SECURITIES PURCHASE AGREEMENT Dated as of November 19, 2007 by and among BLUEPHOENIX SOLUTIONS LTD. and THE PURCHASERS LISTED ON EXHIBIT A
Exhibit
2.01
EXECUTION
VERSION
Dated
as of November 19, 2007
by
and among
and
THE
PURCHASERS LISTED ON EXHIBIT A
ARTICLE
I
PURCHASE AND SALE OF ORDINARY SHARES AND WARRANTS
3
Section
1.1
Purchase and Sale of Ordinary Shares and
Warrants
3
Section
1.2
Purchase Price and
Closing
3
Section
1.3
Warrant
Shares
4
ARTICLE
II
REPRESENTATIONS AND
WARRANTIES 4
Section
2.1 Representations
and
Warranties of the
Company
4
Section
2.2 Representations,
Warranties
and Agreements of the Purchasers
13
ARTICLE
III
COMPANY
COVENANTS
16
Section
3.1
Keeping
of Records
and Books of
Account
16
Section
3.2
Other
Agreements 16
Section
3.3
Use of
Proceeds
16
Section
3.4
Disclosure of
Information 16
Section
3.5
Disclosure of Material
Information 16
Section
3.6
Reservation of
Shares
17
Section
3.7
Transfer Agent
Instructions 17
Section
3.8
Furnishing of
Information 17
Section
3.9
Integration 18
Section
3.10
Listing of Ordinary
Shares 18
Section
3.11
Equal Treatment of
Purchasers 18
Section
3.12
Form D; Blue Sky
Filings
18
Section
3.13
Subsequent Equity
Sales. 18
ARTICLE
IV
CONDITIONS 19
Section
4.1
Conditions Precedent to the Obligation of the Company to
Close
and to Sell the
Securities 19
Section
4.2
Conditions Precedent to the Obligation of the Purchasers to
Close
and to Purchase the
Securities
20
ARTICLE
V
CERTIFICATE
LEGEND
22
Section
5.1
Legend 22
ARTICLE
VI
INDEMNIFICATION
24
Section
6.1
Company
Indemnity 24
ARTICLE
VII
MISCELLANEOUS
25
Section
7.1
Fees and
Expenses
25
Section
7.2
Specific Performance; Consent to Jurisdiction;
Venue.
25
Section
7.3
Entire
Agreement 26
Section
7.4
Notices 26
Section
7.5
Amendments and
Waivers 27
Section
7.6
Headings 27
Section
7.7
Successors and
Assigns 27
1
Section
7.8
No Third Party
Beneficiaries 27
Section
7.9
Governing
Law 27
Section
7.10 Survival
27
Section
7.11 Counterparts
27
Section
7.12 Severability
27
Section
7.13 Further
Assurances
28
Section
7.14
Independent
Nature of
Purchasers’ Obligations and
Rights
28
2
This
SECURITIES PURCHASE AGREEMENT dated as of November 19, 2007 (this “Agreement”) by and
among BluePhoenix Solutions Ltd., an Israeli company (the “Company”), and each
of the purchasers whose names are set forth on Exhibit A attached
hereto (each a “Purchaser” and
collectively, the “Purchasers”).
The
parties hereto agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF ORDINARY SHARES AND WARRANTS
Section
1.1 Purchase
and Sale of
Ordinary Shares and Warrants. (a) Upon the following terms and
conditions, the Company shall issue and sell to the Purchasers, and the
Purchasers shall purchase (in the amounts set forth as Exhibit A hereto)
from the Company, ordinary shares of the Company, par value NIS 0.01 per share
(the “Ordinary
Shares”, and the Ordinary Shares purchased pursuant to the terms hereof,
the “Shares”)
at a price per share of $17.50, amounting to an aggregate purchase price of
Thirty Four Million Nine Hundred Ninety Nine Thousand Nine Hundred Seventy
Five
Dollars ($34,999,975) (the “Purchase
Price”). The Company and the Purchasers are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded by Section 4(2) of the U.S. Securities
Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
“Securities
Act”), including Regulation D (“Regulation
D”),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.
(b)
Upon the following terms and conditions and for no additional consideration,
each of the Purchasers shall be issued warrants, in substantially the form
attached hereto as Exhibit B (the “Warrants”),
to
purchase the number of Ordinary Shares as set forth opposite such Purchaser’s
name on Exhibit
A hereto. The Warrants shall expire five (5) years following
the Closing Date and shall have an exercise price per share equal to the Warrant
Price (as defined in the Warrant).
Section
1.2 Purchase
Price and
Closing. Subject to the terms and conditions hereof, the
Company agrees to issue and sell to the Purchasers and, in consideration of
and
in express reliance upon the representations, warranties, covenants, terms
and
conditions of this Agreement, the Purchasers, severally but not jointly, agree
to purchase the Shares and Warrants for an aggregate purchase price of Thirty
Four Million Nine Hundred Ninety Nine Thousand Nine Hundred Seventy Five Dollars
($34,999,975) (the “Purchase
Price”). The closing of the purchase and sale of the Shares
and the Warrants to be acquired by the Purchasers from the Company under this
Agreement shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the “Closing”) at 10:00
a.m., New York time (i) on the second business day after the fulfillment or
waiver in accordance herewith of all of the conditions set forth in Article
IV
hereof and applicable to the Closing; provided, that such
date shall be no later than November 26, 2007, or (ii) at such other time and
place or on such date as Purchasers committed to purchase hereunder at least
67%
in
3
value
of
the Shares and the Company may agree upon (the “Closing
Date”). Subject to the terms and conditions of this Agreement,
at the Closing the Company shall deliver or cause to be delivered to each
Purchaser (x) a certificate for the number of Ordinary Shares set forth opposite
the name of such Purchaser on Exhibit A hereto,
(y)
its Warrants to purchase such number of Ordinary Shares as is set forth opposite
such Purchaser’s name on Exhibit A and (z) any other documents required to be
delivered pursuant to Article IV hereof. At the Closing, each
Purchaser shall deliver its portion of the Purchase Price by wire transfer
to
the Company.
Section
1.3 Warrant
Shares. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of shareholders, a number of its authorized but unissued
Ordinary Shares equal to one hundred percent (100%) of the aggregate number
of
Ordinary Shares to effect the exercise of the Warrants as of the Closing
Date. Any Ordinary Shares issuable upon exercise of the Warrants (and
such shares when issued) are herein referred to as the "Warrant
Shares". The Shares, the Warrants and the Warrant Shares are
sometimes collectively referred to herein as the "Securities".
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
Section
2.1 Representations
and
Warranties of the Company. The Company hereby represents and
warrants to the Purchasers, as of the date hereof and the Closing Date (except
as set forth on the Schedule of Exceptions attached hereto with each numbered
Schedule corresponding to the section number herein), as follows:
(a) Organization
and Good
Standing. The Company is a company duly incorporated or
otherwise organized and validly existing under the laws of the State of Israel
and has the requisite power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted. The Company
has no significant direct or indirect Subsidiaries other than as specified
in
the Forms 20-F and 20-F/A for the fiscal year ended December 31, 2006 (the
“Form
20-F”). The Company and each Subsidiary listed on the Form
20-F is duly qualified as a foreign company to do business and is in good
standing (if applicable) in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary
except for any jurisdiction(s) (alone or in the aggregate) in which the failure
to be so qualified will not have a Material Adverse Effect. For the
purposes of this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties or financial condition of the Company and its Subsidiaries taken
as a
whole (other than effects resulting from conditions affecting the Company’s or
its Subsidiaries’ markets generally or from general economic conditions) and/or
any condition, circumstance or situation that would prohibit or otherwise
materially interfere with the ability of the Company to perform any of its
obligations under the Transaction Documents (as defined in Section 2.1(b)
below)) in any material respect. For the purposes of this Agreement,
“Subsidiary”
shall mean
any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.
