Document:

exhibit_10-2.htm

Exhibit 10.2

 

(Execution Copy)

AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT

THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (this "Agreement"), is made as of October 14, 2014, by and among (i) Check-Cap Ltd. (company number 51-4259811), a company organized under the laws of the State of Israel (the "Company"), (ii) Pontifax (Cayman) II L.P., Pontifax (Israel) II L.P., and Pontifax (Israel) II - Individual Investors L.P. (collectively, "Pontifax"), (iii) the Shareholders listed in Schedule A hereto (together with Pontifax, the "Shareholders"), and (iv) the entities listed in Schedule B hereto (collectively, the "Lenders").

W I T N E S S E T H :

WHEREAS, the Shareholders are holders of issued and outstanding share capital of the Company;

WHEREAS, the Company and the Lenders have entered into that certain Credit Line Agreement, dated as of August 20, 2014 (the "Credit Line Agreement"), and as an inducement to the Lenders to consummate the transactions under the Credit Line Agreement, the Company and the Shareholders who are signatories hereto wish to amend and restate in its entirety that certain Amended and Restated Shareholders' Agreement dated March, 2011, as supplemented by that certain Joinder Agreement, dated as of January 10, 2012 (together, "Prior Shareholders' Agreement"), to read as set forth below;

WHEREAS, pursuant to the Prior Shareholders' Agreement, such agreement may be amended by the written consent of the Company and the holders of more than 50% of the Registrable Securities (as defined in the Prior Shareholders' Agreement), including Pontifax (the "Requisite Majority"); and

WHEREAS, the Shareholders who are signatories to this Agreement constitute at least the Requisite Majority.

 

NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, it is hereby agreed that the Prior Shareholders' Agreement shall be amended and restated to read as follows:

	
1. 

	
Registration Rights

1.1           Definitions

"Affiliate" with respect to any Shareholder or Lender shall mean: (i) any Person controlling, controlled by or under common control with said Shareholder or Lender (including any partnership in which such shareholder or Lender serves as a general partner or any entity in which such shareholder, Lender, their Affiliates and any of their respective Immediate Family Shareholders own greater than 10% in the aggregate of the issued and outstanding voting equity); (ii) any officer, director, trustee limited or general partner of any shareholder or Lender or of any Person so controlling, controlled by or under common control with said shareholder or Lender; provided that the Company shall not be deemed an Affiliate of any shareholder or Lender; and (iii) any Person which a shareholder or Lender has the power to direct or cause the direction of the policies or management whether by voting power or otherwise;

 

  

  

  

 

"Damages" means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act or any other applicable law, insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or affiliates) of the Securities Act, or any rule or regulation promulgated thereunder.

"Exchange Act" means the U.S. Securities Act of 1934, as amended.

"Immediate Family Shareholder" means with respect to any shareholder or Lender who is a natural person, such shareholder’s or Lender’s parents (including step-parents), siblings (including step-siblings), spouse and children (including step-children).

"Lender Registrable Securities" means (a) any Ordinary Shares issued to the Lender pursuant to the Credit Line Agreement, including, without limitation, upon exercise of the Credit Line Warrant (as such term is defined in the Credit Line Agreement) and upon conversion of any Preferred Shares issued to the Lender under the Credit Line Agreement (including, without limitation, Preferred Shares issued upon conversion of the Credit Line Amount, as such term is defined in the Credit Line Agreement) and (b) any Ordinary Shares issued or issuable with respect to the securities referred to in clause (a) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other similar transaction. As to any particular Lender Registrable Securities, such securities shall cease to be Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in effect) or repurchased by the Company or any subsidiary of the Company.

"Permitted Transferee" with respect to a Shareholder or Lender means such Shareholder or Lender, such Shareholder's or Lender’s spouse or a descendant of such Shareholder or Lender, or a trust for the benefit of any of the foregoing, (i) an Affiliate of a Shareholder or Lender, (ii) another Shareholder or Lender, (iii) the Company, (iv) the partners or shareholders of a Shareholder or Lender that is a partnership or limited liability company, respectively, or (v) a transferee approved by the Board of Directors.  Notwithstanding the foregoing, no competitor of the Company or Affiliate of a competitor can be a Permitted Transferee.

