Document:

heviex101.htm

Exhibit 10.1

 

WITHDRAW AND TRANSFER AGREEMENT

THIS WITHDRAW AND TRANSFER AGREEMENT (hereinafter, the “Agreement”) is made and entered into effective this fourteenth [14]th day of May, 2012 by and between: (i) SK Innovation Co. Ltd., a company existing and organized under the laws of the Republic of Korea, with a Colombian branch incorporated by means of Public Deed of 2351, dated October 9, 2008, granted in Public Notary No. 16 of the Circuit of Bogotá, represented herein by BO SEONG SEO, of legal age, domiciled in Bogota, with Foreign Citizen Number 366830 acting in his capacity as Legal Representative (hereinafter, “SK”); (ii) Petroamerica International Corp. (previously referred to as Imore, S.A.), a company existing and organized under the laws of the Republic of Panama, (continued from Panama to Barbados) with a Colombian branch incorporated by means of Public Deed 4368 of October, 20, 2009, granted in Public Notary No. 17 of the Circuit of Bogotá, represented herein by Nelson Navarrete Hernandez, of legal age, domiciled in Bogotá, with  Citizen ID Card Number 19.460.062 issued in Bogotá; Colombia, acting in his capacity as Legal Representative (hereinafter, “PIC”) (iii) DCX SAS (formerly known as Petropuli Ltda)., a company existing and organized under the laws of the Republic of Colombia, incorporated by means of Public Deed No. 899 of May 4, 1999, granted in Public Notary No. 10 of the Circuit of Bogotá, represented herein by Juan Carlos Robles, of legal age, domiciled in Bogotá D.C., with Citizen ID Card No.19.459.308 issued in Bogota, Colombia acting in his capacity as Legal Representative (hereinafter, “DCX”); and together with SK and Petroamerica, the “Parties”.

WITNESSETH:

	
(i)  

	
SK and DCX (former Petropuli) submitted an offer to the Colombian National Hydrocarbons Agency (hereinafter, the “ANH”) to be awarded the Exploration and Production of Hydrocarbons Contract for the Sinu San Jacinto North Block SSJN-5 (the “SSJN-5 E&P Contract”), within the Offer Invitation Process to Contract Exploratory Blocks in the Colombia 2008 Round (the “Process”).

	
(ii)  

	
ANH awarded the SSJN-5 E&P Contract to SK and DCX (former Petropuli) by Resolution No. 625 on December 5, 2008 and, in accordance with the Terms of Reference of the Process, SK and DCX (former Petropuli) entered into a Temporary Union Agreement on December 10, 2008 (the “Temporary Union Agreement”), to regulate, among other matters, the creation of a temporary union entitled “Union Temporal Bloque SSJN-5 SK-PETROPULI)” (the “SK- Petropuli Temporary Union”).

	
(iii)  

	
The Temporary Union Agreement established that the SK and DCX (former Petropuli) executed a joint operating agreement (the “JOA”) to regulate, in further detail, their respective rights and obligations under the SSJN-5 E&P Contract.

	
(iv)  

	
The SK-Petropuli (present DCX) Temporary Union entered into the SSJN-5 E&P Contract with the ANH on December 18, 2008, entitled “Hydrocarbon Exploration and Production Contract No. 45 of 2008”, covering a total surface of approximately two hundred and thirty thousand eight hundred and fifty four (230,854) hectares, located within the municipal jurisdictions of El Guamo, San Juan Nepomuceno, Zambrano and Córdoba in the Department of Bolívar, and Zapayán (Punta De Piedras), Chivolo, Plato, Tenerife, Nueva Granada, Santa Ana, and Santa Bárbara De Pinto in the Department of Magdalena, Republic of Colombia.

	
(v)  

	
DCX (former Petropuli) was the beneficial owner of a fifty percent (50%) participating interest of the rights and obligations arising under the SSJN-5 E&P Contract, and SK is the beneficial owner of the remaining fifty percent (50%) participating interest of the rights and obligations arising under the SSJN-5 E&P Contract.

	
(vi)  

	
SK and DCX (former Petropuli) entered into the JOA on March 27, 2009, effective as of December 19, 2008.

