EXCHANGE AGREEMENT
EXHIBIT
10.5
This
Exchange Agreement (this “Agreement”) is made and entered into as of September
28, 2008, by and between Xxxxxxxx Xxxxxxx (the “Director”) and Medis
Technologies Ltd., a Delaware corporation (the “Company”). Each of
the Director and the Company are sometimes referred to herein as a “Party” or,
collectively, as the “Parties.”
RECITALS
WHEREAS,
the Director has been granted the options to purchase shares of common stock,
par value $0.01 per share (the “Common Stock”), of the Company, which are
identified on Exhibit A attached hereto (the “Options”);
WHEREAS,
the Board of Directors of the Corporation (the “Board”), the Compensation
Committee of the Board and the Audit Committee of the Board, each (a) has
carefully reviewed and analyzed the transactions contemplated herein, (b)
believes it to be in the Company’s best interest to (i) cancel the Options upon
their surrender to the Company pursuant to the terms hereof and (ii) issue
certain restricted shares of Common Stock to the Director as an incentive to the
Director to surrender the Options and for the Director’s long-term future
performance, and (c) has approved and authorized the Company to enter into such
transactions, all upon the terms and conditions hereinafter set forth;
and
WHEREAS,
the Director desires to enter into the transactions contemplated by this
Agreement, all upon the terms and conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the mutual benefits to be derived from this
Agreement and the representations, warranties, covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Surrender and Cancellation
of Options. Subject to the terms and conditions of this
Agreement, the Director agrees as of the date hereof to surrender to the Company
all of the Options, at which time the Company shall cancel the Options. Upon
such cancellation, the stock option agreements representing the Options (the
“Option Agreements”) and any other document regarding the surrendered Options
will terminate and be of no further force and effect. Such surrender and
cancellation are together referred to herein as the “Option
Cancellation.”
2. Issuance of Restricted
Shares. Subject to the terms and conditions of this Agreement,
the Company agrees to issue to the Director, as of the date hereof, an aggregate
of 25,256 shares of its Common Stock (the “Restricted Shares”), set forth more
fully on Exhibit A attached hereto, which Restricted Shares shall be issued
pursuant to, and have the terms and conditions set forth in, the Company’s 2007
Equity Incentive Plan and in one or more Restricted Share Agreements in the form
attached hereto as Exhibit B (the “Restricted Share Agreement” and, collectively
with this Agreement, the “Transaction Documents”). The issuance of the
Restricted Shares to the Director, collectively with the Option Cancellation,
the “Transactions.”
3. Deliveries. Concurrently
with the Option Cancellation, (a) the Director shall deliver to the Company the
originally executed Option Agreements representing all of the
Options,
marked “cancelled” and (b) the Company and the Director shall execute and
deliver the Restricted Share Agreement(s).
4. Representations and
Warranties of the Director. The Director represents and
warrants to the Company as follows:
(a) Obligation of the
Director. The Transaction Documents constitute the legal,
valid and binding obligation of the Director, enforceable in accordance with
their respective terms.
(b) Non-Contravention. Neither
the execution and delivery of the Transaction Documents, nor the consummation of
the Transactions, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which the Director is subject or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Director is a party or by
which the Director is bound or to which the Director’s assets are
subject.
(c) The
Options. The Director is the record and beneficial owner of
the Options. The Director owns the Options free and clear of all claims,
charges, equities, liens, security interests, pledges, mortgages or encumbrances
(other than (i) as will be discharged on or prior to the date hereof and (ii)
any restrictions under the Securities Act of 1933, as amended (the “Securities
Act”) or state securities laws).
(d) Investment
Experience. The Director is an “accredited investor” as
defined in Rule 501(a) of Regulation D, promulgated under the Securities Act or,
if not an “accredited investor,” either alone or with the Director’s
representatives has such knowledge and experience in financial and business
matters that the Director is capable of evaluating the merits and risks of the
Transactions. The Director is aware of the Company’s business affairs and
financial condition and has had access to and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
enter into and consummate the Transactions. The Director acknowledges that the
Director has been afforded the opportunity to ask questions and receive answers
from the Company regarding the (i) Company, (ii) Transactions, (iii) Transaction
Documents and (iv) Restricted Shares, and to obtain any additional information
reasonably necessary to verify the accuracy of such information, and has
received satisfactory answers to any such questions. The Director further
acknowledges that the Director has been afforded the opportunity to consult the
Director’s own legal, tax and financial advisors regarding the (i) Company, (ii)
Transactions, (iii) Transaction Documents and (iv) Restricted Shares, and that
the Director possesses, either alone or with the Director’s representatives,
such business and financial experience to protect the Director’s own interests
in connection with the consummation of the Transactions, and further
acknowledges that the Director has not received and is not relying upon any
legal, tax or financial advice from the Company or any of its employees,
officers or representatives.
