Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of May 18, 2020,
by and between ScoutCam Inc., a Nevada corporation (the “Company”) and the
entity listed in Exhibit A attached hereto (the “Investor”).

 

WHEREAS, the Company desires to issue and sell to the Investor, and the Investor
desires to purchase from the Company, upon the terms and conditions stated in
this Agreement, for an aggregate purchase price of US$2.0 million (the “Purchase
Price”), 2,066,116 units (the “Units”), each Unit consists of (i) two shares of
the Company’s common stock, par value US$0.001 per share (the “Common Stock” and
the “Purchased Shares”, respectively); and (ii) (a) one warrant to purchase one
share of Common Stock with an exercise price of $0.595 (“Warrant A”), and (b)
two warrants, each to purchase one share of Common Stock with an exercise price
of $0.893 (“Warrant B”), in the forms attached hereto as Appendixes A and B,
respectively (collectively the “Warrants”, and together with the Purchased
Shares, the “Purchased Securities”), on the terms and conditions set forth in
the Warrants;

 

WHEREAS, as a condition to the consummation of the transactions contemplated by
this Agreement, the parties have agreed to the appointment of a representative
of the Investor to the board of directors of the Company (the “Board”);

 

WHEREAS, the Company and the Investor desire to enter into a Registration Rights
Agreement, substantially in the form of Appendix C annexed hereto and made a
part hereof (the “Registration Rights Agreement”), pursuant to which, among
other things, the Company will agree to provide certain registration rights to
the Investor with respect to the Purchased Securities issued under the
Securities Act of 1933, as amended (the “Securities Act”) and the rules and
regulations promulgated thereunder, and applicable state securities laws;

 

WHEREAS, the Company, the Investor and Medigus Ltd., an Israeli company
(“Medigus”), desire to enter into a Voting Agreement, substantially in the form
of Appendix D annexed hereto and made a part hereof (the “Voting Agreement”),
pursuant to which, among other things, the Investor and Medigus have agreed to
vote their respective shares of Common Stock, subject to certain limitations
described therein, in favor of the election of the opposite party’s designated
representative(s), as applicable, to the Board; and

 

WHEREAS, the Investor desires to purchase and the Company desires to issue and
sell to the Investor the Purchased Securities pursuant to the terms and
conditions more fully set forth in this Agreement.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1. PURCHASE AND SALE OF SECURITIES.

 

1.1 Sale and Issuance of Securities. Subject to the satisfaction of certain
closing conditions set forth in Sections 4 and 5 hereof at the Closing (as
defined below), the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company an aggregate of 2,066,116 Units, at a
purchase price of US$0.968 per each Unit, consisting of the Purchased Shares and
Warrants listed in Exhibit A attached hereto.

 

1.2 The capitalization table of the Company, reflecting the issued and
outstanding share capital of the Company on a fully diluted basis, (i)
immediately prior to the Closing and (ii) immediately following the Closing,
assuming the investment of the Purchase Price, is annexed hereto as Appendix E
(the “Capitalization Table”).

 

1.3 Closing. The consummation of the transactions contemplated hereby, including
the purchase and sale of the Purchased Securities (the “Closing”) shall take
place remotely via the exchange of documents and signatures, on May 18, 2020, or
at such other time and place as the Company and the Investor mutually agree upon
(such designated time and place, the “Closing Date”). The Closing shall be
subject to the conditions of Section 4 and 5 below, which conditions shall be
deemed to take place simultaneously and no transaction described in such
sections shall be deemed to have been completed or any document delivered until
all such transactions have been completed and all such required documents
delivered.

 

1.4 Closing Deliverables.

 

(a) At the Closing, the Company shall deliver to the Investor:

 

 

 

 

(i) True and correct copies of written resolutions, or minutes of a meeting, of
the Board, approving and adopting in all respects the execution, delivery and
performance by the Company of this Agreement and the transactions contemplated
hereby, including, among others, (a) authorizing the issuance and sale of the
Purchased Securities against payment of the Purchase Price therefor; (b)
approving the appointment of that certain representative of the Investor to the
Board pursuant to Section ‎4.4 below; and (c) approving the execution, delivery
and performance by the Company of all agreements contemplated herein to which
the Company is party and any agreements, instruments or documents ancillary
thereto;

 

(ii) Duly executed stock certificates or book-entry confirmations representing
the Purchased Shares issued to the Investor at the Closing, in the name of the
Investor;

 

(iii) The Warrants issued to the Investor at the Closing in the name of the
Investor, duly executed by the Company; and

 

(iv) A certificate duly executed by an executive officer of the Company as of
the Closing stating that the conditions specified in Section ‎4 have been
satisfied, in the form attached hereto as Schedule ‎1.4(a)(iv).

