▇▇▇▇▇▇ Electronic Engineering Ltd.
3,000,000 Ordinary Shares
(nominal value NIS 1.00 per share)
Underwriting Agreement
New York, New York
January [__], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
HSBC Securities (USA) Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
as Representative(s) of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇ Electronic Engineering Ltd., a company organized under the laws of the
State of Israel (the "Company"), proposes to sell to the several underwriters
named in Schedule I to this Agreement (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 2,250,000 ordinary shares,
nominal value NIS 1.00 per share ("Ordinary Shares") of the Company, and the
persons named in Schedule II to this Agreement (the "Selling Shareholders")
propose to sell to the several Underwriters 750,000 Ordinary Shares (said shares
to be issued and sold by the Company and shares to be sold by the Selling
Shareholders collectively being hereinafter called the "Underwritten
Securities"). The Company also propose to grant to the Underwriters an option to
purchase up to 450,000 additional Ordinary Shares to cover over-allotments (the
"Option Securities"; the Option Securities, together with the Underwritten
Securities, being hereinafter called the "Securities"). To the extent there are
no additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. The use of the neuter in this Agreement shall include the
feminine and masculine wherever appropriate. Certain terms used herein are
defined in Section 18 hereof.
1. Representations and Warranties.
(i) The Company represents and warrants to, and agrees with, each
Underwriter as set forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-111849) on Form F-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or more
amendments thereto, including a related preliminary prospectus, each of
which has previously been furnished to you. The Company will next file with
the Commission one of the following: either (1) prior to the Effective Date
of such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (2) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in such registration
statement and the Prospectus. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except
to the extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the Company
has advised you, prior to the Execution Time, will be included or made
therein.
(b) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule
424(b) and on the Closing Date (as defined herein) and on any date on which
Option Securities are purchased, if such date is not the Closing Date (a
"settlement date"), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to (x)
the information contained in or omitted from the Registration Statement, or
the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Prospectus (or any
supplement thereto) and (y) any statements in or omissions from the
Registration Statement or the Prospectus or any supplements thereto made in
reliance upon and in conformity with
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information furnished in writing to the Company by or on behalf of the
Selling Shareholder specifically for use in connection with the preparation
thereof.
(c) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized with full corporate
power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business
("Material Adverse Effect").
(d) All the outstanding shares of capital stock of each subsidiary have
been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus, all
outstanding shares of capital stock of the subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and clear
of any perfected security interest or any other security interests, claims,
liens or encumbrances.
(e) The Company's authorized equity capitalization is as set forth in
the Prospectus. The share capital of the Company conforms in all material
respects to the description thereof contained in the Prospectus. The
outstanding Ordinary Shares (including the Securities being sold hereunder
by the Selling Shareholders) have been duly and validly authorized and
issued and are fully paid and nonassessable. The Securities being sold
hereunder by the Company have been duly and validly authorized, and, when
issued and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable. The Securities being sold
by the Selling Shareholders are duly listed, admitted and authorized for
trading on the Tel Aviv Stock Exchange and the Securities being sold
hereunder by the Company are duly listed, admitted and authorized for
trading, subject to official notice of issuance, on the Tel Aviv Stock
Exchange. The certificates for the Securities are in valid and sufficient
form. The holders of outstanding shares of the Company are not entitled to
preemptive or other rights to subscribe for the Securities; and, except as
set forth in the Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to convert
any obligations into or exchange any securities for, shares of or ownership
interests in the Company, in each case to which the Company or any of its
subsidiaries is a party, are outstanding;
(f) There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectus, or to
be filed as an exhibit thereto, which is not described or filed as
required; and the statements in the Prospectus under the headings "U.S. Tax
Considerations",
3
"Israeli Taxation", "Business-Industry Standards and Government
Regulations", "Business-Intellectual Property and Proprietary Rights",
"Shares Eligible for Future Sale", "Management-Corporate Governance Rules",
"Management-Approval of Related Party Transactions Under Israeli Law"
"Description of Ordinary Shares" and "Enforceability of Civil Liabilities"
insofar as such statements summarize legal matters, agreements, documents
or proceedings discussed therein, are accurate and fair summaries of such
legal matters, agreements, documents or proceedings.
(g) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined
in the Investment Company Act of 1940, as amended.
(h) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under
the Act, such as may be required by the National Association of Securities
Dealers and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in the
Prospectus.
(i) Neither the issue and sale of the Securities nor the consummation
of any other of the transactions herein contemplated nor the fulfillment of
the terms hereof will conflict with, result in a breach or violation of, or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, (i) the
organizational documents of the Company or any of its subsidiaries, (ii)
the terms of any material indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of its
subsidiaries or any of its or their properties.
(j) Except as set forth in the Prospectus (exclusive of any supplement
thereto), no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(k) The consolidated historical financial statements of the Company and
its subsidiaries included in the Prospectus and the Registration Statement
present fairly in all material respects the consolidated financial
condition, results of operations and cash flows of the Company and its
subsidiaries as of the dates and for the periods indicated, comply as to
form with the applicable accounting requirements of the Act and have been
prepared in conformity with generally
4
accepted accounting principles as applied in the United States on a
consistent basis throughout the periods involved (except as otherwise noted
therein). The selected consolidated financial data set forth under the
caption "Selected Consolidated Financial Data" in the Prospectus and
Registration Statement fairly present, on the basis stated in the
Prospectus and the Registration Statement, the information included
therein.
(l) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending or,
to the best knowledge of the Company, threatened that (i) could reasonably
be expected to have a material adverse effect on the performance of this
Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to have a Material Adverse
Effect, except as set forth in or contemplated in the Prospectus (exclusive
of any supplement thereto).
(m) Except as set forth in the Prospectus (exclusive of any supplement
thereto) and as would not have a Material Adverse Effect, each of the
Company and each of its subsidiaries owns or leases all such properties as
are necessary to the conduct of its operations as presently conducted.
(n) Neither the Company nor any subsidiary is in violation or default
of (i) any provision of its organizational documents, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to which it is a party or bound or to which its property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or such
subsidiary or any of its properties, as applicable, except in the cases of
clauses (ii) and (iii), for such violations or defaults as would not have a
Material Adverse Effect.
(o) ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, a member firm of Ernst & Young Global, who
have certified certain financial statements of the Company and its
consolidated subsidiaries and delivered their report with respect to the
audited consolidated financial statements included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(p) Assuming that the Underwriters are not otherwise subject to Israeli
taxation by the conduct of their business activities, the sale and delivery
to the Underwriters of the Securities as contemplated in this Agreement and
the sale and delivery of the Securities by the Underwriters to subsequent
purchasers as contemplated in this Agreement, are not subject to any tax
imposed by Israel or any political subdivision thereof or any stamp or
other issuance or transfer tax, duty, capital gain tax or withholding tax
imposed by Federal law, the laws of any state, or any political subdivision
thereof, or any taxing authority in any
5
jurisdiction, except for (i) the Israeli stamp taxes applicable to the
issuance of the Underwritten Securities to be sold by the Company under
this Agreement (which will be paid by the Company at the Closing Date, or
immediately after the Closing Date, to the extent required by, and in
accordance with, Israeli law) and (ii) any New York State stock transfer
tax payable upon the sale and delivery of the Securities by the Selling
Shareholders to the Underwriters (which will be paid by the applicable
Selling Shareholder at the Closing Date, or immediately after the Closing
Date, to the extent required by, and in accordance with, New York State
law).
