EXHIBIT 4.9
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made as of February
17, 2004 (the "EFFECTIVE DATE"), by and between (i) Tefron Ltd., an Israeli
company ("TEFRON" or the "COMPANY"), whose shares are traded on the New York
Stock Exchange (the "NYSE"), and (ii) Norfet, Limited Partnership (the
"INVESTOR"), an Israeli limited partnership wholly owned by (x) N.D.M.S Ltd.
("NDMS"), an Israeli private company, wholly owned by FIMI Opportunity Fund,
L.P. (the "DELAWARE FUND"), a limited partnership formed under the laws of the
State of Delaware, (y) FIMI Israel Opportunity Fund, Limited Partnership (the
"ISRAELI FUND"), a limited partnership, formed under the laws of the State of
Israel, and (z) certain designees and co-investors listed in EXHIBIT A attached
hereto (collectively with the Israeli Fund and the Delaware Fund, the "FUND").
WHEREAS, the Investor desires to invest in the share capital of the
Company, by purchasing the Shares (as defined below), upon the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company has decided to issue to the
Investor 3,529,412 Series A Ordinary Shares of the Company, nominal value NIS
1.00 per share (the "SHARES"), upon the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:
1. (a) PURCHASE AND SALE OF SHARES
Upon the terms and subject to the conditions set forth in this Agreement,
the Investor agrees to purchase, and the Company agrees to sell and issue
to the Investor, at the Closing (as defined in Section 2.1) the Shares, at
a price per share of $4.25 (the "PPS"), and an aggregate purchase price of
$15,000,000 (Fifteen Million US Dollars) (the "PURCHASE PRICE").
(b) PPS ADJUSTMENTS
Notwithstanding the foregoing, in the event that the Company's earnings
before income tax, depreciation and amortization (the "EBITDA") (excluding
(i) the EBITDA of Alba Health LLC ("ALBAHEALTH") to the extent it exceeds
zero, and (ii) any increase in the EBITDA of Alba Waldensian, Inc.
("ALBA"), as a result of the exercise of the Put Option (as defined in
Section 2.2(e) below)) for fiscal year 2004 (the "2004 EBITDA"), as set
forth in the Company's audited consolidated financial statements for the
year ending on December 31, 2004 (the "2004 FINANCIALS"), is less than
US$23 million, then the PPS shall be adjusted as follows: (i) if the
Company's EBITDA is equal to or lower than US$16 million, then the PPS
will be retroactively reduced by US$0.75 (i.e., to US$3.50), and (ii) if
the Company's EBITDA is higher than US$16 million but lower than US$23
million, the PPS will be retroactively reduced, as follows:
PPS= 4.25 - 0.75*[X]
X=[(23,000,000 -2004 EBITDA)/1,000,000]/7]
The PPS, as reduced, shall be referred to herein as the "ADJUSTED PPS".
In the event that the Adjusted PPS is not equal to the PPS, the Company,
at its sole discretion, shall either (i) deliver to the Investor, within
fourteen (14) business days following the release of the 2004 Financials,
a number of additional Ordinary Shares (the "ADDITIONAL SHARES") that is
equal to the difference between the number of Shares issued to the
Investor at the Closing and the number of Ordinary Shares that would have
been issued to the Investor at the Closing had the original PPS been equal
to the Adjusted PPS, or (ii) pay the Investor, within ten (10) business
days following the release of the 2004 Financials a cash amount equal the
difference between the PPS and the Adjusted PPS per each share purchase by
the Investor hereunder.
2. CLOSING OF ISSUE AND PURCHASE
2.1 THE CLOSING. The parties shall hold the closing (the "CLOSING") at
the offices of Naschitz, ▇▇▇▇▇▇▇ & Co., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, on
the 10th business day following the date on which the General Meeting of
Shareholders of the Company approves the transactions contemplated herein (such
approval shall be referred to herein as the "TERM PRECEDENT"), or at such other
date as the Company and the Investor shall agree (the "CLOSING DATE").
2.2. TRANSACTIONS AT THE CLOSING. At the Closing, the following
transactions shall occur, which transactions shall be deemed to take place
simultaneously and no transaction shall be deemed to have been completed or any
required document delivered until all such transactions have been completed and
all required documents delivered:
(1) The Investor shall have received from the Company the
following documents:
(a) True and correct copies of the resolutions
of the Company's General Meeting of Shareholders approving the transactions
contemplated herein;
(b) An opinion of counsel to the Company,
substantially in the form of SCHEDULE 2.2 (1)(b) to this Agreement; and
(c) A certificate duly executed by an officer of the Company
(without personal liability of such officer) dated as of the Closing Date (the
"COMPLIANCE CERTIFICATE") in the form attached hereto as SCHEDULE 2.2 (1)(c).
(d) Copies of the Required Approvals and Notices (as defined
below).
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(e) A written undertaking, duly approved by Alba, addressed
to the Company and to the Investor, in which Alba undertakes to exercise the
put option (the "PUT OPTION") granted to it by AlbaHealth pursuant to that
certain Put Agreement dated September 6, 2003 (the "PUT AGREEMENT"), immediately
following September 2004, and as soon as AlbaHealth's total EBITDA in its then
last four quarterly financial statements is equal to or higher than US$8
million; PROVIDED, HOWEVER, that Alba shall not be required to exercise the Put
Option if, and for as long as, (i) the Company's consolidated debt is equal to,
or lower than, US$50 million (of which, not less than US$30 shall be long-term
debt), and (ii) neither Alba nor the Company or any of its subsidiaries is in
default under any of the financial covenants set forth in the loan agreement(s)
to which such entity is a party.
(2) The Company shall have received from the Investor an opinion
of counsel to the Investor, substantially in the form of SCHEDULE 2.2 (2) to
this Agreement.
(3) The Investor shall pay the Purchase Price to the Company by
SWIFT wire transfer of immediately available funds to the Company's following
bank account: (i) 60% of the Purchase Price should be transferred to Bank
Hapoalim B.M., Branch ▇▇. ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇, and (ii) the
remaining 40% of the Purchase Price shall be transferred to Israel Discount Bank
Ltd., Branch No. 10, Company Account No. 72036, and the issuance of the Shares
in the name of the Investor shall come into effect.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investor, and
acknowledges that the Investor is entering into this Agreement and the SPA (as
defined below) in reliance thereon, as follows:
3.1 ORGANIZATION. The Company is a corporation duly organized and
validly existing under the laws of the State of Israel. The Company is duly
qualified to conduct its business, and (with respect to those jurisdictions in
which the concept of good standing is relevant) is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except for such
failures which would not reasonably be likely to have a Material Adverse Effect
(as defined below). The Company has the requisite corporate power and authority
and the necessary governmental authority, franchise, license or permit to own,
operate, lease and otherwise to hold and operate its assets and properties and
to carry on its businesses as now being conducted, except for such failures
which would not reasonably be likely to have a Material Adverse Effect. SCHEDULE
3.1 attached hereto sets forth each entity in which the Company owns at least
50% of either the voting shares and/or the equity (each of the aforesaid, (a
"SUBSIDIARY" and, collectively, the "SUBSIDIARIES") and all other equity or
similar interests, or any interest convertible or exchangeable or exercisable
for any such equity or similar interest, in any other entities held by the
Company or any Subsidiary. As used herein, the term "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, as now conducted or proposed
to be conducted by, the assets, condition (financial or otherwise), liabilities
or operations of, the Company and its Subsidiaries taken as a whole.
