Ref. XXXXXXXX/MEITAL/SM/14/10/98
[TRANSLATED FROM THE HEBREW]
AGREEMENT
Dated 13th September 1998
BETWEEN
"MEITAL" ELECTRONIC TECHNOLOGY LTD
AND XXXXXXXXX XXXXXX
AND
NUR MACROPRINTERS LTD
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AGREEMENT
Made and signed in Magshimim on 13th September 1998
BETWEEN: 1. MEITAL ELECTRONIC TECHNOLOGY LTD
Private Company 00-000000-0
of 0 Xxxxxxx Xxxxxx, Xxxx 000, Xxxxx Xxxxxxx Xxxx, Xxxxxxx
(hereinafter referred to as "Meital")
2. XXXXXXXXX XXXXXX
Identity No. 000000000
of 00 Xxxxxxxxx Xxxxxx, Xxxxxxx
(hereinafter referred to as "Kobi")
of the one part
AND: NUR MACROPRINTERS LTD
Public Company 00-000000-0
of 5 Xxxxx Xxxxx Street, Magshimim
(hereinafter referred to as "Nur")
of the other part
WHEREAS Meital has developed and is developing a technology which applies
InkJet print technology known as "drop on demand" (hereinafter
referred to as "the DOD technology") which is designed for
application in wide format co1our digital print systems using the
transversal method, the specifications whereof are described in
appendix "A" hereto (hereinafter referred to as "the Meital
technology"):
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AND WHEREAS Kobi is Meital's promoter, and acts as Meital's sole manager
and director, and together with his wife holds all Meital's
issued and paid up share capital;
AND WHEREAS Nur engages in the research, development, manufacture,
marketing, sale and maintenance of digital printers which
operate with various InkJet technologies, which are designed
for wide format colour printing, and in such context it has
also commenced engaging in research in respect of the
possibility of applying the DOD technology within the
framework of its printer line;
AND WHEREAS Meital wishes, with Kobi's consent, to transfer and sell all
its rights in the Meital technology to Nur, and Nur wishes to
accept and purchase all Meital's rights in the Meital
technology from Meital, in order to integrate parts thereof,
with the necessary changes, in Nur's wide format printer line;
AND WHEREAS the parties wish to regulate and anchor in writing everything
agreed between them in connection with the purchase of the
Meital technology by Nur, and all as provided below,
ACCORDINGLY, IT IS AGREED, WARRANTED AND PROVIDED BETWEEN THE PARTIES AS
FOLLOWS:
1. Recitals and Interpretation
1.1 The recitals and appendices hereto constitute an integral part
hereof.
1.2 The clause headings herein are for convenience purposes only and
shall not be used in the interpretation hereof.
1.3 In this agreement, above and below, the following expressions shall
bear the meanings set forth alongside them:
(a) "dollar" - an amount in shekels equal to the one US dollar, at
the representative rate of the US dollar last published by the
Bank of Israel prior to effecting any payment pursuant hereto;
(b) "the date of the agreement" - the date of this agreement as
appearing in the recitals hereto;
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(c) "wide formats" - printing on substrates of a width of 90 cm
and more.
2. Meital's and Kobi's Warranties
2.1 Meital and Kobi hereby warrant, confirm and undertake as follows:
(a) that Meital is the owner of the Meital technology and that
save for the charge currently existing over Meital's assets in
Nur's favour (hereinafter referred to as "the existing
charge"), Meital's rights in the Meital technology are free of
any charge, attachment, lien or other third party right;
(b) that without derogating from the generality of the provisions
of clause 2.1(a) above, Meital is the owner of all the
copyrights included in the Meital technology and/or is the
owner of all the licenses to use the patents, trademarks,
copyrights and/or other intellectual property rights
(hereinafter jointly referred to as "intellectual property
rights") used in the Meital technology;
(c) that it or he is authorised to enter into this agreement and
to perform all its or his obligations pursuant hereto, and
that there is no impediment pursuant to any law, contract,
order, judgment and/or other legal provision prohibiting it or
him from entering into this agreement and performing its or
his obligations pursuant hereto;
(d) that the employees engaged by Meital in connection with the
development of the Meital technology are specified in the list
annexed hereto as appendix 2.1(d) (hereinafter referred to as
"Meital's employees");
(e) that the sub-contractors who were and/or are engaged by Meital
in connection with the development of the Meital technology
are specified in the list annexed hereto as appendix 2.1(e),
which also includes an itemisation of the works executed by
each of the said sub-contractors in connection with the
development of the Meital technology;
(f) that all the valid agreements executed between Meital and/or
Kobi and any third party, including any of the sub-contractors
mentioned in sub-clause (e) above, in connection with the
Meital technology are specified in the list annexed hereto as
appendix 2.1(f) (hereinafter referred to as "the technology
agreements");
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(g) that all Meital's obligations correct as at the date hereof,
whether monetary or otherwise, including details of the third
party to whom the obligation exists, details of the amount of
the obligation or a description of the nature thereof and the
date for the payment or performance thereof, as the case may
be, are specified in the list annexed hereto as appendix
2.1(g) (hereinafter referred to as "Meital's obligations");
(h) that it or he is aware that Nur is entering into this
agreement in reliance on its or his representations as
mentioned in this clause 2.1.
2.2 It is agreed that Meital's and Kobi's warranties, which are
specified in clause 2.1 above, do not apply to any present or future
claim or plea of Idanit Technologies Ltd (hereinafter referred to as
"Idanit"), or anyone on its behalf, in connection with Idanit's
prima facie rights, according to it, in the Meital technology in
consequence of the past engagement of Kobi and any of Meital's other
employees by Idanit, including as specified in claims
14/1632/Nun-Zayin and 3/3823/Nun-Zayin, and in appeals that have
been and/or shall be filed in respect thereof (hereinafter referred
to as "Idanit's claims"). In accordance therewith, if in the future
any judicial instance holds that Idanit or anyone on its behalf has
any rights in the Meital technology, such shall not be deemed a
breach by Meital and/or Kobi of their representations as specified
in clause 2.1 above.
Without derogating from the provisions of this clause 2.2, Meital
and Kobi hereby confirm that to the best of their knowledge Idanit
does not have any right in the Meital technology.
3. Nur's Warranties
Nur hereby warrants, confirms and undertakes as follows:
(a) that it is authorised to enter into this agreement and to perform
all its obligations pursuant hereto, and that there is no impediment
pursuant to any law, contract, order, judgment and/or other legal
provision prohibiting it from entering into this agreement and
performing its obligations pursuant hereto;
(b) that save for the representations specified in clause 2.1 above
(subject to the proviso specified in clause 2.2 above), it is
purchasing the Meital technology on an "as is" basis, having carried
out comprehensive due diligence examinations and found them to be to
its satisfaction, and that it
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is aware that the Meital technology is merely in the development
stages, and in such context it shall not have any pleas or claims in
respect of the quality of the Meital technology;
(c) that it is familiar with all the details of Idanit's claims and an
appeal filed by Meital with the National Labour Court in connection
with Meital's claims;
(d) that it is aware that Meital and Kobi are entering into this
agreement in reliance upon its representations as mentioned in this
clause 3.
4. The Purchase and Transfer of the Meital Technology
4.1 In executing this agreement, and subject to the delivery being
effected as provided in clause 4.5 below, Meital is hereby selling
and transferring to Nur, and Nur is hereby purchasing and receiving
from Meital, all the rights in the Meital technology, including the
intellectual property rights included in the Meital technology, with
them being free of any charge, attachment, lien or other third party
right.
It is expressed that the above provisions of clause 4.1 do not
derogate from the provisions of clause 2.2 above.
4.2 Upon the purchase and receipt of the Meital technology, Nur will
become the owner of the Meital technology, and in such context Nur
shall be entitled to act qua owner in respect of the Meital
technology, in its absolute discretion, but subject to the rights of
Meital and Kobi which have been expressly specified herein. In
addition, from the date of the agreement any further or future
development of the Meital technology shall be exclusively owned by
Nur.
4.3 From the date mentioned in clause 4.5 below, Meital shall deliver
the Meital technology to Nur at Meital's premises, as provided below
in this clause 4.3 (hereinafter referred to as "the delivery").
Within the framework of the delivery Meital shall deliver to Nur all
the documents, equipment, tools, computer software and any other
item connected with the Meital technology which is in its
possession, as specified in the list annexed hereto as appendix 4.3
(hereinafter referred to as "the technology list"). Within the
framework of the items included in the technology list, Meital shall
deliver to Nur all the documents and other documentation in its
possession relating to the Meital technology which is reasonably
required for the continued development and application of the Meital
technology (hereinafter referred to as "the technology
documentation"). The technology documentation which Meital delivers
to Nur shall include, inter alia, all the computer software,
drawings, plans, lists of suppliers and sub-
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contractors and the like including the Meital technology which is
in its possession. Within the framework of the delivery, Meital
shall transfer to Nur's possession and ownership every application
of the Meital technology, and in such context the prototype within
the framework whereof, to prove technological possibility, Meital
applied the Meital technology (hereinafter referred to as "Meital's
machine").
4.4 In addition, and without derogating from the generality of the
aforegoing, with effect from the determining date, as defined in
clause 4.5 below, Meital shall provide Nur, through Kobi, with
development and consultancy services, as provided and on the terms
and conditions specified in the development agreement which is
annexed hereto as appendix 4.4, which shall be executed by the
parties concurrently with their execution hereof (hereinafter
referred to as "the development agreement"). In the event of any
contradiction between the development agreement and this agreement,
the provisions of this agreement shall prevail.
4.5 Within seven business days of the execution hereof, but not prior to
receipt of the trustees' confirmation regarding receipt of the
royalties advance in the trust account, as provided in clause 4.7
below, Nur's representatives shall present themselves at Meital's
premises for the delivery to be effected, within the framework
whereof all the items included in the technology list shall be
delivered to Nur, as mentioned in clause 4.3 above. After Nur's
representatives ascertain the receipt of all the items included in
the technology list, they shall sign a copy of the technology list
and send it to Meital's representatives (hereinafter referred to as
"confirmation of receipt"). The delivery shall only be deemed to
have been effected upon furnishing of the confirmation of receipt as
aforesaid, and the date of furnishing the confirmation receipt shall
hereinabove and hereinbelow be referred to as "the determining
date".
4.6 Immediately after the execution hereof, the parties' attorneys, Adv.
Xxxxxx Xxxx and/or Adv. Xxxxx Xxxxxxx on behalf of Meital and Kobi
(hereinafter referred to as "Meital's trustees"), and Adv. Xxxxxxx
Xxxxxx and /or Xxxxxx Xxxxxxxx on behalf of Nur (hereinafter
referred to as "Nur`s trustees"), shall open a bank account at
United Mizrahi Bank, Diamond Branch (hereinafter referred to as "the
trust account"). Each of Meital's trustees and Nur's trustees
(hereinafter jointly referred to as "the trustees") shall be
authorized to effect operations in the account, provided that for
the purpose of effecting any operation in the trust account the
signature of at least one of Meital's trustees together with the
signature of at least one of Nur's trustees shall be required. The
trustees shall only effect operations in the account pursuant to the
provisions hereof.
