Exhibit 10.1

 

EXECUTION VERSION

NOTE PURCHASE AGREEMENT

 

Protalix BioTherapeutics, Inc.

2 Snunit Street, Science Park, POB 455

Carmiel 20100, Israel

 

Ladies and Gentlemen:

 

This Note Purchase Agreement (this “Agreement”) is made as of July 24, 2017, by
and among Protalix BioTherapeutics, Inc., a corporation organized under the laws
of the State of Delaware (the “Company”), and each purchaser identified on the
signature pages hereof (each, including its successors and assigns, a
“Purchaser” and collectively, the “Purchasers”). Each Purchaser hereby confirms
its agreement with you as follows:

 

1.The Company and such Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Such
Purchaser is a “qualified institutional buyer” as defined in Rule 144A under the
Securities Act.

 

2.Subject to the terms and conditions of this Agreement, the Indenture (as
defined below), the Security Agreement, dated as of December 7, 2016, among the
Company, the guarantors party thereto and Wilmington Savings Fund Society, FSB,
as Collateral Agent (the “Collateral Agent”) (the “U.S. Security Agreement”),
the Security Agreement/Debenture, dated as of December 7, 2016, between Protalix
Ltd. and Altshuler Shaham Trusts Ltd., as Security Trustee (the “Israeli
Security Trustee”) (the “IP Charge”), the Security Agreement/Debenture, dated as
of December 7, 2016, between Protalix Ltd. and the Israeli Security Trustee (the
“Floating Charge”), the Security Agreement/Debenture, dated as of December 7,
2016, between the Company and the Israeli Security Trustee (the “Israeli Stock
Pledge”) and together with the U.S. Security Agreement, the IP Charge and the
Floating Charge, the “Security Agreements”), the Company has authorized the
issuance and sale of $10 million aggregate principal amount of 7.50% Senior
Secured Convertible Notes due 2021 (CUSIP/ISIN # 74365A AH4 / US74365A AH41)
(the “Notes” and, together with this Agreement, the Indenture (as defined below)
and the Security Agreements, the “Transaction Agreements”), to be issued
pursuant to the Base Indenture dated December 7, 2016, among the Company, The
Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and
Wilmington Savings Fund Society, FSB, as collateral agent thereunder (the “Base
Indenture”), as supplemented by the First Supplemental Indenture, dated July 24,
2017, among the Company, the Trustee and the Collateral Agent (the “Supplemental
Indenture” and, with the Base Indenture, the “Indenture”). Subject to Section
3.2 of ANNEX A hereto, the Notes are convertible into cash, shares of common
stock, par value $0.001 per share (the “Common Stock”), of the Company, or a
combination thereof, at the Company’s election. At the Closing (as defined in
Section 1 of ANNEX A hereto), the Company will, subject to the terms of this
Agreement (including the terms and conditions set forth in ANNEX A), issue and
sell to such Purchaser and such Purchaser will buy from the Company, upon the
terms and conditions hereinafter set forth, the principal amount of Notes shown
on such Purchaser’s signature page hereof.

 

  1

 

 

3.The Notes purchased by such Purchaser will be delivered by electronic book
entry through the facilities of The Depository Trust Company (“DTC”) to an
account specified by such Purchaser set forth below and will be released by the
Trustee, at the written instruction of the Company, to such Purchaser at the
Closing.

 

***Signature Page Follows***

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first above
written.

 

  PROTALIX BIOTHERAPEUTICS, INC.           By: /s/ Yossi Maimon  

 

  Name: Yossi Maimon  

 

  Title Chief Financial Officer  

 

[Signature Page to Note Purchase Agreement]

 

 

 

 

ANNEX A

 

NOTE PURCHASE AGREEMENT

 

TERMS AND CONDITIONS

 

Capitalized terms used in this ANNEX A to the Note Purchase Agreement without
definition have the respective meanings ascribed to them in the Agreement.

 

The Company agrees, and each Purchaser, severally and not jointly, agrees, as
follows:

 

1.             Delivery of the Notes at the Closing; Termination.

 

1.1           Closing. The closing of the purchase and sale of the Notes (the
“Closing”) shall occur at the offices of Morrison & Foerster LLP, 250 West 55th
Street, New York, New York 10019, on the date hereof following the execution of
the Agreement (the date of such Closing being referred to herein as the “Closing
Date”).

 

1.2           Closing Deliveries Subject to Section 1.3 below, on the Closing
Date, (a) such Purchaser shall (i) pay, in immediately available funds, the full
amount of the purchase price for the Notes being purchased hereunder, which is
the par value of such Notes, by wire transfer to the account specified by the
Company and (ii) instruct its custodian(s) to post a DWAC request for free
receipt to The Bank of New York Mellon for the portion of the $10 million
aggregate principal amount of Notes (CUSIP/ISIN # 74365A AH4 / US74365A AH41)
that such Purchaser is purchasing hereunder, which shall be made through the
facilities of DTC; (b) the Company, or the Trustee at the Company’s direction,
will cause the Notes purchased by such Purchaser (as specified on its signature
page hereof) to be issued and credited to the DTC accounts identified by such
Purchaser on its signature page hereof; and (c) each Purchaser shall provide the
Company with a duly executed Letter of Undertaking to the Israeli National
Authority for Technological Innovation (the “IIA”), in the form attached hereto
as Annex D (“Letter of Undertaking”), to be held in trust by the Company and
delivered to the IIA only upon and subject to the Purchaser’s and its affiliates
holdings in the Company equal to or exceeds 5% of the Company’s share capital on
a fully diluted basis.

 

1.3           Closing Mechanics.

 

(a)          On the Closing Date, such Purchaser will pay the full amount of the
purchase price for the Notes being purchased hereunder to such Purchaser as
required by Section 1.2 above. The receipt of funds by the Company from such
Purchaser shall be deemed to be irrevocable instructions from such Purchaser to
the Company that the conditions to the Closing have been satisfied.

 

(b)          On the Closing Date, such Purchaser will disburse such funds by
wire transfer of immediately available funds in accordance with the Company’s
written wire instructions, unless otherwise agreed to by the Company and such
Purchaser.

 

 

 

 

(c)          Immediately following the Company’s receipt of such funds, the
Notes purchased by such Purchaser (as specified on the signature page hereof)
will be issued by the Company and delivered pursuant to Section 1.2 above.