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3.2 ORGANIZATIONAL DOCUMENTS. Set forth in SCHEDULE 3.2 is a complete
and correct copy of the Memorandum of Association and the Articles of
Association of Tefron, as amended to date. All of such organizational documents
are in full force and effect.
3.3 CAPITALIZATION.
(a) The registered share capital of the Company immediately prior to the
Closing shall be NIS 50,000,000, which registered share capital is divided into
(i) 4,500 Ordinary B Deferred Shares (the "DEFERRED SHARES"), all of which are
issued and outstanding, and (ii) 49,995,500 Series A Ordinary Shares, nominal
value NIS 1.00 each (the "ORDINARY SHARES"), of which 13,409,566 are issued and
outstanding (of which 997,400 shares are currently held by a wholly owned
subsidiary of the Company).
In addition, the Company has issued employee and/or consultant options to
purchase up to 1,854,323 Ordinary Shares (the "EMPLOYEE OPTIONS") out of a total
amount of 2,266,049 Ordinary Shares, covered by the Company's Employee Stock
Option Plan ("ESOP"). Prior to the Closing, the Company's General Meeting of
Shareholders may approve the grant of additional options to purchase 650,000
Ordinary Shares of the Company to its CEO, ▇▇. ▇▇▇▇▇▇, in which case, the
Company shall increase the number of shares covered by the ESOP by no more than
438,274 (i.e. to 2,704,323 Ordinary Shares). Following such increase and grant,
200,000 Ordinary Shares shall remain reserved for issuance upon the exercise of
options to be granted in the future pursuant to the ESOP.
Except for the foregoing and for the transactions contemplated by this
Agreement, there are no other shares, convertible or other securities,
outstanding warrants, options, or other rights to subscribe for, purchase, or
acquire from the Company any securities of the Company, and there are not any
contracts or binding commitments providing for the issuance of, or the granting
of rights to acquire from the Company, any securities of the Company or under
which the Company is, or may become, obligated to issue any of its securities.
Without derogating from the above, prior to the Closing, the Company may enter
into an agreement with a third party investor(s) (the identity of which must be
approved in advance by the Investor), which agreement shall provide for the
purchase by such investor(s) of Ordinary Shares of the Company, at a price per
Ordinary Share of at least US$4.65, and an aggregate purchase price of up to
US$7,000,000. The closing of any such contemplated equity investment shall not
take place prior to the Closing.
(b) Except as set forth in SCHEDULE 3.3, there are no bonds, debentures,
notes or other indebtedness issued by the Company or, to the Company's
knowledge, granted by third parties that have the right to vote on any matters
on which the Company's shareholders may vote.
Except for agreements or other documents set forth in SCHEDULE 3.3, there are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company's share capital. All
of the issued and outstanding share capital of the Company has been duly
authorized and validly issued and is fully paid and nonassessable.
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(c) All of the Shares issuable in accordance with this Agreement will be,
when paid for and issued at the Closing as provided in this Agreement, duly
authorized, validly issued, fully paid and nonassessable, shall not be subject
to call, forfeiture or preemptive rights, and shall be delivered free and clear
of all Encumbrances. The term "ENCUMBRANCE" means and includes any interest or
equity of any person (including any right to acquire, option, or right of
preemption) or any mortgage, charge, pledge, lien, or assignment, or any other
encumbrance or security interest over or in the relevant property.
3.4 AUTHORITY. Subject to the fulfillment of the Term Precedent (as
defined in Section 2.1 above), the Company has the necessary corporate power and
authority to enter into this Agreement and each of the other agreements,
certificates or other instruments required to be delivered hereunder by the
Company at or prior to Closing (the "TEFRON TRANSACTION DOCUMENTS") and to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and each of the other Tefron Transaction Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby shall have been, at the Closing Date, duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company (other than the Term Precedent) shall be necessary to authorize this
Agreement and each of the other Tefron Transaction Documents or to consummate
the transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the Investor, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity. Each of the other Tefron
Transaction Documents, when executed and delivered by the Company, shall have
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by each of the other parties thereto,
shall constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do not,
and the execution and delivery by the Company of each of the other Tefron
Transaction Documents and the performance by the Company of its obligations
under this Agreement and each of the other Tefron Transaction Documents, will
not, with or without the giving of notice or the lapse of time or both, (i)
conflict with or violate the organizational documents of the Company or any of
its Subsidiaries, (ii) subject to obtaining the Required Approvals and Notices
(as defined below), conflict with or violate any law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to the Company or any Tefron
Subsidiary or by which any of their respective properties or assets is bound or
affected, or (iii) except as set forth in SCHEDULE 3.5, result in any breach of
or constitute a default under, or give to others any rights of termination,
amendment, acceleration or cancellation of any material agreement to which the
Company or any of its Subsidiaries is a party, or result in the creation of any
Encumbrance on the properties or assets of the Company pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company is a party or
by which the Company is bound.
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(b) The execution and delivery of this Agreement by the Company do not,
and the execution and delivery of each of the other Tefron Transaction Documents
and the performance of this Agreement and each of the other Tefron Transaction
Documents by the Company, will not, require any consent, approval, authorization
or permit of or filing with or notification to, any Governmental Entity (as
defined below), by or with respect to the Company, except (i) for applicable
requirements, if any, of the consents, approvals, authorizations, permits or
notification described in SCHEDULE 3.5 (the "REQUIRED APPROVALS AND NOTICES"),
and (ii) where failure to obtain the required consents, approvals,
authorizations or permits, or to make such filings or notifications, (A) would
not prevent or delay consummation of any of the transactions contemplated by
this Agreement or any other Tefron Transaction Document in any material respect,
or otherwise prevent the Company from performing its obligations under this
Agreement or any other Tefron Transaction Document in any material respect, and
(B) would not reasonably be likely to have a Material Adverse Effect. As used
herein the term "GOVERNMENTAL ENTITY" means any Israeli or U.S. entity
exercising executive, legislative, judicial, regulatory or administrative
function of or pertaining to government.
3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, statements and other
documents required to be filed with the Securities and Exchange Commission
("SEC") for the two years preceding the date hereof and has heretofore delivered
to counsel for the Investor, in the form filed with the SEC during such period,
together with any amendments thereto, all (i) Annual Reports on Form 20-F, and
(ii) all proxy statements relating to meetings of shareholders (whether annual
or special) (collectively, the "TEFRON SEC REPORTS"). In addition, it has
published as a press release the financial statements for the first three
quarters of 2003, which have been previously delivered to counsel for the
Investor (the "2003 FINANCIALS"). Except as set forth in the letter issued by
the SEC on February 11, 2004, attached hereto as SCHEDULE 3.6(A), as of their
respective filing or publication dates, the Tefron SEC Reports complied as to
form in all material respects with the requirements of the United States
Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇") ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Securities Act of 1933, as amended (the "SECURITIES ACT") applicable to the
Company. The Tefron SEC Reports and the 2003 Financials did not at the time they
were filed or published, respectively, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) The audited consolidated financial statements of the Company included
in the Tefron SEC Reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as in effect at the time of filing. The
financial statements, including all related notes and schedules, contained in
the Tefron SEC Reports (or incorporated by reference therein) and in the 2003
Financials present fairly in all material respects the consolidated financial
position of the Company and its Subsidiaries as at the respective dates thereof
and the consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods indicated, in accordance with United States
generally accepted accounting principles (GAAP).
