARES IN THE COMPANY
35. Right of First Refusal
Until IPO, in every sale or transfer or other disposition, of shares in the
Company, the selling or transferring shareholder (hereinafter the "
Offeror") shall be obligated to offer them first to all Major Shareholders
(the "Offerees") under identical terms and as specified hereinbelow.
Notwithstanding the above, in case of the transfer of ordinary shares
between Xxxx Xxxxx and Xxxxx Sycamore Ltd., the aforesaid right shall not
apply if and to the extent one of them elects to acquire the other's
shares. A transfer of shares in the Company shall not be permitted except
subject to the obligation of the transferee to fulfill all of the
transferor's obligations according to this Article.
36. Notice of Offer
The Offeror shall send a written offer to all of the Offerees, which offer
shall include the following details:
36.1. The number of shares for sale or transfer (hereinafter "the Offered
Shares").
36.2. The entity and/or the person to whom the Offeror wishes to sell or
transfer the Offered Shares (hereinafter "the Buyer").
36.3. The price of the Offered Shares, which shall be paid by the Buyer,
the terms of payment and credit, and any other term related to the
sale or transfer.
(hereinafter: "Notice of Offer")
The Offerees undertakes not to make contact with the Buyer so long as all
of the proceedings hereunder have not been completed.
37. Notice of Purchase
Each Offeree may notify the Offeror in writing, with a copy to the Company,
within 21 days of receipt of the Notice of Offer, of its/his desire to
purchase the Offered Shares, according to one of the following
possibilities:
37.1. All or more than the Offered Shares;
37.2. Part of the Offered Shares.
All at the price and under the terms set in the Notice of Offer
(hereinafter: "Purchase Notice").
38. Lack of response: If by the end of a 21-day period for giving a Purchase
Notice no Purchase Notices have been received, then the Offeror will be
free, during the following 90 days, to sell the Offered Shares to the Buyer
at a price that shall not be less than the price indicated in the Notice of
Offer and under terms not better than those specified in the Notice of
Offer. In such event the Company shall give its consent to the transfer
subject to the provisions of Article 48 below.
39. A Purchase Notice to purchase the entire quantity of the Offered Shares: If
Purchase Notices have been received for a total number of shares equal to
the number of all the Offered Shares, the contract between the parties
shall be created and the Offeree/s must purchase the number of shares
indicated in the Purchase Notice submitted by them, and the Offeror must
sell the Offered Shares to the Oferree/s. In the event that the total
number of shares for which Purchase Notices have been received is higher
than the total number of Offered Shares, the Offerees shall be entitled to
purchase, each the number of Offered Shares to which it is entitled,
calculated on a pro rata basis.
40. Offers for a quantity less than the offered quantity: If Purchase Notices
are received regarding a total number of shares that is less than the
quantity of The Offered Shares, it shall be deemed a lack of response as
specified in Article 38 above; however, the Offeror may, at his sole
discretion, sell all of the shares for which Purchase Notices have been
received to the Offeree/s, and the provisions of Article 38 above shall
apply with regard to the shares that were not acquired, accordingly.
41. Desire to participate: An Offeree who desires to participate in the
Offeror's sale of shares to the Buyer shall be entitled to give a
participation notice instead of a notice to purchase. The participation
notice shall include the number of shares which the Offeree desires to sell
in accordance with Article 49 below (hereinafter: the "Participation
Notice").
42. Acquisition Notice
In the event of an offer to acquire the entire quantity of the Shares
Offered, or in the event that the Offeror decides as aforesaid in Article
40 that he wishes to sell to the Offeree as stated in Article 40 only part
of the shares, the Offeror shall send, within seven (7) days after the last
date for submitting Purchase Notice, a
notice to the Offeree (hereinafter: "Acquisition Notice") which will
indicate that the Purchase Notice has been received and which will specify
the number of shares that will be acquired by the Offeree and the amount
that the Offeree has to pay the Offeror.
43. Exceptions to the Duty to Offer
Notwithstanding the aforesaid, and without derogating from Articles 35 - 40
above, there shall be no restriction upon the transfer of shares in each of
the following instances, provided that the transferee is not competing with
the Company business and subject to the transferee's agreeing to be bound
by any agreement with other shareholders which binds the transferor:
43.1. A transfer to a corporation in which the transferor holds over 76% of
the voting rights and/or the right to appoint not less than 76% of the
directors.
43.2. If the shares will be held by an individual, a transfer to a relative
of the individual as defined in Article 76 of the Income Tax
Ordinance.
43.3. Notwithstanding anything to the contrary herein, each of the holders
of the Preferred Shares shall be entitled to transfer and assign all
or a part of its Shares, together with the corresponding rights and
obligations thereunder: (a) to a corporate entity which controls, is
controlled by, or is under common control with such holder, or to a
Person who is under the same management as the holder, or to one or
more of its shareholders, directors, officers or limited or general
partners, or to entities that manage or co-manage, directly or
indirectly, the holder or any of its general or limited partners or
affiliates thereof; and (b) to any other holder of Preferred Shares of
its own class; all free of any right of first refusal or similar right
of any other shareholder of the Company, whether set forth herein or
in an agreement.
44. [Intentionally Omitted].
45. [Intentionally Omitted].
46. In every instance of a transfer as set forth in Article 43 hereinabove,
transferee shall be entitled to transfer the shares back to transferor.
47. [Intentionally Omitted].
48. Restrictions on Transfer
Notwithstanding the foregoing the Board of Directors may refuse a transfer
of shares in the Company in the event of:
48.1. A transfer to a competitor of the Company.
48.2. A transfer to an entity which has been convicted, or the directors of
which have been convicted, of criminal offenses of
moral turpitude, or there is a concern that an action of said
character will be filed against them.