(q) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a
Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto)) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse Effect,
except as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(r) No labor problem or dispute with the employees of the Company or
any of its subsidiaries exists or is threatened or imminent, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or its subsidiaries' principal suppliers,
contractors or customers, that could have a Material Adverse Effect, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(s) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its subsidiaries or their respective
businesses, assets, employees, officers and directors are in full force and
effect; the Company and its subsidiaries are in compliance with the terms
of such policies and instruments in all material respects; and there are no
claims by the Company or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; neither the Company nor any
such subsidiary has been refused any insurance coverage sought or applied
for during the last three years; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, except as
set forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
6
(t) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto) or pursuant to
applicable law.
(u) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except for those the failure of which to possess,
individually or in the aggregate, would not have a Material Adverse Effect,
and neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) The Company has not taken, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(x) The Company and its subsidiaries are (i) in compliance with any and
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have
not received notice of any actual or potential liability under any
environmental law, except where such non-compliance with Environmental
Laws, failure to receive required permits, licenses or other approvals, or
liability would not, individually or in the aggregate, have a Material
Adverse Effect, except as set forth in or contemplated in the Prospectus
(exclusive
7
of any supplement thereto). Except as set forth in the Prospectus, neither
the Company nor any of its subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
(y) The Company has reasonably concluded that there are no costs or
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) pursuant to Environmental Laws which would, singly or in the
aggregate, have a Material Adverse Effect, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(z) Each of the Company and its subsidiaries and any "plan" (as defined
in Section 3(3) of United States Employee Retirement Income Security Act of
1974 ("ERISA")) in which employees of the Company and its subsidiaries are
eligible to participate is in compliance in all material respects with the
presently applicable provisions of ERISA and the regulations and published
interpretations thereunder. Neither the Company nor any of its Subsidiaries
has, at any time maintained, contributed to, or had any obligation to
contribute to, or has any liability (fixed or contingent) with respect to,
any plan subject to Title IV of ERISA or to the funding requirements of
▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Internal Revenue Code including any plan
which constituted a "multiemployer plan" as defined in Section 4001(a)(3)
of ERISA or any plan subject to Sections 4063 or 4064 of ERISA ("multiple
employer plan").
(aa) There is and has been no failure on the part of the Company and
any of the Company's directors or officers, in their capacities as such, to
comply with any provision of the Sarbanes Oxley Act of 2002 and the rules
and regulations promulgated in connection therewith (the "Sarbanes Oxley
Act").
(bb) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent or employee of the
Company or any of its subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by such persons of
the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder ("FCPA"), including, without limitation, making use
of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or
authorization of the payment of any money, or other property, gift, promise
to give, or authorization of the giving of anything of value to any
"foreign official" (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA and the Company and its subsidiaries
have conducted their businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure, and
which are reasonably expected to continue to ensure, continued compliance
therewith.
8
(cc) The operations of the Company and its subsidiaries are and have
been conducted at all times in compliance in all material respects with
applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the
money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency (collectively,
the "Money Laundering Laws") and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company,
threatened that could have a Material Adverse Effect.
(dd) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent or employee of the
Company or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department ("OFAC"); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(ee) ▇▇▇▇▇▇ U.S.A., Inc. and ▇▇▇▇▇▇ Electronics Consulting Limited are
the only significant subsidiaries of the Company as defined by Rule 1-02 of
Regulation S-X.
(ff) The Company and its subsidiaries own, possess, license or have
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service ▇▇▇▇ registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and
other intellectual property (collectively, the "Intellectual Property")
necessary for the conduct of the Company's business as now conducted or as
proposed in the Prospectus to be conducted. (a) To the Company's knowledge,
there are no rights of third parties to any such Intellectual Property; (b)
to the Company's knowledge, there is no material infringement by third
parties of any such Intellectual Property; (c) except as set forth in the
Prospectus under "Business--Intellectual Property and Proprietary Rights,"
there is no pending or overtly threatened action, suit, proceeding or claim
by others challenging the Company's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (d) except as set forth in the
Prospectus under "Business--Intellectual Property and Proprietary Rights,"
there is no pending or overtly threatened action, suit, proceeding or claim
by others challenging the validity or scope of any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (e) except as set forth in the
Prospectus under "Business--Intellectual Property and Proprietary Rights,"
there is no pending or overtly threatened action, suit, proceeding or claim
by others that the Company infringes or otherwise
9
violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other fact
which would form a reasonable basis for any such claim; (f) there is no
U.S. patent or published U.S. patent application which contains claims that
dominate any Intellectual Property described in the Prospectus as being
owned by or licensed to the Company or that interferes with the issued or
pending claims of any such Intellectual Property; and (g) there is no prior
art of which the Company is aware that may render any U.S. patent held by
the Company invalid or any U.S. patent application held by the Company
unpatentable which has not been disclosed to the U.S. Patent and Trademark
Office.
(gg) The Securities have been approved for listing on the Nasdaq
National Market, subject only to official notice of issuance.
(hh) The Company is not, and does not believe that, upon consummation
of the transactions contemplated hereby and the application of the proceeds
as described in the Registration Statement under the caption "Use of
Proceeds," it will become, a passive foreign investment company as defined
in Section 1296 of the Internal Revenue Code of 1986, as amended.
(ii) Except as described in the Prospectus, the Company and each of its
Israeli subsidiaries is in compliance with all conditions and requirements
stipulated by the instruments of approval entitling it or any of its
operations to the status of "Approved Enterprise" under Israeli law and by
Israeli laws and regulations relating to such Approved Enterprise status,
except such non-compliance as would not have a Material Adverse Effect. All
information supplied by the Company with respect to such applications was
true, correct and complete in all material respects when supplied to the
appropriate authorities.
(jj) The Company and each of its Israeli subsidiaries is in compliance,
in all material respects, with the labor and employment laws and collective
bargaining agreements applicable to its employees in Israel.
(kk) Neither the Company nor any of its subsidiaries nor any of its or
their properties or assets has any immunity from the jurisdiction of any
court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution or otherwise)
under the laws of the State of Israel.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
(ii) Each Selling Shareholder, severally and not jointly, represents
and warrants to, and agrees with, each Underwriter that:
10
(a) Such Selling Shareholder is the record and beneficial owner of the
Securities to be sold by it hereunder free and clear of all liens,
encumbrances, equities and claims and has duly endorsed such Securities in
blank, and, assuming that each Underwriter acquires its interest in the
Securities it has purchased from such Selling Shareholder without notice of
any adverse claim (within the meaning of Section 8-105 of the New York
Uniform Commercial Code ("UCC")), each Underwriter that has purchased such
Securities delivered on the Closing Date to The Depository Trust Company or
other securities intermediary by making payment therefor as provided
herein, and that has had such Securities credited to the securities account
or accounts of such Underwriters maintained with The Depository Trust
Company or such other securities intermediary will have acquired a security
entitlement (within the meaning of Section 8-102(a)(17) of the UCC) to such
Securities purchased by such Underwriter, and no action based on an adverse
claim (within the meaning of Section 8-105 of the UCC) may be asserted
against such Underwriter with respect to such Securities.