 

1.5 Purchase Price. At the Closing, the Investor shall transfer to the Company
the Purchase Price by wire transfer of immediately available funds according to
the wire instructions attached hereto as Schedule 1.5.

 

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company hereby represents and warrants to the Investor that the following
representations are true, correct and complete as of the date hereof and as of
the Closing (as if made on the Closing Date); except, in each case, as to such
representations and warranties that address matters as of a particular date,
which are true, correct and complete only as of such date.

 

2.1 Subsidiary. The Company wholly-owns ScoutCam Ltd., an Israeli company (the
“Subsidiary”), and as of the date of the Agreement, the Subsidiary is the only
direct or indirect subsidiary of the Company. The Company owns, directly or
indirectly, all of the capital stock or other equity interests of the Subsidiary
free and clear of any lien, charge, claim, pledge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction, and
all of the issued and outstanding share capital of the Subsidiary is validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.

 

2.2 Organization. The Company and the Subsidiary are each an entity duly
incorporated or otherwise organized, validly existing and in good standing (if
applicable in such jurisdiction) under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted or proposed to be conducted in the SEC Reports. Neither the Company
nor the Subsidiary is in violation nor default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiary is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not have or reasonably be expected to result in: (i) a material
adverse effect on the legality, validity or enforceability of any Transaction
Document, (ii) a material adverse effect on the results of operations, assets,
business, prospects, properties or condition (financial or otherwise) of the
Company and the Subsidiary, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”), and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

2.3 Capitalization.

 

(a) The authorized share capital of the Company will consists of 75,000,000 on
or immediately prior to the Closing, as set forth in the Company’s Articles of
Incorporation (the “Articles”), and 32,976,657 shares of Common Stock, as set
forth in the Capitalization Table, shall be (immediately following the Closing)
issued and outstanding. There are no other shares of any other class or series
of capital stock of the Company authorized, issued or outstanding.

 

 

 

 

(b) The Company has no capital stock reserved for issuance, except that, the
Board has reserved (i) 5,804,895 shares of Common Stock for issuance of, and
grant of options or other equity awards exercisable into, Common Stock to
directors, officers, employees, consultants and service providers of the Company
or the Subsidiary, under the 2020 Stock Incentive Plan of the Company, (ii)
immediately following the Closing, 19,377,546 shares of Common Stock for
issuance upon exercise of outstanding warrants listed in the Capitalization
Table and (iii) 2,688,492 shares of Common Stock issuable to Medigus upon the
achievement of certain earnout targets, pursuant to that certain Securities
Exchange Agreement by and between the Company and Medigus, dated September 16,
2019.

 

(c) The issued and outstanding shares of the Company are duly and validly
authorized and issued, fully paid and non-assessable, and were offered and
issued in compliance with the provisions of the Articles as in effect at the
time of each such issuance and in compliance with all applicable corporate and
securities laws.

 

(d) Immediately prior to the Closing, no shares, options, warrants, rights
(including conversion, preemptive rights, rights of first refusal or similar
rights), commitments, agreements, understandings or arrangements, relating to
the issued or unissued capital stock of the Company or any securities
convertible into or exchangeable for stock or equity interest of the Company,
including rights to subscribe for or purchase from the Company of any of its
share capital or other equity interest, or any securities convertible into or
exchangeable for stock of the Company or other equity interest, shall be
outstanding or otherwise existing, other than as set forth in the Capitalization
Table, or that could require or obligate the Company to issue, sell, transfer,
redeem, purchase, repurchase, acquire or otherwise cause to be outstanding, any
of the Company’s share capital or equity interest or securities convertible or
exercisable into shares or equity interest thereof, or obligations of the
Company to grant, extend or enter into any such option, warrant, right,
commitment or agreement. Except as disclosed in the SEC Reports, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

 

(e) Immediately prior to the Closing, no option, security or other equity award
convertible or exercisable into stock of the Company shall contain a provision
for acceleration of vesting (or lapse of a repurchase right) or other changes in
the vesting provisions or other terms of such option, security or other equity
award upon the occurrence of any event or combination of events, except as
disclosed in the SEC Reports. No share, option, security or other equity award
convertible or exercisable into shares of the Company is subject to repurchase
or redemption (contingent or otherwise) by the Company, and the Company has not
repurchased or redeemed any of the Company’s shares of stock, options, security
or other equity awards.

 

(f) No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. The issue and sale of the Securities
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such securities.

 

(g) The Company has not declared or paid any dividends, or authorized or made
any distribution upon or with respect to any class or series of its share
capital.

