SYNERON MEDICAL LTD.
5,500,000 Ordinary Shares
(par value NIS 0.01 per share)
Underwriting Agreement
New York, New York
August [ ], 2004
Citigroup Global Markets Inc.
CIBC World Markets Corp.
▇▇▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters,
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Syneron Medical Ltd., a corporation organized under the laws of the State
of Israel (the "Company"), proposes to sell to the several underwriters named in
Schedule I hereto (the "Underwriters"), for whom you (the "Representatives") are
acting as representatives, 5,000,000 ordinary shares (the "Company Shares"), par
value NIS 0.01 per share ("Ordinary Shares"), of the Company and the Selling
Shareholders propose to sell to the several Underwriters 500,000 Ordinary Shares
(the "Selling Shareholder Shares" and, together with the Company Shares, the
"Underwritten Shares"). The Company also proposes to grant to the Underwriters
an option to purchase up to 825,000 additional Ordinary Shares to cover
over-allotments (the "Option Shares"; together with the Underwritten Shares,
being hereinafter called the "Shares"). To the extent there are no additional
Underwriters listed on Schedule I other than you, the term Representatives as
used herein shall mean you, as Underwriters, and the terms Representatives and
Underwriters shall mean either the singular or plural as the context requires.
In addition, to the extent that there is not more than one Selling Shareholder
named in Schedule II, the term Selling Shareholders shall mean the singular.
Certain terms used herein are defined in Section 20 hereof.
As part of the offering contemplated by this Agreement, Citigroup Global
Markets Inc. has agreed to reserve out of the Shares set forth opposite its name
on Schedule I to this Agreement, up to 275,000 Ordinary Shares, for sale to the
Company's employees, officers, and directors and certain of their friends and
family (collectively, "Participants"), as set forth in the Prospectus under the
heading "Underwriting" (the "Directed Share Program"). The Shares to be sold by
Citigroup Global Markets Inc. pursuant to the Directed Share Program (the
"Directed Shares") will be sold by Citigroup Global Markets Inc. pursuant to
this Agreement at the public offering price. Any Directed Shares not orally
confirmed for purchase by any Participants by 8:00 A.M. New York City time on
the business day following the date on which this Agreement is executed will be
offered to the public by Citigroup Global Markets Inc. as set forth in the
Prospectus.
1. Representations and Warranties.
(a) The Company and the Selling Shareholders, jointly and severally
represent and warrant to, and agree with, each Underwriter as set forth below in
this Section 1.
(i) The Company has prepared and filed with the Commission a
registration statement (file number [ ]) on Form F-1, including a related
preliminary prospectus, for registration under the Act of the offering and
sale of the Shares. The Company may have filed one or more amendments
thereto, including a related preliminary prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: either (1) prior to the Effective Date of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (2) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in such registration
statement and the Prospectus. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except
to the extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the Company
has advised you, prior to the Execution Time, will be included or made
therein.
(ii) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date on
which Option Shares are purchased, if such date is not the Closing Date (a
"settlement date"), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company and the Selling Shareholders make no
representations or warranties as to the information contained in or omitted
from the Registration Statement, or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration Statement or
the Prospectus (or any supplement thereto).
(iii) Each of the Company and the Significant Subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification, except where the failure to be so
qualified or in good standing would not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Significant Subsidiaries,
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taken as a whole, whether or not arising from transactions in the ordinary
course of business (a "Material Adverse Effect").
(iv) All the outstanding shares of capital stock of each Significant
Subsidiary have been duly and validly authorized and issued and are fully
paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the Significant
Subsidiaries are owned by the Company either directly or through wholly
owned subsidiaries free and clear of any perfected security interest or any
other security interests, claims, liens or encumbrances.
(v) The Company's authorized equity capitalization is as set forth in
the Prospectus; the share capital of the Company conforms in all material
respects to the description thereof contained in the Prospectus; the
outstanding Ordinary Shares (including the Selling Shareholder Shares) have
been duly and validly authorized and issued and are fully paid and
nonassessable; the Shares being sold hereunder by the Company (including
the Option Shares) have been duly and validly authorized, and, when issued
and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Ordinary Shares,
including the Company Shares and the Selling Shareholder Shares have been
approved for listing on the Nasdaq National Market, subject to official
notice of issuance and evidence of satisfactory distribution; the
certificates for the Shares are in valid and sufficient form; the holders
of outstanding shares of the Company are not entitled to preemptive or
other rights to subscribe for the Shares; and, except as set forth in the
Prospectus, no options, warrants or other rights to purchase, agreements or
other obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of or ownership interests in the
Company are outstanding;
(vi) There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectus, or to
be filed as an exhibit thereto, which is not described or filed as
required; and the statements in the Prospectus under the headings "Risk
Factors - If we fail to obtain and maintain necessary U.S. Food and Drug
Administration clearances for our products and indications, if clearances
for future products and indications are delayed or not issued, or if there
are U.S. federal or state level regulatory changes, our commercial
operations could be harmed," "Risk Factors - If we or our subcontractors
fail to comply with the FDA's Quality System Regulation and performance
standards, manufacturing operations could be halted, and our business would
suffer," "Risk Factors - Under current U.S. and Israeli law, we may not be
able to enforce covenants not to compete and therefore may be unable to
prevent our competitors from benefiting from the expertise of some of our
former employees," "Risk Factors - Future sales of our ordinary shares
could reduce our stock price," "Risk Factors - The tax benefits available
to us require us to meet several conditions and may be terminated or
reduced in the future, which would increase our costs and taxes," "Risk
Factors - Provisions of our articles of association and Israeli law may
delay, prevent or make difficult an acquisition of Syneron, which could
prevent a change of control and, therefore, depress the price of our
shares," "Business - Manufacturing," "Business - Government Regulation,"
"Business - Litigation," "Management," "Related Party Transactions,"
"Description of Share Capital," "Shares Eligible for Future Sale," "Israeli
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Taxation," "United States Federal Income Tax Consideration," and
"Enforceability of Civil Liabilities." insofar as such statements summarize
legal matters, agreements, documents or proceedings discussed therein, are
accurate and fair summaries of such legal matters, agreements, documents or
proceedings.
(vii) This Agreement has been duly authorized, executed and delivered
by the Company; all corporate action required by the laws of the State of
Israel and the articles of association of the Company to be taken by the
Company for the due and proper authorization, issuance, offering, sale and
delivery of the Company Shares has been validly and sufficiently taken; the
filing of the Registration Statement and the Prospectus with the Commission
has been duly authorized by and on behalf of the Company and the
Registration Statement has been duly executed on behalf of the Company
pursuant to such authorization in accordance with the laws of the State of
Israel.
(viii) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(ix) No consent, approval, authorization, filing with or order of any
court or governmental agency or body (including, without limitation, the
U.S. Food and Drug Administration ("FDA") is required in connection with
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares
by the Underwriters in the manner contemplated herein and in the
Prospectus.
(x) Neither the issue and sale of the Shares nor the consummation of
any other of the transactions herein contemplated nor the fulfillment of
the terms hereof will conflict with, result in a breach or violation of, or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of the Significant Subsidiaries pursuant to, (i) the
articles of association, charter, by-laws or other organizational documents
of the Company or any of the Significant Subsidiaries, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or any of the Significant Subsidiaries is a
party or bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any of the Significant Subsidiaries of any court, regulatory
body, administrative agency or governmental body (including, without
limitation, the FDA), arbitrator or other authority having jurisdiction
over the Company or any of the Significant Subsidiaries or any of its or
their properties, except, in the case of clauses (ii) and (iii) above, as
would not reasonably be expected to have a Material Adverse Effect.
(xi) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
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(xii) The consolidated historical financial statements [and schedules]
of the Company and its consolidated subsidiaries included in the Prospectus
and the Registration Statement present fairly in all material respects the
financial condition, results of operations and cash flows of the Company as
of the dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been prepared in
conformity with U.S. generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise noted
therein). The selected consolidated financial data set forth under the
captions "Summary Consolidated Financial Data" and "Selected Consolidated
Financial Data" in the Prospectus and Registration Statement fairly
present, in all material respects, on the basis stated in the Prospectus
and the Registration Statement, the information included therein. The pro
forma financial information included in the Prospectus and the Registration
Statement include assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro forma
adjustments reflect the proper application of those adjustments to the
historical financial statement amounts in the pro forma financial
information included in the Prospectus and the Registration Statement.
(xiii) No action, suit or proceeding by or before any court or
governmental agency, authority or body (including, without limitation, the
FDA) or any arbitrator involving the Company or any of the Significant
Subsidiaries or its or their property is pending or, to the best knowledge
of the Company, threatened that (i) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to have a Material Adverse Effect, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(xiv) Each of the Company and each of the Significant Subsidiaries
owns or leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(xv) Neither the Company nor any Significant Subsidiary is in
violation or default of (i) any provision of its articles of association,
charter, bylaws or other organizational documents, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to which it is a party or bound or to which its property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency or governmental body
(including, without limitation, the FDA), arbitrator or other authority
having jurisdiction over the Company or such Significant Subsidiary or any
of its properties, as applicable, except, in the case of clauses (ii) and
(iii) above, as would not reasonably be expected to have a Material Adverse
Effect.
(xvi) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and Kasierer (a member of Ernst & Young
Global), who have certified certain financial statements of the Company and
its consolidated subsidiaries and delivered their report with respect to
the audited consolidated financial
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statements [and schedules] included in the Prospectus, are independent
public accountants with respect to the Company within the meaning of the
Act and the applicable published rules and regulations thereunder.
