EXHIBIT 10.11
Investment Agreement
(hereinafter the "Agreement")
Made and entered into this ________ day of May, 2000
Between
Organitech Ltd, an Israeli private company existing under the laws of Israel
Address: ▇.▇.▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ (The "Company")
And
Incubate This, Inc., a company duly incorporated under the laws of the State of
Colorado Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (The"Investor")
WHEREAS the Company was formed according to the Founders Agreement dated June
27, 1999, attached hereto as Exhibit A and was duly registered on July 4, 1999,
under the laws of the State of Israel; and
WHEREAS the Company is engaged in a project for research and development of
"Machines for Automatic Growing of Lettuce", approved by the Office of the Chief
Scientist of the Ministry of Industry and Trade (the "OCS") as more fully set
forth in Exhibit B; and
WHEREAS the Company desires to receive an equity investment; and
WHEREAS the Investor desires to make an equity investment in the Company against
the issuance to the Investor of Series A Preferred Shares of the Company;
NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:
1. Preamble and Exhibits
The preamble and all Exhibits to this Agreement form an integral part hereof.
2. Purchase of Preferred Shares; Closing
2.1 In consideration for the issuance by the Company to the Investor of an
aggregate of twelve thousand four hundred sixty (12,460) Series A Preferred
Shares of the Company of a nominal value of NIS 0.01 each (the "Preferred
Shares") at a price per Preferred Share of approximately eighty US Dollars and
twenty five US Cents (US$80.25) or an aggregate of One Million Dollars US
(US$1,000,000) (hereinafter the "Original Purchase Price" or the "Investment")
based on a pre-investment Company value of Ten Million Dollars US (US$10
Million), on a fully diluted basis immediately following such issuance giving
effect to the ninety-seven thousand one-hundred forty-three (97,143) issued and
outstanding ordinary shares and the fifteen thousand (15,000) ordinary shares
reserved for issuance pursuant to an employee share incentive plan (hereinafter
the "Employee Share Incentive Plan"), the Investors shall invest in the Company
and pay to it the Investment, upon the receipt by the Company of all necessary
authorizations, approvals, consents or waivers, as provided in this Agreement,
to be paid as follows:
2.1.1 One Million US Dollars (US$1,000,000) (which sum shall include
the US100,000 previously paid by the Investor to the Company) at a closing
(the "Closing") to be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇ & CO., ADVOCATES
▇▇▇▇▇ MAHELECH BLVD & TEL.AVIV at p.m. on __________________(the "Closing
Date"), or such other time as shall be mutually agreed upon by the parties,
against the issuance to the Investor of twelve thousand four hundred sixty
(12,460) Preferred Shares.
2.2 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 document
delivered until all such transactions have been completed and all required
documents delivered:
2.2.1 The Company shall deliver to the Investor the following
documents:
(4) Resolutions of the Company's shareholders in the form
attached hereto as Schedule 2.2.1(a)A by which the Articles of
Association of the Company were replaced with the Amended and Restated
Articles of Association attached hereto as Schedule 2.2.1(a)B (the
"Amended Articles"), by which 500,000 authorized but unissued Ordinary
Shares have been converted into Preferred Shares and by which the
Memorandum of Association of the Company was amended as set forth in
such resolutions, together with a duly completed notice of such
changes to the Israeli Registrar of Companies;
(5) True and correct copies of resolutions of the Company's Board
of Directors issuing and allotting the Preferred Shares to the
Investor against payment of the purchase price therefor, in the form
attached hereto as Schedule 2.2.1(b), together with a duly completed
notice of such issuance to the Israeli Registrar of Companies and a
copy of check in full payment of the stamp duty on the issuance of the
Preferred Shares;
(6) Validly executed share certificates covering the Preferred
Shares, issued in the name of the Investor, in the form attached
hereto as Schedules 2.2.1(c);
(7) A certificate duly executed by an executive officer of the
Company, dated as of the date of the Closing, in the form attached
hereto as Schedule 2.2.1(d) (the "Compliance Certificate").
(8) An Opinion of Avi Goldsobel, Advocate, counsel to the
Company, in the form attached hereto as Schedule 2.2.1(e) (the
"Opinion"), dated as of the date of the Closing.
(9) Warrants to the Investor to purchase ____________ Preferred
Shares (the "Preferred Shares Warrants") pursuant to the terms and
conditions of Section __ below, and warrant certificates attached
hereto as Schedules 22.1through 22.5(the "Warrants").
2.2.2 As soon as practicable following the Closing, and no later than
21 days thereafter, the Company shall register the issuance and allotment
of the Preferred Shares to the Investor in the Shareholders Register of the
Company which shall be in the form of Schedule 2.2.2.
2.2.3 The Investor shall cause the transfer to the Company of the
Investment for the Shares being issued to it by wire transfer, banker's
check, or such other form of payment as is mutually agreed by the Company
and the Investor.
2.2.4 Report of the issuance of the Preferred Shares shall be timely
and accurately made to the Registrar of Companies. The Company shall bear
all stamp tax due in connection with the issuance of shares to the Investor
hereunder.
3. Rights to Certain Future Adjustments.
3.1 Until an IPO, in the event that, following the Closing, the Company
shall issue Additional Shares at a price per share (the "Lower Price") which is
lower than the Original Purchase Price per share paid by the Investors
hereunder, adjusted for share splits, share combinations, share dividends and
other recapitalization events, then the Investor shall be entitled to receive
additional Preferred Shares in an amount such that the Investor shall have
received a total number of Preferred Shares equivalent to what it would have
received by investing the same dollar amount in such later offering rather then
his Investment, all as more fully set forth in the Amended Articles. For the
purposes hereof "Additional Shares" shall mean any shares of the Company whether
now authorized or not, and rights, options or warrants to purchase such shares,
and shares of any type whatsoever that are, or may become, convertible into such
shares; provided that the term "Additional Shares" shall not include: (i) shares
issued upon conversion of Preferred Shares; (ii) shares issued upon exercise of
any currently outstanding warrants and options; and (iii) shares issued to
employees, officers or directors of the Company pursuant to any stock option or
incentive plan approved by the Company's board of directors and subject to
Section 17.1.10.
3.2 The rights granted in Section 3.1 above shall apply to the Investment
and to Warrants A-D set forth in Section 22 below.
3.3 To avoid doubt, the rightsd granted in Section 3.1 above shall not
apply to Warrant E.
4. Preemptive Rights
Should the Company, at any time prior to an IPO, wish to issue Additional Shares
to a third party (other than shares issued pursuant to the Employee Option Plan,
the Warrants and Ordinary Shares issuable upon conversion of the Preferred
Shares), the holders of the Preferred Shares, the Ordinary Shares and/or the
holder's transferees shall each have the preemptive right to purchase its
pro-rata share of such Additional Shares on a fully diluted basis, all as more
fully set forth in the Amended Articles.
5. Transfer of Shares
5.1 Right of First Refusal. In every sale or transfer, voluntary or
involuntary, of securities in the Company by any shareholder (hereinafter the
"Offeror"), the Offeror shall be obligated to offer them first to the other
shareholders under identical terms to which the proposed sale or transfer is
subject, all as more fully set forth in the Amended Articles. This obligation
shall not apply to the transfer of shares to Permitted Transferees as that term
is defined in the Amended Articles.
5.2 Co-Sale. Until an IPO, if the right of first refusal pursuant to 5.1
above is not exercised and if at any time ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ (hereinafter the
"Founder") or his transferees (hereinafter the "Selling Shareholder"), intends
to sell shares equal to or exceeding in the aggregate of 10% of the shares of
the Company, the Selling Shareholder shall so notify the Investor in writing.
The Investor shall have
the right to participate in such sale by the Selling Shareholder such that the
purchaser thereof shall purchase shares from the Investor pro-rata to its
percentage of ownership of shares in the Company, as more fully set forth in the
Amended Articles.
5.3 Prior to the earlier of (a) an initial firmly underwritten public
offering of the Company's Ordinary Shares pursuant to an effective registration
statement under the United States Securities Act of 1933, as amended, or
equivalent law of another jurisdiction (the "IPO"); or (b) a merger or
consolidation of the Company with or into another corporation, or a sale of
substantially all of the Company's shares (collectively, including an IPO,
referred to as an "Exit") ; or (c) the date which is 18 months following the
date of the Closing; the Founder shall not sell, transfer, assign, pledge or
otherwise dispose of ("Transfer") any of his shares in the Company without
written approval of the Investor.
6. Bring Along Enforcement
In the event that, prior to an IPO, an offer is made to the shareholders by a
third party to purchase 75% or more of the issued share capital (hereinafter
"Acquisition Offer") and shareholders (hereinafter "Agreeing Shareholders")
holding 75% or more of the issued share capital agree to and approve the said
Acquisition Offer, and such Acquisition Offer is conditional upon the sale of a
number of shares of the Company exceeding the number of shares held by the
Agreeing Shareholders, the other shareholders of the Company shall be obligated
to participate and sell to such offeror an amount of their shares sufficient to
cover such difference, on a pro-rata basis between them.
7. Conversion of Preferred Shares
The holders of the Preferred Shares shall have the right to convert the
Preferred Shares, at any time, into Ordinary Shares. The conversion rate shall
be 1:1 subject to adjustments as provided in this Agreement.
8. Automatic Conversion of Preferred Shares
The Preferred Shares shall be automatically converted into Ordinary Shares, at
the then applicable conversion prices (i) in the event that the holders of at
least seventy five percent (75%) of the outstanding Preferred Shares consent to
such conversion, or (ii) upon the closing of an Exit as that term is defined in
Section 5.3 above.
9. Board of Directors
9.1 Until an IPO, the Board of Directors shall consist of not more than
seven (7) members.
9.2 As of the Closing, the holders of a majority of the Preferred Shares
shall have the right to appoint, remove and replace one (1) director to the
Board of Directors of the Company. The holders of a majority of the Preferred
shares shall have the right to appoint, remove and replace two (2) directors to
the Board of Directors of the Company upon their investment of an additional two
million US Dollars (US$2,000,000) into the Company.
9.3 D.G. Pizza Ltd. shall be entitled to appoint, remove and replace one
(1) director to the Board of Directors of the Company.
9.4 Technion Entrepreneurial Incubator Co. Ltd ("TEIC") shall be entitled
to appoint, remove and replace one (1) director to the Board of Directors of the
Company.
9.5 ▇▇▇▇ ▇▇▇▇▇▇ shall be entitled to appoint, remove and replace one (1)
director to the Board of Directors of the Company.
9.6 ▇▇▇▇ ▇▇▇▇▇▇, shall be entitled to appoint, remove and replace one (1)
non voting observer to the Board of Directors of the Company as long as he holds
at least 4% of the issued and outstanding shares of the Company.
9.7 The Directors may participate in Board meetings by means of conference
telephone or videos. The meeting and proceeding of the Board of Directors shall
be governed by the Company's Articles of Association. The quorum at a meeting of
the Board of Directors shall be constituted (by presence, in person or
represented by an Alternate Director) of at least one Director appointed by the
holders of the Preferred Shares. In the event that the meeting is postponed then
at the second meeting any number of directors will be sufficient to resolve all
the resolutions that were listed for the first meeting.
10 Use of Proceeds
The Company will use the proceeds of the issuance and the sale of Preferred
Shares for the mission as set forth in the Company's Business Plan dated March
1, 2000. The use of the proceeds for any other purpose is subject to approval or
changes of the Board, which shall not be taken against the negative vote of the
Directors designated by the Preferred Shares.
11. Liquidation Preference
11.1 The Preferred Shares shall have a preference to all other equity
securities of the Company in the event of a merger, acquisition, sale,
liquidation or bankruptcy of the Company (a "Preference Triggering Event"). A
merger, acquisition or the sale of all or substantially all of the assets of the
Company shall be deemed to be a liquidation.
11.2 In an actual or deemed liquidation which is a Preference Triggering
Event, each holder of the Preferred Shares shall be entitled to receive in
preference to the holders of the Ordinary Shares, an amount equal to the
Original Purchase Price plus interest calculated in US Dollars at the Libor plus
three percent (3%) per annum. Following said distribution the holders of the
Ordinary Shares will be entitled to an amount per share equal to the amount paid
per share to the holders of the Preferred Shares excluding interest. Thereafter,
the holders of the Preferred Shares will participate with the holders of all
other shares pro rata and on an as-converted basis in any remaining proceeds.
12. Voting Rights
The Preferred Shares will vote together with the Ordinary Shares and not as a
separate class except as provided herein or as otherwise required by law. Each
share of Preferred Shares shall have a number of votes equal to the number of
Ordinary Shares then issuable upon conversion of such share.
13. Confidentiality
13.1 The Investors agree that any information regarding the Company
obtained from the Company pursuant to the provisions hereof will not be
disclosed without the prior written consent of the Company provided that, in
connection with periodic
reports to their shareholders or partners, the Investors may, without first
obtaining such written consent, make general statements, not containing
technical or other confidential information, regarding the nature and progress
of the Company's business, and provided that the confidentiality obligation
under this Section 13 shall not apply to any information which is or has become
public domain, or which any of the Investors shall be obliged to disclose under
the law. Any transfer of shares in the future by the Investors shall be valid
only if the transferee has agreed in writing to be bound by the provisions of
this Section.
13.2 The Company, the Founder and any other person acting on their behalf
shall keep the Investment Agreement and related correspondence in strict
confidence, and shall not issue any public statement or press release concerning
this transaction without the Investor's prior written approval of the substance
and form of any such statement or release.
14. Information Rights
14.1 As soon as practicable, but in any event within forty-five (45) days
after the end of each fiscal year of the Company, the Company shall deliver to
the Investor a consolidated balance sheet of the Company as of the end of such
year, and statements of income and statements of cash flow of the Company for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, United States
dollar-denominated, prepared in accordance with Israeli generally accepted
accounting principles ("GAAP"), audited by a firm of Independent Certified
Public Accountants in the State of Israel who are members of the Israeli
Institute of Certified Public Accountants, and accompanied by an opinion of such
firm which opinion shall state that such balance sheet and statements of income
and cash flow have been prepared in accordance with GAAP applied on a basis
consistent with that of the preceding fiscal year, and present fairly and
accurately the financial position of the Company as of their date, and that the
audit by such accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards.
