SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.18
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This
Subscription and Registration Rights Agreement (this “Agreement”), dated as
of June 22, 2008, is entered into by and between
BioCancell Therapeutics Inc., a Delaware corporation (the “Company”), and Tikcro Technologies
Ltd. (the “Purchaser”).
The
parties hereto agree as follows:
1. Investment and Loan. In consideration of and upon the
basis of the representations, warranties and agreements and subject to the terms
and conditions set forth in this Agreement:
(a) Purchase and Sale.
The Purchaser agrees to purchase from the Company, and the Company shall issue
and allot to the Purchaser, on the Closing Date (as defined below), in
accordance with Section 2 below, 639,608 shares (the “Purchased Shares”) of
the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a
price per share of Common Stock equal to US$ 0.782 (“PPS”) (which on the relevant date was
equal to NIS 2.55), for an aggregate purchase price equal to five hundred
thousand dollars (USD 500,000) (the “Share Purchase”).
Notwithstanding the foregoing, in the event that the average closing price of
the shares of Common Stock of the Company, as reported on the Tel Aviv Stock
Exchange, for the sixty (60) trading days immediately preceding the date which
is two days (the “Determination Date”)
before the Closing (as defined below) (the “Average Price”), is
lower than US$ 0.743 or higher than US$ 0.821 (i.e., five percent lower or
higher than the PPS), the PPS and the corresponding number of Purchased Shares
shall be adjusted such that the PPS shall be equal to the Average Price. The
Average Price shall be denominated in US$ by dividing the Average Price
denominated in NIS by the exchange rate of the US$ to NIS at the close of
business on the Determination Date.
(b) Convertible
Debenture. The Company shall issue to the Purchaser an assignable
convertible debenture in the form attached hereto as Exhibit 1(b) (the
“Convertible
Debenture”), in consideration for the extension of a loan by the
Purchaser to the Company in the amount of two million dollars (USD 2,000,000)
(the “Loan Amount”).
(c) Warrants. The Company
shall grant to the Purchaser a warrant,
in the form attached hereto as Exhibit 1(c), to purchase a minimum of
2,889,263 and up to 3,429,743 shares of Common Stock (the “Warrant”).
(d) The
Purchased Shares, and the shares of Common Stock underlying the Convertible
Debenture and the Warrant shall be referred to herein as the “Issued Shares” and
the consideration paid therefor shall be referred to herein as the “Purchase Price”.
(e) Upon
the terms and subject to the conditions set forth in this Agreement, the closing
of (i) the sale and purchase of the Purchased Shares, (ii) the issuance of the
Convertible Debenture and (iii) the grant of the Warrant (the “Closing”) shall take
place at the offices of Xxxxxx, Xxxx & Co., 1 Azrieli Center, Tel Aviv,
at 10:00 a.m. on the date that is one business day after the satisfaction of all
conditions set forth in Sections 1(g) and 1(h) hereof but not later than 90 days
from the execution hereof, or such other place or date as may be agreed to by
the Company and Purchaser. The date upon which the Closing shall occur is herein
referred to as the “Closing
Date.”
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(f) All
payments payable hereunder, shall be made in US dollars.
(g) Conditions Precedent to the Obligation of the Purchaser to
Close. The obligation hereunder of the Purchaser to purchase the
Purchased Shares and to extend the Loan Amount is subject to the fulfillment at
or before the Closing of the following conditions precedent, any one or more of
which may be waived in writing, in whole or in part, by the Purchaser, which
waiver shall be at
the sole discretion of the Purchaser:
(i) Accuracy of the Company’s
Representations and Warranties. Each of the representations and
warranties of the Company shall be true and correct in all respects as of the
date when made and shall be true and correct in all material respects as of the
Closing, as though made at that time.
(ii) Performance by the
Company. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing.
(iii) All Deliverables
Ready. All documents and other items to be delivered to the Purchaser at
the Closing as specified in Sections 2(A) and 2(B) shall be duly executed, ready
for delivery to the Purchaser, and in form and substance reasonably satisfactory
to counsel for the Purchaser.
(iv) Executive Committee.
The Board of Directors of the Company shall have designated an executive
committee comprised of four members of the Board of Directors as follows: Xxxx.
Xxxxxxxx, an external director who initially shall be Xxxx Xxxxxxx, a
representative of the Purchaser and a representative of Clal Biotechnology
Industries Ltd. (the “Executive
Committee”). The approval of the Executive Committee shall be required
for the consummation of any material transaction of the Company, adoption of the
Company’s annual budget, decisions relating to investment policy and working
plan.
(v) Approval
of each of the Company’s undertakings and the transactions contemplated herein,
in the Convertible Debenture and in the Warrant including, but not limited to,
Sections 8B herein, 6A(e) of the Convertible Debenture and 8.3 of the Warrant
with respect to the grant of shares and/or options under Section 102 of the
Israeli Tax Ordinance, at the Company’s General Meeting, which shall be convened
for such purpose as soon as practicable following the date hereof.
(vi) The
Purchaser shall have entered into a voting agreement with each of Xxxx. Xxxxxxx
Xxxxxxxx, Clal Biotechnology Industries Ltd. and Mr. Xxx Xxxxx, effective as of
the Closing, substantially in the form of Exhibit 1(g)(vi) attached
hereto.
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Notwithstanding
anything to the contrary in this Agreement, the Purchaser shall not be obligated
to consummate the transactions set forth in this Agreement if the Company
suffers a Material Adverse Effect prior to the Closing.
(h) Conditions
Precedent to the Obligation of the Company
to Close. The obligation hereunder of the Company to issue and
sell the Purchased Shares, to issue the Convertible Debenture and to grant the
Warrant to the Purchaser, is subject to the fulfillment at or before the Closing
of the following conditions precedent, any one or more of which (excluding the
condition set forth in sub section (iv) below) may be waived in writing, in
whole or in part, by the Company, which waiver shall be at the sole discretion
of the Company.
(i) Accuracy of the Purchaser’s
Representations and Warranties. Each of the representations and
warranties of the Purchaser shall be true and correct in all respects as of the
date when made and shall be true and correct in all material respects as of the
Closing, as though made at that time.
(ii) Performance by
the Purchaser. The Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchaser at or prior to the Closing.
(iii) Approval
by the Tel Aviv Stock Exchange (“TASE”) of the
registration of the Issued Shares under the TASE rules.
2. Closing. The Closing
shall take place on the Closing Date in the manner set forth below. The
deliveries specified in this Section 2 shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be deemed
to have been made until all such deliveries have been made.