 

  

  

  

 

"Person" means an individual, corporation, partnership, joint venture, trust, and any other body corporate or unincorporated organization;

"Piggyback Registration" shall have the meaning ascribed to such term in Section 1.3 hereof.

"Qualifying IPO" means an initial public offering by the Company or a corporate successor of its equity interests in which at least $50 million is raised at a pre money Company valuation of at least $200 million.

"Preferred Registrable Securities" means (a) any Ordinary Shares issued upon conversion of Preferred A Shares, Preferred B Shares, Preferred C Shares or Preferred D Shares and (b) any Ordinary Shares issued or issuable with respect to the securities referred to in clause (a) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other similar transaction.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in effect) or repurchased by the Company or any subsidiary of the Company.

"Preferred Shares" shall have the meaning ascribed to such term in the Company’s Articles of Association, as in effect from time to time.

"Registrable Securities" means the Preferred Registrable Securities and the Lender Registrable Securities.

"Registration Expenses" shall mean all expenses incurred in connection with any Demand or Piggyback Registration pursuant to this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company but including one counsel for the holders of the Registrable Securities.

"Securities Act" means the US Federal Securities Act of 1933, as amended.

"Securities and Exchange Commission" means the United States Securities and Exchange Commission.

 

  

  

  

 

1.2           Requests for Registration.

At any time after the shares of the Company are traded on a securities exchange, either the (i) holders of a majority of the aggregate of the Preferred D Shares and the Lender Registrable Securities, or (ii) the holders of a majority of the Preferred C Shares or (iii) the Persons holding at least twenty percent (20%) of the Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities.  There shall be a maximum of two such registrations ("Demand Registrations") permitted under this Section 1.2 for each former holder of Preferred D Shares, each former holder of Preferred C Shares, each former holder of Preferred A Shares, each former Holder of Preferred B Shares with respect to all of such former holder's Registrable Securities and for each Lender with respect to all of such Lender’s Registrable Securities. Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within 10 days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice.

1.3           Right to Piggyback.

At any time after the shares of the Company are traded on a securities exchange, whenever the Company proposes to register any of its securities under the Securities Act (other than pursuant to a Demand Registration, registrations for employee stock plans or pursuant to Rule 145 under the Securities Act) and the registration form to be used may be used for the registration of Registrable Securities (a "Piggyback Registration"), the Company shall give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice.

1.4           Registration Expenses.

The Company shall pay all Registration Expenses including the cost of one counsel to represent all sellers of Registrable Securities.  A registration shall not count as a permitted registration until it has become effective and remained effective for at least 120 days; provided however, that the Company shall not be required to pay any Registration Expenses in connection with any registration initiated if such registration is subsequently withdrawn (other than a withdrawal due to a material adverse change not known to the holders of Registrable Securities at the time of such demand or requests by the Company or its underwriters to reduce the size of the offering and, because of such request, the holders of at least a majority of the Registrable Securities elect to withdraw).

  

  

  

 

1.5           Rule 144.

If any proposed sale of Registrable Securities may be effected by the holders thereof pursuant to Rule 144 without any adverse effect on the proposed sale as reasonably determined by such holders, including without limitation the contemplated sale price or the quantity of Registrable Securities to be sold, then the holders of the Registrable Securities covenant to rely upon Rule 144 under the Securities Act in the sale thereof in lieu of requesting a Demand Registration.

1.6           Registration Procedures.

Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(i)             prepare and file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to one (1) counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel);

(ii)            notify each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 120 days and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(iii)           furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

(iv)           use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of any of the United States as a seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company shall not be required to (a) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (b) subject itself to taxation in any such jurisdiction, or (c) consent to general service of process in any such jurisdiction);

 

  

  

  

 

(v)            notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

(vi)           cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed, if any;

(vii)          provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(viii)         enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions, including arranging for provision by accountants of “comfort letters”, as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split or a combination of shares);

(ix)           make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

(x)            otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

  

  

  

 