4
(b) Power;
Authorization;
Enforcement. The Company has the requisite power and authority
to enter into and perform its obligations under this Agreement, the Warrants
and
the Registration Rights Agreement by and among the Company and the Purchasers,
dated as of the Closing, substantially in the form of Exhibit C attached
hereto (the “Registration Rights
Agreement”) (this Agreement, the Warrants and the Registration Rights
Agreement, the “Transaction
Documents”) and to issue and sell the Securities in accordance with the
terms hereof. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by
all
necessary action, and, except as set forth on Schedule 2.1(b), no
further consent or authorization of the Company, its Board of Directors or
shareholders is required. When executed and delivered by the Company,
each of the Transaction Documents shall constitute a valid and binding
obligation of the Company enforceable against the Company in accordance with
its
terms, except as such enforceability may be limited by applicable bankruptcy,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general
application.
(c) Capitalization. The
authorized share capital of the Company as of the date hereof is set forth
on
Schedule 2.1(c)
hereto. All of the outstanding Ordinary Shares and any other
outstanding security of the Company have been duly and validly authorized and
validly issued, fully paid and nonassessable and were issued in accordance
with
the registration provisions of the Securities Act, or pursuant to valid
exemptions therefrom. Except as set forth in this Agreement or on
Schedule 2.1(c)
hereto, no Ordinary Shares or any other security of the Company are entitled
to
preemptive rights, registration rights, rights of first refusal or similar
rights and there are no outstanding options, warrants, scrip, rights to
subscribe to, call or commitments of any character whatsoever relating to,
or
securities or rights convertible into, any share capital of the
Company. Furthermore, except as set forth in this Agreement or on
Schedule 2.1(c)
hereto, there are no contracts, commitments, understandings, or arrangements
by
which the Company is or may become bound to issue additional Ordinary Shares
of
the Company or options, securities or rights convertible into share capital
of
the Company. Except for customary transfer restrictions contained in
agreements entered into by the Company in order to sell restricted securities
or
as provided on Schedule 2.1(c)
hereto, the Company is not a party to or bound by any agreement or understanding
granting registration or anti-dilution rights to any person with respect to
any
of its equity or debt securities.
(d) Issuance
of
Securities. The Shares to be issued at the Closing have been
duly authorized by all necessary action and, when paid for and issued in
accordance with the terms hereof, the Shares shall be duly and validly issued,
fully paid, non-assessable, and free and clear of all liens. When the
Warrant Shares are issued and paid for in accordance with the terms of this
Agreement and as set forth in the Warrants, such shares will be duly authorized
by all necessary action and validly issued, fully paid, non-assessable, and
free
and clear of all liens.
(e) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the performance by the Company of its
obligations under the Warrants and the consummation by the Company of the
transactions contemplated hereby and thereby (including the issuance of the
Securities as contemplated hereby) do not and will not (i) violate any provision
of the Company’s memorandum or articles of association (the
5
“Organizational
Documents”) as amended to date, or any Subsidiary’s comparable charter
documents, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries’
respective properties or assets are bound, or (iii) result in a violation of
any
federal, state, local or foreign statute, rule, regulation, order, judgment
or
decree (including federal and state securities laws and regulations) applicable
to the Company or any of its Subsidiaries or by which any property or asset
of
the Company or any of its Subsidiaries are bound or affected, except, with
respect to clauses (ii) and (iii) above for such conflicts, defaults,
terminations, amendments, acceleration, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect (excluding
with respect to federal and state securities laws). Neither the Company nor any
of its
Subsidiaries is required under federal, state, foreign or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents or issue and sell the Securities in accordance with the
terms hereof,
other than any filings, consents and approvals which may be required to be
made
by the Company under applicable state and federal securities laws, rules or
regulations or any registration provisions provided in the Registration Rights
Agreement.
(f) SEC
Documents, Financial
Statements. The Ordinary Shares of the Company
are registered
pursuant to Section 12(b) of the Exchange Act, and the Company has timely
filed all reports, schedules, forms, statements and any other documents
submitted or filed by the Company with the Securities and Exchange Commission
(“SEC”)
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) (all
of the foregoing including filings incorporated by reference therein being
referred to as the “SEC Documents”)
required to be filed in the last 12 months. At the times of its
filing, the Form 20-F complied in all material respects with the requirements
of
the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and the Form 20-F did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the Form 20-F complied
as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC. Such financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”) applied
on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the
case
of unaudited interim statements, to the extent they may not include footnotes
or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its Subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods
then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) No
Material Adverse
Change. Since the filing of the Form 20-F, the Company has not
experienced or suffered any Material Adverse Effect, except as disclosed on
Schedule 2.1(g)
hereto or as disclosed in its SEC Documents.
6
(h) No
Undisclosed
Liabilities. Except as disclosed in the SEC Documents or on
Schedule
2.1(h)
hereto, since the filing of the Form 20-F, neither the Company nor any of its
Subsidiaries has incurred any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) other than those incurred in the ordinary course of
the
Company’s or its Subsidiaries respective businesses or which, individually or in
the aggregate, are not reasonably likely to have a Material Adverse
Effect.
(i) Actions
Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary which questions the validity of this Agreement or any of the other
Transaction Documents or any of the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto. Except
as set forth in the SEC Documents or on Schedule 2.1(i)
hereto, there is no action, suit, claim, investigation, arbitration, alternate
dispute resolution proceeding or other proceeding pending or, to the knowledge
of the Company, threatened against or involving the Company, any Subsidiary
or
any of their respective properties or assets, which individually or in the
aggregate, would reasonably be expected, if adversely determined, to have a
Material Adverse Effect. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any officers or
directors of the Company or Subsidiary in their capacities as such, which
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(j) Compliance
with
Law. The business of the Company and the Subsidiaries has been
and is presently being conducted in accordance with all applicable federal,
state, local and foreign governmental laws, rules, regulations and ordinances,
except as set forth in the SEC Documents or on Schedule 2.1(j)
hereto or such that, individually or in the aggregate, the noncompliance
therewith could not reasonably be expected to have a Material Adverse
Effect. The Company and each of its Subsidiaries have all franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals necessary for the conduct of its business as now being conducted
by it (the “Permits”) unless
the
failure to possess the Permits, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any of its Subsidiaries have received notice or proceedings relating
to the revocation or modification of any of the Permits which could reasonably
be expected to have a Material Adverse Effect.
(k) Taxes. The
Company and each of the
Subsidiaries has accurately prepared and filed all material federal, state,
foreign and other tax returns required by law to be filed by it, has paid or
made provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of the Company and the Subsidiaries for all current taxes
and other charges to which the Company or any Subsidiary is subject and which
are not currently due and payable. The Company has no knowledge of
any additional assessments, adjustments or contingent tax liability of any
nature whatsoever, whether pending or threatened against the Company or any
Subsidiary for any period, nor of any basis for any such assessment, adjustment
or contingency, which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
7
(l) Certain
Fees. Except as set forth on Schedule
2.1(l)
hereto, the Company has not employed any broker or finder or incurred any
liability for any brokerage or investment banking fees, commissions, finders’
structuring fees, financial advisory fees or other similar fees in connection
with the Transaction Documents or the transactions contemplated
thereby.
(m) Disclosure. Except
for the transactions contemplated by this Agreement, the Company confirms that
neither it nor any other person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that constitutes
or
might constitute material, nonpublic information. The Company
understands and confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in securities of the
Company. All disclosure furnished by or on behalf of the Company to
the Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement,
is
true and correct and does not contain any untrue statement of a material fact
or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof.