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3.7 OPERATIONS IN THE ORDINARY COURSE. Except as set forth in SCHEDULE
3.7 attached hereto or otherwise disclosed in the Tefron SEC Reports or the
2003 Financials, between September 30, 2003 and the date of this Agreement, the
Company has operated its business in the usual and ordinary course consistent
with past practices and there has been no event which resulted or is likely to
result in a Material Adverse Effect.
3.8 LITIGATION. Except as set forth in SCHEDULE 3.8 attached hereto,
there are no claims, actions or proceedings pending or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries, any of
their respective properties (or any of their respective officers or directors,
in such capacity) before any court, arbitral, mediation or regulatory authority
or body, domestic or foreign, that individually or in the aggregate (i) would
reasonably be likely to, or if adversely decided may be expected to, have a
Material Adverse Effect, or (ii) challenge or seek to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
3.9 LICENSES AND PERMITS; COMPLIANCE WITH LAWS. Except with respect to
the Company's non compliance with the minimum shareholders' equity and the
minimum market capitalization requirements of the NYSE, which non-compliance
with respect to the shareholders' equity shall be, and with respect to the
minimum market capitalization requirement, is reasonably expected to be,
rectified by and upon the consummation of the transactions contemplated herein,
to the Company's knowledge, the Company does not lack permits, licenses,
authorizations or approvals necessary to conduct its business, and is not in
material violation of Applicable Law or any permits, licenses, authorizations
and approvals that have been obtained by it, which the failure to obtain or such
violation, as applicable, would reasonably be likely to have a Material Adverse
Effect. As used herein, the term "APPLICABLE LAW" means any provision of any
statute, law, ordinance, rule, regulation, governmental decree, order,
concession, grant, permit or license, or other governmental authorization or
approval applicable to the Company.
3.10 INTELLECTUAL PROPERTY.
(a) Except as set forth in SCHEDULE 3.10(A) attached hereto, the Company
has no knowledge of any material infringement by the Company of any intellectual
property right or other proprietary right of any third party, and no such
infringement shall result in any way from the signing and execution of this
Agreement or any of the other Tefron Transaction Documents or the consummation
of any or all of the transactions contemplated hereby and thereby, and no claim
has been made by any third party based upon an allegation of any such
infringement;
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(b) The Company takes commercially reasonable effort to ensure that all
officers, employees and consultants of the Company and its Subsidiaries shall be
under an obligation regarding the protection of proprietary information and the
assignment to such entity of any intellectual property arising from services
performed for such employer by such persons, all in a manner satisfactory to the
Company, except when, having regard to the nature and function of the tasks
performed by the officer, employee, or consultants, failure to be bound by such
an obligation would not be reasonably anticipated to have, individually or in
the aggregate, a Material Adverse Effect.
(c) The Company takes commercially reasonable effort to ensure that all
use, disclosure or appropriation of Confidential Information (as defined in
Section 5.2 below) owned by the Company or any of its Subsidiaries by or to a
third party shall be subject to the terms of a confidentiality obligation taken
by, or imposed on, such third party, towards the Company or such Subsidiary, all
in a manner satisfactory to the Company.
(d) Except as set forth in Schedule 3.10(d) attached hereto, no claim has
been made by any third party that the use, disclosure or appropriation of
Confidential Information not owned by the Company or any Subsidiary has been in
material violation of the terms of a written agreement between the Company or
such Subsidiary and the owner of such Confidential Information, or is otherwise
materially unlawful.
3.11 MATERIAL AGREEMENTS. Except as set forth in SCHEDULE 3.11, the
Company has delivered to the Investor a true and full copy of each of the
material agreements to which the Company or any of its Subsidiaries is a party
(including the agreements referred to in the Company's filings) (the "MATERIAL
AGREEMENTS"). Such Material Agreements are valid and in full force and effect on
the date hereof, and, except as set forth in Schedule 3.11 attached hereto,
neither the Company nor, to the Company's knowledge, any other party, has
violated any provision thereof, or committed or failed to perform any act which
with or without notice, lapse of time or both would constitute a default under
the provisions of, any Material Agreement except for violations or defaults
which would not reasonably be likely to have a Material Adverse Effect. The
enforceability of any Material Agreement will not be affected in any manner by,
the existence of this Agreement and the Tefron Transaction Documents, or the
consummation of the transactions contemplated hereunder or thereunder.
3.12 EMPLOYEES.
(a) The Company has delivered to the Investor full and complete copies of
all employment agreements or management and consulting agreements currently in
force for each of the three most highly paid individuals employed or hired by
the Company or any of its Subsidiaries.
(b) The Company has delivered to the Investor the form of contracts under
which substantially all the officers, employees and consultants of the Company
and its Subsidiaries at the date hereof are engaged, which include provisions
relating to non-disclosure and non-competition.
3.13 LABOR RELATIONS. Other than as set forth in SCHEDULE 3.13 hereto,
there is not now or has been threatened any material labor dispute, strike,
slow-down, picketing, work-stoppage, or other similar labor activity with
respect to the employees of the Company, taken as a group, or any officer or key
employee of the Company.
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3.14 ENVIRONMENTAL MATTERS. To the Company's knowledge, it is in material
compliance with all applicable environmental laws and regulations
("ENVIRONMENTAL LAWS") in effect on the date hereof, and there are no facts
involving the storage, treatment, release, emission, discharge, disposal or
arrangement for disposal of any hazardous materials by the Company or relating
to its premises that are in violation of Environmental Laws, except where the
failure to comply would not reasonably be likely to have a Material Adverse
Effect.
3.15 TAXATION. Except as set forth in SCHEDULE 3.15 attached hereto, the
financial statements contained in the Tefron SEC Reports make adequate
provisions for taxation for which the Company was then liable or accountable, to
the extent required under United States GAAP (including, without limitation,
with respect to any tax liability relating to the Alba's transactions with Alba
Health, and the Company has promptly paid or provided in its books of account
for all such taxation liability.
3.16 INSURANCE. The Company has acquired the insurance policies as set
forth in SCHEDULE 3.16 hereto, which, based on the opinion of its insurance
advisors, are adequate to cover the Company's risks.
3.17 BROKERS. No person or firm has, or will have, as a result of any act
or omission by the Company or anyone acting on behalf of the Company, any right,
interest or valid claim against the Company or the Investor for any commission,
fee or other compensation as a finder or broker or in any similar capacity with
respect to the transactions contemplated under this Agreement.
3.18 REPRESENTATIONS COMPLETE. None of the representations or warranties
made by the Company herein or in any Schedule or Exhibit hereto or any of Tefron
Transaction Documents furnished by the Company pursuant to this Agreement
contain or will contain at the Closing Date any untrue statement of a material
fact, or omit or will omit at the Closing Date to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to the Company, and acknowledges
that the Company is entering into this Agreement in reliance thereon, as
follows:
4.1 This Agreement, when executed and delivered by the Investor,
constitutes a valid, binding, and enforceable obligation of the Investor.
4.2 The Investor is an entity duly organized, and validly existing under
the laws of the State of Israel, and has all requisite power and authority to
carry out the transactions contemplated hereby, and the execution, delivery, and
performance of the obligations of the Investor hereunder have been duly
authorized by all necessary corporate action.
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4.3 The Investor acknowledges its understanding that the offering and
sale of the Shares is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder. The Investor is a special purpose vehicle
formed by the Fund for the purpose of effecting the transactions contemplated
herein. NDMS, the general partner of the Investor, is wholly owned by the
Delaware Fund. NDMS has full and exclusive power to take any and all actions of
behalf of the Investor and to exercise all rights of the Investor with respect
to its interests in the Company.
