POWERDSINE LTD.
6,000,000 ORDINARY SHARES
(PAR VALUE NIS 0.01 PER SHARE)
UNDERWRITING AGREEMENT
New York, New York
June ___, 2004
Citigroup Global Markets Inc.
Deutsche Bank Securities, Inc.
CIBC World Markets Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
As Representatives of the several Underwriters,
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PowerDsine 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, 5,100,000 ordinary shares (the
"Company Shares"), par value NIS 0.01 per share ("Ordinary Shares") of the
Company, and the persons named in Schedule II hereto (the "Selling
Shareholders") propose to sell to the several Underwriters 900,000 Ordinary
Shares (the "Selling Shareholder Shares" and, together with the Company Shares,
the "Underwritten Shares"). The Selling Shareholders named in Schedule II hereto
also propose to grant to the Underwriters an option to purchase up to 900,000
additional Ordinary Shares to cover over-allotments (the "Option Shares,"
together with the Underwritten Shares, 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. For purposes of this Agreement, the term "Subsidiary" shall
mean PowerDsine, Inc., a corporation organized under the laws of the State of
New York, which is the only subsidiary of the Company. In addition, to the
extent that there is not more than one Selling Shareholder named in Schedule II,
the term Selling Shareholder shall mean either the singular or plural. The use
of the neuter in this Agreement shall include the feminine and masculine
wherever appropriate. 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 Company Shares set forth
opposite its name on the Schedule II to this Agreement, up to 600,000 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 Company 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.
(i) The Company represents and warrants to, and agrees with,
each Underwriter as set forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-115777) 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. It is understood
that for purposes of distribution to Canadian Persons (as defined in
Section 20 hereof), the Prospectus shall have a Canadian "wrap-around"
(the "Canadian Offering Memorandum"). Insofar as they relate to offers or
sales of Shares in Canada, all references herein to the Preliminary
Prospectus and the Prospectus shall include the Canadian Offering
Memorandum.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined herein) and on any
date on which Option 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
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with the applicable requirements of the Act and the rules thereunder; on
the Effective Date and at the Execution Time, the Registration Statement
did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and, on
the Effective Date, the Prospectus, if not filed pursuant to Rule 424(b),
will not, and on the date of any filing pursuant to Rule 424(b) and on
the Closing Date and any settlement date, the Prospectus (together with
any supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that the Company makes
no representations or warranties as to 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).
(c) Each of the Company and the Subsidiary has been duly
incorporated and is validly existing as a corporation 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
in, 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 Subsidiary, taken
as a whole, whether or not arising from transactions in the ordinary
course of business (a "Material Adverse Effect"). No proceeding has been
instituted by the Registrar of Companies in Israel for the dissolution of
the Company. The Subsidiary is in good standing under the laws of the
State of New York.
(d) All the outstanding shares of capital stock of the
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 Subsidiary are
directly owned by the Company free and clear of any perfected security
interest or any other security interests, claims, liens or encumbrances.
(e) The Company's authorized equity capitalization is, as of
the date specified therein, as set forth in the Prospectus; the capital
stock of the Company conforms in all material respects to the description
thereof contained in the Prospectus; the outstanding Ordinary Shares,
including the Selling Shareholder Shares and the Option Shares, have been
duly and validly authorized and issued and are fully paid and
nonassessable (except, however, with respect to any Selling Shareholder
Shares and Option Shares that are to be issued pursuant to the exercise
of warrants or conversion of preferred shares of the Company (the
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"Future Shares"), in which case such Future Shares shall be fully paid
and nonassessable, upon issuance, subject, in the case of warrants, to
payment by the Selling Shareholders of the exercise price therefor).
(f) The Company 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 Shares being sold hereunder by the Company
and by the Selling Shareholders, have been approved for listing on the
Nasdaq National Market, subject to notice of issuance and evidence of
satisfactory distribution; the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
subscribe for the Shares; except as disclosed in the Registration
Statement and the Prospectus, there are no restrictions upon the voting
or transfer of any Ordinary Shares pursuant to the Company's memorandum
or articles of association or any agreements or other instruments to
which the Company is a party or by which it is bound, other than pursuant
to the Amended and Restated Rights Agreement, by and among the Company
and the parties named therein, and any restrictions thereunder shall
terminate immediately following the Closing Date; and, except as
otherwise 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 Shares for, shares of
capital stock of or ownership interests in the Company are outstanding.
(g) 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-Our proprietary technology is difficult to protect
and unauthorized use of our proprietary technology by third parties may
impair our ability to compete effectively," "Risk Factors--We could
become subject to litigation regarding intellectual property rights or we
may need to take steps to avoid infringing the intellectual property
rights of others, increasing our costs or decreasing our sales," "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 PowerDsine, which
could prevent a change of control and therefore depress the price of our
shares," "Business--Intellectual Property and Proprietary Rights,"
"Business--Manufacturing," "Business--Legal Proceedings," "Management,"
"Related Party Transactions," "Background Information," "Description of
Share Capital," "Shares Eligible for Future Sale" and "Enforceability of
Civil Liabilities," insofar as such statements summarize legal matters,
provisions of the Company's memorandum or articles of association,
agreements, documents or proceedings
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discussed therein, are accurate and fair summaries of such legal matters,
provisions of the Company's memorandum or articles of association,
agreements, documents or proceedings.
(h) 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 memorandum or 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.
(i) 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.
(j) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act, the federal and provincial securities laws of
Canada or 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, such as relate to the review
of the transaction by the National Association of Securities Dealers,
Inc. (the "NASD"), and such other approvals as have been obtained. The
Company is not required to publish a prospectus in Israel under the laws
of the State of Israel.
