Exhibit 1.1
EXECUTION COPY
Medis Technologies Ltd.
$4,000,000
6% Senior Convertible Notes due 2010
PURCHASE AGREEMENT
August 2, 2005
The Persons Identified on Schedule I hereto
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Ladies and Gentlemen:
Medis Technologies Ltd., a Delaware corporation (the "Company"), hereby
confirms its agreement with you (collectively, "you" or the "Purchaser"), as set
forth below.
1. THE TRANSACTIONS. (a) Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Purchaser $4,000,000
aggregate principal amount of its 6% Senior Convertible Notes due 2010 in the
amounts set forth on Schedule I hereto (the "Notes"). The Notes shall be
convertible into shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock" or "Conversion Shares"). The Notes will be issued
pursuant to the provisions of the Indenture (the "Indenture"), dated as of July
26, 2005, between the Company and Wachovia Bank, National Association, as
trustee (the "Trustee"). The Notes and the Conversion Shares are hereinafter
referred to collectively as the "Securities." The Notes will be the same class
of securities as the Company's $45,000,000 aggregate principal amount of 6%
Senior Convertible Notes due 2006 (the "144A Notes") issued and sold (or to be
issued and sold as of the Closing Date (as defined below)) (the "144A Offering")
pursuant to a Purchase Agreement dated July 21, 2005 between the Company and
XxXxxxx Securities Co. L.P. ("XxXxxxx").
(b) The sale of the Notes to the Purchaser (the "Offering") will be
made without registration of the Securities under the Securities Act of
1933, as amended (together with the rules and regulations of the Securities
and Exchange Commission (the "Commission") promulgated thereunder, the
"Securities Act"), in reliance upon the exemption therefrom provided by
Section 4(2) of the Securities Act.
(c) In connection with the sale of the 144A Notes, the Company
prepared an offering memorandum, dated July 21, 2005 (the "Offering
Memorandum"), setting forth information regarding the Company, the 144A
Notes and the terms of the 144A Offering. The Offering Memorandum attaches
as Exhibits A and B and incorporates by reference the Company's (i) Annual
Report on Form 10 K for the year ended December 31, 2004 ("Exhibit A") and
(ii) Quarterly Report on Form 10 Q for the quarter ended March 31, 2005
(collectively with Exhibit A, the "Exhibits"). The Offering Memorandum
incorporates by reference the Company's Current Reports on
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Form 8-K filed with the Commission on January 3, 2005, January 12, 2005,
March 18, 2005, March 28, 2005, April 1, 2005, April 26, 2005, April 29,
2005, May 20, 2005, May 31, 2005 (Item 1.01 and Exhibit 99.1 of Item 9.01
only), June 3, 2005, June 7, 2005, June 22, 2005 and July 11, 2005, and any
other report filed by the Company pursuant to the Exchange Act (as defined
below) after the date of such Offering Memorandum (all such documents and
the Exhibits collectively, the "Attached and Incorporated Documents"). Any
references herein to the Offering Memorandum shall be deemed to include, in
each case, all amendments and supplements thereto and the Attached and
Incorporated Documents.
(d) The Purchaser and its direct and indirect transferees of the Notes
will be entitled to the benefits of the Registration Rights Agreement dated
July 26, 2005, among the Company and XxXxxxx (the "Registration Rights
Agreement") pursuant to which the Company shall, among other things, file
(i) a registration statement (the "Registration Statement") on the
appropriate form with the Commission registering the resale of the
Securities under the Securities Act, and (ii) use its commercially
reasonable efforts to cause any such Registration Statement to be declared
effective.
This Agreement, the Securities, the Registration Rights Agreement and the
Indenture are herein referred to as the "Offering Documents."
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to and agrees with the Purchaser that:
(a) The Offering Memorandum, as of the date hereof, does not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Offering
Documents conform in all material respects to the descriptions thereof
contained in the Offering Memorandum.
(b) Subsequent to the respective dates as of which information is
given in the Offering Memorandum, except as disclosed in or contemplated by
the Offering Memorandum, the Company has not declared, paid or made any
dividends or other distributions of any kind on or in respect of its
capital stock and there has been no material adverse change or any
development involving a prospective material adverse change, whether or not
arising from transactions in the ordinary course of business, in or
affecting (i) the business, condition (financial or otherwise), results of
operations, stockholders' equity, properties or prospects of the Company
and the subsidiaries of the Company listed on Exhibit A hereto (each a
"Subsidiary" and collectively, the "Subsidiaries"), individually or taken
as a whole; (ii) the long-term debt or capital stock of the Company or the
Subsidiaries; or (iii) the ability of the Company to consummate the
Offering or any of the other transactions contemplated by the Offering
Documents (any such change or development being a "Material Adverse
Effect"). Since the date of the latest balance sheet included or
incorporated by reference in the Offering Memorandum, neither the Company
nor any Subsidiary has incurred or undertaken any liabilities or
obligations, whether direct or indirect, liquidated or contingent, matured
or unmatured, or entered into any transactions, including any acquisition
or disposition of
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any business or asset, which are material to the Company and the
Subsidiaries, individually or taken as a whole, except for (1) liabilities,
obligations and transactions which are disclosed in or contemplated by the
Offering Memorandum, (2) any such liabilities or obligations incurred in
the ordinary course of the Company's business or operations consistent with
past practice, (3) the execution and delivery of a real estate lease for
additional space at the Company's Israeli facilities and bank guarantee
thereto, and (4) the collateralization of certain obligations by More
Energy under an equipment lease in the amount of approximately (euro)36,000
by obtaining a bank guarantee in favor of the lessor, which guarantee is
secured by More Energy's deposits with the bank from time to time.
(c) The authorized, issued and outstanding capital stock of the
Company as of March 31, 2005 and after giving effect to the 144A Offering
(not including exercise of XxXxxxx'x option contemplated therein) is as set
forth in the Offering Memorandum under the caption "Capitalization". Except
as disclosed in or contemplated by the Offering Memorandum, all of the
issued and outstanding shares of capital stock of the Company are fully
paid and non-assessable and have been duly and validly authorized and
issued, in compliance with all applicable federal, state and foreign
securities laws and are not in violation of or subject to any preemptive or
similar right that does or will entitle any person, upon the issuance or
sale of any security, to acquire from the Company or any Subsidiary any
Common Stock or other security of the Company or any Subsidiary or any
security convertible into, or exercisable or exchangeable for, Common Stock
or any other such security (any "Relevant Security").
(d) The Conversion Shares have been duly authorized and reserved, and
if and when issued upon conversion of the Notes in accordance with their
terms and the Indenture, will be validly issued, fully paid and
non-assessable, free of any preemptive or similar rights; will have been
issued in compliance with all applicable federal, state and foreign
securities laws; will not have been issued subject to any right that does
or will entitle any person to acquire any Relevant Security from the
Company or any Subsidiary upon issuance or sale of the Notes or the
Conversion Shares; and will not be subject to any restriction upon the
voting or, except as disclosed in or contemplated by the Offering
Memorandum, transfer thereof pursuant to applicable law or the Company's
certificate of incorporation, bylaws or governing documents or any
agreement to which the Company or any Subsidiary is a party or by which any
of them may be bound.
(e) The Common Stock (including the Conversion Shares) conforms to the
descriptions thereof contained in the Offering Memorandum. Except as
disclosed in or contemplated by, and as of the date or dates disclosed in,
the Offering Memorandum, neither the Company nor any Subsidiary has
outstanding warrants, options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, or any contracts or
commitments to issue or sell, any Relevant Security. Except (i) as
disclosed in or contemplated by, and as of the date or dates disclosed in,
the Offering Memorandum, and (ii) with respect to the obligations of the
Company to grant 5,000 options to Pascal Goiuerec pursuant to a consulting
agreement between such party and the Company, there are no outstanding
subscriptions, rights, warrants, options, calls,
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convertible securities, commitments of sale or rights related to or
entitling any person to purchase or otherwise to acquire any shares of, or
any security convertible into or exchangeable or exercisable for, the
capital stock of, or other ownership interest in, the Company or any
Subsidiary.