(xvii) There are no transfer taxes, stamp duties on issuance or other
similar fees or charges and no capital gains, income, withholding or other
taxes under the laws of Israel or any political subdivision thereof, U.S.
federal law or the laws of any state, or any political subdivision thereof,
required to be paid by the Underwriters in connection with the execution
and delivery of this Agreement or the sale and delivery by the Underwriters
of the Shares as contemplated herein.
(xviii) Each of the Company and the Significant Subsidiaries has filed
all Tax Returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not have
a Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto)) and has paid all Taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse Effect,
except as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(xix) No labor problem or dispute with the employees of the Company or
any of the Significant Subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor disturbance
by the employees of any of its or the Significant Subsidiaries' principal
suppliers, contractors or customers, that could have a Material Adverse
Effect, except as set forth in or contemplated in the Prospectus (exclusive
of any supplement thereto).
(xx) The Company and each of the Significant Subsidiaries are insured
by insurers of recognized financial responsibility, in their respective
jurisdictions, against such losses and risks and in such amounts as are
prudent and customary in the businesses within the jurisdictions in which
they are engaged; all policies of insurance and fidelity or surety bonds
insuring the Company or any of the Significant Subsidiaries or their
respective businesses, assets, employees, officers and directors are in
full force and effect; the Company and the Significant Subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects; and there are no claims by the Company or any of the Significant
Subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights
clause; neither the Company nor any such Significant Subsidiary has been
refused any insurance coverage sought or applied for; and neither the
Company nor any such Significant Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have
a Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
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(xxi) No Significant Subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such Significant
Subsidiary's capital stock, from repaying to the Company any loans or
advances to such Significant Subsidiary from the Company or from
transferring any of such Significant Subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as described in or
contemplated by the Prospectus (exclusive of any supplement thereto).
(xxii) The Company and the Significant Subsidiaries possess all
licenses, certificates, permits and other authorizations issued by the
appropriate Israeli, U.S. federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the Company
nor any such Significant Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(xxiii) The Company and each of the Significant Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(xxiv) The Company has not taken, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares.
(xxv) The Company and the Significant Subsidiaries are (i) in
compliance with any and all applicable foreign, Israeli, U.S. federal,
state and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) have not received notice of any
actual or potential liability under any environmental law, except where
such non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability would not, individually
or in the aggregate, have a Material Adverse Effect, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto).
Except as set forth in the Prospectus, neither the Company nor any of the
Significant Subsidiaries has been named as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
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(xxvi) The associated costs and liabilities with the Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) would not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(xxvii) The minimum funding standard under Section 302 of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder ("ERISA"), has been satisfied by each
"pension plan" (as defined in Section 3(2) of ERISA) which has been
established or maintained by the Company and/or one or more of its
subsidiaries, and the trust forming part of each such plan which is
intended to be qualified under ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Internal
Revenue Code of 1986, as amended, is so qualified; each of the Company and
its subsidiaries has fulfilled its obligations, if any, under Section 515
of ERISA; neither the Company nor any of its subsidiaries maintains or is
required to contribute to a "welfare plan" (as defined in Section 3(1) of
ERISA) which provides retiree or other post-employment welfare benefits or
insurance coverage (other than "continuation coverage" (as defined in
Section 602 of ERISA)); each pension plan and welfare plan established or
maintained by the Company and/or one or more of its subsidiaries is in
compliance in all material respects with the currently applicable
provisions of ERISA; and neither the Company nor any of its subsidiaries
has incurred or could reasonably be expected to incur any withdrawal
liability under Section 4201 of ERISA, any liability under Section 4062,
4063 or 4064 of ERISA, or any other liability under Title IV of ERISA.
(xxviii) There is and has been no failure on the part of the Company
and any of the Company's directors or officers, in their capacities as
such, to comply with any applicable provisions of the Sarbanes Oxley Act of
2002 and the rules and regulations promulgated in connection therewith (the
"Sarbanes Oxley Act"), including Section 402 related to loans.
(xxix) Neither the Company nor any of the Significant Subsidiaries
nor, to the knowledge of the Company, any director, officer, agent,
employee or affiliate of the Company or any of the Significant Subsidiaries
is aware of or has taken any action, directly or indirectly, that would
result in a violation by such Persons of the FCPA, including, without
limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise
to pay or authorization of the payment of any money, or other property,
gift, promise to give, or authorization of the giving of anything of value
to any "foreign official" (as such term is defined in the FCPA) or any
non-U.S. political party or official thereof or any candidate for non-U.S.
political office, in contravention of the FCPA and the Company, the
Significant Subsidiaries and, to the knowledge of the Company, its
affiliates have conducted their businesses in compliance with the FCPA and
have instituted and maintain policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued
compliance therewith.
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"FCPA" means Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder.
(xxx) The operations of the Company and the Significant Subsidiaries
are and have been conducted at all times in compliance with applicable
financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions to which the Company or the
Significant Subsidiaries are subject, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
"Money Laundering Laws") and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving
the Company or any of the Significant Subsidiaries with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
(xxxi) Neither the Company nor any of the Significant Subsidiaries
nor, to the knowledge of the Company, any director, officer, agent,
employee or affiliate of the Company or any of the Significant Subsidiaries
is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the
Company will not directly or indirectly use the proceeds of the offering,
or lend, contribute or otherwise make available such proceeds to any
Significant Subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently subject
to any U.S. sanctions administered by OFAC.
(xxxii) Syneron, Inc. (the "U.S. Subsidiary"), Syneron Canada
Corporation (the "Canadian Subsidiary") and Syneron GmbH (the "German
Subsidiary") are the only significant subsidiaries of the Company as
defined by Rule 1-02 of Regulation S-X.
(xxxiii) The Company and the Significant Subsidiaries own, possess,
license or have other rights to use, on reasonable terms, all patents,
patent applications, trade and service marks, trademark and service ▇▇▇▇
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct of
the Company's business as now conducted or as proposed in the Prospectus to
be conducted. Except as set forth in the Prospectus under the caption
"Business--Intellectual Property," (a) there are no rights of third parties
to any such Intellectual Property; (b) to the Company's knowledge, there is
no material infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any such Intellectual Property, and the Company
is unaware of any facts which would form a reasonable basis for any such
claim; (d) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others challenging the validity or
scope of any such Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (e) there is
no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise
violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other fact
which
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would form a reasonable basis for any such claim; (f) to the Company's
knowledge, there is no U.S. patent or published U.S. patent application
which contains claims that dominate or may dominate any Intellectual
Property described in the Prospectus as being owned by or licensed to the
Company or that interferes with the issued or pending claims of any such
Intellectual Property; and (g) there is no prior art of which the Company
is aware that may render any U.S. patent held by the Company invalid or any
U.S. patent application held by the Company unpatentable which has not been
disclosed to the U.S. Patent and Trademark Office.
(xxxiv) The statements contained in the Prospectus under the captions
"Risk Factors - If we are unable to protect our intellectual property
rights, our competitive position could be harmed," "Risk Factors -
Third-party claims of infringement or other claims against us could require
us to redesign our products, seek licenses, or engage in future costly
intellectual property litigation, which could impact our future business
and financial performance," and "Business - Intellectual Property," insofar
as such statements summarize legal matters, agreements, documents, or
proceedings discussed therein, are accurate and fair summaries of such
legal matters, agreements, documents or proceedings.
(xxxv) Neither the Company nor any of the Significant Subsidiaries nor
any of its or their properties or assets has any immunity from the
jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) under the laws of the State of Israel.
(xxxvi) The Company is not a Passive Foreign Investment Company
("PFIC") within the meaning of Section 1297 of the United States Internal
Revenue Code of 1986, as amended, and does not expect to become a PFIC in
the future.
(xxxvii) The Company is not a "foreign personal holding company" or a
"controlled foreign corporation" within the meaning of the United States
Internal Revenue Code of 1986, as amended.
(xxxviii) The Company is in compliance in all material respects with
all conditions and requirements stipulated by the instruments of approval
granted to it with respect to the "Approved Enterprise" status of any of
the Company's facilities as well as with respect to the other tax benefits
received by the Company as set forth under the caption "Israeli Taxation"
in the Prospectus and by Israeli laws and regulations relating to such
"Approved Enterprise" status and the aforementioned other tax benefits
received by the Company. The Company has not received any notice of any
proceeding or investigation relating to revocation or modification of any
"Approved Enterprise" status granted with respect to any of the Company's
facilities.
Furthermore, the Company represents and warrants to Citigroup Global
Markets Inc. that (i) the Registration Statement, the Prospectus and any
preliminary prospectus comply, and any further amendments or supplements thereto
will comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share Program,
and that (ii) no authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental instrumentality or
court, other than such as have been obtained, is necessary under the securities
laws and regulations of foreign jurisdictions in which the Directed Shares are
offered outside the United States. The Company has not offered, or caused the
Underwriters to offer, Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (x) a customer or
supplier of the Company to alter the customer's or supplier's level or type of
business with the Company, or (y) a trade journalist or publication to write or
publish favorable information about the Company or its products.
Any certificate signed by any officer of the Company and delivered to the
Representatives or counsel for the Underwriters in connection with the offering
of the Shares shall be deemed a representation and warranty by the Company, as
to matters covered thereby, to each Underwriter.
-10-
(b) Each Selling Shareholder represents and warrants, severally and not
jointly, to, and agrees with, each Underwriter that:
(i) Such Selling Shareholder is the record owner of the Shares to be
sold by it hereunder free and clear of all liens, encumbrances, equities
and claims and has duly endorsed such Shares in blank, and, assuming that
each Underwriter acquires its interest in the Shares it has purchased from
such Selling Shareholder without notice of any adverse claim (within the
meaning of Section 8-105 of the New York Uniform Commercial Code ("UCC")),
each Underwriter that has purchased such Shares delivered on the Closing
Date to The Depository Trust Company or other securities intermediary by
making payment therefor as provided herein, and that has had such Shares
credited to the securities account or accounts of such Underwriters
maintained with The Depository Trust Company or such other securities
intermediary will have acquired a security entitlement (within the meaning
of Section 8-102(a)(17) of the UCC) to such Shares purchased by such
Underwriter, and no action based on an adverse claim (within the meaning of
Section 8-105 of the UCC) may be asserted against such Underwriter with
respect to such Shares.