14.2 As soon as practicable, but in any event within thirty (30) days after
the end of each quarter of each fiscal year of the Company, the Company shall
deliver to the Investor an unaudited consolidated balance sheet of the Company
as of the end of each such period and unaudited consolidated statements of (i)
income and (ii) cash flow of the Company for such period and, in the case of the
first, second and third quarterly periods, for the period from the beginning of
the current fiscal year to the end of such quarterly period, setting forth in
each case in comparative form the figures for the corresponding period of the
previous fiscal year, all in reasonable detail, United States dollar-denominated
and certified, by the chief financial officer (or if none, by the chief
executive officer) of the Company (the "CFO"), that such financial statements
were prepared in accordance with GAAP applied on a basis consistent with that of
preceding periods and, except as otherwise stated therein, fairly present the
financial position of the Company as of their date subject to there being no
footnotes contained therein and changes resulting from year-end audit
adjustments, and all reviewed by a firm of Independent Certified Public
Accountants in the State of Israel who are members of the Israeli Institute of
Certified Public Accountants; and
14.3 As soon as practicable, but in any event within thirty (30) days after
the end of each month, the Company shall deliver to the Investor a report in a
form agreed from time to time by the Company's Board of Directors, which report
shall include an unaudited consolidated balance sheet of the Company and
unaudited estimated consolidated statements of income and statements of cash
flow (including, opening cash, income, expenses and closing cash) as at the end
of such month.
14.4 The Company will permit the authorized representatives of the Investor
full and free access, at all reasonable times, and upon reasonable notice, to
any of the properties of the Company, including its books and records, and to
discuss its affairs, finances and accounts with the Company's officers and
auditor, for any purpose whatsoever. This Section 14.4 shall not be in
limitation of any rights which the Investor or the director designated by the
Investor may have under applicable law. In addition, and not as a limitation on
any of the foregoing, the Company covenants that it will provide full disclosure
and information regarding all of the Company's affairs at meetings of the
Company's Board of Directors, annual general meetings of the shareholders, and
extraordinary general meetings of the shareholders.
14.5 The Company's obligation to deliver the financial statements and other
information under this Section 14 above shall terminate and shall be of no
further force or effect upon the earlier of (a) closing of the Company's IPO; or
(b) such time as the Investor holds an aggregate of less than 2% of the issued
and outstanding share capital of the Company. Thereafter, the Company shall
deliver to the Investor, and its assignees or transferees, such financial
information as the Company from time to time provides to other holders of its
shares.
14.6 The Company's CFO will be approved by the owners of the Preferred
Shares.
(15) Proprietary Information and Non-Competition Agreements.
The Company will not employ, or continue to employ, any person who will have
access to confidential information with respect to the Company and its
operations unless such person has executed and delivered a Proprietary Rights,
Non-Disclosure and Non-Competition Agreement to the satisfaction (as to
substance and form) of the Company's board of directors and reviewed by the
legal counsel.
(16) Annual Plan and Monthly Reports.
The management of the Company shall establish annually an operating plan and
budget for the Company (the "Annual Plan"), in consultation with the Board. The
Annual Plan for the following year shall be submitted to the Board for its
approval.(30) days prior to the first day of the year covered by such Annual
Plan. In addition, the management of the Company shall submit to the Board of
Directors monthly and other reports, in such format and containing such
information, as the Board of Directors shall require.
(17) Negative Covenants
17.1 (1)From the date of Closing and for a period of 100 days thereafter
provided that the Investor's ownership, taken together, shall continue to
constitute at least 5% of the Company's issued capital and (2) from 101 days
after the Closing up until an IPO and provided that the Investor's ownership,
taken together, shall continue to constitute at least 17% of the Company's
issued capital, the Company will not take any of the following actions against
the negative vote of a least 2/3 of the Holders of record of the majority of the
outstanding Preferred Shares voting as a separate class, or against (if such
decision may be taken by the Company's Board of Directors or any committee
thereof) the negative vote of at least one director designated by the Holders of
the Preferred Shares after consultation:
17.1.1 recommend or adopt any amendment of the Memorandum or Articles
of Association of the Company, or any other action which would have the
effect of amending, altering or repealing
preferences, rights, powers or other terms of the Preferred Shares so as to
affect adversely the Preferred Shares. For this purpose, without limiting
the generality of the foregoing, the authorization or issuance of any
securities which have preference or priority over the Preferred Shares (A)
as to the right to receive either dividends or amounts distributable upon
liquidation, dissolution or winding up of the Company, (B) as to the right
to participate in the issuance of new securities by the Company, or (C) as
to the right of first refusal with respect to the transfer of shares by any
shareholder of the Company, shall be deemed to affect adversely the
Preferred Shares;
17.1.2 recommend or approve any material change or modification in the
line of business of the Company, from the Company's current field of
business;
17.1.3 authorize or issue any equity securities of Preferred Shares,
or other securities convertible into such securities, or other securities
of the Company ranking senior to the Preferred Shares, or enter into any
contract or grant any option or warrant for the issue of any such
securities (except for the issuance of Ordinary Shares to employees in
transactions with non-financing purposes) pursuant to an incentive share
option plan approved by the Company's Board of Directors and the issuance
of securities to any investor.
17.1.4 merge with or consolidate into any corporation, firm or entity
or sell, or otherwise dispose of all or substantially all of its assets at
a Company valuation of less than $21,000,000 USD unless the Company causes
the Investor to be paid for their shares as if the valuation was
$21,000,000 USD.
17.1.5 increase the number of directors to more than seven (7)
directors;
17.1.6 declare or pay any dividend or other distribution of cash,
shares, or other assets;
17.1.7 appoint or remove from office the Company's auditors who shall
be from one of the Big Five;
17.1.8 recommend or approve a liquidation (other than a deemed
liquidation), dissolution or winding-up of the Company; or
17.1.9 entering into any transaction with an Interested Party as such
term is defined in the Companies Law 1999.
17.1.10 approving or adopting any stock option plan, in addition to
the existing Employee Share Incentive Plan, which will be granted at an
exercise price reflecting less than a Company valuation of $10,000,000.
18. Conditions of Closing of the Investors.
The obligations of the Investor to purchase Preferred Shares and transfer funds
pursuant to Section 2 above are subject to the fulfillment at or before the
Closing of the following conditions precedent, any one or more of which may be
waived in whole or in part by the Investor, which waiver shall be at the sole
discretion of the Investor:
18.1 The representations and warranties made by the Company and the Founder
in this Agreement shall have been true and correct when made, and shall be true
and correct as of the Closing as if made on the date of the Closing.
18.2 All covenants, agreements, and conditions contained in this Agreement
to be performed or complied with by the Company or the Founder prior to the
Closing shall have been performed or complied with by the Company or the
Founder, as the case may be, prior to or at the Closing.
18.3 The Company shall have secured all permits, consents and
authorizations that shall be necessary or required lawfully to consummate this
Agreement and to issue the Preferred Shares to be purchased by the Investor, and
the Amended Articles shall have been duly filed with the Israeli Registrar of
Companies.
18.4 All of the documents to be delivered by the Company pursuant to this
Agreement prior to or at the Closing shall be in a form and substance
satisfactory to the Investor, in its sole discretion, and shall have been
delivered to the Investor.
18.5 All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory in substance and form to the
Investor, and the Investor shall have received all such counterpart originals or
certified or other copies of such documents as the Investor may reasonably
request.
18.6 The Investor's legal, financial and technical due diligence review of
the Company shall have been completed to the sole and complete satisfaction of
the Investor.
18.7 From the date hereof until the Closing, there will have been no
adverse change in the financial or business condition of the Company.
18.8 Absence of Proceeding. From the date hereof until the Closing there
will have been no effective injunction, writ, preliminary restraining order or
action, suit, proceeding or investigation by or before any court, administrative
agency or other governmental authority directing or instituting the restraining,
prohibition or invalidation of the transactions contemplated by this Agreement
or which materially adversely affect the right of the Investor to own after the
Closing all of the Shares contemplated in this Agreement.
19. Conditions of Closing of the Company.
The Company's obligations to sell and issue the Preferred Shares hereunder are
subject to the fulfillment at or before the Closing of the conditions that (a)
all covenants, agreements and conditions contained in this Agreement to be
performed, or complied with, by the Investor prior to or at the Closing shall
have been performed or complied with by the Investor prior to or at the Closing,
and (b) the representations and warranties made by the Investor in this
Agreement shall have been true and correct when made, and shall be true and
correct as of the date of the Closing, which conditions may be waived in whole
or in part by the Company, and which waiver shall be at the sole discretion of
the Company.
20. Representations and Warranties of the Company and the Founder
20.1 Organization. The Company is duly organized, validly existing and in
good standing under the laws of the State of Israel, and has full corporate
power and authority to own, lease and operate its properties and assets and to
conduct its business as now being conducted and as proposed to be conducted
under the Business Plan. The Company has all requisite power and authority to
execute and deliver this Agreement and other agreements contemplated hereby or
which are ancillary hereto and to consummate the transactions contemplated
hereby and thereby. Neither the nature of the
Company's business as now conducted or as proposed to be conducted nor its
ownership or leasing of property require that the Company be qualified to do
business or in good standing in any jurisdiction other than the State of Israel.
The Memorandum and Articles of Association of the Company as in effect
immediately prior to the Closing are attached hereto as Schedule 20.1. The
Company has not taken any action or failed to take any action, which action or
failure would preclude or prevent the Company or from conducting its business
after the Closing in the manner heretofore conducted. The Company has all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted and as proposed to be conducted
under the Company's Business Plan, the lack of which could adversely affect the
business, properties, prospects, or financial condition of the Company, and the
Company believes that it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
The Company is not in default under any of such franchises, permits, licenses,
or other similar authority.
20.2 Share Capital. The registered share capital of the Company as of the
Closing shall be NIS 35,000, divided into (1) 3,000,000 authorized Ordinary
Shares of a nominal value of 0.01 N.I.S. each, of which (a) ninety-seven
thousand one hundred forty-three (97,143) shares are, on the date of this
Agreement, issued to the shareholders (the "Shareholders") listed in Schedule
20.2(A); (b) an additional fifteen thousand (15,000) shares are reserved for
issuance to the Employee Share Incentive Plan; and (2) 500,000 authorized
Preferred Shares of a nominal value of 0.01 N.I.S. each, of which (a) twelve
thousand four hundred sixty (12,460) are issued to the Investor; and (b) fifty
three thousand six hundred two (53,602) are reserved for the issuance to the
Investor in accordance with Section 22 hereof. Except for the transactions
contemplated by this Agreement, there are no other share capital, preemptive
rights, convertible securities, outstanding warrants, options or other rights to
subscribe for, purchase or acquire from the Company any share capital of the
Company and there are not any contracts or binding commitments providing for the
issuance of, or the granting of rights to acquire, any share capital of the
Company or under which the Company is, or may become, obligated to issue any of
its securities. All issued and outstanding share capital of the Company has been
duly authorized, and is validly issued and outstanding and fully paid and
nonassessable. The Preferred Shares, when issued and allotted in accordance with
this Agreement, will be duly authorized, validly issued, fully paid,
nonassessable, and free of any preemptive rights, and will have the rights,
preferences, privileges, and restrictions set forth in the Amended Articles, and
will be free and clear of any liens, claims, encumbrances or third party rights
of any kind (except as specified in the Amended Articles) and duly registered in
the name of each Investor in the Company's Shareholders Register. The Ordinary
Shares issuable upon conversion of the Shares have been duly authorized and
reserved for issuance by all necessary corporate action and, when issued and
allotted in accordance with the terms of the Amended Articles, will be duly and
validly issued, fully paid, non-assessable, and free of any preemptive rights,
will have the rights, preferences, privileges and restrictions set forth in the
Amended Articles, and will be free and clear of any liens, encumbrances, claims,
or third party rights of any kind (except as specified in the Amended Articles
of Association) and duly registered in the name of each Investor in the
Company's Shareholders Register. The Ordinary Shares issuable upon conversion of
the Shares have been duly authorized and reserved for issuance by all necessary
corporate action and, when issued and allotted in accordance with the terms of
the Amended Articles, will be duly and validly issued, fully paid,
non-assessable, and free of any preemptive rights, will have the rights,
preferences, privileges and restrictions set forth in the Amended Articles, and
will be free and clear of any liens, encumbrances, claims, or third party rights
of any kind (except as specified in the Amended Articles of Association) and
duly registered in the name of each Investor in the Company's Shareholders
Register. The Company is not under any obligation to register for trading on any
securities exchange any of its currently outstanding securities or any of its
securities which may hereafter be issued. Since its incorporation, there has
been no declaration or payment by the Company of dividends, or any distribution
by the Company of any assets of any kind to any of its shareholders in
redemption of or as the purchase price for any of the Company's securities.
Immediately after the Closing and the exercise of the Warrants the authorized
share capital of the Company shall be as all specified in the capitalization
table attached hereto as Schedule 20.1(B).
20.3 Ownership of Shares. Prior to the Closing, the shareholders identified
in Schedule 20.3 are the lawful owners, beneficially and of record, of all of
the issued and outstanding shares as set forth therein, and all rights thereto,
free and clear of all liens, claims, charges, encumbrances, restrictions,
rights, options to purchase, proxies, voting trust and other voting agreements,
calls or commitments of every kind, and none of the said individuals owns any
other shares, options or other rights to subscribe for, purchase or acquire any
capital stock of the Company from the Company or from each other.
20.4 Subsidiaries. The Company does not own any of the issued and
outstanding share capital of any other company, and is not a participant in any
partnership or joint venture.
20.5 Directors, Officers. All the directors of the Company are listed in
Schedule 20.5. Other than is set forth in Section 9 above, the Company has no
agreement, obligation or commitment with respect to the election of any
individual or individuals to the Board and there is no voting agreement or other
arrangement among the Company's shareholders. The sole officers of the Company
are ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇. All agreements,
commitments and understandings, whether written or oral, with respect to any
compensation to be provided to any of the Company's directors or officers have
been fully disclosed in writing to the Investor.