(f) The Subsidiaries are the only "significant subsidiaries" of the
Company within the meaning of Regulation S-X promulgated under the
Securities Act. All of the issued shares of capital stock of or other
ownership interests in the Subsidiaries directly or indirectly owned by the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable and the shares of capital stock or other ownership
interests in the Subsidiaries directly or indirectly owned by the Company
are owned by the Company free and clear of any lien, charge, mortgage,
pledge, security interest, claim, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever (any
"Lien").
(g) Each of the Company and each Subsidiary has been duly organized
and validly exists as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and each Subsidiary has
all corporate power and authority to carry on its business as it is
currently being conducted and as described in the Offering Memorandum, and
to own, lease and operate its respective properties. Each of the Company
and each Subsidiary is duly qualified to do business as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified which (individually and in the aggregate) could not
reasonably be expected to have a Material Adverse Effect.
(h) The Company has the corporate power and authority to execute,
deliver and perform its obligations under the Notes. The Notes have been
duly and validly authorized by the Company for issuance and, when executed
by the Company and authenticated by the Trustee in accordance with the
provisions of the Indenture and when delivered to and paid for by the
Purchaser in accordance with the terms hereof, will have been duly
executed, issued and delivered and will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms except that the enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
and (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity) ((i) and
(ii) collectively, the "Enforceability Exceptions") and will be convertible
into the Conversion Shares in accordance with their terms. At the Closing
Date, the Notes will be in the form contemplated by the Indenture.
(i) The Company has the corporate power and authority to perform its
obligations under the Indenture. The Indenture has been duly and validly
authorized by the Company, has been validly executed and delivered by the
Company and meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "TIA"), and (assuming the due
authorization, execution and delivery by the Trustee)
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constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that
the enforcement thereof may be limited by the Enforceability Exceptions.
(j) The Company has the corporate power and authority to perform its
obligations under the Registration Rights Agreement. The Registration
Rights Agreement has been duly and validly authorized by the Company, has
been validly executed and delivered by the Company and (assuming the due
authorization, execution and delivery by the Initial Purchaser) constitutes
a valid and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms, except that the enforcement
thereof may be limited by the Enforceability Exceptions.
(k) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement. This Agreement
has been duly and validly authorized by the Company and when executed and
delivered by the Company (assuming the due authorization, execution and
delivery by the Purchaser), will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be limited by the
Enforceability Exceptions.
(l) There exists as of the date hereof (after giving effect to the
transactions contemplated by each of the Offering Documents) no event or
condition that would constitute a default or an event of default (in each
case as defined in each of the Offering Documents) under any of the
Offering Documents.
(m) The execution, delivery, and performance of this Agreement, the
Indenture or the Registration Rights Agreement and consummation of the
transactions contemplated by the Offering Documents did not, do not and
will not conflict with, require consent under or result in a breach of any
of the terms and provisions of, or constitute a default (or an event which
with notice or lapse of time, or both, would constitute a default) under,
violate or result in the creation or imposition of any Lien upon any
property or assets of the Company or any Subsidiary pursuant to, (i) any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant, instrument,
franchise, license or permit to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary or their respective
properties, operations or assets may be bound; (ii) any provision of the
certificate or articles of incorporation, bylaws or other organizational
documents of the Company or any Subsidiary; or (iii) any law, rule,
regulation, ordinance, directive, judgment, decree or order of any
judicial, regulatory or other legal or governmental agency or body,
domestic or foreign, having jurisdiction over the Company, any Subsidiary
or any of its or their properties; except, in the case of clauses (i) and
(iii) above, as could not reasonably be expected to have a Material Adverse
Effect.
(n) Each of the Company and each Subsidiary has all necessary
consents, approvals, authorizations, orders, registrations, qualifications,
licenses, filings and permits of, with and from all judicial, regulatory
and other legal or governmental
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agencies and bodies and all third parties, foreign and domestic
(collectively, the "Consents"), to own, lease and operate its properties
and conduct its business as it is now being conducted and as it is
contemplated to be conducted, in each case as disclosed in or contemplated
by the Offering Memorandum, except for Consents the failure of which to
obtain could not reasonably be expected to have a Material Adverse Effect
and the Consent which is listed on Schedule 2(h) hereof which has been
applied for, and each such Consent received by the Company as of the date
hereof is valid and in full force and effect, and except as disclosed in or
contemplated by the Offering Memorandum, neither the Company nor any
Subsidiary has received notice of any investigation or proceedings which
results in or, if decided adversely to the Company or any Subsidiary, could
reasonably be expected to result in, the revocation of, or imposition of a
materially burdensome restriction on, any Consent. Each of the Company and
each Subsidiary is in compliance with all applicable laws, rules,
regulations, ordinances, directives, judgments, decrees and orders, foreign
and domestic, except as disclosed in or contemplated by the Offering
Memorandum or where failure to be in compliance could not reasonably be
expected to have a Material Adverse Effect. No Consent contains a
materially burdensome restriction not adequately disclosed in the Offering
Memorandum.
(o) No Consent of, with or from any judicial, regulatory or other
legal or governmental agency or body or any third party, foreign or
domestic, was or is required by the Company for the execution, delivery and
performance of this Agreement, the Indenture or the Registration Rights
Agreement, or consummation of the Offering and the other transactions
contemplated by the Offering Documents, including the issuance, sale and
delivery of the Notes (and the issuance of the Conversion Shares upon
conversion of the Notes), except such Consents as may be required under
state securities or "blue sky" laws and, in the case of the transactions
contemplated by the Registration Rights Agreement, such as will be obtained
under the Securities Act and applicable state securities or "blue sky"
laws. No consent, approval or authorization of the stockholders of the
Company is required in connection with the issuance of the Securities,
except as may be described in or contemplated by the Offering Memorandum.
(p) Except as disclosed in or contemplated by the Offering Memorandum,
there is no judicial, regulatory, arbitral or other legal or governmental
proceeding or other litigation or arbitration, domestic or foreign, pending
to which the Company or any Subsidiary is a party or of which any property,
operations or assets of the Company or any Subsidiary is the subject which,
individually or in the aggregate, if determined adversely to the Company or
any Subsidiary, could reasonably be expected to have a Material Adverse
Effect, and to the best of the Company's knowledge, no such proceeding,
litigation or arbitration is threatened or contemplated.
(q) The financial statements, including the notes thereto, included in
the Offering Memorandum present fairly, as of the dates and for the periods
specified, the financial position, cash flows and results of operations of
the Company and its consolidated subsidiaries for which financial
statements are included in the Offering Memorandum; such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein); and the selected
consolidated
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financial data set forth under the caption "Selected Financial Data," in
Exhibit A present fairly, as of the dates and for the periods specified, on
the basis stated in Exhibit A, the information included therein. No other
financial statements are required to be included in the Offering Memorandum
if the Offering Memorandum were included in a registration statement filed
pursuant to the Securities Act. The other financial and statistical
information included in the Offering Memorandum presents fairly the
information included therein and, if so required, has been prepared on a
basis consistent with that of the financial statements that are included in
the Offering Memorandum and is derived from the books and records of the
respective entities presented therein and, to the extent such information
is a range, projection or estimate, is based on the good faith belief and
estimates of the management of the Company. The financial information
included in the Attached and Incorporated Documents, including the
information under Item 1 ("Business"), Item 7 ("Management's Discussion and
Analysis of Financial Condition and Results of Operations") and Item 7A
("Quantitative and Qualitative Disclosures About Market Risk") in Exhibit A
has been derived from the Company's consolidated financial statements
included in the Attached and Incorporated Documents or from the Company's
accounting books and records generally.
(r) Xxxx Xxxxx Xxxxx & Kasierer, a member of Ernst & Young Global,
which has examined certain of such financial statements as set forth in its
reports included in the Offering Memorandum, is an independent registered
public accounting firm as required by the Securities Act and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
of the Commission promulgated thereunder, the "Exchange Act").