(A) The
Purchaser shall have received from the Company the following
documents:
(a) True
and correct copies of the resolutions of the Company’s Board of Directors,
approving, among other things, the transactions contemplated herein, the
issuance of the Purchased Shares, the issuance of the Convertible Debenture, the
grant of the Warrant and the appointment of a representative of the Purchaser as
a member to the Company’s Board of Directors until the next annual general
meeting of the stockholders of the Company;
(b) (i) one
or more validly issued share certificates of the Common Stock of the Company
representing, in aggregate, the Purchased Shares issued in the name of the
Purchaser in consideration for the Purchase Price paid to the Company; (ii) a
duly executed copy of this Agreement, (iii) a duly executed Convertible
Debenture, and (iv) a duly executed Warrant;
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(c) A
certificate duly executed by an officer of the Company dated as of the Closing
Date (the “Compliance
Certificate”) in the form attached hereto as Exhibit
2(A)(c):
(d) Audited
annual financial statements for 2007 and audited financial statements for the
first quarter (and, to the extent required by SEC rules or regulations, first
half) of 2008, both prepared and presented in accordance with US GAAP (together
with audited comparison numbers for 2006 and 2005) and such other information as
may be required by Purchaser to comply with its obligations pursuant to SEC
rules and regulations; and
(B) The
Company shall have obtained, and delivered to the Purchaser copies of, the
Required Approvals and Notices (as defined below) which shall be attached to
this Agreement as Exhibit
2(B).
(C) Purchase Price; Purchaser
Deliverables; At the Closing, the Purchaser shall pay the Purchase Price
by wire transfer of immediately available funds to the account of the Company
set forth on Exhibit
2(C) hereto, and shall deliver to the Company (i) a duly executed copy of
this Agreement, (ii) a duly executed copy of the Convertible Debenture, and (iv)
a duly executed copy of the Warrant.
3. Representations
and
Warranties of the Company.
The Company hereby represents and warrants to the Purchaser as
follows:
(a) Organization. The
Company has been duly incorporated, is validly existing and in good standing
under the laws of Delaware. The Company is duly qualified to conduct its
business and has the requisite corporate power and authority and any necessary
governmental authority, franchise, license or permit to own, operate, lease and
otherwise
to hold and operate its assets and properties and to carry on its businesses.
Any entity in which the Company owns at least 50% of either the voting shares
and/or the equity (each, a “Subsidiary” and, collectively, the “Subsidiaries”) is
listed in page 6 of the Periodical Report with respect to fiscal year 2007 filed
by the Company with the TASE on March 12, 2008 (the “Periodical Report”).
The Periodical Report also lists all other equity or similar interests, or any
interest convertible or exchangeable or exercisable for any such equity or
similar interest, in any other entities held by the Company or any
Subsidiary.
(b) Corporate Authorization;
Execution; Validity of Agreement. The execution, delivery and performance
of this Agreement and each of the other agreements, certificates or other
instruments required to be delivered hereunder by the Company at or prior to
Closing (the “Transaction Documents”), including the authorization,
sale, issuance and delivery of the Purchased Shares, the Convertible Debenture,
the Warrant, and the Issued Shares have been duly authorized by the Company and
no other corporate proceedings on the part of the Company shall be necessary to
authorize this Agreement and each of the other Transaction Documents or to
consummate the transactions contemplated hereby and thereby. The Agreement and
the Transaction Documents have been duly executed and delivered by the Company
and, when duly authorized, executed and delivered by the Purchaser, will be
valid and binding agreements enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general applicability relating
to or affecting creditors’ rights generally and to general principles of
equity.
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(c) Corporate Authority.
The Company has full corporate power and authority necessary to enter into this
Agreement and each of the Transaction Documents, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.
(d) Validity of Common
Stock. When issued to the Purchaser against payment therefore, all Issued
Shares will have been duly and validly issued, fully paid and non-assessable;
shall not be subject to call or forfeiture rights and will be free and clear of
any security interests, liens, claims, encumbrances or other adverse interests,
other than those restrictions contemplated by the federal and state securities
laws of the United States and the securities laws of Israel, and the rules of
the TASE; and will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the
Company.
(e) Organizational
Documents. Set forth in Exhibit
3(c) is a complete and correct copy of the Certificate of
Incorporation and Bylaws of the Company, as amended to date. All of such
organizational documents are in full force and effect.
(f) Capitalization.
(i) The
capitalization table of the Company prior to and immediately following the
Closing, in each case on a fully diluted basis, is set forth in Exhibit 3(f) attached
hereto. As more fully set forth in the post-Closing capitalization table, the
Purchased Shares will constitute, immediately following the Closing, 4.57% of
the Company’s share capital, and the Issued Shares will constitute, immediately
following the Closing, 23.69% of the Company’s share capital, on a fully diluted
basis. Except as set forth in Exhibit 3(f), there are no other shares,
convertible or other securities, outstanding warrants, options, or other rights
to subscribe for, purchase, or acquire from the Company any securities of the
Company, and there are no contracts or binding commitments providing for the
issuance of, or the granting of rights to acquire securities of the Company from
the Company, or under which the Company is, or may become, obligated to issue
any of its securities.
(ii) The
Company has not issued or granted any bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which the Company’s
shareholders may vote. There are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any of the Company’s securities. All of the issued and outstanding share capital
of the Company has been duly authorized and validly issued and is fully paid and
nonassessable.
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(g) No Conflict; Required
Filings and Consents.
(i) The
execution and delivery of this Agreement by the Company does not, and the
execution and delivery by the Company of each of the other Transaction Documents
and the performance by the Company of its obligations under this Agreement and
each of the other Transaction Documents, will not, with or without the giving of
notice or the lapse of time or both, (i) conflict with or violate the
organizational documents of the Company or any of its Subsidiaries, (ii) subject
to obtaining the Required Approvals and Notices, conflict with or violate any
law, statute, ordinance, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any of their respective properties
or assets is bound or affected, or (iii) result in any breach of or constitute a
default under, or give to others any rights of termination, amendment,
acceleration or cancellation of any Material Agreement (as defined below), or
result in the creation of any Encumbrance (as defined below) on the properties
or assets of the Company pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by which the Company is bound or
affected. The term “Encumbrance” means and includes any interest or equity of
any person (including any right to acquire, option, or right of preemption) or
any mortgage, charge, pledge, lien, or assignment, or any other encumbrance or
security interest or arrangement of whatsoever nature over or in the relevant
property.
(ii) The
execution and delivery of this Agreement by the Company does not, and the
execution and delivery of each of the other Transaction Documents and the
performance of this Agreement and each of the other Transaction Documents by the
Company, will not, require any consent, approval, authorization or permit of or
filing with or notification to any Governmental Entity (as defined below) or
other third party, by or with respect to the Company, except (i) for applicable
requirements, if any, of the consents, approvals, authorizations, permits or
notification described in Exhibit 3(g) (the
“Required
Approvals and Notices”), and
(ii) where failure to obtain the required consents, approvals, authorizations or
permits, or to make such filings or notifications would not prevent or delay
consummation of any of the transactions contemplated by this Agreement or any
other Transaction Document in any material respect, or otherwise prevent the
Company from performing its obligations under this Agreement or any other
Transaction Document in any material respect. The term “Governmental Entity”
means any governmental or legal authority exercising executive, legislative,
judicial, regulatory or administrative function of or pertaining to
government.
(h) Financial
Statements.