 

2.4 Authorization. The Company has all requisite corporate power and authority,
and has taken all requisite corporate action on the part of the Company, its
directors and stockholders, necessary for the authorization, execution and
delivery of this Agreement and the other agreements, instruments or documents
entered into in connection with this Agreement and to which the Company is a
party, including the Warrants (collectively, the “Transaction Documents”) and
for the performance of all obligations of the Company under the Transaction
Documents in accordance with their terms has been taken or will be taken prior
to the Closing. The Transaction Documents, when executed and delivered by the
Company, and assuming the due authorization, execution and delivery by the other
parties hereto and thereto, constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

 

 

 

 

2.5 Valid Issuance. The Purchased Securities being or that may be issued to the
Investor, have been duly authorized and when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, shall be duly and validly issued, fully paid, and non-assessable, issued
in compliance with all applicable securities laws, and free and clear of liens,
pledges, charges, encumbrances or other restrictions on transfer of any kind
(including, without limitation, preemptive rights), other than restrictions on
transfer under this Agreement, the Articles, the Company’s currently effective
Bylaws (the “Bylaws”) and under applicable securities laws and other than liens
or encumbrances created by or imposed by the Investor. The shares of Common
Stock underlying the Warrants have been duly authorized and, upon exercise of
the Warrants in accordance with their terms, will be validly issued, fully paid
and nonassessable. The rights, privileges and preferences of the Purchased
Securities are as stated in the Articles and Bylaws, as may be amended from time
to time in accordance with their terms. Assuming the accuracy of the
representations made by the Investor in Section 3, the offer and issuance by the
Company of the Purchased Securities is exempt from registration under the
Securities Act.

 

2.6 No Conflict; Consents. The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Purchased Securities and the consummation by
it of the transactions contemplated hereby and thereby do not and will not: (i)
conflict with or violate any provision of the Articles, Bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any lien, charge, pledge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction, upon
any of the properties or assets of the Company, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, or (iii) conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not have or reasonably be expected to result in a
Material Adverse Effect. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company or
the Subsidiary is required in connection with the consummation of the
transactions contemplated by the Transaction Documents.

 

2.7 SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) for the one-year period preceding the date hereof
(collectively, the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
(the “Financial Statements”) comply in all material respects with applicable
accounting requirements and the rules and regulations of the Securities and
Exchange Commission (the “Commission”) with respect thereto as in effect at the
time of filing. Such Financial Statements have been prepared in accordance with
Generally Accepted Accounting Principles in the U.S. (“US GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by US GAAP, and fairly present in all material respects the
consolidated financial condition and position of the Company and the Subsidiary,
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

 

 

 

2.8 Material Changes. Since December 31, 2019 there has been no event,
occurrence or development that has had or that would reasonably be expected to
result in a Material Adverse Effect.

 

2.9 Continued Quotation. The Company is currently quoted on the OTC Markets,
Pink Tier, and it is and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such quotation and
maintenance requirements of the “Pink Sheets” published and maintained by OTC
Markets Group, Inc., and shall make commercial best efforts to maintain such
compliance.

 

2.10 Financial Statements; No Undisclosed Liabilities.

 

(a) The Company and the Subsidiary has no liabilities or obligations, contingent
or otherwise, other than (i) liabilities incurred in the ordinary course of
business, which, individually and in the aggregate, do not exceed US$300,000;
(ii) debt of the Subsidiary to Medigus Ltd. in the principal amount of
US$380,000; and (iii) liabilities and obligations of a type or nature not
required under GAAP to be reflected in its financial statements, which,
individually and in the aggregate do not exceed US$100,000.

 

(b) The Company and the Subsidiary are not guarantors or indemnitors of any debt
or obligation of another, nor has the Company or the Subsidiary given any loan,
security or otherwise agreed to become liable for any obligation of any person.
No person has given any guarantee of, or security for, any obligation of the
Company or the Subsidiary. The Company and the Subsidiary did not extend any
loans or advances to any person, other than advances for expenses to its
employees in the ordinary course of business.

 

2.11 Assets and Properties. Both the Company and the Subsidiary have good and
marketable title to all of the tangible or personal properties and assets owned
by the Company and the Subsidiary, which are material to the business of the
Company or the Subsidiary as currently conducted as now conducted and as
proposed in the SEC Reports to be conducted, and such properties and assets are
free and clear of all mortgages, deeds of trust, liens, pledges, charges,
security interests, conditional sale agreement, loans and encumbrances, except
for statutory liens for the payment of current taxes that are not yet delinquent
and encumbrances and liens that arise in the ordinary course of business and do
not materially impair the Company’s or the Subsidiary’s ownership or use of such
property or assets. With respect to the tangible property and assets it leases,
the Company and the Subsidiary are in compliance in all material respects with
such leases and, to the Company’s knowledge, holds a valid leasehold or license
interest free of any liens, pledges, charges, security interest, claims or
encumbrances, other than those of the lessors of such property or assets. The
Company and the Subsidiary do not own any real property.