(k) 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 Subsidiary pursuant to, (i) the
memorandum or articles of association of the Company or the charter or
by-laws of the Subsidiary, (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 the Subsidiary is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or the Subsidiary of any court,
regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or the Subsidiary or
any of its properties, except, in the cases of clauses (ii) and (iii)
above, as would not reasonably be expected to have a Material Adverse
Effect.
(l) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
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(m) The consolidated historical financial statements, including
the notes thereto, and schedules of the Company and the Subsidiary
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 and the Subsidiary as of the dates and for
the periods indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally 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 such pro forma financial
information included in the Prospectus and the Registration Statement.
(n) Except as disclosed in the Registration Statement and the
Prospectus (exclusive of any supplement thereto), no action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or the Subsidiary or its
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.
(o) Each of the Company and the Subsidiary owns or leases all
such properties as are necessary to the conduct of its operations as
presently conducted.
(p) Neither the Company nor the Subsidiary is in violation or
default of (i) any provision of its memorandum or articles of association
or its charter or by-laws, as the case may be, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company
or the Subsidiary or any of its properties, as applicable, except in the
cases in clauses (ii) and (iii) above, as would not reasonably be
expected to have a Material Adverse Effect.
(q) ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, who have certified certain financial
statements of the Company and the Subsidiary and delivered their report
with
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respect to the audited consolidated financial statements included in the
Prospectus, are independent public accountants with respect to the
Company within the meaning of the Act and the applicable published rules
and regulations thereunder.
(r) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not
have a Material Adverse Effect, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto)) and has paid all
taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not reasonably be
expected to have a Material Adverse Effect.
(s) No labor problem or dispute with the employees of the
Company or the Subsidiary exists, or, to the Company's best knowledge, is
threatened or imminent, that could have a Material Adverse Effect, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto). Without limiting the generality of the foregoing,
the Company is in compliance, in all material respects, with the labor
and employment laws and collective bargaining agreements applicable to
its employees in Israel.
(t) The Company and the Subsidiary 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 insuring the Company or the Subsidiary
or their respective businesses, assets, employees, officers and directors
are in full force and effect, except as would not be reasonably likely to
have to Material Adverse Effect; the Company and the Subsidiary are in
compliance with the terms of such policies and instruments in all
material respects; and there are no claims by the Company or the
Subsidiary under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights
clause, except as would not reasonably likely to have a Material Adverse
Effect; neither the Company nor the Subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor the
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).
(u) The Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any
other distribution on the Subsidiary's capital stock, from repaying to
the Company any loans or advances to the Subsidiary from the Company or
from transferring any of the
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Subsidiary's property or assets to the Company, except as described in or
contemplated by the Prospectus (exclusive of any supplement thereto).
(v) The Company and the Subsidiary possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor the 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).
(w) The Company and the Subsidiary 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.
(x) 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.
(y) The Company and the Subsidiary are (i) in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or potential
liability under any environmental law, except where such non-compliance
with Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(z) 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 the
Subsidiary, and the trust forming part of each such plan which is
intended to be qualified under Section 401 of the Code is
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so qualified; each of the Company and the Subsidiary has fulfilled its
obligations, if any, under Section 515 of ERISA; neither the Company nor
the Subsidiary 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 the Subsidiary is in compliance in all material respects with the
currently applicable provisions of ERISA; and neither the Company nor the
Subsidiary 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.
(aa) There is and has been no failure on the part of the Company
and any of the Company's directors or officers, in their capacities as
such, to comply with any provision of the Sarbanes Oxley Act of 2002 and
the rules and regulations promulgated in connection therewith (the
"Sarbanes Oxley Act"), to the extent applicable, including Section 402
related to loans.
(bb) The operations of the Company and the Subsidiary 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 Subsidiary are
subject, the rules and regulations thereunder and any applicable related
or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency to which the Company or the
Subsidiary are subject (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 the
Subsidiary with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company, threatened.
(cc) Neither the Company nor the Subsidiary nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or the Subsidiary is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department ("OFAC"); and the Company will not directly
or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(dd) The Subsidiary is the only subsidiary of the Company as
defined by Rule 1-02 of Regulation S-X.
(ee) The Company and the Subsidiary own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service ▇▇▇▇
registrations, trade names, copyrights,
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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 described in the
Prospectus, except as such failure to own, possess, license or have other
rights to use would not have a Material Adverse Effect. Except as set
forth in the Prospectus under the captions "Risk Factors--We could become
subject to litigation regarding intellectual property rights or we may
need to take steps to avoid infringing the intellectual property rights
of others, increasing our costs or decreasing our sales" and
"Business--Legal Proceedings" and except as would not have a Material
Adverse Effect, (a) to the Company's knowledge, there are no rights of
third parties to any such Intellectual Property; (b) to the Company's
knowledge, there is no 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) to the Company's knowledge, there is no
pending or 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 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.
(ff) Except as disclosed in the Registration Statement and the
Prospectus, the Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of Citigroup Global
Markets Holdings Inc. and (ii) does not intend to use any of the proceeds
from the sale of the Shares hereunder to repay any outstanding debt owed
to any affiliate of Citigroup Global Markets Holdings Inc.
(gg) Neither the Company nor the Subsidiary nor any of its
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.
(hh) 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
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Underwriters in connection with the sale and delivery by the Underwriters
of the Shares as contemplated herein.
(ii) The Company is not a Passive Foreign Investment Company
("PFIC") within the meaning of Section 1296 of the Code and does not
expect to become a PFIC in the future; the Company is not a "foreign
personal holding company" within the meaning of the Code.
(jj) 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.
(kk) 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.