	
(vii)  

	
PIC and DCX (former Petropuli) entered into a participation agreement arising from a commercial offer made by DCX (former Petropuli) and accepted by PIC on January 12, 2010, by means of which DCX (former Petropuli) granted and assigned a twenty five percent (25%) participating interest in the rights and obligations arising under the SSJN-5 E&P Contract to PIC, subject to fulfillment of the Condition Precedent by PIC.

	
(viii)  

	
On May 24, 2010 PIC, DCX (former Petropuli) and SK executed the adherence agreement by which PIC adhered to the JOA and therefore in July 2010 entered Amendment No.2 of the JOA including PIC as a party.

	
(ix)  

	
Pursuant to Section 75 of the SSJN-5 E&P Contract, any total or partial assignment of the interest, rights and obligations derived from said contract must be previously authorized by the ANH (the “ANH Approval”).

	
(x)  

	
PIC is preparing the documentation for the application of the assignment of the twenty five (25%) participating interest to the ANH.

 

  

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(xi)  

	
By private Agreement Petrovista Energy Corp., a company existing and organized under the laws of Canada (hereinafter “Petrovista”) previous owner of DCX (former Petropuli), sold its shares of Petropuli to Deep Core Inc. and has now no participation within DCX (former Petropuli).

	
(xii)  

	
Deep Core Inc. and Petrovista agreed that the participation within Block SSJN5 would not be included in the sale, and therefore DCX should have no rights or obligations related to the JOA or the E&P Contract.

	
(xiii)  

	
Notwithstanding the aforesaid in numeral xii, DCX and Petrovista did not legalize the assignment of the rights in Block SSJN5 before the ANH, nor did they formally notify SK.

	
(xiv)  

	
The JOA was not amended to modify the holder of the participating interest. Therefore, DCX (former Petropuli) is currently a part of the JOA and the E&P Contract and liable for all obligations.

	
(xv)  

	
On March 14, 2012 SK issued the Default notice1 for the non-payment of the cash call SK-SSJN5-FIN-0012-12.

	
(xvi)  

	
On March 22, 2012, the Repeat Default Period2 commenced.

	
(xvii)  

	
DCX (former Petropuli) did not remedy its default within the fifteen days (15) of the Default notice.

	
(xviii)  

	
Due to Petropuli ́s past owner management default, SK and PIC formally required DCX (former Petropuli) to withdraw from the JOA.

	
(xix)  

	
The Parties have agreed that in order to resolve the default of the previous owners of DCX (former Petropuli) (Today DCX) DCX will voluntarily withdraw from the JOA, the “SSJN-5 E&P Contract”, the “Temporary Union Agreement” and the “SK- Petropuli Temporary Union” in exchange for a release and indemnity SK and PIC in regards to all liabilities and obligations under said JOA, the SSJN-5 E&P Contract, the and the SK- Petropuli Temporary Union.

NOW THEREFORE, in consideration of the foregoing premises and of the mutual promises herein contained, the Parties hereby agree as follows:

1. Withdraw from the  JOA

As of the date of execution of this Agreement and upon the terms and conditions set forth herein; in accordance with Article 8.4. (D)(2) of the JOA, DCX (former Petropuli) withdraws from the JOA and the SSJN5 E&P Contract.

2. Liabilities and indemnities

2.1. In consideration of DCX ́s withdrawal SK and PIC hereby: (i) assume any and all present and future claims, liabilities and obligations, whether know or unknown, derived or arisen from or related to, or in any way connected to the JOA, the SSJN5 E&P Contract and the Temporary Union Agreement “SK-PETROPULI Temporary Union”, and any other agreement existing  between SK and DCX, or PIC and DCX (former Petropuli), or among PIC, DCX (former Petropuli) and SK; and (ii) declare and accept that as of the date of this Agreement, DCX (former Petropuli) has no outstanding payment obligation of any kind derived or arisen from or related to, or in any way connected to the JOA, the SSJN5 E&P Contract, the Temporary Union Agreement “SK- PETROPULI Temporary Union”, and any other agreement existing between SK and DCX, or PIC and DCX (former Petropuli), or among PIC, DCX (former Petropuli)) and SK.