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(e) Investment
Intent. The Director is acquiring the Restricted Shares for
the Director’s own account for investment purposes only and not with a present
view to, or for resale in connection with, any distribution thereof, or any
direct or indirect participation in any such distribution, in whole or in part,
within the meaning of the Securities Act. No arrangement exists between the
Director and the Company and any other person regarding the resale or
distribution of the Restricted Shares. The Director understands that the right
to transfer the Restricted Shares is not permitted absent registration under the
Securities Act or an exemption therefrom and that the Company is not required to
register the Restricted Shares under the Securities Act or register or qualify
the Restricted Shares under any state securities law.
5. Representations and
Warranties of the Company. The Company represents and warrants
to the Director as follows:
(a) Organization. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) Authorization. (i)
The Company has all requisite corporate power, capacity and authority and has
taken all requisite corporate action to authorize, execute and deliver each of
the Transaction Documents, to consummate the Transactions and to carry out and
perform all of its obligations under the Transaction Documents and (ii) the
Transaction Documents each constitutes the legal, valid and binding obligation
of the Company. Except as otherwise described herein or as may be
required by The Nasdaq Global Market, the Company is not required to give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any government or governmental agency or third party in order to
consummate the Transactions.
(c) Non-Contravention. Neither
the execution and delivery of the Transaction Documents, nor the consummation of
the Transactions, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which the Company is subject, or
violate any provision of its certificate of incorporation or bylaws or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any material agreement, contract, lease,
license, instrument, or other arrangement to which the Company is a party or by
which it is bound or to which its assets are subject.
6. Covenants.
(a) The
Director hereby covenants and agrees that (i) the Director will use the
Director’s best efforts to take all action and to do all things necessary,
proper or advisable in order to consummate and make effective the Transactions
and (ii) in case at any time after the date hereof any further action is
necessary to carry out the purposes of the Transaction Documents, the Director
will take such further action (including, without limitation, the execution and
delivery of such further instruments and documents) as the Company reasonably
may request, all at the sole cost and expense of the Company.
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(b) The
Company hereby covenants and agrees that (i) it will use its best efforts to
take all action and to do all things necessary, proper or advisable in order to
consummate and make effective the Transactions and (ii) in case at any time
after the date hereof any further action is necessary to carry out the purposes
of the Transaction Documents, it will take such further action (including,
without limitation, the execution and delivery of such further instruments and
documents) as the Director reasonably may request, all at the sole cost and
expense of the Company.
7. Miscellaneous.
(a) Entire
Agreement. The Transaction Documents constitute the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, to
the extent they related in any way to the subject matter hereof.
(b) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors, assigns, personal
representatives, heirs, executors and administrators. Notwithstanding
the foregoing, neither of the Parties may assign either this Agreement or any of
their respective rights, interests, or obligations hereunder without the prior
written approval of the other Party.
(c) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
(d) Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(e) Governing
Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(f) Amendments and
Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by the Company and the
Director. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(g) Survival. The
representations, warranties, covenants and agreements made in this Agreement
shall survive the execution and delivery hereof and any investigation made by
the Company or the Director.
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(h) Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE TO FOLLOW]
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IN
WITNESS WHEREOF, the Parties hereto have executed this Exchange Agreement as of
the date first above written.
| /s/ Xxxxxxxx Xxxxxxx | |||
| Xxxxxxxx Xxxxxxx | |||
| MEDIS TECHNOLOGIES LTD. | |||
|
By:
|
/s/ Xxxxxx Xxxxxxxx | ||
|
Name:
Xxxxxx Xxxxxxxx
|
|||
|
Title:
Deputy Chairman and COO
|
|||
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Exhibit
A
Options and Restricted
Shares
|
Maximum
Number of Subject Options to be Exchanged
|
Maximum
Number of Exchange Shares (at .75:1)
|
|
|
Xxxxxxxx
Xxxxxxx
|
33,675
|
25,256
|
|
All
Exchange Shares shall vest in full on August 20,
2009
|
||
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Exhibit
B
2007 EQUITY INCENTIVE
PLAN
RESTRICTED SHARE
AGREEMENT
AGREEMENT,
dated as of September 28, 2008, between Medis Technologies Ltd., a Delaware
corporation (the “Company”), and Xxxxxxxx Xxxxxxx (the “Grantee”).
W
I T N E S S E T H:
WHEREAS,
as of April 18, 2007, the Company adopted the Medis Technologies Ltd. 2007
Equity Incentive Plan (the “Plan”), which Plan authorizes, among other things,
the grant of restricted shares of common stock, $.01 par value (“Common Stock”),
of the Company to directors, officers and employees of the Company and to other
individuals; and
WHEREAS,
the Company’s Compensation Committee, as administrator of the Plan, has
determined that it would be in the best interests of the Company to grant the
Restricted Shares documented herein.