The term
“Financial Statements” means the audited consolidated
financial statements of the Company for each of the two years ended on December
31, 2006 and 2007, and the unaudited but reviewed financial statements for the
quarter ended on March 31, 2008, including its balance sheet, statements of
income, cash-flow and changes in shareholder equity for the periods ended
thereon, prepared in accordance with Israeli generally accepted accounting
principles (“GAAP”) by a recognized firm
of independent certified public accountants, including all notes and reports
thereto.
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(1) Each
of the Financial Statements, attached as Exhibit
3(h)(1) hereto has been prepared in accordance with GAAP
consistently applied. Each of the Financial Statements fairly reflects, in
accordance with GAAP, the financial condition and results of operations of the
Company and its Subsidiaries at the relevant dates and for the periods indicated
therein, and in the case of the unaudited but reviewed financial statements, to
year-end audit adjustments.
(2) A
complete list of the Company’s loan facilities in excess of US$100,000 as of the
date hereof, is set forth in Exhibit
3(h)(2).
(3) Since
December 31, 2007 and except as specifically disclosed in Exhibit
3(h)(3):
(i) the
Company has not entered into any material transaction which was not in the
ordinary course of its business or which was not reported to the TASE as
required under applicable law;
(ii) there
has been no material adverse change in the Company’s operations results, assets,
liabilities, debts, or financial condition;
(iii) the
Company has not declared or paid any cash dividend or made any distribution on
its shares; and
(iv) there
has been no sale, assignment, or transfer of any tangible or intangible material
asset of the Company.
(i) Operations in
the Ordinary Course. Between
December 31, 2007 and the date of this Agreement, the Company has operated its
business in the usual and ordinary course consistent with past practices and has
not suffered any Material Adverse Effect. The term “Material Adverse Effect”
means a material adverse effect on the business, as now conducted or as proposed
to be conducted by, the assets, condition (financial or otherwise), liabilities
or operations of, the Company and its Subsidiaries taken as a whole. It is
hereby clarified that a decrease in the price of the Company’s shares, as
reported on the TASE, following the execution hereof shall not be regarded as a
Material Adverse Effect; provided that the underlying reasons for such decrease
may nevertheless constitute a Material Adverse Effect.
(j) Litigation. Except as
set forth in Exhibit 3(j) hereto, there are no claims,
actions or proceedings pending or, to the Company’s knowledge, threatened
against the Company or any of its Subsidiaries, any of their respective
properties or any of their respective officers or directors, in their capacity
as such, before any court, administrative, governmental, arbitral, mediation or
regulatory authority or body, domestic or foreign.
(k) Compliance
with Laws. To the Company’s knowledge, the Company is not in
violation of Applicable Law which would reasonably be likely to have a Material
Adverse Effect. The term “Applicable Law” means any provision of any
statute, law, ordinance, rule, regulation, decree, order, concession, grant,
permit or license or other governmental authorization or approval applicable to
the Company.
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(I) Intellectual
Property.
(i) The
Company and its Subsidiaries, to the extent applicable, own and have good and
valid title to, or have the exclusive right to use, free and clear of any
Encumbrances, all patents, trademarks, service marks, logos, slogans, designs,
copyrights, trade names, design registrations, and other intellectual property
and any trade secrets, know-how, computer programs, documentation and technology
which can reasonably be anticipated to be material to the conduct of the
businesses of the Company and its Subsidiaries, taken as a whole (all of the
foregoing items collectively referred to as the “Intellectual
Property”).
(ii) (a) No
proceedings are pending or, to the Company’s knowledge, threatened, which
challenge the validity of the ownership (to the extent applicable), or the
exclusive right to use, by the Company and/or any of its Subsidiaries of the
Intellectual Properly; (b) the Company has no knowledge of any infringement or
infringing use of any of the Intellectual Property or licenses by any person or
entity; (c) no infringement by the Company of any intellectual property right or
other proprietary right of any third party has occurred and no claim has been
made by any third party based upon an allegation of any such infringement; and
(d) other than as set forth in the agreements listed in Schedule 3(l)(ii) hereto
and the obligations of the Company towards the OCS, there are no restrictions on
the direct or indirect transfer of any license, or any interest therein, held by
the Company or any Subsidiary in respect of the Intellectual
Property.
(iii) The
Company takes commercially reasonable efforts to ensure that all officers,
employees and consultants of the Company and its Subsidiaries sign and deliver
to their respective employer an agreement regarding the protection of
proprietary information and the assignment to such entity of any intellectual
property arising from services performed for such employer by such persons, all
in form satisfactory to the Company.
(iv) The
Company takes commercially reasonable efforts to ensure that all use, disclosure
or appropriation of confidential information of the Company or any of its
Subsidiaries by or to a third party shall be subject to the terms of a written
agreement between the Company or such Subsidiary and such third party, all in
form satisfactory to the Company.
(m) Material Agreements.
The material agreements to which the Company or any of its Subsidiaries is a
party (the “Material Agreements”) are
listed and described in section 1.24 of the Periodical Report. Such Material
Agreements are valid and in full force and effect on the date hereof, and
neither the Company nor, to the Company’s knowledge, any other party, has
violated any material provision thereof, or committed or failed to perform any
act which with or without notice, lapse of time or both would constitute a
material default under the provisions of, any Material
Agreement.
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(n) Employees.
The
employment agreements currently in force for each of the three most highly paid
individuals employed by the Company and its Subsidiaries (treated as a group for
such purposes) are listed and described in section 1.18 of the Periodical
Report.
(o) Taxation.
(i) The
Financial Statements make full provision for all taxation for which the Company
was then or thereafter became or may hereafter become liable or accountable in
respect of or by reference to any income, sales, value added, profit, receipt,
gain, transaction, agreement, distribution or event which was earned, accrued,
received, or realized, entered into, paid, made or accrued on or before December
31, 2007, and the Company has promptly paid or provided in its books of account
for all taxation for which it has or may hereafter become liable or accountable
in the period from that date and until the date hereof.
(ii) The
Company has at all times and within the requisite time limits promptly, fully
and accurately observed, performed and complied with all material obligations or
conditions imposed on it, or to which any claim, deduction, allowance or relief
made, claimed by or afforded to it was made subject, under any legislation
relating to taxation.
(iii) The
Company is not aware of any circumstances which will or may, whether by lapse of
time or the issue of
any notice of assessment or otherwise, give rise to any dispute with any
relevant taxation authority in relation to its liability or accountability for
taxation, any claim made by it, any relief, deduction, or allowance afforded to
it, or in relation to the status or character of the Company or any of its
enterprises under or for the purpose of any provision of any legislation
relating to taxation.
(p) Insurance. The
Company has the benefit of adequate insurance against such risks as are usually
and reasonably insured against by companies carrying on the same or a similar
business.
(q) Properties and Assets.
The real
property owned and leased by the Company and any other Company interest in real
property (including any facilities used by the Company in consideration for
service fees, e.g. labs etc.) is listed and described in section 1.15 of the
Periodical Report.