 

2.12 Intellectual Property. The Company and the Subsidiary own, or have rights
to use, all patents, patent applications, trademarks, trademark applications,
trade and service mark registrations, service marks, trade names, trade secrets,
inventions, copyrights, technology, know-how, licenses and other intellectual
property rights, proprietary rights and similar rights in connection with their
respective businesses and which the failure to so have could or reasonably be
expected to have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Neither the Company nor the Subsidiary have received a notice
(written or otherwise) that any of, the material Intellectual Property Rights
has expired, terminated or been abandoned, or is expected to expire or terminate
or be abandoned, within two (2) years from the date of this Agreement. Neither
the Company nor the Subsidiary have received, since Jan 1, 2019, a written
notice of a claim or otherwise has any knowledge that the Intellectual Property
Rights violate or infringe (and will not infringe) the rights of any Person. To
the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights. The Company and the Subsidiary have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed to the Investor in writing, the Company has
no knowledge of any facts that would preclude it or the Subsidiary from having
valid license rights or clear title to the Intellectual Property Rights. There
is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any Company
Intellectual Property or the Company’s Intellectual Property Rights. The Company
and the Subsidiary own or have rights or licenses to use all Intellectual
Property Rights that are necessary to conduct its business as now conducted and
as proposed in the SEC Reports to be conducted. For purposes of this Section,
“knowledge”, including the phrase “to the Company’s knowledge” (or similar
phrases), when used in this Section 2.11 (Intellectual Property) shall mean the
actual knowledge of the Company, without conducting any patent search, freedom
to operate, infringement, or any similar search.

 

 

 

 

2.13 Labor Matters.

 

(a) The Company and the Subsidiary have complied, in all material respects, with
all applicable employment laws, policies, procedures and agreements relating to
employment, and terms and conditions of employment. The Company and the
Subsidiary have paid in full to all of its respective employees and consultants
all wages, salaries, commissions, bonuses, benefits and other compensation due
and payable to such employees or consultants on or prior to the date of this
Agreement. The Company and the Subsidiary have complied in all material respects
with the applicable laws relating to the proper withholding and remittance to
the proper tax and other authorities of all sums required to be withheld from
employees or persons deemed to be employees under applicable laws. To the
Company’s knowledge, all persons classified by the Company or the Subsidiary as
consultants or contractors thereof are correctly classified as such and not as
employees for any purpose. The Company’s and the Subsidiary’s liability for any
obligations to pay any amount of severance payment, pension, accrued vacation,
and other social benefits and contributions, under applicable law or contract,
or any other payment of substantially the same nature, is fully funded by
deposit of funds in severance funds, pension funds, managers insurance policies
or provident funds (and if not required to be so funded) adequate provisions
have been made in the Company’s Financial Statements.

 

(b) Neither the Company nor the Subsidiary is a party to, bound by or subject
to, and no employee of the Company or the Subsidiary benefits from, any
collective bargaining agreement, collective labor agreement, extension orders
(tzavei harchava) (other than extension orders that apply to all employees in
Israel generally), or other contract or arrangement with a labor union, trade
union or other organization or body, to provide benefits or working conditions
beyond the minimum benefits and working conditions required by applicable law.
No labor union has requested or has sought to represent any of the employees,
representatives or agents of the Company or the Subsidiary, nor is the Company
or the Subsidiary aware of any labor organization activity involving its
employees. There is no strike or other labor dispute involving the Company or
the Subsidiary pending or, to the Company’s knowledge, threatened.

 

2.14 Taxes. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the
Company and the Subsidiary each (i) except as disclosed to the Investor in
writing, has made or filed all United States federal, state and local income and
foreign income and franchise tax returns, reports and declarations required by
any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations and (iii) has set
aside on its books provision reasonably adequate for the payment of all material
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. Except as disclosed in SEC Reports, there are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and neither the officers of the Company nor the Subsidiary know of
no basis for any such claim.

 

2.15 Governmental Grants. Neither the Company nor the Subsidiary have applied,
obtained or received any grant, loan, incentives, benefits (including tax
benefits), subsidies or other assistance from any governmental or regulatory
authority or any agency, or any international or bilateral fund, institute or
organization or public entities or authorities.

 

2.16 Litigation. There is no claim, action, suit, proceeding, arbitration,
complaint, charge or, to the Company’s knowledge, investigation pending, or, to
the Company’s knowledge, currently threatened in writing against the Company or
the Subsidiary, any of its properties, or any officer, director or employee of
the Company or the Subsidiary, including, without limitation, arising out of
their employment or board relationship with the Company or the Subsidiary or in
their capacity as such, or that questions the validity of the Transaction
Documents or the right of the Company to enter into them, or to consummate the
transactions contemplated by the Transaction Documents.

 

 

 

 

2.17 Insurance. The Company and the Subsidiary are covered by insurance with
respect to its properties and business.

 

2.18 Compliance. Neither the Company nor the Subsidiary (i) is in default under
or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company
or the Subsidiary under), nor has the Company or the Subsidiary received written
notice of a claim that it is in default under, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is in violation of any law, rule or
regulation of any governmental authority, except in each case as would not have
a Material Adverse Effect.