(ii) Such Selling Shareholder has not taken, directly or indirectly,
any action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(iii) Certificates in negotiable form for such Selling Shareholder's
Shares have been placed in custody, for delivery pursuant to the terms of
this Agreement, under a Custody Agreement and Power of Attorney duly
authorized (if applicable), executed and delivered by such Selling
Shareholder, in the form heretofore furnished to you (the "Custody
Agreement") with [ ], as Custodian (the "Custodian"); the Ordinary Shares
represented by the certificates so held in custody for each Selling
Shareholder are subject to the interests under this Agreement of the
Underwriters; the arrangements for custody and delivery of such
certificates, made by such Selling Shareholder under this Agreement and
under the Custody Agreement, are not subject to termination by any acts of
such Selling Shareholder, or by operation of law, whether by the death or
incapacity of such Selling Shareholder or the occurrence of any other
event; and if any such death, incapacity or any other such event shall
occur before the delivery of the Shares under this Agreement, such
certificates will be delivered by the Custodian in accordance with the
terms and conditions of this Agreement and the Custody Agreement as if such
death, incapacity or other event had not occurred, regardless of whether or
not the Custodian shall have received notice of such death, incapacity or
other event.
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Shareholder of the transactions contemplated in this Agreement,
except such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters and such other
approvals as have been obtained.
-11-
(v) Neither the sale of the Selling Shareholder Shares nor the
consummation of any other of the transactions herein contemplated by such
Selling Shareholder or the fulfillment of the terms hereof by such Selling
Shareholder will conflict with, result in a breach or violation of, or
constitute a default under (A) the articles of association or charter or
by-laws or other organizational documents of such Selling Shareholder, (B)
the terms of any indenture or other agreement or instrument to which such
Selling Shareholder or any of the Significant Subsidiaries is a party or
bound, or any judgment, order or decree applicable to such Selling
Shareholder or any of the Significant Subsidiaries of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Shareholder or any of the Significant
Subsidiaries, or (C) any law, except, in the cases of clauses (B) and (C)
above, as would not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), business or properties of
such Selling Shareholder and any of its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business.
(vi) This Agreement, the Custody Agreement and the Power of Attorney
have been duly authorized, executed and delivered by the Selling
Shareholders, the Custody Agreement is valid and binding on the Selling
Shareholders and each Selling Shareholder has full legal rights and
authority to sell, transfer and deliver in the manner provided in this
Agreement and the Custody Agreement the Shares being sold by such Selling
Shareholder under this Agreement.
(vii) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters to the State of Israel or to any political
subdivision or taxing authority thereof or therein in connection with the
sale and delivery by the Underwriters of the Shares being sold by such
Selling Shareholder as contemplated herein.
Any certificate signed by any Selling Shareholder or any officer of any
Selling Shareholder and delivered to the Representatives or counsel for the
Underwriters in connection with the offering of the Shares shall be deemed a
representation and warranty by such Selling Shareholder, as to matters covered
thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company and the
Selling Shareholders agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company and the Selling Shareholders, at a purchase price of $ per
share, the amount of the Underwritten Shares set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
825,000 Option Shares at the same purchase price per share as the Underwriters
shall pay for the Underwritten Shares. Said option may be exercised only to
cover over-allotments in the sale of the Underwritten Shares by the
Underwriters. Said option may be exercised in whole or in part at any time on or
before the 30th day after the date of
-12-
the Prospectus upon written notice by the Representatives to the Company and
such Selling Shareholders setting forth the number of shares of the Option
Shares as to which the several Underwriters are exercising the option and the
settlement date. The number of Option Shares to be purchased by each Underwriter
shall be the same percentage of the total number of Option Shares to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Shares, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the Underwritten Shares
and the Option Shares (if the option provided for in Section 2(b) hereof shall
have been exercised on or before the third Business Day prior to the Closing
Date) shall be made at 10:00 AM, New York City time, on [___________], 2004, or
at such time on such later date not more than three Business Days after the
foregoing date as the Representatives shall designate, which date and time may
be postponed by agreement among the Representatives, the Selling Shareholders
and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Shares being herein called the "Closing Date").
Delivery of the Shares shall be made to the Representatives for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representatives of the respective aggregate purchase prices of the
Company Shares and the Selling Shareholder Shares to or upon the order of the
Company and the Selling Shareholders by wire transfer payable in same-day funds
to the accounts specified by the Company and the Selling Shareholders. Delivery
of the Underwritten Shares and the Option Shares shall be made through the
facilities of The Depository Trust Company unless the Representatives shall
otherwise instruct.
Each Selling Shareholder will pay all applicable stamp duties and transfer
taxes, if any, involved in the transfer to the several Underwriters of the
Shares to be purchased by them from such Selling Shareholder and the respective
Underwriters will pay any additional stock transfer taxes involved in further
transfers.
If the option provided for in Section 2(b) hereof is exercised after the
third Business Day prior to the Closing Date, the Company and the Selling
Shareholders will deliver the Option Shares (at the expense of the Company) to
the Representatives, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the
date specified by the Representatives (which shall be within three Business Days
after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company and the Selling Shareholders by wire transfer payable in same-day funds
to the accounts specified by the Company and the Selling Shareholders. If
settlement for the Option Shares occurs after the Closing Date, the Company and
the Selling Shareholders will deliver to the Representatives on the settlement
date for the Option Shares, and the obligation of the Underwriters to purchase
the Option Shares shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the several Underwriters
propose to offer the Shares for sale to the public as set forth in the
Prospectus.
-13-
5. Agreements.
(a) The Company agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Shares, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under Rule 424(b),
the Company will cause the Prospectus, properly completed, and any
supplement thereto to be filed in a form approved by the Representatives
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to
the Representatives of such timely filing. The Company will promptly advise
the Representatives (1) when the Registration Statement, if not effective
at the Execution Time, shall have become effective, (2) when the
Prospectus, and any supplement thereto, shall have been filed (if required)
with the Commission pursuant to Rule 424(b) or when any Rule 462(b)
Registration Statement shall have been filed with the Commission, (3) when,
prior to termination of the offering of the Shares, any amendment to the
Registration Statement shall have been filed or become effective, (4) of
any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or for
any supplement to the Prospectus or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the institution
or threatening of any proceeding for such purpose. The Company will use its
best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules thereunder, the Company promptly will (1) notify the
Representatives of any such event, (2) prepare and file with the
Commission, subject to the second sentence of paragraph (a)(i) of this
Section 5, an amendment or supplement which will correct such statement or
omission or effect such compliance; and (3) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
-14-
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(iv) The Company will furnish to the Representatives and counsel for
the Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each Preliminary Prospectus and the Prospectus and any supplement
thereto as the Representatives may reasonably request.
(v) The Company will arrange, if necessary, for the qualification of
the Shares for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Shares; provided
that in no event shall the Company be obligated to qualify to do business
in any jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction
where it is not now so subject.
(vi) The Company will not, without the prior written consent of
Citigroup Global Markets Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of (or enter into any transaction which is designed to,
or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement
or otherwise) by the Company or any affiliate of the Company or any person
in privity with the Company or any affiliate of the Company), directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any other Ordinary Shares or any securities convertible into, or
exercisable, or exchangeable for, Ordinary Shares; or publicly announce an
intention to effect any such transaction, for a period of 180 days after
the date of this Agreement, PROVIDED, HOWEVER, that the Company may issue
and sell Ordinary Shares pursuant to any employee benefit plans or
qualified stock option plans of the Company in effect at the Execution Time
and the Company may issue Ordinary Shares issuable upon the conversion of
securities or the exercise of warrants outstanding at the Execution Time.
(vii) The Company will comply with, and cooperate with the
Underwriters with respect to, all applicable securities and other
applicable laws, rules and regulations, including, without limitation, the
Sarbanes Oxley Act, the Money Laundering Laws and the FCPA, and use its
best efforts to cause the Company's directors and officers, in their
capacities as such, to comply with such laws, rules and regulations,
including, without limitation, the provisions of the Sarbanes Oxley Act,
the Money Laundering Laws and the FCPA.
(viii) The Company will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under
-15-
the Exchange Act or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Shares.
(ix) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Preliminary Prospectus, the
Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp or transfer
taxes in connection with the original issuance and sale of the Company
Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
any blue sky memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Shares;
(v) the registration of the Shares under the Exchange Act and the listing
of the Shares on the Nasdaq National Market; (vi) any registration or
qualification of the Shares for offer and sale under the securities or blue
sky laws of the several states (including filing fees and the reasonable
fees and expenses of counsel for the Underwriters relating to such
registration and qualification); (vii) any filings required to be made with
the National Association of Securities Dealers, Inc. (including filing fees
and the reasonable fees and expenses of counsel for the Underwriters
relating to such filings); (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; (ix) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; and (x) all other
costs and expenses incident to the performance by the Company and the
Selling Shareholders of their respective obligations hereunder.
Each Selling Shareholder severally agrees (in proportion to
the number of Selling Shareholder Shares being offered by each
of them, together with any Option Shares which the
Underwriters shall have elected to purchase) to pay (i) the
fees and expenses of local and special U.S. counsel and
advisors for the Selling Shareholders; and (ii) any stamp or
transfer taxes in connection with the sale and delivery of the
Selling Shareholder Shares and the Option Shares. This
paragraph shall not affect or modify any separate agreement
relating to the allocation or payment of expenses between the
Company, on the one hand, and the Selling Shareholders on the
other hand.