(b) Such Selling Shareholder has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(c) Certificates in negotiable form for such Selling Shareholder's
Securities have been placed in custody, for delivery pursuant to the terms
of this Agreement, under a Custody Agreement and Power of Attorney duly
authorized (if applicable) executed and delivered by such Selling
Shareholder, in the form heretofore furnished to you (the "Custody
Agreement") with American Stock Transfer & Trust Company as Custodian (the
"Custodian"); the Securities represented by the certificates so held in
custody for each Selling Shareholder are subject to the interests hereunder
of the Underwriters; the arrangements for custody and delivery of such
certificates, made by such Selling Shareholder hereunder and under the
Custody Agreement, are not subject to termination by any acts of such
Selling Shareholder, or by operation of law, whether by the death or
incapacity of such Selling Shareholder or the occurrence of any other
event; and if any such death, incapacity or any other such event shall
occur before the delivery of such Securities hereunder, certificates for
the Securities will be delivered by the Custodian in accordance with the
terms and conditions of this Agreement and the Custody Agreement as if such
death, incapacity or other event had not occurred, regardless of whether or
not the Custodian shall have received notice of such death, incapacity or
other event.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Shareholder of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other approvals
as have been obtained.
11
(e) Neither the sale of the Securities being sold by such Selling
Shareholder nor the consummation of any other of the transactions herein
contemplated by such Selling Shareholder or the fulfillment of the terms
hereof by such Selling Shareholder will conflict with, result in a breach
or violation of, or constitute a default under any law or, if applicable,
the organizational documents of such Selling Shareholder or, if applicable,
the terms of any indenture or other agreement or instrument to which such
Selling Shareholder or, if applicable, any of its subsidiaries is a party
or bound, or any judgment, order or decree applicable to such Selling
Shareholder or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over such Selling Shareholder or, if applicable, any of its subsidiaries.
(f) The sale of Securities by such Selling Shareholder pursuant to this
Agreement is not prompted by any information concerning the Company or any
of its subsidiaries which is not set forth in the Prospectus (exclusive of
any supplement thereto).
(g) In respect of any statements in or omissions from the Registration
Statement or the Prospectus or any supplements thereto made in reliance
upon and in conformity with information furnished in writing to the Company
by or on behalf of the Selling Shareholder specifically for use in
connection with the preparation thereof, such Selling Shareholder hereby
makes the same representations and warranties to each Underwriter as the
Company makes to such Underwriter under paragraph (i)(b) of this Section.
For purposes of this paragraph (f), paragraph (b) of Section 5(ii) and
paragraph (b) of Section 8, the Underwriters acknowledge that the only
information furnished in writing by or on behalf of the Selling Shareholder
expressly for use in the Registration Statement and the Prospectus is the
following: under "Principal and Selling Shareholders" - the number of
Ordinary Shares beneficially owned by the Selling Shareholder before and
after the offering (and related footnotes), the number of Securities to be
sold in the offering listed and the transactions by such Selling
Shareholder, and under "Management" - the information with respect to such
Selling Shareholder's designees to the Company's board of directors and the
Shareholders' Agreement between the Selling Shareholders.
Any certificate signed by any Selling Shareholder or, if applicable,
any authorized officer of any Selling Shareholder, and delivered to the
Representatives or counsel for the Underwriters in connection with the offering
of the Securities shall be deemed a representation and warranty by such Selling
Shareholder, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
and the Selling Shareholders agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company and the Selling Shareholders, at a purchase price of $[___] per
share, the amount of the
12
Underwritten Securities set forth opposite such Underwriter's name in Schedule I
to this Agreement.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
450,000 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time on or before the 30th day after the date of the Prospectus upon
written or telegraphic notice by the Representatives to the Company setting
forth the number of shares of the Option Securities as to which the several
Underwriters are exercising the option and the settlement date. The number of
Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on February [
___,] 2004, or at such time on such later date not more than three Business Days
after the foregoing date as the Representatives shall designate, which date and
time may be postponed by agreement among the Representatives, the Company and
the Selling Shareholders or as provided in Section 9 hereof (such date and time
of delivery and payment for the Securities being herein called the "Closing
Date"). Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the respective aggregate purchase
prices of the Securities being sold by the Company and each of the Selling
Shareholders to or upon the order of the Company and the Selling Shareholders by
wire transfer payable in same-day funds to the accounts specified by the Company
and the Selling Shareholders. Delivery of the Underwritten Securities and the
Option Securities shall be made through the facilities of The Depository Trust
Company unless the Representatives shall otherwise instruct.
Each Selling Shareholder will pay all applicable state transfer taxes,
if any, involved in the transfer to the several Underwriters of the Securities
to be purchased by them from such Selling Shareholder and the respective
Underwriters will pay any additional stock transfer taxes involved in further
transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 4
World Financial Center, New York, New York, on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of
13
the several Underwriters, against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to the accounts specified by
the Company. If settlement for the Option Securities occurs after the Closing
Date, the Company will deliver to the Representatives on the settlement date for
the Option Securities, and the obligation of the Underwriters to purchase the
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements.
(i) The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under Rule 424(b),
the Company will cause the Prospectus, properly completed, and any
supplement thereto to be filed in a form approved by the Representatives
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to
the Representatives of such timely filing. The Company will promptly advise
the Representatives (1) when the Registration Statement, if not effective
at the Execution Time, shall have become effective, (2) when the
Prospectus, and any supplement thereto, shall have been filed (if required)
with the Commission pursuant to Rule 424(b) or when any Rule 462(b)
Registration Statement shall have been filed with the Commission, (3) when,
prior to termination of the offering of the Securities, any amendment to
the Registration Statement shall have been filed or become effective, (4)
of any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or for
any supplement to the Prospectus or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the
14
issuance of any such stop order or the suspension of any such qualification
and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules thereunder, the Company promptly will (1) notify the
Representatives of any such event, (2) prepare and file with the
Commission, subject to the second sentence of paragraph (i)(a) of this
Section 5, an amendment or supplement which will correct such statement or
omission or effect such compliance and (3) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel for the
Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each Preliminary Prospectus and the Prospectus and any supplement
thereto as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities; provided
that in no event shall the Company be obligated to qualify to do business
in any jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any jurisdiction
where it is not now so subject.