(ii) Each Selling Shareholder represents and warrants, severally
and not jointly to, and agrees with, each Underwriter that:
(a) Such Selling Shareholder is the record and beneficial owner
of the Shares to be sold by it hereunder free and clear of all liens,
encumbrances, equities and claims and has duly executed share transfer
deeds with respect to
-11-
such Shares, 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.
(b) Such Selling Shareholder has not taken, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.
(c) Share certificates accompanied by duly executed share
transfer deeds with respect to the Selling Shareholder Shares (or, in the
case of Future Shares, such warrant certificates or preferred share
certificates pursuant to which such Future Shares will be issued,
together with duly executed exercise notices with respect to any warrants
and share transfer deeds with respect to such Future Shares upon
issuance) have been placed in custody, for delivery pursuant to the terms
of this Agreement, under a Custody Agreement and Power of Attorney duly
authorized (if applicable), executed and delivered by such Selling
Shareholder, in the form heretofore furnished to you (the "Custody
Agreement") with American Stock Transfer & Trust Company, as Custodian
(the "Custodian") and the Attorneys-in-Fact appointed therein; the
Ordinary Shares, warrants and/or preferred shares of the Company
represented by the certificates so held in custody for each Selling
Shareholder are subject to the interests hereunder of the Underwriters;
the arrangements for custody and delivery of such certificates, made by
such Selling Shareholder hereunder and under the Custody Agreement, are
not subject to termination by any acts of such Selling Shareholder, or by
operation of law, whether by the death or incapacity of such Selling
Shareholder or the occurrence of any other event; and if any such death,
incapacity or any other such event shall occur before the delivery of
such Shares hereunder, 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.
(d) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by such
Selling Shareholder of the transactions contemplated herein, except such
as have been
-12-
obtained under the Act, the Israeli Securities Act of 1968, as amended,
the federal and provincial securities laws of Canada or 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, such as relate to the review of the transaction by the
NASD, and such other approvals as have been obtained.
(e) Neither the sale of the Selling Shareholder Shares nor the
Option 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 (i) the memorandum
or articles of association or charter or by-laws of such Selling
Shareholder, (ii) the terms of any indenture or other agreement or
instrument to which such Selling Shareholder or any of its subsidiaries
is a party or bound, or any judgment, order or decree applicable to such
Selling Shareholder or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Shareholder or any of its subsidiaries, or
(iii) any law, except, in the cases of clauses (ii) and (iii) 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.
(f) In respect of any statements in or omissions from the
Registration Statement or the Prospectus or any supplements thereto made
in reliance upon and in conformity with information furnished in writing
to the Company by such Selling Shareholder specifically for use in
connection with the preparation thereof, such Selling Shareholder hereby
makes the same representations and warranties to each Underwriter as the
Company makes to such Underwriter under paragraph (i)(b) of this Section.
Each Selling Shareholder severally confirms and the Underwriters
acknowledge that the name, address and number of Ordinary Shares
beneficially owned by such Selling Shareholder and other information with
respect to such Selling Shareholder under the caption "Principal and
Selling Shareholders" (collectively, the "Selling Shareholder
Information") constitute the only information concerning such Selling
Shareholder furnished in writing to the Company.
(g) This Agreement has been duly authorized, executed and
delivered by such Selling Shareholder.
(h) The sale of Shares by such Selling Shareholder pursuant to
this Agreement is not prompted by any information concerning the Company
or the Subsidiary which is not set forth in the Registration Statement or
the Prospectus.
Any certificate signed by any officer of any Selling Shareholder
and delivered by such Selling Shareholders to the Representatives or counsel for
the Underwriters in connection with the offering of the Shares shall be deemed a
-13-
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 Selling Shareholders
named in Schedule II hereto hereby, severally and not jointly, grant an option
to the several Underwriters to purchase, severally and not jointly, up to
900,000 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 the Prospectus upon written notice by the
Representatives to 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 maximum number of Option Shares which each
Selling Shareholder agrees to sell is set forth in Schedule II hereto. In the
event that the Underwriters exercise less than their full over-allotment option,
the number of Option Shares to be sold by each Selling Shareholder listed on
Schedule II shall be, as nearly as practicable, in the same proportion as the
maximum number of Option Shares to be sold by each Selling Shareholder and the
number of Option Shares to be sold. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage of the total number of shares
of the 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 June
[__], 2004, or at such time on such later date not more than three Business Days
after the foregoing date as the Representatives shall designate, which date and
time may be postponed by agreement among the Representatives, the Company and
the Selling Shareholders or as provided in Section 9 hereof (such date and time
of delivery and payment for the 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, 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
-14-
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 Selling Shareholders
named in Schedule II hereto 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
Selling Shareholders named in Schedule II by wire transfer payable in same-day
funds to the accounts specified by the Selling Shareholders named in Schedule II
hereto. If settlement for the Option Shares occurs after the Closing Date, such
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.
5. AGREEMENTS.
(i) The Company agrees with the several Underwriters that:
(a) The Company will use its reasonable 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,
-15-
(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.
(b) 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 (i)(a) of this
Section 5, an amendment or supplement which will correct such statement
or omission or effect such compliance and (3) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and the Subsidiary which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Company will furnish to the Representatives and counsel
for the Underwriters signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by
the Act, as many copies of each Preliminary Prospectus and the Prospectus
and any supplement thereto as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the
qualification of the 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
-16-
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.