(n) Operation
of
Business. Except as set forth on Schedule
2.1(n)
hereto, the Company and each of the Subsidiaries owns or possesses the rights
to
all material patents, trademarks, domain names (whether or not registered)
and
any patentable improvements or copyrightable derivative works thereof, websites
and intellectual property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations which are necessary for the conduct
of
its business as now conducted without any known conflict with the rights of
others, except for any noncompliance that would not reasonably be expected
to
have a Material Adverse Effect.
(o) Books
and Records; Internal
Accounting Controls. The records and documents of the Company
and its Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the Subsidiaries, the location
of
their assets, and the nature of all transactions giving rise to the obligations
or accounts receivable of the Company or any Subsidiary. The Company
and each of its Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company’s board of directors, 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
actions are taken with respect to any differences.
(p) Material
Agreements. Except for the Transaction
Documents (with respect to clause (i) only) or as set forth on Schedule
2.1(p)hereto, or as would
not be reasonably likely to have a Material Adverse Effect, (i) the Company
and
each of its Subsidiaries have performed all obligations required to be performed
by them to date under any material contract, instrument, agreement, commitment,
obligation, plan or arrangement, filed or required to be
filed
8
with
the SEC (the “Material
Agreements”),
(ii) neither the Company nor any of its Subsidiaries has received any
notice of default under any Material Agreement and, (iii) to the Company’s
knowledge, neither the Company nor any of its Subsidiaries is in default under
any Material Agreement now in effect.
(q) Transactions
with
Affiliates. Except as set forth on Schedule
2.1(q)
hereto, there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions between
(a) the Company or any Subsidiary, on the one hand, and (b) on the other hand,
any officer, employee, consultant or director of the Company, or any of its
Subsidiaries, or any person owning at least 5% of the outstanding share capital
of the Company or any Subsidiary which, in each case, is required to be
disclosed on Form 20-F, that is not so disclosed on the Form 20-F.
(r) Securities
Act of
1933. Based in material part upon the representations herein
of the Purchasers, the Company has complied and will comply with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Securities hereunder. Neither the Company nor anyone
acting on its behalf, directly or indirectly, has or will sell, offer to sell
or
solicit offers to buy any of the Securities or similar securities to, or solicit
offers with respect thereto from, or enter into any negotiations relating
thereto with, any person, or has taken or will take any action so as to bring
the issuance and sale of any of the Securities under the registration provisions
of the Securities Act and applicable state securities laws. Neither
the Company nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection
with
the offer or sale of any of the Securities.
(s) Investment
Company Act
Status. The Company is not, and as a result of and immediately
upon the Closing will not be, an “investment company” or, to the Company’s
knowledge, a company “controlled” by an “investment company,” within the meaning
of the Investment Company Act of 1940, as amended.
(t) No
Integrated
Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would cause the offering of the Securities pursuant
to
this Agreement to be integrated with prior offerings by the Company for purposes
of the Securities Act in a manner that would prevent the Company from selling
the Securities pursuant to Regulation D and Rule 506 thereof under the
Securities Act, nor will the Company or any of its affiliates or subsidiaries
take any action or steps that would cause the offering of the Securities to
be
integrated with other offerings. Except as set forth on Schedule 2.1(t)
hereto, the Company does not have any registration statement pending before
the
SEC or currently under the SEC’s review. Except as set forth on Schedule 2.1(t)
hereto, since December 1, 2006, the Company has not offered or sold any of
its
equity securities or debt securities convertible into Ordinary
Shares.
(u) DTC
Status. The Company’s current transfer agent is a participant
in, and the Ordinary Shares are eligible for transfer pursuant to, the
Depository Trust Company Automated Securities Transfer Program. The
name, address, telephone number, fax number,
9
contact
person and email address of the Company’s transfer agent is set forth on Schedule 2.1(u)
hereto.
(v) Labor
Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees
of
the Company.
(w) Title
to
Assets. The Company and the Subsidiaries have valid land use
rights for all real property that is material to their respective businesses
and
good and marketable title in all personal property owned by them that is
material to their respective businesses, in each case free and clear of all
liens, except for liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries. Any real property
and facilities held under lease by the Company and the Subsidiaries are held
by
them under valid, subsisting and enforceable leases of which the Company and
the
Subsidiaries are in compliance, except as could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(x) Insurance. The
Company and the 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 the Company and the Subsidiaries are
engaged, including directors and officers insurance coverage at least equal
to
$10 million. The Company has no reason to believe that it will not be
able to renew its and the Subsidiaries’ 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 on terms consistent with market for the
Company’s and such Subsidiaries’ respective lines of business.
(y) Accounting
Controls. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those
entities. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures in accordance with Item
15 of Form 20-F for the Company’s most recently ended fiscal year-end (such
date, the “Evaluation
Date”). The Company presented in the Form 20-F the conclusions
of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no significant
changes in the Company’s internal controls (as such term is defined in Rule
13a-15(e) of the Exchange Act) or, to the Company’s knowledge, in other factors
that could significantly affect the Company’s internal controls.
(z) Certain
Registration
Matters. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 2.2, no registration under the Securities Act
is
required for the offer and sale of the Shares and the Warrants by the Company
to
the Purchasers under the Transaction Documents. The Company is
eligible to register the Shares and the Warrant Shares under Form F-3
promulgated under the Securities Act.
(aa) Listing
and Maintenance
Requirements. Except as specified in the SEC Documents, the
Company has not, in the two years preceding the date hereof, received
notice
10
from
the
Nasdaq Global Market to the effect that the Company is not in compliance with
the listing or maintenance requirements thereof. The Company is, and
has no reason to believe that it will not in the foreseeable future continue
to
be, in compliance with the listing and maintenance requirements for continued
listing of its shares on the Nasdaq Global Market. The issuance and
sale of the Securities under the Transaction Documents does not contravene
the
rules and regulations of the Nasdaq Global Market, and no approval of the
shareholders of the Company thereunder is required for the Company to issue
and
deliver to the Purchasers the Securities contemplated by Transaction
Documents.
(bb) Application
of Takeover
Protections. The Company has no knowledge of any control share
acquisition, business combination, poison pill (including any distribution
under
a rights agreement) or other similar anti-takeover provision under the Company’s
Articles of Association or the laws of the state of Israel that is or could
become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company’s issuance of
the Securities and the Purchasers’ ownership of the Securities.
(cc) No
Additional
Agreements. Except as set forth in Schedule
2.1(cc), the
Company does not have any agreement or understanding with any Purchaser with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
(dd) Foreign
Corrupt Practices
Act. Neither the Company nor any Subsidiary, nor to the
knowledge of the Company, any agent or other person acting on behalf of any
of
the Company or any Subsidiary, has, directly or indirectly, (i) used any funds,
or will use any proceeds from the sale of the Shares, for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed
to
disclose fully any contribution made by the Company or any Subsidiary (or made
by any Person acting on their behalf of which the Company is aware) which is
in
violation of law, or (iv) has violated in any material respect any provision
of
the Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder.
(ee) PFIC. Neither
the Company nor any Subsidiary is or intends to become a “passive foreign
investment company” within the meaning of Section 1297 of the U.S. Internal
Revenue Code of 1986, as amended.
(ff) Money
Laundering
Laws. The operations of each of the Company and any Subsidiary are and
have been conducted at all times in compliance with the applicable money
laundering statutes of the United States and the state of Israel, the rules
and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any applicable 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
and/or any Subsidiary with respect to the Money Laundering Laws is pending
or,
to the best knowledge of the Company, threatened.