The provision concerning first refusal rights shall apply to every transfer
of shares in the Company including the part of the shares of the
transferor, and including a gift or testamentary disposition or a sale by a
receiver or liquidator or trustee in bankruptcy. The provision concerning
first refusal rights shall also apply to a transfer of shares from the
transferee to additional transferees.
49. Co-Sale Rights
49.1. The following provisions shall apply to dispositions of shares by the
Founder:
49.2. Tower shall have the following Tag Along Rights:
49.3. If at any time prior to an IPO, Founder and/or Eitan Sycamore Ltd.
wish to sell in one or more transactions, more than 25% (twenty five
percent) of their combined shares in the Company and Tower does not
exercise it's right to first refusal as set forth in Articles 35-42
above, Founder and Eitan Sycamore Ltd. undertake to then notify Tower
in writing of its option to exercise its Tag Along Rights, including a
description of the material terms of the proposed sale. Tower shall
advise Founder in writing within 10 business days of receiving the
notice whether it wishes to exercise its Tag Along Rights, and this
decision shall be irrevocably binding on Tower for a period of 6
months following its notification to Founder.
49.4. For the purposes of this Sub-article 49.1 Tag Along Rights means
Tower's right to require and Founder and Eitan Sycamore Ltd.'s
obligation to provide as part of a proposed sale of their shares in
that the Company that Tower shall be given the right to sell shares in
such sale pro rata to the holdings of Tower in the Company, and on the
same terms and conditions as the sale by Founder and/or Eitan Sycamore
Ltd.
49.5. If the Founder desires to sell, transfer or otherwise dispose of any
of his shares in the Company, the Preferred Shareholders shall have
the right to participate in such transactions pro rata to their
holdings of the issued and outstanding share capital of the Company
(on an as-converted basis), as set forth below.
49.6. If at any time prior to IPO the Founder desires to sell, assign,
transfer, pledge, grant any right in or otherwise dispose of any of
his shares in the Company (collectively, in this Sub-article,
"TRANSFER") pursuant to the terms of a bona fide offer received from a
third party (in this Sub-article, the "BUYER") or otherwise, the
Founder shall promptly give the Preferred Shareholders written notice
thereof, which shall fully describe the proposed Transfer (the
"CO-SALE OFFER"), and the Preferred Shareholders or any one of them
shall
have the right to require, within fourteen days of receipt of the
Co-Sale Offer, as a condition to such Transfer described therein, that
the Buyer shall purchase from each Preferred Shareholder at the same
price per share and on the same terms and conditions as involved in
such Transfer by the Founder, a percentage of the shares (regardless
of whether they consist of Preferred or Ordinary Shares, and on an
as-converted basis) proposed to be acquired by the Buyer (in this
Sub-article, the "TRANSACTION SHARES") expressed by a fraction, the
numerator of which is the number of shares then held by each such
Preferred Shareholder, on an as-converted basis, and the denominator
of which is the sum of (i) the aggregate number of shares then held by
all Preferred Shareholders which exercised their right to participate
in the Transfer hereunder, on an as-converted basis, plus the shares
of Tower to the extent it exercises its right of participation as set
forth in Article 49.1 above, and (ii) the number of shares then held
by the Founder, all multiplied by 100 (such percentage shall be
referred to as the "PREFERRED SHAREHOLDERS CO-SALE PRO RATA
PERCENTAGE").
49.7. In the event that one or more of the Preferred Shareholders shall
elect to participate in such Transfer, each such Preferred Shareholder
communicate in writing such election to the Founder within the
aforesaid period of time, and, if the Transfer to the Buyer is
consummated, such Preferred Shareholder shall be entitled to and shall
Transfer to the Buyer as part thereof its Preferred Shareholders
Co-Sale Pro Rata Percentage of the Transaction Shares, at the same
price per share and on the same terms and conditions as set forth in
the Co-Sale Offer. If a Preferred Shareholder did not respond to a
Co-Sale Offer within the aforesaid time period, it shall be deemed to
be waiving its right to participate in such Transfer.
49.8. If none of the Preferred Shareholders elected to participate in such
Transfer, then the Founder shall be entitled to sell or transfer the
Transaction Shares to the Buyer at any time within 90 days thereafter.
Any such Transfer shall be at not less favorable terms and conditions
to the Founder than those specified in the Co-Sale Offer. Any Shares
not sold within such 90-day period shall continue to be subject to the
requirements of this Article 49.
49.9. For the purposes of Article 49 shares held by an entity controlled
(directly or indirectly) by the Founder and/or relative or affiliate
shall be treated as shares held by the Founder.
49.10. Any sale or transfer of shares by the Founder of up to 5% of his
holdings in the Company at the closing of the Agreement B shall not
grant the holders of Preferred Shares the Co-Sale rights described in
this Article 49.
49.11. Bring Along. Until an IPO, in the event that shareholders of the
Company holding at least 80% of the Company's issued and outstanding
share capital on a fully diluted and on as converted basis shall elect
to sell all of their shares to a third party (the "Proposing
Shareholders") then all remaining shareholders (the "Remaining
Shareholders") shall be obligated, if so demanded by the Proposing
Shareholders, to sell all of their shares in the Company to such third
party at the same price and upon the same terms and conditions as the
Proposing Shareholders. Proceeds received under this section shall be
distributed among the Shareholders of the Company in accordance with
distribution instructions set forth in Article 5.2 herein with respect
to an event of Deemed Liquidation.
50. No transfer of shares shall be registered unless a proper instrument of
transfer has been submitted to the Company, coupled with the certificate
for the shares to be transferred. As long as the transferee is not
registered in the Register in respect of the shares transferred to him, the
rights and obligations of the registered owner of the shares shall in no
way be affected by the attempt to transfer.