(r) Brokers. Except as
set forth in the Agreement attached hereto as Exhibit 3(r) hereto
as to amounts payable by the Company, no person or firm has, or will have, as a
result of any act or omission by the Company or anyone acting on behalf of the
Company, any right, interest or valid claim against the Company or the Purchaser
for any commission, fee or other compensation as a finder or broker or in any
similar capacity with respect to the transactions contemplated under this
Agreement.
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(s)
Compliance with Israeli securities rules and regulations. The Company is, and at all times
has been, in all material respects, in compliance with all applicable regulatory
requirements, including without limitation, all filing requirements stipulated
by the Israeli Securities Law, 1968 and the regulations promulgated thereunder
(the “Filings”). The Filings
contain all statements required to be included therein. The Filings were
prepared in accordance with applicable law and regulations.
(t) Related
Party Transactions. Except as set forth
in Exhibit 3(t) attached hereto, no Related Party (as defined below) has any
direct or indirect interest in any asset used in or otherwise relating to the
business of the Company or any of its Subsidiaries; (b) no Related Party is
indebted to the Company or any of its Subsidiaries; (c) no Related Party has
entered into, or has had any direct or indirect financial interest in, any
agreement, transaction or business dealing with or involving the Company or any
of its Subsidiaries; (d) no Related Party is competing directly or indirectly
with the Company or any of its Subsidiaries; and (e) no Related Party has any
claim or right against the Company or any of its Subsidiaries (other than rights
to receive amounts not yet due with respect to compensation for services
performed as an employee or director of the Board of Directors of the Company or
any of its Subsidiaries).
For
purposes of this Agreement, “Related Party” means any person or entity who is,
or who has at any time since December 31, 2005 been, an “Interested Party” 
, or a
“Relative” 
of an “Interested Party”, both
terms as defined in the Israeli Companies Law, 1999.
, or a
“Relative” of an “Interested Party”, both
terms as defined in the Israeli Companies Law, 1999.4. Representations and
Warranties of the Purchaser. The Purchaser hereby represents and warrants
to the Company as follows:
(a) Corporate
Authorization; Validity of Agreement. The execution, delivery and
performance of this Agreement by the Purchaser have been duly authorized by all
requisite corporate actions and no further corporate consent or authorization of
the Purchaser or its shareholders is required. This Agreement has been duly
executed and delivered by the Purchaser and, when duly authorized, executed and
delivered by the Company, will be a valid and binding agreement enforceable
against the Purchaser in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity.
(b) Accredited
Investor Status. The
Purchaser is an “accredited investor” as that term is defined in Rule 501(a)(3)
of Regulation D promulgated under the U.S. Securities Act of 1933, as amended
(the “Securities
Act”).
(c) Reliance on
Exemptions. The Purchaser understands that the Issued Shares are being
offered and sold to in reliance on specific exemptions from the registration
requirements of the United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of the Purchaser’s
representations and warranties set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Issued Shares.
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(d) The Purpose. The
Purchaser is purchasing the Issued Shares for its own account not with a view to
or for resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered under the Securities Act (such as those
contemplated by Section 6 hereof) or an exemption therefrom.
(e) Knowledge and
Experience. The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of purchasing the securities of the Company, has the ability to bear the
economic risks of such purchase for an indefinite period of time, can afford the
complete loss of the value of the securities it is purchasing and recognizes
that such purchase of securities of the Company involves substantial risk;
provided, however, that nothing set forth herein shall be deemed to detract from
the Company’s representations and warranties as set forth herein or from the
Purchaser’s right to fully rely thereon.
(f) Transfer or
Resale. The Purchaser understands and acknowledges that (i) the
Issued Shares, the Convertible Debenture and the Warrant are restricted for
resale through the TASE in accordance to the Israeli Securities Law, 5728-l968
for the periods and amounts specified therein; and (ii) unless the Issued Shares
are registered under the Securities Act as set forth in Section 6 below and
qualified under any state or foreign securities laws, the Issued Shares may not
be offered for sale, sold, assigned or transferred except through an exemption
from the registration and prospectus delivery requirements of the Securities
Act, to the extent applicable.
5. Legend. Until a registration statement under
the Securities Act as described in Section 6 below is in effect, the Purchaser
understands that the certificates or other instruments representing the Issued
Shares shall bear a restrictive legend composed of exactly the following words
capitalized below:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF REGISTRATION
UNDER THE ACT OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT”.
Additional
language may be added at any time to the legend to the extent required to be
placed thereon by applicable securities laws, contract or
otherwise.
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6. Registration.
6.1 Filing
of Registration Statement. Subject
to Section 6.4 hereof, the Company shall use its best efforts to prepare and
file a registration statement which shall include the Issued Shares within nine
(9) months from the Closing Date, on a registration statement on Form S-l or
such other applicable form of registration available under the Securities Act
(the “Registration Statement”). Following such
filing, the Company shall use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
practicable after the filing thereof, subject to the resolution of any comments
received from the staff of the United States Securities and Exchange Commission
(the “SEC”). The Registration
Statement shall be effective for a continuous period of at least four (4) years
following the declaration thereof as effective. Immediately after the
Registration Statement is declared effective, the Company shall list the shares
of the Company for trading in NASDAQ (and if the Company does not meet NASDAQ
qualifications for listing, list the shares at the OTCQX). The Company shall
make best efforts to cause a market maker to trade in the Company’s shares in
order to allow for sufficient trading volume on the stock exchange.
6.2 Demand Registration.
(a) Form S-l Demand. If
at any time after six (6) months following the end of the effectiveness of the
Registration Statement or following twelve (12) months of the Closing Date if a
Registration Statement is not in effect by that time, the Purchaser requests in
writing that the Company file a registration statement on Form S-l (or such
other applicable form for registration of such Registrable Securities) for the
registration under the Securities Act of Registrable Securities in an amount
equal to at least 25% of the Registrable Securities, then the Company shall as
soon as practicable, and in any event within sixty (60) days after the date of
receipt of such request, file a Form S-l registration statement (or such other
applicable form) under the Securities Act covering all Registrable Securities
that the Purchaser requested to be registered as specified in such notice, and
including any other securities of the Company that the Company deems proper to
include in such registration, in each case subject to the limitations set forth
in this Section 6.2 and 6.4..
(b) The
Company shall be permitted to register other Common Stock in any registration
contemplated by 6.2(a) provided, however, that subject to the last sentence of
Section 8.4 below, if the managing underwriter advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, the Purchaser’s Registrable Securities shall be subject to
customary underwriter cutbacks applicable to all holders of securities subject
to registration in such offering; provided further that such cutbacks shall
apply to the Purchaser and other participants in such offering on a pro rata
basis. The Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 6.2 (i) during the period that
is sixty (60) days before the Company’s good faith estimate of the date of
filing of, and ending on date that is one hundred eighty (180) days after the
effective date of, a Company-initiated registration, provided, that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective. The Company shall not be required to effect more
than two (2) registrations pursuant to this Section 6.2. The Company shall not
be required to effect any registration statement demanded by Purchaser under
this Section 6.2 if any registration statement demanded by Purchaser was
effective within the twelve (12) months prior to the Company’s receipt of the
demand for registration under this Section 6.2, unless the Purchaser shall bear
all cost and expenses of such registration statement.