11
(gg) Solvency. Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all
of its assets, after taking into account all anticipated uses of the cash,
would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its
debt). The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one
year
from the Closing Date. Schedule 3.1(gg) sets
forth as of September 30, 2007, all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or
any
Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness”
means (a)
any liabilities for borrowed money or amounts owed in excess of
$500,000 (other than accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations
in
respect of indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection
or
similar transactions in the ordinary course of business; and (c) any lease
payments in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP, except for payments under leases entered into in the
ordinary course of the Company’s business. Neither the Company nor
any Subsidiary is in default with respect to any Indebtedness.
(hh) OFAC.
Neither the
Company nor any Subsidiary nor, to the knowledge of the Company, any director,
officer, agent, employee, Affiliate or Person acting on behalf of the Company
or
any Subsidiary 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 sale of the
Shares, or lend, contribute or otherwise make available such proceeds to any
Subsidiary, joint venture partner or other Person or entity, towards any sales
or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.
(ii) Acknowledgment
Regarding
Purchasers’ Purchase of Securities. The Company acknowledges
and agrees that each of the Purchasers is acting solely in the capacity of
an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges
that no Purchaser is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and
the
transactions contemplated thereby and any advice given by any Purchaser or
any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to
the
Purchasers’ purchase of the Securities. The Company further
represents to each Purchaser that the
12
Company’s
decision to enter into this Agreement and the other Transaction Documents has
been based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(jj) Acknowledgement
Regarding
Purchaser’s Trading Activity. Anything in this Agreement or
elsewhere herein to the contrary notwithstanding (except for Section 2.2(k)),
it
is understood and acknowledged by the Company that none of the Purchasers have
been asked by the Company to agree, nor has any Purchaser agreed, to desist
from
purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Securities for any specified term. The Company acknowledges that such
aforementioned activities do not constitute a breach of any of the Transaction
Documents.
(kk) Regulation
M
Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.
Section
2.2 Representations,
Warranties
and Agreements of the Purchasers. Each of the Purchasers
hereby represents, warrants and agrees to the Company with respect solely to
itself and not with respect to any other Purchaser as follows as of the date
hereof and as of the Closing Date:
(a) Organization
and Standing of the Purchasers. If the Purchaser is an
entity, such Purchaser is a corporation, limited liability company or
partnership duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization.
(b) Authorization
and
Power. Each Purchaser has the requisite power and authority to
enter into and perform its obligations under the Transaction Documents and
to
purchase the Securities being sold to it hereunder. The execution,
delivery and performance of the Transaction Documents by each Purchaser and
the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate or partnership action, and no further
consent or authorization of such Purchaser or its Board of Directors,
shareholders, or partners, as the case may be, is required. When
executed and delivered by the Purchasers, the other Transaction Documents shall
constitute valid and binding obligations of each Purchaser enforceable against
such Purchaser in accordance with their terms, except as such enforceability
may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.
(c) No
Conflict. The execution, delivery and performance of the
Transaction Documents by the Purchaser and the consummation by the Purchaser
of
the transactions
13
contemplated
thereby and hereby do not and will not (i) violate any provision of the
Purchaser’s charter or organizational documents, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Purchaser is a party or by which the Purchaser’s respective
properties or assets are bound, or (iii) result in a violation of any
federal, state, local or foreign statute, rule, regulation, order, judgment
or
decree (including federal and state securities laws and regulations) applicable
to the Purchaser or by which any property or asset of the Purchaser are bound
or
affected, except, with respect to clauses (ii) or (iii) (other than with respect
to federal and state securities laws) for such conflicts, defaults,
terminations, amendments, acceleration, cancellations and violations as would
not, individually or in the aggregate, materially and adversely affect the
Purchaser’s ability to perform its obligations under the Transaction
Documents.
(d) Acquisition
for Own
Account. Each Purchaser is purchasing the Securities solely
for its own account and not with a view to, or for sale in connection with,
public sale or distribution thereof. Each Purchaser does not have a
present intention to sell any of the Securities, nor a present arrangement
(whether or not legally binding) or intention to effect any distribution of
any
of the Securities to or through any person or entity; provided, however,
that by
making the representations herein, such Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with federal and state
securities laws applicable to such disposition. Each Purchaser
acknowledges that it (i) has such knowledge and experience in financial and
business matters such that Purchaser is capable of evaluating the merits and
risks of Purchaser’s investment in the Company, (ii) is able to bear the
financial risks associated with an investment in the Securities and (iii) has
been given full access to such records of the Company and the Subsidiaries and
to the officers of the Company and the Subsidiaries as it has deemed necessary
or appropriate to conduct its due diligence investigation.
(e) Rule
144. Each Purchaser understands that the Securities must be
held indefinitely unless such Securities are registered under the Securities
Act
or an exemption from registration is available. Each Purchaser
acknowledges that such person is familiar with Rule 144 of the rules and
regulations of the SEC, as amended, promulgated pursuant to the Securities
Act
(“Rule 144”),
and that such Purchaser has been advised that Rule 144 permits resales only
under certain circumstances. Each Purchaser understands that to the
extent that Rule 144 is not available, such Purchaser will be unable to sell
any
Securities without either registration under the Securities Act or the existence
of another exemption from such registration requirement.
(f) General. Each
Purchaser understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal
and
state securities laws and the Company is relying upon the truth and accuracy
of
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the applicability
of
such exemptions and the suitability of such Purchaser to acquire the
Securities. Each Purchaser understands that no United States federal
or state agency or any government or governmental agency has passed upon or
made
any recommendation or endorsement of the Securities.
14
(g) No
General
Solicitation. Each Purchaser acknowledges that the Securities
were not offered to such Purchaser by means of any form of general or public
solicitation or general advertising, or publicly disseminated advertisements
or
sales literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, Internet website or similar
media, or broadcast over television or radio, or (ii) any seminar or meeting
to
which such Purchaser was invited by any of the foregoing means of
communications. Each Purchaser, in making the decision to purchase
the Securities, has relied upon independent investigation made by it and has
not
relied on any information or representations made by third parties, including
without limitation, ▇▇▇▇ Capital Partners, LLC.
(h) Accredited
Investor. Each Purchaser is an “accredited investor” (as
defined in Rule 501 of Regulation D), and such Purchaser has such experience
in
business and financial matters that it is capable of evaluating the merits
and
risks of an investment in the Securities. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer or an “associated person” of a
broker-dealer. Each Purchaser acknowledges that an investment in the
Securities is speculative and involves a high degree of risk.
(i) Certain
Fees. No Purchaser has employed any broker or finder or
incurred any liability for any brokerage or investment banking fees,
commissions, finders’ structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents or the transactions
contemplated thereby.
(j) Independent
Investment. Except as may be disclosed in any filings made by
a Purchaser with the SEC, no Purchaser has agreed to act with any other
Purchaser for the purpose of acquiring, holding, voting or disposing of the
Securities purchased hereunder for purposes of Section 13(d) under the Exchange
Act, and each Purchaser is acting independently with respect to its investment
in the Securities.
(k) No
Trading. Such Purchaser has not directly or indirectly, nor
has any Person acting on behalf of or pursuant to any understanding with such
Purchaser, engaged in any transactions in the securities of the Company
(including, without limitations, any Short Sales involving the Company’s
securities) since the time that such Purchaser was first contacted by the
Company or ▇▇▇▇ Capital Partners, LLC or ▇▇▇▇▇ ▇▇▇▇▇▇ regarding the consummation
of this transaction. Such Purchaser covenants that neither it nor any
person or entity acting on its behalf or pursuant to any understanding with
it
will engage in any transactions in the securities of the Company (including
Short Sales) prior to the time that the transactions contemplated by this
Agreement are announced in a press release pursuant to Section
3.4. For purposes of this Section 2.2(k), “Short
Sales” shall include,
without
limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect
stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
15
ARTICLE
III
COMPANY
COVENANTS
The
Company covenants with each
Purchaser as follows, which covenants are for the benefit of each Purchaser
and
their respective permitted assignees.