 

1.4           Conditions to the Company’s Obligations. The Company’s obligation
to complete the purchase and sale of the Notes and deliver such Notes by book
entry to such Purchaser at the Closing shall be subject to the following
conditions, any one or more of which may be waived by the Company:

 

(a)          receipt by the Company of same-day funds in the full principal
amount of the Notes being purchased hereunder;

 

(b)          receipt by the Company of a duly executed Letter of Undertaking to
the IIA from each Purchaser;

 

(c)          completion of the exchange and other transactions contemplated
under the exchange agreement, dated the date hereof, by and among the Company
and the parties identified therein (the “Exchange Agreement”); and

 

(d)          the accuracy of the representations and warranties made by such
Purchaser in the Agreement.

 

1.5           Conditions to the Purchasers’ Obligations. Such Purchaser’s
obligation to pay for the Notes to be purchased by it shall be subject to the
following conditions, any one or more of which may be waived by such Purchaser:

 

(a)          receipt by such Purchaser of the Agreement, executed and delivered
by a responsible officer of the Company;

 

(b)          receipt by such Purchaser of fully executed copies of the
Supplemental Indenture and the Notes;

 

(c)          completion of the exchange and other transactions contemplated
under the Exchange Agreement;

 

(d)          the delivery to such Purchaser by U.S. counsel to the Company of a
legal opinion substantially similar in substance to the form of opinion attached
as Annex B-1 to the Agreement;

 

(e)          the delivery to such Purchaser by Israeli counsel to the Company of
a legal opinion substantially similar in substance to the form of opinion
attached as Annex B-2 to the Note Purchase Agreement;

 

(f)          receipt by such Purchaser of a certificate executed by the chief
executive officer and the chief financial officer of the Company, dated as of
the Closing Date, in substantially the form of certificate attached as Annex
C-1;

 

 

 

 

(g)          receipt by such Purchaser of a certificate of the Secretary of the
Company, dated as of the Closing Date, in substantially the form of certificate
attached as Annex C-2:

 

(i)          certifying the resolutions adopted by the Board of Directors of the
Company approving the transactions contemplated by the Transaction Agreements
and the sale of the Notes and the reservation and issuance of the shares of
Common Stock potentially issuable upon the conversion of the Notes;

 

(ii)         certifying the current versions of the Certificate of Incorporation
and the Bylaws of the Company; and

 

(iii)        certifying as to the signatures and authority of the persons
signing this Agreement and related documents on behalf of the Company;

 

(h)          receipt by such Purchaser of a certificate of good standing for the
Company for its jurisdiction of incorporation;

 

(i)          the Common Stock shall continue to be listed on the New York Stock
Exchange Market (“NYSE MKT”) as of the Closing Date; there shall have been no
suspensions in the trading of the Common Stock as of the Closing Date; and the
listing of additional shares notification form with respect to the maximum
number of shares of Common Stock that may be issued upon conversion of the Notes
(including the maximum number of Additional Shares (as defined in the Indenture)
that may be added to the Conversion Rate (as defined in the Indenture)),
assuming the Company elected to settle all conversions solely in shares of
Common Stock (the “Maximum Number of Shares”), shall have been submitted to NYSE
MKT and NYSE MKT shall have confirmed that it has no objection to such
notification;

 

(j)          no injunction, restraining order, action or order of any nature by
a governmental or regulatory authority shall have been issued, taken or made or
no action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority of competent jurisdiction that would
prevent or materially interfere with the consummation of the transactions
contemplated by the Agreement; and

 

(k)          prior to the Closing, there shall not have occurred a material
adverse effect or any development involving a prospective material adverse
effect in the general affairs, business, properties, management, financial
condition or results of operations of the Company from that set forth in the
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”) (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”).

 

2.             Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, such Purchaser,
as of the Closing Date, as follows:

 

 

 

 

2.1           The Company has timely filed, or cured any defect relating to
timely filing, all SEC Reports since January 1, 2016. The SEC Reports (i) as of
the time they were filed (or if subsequently amended, when amended, and as of
the date hereof), complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not, at the
time they were filed (or if subsequently amended or superseded by an amendment
or other filing, then, on the date of such subsequent filing), contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.

 

2.2           None of the Company, its affiliates (within the meaning of Rule
144 under the Securities Act) or any person acting on its or their behalf has
directly or indirectly made offers or sales of any security, or solicited offers
to buy any security, under circumstances that would require the registration of
the offer and sale of the Notes or the Common Stock potentially issuable upon
conversion thereof under the Securities Act.

 

2.3           None of the Company, its Affiliates or any person acting on its or
their behalf has: (a) engaged in any form of general solicitation or general
advertising in connection with any offer or sale of the Notes or (b) engaged in
any directed selling efforts (within the meaning of Regulation S under the
Securities Act) with respect to the Notes or the Common Stock potentially
issuable upon conversion thereof.

 

2.4           The Notes satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act.

 

2.5           No registration under the Securities Act of the offer and sale of
the Notes or the Common Stock potentially issuable upon conversion thereof is
required for, and no qualification of the Indenture under the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the United States
Securities and Exchange Commission (the “Commission”) promulgated thereunder is
required in connection with, the offer and sale of the Notes to the Purchasers
in the manner contemplated herein.

 

2.6           The Company is not, and after giving effect to the offering and
sale of the Notes and the application of the proceeds thereof will not be, an
“investment company” as defined in the U.S. Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission promulgated thereunder.

 

2.7           The Company is subject to and in full compliance with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act.

 

2.8           The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the Company in
connection with this Agreement.

 

 

 

 

2.9           The Company has not taken, directly or indirectly, any action
designed to or that has constituted or that might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Notes or the shares of Common Stock potentially issuable upon
conversion of the Notes.

 

2.10         The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the SEC Reports,
and is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction that requires such qualification,
except where the failure to be so qualified would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business (a “Material Adverse
Effect”).

 

2.11         Each subsidiary of the Company has been duly incorporated and is
validly existing under the laws of its state of incorporation or formation, is
duly qualified to do business in each jurisdiction in which its ownership or
lease of property or the conduct of its businesses requires such qualification
and has all power and authority necessary to own or hold its properties and to
conduct the businesses in which it is engaged, except where the failure to be so
qualified, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.

 

2.12         All the outstanding shares of capital stock of each subsidiary of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable, and, except as otherwise set forth in the SEC Reports, all
outstanding shares of capital stock of the subsidiaries are owned by the Company
either directly or through wholly owned subsidiaries free and clear of any
security interest, claim, lien or encumbrance.