(f) 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 (the "Lock-up Period"), other than
Ordinary Shares disposed of as bona fide gifts approved by Citigroup
Global Markets Inc., PROVIDED, HOWEVER, (i) in the event that either (x)
during the last 17 days of the Lock-up Period, the Company issues an
earnings release or (y) prior to the expiration of the Lock-up Period,
the Company announces that it will release earnings results during the
17-day period beginning on the last day of the Lock-up Period, the
Lock-up Period shall be extended until the expiration of the 17-day
period beginning on the date of the earnings release; (ii) that the
Company may issue and sell Ordinary Shares (x) in connection with the
offering contemplated herein, or (y) pursuant to employee benefit plans
or qualified stock option plans which, by their terms or by other written
agreement, cannot be sold, pledged or otherwise disposed of within the
Lock-up Period without the prior written consent of Citigroup Global
Markets Inc. on behalf of the Underwriters, and (iii) without derogating
from the foregoing, the Company may file a registration statement on Form
S-8 relating to employee benefit plans or qualified stock option plans.
(g) The Company will comply with all applicable securities and
other applicable laws, rules and regulations, including, without
limitation, the Sarbanes Oxley Act and the Foreign Corrupt Practices Act
of 1977, as amended (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 and the FCPA.
(h) The Company will not take, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
-17-
(i) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary Prospectus,
the Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the 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 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), in an amount not to exceed $3,000;
(vii) any filings required to be made with the NASD (including filing
fees and the reasonable fees and expenses of counsel for the Underwriters
relating to such filings), in an amount not to exceed $15,000; (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 advisors and the fees and expenses of 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
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.
(j) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share
Program including the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging of
such copies) of the Directed Share Program material and stamp duties,
similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
-18-
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.
(ii) Each Selling Shareholder agrees with the several
Underwriters that:
(a) 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 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, 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, within the Lock-up Period, other than Ordinary Shares
disposed of as bona fide gifts approved by Citigroup Global Markets Inc.,
PROVIDED, HOWEVER, (i) in the event that either (x) during the last 17
days of the Lock-up Period, the Company issues an earnings release or (y)
prior to the expiration of the Lock-up Period, the Company announces that
it will release earnings results during the 17-day period beginning on
the last day of the Lock-up Period, the Lock-up Period shall be extended
until the expiration of the 17-day period beginning on the date of the
earnings release; notwithstanding the foregoing, the undersigned may
transfer any Ordinary Shares or securities convertible into, or
exchangeable or exercisable for, Ordinary Shares (1) in the case of an
individual, during his or her lifetime or on death, by will or intestacy
to his or her immediate family, (2) in the case of an individual, during
his or her lifetime or on death, to a trust or other entity formed for
tax or estate planning purposes for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, (3) as a bona
fide gift to any charitable or education not-for-profit institution that
qualifies under Internal Revenue Code Section 501(c)(3), or (4) if the
undersigned is a partnership, limited liability company or other
corporate entity, to its partners, members or shareholders, on a pro rata
basis to their interests in such partnership, limited liability company
or other corporate entity as part of a distribution of capital; PROVIDED,
HOWEVER, that, subject to any additional terms and conditions included in
the lock-up agreement substantially in the form of Exhibit A hereto (the
"Lock-up Agreement"), (1) such transfer shall not involve a disposition
for value, and (2) prior to any such transfer each transferee shall
execute an agreement, reasonably satisfactory to Citigroup Global Markets
Inc., pursuant to which each transferee shall agree to receive and hold
such Ordinary Shares, or securities convertible into or exchangeable or
exercisable for the Ordinary Shares, subject to the provisions hereof,
and there shall be no further transfer except in accordance with the
provisions hereof. For
-19-
the purposes of this paragraph, "immediate family" shall mean spouse,
lineal descendant, father, mother, brother or sister of the transferor.
The limitations on transfers also shall not be understood to apply to the
exercise of stock options granted pursuant to the Company's stock
option/incentive plans.
(b) 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.
(c) 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 any material change in the
Selling Shareholder Information.
(d) Such Selling Shareholder will comply with the agreement
contained in Section 5(i)(h).
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 Gross,
Kleinhendler, Hodak, Halevy, ▇▇▇▇▇▇▇▇▇ & Co., Israeli counsel for the
Company, to have furnished to the Representatives their opinion, dated
the Closing Date and addressed to the Representatives, to the effect
that:
-20-
(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; 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 capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus
under the caption "Description of Share Capital"; 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 (except, however, with respect to Future Shares,
in which case such Future Shares shall be fully paid and nonassessable
upon issuance, subject, in the case of warrants, to payment by the
Selling Shareholders of the exercise price therefor); the Company 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 holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Shares; except as disclosed in the
Registration Statement and the Prospectus, there are no restrictions upon
the voting or transfer of any securities of the Company pursuant to the
Company's memorandum or articles of association or, to the knowledge of
such counsel after reasonable investigation, any agreements or other
instruments to which the Company is a party or by which it is bound; and,
except as set forth in the Prospectus, to the knowledge of such counsel
after reasonable investigation, 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 capital
stock of or ownership interests in the Company are outstanding;
(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 the Subsidiary or its properties of a character required to be
disclosed in the Registration Statement which is not adequately disclosed
in the Prospectus; and the statements in the Prospectus under the
headings "Risk Factors--We could become subject to litigation regarding
intellectual property rights or we may need to take steps to avoid
infringing the intellectual property rights of others, increasing our
costs or decreasing our sales," "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
-21-
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
PowerDsine, which could prevent a change of control and therefore depress
the price of our shares," "Business--Manufacturing," "Business--Legal
Proceedings," "Management," "Related Party Transactions," "Background
Information," "Description of Share Capital," "Shares Eligible for Future
Sale," "Israeli Taxation" and "Enforceability of Civil Liabilities,"
insofar as such statements summarize legal matters as to Israeli law,
provisions of the Company's memorandum or articles of association, or
agreements, documents or proceedings discussed therein governed by the
laws of the State of Israel, are accurate and fair summaries of such
legal matters, provisions of the Company's memorandum or articles of
association, agreements, documents or proceedings;
(iv) to the knowledge of such counsel, the Company is not in
violation or default of (i) any provision of its memorandum or articles
of association, (ii) the terms of any material indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which 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 Israeli court,
regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of its
material 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 memorandum or 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;
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) the Company is not required to publish a prospectus in
Israel under the laws of the State of Israel with respect to the offering
of the Shares;
(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 conflict with, result in a breach or
violation of, or imposition of any lien, charge or encumbrance upon any
material property or assets of the Company pursuant to, (i) the
memorandum or articles of association of the Company, (ii) to the
knowledge of such counsel, the terms of any indenture, contract, lease,
-22-
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 (iii)
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 material properties and
customarily applicable to transactions of this type;
(viii) 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,
provided such documents are executed outside of 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;
(ix) 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; 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; and
(x) 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 as contemplated
herein.