(f) The Company will not, without the prior written consent of ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., offer, sell, contract to sell, pledge, or otherwise dispose of
(or enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise), by the
Company or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company), directly or indirectly, including
the filing (or participation in the filing) of a registration statement
with the Commission in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent
15
position within the meaning of Section 16 of the Exchange Act, with
respect to any other Ordinary Shares or any securities convertible into, or
exercisable or exchangeable for, Ordinary Shares; or publicly announce an
intention to effect any such transaction, for a period of 180 days after
the date of the Underwriting Agreement, provided, however, that the Company
may (i) issue and sell Ordinary Shares or grant options pursuant to any
employee stock option plan, stock ownership plan or dividend reinvestment
plan of the Company in effect at the Execution Time and set forth in the
Prospectus (exclusive of any supplement thereto), (ii) issue Ordinary
Shares issuable upon the conversion of securities or the exercise of
warrants or options outstanding at the Execution Time, (iii) issue Ordinary
Shares as consideration for the acquisition of another entity by the
Company by merger or by the purchase of all or substantially all of such
other entity's assets and (iv) issue Ordinary Shares in connection with
corporate collaborations, joint ventures, partnerships or license,
marketing, manufacturing, research or other similar strategic arrangements;
provided, however, that in the case of clauses (iii) and (iv), each
recipient of Ordinary Shares agrees to be bound in writing by the
provisions of this paragraph (i)(f) of Section 5 as if such recipient was
the Company.
(g) The Company will comply with all applicable securities and other
applicable laws, rules and regulations, including, without limitation, the
Sarbanes Oxley Act, and will use its best efforts to cause the Company's
directors and officers, in their capacities as such, to comply with such
laws, rules and regulations, including, without limitation, the provisions
of the Sarbanes Oxley Act.
(h) The Company will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(i) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Preliminary Prospectus, the
Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities by the Company or the sale of the Securities by the Selling
Shareholders, it being understood that the foregoing shall not alter any
agreements between the Company and the Selling Shareholders allocating
between them responsibilities
16
for such expenses; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Securities; (v) the registration of the Securities under the Exchange
Act and the listing of the Securities on the Nasdaq National Market and the
Tel Aviv Stock Exchange; (vi) any registration or qualification of the
Securities for offer and sale under the securities or blue sky laws of the
several states (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such registration and
qualification); (vii) any filings required to be made with the National
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to
such filings); (viii) the transportation and other expenses incurred by or
on behalf of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company and the Selling Shareholders, it being
understood that the foregoing shall not alter any agreements between the
Company and the Selling Shareholders allocating between them
responsibilities for such expenses; and (x) all other costs and expenses
incident to the performance by the Company and the Selling Shareholders of
their obligations hereunder, it being understood that the foregoing shall
not alter any agreements between the Company and the Selling Shareholders
allocating between them responsibilities for such expenses.
(ii) Each Selling Shareholder, severally and not jointly, agrees with
the several Underwriters that:
(a) Such Selling Shareholder will not take, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(b) Such Selling Shareholder will advise you promptly, and if requested
by you, will confirm such advice in writing, so long as delivery of a
prospectus relating to the Securities by an underwriter or dealer may be
required under the Act, of (i) any material change in the Company's
condition (financial or otherwise), prospects, earnings, business or
properties which comes to the attention of such Selling Shareholder, (ii)
any change in information in the Registration Statement or the Prospectus
relating to such Selling Shareholder or (iii) any new material information
relating to the Company or relating to any matter stated in the Prospectus
which comes to the attention of such Selling Shareholder.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders contained herein as of the
17
Execution Time, the Closing Date and any settlement date pursuant to Section 3
hereof, to the accuracy of the statements of the Company and the Selling
Shareholders made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Selling Shareholders of their respective
obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company shall have requested and caused Shnitzer, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & Co., Israeli counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) each of the Company and its Israeli subsidiaries
(individually an "Israeli Subsidiary" and collectively the "Israeli
Subsidiaries") has been duly incorporated and is validly existing a
under the laws of the State of Israel, with full corporate power and
authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and
is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires such
qualification.
(ii) all the outstanding shares of each Israeli Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus,
all outstanding shares of the Israeli Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and
clear of any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interest, claim, lien or
encumbrance;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus. The capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus. The outstanding Ordinary Shares (including the Securities
being sold hereunder by the Selling Shareholders) have been duly and
validly authorized and issued and are fully paid and nonassessable. The
Securities being sold hereunder by the Company have been duly and
validly
18
authorized, and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be fully paid and
nonassessable. The Securities being sold by the Selling Shareholders
are duly listed, admitted and authorized for trading on the Tel Aviv
Stock Exchange and the Securities being sold hereunder by the Company
are duly listed, admitted and authorized for trading, subject to
official notice of issuance, on the Tel Aviv Stock Exchange. The
certificates for the Securities are in valid and sufficient form. The
holders of outstanding shares of the Company are not entitled to
preemptive or other rights to subscribe for the Securities; and, except
as set forth in the Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
or ownership interests in the Company are outstanding;
(iv) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectus, and the statements in
the Prospectus under the headings "Management-Corporate Governance
Rules", "Management-Approval of Related Party Transactions Under
Israeli Law", "Business-Industry Standards and Government Regulations",
"Business-Intellectual Property and Proprietary Rights" "Israeli
Taxation", "Description of Ordinary Shares" and "Enforceability of
Civil Liabilities" insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are accurate
and fair summaries of such legal matters, agreements, documents or
proceedings;
(v) such counsel has no reason to believe that on the
Effective Date or the date the Registration Statement was last deemed
amended the Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date and on the Closing
Date included or includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the financial
statements and other financial information contained therein, as to
which such counsel need express no opinion);
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
19
(vii) no consent, approval, authorization, filing with or
order of any Israeli court or governmental agency or body is required
in connection with the transactions contemplated herein, except such
approvals (specified in such opinion) as have been obtained;
(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or
any of its Israeli subsidiaries, or (ii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its subsidiaries of any Israeli court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its subsidiaries or any
of its or their properties;
(ix) Except as set forth in the Prospectus (exclusive of any
supplement thereto), no holders of securities of the Company have
rights to the registration of such securities under the Registration
Statement;
(x) The Company has duly and irrevocably appointed ▇▇▇▇▇▇
U.S.A., Inc. as the authorized agent of the Company for the purpose
described in Section 15 of this Agreement;
(xi) Under the laws of the State of Israel, the Company's
designation of any Federal or state court sitting in the State of New
York for any action brought by the Company relating to or arising out
of this Agreement or the sale of the Securities, and the designation of
the law of the State of New York to apply to the Agreement is binding
upon the Company and, if properly brought to the attention of the court
or administrative body in accordance with the laws of the State of
Israel, would be enforceable in any judicial or administrative
proceeding in Israel; and
(xii) A final and conclusive judgment against the Company for
a definitive sum of money entered by any court in the United States
would be enforced by Israeli courts according to the rules relating to
Enforceability of Civil Liabilities, as described in the Prospectus.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of Israel, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectus in this paragraph (b)
shall also include any supplements thereto at the Closing Date.