51. The instrument of transfer of any share shall be in writing in the
following form or in any other form approved by the Board of Directors of
the Company and shall be signed by the transferor and transferee, or a
representative:
I, the undersigned, of _________ in consideration of the sum of NIS
___ paid to me by _______ of _____ (hereinafter called the "Said
Transferee") do hereby transfer to the Said Transferee the share (or
shares) numbered _ in ________ Ltd., to hold unto the Said Transferee,
executors, administrators, and assigns, subject to the several
conditions on which I held the same at the time of the execution
thereof, and I, the Said Transferee, do hereby agree to take the said
share (or shares) subject to the conditions aforesaid.
As witness our hands the __ day of
Witness to the Signatures
52. [Intentionally Omitted].
53. The executors and administrators of a deceased sole holder of a share, or,
if there are no executors or administrators, the persons beneficially
entitled as heirs of a deceased sole holder, shall be the only persons
recognized by the Company as having any title to the share.
54. The Company may recognize the receiver or liquidator of any shareholder in
winding-up or dissolution, or the trustee in bankruptcy or any official
receiver of a bankrupt shareholder as being entitled to the shares
registered in the name of such shareholder.
55. The Company may, by Special Resolution:
55.1. consolidate and divide its share capital into shares of larger amount
than its existing shares;
55.2. divide, by sub-division of its existing shares, of any of them, the
whole or any part of its share capital into shares of smaller amount
than is fixed by the Memorandum of Association, subject, nevertheless,
to the provisions of paragraph (d) of Section 144.1 of the Companies
Ordinance;
55.3. cancel any shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any person;
55.4. reduce its share capital in any manner and with and subject to any
incident authorized, and consent required, by law.
BORROWING POWERS
56. The Board of Directors may from time to time, at its discretion, borrow or
secure the payment of any sums of money for the purposes of or in
connection with Company's affairs.
57. The Directors may secure the repayment of such sum or sums in such manner,
at such times and upon such terms and conditions in all respects as they
think fit, and, in particular, by the issue of bonds, perpetual of
redeemable debentures, debenture stock, or any mortgages, charges, of other
securities on the undertaking of the whole or any part of the property of
the Company, both present and future, including its uncalled capital for
the time being and its called but unpaid capital.
GENERAL MEETINGS
58. An Annual General Meeting shall be held once in every calendar year at such
time (within a period of not more than fifteen (15) months after the last
Annual General Meeting) and at such time and place as the Board of
Directors may fix.
59. All General Meetings, other than Annual General Meeting, shall be called
"Extraordinary General Meetings". The Board of Directors may, whenever it
deems fit, convene an Extraordinary General Meeting, and shall be obligated
to do so upon a requisition in writing in accordance with Section 63 of the
Companies Act.
60. [Intentionally Omitted].
61. Where it is proposed to pass any resolution including a Special Resolution,
case seven (7) days' prior notice, specifying the place, the day and the
hour of the meeting and the general nature of every matter on the agenda,
shall be given to all shareholders entitled to receive notice of General
Meetings by notice as hereinafter provided. Provided that if all
shareholders entitled to receive notice of General Meetings agree, a
General Meeting at which it is proposed to pass a Special Resolution, or
any other meeting, may be held if less than 7 (seven) days' or three (3)
days' notice, as applicable, is given.
62. The accidental omission to give notice of a meeting to, or the non-receipt
of notice by, any shareholder, may invalidate the proceedings at any
meeting.
63. Any resolution in writing signed by all shareholders of the Company
entitled to vote at General Meetings or to which all said shareholders have
given their written consent, by letter, or fax or telegram or telex or
electronic mail or by other media, shall be deemed to have been unanimously
adopted by a meeting duly convened and held.
PROCEEDINGS AT GENERAL MEETINGS
64. No business shall be transacted at a General Meeting unless the requisite
quorum is present at the commencement of the meeting, and no resolution
shall be adopted unless the requisite quorum is present when the resolution
is voted upon.
65. Save as herein otherwise provided, the presence of a majority of the
shareholders including shareholders holding the majority in interest of the
Preferred B Shares shall constitute a quorum for general meetings.
66. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting shall be postponed to the same date, time and
place one week following. At such postponed meeting a quorum shall be
formed by the present shareholders.
67. The Chairman, if any, of the Board of Directors shall preside as Chairman
at every General Meeting of the Company. If there is no such Chairman or if
at any meeting he is not present within fifteen (15) minutes after the time
appointed for holding the meeting or is unwilling to act as Chairman, the
shareholders present shall elect one of the shareholders to be Chairman.
The Chairman of any General Meeting of the Company shall not be entitled to
a casting vote.
68. Ordinary resolutions shall be adopted if approved by the holder(s) of a
majority of shares held by the shareholder(s) present at the General
Meeting whether personally or by proxy.
69. Special Resolutions shall be adopted if approved by the holder(s) of 75%
(seventy five percent) of the shares held by the
shareholder(s) present at the General Meeting whether personally or by
proxy.
70. Subject to Article 69 above and subject to Article 106 below, all
resolutions adopted by the General Meeting shall be taken by a majority
vote.
71. [Intentionally Reserved].
72. [Intentionally Reserved].
73. A declaration by the Chairman of the meeting that a resolution has been
adopted unanimously, or adopted by a particular majority, or has been
rejected, and an entry to that effect in the minutes book of the Company,
shall be conclusive evidence of the fact without proof of the number or
proportion of the votes recorded in favor of or against such resolution.
74. The Chairman of a General Meeting may adjourn the same from time to time
and from place to place, and the Chairman shall do so if the meeting so
demands; but no business shall be transacted at any adjourned meeting other
than the business left unfinished at the meeting from the adjournment took
place. A notice of the adjournment and of the matters to be included in the
agenda of the adjourned meeting shall be given to all shareholders entitled
to receive notices of General Meetings.