(xi)           if any such registration or comparable statement refers to any holder by name or otherwise as the holder of any securities of the Company and if in such holder's sole and exclusive judgment, such holder is or might be deemed to be an underwriter or a controlling person of the Company, (a) insert therein language, at such holder's request, in form and substance satisfactory to such holder and presented to the Company in writing, to the effect that the holding by such holder of such securities is not to be construed as a recommendation by such holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such holder shall assist in meeting any future financial requirements of the Company, or (b) in the event that such reference to such holder by name or otherwise is not required by the Securities Act or any similar U.S. Federal statute then in force, delete the reference to such holder; provided that with respect to this clause (b) such holder shall furnish to the Company an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the Company;

(xii)          in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any ordinary shares included in such registration statement for sale in any jurisdiction, obtain the withdrawal of such order and notify each seller of Registrable Securities of such stop order;

(xiii)         in the event such registration is an underwritten public offering, enter into and perform the Company's obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering.

1.7          Registration Priority.

To the extent it is not in the Company's best interest for all of the Registrable Securities to participate in any Demand or Piggyback Registration, then the number of Registrable Securities that may be included in such registration such be allocated as follows: (i) first, Preferred Registrable Securities held by the former holders of Preferred D Shares as a result of their former Preferred D Shareholdings and the Lender Registrable Securities (together, the “First Priority Registrable Securities”), pro-rata to the number of First Priority Registrable Securities owned by each selling holder, before the Registrable Securities held by any person as a result of their holdings of Ordinary Shares or former holdings of Preferred C Shares, Preferred A Shares or Preferred B Shares may be registered and sold; (ii) second, Preferred Registrable Securities held by the former holders of Preferred C Shares as a result of their former Preferred C Shareholdings, pro-rata to the number of such Registrable Securities owned by each selling holder, before the Registrable Securities held by any person as a result of their holdings of Ordinary Shares or former holdings of Preferred A Shares or Preferred B Shares may be registered and sold; (iii) third, Preferred Registrable Securities held by the former holders of Preferred A Shares as a result of their former Preferred A Shareholdings, pro-rata to the number of such Registrable Securities owned by each selling holder, before the Registrable Securities held by any person as a result of their holdings of Ordinary Shares or former holdings of Preferred B Shares may be registered and sold; and (iv) fourth, Preferred Registrable Securities held by the former holders of Preferred B Securities as a result of their former Preferred B Shareholdings, pro-rata to the number of such Registrable Securities owned by each selling holder, before the Registrable Securities held by any person as a result of their holdings of Ordinary Shares.

 

  

  

  

 

1.8          Registrations Outside the United States.

The terms of this Agreement are drafted primarily in contemplation of securities offerings in the United States of America.  The parties recognize, however, the possibility that there may be one or more registrations in a jurisdiction other than the United States of America.  It is, accordingly, their intention that whenever this Agreement refers to a law or institution of the United States of America but the parties wish to effectuate a registration in a different jurisdiction (and without derogating from all rights or expanding any rights of shareholders and obligations of the Company’s regarding such registrations), reference in this Agreement to the laws or institutions of the United States shall be read as referring, mutatis mutandis, to the comparable laws or institutions of the jurisdiction in question.

1.9           Indemnification.

If any Registrable Securities are included in a registration statement under this Agreement:

 

1.9.1         To the extent permitted by law, the Company will indemnify and hold harmless each selling holder of Registrable Securities, and the partners, members, officers, directors, and shareholders of each such holder; legal counsel and accountants for each such holder; any underwriter (as defined in the Securities Act) for each such holder; and each Person, if any, who controls such holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 1.9.1 shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

  

  

  

 

1.9.2         To the extent permitted by law, each selling holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling holder expressly for use in connection with such registration; and each such selling holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 1.9.2 shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the holder, which consent shall not be unreasonably withheld; and provided, further, that in no event shall any indemnity under this Section 1.9.2 exceed the proceeds from the offering received by such holder (net of any selling expenses paid by such holder), except in the case of fraud or willful misconduct by such holder.

1.9.3         Promptly after receipt by an indemnified party under this Section 1.9 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.9, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.9, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.9. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of this Section 1.9 for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed counsel in accordance with the provision of the preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action and within fifteen (15) days after written notice of the indemnified party’s intention to employ separate counsel pursuant to the previous sentence, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the indemnified party with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.