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Within three business days of the date of this agreement, Nur shall
deposit the amount of the royalties advance, as defined in clause
7.5 below, in the trust account, and the trustees shall invest the
said amount in a daily interest-bearing deposit, pursuant to
Meital's guidelines. Upon the delivery being effected and against
the furnishing of a copy of the confirmation of receipt, the
trustees shall transfer the royalties advance, together with the
income accruing thereon, to such bank account as Meital instructs
them in writing.
If on the date mentioned in clause 4.5 above Nur's representatives
believe that not all the items included in the technology list are
at Meital's premises, the delivery shall not be effected on such
date, and Nur's representatives shall give Meital's representatives
notice of the missing items, and the latter shall act to supplement
those items. After three business days have elapsed from such date,
Nur's representatives shall return to Meital's premises in order to
effect the delivery (hereinafter referred to as "the postponed
delivery"). If confirmation of receipt is not furnished by Nur's
representatives on the postponed delivery date, the validity of this
agreement shall lapse, without either party having any claim or plea
vis-a-vis the opposing party, and in such context the trustees shall
refund the royalties advance to Nur, together with the income
accruing thereon.
5. Meital's Employees and the Technology Agreements
5.1 Immediately after the determining date, Meital shall terminate the
employment of Meital's employees whom Nur wishes to employ in its
framework in connection with the Meital technology. Meital shall be
exclusively liable for making all the payments due to such employees
in respect of the period of their employment by Meital and in
respect of the termination of their employment by Meital.
5.2 Nur may conduct negotiations with each of Meital's employees in
respect of his employment with Nur, and enter into an agreement with
him for his employment by Nur. Meital and Kobi shall assist to the
best of their ability in the said negotiations and in the absorption
of Meital's employees by Nur. Without derogating from their
obligation to assist to the best of their ability in the absorption
of Meital's employees by Nur, neither Kobi nor Meital shall bear any
liability in the event that any of Meital's employees elects, for
his own considerations, not to be employed by Nur.
5.3 Commencing from the determining date, the parties shall act to the
best of their ability for the assignment of all or some of the
technology
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agreements, which in the parties' opinion shall be necessary for the
application of the Meital technology by Nur, as provided in clause 6
below.
5.4 Both Meital and Kobi hereby acknowledge that the employment of
Meital's employees by Nur, and the assignment of the technology
agreements, as mentioned in clause 5.3 above, are essential for the
absorption of the Meital technology by Nur and the successful
application thereof within the framework of the integrated product,
as provided in clause 6 below.
6. The Application of the Meital Technology by Nur
6.1 Nur hereby warrants that it intends acting to complete the
development of the Meital technology and to develop a product the
definitions whereof shall be characterised in due course and which
shall apply the Meital technology, including components of Meital's
machine insofar as they are found to be suitable, in combination
with Nur's hardware, software and/or mechanical systems (hereinafter
referred to as "the integrated product").
6.2 After completion of the integrated product's development, Nur
intends acting to promote, market and sell the integrated product,
both through its sales set-up and through others, and all as shall
be decided by it at such time.
6.3 In addition to the aforegoing, Nur shall examine the possibility of
integrating the Meital technology, in whole or in part, as part of a
process of upgrading Nur's existing digital printing systems to DOD
technology.
7. Consideration and Royalties
7.1 In consideration for the performance of all Meital's and Kobi's
obligations pursuant hereto, including the transfer of all the
rights in the Metail technology, effecting the delivery, assistance
in the absorption of Meital's employees by Nur, assignment of the
technology agreements, Kobi's and Meital's non-competition
undertakings, as provided below, and for Meital's and Kobi's
willingness to enter into this agreement instead of other business
opportunities, Nur shall pay Meital a one-time payment as provided
in clause 7.2 below (hereinafter referred to as "the consideration")
and royalties as provided in clauses 7.3 to 7.9 below (hereinafter
referred to as "the royalties"). VAT at its statutory rate on the
date of any payment shall be added to the consideration and royalty
payments specified in this clause 7. The parties shall apply to the
VAT authorities to transfer to Nur the VAT payment burden in respect
of the payments due to Meital pursuant hereto, in accordance with
section 20 of the Value Added Tax Law, 5735-1975.
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7.2 The consideration shall be in an amount of $800,000 (eight hundred
thousand dollars). The consideration shall be paid to Meital in two
instalments as follows:
(a) an amount of $400,000 (four hundred thousand dollars) shall be
paid to Meital on the determining date, and immediately upon
the receipt thereof it shall be used by Meital to repay the
principal loan and the additional loan, as provided in clause
13.1 below;
(b) the balance of the consideration, in an amount of $400,000
(four hundred thousand dollars), including an amount of
approx. $193,000 (one hundred and ninety three thousand
dollars) in respect of advances from customers (Omni, Abudi
and Xxxxxx), shall be paid to Meital by way of the assumption
of Meital's obligations by Nur, as provided in clause 7.11
below.
7.3 Meital shall be entitled to royalties from the sale of the
integrated product and/or any other system manufactured by Nur (or
pursuant to Nur's license, such as the OEM agreement) which includes
the Meital technology (hereinafter jointly referred to as "the
technology products"). It is agreed that for the purpose of
determining Meital's right to royalties, every system manufactured
by Nur which integrates the DOD technology using the transversal
method shall be deemed to include the Meital technology.
The royalties shall be paid to Meital from the consideration (net)
actually received by Nur from sales of the technology products
(hereinafter referred to as "Nur's income"), and such being in
accordance with the higher of:
(a) 10% (ten percent) of Nur's income; or
(b) an amount of $30,000 (thirty thousand dollars), from Nur's
income.
For the purpose of this clause 7.3, the consideration (net) actually
received by Nur means the consideration actually received less
payments to distributors and/or agents and less taxes deducted at
source which may not be set off against other tax obligations.
It is expressed that if Nur's income from one of the technology
products is received by it in payments, Meital's shall be entitled
to royalties at a rate of 10% (ten percent) of each amount received,
and upon receipt of the last payment for such product Meital shall
be entitled to supplementation of the
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royalties amount to $30,000 (thirty thousand dollars), if the
royalties amount received by it, including pursuant to the last
payment, is lower than such amount.
If Nur offers upgrade kits for Nur's existing printers which include
the Meital technology, or any other assembly that does not
constitute an independent product, Meital shall be entitled to
royalties from Nur's income from such kit or assembly at the rate
prescribed in sub-clause (a) above.
7.4 The royalties, as provided in clause 7.3 above, shall be paid to
Meital in respect of Nur's income in each calendar quarter, within
45 days of the end of such quarter, by a bank transfer to such bank
account as Meital directs Nur. Together with payment of the
royalties, Nur shall furnish Meital with confirmation of the amount
of Nur's income in such quarter. In addition, Meital shall be
entitled, pursuant to its demand, to receive confirmation from Nur's
auditor within 90 days of the end of each calendar year regarding
Nur's income in such calendar year.
7.5 On account of Meital's entitlement to the royalties, Nur shall pay
Meital an amount of $750,000 (seven hundred and fifty thousand
dollars) (hereinafter referred to as "the royalties advance"). The
royalties advance shall be paid to Meital on the determining date,
against the delivery being effected, as provided in clause 4.6
above. The royalties advance shall be attributed to Kobi's
entitlement to royalties as provided in clause 7.3 above.
7.6 If by the end of one year from the determining date (hereinafter
referred to as "the first year") Nur pays Meital royalties pursuant
to clause 7.3 above in a cumulative amount of less than $450,000
(four hundred and fifty thousand dollars), and such being in
addition to the royalties advance (that is to say, royalties in a
cumulative amount of $1,200,000) (hereinafter referred to as "the
minimum royalties for the first year"), Meital shall be entitled to
notify Nur, within 30 days of the end of such year, that it is
exercising its right to repurchase the Meital technology, in
accordance with the provisions of clause 8 below (hereinafter
referred to as "Meital's option"). In such a case, Meital shall be
entitled to exercise Meital's option unless within 30 days of
receiving Meital's notice as aforesaid Nur pays Meital an amount
equal to the difference between the royalties actually paid by it
pursuant to clause 7.3 above together with the royalties advance,
and the minimum royalties for the first year (hereinafter referred
to as "the royalties difference for the first year"). If Nur pays
Meital the amount of the royalties difference for the first year,
Meital shall not be entitled to exercise Meital's option in respect
of such year.
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If by the end of two years from the determining date (hereinafter
referred to as "the first two years") Nur pays Meital royalties
pursuant to clause 7.3 above in a cumulative amount of less than
$900,000 (nine hundred thousand), and such being in addition to the
amount of the royalties advance (that is to say, royalties in a
cumulative amount of $1,650,000) (hereinafter referred to as "the
minimum royalties for the second year"), Meital shall be entitled to
notify Nur, within 30 days of the end of such year, that it is
exercising Meital's option. In such a case, Meital shall be entitled
to exercise Meital's option unless within 30 days of receiving
Meital's notice as aforesaid Nur pays Meital an amount equal to the
difference between the royalties actually paid by it pursuant to
clause 7.3 above together with the royalties advance and the
royalties difference for the first year (if paid), and the minimum
royalties for the second year (hereinafter referred to as "the
royalties difference for the second year"). If Nur pays Meital the
royalties difference for the second year, Meital shall not be
entitled to exercise Meital's option in respect of such year.
The minimum royalties for the first year and the minimum royalties
for the second year shall hereinafter jointly be referred to as "the
minimum royalties").
For example, if the amount of the royalties paid to Meital in the
first year pursuant to clause 7.3 above comes to $200,000 the amount
of the royalties difference for the first year shall be $250,000. If
thereafter the amount of the royalties paid to Meital in the first
two years pursuant to clause 7.3 above comes to $500,000, the amount
of the royalties difference for the second year shall be $150,000.
7.7 For the purposes of this clause 7.7, "the acceptance condition"
shall be deemed receipt by Nur of confirmations of installation
(COI) in respect of ten (10) of the technology products. In such
regard, confirmation of installation shall be deemed to have been
received in respect of a technology product even if confirmation as
aforesaid has not actually been received, where the product has been
installed at the customer and within two months of its installation
it is not returned by the customer, or taken back by Nur.
Furthermore, for the purposes of this clause 7.7, "the acceptance
date" shall be deemed the date on which the acceptance condition is
fulfilled.
