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Exhibit 10.7
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WARRANT
to Purchase up to an Aggregate of ______ Non Voting Convertible Preferred B
Shares
(Subject to Adjustment) of
R.T.S. Relational Technology Systems Ltd.
at U.S. $30 per share
VOID AFTER 10:00 a.m. (prevailing Tel Aviv time)
on October 30, 2006
THIS IS TO CERTIFY that the holder specified below ("Holder") is entitled to
purchase, subject to the provisions of this Warrant, from R.T.S. Relational
Technology Systems Ltd. (the "Company"), at any time on or after the date hereof
(the "Effective Date") and until October 30, 2006, an aggregate of up to ______
(subject to adjustment) fully and nonassessable Non Voting Convertible Preferred
B Shares, nominal value New Israeli Shekel ("NIS") 1.00 per share (the
"Convertible Preferred B Shares"), of the Company at a price of US$30 per share
or the NIS equivalent thereof (the "Exercise Price"). In the event that all of
the outstanding Convertible Preferred B Shares are converted into Ordinary
Shares, this Warrant shall be exercisable solely for such Ordinary Shares and
any references throughout this Warrant to shares of Convertible Preferred B
Shares shall be deemed to refer to the Ordinary Shares into which the
Convertible Preferred B Shares may be converted. The amount and kind of
securities purchasable pursuant to the rights granted hereunder and the Exercise
Price for such securities are subject to adjustment pursuant to the further
provisions of this Warrant.
1. EXERCISE OF WARRANT
Subject to the provisions hereof, this Warrant may be exercised in whole or
in part, at any time or from time to time on or after the Effective Date and
until October 30, 2006. This Warrant shall be exercised by presentation and
surrender hereof to the Company at the principal office of the Company;
accompanied by
1. a written notice of exercise and
2. payment to the Company, for the account of the Company, of the Exercise
Price for the number of Ordinary Shares specified in such notice.
The Exercise Price for the number of Ordinary Shares specified in the notice
shall be payable in immediately available good funds, at the option of the
Holder, in U.S. dollars or the NIS equivalent thereof, based on the
Representative Rate of Exchange published by the Bank of Israel known as of
the time of payment.
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Upon such presentation and surrender, the Company shall issue promptly to
the Holder the Convertible Preferred B Shares to which the Holder is
entitled hereunder. In the event the Exercise Price has been paid in U.S.
dollars, the certificate representing the Convertible Preferred B Shares
issued upon such exercise shall bear a stamp from an Israeli commercial bank
confirming that the Convertible Preferred B Shares were purchased with
foreign currency. In the event that the Warrant is exercised pursuant to the
net exercise provisions below, the Company shall apply to the Bank of
Israel, if necessary, in order to obtain such stamp.
If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder to purchase the balance of the
Convertible Preferred B Shares purchasable hereunder. Upon receipt by the
Company of this Warrant, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the Convertible Preferred B Shares
issuable upon such exercise, notwithstanding that the share transfer books
of the Company shall then be closed or that certificates representing such
Convertible Preferred B Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all expenses, any stamp duty and any
other charges that may be payable in connection with the issuance of the
Convertible Preferred B Shares and the preparation and delivery of share
certificates pursuant to this Paragraph 1 in the name of the Holder.
No fractions of Convertible Preferred B Shares shall be issued in connection
with the exercise of this Warrant, and the number of Convertible Preferred B
Shares issued shall be rounded down to the nearest whole number.
Notwithstanding the foregoing, in the event of (i) the initial public
offering of the Company (the "IPO"), (ii) on or after the merger of the
Company with or into another company or entity, in which the Company is not
the surviving entity (a "Merger") or (iii) on or after the sale of all or
substantially all of the assets of the Company (a "Sale") then, in lieu of
exercising this Warrant as provided above, in whole or in part, the Holder
may elect to receive simultaneously with the Closing of the IPO, or
simultaneously with the closing of the Merger or Sale, by the surrender and
cancellation of this Warrant or any such portion thereof to the Company,
Convertible Preferred B Shares equal to the value of the Warrant (or the
portion thereof being canceled) by written notice of such election to the
Company, at the principal office of the Company, in which event the Company
shall issue to the Holder, for no additional consideration, that number of
Convertible Preferred B Shares computed using the following formula:
Y(A - B)
X = -----------------
A
X equals the number of Convertible Preferred B Shares to be issued to the
Holder;
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Y equals the number of Convertible Preferred B Shares which would
otherwise have been purchasable under this Warrant (or the portion
thereof being canceled);
B equals the Exercise Price in effect at the time of exercise pursuant to
this formula (as may have been or be adjusted pursuant to the terms of
this Warrant); and
A shall equal the "Fair Value" of one share of the Company's Convertible
Preferred B Shares. Fair Value shall mean in the event that this Warrant
is exercised in accordance with the above formula (i) if in connection
with an IPO, then the Fair Value shall equal the price (as sold to the
public) of that number of the Company's Ordinary Shares into which one
share of the Company's Preferred B Shares is Convertible, or (ii) if in
connection with a Merger or Sale, the value of such share(s) as
determined for the purposes of the Merger or Sale, or (iii) if other
than in connection with an IPO or a Merger or Sale and if a public
market exists for the securities then subject to this Warrant and such
securities are listed on a U.S. nationally recognized stock exchange or
on the Nasdaq stock market, then the Fair Value shall equal the last
sale or trading price of such securities as reported on such exchange or
market, as applicable; provided, however, if no public market exists for
the securities then the Fair Value shall be determined in good faith by
the Board of Directors of the Company, but if such determination is
challenged in good faith by the Holder, then as determined by an
independent appraiser mutually satisfactory to the Company and the
Holder, which determination shall be binding upon the parties.
