This Agreement (the “Agreement”) is made as of this 22 day of March 2010 between Vuance Ltd., a company organized under the laws of the State of Israel (the "Company"), and Yitzchak Babayov , an individual with a residence address at Shahaf Street,...
This
Agreement (the “Agreement”) is made as of this
22 day of March 2010 between vuance-ltd" id="vuance-ltd">Vuance Ltd., a company organized under the laws of
the State of Israel (the "Company"), and Yitzchak
Babayov , an individual with a residence address at Xxxxxx Xxxxxx, Xxx
Xxxxxxxx,00000, Xxxxxx (the "Subscriber").
WHEREAS,
the Subscriber desires to subscribe for 1,538,461 ordinary shares, at a par
value of NIS 0.0588235 each, of the Company (the "Shares") and for a warrant
(the "Warrant") to purchase up to
553,846 additional ordinary shares, at a par value of NIS
0.0588235 each, of the Company (the "Warrant Shares"), at an
exercise price of $0.15 per Warrant Share; and
WHEREAS,
the Company desires to issue to the Subscriber the Shares and the
Warrant;
NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:
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I.
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SUBSCRIPTION;
SUBSCRIBER'S REPRESENTATIONS AND
COVENANTS
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1.1 Subscription for Shares and
Warrant. Subject to the terms and conditions hereinafter set
forth, the Subscriber hereby subscribes for and agrees to purchase from the
Company the Shares and the Warrant at a price of $200,000 (the "Purchase Price"), payable in
cash at the closing (the "Closing") of the transaction
contemplated hereby (the "Transaction"), and the Company
agrees to sell such Shares and Warrant to the Subscriber for said Purchase
Price.
1.2 Reliance on
Exemptions. The Subscriber acknowledges that the offering of
the securities issuable hereunder has not been reviewed by the United States
Securities and Exchange Commission (the "SEC") or any state agency
because it is intended to be a nonpublic offering exempt from the registration
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and state
securities laws. The Subscriber understands that the Company is
relying upon the truth and accuracy of, and the Subscriber’s compliance with,
the representations, warranties, agreements, acknowledgments and understandings
of the Subscriber set forth herein in order to determine the availability of
such exemptions and the eligibility of the Subscriber to acquire the securities,
the subject matter of the Transaction.
1.3 Investment
Purpose. The Subscriber represents that the Shares and Warrant
are being purchased for its own account, for investment purposes only and not
for distribution or resale to others in contravention of the registration
requirements of the 1933 Act. The Subscriber agrees that it will not
sell or otherwise transfer the Shares, the Warrant or the Warrant Shares
(collectively, the "Securities") unless they are
registered under the 1933 Act or unless an exemption from such registration is
available.
1.4 Accredited
Investor. The Subscriber represents and warrants that it is an
"accredited investor" as such term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act, as indicated by its responses to the
questionnaire attached hereto as Exhibit
A (the "Questionnaire") and that it is
able to bear the economic risk of investment in the Securities. The
Subscriber further represents and Warrant that the information furnished in the
Questionnaire is accurate and complete in all material respects.
1.5 Risk of
Investment. The Subscriber recognizes that the purchase of the
Securities involves a high degree of risk in that: (a) an investment
in the Company is highly speculative and only investors who can afford the loss
of their entire investment should consider investing in the Company and the
Securities; (b) transferability of the Securities is limited; and (c) the
Company may require substantial additional funds to operate its business and
there can be no assurance that any other funds will be available to the
Company.
1.6 Prior Investment
Experience. The Subscriber acknowledges that he has prior
investment experience, and that he recognizes the highly speculative nature of
this investment.
1.7 Information. The
Subscriber acknowledges careful review of this Agreement and all of
its exhibits, schedules and appendices, and hereby represents that the
Subscriber: (i) has been furnished by the Company during the course of the
Transaction with all information regarding the Company which it has requested;
and (ii) has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers of the Company concerning the terms and
conditions of the Transaction, and any additional information which it has
requested.
1.8 No
Representations. The Subscriber hereby represents that, except
as expressly set forth in this Agreement, no representations or warranties have
been made to the Subscriber by the Company or any agent, employee or affiliate
of the Company, and in entering into this Transaction the Subscriber is not
relying on any information other than that contained in the Agreement and the
results of independent investigation by the Subscriber.
1.9 Tax
Consequences. The Subscriber acknowledges that the Transaction
may involve tax consequences and that the contents of the Company has not
rendered to it tax advice or information. The Subscriber acknowledges
that he must retain his own professional advisors to evaluate the tax and other
consequences of an investment in the Securities.