20.6 Financial Statements. The Company has furnished the Investor with its
(i) audited financial statements as of and for the year ended December 31, 1999
and (ii) trial balance for March 31, 2000, ((i) and (ii) are collectively
referred to as the "Financial Statements" and are attached hereto as Schedule
20.6) (the "Financial Statements"). The Financial Statements are true and
correct in all material respects, are in accordance with the books and records
of the Company and have en prepared in accordance with Israeli GAAP consistently
applied, and fairly and accurately present in all material respects the
financial position of the Company as of such dates and the results of its
operations for the periods then ended. The Company has no liabilities, debts or
obligations, whether accrued, absolute or contingent other than liabilities
reflected or reserved against in the Financial Statements. The Company was
established in July 4, 1999, and since its inception, the Company has operated
only in the ordinary course of business. There has not been:
20.6.1 any material change in the assets, liabilities, condition
(financial or otherwise) or business of the Company from that reflected in
the Financial Statements;
20.6.2 any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties,
conditions (financial or otherwise), operating results or business of the
Company;
20.6.3 any waiver by the Company of a valuable right or of a material
debt owed to it;
20.6.4 any satisfaction or discharge of any material lien, material
claim or material encumbrance or payment of any material obligation by the
Company, except in the ordinary course of business and that is not
individually or in the aggregate adverse to the assets, properties,
condition (financial or otherwise), operating results or business of the
Company;
20.6.5 any material change or amendment to a material contract or
material arrangement by which the Company or any of their assets or
properties is bound or subject;
20.6.6 any material change in any compensation arrangement or
agreement with any employee of the Company;
20.6.7 any loans made by the Company to its employees, officers, or
directors other than travel advances made in the ordinary course of
business;
20.6.8 any sale, transfer or lease of, except in the ordinary course
of business, or mortgage or pledge or imposition of lien on, any of the
Company's assets;
20.6.9 any change in the accounting methods or accounting principles
or practices employed by the Company; or
20.6.10 any other event or condition of any character that would
materially adversely affect the assets, properties, condition (financial or
otherwise), operating results or business of the Company.
20.7 Authorization; Approvals. All corporate action on the part of the
Company necessary for the authorization, execution, delivery, and performance of
all the of Company's obligations under this Agreement and for the authorization,
issuance, and allotment of the Preferred Shares being sold under this Agreement
and of the Ordinary Shares issuable upon conversion of the Preferred Shares has
been (or will be) taken prior to the Closing. This Agreement, when executed and
delivered by or on behalf of the Company, shall constitute the valid and legally
binding obligations of the Company, legally enforceable against the Company in
accordance with their respective terms. No consent, approval, order, license,
permit, action by, or authorization of or designation, declaration, or filing
with any governmental authority on the part of the Company is required that has
not been, or will not have been, obtained by the Company prior to the Closing in
connection with the valid execution, delivery and performance of this Agreement
or the offer, sale, or issuance of the Preferred Shares.
20.8 Compliance with Other Instruments. The Company is not in default (a)
under its Memorandum or Articles of Association or other formative documents, or
under any note, indenture, mortgage, lease, agreement, contract, purchase order
or other instrument, document or agreement to which the Company is a party or by
which it or any of its property is bound or affected or (b) with respect to any
law, statute, ordinace, regulaton, order, writ, injunction, decree, or judgment
of any court or any governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which default, in any such case, would
adversely affect or in the future is reasonably likely to adversely affect the
Company's business, prospects, condition (financial or otherwise, affairs,
operations or assets. No third party is in default under any agreement, contract
or other instrument, document or agreement to which the Company is a party or by
whichit or any of its property is affected. The Company is not a party to or
bound by any order, judgment, decree or award of any governmental authority,
agency, court, tribunal or arbitrator.
20.9 No Breach. Neither the execution and delivery of this Agreement nor
compliance by the Company with the terms and provisions hereof or thereof, will
conflict with, or result in a breach or violation of, any of the terms,
conditions and provisions of: (i) the Company's Memorandum of Association or the
Articles of Association, or other governing instruments of the Company, (ii) any
judgment, order, injunction, decree, or ruling of any court or governmental
authority, domestic or
foreign, (iii) any agreement, contract, lease, license or commitment to which
the Company or any Subsidiary is a party and which would impair the ability of
the Company to execute or deliver or perform any of the Agreement transactions
or (iv) applicable law. Such execution, delivery and compliance will not (a)
give to others any rights, including rights of termination, cancellation or
acceleration, in or with respect to any agreement, contract or commitment
referred to in this paragraph, or to any of the properties of the Company or (b)
otherwise require the consent or approval of any person, which, consent or
approval has not heretofore been obtained.
20.10 Records. The minute books of the Company which have been provided to
the Investor contain accurate and complete copies of the minutes of every
meeting of the Company's shareholders and Board of Directors (and any committee
thereof). No resolutions have been passed, enacted, consented to or adopted by
the directors (or any committee thereof) or shareholders of the Company, except
for those contained in such minute books. The corporate records of the Company
have been maintained in accordance with all applicable statutory requirements
and are complete and accurate in all respects.
20.11 Ownership of Assets. The Company does not currently lease or license
any property with the exception of the Company's office space located at Science
Park, Nesher, Israel, true and correct copies of the leases for which have been
provided to the Investor. The Company does not own any assets other than those
set forth in Schedule 20.11 hereto.
20.12 Intellectual Property and Other Intangible Assets.
20.12.1 Other than components and sub-systems which have been legally
acquired, the Company owns and has developed, free and clear of all liens,
claims and restrictions, all patents, trademarks, service marks, trade
names and copyrights, and applications and rights with respect to the
foregoing, and all trade secrets, including know-how, inventions, designs
processes, works of authorship, computer programs and technical data and
information (collectively herein "Intellectual Property") used and
sufficient for use in the conduct of its business as now conducted and as
proposed to be conducted under the Business Plan, without infringing upon
or violating any right, lien, or claim of others, including without
limitation the Founder, past and present employees and employers of the
Founder, and past and present employees and employers of the past and
present employees of the Company. The Company is not obligated or under any
liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service ▇▇▇▇, trade name, copyright or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business as now conducted or as proposed to be conducted or otherwise.
20.12.2 Any and all Intellectual Property of any kind which has been
developed, is currently being developed, or will be developed in the
future, by any employee of the Company shall be the property solely of the
Company. The Company has taken security measures to protect the secrecy,
confidentiality and value of all the Intellectual Property, which measures
are reasonable and customary in the industry in which the Company operates.
The Founder and each of the Company's employees have entered into written
agreements with the Company assigning to the Company all rights in
Intellectual Property developed in the course of their employment by the
Company and each of the Company's employees and other persons who, either
alone or in concert with others, developed, invented, discovered, derived,
programmed or designed the Intellectual Property, or who has knowledge of
or access to information about the Intellectual Property, including
(without limitation) the Founder, have entered into a written agreement
with the Company which has been provided to the Investor.
20.12.3 The Company has not received any communications alleging that
the Company has violated or by conducting its business as proposed, would
violate, any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person
or entity. Neither the Founder nor any of the Company's employees is
obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or
order of any court or administrative agency, that would interfere with the
use of the Founder's or such employee's best efforts to promote the
interests of the Company, as the case may be, or that would conflict with
the Company's business as conducted and as proposed to be conducted.
Neither the execution nor delivery of the Agreement, nor the carrying on of
the Company's business by the employees of the Company, as the case may be,
nor the conduct of the Company's business as proposed to be conducted, will
conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or instrument
under which the Founder or any of s uch employees are now obligated. It
isnot, and will not become, necessary to utilize any invention of the
Founder or the Company's employees (or people the Company or any Subsidiary
currently intends to hire) made prior to their employment by the Company
other than those that have been assigned to the Company pursuant to the
Proprietary Information and Non-Competition Agreement signed by the Founder
or such employee.
20.13 Taxes. The Company has not made any elections under applicable
laws or regulations (other than elections that related solely to methods of
accounting, depreciation or amortization) that would have an adverse effect
on the Company, its financial condition, its business as presently
conducted or proposed to be conducted or any of its properties or assets.
The company has accurately prepared and timely filed all income and payroll
tax returns and filings that are required to be filed by them (the "Tax
Returns") and have paid or made provision for the payment of all amounts
due pursuant to such returns. None of the Tax Returns has been audited by
any taxing authority, the Company has not been advised that any of such Tax
Returns will be so audited, and there are no waivers in effect of the
applicable statute of limitations for any period. No deficiency assessment
or proposed adjustment of income or payroll taxes of the Company is pending
and the Company has no knowledge, after due inquiry, of any proposed
liability for any tax to be imposed on the Company other than in the
ordinary course of business.
20.14 Contracts. Schedule 20.14 contains a true and complete list of
all contracts and agreements to which the Company is a party or by which
its property is bound. Each of such contracts and agreements is in full
force and effect, and neither the Company nor any other party thereto is in
breach thereof. True and correct copies of all such contracts have been
delivered to the Investor. Except as set forth on Schedule 20.14 hereto,
the Company does not have any employment or consulting contracts, deferred
compensation agreements or bonus, incentive, profit-sharing, or pension
plans currently in force and effect, or any understanding with respect to
any of the foregoing.
20.15 Litigation. No action, proceeding or governmental inquiry or
investigation is pending or threatened against the Company or any of its
officers, directors, or employees (in their capacity as such), or against
the Founder, or against any of the Company's or properties, before any
court, arbitration board or tribunal or administrative or other
governmental agency, nor is there is any basis for the foregoing. There is
no action, suit, proceeding or investigation by the Company or the Founder
currently pending or that the Company or the Founder intends to initiate.
20.16 Interested Party Transactions. No officer, director or
shareholder of the Company, or any affiliate of any such person or entity
or of the Company, has or has had, either directly or indirectly, (a) an
interest in any person or entity which (i) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or
sold by the Company, or (ii) purchases from or
sells or furnishes to the Company any goods or services, or (b) a
beneficial interest in any contract or agreement to which the Company is a
party or by which it may be bound or affected. There are no existing
arrangements or proposed transactions between the Company and any officer,
director, or shareholder of the Company, or any affiliate or associate of
any such person. No employee, shareholder, officer, or director of the
Company is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them.
20.17 Employees. The Company does not have any employment contract
with any officer or employee or any other consultant or person which is not
terminable by it at will without liability, upon thirty (30) days prior
notice. Except as set forth in Schedule 20.2, the Company does not have any
deferred compensation or stock option covering any of its officers or
employees. The Company has complied with all applicable employment laws.
Schedule 20.17 hereto lists all employees of the Company and all
employment, non-competition and confidentiality agreements between the
Company and any employee or consultant of the Company or any other entity.
True and correct copies of such agreements have been delivered to the
Investors. To the best of the Company's and the Founder's knowledge,
neither the employment by the Company of any of the Company's employees,
nor the engagement by the Company with any of its consultants, constitutes
or is likely to constitute a breach of any of such persons obligations to
third parties, including non-competition or confidentiality obligations.
All obligations, commitments and liabilities in connection with the
employment of the Company's employees (including without limitation the
payments to the Income Tax Authority and the National Security) have been
fully paid by the Company. In addition, the Company does not have any
obligations, commitments or liabilities to its former employees who
resigned or commenced working in the Company.
20.18 Environment and Health. The Company is in compliance in all
material respects with all applicable Environmental and Health Laws, which
compliance includes the possession by the Company of all permits,
approvals, licenses and other governmental authorizations required under
applicable health and/or environmental laws, and compliance with the terms
and conditions thereof. The Company has not received any notice or other
communication (in writing or otherwise), whether from a governmental body,
citizens group, employee or otherwise, that alleges that the Company is not
in compliance with any Environmental and Health Law, and, to the Company
and the Founder's best knowledge, there are no circumstances that may
prevent or interfere with the Company's compliance with any Environmental
and Health Law in the future. For purposes of this Section 20.18: (i)
"Environmental and Health Law" means any Israeli , regulations, orders,
decrees, standards, and other legal or administrative requirement relating
to pollution, hazardous materials or protection of human wealth or the
environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any such requirement relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern; and (ii) "Materials of
Environmental Concern" include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance
that is now regulated by any Environmental and Health Law or that is
otherwise a danger to health, reproduction or the environment.)
20.19 Insurance. The Company has adequate and customary insurance policies
in force as described in Schedule 20.19.
20.20 Governmental Authorizations. Schedule 20.20 identifies each material
governmental authorization, license, permit approval and consent held by the
Company (the "Governmental Authorizations"), and the Company has delivered to
Investor accurate and complete copies thereof.
The Governmental Authorizations are valid and in full force and effect, and
collectively constitute all Governmental Authorizations necessary to enable the
Company to conduct its business in the manner in which its business is currently
being conducted, and as proposed to be conducted under the Company Business
Plan. The Company is, and at all times has been, in substantial compliance with
the terms and requirements of the Governmental Authorizations. Without
derogating from the foregoing, the Project has been approved by the OCS as an
approved plan as more fully set forth is Schedule 20.20.
20.21 Full Disclosure. Neither this Agreement nor any certificates made or
delivered in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading, in view of the circumstances in which they were made.
There is no material fact or information relating to the business, prospects,
condition (financial or otherwise), affairs, operations, or assets of the
Company that has not been disclosed to the Investor in writing by the Company.
20.22 Financial Liabilities. The Company's liabilities are not in excess of
$US30,000 and is reflected in the Company's latest financial report as exhibited
to the Investor. Additionally, the Company shall cause all outstanding
liabilities towards its shareholders (shareholder loans) which are not repaid to
be converted into equity prior to the Closing of this Agreement.
21. Representations and Warranties of the Investors
The Investor hereby represents and warrants severally and not jointly, to the
Company as follows:
21.1 Enforceability. Such Investor has been duly incorporated and is
validly existing under the laws of the State of Colorado. This Agreement, when
executed and delivered by such Investor, will constitute the valid, binding and
enforceable obligations of such Investor.
21.2 Authorization. The execution, delivery and performance of the
obligations of such Investor hereunder have been duly authorized by all
necessary corporate action.
21.3 Experience. The Investor is experienced in investments in start-up
companies such as the Company and has reviewed and inspected all of the data and
information provided to it by the Company in response to its request in
connection wtith this Agreement. The Investor is also basing its decision to
invest herein on reliance of the Company's representations and warranties
contained herein.. The Investor is aware that that the Company is a start-up
company, that its technology is under development and that there is no guarantee
of success.
22. Warrants to the Investor.
At the Closing, the Company shall issue to the Investor Warrants to purchase
Preferred shares of the Company in the form of Schedules 22.1 ("Warrant A"),
22.2 ("Warrant B"), 22.3 ("Warrant C"), 22.4 ("Warrant D") and 22.5 ("Warrant
E") subject to the following general provisions:
22.1 Warrant A. Warrant A shall be exercisable in whole beginning on the
date of the signing of this Agreement and remaining in effect for a period of
seventy (70) days thereafter (the "Warrant A Period").