(x) The Company agrees to pay (1) all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program, (2)
all costs and expenses incurred by the Underwriters in connection with the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of copies of the Directed Share Program
material and (3) all stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Directed Share Program.
Furthermore, the Company covenants with Citigroup Global Markets Inc. that
the Company will comply with all applicable securities and other applicable
laws, rules and regulations in each foreign jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
(b) Each Selling Shareholder agrees with the several Underwriters
that:
(i) Such Selling Shareholder will not, without the prior written
consent of Citigroup Global Markets Inc., offer, sell, contract to
sell, pledge or otherwise dispose of, (or enter into any transaction
which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition
-16-
or effective economic disposition due to cash settlement or otherwise)
by the Selling Shareholder or any affiliate of the Selling Shareholder
or any person in privity with the Selling Shareholder or any affiliate
of the Selling Shareholder) directly or indirectly, or file (or
participate in the filing of) a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act with respect to, any
Ordinary Shares or any securities convertible into or exercisable or
exchangeable for Ordinary Shares, or publicly announce an intention to
effect any such transaction, for a period of 180 days after the date
of this Agreement.
Notwithstanding the foregoing, each Selling Shareholder may transfer
Ordinary Shares (i) to the extent approved by the Underwriters, to be
disposed of by such Selling Shareholder pursuant to the Registration
Statement, (ii) by bona fide gift or gifts, PROVIDED that no such gift
or gifts shall in the aggregate constitute more than 20% of such
Selling Shareholder's Ordinary Shares held as of the date hereof or
(iii) to an immediate family member of such Selling Shareholder or to
any trust for the direct or indirect benefit of such Selling
Shareholder or an immediate family member of such Selling Shareholder,
PROVIDED that any such transfer shall not involve a disposition for
value, and PROVIDED, FURTHER, as to both (ii) and (iii) above, prior
to such transfer, the undersigned shall notify Citigroup Global
Markets Inc. in writing of such proposed transfer and each resulting
transferee of Ordinary Shares shall then execute and deliver to the
Underwriters an agreement satisfactory to the Underwriters certifying
that such transferee, including such donee or trustee, as the case may
be, shall be bound by the terms of this Agreement as if it had been an
original party hereto. For purposes of this Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin.
(ii) Such Selling Shareholder will not take, directly or
indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
(iii) Such Selling Shareholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as
delivery of a prospectus relating to the Shares by an underwriter or
dealer may be required under the Act, of (i) any material change in
the Company's condition (financial or otherwise), prospects, earnings,
business or properties, (ii) any change in information in the
Registration Statement or the Prospectus relating to such Selling
Shareholder or (iii) any new material information relating to the
Company or relating to any matter stated in the Prospectus which comes
to the attention of such Selling Shareholder.
(iv) Such Selling Shareholder will comply with the agreement
contained in Section 5(a)(ix).
-17-
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
Underwriters to purchase the Underwritten Shares and the Option Shares, as the
case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Shareholders contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 3 hereof, to the accuracy of the statements of the Company
and the Selling Shareholders made in any certificates pursuant to the provisions
hereof, to the performance by the Company and the Selling Shareholders of their
respective obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later time, the
Registration Statement will become effective not later than (i) 6:00 PM New York
City time on the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on such date or
(ii) 9:30 AM on the Business Day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company shall have requested and caused each of Gross,
Kleinhendler, Hodak, Halevy, ▇▇▇▇▇▇▇▇▇ & Co. ("GKHHG") and Primes, Shiloh,
▇▇▇▇▇, ▇▇▇▇ Law Firm, Israeli co-counsel for the Company, to have furnished to
the Representatives their respective opinions, dated the Closing Date and
addressed to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly existing as
a corporation under the laws of the State of Israel, with full corporate
power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification; no proceeding has been instituted by the Registrar of
Companies in Israel for the dissolution of the Company;
(ii) the Company's authorized equity capitalization is as set forth in
the Prospectus; the share capital of the Company conforms in all material
respects to the description thereof contained in the Prospectus; the
outstanding Ordinary Shares (including the Selling Shareholder Shares and
the Option Shares) have been duly and validly authorized and issued and are
fully paid and nonassessable; the Shares being sold hereunder by the
Company have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this Agreement,
will be fully paid and nonassessable; the certificates for the Shares are
in valid and sufficient form; the holders of outstanding shares of the
Company are not entitled to preemptive or other rights to subscribe for the
Shares; and, except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
rights to convert any obligations into or exchange any securities for,
shares of or ownership interests in the Company are outstanding;
-18-
(iii) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any Israeli court or
governmental agency, authority or body or any arbitrator involving the
Company or any of the Significant Subsidiaries or its or their properties
of a character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectus, and there is no franchise,
contract or other document governed by Israeli law, which is of a character
required to be described in the Registration Statement or Prospectus, or to
be filed as an exhibit thereto, and which is not described or filed as
required; and the statements included in the Prospectus under the headings
"Risk Factors - Under current U.S. and Israeli law, we may not be able to
enforce covenants not to compete and therefore may be unable to prevent our
competitors from benefiting from the expertise of some of our former
employees," "Risk Factors - The tax benefits available to us require us to
meet several conditions and may be terminated or reduced in the future,
which would increase our costs and taxes," "Risk Factors - Provisions of
our articles of association and Israeli law may delay, prevent or make
difficult an acquisition of Syneron, which could prevent a change of
control and, therefore, depress the price of our shares," "Management,"
"Related Party Transactions," "Description of Share Capital," "Shares
Eligible for Future Sale," "Israeli Taxation" and "Enforceability of Civil
Liberties" insofar as such statements summarize legal matters as to Israeli
law, provisions of the Company's articles of association, or agreements,
documents or proceedings discussed therein governed by Israeli law, are
accurate and fair summaries of such legal matters, agreements, documents or
proceedings;
(iv) to the knowledge of such counsel, the Company is not in violation
or default of (a) any provision of its articles of association, (b) the
terms of any material indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company is a party or bound or to which
its property is subject, or (c) any statute, law, rule, regulation,
judgment, order or decree of any Israeli court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its properties, as
applicable;
(v) this Agreement has been duly authorized and executed by the
Company; all corporate action required by the laws of the State of Israel
and the articles of association of the Company to be taken by the Company
for the due and proper authorization, issuance, offering, sale and delivery
of the Shares has been validly and sufficiently taken; and the filing of
the Registration Statement and the Prospectus with the Commission has been
duly authorized by and on behalf of the Company and the Registration
Statement has been duly executed pursuant to such authorization in
accordance with the laws of the State of Israel;
(vi) no consent, approval, authorization, filing with or order of any
Israeli court or governmental agency or body is required in connection with
the transactions contemplated in this Agreement, except such approvals (to
be specified in such opinion) as have been obtained;
(vii) neither the issue and sale of the Shares, nor the consummation
of any other of the transactions herein contemplated nor the fulfillment of
the terms hereof will
-19-
conflict with, result in a breach or violation of, or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
pursuant to, (a) the articles of association of the Company, (b) to the
knowledge of such counsel, the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company is a
party or bound or to which its property is subject, or (c) any statute,
law, rule, regulation, judgment, order or decree applicable to the Company
of any Israeli court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or
any of its properties;
(viii) no holders of securities of the Company have rights to the
registration of Ordinary Shares or any other securities of the Company
under the Registration Statement;
(ix) to ensure the legality, validity or [admissibility into evidence]
of each of this Agreement and any other document required to be furnished
hereunder or thereunder in the State of Israel, it is not necessary that
(a) this Agreement or any such other document be filed or recorded with any
court or other authority in the State of Israel or (b) any stamp,
registration or similar tax be paid on or in respect of any such document
or the Shares in connection with the sale of Shares to the Underwriters;
(x) The appointment by the Company of the U.S. Subsidiary as the
Company's designee, appointee and authorized agent for the purpose
described in Section 15 of this Agreement is legal, valid and binding under
the laws of the State of Israel;
(xi) under the laws of Israel, the submission by the Company under
this Agreement to the jurisdiction of any court sitting in New York and the
designation of New York law to apply to this Agreement, is binding upon the
Company and, if properly brought to the attention of a court or
administrative body in accordance with the laws of Israel, would be
enforceable in any judicial or administrative proceeding in Israel; subject
to certain time limitations, Israeli courts are empowered to enforce
foreign final executory judgments for liquidated amounts in civil matters,
obtained after completion of process before a court of competent
jurisdiction which recognizes similar Israeli judgments, provided such
judgments or the enforcement thereof are not contrary to Israeli law,
public policy, security or the sovereignty of the State of Israel; and the
enforcement of judgments is conditional upon: (a) adequate service of
process being effected and the defendant having had a reasonable
opportunity to be heard; (b) such judgment having been obtained before a
court of competent jurisdiction according to the rules of private
international law prevailing in Israel; (c) such judgment not being in
conflict with another valid judgment in the same matter between the same
parties; (d) such judgment not having been obtained by fraudulent means;
and (e) an action between the same parties in the same matter not pending
in any Israeli court at the time the lawsuit is instituted in the foreign
court;
(xii) no stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters to the State of Israel or to any political
subdivision or taxing authority thereof or therein in
-20-
connection with the sale and delivery by the Underwriters of the Shares as
contemplated herein; and
(xiii) All dividends and other distributions declared and payable on
the shares of the Company may under the current laws and regulations of the
State of Israel be paid in New Israeli Shekels that may be converted, as
described in the Prospectus, into foreign currency that may be freely
transferred out of the State of Israel; and, except as described in the
Prospectus, all such dividends and other distributions will not be subject
to withholding or other taxes under the laws and regulations of the State
of Israel and are otherwise free and clear of any other tax, withholding or
deduction in Israel and without the necessity of obtaining any Governmental
Authorization in the State of Israel.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Israel, to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be reliable and
who are satisfactory to counsel for the Underwriters and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company and public officials. References to the Prospectus in this Section 6
shall also include any supplements thereto at the Closing Date.
