Exhibit 10.9
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WARRANT
to Purchase up to an Aggregate of ______ Series C-2 Convertible Preferred
Shares
(Subject to Adjustment) of
R.T.S. Software Ltd.
at U.S. $5.75 per share
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VOID AFTER 10:00 a.m. (prevailing Tel Aviv time)
on the Termination Date (as defined below)
THIS IS TO CERTIFY that the holder specified below ("Holder") is entitled to
purchase, subject to the provisions of this Warrant, from R.T.S. Software Ltd.
(the "Company"), at any time on or after June 1, 1999 (the "Effective Date") and
until the Termination Date (as defined below), an aggregate of up to _____
(subject to adjustment) fully paid and nonassessable Series C-2 Convertible
Preferred Shares, nominal value New Israeli Shekel ("NIS") 0.1 per share (the
"Convertible Preferred Shares"), of the Company at a price of US$5.75 per share
or the NIS equivalent thereof (the "Exercise Price"). In the event that all of
the outstanding Convertible Preferred Shares are converted into Ordinary Shares,
this Warrant shall be exercisable solely for such Ordinary Shares and any
references throughout this Warrant to shares of Convertible Preferred Shares
shall be deemed to refer to the Ordinary Shares into which the Convertible
Preferred Shares may be converted. The amount and kind of securities purchasable
pursuant to the rights granted hereunder and the Exercise Price for such
securities are subject to adjustment pursuant to the further provisions of this
Warrant.
1. EXERCISE OF WARRANT
Subject to the provisions hereof, this Warrant may be exercised by the
Holder in whole or in part at any time or from time to time following the
Effective Date and until the earlier of (i) June 1, 2004, (ii) a
consolidation, merger or reorganization involving the Company or a sale of
all or substantially all of the assets of the Company, or (iii) sale or
transfer of the majority of the issued and outstanding share capital of the
Company other than through an initial public offering ("IPO") of the
Company's securities (the "Termination Date") (the period commencing on the
Effective Date and ending on the Termination Date shall be referred to
herein as the "Warrant Exercise Period").
This Warrant shall be exercised by presentation and surrender hereof to the
Company at the principal office of the Company; accompanied by
1. a written notice of exercise; and
2. payment to the Company, for the account of the Company, of the Exercise
Price for the number of Convertible Preferred Shares specified in such
notice.
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The Exercise Price for the number of Convertible Preferred Shares
specified in the notice shall be payable in immediately available funds,
at the option of the Holder, in U.S. dollars or the NIS equivalent
thereof, based on the Representative Rate of Exchange published by the
Bank of Israel known as of the time of payment.
Upon such presentation and surrender, the Company shall issue promptly
to the Holder the Convertible Preferred Shares to which the Holder is
entitled hereunder.
If this Warrant is exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder to purchase the balance of
the Convertible Preferred Shares purchasable hereunder. Upon receipt by
the Company of this Warrant, in proper form for exercise, the Holder
shall be deemed to be the holder of record of the Convertible Preferred
Shares issuable upon such exercise, notwithstanding that the share
transfer books of the Company shall then be closed or that certificates
representing such Convertible Preferred Shares shall not then be
actually delivered to the Holder. The Company shall pay any and all
expenses, any stamp duty and any other charges that may be payable in
connection with the issuance of the Convertible Preferred Shares and the
preparation and delivery of share certificates pursuant to this
Paragraph 1 in the name of the Holder.
No fractions of Convertible Preferred Shares shall be issued in
connection with the exercise of this Warrant, and the number of
Convertible Preferred Shares issued shall be rounded down to the nearest
whole number.
Notwithstanding the foregoing, in lieu of exercising this Warrant as
provided above, in whole or in part, the Holder may elect to receive, by
the surrender and cancellation of this Warrant or any such portion
thereof to the Company, Convertible Preferred Shares equal to the value
of the Warrant (or the portion thereof being canceled) by written notice
of such election to the Company, at the principal office of the Company,
in which event the Company shall issue to the Holder, for no additional
consideration, that number of Convertible Preferred Shares computed
using the following formula:
Y(A - B)
X = ------------
A
X equals the number of Convertible Preferred Shares to be issued to
the Holder;
Y equals the number of Convertible Preferred Shares which would
otherwise have been purchasable under this Warrant (or the portion
thereof being canceled);
B equals the Exercise Price in effect at the time of exercise pursuant
to this formula (as may have been or be adjusted pursuant to the
terms of this Warrant); and
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A shall equal the "Fair Value" of one share of the Company's
Convertible Preferred Shares. Fair Value shall mean in the event
that this Warrant is exercised in accordance with the above formula
(i) if in connection with an IPO, then the Fair Value shall equal
the price (as sold to the public) of that number of the Company's
Ordinary Shares into which one share of the Company's Preferred
Shares is Convertible, or (ii) if in connection with a Merger or
Sale, the value of such share(s) as determined for the purposes of
the Merger or Sale, or (iii) if other than in connection with an IPO
or a Merger or Sale and if a public market exists for the securities
then subject to this Warrant and such securities are listed on a
U.S. nationally recognized stock exchange or on the Nasdaq stock
market, then the Fair Value shall equal the last sale or trading
price of such securities as reported on such exchange or market, as
applicable; provided, however, if no public market exists for the
securities then the Fair Value shall be determined in good faith by
the Board of Directors of the Company, but if such determination is
challenged in good faith by the Holder, then as determined by an
independent appraiser mutually satisfactory to the Company and the
Holder, which determination shall be binding upon the parties.