Warrant A entitles the Investor to purchase from the Company 8,900 Preferred
Shares of the Company par value NIS 0.01 (the "Warrant A Shares") in
consideration for the payment to the
Company of US$1,000,000. Such number of Preferred Shares shall be adjusted for
any share combination or sub-division, bonus shares or any other
recapitalization of the Company's shares (a "Recapitalization Event"). For the
removal of doubt, the exercise of the aforementioned Warrant A Shares shall
entitle the Investor to hold 5% of the Company's authorized share capital at the
time of exercising the Warrant A shares based on a Company value of $20,000,000
(Twenty Million USD).
22.2 Warrant B. Warrant B shall be exercisable in whole beginning on the
date of e signing of this Agreement and remaining in effect for a period of one
hundred (100) days thereafter (the "Warrant B Period").
Warrant B entitles the Investor to purchase from the company 8,900 Preferred
Shares of the Company par value NIS 0.01 (the "Warrant B Shares") in
consideration for the payment to the Company of US$1,000,000. Such number of
Preferred Shares shall be adjusted for any Recapitalization Event. For the
removal of doubt, the exercise of the aforementioned Warrant B Shares shall
entitle the Investor to hold 5% of the Company's authorized share capital at the
time of exercising the Warrant B Shares based on a Company vlaue of $20,000,000
(Twenty Million USD).
22.3 Warrant C. Warrant C shall be exercisable in whole beginning on the
date of the signing of this Agreement and remaining in effect for a period of
one hundred thirty (130) days thereafter (the "Warrant C Period").
Warrant C entitles the Investor to purchase from the company 8,901 Preferred
Shares of the Company par value NIS 0.01 (the "Warrant C Shares") in
consideration for the payment to the Company of US$1,000,000. Such number of
Preferred Shares shall be adjusted for any Recapitalization Event. For the
removal of doubt, the exercise of the aforementioned Warrant C Shares shall
entitle the Investor to hold 5% of the Company's authorized share capital at the
time of exercising the Warrant C Shares based on a Company value of $20,000,000
(Twenty Milllion USD).
22.4 Warrant D. Warrant D shall be exercisable in whole beginning on the
date of the signing of this Agreement and remaining in effect for a period of
one hundred sixty (160) days thereafter (the "Warrant D Period").
Warrant D entitles the Investor to purchase from the Company 8,901 Preferred
Shares of the Company par value NIS 0.01 (the "Warrant D Shares") in
consideration for the payment to the Company of US$1,000,000. Such number of
Preferred Shares shall be adjusted for any Recapitalization Event. For the
removal of doubt, the exercise of the aforementioned Warrant D Shares shall
entitle the Investor to hold 5% of the Company's authorized share capital at the
time of exercising the Warrant D Shares based on a Company value of $20,000,000
(Twenty Million USD).
22.5 Warrant E. Warrant E shall be exercisable in whole beginning upon the
exercise of at least three (3) of the above mentioned Warrants in this Section
22 and until the earlier of (i) twenty four (24) months from the date of the
signing of the Agreement, or (ii) the consummation of an IPO or an Exit.
Warrant E entitles the Investor to purchase from the Company 18,000 Preferred
Shares of the Company par value NIS 0.01 (the "Warrant E Shares") in
consideration for the payment to the Company of US$5,000,000. Such number of
Preferred Shares shall be adjusted for any Recapitalization Event. For the
removal of doubt, the exercise of the aforementioned Warrant E Shares shall
entitle the Investor to hold 7.07% of the Company's authorized share capital at
the time
of exercising the Warrant E Shares based on a Company vlaue of $50,000,000
(Fifty Million USD).
22.6 The Warrants shall be exercised in the manner set forth in the warrant
certificates.
22.7 In order for the Investor to exercise Warrant C and/or Warrant D he
must exercise either Warrant A or Warrant B. Failure to exercise Warrants A and
Warrant B will cause the expiration of Warrants C and D.
22.8 The Company and the Founder agrees that the Investor at his sole
discretion and with the consent of the Company which consent shall not be
unreasonably withheld, shall have the right to assign his right of exercising
all of the above mentioned Warrants to any other third party provided that the
third party undertakes all rights and obligations contained herein. The parties
acknowledge that in any assignment a commission up to six percent (6%) in
shares/cash may be expected by some or all of the assign's agent.
23. Chief Scientist
Schedule 23 includes a complete list of all grants, incentives and subsidies
("Grants") from the Government of the State of Israel or any agency thereof to
the Company, including, without limitation, grants from the Office of the Chief
Scientist (hereinafter: the "OCS") Copies of all letters of approval, and
supplements thereto, granted to the Company by the OCS (and copies of all
applications with respect to extension of plans which are not reflected in the
Company Financial Statements) are attached hereto as Schedule 23. The Company
has not received any Grant in relation to the building that they lease within
the Encouragement of Capital Investments Law, 1959. The Company has not
approached the Investment Center of the Ministry of Industry and Trade for any
purpose. The Company is in compliance with the material terms and conditions of
the Grants and has fulfilled all the undertakings relating thereto. The Company
has received funds from the OCS and it is required to repay royalties to the OCS
from its sales until full repayment of the funds. The Company shall have
received approval from and provided all notices to the OCS required to
consummated the Agreement and the transactions contemplated herein.
24. Registration Rights
The registration rights agreement attached as Schedule 24 will allow the current
shareholders to join any demand registration and "piggyback" rights of the
Investor's shares at the rate of twenty five percent (25%) to the current
shareholders and seventy-five percent (75%) to the Investor.
25. Employee Share Incentive Plan
Options constituting fifteen thousand (15,000) of the Company's issued share
capital may be granted or sold to the Company's employees under the Employee
Share Incentive Plan to be approved by the Company of which 6,000 shares have
already been committed.
26. Employment Agreements
The Founder and the key employees shall enter into twenty four (24) month
employment agreement with the Company under reasonable terms approved by the
Investor including a non-competition undertaking which will survive termination
of the employment agreements.
27. Expenses
Each party shall pay their own expenses, including but not limited to attorney
fees, in connection with the investment contemplated herein.
28. Stamp Tax.
The Company will pay the stamp duty on the issuance of the Preferred Shares.
29. Governing Law & Jurisdiction
This Agreement shall be interpreted in accordance with and governed in all
aspects by the laws of the State of Israel. The competent courts in Tel Aviv
shall have the exclusive jurisdiction over all disputes arising between the
parties with respect to this Agreement, its implementation or interpretation.
30. General
30.1 This Agreement may be executed in several counterparts and all such
counterparts together shall be deemed to be the original and will constitute but
one and the same instrument. To remove any doubt, facsimile signature shall be
deemed as an original for all purposes.
30.2 The failure or delay of either party to require the performance of any
term under this Agreement, or the waiver by either party of any breach under
this Agreement, shall not prevent subsequent enforcement of such terms, nor be
deemed a waiver of any subsequent or prolonged breach.
30.3 Any notice sent by one party to the other by registered mail to the
addresses heading the Agreement, or to addresses provided by one party to the
other from time to time - will be deemed to have been delivered on the 7th
business day after the day of mailing in Israel. Fax messages will be deemed to
have been delivered one business day after transmission.
30.4 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. Any term of this Agreement may be
amended and the observance of any term hereof may be waived (either
prospectively or retroactively and either generally or in a particular instance)
only with the written consent of the parties to this Agreement.
31 Miscellaneous
31.1 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.
31.2 Survival of Representations. All representations, warranties and
agreements made by any party to this Agreement or pursuant hereto shall survive
the Closing, except that with respect to the Company the representations and
warranties set forth in Sections 20.2, 20.13 and 23, for the limitation period
in accordance with any applicable law.
31.3 Successors and Assigns; Assignment. Except as otherwise expressly
limited herein, the provisions hereof shall be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties hereto. None of the
rights, privileges, or obligations set forth in, arising under, or created by
this Agreement may be assigned or transferred without the prior consent in
writing of each party to this Agreement, with the exception of assignments and
transfers from the Investor to any other entity which controls, is controlled by
or is under common control with, such Investor. provided, however, that no such
assignment or transfer shall become effective unless each such transferee has
provided the Company with a confirmation in writing that it is bound by all
terms and conditions of this Agreement as if it were an original party to it.
For the purposes of this Agreement, a person shall be deemed to control another
if the former (a) owns (directly or indirectly through one or more
intermediaries) fifty percent (50%) or more of the issued and outstanding share
capital of the latter, or (b) possesses the ability (directly or indirectly
through one or more intermediaries) to designate or cause the designation of
fifty percent (50%) or more of the directors of the latter or of its managing
director, general manager or chief executive officer (regardless of actual
title) or (c) possess the power (directly or indirectly through one or more
intermediaries) to direct or cause the direction of the management and policies
of the latter whether through the ownership of voting securities, by contract or
otherwise.
31.4 Best Efforts. Subject to the terms and conditions of this Agreement,
each of the parties hereto will use its best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
IN WITNESS WHEREOF THE PARTIES HAVE SIGNED AS OF THE DATE SET FORTH ABOVE.
--------------------
ORGANITECH LTD. INCUBATE THIS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------- --------------------------
/s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------- --------------------------
Each of the undersigned hereby: (1) confirms his agreement to the terms of this
Agreement; and (2) grants any consent that may be required from him/it as a
shareholders of the Company; and (3) waives y rights, including, but not limited
to, preemptive right, the waiver of which may be required for the consummation
of this Agreement and the transactions contemplated herein; and (4) covenants to
vote in favor of any resolution which will be needed in order to perfect the
Agreement and/or to comply with Company's obligations pursuant to said
Agreement; and (5) covenants to refrain from voting in favor of any resolution
which might negate the Company's obligations pursuant to said Agreement; and (6)
confirms that as of the date hereof, he/it has no claim or cause of action
whatsoever against the Company.
AGREED AND ACCEPTED:
1. ▇▇▇▇ ▇▇▇▇▇▇ Date: June 20, 2000
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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2. TEIC Date:June 20, 2000
/s/ ▇▇▇▇▇ Mor
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3. D.G. Pizza, Ltd. Date: June 20, 2000
/s/D. Gold
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4. ▇▇▇▇ ▇▇▇▇▇▇ Date: June 20, 2000
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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5. ▇▇▇▇ ▇▇▇▇▇▇ Date:June 20, 2000
/s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------
EXHIBIT A
FOUNDERS AGREEMENT
EXHIBIT B
PROJECT B
SCHEDULE 2.2.1(a)(A)
MINUTES OF AN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY DULY
CONVENED AND HELD ON July 10, 2000
ORGANITECH LTD
MINUTES OF AN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY DULY
CONVENED AND HELD ON July 10, 2000
Present
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Technion Entrepreneurial Incubator Co. Ltd (▇▇▇▇▇ Mor)
Chairman of the Meeting
▇▇▇▇ ▇▇▇▇▇▇
Agenda
1. Special Resolutions effecting amendments to the Company's Memorandum and
Articles of Association with respect to:
o Creation of a new class of shares.
1.2 Adopting new Articles of Association.
UNANIMOUSLY RESOLVED:
1. To Waive any and all formal requirements relating to convening a general
meeting of shareholders under the Company's Articles of Association and/or any
agreement and/or any applicable law, including - but not limited to - the
requirement for 21 days prior notice for adoption of special resolutions.
+ To adopt the following resolutions as special resolutions:
2.1 To create a new class of shares in the Company's registered share capital to
be called Series A Preferred Shares (hereinafter "Preferred Shares"), by
converting an aggregate of five hundred thousand (500,000) Ordinary Shares, NIS
0.01 nominal value each, from the Company's registered and unissued share
capital, into five hundred thousand (500,000) Preferred Shares . Each Preferred
Share shall bear a nominal value of NIS 0.01 and shall have such rights attached
thereto as detailed in the Company's Articles of Association, as amended
pursuant to the resolution detailed below.
2.2 To redefine the rights attached to the Ordinary Shares NIS 0.01 nominal
value each in the Company's registered and unissued, as well as in the Company's
authorized and issued share capital, as detailed in the Company's Articles of
Association, as amended pursuant to the resolution detailed below.
2.3 To effect amendments to the Company's Memorandum of Association
corresponding to the amendments effected pursuant to resolutions 2.1 - 2.2
above.
2.4 To cancel the existing Articles of Association of the Company and replace
them with the Articles of Association attached as Schedule 2.2.1(a)(B) to these
minutes.
There being no further business the Chairman adjourned the meeting
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ Mor
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Technion Entrepreneurial Incubator Co. Ltd
/s/ ▇.▇▇▇▇
----------------------------------------
D.G. Pizza Ltd
036 organitech 18.7
Schedule 2.2.1(a)B
Amended and Restated Articles of Association
SCHEDULE 2.2.1(b)
ORGANITECH LTD.
MINUTES OF A MEETING OF THE COMPANY'S BOARD OF DIRECTORS DULY CONVENED AND HELD
ON July 10, 2000
ORGANITECH LTD.
MINUTES OF A MEETING OF THE COMPANY'S BOARD OF DIRECTORS DULY CONVENED AND HELD
ON JULY 10, 2000
Present
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Technion Entrepreneurial Incubator Co. Ltd (▇▇▇▇▇ Mor)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Chairman of the Meeting
---------------
Agenda
1. Approval of Investment Agreement.
2. Issuance of Shares.
UNANIMOUSLY RESOLVED
1. That the Investment Agreement dated June 20, 2000, by and between the Company
and the Incubate This Inc., a company duly incorporated under the laws of the
State of Colorado, USA ( hereinafter the "Investor"), including all agreements
and other instruments attached thereto (hereinafter the "Agreement"), and the
transactions contemplated thereunder be and hereby are approved and ratified and
that ▇▇▇▇ ▇▇▇▇▇▇ has been, designated and authorized both on behalf of, and as
an officer of the Company, to execute the Agreement and to take or cause to be
taken such action which this Board of Directors might have authority to take in
connection with the creation, issuance and sale of the Preferred Shares to be
issued to the Purchasers thereunder and for the consummation of the transactions
contemplated thereunder.
2. That the Company be and hereby is, further to the Agreement, authorized to
issue and sell and does hereby issue and sell as follows:
To the Investor, an aggregate of twelve thousand four hundred sixty (12,460) of
the Company's Preferred Shares, NIS 0.01 nominal value each.
3. That ▇▇▇▇ ▇▇▇▇▇▇ is authorized to take any and all action which they may deem
necessary or desirable to carry out the purposes and intent of the foregoing
resolutions, including, but not limited to execute, make, verify, acknowledge,
deliver, file and sign any and all applications, certificates, forms, notices,
reports, instruments, agreements and documents, and to take any and all other
action as may be necessary in this regard.
There being no further business the Chairman adjourned the meeting.