(s) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or 15(d) of the Exchange Act and files
reports with the Commission on the XXXXX System. The Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and the
outstanding shares of Common Stock are listed for quotation on The Nasdaq
National Market, and the Company has taken no action designed to, or likely
to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or de-listing the Common Stock from The Nasdaq
National Market, nor has the Company received any notification that the
Commission or The Nasdaq National Market is contemplating terminating such
registration or listing.
(t) Since July 1, 2004, the Company has filed in a timely manner each
document or report required to be filed by it pursuant to the Exchange Act,
including, without limitation, the Attached and Incorporated Documents;
each such document or report (including any financial statements) and any
amendment thereto at the time it was filed, conformed to the requirements
of the Exchange Act; and none of such documents or reports on the date of
its filing contained an untrue statement of any material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(u) There are no agreements, contracts, indentures, leases or other
instruments (including, without limitation, any voting agreement), which
are required to
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be filed as exhibits to the Attached and Incorporated Documents, which are
not so filed as required.
(v) The Company and each Subsidiary maintain a system of internal
accounting and other controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with United States
generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accounting for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(w) Neither the Company nor any of its affiliates (within the meaning
of Rule 144 under the Securities Act) has taken, directly or indirectly,
any action that constitutes or is designed to cause or result in, or which
could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Securities.
(x) Neither the Company nor any of its affiliates (within the meaning
of Rule 144 under the Securities Act) directly, or through any agent, (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of any "security" (as defined in the Securities Act) which is or
could be integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities, or
(ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) in
connection with the offering of the Securities or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
The offer and sale of the Notes to the Purchaser and the Purchaser's resale
of the Notes in the manner contemplated by this Agreement and the Offering
Memorandum does not require registration under the Securities Act and the
Indenture does not require qualification under the TIA.
(y) Except as described in or contemplated by the Offering Memorandum,
no holder of any Relevant Security has any rights to require registration
of any Relevant Security as part or on account of, or otherwise in
connection with the Offering and any of the other transactions contemplated
by the Offering Documents, and any such rights so disclosed have been
effectively waived by the holders thereof, and any such waivers remain in
full force and effect.
(z) Neither the Company nor any Subsidiary is now and, immediately
after the sale of the Notes as contemplated hereunder and application of
the net proceeds of such sale as described in the Offering Memorandum under
the caption "Use of Proceeds," will be an "investment company" or be
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(aa) No relationship, direct or indirect, exists between or among the
Company or any affiliate of the Company, on the one hand, and any director,
officer,
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stockholder, customer or supplier of the Company or any affiliate of the
Company, on the other hand, which is required by the Exchange Act to be
described in the Company's annual and/or quarterly reports on Forms 10-K
and 10-Q, as applicable, which is not so described and described as
required in such reports. There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business)
or guarantees of indebtedness by the Company to or for the benefit of any
of the executive officers or directors of the Company or any of their
respective family members. Neither Xxxxxxx Xxxxxxxxxxxx nor Xxxxxxxx Xxxx
is an executive officer of the Company.
(bb) Each of the Company and each Subsidiary owns or leases all such
properties as are necessary to the conduct of their respective businesses
as presently operated and as proposed to be operated as described in the
Offering Memorandum. The Company and each Subsidiary have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear
of all Liens except such as are described in the Offering Memorandum or as
described in Section 2(b)(4) of this Agreement, such as could not
reasonably be expected to have a Material Adverse Effect; and any real
property and buildings held under lease or sublease by the Company and any
Subsidiary are held by them under valid, subsisting and enforceable leases
or subleases with such exceptions as are not material to, and do not
interfere with, the use made and proposed to be made of such property and
buildings by the Company and such Subsidiary. Neither the Company nor any
Subsidiary has received any notice of any claim adverse to its ownership of
any real or personal property or of any claim against the continued
possession of any real property, whether owned or held under lease or
sublease by the Company or any Subsidiary.
(cc) The Company and each Subsidiary (i) owns or possesses adequate
rights to use Company and Subsidiary patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
xxxx registrations, copyrights, licenses, formulae, customer lists, and
know-how and other intellectual property (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures, "Intellectual Property") necessary for the conduct
of its business as being conducted and as proposed to be conducted as
described in the Offering Memorandum, (ii) owns or possesses adequate
rights to use third party patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service xxxx registrations,
copyrights, licenses, formulae, customer lists, and know-how and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures, "Third Party Intellectual Property") necessary for the conduct
of their respective businesses as being conducted and as proposed to be
conducted as described in the Offering Memorandum, and (iii) has no reason
to believe that the conduct of its business conflicts with, and has not
received any notice of any claim of conflict with, any such right of
others, except with respect to the prior use of the slogan "Socket in your
Pocket" by Charge 2 Go.
To the Company's knowledge, none of the patents owned or licensed by
the Company or any Subsidiary are invalid or unenforceable. To the
Company's
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knowledge, all technical information developed by and belonging to the
Company or any Subsidiary which has not been patented has been kept
confidential, except such information, the disclosure of which could not
reasonably be expected to have a Material Adverse Effect. To the Company's
knowledge, there is no infringement by third parties of any Intellectual
Property of the Company or any Subsidiary. There is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's or any Subsidiary's rights in or to any
Intellectual Property or Third Party Intellectual Property, and the Company
is unaware of any facts which would form a reasonable basis for any such
claim. There is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others that the Company or any
Subsidiary infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the
Company is unaware of any facts which would form a reasonable basis for any
such claim.
(dd) The Company has duly filed or caused to be filed with the U.S.
Patent and Trademark Office (the "PTO") and applicable foreign and
international patent authorities all patent applications described in the
Offering Memorandum and owned by the Company. The Company has complied with
the PTO's duty of candor and disclosure, and complied with such duty that
any other applicable patent office may have, regarding prosecution of the
patent applications and made no misrepresentation in the patent
applications. The Company is not aware of any facts material to a
determination of patentability regarding the patent applications not called
to the attention of the PTO that would preclude the grant of a patent for
the patent applications; and the Company has secured with appropriate legal
instruments clear title to the patent applications and has no knowledge of
any facts which would adversely affect the patent applications.
(ee) The Company and each Subsidiary maintain insurance in such
amounts and covering such risks as the Company considers adequate for the
conduct of its business and the value of its properties, all of which
insurance is in full force and effect. There are no claims by the Company
or any Subsidiary under any such policy or instrument as to which any
insurance company has indicated that it intends to deny liability or to
provide defense under a reservation of rights clause. The Company believes
that it will be able to renew its existing insurance as and when such
coverage expires or will be able to obtain replacement insurance adequate
for the conduct of the business and the value of its properties at a cost
that could not reasonably be expected to have a Material Adverse Effect.
(ff) The Company has in effect insurance covering the Company and its
directors and officers for liabilities or losses arising in connection with
this Offering, including, without limitation, liabilities or losses arising
under the Securities Act, the Exchange Act and applicable foreign
securities laws.
(gg) Each of the Company and each Subsidiary has prepared and timely
filed all federal, state, local, foreign and other tax returns that are
required to be filed by it and has paid or made provision for the payment
of all taxes, assessments, governmental or other similar charges,
including, without limitation, all sales and use taxes and all taxes which
the Company or the Subsidiary is obligated to withhold from amounts owing
to
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employees, creditors and third parties, with respect to the periods covered
by such tax returns (whether or not such amounts are shown as due on any
tax return). No deficiency assessment with respect to a proposed adjustment
of the Company's or any Subsidiary's federal, state, local or foreign taxes
is pending or, to the Company's knowledge, threatened. The accruals and
reserves on the books and records of the Company and the Subsidiaries in
respect of tax liabilities for any taxable period not finally determined
are adequate to meet any assessments and related liabilities for any such
period. Neither the Company nor any Subsidiary have incurred any liability
for taxes other than in the ordinary course of its business. There is no
tax Lien, whether imposed by any federal, state, local, foreign or other
taxing authority, outstanding against the assets, properties or business of
the Company or any Subsidiary.