20
(c) The Company shall have requested and caused Fulbright & ▇▇▇▇▇▇▇▇
LLP, United States counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives, substantially to the effect that:
(i) ▇▇▇▇▇▇ U.S.A., Inc. (the "U.S. Subsidiary") is a
corporation validly existing and in good standing under the laws of the
State of New York, with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and conduct
its business as described in the Prospectus;
(ii) all of the outstanding shares of capital stock of the
U.S. Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable, except as provided by Section 630 of the
New York Business Corporation Law. All of the outstanding shares of
capital stock of the U.S. Subsidiary are owned of record by the
Company. To the knowledge of such counsel, such shares are also owned
beneficially by the Company and are free and clear of all adverse
claims, limitations on voting rights, options and other encumbrances;
(iii) to the knowledge of such counsel, there are no legal or
governmental proceedings before any court or governmental agency,
authority or body or any arbitrator pending or overtly threatened to
which the Company or any of its subsidiaries is a party or to which its
or their property is subject that are required to be disclosed in the
Registration Statement which are not adequately described in the
Prospectus, and there are no contracts or other documents that are
required to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit thereto, that are not described or filed
as required;
(iv) the statements in the prospectus under the caption "U.S.
Tax Considerations" and "Shares Eligible for Future Sale" insofar as
such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein in all material
respects;
(v) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplement thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been
instituted or overtly threatened and the Registration Statement and the
Prospectus (other than the financial statements and notes thereto and
other financial and accounting information contained therein, as to
which such counsel
21
need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules thereunder;
(vi) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(vii) no consent, approval, authorization, filing with or
order of any New York or U.S. governmental agency or body is required
in connection with the transactions contemplated herein, except such as
have been obtained under the Act and such as may be required under the
rules of the National Association of Securities Dealers, Inc. or the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus, as to which such
counsel need express no opinion, and such other approvals (specified in
such opinion) as have been obtained;
(viii) the execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations
hereunder will not conflict with, constitute a default under or violate
(i) any of the terms, conditions or provisions of the Certificate of
Incorporation or By-laws of the U.S. Subsidiary, (ii) any of the terms,
conditions or provisions of any material document, agreement or other
instrument to which the Company or any of its subsidiaries is a party
or bound or to which its or their property is subject, (iii) any New
York or U.S. federal law or regulation (other than U.S. federal and
state securities or blue sky laws, as to which such counsel need
express no opinion in this paragraph), or (iv) any judgment, writ,
injunction, decree, order or ruling of any U.S. court or governmental
authority or arbitrator binding on the Company or any of its
subsidiaries of which such counsel is aware; and
(ix) Assuming the validity of such actions under the laws of
the State of Israel, under the laws of the State of New York relating
to submission to jurisdiction, the Company has validly appointed the
U.S. Subsidiary as its authorized agent for service of process pursuant
to the Agreement, and service of process effected on such agent in the
manner set forth in Section 15 of the Agreement will be effective under
the laws of the State of New York to confer valid personal jurisdiction
over the Company.
Such counsel shall also state that it has no reason to believe that on the
Effective Date or the date the Registration Statement was last deemed amended
the Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of its date
and on the Closing Date included or includes any
22
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (in each case, other than the
financial statements and related notes and other financial and accounting data
contained therein, as to which such counsel need express no opinion).
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York or the
Federal laws of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Underwriters
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials. References to the
Prospectus in this paragraph (c) shall also include any supplements thereto at
the Closing Date.
(d) The Company shall have requested and caused Sabri Borutecene,
Turkish counsel for the Company, to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the Representatives,
to the effect that:
(i) ▇▇▇▇▇▇ Electronics Consulting Limited (the "Turkish
Subsidiary") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate power and
authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and
is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires such
qualification;
(ii) all the outstanding shares of capital stock of the
Turkish Subsidiary have been duly and validly authorized and issued and
are fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the Turkish
Subsidiary are owned by the Company either directly or through wholly
owned subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, after due inquiry, any other
security interest, claim, lien or encumbrance;
(iii) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any Turkish court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property; and
(iv) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or imposition of any lien, charge or
encumbrance upon
23
any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the organizational documents of the
Turkish Subsidiary, or (ii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of its
subsidiaries of any Turkish court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the Republic of Turkey, to
the extent they deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectus in this paragraph (d)
shall also include any supplements thereto at the Closing Date.
(e) Mivtach Shamir Holdings Ltd. shall have requested and caused its
Israeli counsel, Shnitzer, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., and Mez-Op Holdings Ltd.
shall have requested its Israeli counsel, Naschitz, ▇▇▇▇▇▇▇ & Co., to have
furnished to the Representatives their respective opinions, dated the
Closing Date and addressed to the Representatives, to the effect that:
(i) this Agreement and the Custody Agreement and Power of
Attorney have been duly authorized, executed and delivered by the
Selling Shareholders, the Custody Agreement is valid and binding on the
Selling Shareholders and each Selling Shareholder has full legal right
and authority to sell, transfer and deliver in the manner provided in
this Agreement and the Custody Agreement the Securities being sold by
such Selling Shareholder hereunder;
(ii) no consent, approval, authorization or order of any
Israeli court or governmental agency or body is required for the
consummation by any Selling Shareholder of the transactions
contemplated herein, except such approvals (specified in such opinion)
as have been obtained;
(iii) neither the sale of the Securities being sold by any
Selling Shareholder nor the consummation of any other of the
transactions herein contemplated by any Selling Shareholder or the
fulfillment of the terms hereof by any Selling Shareholder will
conflict with, result in a breach or violation of, or constitute a
default under any Israeli law or the charter or By-laws of the Selling
Shareholder or the terms of any indenture or other agreement or
instrument known to such counsel and to which any Selling Shareholder
or any of its subsidiaries is a party or bound, or any judgment, order
or decree known to such counsel to be applicable to any Selling
Shareholder or any of its subsidiaries of any court, regulatory body,
24
administrative agency, governmental body or arbitrator having
jurisdiction over any Selling Shareholder or any of its subsidiaries;
(iv) Each Selling Shareholder has duly and irrevocably
appointed ▇▇▇▇▇▇ U.S.A., Inc. as the authorized agent of such Selling
Shareholder for the purpose described in Section 15 of this Agreement;
and
(v) Under the laws of the State of Israel, each Selling
Shareholders' designation of any Federal or state court sitting in the
State of New York for any action brought by each Selling Shareholder
relating to or arising out of this Agreement or the sale of the
Securities, and the designation of the law of the State of New York to
apply to the Agreement is binding upon each Selling Shareholder and, if
properly brought to the attention of the court or administrative body
in accordance with the laws of the State of Israel, would be
enforceable in any judicial or administrative proceeding in Israel.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of Israel, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters, and (B) as to matters of fact, to
the extent they deem proper, on certificates of the Selling Shareholders
(including, if applicable, responsible officers of the Selling Shareholders) and
public officials.
