Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of March 3,
2020, by and among ScoutCam Inc. (f/k/a Intellisense Solutions Inc.), a Nevada
corporation (the “Company”) and the persons and entities listed on Exhibit A
attached hereto (each an “Investor” and collectively the “Investors”).

 

WHEREAS, the Company desires to issue and sell to the Investors, and the
Investors desire to purchase from the Company, upon the terms and conditions
stated in this Agreement, for an aggregate purchase price of up to US$1.0
million (the “Purchase Price”), up to 1,033,058 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 to purchase each 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, the Company and the Investors 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 Investors 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; and

 

WHEREAS, the Investors desire to purchase and the Company desires to issue and
sell to the Investors the 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 Investors, and such
Investors shall purchase, severally and not jointly, from the Company, according
to the allocation set forth in Exhibit A attached hereto, an aggregate of up to
1,033,058 Units at a purchase price of US$0.968 per each Unit.

 

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 D
(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 March 3, 2020,
or at such other time and place as the Company and Investors representing a
majority of the Purchase Price (the “Majority Investors”) 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 Investors:

 

(i) True and correct copies of written resolutions, or minutes of a meeting, of
the board of directors of the Company (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; and (b) 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) True and correct copies of written resolutions, or minutes of meeting, of
the Company’s stockholders 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, the approval of 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, in the form attached hereto as Schedule ‎1.4(a)(ii);

 

(iii) Duly executed stock certificates or book-entry confirmations representing
the respective Purchased Shares issued to each Investor at the Closing in the
name of each of such Investor, in the form attached hereto as Schedule
‎1.4(a)(iii);

 

(iv) The Warrants issued to each Investor at the Closing in the name of each of
such Investor; and

 

(v) 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)(v).

 

1.5 Purchase Price. Upon the execution of this Agreement, each Investor shall,
severally and not jointly, transfer to the Company, its respective portion of
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 each Investor that, except as set
forth on the Disclosure Schedule delivered on the date hereof (the “Disclosure
Schedule”), and as annexed hereto as Appendix F, which exceptions shall be
deemed to be part of the representations and warranties made hereunder, 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. The Disclosure
Schedule shall be arranged in sections and subsections corresponding to the
numbered and lettered sections and subsections contained in this Section ‎2, and
the information set forth in any one in any section or subsection of the
Disclosure Schedule shall apply to and qualify (a) the representation and
warranty set forth in this Agreement to which it corresponds, and (b) whether or
not an explicit reference or cross-reference is made, each other representation
and warranty set forth in this Agreement for which it is reasonably apparent on
its face that such information is relevant to such other section.

 

In this Agreement, “Material Adverse Effect” means a material and adverse effect
on the assets, properties, conditions (financial or otherwise), operating
results or business of the Company, as currently conducted.

 

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
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, 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. 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 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 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 stock capital of the Company will be on or immediately
following to the Closing, as set forth in the Company’s Articles of
Incorporation (the “Articles”), and such number of Common Stock as set forth in
the Capitalization Table are or shall be (immediately following the Closing)
issued and outstanding.

 

(b) The Board has reserved a total of 5,228,007 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 (the “ESOP Pool”).

 

(c) The issued and outstanding shares of the Company were duly and validly
authorized and issued, fully paid and non-assessable, and 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) or agreements for the purchase from the Company of any of its stock
capital, or any securities convertible into or exchangeable for stock of the
Company shall be outstanding, other than as set forth in Section 2.3(d) of the
Disclosure Schedule, or that could require the Company to issue, sell, transfer
or otherwise cause to be outstanding any of the Company’s stock capital or
securities convertible or exercisable into shares thereof.

 

(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, other than as
set forth in Section 2.3(e) of the Disclosure Schedule. 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) 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 stock
capital.

 

2.4 Authorization. All corporate action on the part of the Company, its
directors and shareholders, 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 (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
Investors hereunder, 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 state 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 on each Investor as to itself. 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 its
terms.