Such opinion shall also include statements to the effect that, based upon
such counsel's participation in the preparation of the Registration Statement,
nothing has come to its attention that causes it to believe that on the
Effective Date or the date the Registration Statement was last deemed amended
the Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of its date
and on the Closing Date included or includes any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in each case, other than the financial statements and
other financial information contained therein, as to which such counsel need
express no opinion).
(c) The Company shall have requested and caused ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
U.S. counsel for the Company, to have furnished to the Representatives their
opinion, dated the Closing Date and addressed to the Representatives, to the
effect that:
(i) the U.S. Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own or lease, as the
case may be, and to operate its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction set forth on Schedule A to such counsel's opinion;
(ii) all the outstanding shares of capital stock of the U.S.
Subsidiary have been duly and validly authorized and issued and are fully
paid and nonassessable, and all outstanding shares of capital stock of the
U.S. Subsidiary are, to the knowledge of such counsel, after due inquiry,
directly owned by the Company free and clear of any perfected
-21-
security interest and, to the knowledge of such counsel, after due inquiry,
any other security interest, claim, lien or encumbrance;
(iii) the Ordinary Shares, including the Company Shares and the
Selling Shareholder Shares, have been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance and evidence of
satisfactory distribution;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any U.S. federal or
state court or governmental agency, authority or body or any arbitrator
involving the Company or any of the Significant Subsidiaries or its or
their property of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus, and, to such
counsel's knowledge, and relying as to matters of fact on certificates of
responsible officers of the Company and public officials, there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed as an
exhibit thereto, which is not described or filed as required;
(v) the statements included in the Prospectus under the headings "Risk
Factors - Under current U.S. and Israeli law, we may not be able to enforce
covenants not to compete and therefore may be unable to prevent our
competitors from benefiting from the expertise of some of our former
employees," "Risk Factors - Future sales of our ordinary shares could
reduce our stock price," "Business - Manufacturing," Business - Litigation"
and "Shares Eligible for Future Sale" (insofar as such statements summarize
legal matters, agreements, documents or proceedings governed by U.S.
federal or state law discussed therein) and "United States Federal Income
Tax Considerations" (insofar as such statements summarize matters of U.S.
federal income tax law or legal conclusions with respect thereto) are
accurate and fair summaries in all material respects of such legal matters,
agreements, documents, proceedings or conclusions, as applicable;
(vi) assuming this Agreement has been duly authorized, executed and
delivered under Israeli law, this Agreement has been duly authorized,
executed and delivered by the Company to the extent governed by New York
law;
(vii) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued, no proceedings for that purpose have been instituted or threatened
and the Registration Statement and the Prospectus (other than the financial
statements and other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the rules
thereunder;
(viii) the Company is not and, immediately after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof
as described in the Prospectus, will not be, an "investment company" as
defined in the Investment Company Act of 1940, as amended;
-22-
(ix) no consent, approval, authorization, filing with or order of any
U.S. federal or state court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as have
been obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and distribution
of the Shares by the Underwriters in the manner contemplated in this
Agreement and in the Prospectus and such other approvals (specified in such
opinion) as have been obtained;
(x) neither the issue and sale of the Shares, nor the consummation of
any other of the transactions herein contemplated nor the fulfillment of
the terms hereof will conflict with, result in a breach or violation of, or
imposition of any lien, charge or encumbrance upon any property or assets
of the U.S. Subsidiary pursuant to, (a) the charter or by-laws of the U.S.
Subsidiary, (b) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument known to such counsel to which the U.S.
Subsidiary is a party or bound or to which its property is subject, or (c)
any statute, law, rule, regulation, judgment, order or decree known to such
counsel to be applicable to the U.S. Subsidiary or any U.S. federal or
state court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the U.S. Subsidiary
or any of its properties;
(xi) no holders of securities of the Company have rights to the
registration of Ordinary Shares or any other securities of the Company
under the Registration Statement;
(xii) assuming the appointment by the Company of the U.S. Subsidiary
as the Company's designee, appointee and authorized agent for the purpose
described in Section 15 of this Agreement is legal, valid and binding under
the laws of the State of Israel, under the laws of the State of New York
relating to personal jurisdiction, (a) the Company has, under this
Agreement, validly submitted to the personal jurisdiction of any state or
federal court located in the State of New York, County of New York in any
action arising out of or relating to this Agreement and the transactions
contemplated herein and have validly and effectively waived any objection
to the venue of a proceeding in any such court as provided in Section 15
hereof, (b) its appointment thereunder of the U.S. Subsidiary as its
authorized agent for service of process is valid, legal and binding, and
(c) service of process in the manner set forth in Section 15 hereof will be
effective to confer valid personal jurisdiction of such court over the
Company;
(xiii) the Underwriters may rely on the non-infringement opinions
issued by such counsel, one of which is dated September 15, 2003 and two of
which are dated May 13, 2004; and
(xiv) such counsel is of the opinion that the statements in the
Registration Statement under the captions "Risk Factors" - "If we fail to
obtain and maintain necessary U.S. Food and Drug Administration clearances
for our products and indications, if clearances for future products are
delayed or not issued, or if there are U.S. federal or state level
regulatory changes, our commercial operations could be harmed," "Risk
Factors - If we or our subcontractors fail to comply with the FDA's Quality
-23-
System Regulation and performance standards, manufacturing operations could
be halted, and our business would suffer" and "Business" - "Government
Regulation" insofar as such statements purport to summarize applicable
provisions of the Federal Food, Drug, and Cosmetic Act, as amended (the
"FFDCA"), and the regulations promulgated thereunder or otherwise relate to
FDA regulatory matters, including, without limitation, the regulatory
status of the Company's products, are accurate summaries in all material
respects of the provisions purported to be summarized under such captions
in the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the DGCL, the
State of New York or the federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company or the U.S.
Subsidiary and public officials.
Such opinion shall also include statements to the effect that, based upon
such counsel's participation in the preparation of the Registration Statement,
nothing has come to its attention that causes it to believe that on the
Effective Date or the date the Registration Statement was last deemed amended
the Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of its date
and on the Closing Date included or includes any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in each case, other than the financial statements and
other financial information contained therein, as to which such counsel need
express no opinion).
(d) The Company shall have requested and caused ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
intellectual property counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) the Company's patents are valid and subsisting; provided, that
such opinion shall include a description of such counsel's prior art
searches in a form satisfactory to counsel to the Representatives;
(ii) the Company's issued patents and filed patent applications filed
in the U.S. (the "Applications") have been properly prepared and filed on
behalf of the Company, are being diligently pursued by the Company and to
the best of such counsel's knowledge, the Company has complied with all
applicable examination requirements of duty of candor and disclosure; the
inventions described in the Applications are assigned or licensed to the
Company to the best of such counsel's knowledge, except for Applications
where the Company has obtained a field of use license, and/or where certain
rights have been retained by the licensor or the U.S. government, no other
entity or individual has any right or claim in any of the inventions,
Applications, or any patent to be issued therefrom, and in such counsel's
opinion, each of the Applications discloses patentable subject matter;
-24-
(iii) the statements contained in the Registration Statement and
Prospectus including, but not limited to, the statements under the captions
"Risk Factors - If we are unable to protect our intellectual property
rights, our competitive position could be harmed," "Risk Factors - Third
party claims of infringement or other claims against us could require us to
redesign our products, seek licenses, or engage in future costly
intellectual property litigation, which could impact our future business
and financial performance" and "Business - Intellectual Property"
(collectively, the "Intellectual Property Portion") are accurate
descriptions of the Company's patent applications, issued and allowed
patents, and fairly summarizes the legal matters, documents and proceedings
relating thereto of which such counsel is aware;
(iv) except as disclosed in the Prospectus, such counsel is not aware
or has not been put on notice of any valid patent that is or would be
infringed by the activities of the Company in the manufacture, use or sale
of any presently proposed product, as described in the Prospectus;
(v) except as disclosed in the Prospectus, such counsel is not aware
of any pending or threatened judicial or governmental proceedings relating
to patents or proprietary information to which the Company is a party or of
which any property of the Company is subject, including any interference,
reexamination, reissue or declaratory action proceeding, and such counsel
is not aware of any pending or threatened action, suit or claim by others
that the Company is infringing or otherwise violating any patent rights of
others, nor is such counsel aware of any rights of third parties to any of
the Company's inventions described in the Applications, issued, approved or
licensed patents which could reasonably be expected to materially affect
the ability of the Company to conduct its business as described in the
Registration Statement and Prospectus; and
(vi) such counsel has no reason to believe that the information
contained in the Intellectual Property Portion of the Registration
Statement and the Prospectus at the time each became effective, contained
any untrue statement of a material fact or omitted to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the federal
laws of the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for the Underwriters and (B) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
(e) The Company shall have requested and caused ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP,
Canadian counsel for the Company, to have furnished to the Representatives their
opinion, dated the Closing Date and addressed to the Representatives, to the
effect that:
(i) Syneron Canada Corporation (the "Canadian Subsidiary") is
incorporated and existing under the BUSINESS CORPORATIONS ACT (Ontario),
with the corporate power and capacity to own or lease, as the case may be,
its properties and assets and to carry on
-25-
its business as it is currently being conducted; the Canadian Subsidiary
does not carry on business as a foreign corporation outside of Canada;
(ii) the authorized capital of the Canadian Subsidiary consists of an
unlimited number of common shares, of which 1 common share has been duly
issued and is outstanding as a fully paid and non-assessable share, and the
1 outstanding share in the capital of the Canadian Subsidiary is owned by
the Company free and clear of any security interest perfected in the
Province of Ontario and, to the knowledge of such counsel, after due
inquiry, any other security interest, claim, lien or encumbrance;
(iii) to the knowledge of such counsel, after a search of such
counsel's records and after due inquiry of the senior officers of the
Canadian Subsidiary, there is no pending or overtly threatened actions,
suits or proceedings affecting the Canadian Subsidiary or the Company or
either of their properties or assets before any Canadian court,
governmental agency or arbitrator which may, individually or collectively,
materially adversely affect the financial condition or operations of the
Canadian Subsidiary or the Company; and
(iv) [neither the issue and sale of the Shares, nor the consummation
of any other of the transactions herein contemplated nor the fulfillment of
the terms of this Agreement will conflict with, result in a breach or
violation of, or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Canadian Subsidiary pursuant to,
(a) the organizational documents of the Canadian Subsidiary or (b) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company or the Canadian Subsidiary of any Canadian court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or the Canadian Subsidiary or any of
their properties].