(hh) No collective bargaining agreement covering any employee of the
Company or any Subsidiary exists that is binding on either the Company or
any Subsidiary, and, to the Company's knowledge, no petition has been filed
or proceeding instituted by an employee or group of employees of either the
Company or any Subsidiary with the National Labor Relations Board seeking
recognition of a bargaining representative. To the Company's knowledge, no
organizational effort currently is being made or threatened by or on behalf
of any labor union to organize any employees of either the Company or any
Subsidiary, and there currently is no labor strike or organized work
stoppage in effect by the employees of either the Company or any
Subsidiary.
(ii) No non-exempt "prohibited transaction" (as defined in either
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time (the "Code")), "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or other event of the kind described in
Section 4043(c) of ERISA (other than events with respect to which the
30-day notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan (as defined in Section
3(3) of ERISA) established or maintained by the Company or any Subsidiary
for which the Company or any Subsidiary has incurred or expects to incur
any material liability; each employee benefit plan (as defined in Section
3(3) of ERISA) established or maintained by Company or any Subsidiary is in
compliance in all material respects with applicable law, including without
limitation, ERISA and the Code; the Company has not incurred and does not
expect to incur material liability under Title IV of ERISA with respect to
the termination of, or withdrawal from, any "pension plan" (as defined in
Section 3(2)) established or maintained by the Company; and each pension
plan (as defined in Section 3(2)) established or maintained by the Company
or any Subsidiary that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the Company's knowledge, nothing has
occurred, whether by action or by failure to act, which could cause the
loss of such qualification. For purposes of this Section 2(ii), the terms
"Company" and "Subsidiary" include any employer, trade, business or
corporation related to or under common control with the Company and any
Subsidiary under Section 414 of the Code, including, without limitation,
Sections 414(b), 414(c), 414(m) and 414(o) of the Code.
-11-
(jj) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of
toxic or hazardous substances or wastes regulated under Environmental Laws
("Hazardous Substances") by the Company or any Subsidiary (or, to the
Company's knowledge, any other entity for whose acts or omissions the
Company is liable) upon any property now or previously owned or leased by
the Company or any Subsidiary or, to the Company's or Subsidiary's
knowledge, upon any other property, in violation of any applicable law,
rule, regulation, order, judgment, decree or permit relating to pollution
or protection of human health and the environment ("Environmental Law").
There has been no disposal, discharge, emission or other release of any
kind onto such property of any Hazardous Substances in violation of
Environmental Laws. Neither the Company nor any Subsidiary has agreed to
assume, undertake or provide indemnification for any liability of any other
person under any Environmental Law, including any obligation for cleanup or
remedial action. There is no pending or, to the Company's knowledge,
threatened administrative, regulatory or judicial action, claim or notice
of noncompliance or violation, investigation or proceedings pursuant to any
Environmental Law against the Company or any Subsidiary or, to the
Company's knowledge, any other party for which the Company or any
Subsidiary may be held liable.
(kk) Neither the Company, any Subsidiary, nor to the Company's
knowledge, any of its officers, directors, employees or agents has at any
time (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of law,
or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States.
(ll) Neither the Company nor any Subsidiary (i) is in violation of its
certificate of incorporation, bylaws, or other organizational documents, or
(ii) is in default under, and no event has occurred which, with notice or
lapse of time or both, would constitute a default under or result in the
creation or imposition of any Lien upon any of its property or assets
pursuant to, any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant, instrument, franchise, license or permit to which it is a party
or by which it is bound or to which any of its property or assets is
subject, except (in the case of clause (ii) above) defaults or Liens
disclosed in the Offering Memorandum.
(mm) Except as described in the Offering Memorandum, none of the
Company or any Subsidiary is in default under any of the contracts
described in the Offering Memorandum or has received a notice or claim of
any such default or has knowledge of any breach of such contracts by the
other party or parties thereto.
(nn) Neither the Company nor any Subsidiary has taken or will take any
action that would cause this Agreement or the issuance or sale of the
Securities to violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System, in each case as in effect or as the same may
hereafter be in effect, on the Closing Date.
-12-
(oo) Except as described in or contemplated by the Offering
Memorandum, no securities of the Company or of any Subsidiary are (i) of
the same class (within the meaning of Rule 144A under the Securities Act)
as the Notes, and (ii) listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a U.S. automated
interdealer quotation system.
(pp) The statistical, industry-related and market-related data
included in the Offering Memorandum are based on or derived from sources
which the Company reasonably and in good faith believes are reliable and
accurate, and such data agree with the sources from which they are derived.
(qq) The Company has not distributed and, prior to the completion of
the distribution of the Notes, will not distribute any offering material in
connection with the offer and sale of the Notes other than a preliminary
offering memorandum, dated July 15, 2005 and the Offering Memorandum.
(rr) The certificates for the shares of Common Stock (including the
Conversion Shares) conform to the requirements of Delaware General
Corporation Law.
(ss) The Company is in compliance with applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 that are effective and is actively taking steps
to ensure that it will be in compliance with other applicable provisions of
the Xxxxxxxx-Xxxxx Act upon the effectiveness of such provisions.
(tt) The Company has implemented the "disclosure controls and
procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) required in order for the Chief Executive Officer and Chief Financial
Officer of the Company to engage in the review and evaluation process
mandated by the Exchange Act. The Company's "disclosure controls and
procedures" are reasonably designed to ensure that all information (both
financial and non-financial) required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the specified time periods, and
that all such information is accumulated and communicated to the Company's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer
and Chief Financial Officer of the Company required under the Exchange Act
with respect to such reports.
(uu) Since December 31, 2003, the Company has not informed its
auditors or the audit committee of the board of directors of the Company
(or persons fulfilling the equivalent function) of (i) any significant
deficiencies in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the Company's
ability to record, process, summarize and report financial data nor any
material weaknesses in internal controls over financial reporting; or (ii)
any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal controls.
-13-
(vv) Except as disclosed in the Offering Memorandum, there are no
outstanding guarantees or other known contingent obligations of the Company
or any Subsidiary.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to and agrees with the Company that:
(a) The Purchaser is a qualified institutional buyer, as that term is
defined in Rule 144A promulgated under the Securities Act, with such
knowledge and experience in financial and business matters as is necessary
in order to evaluate the merits and risks of an investment in the Notes.
(b) The Purchaser is not acquiring the Notes with a view to any
distribution thereof or with any present intention of offering or selling
any of the Notes in a transaction that would violate the Securities Act or
the securities laws of any state of the United States or any other
applicable jurisdiction.
(c) The Purchaser has been furnished with and has carefully read the
Offering Memorandum and is familiar with the terms of the Offering. Except
as disclosed in the Offering Memorandum, with respect to tax and other
economic considerations involved in this investment, the Purchaser is not
relying on the Company (or any of its agents or representatives). The
Purchaser has carefully considered and has, to the extent the Purchaser
believes such discussion necessary, discussed with Purchaser's legal, tax,
accounting and financial advisers the suitability of an investment in the
Securities for the Purchaser's particular tax and financial situation.
(d) The Purchaser has had an opportunity to inspect relevant documents
relating to the organization and operations of the Company. The Purchaser
acknowledges that all documents, records and books pertaining to the
investment in the Notes which the Purchaser has requested have been made
available for inspection by the Purchaser and Purchaser's attorney,
accountant, representatives or other adviser(s).
(e) The Purchaser and/or the Purchaser's advisor(s) or representatives
has/have had a reasonable opportunity to ask questions of and receive
answers and to request additional relevant information from a person or
persons acting on behalf of the Company concerning the Offering.
(f) The Purchaser is not subscribing for the Notes as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar.
(g) The Purchaser has adequate means of providing for its current
financial needs and contingencies, is able to bear the substantial economic
risks of an investment in the Notes for an indefinite period of time, has
no need for liquidity in such investment and, at the present time, could
afford a complete loss of such investment.