NOW,
THEREFORE, the parties hereto hereby agree as follows:
1 Definitions. Capitalized
terms not defined in this Agreement shall have the meaning ascribed to such
terms in the Plan.
2 Grant of Restricted
Shares. Subject to the terms and conditions of the Plan and as set forth
herein, the Company hereby grants to the Grantee, as of date hereof, an
aggregate of 25,256 restricted shares of Common Stock (the “Restricted
Stock”).
3 Vesting. Subject to
such further limitations as are provided in the Plan and as set forth herein,
the Restricted Stock shall vest as follows:
|
Vesting
Date
|
Restricted
Stock (U.S.)
|
102
Capital Gains Track Restricted Stock Award (with Trustee)
(Israel)
|
102
Ordinary Income Track Restricted Stock Award (with Trustee)
(Israel)
|
102
Non-Trustee Restricted Stock Award (Israel)
|
3(9)
Restricted Stock Award (Israel)
|
|||||
|
August
20, 2009
|
25,256
|
—
|
—
|
—
|
—
|
4 Termination
of Service.
(a) If the
Grantee does not continue
to provide service to the
Company through the Vesting Date set forth in Section 3, all shares of Restricted Stock not
vested as of the date Grantee ceases to provide service
to the Company will be
forfeited (the “Forfeited
Shares”), the Grantee shall not have any rights to any of the Forfeited Shares
and any stock certificates then held by the Grantee representing the Forfeited
Shares shall be cancelled and voided. Notwithstanding the foregoing,
in the event the
Grantee’s service to the Company is terminated due to death or
Disability, all shares of Restricted Stock held by the Grantee at the time of such death or termination of service due to such
Disability shall
immediately become
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vested and released from restriction as
of such date.
(b) In the event the
Grantee’s service with the Company shall terminate (other than on account of
death or Disability) prior to the end of the Restricted Period, or any other
event causing the forfeiture of the Restricted Stock prior to a Vesting Date,
the Grantee shall be obligated immediately to redeliver to the Company any stock
certificates representing the Forfeited Shares. No payment by the Company will
be due to the Grantee for the Forfeited Shares.
5 Certificate
Legend. The share certificate evidencing the Restricted Stock
issued hereunder shall be endorsed with the following legend or a legend
substantively similar thereto:
THE
RESTRICTED SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.
THE
RESTRICTED SHARES REPRESENTED HEREBY ARE SUBJECT TO A RESTRICTION ON TRANSFER
PURSUANT TO THE PROVISIONS OF AN AGREEMENT BETWEEN THE COMPANY AND THE HOLDER OF
SUCH RESTRICTED SHARES, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS OF
SUCH AGREEMENT.
6 Removal of Certificate
Legend. After the completion of the Restricted Period, the
Grantee shall be entitled to have the legend required by Section 5 of this
Agreement removed from the applicable stock certificates for the shares of
Restricted Stock that have not been forfeited; provided, however, that the first
paragraph of such certificate legend shall not be removed unless the shares are
in fact registered under the Securities Act or the Company is satisfied that
registration is not required thereunder, in its sole discretion.
7 Non−Transferability of
Restricted Stock. The Restricted Stock shall not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of during the
Restricted Period.
8 No Special Rights.
The granting of the Restricted Stock shall not be construed to confer upon the
Grantee any right with respect to the continuation of his or her service with
the Company (or any subsidiary of the Company) or interfere in any way with the
right of the Company (or any subsidiary of the Company), subject to the terms of
any separate agreement to the contrary, at any time to terminate such service or
to increase or decrease the compensation of the Grantee from the rate in
existence as of the date hereof.
9 Tax
Consequences. (a) All tax consequences under any
Applicable Law which may arise from the grant of the Restricted Stock, the sale
or disposition of any shares granted
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hereunder
or from any other action of the Grantee in connection with the foregoing shall
be borne and paid solely by the Grantee, and the Grantee shall indemnify the
Company, and its Subsidiaries and Affiliates, and shall hold them harmless
against and from any liability for any such tax or penalty, interest or
indexation thereon. The Grantee agrees to, and undertakes to comply with, any
ruling, settlement, closing agreement or other similar agreement or arrangement
with any tax authority in connection with the foregoing which is approved by the
Company. The Grantee is advised to consult with a tax advisor with
respect to the tax consequences of receiving the Restricted Stock. The Company
does not assume any responsibility to advise the Grantee on such matters, which
shall remain solely the responsibility of the Grantee.