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the Province of
Ontario and the laws of Canada applicable therein, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to counsel
for the Underwriters and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials.
(f) The Company shall have requested and caused [_______________], German
counsel for the Company, to have furnished to the Representatives their opinion,
dated the Closing Date and addressed to the Representatives, to the effect that:
(i) The German Subsidiary has been duly organized and is validly
existing as a [GmbH] in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full [corporate] power and
authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus[, and is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification];
-26-
(ii) all the outstanding shares of capital stock of the German
Subsidiary have been duly and validly authorized and issued and are fully
paid and nonassessable, and all outstanding shares of capital stock of the
Canadian Subsidiary are wholly owned by the Company free and clear of any
perfected security interest and, to the knowledge of such counsel, after
due inquiry, any other security interest, claim, lien or encumbrance;
(iii) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any German court or
governmental agency, authority or body or any arbitrator involving the
Company or the German Subsidiary or either of their property; and
(iv) neither the issue and sale of the Shares, nor the consummation of
any other of the transactions herein contemplated nor the fulfillment of
the terms hereof will conflict with, result in a breach or violation of, or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or the German Subsidiary pursuant to, (a) the organizational
documents of the German Subsidiary or (b) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or the
German Subsidiary of any German court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or the German Subsidiary or any of their
properties.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than Germany, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials.
(g) The Selling Shareholders shall have requested and caused ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, U.S. counsel for the Selling Shareholders, to have furnished to
the Representatives their opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) assuming this Agreement and the Custody Agreement have been duly
authorized, executed and delivered by the Selling Shareholders, the Custody
Agreement is valid and binding on the Selling Shareholders (except to the
extent that enforceability of the Custody Agreement may be limited by
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
and the application of equitable principles relating to the availability of
remedies);
(ii) assuming that each Underwriter acquires its interest in the
Shares it has purchased from such Selling Shareholder without notice of any
adverse claim (within the meaning of Section 8-105 of the UCC), each
Underwriter that has purchased such Shares delivered on the Closing Date to
The Depository Trust Company or other securities intermediary by making
payment therefor as provided herein, and that has had such Shares credited
to the securities account or accounts of such Underwriters maintained with
The Depository Trust Company or such other securities intermediary will
have
-27-
acquired a security entitlement (within the meaning of Section 8-102(a)(17)
of the UCC) to such Shares purchased by such Underwriter, and no action
based on an adverse claim (within the meaning of Section 8-105 of the UCC)
may be asserted against such Underwriter with respect to such Shares;
(iii) no consent, approval, authorization or order of any U.S. federal
or New York State court or governmental agency or body is required for the
consummation by any Selling Shareholder of the transactions contemplated
herein, except such as may have been obtained under the Act and such as may
be required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Shares by the Underwriters, such as
relate to the review of the transaction by the NASD, and such other
approvals (specified in such opinion) as have been obtained;
(iv) to such counsel's knowledge, neither the sale of the Shares being
sold by any Selling Stockholder nor the consummation of any other of the
transactions contemplated in this Agreement by any Selling Stockholder or
the fulfillment of the terms hereof by any Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a default
under any U.S. federal or New York state law or any judgment, order or
decree applicable to any Selling Stockholder [or any of its subsidiaries]
of any U.S. federal or New York state court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over any Selling Stockholder [or any of its subsidiaries]; and
(v) assuming the appointment by the Selling Shareholders of the U.S.
Subsidiary as the Company's designee, appointee and authorized agent for
the purpose described in Section 15 of this Agreement is legal, valid and
binding under the laws of the State of Israel, under the laws of the State
of New York relating to personal jurisdiction, (a) the Selling Shareholders
have, under this Agreement, validly submitted to the personal jurisdiction
of any state or federal court located in the State of New York, County of
New York in any action arising out of or relating to this Agreement and the
transactions contemplated herein and have validly and effectively waived
any objection to the venue of a proceeding in any such court as provided in
Section 15 hereof, (b) their appointment thereunder of the U.S. Subsidiary
as thereunder authorized agent for service of process is valid, legal and
binding, and (c) service of process in the manner set forth in Section 15
hereof will be effective to confer valid personal jurisdiction of such
court over the Selling Shareholders.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent they deem proper, on certificates of [responsible officers of] the
Selling Shareholders and public officials.
(h) European High-Tech Capital S.A. ("European High-Tech"), as one of the
Selling Shareholders, shall have requested and caused GKHHG, Israeli counsel for
European High-Tech, to have furnished to the Representatives their opinion,
dated the Closing Date and addressed to the Representatives, to the effect that:
-28-
(i) assuming this Agreement and the Custody Agreement have been duly
authorized, executed and delivered by European High-Tech, the Custody
Agreement is valid and binding on European High-Tech (except to the extent
that enforceability of the Custody Agreement may be limited by applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights and the
application of equitable principles relating to the availability of
remedies);
(ii) to such counsel's actual knowledge, no consent, approval,
authorization or order of any Israeli court or governmental agency or body
is required for the consummation by European High-Tech of the transactions
contemplated herein, except such as may have been obtained under the Israel
Securities Act of 1968, as amended, to which such counsel expresses no
opinion;
(iii) to such counsel's actual knowledge, neither the sale of the
Selling Shareholder Shares by European High-Tech nor the consummation of
any other of the transactions herein contemplated by European High-Tech or
the fulfillment of the terms hereof by European High-Tech will conflict
with, result in a breach or violation of, or constitute a default under any
law or any Israeli judgment, order or decree applicable to European
High-Tech or any of its subsidiaries of any Israeli court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over European High-Tech or any of its subsidiaries; and
(iv) under the laws of Israel, the submission by European High-Tech
under this Agreement to the jurisdiction of any court sitting in New York
and the designation of New York law to apply to this Agreement, is binding
upon the Company and, if properly brought to the attention of the court or
administrative body in accordance with the laws of Israel, would be
enforceable in any judicial or administrative proceeding in Israel; subject
to certain time limitations, Israeli courts are empowered to enforce
foreign final non-appealable executory judgments for liquidated amounts in
civil matters, obtained after completion of process before a court of
competent jurisdiction which recognizes similar Israeli judgments, provided
such judgments or the enforcement thereof are not contrary to Israeli law,
public policy, security or the sovereignty of the State of Israel; the
enforcement of judgments is conditional upon: (a) adequate service of
process being effected and the defendant having had a reasonable
opportunity to be heard; (b) such judgment having been obtained before a
court of competent jurisdiction according to the rules of private
international law prevailing in Israel; (c) such judgment not being in
conflict with another valid judgment in the same matter between the same
parties; (d) such judgment not having been obtained by fraudulent means;
and (e) an action between the same parties in the same matter not pending
in any Israeli court at the time the lawsuit is instituted in the foreign
court.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of European
High-Tech, the Company and public officials.
(i) M.N.M.M. Holdings Ltd., Israel Health Care Ventures LP and ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, as the other Selling Shareholders (collectively, the "Other Selling
Shareholders"), shall have
-29-
requested and caused [_______________], Israeli counsel for the Other Selling
Shareholders, to have furnished to the Representatives their opinion, dated the
Closing Date and addressed to the Representatives, to the effect that:
(i) This Agreement, the Custody Agreement and the Power of Attorney
have been duly authorized, executed and delivered by the Other Selling
Shareholders, the Custody Agreement is valid and binding on the Other
Selling Shareholders and each Selling Shareholder has full legal rights and
authority to sell, transfer and deliver in the manner provided in this
Agreement and the Custody Agreement the Shares being sold by such Selling
Shareholder under this Agreement;
(ii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by any Selling
Shareholder of the transactions contemplated herein;
(iii) neither the sale of the Selling Shareholder Shares nor the
consummation of any other of the transactions herein contemplated by any
Selling Shareholder or the fulfillment of the terms hereof by any Selling
Shareholder will conflict with, result in a breach or violation of, or
constitute a default under any law or any judgment, order or decree
applicable to any Selling Shareholder or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over any Selling Shareholder or any of its
subsidiaries; and
(iv) the appointment by each of the Other Selling Stockholders of the
U.S. Subsidiary as such Other Selling Stockholder's designee, appointee and
authorized agent for the purpose described in Section 15 of this Agreement
is legal, valid and binding under the laws of the State of Israel;
(v) the submission by the Other Selling Shareholders under this
Agreement to the jurisdiction of any court sitting in New York and the
designation of New York law to apply to this Agreement, is binding upon the
Company and, if properly brought to the attention of the court or
administrative body in accordance with the laws of Israel, would be
enforceable in any judicial or administrative proceeding in Israel; subject
to certain time limitations, Israeli courts are empowered to enforce
foreign final non-appealable executory judgments for liquidated amounts in
civil matters, obtained after completion of process before a court of
competent jurisdiction which recognizes similar Israeli judgments, provided
such judgments or the enforcement thereof are not contrary to Israeli law,
public policy, security or the sovereignty of the State of Israel; the
enforcement of judgments is conditional upon: (a) adequate service of
process being effected and the defendant having had a reasonable
opportunity to be heard; (b) such judgment having been obtained before a
court of competent jurisdiction according to the rules of private
international law prevailing in Israel; (c) such judgment not being in
conflict with another valid judgment in the same matter between the same
parties; (d) such judgment not having been obtained by fraudulent means;
and (e) an action between the same parties in the same matter not pending
in any Israeli court at the time the lawsuit is instituted in the foreign
court.