 

 

 

 

2.13         The authorized, issued and outstanding capital stock of the Company
is as set forth in the SEC Reports (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the SEC Reports or upon the
exercise of outstanding options or warrants described in the SEC Reports); the
Common Stock conforms in all material respects to the description thereof
contained in the SEC Reports; all of the issued and outstanding shares of Common
Stock have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and state
securities laws; none of the outstanding shares of Common Stock was issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company; there are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or any
of its subsidiaries other than those described in the SEC Reports; all grants of
options to acquire shares of Common Stock (each, a “Company Stock Option”) were
validly issued and approved by the Board of Directors of the Company, a
committee thereof or an individual with authority duly delegated by the Board of
Directors of the Company or a committee thereof; grants of Company Stock Options
were (a) made in material compliance with all applicable laws and (b) as a
whole, made in material compliance with the terms of the plans under which such
Company Stock Options were issued; there is no and has been no policy or
practice of the Company to coordinate the grant of Company Stock Options with
the release or other public announcement of material information regarding the
Company or its results of operations or prospects; assuming the Authorized Share
Approval (as defined below) is obtained, the Maximum Number of Shares will be
duly authorized and, when issued upon conversion of the Notes in accordance with
the Indenture, will be validly issued, fully paid and nonassessable; on the date
hereof, immediately prior to giving effect to the transactions contemplated
hereby and by the Exchange Agreement, the Company has 19,863,341 authorized,
unreserved and unissued shares of Common Stock (the “Pre-Transaction Available
Authorized Shares”); an additional 1,906,740 shares of Common Stock will be
authorized, unreserved and unissued immediately upon consummation of the
transactions contemplated by the Exchange Agreement (such shares, together with
the Pre-Transaction Available Authorized Shares, the “Available Authorized
Shares”); the total number of Available Authorized Shares is 21,770,081 shares
of Common Stock; out of such Available Shares, the Board of Directors of the
Company has duly and validly adopted resolutions reserving 11,239,642 shares of
Common Stock for issuance upon conversion of the 4.50% Senior Convertible Notes
due 2022 being issued by the Company pursuant to the Exchange Agreement (the
“4.50% Notes”) and reserving 10,530,439 shares of Common Stock for issuance upon
conversion of the Notes; at the soonest practicable date after the Authorized
Share Approval (as defined below) is obtained, the Board of Directors of the
Company will duly and validly adopt resolutions reserving the Maximum Number of
Shares for issuance upon conversion of the Notes; the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Notes or the shares of Common Stock potentially
issuable upon conversion thereof; and, the Company has not sold or issued any
shares of Common Stock during the six-month period preceding the date hereof,
including any sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act other than shares issued pursuant to employee benefit plans,
qualified stock options plans or other employee compensation plans or pursuant
to outstanding convertible securities, options, rights or warrants.

 

2.14         No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated by the Transaction Agreements. No stockholder approval
is required under the rules of The NYSE MKT in connection with the initial sale
of the Notes under this Agreement.

 

2.15         The Agreement has been duly authorized, executed and delivered by
the Company; the Base Indenture has been duly authorized, executed and delivered
by the Company; the Security Agreements have been duly authorized, executed and
delivered by the Company or Protalix Ltd., as applicable; the Supplemental
Indenture has been duly authorized and, assuming due authorization, execution
and delivery thereof by the Trustee and the Collateral Agent, when executed and
delivered by the Company, constitutes a legal, valid, binding instrument
enforceable against the Company in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors’ rights generally from time to time
in effect and to general principles of equity); and the Notes have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Purchasers,
will have been duly executed and delivered by the Company and will constitute
the legal, valid and binding obligations of the Company entitled to the benefits
of the Indenture (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors’ rights generally from time to time in effect and to general
principles of equity) and, subject to Section 3.2 of this Agreement, will be
convertible into Common Stock in accordance with their terms.

 

 

 

 

2.16         None of the execution and delivery of the Transaction Agreements,
the issuance and sale of the Notes or, subject to Section 3.2 of this Agreement,
the issuance of the Common Stock upon conversion thereof, the consummation of
any other of the transactions herein or therein contemplated, or the fulfillment
of the terms hereof or thereof, will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, (a) the charter or
by-laws or comparable constituting documents of the Company or any of its
subsidiaries; (b) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any of its subsidiaries is a
party or bound or to which its or their property is subject; or (c) any statute,
law, rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or their
properties, except, in the cases of clauses (b) and (c), as would not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.17         The consolidated historical financial statements and schedules of
the Company and its consolidated subsidiaries included or incorporated by
reference in the SEC Reports present fairly the financial condition, results of
operations and cash flows of the Company as of the dates and for the periods
indicated and comply as to form with the applicable accounting requirements of
Regulation S-X under the Securities Act; and have been prepared in conformity
with generally accepted accounting principles in the United States applied on a
consistent basis throughout the periods involved (except as otherwise noted
therein).

 

2.18         No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or its or their property is pending or, to the
knowledge of the Company, threatened that (a) could, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
performance of the Transaction Agreements, or the consummation of any of the
transactions contemplated hereby or thereby or (b) could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.19         Each of the Company and its subsidiaries owns or leases all such
properties as are reasonably necessary to the conduct of its operations as
presently conducted.

 

2.20         Neither the Company nor any of its subsidiaries is in violation or
default of: (a) any provision of its charter or bylaws or comparable
constituting documents; (b) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a party or bound or
to which its property is subject; or (c) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of its subsidiaries
of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or such
subsidiary or any of its properties, as applicable, except, in the cases of
clauses (b) and (c), as would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

 

 

 

2.21         Kesselman & Kesselman, a member of PricewaterhouseCoopers
International Limited, which has certified certain financial statements of the
Company and its consolidated subsidiaries and delivered its report with respect
to the audited consolidated financial statements and schedules for the year
ended December 31, 2016 in the SEC Reports, is an independent registered public
accounting firm with respect to the Company within the meaning of the Securities
Act and the applicable published rules and regulations thereunder and under the
rules of the Public Company Accounting Oversight Board.

 

2.22         There are no stamp or other issuance or transfer taxes or duties or
other similar fees or charges required to be paid in connection with the
execution and delivery of the Agreement or the issuance, sale or resale of the
Notes or upon the issuance of Common Stock upon the conversion thereof.

 

2.23         The Company has filed all applicable tax returns that are required
to be filed or has requested extensions thereof (except in any case in which the
failure to so file would not reasonably be expected to have a Material Adverse
Effect and except as set forth or contemplated in the SEC Reports) and has paid
all taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not reasonably be expected to have a
Material Adverse Effect and except as set forth in or contemplated in the SEC
Reports.