Section
3.1 Keeping
of Records and Books
of Account. The Company shall keep and cause each Subsidiary
to keep adequate records and books of account, in which complete entries will
be
made in accordance with GAAP consistently applied, reflecting all material
financial transactions of the Company and its Subsidiaries, and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
Section
3.2 Other
Agreements. The Company shall not enter into any agreement in
which the terms of such agreement would restrict or impair the right or ability
to perform of the Company under any Transaction Document.
Section
3.3 Use
of
Proceeds. The Company may use the net proceeds from the sale
of the Securities hereunder for working capital purposes, including
acquisitions, and the satisfaction of all or a portion of the Company’s debt set
forth in Schedule
2.1(gg) hereto and shall not use such proceeds for (a) the redemption of
any Ordinary Shares or any convertible security or warrant, option or other
right to subscribe for or purchase any additional Ordinary Shares or any
convertible security (“Ordinary Share
Equivalents”) or (b) the settlement of any outstanding
litigation.
Section
3.4 Disclosure
of
Information. The Company shall, after 8:45 a.m. (New York City
time) and before 9:30 a.m. (New York City time) on November 19, 2007, issue
a
press release disclosing the material terms of the transactions contemplated
hereunder and, within one Trading Day of the date hereof, a Report of Foreign
Private Issuer on Form 6-K, disclosing the material terms of the transactions
contemplated hereby, and filing the Transaction Documents as exhibits
thereto. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except (i) as
required by federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B) the filing
of final Transaction Documents (including signature pages thereto) with the
Commission and (ii) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall provide the Purchasers
with
prior notice of such disclosure permitted under this clause (ii).
Section
3.5 Disclosure
of Material
Information. The Company covenants and agrees that neither it
nor any other person acting on its behalf has provided or will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto
such
Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information. The Company
16
understands
and confirms that each Purchaser shall be relying on the foregoing
representations in effecting transactions in the Ordinary Shares.
Section
3.6 Reservation
of
Shares. So long as any of the Warrants remain outstanding, the
Company shall take all action necessary to at all times have authorized and
reserved for the purpose of issuance, one hundred percent (100%) of the
aggregate number of Ordinary Shares needed to provide for the issuance of the
Warrant Shares.
Section
3.7 Transfer
Agent
Instructions. The Company shall issue irrevocable instructions
to its transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Purchaser or its respective nominee(s), for
the
Warrant Shares in such amounts as specified from time to time by each Purchaser
to the Company upon exercise of the Warrants in the form of Exhibit D attached
hereto (the “Irrevocable Transfer
Agent
Instructions”). Prior to registration of the Warrant Shares
under the Securities Act, all such certificates shall bear the restrictive
legend specified in Section 5.1 of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.7 will be given by the Company to
its
transfer agent and that the Warrant Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. If
a Purchaser provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that a public sale, assignment or transfer of
the
Warrant Shares may be made without registration under the Securities Act or
the
Purchaser provides the Company with reasonable assurances that the Warrant
Shares can be sold pursuant to Rule 144 without any restriction as to the number
of securities acquired as of a particular date that can then be immediately
sold, the Company shall permit the transfer, and, in the case of the Warrant
Shares, promptly instruct its transfer agent to issue one or more certificates
in such name and in such denominations as specified by such Purchaser and
without any restrictive legend. The Company acknowledges that a
breach by it of its obligations under this Section 3.7 will cause irreparable
harm to the Purchasers by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 3.7 will
be inadequate and agrees, in the event of a breach or threatened breach by
the
Company of the provisions of this Section 3.7, that the Purchasers shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
Section
3.8 Furnishing
of
Information. Until the earliest of the time that (i) no
Purchaser owns Securities or (ii) the Warrants have expired, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long
as any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers
and
make publicly available in accordance with Rule 144(c) such information as
is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, to the extent required from time to time
to
enable such Person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule
144.
17
Section
3.9 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Purchasers or that would be integrated with the offer
or sale of the Securities to the Purchasers for purposes of the rules and
regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent
transaction.
Section
3.10 Listing
of Ordinary
Shares. The Company hereby agrees to use reasonable best
efforts to maintain the listing of the Ordinary Shares on a Trading Market,
and
as soon as reasonably practicable following the Closing (but not later than
the
earlier of the Effective Date (as defined in the Registration Rights Agreement)
and the first anniversary of the Closing Date) to list all of the Shares and
Warrant Shares on such Trading Market. The Company further agrees, if the
Company applies to have the Ordinary Shares traded on any other Trading Market,
it will include in such application all of the Shares and Warrant Shares, and
will take such other action as is necessary to cause all of the Shares and
Warrant Shares to be listed on such other Trading Market as promptly as
possible. The Company will take all action reasonably necessary to
continue the listing and trading of the Ordinary Shares on a Trading Market
and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.
Section
3.11 Equal
Treatment of
Purchasers. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of
any
of the Transaction Documents unless the same consideration is also offered
to
all of the parties to the Transaction Documents. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended
for
the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to
the
purchase, disposition or voting of Securities or otherwise.
Section
3.12 Form
D; Blue Sky
Filings. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the Purchasers
at
the Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Purchaser.
Section
3.13 Subsequent
Equity
Sales.
(a) From
the
date hereof until forty-five (45) days after the Effective Date (as defined
in
the Registration Rights Agreement), neither the Company nor any Subsidiary
shall
issue Ordinary Shares or Ordinary Share Equivalents; provided, however,
that the
forty-five (45) day period set forth in this Section 3.13 shall be extended
for
the number of Trading Days during such period in which trading in the Ordinary
Shares is suspended by any Trading Market.
18
(b) From
the
date hereof until the earlier of (x) the five year anniversary of the Closing
Date and (y) such time as the Purchasers no longer hold in the aggregate
more than 20% of the Securities, the Company shall be prohibited from effecting
or entering into an agreement to effect any financing by the Company or any
of
its Subsidiaries involving a Variable Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company issues or sells (i)
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional Ordinary Shares
either (A) at a conversion, exercise or exchange rate or other price that is
based upon and/or varies with the trading prices of or quotations for the
Ordinary Shares at any time after the initial issuance of such debt or equity
securities, or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such debt
or
equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market
for
the Ordinary Shares or (ii) enters into any agreement, including, but not
limited to, an equity line of credit, whereby the Company may sell securities
at
a future determined price. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages.
(c) Notwithstanding
the foregoing, this Section 3.13 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt
Issuance. “Exempt Issuance”
means the
issuance of (a) Ordinary Shares or options to employees, officers or
directors of the Company or up to 250,000 Ordinary Shares or options per year
to
consultants of the Company, in either case, pursuant to any stock or option
plan
duly adopted for such purpose, by a majority of the non-employee members of
the
Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise of
any
Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into Ordinary Shares issued and outstanding on, or
contractually obligated by the Company to issue as of, the date of this
Agreement, provided that such securities have not been amended since the date
of
this Agreement to increase the number of such securities or to decrease the
exercise, exchange or conversion price of such securities, (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of
the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities and (d) securities issued pursuant
to the agreements set forth on Schedule
2.1(c).
ARTICLE
IV
CONDITIONS
Section
4.1 Conditions
Precedent to the
Obligation of the Company to Close and to Sell the
Securities. The obligation hereunder of the Company to close
and issue and sell the Securities to the Purchasers at the Closing is subject
to
the satisfaction or waiver, at or before the Closing of the conditions set
forth
below. These conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion.
