AGREEMENT
AND BELOW ARE INCORPORATED HEREIN BY REFERENCE:
1.2.1.
"BOARD" MEANS THE COMPANY'S BOARD OF DIRECTORS.
1.2.2.
"CONVERTIBLE SECURITIES" MEANS OPTIONS TO PURCHASE AND/OR RIGHTS TO
SUBSCRIBE FOR ORDINARY SHARES, AND/OR SECURITIES BY THEIR TERMS CONVERTIBLE INTO
AND/OR EXCHANGEABLE FOR ORDINARY SHARES AND/OR OPTIONS OR WARRANTS TO PURCHASE
AND/OR RIGHTS TO SUBSCRIBE FOR SUCH CONVERTIBLE AND/OR EXCHANGEABLE SECURITIES
OF THE COMPANY.
1.2.3.
"DIRECTOR(S)" MEANS A MEMBER(S) OF THE BOARD.
1.2.4.
"FULLY DILUTED BASIS" MEANS ALL ISSUED SHARES, AND ALL OUTSTANDING
OPTIONS, WARRANTS OR ANY OTHER SECURITIES ISSUED BY THE COMPANY, WHICH ARE
CONVERTIBLE OR EXCHANGEABLE INTO SHARES.
1.2.5.
"MANAGEMENT AGREEMENT" MEANS THAT CERTAIN MANAGEMENT AGREEMENT
REFERRED TO IN SECTION 11 BELOW, IN THE FORM ATTACHED HERETO AS SCHEDULE 11.2.
1.2.6.
"ORDINARY SHARES" MEANS ORDINARY SHARES OF THE COMPANY, NOMINAL
VALUE NIS 0.01 PER SHARE.
1.2.7.
"ORIGINAL ISSUE PRICE" WITH RESPECT TO A SHARE MEANS, FOR EACH
SERIES A PREFERRED SHARE, US$0.03; AND FOR EACH SERIES B PREFERRED SHARE,
US$0.04.
1.2.8.
"PREFERRED DIRECTORS" MEANS, THOSE DIRECTORS DESIGNATED FOR
APPOINTMENT TO THE BOARD BY THE LEAD INVESTOR.
1.2.9.
"PREFERRED SHARES" MEANS SERIES A PREFERRED SHARES AND SERIES B
PREFERRED SHARES.
1.2.10.
"RECAPITALIZATION EVENT" MEANS ANY SHARE SPLIT, SHARE SUBDIVISION OR
COMBINATION, DISTRIBUTION OF A SHARE DIVIDEND OR RECAPITALIZATION RELATING TO
THE COMPANY'S SHARE CAPITAL.
1.2.11.
"REGISTRATION RIGHTS AGREEMENT" MEANS THAT CERTAIN REGISTRATION
RIGHTS AGREEMENT REFERRED IN SECTION 10 BELOW, IN THE FORM ATTACHED HERETO AS
SCHEDULE 10.
1.2.12.
"SERIES A PREFERRED SHARES" MEANS PREFERRED A SHARES OF THE COMPANY,
NOMINAL VALUE NIS 0.01 EACH.
1.2.13.
"SERIES B PREFERRED SHARES" MEANS PREFERRED B OF THE COMPANY,
NOMINAL VALUE NIS 0.01 EACH.
1.2.14.
"SUBSIDIARY" MEANS WITH RESPECT TO ANY ENTITY, THE POSSESSION
DIRECTLY OR INDIRECTLY OF AT LEAST 25% (TWENTY FIVE PERCENT) OF THE VOTING
POWER, THE RIGHT TO APPOINT AT LEAST 50.1% OF THE MEMBERS OF THE BOARD OF
DIRECTORS OR THE RIGHT TO RECEIVE AT LEAST 50.1% OF THE DISTRIBUTED PROFITS OF
SUCH ENTITY.
2.
FIRST CLOSING - INVESTMENT; ACQUIRED SHARES; GRANT OF WARRANTS
2.1.
AT THE FIRST CLOSING (AS DEFINED BELOW), THE COMPANY SHALL ISSUE
AND THE INVESTORS SHALL ACQUIRE 25,000,000 NEWLY ISSUED SERIES A PREFERRED
SHARES (THE "ACQUIRED SHARES") IN ACCORDANCE WITH THE TERMS OF THIS SECTION 2,
FREE AND CLEAR OF ANY LIEN, ENCUMBRANCE, DEBT, OR ANY OTHER THIRD PARTY RIGHT
WHATSOEVER AT A PRICE PER SHARE OF US$0.03 (THE "PRICE PER SHARE") AND FOR AN
AGGREGATE PURCHASE PRICE OF US $750,000 FOR ALL THE ACQUIRED SHARES (THE
"PURCHASE PRICE"). ACTUAL ISSUANCES AND PURCHASE OF THE ACQUIRED SHARES SHALL BE
IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THE SUB-SECTIONS BELOW
OF THIS SECTION 2 (INCLUDING SECTION 2.5).
2.2.
EACH INVESTOR SHALL PAY ITS RESPECTIVE PORTION OF THE PURCHASE
PRICE TO THE COMPANY AT THE CLOSING IN IMMEDIATELY AVAILABLE FUNDS AGAINST
ISSUANCE TO EACH INVESTOR OF ITS RESPECTIVE PORTION OF THE ACQUIRED SHARES, ALL
AS SET FORTH OPPOSITE EACH INVESTOR'S NAME APPEARING IN SCHEDULE A ATTACHED
HERETO. THE ACQUIRED SHARES, WHEN ISSUED IN ACCORDANCE WITH THIS