 

2.24         No labor problem or dispute with the employees of the Company or
any of its subsidiaries exists or is threatened or imminent, and the Company is
not aware of any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries’ principal suppliers, contractors or customers,
except as would not reasonably be expected to have a Material Adverse Effect and
except as set forth in or contemplated in the SEC Reports.

 

2.25         The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or any of its subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company and
its subsidiaries are in compliance with the terms of such policies and
instruments; there are no claims by the Company or any of its subsidiaries under
any such policy or instrument as to which insurance company is denying liability
or defending under a reservation of rights clause; neither the Company nor any
of its subsidiaries has been refused any insurance coverage sought or applied
for; and neither the Company nor any of its subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not reasonably
be expected to have a Material Adverse Effect except as set forth or
contemplated in the SEC Reports.

 

 

 

 

2.26         Except as required under the Indenture, no subsidiary of the
Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other subsidiary of the
Company, except as described in or contemplated in the SEC Reports.

 

2.27         The Company and its subsidiaries possess and are in compliance in
all material respects with the terms of all licenses, approvals, orders,
certificates, permits and other authorizations (collectively, “Licenses”) issued
by all applicable authorities, including, without limitation, all such Licenses
required by the U.S. Food and Drug Administration or any component thereof
and/or by any other U.S. state, local or foreign government or drug regulatory
agency (collectively, the “Regulatory Agencies”) necessary to conduct their
respective businesses as described in the SEC Reports, and neither the Company
nor any such subsidiary has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such License that,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to have a Material Adverse Effect, except
as set forth or contemplated in the SEC Reports, and all such Licenses are in
full force and effect.

 

2.28         The preclinical tests and clinical trials that are described in, or
the results of which are referred to in, the SEC Reports were and, if still
pending, are being conducted in all material respects in accordance with
protocols filed with the appropriate Regulatory Agencies for each such test or
trial, as the case may be, and with standard medical and scientific research
procedures and all applicable statutes, directives, rules and regulations of the
Regulatory Agencies, including, without limitation, the Federal Food, Drug and
Cosmetic Act and the rules and regulations promulgated thereunder; each
description of such tests and trials, and the results thereof, contained in the
SEC Reports is accurate and complete in all material respects and fairly
presents the data about and derived from such tests and trials, and the Company
has no knowledge of any other studies or tests, the results of which are
inconsistent with, or otherwise call into question, the results described or
referred to in the SEC Reports; neither the Company nor its subsidiaries has
received any notices or other correspondence from any Regulatory Agency
requiring the termination, suspension or modification of any clinical trials
that are described or referred to in the SEC Reports; and each of the Company
and its subsidiaries has operated and currently is in compliance in all material
respects with all applicable rules and regulations of the Regulatory Agencies.

 

 

 

 

2.29         The Company and each of its subsidiaries: (a) are and have been in
material compliance with applicable health care laws, including, without
limitation, the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.),
the Federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), Physician Payment
Sunshine Act (42 U.S.C. § 1320a-7h), the civil False Claims Act (31 U.S.C. §§
3729 et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)),
the Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)), the Health Insurance
Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.), as
amended by the Health Information Technology for Economic and Clinical Health
Act of 2009, the exclusion laws, Social Security Act § 1128 (42 U.S.C. §
1320a-7), Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX
of the Social Security Act) and the regulations promulgated pursuant to such
laws, and comparable state laws, and all other local, state, federal, national,
supranational and foreign laws, manual provisions, policies and administrative
guidance relating to the regulation of the Company and its subsidiaries
(collectively, “Health Care Laws”); (b) have not received notice of any ongoing
claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration or other action from any Regulatory Agency or third party alleging
that any product operation or activity is in material violation of any Health
Care Laws and has no knowledge that any such Regulatory Agency or third party is
considering any such claim, litigation, arbitration, action, suit, investigation
or proceeding; and (c) are not a party to any corporate integrity agreement,
deferred prosecution agreement, monitoring agreement, consent decree, settlement
order or similar agreements or have any reporting obligations pursuant to any
such agreement, plan or correction or other remedial measure entered into with
any governmental authority. Neither the Company nor its subsidiaries or any of
their officers, directors, employees, agents or contractors has been or is
currently debarred, suspended or excluded from participation in the Medicare and
Medicaid programs or any other state or federal health care program.

 

2.30         The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management’s general or specific
authorizations; (b) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles in the United States and to maintain asset accountability; (c) access
to assets is permitted only in accordance with management’s general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company and its subsidiaries’ internal controls
over financial reporting are effective, and the Company and its subsidiaries are
not aware of any material weakness in their internal control over financial
reporting.

 

2.31         The Company and its subsidiaries maintain “disclosure controls and
procedures” (as such term is defined in Rules 13a-15(e) under the Exchange Act);
such disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed in the Company’s Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified by the Commission and that material information related to the
Company and its consolidated subsidiaries is made known to management, including
the Company’s Chief Executive Officer and Chief Financial Officer, particularly
during the period when the Company’s periodic reports are being prepared to
allow timely decisions regarding required disclosure.

 

2.32         The Company and its subsidiaries (a) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (“Environmental Laws”);
(b) have received and are in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses; and (c) have not received notice of any actual or
potential liability under any Environmental Law, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or liability would not, individually or in the
aggregate, have a Material Adverse Effect, except as set forth in or
contemplated in the SEC Reports. Except as set forth in the SEC Reports, neither
the Company nor any of its subsidiaries has been named as a “potentially
responsible party” under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.

 

 

 

 

2.33         In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties); on the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a Material Adverse Effect, except as set forth
or contemplated in the SEC Reports.

 

2.34         None of the following events has occurred or exists: (a) a failure
to fulfill the obligations, if any, under the minimum funding standards of
Section 302 of the United States Employee Retirement Income Security Act of
1974, as amended (“ERISA”), and the regulations and published interpretations
thereunder with respect to a Plan (as defined below), determined without regard
to any waiver of such obligations or extension of any amortization period; (b)
an audit or investigation by the Internal Revenue Service, the U.S. Department
of Labor, the Pension Benefit Guaranty Corporation or any other federal or state
governmental agency or any foreign regulatory agency with respect to the
employment or compensation of employees by any of the Company or any of its
subsidiaries that could have a Material Adverse Effect, except as set forth or
contemplated in the SEC Reports; (c) any breach of any contractual obligation,
or any violation of law or applicable qualification standards, with respect to
the employment or compensation of employees by the Company or any of its
subsidiaries that could have a Material Adverse Effect, except as set forth or
contemplated in the SEC Reports. None of the following events has occurred or is
reasonably likely to occur: (i) a material increase in the aggregate amount of
contributions required to be made to all Plans in the current fiscal year of the
Company and its subsidiaries compared to the amount of such contributions made
in the most recently completed fiscal year of the Company and its subsidiaries;
(ii) a material increase in the “accumulated post-retirement benefit
obligations” (within the meaning of FASB ASC Topic 715) of the Company and its
subsidiaries compared to the amount of such obligations in the most recently
completed fiscal year of the Company and its subsidiaries; (iii) any event or
condition giving rise to a liability under Title IV of ERISA that could have a
Material Adverse Effect, except as set forth in or contemplated in the SEC
Reports; or (iv) the filing of a claim by one or more employees or former
employees of the Company or any of its subsidiaries related to their employment
that could have a Material Adverse Effect, except as set forth or contemplated
in the SEC Reports. For purposes of this paragraph, the term “Plan” means a plan
(within the meaning of Section 3(3) of ERISA) subject to Title IV of ERISA with
respect to which the Company or any of its subsidiaries may have any liability.