(f) The Selling Shareholders have requested and caused Fulbright &
▇▇▇▇▇▇▇▇ LLP, United States counsel for the Selling Shareholders, to have
furnished to the Representatives their opinion, dated the Closing Date and
addressed to the Representatives, to the effect that:
(i) assuming that (i) each Underwriter acquires its interest
in the Securities without notice of any adverse claim (within the
meaning of Section 8-105 of the Uniform Commercial Code in effect in
the State of New York (the "UCC")), (ii) each Underwriter has paid for
its interest in the Securities in accordance with this Agreement, (iii)
the securities have been delivered to The Depository Trust Company
("DTC"), (iv) DTC has indicated by book entry that the interest in the
Securities has been credited to the securities account of such
Underwriter maintained with DTC, each Underwriter will have acquired a
security entitlement (within the meaning of Section 8-102(a)(17) of the
UCC) to such Securities purchased by such Underwriter, and no action
based on an adverse claim (within the meaning of Section 8-102(a)(1) of
the UCC) may be asserted against such Underwriter with respect to such
Securities;
(ii) no consent, approval, authorization, filing with or order
of any New York or U.S. court or governmental agency or body is
required
25
in connection with the consummation by any Selling Shareholder of the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the rules of the
National Association of Securities Dealers, Inc. or the blue sky laws
of any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated in this
Agreement and in the Prospectus, as to which counsel need express no
opinion, and such other approvals (specified in such opinion) as have
been obtained;
(iii) neither the sale of the Securities being sold by any
Selling Shareholder nor the consummation of any other of the
transactions herein contemplated by any Selling Shareholder or the
fulfillment of the terms hereof by any Selling Shareholder will
conflict with, result in a breach or violation of, or constitute a
default under any U.S. law; and
(iv) Assuming the validity of such actions under the laws of
the State of Israel, under the laws of the State of New York relating
to submission to jurisdiction, each Selling Shareholder has validly
appointed ▇▇▇▇▇▇ U.S.A., Inc. as its authorized agent for service of
process pursuant to the Agreement; and service of process effected on
such agent in the manner set forth in Section 15 of the Agreement will
be effective under the laws of the State of New York to confer valid
personal jurisdiction over each Selling Shareholder.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York or the
Federal laws of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Underwriters,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of the Selling Shareholders (including, if applicable, responsible officers of
the Selling Shareholders) and public officials.
(g) The Representatives shall have received from each of Naschitz,
▇▇▇▇▇▇▇ & Co. and Weil, Gotshal and ▇▇▇▇▇▇ LLP, respectively, the Israeli
and U.S. counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related matters
as the Representatives may reasonably require, and the Company and each
Selling Shareholder shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(h) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully
26
examined the Registration Statement, the Prospectus, any supplements to
the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date and the Company has complied
with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto), there
has been no Material Adverse Effect, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(i) Each Selling Shareholder shall have furnished to the
Representatives a certificate, signed by such Selling Shareholder or, if
applicable, the Chairman of the Board or the President and the principal
financial or accounting officer of such Selling Shareholder, dated the
Closing Date, to the effect that the signer(s) of such certificate have
carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that the
representations and warranties of such Selling Shareholder in this
Agreement are true and correct on and as of the Closing Date to the same
effect as if made on the Closing Date.
(j) The Company shall have requested and caused ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, a
member of Ernst & Young Global, to have furnished to the Representatives
letters, at the Execution Time and at the Closing Date, dated respectively
as of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Act and the applicable rules and
regulations adopted by the Commission thereunder and that they have
performed a review of the unaudited interim financial information of the
Company for the nine-month period ended September 30, 2003 and as at
September 30, 2003, in accordance with Statement on Auditing Standards No.
100, and stating in effect that:
(i) in their opinion the audited financial statements included
in the Registration Statement and the Prospectus and reported on by
them comply as to form in all material respects with the applicable
accounting requirements of the Act and the related rules and
regulations adopted by the Commission;
27
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review, in accordance with standards
established under Statement on Auditing Standards No. 100, of the
unaudited interim financial information for the nine-month period ended
September 30, 2003, and as at September 30, 2003; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
shareholders, directors and audit and corporate finance committees of
the Company and the Subsidiaries; and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions and
events subsequent to December 31, 2002, nothing came to their attention
which caused them to believe that:
(1) any unaudited financial statements included in
the Registration Statement and the Prospectus do not comply as
to form in all material respects with applicable accounting
requirements of the Act and with the related rules and
regulations adopted by the Commission with respect to
registration statements on Form F-1; and said unaudited
financial statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Registration Statement and the
Prospectus; and
(2) with respect to the period subsequent to
September 30, 2003, there were any changes, at a specified
date not more than five days prior to the date of the letter,
in the long-term bank loans, net of current maturities of the
Company and its subsidiaries or capital stock of the Company
or decreases in the shareholders' equity of the Company or
decreases in working capital of the Company and its
subsidiaries as compared with the amounts shown on the
September 30, 2003 consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the period
from October 1, 2003 to such specified date there were any
decreases, as compared with the corresponding period in the
preceding year in revenues or income before taxes on income or
in total or per share amounts of net income of the Company and
its subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed
necessary by the Representatives; and
28
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectus, including the
information set forth under the captions "Summary", "Dividend Policy",
"Capitalization", "Dilution", "Selected Consolidated Financial Data",
"Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Management", "Transactions with Related
Parties", "Principal and Selling Shareholders", "Description of
Ordinary Shares" and "Israeli Taxation" in the Prospectus, agrees with
the accounting records of the Company and its subsidiaries, excluding
any questions of legal interpretation.
References to the Prospectus in this paragraph (j) include any
supplement thereto at the date of the letter.
(k) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (j) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries taken as a whole, whether or
not arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any supplement
thereto) the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(l) Prior to the Closing Date, the Company and the Selling Shareholders
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
(m) The Securities shall have been approved for listing on the Nasdaq
National Market and the Tel Aviv Stock Exchange, subject only to official
notice of issuance.
(n) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A to this
Agreement from each officer and director of the Company addressed to the
Representatives.
(o) At the Execution Time, each Selling Shareholder shall have
furnished to the Representatives a letter substantially in the form of
Exhibit A to
29
this Agreement from each such Selling Shareholder addressed to the
Representatives.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company and
each Selling Shareholder in writing or by telephone or facsimile confirmed in
writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Weil, Gotshal & ▇▇▇▇▇▇ LLP, U.S. counsel for the
Underwriters, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company or any Selling
Shareholders to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. on demand for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter, each person who controls any Underwriter within
the meaning of either the Act or the Exchange Act, each Selling Shareholder, the
directors, officers, employees and agents of each Selling Shareholder and each
person who controls any Selling Shareholder within the meaning of either the Act
or the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Securities as originally
filed or in any amendment thereof, or in any Preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based
30
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein; provided, further, that
with respect to any untrue statement or omission of material fact made in any
Preliminary Prospectus, the indemnity provided in this Section 8(a) shall not
inure to the benefit of any Underwriter from whom the person asserting any such
loss, claim, damage or liability purchased the Securities concerned, to the
extent that any such loss, claim, damage or liability of such Underwriter occurs
where it shall be determined by a court of competent jurisdiction by final and
non-appealable judgment that (i) delivery of the Prospectus was required under
the Act, (ii) the Company had previously furnished copies of the Prospectus to
the Representatives in sufficient quantity and in sufficient time to enable the
Representatives to satisfy their delivery obligations under the Act, (iii) the
untrue statement or omission of a material fact contained in the Preliminary
Prospectus was corrected in the Prospectus and (iv) such loss, claim, damage or
liability results solely from the fact that there was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities to
such person, a copy of the Prospectus. This indemnity agreement will be in
addition to any liability which the Company may otherwise have
(b) Each Selling Shareholder severally agrees to indemnify and hold
harmless each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning of
either the Act or the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only with reference to written
information furnished to the Company by or on behalf of such Selling Shareholder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Selling Shareholder may otherwise have.