1.10 Transfer or
Resale. The Subscriber acknowledges that there is a limited
public market for the Company's shares and there can be no assurance that a more
active public market for the securities of the Company will ever
develop. The Subscriber understands that Rule 144 (the "Rule") promulgated under the
1933 Act requires, among other conditions, a one-year holding period prior to
the resale (in limited amounts) of securities acquired in a non-public offering
without having to satisfy the registration requirements under the 1933
Act. The Subscriber understands that the Company makes no
representation or warranty regarding its fulfillment in the future of any
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or
its dissemination to the public of any current financial or other information
concerning the Company, as is required by the Rule as one of the conditions of
its availability. The Subscriber understands and hereby acknowledges
that, except as provided in Section 4, the Company is under no
obligation to register the Securities under the 1933 Act. The
Subscriber consents that the Company may, if it desires, permit the transfer of
the Securities out of the Subscriber’s name only when the Subscriber’s request
for transfer is accompanied by an opinion of counsel reasonably satisfactory to
the Company that neither the sale nor the proposed transfer results in a
violation of the 1933 Act or any applicable state "blue sky"
laws.
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1.11 Legends. The Subscriber
understands that the certificates representing the Securities, until such time
as they have been registered under the 1933 Act, shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of such certificates or other instruments):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Shares and the Warrant
Shares upon which it is stamped, if (a) such securities are being
sold pursuant to a registration statement under the 1933 Act, (b) such holder
delivers to the Company an opinion of counsel, in a reasonably acceptable form,
to the Company that a disposition of such securities is being made pursuant to
an exemption from such registration, or (c) such holder provides the Company
with reasonable assurance that a disposition of such securities may be made
pursuant to the Rule without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold.
1.12 No General
Solicitation. The Subscriber represents that the Subscriber
was not induced to invest by any form of general solicitation or general
advertising including, but not limited to, the following: (a) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over the news or radio; and (b) any seminar or
meeting whose attendees were invited by any general solicitation or
advertising.
1.13 Validity;
Enforcement. The Subscriber represents and Warrant that this
Agreement has been duly and validly executed and delivered and constitutes the
legal, binding and enforceable obligation of the Subscriber.
3
1.14 Foreign
Subscriber. The Subscriber hereby represents that he has
satisfied itself as to the full observance of the laws of his jurisdiction in
connection with any invitation to subscribe for the Securities or any use of
this Agreement, including: (a) the legal requirements within his jurisdiction
for the purchase of the Securities; (b) any foreign exchange restrictions
applicable to such purchase; (c) any governmental or other consents that may
need to be obtained; and (d) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption, sale or transfer of
the Securities comprising the Securities. The Subscriber’s
subscription and payment for, and his or her continued beneficial ownership of
the Securities, will not violate any applicable securities or other laws of the
Subscriber’s jurisdiction.
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II.
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REPRESENTATIONS
BY THE COMPANY
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The
Company represents and warrants to the Subscriber, except as set forth in the
disclosure schedules attached hereto:
2.1 Organization and
Qualification. The Company is duly organized and validly
existing in good standing under the laws of the jurisdiction in which it is
organized, and has the requisite corporate power and authority to own its
properties and to carry on its business as now being conducted. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Agreement, "Material
Adverse Effect" means any material adverse effect on the business, properties,
assets, operations, results of operations, financial condition or prospects of
the Company, or on the Transactions contemplated hereby.
2.2 Authorization; Enforcement;
Validity. The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, to
perform its obligations hereunder, and to issue the Securities in accordance
with the terms of this Agreement and the Warrant. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transaction have been duly authorized by the Company’s board of directors
and no further consent or authorization is required from the Company’s board of
directors or its shareholders.
2.3 Issuance of
Securities. The issuance, sale and delivery of the Securities
have been duly authorized by all requisite corporate action by the Company and,
upon issuance in accordance with the this Agreement, shall be (a) duly
authorized, validly issued, fully paid and non-assessable, and (b) free from all
taxes, liens and charges with respect to the issue thereof.
2.4 No Conflicts. The
execution, delivery and performance of the this Agreement by the Company and the
consummation by the Company of the, will not (a) result in a violation of the
Company’s memorandum of association or articles, (b) conflict with, or
constitute a default or an event which with notice or lapse of time or both
would become a default under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, lease,
license or instrument, or (c) result in a violation of any law, rule,
regulation, order, judgment or decree (including Federal and state securities
laws and regulations and the rules and regulations of The NASDAQ Stock Market,
Inc.) applicable to the Company or by which any property or asset of the Company
is bound or affected.