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In rendering such opinion, such counsel may rely as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Other Selling Shareholders, the Company and public officials.
(j) The Representatives shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, U.S.
counsel for the Underwriters, and Naschitz, ▇▇▇▇▇▇▇ & Co., Israeli counsel for
the Underwriters, such opinion or opinions, dated the Closing Date and addressed
to the Representatives, with respect to the issuance and sale of the Shares, the
Registration Statement, the Prospectus (together with any supplement thereto)
and other related matters as the Representatives may reasonably require, and the
Company and each Selling Shareholder shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(k) The Company shall have furnished to the Representatives a certificate
of the Company, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Prospectus, any supplements to the Prospectus
and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Prospectus (exclusive of any supplement thereto), there has been no
Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(l) Each Selling Shareholder shall have furnished to the Representatives a
certificate, signed by [the Attorneys-in-Fact appointed in the Custody
Agreement,] dated the Closing Date, to the effect that such Selling Shareholders
have carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and the representations and
warranties of such Selling Shareholder in this Agreement are true and correct in
all material respects on and as of the Closing Date to the same effect as if
made on the Closing Date.
(m) The Company shall have requested and caused ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and
Kasierer (a Member of Ernst & Young Global) to have furnished to the
Representatives, at the Execution Time and at the Closing Date, letters, dated
respectively as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable rules
and regulations adopted by the Commission thereunder and that they have
performed a review of the unaudited interim financial information of the Company
for the three-month period ended March 31, 2004,
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and as at March 31, 2004, in accordance with Statement on Auditing Standards No.
100 and stating in effect that:
(i) in their opinion the audited financial statements [and financial
statement schedules] included in the Registration Statement and the
Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related rules and regulations adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and the Significant Subsidiaries;
their limited review, in accordance with standards established under
Statement on Auditing Standards No. 100, of the unaudited interim financial
information for the three-month period ended March 31, 2004, and as at
March 31, 2004; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the meetings
of the shareholders and directors of the Company and the Significant
Subsidiaries; and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company and the
Significant Subsidiaries as to transactions and events subsequent to
December 31, 2004, nothing came to their attention which caused them to
believe that:
(A) any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply as to form in
all material respects with applicable accounting requirements of the
Act and Exchange Act and with the related rules and regulations
adopted by the Commission with respect to such financial statements;
and said unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus;
(B) with respect to the period subsequent to March 31, 2004,
there were any changes, at a specified date not more than five days
prior to the date of the letter, in the share capital of the Company,
increase in its long-term debt or decreases in the shareholders'
equity of the Company as compared with the amounts shown on the March
31, 2004 consolidated balance sheet included in the Registration
Statement and the Prospectus, or for the period from April 1, 2004 to
such specified date there were any decreases, as compared with the
corresponding period in the preceding quarter in revenues, gross
profits or income before taxes on income or in total or per share
amounts of net income of the Company and the Significant Subsidiaries,
except in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives;
(C) the information included in the Registration Statement and
Prospectus in response to Form 20-F, Item 8 (Selected Financial Data),
and Item 11
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(Compensation of Directors and Officers) is not in conformity with the
applicable disclosure requirements of Form 20-F; and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and the Significant Subsidiaries) set forth in the Registration
Statement and the Prospectus, including the information set forth under the
captions "Summary Consolidated Financial Data," "Capitalization" and
"Selected Consolidated Financial Data" in the Prospectus, agrees with the
accounting records of the Company and the Significant Subsidiaries,
excluding any questions of legal interpretation.
(n) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto), there shall
not have been (i) any change or decrease specified in the letter or letters
referred to in paragraph (m) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company and
the Significant Subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto) the effect
of which, in any case referred to in clause (i) or (ii) above, is, in the sole
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Shares as contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto).
(o) Prior to the Closing Date, the Company and the Selling Shareholders
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
(p) The Ordinary Shares, including the Shares being sold hereunder by the
Company and by the Selling Shareholders, shall have been approved for quotation
on the Nasdaq National Market, subject to notice of official issuance and
exchange of satisfactory distribution.
(q) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating that does
not indicate the direction of the possible change.
(r) At or prior to the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A hereto from
each officer, director and shareholder of the Company addressed to the
Representatives.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the
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Representatives and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Representatives. Notice of such cancelation
shall be given to the Company and each Selling Shareholder in writing or by
telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, U.S. counsel for the Underwriters, at ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, on the Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the Shares provided
for herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 6 hereof is not satisfied, because of any
termination pursuant to Section 10 hereof or because of any refusal, inability
or failure on the part of the Company or any Selling Shareholder to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Citigroup Global Markets Inc. on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Shares.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Selling Shareholders jointly and severally agree to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Shares as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agree to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company and the Selling Shareholders will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein. This indemnity agreement
will be in addition to any liability which the Company or the Selling
Shareholders may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each Selling Shareholder, each
of its officers and directors and each person who controls
-34-
such Selling Shareholder within the meaning of either the Act or the Exchange
Act to the same extent as the foregoing indemnity to each Underwriter, but only
with reference to written information relating to such Underwriter furnished to
the Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company and each Selling Shareholder
acknowledge that the statements set forth in the last paragraph of the cover
page regarding delivery of the Shares and, under the heading "Underwriting," (i)
the list of Underwriters and their respective participation in the sale of the
Shares, (ii) the sentences related to concessions and reallowances and (iii) the
paragraph related to stabilization, syndicate covering transactions and penalty
bids in any Preliminary Prospectus and the Prospectus constitute the only
information furnished in writing by or on behalf of the several Underwriters for
inclusion in any Preliminary Prospectus or the Prospectus.
(c) The Company agrees to indemnify and hold harmless Citigroup Global
Markets Inc., the directors, officers, employees and agents of Citigroup Global
Markets Inc. and each person, who controls Citigroup Global Markets Inc. within
the meaning of either the Act or the Exchange Act ("Citigroup Entities"), from
and against any and all losses, claims, damages and liabilities to which they
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim), insofar as such losses,
claims damages or liabilities (or actions in respect thereof) (i) arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the prospectus wrapper material prepared by or with the
consent of the Company for distribution in foreign jurisdictions in connection
with the Directed Share Program attached to the Prospectus or any preliminary
prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statement therein, when considered in conjunction with the Prospectus
or any applicable preliminary prospectus, not misleading; (ii) caused by the
failure of any Participant to pay for and accept delivery of the securities
which immediately following the Effective Date of the Registration Statement,
were subject to a properly confirmed agreement to purchase; or (iii) related to,
arising out of, or in connection with the Directed Share Program, except that
this clause (iii) shall not apply to the extent that such loss, claim, damage or
liability is finally judicially determined to have resulted primarily from the
gross negligence or willful misconduct of Citigroup Global Markets Inc.
Notwithstanding anything contained herein to the contrary, if indemnity may be
sought pursuant to this Paragraph (c) in respect of such action or proceeding,
then in addition to such separate firm for the indemnified parties, the
indemnifying party shall be liable for the reasonable fees and expenses of not
more than one separate firm (in addition to any local counsel) for Citigroup
Global Markets Inc., the directors, officers, employees and agents of Citigroup
Global Markets Inc., and all persons, if any, who control Citigroup Global
Markets Inc. within the meaning of either the Act or the Exchange Act for the
defense of any losses, claims, damages and liabilities arising out of the
Directed Share Program.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a), (b) or (c) above unless and to the extent it did
not otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
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(e) In the event that the indemnity provided in paragraph (a), (b) or (c)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Selling Shareholders,
jointly and severally, and the Underwriters severally agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, the Selling Shareholders and one
or more of the Underwriters may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Shareholders on the one hand and by the Underwriters on the other from the
offering of the Shares; PROVIDED, HOWEVER, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters relating to the
offering of the Shares) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Shares purchased by such
Underwriter hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Selling
Shareholders, jointly and severally, and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company, the Selling
Shareholders and of the Underwriters on the other in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company and the
Selling Shareholders shall be deemed to be equal to the total net proceeds from
the offering (before deducting expenses) received by each of them, and benefits
received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Prospectus. Relative fault shall be determined by reference to,
among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company or the Selling Shareholders on
the one hand or the Underwriters on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, the Selling Shareholders
and the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (e), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (e).
(e) The liability of each Selling Shareholder under such Selling
Shareholder's representations and warranties contained in Section 1 hereof and
under the indemnity and contribution agreements contained in this Section 8
shall be limited to an amount equal to the initial public offering price of the
Shares sold by such Selling Shareholder to the Underwriters. The Company and the
Selling Shareholders may agree, as among themselves and without limiting the
rights of the Underwriters under this Agreement, as to the respective amounts of
such liability for which they each shall be responsible.