-23-
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 Company and public officials. References to the
Prospectus in this paragraph (b) shall also include any supplements
thereto at the Closing Date.
Such opinion will 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 Subsidiary is validly existing as a corporation
in good standing under the laws of the State of New York, with the
requisite 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
Subsidiary have been duly and validly authorized and issued and
are fully paid and nonassessable, and all outstanding shares of
capital stock of the Subsidiary are, to the knowledge of such
counsel, after due inquiry, directly 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) the Ordinary Shares, including the Shares being sold
hereunder by the Company and by the Selling Shareholders, have
been approved for quotation on the Nasdaq National Market, subject
to 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
United States federal or state court or governmental agency,
authority or body or any
-24-
arbitrator involving the Company or the Subsidiary or its 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, to
the extent they deem proper, 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 in the Prospectus under the heading
"United States Federal Income Tax Considerations," insofar as such
statements constitute matters of U.S. federal income tax law or
legal conclusions with respect thereto, are accurate and fair in
all material respects;
(vi) 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;
(vii) the Company is not and, immediately after giving
effect to the offering and sale of the Company 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;
(viii) no consent, approval, authorization, filing with or
order of any United States 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, 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 and such other approvals as have been
obtained;
(ix) 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 Subsidiary pursuant
to, (i) the charter or by-laws of the Subsidiary, (ii) the terms
of any indenture, contract, lease,
-25-
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument known to
such counsel to which the Subsidiary is a party or bound or to
which its property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree known to such counsel to be
applicable to the Company or the Subsidiary of any United States
federal or state court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having
jurisdiction over the Company or the Subsidiary or any of its
properties;
(x) except as otherwise set forth in the Prospectus, no
holders of securities of the Company have rights to the
registration of the Ordinary Shares or any other securities of the
Company; and
(xi) under the laws of the State of New York relating to
personal jurisdiction, (i) the Company and each Selling
Shareholder 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, (ii) their appointment thereunder of PowerDsine, Inc.
as their authorized agent for service of process is valid, legal
and binding, and (iii) 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 and 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 Company and public officials. References to the
Prospectus in this paragraph (c) shall also include any supplements
thereto at the Closing Date.
Such opinion will 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 ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, intellectual property counsel for the Company, to have
furnished to the
-26-
Representatives an intellectual property opinion, dated the Closing Date
and addressed to the Representatives, to the effect that:
(i) to the knowledge of such counsel, the Company is the
owner of record of the patents and patent applications listed on a
schedule to such opinion (the "Patent Rights"). To the knowledge
of such counsel, the inventors of the Patent Rights have assigned
their ownership rights therein to the Company. To the knowledge of
such counsel, neither the Company nor any inventors of the Patent
Rights have transferred ownership of any of the Patent Rights to
any third party. To the knowledge of such counsel, no third party
has asserted an adverse claim of ownership of any of the Patent
Rights against the Company;
(ii) to the knowledge of such counsel, the Company did
not fail to comply with any applicable material rule or statutory
requirement in connection with the Company's filing and
prosecution of the Patent Rights;
(iii) to the knowledge of such counsel, all required
maintenance fees have been timely paid with respect to the Patent
Rights. To the knowledge of such counsel, none of the issued
patents within the Patent Rights has been declared invalid. To the
knowledge of such counsel, none of the pending patent applications
within the Patent Rights has been abandoned;
(iv) to the knowledge of such counsel, the statements in
(a) the second sentence of the first paragraph under the heading
"Risk Factors--Our proprietary technology is difficult to protect
and unauthorized use of our proprietary technology by third
parties may impair our ability to compete effectively" in the
Registration Statement and the first sentence of the second
paragraph thereunder, and (b) the first, second, third and fourth
sentences of the first paragraph under the heading
"Business--Intellectual Property and Proprietary Rights" in the
Registration Statement are accurate and complete. To the knowledge
of such counsel, the Company's patents and patent applications
described in the statements referenced above in this paragraph
(iv) are included in the Patent Rights; and
(v) to the knowledge of such counsel, there are no
pending governmental or administrative proceedings challenging or
otherwise relating to the Patent Rights, other than the
examination proceedings presently pending before the United States
Patent and Trademark Office and before foreign patent offices with
respect to the pending patent applications within the Patent
Rights. To the knowledge of such counsel, no governmental or
administrative proceedings adverse to the Patent Rights have been
threatened by any governmental authorities. To the knowledge of
such counsel, except as set forth in the Registration
-27-
Statement under the heading "Business--Legal Proceedings," there
are no other pending legal proceedings or legal proceedings
threatened in writing relating to the Patent Rights or the patent
rights of any third party to which the Company is a party.