/s/▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------- ------------------ --------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ Dani Gold /s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------- ------------------ --------------------
Dani Gold ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
037(vers 3) organitech 18.7
SCHEDULE 2.2.1(c)
SHARE CERTIFICATES
SCHEDULE 2.2.1(d)
(ORGANITECH'S LETTERHEAD)
COMPLIANCE CERTIFICATE
For the purpose of the Closing as per Section 2.2.1(d) of the
InvestmentAgreement dated as of _____, 2000, (the "Agreement") by and
betweenOrganitech Ltd. (the "Company") and Incubate This, Inc (the
"Investor"),the Company hereby certifies to the Investor as follows:
All representations and warranties made by the Company in the Agreementare true
and correct as of the date of the Closing.All covenants, agreements and
conditions contained in the Agreement tobe performed or complied with by the
Company prior to or at the Closinghave been performed or complied with prior to
or at the Closing.Since the signing of the Agreement, there has been no material
adversechange in the financial and/or business condition of the Company.
IN WITNESS WHEREOF, the undersigned has signed his name to thiscertificate this
__ day of ________, 2000.
ORGANITECH LTD.
/s/▇▇▇▇ ▇▇▇▇▇▇
--------------
▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE 2.2.1(e)
OPINION OF COUNSEL
________ , 2000
----------------------
----------------------
----------------------
Re: Opinion of Counsel
This Opinion Letter is provided to you at the request of the Investorlisted in
that certain Investment Agreement dated _________, 2000, byand between
Organitech Ltd (the "Company") and Incubate This, Inc. (the"Investor") (the
"Agreement") and pursuant to Section 2.2.1(e) of saidAgreement.
Except as otherwise indicated herein, capitalized terms used in thisOpinion
Letter are defined as set forth in the Agreement.This Opinion Letter is governed
by and shall be interpreted inaccordance with the laws of the State of Israel.
The law covered by theopinions expressed herein is limited to the law of the
State of Israel.Without limiting the foregoing, no opinion is rendered hereby
withrespect to the laws of the United States of America. Any disputearising
under or in relation to this Opinion Letter shall be resolvedexclusively in the
competent court of the Haifa district.
In addition to the other assumptions on which I may rely, I have reliedupon the
factual representations made by the Company in Section 20 ofthe Agreement.
Based upon and subject to the foregoing I am of the opinion that:
1. The Company is a corporation duly organized, validly existing and ingood
standing under the laws of the State of Israel. The Company has allnecessary
corporate power and authority to own or lease its propertiesand to conduct its
business as it is now being conducted.
2. The execution, delivery and performance by the Company of theAgreement and
the transactions contemplated thereby have been dulyauthorized by all requisite
corporate actions that have been taken bythe Company. The Agreement constitutes
a valid and binding obligation ofthe Company enforceable against the Company in
accordance with its terms.
3. Neither the execution, delivery and performance of the Agreement northe
consummation of the transactions contemplated thereby will (1)violate or be in
conflict with any provision of the Memorandum ofAssociation or Articles of
Association of the Company; or (2) anyjudgment, decree or order by which the
Company is bound or affected; or(3) result in a breach or constitute a default
under applicable law orany contract known to me, to which the Company is a
party.
4. All corporate actions necessary for the issuance, sale and deliveryof the
Preferred Shares as per Sections 2 of the Agreement have beentaken by the
Company. The Shares have been validly issued,
fully paid-upand are free and clear of any and all liens, pledges,
claims,encumbrances or other third party rights. The Company's
currentlyauthorized share capital allows for the exercise of the Warrants
inaccordance with their terms and to be free and clear of any and allliens,
ledges, claims, encumbrances or other third party rights.
5. Upon Closing of the transaction contemplated by the Agreement (andafter the
issuance of the Preferred Shares to the Investor) theauthorized capital stock of
the Company shall consist of three million(3,000,000) Ordinary Shares and five
hundred thousand (500,000) Series APreferred Shares of which ninety seven
thousand one hundred forty three(97,143) Ordinary Shares and twelve thousand
four hundred sixty (12,460)Preferred Shares are issued, fifteen thousand
(15,000) Ordinary Sharesare reserved for employees and the balance of the
Ordinary Shares andthe Preferred Shares are duly authorized and unissued.
To the best of my knowledge there are no outstanding preemptiverights, options,
warrants or rights to subscribe for, or to purchase, oragreements with respect
to any such rights, or commitments to issue, anyshares of the Company, except as
set forth in the Agreement.
6. There is no approval, consent, authorization or other action by, ornotice to,
or filing with, any governmental authority which has not beenexercised prior to
Closing which is necessary or required in connectionwith the execution, delivery
or performance by the Company, orenforcement against the Company, of the
Agreement and/or thetransactions contemplated thereby.
7. Except as disclosed in the Agreement, to our knowledge there is noaction,
proceeding, governmental inquiry or investigation pendingagainst the Company or
any of the Company's properties before any court,arbitration board, tribunal,
administrative or other governmentalagency. The Company is not a party to or
subject to the provisions ofany order, writ, injunction, judgment or decree of
any court orgovernmental agency or instrumentality. There is no action,
suit,proceeding or investigation currently pending by the Company.
This Opinion Letter speaks only as of its date and may be reliedupon by you
alone and only in connection with the Agreement and may notbe used or relied
upon by you or any other person for any other purposewhatsoever, without my
prior written consent in each instance.
Very truly yours,
Avi Goldsobel, Adv.
SCHEDULE 2.2.2
SHAREHOLDERS REGISTER
SCHEDULE 20.1
MEMORANDUM AND ARTICLES OF ASSOCIATION
SCHEDULE 20.2(A)
LIST OF SHAREHOLDERS
Shareholders
1. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 50,000 ordinary shares
2. D.G. Pizza Ltd. 20,000 ordinary shares
3. Technion Entrepreneurial Incubator Co. Ltd 20,000 ordinary shares
4. Arie and ▇▇▇▇ ▇▇▇▇▇▇ 7,143 ordinary shares
5. Employees (reserved) 15,000 ordinary shares
OPTIONS
There are no option or other security holders other than the employee options..
SCHEDULE 20.2(B)
CAPITALIZATION TABLE
SCHEDULE 20.3
LIST OF SHAREHOLDERS
Shareholders
1. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ 50,000 ordinary shares
2. D.G. Pizza Ltd. 20,000 ordinary shares
3. Technion Entrepreneurial Incubator Co. Ltd 20,000 ordinary shares
4. Arie and ▇▇▇▇ ▇▇▇▇▇▇ 7,143 ordinary shares
SCHEDULE 20.5
DIRECTORS OF THE COMPANY
List of current Directors:
1. ▇▇▇▇▇ ▇▇▇▇▇▇▇
2. ▇▇▇▇▇ ▇▇▇▇
3. ▇▇▇▇ ▇▇▇▇▇▇
4. ▇▇▇▇ ▇▇▇▇▇▇
5. ▇▇▇▇ ▇▇▇▇▇▇
6. ▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE 20.6
FINANCIAL STATEMENTS
SCHEDULE 20.11
LIST OF ASSETS
SCHEDULE 20.14
MATERIAL CONTRACTS AND AGREEMENTS
SCHEDULE 20.17
EMPLOYEES, EMPLOYEE CONTRACTS, STOCK OPTIONS, NON-COMPETITION AND
CONFIDENTIALITY AGREEMENTS
SCHEDULE 20.19
INSURANCE POLICIES
SCHEDULE 20.20
GOVERNMENTAL AUTHORIZATIONS
Attached
SCHEDULE 22.1
WARRANT "A"
To: Incubate This, Inc.
Date: _______________
Warrant Certificate "A"
To Purchase Series A Preferred Shares of
ORGANITECH LTD.
for such consideration as detailed below
VOID AFTER 17:00 p.m. (prevailing Tel Aviv time) On the last day of the Warrant
Period (defined below)
This is to certify that the holder specified above ("Holder") isentitled to
purchase, subject to the provisions of this Warrant, fromOrganitech Ltd (the
"Company"), beginning on ____________ and remainingin effect for a period of
seventy (70) days thereafter (the "WarrantPeriod"), eight thousand nine hundred
(8,900) Series A Preferred Sharesof the Company par value NIS 0.01 (the "Warrant
Shares") inconsideration of the payment to the Company of One Million Dollars
US(US$1,000,000) (the "Exercise Price"), all subject to the terms andconditions
set forth below.
For the removal of doubt, the exercise of the aforementioned Warrant AShares
shall entitle the Investor to hold 5% of the Company's authorizedshare capital
at the time of exercising the Warrant A Shares based on aCompany value of
$20,000,000 (Twenty Million USD).
1. Exercise of Warrant
(a) Exercise. Subject to the provisions hereof, this Warrant may beexercised at
any time, in whole, during the Warrant Period. This Warrantshall be exercised by
notice to the Company, and presentation andsurrender hereof to the Company at
the principal office of the Company,accompanied by i) a written notice of
exercise and (ii) payment to theCompany, for the account of the Company, of the
Exercise Price for thenumber of Series A Preferred Shares specified in such
notice. Suchnotice shall become effective when given (the "Effective Date")..
TheExercise Price for the number of Series A Preferred Shares specified inthe
notice shall be payable on the Effective Date, in U.S. dollars orthe NIS
equivalent thereof, based on the Representative Rate of Exchange published by
the Bank of Israel known as of the time of payment.
(b) Issuance of the Warrant Shares. Upon presentation and surrender of the
notice of exercise, accompanied by the payment of the Exercise Price made
pursuant to section 1(a), the Company shall issue promptly to the Holder the
shares to which the Holder is entitled thereto.
Upon receipt by the Company of the notice of exercise, and, ifapplicable, the
Exercise Price, the
Holder shall be deemed to be theHolder of the shares issuable upon such
exercise, notwithstanding thatthe share transfer books of the Company shall then
be closed and thatcertificates representing such shares shall not then be
actuallydelivered to the Holder. The Company shall pay all taxes and
othercharges that may be payable in connection with the issuance of theshares
and the preparation and delivery of share certificates pursuantto this Section 1
in the name of the Holder, but shall not pay any taxespayable by the Holder by
virtue of the holding, issuance, exercise orsale of this Warrant by the Holder.
(c) No fractions of shares shall be issued in connection with theexercise of
this Warrant, and the number of shares issued shall berounded of the nearest
whole number.
(d) The Company covenants that the Series A Preferred Shares issuablehereunder,
when issued and allotted in accordance with this Warrant,will be duly
authorized, validly issued, fully paid, non-assessable,free of preemptive or
similar rights; will have the rights, preferencesand privileges set forth in the
Corporate Documents of the Company; willbe free and clear of any Liens and duly
registered in the name of theInvestor in the Company's shareholders register.
2. Reservation of shares; Preservation of Rights of Holder The Company hereby
agrees that at all times it will maintain andreserve, free from pre-emptive
rights, such number of authorized butunissued Series A Preferred Shares so that
this Warrant may be exercisedwithout additional authorization of Series A
Preferred Shares aftergiving effect to all other warrants, options, convertible
securities andother rights to acquire shares of the Company. The Company
furtheragrees that it will not, by charter amendment or through
reorganizationconsolidation merger, dissolution or sale of assets, or by and
othervoluntary act, avoid or seek to avoid the observance or performance ofany
of the covenants stipulations or conditions to be observed orperformed hereunder
by the Company, or the provisions contained in theCompany's Articles of
Association relating to the rights of the holdersof the Series A Preferred
Shares.
3. Exchange or Loss of Warrant
Upon receipt by the Company of evidence reasonably satisfactory to it ofthe
loss, theft, destruction or mutilation of this Warrant, and (in thecase of loss,
theft or destruction) of reasonably satisfactoryindemnification, and upon
surrender and cancellation of this Warrant, ifmutilated, the Company will
execute and deliver a new Warrant of liketenor and date. Any such new Warrant
executed and delivered shallconstitute and additional contractual obligation on
the part of theCompany, whether or not the Warrant so lost, stolen, destroyed
ormutilated shall be at any time enforceable by anyone.
4. RIGHTS OF THE HOLDER
(a) Without limiting the foregoing or any remedies available to theHolder, the
Holder will be entitled to specific performance of theobligations hereunder, and
injunctive relief against actual or threatened violations of the obligations of
any person subject to thisWarrant.
(b) The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company.
5. Termination
This Warrant and the rights conferred hereby shall terminate at the
aforementioned time on the last day of the Warrant Period.
6. Governing Law
This Warrant shall be governed by, and interpreted in accordance with,the laws
of the State of Israel, without giving effect to the rulesrespecting conflict of
law, and the parties hereto irrevocably submit tothe exclusive jurisdiction of
the Courts of Israel in respect of anydispute or matter arising out of or
connected with this Warrant.
7. Transfer
This Warrant and the rights conferred hereby shall be transferable bythe Holder
(1) only with the consent of the Company, which consent shallnot be unreasonably
withheld; and (2) subject to limitations set forthin the Company's Articles of
Association; and (3) only in whole.
8. Registration Rights
Upon exercise of this Warrant, the Holder shall have and be entitled toexercise
the rights of registration granted under Schedule 24 of theInvestment Agreement
between the Holder and the Company dated ________,with respect to the Series A
Preferred Shares issued on exercise of thisWarrant and the Ordinary Shares
obtained upon conversion of such SeriesA Preferred Shares.
Date:_________________ By:____________________
Name:__________________
Title:___________________
SCHEDULE 22.2
WARRANT "B"
To: Incubate This, Inc.
Date: _______________
Warrant Certificate "B"
To Purchase Series A Preferred Shares of
ORGANITECH LTD.
for such consideration as detailed below
VOID AFTER 17:00 p.m. (prevailing Tel Aviv time) On the last day of the Warrant
Period (defined below)
This is to certify that the holder specified above ("Holder") isentitled to
purchase, subject to the provisions of this Warrant, fromOrganitech Ltd (the
"Company"), beginning on ____________ and remainingin effect for a period of one
hundred (100) days thereafter (the"Warrant Period"), eight thousand nine hundred
(8,900) Series APreferred Shares of the Company par value NIS 0.01 (the
"WarrantShares") in consideration of the payment to the Company of One
MillionDollars US (US$1,000,000) (the "Exercise Price"), all subject to theterms
and conditions set forth below.
For the removal of doubt, the exercise of the aforementioned Warrant BShares
shall entitle the Investor to hold 5% of the Company's authorizedshare capital
at the time of exercising the Warrant B Shares based on aCompany value of
(20,000,000 (Twenty Million USD).