2. RESERVATION OF SHARES: PRESERVATION OF RIGHTS
The Company hereby agrees that at all times it will maintain and reserve
such number of authorized but unissued Convertible Preferred Shares so that
this Warrant may be exercised without additional authorization of
Convertible Preferred Shares after giving effect to all other options,
warrants, convertible securities and other rights to acquire Convertible
Preferred Shares of the Company. In addition, the Company will maintain and
reserve such number of authorized but unissued Ordinary Shares as will be
sufficient to permit the conversion in full of all issued or issuable
Convertible Preferred Shares. All shares of Convertible Preferred Shares
(and Ordinary Shares issuable upon conversion thereof) issuable pursuant to
the terms hereof, when issued upon exercise of this Warrant in accordance
with the terms hereof shall be duly and validly issued, fully paid and
nonassessable, not subject to preemptive rights and shall be free and clear
of all liens, encumbrances, equities and claims. The Company further agrees
that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by the Company.
3. EXCHANGE OR LOSS OF WARRANT
This Warrant is exchangeable, upon presentation and surrender hereof at the
principal office of the Company, only in connection with a partial exercise
hereof. The Company shall be under no obligation to issue replacement
warrants for the aggregate number of shares covered hereby except as
described herein. The term "Warrant" as used herein includes any Warrant or
Warrants for which this Warrant may be exchanged. Upon receipt by the
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Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft
or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like terms, tenor and date.
4. ADJUSTMENT
The number of Convertible Preferred Shares (and the number of Ordinary
Shares issuable upon conversion thereof) purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from
time to time or upon exercise as provided in this paragraph 4.
4.1. If, during the term of this Warrant, the Company shall distribute a
stock dividend or shares of capital stock pursuant to a
reclassification of its Convertible Preferred Shares to the holders
of Convertible Preferred Shares (i.e., bonus shares), the number of
Convertible Preferred Shares purchasable upon exercise of this
Warrant shall be increased by multiplying such number of shares to be
purchased under this Warrant by a fraction of which the denominator
shall be the number of Convertible Preferred Shares outstanding at
the close of business on the day immediately preceding the date of
such distribution and the numerator shall be the sum of such number
of shares and the total number of bonus shares, such increase to
become effective immediately after the opening of business on the
date following such distribution, and upon the happening of such an
event the Exercise Price shall be adjusted appropriately.
4.2. If, during the term of this Warrant, the outstanding Convertible
Preferred Shares shall be subdivided into a greater number of
Convertible Preferred Shares, the number of Convertible Preferred
Shares purchasable upon exercise of this Warrant at the opening of
business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and,
conversely, if the outstanding Convertible Preferred Shares shall
each be combined into a smaller number of Convertible Preferred
Shares, the number of Convertible Preferred Shares purchasable upon
exercise of this Warrant at the opening of business on the day
following the day upon which such combination becomes effective shall
be proportionately decreased, and in each such case the Exercise
Price shall be adjusted appropriately.
4.3. Reorganization, Reclassification, Merger, Consolidation or
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Disposition of Assets
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(a) In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another
corporation or sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business to another
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corporation and pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets,
(i) shares of capital stock of the successor or acquiring
corporation or of the Company (if it is the surviving
corporation) or (ii) any cash, shares of stock or other
securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to
or in lieu of capital stock of the successor or acquiring
corporation ("Other Property") are to be received by or
distributed to the holders of Convertible Preferred Shares of the
Company who are holders immediately prior to such transaction,
then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of capital stock
of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and Other Property receivable
upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a holder of the
number of shares of Convertible Preferred Shares for which this
Warrant is exercisable immediately prior to such event.
(b) In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or
acquiring corporation shall expressly assume the due and punctual
observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the
Company and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the
Convertible Preferred Shares for which this Warrant is
exercisable, which modifications shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4.
(c) The provisions of this subsection 4.3 shall similarly apply to
successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.4. Other Dilutive Events
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In case any event shall occur as to which the preceding subsections 4.1
through 4.3 are not strictly applicable but as to which the failure to
make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles hereof then, in each such case, the Board of Directors of the
Company shall, in good faith, determine what adjustments are necessary to
preserve the purchase rights of the Holder represented by this Warrant.