2.2. SK and PIC hereby; assume any and all past Claims, liabilities and obligations, whether know or unknown, that may be raised by any third party, including but not limited to the Colombian Government and/or the ANH derived or arisen from or related to, or in any way connected to the obligations of the execution of the JOA, the SSJN5 E&P Contract, the Temporary Union Agreement “SK- PETROPULI Temporary Union”, and any other agreement existing between SK and DCX, or PIC and DCX (former Petropuli), or among PIC, DCX (former Petropuli) and SK including but not limited to any environmental claims, liabilities or obligations.

(i) Notwithstanding the foregoing and solely for a period of six (6) months after the execution of this Agreement, DCX (former Petropuli) shall hold harmless, defend and indemnify SK of any Claims derived from past obligation from the agreements existing between PIC and DCX whether know or unknown, derived or arisen from or related to, or in any way connected to the JOA, the SSJN5 E&P Contract and the Temporary Union Agreement “SK-PETROPULI Temporary Union.  Thereafter, SK and PIC hereby: (i) assume any and all past Claims, liabilities and obligations as provided under 2.2 above.

(ii) Furthermore, for a period of six (6) months after the execution of this Agreement DCX (former Petropuli) shall hold harmless, defend and indemnify SK and PIC of any Claims derived from past obligations from agreements existing and/or Agreements with any third party whether know or unknown, derived or arisen from or related to, or in any way connected to the JOA, the SSJN5 E&P Contract and the Temporary Union Agreement  “SK-PETROPULI Temporary Union .

 

  

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2.3.  

	
DCX accepts that it is the sole responsible for the agreements entered into with Petrovista Energy Corp (Petropuli ́s previous shareholders) and shall hold all Parties harmless and indemnify them from any claims derived from such agreements regardless of their nature.

	
2.4.  

	
 PIC accepts that it is the sole responsible for the agreements entered into with DCX (former Petropuli) and shall hold SK harmless and indemnify them from any claims derived from such agreements regardless of their nature.

For purposes of this Agreement, “Claims” shall mean any claims, losses, costs, expenses, liabilities, demands, or causes of action, and cost of defense or settlement (including, without limitation, attorneys’ fees and court cost).  The releases, waivers and indemnities contained in the Agreement expressly shall apply regardless of cause.

 

	
3.  

	
Transfer of DCX (former Petropuli) (present DCX) Participating Interest

Pursuant to Article 13.6 of JOA, DCX (former Petropuli) hereby transfers its 25% Participating Interest to PIC and SK as Follows:

PIC:    8.333%

SK:     16.667%

Therefore, the final participation after this transfer is as follows

PIC:    33.333%

SK:     66.667%

	
4.  

	
 Execution of Required documents

4.1. As set forth within Article 8.4.(F) of JOA, DCX (former Petropuli) (present DCX) shall execute any document and take any action required in order to make the transfer valid and obtain all required permits and approvals.

4.2. Likewise, SK and PIC agree to and shall execute any documents and take any actions that may be required in order to fully comply with the objectives, terms and conditions of this Agreement.

5. ANH Approval

5.1. The Parties agree that in accordance with the terms and conditions set forth in Section 75 of the SSJN-5 E&P Contract, it is necessary to obtain the ANH Approval to allow the initial assignment made by DCX (former Petropuli) to PIC.

Notwithstanding the above mentioned, PIC and SK hereby agree that SK will process the Assignment of DCX (former Petropuli) ́s Participating interest registered before ANH (50%) on SK ́S behalf and afterwards SK will transfer the 33.333% to PIC.

5.2. In any case, PIC will be liable for a participating interest of 33.333% of all obligations to the JOA and the E&P Contract.

6. Termination of the Agreement

This Agreement shall automatically terminate if any one of the following agreements is terminated prior to ANH Approval: the JOA, or/and the SSJN-5 E&P Contract.

  

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in Bogotá D.C., Colombia, on the date hereinabove mentioned.

	
(i) SK INNOVATION CO. LTD.

 

 

	 	 	(iii) DCX SAS (former PETROPULI Ltda).	 
	/s/ Bo Seong Seo	 	  	
/s/ Juan Carlos Robles

	 
	
By: Bo Seong Seo

	 	  	
By: Juan Carlos Robles

	 
	
Title: Legal Representative

	 	  	
Title: Legal Representative

	 
	  	 	  	  	 
	
(ii) PETROAMERICA INTERNATIONAL CORP.