  

  

  

 

1.9.4         Notwithstanding anything else herein to the contrary, the foregoing indemnity agreements of the Company and the selling holders are subject to the conditions that (i) insofar as they relate to any Damages arising from any untrue statement or alleged untrue statement of a material fact contained in, or omission or alleged omission of a material fact from, a preliminary prospectus (or necessary to make the statements therein not misleading) that has been corrected in the form of prospectus included in the registration statement at the time it becomes effective, or any amendment or supplement thereto filed with the SEC pursuant to Rule 424(b) under the Securities Act (the "Final Prospectus"), such indemnity agreement shall not inure to the benefit of any Person if a copy of the Final Prospectus was furnished to the indemnified party and such indemnified party failed to deliver, at or before the confirmation of the sale of the shares registered in such offering, a copy of the Final Prospectus to the Person asserting the loss, liability, claim, or damage in any case in which such delivery was required by the Securities Act and (ii) to the extent that such material statement or omission was the result of information provided by or on behalf of any selling holder to the Company to be included in the offering materials then the Company shall not be bound by this indemnity agreement with respect to such statements or omissions by a selling holder in the offering materials if not corrected in a Final Prospectus.

1.9.5         To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 1.9 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 1.9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 1.9, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided, further, that in no event shall a holder’s liability pursuant to this Section 1.9.5, when combined with the amounts paid or payable by such holder pursuant to Section 1.9.2, exceed the proceeds from the offering received by such holder (net of any selling expenses) paid by such holder), except in the case of willful misconduct or fraud by such holder.

 

  

  

  

 

1.9.6         Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in an underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

1.9.7         Unless otherwise superseded by an underwriting agreement entered into in connection with an underwritten public offering, the obligations of the Company and holders under this Section 1.9 shall survive the completion of any offering of Registrable Securities in a registration under this Agreement, and otherwise shall survive the termination of this Agreement.

	
2.

	
Issues Relating to the Board of Directors.

2.1           The Board of Directors of the Company (the "Board") may form an HR Committee. To the extent that such committee is formed, it shall be comprised of the Director appointed by Pontifax to the Board (the "Pontifax Director"), the director representing the Company’s Preferred A Shareholders, and the director representing the Company’s Preferred B Shareholders. The HR Committee, to the extent formed, will review and approve the terms of employment of all VP level management of the Company.

2.2           The Board shall have the right to appoint, in the name of the Company, (an) advisor(s), counsel, (an) attorney(s), (a) consultant(s) or other third party to provide strategic advice, scientific assessments, legal advice, general business development advice or other specialist advice. The fees for such advice will be paid by the Company.

2.3           The Board of Directors may form a Business Development and Management Committee, including the Pontifax member of the Board. To the extent so formed, representatives of Pontifax will serve as external members of the Business Development and Management Committee.

 

  

  

  

 

2.4           The Pontifax Director shall have the right to determine the location of one "in person" Board meeting each year. The Company will reimburse the Pontifax Director and observer for reasonable out-of-pocket expenses incurred by them in connection with their attendance at Board meetings.

	
3

	
Information Rights.

 

The Company will deliver, when and as appropriate, the following to each of the Shareholders and the Lenders:

 

3.1           As soon as practicable after the end of each calendar quarter, and in any event within 45 days thereafter, a balance sheet of the Company as of the end of such period and the related statements of shareholders' equity, income and cash flow for such period and for the period commencing at the end of the previous fiscal year and ending with the end of such month, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year and fiscal year to date, all in reasonable detail, and duly certified (except for the absence of footnotes and subject to normal year-end adjustments and accruals) by the chief financial officer of the Company as having been prepared in accordance with GAAP or IFRS (as determined by the Company), except with regard to the valuation of the Company's underlying asset which shall be valued in accordance with Statutory Accounting Practices.

3.2           As soon as practicable after the end of each fiscal year, and in any event within 60 days thereafter, a balance sheet of the Company as of the end of such year and the related statements of shareholders' equity, income and cash flow for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding fiscal year and fiscal year to date, all in reasonable detail, and duly certified (except for the absence of footnotes and subject to normal year-end adjustments and accruals) by the chief financial officer of the Company as having been prepared in accordance with GAAP or IFRS (as determined by the Company), except with regard to the valuation of the Company's underlying asset which shall be valued in accordance with Statutory Accounting Practices.