If by the end of one year from the acceptance date (hereinafter
referred to as "the success year"), Nur pays Meital royalties
pursuant to clause 7.3 above, in a cumulative amount that is less
than $425,000 (four hundred and twenty five thousand dollars), and
such being in addition to the
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royalties advance and the minimum royalties to which it was entitled
until such date (that is to say, on the assumption that the success
year ended prior to the end of the second year, as defined in clause
7.6 above, royalties in a cumulative amount of less than one million
six hundred and twenty five thousand dollars) (hereinafter referred
to as "the minimum royalties for the success year"), Meital shall be
entitled to notify Nur, within 30 days of the end of such year, that
it is exercising Meital's option. In such a case, Meital shall be
entitled to exercise Meital's option unless within 30 days of
receiving Meital's notice as aforesaid Nur pays Meital an amount
equal to the difference between the royalties actually paid by it
pursuant to clause 7.3 above together with the royalties advance and
the royalties difference for the first year, if paid, and the
minimum royalties for the success year (hereinafter referred to as
"the royalties difference for the success year"). If Nur pays Meital
the royalties difference for the success year, Meital shall not be
entitled to exercise Meital's option in respect of such year. It is
expressed that if the success year falls prior to the end of the
second year, royalties paid in the success year pursuant to clause
7.3 above, and included for the purpose of determining the royalties
difference for the success year, shall not be deemed to have been
paid to Meital for the purpose of determining the royalties
difference for the second year, as provided in clause 7.6 above.
If by the end of a period of two years from the acceptance date
(hereinafter referred to as "the two success years"), Nur pays
Meital royalties pursuant to clause 7.3 above, in a cumulative
amount that is less than $850,000 (eight hundred and fifty thousand
dollars), and such being in addition to the royalties advance and
the minimum royalties (that is to say, royalties in a cumulative
amount of less than two and a half million dollars) (hereinafter
referred to as "the minimum royalties for the two success years"),
Meital shall be entitled to notify Nur, within 30 days of the end of
the two success years, that it is exercising Meital's option. In
such a case, Meital shall be entitled to exercise Meital's option
unless within 30 days of receiving Meital's notice as aforesaid Nur
pays Meital an amount equal to the difference between the royalties
actually paid by it pursuant to clause 7.3 above together with the
royalties advance and the royalties difference for the first year
and the royalties difference for the second year, if paid, and the
minimum royalties for the two success years (hereinafter referred to
as "the royalties difference for the two success years"). If Nur
pays Meital the royalties difference for the two success years,
Meital shall no longer be entitled to exercise Meital's option.
The minimum royalties for the success year and the minimum royalties
for the two success years shall hereinafter jointly be referred to
as "the success royalties".
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For example, on the assumption that the success year ended prior to
the end of the second year, as defined in clause 7.6 above, and that
the royalties that shall be paid to Meital in the success year
pursuant to clause 7.3 above come to one hundred and fifty thousand
dollars (not including royalties paid and taken into account for the
purpose of determining the royalties difference for the first year),
the royalties difference for the success year shall be two hundred
and seventy five thousand dollars. If subsequently the royalties
that shall be paid to Meital in the two success years pursuant to
clause 7.3 above (not including royalties paid and taken into
account for the purpose of determining the royalties difference for
the first year and/or the royalties difference for the second year)
come to five hundred thousand dollars, the royalties difference for
the two success years shall be seventy five thousand dollars.
7.8 For the avoidance of doubt, it is hereby expressed that the
provisions of clauses 7.6 and 7.7 above, with regard to the minimum
royalties and the success royalties, shall only apply where the
actual royalties payments to Meital, pursuant to clause 7.3 above,
in respect of the relevant periods are lower than the amounts to
which Meital shall be entitled in respect of such periods pursuant
to clauses 7.6 or 7.7 above.
7.9 Meital's entitlement to receive the royalties shall lapse upon the
payment of royalties, including the royalties advance, royalties
paid pursuant to cause 7.3 and payments of royalties differences, if
paid, pursuant to clauses 7.6 or 7.7 above, in a cumulative amount
of $2,500,000 (two million five hundred thousand dollars)
(hereinafter referred to as "the royalties ceiling"). That is to
say, after the payment of royalties in a cumulative amount equal to
the royalties ceiling, Meital shall no longer be entitled to any
payment in respect of its right to royalties as provided in this
clause 7. Furthermore, Meital's entitlement to receive the royalties
shall lapse in the event that Meital ceases to provide Nur, through
Kobi, with the development services pursuant to the development
agreement on Meital's and/or Kobi's initiative, and provided that
cessation of the services' provision as aforesaid does not derive
from a fundamental breach of the development agreement by Nur and/or
from force majeure.
7.10 In any case in which Nur is late in actually making any payment in
accordance with the provisions of this clause 7, such payment shall
bear, commencing from the third day of delay and without derogating
from the provisions of clause 10 below, interest at the rate of
LIBOR + 2.5%.
7.11 From the delivery date, Nur assumes all Meital's obligations, as
defined in clause 2.1(g) above, and it shall be exclusively liable
for the payment or
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performance of all Meital's obligations. Subject to the provisions
of clause 8.2 below, Nur undertakes to indemnify Meital and/or Kobi
in respect of any expenses which they actually bear which are
included in the framework of Meital's obligations, within seven days
of the date on which Meital and/or Kobi bear the expense as
aforesaid, but not prior to the date indicated in respect of such
obligation in appendix 2.1(g).
8. Meital's Option
8.1 As provided in clauses 7.6 and 7.7 above, Meital has an option
("Meital's option"), pursuant whereto it shall be entitled to
repurchase the rights in the Meital technology. In the event that
Nur does not comply with the minimum royalties payments in respect
of the first year or the first two years, or the success royalties
in respect of the success year or the two success years.
8.2 In the conditions are fulfilled for exercise of Meital's option and
Meital elects to exercise Meital's option (subject to Nur's right to
pay the royalties differences as provided in the said clauses), the
following provisions shall apply:
(a) If by the end of the 30 day period Nur does not pay Meital the
royalties difference in respect of such year, on such date Nur
shall sell to Meital, and Meital shall purchase from Nur,
title to the Meital technology, including the rights to use
the intellectual property rights purchased by Nur as part of
the Meital technology or which arose in connection with the
Meital technology after the purchase thereof by Nur, and in
such context Meital shall be entitled to act qua owner in
respect of the Meital technology, in its absolute discretion,
but subject to Nur's rights which have been expressly
determined in this agreement.
(b) The development agreement shall come to an end and the
non-competition provisions in this agreement and in the
service agreement, as in the employment agreements of any of
Meital's employees who elect to leave their employment with
Nur and return to their employment with Meital, shall be
cancelled insofar as they relate to the development,
manufacture, marketing and sale of systems or technologies for
the wide format digital printing applying the DOD technology
using the transversal method.
(c) Meital shall be entitled to take possession, including by way
of exercising the charge to Meital, as defined in clause 10
below, of all
15
the documents deposited with the trustees, as provided in the
said clause.
(d) For a period of two years from the date on which Meital's
option is exercised, Nur may not engage in any application
(including research, development or manufacture) of systems or
technologies for wide format digital printing applying the DOD
technology using the transversal method in Israel or abroad,
directly or indirectly, for consideration or otherwise. Nur
shall assign its employees' non-competition undertaking to
Meital, insofar as it relates to the Meital technology, and
shall act to the best of its ability to enforce the said
non-competition undertaking on its employees.
(e) Nur shall not be liable for any further payment to Meital
pursuant hereto.
8.3 In consideration for the purchase of all the rights in the Meital
technology by Meital, in the event that Meital's option is
exercised, Meital shall remit to Nur an amount equal to all the
royalties paid by Nur to Meital pursuant hereto, including advances
on account of royalties, and a sum of $10 (ten dollars) shall be
paid by Meital to Nur upon the technology's return to Meital's
ownership, whilst the balance of the payments refunds shall be paid
to Nur:
(a) If Meital itself engages in the manufacture of wide format
digital printer systems applying the Meital technology (for
such purpose any such system which applies the DOD technology
using the transversal method shall be deemed to apply the
Meital technology) - by way of royalties at the rates and
times prescribed in clauses 7.3 and 7.4 above;
(b) If Meital and/or Kobi wish to execute any disposition
(transfer, sale, assignment and the like) with the Meital
technology, in whole or in part, to any third party (for such
purpose any disposition of know-how or systems connected with
the application of the DOD technology using the transversal
method shall be deemed a disposition of the Meital technology)
- immediately and as a condition for the disposition's
execution.
8.4 In addition to the aforegoing, in the event that this agreement is
terminated in consequence of a judicial order, and Meital and/or
Kobi wish to make any commercial use of the Meital technology and/or
to execute any disposition with the Meital technology, in whole or
in part, Meital shall be liable to refund to Nur all the amounts
paid by Nur to Meital pursuant
16
hereto, including the consideration and the royalties or advances on
account of royalties, together with interest at LIBOR + 2.5% on such
terms and conditions and at such times as provided in sub-clauses
8.3(a) and (b) above. For the avoidance of doubt, it is hereby
expressed that on the occurrence of an event specified in clause
8.4, and if Meital does not make use of the technologies, it shall
not be under any obligation to refund any amount.
8.5 To secure the performance of Meital's obligation to effect payments
to Nur as provided in clauses 8.3 or 8.4 above, immediately after
the determining date Meital shall execute a first-ranking fixed
charge in Nur's favour over all its rights in connection with the
Meital technology, including its future rights, but save for its
rights to receive payments from Nur pursuant hereto (hereinafter
referred to as "the charge to Nur"). At the earliest possible
opportunity and no later than 21 days from the determining date, the
trustees shall act to register the charge to Nur with the Registrar
of Companies.
The charge to Nur shall be removed on the later between: (1) the
deadline for exercising Meital's option or (2) three years from the
date of this agreement. To secure the removal of the charge to Nur,
on the execution hereof Nur shall sign a charge discharge instrument
in which it agrees to the cancellation of the charge to Nur. The
discharge instrument shall be deposited with the trustees and
delivered by them to Meital on the later of three years from the
date of this agreement, or upon receipt of documents proving that
the deadline for exercising Meital's option has passed.
Nur may take any action and adopt any measures to realise the charge
to Nur in each of the following cases:
(a) Meital does not pay any of the payments refunds for which it
is liable pursuant hereto in full and on time, and such being
within at least 30 (thirty) days of receiving written notice
from Nur;
(b) a provisional or permanent liquidator is appointed for Meital
or a receiver is appointed for all or most of its assets, and
the said appointment is not cancelled within 60 (sixty) days.
9. Idanit's Claims
9.1 From the date of the agreement and thenceforth, and subject to the
delivery being effected, Nur assumes the financing of the existing
or future legal proceedings in connection with ldanit's claims, and
in such context the proceedings involved in the appeal filed by
Meital with the National
00
Xxxxxx Xxxxx any legal proceedings commenced by Idanit in connection
with Meital's claims, against Meital, Kobi, any of Meital's
employees and/or Xx Xxxx Xxxxxxx (hereinafter jointly referred to as
"the indemnity entitlees"). Furthermore, and in addition to the
provisions of clause 2.2 above, if within the scope of the
proceedings as aforesaid any of the indemnity entitlees are ordered
by a judicial instance to make any payment in respect of Idanit's
claims, Nur shall indemnify them for the full amount of the payment
within seven days of the date prescribed in the judicial decision
for payment as aforesaid.