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6.3 S-3
Registration; Piggyback Registration. The Purchaser shall
have the right to request the Company to register Registrable Securities on a
registration statement Form S-3 at any time that the Company is eligible to use
a Form S-3 under applicable United State securities law. If the Company at any
time proposes to register any of its securities (other than (i) in a demand
registration under Section 6.2, (ii) in a registration relating solely to
employee benefit plans; (iii) in a registration relating solely to a Rule 145
transaction (such as a registered Stock merger transaction); or (iv) in a
registration relating to a corporate reorganization or other transaction on Form
S-4, or in each case a foreign equivalent thereof) under the Securities Act, it
shall give notice to the Purchaser of such intention. Upon the written request
of the Purchaser given to the Company within twenty (20) days after receipt of
any such notice, the Company shall include in such registration all of the
Registrable Securities requested to be registered in such request. The Company
will cause the managing underwriter or underwriters, if any, of any proposed
registration of securities of the Company through underwriters in such offering
to permit the Purchaser, if holding Registrable Securities requested to be
included in such registration in the Shareholder’s notice, to include in the
registration for such offering all such requested Registrable Securities on the
same terms and conditions as any securities of the Company included therein;
provided,
that the Purchaser shall have given customary representations and
warranties and indemnifications in connection therewith. Subject to the last
sentence of Section 8.4 below, if the managing underwriter advises the Company
in writing that marketing factors require a limitation of the number of shares
to be underwritten, the Purchaser’s Registrable Securities shall be subject to
customary underwriter cutbacks applicable to all holders of securities subject
to registration in such offering; provided, that such cutbacks shall
apply to the Purchaser and other participants in such offering on a pro rata
basis.
6.4 Blackout Periods.
Notwithstanding the foregoing obligations in Section 6.1, 6.2 and 6.3, if the
Company furnishes to the Purchaser a certificate signed by the Company’s chief
executive officer stating that in the good faith judgment of the Company’s Board
of Directors it would be materially detrimental to the Company to maintain the
effectiveness of such Registration Statement (or, if no Registration Statement
has yet been filed or become effective, to file such a Registration Statement or
cause it to become effective) because such action would (i) require the public
disclosure of material non-public information concerning any transaction or
negotiations involving the Company or any of its affiliates that would interfere
with such transaction or negotiations, (ii) otherwise require premature
disclosure of information, in either case that would be significantly
disadvantageous or (iii) render the Company unable to comply with requirements
under the Securities Act, the Securities and Exchange Act of 1934 and/or the
securities laws of Israel or the Tel Aviv Stock Exchange (a “Disadvantageous
Condition”), then the Company shall have the right to defer taking action
with respect to any filing or cause such Registration Statement or other filing
to become unavailable for use, in each case for such period as a Disadvantageous
Condition shall exist; provided, that the Company shall not
exercise such rights for a period of more than sixty (60) consecutive days from
the date of delivery of such notice to the Purchaser, and in any event when
aggregated with any other Disadvantageous Condition not more than an aggregate
of one hundred (100) days in any 365-day period. If the Company exercises such
right, it will provide written notice thereof to the Purchaser, and upon the
receipt of any such notice, the Purchaser shall forthwith discontinue use of the
prospectus contained in such registration statement as provided in this Section
6 and otherwise act as instructed in such notice. If any Disadvantageous
Condition shall cease to exist, the Company shall promptly notify the Purchaser
to such effect.
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6.5 Definitions. As used
in this Agreement,
(a) “Registrable Securities” shall mean the Issued Shares
and any Common Stock issued or issuable with respect to any Issued Shares,
including by way of conversion, exercise, stock split or stock dividend, in
connection with a recapitalization or merger, consolidation or other
reorganization, or pursuant to a distribution; provided
that any such Registrable Securities shall
cease to be considered Registrable Securities if and when (i) a registration
statement with respect to the disposition of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of pursuant to such effective registration statement, (ii) such securities shall
have been sold under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) are met, (iii) such
securities may be sold pursuant to Rule 144(k) or otherwise in the public market
without being registered pursuant to the Securities Act, or (iv) such securities shall have ceased
to be outstanding, provided, further, that any such
securities that have ceased to be Registrable Securities pursuant any of the
foregoing clauses cannot thereafter become Registrable Securities and securities
that are issued or distributed following the date of such disposition or sale by
way of dividends or otherwise in respect of such securities that has ceased to
be Registrable Securities shall not be Registrable Securities.
(b) “Damages” shall mean
any losses, damages, claims, liabilities, joint or several, costs and expenses
(including any amounts paid in any settlement effected with the Company’s
consent) to which a party hereto or its underwriter or controlling person may
become subject under the Securities Act, the Securities Exchange Act of 1934,
the Israeli Securities Law, 1968, as amended, or other United States federal or
state law or foreign securities laws, insofar as such losses, damages, claims,
liabilities (or actions or proceedings in respect thereof), costs or expenses
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
included in the prospectus, as amended or supplemented, or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they are made, not misleading.
6.6 Purchaser to Furnish
Information. The Company may require the Purchaser to furnish to the
Company a certified statement as to the number of shares of Common Stock that it
beneficially owns and, if required by the SEC, the person thereof that has
voting and dispositive control over such Common Stock. It shall be a condition
precedent of the Company to take any action pursuant to this Section 6 with
respect to the Registrable Securities of the Purchaser, that the Purchaser shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as is reasonably required to effect the registration of the Purchaser’s
Registrable Securities.
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6.7 Registration
Procedures. In connection with the Company’s registration obligations
hereunder, the Company shall:
(a)
Prepare and file with the SEC a registration statement with respect to such
Registrable Securities and use all commercially reasonable efforts to cause such
registration statement to become effective, and keep such registration statement
(or in the case of Section 6.1, the Registration Statement) effective for up to
forty eight (48) months after the applicable effective date or, if earlier,
until the Purchaser has completed the distribution related thereto.
(b) Not
less than five (5) business days prior to the filing
of the Registration Statement or any related prospectus or any amendment or
supplement thereto, the Company shall furnish to the Purchaser copies of all
such documents proposed to be filed. The Company shall not file in the
Registration Statement or any such prospectus or any amendments or supplements
thereto information to which the Purchaser shall reasonably object in good
faith, provided that
such objection by the Purchaser is based solely on information provided in
writing to the Company by the Purchaser relating to information contained
therein regarding the Purchaser, and provided, the Company is
notified of such objection in writing no later than three (3) business days
after the Purchaser has been so furnished copies of such documents, The
Purchaser shall within five (5) business days after
receipt of the request therefor by the Company provide revised information which
the Company reasonably requests for purposes of compliance with the rules and
regulations governing the Registration Statement and the exhibits and documents
in connection therewith.