1. Exercise of Warrant
(a) Exercise. Subject to the provisions hereof, this Warrant may beexercised at
any time in whole during the Warrant Period. This Warrantshall be exercised by
notice to the Company, and presentation andsurrender hereof to the Company at
the principal office of the Company,accompanied by (i) a written notice of
exercise and (ii) payment to theCompany, for the account of the Company, of the
Exercise Price for thenumber of Series A Preferred Shares specified in such
notice. Suchnotice shall become effective when given (the "Effective Date").
TheExercise Price for the number of Series A Preferred Shares specified inthe
notice shall be payable on the Effective Date, in U.S. dollars orthe NIS
equivalent thereof, based on the Representative Rate of Exchange published by
the Bank of Israel known as of the time of payment.
(b) Issuance of the Warrant Shares. Upon presentation and surrender of the
notice of exercise, accompanied by the payment of the Exercise Price made
pursuant to section 1(a), the Company shall issue promptly to the Holder the
shares to which the Holder is entitled thereto.
Upon receipt by the Company of the notice of exercise, and, ifapplicable, the
Exercise Price, the
Holder shall be deemed to be theHolder of the shares issuable upon such
exercise, notwithstanding thatthe share transfer books of the Company shall then
be closed and thatcertificates representing such shares shall not then be
actuallydelivered to the Holder. The Company shall pay all taxes and
othercharges that may be payable in connection with the issuance of theshares
and the preparation and delivery of share certificates pursuantto this Section 1
in the name of the Holder, but shall not pay any taxespayable by the Holder by
virtue of the holding, issuance, exercise orsale of this Warrant by the Holder.
(c) No fractions of shares shall be issued in connection with theexercise of
this Warrant, and the number of shares issued shall berounded of the nearest
whole number.
(d) The Company covenants that the Series A Preferred Shares issuablehereunder,
when issued and allotted in accordance with this Warrant,will be duly
authorized, validly issued, fully paid, non-assessable,free of preemptive or
similar rights; will have the rights, preferencesand privileges set forth in the
Corporate Documents of the Company; willbe free and clear of any Liens and duly
registered in the name of theInvestor in the Company's shareholders register.
2. Reservation of shares;
Preservation of Rights of Holder The Company hereby agrees that at all times it
will maintain andreserve, free from pre-emptive rights, such number of
authorized butunissued Series A Preferred Shares so that this Warrant may be
exercisedwithout additional authorization of Series A Preferred Shares
aftergiving effect to all other warrants, options, convertible securities
andother rights to acquire shares of the Company. The Company furtheragrees that
it will not, by charter amendment or through reorganizationconsolidation merger,
dissolution or sale of assets, or by and othervoluntary act, avoid or seek to
avoid the observance or performance ofany of the covenants stipulations or
conditions to be observed orperformed hereunder by the Company, or the
provisions contained in theCompany's Articles of Association relating to the
rights of the holdersof the Series A Preferred Shares.
3. Exchange or Loss of Warrant
Upon receipt by the Company of evidence reasonably satisfactory to it ofthe
loss, theft, destruction or mutilation of this Warrant, and (in thecase of loss,
theft or destruction) of reasonably satisfactoryindemnification, and upon
surrender and cancellation of this Warrant, ifmutilated, the Company will
execute and deliver a new Warrant of liketenor and date. Any such new Warrant
executed and delivered shallconstitute and additional contractual obligation on
the part of theCompany, whether or not the Warrant so lost, stolen, destroyed
ormutilated shall be at any time enforceable by anyone.
4. RIGHTS OF THE HOLDER
(a) Without limiting the foregoing or any remedies available to theHolder, the
Holder will be entitled to specific performance of theobligations hereunder, and
injunctive relief against actual orthreatened violations of the obligations of
any person subject to thisWarrant.
(b) The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company.
5. Termination
This Warrant and the rights conferred hereby shall terminate at the
aforementioned time on the last day of the Warrant Period.
6. Governing Law
This Warrant shall be governed by, and interpreted in accordance with,the laws
of the State of Israel, without giving effect to the rulesrespecting conflict of
law, and the parties hereto irrevocably submit tothe exclusive jurisdiction of
the Courts of Israel in respect of anydispute or matter arising out of or
connected with this Warrant.
7. Transfer
This Warrant and the rights conferred hereby shall be transferable bythe Holder
(1) only with the consent of the Company, which consent shallnot be unreasonably
withheld; and (2) subject to limitations set forthin the Company's Articles of
Association; and (3) only in whole.
8. Registration Rights
Upon exercise of this Warrant, the Holder shall have and be entitled toexercise
the rights of registration granted under Schedule 24 of theInvestment Agreement
between the Holder and the Company dated__________, with respect to the Series A
Preferred Shares issued onexercise of this Warrant and the Ordinary Shares
obtained uponconversion of such Series A Preferred Shares.
Date:_________________ By:____________________
Name:__________________
Title:___________________
SCHEDULE 22.3
WARRANT "C"
To: Incubate This, Inc.
Date: _______________
Warrant Certificate "C"
To Purchase Series A Preferred Shares of
ORGANITECH LTD.
for such consideration as detailed below
VOID AFTER 17:00 p.m. (prevailing Tel Aviv time) On the last day of the Warrant
Period (defined below)
This is to certify that the holder specified above ("Holder") isentitled to
purchase, subject to the provisions of this Warrant, fromOrganitech Ltd (the
"Company"), beginning on ____________ and remainingin effect for a period of one
hundred thirty (130) days thereafter (the"Warrant Period"), eight thousand nine
hundred one (8,901) Series APreferred Shares of the Company par value NIS 0.01
(the "WarrantShares") in consideration of the payment to the Company of One
MillionDollars US (US$1,000,000) (the "Exercise Price"), all subject to theterms
and conditions set forth below.
For the removal of doubt, the exercise of the aforementioned Warrant CShares
shall entitle the Investor to hold 5% of the Company's authorizedshare capital
at the time of exercising the Warrant C Shares based on aCompany vlaue of
$20,000,000 (Twenty Million USD).
1. Exercise of Warrant
(a) Exercise. Subject to the provisions hereof, this Warrant may beexercised at
any time in whole during the Warrant Period. This Warrantshall be exercised by
notice to the Company, and presentation andsurrender hereof to the Company at
the principal office of the Company,accompanied by (I) a written notice of
exercise and (ii) payment to theCompany, for the account of the Company, of the
Exercise Price for thenumber of Series A Preferred Shares specified in such
notice. Suchnotice shall become effective when given (the "Effective Date")..
TheExercise Price for the number of Series A Preferred Shares specified inthe
notice shall be payable on the Effective Date, in U.S. dollars orthe NIS
equivalent thereof, based on the Representative Rate of Exchange published by
the Bank of Israel known as of the time of payment.
(b) Issuance of the Warrant Shares. Upon presentation and surrender ofthe notice
of exercise, accompanied by the payment of the Exercise Pricemade pursuant to
section 1(a), the Company shall issue promptly to theHolder the shares to which
the Holder is entitled thereto.
Upon receipt by the Company of the notice of exercise, and, ifapplicable, the
Exercise Price, the Holder shall be deemed to be theHolder of the shares
issuable upon such exercise, notwithstanding thatthe share transfer books of the
Company shall then be closed and thatcertificates representing such shares shall
not then be actuallydelivered to the Holder. The Company shall pay all taxes and
othercharges that may be payable in connection with the issuance of theshares
and the preparation and delivery of share certificates pursuantto this Section 1
in the name of the Holder, but shall not pay any taxespayable by the Holder by
virtue of the holding, issuance, exercise orsale of this Warrant by the Holder.
(c) No fractions of shares shall be issued in connection with theexercise of
this Warrant, and the number of shares issued shall berounded of the nearest
whole number.
(d) The Company covenants that the Series A Preferred Shares issuablehereunder,
when issued and allotted in accordance with this Warrant,will be duly
authorized, validly issued, fully paid, non-assessable,free of preemptive or
similar rights; will have the rights, preferencesand privileges set forth in the
Corporate Documents of the Company; willbe free and clear of any Liens and duly
registered in the name of theInvestor in the Company's shareholders register.
2. Reservation of shares;
Preservation of Rights of Holder The Company hereby agrees that at all times it
will maintain andreserve, free from pre-emptive rights, such number of
authorized butunissued Series A Preferred Shares so that this Warrant may be
exercisedwithout additional authorization of Series A Preferred Shares
aftergiving effect to all other warrants, options, convertible securities
andother rights to acquire shares of the Company. The Company furtheragrees that
it will not, by charter amendment or through reorganizationconsolidation merger,
dissolution or sale of assets, or by and othervoluntary act, avoid or seek to
avoid the observance or performance ofany of the covenants stipulations or
conditions to be observed orperformed hereunder by the Company, or the
provisions contained in theCompany's Articles of Association relating to the
rights of the holdersof the Series A Preferred Shares.
3. Exchange or Loss of Warrant
Upon receipt by the Company of evidence reasonably satisfactory to it ofthe
loss, theft, destruction or mutilation of this Warrant, and (in thecase of loss,
theft or destruction) of reasonably satisfactoryindemnification, and upon
surrender and cancellation of this Warrant, ifmutilated, the Company will
execute and deliver a new Warrant of liketenor and date. Any such new Warrant
executed and delivered shallconstitute and additional contractual obligation on
the part of theCompany, whether or not the Warrant so lost, stolen, destroyed
ormutilated shall be at any time enforceable by anyone.
4. RIGHTS OF THE HOLDER
(a) Without limiting the foregoing or any remedies available to theHolder, the
Holder will be entitled to specific performance of theobligations hereunder, and
injunctive relief against actual orthreatened violations of the obligations of
any person subject to thisWarrant.
(b) The Holder shall not, by virtue hereof, be entitled to any rights ofa
shareholder in the Company.
5. Termination
This Warrant and the rights conferred hereby shall terminate at the
aforementioned time on the last day of the Warrant Period.
6. Governing Law
This Warrant shall be governed by, and interpreted in accordance with,the laws
of the State of Israel, without giving effect to the rulesrespecting conflict of
law, and the parties hereto irrevocably submit tothe exclusive jurisdiction of
the Courts of Israel in respect of anydispute or matter arising out of or
connected with this Warrant.
7. Transfer
This Warrant and the rights conferred hereby shall be transferable bythe Holder
(1) only with the consent of the Company, which consent shallnot be unreasonably
withheld; and (2) subject to limitations set forthin the Company's Articles of
Association; and (3) only in whole.
8. Registration Rights
Upon exercise of this Warrant, the Holder shall have and be entitled toexercise
the rights of registration granted under Schedule 24 of theInvestment Agreement
between the Holder and the Company dated___________, with respect to the Series
A Preferred Shares issued onexercise of this Warrant and the Ordinary Shares
obtained uponconversion of such Series A Preferred Shares.
Date:_________________ By:____________________
Name:__________________
Title:___________________
SCHEDULE 22.4
WARRANT "D"
To: Incubate This, Inc.
Date: _______________
Warrant Certificate "D"
To Purchase Series A Preferred Shares of
ORGANITECH LTD.
for such consideration as detailed below
VOID AFTER 17:00 p.m. (prevailing Tel Aviv time) On the last day of the Warrant
Period (defined below)
This is to certify that the holder specified above ("Holder") isentitled to
purchase, subject to the provisions of this Warrant, fromOrganitech Ltd (the
"Company"), beginning on ____________ and remainingin effect for a period of one
hundred sixty (160) days thereafter (the"Warrant Period"), eight thousand nine
hundred one (8,901) Series APreferred Shares of the Company par value NIS 0.01
(the "WarrantShares") in consideration of the payment to the Company of One
MillionDollars US (US$1,000,000) (the "Exercise Price"), all subject to theterms
and conditions set forth below.
For the removal of doubt, the exercise of the aforementioned Warrant DShares
shall entitle the Investor to hold 5% of the Company's authorizedshare capital
at the time of exercising the Warrant D Shares based on aCompany value of
$20,000,000 (Twenty Million USD).
1. Exercise of Warrant
(a) Exercise. Subject to the provisions hereof, this Warrant may beexercised at
any time in whole during the Warrant Period. This Warrantshall be exercised by
notice to the Company, and presentation andsurrender hereof to the Company at
the principal office of the Company,accompanied by (i) a written notice of
exercise and (ii) payment to theCompany, for the account of the Company, of the
Exercise Price for thenumber of Series A Preferred Shares specified in such
notice. Suchnotice shall become effective when given (the "Effective Date")..
TheExercise Price for the number of Series A Preferred Shares specified inthe
notice shall be payable on the Effective Date, in U.S. dollars orthe NIS
equivalent thereof, based on the Representative Rate of Exchange published by
the Bank of Israel known as of the time of payment.
(b) Issuance of the Warrant Shares. Upon presentation and surrender ofthe notice
of exercise, accompanied by the payment of the Exercise Pricemade pursuant to
section 1(a), the Company shall issue promptly to theHolder the shares to which
the Holder is entitled thereto.
Upon receipt by the Company of the notice of exercise, and, ifapplicable, the
Exercise Price, the Holder shall be deemed to be theHolder of the shares
issuable upon such exercise, notwithstanding thatthe share transfer books of the
Company shall then be closed and thatcertificates representing such shares shall
not then be actuallydelivered to the Holder. The Company shall pay all taxes and
othercharges that may be payable in connection with the issuance of theshares
and the preparation and delivery of share certificates pursuantto this Section 1
in the name of the Holder, but shall not pay any taxespayable by the Holder by
virtue of the holding, issuance, exercise orsale of this Warrant by the Holder.
(c) No fractions of shares shall be issued in connection with theexercise of
this Warrant, and the number of shares issued shall berounded of the nearest
whole number.
(d) The Company covenants that the Series A Preferred Shares issuablehereunder,
when issued and allotted in accordance with this Warrant,will be duly
authorized, validly issued, fully paid, non-assessable,free of preemptive or
similar rights; will have the rights, preferencesand privileges set forth in the
Corporate Documents of the Company; willbe free and clear of any Liens and duly
registered in the name of theInvestor in the Company's shareholders register.
2. Reservation of shares;
Preservation of Rights of Holder The Company hereby agrees that at all times it
will maintain andreserve, free from pre-emptive rights, such number of
authorized butunissued Series A Preferred Shares so that this Warrant may be
exercisedwithout additional authorization of Series A Preferred Shares
aftergiving effect to all other warrants, options, convertible securities
andother rights to acquire shares of the Company. The Company furtheragrees that
it will not, by charter amendment or through reorganizationconsolidation merger,
dissolution or sale of assets, or by and othervoluntary act, avoid or seek to
avoid the observance or performance ofany of the covenants stipulations or
conditions to be observed orperformed hereunder by the Company, or the
provisions contained in theCompany's Articles of Association relating to the
rights of the holdersof the Series A Preferred Shares.