 

2.35         Protalix Ltd., a company organized under the laws of Israel, and
Protalix B.V., a company organized under the laws of the Netherlands, are the
only “significant subsidiaries” of the Company (as defined in Rule 1-02 of
Regulation S-X).

 

 

 

 

2.36         None of the Company, its subsidiaries or, to the knowledge of the
Company, any director, officer, agent, employee or Affiliate (as defined below)
of the Company or any of its subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA; the Company, its
subsidiaries and, to the knowledge of the Company, its Affiliates have conducted
their businesses in compliance with the FCPA and have instituted and maintained
policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith. “Affiliate” has the meaning
given to it in Rule 144(a) under the Securities Act.

 

2.37         The operations of the Company and its subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements and money laundering statutes and the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to the
Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

 

2.38         None of the Company, any of its subsidiaries or, to the knowledge
of the Company, any director, officer, agent, employee or Affiliate of the
Company or any of its subsidiaries is currently subject to any sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of
the Treasury (“OFAC”), and the Company will not, directly or indirectly, use the
proceeds of the offering of the Notes hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.

 

2.39         There is and has been no failure on the part of the Company and any
of the Company’s directors or officers, in their capacities as such, to comply
with any provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith, including Section 402, related
to loans, and Sections 302 and 906, related to certifications.

 

 

 

 

2.40         The Company and its subsidiaries own, possess, license or otherwise
have adequate rights to use, on reasonable terms, all patents, trademarks,
service marks, trade names, copyrights and copyrightable works, licenses,
inventions, trade secrets, technology, know-how (whether or not patentable) and
other intellectual property or proprietary rights (including all registrations
and applications for registration of, and all goodwill associated with, the
foregoing) (collectively, the “Intellectual Property”) necessary for the conduct
of the Company’s business as now conducted. Except as set forth in the SEC
Reports or would not, singly or in the aggregate, have a Material Adverse
Effect: (a) there are no rights of third parties to any such Intellectual
Property; (b) to the Company’s knowledge, there is no material infringement by
third parties of any such Intellectual Property; (c) there is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the Company’s rights in or to any such Intellectual Property, and
the Company is unaware of any facts which would form a reasonable basis for any
such claim; (d) 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 such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (e) there is no pending or, to
the Company’s knowledge, threatened action, suit, proceeding or claim by others
that the Company infringes or otherwise violates any Intellectual Property or
other proprietary rights of others, and the Company is unaware of any other fact
which would form a reasonable basis for any such claim; (f) there is no U.S.
patent or published U.S. patent application which contains claims that have (or
may have) priority over or dominate (or may dominate) any Intellectual Property
described in the SEC Reports as being owned by or licensed to the Company or
that interferes with the issued or pending claims of any such Intellectual
Property; and (g) there is no prior art of which the Company is aware that may
render any U.S. patent held by the Company invalid or any U.S. patent
application held by the Company unpatentable that has not been disclosed to the
U.S. Patent and Trademark Office.

 

2.41         The Company has not engaged any broker, finder, commission agent or
other person in connection with the offering and sale of the Notes contemplated
hereby or any of the transactions contemplated in the Agreement, and the Company
is not under any obligation to pay any broker’s fee or commission in connection
with such transactions.

 

3.             Representations, Warranties and Covenants of the Purchasers. Such
Purchaser represents and warrants to, and covenants with, the Company that:

 

3.1           Purchaser Status. Such Purchaser acknowledges that (a) it meets
the definition of “qualified institutional buyer” as defined in Rule 144A(a)(1)
under the Securities Act; and (b) is not an entity formed for the sole purpose
of acquiring the Notes. Such Purchaser is not an “affiliate” of the Company
within the meaning of Rule 144 under the Securities Act.

 

3.2           Conversion.

 

(a)          Such Purchaser covenants that, until the NYSE Shareholder Approval
(as defined below) is obtained, it shall not exercise its right to convert the
Notes issued pursuant hereto to the extent that the aggregate number of shares
of Common Stock that would be issuable by the Company upon such conversion if
the Company were to elect to settle such conversion solely by delivering shares
of Common Stock, together with the number of shares of Common Stock issued by
the Company upon conversion of the Notes issued pursuant hereto concurrently
with or prior to such conversion, would exceed 16,373,633 shares of Common Stock
(such number to be adjusted from time to time for stock dividends, stock splits
or stock combinations with respect to the Common Stock).

 

 

 

 

(b)          Such Purchaser covenants that, until the Authorized Share
Availability Date (as defined below) has occurred (including as a result of the
receipt of the Authorized Share Approval), it shall not exercise its right to
convert the Notes issued pursuant hereto to the extent that the aggregate number
of shares of Common Stock that would be issuable by the Company upon such
conversion if the Company were to elect to settle such conversion solely by
delivering shares of Common Stock would exceed the number of shares of Common
Stock that are then authorized, unreserved (for other issuances) and unissued.

 

(c)          Such Purchaser covenants that it will not transfer the Notes to any
person unless such transferee agrees in writing to be bound by the covenants set
forth in Sections 3.2(a) and 3.2(b) (any such transferee, a “Successor
Purchaser”), whereupon such Successor Person shall be entitled to the benefits
of and to enforce the representations, warranties and covenants of the Company
set forth in Section 2 and Section 4 hereof.