3.3           As soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year, a balance sheet of the Company as of the end of such year and the related statements of shareholders' equity, income and cash flow for such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, as audited by a firm of independent certified public accountants of recognized national standing selected by the Board.

3.4           Promptly upon receipt thereof, any written report submitted to the Company by independent public accountants in connection with an annual or interim audit of the books of the Company made by such accountants.

 

  

  

  

 

3.5           Each of the financial statements referred to in Section 3.1 and 3.2 will be complete and correct in all material respects as of the dates and for the periods stated therein, subject in the case of the unaudited financial statements to changes resulting from normal year-end audit adjustments (none of which would, alone or in the aggregate, be materially adverse to the financial condition, operating results, assets, operations or business prospects of the Company).  Except as otherwise required by law or judicial order or decree or by any governmental agency or authority, the Shareholders and Lenders shall use their best efforts to maintain the confidentiality of all nonpublic information obtained by them hereunder which the Company has reasonably designated as proprietary or confidential in nature; provided that the Shareholders and Lenders may disclose such information in connection with the sale or transfer or proposed sale or transfer of any securities of the Company, if the transferee or proposed transferee agrees in writing to be bound by the provisions hereof.

3.6           In addition, the Company will deliver to the holders of Preferred C Shares, the holders of Preferred D Shares and the Lenders, within ten (10) business days of the end of each month, monthly and quarterly management reports in a form satisfactory to Pontifax.

3.7           In addition, the Company will deliver to the holders of Preferred C Shares, the holders of the Preferred D Shares and the Lenders, within sixty (60) days prior to the first day of the year covered by such plan and budget, an annual operating plan and budget.

3.8           The Company’s obligation to deliver the financial statements and other information to the Lenders under Section 3 hereof shall terminate and be of no further force or effect upon the earlier to occur of (i) release of the Credit Line Amount (as defined in the Credit Line Agreement) to the Lenders; (ii) placement of the Credit Line Amount in an IPO or conversion of the Conversion Amount upon a PO (as such terms are defined in the Credit Line Agreement); and (iii) an M&A Event (as defined in the Credit Line Agreement).

	
4

	
Distributions, Reorganization.

4.1           The Company shall make commercially reasonable efforts to make or cause to be made distributions, or to advance funds to the holders of Ordinary Shares, Preferred A Shares and/or Preferred B Shares as are necessary to eliminate the tax impact of the reorganization and the transfer of certain assets or licensing of certain Company assets from Check-Cap LLC (the "Reorganization").  Notwithstanding the foregoing, the Company will not advance payments to holders of Ordinary Shares, Preferred A Shares and/or Preferred B Shares to address the fact that they will no longer receive a "pass through" of losses generated by the Company as they have while owning units of Check-Cap LLC. These advances, if and to the extent made, will be deducted from any distributions such shareholders receive from the Company.

 

  

  

  

 

4.2           In consideration for the respective Company securities issued to each of the Shareholders as part of the Reorganization, each of the Shareholders hereby irrevocably waives any and all right, claim or demand it, its successors and/or assigns, may have in connection with any of the transactions consummated or contemplated as part of the Reorganization, of whatsoever kind or nature, whether known or unknown, concealed or hidden, it had, has or shall have against Check-Cap LLC, the Company and/or their affiliates and subsidiaries, predecessors, successors and assigns, directors, shareholders, officers, employees and agents, whether current, past or in the future.

	
5

	
Miscellaneous.

5.1           Further Assurances.  Each of the parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the parties as reflected thereby, including as shall be necessary for the consummation of the Reorganization.

5.2           Governing Law; Jurisdiction.  This Agreement shall be governed by and construed according to the laws of the State of Israel, without regard to the conflict of laws provisions thereof.  Any dispute arising under or in relation to this Agreement shall be resolved in the competent court for Tel Aviv-Jaffa district, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such court.