 

2.19 Permits. The Company and the Subsidiary possess all licenses, certificates,
permits and other authorizations issued by all applicable authorities necessary
to conduct their respective businesses, and neither the Company nor the
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.

 

2.20 Certain Fees. No brokerage or finder’s fees or commissions are or will be
payable by the Company or the Subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by this Agreement.

 

2.21 Disclosure. No representation or warranty of the Company contained in this
Agreement and no certificate furnished or to be furnished to the Investor at the
Closing contains any untrue statement of a material fact or, to the Company’s
knowledge, omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.

 

3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

 

The Investor hereby represents and warrants that the following representations
are true, correct and complete as of the date hereof and as of the Closing (as
if made on the Closing Date); except, in each case, as to such representations
and warranties that address matters as of a particular date, which are given
only as of such date:

 

3.1 Authorization; Organization. The Investor is duly organized, validly
existing and, if applicable, in good standing under the laws of the jurisdiction
in which it has been incorporated and has full power and authority to enter into
the Transaction Documents to which the Investor is a party. The Transaction
Documents to which the Investor is a party, when executed and delivered by the
Investor, and assuming the due authorization, execution and delivery by the
other parties hereto and thereto, constitute valid and binding obligations of
the Investor, enforceable against the Investor in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the Rights Agreement, as may
be limited by applicable securities laws.

 

3.2 No Conflict; Consents. The execution, delivery and performance by the
Investor of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated by such Transaction Documents do
not and will not (a) result in any conflict with, or a breach or violation, with
or without the passage of time and giving of notice, of any of the terms,
conditions or provisions of, or give rise to rights to others (including rights
of termination, cancellation or acceleration) under: (i) the governing documents
of the Investor; (ii) any judgment, injunction, order, writ, decree or ruling of
any court or governmental authority, domestic or foreign, to which the Investor
is subject; (iii) any material contract or agreement, lease, license or
commitment to which the Investor is a party or by which it is bound; (iv) any
applicable law; or (b) require the consent, approval or authorization of,
registration, qualification or filing with, or notice to any person or any
federal, state, local or foreign governmental authority or regulatory authority
or agency, in each case, by the Investor, which has not heretofore been obtained
or made or will be obtained or made prior to Closing.

 

 

 

 

3.3 Purchase Entirely for Own Account. The Purchased Securities will be acquired
for investment for the Investor’s own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. The Investor does not presently have any
contract, undertaking, agreement or arrangement to sell, transfer or grant
participation rights to any person with respect to any of the Purchased
Securities. The Investor has not been formed for the specific purpose of
acquiring the Purchased Securities.

 

3.4 Disclosure of Information. The Investor has had an opportunity to discuss
the Company’s business, operations, properties, prospects, technology, plans,
management, financial affairs and the terms and conditions of the offering of
the Purchased Securities with the Company’s management and has had an
opportunity to review the Company’s facilities. The foregoing, however, does not
limit, modify or qualify the representations and warranties of the Company in
Section ‎2 of this Agreement or the right of the Investor to rely thereon. The
Investor acknowledges that any projections provided (if any) by the Company are
uncertain in nature, and that some or all of the assumptions underlying such
projections may not materialize or will vary significantly from actual results.

 

3.5 Investment Experience; Accredited Investor; Non-U.S. Person. The Investor is
an investor in securities of companies in the development stage and acknowledges
that it is able to fend for itself, can bear the economic risk of its
investment, and has such knowledge and experience in financial or business
matters that it is capable of evaluating and understanding the merits and risks
of the investment in the Purchased Securities. The Investor is either (i) an
accredited investor as defined in Rule 501(a) of Regulation D promulgated under
the Securities Act or (ii) a Non U.S. Person as defined under Regulation S
promulgated under the Securities Act. To the extent that the Investor is a non
U.S. Person, the Investor (x) is not acquiring Purchased Securities for the
account or benefit of any U.S. Person, (y) is not, at the time of execution of
this Agreement, and will not be, at the time of the Closing, in the United
States and (z) is not a “distributor” (as defined in Regulation S promulgated
under the Securities Act).

 

3.6 Restricted Securities. The Purchased Securities have not been and will not
be registered under the Securities Act or any state securities laws and,
therefore, cannot be resold unless they are registered under the Securities Act
and applicable state securities laws or unless an exemption from such
registration requirements is available. The Investor is aware that, except as
set forth in the Registration Rights Agreement, the Company is under no
obligation to effect any such registration or to file for or comply with any
exemption from registration. The sale and issuance of the Purchased Securities
have not been registered under the Securities Act by reason of a specific
exemption from registration which depends upon, among other things, the accuracy
of the Investor’s representations as expressed herein.