19
(a) Accuracy
of the Purchasers’
Representations and Warranties. The representations and
warranties of each Purchaser shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality, which shall be true and correct in all respects) as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality, which shall
be
true and correct in all respects) as of such date.
(b) Performance
by the
Purchasers. Each Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchasers at or prior to the Closing Date.
(c) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) No
Proceedings or
Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates
of the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
(e) Delivery
of Purchase
Price. The Purchasers shall have delivered to the Company the
Purchase Price for the Securities to be purchased by each
Purchaser.
(f) Delivery
of Transaction
Documents. The Transaction Documents shall have been duly
executed and delivered by the Purchasers to the Company.
Section
4.2 Conditions
Precedent to the
Obligation of the Purchasers to Close and to Purchase the
Securities. The obligation hereunder of the Purchasers to
purchase the Securities and consummate the transactions contemplated by this
Agreement is subject to the satisfaction or waiver, at or before the Closing,
of
each of the conditions set forth below. These conditions are for the
Purchasers’ sole benefit and may be waived by the Purchasers holding, or
committed to purchase at least 67% of the Shares at any time in their sole
discretion.
(a) Accuracy
of the Company’s
Representations and Warranties. Each of the representations
and warranties of the Company in this Agreement and the other Transaction
Documents shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material
Adverse Effect, which shall be true and correct in all respects) as of the
date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all material respects (except for those
representations and
20
warranties
that are qualified by materiality or Material Adverse Effect, which shall be
true and correct in all respects) as of such date.
(b) Performance
by the
Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
(c) No
Suspension, Etc. Trading in the Ordinary
Shares shall not have been suspended by the SEC or the Nasdaq Global
Market (except for any suspension
of trading of limited duration agreed to by the Company, which suspension shall
be terminated prior to the Closing), and, at any time prior to the Closing
Date,
trading in securities generally as reported by Bloomberg Financial Markets
(“Bloomberg”)
shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by Bloomberg, nor shall a banking moratorium have been
declared either by the Israel, United States or New York State
authorities.
(d) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) No
Proceedings or
Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates
of the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
(f) Opinion
of
Counsel. The Purchasers shall have received an opinion of
Israel counsel, U.S. counsel and general counsel to the Company, dated the
date
of the Closing, substantially in the form of Exhibits E-1, E-2
and E-3, respectively
with such exceptions and limitations as shall be reasonably acceptable to
counsel to the Purchasers.
(g) Shares
and Warrant
Shares. At or prior to the Closing Date, the Company shall
have delivered to the Purchasers the certificates representing the Shares (in
such denominations as each Purchaser may request) and the Warrants (in such
denominations as each Purchaser may request).
(h) Secretary’s
Certificate. The Company shall have delivered to the
Purchasers a secretary’s certificate, dated as of the Closing Date, as to (i)
the resolutions adopted by the Board of Directors approving the transactions
contemplated hereby, (ii) the Officer’s Certificate referred to in Section
4.2(i) below, (iii) the Organizational Documents, each as in effect at the
Closing, and (iv) the authority and incumbency of the officers of the Company
executing the Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
21
(i) Officer’s
Certificate. On the Closing Date, the Company shall have
delivered to the Purchasers a certificate signed by an executive officer on
behalf of the Company, dated as of the Closing Date, confirming the accuracy
of
the Company’s representations, warranties and covenants as of the Closing Date
and confirming the compliance by the Company with the conditions precedent
set
forth in paragraphs (a)-(e) and (l) of this Section 4.2 as of the Closing Date
(provided that, with respect to the matters in paragraphs (d) and (e) of this
Section 4.2, such confirmation shall be based on the knowledge of the executive
officer after due inquiry).
(j) Registration
Rights
Agreement. As of the Closing Date, the Company shall have
executed and delivered the Registration Rights Agreement to each
Purchaser.
(k) Transfer
Agent
Instructions. The Irrevocable Transfer Agent Instructions, in
the form of Exhibit
D attached hereto, shall have been delivered to the Company’s transfer
agent.
(l) Material
Adverse
Effect. No Material Adverse Effect shall have occurred at or
before the Closing Date.
ARTICLE
V
CERTIFICATE
LEGEND
Section
5.1 Legend. Each
certificate representing the Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required by applicable state securities or “blue sky” laws):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR BLUEPHOENIX SOLUTIONS LTD. SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
Certificates
evidencing the Securities shall not contain any legend (including the legend
forth above) if at such time (i) the Company has received an opinion of counsel
reasonably satisfactory to the Company, to the effect that the registration
of
the Securities under the Securities Act is not required in connection with
such
proposed transfer, (ii) a registration statement under the Securities Act
covering the resale of the Securities has been filed by the
22
Company
with the SEC and has become effective under the Securities Act, (iii) the
Company has received other evidence reasonably satisfactory to the Company
that
such registration and qualification under the Securities Act and state
securities laws are not required (which may include an opinion of counsel
provided by the Company), or (iv) following the sale of the Securities pursuant
to Rule 144 or (v) following the date that the Securities may be sold pursuant
to Rule 144 without manner or volume restriction. If all or any
portion of a Warrant is converted or exercised (as applicable) at a time when
there is an effective registration statement to cover the resale of the Warrant
Shares, or if such Warrant Shares may be sold under Rule 144 without volume
or
manner restrictions or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations thereof)
then such Warrant Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 5.1, it will use reasonably best
efforts to, no later than three Trading Days following the delivery by a
Purchaser to the Company or the Company's transfer agent of a certificate
representing Warrant Shares, as applicable, issued with a restrictive legend
(such third Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. Whenever a certificate representing
the
Securities is required to
be issued to a Purchaser without a legend, in lieu of delivering physical
certificates representing the Shares or Warrant Shares, as appropriate, provided
the Company’s
transfer agent is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer
program, the Company shall use its reasonable best efforts to cause its transfer
agent to electronically transmit the Shares or Warrant Shares, as
appropriate, to a Purchaser by
crediting the account of such Purchaser’s Prime Broker with DTC through its
Deposit Withdrawal Agent Commission (“DWAC”)
system (to the extent not
inconsistent with any provisions of this
Agreement). Notwithstanding anything contained in this
Agreement to the contrary, each Purchaser agrees that, upon receipt of a notice
from the Company of the occurrence of any event of the kind described in Section
3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(n) of the Registration Rights
Agreement, such Purchaser will forthwith discontinue disposition of such Shares
and Warrant Shares under the Registration Statement until such Purchaser’s
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j) of the Registration Rights Agreement,
or
until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration
Statement. In addition to such Purchaser’s other available remedies,
the Company shall pay to a Purchaser, in cash, as partial liquidated damages
and
not as a penalty, for each $25,000 of the Securities (based on the VWAP of
the
Ordinary Shares on the date such Securities are submitted to the Company’s
transfer agent) delivered for removal of the restrictive legend and subject
to
this Section 4.1(c), $50 per Trading Day for each Trading Day after the seventh
Trading Day following the Legend Removal Date until such certificate is
delivered without a legend. Notwithstanding anything hereunder to the
contrary, for any periods during which partial liquidated damages are accruing
under both this Section 5.1 and Section 2(e) of the Warrant, the holder of
the
Warrant shall only have the right to recover partial liquidated damages, at
the
option of such holder, under one such provision. Nothing herein
shall limit such Purchaser’s right to pursue actual damages for the Company's
failure to deliver
23
certificates
representing any Securities as required by the Transaction Documents, and such
Purchaser shall have the right to pursue all remedies available to it at law
or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief. The Company acknowledges and agrees that the
Securities may be pledged by a Purchaser in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document. The Company hereby
agrees to execute and deliver such documentation as a pledgee of the Securities
may reasonably request in connection with a pledge of the Securities to such
pledgee by a Purchaser.