(c) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each Selling Shareholder, to
the same extent as the foregoing indemnity to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company and each Selling Shareholder
acknowledge that the statements set forth on the cover page regarding delivery
of the Securities and, under the heading "Underwriting", (i) the list of
underwriters and their respective participation in the sale of the Securities,
(ii) the first paragraph under the sub-heading "Commissions and Discounts",
(iii) all information under the sub-headings "Price Stabilization, Short
Positions and Penalty Bids" and "Internet Distribution" in any Preliminary
Prospectus and the Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus.
31
(d) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a), (b) or (c) above unless and to the extent it did
not otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. In any such case, the indemnifying party shall not,
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to local counsel) for all
indemnified parties, unless the use of such counsel would present such counsel
with a conflict of interest. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a), (b) or
(c) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, the Selling Shareholders and the
Underwriters agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same)
32
(collectively "Losses") to which the Company, one or more of the Selling
Shareholders and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company, by the Selling Shareholders and by the Underwriters from the offering
of the Securities; provided, however, that in no case shall (i) any Underwriter
(except as may be provided in any agreement among underwriters relating to the
offering of the Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities purchased by
such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company, the Selling
Shareholders and the Underwriters shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company, of the Selling Shareholders and of the Underwriters in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company and by the Selling Shareholders shall be deemed to be equal to the total
net proceeds from the offering (before deducting expenses) received by each of
them, and benefits received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set forth on
the cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company, the Selling
Shareholders on the one hand or the Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company, the Selling
Shareholders and the Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (e), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (e).
(f) The liability of each Selling Shareholder under such Selling
Shareholder's representations and warranties contained in Section 1 hereof and
under the indemnity and contribution agreements contained in this Section 8
shall be limited to an amount equal to the initial public offering price of the
Securities sold by such Selling Shareholder to the Underwriters. The Company and
the Selling Shareholders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.
33
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I to this Agreement bears to the
aggregate amount of Securities set forth opposite the names of all the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of
Securities set forth in Schedule I to this Agreement, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter, the Selling Shareholders or the Company. In the
event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Representatives shall determine in order that the required changes
in the Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company, the Selling
Shareholders and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Ordinary Shares shall have been suspended by the
Commission, the Israeli Securities Exchange Commission, the Tel Aviv Stock
Exchange or the Nasdaq National Market or trading in securities generally on the
New York Stock Exchange, the Tel Aviv Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on such Exchanges or the Nasdaq National Market, (ii) a banking
moratorium shall have been declared by U.S. Federal, New York State or Israeli
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Shareholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Shareholder or the Company or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the
34
Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention: [____________] (fax
no.:[______________]); or, if sent to the Company, will be mailed, delivered or
telefaxed to ▇▇▇▇▇▇ Electronic Engineering Ltd., President & CEO (fax no.:
(▇▇▇-▇) ▇▇▇-▇▇▇▇) and confirmed to it at ▇▇ ▇▇'▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇'▇▇▇▇, ▇▇▇▇▇ Israel, Attention of President & CEO; with a copy to Shnitzer,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co. (fax no.: (▇▇▇-▇) ▇▇▇-▇▇▇▇) at Gibor Sport ▇▇▇▇., ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, and Fulbright
& ▇▇▇▇▇▇▇▇ L.L.P. (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇) at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇, Esq., or if sent to any Selling Shareholder,
will be mailed, delivered or telefaxed and confirmed to it at the address set
forth in Schedule II to this Agreement.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties to this Agreement and their respective successors and
the officers, directors, employees, agents and controlling persons referred to
in Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Consent to Service, Submission to Jurisdiction and Related Matters.
(a) Each of the Company and the Selling Shareholders, by the execution
and delivery of this Agreement, designates and appoints ▇▇▇▇▇▇ U.S.A.,
Inc., which currently maintains an office at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, as the authorized agent of the
Company and the Selling Shareholders upon whom process may be served in any
suit, proceeding or other action against the Company or the Selling
Shareholders, as the case may be, instituted by any Underwriter or by any
person controlling an Underwriter as to which such Underwriter or any such
controlling person is a party and based upon this Agreement, or in any
other action against the Company or the Selling Shareholders, as the case
may be, in any Federal or state court sitting in the State of New York,
arising out of the offering made by the Prospectus or any purchase or sale
of securities in connection therewith, and the Company and each of the
Selling Shareholders each expressly accepts the jurisdiction of any such
court in respect of any such suit, proceeding or other action and, without
limiting other methods of obtaining jurisdiction, each expressly submits to
the nonexclusive personal jurisdiction of any such court in respect of any
such suit, proceeding or other action. Such designation and appointment
shall be irrevocable, unless and until a successor authorized agent in
35
the United States reasonably acceptable to the Representatives shall have
been appointed by the Company or the Selling Shareholders, as the case may
be, such successor shall have accepted such appointment, and written notice
thereof shall have been given to the Representatives. Each of the Company
and the Selling Shareholders further agrees that service of process upon
its authorized agent or successor (and written notice of said service to
the Company or the Selling Shareholders, as the case may be, mailed by
certified mail or sent by telex or delivered, as provided in Section 12
above) shall be deemed in every respect personal service of process upon
the Company or the Selling Shareholders, as the case may be, in any such
suit, proceeding or other action. In the event that service of any process
or notice or motion or other application to any such court in connection
with any such action or proceeding cannot be made in the manner described
above, such service may be made in the manner set forth in conformance with
the Hague Convention on the Service Abroad of Judicial and Extrajudicial
Documents of Civil and Commercial Matters or any successor convention or
treaty. The Company and the Selling Shareholders each hereby irrevocably
waive any objection that they may have or hereafter have to the laying of
venue of any such action or proceeding arising out of or based on the
Securities or this Agreement, or otherwise relating to the offering,
issuance and sale of the Securities in any Federal or state court sitting
in the State of New York, and each hereby further irrevocably waives any
claim that any such action or proceeding in any such court has been brought
in an inconvenient forum. The Company and each of the Selling Shareholders
each agrees that any final judgment after exhaustion of all appeals or the
expiration of time to appeal in any appeals or proceeding arising out of
the sale of the Securities or this Agreement rendered by any such Federal
court or state court shall be conclusive and, except as prohibited by
applicable law, may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Nothing contained in this
Agreement shall affect or limit the right of the Underwriters to serve any
process or notice of motion or other application in any other manner
permitted by law or limit or affect the right of the Underwriters to bring
any action or proceeding against the Company or the Selling Shareholders or
any of their respective property in the courts of any other jurisdiction.