4
2.5 Absence of
Litigation. Except as set forth in Schedule 2.5 to this
Agreement, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory organization
or body, or arbitrator pending or, to the knowledge of the Company, threatened
against the Company or any of the Company’s officers or directors in their
capacities as such which would have a Material Adverse Effect.
2.6 Securities Law
Compliance. The offer, offer for sale, and sale of the
Securities have not been registered with the SEC. The Securities are
to be offered for sale and sold in reliance upon the exemptions from the
registration requirements of Section 5 of the 1933 Act.
2.7 Disclosure. None of
the representations and warranties of the Company appearing in this Agreement or
any information appearing in any schedule hereof, when considered together as a
whole, contains, or on the Closing Date (as defined in Section 3 below) will
contain, any untrue statement of a material fact or omits, or on the Closing
Date will omit, to state any material fact required to be stated herein or
therein in order for the statements herein or therein, in light of the
circumstances under which they were made, not to be misleading.
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III.
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Closing
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3.
Closing. The
Closing shall take place at 11:00 on March 22, 2010 (the "Closing Date"), at the offices
of Xxxxx Xxxxxxx & Co., counsel to the Company, 3 Xxxxxx Xxxxxx St., Tel
Aviv, or at such other time, date or place as the parties may agree in
writing. At the Closing, full payment of the Purchase Price, by wire
transfer or bank check shall be made by the Subscriber against issuance and
delivery by the company of the Shares and of the Warrant, in the form of Exhibit B.
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IV.
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REGISTRATION
RIGHTS
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4.1 Incidental Registration. If
the Company proposes to register any of its shares under the 1933 Act in
connection with the public offering of such securities solely for cash (other
than registration statements relating to benefit plans or with respect to
corporate reorganization or other transactions under Rule 145 of the 1933 Act),
the Company shall at such time, promptly give the Subscriber written notice of
such registration. Upon the written request of the Subscriber given within
twenty (20) days after receipt of such notice from the Company, in accordance
with the notice provisions of this Agreement, the Company shall use its best
commercially reasonable efforts to cause the registration under the 1933 Act of
all of the Shares and the Warrant Shares (the "Registrable Securities") that
the Subscriber requested to be registered.
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4.2
Conditions to Incidental
Registration Rights. In connection with any offering involving an
underwriting of the Company's shares, the Company shall not be required to
include any of the Subscriber's Registrable Securities in such underwriting,
unless the Subscriber (i) agrees to the sale of (including any restriction on
the sale of) its Registrable Securities on the basis provided in any customary
underwriting arrangements, including customary lock-up period as required by (x)
the underwriters with respect to any shares (y) applicable law, or (c) stock
exchanges; and (ii) provides any relevant information reasonably requested and
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and all other documents reasonably requested, that are
required under such underwriting arrangements, and then only in in such quantity
as the underwriters determine, in their sole discretion,will not materially and
adversely affect the success of the offering by the Company. If such
underwriters determine, in their sole discretion, that the total amount of
Registrable Securities requested by the Subscriber to be included in such
offering could materially adversely affect the success of such offering, then
the Company shall be required to include in such offering only that number of
the Registrable Securities which the underwriters determine, in their sole
discretion, will not materially adversely affect the success of the offering,
provided the Company will first include in such offering the securities the
Company proposes to sell.
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V.
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MISCELLANEOUS
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5.1 Notice. Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (a) upon receipt, when delivered personally, (b) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party),
or (c) one (1) business day after deposit with an overnight courier service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the
Company:
0
Xx'Xxxxxx Xx., X.X.X. 0000
Xx'Xxxxxx
Xxxxxxxxxx Xxxx
Xxxxxx
00000, Xxxxxx
Telephone:
x000-0-0000000
Facsimile:
x000-0-0000000
Attention:
Chief Executive Officer
If to the
Subscriber:
Xxxxxxxx
Xxxxxxx Xxxxxx Xxxxxx,
Xxx
Xxxxxxxx,00000, Xxxxxx
Telephone:
x000-00-0000000
Facsimile:
x000-00-0000000
or to
such other address and/or facsimile number and/or to the attention of such other
person as specified by written notice given by a party hereto to the other party
five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (a) given by the recipient of such notice, consent,
waiver or other communication, (b) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission, or (c) provided by
an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (a), (b) or (c) above, respectively.
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5.2 Entire Agreement;
Amendment. This Agreement supersedes all other prior oral or
written agreements between the Subscriber, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Subscriber makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be amended or waived other than by an instrument in writing signed
by the Company and the Subscriber.