(b) The
Grantee may elect to be immediately taxed on the Restricted Stock for
United States Federal tax purposes under Section 83(b) of the Code. The
Grantee shall notify the Company of his or her election within thirty
(30) days of the date hereof.
(c) The
Grantee shall notify the Company in writing promptly and in any event within ten
(10) days after the date on which the Grantee first obtains knowledge of any tax
bureau inquiry, audit, assertion, determination, investigation, or question
relating in any manner to the Restricted Stock granted or received hereunder and
shall continuously inform the Company of any developments, proceedings,
discussions and negotiations relating to such matter, and shall allow the
Company and its representatives to participate in any proceedings and
discussions concerning such matters. Upon request, the Grantee shall
provide to the Company any information or document relating to any matter
described in the preceding sentence, which the Company, in its discretion,
requires.
(d) To
the extent a 102 Restricted Stock Award is designated above, you declare and
acknowledge: (i) that you fully understand that Section 102 of the Israeli
Income Tax Ordinance and the rules and regulations enacted thereunder apply to
the Restricted Stock specified in this Agreement and to you; and (ii) that you
understand the provisions of Section 102, the tax track chosen and the
implications thereof. With respect to Restricted Stock granted under Section
102, the terms of such Restricted Stock shall also be subject to the terms of
the Trust Agreement made between the Company and the Trustee for the benefit of
the Grantee, as well as the requirements of the Israeli Income Tax Commissioner.
The grant of Restricted Stock hereunder is further conditioned upon the Grantee
signing all documents requested by the Company or the Trustee, in accordance
with and under the Trust Agreement. A copy of the Trust Agreement is available
for the Grantee’s review, during normal working hours, at the Company’s
offices.
10 Investment
Representations. In connection with the receipt of the
Restricted Stock, the Grantee represents to the Company the
following:
(a) The Grantee
is receiving these securities for investment for his or her own account only and
not with a view to, or for resale in connection with, any “distribution” thereof
within the meaning of the Securities Act.
(b) The Grantee
understands that the securities have not been registered under the Securities
Act.
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(c) The Grantee
further acknowledges and understands that the securities must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. The Grantee further
acknowledges and understands that the Company is under no obligation to register
the securities. The Grantee understands that the certificate evidencing
the securities will be imprinted with a legend which prohibits the transfer of
the securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company.
11 Rights of
Stockholder. Except with regard to restrictions on selling, assigning,
transferring, pledging, hypothecating, encumbering or otherwise
disposing the Restricted Stock, the Grantee will generally have all rights
of a shareholder of the Company with respect to the shares of Restricted Stock
from the date of grant until forfeiture, if any, pursuant to Section 4,
including, without limitation, the right to receive dividends with respect to
such Restricted Stock and the right to vote such Restricted Stock, subject to
any restrictions in this Agreement or in the Plan.
12 Amendment. Subject to
the terms and conditions of the Plan, the Committee may amend this Agreement
with the consent of the Grantee when and subject to such conditions as are
deemed to be in the best interests of the Company and in accordance with the
purposes of the Plan.
13 Notices. Any
communication or notice required or permitted to be given hereunder shall be in
writing, and, if to the Company, to its principal place of business, attention:
Secretary, and, if to the Grantee, to the address as appearing on the records of
the Company. Such communication or notice shall be deemed given if and when (a)
properly addressed and posted by registered or certified mail, postage prepaid,
or (b) delivered by hand.
14 Incorporation of Plan by
Reference. The shares of Restricted Stock are granted pursuant to the
terms of the Plan, the terms of which are incorporated herein by reference, and
the Restricted Stock shall in all respects be interpreted in accordance with the
Plan. In the event of any inconsistency between the Plan and this Agreement, the
Plan shall govern. The Board or the Committee, whichever shall then
have authority to administer the Plan, shall interpret and construe the Plan and
this Agreement, and their interpretations and determinations shall be conclusive
and binding upon the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or
thereunder.
15 Acknowledgement. The
Grantee acknowledges receipt of the copy of the Plan attached hereto as Exhibit
A.
16 Governing Law. The
validity, construction and interpretation of this Agreement shall be governed by
and determined in accordance with the laws of the State of New
York.
[SIGNATURES
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
above written.
| MEDIS TECHNOLOGIES LTD. | |||
|
|
By:
|
/s/ Xxxxxx Xxxxxxxx | |
|
Name:
Xxxxxx Xxxxxxxx
|
|||
|
Title: Deputy
Chairman and COO
|
|||
| GRANTEE: | |||
| /s/ Xxxxxxxx Xxxxxxx | |||
| Name: Xxxxxxxx Xxxxxxx | |||
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Exhibit
A
2007 Equity Incentive
Plan
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