9.2 Nur's financing and indemnity obligations as provided in clause 9.1
above are conditional upon the fulfilment of the following
conditions:
(a) Within seven days of receiving any demand or claim from Idanit
by any of the indemnity entitlees, the party receiving the
claim or demand sends written notice thereof to Nur.
(b) Nur shall have the right to elect the legal representation for
these proceeds and to exclusively instruct the attorneys who
are elected as aforesaid.
(c) The indemnity entitlees shall assist to the best of their
ability in defending Idanit claims (not including financial
assistance).
(d) The indemnity entitlees shall refrain from sending any notice
to Idanit or from conducting negotiations or reaching a
settlement with Idanit, without Nur's prior written consent.
It is expressed that a breach of any of the conditions specified
above in this clause 9.2 by any of the indemnity entitlees shall not
result in the cancellation of Nur's indemnity obligation pursuant
hereto vis-a-vis the remaining indemnity entitlees (however, for
such purpose Kobi and Meital shall be deemed to be one indemnity
entitlee), provided that Meital and Kobi have notified the remaining
indemnity entitlees of the provisions of clause 9.1 and have acted
reasonably in order to secure that such employees comply with the
provisions of this clause.
10. Charge to Secure Nur's Obligations
10.1 To secure all Nur's obligations pursuant hereto, and in such context
its obligation to pay the consideration and the royalties, subject
to the delivery being effected, Nur shall execute a first-ranking
fixed charge in favour of Meital over its rights in the Meital
technology (hereinafter referred to as "the charge to Meital").
18
10.2 To secure the charge, no later than three business days from the
delivery date, Nur shall deposit copies of the technology
documentation with the trustees which shall actually be kept at the
offices of Xxxxxxxx, Barnea & Co., and once every three months Nur
shall update the documentation deposited with the trustees such that
it shall include full documentation in respect of the Meital
technology (hereinafter jointly referred to as "the documents").
10.3 Without derogating from the provisions of clause 10.2 above, at the
earliest possible opportunity and no later than 21 days from the
determining date, the trustees shall act to register the charge to
Meital with the Registrar of Companies.
10.4 The trustees shall undertake, by signing at the foot hereof, that
they will keep the documents in favour of Meital until receipt of
written notice from Meital or Nur, together with documents to prove
its notice, that:
(a) the consideration and the royalties have been fully paid to
Meital, subject to the provisions of clause 10.7 below;
(b) one of the conditions specified in clause 10.5 below have been
fulfilled.
If the trustees receive notice as provided in clause 10.4(a) above,
they shall transfer the documents to Nur within three business days.
If the trustees receive notice as provided in clause 10.4(b) above,
they shall transfer the documents to Meital within three business
days. Once the trustees have transferred the documents to either of
the parties, their trusteeship pursuant hereto shall come to an end.
On the execution hereof, Meital shall sign a discharge instrument in
respect of the charge to Meital, in which it agrees to the
cancellation of the charge to Meital. The discharge instrument shall
be deposited with the trustees and shall be delivered by them to Nur
only in the event that the documents are transferred to Nur, in
accordance with the above provisions of this clause 10.4.
10.5 Meital may take any action and adopt any measure to realise the
charge in each of the following cases:
(a) Nur does not make any payment in respect of the consideration
or royalties for which it is liable pursuant hereto in full
and on time,
19
and such being within at least 30 (thirty) days of receiving
written demand from Meital;
(b) a provisional or permanent liquidator is appointed for Meital
or a receiver is appointed for all or most of its assets, and
the said appointment is not cancelled within 60 (sixty) days.
10.6 The taking of any action by the trustees in accordance with the
provisions of clauses 4.6 and/or 8.5 and/or 10.4 above shall require
the consent of one of Meital's trustees and one of Nur's trustees.
In any event, none of the trustees shall bear liability vis-a-vis
the parties in respect of this agreement, provided that he acts in
good faith and without malice.
10.7 If on the date of granting notice to the trustees, as provided in
clause 10.4(a) above, any legal proceedings are pending in respect
of Idanit's claims, or if the said notice is sent prior to the end
of three years from the date of this agreement and no legal
proceedings are pending as aforesaid, as a condition for the removal
of the charge to Meital Nur shall be liable to furnish Meital with
alternative collateral, to Meital's satisfaction, in order to secure
Nur's indemnity obligation as provided in clause 9 above, in respect
of such legal proceedings, or, if the notice is given prior to the
end of three years, to secure the indemnity, in respect of legal
proceedings which might be filed, and the amount which must be
secured shall be determined in a legal opinion which shall be
prepared by an attorney to be determined by the parties with
consent.
11. Non-Competition
11.1 In consideration for Nur's obligations pursuant hereto, Meital and
Kobi hereby undertake that commencing from the date of the agreement
it or he shall cease any activity in the field of wide format
digital printing and/or any other application of the DOD technology
in Israel or abroad, directly or indirectly, for consideration or
otherwise, as employee, consultant, partner or shareholder. Meital
shall assign to Nur the non-competition undertaking of Meital's
employees as shall be from time to time, insofar as it relates to
activity in the wide format digital printing field and/or any other
application of the DOD technology, and it shall act to the best of
its ability to enforce the said non-competition undertaking on its
employees.
11.2 Meital's obligations pursuant to clause 11.1 above shall remain
valid for an unlimited period.
11.3 Kobi's obligations pursuant to 11.1 above shall remain valid until
the end of two years from the later between:
20
(a) the date of the agreement;
(b) the termination of the development agreement, for any
reason;
(c) payment of the last royalties by Nur to Meital.
12. Transfer of Rights and Obligations
12.1 Nur may assign all its rights and obligations pursuant hereto to a
corporation under its control, provided that such corporation
assumes vis-a-vis Meital and Kobi all Nur's obligations to them
pursuant hereto, subject that Nur shall be a guarantor for the
performance of such corporation's obligations pursuant hereto.
Furthermore, in the case of a transfer of all or most of Nur's
activity in the wide format digital printing field to another
corporation, it shall also be entitled, within the scope of the said
transfer, to transfer its rights and obligations pursuant hereto,
provided that such corporation assumes vis-a-vis Meital and Kobi all
Nur's obligations to them pursuant hereto and that Nur guarantees
the performance of such corporation's obligations pursuant hereto,
12.2 Meital shall be entitled to assign its rights to payments pursuant
hereto, subject to the terms and conditions hereof, to any third
party. Meital shall not be entitled to assign its obligations
pursuant hereto to any third party without Nur's prior written
consent.
13. The Previous Agreement
13.1 Together with and against payment of the first part of the
consideration, as provided in clause 7.2 above, Meital shall pay
Nur a sum of $400,000 (four hundred thousand dollars) in full and
final repayment of the loan of $300,000 provided by Nur to Meital
pursuant to the general terms sheet dated 11th December 1997 which
was drawn up between them (hereinafter referred to as "the term
sheet"), and of the loan of $100,000 provided by Nur to Meital
pursuant to the addendum to the term sheet dated 9th June 1998
(hereinafter referred to as "the addendum"). Nur may set off the
amount of the loans' repayment as aforesaid from payment of the
consideration. Upon repayment of the loans as aforesaid they shall
be deemed as fully repaid, the personal guarantee of Kobi pursuant
to the terms sheet and the addendum (hereinafter jointly referred to
as "the previous agreements") shall expire, the existing charge
shall be removed, and subject to the provisions of clause 13.2 below
the validity of all the previous agreements shall come to an and.
21
13.2 If at any time prior to the end of three years from the date of the
agreement Nur becomes entitled to the payments refunds, as provided
in clause 8.4 above, then, without derogating from any right
available to the parties in such a case, Nur shall be entitled, at
any time within three months of the date on which it becomes
entitled to the payments refunds, to reduce the amount of the
payments refunds by $300,000 (together with the relevant interest)
and to convert the said amount to 26% of Meital's shares, in
accordance with the provisions of appendix 13.2 hereto.
14. Miscellaneous
14.1 Any modification and/or cancellation of any of the provisions
hereof may only be effected in a written document, which shall be
signed by all the parties.
14.2 In the event that any of the parties does not exercise any of the
rights conferred upon him or it pursuant hereto or at law, such
shall not be deemed a waiver on its or his part of such right, and
he or it may later exercise such rights. A plea of laches or waiver
shall not be available to the breaching party.
14.3 The laws of the State of Israel shall apply hereto, and sole
jurisdiction in respect hereof shall rest with the competent courts
in the District of Tel Aviv.
14.4 The terms and conditions hereof fully embrace everything provided
and agreed between the parties in respect of the Meital technology,
and they prevail over any contract, agreement, representation or
undertaking in such matter that preceded the execution hereof made
in writing or orally, unless otherwise expressly prescribed in this
agreement.
14.5 Any notice sent by registered mail by one of the parties to another
pursuant to the addresses appearing in the recitals hereto shall be
deemed to have been received by such party after 72 hours have
elapsed from the time of its dispatch as aforesaid, if sent by fax
- within 24 hours of its transmission, and if sent by hand - upon
the delivery thereof.
22
AS WITNESS THE HANDS OF THE PARTIES:
___________________ ________________
"Meital" Electronic Technology Ltd Nur Macroprinters Ltd
__________________
Xxxxxx Xxxxxxxxx
We hereby agree to serve as trustees in accordance with the provisions of this
agreement:
Meital's trustees Nur's trustees
_______________________ _______________________
Xxxxxx Xxxx, Adv. Xxxxxxx Xxxxxx, Adv.
_______________________ _______________________
Xxxxx Xxxxxxx, Adv. Xxxxxx Xxxxxxxx, Adv.
23
LIST OF APPENDICES
Appendix "A" Specifications of the Meital technology
Appendix 2.1 (d) Meital's employees
Appendix 2.1 (e) Sub-contractors (included in appendix 2.1(g))
Appendix 2.1 (f) The technology agreements
Appendix 2.1 (g) Meital's obligations
Appendix 4.3 The technology list
Appendix 4.4 Development and consultancy agreement
Appendix 13.2 Loan conversion
24
APPENDIX A
----------
Specification of Meital Technology
[Meital letterhead]
DigiSWIFT
Meital introduces new standards to Super-Wide-Format digital imaging. Sturdy and
reliable equipment, top quality imaging, outstanding print production speed,
substrate and application versatility and outdoor durability at unmatched
cost-performance ratios:
o 4 color imaging - simultaneous application of CMYK inks
o Mass production capacity - 90 m(2) per hour - standard mode
o 3 imaging modes selections: (arrow) Standard mode
(arrow) Enhanced mode
(arrow) Double density mode (back-lit
applications)
o High imaging quality - 300 dpi imaging resolution
o Roll-to-roll imaging - unit widths selections:
digiSWIFT 1.8 - 183 cm width (6')
digiSWIFT 3.2 - 320 cm width (10'6")
o Solvent based pigmented ink (arrow) exceptional adhesion to substrates
(arrow) 3-5 years outdoor durability -
without lamination
(arrow) extra-vibrant pigments
The digiSWIFT winning combination of features is accompanied with numerous
production benefits to enhance users competitive edge:
o The unit robust construction combined with a highly accurate and powerful
media delivery system insure product reliability, longevity and industrial
performance.
o Meital's specialty inks are developed for imaging reliability, consistency
and vibrancy. Superb adhesion combined with exceptional pigment selection
enable direct imaging on to the widest selection of substrates available
on the market in addition to 3-5 years outdoor durable and UV resistancy
product without lamination.
o Highly effective consumable cost performance ration enable users to compete
effectively.
o Sharp text, photo-realistic images and size versatility provide users the
option to produce a wide range of applications for both remote and close
proximity viewing distances: POP displays, posters, signs, street
advertisements, backlit signs, bus-shelters, fleet graphics, billboards,
banners, flags, etc.
o Semi-automatic color correction system for users substrate qualification
needs enables achievement of optimal results on a wide range of substrates
selection and use of user's choice of substrates.
o Integral on-line drying ensure image drying and solvent evaporation prior
to media roll take-up.
o A parallel media cutter is optional.
o Flexible data processing and multiple roll feed option allow imaging of
multiple images simultaneously, on the full width of the media or onto a
number of parallel loaded rolls.