 

   

 

 

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 Company’s certificate or articles
of incorporation, 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)
subject to the Required Approvals, 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.

 

2.7 SEC Reports; Financial Statements; DTC Eligibility. 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 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 comply in all material respects with applicable accounting
requirements and the rules and regulations of 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 financial position of the Company 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 Continued Quotation. The Company 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.

 

2.9 Financial Statements; No Undisclosed Liabilities.

 

(a) The Company 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$200,000; (ii) obligations
under contracts and commitments incurred in the ordinary course of business
including debt of the Subsidiary to the parent company of the Company in the
principal amount of US$500,000; 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 is not a guarantor or indemnitor of any debt or obligation of
another, nor has the Company 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. The Company did
not extend any loans or advances to any person, other than advances for expenses
to its employees in the ordinary course of business.

 

2.10 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, 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 its 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.

 

2.11 Intellectual Property. The Company and the Subsidiary have, or have rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and
other intellectual property rights and similar rights for use in connection with
their respective businesses and which the failure to so have could 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) upon the rights of any Person,
except as could not have or reasonably be expected to not have a Material
Adverse Effect. 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. 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. The Company has no knowledge that either it or
the Subsidiary lacks or will be unable to obtain any rights or licenses to use
all Intellectual Property Rights that are necessary to conduct its business. 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.

 

2.12 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.

 

2.13 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) has made or filed all United States federal,
state and local income and all 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.

 

2.14 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.

 

2.15 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.

 

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

 

2.17 Disclosure. No representation or warranty of the Company contained in this
Agreement, as qualified by the Disclosure Schedule, and no certificate furnished
or to be furnished to Investors 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 INVESTORS.

 

Each of the Investors, severally and not jointly, hereby represents and
warrants, with respect to itself only, 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. 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, on the part of 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 of 1933, as amended (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, such 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. Investor is aware that, except as set
forth in the 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.”

 

   

 

 

3.8 Exculpation among Investors. The Investor is not relying upon any other
Investor in making its investment or decision to invest in the Company. Neither
of the other Investors nor the respective controlling persons, officers,
directors, partners, agents, employees or legal or other advisors of any such
other Investors shall be liable to the Investor for any action heretofore taken
or omitted to be taken by any of them in connection with the purchase of the
Purchased Securities.

 

4. CONDITIONS OF INVESTORS’ OBLIGATIONS AT CLOSING.

 

The obligations of each 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 Majority
Investors:

 

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 1.5, shall have been in a form as attached to this
Agreement, or, if not attached, in a form and substance satisfactory to the
Investors and shall have been delivered to the Investors.

 

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

 

The obligations of the Company to the Investors 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. Each of the Investors 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
Majority Investors (which consent shall not be unreasonably withheld or
delayed), 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) Each 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. Unless otherwise set forth in this
Agreement, 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 any 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 fraud or willful
misrepresentation 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 each 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 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 with respect to each Investor
to the respective portion of Purchase Price of such Investor at the Closing and
each Indemnitee shall be entitled to receive a pro rata share of the
indemnifiable Loss, based on the respective portion of such Investor of the
Purchase Price as of the Closing.

 

 

 

 

(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 for Fraud; provided that
this provision does not limit the right to seek specific performance, a
restraining order or injunctive 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 Majority Investors, provided that any amendment amending an Investor’s
respective portion of the Purchase Price to be invested at the Closing, or any
amendment that has a disproportionate and adverse effect on specific Investor(s)
(as compared to other Investors), shall require also such specific Investor’s
prior written consent. 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 (and in case enforcement will be sought against the
Investors, of the Majority Investors). Any amendment or waiver effected in
accordance with this Section ‎8.3 shall be binding upon the Investors 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 an Investor, without the prior written consent of the
Company. 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 Investors, 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 Investors: 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:     Name:     Title:  

 

[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:

 

Signature:           By:     Name:     Title:     Address:           Investment
Amount:  

 

[Investor Signature Page to Securities Purchase Agreement]