The Company and the Selling Shareholders each further agrees to take any
and all action, including the execution and filing of all such instruments
and documents, as may be necessary to continue such designation and
appointment or such substitute designation and appointment in full force
and effect. The Company and the Selling Shareholders each hereby agrees to
the exclusive jurisdiction of the courts of the State of New York, or the
Federal courts sitting in the State of New York, in connection with any
action brought by them relating to or arising out of this Agreement or the
sale of the Securities.
(b) The Company and the Selling Shareholders agree that in any suit
(whether in a court in the United States, Israel or elsewhere) seeking
enforcement of this Agreement or provisions of this Agreement (i) no
defense (other than a procedural defense) given or allowed by the laws of
any other state or country shall be interposed by the Company or the
Selling Shareholders in any such suit,
36
action or proceeding unless such defense is also given or allowed by the
laws of the State of New York or of the United States. (ii) if the
plaintiffs therein seek a judgment in either United States dollars or
Israel currency, subject to Israel foreign currency control regulations,
neither the Company nor the Selling Shareholders will interpose any defense
or objection to or otherwise oppose judgment, if any, being awarded in such
currencies except to the extent that such a judgment would violate the laws
of Israel, and (iii) if the plaintiffs therein seek to have any judgment
(or any aspect thereof) awarded in Israel currency linked, for the period
from entry of such judgment until actual payment thereof in full has been
made, to either or both of the consumer price index of Israel and changes
in the Israel currency-United States dollar exchange rate, neither the
Company nor the Selling Shareholders will interpose any defense or
objection to or otherwise oppose inclusion of such linkage in any such
judgment except to the extent that such a judgment would violate the laws
of Israel. Each of the Company and the Selling Shareholders agrees that it
will not initiate or seek to initiate any action, suit or proceeding, in
Israel or in any other jurisdiction other than in the United States,
seeking damages in respect of or for the purpose of obtaining any
injunction or declaratory judgment against the enforcement of, or a
declaratory judgment concerning any alleged breach by the Company or the
Selling Shareholders or other claim by the Underwriters in respect of this
Agreement or any of the Underwriters' rights under this Agreement,
including without limitation any action, suit or proceeding challenging the
enforceability of or seeking to invalidate in any respect the submission by
the Company and the Selling Shareholders hereunder to the jurisdiction of
the courts or the designation of the laws as the law applicable to this
Agreement, in each case as set forth herein.
(c) The Company and the Selling Shareholders agree that if any payment
of any sum due under this Agreement from the Company or the Selling
Shareholders is made to or received by the Underwriters or any controlling
person of any Underwriter in a currency other than freely transferable
United States dollars, whether by judicial judgment or otherwise, the
obligations of the Company or the Selling Shareholders, as the case may be,
under this Agreement shall be discharged only to the extent of the net
amount of freely transferable United States dollars that the Underwriters
or such controlling persons, as the case may be, in accordance with normal
bank procedures are able to lawfully purchase with such amount of such
other currency. To the extent that the Underwriters or such controlling
persons are not able to purchase sufficient United States dollars with such
amount of such other currency to discharge the obligations of the Company
or the Selling Shareholders, as the case may be, to the Underwriters or
such controlling persons, the obligations of the Company and the Selling
Shareholders as the case may be, shall not be discharged with respect to
such difference, and any such undischarged amount will be due as a separate
obligation and shall not be affected by payment of or judgment being
obtained for any other sums due under or in respect of this Agreement.
37
16. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
17. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
18. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties to this Agreement.
"Preliminary Prospectus" shall mean any preliminary prospectus referred
to in paragraph 1(i)(a) above and any preliminary prospectus included in
the Registration Statement at the Effective Date that omits Rule 430A
Information.
"Prospectus" shall mean the prospectus relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred
to in paragraph 1(i)(a) above, including exhibits and financial statements,
as amended at the Execution Time (or, if not effective at the Execution
Time, in the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such
38
term shall include any Rule 430A Information deemed to be included therein
at the Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a) hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
▇▇▇▇▇▇ ELECTRONIC ENGINEERING LTD.
By:
----------------------------------
Name:
Title:
MIVTACH SHAMIR HOLDINGS LTD.
By:
----------------------------------
Name:
Title:
MEZ-OP HOLDINGS LTD.
By:
----------------------------------
Name:
Title:
39
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
HSBC SECURITIES (USA) INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO.
BY: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By
------------------------------------------
Authorized Signatory
For themselves and the other several Underwriters named in Schedule I to the
foregoing Agreement.
40
SCHEDULE I
UNDERWRITERS NUMBER OF UNDERWRITTEN SECURITIES TO BE PURCHASED
------------ -------------------------------------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
HSBC Securities (USA) Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
---------------
Total
===============
3,000,000
41
SCHEDULE II
SELLING SHAREHOLDERS: NUMBER OF UNDERWRITTEN
--------------------- ----------------------
SECURITIES TO BE SOLD
---------------------
Mivtach Shamir Holdings Ltd.
[address, fax no.]............... 465,000
Mez-Op Holdings Ltd.
[address, fax no.]............... 285,000
-------------------
750,000
Total ................
===================
42
[FORM OF LOCK-UP AGREEMENT] EXHIBIT A
[LETTERHEAD OF OFFICER, DIRECTOR OR SELLING SHAREHOLDER OF
▇▇▇▇▇▇ ELECTRONIC ENGINEERING LTD.]
▇▇▇▇▇▇ ELECTRONIC ENGINEERING LTD.
PUBLIC OFFERING OF ORDINARY SHARES
January ___, 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
HSBC Securities (USA) Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
As Representatives of the several Underwriters,
c/o Merrill ▇▇▇▇▇ & Co.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between ▇▇▇▇▇▇
Electronic Engineering Ltd., an Israeli corporation (the "Company"), and each of
you as representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Ordinary Shares, nominal value NIS 1.00 per
share (the "Ordinary Shares"), of the Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., offer, sell, contract to sell, pledge or
otherwise dispose of (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period beginning on the date
hereof and continuing for 180 days after the date of the Underwriting Agreement,
other than Ordinary Shares disposed of as bona fide gifts; provided that the
donee agrees in writing to be bound by the terms of this letter. If (i) the
Company notifies you in writing that it does not intend to proceed with the
Offering, (ii) the registration statement submitted or filed with the Securities
and Exchange Commission with respect to the Offering is withdrawn, (iii) the
43
parties to the Underwriting Agreement do not execute such agreement by February
28, 2004 or (iv) I am an employee of the Company (other than ▇▇▇▇▇ ▇▇▇▇▇) and I
have voluntarily terminated my employment with the Company, this letter shall
automatically terminate and no longer be of force and effect. This letter is not
intended to prohibit the sale of Ordinary Shares by the undersigned pursuant to
the Underwriting Agreement.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER, DIRECTOR OR
SELLING SHAREHOLDER]
[NAME AND ADDRESS OF OFFICER, DIRECTOR OR SELLING SHAREHOLDER]
44