3. Exchange or Loss of Warrant
Upon receipt by the Company of evidence reasonably satisfactory to it ofthe
loss, theft, destruction or mutilation of this Warrant, and (in thecase of loss,
theft or destruction) of reasonably satisfactoryindemnification, and upon
surrender and cancellation of this Warrant, ifmutilated, the Company will
execute and deliver a new Warrant of liketenor and date. Any such new Warrant
executed and delivered shallconstitute and additional contractual obligation on
the part of theCompany, whether or not the Warrant so lost, stolen, destroyed
ormutilated shall be at any time enforceable by anyone.
4. RIGHTS OF THE HOLDER
(a) Without limiting the foregoing or any remedies available to theHolder, the
Holder will be entitled to specific performance of theobligations hereunder, and
injunctive relief against actual orthreatened violations of the obligations of
any person subject to thisWarrant.
(b) The Holder shall not, by virtue hereof, be entitled to any rights ofa
shareholder in the Company.
5. Termination
This Warrant and the rights conferred hereby shall terminate at
theaforementioned time on the last day of the Warrant Period.
6. Governing Law
This Warrant shall be governed by, and interpreted in accordance with,the laws
of the State of Israel, without giving effect to the rulesrespecting conflict of
law, and the parties hereto irrevocably submit tothe exclusive jurisdiction of
the Courts of Israel in respect of anydispute or matter arising out of or
connected with this Warrant.
8. Transfer
This Warrant and the rights conferred hereby shall be transferable bythe Holder
(1) only with the consent of the Company, which consent shallnot be unreasonably
withheld; and (2) subject to limitations set forthin the Company's Articles of
Association; and (3) only in whole.
9. Registration Rights
Upon exercise of this Warrant, the Holder shall have and be entitled toexercise
the rights of registration granted under Schedule 24 of theInvestment Agreement
between the Holder and the Company dated___________, with respect to the Series
A Preferred Shares issued onexercise of this Warrant and the Ordinary Shares
obtained uponconversion of such Series A Preferred Shares.
Date:_________________ By:____________________
Name:__________________
Title:___________________
SCHEDULE 22.5
WARRANT "E"
To: Incubate This, Inc.
Date: _______________
Warrant Certificate "E"
To Purchase Series A Preferred Shares of
ORGANITECH LTD
for such consideration as detailed below
VOID AFTER 17:00 p.m. (prevailing Tel Aviv time) On the last day of the Warrant
Period (defined below)
This is to certify that the holder specified above ("Holder") isentitled to
purchase, subject to the provisions of this Warrant, fromOrganitech Ltd (the
"Company"), at any time after the Holder invests anaggregate amount of at least
Three Million Dollars US (US$3,000,000)pursuant to Warrant Certificates A
through D and until the earlier of(i) twenty four (24 months) from the date of
the signing of theAgreement, or (ii) the consummation of an initial public
offering of theCompany's securities ("IPO"), (the "Warrant Period"), eighteen
thousand(18,000) Series A Preferred Shares of the Company par value NIS 0.01(the
"Warrant Shares") in consideration of the payment to the Company ofFive Million
Dollars US (US$5,000,000) (the "Exercise Price"), allsubject to the terms and
conditions set forth below.
For the removal of doubt, the exercise of the aforementioned Warrant EShares
shall entitle the Investor to hold 7.07% of the Company'sauthorized share
capital at the time of exercising the Warrant E Sharesbased on a Company value
of $50,000,000 (Fifty Million USD).
1. Exercise of Warrant
(a) Exercise. Subject to the provisions hereof, this Warrant may beexercised at
any time in whole during the Warrant Period. This Warrantshall be exercised by
notice to the Company, and presentation andsurrender hereof to the Company at
the principal office of the Company,accompanied by (i) a written notice of
exercise and (ii) payment to theCompany, for the account of the Company, of the
Exercise Price for thenumber of Series A Preferred Shares specified in such
notice. Suchnotice shall become effective when given (the "Effective
Date"),provided, however that if this Warrant is being exercised prior to the
Company's Exit, such exercise may be conditioned upon the occurrence of the Exit
such that if the Exit does not occur within 30 days thereafter such notice of
exercise shall be deemed null and void and the void and the Warrant shall
continue in full force and effect. The Exercise Pricefor the number of Series A
Preferred Shares specified in the noticeshall be payable on the Effective Date,
in U.S. dollars or the NISequivalent thereof, based on the Representative Rate
of Exchangepublished by the Bank of Israel known as of the time of payment.
(b) Issuance of the Warrant Shares. Upon presentation and surrender ofthe notice
of exercise, accompanied by the payment of the Exercise Pricemade pursuant to
section 1(a), the Company shall issue promptly to theHolder the shares to which
the Holder is entitled thereto.
Upon receipt by the Company of the notice of exercise, and, ifapplicable, the
Exercise Price, the Holder shall be deemed to be theHolder of the shares
issuable upon such exercise, notwithstanding thatthe share transfer books of the
Company shall then be closed and thatcertificates representing such shares shall
not then be actuallydelivered to the Holder. The Company shall pay all taxes and
othercharges that may be payable in connection with the issuance of theshares
and the preparation and delivery of share certificates pursuantto this Section 1
in the name of the Holder, but shall not pay any taxespayable by the Holder by
virtue of the holding, issuance, exercise orsale of this Warrant by the Holder.
(c) No fractions of shares shall be issued in connection with theexercise of
this Warrant, and the number of shares issued shall berounded of the nearest
whole number.
(d) The Company covenants that the Series A Preferred Shares issuablehereunder,
when issued and allotted in accordance with this Warrant,will be duly
authorized, validly issued, fully paid, non-assessable andfree of preemptive or
similar rights; will have the rights, preferencesand privileges set forth in the
Corporate Documents of the Company; willbe free and clear of any Liens and duly
registered in the name of theInvestor in the Company's shareholders register.
2. Reservation of shares; Preservation of Rights of Holder
The Company hereby agrees that at all times it will maintain andreserve, free
from pre-emptive rights, such number of authorized butunissued Series A
Preferred Shares so that this Warrant may be exercisedwithout additional
authorization of Series A Preferred Shares aftergiving effect to all other
warrants, options, convertible securities andother rights to acquire shares of
the Company. The Company furtheragrees that it will not, by charter amendment or
through reorganizationconsolidation merger, dissolution or sale of assets, or by
and othervoluntary act, avoid or seek to avoid the observance or performance
ofany of the covenants stipulations or conditions to be observed orperformed
hereunder by the Company, or the provisions contained in theCompany's Articles
of Association relating to the rights of the holdersof the Series A Preferred
Shares.
3. Exchange or Loss of Warrant
Upon receipt by the Company of evidence reasonably satisfactory to it ofthe
loss, theft, destruction or mutilation of this Warrant, and (in thecase of loss,
theft or destruction) of reasonably satisfactoryindemnification, and upon
surrender and cancellation of this Warrant, ifmutilated, the Company will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute and additional contractual obligation on
the part of the Company, whether or not the Warrant so lost, stolen, destroyed
or mutilated shall be at any time enforceable by anyone.
4, Rights of the Holder
One. Without limiting the foregoing or any remedies available to theHolder, the
Holder will be entitled to specific performance of theobligations hereunder, and
injunctive relief against actual orthreatened violations of the obligations of
any person subject to thisWarrant.
b. The Holder shall not, by virtue hereof, be entitled to any rights ofa
shareholder in the Company.
5. Termination
This Warrant and the rights conferred hereby shall terminate at the
aforementioned time on the last day of the Warrant Period.
6. Governing Law
This Warrant shall be governed by, and interpreted in accordance with,the laws
of the State of Israel, without giving effect to the rulesrespecting conflict of
law, and the parties hereto irrevocably submit tothe exclusive jurisdiction of
the Courts of Israel in respect of anydispute or matter arising out of or
connected with this Warrant.
7. Transfer
This Warrant and the rights conferred hereby shall be transferable bythe Holder
(1) only with the consent of the Company, which consent shallnot be unreasonably
withheld; and (2) subject to limitations set forthin the Company's Articles of
Association; and (3) only in whole.
8. Registration Rights
Upon exercise of this Warrant, the Holder shall have and be entitled toexercise
the rights of registration granted under Schedule 24 of theInvestment Agreement,
with respect to the Series A Preferred Sharesissued on exercise of this Warrant
and the Ordinary Shares obtained uponconversion of such Series A Preferred
Shares.
Date:_________________ By:___________________
Name:__________________
Title:___________________
SCHEDULE 23
GRANTS, INCENTIVES, SUBSIDIES & OCS LETTERS OF APPROVAL
SCHEDULE 24
REGISTRATION RIGHTS AGREEMENT
1. DEFINITIONS
1.1. In this Exhibit, the following expressions shall bear the meaningsset forth
alongside them, insofar as such meaning does not contradictthe contents or
context thereof:
(ONE) "SHARE PURCHASE AGREEMENT" - THE INVESTMENT AGREEMENT TO WHICH THIS
SCHEDULE 24 IS ATTACHED;(TWO) "NEW ARTICLES" - THE ARTICLES OF ASSOCIATION
SUBSTANTIALLY IN THEFORM ATTACHED AS SCHEDULE 20.1 TO THE SHARE PURCHASE
AGREEMENT;(THREE) "PURCHASERS" - ALL HOLDERS OF SERIES A PREFERRED SHARES;(FOUR)
"OTHER SHAREHOLDERS" - ALL SHAREHOLDERS OF THE ORDINARY SHARES OFTHE COMPANY
OTHER THAN THE PURCHASERS AT THE TIME OF A REGISTRATION OFSHARES OF THE
COMPANY;(FIVE) "PURCHASERS' REGISTRABLE SECURITIES" - ALL SERIES A
PREFERREDSHARES, OR SHARES INTO WHICH THE SERIES A PREFERRED SHARES
WERECONVERTED; AND (II) ALL SHARES ISSUED WITH RESPECT TO SERIES A
PREFERREDSHARES OR SHARES INTO WHICH THE PREFERRED SHARES A WERE CONVERTED BY
WAYOF DIVIDENDS, DISTRIBUTIONS, BONUS SHARES, SHARE SPLIT, SHARE CONVERSIONOR
EXERCISE OF OPTION OR WARRANT;(SIX) "OTHER SHAREHOLDERS' REGISTRABLE SECURITIES"
- (I) SHARES HELD BYTHE OTHER SHAREHOLDERS OR THEIR PERMITTED TRANSFEREES (AS
DEFINED IN THENEW ARTICLES), OTHER THAN PURCHASERS' REGISTRABLE SECURITIES, AND
(II)ANY SECURITIES ISSUED OR ISSUABLE WITH RESPECT TO ALL SHARES HELD BY
THEOTHER SHAREHOLDERS OR ANY OF THEIR PERMITTED TRANSFEREES, OTHER
THANPURCHASERS' REGISTRABLE SECURITIES, BY WAY OF DIVIDENDS, DISTRIBUTIONS,BONUS
SHARES, SHARE SPLIT, SHARE CONVERSION OR EXERCISE OF OPTION ORWARRANT;(SEVEN)
"REGISTRABLE SECURITIES" - PURCHASERS' REGISTRABLE SECURITIESAND OTHER
SHAREHOLDERS' REGISTRABLE SECURITIES;(EIGHT) THE TERM "SECURITIES ACT" - THE
U.S. SECURITIES ACT OF 1933, ASAMENDED;(NINE) THE TERM "REGISTRATION" -
REGISTRATION UNDER THE SECURITIES ACT.
1.2. Any expression which is not defined in Section 1.1 above shall bearthe
meaning set forth in the Share Purchase Agreement, insofar as suchmeaning does
not contradict the contents or context thereof
1.3. As to any particular Registrable Securities, such securities willcease to
be Registrable Securities when they have been effectivelyregistered under the
Securities Act and/or any other applicablesecurities law.
2. DEMAND REGISTRATION
2.1. Request for Registration. Subject to the terms hereof, and provided any
securities of the Company are publicly traded over the counter or onany
recognized stock exchange in the United States, the holders of 50%or more of the
Purchasers' Registrable Securities may requestregistration under the Securities
Act of the Registrable Securities (a"Demand Registration"). Such holders of the
Purchasers' RegistrableSecurities will be entitled to two Demand Registrations,
commencing on the
expiry of any "lock-up" period restricting the sale of theRegistrable Securities
as may be required by the Company's underwriter,which lock-up period should in
no event be longer than 180 daysfollowing the public offering of any securities
of the Company over thecounter or on any recognized stock exchange in the United
States. If theholders initiating the registration request hereunder (the
"InitiatingHolders") intend to distribute the Registrable Securities covered
bytheir request by means of an underwriting, they shall advise the Companyas
part of their request. The underwriters shall be selected by majorityin interest
of the Initiating Holders and shall be reasonably acceptableto the Company.
2.2. Whenever required to register any of its securities under theSecurities Act
pursuant to this Section 2.2 the Company will givewritten notice, delivered at
least 20 days prior to the initial filingof a registration statement with the
Securities and Exchange Commission,to the holders of Registrable Securities, of
the Company's intention toeffect such a registration and, subject to the
priority provisions ofSection 2.3, will include in such registration all the
RegistrableSecurities with respect to which the Company has received
writtenrequests for inclusions therein within 20 days after the Company
givessuch notice.
2.3. If the managing underwriters in a Demand Registration advise theCompany in
writing that in their opinion the number of Securitiesrequested to be included
in such registration exceeds the number thatcan be sold in such offering without
adversely affecting suchunderwriters' ability to effect an orderly distribution
of suchSecurities, the Company will include in such registration
RegistrableSecurities according to the following order: (i) first, the number
ofPurchasers' Registrable Securities requested to be included that, in
theopinion of such underwriters, can be sold, pro rata among the
respectiveholders on the basis of the number of Purchasers' Registrable
Securitiesthen owned by each such holder; (ii) second, if the
managingunderwriters allow the registration of additional securities, the
numberof Other Shareholders' Registrable Securities requested to be
includedthat, in the opinion of such underwriters, can be sold, pro rata
amongthe respective holders on the basis of the number of Other
Shareholders'Registrable Securities then owned by each such holder; and (iii)
third,if the managing underwriters allow the registration of
additionalsecurities, other securities of the Company. In any event,
allRegistrable Securities must be included in such registration prior toany
other shares of the Company.