74A. The General Meeting, through a Special Resolution, may amend the Company's
Memorandum of Association and Articles of Association unless stipulated
otherwise herein.
VOTES OF SHAREHOLDERS
75. Every shareholder, present in person or by proxy, shall upon a poll, have
such number of votes equal to the aggregate number of shares issued in the
class held by him, on an as converted basis.
76. [Intentionally Omitted].
77. Shareholders may vote either personally or by proxy, or, if the shareholder
is a corporation, by a representative by a duly authorized proxy.
78. The instrument appointing a proxy shall be in writing under the hand of the
appointer or of his attorney duly authorized in writing, or, if such
appointer is a corporation by a duly authorized representative in the
following form or in any other form which may be approved by the Board of
Directors of the Company:
I, _____ of _________ being a shareholder of _______ Ltd., hereby
appoint of as my proxy to vote for me and on my behalf at the
(ordinary or extraordinary as the case may be) General Meeting
of the Company to be held on the __ day of __ and at any adjournment
thereof.
Signed this __ day of
The appointment may be by facsimile transmission.
79. In case of joint holders the vote of the senior who tenders a vote whether
in person or by proxy, shall be accepted to the exclusion of the votes of
the other joint holders; and for this purpose seniority shall be determined
by the order in which the names stand in the Register.
80. No shareholder shall be entitled to vote at any General Meeting unless all
calls or other sums then due and payable by him in respect of his shares in
the Company have been paid.
81. The instrument appointing a proxy and the power of attorney or other
authority, if any, under which it is signed or a notarially certified copy
of that power or authority shall be deposited at the registered office of
the Company not less than twenty four (24) hours before the time for
holding the meeting at which the person named in the instrument proposes to
vote. The chairman of the meeting shall be entitled to waive such
requirement of deposit of twenty-four hours before the meeting in his sole
discretion.
82. A vote given in accordance with the terms of an instrument of appointment
of attorney or proxy shall be valid notwithstanding the previous death of
the principal, or revocation of the appointment, or transfer of the share
in respect of which the vote is given, provided no intimation in writing of
the death, revocation or transfer shall have been received at the office or
by the Chairman of the meeting before the vote is given.
THE BOARD OF DIRECTORS
83. Until an IPO, the number of members of the Board of Directors of the
Company ("Board") shall be not less than 3 and not more than 7 members.
84.
84.1. The holders of the majority of the Preferred A Shares and Preferred B
Shares are entitled each to appoint and replace from time to time one
(1) member of the Board, by a written notice to the Company..
84.2. Dr. Yoav Nissan-Xxxxx shall represent Tower on the Board until such
time as the Tower Agreement is terminated or Tower holdings in the
Company are reduced to less than 3% of the issued and outstanding
share capital of the Company. In the event that Dr. Yoav Nissan-Xxxxx
resigns of otherwise terminates his
membership on the Board, or in the event that he ceases to be employed
by Tower, and Tower holds 5% or more of the issued and outstanding
share capital of the Company, the Company and Tower will appoint a
mutually agreed upon Board member as his replacement. Such director
will maintain its position as long as Tower holds 5% or more of the
issued and outstanding share capital of the Company.
84.3. The remaining members of the Board will be appointed by a general
meeting of the holders of the Ordinary Shares excluding: (i) Tower and
(ii) the holders of the Preferred Shares.
85. In addition to the appointment of one director, the holders of the
Preferred A Shares will be entitled to appoint one observer, and such
observer will be invited to attend the meetings of the Board (without the
right to vote thereat) and will receive all written information as a
regular member of the Board.
(a) The right of the holders of Preferred A Shares to appoint a director
and an observer to the Board and the right of the holders of Preferred B
Shares to appoint a director will expire if each such class's holdings in
the Company, respectively, are reduced to less than 4% (on an as-converted
basis). In the event that the shareholding of each class of Preferred
Shares is reduced below 4% but then increases to 4% or more again, the
right of the such class of Preferred Shares to appoint a director (and if
applicable, an observer) to the board shall be reinstated immediately
thereupon.
86. The remuneration of the Directors - if any - shall be set from time to time
in decisions adopted by the Company in General Meetings.
87. A Director may appoint in writing, at any time, any other director to act
as a substitute director in his stead at any meeting or meetings of the
directors at which that director is unable to be present. Any director so
appointed shall be entitled to exercise all the powers and authorities of
the director who appointed him, and shall comply with all the duties
imposed on that director. Such appointment may be by facsimile
transmission.
88. [Intentionally reserved].
89. [Intentionally reserved].
90. [Intentionally reserved].
91. A person who has ceased to be a member of the Board of Directors shall be
eligible for re-appointment.
92. If any member of the Board of Directors is not appointed, or if the office
of a member of the Board of Directors is vacated, the continuing members of
the Board of Directors may, as long as their
number does not fall below the quorum, act in every matter. If the number
of Directors falls below quorum, they shall not act except in emergency.
93. The office of a member of the Board of Directors shall, ipso facto, be
vacated upon the happening of any of the following events:
93.1. Upon his death, or, if the Director is a Company, upon its
winding-up;
93.2. If he be found lunatic or become of unsound mind;
93.3. If he becomes bankrupt;
93.4. If he resigns his office by notice in writing to the Company;
93.5. If he is removed from office under Article 84.
94. A member of the Board of Directors shall not be required to hold any
qualification share.