Meital Technologies Ltd. CONFIDENTIAL Subject to change
PRELIMINARY without notice
o Piezo-Electric inkjet technology provide users with reliable imaging and
consistent coloring. The modular-inkjet head assembly is designed for
simple approach and is supplemented by an automatic self-maintenance
station for long and reliable production and shutdown protection.
o An automatic head calibration mechanism has developed for efficient
maintenance.
o Open architecture and Fast Ethernet network connectivity allows users
efficient work flow and utilization of existing software and hardware
packages that are in common use in the graphics industry.
--------------------------------------------------------------------------------
Specifications
================================================================================
digiSWIFT 1.8
--------------------------------------------------------------------------------
Max substrate width 183 cm 72"
--------------------------------------------------------------------------------
digiSWIFT 3.2
--------------------------------------------------------------------------------
Max substrate width 320 cm 126"
================================================================================
Printing technology Drop-on-demand Multiple Piezo Electric inkjet
assembly
--------------------------------------------------------------------------------
Resolution 300 dpi
--------------------------------------------------------------------------------
Drop shape consistent, no satellite formations
--------------------------------------------------------------------------------
Maximum substrate length limited by roll length
--------------------------------------------------------------------------------
Roll diameter 50 cm 20"
--------------------------------------------------------------------------------
Ink o solvent based pigmented (CMYK)
o 5 liter ink containers
--------------------------------------------------------------------------------
Printing throughput 90 sq. m/hour 970 sq. ft/hour
--------------------------------------------------------------------------------
Printed media paper, vinyl, banner, PVC, textile, panaflex,
canvas, mesh
--------------------------------------------------------------------------------
File acceptance TIFF (CMYK), CT, BMP, JPG, PostScript
Xxxxx 0, XXX and other common file formats
--------------------------------------------------------------------------------
Interface Open Architecture, Fast Ethernet,
--------------------------------------------------------------------------------
Operating environment: temperature: humidity:
20 [degrees]C - 30 [degrees]C 30%-60%
68 [degrees]F - 86 [degrees]F
--------------------------------------------------------------------------------
Dimensions 1.8 - 160cm H x 350cm W x 140cm D
63" H x 138" W x 55" D
3.2 - 160cm H x 500cm W x 140cm D
63" H x 199" W x 55" D
--------------------------------------------------------------------------------
Meital Technologies Ltd. CONFIDENTIAL Subject to change
PRELIMINARY without notice
APPENDIX 2.1(f)
---------------
Technology Agreements
[XXXXX letterhead]
FAX TRANSMISSION
================
For the Attention of: Company: Department:
Xx. Xxxx Xxxxxxxxx MEITAL TECHNOLOGIES LTD.
Managing Director
From: Date: Fax Number:
Xxxx Xxxxxx 25th November, 1997 00972 8 9366134
Reference: Time: Total Pages including this one:
ap\fax\meital\jd 2
Dear Kobi,
The following is our suggestion for a document of understanding between our two
companies. It is not a supply contract but simply lays out the way in which we
do business together.
DOCUMENT OF UNDERSTANDING BETWEEN
MEITAL TECHNOLOGIES LTD., ISRAEL, AND XXXXX LTD., ENGLAND
The purpose of this document is to formalise the terms of co-operation between
Meital Technologies Ltd. (the Buyer) and Xxxxx Ltd. (the Supplier) over the
supply of inks for wide format and grand format graphics ink jet printers.
1. The Supplier manufactures inks to strict quality control procedures
which are then purchased by the Buyer for resale to the Buyer's
customers and distributors.
2. The technical specification of the inks is to be mutually agreed
between the Supplier and the Buyer. This specification is subject to
change but only with the written consent of the Buyer and the Supplier.
3. All formulations and intellectual rights remain the property of the
Supplier.
4. The inks covered by this document are known as MEITAL P128 PIGMENTED
INKS (CMYK) for use on Meital Wide and Grand Format Ink Jet Printers.
5. The Supplier agrees to not knowingly supply this ink directly or
indirectly to the Buyer's customers and distributors without the
written consent of the Buyer.
6. Other inks may be purchased in the future by the Buyer for use on
similar printers and, with written mutual agreement in each case, these
inks will be supplied under the broad terms of supply of this document.
7. The Supplier will supply ink packages in suitable bottles which are
labelled in accordance with the Buyer's instructions. The Supplier will
also provide packaging and documentation in accordance with
International Safety & Transport Standards (UN approved).
8. The price of MEITAL P128 PIGMENTED INKS is currently $27.10 per litre
supplied in 5 litre UN approved bottles ex-works, Stockport, England.
Transport and Insurance is the responsibility of the Buyer. However,
the supplier is happy to arrange this on the Buyer's behalf and will
invoice charges at cost.
9. The price of ink will normally be reviewed on a twelve monthly basis
starting from the date of this document. However, the Supplier reserves
the right to increase or decrease prices if there is a + or - 10%
increase in raw material costs. A price change cannot be implemented
without 60 days written notice to the Buyer.
10. Payment to the Supplier will be made 30 days from the date of the
Supplier's invoice.
11. The Supplier agrees to replace or credit any product that does not meet
the agreed technical specification.
12. Shipment will normally be 5-10 working days from receipt of the Buyer's
purchase order. Minimum order quantity will be 50 litres.
13. Within six months of the date of this document, the Supplier will also
be able to supply the same ink from the Supplier's site in Chicago,
USA, under the same terms of supply.
14. This document of understanding will normally be reviewed on a yearly
basis.
15. Both the Supplier and the Buyer are allowed to cancel this document at
any time with three months notice in writing.
Please let me know your comments on the above. If you are happy with this then I
will arrange for two signed copies to be sent to you for signing by yourselves.
Kind regards,
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
PRINTHEAD
---------
PURCHASE AGREEMENT
------------------
This agreement (the "Agreement"), dated 29 October 1997 (the "Effective
Date"), among Meital Technologies, Ltd. a Israel company ("Purchaser"), and
Modular Ink Technology i Stockholm AB, Inc., a Swedish corporation ("MIT").
A. MIT produces Printheads (as hereafter defined);
B. Purchaser has developed, or is developing a printing application
into which it wishes to incorporate the Printhead; and
C. MIT desires to sell the Printheads to Purchaser and Purchaser
desires to purchase the Printheads from MIT;
NOW, THEREFORE, the parties hereto agree as follows:
Article I
Definitions
1.1. Definitions: As used herein, the following terms shall have the
following meanings:
Ink: means any material suitable to be transferred by a Printhead on to paper or
other material to produce a visual image.
Printhead: means an inkjet printhead meeting the specifications in Annex 1.
Article II
Product Purchase
2.1. Purchase Commitment. Purchaser agrees to purchase the Printheads, at
the prices set forth on Annex II attached hereto.
2.2. Delivery, Payment.
2.2.1. All Printheads purchased by Purchaser will be delivered Ex Works
(INCOTERMS 1990) place of manufacture.
2.2.2. All deliveries of the Printheads will be accompanied by an invoice
issued by MIT which will state the amount owed by Purchaser (including all
sales, value-added or other taxes) in local currency of the point of origin of
the Printheads. Payment will be due within 30 days of receipt of such invoice.
Amounts outstanding after such 30 days period shall bear interest at the lower
of 10% per annum and the maximum legal rate.
2.3. Warranties and Remedies.
2.3.1. MIT warrants that the Products will be free of defects in materials
and workmanship on the date of shipment by MIT. MIT's warranty obligations is
limited, at MIT's option, to repair and replacement of defective parts and
materials or refund of the purchase price. If MIT finds that a Product is
defective, it will reimburse Purchaser or Purchaser's customer for the cost of
shipping the Product to MIT. Except for the foregoing, MIT shall have no
liability whatsoever for any warranty, whether express or implied, made by
Purchaser to any of its customers
2
2.3.2. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH IN THIS SECTION 2.3. THERE
ARE NO WARRANTIES EXPRESS OR IMPLIED WITH RESPECT TO THE PRODUCTS, INCLUDING,
BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
2.3.3. MIT's liability for damages and costs under this Agreement and for the
sale of any Products shall not under any circumstances exceed the aggregate
amounts paid to MIT for the Product. MIT shall not be liable to Purchaser or
any other person for any incidental, consequential or punitive damages or for
any compensation for lost profits arising out of or in connection with this
Agreement or the sale of Products. If Purchaser's use or sale of any Product or
any part hereof be enjoined, or in the event that MIT desires to minimize any
liability it may have hereunder, MIT may, at its option, either (a) substitute
equivalent non-infringing Products for the infringing item, (b) modify the
infringing item so that it no longer infringes but remains equivalent, or (c)
obtain for Purchaser the right to continue using such item.
Article III
Patents and Licenses
3.1. Inventions and Discoveries. All patents for inventions or discoveries
used or embodied in the Printhead, or for any method of manufacturing the
Printhead, conceived or made heretofore or during the term of this Agreement,
shall be assigned to and owned by MIT.
Article IV
Term and Termination
4.1. Term. Unless earlier terminated in accordance with Section 4.2., this
Agreement shall terminate Three (_3_) years from the date first set forth above.
Payment in full for all Printheads, described in Annex II shall be due and
payable upon termination of this agreement if payment has not previously been
received by MIT.
4.2. Termination.
4.2.1. In the event of a material breach of this Agreement by either MIT or
Purchaser not cured within forty-five (45) days following written notice thereof
given by the party not in default to the party in default, then, and in addition
to all other rights and remedies a party may have at law or in equity the party
not in default may at its option terminate this Agreement and such termination
shall become effective forty-five (45) days following the date of such notice;
provided, however, that if such default involves a technical problem with the
Printhead, then MIT shall have ninety (90) days from the receipt of written
notice to cure the default before this Agreement may be terminated and such
termination will be effective forty-five (45) days after the notice.