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 Company and public officials. References to the
Prospectus in this paragraph (d) shall also include any supplements
thereto at the Closing Date.
(e) The Selling Shareholders shall have requested and caused
Kronish ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 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 creditor's rights and
the application of equitable principles relating to the
availability of remedies);
(ii) in accordance with Section 8-502 of the UCC,
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 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) to such counsel's actual knowledge, 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, 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
-28-
NASD, and such other approvals (specified in such opinion) as have
been obtained;
(iv) to such counsel's actual knowledge, neither the sale
of the Selling Shareholder Shares and the Option Shares nor the
consummation of any other of the transactions herein contemplated
by any Selling Shareholder nor 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
(v) the submission of such Selling Shareholder to the
non-exclusive jurisdiction of the New York Courts and the
appointment of the Authorized Agent (as defined in Section 15
hereof) as its designee, appointee and authorized agent for the
purpose described in Section 15 hereof are legal, valid and
binding under the laws of the State of New York; and service of
process in the manner set forth in Section 15 hereof is effective
under the laws of the State of New York to confer valid personal
jurisdiction over such Selling Shareholder.
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, the Company and public officials.
References to the Prospectus in this paragraph (e) shall also include any
supplements thereto at the Closing Date.
(f) The Selling Shareholders shall have requested and caused
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ & Co., Israeli 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 creditor's 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 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 Israeli Securities Act of
1968, as amended;
-29-
(iii) to such counsel's actual knowledge, neither the sale
of the Selling Shareholder Shares and the Option 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) under the laws of Israel, the submission by the
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.
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, the Company and public officials.
References to the Prospectus in this paragraph (f) shall also include any
supplements thereto at the Closing Date.
(g) The Representatives shall have received from White & Case
LLP, U.S. counsel for the Underwriters, and Meitar Liquornik Geva &
Leshem ▇▇▇▇▇▇▇▇▇, 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
-30-
Shareholder shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(h) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in
this Agreement are true and correct on and as of the Closing Date
with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any supplement
thereto), there has been no Material Adverse Effect, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(i) Each Selling Shareholder shall have furnished to the
Representatives a certificate, signed by the Attorneys-in-Fact appointed
in the Custody Agreement, dated the Closing Date, to the effect that such
Selling Shareholders have carefully examined the Selling Shareholder
Information contained in the Prospectus and any supplement thereto and
that the representations and warranties of the 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.
(j) The Company shall have requested and caused ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ to have furnished to the Representatives letters, at the
Execution Time and at the Closing Date, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, to the
effect that:
(i) they are independent accountants within the meaning
of the Act and the applicable rules and regulations thereunder
adopted by the Commission;
(ii) in their opinion, the consolidated financial
statements of the Company and the Subsidiary audited by them and
included in the Registration Statement comply as to form in all
material respects with the
-31-
applicable accounting requirements of the Act and related rules
and regulations adopted by the Commission;
(iii) On the basis of procedures (but not an audit in
accordance with generally accepted auditing standards) consisting
of:
(a) Reading the minutes of meetings of the
shareholders and the Board of Directors of the Company and
the Subsidiary since December 31, 2003 as set forth in the
minute books through a specified date not more than five
business days prior to the date of delivery of such letter;
(b) Performing the procedures specified by the
American Institute of Certified Public Accountants for a
review of interim financial information as described in SAS
100, Interim Financial Information, on the unaudited
condensed interim financial statements of the Company and
the Subsidiary included in the Registration Statement; and
(c) Making inquiries of certain officials of the
Company who have responsibility for financial and
accounting matters regarding the specific items for which
representations are requested below;
nothing has come to their attention as a result of the
foregoing procedures that caused them to believe that:
1. the unaudited condensed interim
financial statements, included in the Registration
Statement, do not 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; and
2. any material modifications should be
made to the unaudited condensed interim financial
statements, included in the Registration Statement,
for them to be in conformity with accounting
principles generally accepted in the United States;
and
3. at a specified date not more than five
business days prior to the date of delivery of such
letter, there was any change in the capital stock,
increase in long-term debt or any decreases in
consolidated net current assets (working capital) or
shareholders' equity of the Company and the
Subsidiary as compared with amounts shown in the
latest balance sheet included in the Registration
Statement or (ii) for the period from the date
-32-
of the latest income statement included in the
Registration Statement to a specified date not more
than five business days prior to delivery of such
letter, there were any decreases, as compared with
the corresponding period in the preceding year, in
consolidated sales or in the total or per-share
amounts of net income (loss), except in all
instances for changes, increases or decreases which
the Registration Statement discloses have occurred
or may occur; and
(iv) The letter shall also state that the information set
forth in the Registration Statement and the Prospectus under the
captions "Summary Consolidated Financial Data," "Capitalization"
and "Selected Financial Data", which is expressed in dollars (or
percentages derived from such dollar amounts) and has been
obtained from accounting records which are subject to controls
over financial reporting or which has been derived directly from
such accounting records of the Company and the Subsidiary by
analysis or computation, is in agreement with such records or
computations made therefrom.
References to the Prospectus in this paragraph (j) include any
supplement thereto at the date of the letter.
(k) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified
in the letter or letters referred to in paragraph (j) of this Section 6
or (ii) any change, or any development involving a prospective change, in
or affecting the condition (financial or otherwise), earnings, business
or properties of the Company and the Subsidiary 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).
(l) Prior to the Closing Date, the Company and the Selling
Shareholders shall have furnished to the Representatives such further
information, certificates and documents as the Representatives may
reasonably request.
(m) The 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 issuance and evidence of satisfactory distribution.