95. No member of the Board of Directors shall be disqualified by his office
from holding any office or place of profit under the Company or under any
company in which the Company shall be a shareholder or otherwise
interested, or from contracting with the Company either as vendor,
purchaser, or otherwise, nor shall any such contract, or any contract or
arrangement entered into by or on behalf of the Company in which any member
of the Board of Directors shall be in any way interested, be avoided, nor
shall any member of the Board of Directors be liable to account to the
Company for any profit arising from any such office or place of profit or
realized by any such contract or arrangement by reason only of such member
of the' Board of Directors holding that office or of the fiduciary
relations thereby established, but it is declared that the nature of his
interest must be disclosed by him at the meeting of the Board of Directors
at which the contract or arrangement is first taken into consideration, if
his interest then exists, or in any other case at the first meeting of the
Board of Directors after the acquisition of his interest.
96. [Intentionally Reserved].
97. The members of the Board of Directors and their substitutes, if any, shall
not be paid remuneration or fees out of the funds of the Company unless the
General Meeting so decides and at the rate determined by the general
Meeting but may be reimbursed for expenses.
PROCEEDINGS OF THE BOARD OF DIRECTORS
98. The Board may meet together, upon at least 7 days prior notice, and adjourn
their meetings and otherwise regulate their meetings and proceedings as
they think fit. Notwithstanding, the Board shall meet, in any event at
least every calendar quarter. A director shall be entitled to waive this
notice requirement. The attendance of a director at a meeting of the Board
shall in itself constitute such a waiver.
99. Quorum. The presence of a majority of the directors including one of the
directors appointed by the Preferred Shareholders shall constitute a quorum
for meetings of the Board. Notwithstanding the aforesaid, if within half an
hour of the time arranged for a Board meeting or for a general meeting,
respectively, no quorum is present, such meeting shall stand adjourned to
the same day of the following week, at the same hour and in the same place,
or in the event that such a day is not a business day, then to the first
business day thereafter, and in such adjourned meeting if no quorum is
present within half an hour of the time arranged, the present directors or
shareholders (as applicable) shall be deemed a quorum.
100. [Intentionally Omitted]
101. No business shall be transacted at a meeting of the Board of Directors
unless the requisite quorum is present at the commencement of the meeting,
and no resolution shall be adopted unless the requisite quorum is present
when the resolution is voted upon.
102. The Board of Directors may from time to time elect one of its members to be
Chairman of the Board of Directors, remove such Chairman from office and
appoint another in his place.
103. The Chairman of the Board of Directors shall take the chair at every
meeting of the Board of Directors, but if there is no such Chairman, or if
at any meeting he is not present within fifteen (15) minutes of the time
appointed for the meeting, or if he is unwilling to take the chair, the
Directors present shall choose one of their number to the Chairman of such
meeting. Such chairman shall have no second vote.
104. A meeting of the Board of Directors at which a quorum is present shall be
competent to exercise all the authorities, powers and discretion by or
under the regulations of the Company for the time being vested in or
exercisable by the Board of Directors generally.
105. Subject to Article 106 below, Subject to any applicable mandatory law, all
resolutions and actions of the Board shall be taken by a majority vote.
106. Notwithstanding the aforesaid, until the consummation of the IPO any action
or resolution of the Company's general meeting, or of the Company's Board
of Directors, as applicable, regarding any of the following issues shall
require the affirmative consent of:
106.1. the majority holders of the Preferred B Shares or of the Preferred B
Director: Change the terms and provisions of the
Preferred B Shares or any other term or condition of the Articles of
Association of the Company so as to affect adversely the rights of the
Preferred B Shares.
106.2. the majority holders of the Preferred A Shares or the Preferred A
Director: Change the terms and provisions of the
Preferred A Shares or any other term or condition of the Articles of
Association of the Company so as to affect adversely the rights of the
Preferred A Shares.
106.3. a majority of 70% of the holders of the Preferred A Shares and the
Preferred B Shares, as one group:
(a) 106.3.1. Any material transaction with any officer, director,
shareholder or any other Interested Party, except for
transactions with Tower, M Systems - Flash Disk Pioneers Ltd. and
Infineon AG, between the Company and such entities;
(b) 106.3.2. Liquidation, dissolution, winding-up, or any other event
which means or entails the cessation of the operations of the
Company as an on-going independent business entity; and
(c) 106.3.3. Issuance of share capital, or options, or warrants to
purchase shares, or other securities ranking senior to the
Preferred A Shares and/or to the Preferred B Shares, or increase
in the number of authorized securities beyond those specified in
Agreement B and in the Amended Articles (As defined therein)- if
such increase adversely affects the rights and privileges of the
holders of the Preferred A and/or B Shares.
107. A resolution in writing signed by all members of the Board of Directors or
to which all members of the Board of Directors have agreed in writing or
fax or by cable or telex or electronic mail shall be as valid and effective
for all purposes as if passed at a meeting of the Board of Directors duly
convened and held.
108. Meetings of the Board of Directors may be held through computer network,
telephone, radio or any other media of communication, enabling the
Directors to communicate with each other, in the presence of all of them,
provided due prior notice detailing the time and manner of holding a given
meeting is served (orally or otherwise) upon all the Directors. Any
resolution adopted by the Directors in such a meeting will immediately be
recorded in writing and signed by the Chairman of the Board of Directors or
the Chairman of the meeting, and shall be valid as if adopted at a meeting
of the Board of Directors duly convened and held.
109. The Board of Directors may for any special matter delegate any of its
powers to committees consisting of one or several members, whether or not
such members are Directors, as the Board of Directors may deem fit, and it
may from time to time revoke such delegation. Any Committee so formed (in
these Articles referred to as "a Committee of the Board of Directors")
shall, in the exercise of the powers so delegated, conform to any
regulations that may be imposed on it by the Board of Directors. The
meetings and proceedings of any such Committee of the
Board of Directors, consisting of two (2) or more members, shall be
governed by the provisions herein contained for regulating the meetings of
the Board of Directors, so far as the same is applicable thereto, and so
far as not superseded by any regulation made by the Board of Directors
under this Article.