FIMI 2001 Ltd., the Managing General Partner of the Israeli Fund and the
Delaware Fund has full and exclusive power to take any and all actions on behalf
of NDMS.
The Investor represents and warrants that each of the entities comprising the
Fund, and each of the other persons whose name is set forth in Schedule A, is an
"Accredited Investor", as that term is defined under Regulation D, and that such
entity is a sophisticated investor that has experience in business and financial
matters and is capable of evaluating the merits and risks relevant to the
Company and to the transaction contemplated by this Agreement.
The Investor is able to bear the economic risk of an investment in the Shares.
The Investor is acquiring the Shares for its own account for investment purposes
only and not with a view to or for distributing or reselling the Shares.
4.4 Without derogating from the representations and warranties set forth
in Section 3 above, the Investor has conducted a due diligence review of the
Company, has been given access to information regarding the Company, including
the Company's SEC filings listed in SCHEDULE 4.4. attached hereto, and has
utilized that access to its satisfaction, in order to receive all such
information as it considered necessary, required and advisable for deciding
whether and under which terms to purchase the Shares, and has had the
opportunity to ask such questions as it has deemed necessary and to receive
answers from representatives of the Company regarding the terms of the offering
of the Shares and the business of the Company. The Investor acknowledges that in
making its decision to enter into this transaction, it has not relied on any
information other than the representations and warranties set forth in this
Agreement and public information filed with the NYSE.
4.5 The Investor understands, acknowledges and agrees that the Shares
have not been registered under the securities laws of any jurisdiction, and may
not be transferred without such registration or an exemption therefrom. Until
registered under the Securities Act or otherwise permitted under the Securities
Act, all certificates evidencing any of the Shares shall bear a legend,
prominently stamped or printed thereon, reading substantially as follows:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT") or
applicable State securities laws. These securities have been acquired for
investment and not with a view to distribution or resale, and may not be
sold or otherwise transferred without an effective registration statement
for such securities under the Securities Act and applicable State
securities laws, or the availability of an exemption from the registration
provisions of the Securities Act and applicable State securities laws".
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4.6 The execution and delivery of this Agreement and the consummation of
the transactions herein contemplated will not (i) result in any conflict with,
breach of, or default (or give rise to any right of termination, cancellation or
acceleration or the loss of any benefit) under any of the terms, conditions or
provisions of the Investor's organizational documents or of any material
agreement, permit or other instrument or obligation to which the Investor is a
party or is bound, or (ii) violate any law or regulation, or any order,
injunction, or judgment of any court or any governmental bureau or agency,
domestic or foreign applicable to the Investor. No consent or approval by any
governmental authority or any third party is required in connection with the
execution by the Investor of this Agreement or the consummation by the Investor
of the transactions contemplated hereby except for such actions, consents or
approvals as have been obtained prior to the execution of this Agreement.
4.7 NO FINDERS FEE. No person or firm has, or will have, as a result of
any act or omission by the Investor or anyone acting on its behalf, any right,
interest or valid claim against the Company for any commission, fee or other
compensation as a finder or broker or in any similar capacity, with respect to
any of the transactions contemplated under this Agreement.
4.8 Nothing set forth in this Section 4 shall be deemed to detract from
or otherwise prejudice the Investor's reliance on the Company's representations
and warranties set forth in Section 3 above.
5. CONFIDENTIALITY.
5.1 The Investor agrees that any Confidential Information (defined
below) obtained pursuant to this Agreement, or provided to the Investor prior
to the Closing, will not be disclosed or used by the Investor, the Fund or any
of their representatives without the prior written consent of the Company.
5.2 For the purposes of this Section 5 and Section 3.10 above,
Confidential Information shall mean all information, including, but not limited
to, financial information, business plans, budgets, customer lists, computer
software, source codes, plans, drawings, technical specifications, patents,
copyrights, and other intellectual property rights, in any form (paper, disk, or
other), relating to the Company or its business . However, Confidential
Information shall not include information which, as demonstrated by documentary
evidence: (a) was in the Investor's possession prior to its disclosure; (b) is
or becomes available to the public through no fault of the Investor; (c) was
disclosed to the public by operation of law; or (d) is rightfully received by
the Investor from a third party without a duty of confidentiality.
5.3 The Investor acknowledges and agrees that in the event of any breach
of this Section 5, the Company would be irreparably and immediately harmed and
monetary damages would be inadequate compensation. It is, therefore, agreed that
the Company, in addition to any other remedy to which it may be entitled by law
or in equity, shall be entitled to an injunction or injunctions to prevent
breaches of this Section 5 and to compel specific performance of this Section 5,
without the need for proof of actual damages.
11
6. CONDITIONS TO CLOSING
6.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTOR TO CLOSE. The
obligation hereunder of the Investor to purchase the Shares and pay the Purchase
Price is subject to the Term Precedent being complied with within 120 days
following the date hereof, and the fulfillment at or before the Closing of the
following conditions precedent, any one or more of which may be waived in
writing, in whole or in part, by the Investor, which waiver shall be at the sole
discretion of the Investor.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects as of the date when made and,
except for such changes as are attributable to the Company's ordinary course of
business and do not, in the aggregate, have a material adverse effect on its
business or prospects, as of the Closing, as though made at that time.
(b) PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) ALL DELIVERABLES READY. All documents and other items to be delivered
to the Investor at the Closing as specified in Section 2.2(b) above, shall be
duly executed, ready for delivery to the Investor.
(d) HOLDINGS OF CONTROLLING SHAREHOLDERS. Immediately prior to the
Closing, Arwol Holdings Ltd. ("ARWOL") and Macpell Industries Ltd. ("MACPELL")
shall, collectively, hold more than 50% of the Company's Ordinary Shares
(excluding shares held by the Company's subsidiary).
(e) CONCURRENT PURCHASE OF SHARES FROM CERTAIN SHAREHOLDERS. The
conditions to the closing (the "CONCURRENT CLOSING") of the Investor's purchase
of an aggregate of 1,365,000 Series A Ordinary Shares of the Company from the
Company's shareholders, Arwol and/or Macpell, pursuant to that certain Agreement
(the "SPA"), dated as of the date hereof, shall have been satisfied and the
transaction shall consummate concurrently with the Closing.
(f) MANAGEMENT FEE. The General Meeting of Shareholders of the Company
shall have approved (i) the payment to the Investor of management fees (the
"MANAGEMENT FEE") in an aggregate amount of (i) US$172,000 plus Value Added Tax
per annumuntil the Company's first Annual General Meeting of Shareholders in
calendar year 2005, and (ii) US$120,000 plus Value Added Tax per annum, as of
such meeting, which Management Fee shall cover non-exclusive strategic guidance
and consulting services. Such services shall be provided on an as needed basis,
as determined by Company and the Investor from time to time, and (ii) the
amendment of the Consulting Agreement (as defined below) by providing that as of
the date on which ▇▇▇▇ ▇▇▇▇▇▇▇ ceases to serve as Chairman of the Company's
Board of Directors and for so long as ▇▇▇▇▇▇▇ continues to provide consulting
services to the Company, the annual amounts payable pursuant to the Consulting
Agreement shall be reduced from US$253,800 to US$120,000, in each case
supplemented by VAT.