-33-
(n) On or prior to the Execution Time, the Nasdaq National
Market shall have approved the Underwriters' participation in the
distribution of the Shares to be sold by the Selling Shareholders in
accordance with Rule 393 of the New York Stock Exchange.
(o) At the Execution Time, the Company shall have furnished to
the Representatives a signed Lock-up Agreement from each officer and
director of the Company and certain holders of the Ordinary Shares
addressed to the Representatives.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as provided in this Agreement, or if any of the
opinions and certificates mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancellation shall be given to the
Company and each Selling Shareholder in writing or by telephone or facsimile
confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of White & Case 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
Shareholders to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through 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 agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act 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
-34-
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based 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 may otherwise have.
(b) 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,
provided that, the Company will not be liable to the extent that such loss,
claim, damage or liability results 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 (b) 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.
(c) Each Selling Shareholder, 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, each Underwriter, the directors,
officers, employees and
-35-
agents of each Underwriter and each person who controls the Company or any
Underwriter within the meaning of either the Act or the Exchange Act and each
other Selling Shareholder, if any, to the same extent as the foregoing indemnity
from the Company to each Underwriter, except solely with reference to the
Selling Shareholder Information. This indemnity agreement will be in addition to
any liability which any Selling Shareholder may otherwise have.
(d) 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 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 participants
in the sale of the Shares, (ii) the sentences related to concessions and
reallowances and (iii) the paragraphs 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.
(e) 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), (c) or (d) 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), (c) or (d) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party) 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
-36-
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.
(f) In the event that the indemnity provided in paragraph (a),
(b), (c) or (d) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company, the Selling
Shareholders and the Underwriters agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which the Company, one or more of the Selling Shareholders and one
or more of the Underwriters may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company, by the Selling
Shareholders and by the Underwriters from the offering of the 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, the Selling Shareholders and the Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company, of the Selling
Shareholders and of the Underwriters in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and by the Selling Shareholders
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by each of them, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company, the Selling Shareholders on the one hand or the Underwriters on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take
-37-
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (f), 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 (f).
(g) 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.
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
-38-
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 either of 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 cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Citigroup Global Markets Inc. General
Counsel (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to Citigroup Global Markets
Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: General
Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to
PowerDsine, Inc., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇, General Counsel; 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
-39-
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 PowerDsine, Inc. 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, any action arising out of or based
upon this Agreement may be instituted by any Underwriter, the directors,
officers, employees and agents of any Underwriter, or by any person who controls
any Underwriter, in any court of competent jurisdiction in the State of Israel.
The provisions of this Section 15 shall survive any termination of
this Agreement, in whole or in part.
-40-
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 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.
"Canadian Person" shall mean any person who is a national or
resident of the Canada, any corporation, partnership, or other entity
created or organized in or under the laws of Canada or of any political
subdivision thereof, or any estate or trust the income of which is
subject to Canadian Federal income taxation, regardless of its source
(other than any non-Canadian branch of any Canadian
-41-
Person), and shall include any Canadian branch of a person other than a
Canadian Person.
"Code" shall mean the Internal Revenue Code of 1986, as amended
and supplemented from time to time, together with the regulations and
published interpretations related thereto.
"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.
"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(i)(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the 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(i)(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date, shall
also mean such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such 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.
-42-
"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.
21. CANADA.
Each of the Underwriters hereby covenants and agrees that it will
not distribute the Shares in such a manner as to require the filing of a
prospectus or similar document (excluding a private placement offering
memorandum) with respect to the Shares under the laws of any province or
territory in Canada.
22. ISRAEL
Each of the Underwriters hereby covenants and agrees that it will
not offer the Shares in Israel, except that such Underwriter may (A) offer for
sale and sell Shares to entities which qualify under Section 15A(b)(1) of the
Israeli Securities Law, 1968 and appear in the Addendum thereto, or (B) offer
Shares to other persons in Israel whose number (pursuant to offers by all
Underwriters) do not exceed thirty-five (35).
-43-
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,
PowerDsine Ltd.
By:
--------------------------------
Name:
Title:
The Selling Shareholders listed on Schedule
II hereto
By:
----------------------------------------
▇▇▇▇ ▇▇▇▇▇, as Attorney-in-Fact
acting on behalf of the Selling
Shareholders
By:
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, as Attorney-in-Fact
acting on behalf of the Selling
Shareholders
-2-
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Citigroup Global Markets Inc.
Deutsche Bank Securities, Inc.
CIBC World Markets Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
By: Citigroup Global Markets Inc.
By:
---------------------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
-3-
SCHEDULE I
NUMBER OF UNDERWRITTEN SHARES TO
UNDERWRITERS BE PURCHASED
Citigroup Global Markets Inc.
Deutsche Bank Securities, Inc.
CIBC World Markets Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
-----------------
Total........
=================
SCHEDULE II
NUMBER OF MAXIMUM NUMBER
UNDERWRITTEN OF OPTION SHARES
SELLING SHAREHOLDERS: SHARES TO BE SOLD TO BE SOLD
-------------------- ----------------- ----------------
Acquirex BVBA
[address, fax no.]
▇▇▇▇ ▇▇▇▇▇ Gmulim Ltd.
[address, fax no.]
Ampal Industries (Israel) Ltd.
[address, fax no.]
Ampal Industries Inc.
[address, fax no.]
Argoquest Holdings LLC
[address, fax no.]
Bar Keren Tagmulim Ltd.
[address, fax no.]
Catalyst Investments L.P
[address, fax no.]
Clal Electronics Industries Ltd.
[address, fax no.]
Clal Venture Capital Fund L.P.
[address, fax no.]