4.2.2. MIT or Purchaser shall have the right to terminate this Agreement by
written notice of termination to the other, effective upon receipt of such
notice by the other, in the event of any one of the following: (a) liquidation
of the other, (b) insolvency or bankruptcy of the other, whether voluntary or
involuntary, (c) failure of a party to satisfy any judgment against it.
4.2.3. Termination of this Agreement for any cause whatsoever shall not
relieve Purchaser of the obligation to pay MIT any amount then owed by Purchaser
to MIT.
3
Article V
Miscellaneous
5.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Sweden (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).
5.2. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto; provided, however, that this Agreement may not be assigned by
any party without the prior written consent of the others, which consent will
not be unreasonably withheld, except for assignment in the event of an
acquisition or purchase of substantially all of the assets of a party.
5.3. Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent possible.
5.4. Entire Agreement. This Agreement, including the Annexes hereto
constitute the entire Agreement by the parties relating to the subject matter
herein and supersedes all other prior and contemporaneous Agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, with respect to the subject matter hereof.
5.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
5.6. Notices. Any notice or other communication required or permitted under
this Agreement shall be in writing and shall be deemed sufficiently given when
delivered in person, or transmitted by telegram or telecopier (confirmed by
mail) addressed as follows:
if to MIT, at: 000 Xxxxxxx Xxxxx
P.O. Box 3000
Franklin, Tn. 37064
Attn: Vice President-MIT
if to Purchaser, at: 0 Xxxxxxx Xx.
Xxxxx 000
Xxxxx Science Park
Rehovot 00000
XXXXXX
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
5.7. No Joint Venture, etc. The parties hereto are independent contractors
and this Agreement does not constitute the parties having entered into a joint
venture nor shall it constitute any party the agent or legal representative of
the other party for any purposes whatsoever.
5.8. Waiver, Modification. The waiver by party hereto of a breach on any
provision of this Agreement shall not operate as or be construed as a waiver of
any preceeding or succeeding breach and no failure by either party to exercise
any right or privilege thereunder shall be deemed a waiver of such party's
rights or privileges thereunder or shall be deemed a waiver of such party's
rights to exercise the same at any subsequent time or times thereunder. The
terms and conditions contained herein can only be modified, amended, revised or
supplemented by a written agreement signed by both parties. The terms of this
Agreement shall not be varied by the terms of any purchase order form used by
Purchaser.
3
5.9 Force Majeure. Except for the payment of monies owed, no party shall
be responsible or liable to the others for, nor shall this Agreement be
terminated as a result of, any delay or failure to perform any of its
obligations thereunder, if such delay or failure results from circumstances
beyond the control of such party, including but not limited to requisition by
any government authority or any other governmental order or regulation,
earthquake, failure of public utilities or common carriers, fire, flood,
explosion, acts of God, epidemics, strikes, lockouts, riots or other civil
commotion, wars or enemy action.
5.10. Legal Expenses. The prevailing party in any legal action brought by
one party against the other and arising out of this agreement shall be entitled,
in addition to any other rights and remedies it may have, to reimbursement for
its expenses, including court costs and reasonable attorney's fees.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day first above written.
MIT
By
-------------------------------------
Name:
Title:
PURCHASER:
By /s/ Xxxxxxxxx Xxxx
-------------------------------------
Name:
Title:
ANNEX I
---------------------------------------------------------------------------------------------------------------
P 64 / 200 dpi P 128 / 200 dpi P 64/360 dpi P 128/360 dpi
---------------------------------------------------------------------------------------------------------------
Technology Piezo Piezo Piezo Piezo
---------------------------------------------------------------------------------------------------------------
Channels 64 128 64 128
---------------------------------------------------------------------------------------------------------------
Resolution 200 dpi 200 dpi 360 dpi 360 dpi
---------------------------------------------------------------------------------------------------------------
Firing frequency 4.25 kHz 4.25 kHz 5.0 kHz 5.0 Khz
---------------------------------------------------------------------------------------------------------------
Power requirements 35 volts 35 volts 35 volts 35 volts
---------------------------------------------------------------------------------------------------------------
Power consumption 3 xxxxx peak 6 xxxxx peak 3 xxxxx peak 6 xxxxx peak
---------------------------------------------------------------------------------------------------------------
Firing distance 1 mm 1 mm 1 mm 1 mm
---------------------------------------------------------------------------------------------------------------
Interface Serial Serial Serial Serial
---------------------------------------------------------------------------------------------------------------
Rated Life 2 billion drops 2 billion drops 2 billion drops 2 billion drops
per channel per channel per channel per channel
---------------------------------------------------------------------------------------------------------------
Operating temperature +10 to +40C +10 to +40C +10 to +40C +10 to +40C
---------------------------------------------------------------------------------------------------------------
Humidity 10% - 80% 10% - 80% 10% - 80% 10% - 80%
---------------------------------------------------------------------------------------------------------------
ANNEX II
PURCHASE COMMITMENT
Printheads Purchase Commitment:
Purchaser commits to purchase the following number of Printheads:*
Delivery Date(s) Quantity Price (Swedish Krona)
----------------------------------------------------------------------
12 month volume >1.000 2.500 SKR for 128 channel head
* Prices are subject to increase on 30 days written notice from MIT.
[LETTERHEAD FOR MIT INKJET]
November 30, 1997
Xxxx Xxxxxxxxx
Xxxx Xxxxx
Meital Technologies, Ltd.
2 Xxxxxxx St., Suit 214
Xxxxx Science Park
Rehovot 76100
Israel
Dear Kobi,
Dear Iris,
Attached please the signed original of the contract between your and our
company.
We thank you very much for your confidence and wish you fast progress in this
project and you and us great success.
My plan is to visit Israel togehter with a technical engineer in
January/February next year.
I enjoy to see you than.
Best regards
/s/ Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx
APPENDIX 4.4
Summary of consulting and development agreement with Meital.
This contract specifies the relationships between Xxxx Xxxxxxxxx, the founder of
Meital and Nur Macroprinters ("Nur"). Under this agreement, Xx. Xxxxxxxxx is
obliged to provide development and consulting services to Nur for a period of
one year from the signing of the contract at a capacity equal to full time
employment, and for a second year form the signing of the contract at a capacity
not less than 50% of full time employment. Meital, which is owned by Xx.
Xxxxxxxxx will receive a monthly compensation of NIS 30,000 per month for these
services and an option to acquire 100,000 shares of Nur at $1.00 at the end of
the first anniversary of this contract.
APPENDIX 13.2
-------------
Conversion of loan
Conversion of Loan
The provisions set forth below refer to the terms and conditions upon
which Nur Macroprinters Ltd. (the "Investor") may convert the amount of Three
Hundred United States Dollars ($300.000) (the "Payment Returns") into Series A
Preferred Shares, par value NIS 1.00 each (the "Preferred Shares"), which
represent, following their issuance, 26% of the issued and outstanding share
capital of "Meital" Electronic Technology Ltd. (the "Company") at the date of
issuance on a fully diluted basis (i.e. ;including all shares, securities
convertible into shares and/or any undertaking by the Company to issue shares,
or such other securities), in accordance with Section 123.2 of the Agreement
dated September 13, 1998 between the Company and the Investor (the "Agreement").
Conversion of the In the event that under Section 8.4 to the Agreement,
Payment Returns the Investor during the period of three years from the
date of the Agreement will be entitled to Payment
Returns (as defined in Section 8.4 of the Agreement),
then during the three months period from the first date
when the Investor becomes entitled to Payment Returns,
the Investor may, at its sole discretion, convert the
Payment Returns into Preferred Shares.
The Preferred Shares, when issued, will have been
validly issued, fully paid and non-assesable, and will
be free of any liens or encumbrances.
Conversion of the The Preferred Shares will be convertible (the "Share
Preferred Shares Conversion") on a one-to-one basis (subject to
adjustment) at the option of the Investor, into Ordinary
Shares of the Company, par value NIS 1.00 each (the
"Ordinary Shares"). The Preferred Shares will
automatically convert on a one-to-one basis (subject to
adjustment) into Ordinary Shares in the event of an IPO
yielding at least $7.5 million net to the Company at a
price per share (as adjusted) which is at least fifteen
times the purchase price of the Preferred Shares
(reflected by the conversion of the Payment Returns into
Preferred Shares) (the "IPO"). The Ordinary Shares, when
issued, will have been validly issued, fully paid and
non-assesable, and will be free of any liens or
encumbrances.
Anti dilution The Share Conversion ratio will be adjusted in the event
Protections of stock splits, reclassifications, etc., and will also
be adjusted by standard full-ratchet anti-dilution in
the event that equity securities, securities convertible
into equity or options to purchase equity securities
(other than employee options) of the Company are
subsequently issued at a price per share which reflects
a Company valuation at the date the Preferred Shares are
issued to the Investor.
Liquidation The Preferred Shares will be senior to all other equity
Preference securities of the Company in the event of a sale,
merger, liquidation, bankruptcy, or reorganization of
the Company. The merger of the Company, the sale of all
or substantially all of its assets, the sale of all or
substantially all of the shares in the Company, or a
change in control, will be deemed to be a liquidation.
In an actual or deemed liquidation, the Investor shall
be entitled to receive an amount equal to the full
purchase price paid for the Preferred Shares (reflected
by the conversion of the Payment Returns into Preferred
Shares) and interest at the rate of LIBOR + 4% from the
date of the issuance of the Preferred Shares and until
the date of the actual or deemed liquidation, prior to
any payments to the holders of Ordinary Shares (the
"Preference"). After the Preference is paid, the
remaining assets (if any) shall be distributed to the
holders of Preferred and Ordinary Shares pro rata (on an
as converted basis).
Dividend Preference The Preferred Shares shall be entitled to dividends, as
and when declared by the Company's Board of Directors,
at a rate of 25% per year, prior an in preference to
any dividends on shares of any other class.
1
Registration Rights The Registration Rights granted to the Investor are as
set forth in Appendix A attached hereto.
Voting Rights Except as provided by the Restrictive Provisions below
or by law, the Preferred Shares vote with the Ordinary
Shares on an as-converted basis (i.e. as if the
Preferred Shares have been converted into Ordinary
Shares).
Restrictive The Company's Articles of Association will contain
Provisions restrictions prohibiting the Company from taking certain
actions without: (i) during a period of one year from
the date hereof, the consent of the Investor, or the
consent of the observer designated by the Investor, as
the case may be; and (ii) after a period of one year
from the date hereof, the consent of a 75% majority of
the holders of Preferred Shares, or the consent of one
of the Directors appointed by the holders of the
Preferred Share, as the case may be. Such actions
include: (1) amending the Memorandum or Articles of
Association or other action which would have the affect
of amending the rights, preferences or privileges of the
Preferred Shares; (2) the issuance of any further
debentures or other securities (except for the issuance
of securities to employees of the Company) (3) the
issuance of any further Preferred Shares or other
securities with rights equal to or superior to the
rights of the Preferred Shares; (4) the merger of the
Company or sale of substantially all the Company's
assets; (5) increase in the number of the Company's
Directors above 5; (6) declaration or payment of any
dividend or other distribution of cash, shares, or other
assets; (7) interested party transactions; (8) making
any loans or advances to employees other than in
ordinary course of business as travel advances; (9)
making any guarantee; (10) mortgage, pledge or create a
security interest in all or substantially all of the
assets of the Company or a subsidiary; (11) making any
expense of an amount in excess of $10,000; and (12)
formation of or investment in any entity which is not
wholly owned by the Company.