110. All acts done at any meeting of the Board of Directors, or of a Committee
of the Board of Directors, or by any person acting as a Director, shall,
notwithstanding that it may afterwards be discovered that there was some
defect in the appointment of such Directors or members of a Committee of
the Board of Directors or person acting as aforesaid or any of them, or
that they or any of them were disqualified, be as valid as if every such
person had been duly appointed and was qualified to be a Director or a
member of such Committee of the Board of Directors.
POWERS OF THE BOARD OF DIRECTORS
111. The management of the business of the Company shall be vested in the Board
of Directors, and the Board of Directors may exercise all such powers and
do all such acts and things as the Company is, by its Memorandum of
Association and/or its Articles of Association or under the Law, authorized
to exercise and do, and are not hereby or by statute directed or required
to be exercised or done by the Company in General Meeting, but subject,
nevertheless, to the provisions of the Companies Act, and of these presents
and any regulations or resolution not being inconsistent with these
presents made from time to time by the Company in General Meeting; provided
that no such regulation or resolution shall invalidate any prior act done
by or pursuant to the directions of the Board of Directors which would have
been valid if such regulation or resolution had not been made.
LOCAL MANAGEMENTS
112. The Board of Directors may from time to time provide for the management and
transaction of the affairs of the Company in any specified locality,
whether in Israel or abroad, in such manner as it think fit, and the
provisions contained in the next following Article shall be without
prejudice to the general powers conferred by this Article on the Board of
Directors.
113. The Board of Directors may from time to time and at any time, establish any
local board or agency for managing any of the affairs of the Company in any
such specified Locality, any may appoint any person to be a member of such
local board, or any manger or agent, and may fix their remuneration. The
Board of Directors may from time to time and at any time, delegate to any
person so appointed any of the powers, authorities and discretion for the
time being of any such local board to continue in his office
notwithstanding any vacancy which may occur, and any such appointment or
delegation may be made on such terms and
subject to such conditions as the Board of Directors may think fit, and the
Board of Directors may at any time remove any person so appointed and may
annul or vary any such delegation.
MANAGING DIRECTORS AND GENERAL MANAGERS
114. The Board of Directors may from time to time appoint one or more persons,
whether or not Directors, as Managing Director or General Manager of the
Company, either for a fixed term or without any limitation as to the period
for which he or they is or are to hold office, and may from time to time
(subject to any provisions of any contract between him or them and the
Company) remove or dismiss him or them from office and appoint another or
others in his or their place or places.
115. The remuneration of a Managing Director or Director General shall from time
to time (subject to any contract between him and the Company) be fixed by
the Board of Directors.
116. The Board of Directors may from time to time entrust to and confer upon a
Managing Director or a General Manager for the time being such of the
powers exercisable under these presents by the Board of Directors as it may
think fit, and may confer such powers for such time, and to be exercised
for such objects and purposes, and upon such terms and conditions, and with
such restrictions, as it thinks expedient; and it may confer such powers,
either collectively with, or to the exclusion of, and in substitution for,
all or any of the powers of the Board of Directors in that behalf; and may
from time to time revoke, withdraw, alter or vary all or any of such
powers, all as the Board of Directors may, from time to time, deem fit.
MINUTES
117. The Board of Directors shall cause minutes to be duly entered in books
provided for that purpose and which will also include:
117.1. the names of the Directors present at each meeting of the Board of
Directors and of any committee of the Board of Directors;
117.2. the names of the shareholders present at each General Meeting;
117.3. all directions given by the Board of Directors to any Committee of
the Board of Directors;
117.4. all proceedings and resolutions of General Meetings and of meetings
of the Board of Directors and Committees of the Board of Directors.
118. Any minutes as aforesaid of a meeting of the Board of Directors, of a
meeting of a Committee of the Board of Directors or of a General Meeting of
the Company, if purporting to be signed by the
Chairman of such meeting or by the Chairman of the next succeeding meeting
or by the Chairman of such General Meeting, shall be accepted as prima
facie evidence of the matters therein recorded.
BRANCH REGISTERS
119. The Company may, subject to and in accordance with the provisions of
Section 138 of the Companies Act and to all orders and directions made
and/or to be made by virtue of the said Sections, or any of them, keep
branch registers in any place outside of Israel, as the Board of Directors
may deem fit, and, subject to the Requirements of the Law, the Board of
Directors may from time to time make and alter such regulations as it may
deem fit in connection with the keeping of such branch registers.
THE STAMP AND THE RIGHT OF SIGNATURE
120. The Company shall have at least one rubber stamp, and the Board of
Directors shall provide for the safe custody of such rubber stamp.
121. The Board of Directors shall be entitled to authorize (and revoke such
authorization) any person or persons (even if he or they is or are not
Director(s) of the Company) to act and sign on behalf of the Company in any
given case or as general authority with or without limitations, all as may
be determined from time to time by the Board of Directors, and the acts and
signatures of such person or persons on behalf of the Company shall bind
the Company insofar as such person or persons acted and signed within his
or their powers as aforesaid.
122. The Company may exercise the powers conferred by Article 120 hereof with
regard to having a rubber stamp for use abroad, and such powers shall be
vested in the Board of Directors.
THE XXXXXXXXX, XXXXXXXX, XXX XXXXXXXXX
000. The Board of Directors may from time to time appoint a Secretary to the
Company, as well as officers, personnel, agents and servants, for fixed,
provisional or special duties, as the Board of Directors may from time to
time deem fit, and may from time to time, in its discretion, suspend the
service of any one or more of such persons.
124. The Board of Directors may determine the powers and duties, as well as the
salaries and emoluments, of such persons, and may demand security in such
cases and at such amounts as it deems fit.