ARTICLE
VI
INDEMNIFICATION
Section
6.1 Company
Indemnity. Subject to the provisions of this Section 6.1, the
Company will indemnify and hold each Purchaser and its directors, officers,
shareholders, members, managers, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities
Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, managers, partners or employees (and any other Persons with
a
functionally equivalent role of a Person holding such titles notwithstanding
a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as
a
result of or relating to any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents. If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the reasonable fees and
expenses of such counsel shall be at the expense of such Purchaser Party except
to the extent that (i) the employment thereof has been specifically authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the
position of such Purchaser Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate
counsel. The Company will not be liable to any Purchaser Party under
this Agreement (i) for any settlement by a Purchaser Party effected without
the
Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents.
24
ARTICLE
VII
MISCELLANEOUS
Section
7.1 Fees
and
Expenses. At the Closing, the Company has agreed to reimburse
Enable Capital Management, LLC (“Enable”) up to $30,000 for its fees and
expenses. Accordingly, in lieu of the foregoing payments, the
aggregate amount that Enable is to pay for the Securities at the Closing shall
be reduced by $30,000 in lieu thereof. Except as expressly set forth
in the Transaction Documents to the contrary, each party shall pay the fees
and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees, stamp taxes
and other taxes and duties levied in connection with the delivery of any
Securities to the Purchasers.
Section
7.2 Specific
Performance;
Consent to Jurisdiction; Venue.
(a) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents were not performed in accordance with their specific
terms
or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches
of
the provisions of this Agreement or the other Transaction Documents and to
enforce specifically the terms and provisions hereof or thereof, this being
in
addition to any other remedy to which any of them may be entitled by law or
equity.
(b) All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced
in
accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof. Each party agrees that
all legal proceedings concerning the interpretations, enforcement and defense
of
the transactions contemplated by this Agreement and any other Transaction
Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New
York. The parties agree that venue for any dispute arising under this
Agreement will lie exclusively in the state or federal courts located in New
York County, New York, and the parties irrevocably waive any right to raise
forum non conveniens or
any other argument that New York is not the proper venue. The parties
irrevocably consent to personal jurisdiction in the state and federal courts
of
the state of New York. The Company and each Purchaser consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 7.2
shall affect or limit any right to serve process in any other manner permitted
by law. THE
PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY. If either
party shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
25
Section
7.3 Entire
Agreement. This Agreement, the Warrant and the Registration
Rights Agreement contain the entire understanding and agreement of the parties
with respect to the matters covered hereby and, except as specifically set
forth
herein, the Warrant or in the Registration Rights Agreement, neither the Company
nor any Purchaser make any representation, warranty, covenant or undertaking
with respect to such matters, and they supersede all prior understandings and
agreements with respect to said subject matter, all of which are merged
herein.
Section
7.4 Notices. Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery by telecopy or facsimile at the address or number designated below
(if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the third business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
If
to the
Company:
BluePhoenix Solutions Ltd.
▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
Tel.
No.:
▇▇▇-(▇)-▇▇▇-▇▇▇▇
Fax
No.:
▇▇▇-(▇)-▇▇▇-▇▇▇▇
with
copies (which copies
shall
not
constitute notice
to
the
Company)
to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Tel
No.:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax
No.:
(▇▇▇) ▇▇▇-▇▇▇▇
|
If
to any Purchaser:
|
At
the address of such Purchaser set forth on the signature attached
hereto
to this Agreement, with copies to Purchaser’s counsel as set forth on the
signature page attached hereto or as specified in writing by such
Purchaser.
|
Any
party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto pursuant to the
provisions of this Section 7.4.
26
Section
7.5 Amendments
and
Waivers. No provision of this Agreement may be amended or
waived except in a written instrument signed by the Company and Purchasers
holding, or committed to purchase at least 67% of the Shares. Any
amendment or waiver effected in accordance with this Section 7.5 shall be
binding upon each Purchaser (and their permitted assigns) and the
Company. No waiver by either party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any other provision, condition
or
requirement hereof, nor shall any delay or omission of any party to exercise
any
right hereunder in any manner impair the exercise of any such right accruing
to
it thereafter.
Section
7.6 Headings. The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose
and
shall not be deemed to limit or affect any of the provisions
hereof.
Section
7.7 Successors
and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. After the
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement. Subject to Section 5.1 hereof, the Purchasers may assign
the Shares and its rights under this Agreement and the other Transaction
Documents and any other rights hereto and thereto without the consent of the
Company.
Section
7.8 No
Third Party
Beneficiaries. Except as contemplated by Article VI hereof,
this Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and is not for the benefit of,
nor
may any provision hereof be enforced by, any other person.
Section
7.9 Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This
Agreement shall not be interpreted or construed with any presumption against
the
party causing this Agreement to be drafted.
Section
7.10 Survival. The
representations and
warranties of the Company and the Purchasers shall survive the execution and
delivery hereof and the Closing hereunder for the applicable statute
of
limitations period.
Section
7.11 Counterparts. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.
Section
7.12 Severability. The
provisions of this Agreement are severable and, in the event that any court
of
competent jurisdiction shall determine that any one or more of the provisions
or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part
of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part
of
27
such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.
Section
7.13 Further
Assurances. From and after the date of this Agreement, upon
the request of the Purchasers or the Company, the Company and each Purchaser
shall execute and deliver such instruments, documents and other writings as
may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement, the Warrants and the
Registration Rights Agreement.
Section
7.14 Independent
Nature of
Purchasers’ Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in
any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation,
the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents. The Company has elected to
provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to
do so
by the Purchasers.
Section
7.15 Agent
for Service of
Process. The Company hereby irrevocably appoints ▇▇▇
▇’▇▇▇▇▇▇▇, BluePhoenix Solutions U.S.A. Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: Secretary, as its agent for the receipt of service
of
process in the United States. The Company agrees that any document
may be effectively served on it in connection with any action, suit or
proceeding in the United States by service on its agents. Each of the Purchasers
consents and agrees that the Company may, in its reasonable discretion,
irrevocably appoint a substitute agent for the receipt of service of process
located within the Untied States, and that upon such appointment, the
appointment of ▇▇▇ ▇’▇▇▇▇▇▇▇ may be revoked.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
28
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
By:_____________________________________
Name:
Title:
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOR PURCHASERS FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
NAME
OF
INVESTOR
By:_____________________________________________
Name:
Title:
Investment
Amount:
$
Number
of Ordinary
Shares: __________________
Number
of
Warrants: _______________________
Tax
ID
No.:
ADDRESS
FOR
NOTICE
c/o:
Street:
City/State/Zip:
Attention:
Tel:
Fax:
DELIVERY
INSTRUCTIONS
(if
different from
above)
c/o:
Street:
City/State/Zip:
Attention:
Tel:
EXHIBIT
A
LIST
OF PURCHASERS
|
Names
of
Purchasers
|
Investment
Amount and Number of
Shares
and Warrants
Purchased
|
EXHIBIT
B
FORM
OF WARRANT
EXHIBIT
C
FORM
OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT
D
FORM
OF IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS
as
of
_____, 2007
[Name
and
address of Transfer Agent]
Attn: _____________
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as
of November __, 2007, by and among BluePhoenix Solutions Ltd., an Israeli
corporation (the “Company”), and the purchasers
named therein (collectively, the “Purchasers”) pursuant to which
the Company is issuing to the Purchasers ordinary shares, par value NIS 0.01
per
share (“Ordinary
Shares”) and warrants (the “Warrants”) to purchase
Ordinary Shares. This letter shall serve as our irrevocable
authorization and direction to you (provided that you are the transfer agent
of
the Company at such time) to issue Ordinary Shares upon exercise of the Warrants
(the “Warrant Shares”)
to or upon the order of a Purchaser from time to time upon (i) surrender to
you
of a properly completed and duly executed Exercise Notice in the form attached
hereto as Exhibit I and (ii) delivery of a treasury order or other appropriate
order duly executed by a duly authorized officer of the Company. So
long as you have previously received written confirmation from counsel to the
Company that a registration statement covering resales of the Warrant Shares,
as
applicable, has been declared effective by the Securities and Exchange
Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”), and no subsequent
notice by the Company or its counsel of the suspension or termination of its
effectiveness, then certificates representing the Warrant Shares shall not
bear
any legend restricting transfer of the Warrant Shares and should not be subject
to any stop-transfer restriction; provided, however, that if you have not
previously received written confirmation from counsel to the Company that a
registration statement covering resales of the Warrant Shares has been declared
effective by the SEC under the 1933 Act, then the certificates for the Warrant
Shares shall bear the following legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR
AMBIENT CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.”