-14-
(h) The Purchaser has such knowledge and experience in financial, tax
and business matters so as to enable the Purchaser to use the information
made available to it in connection with the Offering to evaluate the merits
and risks of an investment in the Notes and to make an informed investment
decision with respect thereto.
(i) The Purchaser acknowledges that the Securities have not been
registered under the Securities Act or under any state securities act. The
Purchaser understands further that in absence of an effective Registration
Statement, the Securities can only be sold pursuant to some exemption from
registration, such as Rule 144 of the Securities Act.
(j) The Purchaser recognizes that investment in the Securities
involves substantial risks. The Purchaser acknowledges that it has reviewed
the risk factors set forth in the Offering Memorandum. The Purchaser
further recognizes that no Federal or state agencies have passed upon the
sale or issuance of the Notes pursuant hereto or made any finding or
determination as to the fairness of this investment.
The Purchaser acknowledges that the Company and, for purposes of the
opinions to be delivered to the Purchaser pursuant to Section 6 hereof,
counsel to the Company will rely upon the accuracy and truth of the
foregoing representations and the Purchaser hereby consents to such
reliance.
4. PURCHASE, SALE AND DELIVERY OF THE NOTES.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to the Purchaser, and the
Purchaser agrees to purchase from the Company, at 100% of their principal
amount plus accrued interest, if any, from July 26, 2005, $4,000,000
aggregate principal amount of Notes.
(b) Delivery of and payment for the Notes shall be made at the offices
of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 000 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 9:00 a.m., New York time, on
August 2, 2005, or at such other date and time as the Purchaser and the
Company may agree upon, such time and date being herein referred to as the
"Closing Date." The Notes shall be delivered on the Closing Date against
payment of the purchase price therefore by wire transfer of immediately
available funds to an account specified in writing to the Purchaser by the
Company. One or more global securities representing the Notes shall be
registered by the Trustee in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC"), and credited to such accounts.
5. CERTAIN COVENANTS. The Company covenants and agrees with the Purchaser
that:
(a) The Company will cooperate with the Purchaser in arranging for the
qualification or exemption of the Notes for offer and sale under the
securities or "blue sky" laws of such jurisdictions as the Purchaser may
designate and will continue any such qualifications or exemptions in effect
for as long as may be necessary to complete the
-15-
distribution of the Notes by the Purchaser; PROVIDED, HOWEVER, that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to execute a general consent to service of process
in any jurisdiction or to take any other action that would subject it to
general service of process or to taxation in respect of doing business in
any jurisdiction in which it is not otherwise subject.
(b) The Company will apply the net proceeds from the sale of the Notes
materially as set forth under "Use of Proceeds" in the Offering Memorandum.
(c) None of the Company or any of its respective affiliates (as
defined in Rule 144(a) under the Securities Act) will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Securities Act) which could be integrated
with the sale of the Notes in a manner which would require the registration
under the Securities Act of the Notes.
(d) For so long as the Notes constitute "restricted" securities within
the meaning of Rule 144(a)(3) under the Securities Act, the Company will
not, and will not permit any Subsidiary to, solicit any offer to buy or
offer to sell the Notes by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(e) For so long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and not able to be sold in their entirety by a seller under
Rule 144 under the Securities Act (or any successor provision), the Company
will make available, upon request, to any such seller of such Notes the
information specified in Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to Section 13 or 15(d) of the Exchange Act.
(f) The Company will not take any action prohibited by Regulation M
under the Exchange Act in connection with the distribution of the
Securities contemplated hereby.
(g) The Company will (i) permit the Notes to be included for quotation
on the PORTAL Market, and (ii) permit the Notes to be eligible for
clearance and settlement through DTC.
(h) The Company will use its commercially reasonable efforts to list
the Conversion Shares for quotation on The Nasdaq National Market as
promptly as practicable but in no event later than the time that the
Registration Statement is declared effective in accordance with the
Registration Rights Agreement.
(i) The Company will, at all times, reserve and keep available, free
of preemptive rights, enough shares of Common Stock for the purpose of
enabling the Company to satisfy its obligations to issue the Conversion
Shares upon conversion of the Notes.
-16-
(j) The Company will do and perform all things required to be done and
performed by it under this Agreement and the other Offering Documents and
will use its best efforts to satisfy all conditions on its part to the
obligations of the Purchaser to purchase and accept delivery of the Notes.
6. CONDITIONS OF THE PURCHASER'S OBLIGATIONS. The obligations of the
Purchaser to purchase and pay for the Notes are subject to the absence from any
certificates, opinions, written statements or letters furnished to the Purchaser
pursuant to this Section 6 of any misstatement or omission and to the following
additional conditions unless waived in writing by the Purchaser.
(A) The Purchaser shall have received an opinion in form and
substance reasonably satisfactory to the Purchaser, dated the date
hereof, of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP, United States and
Securities counsel to the Company, and Meitar, Liquornik, Geva &
Leshem Xxxxxxxxx, Law Offices, Israeli counsel to the Company,
covering the matters set forth on Exhibit B hereto.
(B) The Purchaser shall have received an opinion in form and
substance reasonably satisfactory to the Purchaser, dated the date
hereof, of Dr. Xxxx Xxxxxxxx, intellectual property counsel to the
Company, covering the matters set forth on Exhibit C hereto.
(C) The representations and warranties of the Company contained
in this Agreement shall be true and correct on and as of the date
hereof, and the Company shall have complied in all material respects
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the date hereof.
(D) None of the issuance and sale of the Securities pursuant to
this Agreement or any of the transactions contemplated by this
Agreement or any of the other Offering Documents shall be enjoined
(temporarily or permanently) and no restraining order or other
injunctive order shall have been issued; and there shall not have been
any legal action, statute, order, decree or other administrative
proceeding enacted, instituted or overtly threatened against the
Company or against the Purchaser relating to the issuance of the
Securities or the Purchaser's activities in connection therewith or
any other transactions contemplated by this Agreement or the Offering
Memorandum or the other Offering Documents.
(E) Subsequent to the date of the consummation of the Rule 144A
Offering (the "144A Closing Date") and since the date of the most
recent financial statements in the Offering Memorandum (exclusive of
any amendment or supplement thereto after the 144A Closing Date),
there shall not have occurred (i) any change, or any development
involving a prospective change in, or affecting the business,
condition (financial or other), properties or results of operations
of, the Company or any Subsidiary not disclosed in or contemplated by
the Offering Memorandum that is, in the judgment of the Purchaser, so
material
-17-
and adverse as to make it impracticable or inadvisable to proceed with
the Offering on the terms and in the manner contemplated hereby, or
(ii) any event or development relating to or involving the Company or
any Subsidiary or any of their respective officers or directors that
makes any statement of a material fact made in the Offering Memorandum
untrue or that, in the opinion of the Company and its counsel or the
Purchaser and its counsel, requires the making of any addition to or
change in the Offering Memorandum in order to state a material fact
necessary in order to make the statements made therein not misleading.
(F) The Purchaser shall have received a certificate, dated the
Closing Date and signed by the President and the Chief Executive
Officer of the Company, to the effect that:
(i) All of the representations and warranties of the Company
set forth in this Agreement are true and correct as of the
Closing Date, all agreements, conditions and obligations of the
Company to be performed, satisfied or complied with hereunder on
or prior the Closing Date have been duly performed, satisfied or
complied with.
(ii) The issuance and sale of the Notes pursuant to this
Agreement and the consummation of the transactions contemplated
by this Agreement have not been enjoined (temporarily or
permanently) and no restraining order or other injunctive order
has been issued and there has not been any legal action, order,
decree or other administrative proceeding instituted or, to such
officers' knowledge, threatened against the Company relating to
the issuance of the Securities or the Purchaser's activities in
connection therewith or in connection with any other transactions
contemplated by this Agreement or the other Offering Documents.