12
(g) REMUNERATION TO DIRECTORS. The Company's Board of Directors shall have
resolved, effective as of the Closing, to cease any and all payments or other
remuneration (including grant of stock options) to any of its directors (other
than its independent directors) with respect to their service as directors,
excluding, for the avoidance of doubt, (i) payment to New York Delight Ltd., a
company beneficially owned by ▇▇▇▇ ▇▇▇▇▇▇▇, or any other party designated by
▇▇▇▇▇▇▇, for services provided by ▇▇▇▇▇▇▇ as Chairman of the Company's Board of
Directors pursuant to that certain consulting agreement (the "CONSULTING
AGREEMENT") between the Company, ▇▇▇▇ ▇▇▇▇▇▇▇ and New York Delight Ltd., dated
August 5th, 2002, and (ii) any amounts due to the Company's directors with
respect to the period terminating on and as of the Closing Date.
(h) DEBT RESTRUCTURING ARRANGEMENT. The Company shall have executed debt
restructuring agreements with all its creditor banking institutions, which
agreements shall include, among other things, terms that are not less favorable
than the principles set forth in the Company's letter to such banking
institutions, attached as SCHEDULE 6.1(H) hereto.
(i) SHAREHOLDERS' EQUITY AND MARKET CAPITALIZATION ON THE CLOSING DATE.
The Company's average closing price of the Company's shares on NYSE over the
consecutive 30 trading-days immediately preceding the Closing shall not be less
than US$3.14. In the event that the condition set forth in this sub-section (i)
is not met, the Investor may elect to postpone the Closing by up to 60 days in
which case, the Closing will take place upon the termination of such period
provided that on such date, this closing condition is met. Notwithstanding the
above, (i) in the event that the Investor elects to postpone the Closing in
accordance with the provisions contained herein, the Company shall have the
right to inform the Investor that it no longer wishes to go through with the
contemplated investment and, accordingly, this agreement shall become null and
void, and (ii) in the event that during such 60 day period, the average closing
price of the Company's shares on the NYSE over any consecutive 30 trading-days
is higher than US$3.14, then this closing condition shall be deemed to have been
met and the parties shall be required to close the investment contemplated
herein by no later than 10 business days following the date on which the Company
informs the Investor in writing that such condition has been met.
(j) SECURING OF FINANCING BY THE INVESTOR. The Investor shall have
received financing (the "FINANCING") from Bank Hapoalim B.M and Israel Discount
Bank Ltd., in the amount and upon terms and conditions not less favorable to the
Investor than those set forth in the drafts of the bank loan documents dated
February 16, 2004.
13
6.2. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE. The
obligation hereunder of the Company to issue and sell the Shares to the Investor
is subject to the Term Precedent having been complied with within 120 days
following the date hereof, and the fulfillment at or before the Closing of the
following conditions precedent, any one or more of which may be waived in
writing, in whole or in part, by the Company, which waiver shall be at the sole
discretion of the Company.
(a) ACCURACY OF THE INVESTOR REPRESENTATIONS AND WARRANTIES. Each of
the representations and warranties of the Investor shall be true and correct in
all material respects as of the date when made and as of the Closing, as though
made at that time.
(b) PERFORMANCE BY THE INVESTOR. The Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to the Closing.
6.3. For the avoidance of doubt, in the event that the Term Precedent is
not complied with within 120 days, this Agreement shall become null and void and
the parties will not have any claims against each other.
7. REGISTRATION RIGHTS.
At the Closing, the Company and the Investor shall enter into a Registration
Rights Agreement in the form attached hereto as SCHEDULE 7.
8. POST CLOSING COVENANTS AND UNDERTAKINGS.
8.1. (a) INVESTOR ADDITIONAL PAYMENT UNDERTAKING. In the event that during the
three year period commencing at the Closing Date the Investor shall sell, for
cash or publicly traded securities (excluding publicly traded securities that
are received in connection with a merger or reorganization of the Company), at
least 20% of the total number of the Company's Ordinary Shares it had purchased
at the Closing and at the Concurrent Closing, at an average price per Share
(adjusted for share combinations and splits) which, together with the total
amount of dividends which had been distributed to the Investor with respect to
each such share prior to the date it was sold, is equal to or higher than
US$9.22 (the "SALE THRESHOLD"), then, on the third anniversary of the Closing
the Investor shall pay the Company an amount equal to the excess of such average
price per share over the Sale Threshold, but in any event not exceeding US$0.75,
per each Share so sold by the Investor.
(b) The provisions of Section 8.1(a) above shall also apply to the
Investors' aggregate sales during the four year period commencing on the Closing
Date; provided, however, that in such case the Sale Threshold shall be US$11.6
instead of US$9.22.
14
8.2. COMPANY UNDERTAKINGS.
(a) The Company shall not be entitled to exercise any right granted or which may
be granted to it to cause Southbridge Capital Markets LLC (or any of its
affiliated entities) to purchase any of the Company's Ordinary Shares, without
having obtained the prior written consent of the Investor; provided, however,
that the consent of the Investor shall not be required if such sale is at a
price per Ordinary Share of at least US$4.6 or is required so that the Company
would comply with the covenants relating to shareholders' equity under the
Company's loan agreements or with the listing requirements of the NYSE.
Notwithstanding the foregoing, the Investor's consent must be obtained if
following any issuance of Ordinary Shares, Southbridge Capital Markets LLC (or
any of its affiliated entities) would have purchased (together with all prior
purchases) an aggregate of 12% or more of the issued and outstanding share
capital of the Company.
(b) For so long as Article V of the SPA remains in effect, any amendment to any
agreement or arrangement between the Company and Arwol and/or Macpell and/or
▇▇▇▇ ▇▇▇▇▇▇▇ in effect as of the Closing (all of which agreements and
arrangements are listed in SCHEDULE 8.2(B) attached hereto) or the adoption of
any new agreement or arrangement between the Company and Arwol and/or Macpell
and/or ▇▇▇▇ ▇▇▇▇▇▇▇ shall require the Investor's prior written approval.
Similarly, as of the Closing, any amendment of the Investor's Management Fee
arrangement or the adoption of any new agreement or arrangement between the
Company and the Investor shall require Macpell's and Arwol's prior written
approval.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made by any party in this Agreement shall
survive the Closing and be in effect until 60 days following the filing of Form
20-F with respect to calendar year 2004, on which date they shall expire and be
of no further force or effect; provided, however, that the representations set
forth in Section 3.15 (Taxation) shall be in effect until the earlier of (i) the
date on which the tax authorities issue final tax assessments for calendar year
2003, and (ii) the expiration of the statute of limitations with respect to such
assessments.
10. MISCELLANEOUS.
10.1 FURTHER ASSURANCES. Each of the parties hereto shall perform such
further acts and execute such further documents as may reasonably be necessary
to carry out and give full effect to the provisions of this Agreement and the
intentions of the parties as reflected thereby.
10.2 GOVERNING LAW; DISPUTE RESOLUTION. This Agreement shall be governed
by and construed according to the laws of the State of Israel, without regard to
the conflict of laws provision thereof; provided, however, that all provisions
relating to the registration of the Shares on the NYSE and/or with the SEC shall
be interpreted in accordance with United States federal securities laws. Any
claim arising under or in connection with this Agreement shall be resolved
exclusively in the appropriate court in Tel-Aviv, Israel. Each of the parties
hereby irrevocably consents to the exclusive jurisdiction of such courts and
waives and agrees not to assert any objection to the jurisdiction or convenience
thereof.