 

3.7 Legends. The Purchased Securities, and (if applicable) any securities issued
in respect of or exchange for the foregoing may be notated with the following or
a similar legend as well as other legends as may be required by applicable
securities laws: “THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO TRANSFER OF
SUCH SHARES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

 

 

 

 

4. CONDITIONS OF INVESTOR’S OBLIGATIONS AT CLOSING.

 

The obligation of the Investor to purchase the Purchased Securities at the
Closing are subject to the fulfillment on or before the Closing of each of the
following conditions, unless otherwise waived in writing by the Investor:

 

4.1 Representations and Warranties. The representations and warranties of the
Company in Section 2 of this Agreement shall have been true in all respects on
and as if made as of the Closing.

 

4.2 Performance. The Company shall have performed and complied, in all respects,
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.

 

4.3 Delivery of Documents. All of the documents to be delivered by the Company
pursuant to Section ‎1.4, shall have been in a form as attached to this
Agreement, or, if not attached, in a form and substance satisfactory to the
Investor and shall have been delivered to the Investor.

 

4.4 Appointment of Investor Representative to the Board. Effective immediately
following the Closing, the Company shall cause a representative selected
exclusively by the Investor to be appointed to the Board.

 

4.5 Registration Rights Agreement. The Company and the Investor shall have
executed and delivered the Registration Rights Agreement.

 

4.6 Voting Agreement. The Company, the Investor and Medigus shall have executed
and delivered the Voting Agreement.

 

5. CONDITIONS OF THE COMPANY’S OBLIGATIONS AT CLOSING.

 

The obligations of the Company to the Investor under this Agreement are subject
to the fulfillment on or before the Closing, of each of the following
conditions, unless otherwise waived in writing by the Company:

 

5.1 Representations and Warranties. The representations and warranties contained
in Section ‎3 shall have been true in all respects on and as if made as of the
Closing.

 

5.2 Performance. The Investor shall have performed and complied, in all
respects, with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.

 

6. AFFIRMATIVE COVENANTS BY THE COMPANY.

 

6.1 Use of Proceeds. The Company will use the Purchase Price for general working
capital purposes.

 

6.2 Conduct of the Business between Signing and Closing. Except as otherwise
expressly provided by this Agreement or with the prior written consent of the
Investor, the Company shall (i) conduct its business in the ordinary course of
business, consistent with prior practice; (ii) comply with legal requirements
applicable to the operation of its business and pay applicable taxes as due;
(iii) maintain its books, accounts and records in the ordinary course of
business; and (iv) not take any other action that would result in a breach of
any of the representations, warranties or covenants made by the Company in this
Agreement or that would adversely affect its ability to consummate the
transactions contemplated by this Agreement.

 

7. INDEMNIFICATION.

 

7.1 Effectiveness; Survival.

 

(a) The Investor has the right to fully rely upon all representations,
warranties and covenants of the Company, for which the Company shall be held
responsible (the “Indemnitor”), contained in or made pursuant to this Agreement
and in the schedules attached hereto. The representations and warranties of the
Company contained in or made pursuant to this Agreement shall in no way be
affected by any investigation or knowledge of the subject matter thereof made by
or on behalf of the Investor.

 

 

 

 

(b) The representations and warranties of the Company contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing, until (1) in case of Section 2.11 (Intellectual
Property), until the 30th months anniversary of the Closing Date; (2) in case of
Sections 2.2 (Organization), 2.4 (Authorization) and 2.6 (No Conflict;
Consents), until the expiration of the applicable statute of limitation period;
and (3) other than as set forth in clause (1) above, the 24th months anniversary
of the Closing Date; in each case, with respect to any theretofore un-asserted
claims as set forth in clause (d) below;

 

(c) In respect to Section 7.1(b) above, no limitation shall apply to breach of
any representation or warranty, which constitutes or otherwise involves fraud or
willful misrepresentation or breach by the Company (“Fraud”). The applicable
survival period shall be referred to, as applicable, as the “Claims Period”.

 

(d) Except for Fraud, the Company shall have any liability with respect to any
breach of representation and warranty, unless a claim is made hereunder prior to
the expiration of the Claims Period for such representation and warranty, in
which case such representation and warranty shall survive as to that claim until
the claim has been finally resolved.

 

(e) It is the intention of the parties hereto that the Claims Periods supersede
any statute of limitations applicable to the representations and warranties, and
this Section ‎7.1 constitutes a separate written legally binding agreement among
the parties hereto in accordance with the provisions of Section 19 of the
Israeli Limitation Law, 1958.