125. The Board of Directors may from time to time, and at any time, by power of
attorney, appoint any company, firm or person or body of persons, whether
nominated directly or indirectly by the Board of Directors, to be the
Attorney or Attorneys of the Company for such purpose and with such powers,
authorities and discretion (not exceeding those vested in or exercisable by
the Board of Directors under these Articles), and for such period and
subject to such conditions as it thinks fit,
and any such power of attorney may contain such provisions for the
protection and convenience of persons dealing with any such Attorney as the
Board of Directors may third( fit, and may also authorize any such Attorney
to delegate all or any of the powers, authorities and discretion vested in
him.
DIVIDENDS AND RESERVE FUND
126. The Board of Directors may, before recommending any dividend, set aside,
out of the profits of the Company, such sums as it thinks proper, as a
reserve fund to meet contingencies, or for equalizing dividends, or for
special dividends, or for repairing, improving and maintaining any of the
property of the Company, and for such other purposes as the Board of
Directors shall, in its absolute discretion, think conducive to the
interests of the Company; and may invest the several sums so set aside upon
such investments (other than shares of the Company) as it may think fit,
and from time to time deal with and vary such investments, and dispose of
all or any part thereof for the benefit of the Company, and may divide the
reserve fund into such special funds as it thinks fit, and employ the
reserve fund or any part thereof in the business of the Company, and
without being bound to keep the same separate from the other assets.
127. Subject to the rights of holders of shares with special rights as to
dividends (if there are any) and subject to the provisions of these
Articles as to the reserve fund, dividends shall be paid to the
shareholders of issued, outstanding and fully paid-up shares
proportionately, as the proportion of the number of their issued,
outstanding and fully paid-up shares to the total number of issued,
outstanding and fully paid-up shares in the Company as of the time of the
payment of the dividend, on pro rata basis.
128. The Company in General Meeting may declare a dividend to be paid to the
shareholders according to their rights and interests in the profits, and
may fix the time for payment; no dividend shall exceed the amount
recommended by the Board of Directors, but the Company, in General Meeting,
may declare a smaller dividend.
129. The Board of Directors may from time to time pay to the shareholders such
interim dividend as may appear to the Board of Directors to be justified by
the profits of the Company.
130. A General Meeting declaring a dividend may resolve that such dividend be
paid, wholly or partly, by the distribution of specific assets, and, in
particular, by distribution of paid up shares, debentures, or debenture
stock of the Company, or paid-up shares, debentures, or debenture stock of
any other Company, or in any one or more of such ways.
131. No dividend shall be paid otherwise than out of the profits of the Company,
and no dividend shall carry interest as against the Company.
132. Any General Meeting may resolve that any moneys, investments, or other
assets forming part of the undivided profits of the Company standing to the
credit of the reserve fund, or to the credit of the reserve fund, or to the
credit of the reserve fund for the redemption of capital, or in the hands
of the Company and available for dividends, or representing premiums
received on the issue of shares and standing to the credit of the share
premium account, be capitalized.
133. For the purpose of giving effect to any resolution under the two (2) last
preceding Articles, the Board of Directors may settle any difficulty which
may arise in regard to the distribution as it thinks expedient, and, in
particular, may issue fractional certificates, and may fix the value for
distribution of any specific asset, and may determine that cash payments
shall be made to any shareholder upon the footing of the value so fixed, or
that fractions of value less than NIS 1 - (one New Israeli Shekel) may be
disregarded in order to adjust the rights of all parties, and may vest any
such cash or specific assets in trustees upon such trusts for the persons
entitled to the dividend or capitalized fund as may seem expedient to the
Board of Directors.
134. The Board of Directors may deduct from any dividend, bonus or other amount
to be paid in respect of shares held by any shareholder, whether alone or
together with another shareholder, any sum or sums due from him and payable
by him alone or together with any other person to the Company on account of
calls or the like.
135. If several persons are registered as joint holders of any share, any one of
them may give effectual receipts for any dividend payable on the share.
BOOKS OF ACCOUNT
136. The Board of Directors shall cause accurate books of account to be kept in
accordance with the provisions of the Companies Act, or any modification
thereof for the time being in force. The books of account shall be kept at
the registered office of the Company, or at any place or places, as the
Board of Directors may deem fit, and they shall always be open to
inspection by members of the Board of Directors. No member not being a
member of the Board of Directors, shall have any right of inspecting any
account or book or document of the Company except as conferred by law or
authorized by the Board of Directors or by the Company in General Meeting.
ACCOUNTS AND AUDITS
137. Once at least in every year the account of the Company shall be examined
and the correctness of the profit and loss account and balance sheet
ascertained by one or more duly qualified auditors.
138. The appointment, authorities, rights, salaries and duties of the auditor or
auditors shall be regulated by the law in force for the time being.
NOTICES
139. A notice may be given by the Company to any shareholder, either personally
or by letter, or telegram, or telex, or fax, or electronic mail or by any
other medium.
140. A notice may be given by the Company to the joint holders Of a share by
giving notice to the joint holders named first in the register in respect
of the share.
141. Notice of every General Meeting shall be given in any manner hereinbefore
authorized to all holders of share and to every person entitled to a share
in consequence of death or bankruptcy or winding-up, would have been
entitled to receive notice of the meeting. No other persons shall be
entitled to receive notices of General Meetings.
142. A notice shall be given by the Company to the persons entitled to a share
in consequence of the death, bankruptcy or winding-up of a shareholder by
sending it through the post in a prepaid letter addressed to them by name,
or by the title of the representatives of the deceased, or trustee of the
bankrupt or liquidator, or by any like description, at the address, if any,
in Israel or abroad, supplied for the purpose by the person claiming to be
so entitled, or - until such address has been so supplied - by giving the
notice in any manner in which the same might have been given if the death,
bankruptcy or winding-up had not occurred.