 

 

	 	  	  	 
	/s/ Nelson Navarrete Hernandez	 	  	  	 
	
By: Nelson Navarrete Hernandez

	 	  	  	 
	
Title: Legal Representative

	 	  	  	 

  

1 Article 8.1.(A) Default and Notice of the JOA

  

2 Article 8.1 (B) Default and Notice o the JOA

 

4Unassociated Document

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, SUBJECT TO THE PROVISIONS OF THE BORROWER’S ARTICLES OF ASSOCIATION REGARDING RESTRICTIONS ON TRANSFER OF THE BORROWER'S SECURITIES, AS SHALL BE AMENDED FROM TIME TO TIME, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

	  	
Right to Purchase ____ Shares of Common Stock of InspireMD, Inc. (subject to adjustment as provided herein)

AMENDED AND RESTATED

COMMON STOCK PURCHASE WARRANT

	
No.

	
Original Issue Date: March 31, 2011

 

Restated: April 5, 2012

 

InspireMD, Inc., a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, [  ], or its assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company at any time after the Issue Date until 5:00 p.m., Tel Aviv time, on three years after the Issue Date (the “Expiration Date”), up to [  ] ([  ]) fully paid and non-assessable shares of Common Stock at a per share purchase price of One Dollar and Twenty-Three Cents (US$1.23).  The aforedescribed purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the “Purchase Price.”  The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of July 20, 2010, entered into by the Company, the Holder and the other signatories thereto.

This Amended and Restated Common Stock Purchase Warrant amends, restates and supersedes in all respects that certain Common Stock Purchase Warrant No. [  ] issued to the Holder on March 31, 2011 (the “Original Warrant”). The Original Warrant is henceforth void and shall be of no further force or effect as of the date hereof. However, the Company and the Holder hereby agree that (i) no consideration was paid by the Holder in connection with the amendment and restatement of the Original Warrant, (ii) this Warrant shall be treated as a continuation of the Original Warrant for U.S. tax purposes and (iii) for purposes of calculating any holding periods under Rule 144 of the Securities Act of 1933, as amended, the original issuance date of this Warrant shall be March 31, 2011.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

 

  

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(A)           The term “Common Stock” includes (i) shares of the Company’s common stock, US$0.0001 par value per share, as authorized on the issue date hereof, or (ii) any other securities into which or for which any of the securities described in (i) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

 

(B)           The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) that the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise.

 

(C)           The term “Principal Market” shall mean the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange, the NYSE Amex Equities, the OTC Bulletin Board or in any over-the-counter market maintained by the OTC Markets Group Inc.

 

(D)           The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this Warrant.

 

1.             Exercise of Warrant.

 

1.1.           Number of Shares Issuable upon Exercise.  From and after the Issue Date through and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of Section 1.2 or upon exercise of this Warrant in part in accordance with Section 1.3, shares of Common Stock of the Company, subject to adjustment pursuant to Section 4 below.

 

1.2.           Full Exercise.  This Warrant may be exercised in full, by the Holder hereof by delivery to the Company of an original or facsimile copy of the form of subscription attached as Exhibit A hereto (the “Subscription Form”) duly executed by such Holder and delivery within two days thereafter of payment, in cash, wire transfer or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of whole shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. The original Warrant is not required to be surrendered to the Company until it has been fully exercised.

 

1.3.           Partial Exercise.  This Warrant may be exercised in part (but not for a fractional share) by delivery of a Subscription Form in the manner and at the place provided in Section 1.2, except that the amount payable by the Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the Holder in the Subscription Form by (b) the Purchase Price then in effect.  On any such partial exercise, provided the Holder has surrendered the original Warrant, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant of like tenor, in the name of the Holder hereof, the whole number of shares of Common Stock for which such Warrant may still be exercised.

 

1.4.           Fair Market Value.  For purposes of this Warrant, the Fair Market Value of a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

 

(a)           If the Company’s Common Stock is quoted on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange or the NYSE AMEX Equities, then the average of the closing sale prices of the Common Stock for the five (5) trading days immediately prior to (but not including) the Determination Date;

 

  

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(b)           If the Company’s Common Stock is not traded on an exchange or on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange or the NYSE AMEX Equities, but is traded on the OTC Bulletin Board or in any over-the-counter market maintained by the OTC Markets Group Inc., then the average of the closing bid and ask prices reported for the five (5) trading days immediately prior to (but not including) the Determination Date;

 

(c)           Except as provided in clause (d) below, if the Company’s Common Stock is not publicly traded, then as the Holder and the Company agree, or in the absence of such an agreement, by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided; or

 

(d)           If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date.