The Company will notify the Holder of any such adjustments.
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5. NOTICE OF CERTAIN EVENTS
The Holder of this Warrant shall not be entitled to the same rights to
receive notices of corporate actions as any holder of Convertible
Preferred Shares. Notwithstanding the foregoing, in case at any time:
5.1. There shall be any merger of the Company with, or any statutory
exchange of the Company's securities with the securities of, or
sale of all or substantially all of its assets to, another
corporation; or
5.2. There shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of such cases, the Company shall give written
notice, by first class mail, postage prepaid, addressed to the Holder at
the address of the Holder as shown on the books of the Company, of the
date on which such merger, exchange, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of Convertible Preferred Shares
of record shall be entitled to exchange their Convertible Preferred
Shares for securities or other property deliverable upon such merger,
exchange, sale, dissolution, liquidation or winding up, as the case may
be. Such written notice shall be given at least twenty (20) days prior to
the action in question.
6. NOTICE OF ADJUSTMENTS
Whenever the number of Convertible Preferred Shares for which this
Warrant is exercisable is adjusted as provided in paragraph 4 hereof or
whenever the rate at which the Convertible Preferred Shares are
convertible into Ordinary Shares is adjusted pursuant to the Company's
Articles of Association, the Company shall promptly compute such
adjustment and mail to the Holder at the last address provided to the
Company in writing a certificate, signed by the principal financial
office of the Company, setting forth the number of Convertible Preferred
Shares (and the number of Ordinary Shares into which the Convertible
Preferred Shares may be converted) for which this Warrant is exercisable
and the exercise price as a result of such adjustment, a brief statement
of the facts requiring such adjustment and the detailed computation
thereof and when such adjustment has or will become effective.
7. RIGHTS OF THE HOLDER
7.1. Without limiting the foregoing or any remedies available to the
Holder, the Holder will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or
threatened violations of the obligations of any person subject to
this Warrant.
7.2. This Warrant shall not entitle the Holder to any voting rights or
other rights as a shareholder of the Company whatsoever, except the
rights
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expressed herein and no dividend or interest shall be
payable or accrue in respect of this Warrant.
8. TAX ALLOCATION
The Company and the Holder hereby acknowledge and agree that the Warrant
is part of an investment unit within the meaning of Section 1273(c)(2) of
the Internal Revenue Code of 1986, as amended, which includes the
Convertible Preferred Shares. Notwithstanding anything to the contrary
contained herein, the Company and the Holder hereby further acknowledge
and agree that for purposes of United States federal, state and local
income tax and United States generally accepted accounting principles (if
applicable), the "issue price" of the Warrant and the Convertible
Preferred Shares to be issued thereunder shall be the amount agreed by the
Company and the Holder within 60 days following the date when the Warrant
first becomes exercisable. The Company and the Holder agree to use the
foregoing issue prices for all the foregoing purposes with respect to this
transaction.
9. NOTICE GENERALLY
Any notice, demand, request, consent, approval, declaration, delivery or
communication hereunder to be made pursuant to the provisions of this
Warrant shall be sufficiently given or made if in writing and shall be
deemed to have been validly served, given or delivered (a) when sent after
receipt of confirmation or answer back if sent by telex or telecopy or
other similar facsimile transmission, (b) two (2) business days after
deposit with a reputable international two (2) day courier with all
charges prepaid or (c) when delivered if hand-delivered by messenger, all
of which shall be properly addressed to the party to be notified and sent
to the address or number indicated, to the Holder, or the holder of
Convertible Preferred Shares (or the Ordinary Shares issuable upon
conversion thereof) at its last known address appearing on the books of
the Company maintained for such purpose, and to the Company at:
R.T.S. Software Ltd.
Science Based Industries Campus
P.O. Box 23052
Jerusalem 91230, Israel
or at such other address as may be submitted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice.
10. EFFECTIVENESS AND TERMINATION
This Warrant and the rights conferred hereby shall become effective at the
Effective Date and shall terminate at the Termination Date.
11. LIMITATION ON TRANSFER
This Warrant shall not be transferable in whole or in part to any third
party other than to a permitted transferee pursuant to Section 2.3 of that
certain
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Shareholders Agreement, dated June 1, 1999, by and among the Holder
and certain other shareholders of the Company.
12. GOVERNING LAW
This Warrant shall be governed by, and construed in accordance with, the
laws of the State of Israel, without giving effect to the rules respecting
conflict of law, and the parties hereto irrevocably submit to the
exclusive jurisdiction of the Courts of Israel in respect of any dispute
or matter arising out of or connected with this Warrant.
DATED: June 1, 1999 R.T.S. SOFTWARE LTD.
By: ________________
Name: ________________
Title: ________________
Agreed to and accepted:
By:
Name: _______________
Title: _______________
Address: _______________