 

7.2 Indemnification.

 

(a) Indemnifiable Losses. The Indemnitor shall indemnify the Investor (including
its shareholders, limited and general partners directors and officers) (each, an
“Indemnitee”) against, and hold each Indemnitee harmless from all claims,
actions, suits, settlements, damages, expenses (including, reasonable legal
costs and expenses), losses, or costs sustained or incurred by such Indemnitees
(collectively, “Losses”) resulting from, or arising out of, a breach or
misrepresentations of any the Indemnitor’s representations, warranties or
covenants made in this Agreement, subject to the limitations in this Section ‎7.

 

(b) Limitations. The Indemnitee’s right for indemnification hereunder is subject
to the following conditions and limitations, notwithstanding anything to the
contrary in this Agreement, but in addition to any other limitation or condition
contained herein; provided, however, no limitation shall apply to Fraud:

 

(i) Other than in respect of the Fundamental Representations, no Indemnitor
shall be liable for any Loss, unless and until the aggregate of Losses equal or
exceeds US$100,000, in which case indemnification shall be made from the first
dollar amount.

 

(ii) The Indemnitor’s liability shall be limited to the Purchase Price.

 

(c) Claims Notice; Third Party Claims. In the event that an Indemnitee wishes to
assert a claim for indemnification hereunder it shall give the Indemnitor a
prompt written notice thereof (a “Claims Notice”), which shall describe in
reasonable detail the facts and circumstances upon which the asserted claim for
indemnification is based and thereafter keep the Indemnitor informed, in all
material respects, with respect thereto. In the event that such Claims Notice
results from a third party claim against the Indemnitee, such Indemnitee shall
promptly upon becoming aware of the commencement of proceedings by such third
party provide the Indemnitor with the Claims Notice and the Indemnitor shall
have the right to assume the defense thereof (at Indemnitor’s expense) with
counsel mutually satisfactory to the parties; provided, however, that the
Indemnitees shall have the right to retain their own counsel, at the reasonable
expense of the Indemnitor, and within the indemnification limitations herein, if
representation of all parties by the counsel retained by the Indemnitor would be
inappropriate due to actual or potential differing interests between the parties
in such proceeding. Failure of the Indemnitees to give prompt notice or to keep
it informed, as provided herein, shall not relieve the Indemnitor of any of its
obligations hereunder, except to the extent that the Indemnitor is actually and
materially prejudiced by such failure. The Indemnitor shall not be liable nor
shall it be required to indemnify or hold harmless the Indemnitee in connection
with any settlement effected without its consent in writing, which shall not be
unreasonably withheld or delayed.

 

 

 

 

(d) Sole Remedy. The indemnification provided by the Indemnitor hereunder and
the enforcement of such indemnification shall be the exclusive remedy available
to the Indemnitees under this Agreement, other than with respect to Fraud;
provided that this provision does not limit the right to seek specific
performance, a restraining order or injunctive or other equitable relief with
respect to any provision of this Agreement.

 

8. MISCELLANEOUS.

 

8.1 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.

 

8.2 Entire Agreement. This Agreement (including the exhibits and schedules
hereto) and the other Transaction Documents constitute the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersede all prior agreements and understandings, both
written and oral, among any of the parties hereto, with respect to the subject
matter hereof (with no concession being made as to the existence of any such
prior agreements or understandings).

 

8.3 Amendment; Waiver. Except as explicitly set forth herein, any term of this
Agreement may be amended only with the written consent of both the Company and
the Investor. The observance of any term hereof may be waived (either
prospectively or retroactively and either generally or in a particular instance)
only by the prior written consent of the party against which enforcement of such
waiver shall be sought. Any amendment or waiver effected in accordance with this
Section ‎8.3 shall be binding upon the Investor and each transferee of the
Purchased Securities, each future holder of all such securities and the Company.

 

8.4 Assignment; Successors and Assigns. None of the rights, privileges or
obligations set forth in, arising under, or created by this Agreement may be
assigned or transferred by either party, without the prior written consent of
the other party. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

 

8.5 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with to the laws of the State of Israel, disregarding
its conflict of laws rules. Any dispute arising under or in relation to this
Agreement shall be resolved exclusively in the competent court located in Tel
Aviv-Jaffa, Israel and each of the parties hereby irrevocably submits to the
exclusive jurisdiction of such court. Each of the parties hereto (i) consents to
submit itself to the exclusive jurisdiction of the abovementioned courts in the
event any dispute arises out of this Agreement or the transactions contemplated
by this Agreement, (ii) agrees that it shall not attempt to deny or defeat such
jurisdiction by motion or other request for leave from the abovementioned court,
(iii) agrees that it shall not bring any action relating to this Agreement or
the transactions contemplated by this Agreement in any court other than the
abovementioned court, and (iv) irrevocably consents to service of process in the
manner provided by Section ‎8.6 or as otherwise provided by applicable law.