2. RESERVATION OF SHARES: PRESERVATION OF RIGHTS
The Company hereby agrees that at all times it will maintain and reserve
such number of authorized but unissued Ordinary Shares so that this Warrant
may be exercised without additional authorization of Convertible Preferred B
Shares after giving effect to all other options, warrants, convertible
securities and other rights to acquire Convertible Preferred B Shares of the
Company. In addition, the Company will maintain and reserve such number of
authorized but unissued Ordinary Shares as will be sufficient to permit the
conversion in full of all issued or issuable Convertible Preferred B Shares.
All shares of Convertible Preferred B Shares (and Ordinary Shares issuable
upon conversion thereof) issuable pursuant to the terms hereof, when issued
upon exercise of this Warrant in accordance with the terms hereof shall be
duly and validly issued and fully paid and nonassessable, not subject to
preemptive rights and shall be free and clear of all liens, encumbrances,
equities and claims. The Company further agrees that it will not, by charter
amendment or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Company.
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3. EXCHANGE OR LOSS OF WARRANT
This Warrant is exchangeable, upon presentation and surrender hereof at the
principal office of the Company, only in connection with a partial exercise
hereof. The Company shall be under no obligation to issue replacement
warrants for the aggregate number of shares covered hereby except as
described herein. The term "Warrant" as used herein includes any Warrant or
Warrants for which this Warrant may be exchanged. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft
or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like terms, tenor and date.
4. ADJUSTMENT
The number of Convertible Preferred B Shares (and the number of Ordinary
Shares issuable upon conversion thereof) purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time
to time or upon exercise as provided in this paragraph 4.
4.1. If, during the term of this Warrant, the Company shall distribute a
stock dividend or shares of capital stock pursuant to a
reclassification of its Convertible Preferred B Shares to the holders
of Convertible Preferred B Shares (i.e., bonus shares), the number of
Convertible Preferred B Shares purchasable upon exercise of this
Warrant shall be increased by multiplying such number of shares to be
purchased under this Warrant by a fraction of which the denominator
shall be the number of Convertible Preferred B Shares outstanding at
the close of business on the day immediately preceding the date of
such distribution and the numerator shall be the sum of such number of
shares and the total number of bonus shares, such increase to become
effective immediately after the opening of business on the date
following such distribution, and upon the happening of such an event
the Exercise Price shall be adjusted appropriately.
4.2. If, during the term of this Warrant, the outstanding Convertible
Preferred B Shares shall be subdivided into a greater number of
Convertible Preferred B Shares, the number of Convertible Preferred B
Shares purchasable upon exercise of this Warrant at the opening of
business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely,
if the outstanding Convertible Preferred B Shares shall each be
combined into a smaller number of Convertible Preferred B Shares, the
number of Convertible Preferred B Shares purchasable upon exercise of
this Warrant at the opening of business on the day following the day
upon which such combination becomes effective shall be proportionately
decreased, and in each such case the Exercise Price shall be adjusted
appropriately.
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4.3. Reorganization, Reclassification, Merger, Consolidation or Disposition
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of Assets
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(a) In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another
corporation or sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business to another
corporation and pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of
assets, (i) shares of capital stock of the successor or
acquiring corporation or of the Company (if it is the surviving
corporation) or (ii) any cash, shares of stock or other
securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition
to or in lieu of capital stock of the successor or acquiring
corporation ("Other Property") are to be received by or
distributed to the holders of Convertible Preferred B Shares of
the Company who are holders immediately prior to such
transaction, then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the number of shares of
capital stock of the successor or acquiring corporation or of
the Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Convertible Preferred B
Shares for which this Warrant is exercisable immediately prior
to such event.
(b) In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or
acquiring corporation shall expressly assume the due and
punctual observance and performance of each and every covenant
and condition of this Warrant to be performed and observed by
the Company and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the
Convertible Preferred B Shares for which this Warrant is
exercisable, which modifications shall be as nearly equivalent
as practicable to the adjustments provided for in this Section
4.