(iii) Subsequent to the 144A Closing Date and since the date
of the most recent financial statements in the Offering
Memorandum (exclusive of any amendment or supplement thereto
after the 144A Closing Date), there has not occurred (1) any
change, or any development involving a prospective change, in or
affecting the business, condition (financial or other),
properties or results of operations of the Company or any
Subsidiary, not contemplated by the Offering Memorandum, or (2)
any event or development relating to or involving the Company or
any Subsidiary or any of their respective officers or directors
that makes any statement of a material fact made in the Offering
Memorandum untrue or that requires the making of any addition to
or change in the Offering Memorandum in order to state a material
fact necessary in order to make the statements made therein not
misleading.
(iv) As of the Closing Date and after giving effect to the
consummation of the transactions contemplated hereby, there shall
exist no Default or Event of Default (as defined in the
Indenture).
-18-
(G) Each of the Offering Documents and each other agreement or
instrument executed in connection with the transactions contemplated
thereby shall be satisfactory in form and substance to the Purchaser
and shall have been executed and delivered by all the respective
parties thereto and shall be in full force and effect, and there shall
have been no amendments, alterations, modifications or waivers of any
provision thereof since the date of this Agreement.
(H) the Notes and the transactions contemplated by this
Agreement, the other Offering Documents and all documents and papers
relating thereto shall be satisfactory to the Purchaser and counsel to
the Purchaser. The Purchaser and counsel to the Purchaser shall have
received copies of such papers and documents as they may reasonably
request in connection therewith, all in form and substance reasonably
satisfactory to them.
(I) The Notes shall have been approved for trading on PORTAL.
(J) The Purchaser shall have received the Registration Rights
Agreement executed by the Company, and such agreement shall be in full
force and effect.
(K) The Company shall have furnished or caused to be furnished to
the Purchaser such further certificates and documents as the Purchaser
shall have reasonably requested.
(L) The Purchaser shall have received counterparts, conformed as
executed, of the Indenture and the Notes shall have been duly executed
and delivered by the Company and duly authenticated by the Trustee.
All such opinions, certificates, letters, schedules, documents or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are satisfactory in all material respects to the Purchaser
and counsel to the Purchaser. The Company shall furnish to the Purchaser such
conformed copies of such opinions, certificates, letters, schedules, documents
and instruments in such quantities as the Purchaser shall reasonably request.
7. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless (i) the Purchaser,
(ii) each person, if any, who controls the Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and
(iii) the respective officers, directors, partners, employees,
representatives and agents of the Purchaser or any controlling person, from
and against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including, but not limited to, reasonable
attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim
-19-
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon (1) any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum, (2) the omission or alleged omission to state in the Offering
Memorandum a material fact necessary to make the statements therein not
misleading, or (3) any breach of any representation, warranty, covenant or
agreement made by the Company in this Agreement, any of the other Offering
Documents or any certificate, letter, schedule, document or instrument
delivered in connection herewith or therewith. This indemnity agreement
will be in addition to any liability that the Company may otherwise have,
including under this Agreement.
(b) The Purchaser shall indemnify and hold harmless (i) the Company,
(ii) each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and
(iii) the officers, directors, partners, employees, representatives and
agents of the Company, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including, but not
limited to, attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any breach of any representation, warranty,
covenant or agreement made by the Purchaser in this Agreement or any
certificate, letter, schedule, document or instrument delivered in
connection herewith. This indemnity will be in addition to any liability
that the Purchaser may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not
relieve it from any liability which it may have under this Section 7). In
case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate, at its own expense in
the defense of such action, and to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel satisfactory to such indemnified party; PROVIDED, HOWEVER,
that counsel to the indemnifying party shall not (except with the written
consent of the indemnified party) also be counsel to the indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified
party or parties unless (i) the employment of such counsel shall have been
authorized in writing by one of the indemnifying parties in connection with
the defense of such action, (ii) the
-20-
indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of
commencement of the action, (iii) the indemnifying party does not
diligently defend the action after assumption of the defense, or (iv) such
indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case
the indemnifying party or parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of one such counsel and any
local counsel shall be borne by the indemnifying parties. No indemnifying
party shall, without the prior written consent of the indemnified parties,
effect any settlement or compromise of, or consent to the entry of judgment
with respect to, any pending or threatened claim, investigation, action or
proceeding in respect of which indemnity or contribution may be or could
have been sought by an indemnified party under this Section 7 or Section 8
hereof (whether or not the indemnified party is an actual or potential
party thereto), unless (x) such settlement, compromise or judgment (A)
includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding
and (B) does not include a statement as to or an admission of fault,
culpability or any failure to act, by or on behalf of the indemnified
party, and (y) the indemnifying party confirms in writing its
indemnification obligations hereunder with respect to such settlement,
compromise or judgment.
8. CONTRIBUTION. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 is for any reason held to be
unavailable from an indemnifying party or is insufficient to hold harmless a
party indemnified thereunder, the Company, on the one hand, and the Purchaser,
on the other hand, shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
liabilities, claims, damages and expenses suffered by the Company, any
contribution received by the Company from persons, other than the Purchaser, who
may also be liable for contribution, including persons who control the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) to which the Company and the Purchaser may be subject, in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Purchaser, on the other hand, from the
offering of the Notes or, if such allocation is not permitted by applicable law
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company, on the one hand,
and the Purchaser, on the other hand, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Purchaser, on the
other hand, shall be deemed to be in the same proportion as (a) the total
proceeds from the offering of the Notes (net of discounts but before deducting
expenses) received by the Company bear to (b) the discounts and commissions
received by the Purchaser, respectively. The relative fault of the Company, on
the one hand, and of the Purchaser, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material
-21-
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by PRO RATA allocation (even if the Purchaser were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to above. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in Section 7 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 8, (i) in no case shall
the Purchaser be required to contribute any amount in excess of the amount by
which the discounts and commissions received by the Purchaser in respect of the
Notes resold by such Purchaser in the initial placement of such Notes exceeds
the amount of any damages which the Purchaser has otherwise been required to pay
by reason of any untrue or alleged untrue statement or omission, or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, (A) each person, if any, who
controls the Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and (B) the respective officers, directors,
partners, employees, representatives and agents of the Purchaser or any
controlling person shall have the same rights to contribution as such Purchaser,
and (C) each person, if any, who controls any Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and (D) the
officers, directors, employees, representatives and agents of the Company shall
have the same rights to contribution as the Company, subject in each case to
clauses (i) and (ii) of this Section 8. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8, notify such party
or parties from whom contribution may be sought, but the failure to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. No party shall be liable for contribution with respect
to any action or claim settled without its prior written consent, PROVIDED that
such written consent shall not be unreasonably withheld or delayed.
9. SURVIVAL CLAUSE. The respective representations, warranties, agreements,
covenants and indemnities of the Company and the Purchaser set forth in this
Agreement shall remain in full force and effect, regardless of (a) any
investigation made by or on behalf of officers, directors, partners, employees,
agents, representatives or controlling persons referred to in Sections 7 and 8
hereof, and (b) delivery of and payment for the Notes, and shall, subject to
Section 11 hereof, be binding upon and shall inure to the benefit of, any
successors, permitted assigns, heirs and legal representatives of the Company,
the Purchaser and the indemnified parties referred to in Section 7 hereof. The
respective agreements, covenants and indemnities set forth in Sections 7, 8, and
9 hereof shall remain in full force and effect, regardless of any termination of
this Agreement.
-22-
10. NOTICES. All notices and other communications provided for or permitted
hereunder shall be made in writing, shall be delivered by hand delivery, by
telecopier, by courier guaranteeing overnight delivery or by first-class mail,
return receipt requested, and shall be deemed given (i) when made, if made by
hand delivery, (ii) upon confirmation, if made by telecopier (provided notice is
also given by some other means permitted by this Section 10), (iii) one Business
Day after being deposited with such courier, if made by overnight courier or
(iv) on the date indicated on the notice of receipt, if made by first-class
mail, to the parties as follows: to the Purchaser c/o Merrill Xxxxx Investment
Managers, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxx
Xxxxxxxxx, facsimile number: (000) 000-0000, and with a copy to, and if sent to
the Company, to Medis Technologies Ltd., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx Xxxxxxxx, facsimile number: (000) 000-0000, and with a
copy to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP, Attention: Xxx X. Xxxxxxx, Esq.,
facsimile number: (000) 000-0000.