 

3.3           Experience. (a) Such Purchaser is knowledgeable, sophisticated and
experienced in financial and business matters and in making, and is qualified to
make, decisions with respect to investments in shares representing an investment
decision like that involved in the purchase of the Notes (and the Common Stock
into which the Notes are potentially convertible), and such Purchaser has
undertaken an independent analysis of the merits and the risks of an investment
in the Notes (and the Common Stock into which the Notes are potentially
convertible) and has reviewed carefully the SEC Reports, based on such
Purchaser’s own financial circumstances; (b) such Purchaser understands that its
investment in the Notes (and the Common Stock into which the Notes are
potentially convertible) involves a significant degree of risk, including a risk
of total loss of such Purchaser’s investment, and such Purchaser understands
that the market price of the Common Stock into which such Notes are potentially
convertible has been volatile and that no representation is being made as to the
future value of the Common Stock; (c) such Purchaser has had the opportunity to
request, receive, review and consider all information it deems relevant in
making an informed decision to purchase the Notes (and the Common Stock into
which the Notes are potentially convertible) and to ask questions of, and
receive answers from, the Company concerning such information; (d) such
Purchaser will comply with the Securities Act as applicable to it in connection
with resales of the Notes, or the Common Stock into which the Notes are
convertible, pursuant to any exemption from the Securities Act; and (e) such
Purchaser has, in connection with its decision to purchase the principal amount
of Notes, relied solely upon the SEC Reports and the representations and
warranties of the Company contained herein.

 

3.4           Intent. Such Purchaser is acquiring the principal amount of Notes
in the ordinary course of its business and for its own account and with no
present intention of distributing any of such Notes or the Common Stock
potentially issuable upon conversion of the Notes or any arrangement or
understanding with any other Persons regarding the distribution of such Notes or
Common Stock.

 

 

 

 

3.5           Source of Funds. Such Purchaser of the Notes will be deemed to
have represented and agreed that either (a) such Purchaser is not a “plan” (as
defined in ERISA, and which term includes: (i) “employee benefit plans” (as
defined in Section 3(3) of ERISA); (ii) plans, individual retirement accounts
and other arrangements that are subject to Section 4975 of the Internal Revenue
Code of 1986, as amended, and the regulations and published interpretations
thereunder (the “Code”) or to provisions under applicable Federal, state, local,
non-U.S. or similar laws; and (iii) entities the underlying assets of which are
considered to include “plan assets” of such plans, accounts and arrangements)
and it is not purchasing the Notes on behalf of, or with the “plan assets” of,
any “plan” (as so defined); or (b) such Purchaser’s purchase, holding and
subsequent disposition of the Notes either (i) are not a prohibited transaction
under ERISA or the Code and are otherwise permissible under all applicable
similar laws or (ii) are entitled to exemptive relief from the prohibited
transaction provisions of ERISA and the Code in accordance with one or more
available statutory, class or individual prohibited transaction exemptions and
are otherwise permissible under all applicable similar laws.

 

3.6           Reliance on Exemptions. Such Purchaser understands that the Notes
(and the Common Stock into which the Notes are potentially convertible) are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of the Securities Act, the rules and regulations
promulgated thereunder, and state securities laws and that the Company is
relying upon the truth and accuracy of, and such Purchaser’s compliance with,
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the availability of
such exemptions and the eligibility of such Purchaser to acquire the Notes (and
the Common Stock into which the Notes are potentially convertible).

 

3.7           Confidentiality. For the benefit of the Company, such Purchaser
previously agreed to keep confidential all information concerning the private
placement of Notes. Such Purchaser is prohibited from reproducing or
distributing the Agreement or any other offering materials or other information
provided by the Company in connection with such Purchaser’s consideration of its
investment in the Company, in whole or in part, or divulging or discussing any
of their contents, except to its financial, investment or legal advisors, on a
confidential basis, in connection with its proposed investment in the Notes (and
the Common Stock into which the Notes are potentially convertible) or as
required by applicable law or regulation. Further, such Purchaser understands
that the existence and nature of all conversations and presentations, if any,
regarding the Company and the offering of Notes must be kept strictly
confidential. Such Purchaser understands that the federal securities laws impose
restrictions on trading based on information regarding the offering of Notes. In
addition, such Purchaser hereby acknowledges that unauthorized disclosure of
information regarding the offering of Notes may result in a violation of
Regulation FD. This obligation will terminate upon the filing by the Company of
the press release or Current Report on Form 8-K referred to in Section 4(a)
below, which shall include any material, non-public information provided to such
Purchaser prior to the date hereof. The foregoing agreements shall not apply to
any information that is or becomes publicly available through no fault of such
Purchaser, or that such Purchaser is legally required to disclose; provided,
however, that if such Purchaser is requested or ordered to disclose any such
information pursuant to any court or other government order or any other
applicable legal procedure, it shall use its reasonable best efforts to provide
the Company with prompt notice of any such request or order in time sufficient
to enable the Company to seek an appropriate protective order.

 

3.8           Investment Decision. Such Purchaser understands that nothing in
the Agreement or any other materials presented to such Purchaser in connection
with the purchase and sale of the Notes (and the Common Stock into which the
Notes are potentially convertible) constitutes legal, tax or investment advice.
Such Purchaser has consulted such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Notes (and the Common Stock into which the Notes are potentially
convertible).

 

 

 

 

3.9           Legend. Such Purchaser understands that the Notes and the Common
Stock will initially bear the restrictive legends as set forth in the Indenture
and that the Company will make a notation on its records and give instructions
to the Trustee and any transfer agent of the Common Stock in order to implement
the restrictions on transfer set forth and described herein.

 

3.10         Residency. Such Purchaser’s principal executive offices are in the
jurisdiction set forth immediately below such Purchaser’s name on the signature
page hereto.

 

3.11         Organization; Validity; Enforcements; Undertaking. (a) Such
Purchaser has full right, power and authority to enter into the Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of the Agreement,
(b) the making and performance of the Agreement by such Purchaser and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of such Purchaser or conflict with,
result in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any material agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which such Purchaser is a party or, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental agency or body
applicable to such Purchaser, (c) no consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other governmental
agency or body is required on the part of such Purchaser for the execution and
delivery of the Agreement or the consummation of the transactions contemplated
by the Agreement, (d) upon the execution and delivery of the Agreement, the
Agreement shall constitute a legal, valid and binding obligation of such
Purchaser, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws or judicial decisions of
general application relating to or affecting the enforcement of creditors’
rights generally and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or contribution may
be limited by federal or state securities laws or the public policy underlying
such laws; (e) there is not in effect any order enjoining or restraining such
Purchaser from entering into or engaging in any of the transactions contemplated
by the Agreement; and (f) each Purchaser undertakes (i) to observe all the
requirements of the Encouragement of Research, Development and Technological
Innovation in the Industry Law 5744-1984 (the “Innovation Law”) and the
provisions of the applicable regulations, rules, procedures and benefit plans,
as applied to Protalix Ltd. and as directed by the research committee of the IIA
(the “Research Committee”), in particular those requirements relating to the
prohibitions on the transfer of know-how and/or production rights; and (ii) as a
stockholder of the Company, to make all reasonable efforts that Protalix Ltd.
shall observe strictly all the requirements of the Innovation Law and the
provisions of the applicable regulations, rules, procedures and benefit plans,
as applied to Protalix Ltd. and as directed by the Research Committee, in
particular those requirements relating to the prohibitions on the transfer of
know-how and/or production rights. Each Purchaser hereby irrevocably authorizes
and empowers the Israeli Security Trustee to execute on its behalf the standard
lender’s undertaking in the form requested by the IIA.