Pre-emptive Rights Prior to an IPO, holders of the Preferred Shares will
have the right to maintain their percentage ownership in
the Company (on an as converted basis) by purchasing a
pro rata portion of any further issuance of securities
by the Company at the offering price. Each holder of
Preferred Shares shall also be entitled to purchase the
pro rata portion of any other shareholder that does not
exercise such right.
Right of Prior to an IPO of the Ordinary Shares, the holders of
First Refusal the Preferred Shares will have a right of first refusal
to purchase any Preferred or other shares of the Company
offered for sale by any shareholder to any person or
entity, subject to standard exceptions for transfer to
affiliates and family members.
Tag Along Prior to an IPO of the Ordinary Shares, in the event
that any shareholder other than the Investor, sells or
desires to sell any of its shares in the Company to any
third party, the Investor will be entitled to sell, to
the same third party and on the same terms and
conditions, shares held by the Investor; the number of
such shares to be determined by multiplying the
aggregate number of shares to be sold to the third party
by the Investor's percentage shareholding of the
Company's issued and outstanding share capital at the
time.
Board of Directors The composition of the Board is based on the recognition
that: (1) the primary function of the Board is to
provide guidance and support to the Company's executives
in the conduct of its business; (2) each member of the
Board acts in such capacity as a representative of the
Company rather than of the shareholders; (3) the Board
should be limited in size for efficient functioning; and
(4) there are ample provisions for the protection of
shareholder's rights, making it unnecessary for the
Board composition to reflect directly the distribution
of share ownership or control. Accordingly, the Board of
2
Directors consists of a total of seven (7) members, of
whom two(2) shall be designated by the Investor. If the
Investor's aggregate shareholding in the Company is
reduced to less than 13% of the issued and outstanding
share capital of the Company, on a fully diluted basis,
then the Investor will only be entitled to designate one
(1) director to the Board of Directors of the Company.
The Company will agree to maintain customary indemnity
insurance policy covering the directors. For as long as
the Company owes the Investor any amount of money, the
Investor will be entitled to designate an observer to
the Board of Directors of the Company. The observer will
be entitled to receive all materials distributed to
directors and participate at all meetings of the Board
of Directors, but will not be entitled to vote. Prior to
participating at the first Board Meeting, the observer
will sign a standard confidentiality and non-disclosure
agreement with the Company.
Information Rights The Investor shall be entitled to receive from the
Company: (1) audited financial statements within 60 days
after the end of each fiscal year. (2) un-audited,
reviewed quarterly financial statements within 45 days
after the end of each quarter, (3) monthly reports in a
form agreed by the Board of Directors, within 30 days
after the end of each month, and (4) immediate reports
signed by the Chief Financial Officer of the Company
upon the occurrence of any event which has or may have
any adverse on the Company, its business or the
Technology.
The Investor will have the right to inspect the
properties and records of the Company and to consult
with management of the Company at reasonable times and
upon reasonable notice. In addition, the Company's
management will submit to the Investor and to the Board
for approval, an annual operating plan and budget at
least 60 days prior to the first day of the year covered
by such plan.
3
SCHEDULE A
----------
REGISTRATION RIGHTS
-------------------
1. Definitions.
As used herein, the following terms have the following meaning:
1.1 "Holder" -- means any holder of outstanding Registrable Shares or
shares convertible into Registrable Shares, who acquired such Registrable Shares
or shares convertible into Registrable Shares in a transaction or series of
transactions not involving any registered offering.
1.2 "Commission" -- refers to the Securities and Exchange Commission.
1.3 "Register", "registered", and "registration" -- refer to a
registration effected by filing a registration statement in compliance with the
Securities Act and the declaration or ordering by the Commission of
effectiveness of such registration statement, or the equivalent actions under
the laws of another jurisdiction.
1.4 "Registrable Shares" -- means all Ordinary Shares issued upon
conversion of the Issued Preferred Shares and the Additional Preferred Shares,
if any, all Ordinary Shares issued by the Company in respect of such shares, and
all Ordinary Shares that the Investors may hereafter purchase, pursuant to their
pre-emptive rights or otherwise, or Ordinary Shares issued on the conversion or
exercise of other securities so purchased by the Investors.
2. Incidental Registration.
2.1 If the Company at any time proposes to register any of its
securities, other than in a demand registration under Section 3 or 5 below, on
any form (other than a Registration Statement on Form S-8 or Form S-4 or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation, or any successor form for
securities to be offered to employees of the Company pursuant to any employee
benefit plan), for its own account or for the account of any other person,
including in the initial public offering of the Company's securities (the
"IPO"), it shall give notice to the Holders of such intention.
2.2 Upon the written request of any Holder given within twenty (20) days
after receipt of any such notice, the Company shall include in such registration
all of the Registrable Shares indicated in such request, so as to permit the
disposition of the shares so registered in the manner requested by such Holder
or Holders.
2.3 Notwithstanding the provisions of Sections 2.1 or 2.2, with respect
to an underwritten public offering by the Company, if the managing underwriter
advises the Company in writing that marketing or other factors require a
limitation of the
number of shares to be underwritten, and the aggregate number of Registrable
Shares requested to be included in such registration pursuant to Section 2.2
above (the "Requested Shares"), shall exceed the number of shares indicated by
the underwriter, then first, there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation, shares held by
shareholders other than the Holders, and second, there shall be excluded from
such underwriting (but not from such registration) pro rata, shares held by the
Holders to the extent necessary to satisfy such limitation. To the extent
Registrable Securities are excluded from such underwriting, the Holders shall
agree not to sell their Registrable Shares included in the registration
statement for such period, not to exceed 180 days, as may be required by the
managing underwriter, and the Company shall keep effective and current such
registration statement for such period as may be required to enable the Holders
to complete the distribution and resale of their Registrable Shares.
2.4 Notwithstanding Section 2.3 above, should the Company provide the
Holders with a letter from the managing underwriter of the IPO stating that the
exercise of the Holders' rights pursuant to this Section 2 would have an adverse
effect on the IPO, and should Holders holding at least 80% of the Issued
Preferred Shares and the Additional Preferred Shares, if any, agree in writing
not to exercise their rights under this Section 2 at the IPO and for an
additional 180 days following the IPO (as may be required by the managing
underwriter), then such agreement will be binding upon all the Holders and the
Holders shall not be entitled to exercise their rights under this Section 2
until the end of such period; provided, however, that all other shareholders in
the Company similarly shall not exercise any similar right that they may have
until the end of such period.
3. Demand Registration.
3.1. On two separate occasions, commencing as soon as legally permissible
after the closing of the IPO, any Holder or Holders are entitled to request in
writing that all or part of their Registrable Shares shall be registered under
the Securities Act. Any such demand must request the registration of shares in a
minimum of 1.5 Million United States Dollars ($1,500,000).
3.2 Within 20 days after receipt of any such request, the Company shall
give written notice of such request to the other Holders and shall include in
such registration all Registrable Shares held by all such Holders who wish to
participate in such demand registration and provide the Company with written
requests for inclusion therein within 15 days after the receipt of the Company's
notice.
3.3 The Company shall effect the registration of all Registrable Shares
as to which it has received requests for registration as promptly as
practicable; provided, however, that the Company shall not be required to effect
any registration under this Section 3 within a period of one hundred and eighty
(180) days, (but shall be required to prepare and file the registration
statement within such period), following the effective date of a previous
registration (a) initiated by the Holders, pursuant to this Section 3, or (b) in
which the Holders had the right to participate pursuant to Section
2
2. Should the lock-up in accordance with Section 12 below be for a period
shorter than 180 days, then the 180 period of the preceding sentence shall be
shortened accordingly.
3.4 The Company shall register neither securities for sale for its own
account nor securities held by holders permitted to do so by the written consent
of Holders who hold at least sixty-six and two thirds percent (66 and 2/3%) of
the Registrable Shares as to which registration has been requested. The Company
may not cause any other registration of securities (a) for sale for its own
account (other than a registration effected solely to implement an employee
benefit plan) or (b) for the account of others, to be initiated after a
registration requested pursuant to Section 3 and to become effective less than
120 days after the effective date of any registration statement filed pursuant
to Section 3.
3.5 The Company shall not be required to effect more than two (2)
registrations under this Section 3.
4. Delay of Registration.
The Company may delay the filing or effectiveness of any registration
statement prepared pursuant to Section 3 for a period of up to 90 days (and, if
the Company makes a good faith determination that further delay is necessary,
for up to an additional 30 days) after the date of a request for registration
pursuant to sEction 3, if the Company determines in good faith that (a) it is in
possession of material, non-public information concerning an acquisition,
merger, recapitalization, consolidation, reorganization, or other material
transaction by or of the Company, and (b) disclosure of such information would
jeopardize any such transaction or otherwise materially harm the Company;
provided, however, that the Company may exercise such right to delay the filing
of a registration statement only once and that such delay period will not delay
the effectiveness of a registration statement demanded under Section 3 beyond a
period of 180 days following the effective date of a previous registration.
5. Shelf Registration.
Commencing as soon as legally permissible after the closing of the IPO, in
case the Company shall receive from any Holder or Holders a written request or
requests that the Company effect a registration on Form S-3 or F-3, or any
successor form for securities to be offered in a transaction of a type referred
to in Rule 415 under the Securities Act, and in related qualification or
compliance, with respect to registrable Shares where the aggregate net proceeds
from the sale of such Registrable Shares equals to at least one and a half
million United States Dollars (US$1,500,000), the Company will within twenty
(20) days after receipt of any such request give written notice of the proposed
registration and any related qualification or compliance, to all other Holders,
and include in such Registration all Registrable Shares held by all such Holders
who wish to participate in such Registration and provide the Company with
written requests for inclusion therein within 15 days after the receipt of the
Company's
3
notice. Thereupon, the Company shall effect such registration and all such
qualifications and compliances as may be requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holder's Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining such request as are specified in a written request given within fifteen
(15) days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect such registration,
qualification, or compliance, pursuant to this Section 5 if the Company, within
twelve (12) months period preceding the date of such request, already effected
two (2) registrations for the Holders pursuant to this Section 5. The Company
shall not be required to effect more than six (6) registrations requested under
this Section 5.
6. Designation of Underwriter.
6.1 In the case of any registration effected pursuant to Section 3 or 5,
the Initiating Holders that submitted the request for registration shall have
the right to designate the managing underwriter(s) in any underwritten offering.
6.2 In the case of any registration initiated by the Company, the
Company shall have the right to designate the managing underwriter in any
underwritten offering.
7. Expenses.
All expenses incurred in connection with any registration under Section 2,
Section 3 or Section 5, shall be borne by the Company; provided, however, that
each of the Holders participating in such registration shall pay its pro rata
portion of the discounts payable to any underwriter.