5.3 Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
5.4 Governing Law; Jurisdiction; Waiver
of Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of Israel, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Israel or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Israel. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the courts sitting in
Tel Aviv for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.
5.5 Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
5.6 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. A party
hereto shall not assign its rights hereunder without the consent of the other
party, which consent shall not be unreasonably withheld.
5.7 No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
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5.8 Survival. The
representations and warranties of the Company and the Subscriber contained in
Articles I and II and the agreements set forth this Article V shall survive the
Closing for a period of two years.
5.9 Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
5.10 No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
5.11 Legal
Representation. The Subscriber acknowledges that: (a) it has
read this Agreement and the exhibits hereto; (b) it understands that the Company
has been represented in the preparation, negotiation, and execution of this
Agreement by Xxxxx Xxxxxxx & Co., counsel to the Company; (c) it has either
been represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of its own choice, or has chosen to forego such
representation by legal counsel after being advised to seek such legal
representation; and (d) it understands the terms and consequences of this
Agreement and is fully aware of its legal and binding effect.
5.12 Confidentiality. The
Subscriber acknowledges that the information contained in the this Agreement is
of a confidential nature and that the Subscriber shall treat it in a
confidential manner, and that it will not, directly or indirectly, disclose or
permit, if applicable, its affiliates or representatives to disclose any of such
information to any other person or e-mail or reproduce any of the this
Agreement, or to make accessible to anyone, the confidential information
concerning or relating to the business or financial affairs of the Company
contained in the this Agreement to which it has become privy by reason of this
Agreement until such information has been publicly disclosed by the Company or
until such information is no longer material, in whole or in part without the
prior written consent of the Company. The Subscriber further
acknowledges that its confidentiality and other obligations shall apply to any
non-public information relating to the Company or the Securities which is
provided to the Subscriber subsequent to the delivery of this
Agreement.
5.13 Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first written above.
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THE
COMPANY:
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vuance-ltd" id="vuance-ltd">VUANCE LTD.
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By:
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Name:
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Title:
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THE
SUBSCRIBER:
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Yitzchak
Babayov
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Signature:
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EXHIBIT
A
ACCREDITED
INVESTOR QUESTIONNAIRE
Part
I
Status
as an Accredited Investor
By
initialing the appropriate space(s) below, the Investor represents and warrants
that he/she/it is an “accredited investor” within the meaning of Regulation
D. Specifically, the Investor represents and warrants that he/she/it
qualifies under the following sub-category or sub-categories of “accredited
investor” (INVESTOR MUST
INDICATE THE APPLICABLE SUB-CATEGORY OR SUB-CATEGORIES BY INITIALING EACH
APPLICABLE SPACE BELOW; IF JOINT INVESTORS, BOTH PARTIES MUST
INITIAL);
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_____
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(a)
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Investor
is a director or executive officer of the Company;
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_____
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(b)
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Investor
is a natural person whose individual income exceeded $200,000 in each of
the previous two years, or whose joint income with spouse exceeded
$300,000 in each of those years, and who reasonably expects to receive at
least the same level of income in this year;
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_____
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(c)
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Investor
is a natural person whose individual net worth, or joint net worth with
his or her spouse, exceeds $1,000,000;
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_____
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(d)
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Investor
is an organization or entity consisting solely of persons who meet the
requirements specified in (a), (b) or (c) above;
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_____
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(e)
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Investor
is a trust, corporation or partnership with total assets in excess of
$5,000,000 not formed for the specific purpose of acquiring the
Securities;
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_____
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(f)
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Investor
is another type of “accredited investor” as that term is defined in
Regulation D, namely
___________________.
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The
Investor is a resident of the State of ____________.
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Part II
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Name
as you would like it to appear on Stock Certificate and Warrant
Certificate(s)
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Indicate
ownership as:
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_____
(a)
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Individual
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_____
(b)
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Community
Property
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_____
(c)
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Joint
Tenants with Right of Survivorship
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)
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All
parties
must
sign
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_____
(d)
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Tenants
in Common
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)
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_____
(e)
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Corporate
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_____
(f)
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Partnership
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_____
(g)
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Trust
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Residential
(or Business, if not an individual) Address
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Address
for Sending
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Notices
(if different)
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City,
State and Zip Code
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City,
State and Zip Code
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Telephone
Number
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Telephone
Number
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Investor’s
Taxpayer ID or
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Citizen
of:
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Social
Security No.:
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AGREED
AND ACCEPTED as of ______________________, 2010.
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ACCREDITED
INVESTOR
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By:
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Its:
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11
EXHIBIT
B
FORM OF
WARRANT AGREEMENT
12
SCHEDULE
2.5
PENDING
LITIGATION
13