 

1.5.           Company Acknowledgment.  The Company will, at the time of the exercise of the Warrant, upon the request of the Holder hereof, acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant.  If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights.

 

1.6.           Delivery of Stock Certificates, etc. on Exercise.  The Company agrees that, provided the full purchase price listed in the Subscription Form is received as specified in Section 1.2, the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which delivery of a Subscription Form shall have occurred and payment made for such shares as aforesaid.  As soon as practicable after the exercise of this Warrant in full or in part, and in any event within seven (7) calendar days thereafter (“Warrant Share Delivery Date”), the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and non-assessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, together with any other stock or other securities to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.  The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder.  In the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant.

 

2.             Exercise.

 

(a)           Payment upon exercise may be made at the option of the Holder either in (i) cash, by wire transfer or by certified or official bank check payable to the order of the Company equal to the applicable aggregate Purchase Price, (ii) by delivery of Common Stock issuable upon exercise of the Warrants in accordance with Section (b) below or (iii) by a combination of any of the foregoing methods, for the number of shares of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein. Notwithstanding the immediately preceding sentence, payment upon exercise may be made in the manner described in Section 2(b) below, but only with respect to Warrant Shares not included for unrestricted public resale in an effective Registration Statement on the date notice of exercise is given by the Holder.

 

  

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(b)           If the Fair Market Value of one share of Common Stock is greater than the Purchase Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being cancelled) by delivery of a properly endorsed Subscription Form delivered to the Company by any means described in Section 14, in which event the Company shall issue to the holder a number of shares of Common Stock computed using the following formula:

 

X=Y (A-B)

          A

	
Where   

	
X=

	the number of shares of Common Stock to be issued to the Holder

 

	
  

	
Y=

	
the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation)

 

	
  

	
A=

	
Fair Market Value

 

	
  

	
B=

	
Purchase Price (as adjusted to the date of such calculation)

 

3.             Adjustment for Reorganization, Consolidation, Merger, etc.

 

3.1.           Fundamental Transaction.  If, at any time while this Warrant is outstanding, (A) the Company effects any merger or  consolidation  of the Company with or into another entity or (B) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental  Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant, subject to the limitations set forth herein (the “Alternate Consideration”). The aggregate Purchaser Price for this Warrant will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Purchase Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate Consideration.  The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3.1 and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.  The Company shall give the Holder not less than fifteen (15) Business Days notice prior to any Fundamental Transaction (“Fundamental Transaction Notice”).  The failure to timely give a Fundamental Transaction Notice shall extend any rights of the Holder pursuant to this Warrant until fifteen (15) Business Days after receipt of a Fundamental Transaction Notice.

 

  

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4.           Extraordinary Events Regarding Common Stock.  In the event that the Company shall (a) issue additional shares of Common Stock as a dividend or other distribution of its assets on outstanding shares of Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 4.  The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.

 

5.           Certificate as to Adjustments.  In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant.  The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 11 hereof).

 

6.           Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements.  The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.  This Warrant entitles the Holder hereof, upon written request, to receive copies of all financial and other information distributed or required to be distributed to the holders of the Company's Common Stock.

 

7.           Assignment; Exchange of Warrant.  Subject to compliance with applicable securities laws and the Company’s Certificate of Incorporation, as may be amended from time, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”).  On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance with applicable securities laws and the Company's Certificate of Incorporation, as may be amended from time to time, the Company will issue and deliver to or on the order of the Transferor thereof a new Warrant or Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor.

 

  

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8.           Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

9.           Maximum Exercise.  The Holder shall not be entitled to exercise this Warrant on an exercise date and the Company may not call this Warrant pursuant to Section 10, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an exercise or call date, and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant with respect to which the determination of this limitation is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Rule 13d-3 thereunder.  Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 9.99%.  The Company shall have no obligation to determine whether the Holder may exercise this Warrant with respect to the limitations set forth in this paragraph and each delivery of a Subscription Form hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Subscription Form is permitted under this paragraph.