 

 

 

 

4.             Covenants. The Company shall:

 

(a)          issue a press release or file with the Commission a Current Report
on Form 8-K publicly disclosing all material non-public information provided to
the Purchasers in connection with the transactions contemplated by the Agreement
on or before 9:00 a.m., New York City time, on the first business day following
the date hereof;

 

(b)          not, and shall cause each of its subsidiaries and each of their
respective officers, directors, employees and agents not to, provide any
Purchaser with any material, non-public information regarding the Company or any
of its subsidiaries from and after the issuing or filing of such press release
or current report on Form 8-K, as applicable, pursuant to Section 4(a) above
without the express written consent of such Purchaser;

 

(c)          cause all shares of Common Stock, if any, issued upon conversion of
the Notes to be listed on each securities exchange, if any, on which other
shares of Common Stock are then listed;

 

(d)          call and hold a special stockholders meeting on the soonest
practicable date hereafter and, in any event, within 120 days of the date hereof
at which it shall use commercially reasonable efforts to obtain (i) stockholder
approval (the “Authorized Share Approval”) to amend its Amended and Restated
Articles of Incorporation to increase the number of authorized shares of Common
Stock to an amount that is sufficient to cover issuances of the maximum number
of shares of Common Stock issuable upon the conversion of each of (x) the Notes,
including the maximum number of shares of Common Stock issuable thereunder in
connection with a Make-Whole Adjustment Event and assuming Physical Settlement
(each as defined in the Indenture) and (y) the 4.50% Notes, including the
maximum number of shares of Common Stock issuable thereunder in connection with
a Make-Whole Adjustment Event and assuming Physical Settlement (each as defined
in the Indenture governing the 4.50% Notes (the “4.50% Indenture”)), and (ii)
the stockholder approval (the “NYSE Shareholder Approval”) contemplated by
Section 713(a) of the NYSE MKT Company Guide to issue 20% or more of the
outstanding Common Stock in connection with the issuance of the Notes and the
4.50% Notes;

 

(e)          if the Authorized Share Approval has not been obtained by the date
that is 120 days after the date hereof, the Company shall not, in connection
with any conversion of any of the Company’s 7.50% Senior Secured Convertible
Notes due 2021 (including any such notes issued prior to the date hereof) by a
Purchaser or any Successor Purchaser for which the Conversion Date (as defined
in the Indenture) occurs after such 120th day, issue a number of shares of
Common Stock upon such conversion (whether in settlement of its Conversion
Obligation (as defined in the Indenture), its Make-Whole Obligation (as defined
in the Indenture) or for any other reason) exceeding 1,176.4706 shares per
$1,000 principal amount of such converted notes, until such date (the
“Authorized Share Availability Date”) as the Company has a sufficient number of
authorized, unreserved (for other issuances) and unissued shares available to
issue the maximum number of shares of Common Stock issuable upon conversion of
both the Notes and the 4.50% Notes, including the maximum number of Additional
Shares (as defined in the Indenture and the 4.50% Indenture, as applicable) and
assuming all such conversions are settled (including both the Conversion
Obligation and the Make-Whole Obligation (each as defined in the Indenture and
the 4.50% Indenture, as applicable)) solely in shares of Common Stock; within
one business day of a request by a Purchaser or any Successor Purchaser, the
Company will notify such Purchaser or Successor Purchaser of the number of
shares of Common Stock then authorized, unreserved (for other issuances) and
unissued; and the Company shall notify each Purchaser (including any Successor
Purchaser) promptly of the occurrence of the Authorized Share Availability Date;

 

 

 

 

(f)           the Company shall not, in connection with any redemption of any of
the Company’s 7.50% Senior Secured Convertible Notes due 2021 (including any
such notes issued prior to the date hereof), issue a number of shares of Common
Stock upon conversions in connection with such redemption exceeding 1,176.4706
shares per $1,000 principal amount of such redeemed converted notes until the
Authorized Share Availability Date;

 

(g)          until the Authorized Share Approval, the Company shall not issue
any shares of Common Stock to any person for any reason, other than any shares
of Common Stock that are reserved for issuance immediately prior to the date
hereof or upon conversion of the Notes issued pursuant hereto or the 4.50%
Notes;

 

(h)          until the Authorized Share Availability Date and the NYSE
Shareholder Approval have both been obtained, the Company shall not redeem the
Notes; and

 

(i)           as long as a Purchaser holds any of the Notes, should the Trustee
or its legal counsel require a legal counsel’s Rule 144 opinion with regard to
sale of such Purchaser’s Notes, or the removal of any restrictive legends from
such Notes, to the extent permitted by applicable law, the Company shall provide
a written opinion of legal counsel who shall, and whose legal opinion shall, be
reasonably satisfactory to such Purchaser and the Trustee, addressed to the
Company and such Trustee (if necessary), to the effect that the sale of such
Purchaser’s Notes may be effected without registration under the Securities Act
and the removal of any restrictive legend may occur. Such Purchaser shall
provide any customary representations in order to permit the Company’s legal
counsel to provide such opinion. The Company shall provide such an opinion to
the Trustee within three (3) Business Days of a request to do so by a Purchaser
or the Trustee.

 

5.             Indemnification.

 

5.1           The Company agrees to indemnify and hold harmless such Purchaser
and its affiliates or managers, and in each case, their respective officers,
directors, employees, controlling persons (within the meaning of the Securities
Act or the Exchange Act) and agents (each, an “Indemnified Party”), against any
loss, claim, damage, liability or out-of- pocket expense (including reasonable
attorneys’ fees), as incurred, if any (collectively, “Losses”), arising out of
or relating to this Agreement and the transactions contemplated hereby, other
than Losses relating to (i) taxes, (ii) to the extent finally determined by a
court of competent jurisdiction to have resulted from the bad faith, gross
negligence or willful misconduct of such Indemnified Party, from a willful and
material breach by such Purchaser of its obligations under this Agreement or
from a claim solely among the Indemnified Parties or (iii) a claim brought by or
on behalf of another holder of 7.50% Senior Secured Convertible Notes due 2021
to the extent arising from actions taken by such Indemnified Party prior to the
date of this Agreement that has not been disclosed to the Company prior to the
date hereof.