 

8.6 Notices. All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given upon the
earlier of actual receipt, or (i) when delivered, if sent by personal delivery
to the party to be notified, (ii) when sent, if sent by electronic mail or
facsimile (with electronic conformation of delivery) on a business day and
during normal business hours of the recipient, and otherwise on the first
business day in the place of recipient, (iii) five (5) business days after
having been sent, if sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) business day after deposit with an
internationally recognized overnight courier, freight prepaid, specifying next
business day delivery, with written confirmation of receipt. All communications
shall be sent to the respective parties at their address or contact details as
set forth below, or to such address or contact details as subsequently modified
by written notice given in accordance with this Section 8.6 or, in the case of
the Investor, as used for purposes of sending shareholders’ notices by the
Company.

 

 

 

 

If to the Company:

7A Industrial Park, P.O. Box 3030, Omer, 8496500, Israel

Attention: Yaron Silberman

Telephone: +972-72-260-2200

E-mail: yaron.silberman@scoutcam.com

      with a mandatory copy to (which shall not constitute a notice):      

Meitar | Law Offices

16 Abba Hillel St., Ramat-Gan, Israel

Attention: Dr. Shachar Hadar, Adv.

Telephone: +972-3-6103961

E-mail: shacharh@meitar.com

    If to the Investor: as set forth on the signature page hereto/Exhibit A

 

8.7 Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any party to this
Agreement upon any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such non-defaulting party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default therefore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party to this Agreement, shall be cumulative and not alternative.

 

8.8 Interpretation. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. Unless the context requires
otherwise, the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety, and not
to any particular provision hereof, and all references herein to Sections shall
be construed to refer to Sections to this Agreement. Reference to “governmental
authorities” (or similar terms) shall include any: (a) nation, principality,
state, commonwealth, territory, county, municipality, district or other
jurisdiction of any nature, (b) federal, state, local, municipal, foreign or
other government, (c) governmental, quasi-governmental or regulatory body of any
nature, including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality,
organization, unit, or body, or (d) court, public or private arbitrator or other
public tribunal. Reference to a “person” shall mean any individual, corporation,
partnership, limited liability company, firm, joint venture, association,
joint-stock company, trust, estate, unincorporated organization, governmental
authority or other entity, including, any party to this Agreement. Any reference
to a “day” or a number of days (without explicit reference to “business days”)
shall be interpreted as a reference to a calendar day or number of calendar
days, and if any action is to be taken or given on or by a particular calendar
day, and such calendar day is not a business day, then such action may be
deferred until the first business day thereafter (where “business day” shall
mean any day on which banking institutions in Tel-Aviv-Jaffa, Israel are
generally open to the public for conducting business and are not required by law
to close).

 

8.9 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be enforceable in accordance
with its terms and interpreted so as to give effect, to the fullest extent
consistent with and permitted by applicable law, to the meaning and intention of
the excluded provision.

 

8.10 Counterparts. This Agreement and any Transaction Document may be executed
in one or more counterparts, all of which together shall constitute one and the
same instrument, binding and enforceable against the parties so executing the
same; it being understood that all parties need not sign the same counterpart.
Counterparts may also be delivered by facsimile or email transmission (in pdf
format or the like, or signed with docusign, e-sign or any similar form of
signature by electronic means) and any counterpart so delivered shall be
sufficient to bind the parties to this Agreement or any other Transaction
Document, as an original.

 

- Signature Pages Follow -

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this SECURITIES PURCHASE AGREEMENT
to be executed as of the date first written above.

 

  COMPANY:       SCOUTCAM INC.       By: /s/ Yaron Silberman   Name: Yaron
Silberman   Title: Chief Executive Officer

 

  By: /s/ Tanya Yosef   Name: Tanya Yosef   Title: Chief Financial Officer

 

[Company Signature Page to Securities Purchase Agreement]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this SECURITIES PURCHASE AGREEMENT
as of the date first written above.

 

INVESTOR:

 

M. Arkin (1999) Ltd.

 

By: /s/ Mori Arkin   Name: Mori Arkin   Title: Director   Address: 6 Hachoshlim
Street, Building C, 6th Floor, Herzliya, Israel 4672406

 

[Company Signature Page to Securities Purchase Agreement]

 

 

 

 

Exhibit List

 

Exhibit A - Investor and Purchased Securities at the Closing

 

Appendix List

 

Appendix A – Form Warrant A

 

Appendix B – Form Warrant B

 

Appendix C – Registration Rights Agreement

 

Appendix D – Voting Agreement

 

Appendix E – Capitalization Table

 

 

 

 

Exhibit A

 

Investor and Purchased Securities at the Closing

 

Name of Investor  Investment
Amount  Purchased Shares   Shares
Underlying
Purchased
Warrant A   Shares
Underlying Purchased
Warrant B  M. Arkin (1999) Ltd.  US$2,000,000   4,132,232    2,066,116  
 4,132,232