 

10.           Mandatory Conversion.  Notwithstanding anything to the contrary contained herein, the Company may, at any time, or from time to time, require the Holder, upon not less than fifteen (15) trading days  prior written notice, to exercise this Warrant in whole or in part in the event (i) the Company’s Common Stock shall be listed for trading on a Principal Market, (ii) the closing sales price for fifteen (15) consecutive trading days was at least 165% of the Purchase Price, (iii) the average daily trading volume of the Common Stock on the Principal Market, as reported by Bloomberg L.P., was not less than 150,000 shares for fifteen (15) consecutive trading days and (iv) there is an effective registration statement covering the resale of the Warrant Shares. In the event that the Holder does not exercise this Warrant prior to the date prescribed by the Company (the “Mandatory Exercise Date”), this Warrant shall expire immediately and the Mandatory Exercise Date shall be deemed to be the “Expiration Date” hereunder.

 

11.           Warrant Agent.  The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose of issuing shares of Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.

 

  

6

  

 

12.           Transfer on the Company's Books.  Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

 

13.           Registration Rights.  The Holder of this Warrant will be granted the same registration rights granted to investors in the Reverse Merger Financing as defined in the Securities Purchase Agreement.

14.           Notices.  All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be:  if to the Company, to: InspireMD, Inc., 4 Menorat Hamaor St. Tel Aviv, Israel Fax:  + 972-3-6917692, Attn: Ofir Paz, with a copy to:  Haynes and Boone, LLP, 30 Rockefeller Plaza, 26th Floor, New York, NY 10112, Fax: (212) 884–8234, Attention: Rick Werner, Esq., and (ii) if to the Holder, to the address and facsimile number listed on the first paragraph of this Warrant, with a copy by fax only to: Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697–3575.

 

15.           Applicable law and arbitration.  All disputes arising under this Warrant or in connection with the transactions hereunder shall be resolved only between the parties in good faith, however, if these efforts fail the dispute shall be resolved in accordance with the laws of the State of New York excluding that body of law pertaining to conflict of law.  Any action brought by either party against the other concerning the transactions contemplated by this Warrant must be brought only in the courts located in New York, New York.  Both parties and the individual signing this Agreement on behalf of the Company agree to submit to the exclusive jurisdiction of such courts and the Holder irrevocably waives any objection as to venue or “inconvenient forum.”

 

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

 

	 	INSPIREMD, INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name:	 
	 	Title:	 

 

  

7

  

 

Exhibit A

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO:  INSPIREMD, INC.

 

The undersigned, pursuant to the provisions set forth in Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

 

	
___

	________ shares of the Common Stock covered by such Warrant; or

 

	
___

	
shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2 of the Warrant.

The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant, which is $___________.  Such payment takes the form of (check applicable box or boxes):

 

	
___

	$__________ in lawful money of the United States; and/or

 

	
___

	
the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2 of the Warrant, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2.

After application of the cashless exercise feature as described above, _____________ shares of Common Stock are required to be delivered pursuant to the instructions below.

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to __________________________________________ whose address is _____________________________________________.

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or pursuant to an exemption from registration under the Securities Act.

 

	
Dated:________________________

	 	 
	 	(Signature must conform to name of holder as specified on the face of the Warrant)	 
	 	 	 
	 	 	 
	 	 	 
	 	

(Address)

	 
	 	 	 	 

 

  

  

  

 

Exhibit B

 

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

 

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of INSPIREMD, INC. to which the within Warrant relates specified under the headings “Percentage Transferred” and “Number Transferred,” respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of INSPIREMD, INC. with full power of substitution in the premises.

 

	
Transferees

	
Percentage Transferred

	
Number Transferred

	  	  	  
	  	  	  
	  	  	  

 

 

	

Dated: __________________, _______

	 	 	 	 
	 	 	 	(Signature must conform to name of holder as specified on the face of the warrant)	 
	 	 	 	 	 
	 	 	 	 	 
	Signed in the presence of:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	(Name)	 	 	 	 
	 	 	 	(address)	 
	 	 	 	 	 
	

ACCEPTED AND AGREED:

[TRANSFEREE]

	 	 	 	 
	 	 	 	 	 
	 	 	 	(address)	 
	 	 	 	 	 
	(Name)

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