10.3 SUCCESSORS AND ASSIGNS; ASSIGNMENT.
Except as otherwise expressly stated to the contrary herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns under law ("HA'▇▇▇▇▇ AL PI DIN"), heirs, executors, and administrators
of the parties.
15
Except as otherwise expressly stated to the contrary herein, each of the parties
hereto shall not assign or transfer any of its rights or obligations hereunder
absent the consent of the other party, which consent shall not be unreasonably
withheld.
10.4 ENTIRE AGREEMENT; AMENDMENT AND WAIVER.
This Agreement and the Exhibits and Schedules hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subject matters hereof and thereof. All prior understandings and agreements
among the parties (or anyone on their behalf) are void and of no further effect.
Any term of this Agreement may be amended, waived, or discharged (either
prospectively or retroactively, and either generally or in a particular
instance), by a written instrument signed by all the parties to this Agreement.
10.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder to be given to a party to this Agreement shall be in writing
and shall be telecopied or mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed to such
party's address as set forth below or at such other address in Israel as the
party shall have furnished to each other party in writing in accordance with
this provision:
If to the Investor:
c/o FIMI 2001 Ltd.
"▇▇▇▇▇▇▇▇▇▇ House"
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Tel: ▇▇-▇▇▇▇▇▇▇
Fax: ▇▇-▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇, Adv.
Naschitz, ▇▇▇▇▇▇▇ & Co.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Facsimile: ▇▇▇▇-▇-▇▇▇-▇▇▇▇
If to the Company:
Tefron Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Israel
Facsimile: + 972-3-579-8715
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Adv.
Meitar, Liquornik, Geva & Leshem ▇▇▇▇▇▇▇▇▇.
16 Abba Hillel Silver,
Ramat Gan
Israel
Facsimile: ▇▇▇▇-▇-▇▇▇▇▇▇▇
16
All such notices shall be deemed to have been duly given to the addressee
thereof (i) if hand delivered, on the day of delivery, (ii) if given by
facsimile transmission, on the business day on which such transmission is sent
and confirmed, (iii) if mailed by registered mail, return receipt requested,
five business days following the date it was mailed, to such party's address.
10.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to any party upon any breach or default under this
Agreement, shall be deemed a waiver of any other breach or default therefore or
thereafter occurring. Any waiver, permit, consent, or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law, or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
10.7 SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be unenforceable under applicable law, then such
provision shall be excluded from this Agreement and the remainder of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms; provided, however, that in such
event this Agreement shall be interpreted so as to give effect, to the greatest
extent consistent with and permitted by applicable law, to the meaning and
intention of the excluded provision as determined by such court of competent
jurisdiction.
10.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and enforceable against
the parties actually executing such counterpart, and all of which together shall
constitute one and the same instrument.
10.9 HEADING, PREAMBLE, AND EXHIBITS. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. The Preamble, Schedules and Exhibits
are an integral and inseparable part of this Agreement.
10.10 EXPENSES. Each party hereto shall pay its own expenses in connection
with the negotiation and preparation of this Agreement and the related
agreements and the consummation of the transactions contemplated hereby and
thereby, except that if the Closing is effected the Company shall pay the
Investor's fees of professional advisors for performing legal due diligence and
preparing this Agreement in an amount not to exceed $66,000 plus applicable
Value Added Tax. Any stamp duty payable in connection with the issue of the
Shares will be borne by the Company.
10.11 LIMITATIONS ON RIGHTS OF THIRD PARTIES. Nothing expressed or implied
in this Agreement is intended or shall be construed to confer upon or give any
person, other than the Company and the Investor, any rights or remedies under
this Agreement.
17
10.12 ▇▇▇▇▇▇ ISKA. Wherever this Agreement, or any other future agreement
between the parties hereto, refers to loans and/or interest rates, such
agreements will be subject to ▇▇▇▇▇▇ Iska, under the customary terms used for
that purpose in Israeli banks.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF the parties have signed this Agreement as of the date first
hereinabove set forth.
Tefron Ltd. Norfet, Limited Partnership
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ / /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- ---------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ / ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- -------------------
Title: Chairman of the Board / CEO Title
--------------------------- --------------------
19
SCHEDULE 2.2.(1)(c)
Date: [ ], 2004
To: Norfet, Limited Partnership (the "INVESTOR")
Pursuant to Section 2.2.1(c) of that certain Share Purchase Agreement between
the Investor and Tefron Ltd. (the "COMPANY") dated as of February 17, 2004 (the
"AGREEMENT") I, [ ], without personal liability, hereby certify that as of
the date hereof (and except only as set forth in the amended disclosure
schedule, attached hereto as EXHIBIT A):
1. The representations and warranties made by the Company in Section 2 of the
Agreement (and all schedules and exhibits attached thereto), are true and
correct in all material respects as if made on the date hereof.
2 The Company has obtained all Required Approvals and Notices to be obtained
by it pursuant to the Agreement prior to or upon Closing, in connection with the
transactions contemplated by the Agreement and all such consents are in full
force and effect.
All capitalized terms shall have the respective meanings attributed to them in
Agreement.
Very truly yours,
_______________________________
20
SCHEDULE 7
TEFRON LTD.
REGISTRATION RIGHTS AGREEMENT
__, 2004
21
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the __ day of ____, 2004, by
and among Tefron Ltd., an Israeli company (the "COMPANY"), and Macpell
Industries Ltd., Arwol Holdings Ltd. and Norfet, Limited Partnership (each, a
"PRINCIPAL SHAREHOLDER" and collectively, the "PRINCIPAL SHAREHOLDERS").
RECITALS
WHEREAS, in order to allow the Company's principal shareholders to register
their shares in the Company in the future in the manner and at the times set
forth in this Agreement, the Principal Shareholders and the Company hereby agree
that this Agreement shall govern the rights of the Principal Shareholders to
cause the Company to register Ordinary Shares of the Company held now or in the
future by the Principal Shareholders.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS
For purposes of this Agreement:
(a) The term "ACT" means the Securities Act of 1933, as amended.
(b) The term "FORM F-3" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently adopted by
the SEC that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(c) The term "HOLDER" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 12 hereof.
(d) The term "1934 ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(e) The term "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(f) The term "REGISTRABLE SECURITIES" means: (i) any Ordinary Shares of
the Company held now or in the future by a Principal Shareholder and (ii) any
Ordinary Shares of the Company issuable upon exercise of any warrant, option or
other right of a Principal Shareholder, excluding, however, any Registrable
Securities sold by a person in a transaction in which such person's rights under
this Agreement are not assigned.
1
(g) The number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING"
shall mean the number of shares of Ordinary Shares that are Registrable
Securities and (i) are then issued and outstanding or (ii) are then issuable
pursuant to the exercise or conversion of then outstanding and then exercisable
options, warrants or convertible securities.
(h) The term "SEC" shall mean the United States Securities and Exchange
Commission.
2. DEMAND REGISTRATION
2.1 If the Company shall receive at any time at least six months from
the date hereof, a written request from one or more Holders holding in the
aggregate at least 25% of the total Registrable Securities as of the time of the
request to register under the Act, a minimum of five percent (5%) of the share
capital of the Company then outstanding but not less than 500,000 Ordinary
Shares of the Company, the Company shall:
(a) within twenty (20) days of the receipt thereof, give written notice of
such request to all Holders; and
(b) use its reasonable efforts to effect as soon as practicable, the
registration under the Act of all Registrable Securities that the Holders
request to be registered as soon as reasonably practicable so as to permit the
sale thereof and in connection therewith shall prepare and file a registration
statement on Form F-3, subject to the limitations of subsection 2.2 hereof.