▇▇▇▇▇▇ ▇▇▇▇▇▇
[address, fax no.]
Eventoren Investments Ltd.
[address, fax no.]
Gadish Kranot Gmulim Ltd.
[address, fax no.]
Jerusalem Global Ltd.
[address, fax no.]
Jerusalem Venture Partners L.P
[address, fax no.]
Jerusalem Venture Partners (Israel) L.P
[address, fax no.]
Katzir Kupat Tagmulim Upitzuim Ltd.
[address, fax no.]
Keren Merkazit Lepitzuyei Piturim Ltd.
[address, fax no.]
Keren Or Kupat Tagmulim Upitzuim Ltd.
[address, fax no.]
Kineret Keren Hishtalmut Ltd.
[address, fax no.]
▇▇▇▇ ▇▇▇▇ [address, fax no.]
▇▇▇▇▇ ▇▇▇▇▇ Gmulim Le'atzmaim Ltd.
[address, fax no.]
Plenus Technologies Ltd.
[address, fax no.]
Poalim Ventures Ltd.
(formerly Poalim Capital Markets
Technologies Ltd.)
[address, fax no.]
Poalim Ventures I Ltd.
(formerly Poalim (S.H.) High-Tech Ltd.)
[address, fax no.]
-2-
Poalim Ventures II L.P.
(formerly Hapoalim Technology Fund L.P.)
[address, fax no.]
Tagmulim Ltd.
[address, fax no.]
The Challenge Fund - Etgar II L.P
[address, fax no.]
Vertex-Discount L.P.
[address, fax no.]
Vertex IIF L.P.
[address, fax no.]
Vertex IIF 2 L.P.
[address, fax no.]
Vertex Investment III Ltd.
[address, fax no.]
Vertex ▇▇▇▇▇▇ ▇▇ (A) Fund L.P.
[address, fax no.]
Vertex ▇▇▇▇▇▇ ▇▇ (B) Fund L.P.
[address, fax no.]
Vertex ▇▇▇▇▇▇ ▇▇ (C.I.) Executive Fund, L.P.
[address, fax no.]
Vertex ▇▇▇▇▇▇ ▇▇ (C.I.) Fund, L.P.
[address, fax no.]
Vertex ▇▇▇▇▇▇ ▇▇ Discount Fund
[address, fax no.]
Vertex-Yozma L.P
[address, fax no.]
-3-
Yeter Kranot Gmulim Ltd.
[address, fax no.]
Total ................ 900,000 900,000
================= ================
-4-
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
[Letterhead of officer, director or shareholder]
POWERDSINE LTD.
INITIAL PUBLIC OFFERING OF ORDINARY SHARES
____________, 2004
Citigroup Global Markets Inc.
Deutsche Bank Securities, Inc.
CIBC World Markets Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
as Representatives of the several Underwriters
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), among PowerDsine
Ltd., a company incorporated under the laws of the State of Israel (the
"Company"), each of you as representatives of a group of Underwriters named
therein, and any selling shareholders party thereto, relating to an underwritten
initial public offering (the "Offering") of ordinary shares, NIS 0.01 par value
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
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 from the date hereof
until and including the date that is 180 days from the date of the Underwriting
Agreement (the "Lock-up Period"), other than Ordinary Shares disposed of as bona
fide gifts approved by Citigroup Global Markets Inc.
In the event that either (x) during the last 17 days of the
Lock-up Period, the Company issues an earnings release or (y) prior to the
expiration of the Lock-up Period, the Company announces that it will release
earnings results during the 17-day period beginning on the last day of the
Lock-up Period, the Lock-up Period shall be extended until the expiration of the
17-day period beginning on the date of the earnings release.
Notwithstanding the foregoing, the undersigned may transfer any
Ordinary Shares or securities convertible into, or exchangeable or exercisable
for, Ordinary Shares (1) in the case of an individual, during his or her
lifetime or on death, by will or intestacy to his or her immediate family, (2)
in the case of an individual, during his or her lifetime or on death, to a trust
or other entity formed for tax or estate planning purposes for the direct or
indirect benefit of the undersigned or the immediate family of the undersigned,
(3) as a bona fide gift to any charitable or education not-for-profit
institution that qualifies under Internal Revenue Code Section 501(c)(3), or (4)
if the undersigned is a partnership, limited liability company or other
corporate entity, to its partners, members or shareholders, on a pro rata basis
to their interests in such partnership, limited liability company or other
corporate entity as part of a distribution of capital; PROVIDED, HOWEVER, that
(1) such transfer shall not involve a disposition for value, and (2) prior to
any such transfer each transferee shall execute an agreement, reasonably
satisfactory to Citigroup Global Markets Inc., pursuant to which each transferee
shall agree to receive and hold such Ordinary Shares, or securities convertible
into or exchangeable or exercisable for the Ordinary Shares, subject to the
provisions hereof, and there shall be no further transfer except in accordance
with the provisions hereof. For the purposes of this paragraph, "immediate
family" shall mean spouse, lineal descendant, father, mother, brother or sister
of the transferor. The limitations on transfers also shall not be understood to
apply to the exercise of stock options granted pursuant to the Company's stock
option/incentive plans.
The agreement set forth herein shall be terminated if (1) prior to
the execution of the Underwriting Agreement, the Company notifies you that it
does not intend to proceed with the Offering, or (2) for any reason the
Underwriting Agreement shall be terminated prior to the Closing Date (as defined
in the Underwriting Agreement).
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This agreement set forth herein shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
conflict of laws provisions.
Yours very truly,
(For individuals)
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SIGNATURE
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NAME
(For corporations)
CORPORATE NAME:
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BY: ____________________
NAME:
TITLE:
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