11. SUCCESSORS. This Agreement shall inure to the benefit of and be binding
upon the Purchaser and the Company and their respective successors, permitted
assigns and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (a)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of any person or persons who control the Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and the respective officers, directors, partners, employees, agents
and representatives of the Purchaser and any such person or persons, and (b) the
indemnities of the Purchaser contained in Section 7 of this Agreement shall also
be for the benefit of the directors, officers, employees, agents and
representatives of the Company and any person or persons who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act. No purchaser of Notes from the Purchaser will be deemed a
successor or an assign because of such purchase.
12. NO WAIVER; MODIFICATIONS IN WRITING. No failure or delay on the part of
the Company or the Purchaser in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or the Purchaser at law or in equity or otherwise. No
waiver of or consent to any departure by the Company or the Purchaser from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof; PROVIDED that notice of any such waiver
shall be given to each party hereto as set forth below. Except as otherwise
provided herein, no amendment, modification or termination of any provision of
this Agreement shall be effective unless signed in writing by or on behalf of
the Company and the Purchaser. Any amendment, supplement or modification of or
to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by the Company or the Purchaser from
the terms of any provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on the
-23-
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties hereto and supersedes all prior agreements, representations,
warranties, understandings and arrangements, oral or written, among the parties
hereto with respect to the subject matter hereof.
14. APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THE
VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET
FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO
CONFLICTS OF LAW. The Company agrees that any suit, action or proceeding against
the Company arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in any state or federal court in The City
of New York, New York, and waives any objection which it may now or hereafter
have to the laying of venue of any such proceeding, and irrevocably submits to
the non-exclusive jurisdiction of such courts in any suit, action or proceeding.
The Company expressly accepts the non-exclusive jurisdiction of any such court
in respect of any such suit, action or proceeding. The Company agrees that a
final judgment in any such proceeding brought in any such court shall be
conclusive and binding thereupon and may be enforced in any other court in the
jurisdiction to which the Company is or may be subject by suit upon such
judgment. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR
TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE
IN COUNTERPARTS FOLLOWS]
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[SIGNATURE PAGE TO PURCHASE AGREEMENT]
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement between the Company and the
Purchaser.
Very truly yours,
MEDIS TECHNOLOGIES LTD.
a Delaware corporation
By:
-----------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
[Signatures Continue on Next Page]
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The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXXX XXXXX XXXX FUND, INC., HIGH INCOME PORTFOLIO
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
FAM SERIES: MERCURY HIGH YIELD PORTFOLIO
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
FAM VARIABLE SERIES: MERCURY HIGH CURRENT INCOME V.I. FUND
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
CORP HIGH YIELD FUND, INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
CORP HIGH YIELD FUND, III, INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
-26-
CORP HIGH YIELD FUND V, INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
CORP HIGH YIELD FUND VI, INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
XXXXXXX XXXXX INTERNATIONAL INVESTMENT FUNDS - US HIGH YIELD BOND FUND
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
XXXXXXX XXXXX GLOBAL INVESTMENT SERIES - INCOME STRATEGIES PORTFOLIO
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
DEBT STRATEGIES FUND, INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
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FLOATING RATE INCOME STRATEGIES FUND, INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
FLOATING RATE INCOME STRATEGIES FUND II, INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Signatory
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SCHEDULE I
PURCHASER AMOUNT
Xxxxxxx Xxxxx Xxxx Fund, Inc., High Income Portfolio $1,855,000
Fam Series: Mercury High Yield Portfolio 37,000
Fam Variable Series: Mercury High Current Income V.I. Fund 90,000
Corp High Yield Fund, Inc. 180,000
Corp High Yield Fund, III, Inc. 180,000
Corp High Yield Fund V, Inc. 279,000
Corp High Yield Fund VI, Inc. 295,000
Xxxxxxx Xxxxx International Investment Funds - US High Yield Bond Fund 55,000
Xxxxxxx Xxxxx Global Investment Series - Income Strategies Portfolio 399,000
Debt Strategies Fund, Inc. 399,000
Floating Rate Income Strategies Fund, Inc. 185,000
Floating Rate Income Strategies Fund II, Inc. 46,000
-----------------
$4,000,000
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SCHEDULE 2(N)
In December 2004, the Company moved to its new facilities in Lod, Israel. As
part of the moving process, the Company applied for a business permit from the
municipality of Lod. The Company has paid all necessary fees and undertaken all
necessary administrative activities relating thereto. The Company has not yet
been issued the permit but under city ordinance is permitted to conduct business
while the permit application is pending.
-30-
EXHIBIT A
Jurisdiction of
Subsidiary Incorporation
------------------------------------------------- ---------------------
Medis, Inc. Delaware
Medis El Ltd. Israel
More Energy Ltd. Israel
As used in this Agreement, the term "Subsidiary" does not include Cell Kinetics
Ltd., Medis CellScan Ltd. and New Devices Engineering A.K.O. Ltd. The Company
represents and warrants that none of such companies owns any securities of any
Subsidiary, conducts any business or owns any assets, except that New Devices
Engineering A.K.O. Ltd. owns two patents, neither of which is used in the
business of the Company or any of its Subsidiaries as currently conducted or as
proposed to be conducted or is otherwise material to the Company in any respect.
-31-
EXHIBIT B
FORM OF OPINION OF XXXXXXXXXXXX XXXX & XXXXXXXXX LLP
1. Each of the Company and each U.S. Subsidiary has been incorporated and
validly exists as a corporation in good standing under the laws of its
respective jurisdiction of incorporation, with the requisite corporate power and
authority to own its properties and conduct its businesses as described in the
Offering Memorandum. Each of the Company and each U.S. Subsidiary is duly
qualified as a foreign corporation in the specified jurisdictions set forth on
Schedule A annexed to this opinion letter.
2. The Company has the authorized capitalization as set forth in the
Offering Memorandum, and all of the authorized shares of capital stock of the
Company conform in all material respects to the descriptions thereof contained
in the Offering Memorandum in the section entitled "Description of Capital
Stock". All shares of Common Stock outstanding on the date of the Offering
Memorandum have been duly and validly authorized and issued, are fully paid and
non-assessable. To such counsel's knowledge, except as disclosed and as of the
date or dates disclosed in the Offering Memorandum and in the Purchase
Agreement, there are (i) no outstanding securities of the Company convertible
into or evidencing the right to subscribe for any shares of capital stock of the
Company, (ii) no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other instruments or agreements of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible into or evidencing the right to subscribe for any shares
of such stock, and (iii) no agreements or arrangements with respect to the
voting, sale or transfer of any shares of capital stock of the Company to which
the Company is a party, and, to such counsel's knowledge, subsequent to the date
or dates disclosed in the Offering Memorandum, no other securities described in
clauses (i) and (ii) were issued or granted, other than options which were
granted or exercised under, or shares of Common Stock which were issued or sold
pursuant to, the Company's employee and director stock option plan, which plan
is described in the Offering Memorandum.
3. All of the outstanding shares of capital stock or other equity
securities of each U.S. Subsidiary held by the Company, to such counsel's
knowledge, are held free and clear of all Liens and limitations on voting rights
and are duly authorized, validly issued, fully paid and non-assessable.
4. The Company has the requisite corporate power and authority to execute
and deliver the Purchase Agreement, the Registration Rights Agreement and the
Indenture, to perform its obligations thereunder, to issue and sell and deliver
the Notes to the Purchaser and to issue and deliver the Conversion Shares.
5. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and (assuming that the Registration Rights Agreement is
the valid and legally binding obligation of the Purchaser) constitutes a valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with its terms, except that the enforcement thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
and court decisions now or hereafter in effect relating to or affecting
creditors'
-32-
rights generally; and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding at law or in equity) (clauses (i)
and (ii) together, the "Enforceability Exceptions"); and (iii) the fact that any
rights to indemnity or contribution thereunder may be limited by federal or
state securities laws and public policy considerations.
6. The Purchase Agreement has been duly authorized, executed and delivered
by the Company and (assuming that the Purchase Agreement is the valid and
legally binding obligation of the Purchaser) constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be limited by the
Enforceability Exceptions and the fact that any rights to indemnity or
contribution thereunder may be limited by federal or state securities laws and
public policy considerations.
7. The Indenture has been duly authorized, executed and delivered by the
Company and (assuming that the Indenture is the valid and legally binding
obligation of the Trustee) constitutes a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except that the enforcement thereof may be limited by the Enforceability
Exceptions.
8. The Notes have been duly authorized, executed and issued by the Company
and, when duly authenticated by the Trustee in accordance with the terms of the
Indenture and delivered to and paid for by the Purchaser in accordance with the
terms of the Purchase Agreement, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be limited by the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture
and the Registration Rights Agreement.
9. The Conversion Shares have been duly authorized and reserved for
issuance upon conversion of the Notes and, when issued upon conversion of the
Notes in accordance with the terms of the Notes and the Indenture, will be
validly issued, fully paid and non-assessable, and such issuance of the
Conversion Shares will not be subject to any preemptive rights under (i) the
Company's Certificate of Incorporation or By-laws, (ii) Delaware General
Corporation Law, or (iii) to such counsel's knowledge, under the express terms
or provisions of any material agreement or other instrument to which the Company
is a party.
10. The execution and delivery by the Company of the Purchase Agreement,
the Registration Rights Agreement and the Indenture, the issuance of the Notes
and the performance by the Company of its obligations thereunder do not and will
not (i) conflict with or result in a breach of any of the express terms and
provisions of, or constitute a default (or an event that with notice or lapse of
time, or both, would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries pursuant to, any indenture, mortgage, deed of
trust, loan agreement or any other agreement or instrument filed or incorporated
by reference as an exhibit to the Form 10 K for the year ended December 31, 2004
or the Form 10 Q for the three months ended March 31, 2005, or any franchise,
license or permit known to such counsel to which the Company or any of the U.S.
Subsidiaries is a party or by which the Company or any of the U.S. Subsidiaries
or their respective properties or assets are otherwise bound, or (ii) violate or
conflict
-33-
with any provision of the certificate of incorporation or by-laws of the Company
or any of the U.S. Subsidiaries or, to such counsel's knowledge, any judgment,
decree, order, statute, rule or regulation of any court or any judicial,
regulatory or other legal or governmental agency or body.
11. No consent, approval, authorization or qualification of or with any
federal, New York or Delaware State court, governmental agency or body is
required for the issue and sale of the Notes and the issuance of the Conversion
Shares, the execution and delivery by the Company of the Purchase Agreement, the
Registration Rights Agreement or the Indenture, the consummation by the Company
of the transactions contemplated thereby or the performance by the Company of
its obligations thereunder, except such as may be required (i) in connection
with the Company registering the Securities for resale pursuant to the
Registration Rights Agreement, (ii) under applicable state securities or "blue
sky" laws in connection with the purchase and sale of the Securities or in
connection with the resale of the Notes or the underlying Conversion Shares, or
(iii) in connection with the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended.
12. To such counsel's knowledge, except as set forth in the Offering
Memorandum, there are no judicial, regulatory or other legal or governmental
proceedings pending to which the Company or any of the Subsidiaries is a party
or of which any property of the Company or any of the Subsidiaries is the
subject that are required to be described in the Offering Memorandum and are not
so described and, to such counsel's knowledge, no such proceedings are
threatened by governmental authorities or others.
13. Assuming (i) all of the representations and warranties of the Purchaser
and the Company set forth in the Purchase Agreement are true and correct, (ii)
compliance by the Purchaser and the Company with their respective covenants set
forth in the Purchase Agreement and (iii) all of the representations and
warranties made in accordance with the Offering Memorandum by the purchasers to
whom the Purchaser initially resells the Notes are true and correct, it is not
necessary in connection with the offer, sale and delivery of the Notes to the
Purchaser pursuant to the Purchase Agreement or the offer, sale and delivery of
the Notes by the Purchaser to the initial purchasers therefrom, in the manner
contemplated by the Purchase Agreement and as described in the Offering
Memorandum, to register the Securities under the Securities Act of 1933, as
amended, or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended.
14. The Company is not and, immediately after giving effect to the offering
and sale of the Notes and the application of the proceeds thereof as described
in the Offering Memorandum, will not be required to register as an "investment
company," as defined in the Investment Company Act of 1940, as amended.
15. When the Notes are issued and delivered pursuant to the Purchase
Agreement, such Notes will not be of the same class (within the meaning of Rule
144A under the Securities Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that are quoted on a United States automated inter-dealer quotation system.
-34-
16. The statements in the Offering Memorandum under the captions
"Description of the Notes", "Description of Capital Stock," insofar as such
statements purport to summarize the provisions of the Indenture, the
Registration Rights Agreement, the Notes and the Common Stock (including the
Conversion Shares), fairly summarize such provisions.
17. The statements in the Offering Memorandum under the caption "Certain
U.S. Federal Income Tax Considerations," insofar as they purport to constitute
summaries of matters of United States federal income and, in the case of
non-resident aliens, estate tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters described therein
in all material respects.
18. Each document incorporated by reference in the Offering Memorandum
(except for the financial statements and related schedules included therein as
to which such counsel need express no opinion) complied, when filed with the
Commission, as to form, in all material respects with the Exchange Act and the
rules and regulations of the Commission promulgated thereunder.
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with officers and representatives of the
Company, representatives of the independent auditors for the Company and the
Purchaser at which the contents of the Offering Memorandum (including the
documents incorporated by reference therein) and related matters were discussed
and, no facts have come to the attention of such counsel that causes such
counsel to believe that the Offering Memorandum (including the documents
incorporated by reference therein), as of its date (or any amendment thereof or
supplement thereto made prior to the Closing Date as of the date of such
amendment or supplement) and as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief or opinion with
respect to the financial statements, including the related notes, and schedules
and all other financial data included or incorporated by reference therein).
-35-
EXHIBIT C
FORM OF OPINION OF IP COUNSEL
1. We have disclosed or intend to disclose to the United States Patent and
Trademark Office any references known by us to be material to the patentability
of the claimed inventions of the United States patent applications of the
Company being prosecuted by us listed on SCHEDULE A in accordance with 37 C.F.R.
ss. 1.56.
2. To our knowledge, the Company is the sole assignee of each of the United
States patent applications of the Company being prosecuted by us listed on
SCHEDULE A as pending for which a serial number has been issued; or to our
knowledge all inventors on such patent applications are under an obligation to
assign all of their rights in such applications to the Company, except for the
cases listed on SCHEDULE B.
3. To our knowledge, the Company has not received any notice of
infringement with respect to any patent, trademark or copyright or any notice of
misappropriation of trade secrets in relation to the Company's currently
contemplated [DESCRIBE PRODUCT].
4. Based on our knowledge of the Company's currently contemplated [DESCRIBE
PRODUCT] as described to us by the Company, the Company is not currently
violating any patent right of a third party which we are aware of.
5. We are not aware of any pending or threatened legal or governmental
proceedings relating to patent rights, copyrights trademark rights, trade
secrets or other proprietary rights of the Company (other than the patent
prosecution or trademark proceedings themselves).
6. Nothing has come to our attention which would lead us to believe that
the statements under the caption entitled "RISK FACTORS", found on pages 30 and
21 of the Company's most recent Form 10 K and pertaining to Intellectual
Property" as of the date thereof and at any Closing Date, contain any untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, not misleading.
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