 

 

 

 

5.2           Promptly after receipt by an Indemnified Party under this Section
5 of notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the Company under this Section 5,
notify the Company in writing of the commencement thereof, but the failure to
notify the Company will not relieve it from liability under Section 5.1 above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the Company of substantial rights and
defenses. In case any such action is brought against any Indemnified Party and
such Indemnified Party seeks or intends to seek indemnity from the Company, the
Company will be entitled to participate in, and, to the extent that it shall
elect, by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, to assume the
defense thereof; provided, however, if the defendants in any such action include
both the Indemnified Party and the Company and the Company or the Indemnified
Party shall have reasonably concluded that a conflict may arise between the
positions of the Company and the Indemnified Party in conducting the defense of
any such action or that there may be legal defenses available to them and/or
other Indemnified Parties that are different from or additional to those
available to the Company, the Indemnified Party or Parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
Parties. Upon receipt of notice from the Company to such Indemnified Party of
the Company’s election so to assume the defense of such action and approval by
the Indemnified Party of counsel, the Company will not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed separate counsel in accordance with the
proviso to the preceding sentence (it being understood, however, that in
connection with any such action the Company shall not be liable for the expenses
of more than one separate counsel (in addition to any local counsel)
representing the Indemnified Parties who are parties to such action) or (ii) the
Company shall not have employed counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of commencement of the action.

 

5.3           The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which shall not be withheld
unreasonably, but if settled with such consent or if there is a final judgment
for the plaintiff, the Company agrees to indemnify the Indemnified Party against
any Loss by reason of such settlement or judgment. The Company shall not,
without the prior written consent of the Indemnified Party, effect any
settlement in any pending or threatened action, suit or proceeding in respect of
which any Indemnified Party is or could have been a party and indemnity was or
could have been sought hereunder by such Indemnified Party, unless such
settlement, compromise or consent (x) includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such action, suit or proceeding and (y) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of any
Indemnified Party.

 

5.4           If the indemnification provided for in this Section 5 is for any
reason unavailable to or otherwise insufficient to hold harmless the Indemnified
Party in respect of any Loss referred to therein, then the Company shall
contribute to the aggregate amount paid or payable by such Indemnified Party, as
incurred, as a result of any Loss referred to therein:

 

 

 

 

(a)          in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and such Purchaser, on the
other hand, pursuant to this Agreement, or

 

(b)          if the allocation provided by Section 5.4(a) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in Section 5.4(a) above but also the relative
fault of the Company, on the one hand, and such Purchaser, on the other hand, as
well as any other relevant equitable considerations.

 

The Company and such Purchaser agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
(even if the Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in this Section 5.4. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

 

6.             The provisions of this Section 5 will survive the Closing.

 

7.             Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, email, confirmed facsimile or nationally recognized overnight
express courier postage prepaid and shall be deemed given when so mailed and
shall be delivered as addressed as follows:

 

(x)          if to the Company, to:

 

Protalix BioTherapeutics, Inc.

2 Snunit Street, Science Park, POB 455,

Carmiel 20100, Israel

Attention: Moshe Manor, President and Chief Executive Officer

Facsimile: 972-4-902-8102

Email: moshe.manor@protalix.com

 

with a copy to:

 

Morrison & Foerster LLP

250 West 55th Street

New York, New York 10019

Attention: Anna T. Pinedo

Facsimile: 1-212-468-7900

Email: apinedo@mofo.com

 

(y)           if to such Purchaser, at its address as set forth on this
signature page to the Agreement or at such other address or addresses as may
have been furnished to the Company in writing.

 

8.             Changes. The Agreement may not be modified or amended as between
such Purchaser and the Company except pursuant to an instrument in writing
signed by the Company and such Purchaser. Any amendment or waiver effected in
accordance with this Section 7 shall be binding upon the Company and such
Purchaser and upon any future holder of any Notes or any shares of Common Stock
issued upon conversion of the Notes (or any successor securities thereto)
purchased by such Purchaser pursuant hereto.

 

 

 

 

9.             Survival of Agreements; Non-Survival of Company Representations
and Warranties. Notwithstanding any investigation made by any party to the
Agreement, all covenants and agreements made by the Company and such Purchaser
herein and in the Notes delivered pursuant hereto shall survive the execution of
the Agreement, the delivery to such Purchaser of the Notes being purchased and
the payment therefor.

 

10.           Headings. The headings of the various sections of the Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of the Agreement.

 

11.           Severability. In case any provision contained in the Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

 

12.           Governing Law; Venue. The Agreement is to be construed in
accordance with the internal laws of the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under the Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereby irrevocably
waives any right it may have to, and agrees not to request, a jury trial for the
adjudication of any dispute hereunder or in connection with or arising out of
the Agreement or any transaction contemplated hereby. If either party shall
commence a proceeding to enforce any provisions of the Agreement, then the
prevailing party in such proceeding shall be reimbursed by the other party for
its attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such proceeding.

 

13.           Counterparts. The Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which, when taken together,
shall constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties. Delivery of an executed counterpart of the Agreement by facsimile
transmission or electronic mail in PDF form shall be as effective as delivery of
a manually executed counterpart hereof.

 

 

 

 

14.           Entire Agreement. The Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein, and, except as specifically set forth herein
or therein, neither the Company nor such Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. Each party
expressly represents and warrants that it is not relying on any oral or written
representations, warranties, covenants or agreements outside of the Agreement.

 

15.           Fees and Expenses. Each of the Company and such Purchaser shall
pay its fees and expenses related to the transactions contemplated by the
Agreement.

 

16.           Parties. The Agreement is made solely for the benefit of and is
binding upon such Purchaser and the Company, and any Person controlling the
Company or such Purchaser, the officers and directors of the Company and their
respective executors, administrators, successors and assigns. No other Person
shall acquire or have any right under or by virtue of the Agreement. The term
“successors and assigns” shall not include any subsequent purchaser of the Notes
sold to such Purchaser pursuant to the Agreement or any shares of Common Stock
issued to such Purchaser upon the conversion of such Notes.

 

17.           Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurance as may be reasonably requested by any
other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of the
Agreement.

 

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