and,
provided further, that the Company may from time to time notify you to place
stop-transfer restrictions on the certificates for the Warrant Shares in the
event a registration statement covering the Warrant Shares is subject to
amendment for events then current.
A
form of
written confirmation from counsel to the Company that a registration statement
covering resales of the Warrant Shares has been declared effective by the SEC
under the 1933 Act is attached hereto as Exhibit II.
Please
be
advised that the Purchasers are relying upon this letter as an inducement to
enter into the Purchase Agreement and, accordingly, each Purchaser is a third
party beneficiary to these instructions.
Please
execute this letter in the space indicated to acknowledge your agreement to
act
in accordance with these instructions. Should you have any questions
concerning this matter, please contact me at ___________.
Very
truly
yours,
By:_________________________________
Name:_______________________________
Title:________________________________
ACKNOWLEDGED
AND AGREED:
[TRANSFER
AGENT]
By:________________________________
Name:______________________________
Title:_______________________________
Date:_______________________________
EXHIBIT
I
FORM
OF EXERCISE NOTICE
EXERCISE
FORM
The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ Ordinary Shares of BluePhoenix Solutions Ltd.
covered by the within Warrant.
Dated:
_________________ Signature ___________________________
Address
_____________________
_____________________
Number
of
Ordinary Shares beneficially owned or deemed beneficially owned by the Holder
on
the date of Exercise: _________________________
The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.
The
undersigned intends that payment of the Warrant Price shall be made as (check
one):
Cash
Exercise_______
Cashless
Exercise_______
If
the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________
by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.
If
the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________. The
Company shall pay a cash adjustment in respect of the fractional portion of
the
product of the calculation set forth below in an amount equal to the product
of
the fractional portion of such product and the Per Share Market Value on the
date of exercise, which product is ____________.
X
= Y -
(A)(Y)
B
Where:
The
number of Ordinary Shares to be issued to the Holder __________________(“X”).
The
number of Ordinary Shares purchasable upon exercise of all of the Warrant or,
if
only a portion of the Warrant is being exercised, the portion of the Warrant
being exercised ___________________________ (“Y”).
The
Warrant Price ______________ (“A”).
The
Per
Share Market Value of one Ordinary Share _______________________
(“B”).
ASSIGNMENT
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and
does
irrevocably constitute and appoint _____________, attorney, to transfer the
said
Warrant on the books of the within named corporation.
Dated:
_________________ Signature ___________________________
Address
______________________
______________________
PARTIAL
ASSIGNMENT
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.
Dated:
_________________ Signature ___________________________
Address
_______________________
_______________________
FOR
USE
BY THE ISSUER ONLY:
This
Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, Ordinary Shares issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ Ordinary Shares in the
name
of _______________.
EXHIBIT
II
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
[Name
and
address of Transfer Agent]
Attn: _____________
Re:
BluePhoenix
Solutions Ltd.
Ladies
and Gentlemen:
We
are
special counsel to BluePhoenix Solutions Ltd., an Israeli corporation (the
“Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement (the “Purchase
Agreement”), dated as of November __, 2007, by and among the Company and
the purchasers named therein (collectively, the “Purchasers”) pursuant to which
the Company is issuing to the Purchasers ordinary shares, par value NIS 0.01
per
share (“Ordinary
Shares”) and warrants (the “Warrants”) to purchase
Ordinary Shares. Pursuant to the Purchase Agreement, the Company has
also entered into a Registration Rights Agreement with the Purchasers (the
“Registration Rights
Agreement”), dated as of November __, 2007, pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the Ordinary Shares issuable
upon exercise of the Warrants, under the Securities Act of 1933, as amended
(the
“1933
Act”). In connection with the Company’s obligations under the
Registration Rights Agreement, on ________________, 200__, the Company filed
a
Registration Statement on Form F-3 (File No. 333-________) (the “Registration Statement”) with
the Securities and Exchange Commission (the “SEC”) relating to the
resale
of the Registrable Securities which names each of the present Purchasers as
a
selling stockholder thereunder.
In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF
EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a
member of the SEC’s staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and accordingly, the Registrable Securities are available
for resale under the 1933 Act pursuant to the Registration
Statement.
Very
truly
yours,
[COMPANY
COUNSEL]
By:_________________________
cc:
[LIST NAMES OF
PURCHASERS]
EXHIBIT
E-1
FORM
OF ISRAEL COUNSEL OPINION
1.
The Company is a corporation duly incorporated and validly existing under the
laws of the State of Israel and has the requisite power to own, lease and
operate its properties and assets, and to carry on its business as described
in
the SEC Documents.
2.
The Company has the requisite power and authority to enter into and perform
its
obligations under the Transaction Documents and to issue the Shares. The
execution, delivery and performance of each of the Transaction Documents by
the
Company and the consummation by it of the transactions contemplated thereby
have
been duly and validly authorized by all necessary action and no further consent
or authorization of the Company, its Board of Directors or its shareholders
is
required. The Ordinary Shares are not subject to any preemptive rights under
the
Organizational Documents.
3.
The Shares have been duly authorized, and when delivered against payment in
full
as provided in the Purchase Agreement, will be, validly issued, fully paid
and
nonassessable. The Ordinary Shares issuable upon exercise of the Warrants have
been duly authorized and reserved for issuance, and when delivered upon exercise
as provided in the Warrants will be validly issued, fully paid and
nonassessable.
4.
The execution, delivery and performance of and compliance with the terms of
the
Transaction Documents and the Ordinary Shares do not (a) violate any
provision of the Organizational Documents or (b) result in a violation of any
Israeli statute, rule, regulation (including Israeli securities laws and
regulations) applicable to the Company.
EXHIBIT
E-2
FORM
OF U.S. COUNSEL OPINION
1.
Each of the Transaction Documents constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its
respective terms.
2.
Assuming that all of the Purchasers’ representations and warranties in the
Purchase Agreement are complete and accurate, the offer, issuance and sale
of
the Shares and the offer, issuance and sale of the Ordinary Shares issuable
upon
exercise of the Warrants are exempt from the registration requirements of the
Securities Act of 1933, as amended.
EXHIBIT
E-3
FORM
OF GENERAL COUNSEL OPINION
1.
The execution, delivery and performance of the Agreement, the Registration
Rights Agreement and the Warrant by the Company and the consummation by the
Company of the transactions contemplated thereby, including, without limitation,
the issuance of the Shares, the Warrants and the Warrant Shares, do not and
will
not conflict with, or constitute a material default (or an event that with
notice or lapse of time of both would become a default) under any agreement
incorporated by reference as an exhibit to the Company’s Form 20-F for the year
ended December 31, 2006.