The written request referred to in this Section 2.1 shall (i) specify the
number of Registrable Securities intended to be offered and sold, (ii) express
the present intent of the Holder or Holders to offer or cause the offering of
such shares for distribution, (iii) describe the nature and method of the
proposed offer and sale thereof, and (iv) contain an undertaking of the Holder
or Holders to provide all such information and materials and take all such
action as may be required in order to permit the Company to comply with all
applicable requirements of the SEC.
2
2.2 If the Holders initiating the registration request hereunder (the
"INITIATING HOLDERS") intend to distribute the Registrable Securities covered by
their request by means of an underwriting, the underwriter will be selected by
the Company and shall be reasonably acceptable to Initiating Holders holding a
majority of the Registrable Securities to be registered. In such event, the
right of any Holder to include such Holder's Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by Initiating Holders holding a
majority of the Registrable Securities to be registered and such Holder) to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting and the Company shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting. Notwithstanding any other provision of this Section 2.2, if
the underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Registrable Securities that
would otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, on a pro
rata basis based upon the total number of Registrable Securities then held by
each such Holder.
2.3 Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 2, a
certificate signed by an authorized officer of the Company of the Company
stating that filing a registration statement in the good faith judgment of the
Board of Directors of the Company (i) would have a material adverse effect on
the Company or its shareholders, (2) would require disclosure of material
information that the Company has a valid business purpose of retaining as
confidential or (3) would interfere with a registration statement of the Company
contemplated to be filed or filed with the SEC or declared effective by the SEC,
the Company shall have the right to defer taking action with respect to such
filing for a period not to exceed one hundred and eighty (180) days after
receipt of the request of the Initiating Holders; PROVIDED, HOWEVER, that the
Company may not utilize this right more than once in any twelve-month period.
2.4 In addition, the Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 2:
(a) after the Company has effected three (3) registrations pursuant to
this Section 2 and such registrations have been declared or ordered effective;
(b) within six (6) months after any other registration by the Company
under the Act;
(c) if the Holders, together with the holders of any other securities of
the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate price
to the public (net of any underwriters' discounts or commissions) of less than
$1,000,000; or
(d) in any particular jurisdiction in which the Company would be required
to qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance.
3
2A. F-3 REGISTRATION
2A.1 In any case that the Company shall receive from any Holder a
written request or requests at least six months from the date hereof that the
Company effect a registration on Form F-3 and any related qualification or
compliance with respect to Registrable Securities where the aggregate net
proceeds from the sale of such Holders' Registrable Securities equal to at least
three million United States Dollars ($3,000,000), the Company shall promptly
give notice to the other Holders of such request, at least sixty (60) days prior
to the filing of the registration statement in connection with such
registration. Upon the written request of any other Holder given within twenty
(20) days after mailing of such notice by the Company in accordance with Section
15.5, the Company shall include in such registration (subject to the provisions
of this Section 2A) all of the Registrable Securities indicated in the request
of the Holders. The Company shall then use its reasonable efforts to effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all of such
Registrable Securities as are specified in the requests; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification, or compliance, pursuant to this Section 2A if the Company has,
within the eighteen (18) month period preceding the date of such request,
already effected one (1) registration for the Holders requesting registration
pursuant to this Section 2A. The Company undertakes that it will, once having
qualified for registration on Form F-3, use its reasonable efforts to comply
with all necessary filings and other requirements so as to maintain such
qualification for a period of two (2) years or such earlier date as the
Registrable Securities covered by such Registration Statement have been sold or
may be sold without volume restrictions pursuant to Rule 144 promulgated under
the Act.
2A.2 If at any time or from time to time after the date of effectiveness
of the Registration Statement, the Company notifies in writing the Principal
Shareholders participating in the Form F-3 Registration pursuant to this Section
2A of the existence of a Potential Material Event ("Blackout Notice"), the
registration of Registrable Securities on the Form F-3 shall be suspended from
the time of the giving of notice with respect to a Potential Material Event
until such Principal Shareholders receive written notice from the Company that
such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event; PROVIDED, HOWEVER, that the
Company may not so suspend such registration for more than ninety (90) days in
the aggregate during any 12-month period ("Blackout Period") during the periods
the Form F-3 Registration Statement is required to be in effect.
For purposes of this Section 2A, "Potential Material Event" means any of
the following: (a) the possession by the Company of material information not
ripe for disclosure in a Registration Statement, which shall be evidenced by a
good faith determination by the Board of Directors of the Company that
disclosure of such information in the Registration Statement would be
detrimental to the business and affairs of the Company, or (b) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a Registration Statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the Registration Statement would be materially misleading absent
the inclusion of such information.
2A3. The Company shall not be obligated to effect, or to take any action
to effect, any registration pursuant to this Section 2A: (i) within six (6)
months after any other registration by the Company under the Act; or (ii) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance.
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3. INCIDENTAL REGISTRATION
(a) If (but without any obligation to do so) the Company proposes to
register for its own account any of its capital stock or other securities under
the Act in connection with the public offering of such securities solely for
cash (other than a registration relating solely to the sale of securities to
participants in a Company share option plan, a registration on any form that
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities or a registration in which the only Ordinary Shares being registered
is Ordinary Shares issuable upon conversion of debt securities that are also
being registered or a transaction under Rule 145 of the Act), the Company shall,
at such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company in accordance with Section 15.5 the
Company shall, subject to the provisions of Section 8, use its reasonable
efforts to cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered; PROVIDED,
HOWEVER, that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company shall give written notice of such determination and its
reasons therefor to the Holders, and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities.
(b) Any registration by holders of Registrable Securities in a
registration by the Company shall be in accordance with the Company's plan of
distribution.
4. OBLIGATIONS OF THE COMPANY
Whenever required under this Agreement to use its reasonable efforts to
effect as soon as practicable the registration of Registrable Securities, the
Company shall:
4.1 Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder (other than a
registration statement filed pursuant to Section 2A of this Agreement), keep
such registration statement effective for a period of up to one hundred twenty
(120) days or until the distribution contemplated in the Registration Statement
has been completed; PROVIDED, HOWEVER, that in the case of any registration of
Registrable Securities on Form F-3 that are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold but not longer than one hundred and eighty (180)
days, provided that Rule 415, or any successor rule under the Act, permits an
offering on a continuous or delayed basis, and provided further that applicable
rules under the Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment that (x) includes any
prospectus required by Section 10(a)(3) of the Act or (y) reflects facts or
events representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference of
information required to be included in (x) and (y) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.
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4.2 Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
4.3 Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request to facilitate the
disposition of Registrable Securities owned by them.
4.4 Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders; PROVIDED
THAT the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, except as may be required by the
Act.
4.5 In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
4.6 Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act or the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
4.7 Cause all such Registrable Securities registered hereunder to be
listed on a securities exchange on which similar securities issued by the
Company are then listed.
4.8 Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
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4.9 Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to Section 2, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to Section 2, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, an opinion, dated such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
5. FURNISH INFORMATION
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to Sections 2, 2A and 3 with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of such Holder's Registrable Securities.