(c)
Prepare and file with the SEC such amendments and supplements to such
Registration Statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the Securities Act in
order to enable the disposition of all securities covered by such Registration
Statement.
(d)
Furnish to the Purchaser such number of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other
documents as the Purchaser may reasonably request in order to facility its
disposition of the Registrable Securities.
(e) Use
its commercially reasonable efforts to register and qualify the securities
covered by such Registration Statement under such blue-sky laws in the United
States as shall be necessary for compliance by the Purchaser with such laws;
provided, that
the Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions, unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act.
(f)
Notify the Purchaser, promptly after the Company receives notice thereof, of the
time when a Registration Statement has been declared effective by the SEC, when
a supplement to any prospectus forming a party of such Registration Statement
has been filed, and when there is any request by the SEC that the Company amend
or supplement such Registration Statement or prospectus.
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(g)
Provide a transfer agent and registrar for all Registrable Securities registered
pursuant to this Agreement and provide a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration.
7. Indemnification relating to
Registration. In the event of any registered offering of Registrable
Securities pursuant to Section 6 of this Agreement:
(a) The
Company will indemnify and hold harmless, to the fullest extent permitted by
law, the Purchaser, any underwriter for the Purchaser, and each person, if any,
who controls the Purchaser, from and against any and all Damages, and the
Company will reimburse the Purchaser, such underwriter and each such controlling
person of the Purchaser, promptly upon demand, for any reasonable legal or any
other expenses reasonably incurred by them in connection with investigating or
defending against such loss, claim, Damages, liability, action or proceeding;
provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing by or on behalf of the
Purchaser, such underwriter or such controlling persons expressly for use in
connection with such registration; provided, that
this indemnity shall not be deemed to relieve any underwriter of any of its due
diligence obligations; and provided, further, that
the indemnity agreement contained in this subsection 7(a) shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld.
(b) The
Purchaser will indemnify and hold harmless, to the fullest extent permitted by
law, the Company, any underwriter for the Company, and each person, if any, who
controls the Company, from and against any and all Damages, and the Purchaser
will reimburse the Company, any underwriter and each such controlling person of
the Company, promptly upon demand, for any reasonable legal or other expenses
incurred by them in connection with investigating, preparing to defend or
defending against such loss, claim. Damages, liability, action or proceeding; in
each case to the extent, but only to the extent, that such loss, claim, Damages,
liability, action or proceeding arise out or are based upon actions or omissions
made in reliance upon and in conformity with written information furnished by or
on behalf of the Purchaser expressly for use in connection with such
registration; provided, that
this indemnity shall not be deemed to relieve any underwriter of any of its due
diligence obligations; and provided, further, that
the indemnity agreement contained in this subsection 7(b) shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability or action
if such settlement is effected without the consent of the Purchaser, as the case
may be, which consent shall not be unreasonably withheld. In no event shall the
liability of a Purchaser exceed the net proceeds from the offering received by
such Purchaser, except in the case of fraud or willful misconduct by the
Purchaser.
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(c) The
foregoing indemnity agreement in Section 7(a) and (b) is subject to the
condition that, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus at the time the
registration statement becomes effective or in the final prospectus, such
indemnity agreement shall not inure to the benefit of an indemnified party
hereunder if a copy of the final prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act.
(d)
Promptly after receipt by an indemnified party pursuant to the provisions of
Sections 7(a) or 7(b) of notice of the commencement of any action involving the
subject matter of the foregoing indemnity provisions, such indemnified party
will, if a claim thereof is to be made against the indemnifying party pursuant
to the provisions of said 7(a) or 7(b), promptly notify the indemnifying party
of the commencement thereof; but the omission to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, that
if the defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interests which would prevent
counsel for the indemnifying party from also representing the indemnified party,
the indemnified party or parties shall have the right to select one separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said Sections 7(a) or 7(b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed counsel in
accordance with the provision of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after the
notice of the commencement of the action and within fifteen (15) days after
written notice of the indemnified party’s intention to employ separate counsel
pursuant to the previous sentence, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or
litigation.
(e) If
recovery is not available under the foregoing indemnification provisions, for
any reason other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution to
liabilities and expenses as more fully set forth in an underwriting agreement to
be executed in connection with such registration. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the parties’ relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances.
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8. Anti Dilution and Most
Favored Nation Protection
8.1
Adjustment due to Future Issuance of Securities. Until such time in which an
aggregate amount of US$ 15,000,000 has been invested in the Company (excluding
the Excluded Capital (as defined below)), in any event that the Company issues
any additional securities to Purchaser or to any third party, save for Excluded
Issuances (as defined below), either at a purchase price, conversion price or
exercise price per share less than any of the purchase price, conversion price
or exercise price per share paid or payable for an Issued Share, the Purchaser
will benefit from a “full ratchet” anti-dilution protection, such that the price
paid or payable in consideration for such Issued Share shall be reduced
retroactively to the Closing Date to the lowest of the purchase price,
conversion price or exercise price per share at which such additional new
securities have been issued and if such price reduction applies for the purchase
price, the Company shall immediately upon issuance of such shares issue to the
Purchaser a number of additional shares of Common Stock that is equal to the
difference between the number of Common Stock issued to the Purchaser before the
relevant anti-dilution adjustment and the number of Common Stock that would have
been issued to the Purchaser at the reduced purchase price per
share.
“Excluded
Capital” means the Purchase Price, the Loan Amount, the aggregate exercise price
of the Warrant, any amounts invested in the Company up to US$ 5,000,000
(including the Share Purchase and the Loan Amount) within 3 months from the
Closing Date, any amount invested by the Purchaser, any amounts received by the
Company not for equity or securities convertible into equity, funds from the OCS
or other governmental funding (including BIRD) and all other types of funded
R&D either for royalties or for other non-equity consideration.
8.2 “Excluded Issuances” shall
mean any of the following: (i) securities issued in the ordinary course of
business to directors, officers, employees, or consultants of the Company
pursuant to any stock option or stock incentive plan reserved for Company
officers, directors, employees or consultants and approved by the Company’s
Board, and, if applicable, any securities issued upon the exercise of such
securities; (ii) securities issued pursuant to any stock split,
recapitalization, reclassification or payment of any dividend or distribution
with respect to the Company’s issued and outstanding share capital, including
any bonus shares; (iii) securities issued upon the conversion of any issued and
outstanding options or warrants granted as of the date of the Closing; or (iv)
securities issued in connection with an acquisition transaction of another
entity in the field of business of the Company as approved by the Company’s
Board of Directors, which issuances shall not exceed in the aggregate 15% of the
Company’s issued and outstanding share capital as of the date of this Agreement
and provided that the current assets of the acquired entity do not exceed its
current liabilities as reflected in the last audited financial statements of
such entity immediately preceding the acquisition.