8. Indemnities.
In the event of any registered offering of Ordinary Shares pursuant to
this Agreement:
8.1 The Company will indemnify and hold harmless, to the fullest extent
permitted by law, any Holder and any underwriter for such Holder, and each
person, if any, who controls the Holder or such underwriter, from and against
any and all losses, damages, claims, liabilities, joint or several, costs, and
expenses (including any amounts paid in any settlement effected with the
Company's consent) to which the Holder or any such underwriter or controlling
person may become subject under applicable law or otherwise, insofar as such
losses, damages, claims, liabilities (or actions or proceedings in respect
thereof), costs, or expenses arise out of are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement or included in the prospectus, as amended or
supplemented, or (ii) the omission or alleged omission to state therein a
material fact
4
required to be started therein or necessary to make the statement therein, in
the light of the circumstances in which they are made, not misleading, and the
Company will reimburse the Holder, such underwriter, and each such controlling
person of the Holder or the underwriter, promptly upon demand, for any
reasonable legal or any other expenses incurred by them in connection with
investigating, preparing to defend, or defending against, or appearing as a
third-party witness in connection with such loss, claim, damage, liability,
action, or proceeding; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, damage, liability, cost, or
expense arises solely out of or is based solely upon an untrue statement or
alleged untrue statement, or omission or alleged omission, so made in conformity
with information furnished to the Company in writing by a Holder, such
underwriter, or such controlling persons in writing specifically for inclusion
therein; provided, further, that this indemnity shall not be deemed to relieve
any underwriter of any of its due diligence obligations; and provided, further,
that the indemnity agreement contained in this Section 8.1 shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability, or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the selling
Holder, the underwriter, or any controlling person of the selling Holder or the
underwriter, and regardless of any sale in connection with such offering by the
selling Holder. Such indemnity shall survive the transfer of securities by a
selling Holder.
8.2 Each Holder participating in a registration hereunder will indemnify
and hold harmless the Company, any underwriter for the Company, and each person,
if any, who controls the Company or such underwriter, from and against any and
all losses, damages, claims, liabilities, costs, or expenses (including any
amount paid in any settlement effected with the selling Holder's consent) to
which the Company or any such controlling person and/or any such underwriter may
become subject under applicable law or otherwise, insofar as such losses,
damages, claims, liabilities (or actions or proceedings in respect thereof),
costs, or expenses arise out of or are based on (i) any untrue or alleged untrue
statement of any material fact contained in the registration statement or
included in the prospectus, as amended or supplemented, or (ii) the omission or
the alleged omission to state therein a material fact required to be started
therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, and each such Holder will
reimburse the Company, any underwriter, and each such controlling person of the
Company or any underwriter, promptly upon demand, for any reasonable legal or
other expenses incurred by them in connection with investigating, preparing to
defend, or defending against, or appearing as a third-party witness in
connection with such loss, claim, damage, liability, action or proceeding; in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made in
conformity with written information furnished in a certificate by such Holder
specifically for inclusion therein. The foregoing indemnity agreement is subject
to the condition that, insofar as it relates to any such untrue statement (or
alleged untrue statement), or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended prospectus at
the time the registration statement becomes effective in the Final Prospectus,
such
5
indemnity agreement shall not inure to the benefit of (i) the Company and (ii)
any underwriter, if a copy of the Final Prospectus was not furnished to the
person or entity asserting the loss, liability, claim, or damage at or prior to
the time such furnishing is required by the Security Act; provided, further,
that this indemnity shall not be deemed to relive any underwriter of any of its
due diligence obligations; provided, further, that the indemnity agreement
contained in this Section 8.2 shall not apply to amounts paid in settlement of
any such claim loss, damage, liability, or action if such settlement is effected
without the consent of the Holders, as the case may be, which consent shall not
be unreasonably withheld. In no event shall the liability of a Holder exceed the
gross proceeds from the offering received by such Holder.
8.3 Promptly after receipt by an indemnified party pursuant to the
provisions of Section 8.1 or Section 8.2 of notice of the commencement of any
action involving the subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim thereof is to made against the indemnifying
party pursuant to the provisions of said Section 8.1 or 8.2 promptly notify the
indemnifying party of the commencement thereof; but the omission to notify the
indemnifying party shall only relieve it from any liability which it may have to
any indemnified party to the extent that such indemnifying party has been
damaged by such omission to notify hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any action include both the indemnified party and the indemnifying
party and if in the reasonable judgment of the indemnified party there are
separate defenses that are available to the indemnified party or there is a
conflict of interest which would prevent counsel at the expense to the Company.
After notice from the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select, at the
such action on behalf of such indemnified party or parties; provided, further,
however, that if the Holders are the indemnified party, such Holders as a group
shall be entitled to once separate counsel at the expense of the Company. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said Section 8.1 or 8.2 for any
legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed counsel in accordance with the provision of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after the notice of commencement of the action and within 15
days after written notice of the indemnified party's intention to employ
separate counsel pursuant to the previous sentence, or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party will consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim
litigation.
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8.4 If recovery is not available under the foregoing indemnification
provisions, for any reason than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution to
liabilities and expenses. In determining the amount of contribution to which the
respective parties are entitled, there shall be considered the parties' relative
knowledge and access to information concerning the matter with respect to which
was asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable consideration appropriate under the circumstances. In no
event shall any party that is found liable for fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act be entitled to
contribution hereunder form any party not found so liable, and in no event shall
any contribution form any Holder be more than the gross proceeds from the
offering received by such Holder.
9. Obligations of the Company.
Whenever required under this Agreement to effect the registration of any
Registrable Shares, the Company shall, as expeditiously as possible:
9.1 Prepare and file with the Commission a registration statement with
respect to such Registrable Shares and use its best efforts to cause such
registration statement to become effective, and, upon the request of the holders
of a majority of the Registrable Shares registered thereunder, keep such
registration statement effective for a period of up to 180 days, or, if sooner,
until the distribution contemplated in the Registration Statement has been
completed.
9.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Shares covered by such registration statement.
9.3 Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirement of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Shares owned by them.
9.4 In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such agreement.
9.5 Notify each holder of Registrable Shares covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated
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therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and promptly amend such prospectus by filing
a post effective amendment or supplement so that such prospectus does not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and deliver copies
thereof to the Holders.
9.6 Cause all Registrable Shares registered pursuant hereunder to be
listed on each securities exchange or NASDAQ on which similar securities issued
by the Company are then listed.
9.7 Provide a transfer agent and registrar for all Registrable Shares
registered pursuant hereunder and a CUSIP number for all such Registrable
Shares, in each case not later than the effective date of such registration.
9.8 Furnish, at the request of any Holders requesting registration of
the Registrable Shares pursuant to this agreement, on the date that such
Registrable Shares are delivered to the underwriters for sale in connection with
a registration pursuant to this agreement, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the Counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of the Registrable Shares, and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified accountants to
underwriters in an underwritten public offering addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Shares.
9. Conditions to Registration.
The Company shall not be obligated to effect the registration of the
Registrable Shares pursuant to this Agreement unless the Holders participating
therein consent to customary conditions of a reasonable nature that are imposed
by the Company, including, but not limited to, the following:
(a) conditions prohibiting the sale of Registrable Shares by such
Holders from 30 days before the filing of the registration statement until the
registration statement becomes effective;
(b) conditions requiring such Holders to comply with all
applicable provisions of the Securities Act and the United States Securities
Exchange Act of 1934, as amended, (the "Exchange Act"), including, but not
limited to, the prospectus delivery requirements, and to furnish to the Company
information about sales made in such public offering; and
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(c) conditions prohibiting such Holders, upon receipt of written
notice from the Company that it is required by law to correct or update the
registration statement or prospectus, from effecting sales of the Registrable
Shares until the Company has completed the necessary correction or updating.
10. Assignment of Registration Rights.
Any of the Holders may assign its rights to cause the Company to register
Shares pursuant to this Agreement to a transferee of all or any part of its
Registrable Shares. The transferor shall, within twenty (20) days after such
transfer, furnish the Company with written notice of the name and address of
such transferee and the securities with respect to which such registration
rights are being assigned, and the transferee's written agreement to be bound by
this Agreement.
11. Rights that may be granted to Subsequent Investors.
11.1 Within the limitation prescribed by this section 11.1, but not
otherwise, the Company may grant to subsequent investors in the Company rights
of incidental registration (such as those provided in Section 2). Such rights
may only pertain to Ordinary Shares, including Ordinary Shares into which any
other securities may be converted. Such rights may be granted with respect to
(i) registrations actually requested by Holders pursuant to Section 3, but only
subject to the approval of the Holders as required therein and only in respect
of the available portion of any such registration as remains after inclusion of
all Registrable Shares requested by Holders, and (ii) registrations initiated by
the Company, but only in respect of the available portion of such registration
as remains after inclusion of all Registrable Shares. With respect to
registrations which are for underwritten public offerings, "available portion"
shall mean the portion of the underwritten shares that is available as specified
in clauses (i) and (ii) of the third sentence of this Section 11.1. Shares not
included in such underwriting shall not be registered.
11.2 The Company may not grant to subsequent investors in the Company
rights of registration upon request (such as those provided in Section 3) unless
(i) such rights are limited to shares of Ordinary Shares, (ii) all Holders are
given enforceable contractual rights to participate in registration requested by
such subsequent investors, such participation to be on a pro-rata basis, and
subject to the limitations, described in the final three sentences of Section
11.1, (iii) such rights shall not become effective prior to 120 days after the
effective date of the first registration pursuant to Section 3, and (iv) such
rights shall not be equal to nor more favorable than those granted to the
Holders.
12. Lock-Up.
In any registration of the Company's shares, all Holders acknowledge that
any sales of Registrable Shares may be subject to a "lock-up" period restricting
such sales
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beginning thirty (30) days prior to, and for up to one hundred and eighty (180)
days following, the effective date of such registration, and all Holders will
agree to abide by such customary "lock-up" period as is required by the
underwriter in such registration.
13. Customary Arrangements.
No Holder may participate in any underwritten offering pursuant to a
registration filed hereunder unless such person (a) agrees to sell such person's
securities on the basis provided in any customary underwriting arrangements, and
(b) provides any relevant information and completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents required under the terms of such underwriting arrangements;
provided, however, that all Holders participating in the underwritten
registration may appoint one legal or other representative to negotiate the
underwriting arrangements.
14. Public Information.
At any time and from time to time after the earlier of the close of
business on such date as (a) a registration statement filed by the Company under
the Securities Act becomes effective, or (b) the Company registers a class of
securities under Section 12 of the Exchange Act, the Company shall undertake to
make publicly available and available to the Investors adequate current public
information within the meaning of, and as required pursuant to, Rule 144.
15. Non-United States Offering.
In the event of a public offering of securities of the Company outside of
the United States, the Company will afford the Holders registration rights in
accordance with applicable law and comparable in substance to the foregoing
registration rights.
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