INSURANCE AND INDEMNITY
143. The Company is authorized to the fullest extent permitted by the Companies
Act, as may be amended or supplemented in the future to:
143.1. procure directors' and Officers' liability insurance for the
following:
(a) breach of duty or care by any Officer (as defined in the
Companies Act) owed to the Company or any other person; and
(b) breach of fiduciary duty by any Officer owed to the Company to
the extent that such Officer acted in good faith and had a
reasonable basis to assume that the action would not prejudice
the Company; and
(c) any financial liability imposed on any Officer for the benefit of
a third party as a result of an act or omission such Office
Holder committed as an Officer of the Company; and
143.2. indemnify its Officers (as defined in the Companies Act) for the
following:
(a) any financial liability imposed on any Officer for the benefit of
a third party by a judgment, including a settlement or
arbitration decision certified by the court, as a result of an
act or omission that such Officer committed as an Officer of the
Company; and
(b) reasonable litigation expenses including legal fees incurred by
the Officer or which he is obliged to pay by court order for:
(One) a proceeding brought against him by the Company, on his
behalf or by a third party, or
(Two) a criminal proceeding in which he is acquitted, or found
guilty if the crime is defined as not necessitating criminal
intent, provided that any such proceeding related to an act
or omission that such Officer committed as an Officer of the
Company; and
(c) procure insurance for or indemnify any employee who is not an
Officer with respect to any of the matters set forth in (a) and
(b). The Company is authorized to exempt any or all Officer from
liability due to his breach of duty care owed to the Company.
CONFIDENTIALITY AND NON-COMPETE
144. The shareholders undertakes to keep in strict confidence, and not to use
for any purpose whatsoever except for the benefit of the Company, any and
all information relating in any way to the Company and its business which
had been provided to such party by the Company, except: (i) information
which is or shall be in the public domain not due to any act of a
Shareholder in breach of law or agreement; (ii) information which became or
shall become known to a Shareholder prior to disclosure by Company of such
information to the Shareholder; (iii) information which became or shall
become known to a Shareholder from a source other than Company other than
by the breach of an obligation of confidentiality owed to the Company; (iv)
information that was or shall be independently developed by a Shareholder;
or (v) information which a Shareholder is required to disclose under any
applicable law. Notwithstanding the aforesaid, in connection with periodic
reports to their shareholders or
partners, the Shareholders may make general statements, not containing
technical information, regarding the nature and progress of the Company's
business, and may provide summary financial information of the Company. In
addition, in the event that any Shareholder or its partners or parent
companies (any such entity, a "PARENT COMPANY") is or shall become publicly
traded and/or otherwise subject to certain disclosure duties under
applicable securities laws and regulations (including any regulations and
rules of stock exchanges), or any other laws and regulations, the Company
shall furnish it with financial statements and/or any other information as
such Shareholder or its Parent Company may require in order to comply with
any disclosure requirements under such laws and regulations.
145. The holders of Preferred Shares confirm that, in the event that any of them
shall invest in any entity which directly competes with the Company's
products, then, absent the Board's prior written approval, the applicable
Preferred Director shall not simultaneously serve as a director of such
entity which competes with the Company. It is agreed that in the event a
certain holder of Preferred Shares shall make an equity investment in a
company which is a competitor of the Company, the applicable Preferred
Director shall not be entitled to provide such holder of Preferred Shares
with any material concerning the Company which is of a confidential nature.
For the prevention of doubt and for purposes of this Article 143A only,
financial statements shall not be regarded as confidential. Furthermore,
for purposes of this Article 143A, a Competitor shall be taken to mean any
legal entity in which the holder of Preferred Shares holds at least 5% of
the equity or a legal entity in which the holder of Preferred Shares has a
representative at the board of directors.
WINDING-UP
146. If the Company be wound up, the assets available for distribution among the
shareholders as such shall be distributed among the shareholders in
proportion to the capital paid-up, which ought to have been paid-up at the
commencement of the winding-up on the shares held by them.
147. A resolution to liquidate the Company (as a voluntary liquidation) shall be
carried, only if 75% of the holders of Preferred Shares and Ordinary Shares
voted in favour including 70% of the holders of the Preferred Shares.
EXHIBIT A
WEIGHTED AVERAGE CALCULATION
(P X a) + C'
P' = ----------------
a + n
In which:
a = Number of Ordinary Shares outstanding immediately prior to the relevant
issue of Additional Shares, plus all Ordinary Shares issuable upon
conversion or exercise of all outstanding securities of the Company
convertible to or exercisable into Ordinary Shares.
n = Number of Additional Shares issued.
P = Conversion Price in effect immediately prior to such issuance.
C' = Total consideration paid for the Additional Shares.
P' = Adjusted Conversion Price
APPENDIX E
SAIFUN'S ISSUED AND OUTSTANDING CAPITAL STOCK
# ORDINARY # PRE. A # PRE. B # OUTSTANDING % OPTIONS %
---------- --------- --------- ------------- ---- --------- ----
EMPLOYEES + FOUNDERS 13,997,156 13,997,156 59.8% 1,650,000 59.7%
AMD/FUJITSU 938,470 938,470 4.0% 3.6%
GEMINI GROUP 1,000,546 296,557 1,297,103 5.5% 533,042 7.0%
CONCORD GROUP 994,816 994,816 4.3% 538,772 5.9%
OTHER INVESTORS PRE A. 80,000 287,000 367,000 1.6% 1.4%
PRE. B INVESTORS 1,972,159 1,972,159 8.4% 7.5%
OTHER ORD. INVESTORS 3,836,431 3,836,431 16.4% 68,784 14.9%
---------- --------- --------- ---------- ---- --------- ----
TOTAL 18,852,057 2,282,362 2,268,716 23,403,135 100% 2,790,598 100%
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