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8.3
Whenever the purchase price is adjusted pursuant hereto, the Company shall
promptly mail to the Purchaser a notice setting forth the conversion price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
8.4 Most Favored Terms.
Until such time as an aggregate amount of US$ 15,000,000 has been invested in
the Company (excluding the Excluded Capital), in the event that any person or
entity is issued any type of security including, but not limited to, any type of
debt, warrant or equity securities of the Company under terms more favorable
than those set forth in this Agreement, the Convertible Debenture or the Warrant
(collectively, the “Issued Securities”), then, at the option of the Purchaser,
the Issued Securities shall be construed as containing the more favorable terms
afforded to such third party, as though such terms were previously provided
herein retroactively from the Closing Date. In the event that the Company issues
convertible debentures which are publicly traded, the Purchaser shall have the
right to replace the Convertible Debenture with such publicly traded convertible
debentures in an amount equal to the outstanding Loan Amount at such time, the
Convertible Debenture shall be cancelled and the provisions of the publicly
traded debentures shall apply. For example, if the Company issues shares of the
Company with a higher purchase price per share but with liquidation preferences
rights and/or anti-dilution rights that are superior to the rights of the
Purchased Shares, the Purchased Shares shall be deemed to include such superior
liquidation preference and/or anti-dilution rights while all other terms of the
Purchased Shares will remain unchanged and in effect. The Company shall
immediately (subject to applicable law) notify the Purchaser in writing on the
terms of any issuance of equity of the Company. In the event that any person or
entity is granted by the Company registration rights (including, but not limited
to, preferences in underwriter’s cutbacks) under terms more favorable than
Purchaser’s rights then in effect, such favorable rights shall be deemed to have
been granted to Purchaser as of the Closing Dates.
8.5 Any
dispute on matters under this Section 8 shall be referred to a resolution by
Giza Singer Even and Xxxxxxxxx and Xxxxxxxxx (PWC Israel). In the event of
different determinations by Giza Singer Even and PWC, the dispute shall be
resolved by calculating the average between the values determined by each of
Giza Singer Even and PWC with respect to each parameter of their determination.
The determination of Giza Singer Even and PWC will be exclusive and final. The
non-prevailing party in such dispute shall bear the expenses of Giza Singer Even
and PWC. The Company hereby acknowledges that the Purchaser and its affiliates
retain the services of Giza Singer Even and PWC in the ordinary course of
business for various tasks (including, but not limited to, accounting, tax,
financial and fairness opinion, advisory services and the like) and that they
will not be limited from retaining them also in the future. In that respect, the
Company waives any claim it may have against the Purchaser and its affiliates in
connection with a conflict of interest regarding the matters contemplated in
this Section 8.5.
8A. Appointment of Director by
Purchaser. Prior to the Closing, a person designated by the Purchaser (a
“Purchaser Designated Director”) shall have been appointed to the Company’s
Board of Directors. So long as Purchaser holds securities (on an as-converted
basis) that represent more than 7% of the Company’s issued and outstanding share
capital of the Company, in the event the Company’s Board of Directors does not
include a Purchaser Designated Director, other than by reason of the resignation
or death of the Purchaser Designated Director previously in office, then an
Event of Default shall have occurred and the Purchaser shall have the rights set
forth in section 3.3 of the Note.
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8B. Section 102 Shares and Options.
Upon the request of the Purchaser, and subject to approval at the Company’s
General Meeting to be convened as soon as practicable following the date hereof
to approve the transactions contemplated herein, in the Convertible Debenture
and in the Warrant, the Company shall take all actions necessary to effect the
assignment of a portion of any shares of the Company and/or options to purchase
shares of the Company due to the Purchaser hereunder, under the Convertible Note
or under the Warrant, to such person as determined by the Purchaser in its sole
discretion; provided, however, that if the holder designated by the Purchaser
shall be a director of the Company or shall otherwise be eligible to receive
securities under Section 102 of the Israeli Income Tax Ordinance, the Company
shall grant such shares or options under such Section 102.
9. Fees and Expenses.
Each of the parties hereto agrees to pay all of the fees and expenses incurred
by such party in connection with this Agreement, including, but not limited to
the fees, expenses and disbursements of such party, its counsel and other
advisors, except that if the Closing is effected the Company shall be
responsible for and shall pay the fees charged by the advisors retained by the
Purchaser in connection with this Agreement, in an amount not to exceed $30,000
plus applicable Value Added Tax; provided, however, that all expenses
(other than Selling Shareholder Expenses which shall be paid by the Purchaser)
incurred in connection with the registrations, filings or qualifications
pursuant to Section 6 shall be borne by the Company. “Selling Shareholder
Expenses” shall mean all underwriting discounts, selling commissions,
brokerage fees and stock transfer taxes applicable to the sale of the
Registrable Securities, and fees and disbursements of counsel and/or advisors
for the Purchaser.
10. Survival of Representations,
Warranties, etc. The respective representations, warranties, and
agreements made herein by or on behalf of the parties hereto shall remain in
full force and effect, regardless of any investigation made by or on behalf of
the other party to this Agreement or any officer, director or employee of, or
person controlling or under common control with, such party and will survive
delivery of and payment for the Purchased Shares issuable hereunder; provided that the representations and warranties made
herein shall survive until the third anniversary of the Closing Date; and provided further, that
any such representations, warranties or agreements that survive for a time
expressly provided herein shall only survive for such period of
time.
11. Information Rights;
Insurance.
11.1 The
Company recognizes that the Purchaser is a public company with financial
reporting requirements. The Company will cooperate with the Purchaser to enable
the timely reporting of its financial statements as follows: (a) the Company
shall make best efforts to provide its quarterly financial statements to the
Purchaser within 30 days following the end of the
relevant fiscal quarter of the Company but not later than 45 days after such
date; (b) the Company shall make best efforts to provide its audited annual
financial statements to the Purchaser within 45 days following the end of the
fiscal fourth quarter of the Company but not later than 60 days after such date;
and (c) shall translate all immediate reports filed with the TASE and all press
releases (including press releases relating to annual and quarterly financial
results) to English.
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11.2 If
the Purchaser notifies the Company in writing that applicable securities laws or
regulations require the Purchaser to include certain information about the
Company in the Purchaser’s publicly filed documents, the Company shall, subject
to applicable law, provide such information to the Purchaser that is reasonably
required by the Purchaser in order to timely comply with any applicable law or
regulation requiring public disclosure of such information, and shall use best
efforts to provide such information within seven (7) days following the receipt
of such request.
11.3 If
any request set forth in Section 11.2 hereof would include a request for any
non-public information about the Company, the Purchaser shall coordinate the
delivery of such information with the Company such that it is in compliance with
applicable law; provided, that
if required pursuant to applicable law, the Purchaser shall coordinate the form
and the timing of such publication, subject to any law or regulations, with the
Company in a way which will enable the Company to publish the non-public
information prior to its publication by the Purchaser. The parties hereto
acknowledge and agree that all information provided herein is subject to
applicable law and may be subject to the restrictions applicable to inside
information (or material non-public information) and the parties hereto agree to
comply with applicable law regarding use or disclosure of this
information.