2.4. Shelf Registrations. From such time as the Company becomes eligibleto file
an F-3 "Shelf" Registration, the Company shall, at the requestof the holders of
a majority of the Purchasers' Registrable Securities,file a shelf registration
with the Securities and Exchange Commission,and the Company will maintain the
effectiveness of such registrationstatement and will take all necessary action
to allow its continued useby the holders of the Registrable Securities,
including the timelyfiling of all required reports under the Securities Act.
2.5. The Company may not cause any other registration of securities forsale for
its own account (other than a registration effected solely toimplement an
employee benefit plan) to be initiated and to becomeeffective less than 120 days
after the effective date of anyregistration requested pursuant to Section 2.1.
3. PIGGYBACK REGISTRATIONS
3.1. Right to Piggyback. Whenever the Company proposes to register anyof its
securities under the Securities Act (other than pursuant to (i) aregistration
primarily for sales of shares or options to employees ofthe Company; or (ii) a
Demand Registration), and the registration formto be used is suitable for the
registration of the RegistrableSecurities (a "Piggyback Registration") (it being
understood that FormS-8 and Form F-4 may not be used for such purposes), the
Company willgive written notice, delivered at least 20 days prior to the
initialfiling of a registration statement with the Securities and
ExchangeCommission, to the holders of Registrable Securities, of the
Company'sintention to effect such a registration and, subject to the
priorityprovisions of Section 3.2, will include in such registration all
theRegistrable Securities with respect to which the Company has receivedwritten
requests for inclusions therein within 20 days after the Companygives such
notice.
3.2. Priority on Piggyback Registrations. If a Piggyback Registration isan
underwritten offering of Company's Securities and the managingunderwriters
advise the Company in writing that in their opinion thenumber of Securities
requested to be included in such registrationexceeds the number that can be sold
in such offering without adverselyaffecting such underwriters' ability to effect
an orderly distributionof such Securities, the Company will include in such
registrationRegistrable Securities according to the following order: (i) first,
theCompany's Securities; (ii) second, if the managing underwriters allowthe
registration of additional securities, the number of Purchasers'Registrable
Securities requested to be included that, in the opinion ofsuch underwriters,
can be sold, pro rata among the respective holders onthe basis of the number of
Purchasers' Registrable Securities then ownedby each such holder; and (iii)
third, if the managing underwriters allowthe registration of additional
securities, the number of OtherShareholders' Registrable Securities requested to
be included that, inthe opinion of such underwriters, can be sold, pro rata
among therespective holders on the basis of the number of Other
Shareholders'Registrable Securities then owned by each such holder. In any
event, allRegistrable Securities must be included in such registration prior
toany other shares of the Company, except for the shares to be issued bythe
Company to the public.
4. REGISTRATION PROCEDURES
Whenever the holders of Registrable Securities have requested that
anyRegistrable Securities be registered pursuant to this Exhibit, theCompany
will use its best efforts to effect the registration with theproper authorities
in the United States and Israel and the sale of suchRegistrable Securities in
accordance with the intended method ofdisposition thereof and to list such
shares on the stock exchange orover the counter market on which the Company's
shares are then ▇▇▇▇▇▇▇.▇▇ connection therewith, the Company will make available
for inspectionby any seller of Registrable Securities, and any attorney,
accountant,or any other agent retained in connection with such a registration,
allpertinent financial and other records, other pertinent corporatedocuments and
properties of the Company, and cause the Company'srespective officers,
directors, and employees to supply all informationreasonably requested by such
seller, attorney, accountant, or agent inconnection with such registration
statement.
5. REGISTRATION EXPENSES
The Company shall be responsible for all registration expenses incurredin
connection with the transactions described in Sections 2 and 3,including the
reasonable fees of one legal counsel for the holders ofRegistrable Securities,
to be selected by the holders of a majority ofthe Registrable Securities
participating in the registration.Registration expenses include all expenses
incident to the Company'sperformance of, or compliance with, this Exhibit with
respect to anyDemand Registration (whether or not the registration has
becomeeffective or such registration is counted as a Demand Registration)
orPiggyback Registration, including without limitation expenses incurredin
connection with the preparation of the prospectus. Notwithstandingthe foregoing,
however, all underwriters' commissions in respect of thesale of Registrable
Securities shall be paid by the sellers, pro rata,in accordance with the number
of shares sold in the offering.
6. PRECONDITIONS TO PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No holder of Registrable Securities may participate in any
underwrittenregistration hereunder unless such person (i) agrees to sell
suchperson's securities on the basis provided in any customary
underwritingarrangements; and (ii) provides any relevant information and
completesand executes all questionnaires, powers of attorney,
indemnities,underwriting agreements, and other documents required under the
terms ofsuch underwriting arrangements.
7. RULE 144
With a view to making available the benefits of Rule 144 under theSecurities Act
(or similar rule then in effect) available to the holdersof Registrable
Securities, after the initial public offering of anySecurities of the Company
over the counter or on any recognized stockexchange in the United States, the
Company shall:
7.1. Make and keep available adequate current public information withrespect to
the Company within the meaning of Rule 144(c) under theSecurities Act (or
similar rule then in effect);
7.2. Furnish to any holder of Registrable Securities forthwith uponrequest (i) a
written statement by the Company as to its compliance withthe informational
requirements of Rule 144(c) (or similar rule then ineffect); (ii) a copy of the
most recent annual or quarterly report ofthe Company; and (iii) such other
information as may be reasonablyrequested in availing any holder of Registrable
Securities of any ruleor regulation of the SEC which permits the selling of any
suchsecurities without registration and pursuant to such form.
7.3. Comply with all other necessary filings and other requirements soas to
enable the holders of Registrable Securities to sell RegistrableSecurities under
Rule 144 under the Securities Act (or similar rule thenin effect).
7.4. If in the opinion of counsel for the Company, any holder ofRegistrable
Securities is able to sell all of the Registrable Securitiesheld by it at that
time in a three-month period pursuant to Rule 144 ofthe Securities Act, the
Company will not be required to register suchsecurities, notwithstanding
anything herein to the contrary.
8. INDEMNIFICATION AND CONTRIBUTION
8.1. Company Indemnity. The Company shall indemnify and hold harmlesseach holder
of Registrable Securities and each of such holder'sofficers, directors,
employees, legal counsel and accountants, from andagainst any and all losses,
claims, damages, liabilities, and charges,joint or several ("Claims"), to which
any of them may be subject underthe Securities Act or any other statute (whether
U.S. or Israeli) or atcommon law, insofar as such Claims arise out of, are based
upon, or arein connection with (i) any untrue statement of any material
factcontained in any registration statement or prospectus under which
suchSecurities were sold, or (ii) any omission to state therein a materialfact
required to be stated therein or necessary to make the statementstherein not
misleading, or (iii) any other violation by the Company ofthe Securities Act or
any state or foreign jurisdiction securities lawsin connection with each such
registration, and shall reimburse each suchperson entitled to indemnification
for any legal or other expensesreasonably incurred by such person in connection
with investigating ordefending any such Claim, as and when such expense are
incurred;provided, however, that the Company shall not be liable to any
suchperson in any such case to the extent that any such claim arises out ofor is
based upon any untrue statement or omission made
in suchregistration statement or prospectus in reliance upon and in
conformitywith written information furnished to the Company by such person
and/orany person acting on its behalf.
8.2. Other Shareholders Indemnity. Each holder of Registrable Securitiesshall
severally indemnify and hold harmless the Company, each of itsofficers,
directors, employees, legal counsel, and accountants, from andagainst any and
all Claims, to which any of them may be subject underthe Securities Act or any
other statute (whether U.S. or Israeli) or inCommon law, insofar a such Claims
arise out of, are based upon or are inconnection with (i) any untrue statement
of material fact contained inany registration statement or prospectus under
which such Securitieswere sold, or (ii) any omission to state therein a material
factrequired to be stated therein or necessary to make the statementstherein not
misleading, or (iii) any other violation by the Company ofthe Securities Act or
any state or foreign jurisdiction securities lawsin connection with any
registration, and shall reimburse each suchperson entitled to indemnification
for any legal or other expensesreasonably incurred by such person in connection
with investigating ordefending any such Claim, as and when such expenses are
incurred;provided, however, that the aforesaid indemnity shall only apply
wheresuch Claim or violation results from and/or reliance upon and inconformity
with written information furnished to the Company by suchholder of Registrable
Securities and/or any person acting on its ortheir behalf. In no event shall a
holders of Registrable Securities beliable under this section for any amount in
excess of the total netproceeds received by such holder of Registrable
Securities in connectionwith the offering related to the registration giving
rise to such claim.
8.3. Indemnity Procedure. Promptly after receipt by a holder ofRegistrable
Securities (the "Indemnitee") or the Company of notice ofthe commencement of any
action, proceeding, or investigation in respectof which indemnity may be sought
as provided above, such party shallnotify the party from whom indemnification is
claimed (the"Indemnitor"). The Indemnitor shall promptly assume the defense of
theIndemnitee with counsel reasonably satisfactory to such Indemnitee, andthe
fees and expenses of such counsel shall be at the sole cost andexpense of the
Indemnitor. The Indemnitee will cooperate with theIndemnitor in the defense of
any action, proceeding, or investigationfor which the Indemnitor assumes the
defense. The Indemnitor shall notbe liable for the settlement by the Indemnitee
of any action, proceedingor investigation effected without its consent, which
consent shall notbe unreasonably withheld. The Indemnitor shall not enter into
anysettlement in any action, suit, or proceeding to which the Indemnitee isa
party, unless such settlement includes a general release of theIndemnitee with
no payment by the Indemnitee of consideration andwithout an admission of
liability.
8.4. Contribution. If the indemnification provided for above is held bya court
of competent jurisdiction to be unavailable to an Indemniteewith respect to any
loss, liability, claim, damage, or expense referredto therein, then the
Indemnitor, in lieu of indemnifying such Indemniteehereunder, shall contribute
to the amount paid or payable by suchIndemnitee as a result of such loss,
liability, claim, damage, orexpense in such proportion as is appropriate to
reflect the relativefault of the Indemnitor on the one hand and of the
Indemnitee on theother in connection with the statements or omissions that
resulted insuch loss, liability, claim, damage, or expense as well as any
otherrelevant equitable considerations. The relative fault of the Indemnitorand
of the Indemnitee shall be determined by reference to, among otherthings,
whether the untrue or alleged untrue statement of a materialfact or the omission
to state a material fact relates to informationsupplied by the Indemnitor or by
the Indemnitee and the parties'relative intent, knowledge, access to
information, and opportunity tocorrect or prevent such statement or
omission.8.5. Notice. The parties agree promptly to notify each other of
thecommencement of any litigation or proceedings against the Company or anyof
its officers or directors in connection with the sale of anyRegistrable
Securities or any preliminary prospectus or registrationstatement relating to
any sale of any Registrable
Securities, or of anyother litigation or proceedings to which this Section 8 is
applicable ofwhich they became aware.
9. ASSIGNMENT OF REGISTRATION RIGHTS
The rights to cause the Company to register Registrable Securitiespursuant
hereto may be assigned (but only with all related obligations)by a holder of
Registrable Securities to a transferee or assignee ofsuch securities, provided:
(a) the Company is, within a reasonable timeafter such transfer, furnished with
written notice of the name andaddress of such transferee or assignee and the
securities with respectto which such registration rights are being assigned; (b)
suchtransferee or assignee agrees in writing to be bound by and subject tothe
terms and conditions of this Exhibit; and (c) such assignment shallbe effective
only if immediately following such transfer the furtherdisposition of such
securities by the transferee or assignee isrestricted under the Act. For the
purposes of determining the number ofshares of Registrable Securities held by a
transferee or assignee, theholdings of transferees and assignees of a
partnership who are partnersor retired partners of such partnership (including
spouses andancestors, lineal descendants and siblings of such partners or
spouseswho acquire Registrable Securities by gift, will or intestatesuccession)
shall be aggregated together and with the partnership.
10. LOCK-UP
In any registration of the Company's shares, all holders of
RegistrableSecurities agree that any sales of Registrable Securities may be
subjectto a "lock-up" period restricting such sales for up to one hundred
andeighty (180) days. All holders will agree to abide by such customary"lock-up"
period of up to one hundred and eighty (180) days as isrequired by the
underwriter in a registration under Section 3 of thisExhibit. All holders who do
not participate in a demand registrationwill agree to abide by such customary
"lock-up" period of up to onehundred and eighty (180) days as is required by the
underwriter in ademand registration under Section 2.1 of this Exhibit,
provided,however, that all officers and directors of the Company agree to
asimilar lock-up with respect to any securities held by them.
11. OTHER REGISTRATION RIGHTS
(One) With regard to any registration of the Company's securitiescovered herein,
the Company shall provide at least 15 days' writtennotice to the Other
Shareholders prior to the initial filing of aregistration statement, and subject
to the following conditions, theCompany will include in such registration all of
the Ordinary Shares ofsuch Other Shareholders with respect to which the Company
has receivedwritten requests for inclusion therein within 10 days after the
Companygives such notice. The foregoing Other Shareholder registration right
issubject to the following: (i)_the total amount of Other Shareholders'Ordinary
Shares included in a Company registration pursuant to thisSection shall not
exceed twenty percent (25%) of the total number ofshares of selling shareholders
of the Company registered in suchregistration, and (ii) the provisions of this
Section shall not apply tothe Ordinary Shares of any Other Shareholder who will
be entitledpursuant to Rule 144 to sell such shares within six months of
theinitial filing of such registration statement.
(Two) Unless approved by the holders of the majority of the
Purchasers'Registrable Securities, the Company shall not grant registration
rightswith respect to any securities of the Company that might derogate fromthe
rights granted to the holders of the Registrable Securities pursuantto this
Exhibit.
12. TERMINATION OF REGISTRATION RIGHTS
Except as otherwise provided herein, all registration rights, containedherein
shall expire after four years following the Company's initialpublic offering on
any recognized stock exchange in the United States oron NASDAQ. Notwithstanding
the above, the provisions of Section 8 hereofshall survive any termination of
the registration rights containedherein.
13. SURVIVAL
The obligations of the Company and holders of Registrable Securitieshereunder,
including, without limitation, those obligations underSections 8 and 5 shall
survive the completion of any offering ofRegistrable Securities hereunder and
otherwise.
025(vers 2) Organitech 19.6