(c) The provisions of this subsection 4.3 shall similarly apply to
successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.4. Other Dilutive Events
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In case any event shall occur as to which the preceding subsections
4.1 through 4.3 are not strictly applicable but as to which the
failure to make any adjustment would not fairly protect the purchase
rights represented by
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this Warrant in accordance with the essential intent and principles
hereof then, in each such case, the Board of Directors of the Company
shall, in good faith, determine what adjustments are necessary to
preserve the purchase rights of the Holder represented by this
Warrant. The Company will notify the Holder of any such adjustments.
5. NOTICE OF CERTAIN EVENTS
The holder of this Warrant shall be entitled to the same rights to receive
notices of corporate actions as any holder of Convertible Preferred B Shares
as provided in the Company's Articles of Association or otherwise.
Notwithstanding, in case at any time:
5.1. There shall be any merger of the Company with, or any statutory
exchange of the Company's securities with the securities of, or sale
of all or substantially all of its assets to, another corporation; or
5.2. There shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, in any one or more of such cases, the Company shall give written
notice, by first class mail, postage prepaid, addressed to the Holder at the
address of the Holder as shown on the books of the Company, of the date on
which such merger, exchange, sale, dissolution, liquidation or winding up
shall take place, as the case may be. Such notice shall also specify the
date as of which the holders of Convertible Preferred B Shares of record
shall be entitled to exchange their Convertible Preferred B Shares for
securities or other property deliverable upon such merger, exchange, sale,
dissolution, liquidation or winding up, as the case may be. Such written
notice shall be given at least twenty (20) days prior to the action in
question.
6. NOTICE OF ADJUSTMENTS
Whenever the number of Convertible Preferred B Shares for which this Warrant
is exercisable is adjusted as provided in paragraph 4 hereof or whenever the
rate at which the Convertible Preferred B Shares are convertible into
Ordinary Shares is adjusted pursuant to the Company's Articles of
Association, the Company shall promptly compute such adjustment and mail to
the Holder at the last address provided to the Company in writing a
certificate, signed by the principal financial office of the Company,
setting forth the number of Convertible Preferred B Shares (and the number
of Ordinary Shares into which the Convertible Preferred B Shares may be
converted) for which this Warrant is exercisable and the exercise price as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the detailed computation thereof and when such adjustment has
or will become effective.
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7. RIGHTS OF THE HOLDER
7.1 Without limiting the foregoing or any remedies available to the
Holder, the Holder will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or
threatened violations of the obligations of any person subject to this
Warrant.
7.2 This Warrant shall not entitle the Holder to any voting rights or
other rights as a shareholder of the Company whatsoever, except the
rights expressed herein and no dividend or interest shall be payable
or accrue in respect of this Warrant.
8. REGISTRATION RIGHTS
The Holder shall have the registration and other rights and be subject to
the obligations, set forth in the Investors Rights Agreement, dated the date
hereof, as it may be amended from time to time as provided therein, with
respect to the Ordinary Shares issued or issuable upon conversion of the
Convertible Preferred B Shares issuable or issued upon the exercise of this
Warrant.
9. NOTICE GENERALLY
Any notice, demand, request, consent, approval, declaration, delivery or
communication hereunder to be made pursuant to the provisions of this
Warrant shall be sufficiently given or made if in writing and shall be
deemed to have been validly served, given or delivered (a) when sent after
receipt of confirmation or answer back if sent by telex or telecopy or other
similar facsimile transmission, (b) two (2) business days after deposit with
a reputable international two (2) day courier with all charges prepaid or
(c) when delivered if hand-delivered by messenger, all of which shall be
properly addressed to the party to be notified and sent to the address or
number indicated, to the Holder, or the holder of Convertible Preferred B
Shares (or the Ordinary Shares issuable upon conversion thereof) at its last
known address appearing on the books of the Company maintained for such
purpose, and to the Company at:
R.T.S. Relational Technology Systems, Ltd.
Science Based Industries Campus
P.O. Box 23052
Jerusalem 91230, Israel
or at such other address as may be submitted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice.
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10. TERMINATION
This Warrant and the rights conferred hereby shall terminate at the earlier
of (a) the aforementioned time on October 30, 2006; or (b) the offering to
the public of the shares of the Company.
11. LIMITATION ON TRANSFER
This Warrant shall be transferable in whole or in part only to a subsidiary
of the Holder.
12. GOVERNING LAW
This Warrant shall be governed by, and construed in accordance with, the
laws of the State of Israel, without giving effect to the rules respecting
conflict of law, and the parties hereto irrevocably submit to the exclusive
jurisdiction of the Courts of Israel in respect of any dispute or matter
arising out of or connected with this Warrant.
DATED: October 30, 1996 R.T.S. RELATIONAL
TECHNOLOGY SYSTEMS LTD.
By: ---------------
Name: ---------------
Title: ---------------
Agreed to and accepted:
_____________________________
Name of Holder
By: ---------------
Name: ---------------
Title: ---------------
Address: ---------------