-36-
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall fail to
purchase and pay for any of the Shares agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Shares set forth
opposite their names in Schedule I hereto bears to the aggregate amount of
Shares set forth opposite the names of all the remaining Underwriters) the
Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Shares set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Shares, and
if such nondefaulting Underwriters do not purchase all the Shares, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Shareholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Selling Shareholders and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to
delivery of and payment for the Shares, if at any time prior to such time (i)
trading in the Company's Ordinary Shares shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on such
Exchange or the Nasdaq National Market, (ii) a banking moratorium shall have
been declared either by federal, New York State or Israeli authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States or Israel of a national emergency or war, or other calamity
or crisis the effect of which on financial markets is such as to make it, in the
sole judgment of the Representatives, impractical or inadvisable to proceed with
the offering or delivery of the Shares as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers, of each Selling Shareholder and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, any
Selling Shareholder or the Company or any of the officers, directors, employees,
agents or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the Shares. The provisions of Sections 7 and 8
hereof shall survive the termination or cancelation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and effective only
on receipt, and, if sent to the Representatives, will be mailed, delivered or
telefaxed to the Citigroup Global Markets Inc. General Counsel (fax no.: (212)
▇▇▇-▇▇▇▇) and confirmed to Citigroup
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Global Markets Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or telefaxed to Syneron Medical Ltd. (fax no.: (▇▇▇-▇) ▇▇▇-▇▇▇▇) and
confirmed to it, at Industrial Zone, Yokneam Illit, 20692, P.O.B. 550 Israel,
attention of the Chief Executive Officer; or, if sent to any Selling
Shareholder, will be mailed, delivered or telefaxed and confirmed to it at the
address set forth in Schedule II hereto.
13. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the officers, directors,
employees, agents and controlling persons referred to in Section 8 hereof, and
no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. JURISDICTION. Each of the Company and the Selling Shareholders agrees that
any suit, action or proceeding against the Company brought by any Underwriter,
the directors, officers, employees and agents of any Underwriter, or by any
person who controls any Underwriter, arising out of or based upon this Agreement
or the transactions contemplated hereby may be instituted in any New York Court,
and waives any objection which it may now or hereafter have to the laying of
venue of any such proceeding, and irrevocably submits to the non-exclusive
jurisdiction of such courts in any suit, action or proceeding. Each of the
Company and each Selling Shareholder has appointed the U.S. Subsidiary as its
authorized agent (the "Authorized Agent") upon whom process may be served in any
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated herein which may be instituted in any New York Court,
by any Underwriter, the directors, officers, employees and agents of any
Underwriter, or by any person who controls any Underwriter, and expressly
accepts the non-exclusive jurisdiction of any such court in respect of any such
suit, action or proceeding. Each of the Company and the Selling Shareholders
hereby represents and warrants that the Authorized Agent has accepted such
appointment and has agreed to act as said agent for service of process, and the
Company agrees to take any and all action, including the filing of any and all
documents that may be necessary to continue such appointment in full force and
effect as aforesaid. Service of process upon the Authorized Agent shall be
deemed, in every respect, effective service of process upon the Company and the
Selling Shareholders. Notwithstanding the foregoing, the Company and the Selling
Shareholders each hereby agrees to the exclusive jurisdiction of the New York
Courts in connection with any action brought by them arising out of or based
upon this Agreement or the sale of the Shares.
The provisions of this Section 15 shall survive any termination of this
Agreement, in whole or in part.
16. CURRENCY. Each reference in this Agreement to U.S. Dollar or "$" (the
"relevant currency") is of the essence. To the fullest extent permitted by law,
the obligations of each of the Company and the Selling Shareholders in respect
of any amount due under this Agreement will, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged only
to the extent of the amount in the relevant currency that the party
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entitled to receive such payment may, in accordance with its normal procedures,
purchase with the sum paid in such other currency (after any premium and costs
of exchange) on the Business Day immediately following the day on which such
party receives such payment. If the amount in the relevant currency that may be
so purchased for any reason falls short of the amount originally due, the
Company or the Selling Shareholder making such payment will pay such additional
amounts, in the relevant currency, as may be necessary to compensate for the
shortfall. Any obligation of any of the Company or the Selling Shareholders not
discharged by such payment will, to the fullest extent permitted by applicable
law, be due as a separate and independent obligation and, until discharged as
provided herein, will continue in full force and effect.
17. WAIVER OF IMMUNITY. To the extent that any of the Company or the Selling
Shareholders has or hereafter may acquire any immunity (sovereign or otherwise)
from any legal action, suit or proceeding, from jurisdiction of any court or
from set-off or any legal process (whether service or notice, attachment in aid
or otherwise) with respect to itself or any of its property, each of the Company
and the Selling Shareholders hereby irrevocably waives and agrees not to plead
or claim such immunity in respect of its obligations under this Agreement.
18. COUNTERPARTS. This Agreement may be signed in one or more counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same agreement.
19. HEADINGS. The section headings used herein are for convenience only and
shall not affect the construction hereof.
20. DEFINITIONS. The terms which follow, when used in this Agreement, shall
have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
-39-
"New York Courts" shall mean the U.S. federal or state courts located in
the State of New York, County of New York.
"Preliminary Prospectus" shall mean any preliminary prospectus referred to
in paragraph 1(a)(i) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Shares that is first
filed pursuant to Rule 424(b) after the Execution Time or, if no filing pursuant
to Rule 424(b) is required, shall mean the form of final prospectus relating to
the Shares included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred to
in paragraph 1(a)(i) above, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date, shall also mean such registration
statement as so amended or such Rule 462(b) Registration Statement, as the case
may be. Such term shall include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the Act.
"Rule 430A Information" shall mean information with respect to the Shares
and the offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the
offering covered by the registration statement referred to in Section 1(a)
hereof.
"Selling Shareholders" shall mean the persons named on Schedule II to this
Agreement.
"Significant Subsidiaries" shall mean, collectively, the U.S. Subsidiary,
the Canadian Subsidiary and the German Subsidiary.
"Taxes" includes all forms of taxation (including, without limitation, any
net income or gains, minimum, gross income, gross receipts, sales, use, ad
valorem, value-added, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, capital stock, occupation,
property, custom, environmental or windfall tax or duty), together with
interest, penalties and additions imposed with respect to the foregoing, imposed
by any local, municipal, state, provincial, Federal or other government,
governmental entity or political subdivision, whether of Israel, the United
States or other country or political unit.
"Tax Return" means all returns, declarations, statements, reports,
schedules, forms and information returns, whether original or amended, relating
to Taxes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
SYNERON MEDICAL LTD.
By:
---------------------------------------
Name:
Title:
THE SELLING SHAREHOLDERS
LISTED ON SCHEDULE II HERETO
By:
----------------------------------------
Name:
As Attorney-in-Fact acting on behalf of
the Selling Stockholders
By:
----------------------------------------
Name:
As Attorney-in-Fact acting on behalf of
the Selling Stockholders
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Citigroup Global Markets Inc.
CIBC World Markets Corp.
▇▇▇▇▇▇▇▇ Inc.
By: Citigroup Global Markets Inc.
By:
-------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
SCHEDULE I
Number of Underwritten Shares
Underwriters to be Purchased
------------ ---------------
Citigroup Global Markets Inc.
CIBC World Markets Corp.
▇▇▇▇▇▇▇▇ Inc.
Total
SCHEDULE II
NUMBER OF UNDERWRITTEN
SELLING SHAREHOLDERS: SHARES TO BE SOLD
M.N.M.M. Holdings Ltd. 100,000
[address, fax no.]
European High-Tech Capital S.A. 100,000
[address, fax no.]
Israel Health Care Ventures LP 200,000
[address, fax no.]
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 100,000
[address, fax no.]
Total 500,000
EXHIBIT A
[Letterhead of officer, director or shareholder of Syneron Medical Ltd.]
SYNERON MEDICAL LTD.
INITIAL PUBLIC OFFERING OF ORDINARY SHARES
May __, 2004
Citigroup Global Markets Inc.
CIBC World Markets Corp.
▇▇▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters,
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Syneron Medical
Ltd., an Israeli company (the "Company"), and each of you as representatives of
a group of Underwriters named therein, relating to an underwritten initial
public offering of ordinary shares, par value NIS 0.01 per share (the "Ordinary
Shares"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Citigroup Global Markets Inc., offer, sell, contract to sell, pledge
or otherwise dispose of, or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned, directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of the Company or any securities convertible into, or exercisable or
exchangeable for such shares, or publicly announce an intention to effect any
such transaction, for the period from the date hereof until one hundred eighty
(180) days after the date of the Underwriting Agreement.
Notwithstanding the foregoing, the undersigned may transfer Ordinary
Shares of the Company (i) to the extent approved by the Underwriters, to be
disposed of by the selling shareholders pursuant to the Company's Registration
Statement on Form F-1 described in the Underwriting Agreement, (ii) by bona fide
gift or gifts, PROVIDED that no such gift or gifts shall in the aggregate
constitute more than 20% of the undersigned's Ordinary Shares held as of the
date hereof or (iii) to an immediate family member of the undersigned or to any
trust for the direct or indirect benefit of the undersigned or an immediate
family member of the undersigned, PROVIDED that any such transfer shall not
involve a disposition for value, and PROVIDED, FURTHER, as to both (ii) and
(iii) above, prior
to such transfer, the undersigned shall notify Citigroup Global Markets Inc. in
writing of such proposed transfer and each resulting transferee of Ordinary
Shares shall then execute and deliver to you an agreement satisfactory to you
certifying that such transferee, including such donee or trustee, as the case
may be, shall be bound by the terms of this Agreement as if it had been an
original party hereto. For purposes of this Agreement, "immediate family" shall
mean any relationship by blood, marriage or adoption, not more remote than first
cousin.
[remainder of page intentionally left blank; signature page follows]
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER, DIRECTOR OR SHAREHOLDER]
[Name and address of officer, director or shareholder]