11.4 The
agreements contained in this Section 11 shall survive only so long as the
Purchaser is required to include the Company’s financial statements on an equity
basis in the Purchaser’s consolidated financial statements under applicable law
or is otherwise so required by reporting requirements applicable to Purchaser
pursuant to SEC rules or requirements. All financial statements of the Company
shall be audited or reviewed (as required) in accordance with U.S. GAAP by a
firm of Independent Certified Public Accountants which is affiliated with one of
the “big four” accounting firms.
11.5 Any
of the above reports or any other consent or approvals of the auditors of the
Company which the Company is otherwise required to prepare or obtain for itself
pursuant to any applicable securities laws or stock exchange rules and
regulations shall be prepared at the Company’s expense. Notwithstanding anything
to the contrary contained in this Agreement, in the event that compliance with
any of the Purchaser’s requests under this Section 11 shall cause the Company to
bear direct and reasonable costs and expenses that are in excess of the cost and
expense required to be borne by the Company in order to comply with its own
disclosure requirements according to applicable law, the Purchaser shall pay or
shall cause to be paid, subject to a prior written approval of the Purchaser
(which approval shall be necessary before the Company is obligated to fulfill
the Purchaser’s request), any and all costs or expenses of the Company relating
to compliance with the Purchaser request which, in aggregate with all other
requests of Purchaser, exceed 20,000 New Israeli Shekels during any fiscal year
of the Company; provided, however, that the requirement to complete the audited
financial statements of the Company for calendar years 2005-2007 and for the
first quarter and half of 2008 in accordance with U.S. GAAP shall not be deemed
to have been performed at Purchaser’s request.
11.6
Public
Announcement. The parties hereto will agree in advance on a press release
or any other statement or communication regarding the subject matter of this
Agreement or the transactions contemplated hereby.
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11.7
Within 9 months of the Closing Date, the Company will obtain a key-man insurance
policy with coverage similar to those of comparable companies applying for
registration of their securities as set forth in Section 6.
12. Notices. All notices,
consents, waivers or other communications required or permitted hereunder shall
be in writing and shall be mailed by registered or certified mail, return
receipt requested, postage prepaid or otherwise delivered by hand, messenger,
internationally recognized courier or facsimile transmission, addressed as set
forth below or at such other address as the party shall have furnished to the
other party in writing in accordance with this provision:
If sent
to the Company to:
0 Xxxxxx
Xx. Xxx Xxxxxxx
Xxxxxxxxx
00000
Fax:00-0000000
Email:
xxx.xxxxx@xxxxxxxxxx.xxx
Attention:
Xxx Xxxxx
with a
copy (which shall not constitute notice) to:
Xxxxxx,
Horn & Co.
1 Azriel
Center
Xxx Xxxx,
Xxxxxx 00000
Fax:x000-0-0000000
Email:
x.xxxx@xxx-xxx.xxx
Attention:
Xxxxx Xxxx, Adv.
If sent
to the Purchaser to:
CEO,
Tikcro Technology
126 Xxxxx
Xxxx Xx.
Xxx Xxxx
00000, Xxxxxx
Fax: x000
0 000 0000
Email:
Xxxx@xxxxxx.xxx
With a
copy to:
Xxxxxx
Xxxx, Adv.
Naschitz,
Xxxxxxx & Co.
0 Xxxxx
Xxxxxx
Xxx-Xxxx
00000, Xxxxxx
Facsimile:
x000-0-000-0000
Each such
notice or other communication shall for all purposes of this Agreement be
treated as effective or as having been given (1) if mailed, seven (7) business
days after mailing, (ii) if sent by hand or by messenger, upon delivery, and
(iii) if sent via facsimile transmission, twenty four (24) hours after
electronic confirmation of receipt, except if such facsimile transmission was
transmitted and received on a non-business day, on the first business day
following transmission and electronic confirmation of receipt.
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13. Miscellaneous
(a)
Immediately following the Closing, the board representative of Purchaser will be
added to the indemnification and insurance arrangements currently existing in
the Company with respect to all members of the Board of Directors.
(b) THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
ISRAEL, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
(c) This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, and their respective successors and assigns, and no other person will
have any rights or obligation hereunder. Either party may freely assign or
transfer the rights granted pursuant to this Agreement. If, as a result of such
assignment by the Purchaser, the Company is required under applicable law to
file any registration statement or prospectus with the US Securities and
Exchange Commission or any stock exchange or other similar institution in any
jurisdiction, that the Company would not be required to file under this
Agreement, the party that seeks such assignment will cover the Company’s
expenses for such filing. Notwithstanding the foregoing, the Anti Dilution and
Most Favored Nation rights set forth in Section 8 herein shall not be
transferable to any third party.
(d) This
Agreement and the Transaction Documents constitute the full and entire
understanding and agreement between the parties hereto with regard to the
subject matter hereof and supersede all prior oral or written (and all
contemporaneous oral) agreements or understandings with respect to the subject
matter hereof.
(e) No
delay or omission to exercise any right power or remedy accruing to any party
hereto upon any breach or default of the other party hereto under this Agreement
shall impair any such right, power or remedy or such party, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereunder occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default therefore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any party hereto of any
breach or default under this agreement, or any waiver on the part of any party
hereto of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement, or by law or otherwise afforded to
any party, shall be cumulative and not alternative.
(f) This
Agreement may be executed in any number of counterparts, each of which may be
executed by less than all of the parties hereto, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.
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(g) If
any provision of this Agreement, or its application to any party hereto, shall
be,
or be found by an authority of competent jurisdiction to be, invalid
or unenforceable in whole or in part, such provision shall be constructed and
applied so as to give effect, to the greatest extent possible, the original
intent of the parties hereto. The invalidity or unenforceability of any of the
provisions of this Agreement shall not affect the other validity herein, all of
which shall remain in full force and effect.
(h) This
Agreement may be amended,
modified or supplemented only by a written instrument signed by each of the
Purchaser and the Company.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Subscription and Registration Rights Agreement as of the date first written
above.
|
By:
|
/s/ Xxx Xxxxx /s/ X. Xxxxxxxx |
|
Name: Xxx
Xxxxx X.
Xxxxxxxx
|
|
|
Title:
|
|
|
TIKCRO
TECHNOLOGIES LTD.
|
|
|
By:
|
/s/ Izhah Tahiv |
|
Name:
Izhah Tahiv
|
|
|
Title:
Chairman
|
|
|
By:
|
/s/ Aviv Xxxx |
| Aviv Xxxx | |
| Title: CEO | |
Execution
Copy
Exhibit
1(b)
CONVERTIBLE
DEBENTURE
(attached)
Execution
Copy
Exhibit
1(c)
WARRANT
(attached)
Execution
Copy
Exhibit 2(a)
COMPANY
WIRE INSTRUCTIONS
Bank
Leumi Le Israel Ltd. Branch 968, Har Hotzvim, Account 724100/97