6. EXPENSES OF DEMAND AND F-3 REGISTRATION
All registration, filing and qualification fees, printers' and accounting
fees and fees and disbursements of counsel for the Company and the underwriters,
but excluding underwriting discounts and commissions, stock transfer taxes and
fees, incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 2A shall be borne by the parties in the following
manner: the first $50,000 of such expenses shall be borne by the Company, and
all such expenses in excess of the first $50,000 shall be borne 50% by the
Company, on the one hand, and 50% by the selling shareholders, on the other
hand, proportionately among the selling shareholders in accordance with the
number of Registrable Securities each selling shareholders elects to have
registered. Underwriting discounts and commissions, and stock transfer taxes and
fees shall be paid in their entirety by the selling shareholders.
7. EXPENSES OF INCIDENTAL REGISTRATION
The Company shall bear and pay all expenses incurred in connection with
any registration, filing or qualification of Registrable Securities with respect
to the registrations pursuant to Section 3 for each Holder, including (without
limitation) all registration, filings and qualification fees, printers' and
accounting fees and fees and disbursements of counsel for the Company, but
excluding underwriting discounts and commissions with respect to Registrable
Securities to be sold for the selling shareholders stock transfer taxes and
fees.
8. UNDERWRITING REQUIREMENTS
If a registration statement for which the Company gives notice pursuant to
Section 3 is for an underwritten offering, then the Company shall so advise the
Holders of Registrable Securities. In such event, the right of any Holder's
Registrable Securities to be included in a registration pursuant to Section 3
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the managing underwriter or underwriter(s) selected for
such underwriting. Notwithstanding any other provision of this Agreement, if the
managing underwriter(s) determine(s) in good faith that marketing factors
require a limitation of the number of shares to be underwritten, then the
managing underwriter(s) may exclude shares (including Registrable Securities)
from the registration and the underwriting, and the number of shares that may be
included in the registration and the underwriting shall be allocated FIRST, to
the Company, and SECOND, to each of the Holders requesting inclusion of their
Registrable Securities in such registration statement on a pro rata basis based
upon the total number of Registrable Securities then held by each such Holder.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least 20 business days prior to the effective date of
the registration statement. Any Registrable Securities excluded or withdrawn
from such underwriting shall be excluded and withdrawn from the registration.
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9. DELAY OF REGISTRATION
No Holder shall have any right to obtain or seek an injunction restraining
or otherwise delaying any such registration as the result of any controversy
that might arise with respect to the interpretation or implementation of this
Agreement.
10. INDEMNIFICATION
In the event any Registrable Securities are included in a registration
statement under Agreement:
10.1 To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively a
"VIOLATION"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse each such Holder, underwriter or controlling
person 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 indemnity agreement contained in this
subsection 10.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to which a Holder, underwriter or controlling person become
subject to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information furnished for
use in connection with such registration by any such Holder, underwriter or
controlling person.
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10.2 To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder for use in connection with such
registration; and each such Holder will reimburse any person intended to be
indemnified pursuant to this subsection 10.2 for any legal or other expenses
reasonably incurred by such person, in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the indemnity agreement contained in this subsection 10.2 shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; PROVIDED, FURTHER, that in no event
shall any indemnity under this subsection 10.2 exceed the gross proceeds from
the offering received by such Holder.
10.3 Promptly after receipt by an indemnified party under this Section 10
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 10, deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; PROVIDED,
HOWEVER, that all indemnified parties shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified parties by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 10.
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10.4 If the indemnification provided for in this Section 10 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
10.5 Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
10.6 The obligations of the Company and Holders under this Section 10
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement and otherwise.
11. REPORTS UNDER THE 1934 ACT
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form F-3, the Company
agrees to:
11.1 make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
11.2 file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the 1934 Act; and
11.3 furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form F-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents filed under the 1934
Act by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC that
permits the selling of any such securities without registration or pursuant to
such form.
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12. ASSIGNMENT OF REGISTRATION RIGHTS
The rights to cause the Company to register Registrable Securities
pursuant to this Agreement may be assigned (but only with all related
obligations) by a Holder to a transferee or assignee of such securities
provided: (a) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; (b) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 14 below; (c) the transfer involves a
transfer of at least the lesser of (i) five percent (5%) of the share capital of
the Company then outstanding, but not less than 500,000 Ordinary Shares of the
Company and (ii) all shares of Registrable Securities held by such Holder;
PROVIDED, HOWEVER, that transfers or assignments to affiliates of a Holder shall
be without restriction as to the minimum number of shares to be transferred; and
(d) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
13. "MARKET STAND-OFF" AGREEMENT
Each Principal Shareholder hereby agrees that, during the period of
duration specified by the Company and an underwriter of Ordinary Shares or other
securities of the Company, following the effective date of a registration
statement of the Company filed under the Act, it shall not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of the Company during
such period except Ordinary Shares included in such registration; PROVIDED,
HOWEVER, that:
13.1 all executive officers, directors and holders of at least 1% of the
outstanding capital stock of the Company enter into similar agreements; and
13.2 such market stand-off time period shall not exceed one hundred
eighty (180) days.
Each Principal Shareholder hereby agrees that it will enter into the
underwriter's standard lock-up agreement containing restrictions similar to
those set forth in this Section 13. In addition, in order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the Registrable Securities of each Principal Shareholder (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.
14. TERMINATION OF REGISTRATION RIGHTS
No Holder shall be entitled to exercise any right provided for in this
Agreement after the earlier of:
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(a) November 24, 2010 (the "Expiration Date"); PROVIDED, HOWEVER, that
if on or prior to such date the Principal Shareholders have not sold or
otherwise transferred or disposed of at least 3,041,950 ordinary shares in the
Company (which represent 50% of the ordinary shares held by them in the
aggregate on the date of this Agreement), the Expiration Date shall be November
24, 2013, or
(b) such time as all Registrable Securities held by such Holder can be
sold in any three (3) month period without registration under SEC Rule 144.
15. MISCELLANEOUS
15.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
15.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Israel as applied to agreements among Israeli
residents entered into and to be performed entirely within Israel. Each of the
parties hereto irrevocably consents to the sole and exclusive jurisdiction and
venue of any court within Tel Aviv - Jaffa, State of Israel, in connection with
any matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of Israel for such persons and waives and
covenants not to assert or plead any objection that they might otherwise have to
such jurisdiction, venue and such process.
15.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
15.5 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(iii) two days after being sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the address as set
forth on the signature page hereof or at such other address as such party may
designate by ten days advance written notice to the other parties hereto.
15.6 EXPENSES. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
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15.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least a majority of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities and the Company.
15.8 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
15.9 AGGREGATION OF STOCK. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
15.10 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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TEFRON PIPE
IN WITNESS WHEREOF, the parties have executed this Principal Shareholders'
Rights Agreement as of the date first above written.
COMPANY:
TEFRON LTD.
By: ___________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title:CEO
By: ___________________
Name:
Title:
SHAREHOLDERS:
MACPELL INDUSTRIES LTD. Address for Notices:
By: ___________________ ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇,
Name: Israel
Title:
------------------------------------
By: ___________________ Fax: ▇ - ▇▇▇ ▇▇ ▇▇
Name:
Title:
ARWOL HOLDINGS LTD. Address for Notices:
By: ___________________
------------------------------
Name:
Title:
-----------------------
By: _____________________ Fax:
-----------------------------
Name:
Title:
TEFRON PIPE
[Signature page continued]
Norfet, Limited Partnership Address for Notices:
By: N.D.M.S Ltd. c/o FIMI 2001 Ltd.
By: ___________________ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Tel-Aviv
Title: Director Fax: ▇▇▇▇▇▇▇▇▇
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