5.3           Successors and Assigns; Assignment.  Except as otherwise expressly limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto.  None of the rights, privileges, or obligations set forth in, arising under, or created by this Agreement may be assigned or transferred without the prior consent in writing of the Company and holders of more than 50% of the Registrable Securities, with the exception of (a) assignments and transfers between the holders of the Preferred Shares of the same class, and (b) assignments and transfers to Permitted Transferees, provided, however, that (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address and any other requested relevant information of such transferee and the Registrable Securities with respect to which such rights are being transferred; (b) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement; and (c) such transferee delivers to the Company a duly signed declaration of waiver acknowledging prohibition of access to classified security information.

5.4           Entire Agreement; Amendment and Waiver.  This Agreement and the Schedules hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matters hereof and thereof and supersedes any other agreements, promises and understandings regarding the transactions contemplated herein and therein, whether oral or written, between all or part of the parties thereto, including the Prior Shareholders' Agreement.  Any term of this Agreement may be amended and the observance of any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) only with the written consent of the Company and the holders of more than 50% of the Registrable Securities.

 

  

  

  

 

5.5           Additional Lenders. Notwithstanding anything to the contrary contained herein, if the Company consummates one or more Deferred Closings with Additional Lender(s), as such terms are defined in and in accordance with the Credit Line Agreement, then subject to and upon any Deferred Closing, any such Additional Lender may become a party to this Agreement (as may be amended from time to time in accordance with the terms hereof) by executing and delivering a joinder to this Agreement, and thereafter shall be deemed a "Lender" for all intents and purposes hereunder and shall have all of the rights and obligations of a "Lender" hereunder. No action or consent by the parties hereto shall be required in connection with the execution of such a joinder to this Agreement by the Company and any such Additional Lender, so long as each such Additional Lender has agreed in writing to be bound by all of the obligations as a "Lender" hereunder.

5.6           Notices, etc.  All notices and other communications required or permitted hereunder to be given to a party to this Agreement shall be in writing and shall be telecopied or mailed by registered or certified mail, postage prepaid, or prepaid air courier, or otherwise delivered by hand or by messenger, if to the Shareholders,  addressed to such party's address as set forth in the Company’s Register of Shareholders and if to the Lenders, to the addresses set forth on Schedule B, or such other address with respect to a party as such party shall notify the Company in writing as above provided.  Any notice sent in accordance with this Section ‎5.5 shall be effective (i) if mailed, five (5) business days after mailing, (ii) if by air courier, two (2) business days after delivery to the courier service, (iii) if sent by messenger, upon delivery, and (iv) if sent via telecopier, upon transmission and electronic confirmation of receipt or (if transmitted and received on a non-business day) on the first business day following transmission and electronic confirmation of receipt.

5.7           Delays or Omissions.  No delay or omission to exercise any right, power, or remedy accruing to any party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent, or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative.

 

  

  

  

5.8           Severability.  If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

 

5.9           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument.

 

[Remainder of Page Left Intentionally Blank]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

 

COMPANY:

 

Check Cap Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

[SIGNATURE PAGE 1 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

 

THE SHAREHOLDERS:

	
GE Ventures Limited

 

By:      __________________________________

 

Title:   __________________________________

 

	
BioSec Ltd.

 

By:      __________________________________

 

Title:   __________________________________

         

	
Pontifax (Israel) II – Individual Investor, L.P.

 

By:      __________________________________

 

Title:   __________________________________

 

	
Pontifax (Israel) II Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

	
Pontifax (Cayman) II L.P.

 

By:      __________________________________

 

Title:   __________________________________

	
Spearhead Investments (Bio) Ltd.

 

By:      __________________________________

 

Title:   __________________________________

	
Docor International B.V.

 

By:      __________________________________

 

Title:   __________________________________

	
Jacobs Investments Company LLC

 

By:      __________________________________

 

Title:   __________________________________

	
Counterpoint Ventures Fund LP

 

By:      __________________________________

 

Title:   __________________________________

 

	
Counterpoint Ventures Fund II LP

 

By:      __________________________________

 

Title:   __________________________________

 

	
BXR Portfolio Limited

 

By:      __________________________________

 

Title:   __________________________________

	
Remer Holdings Inc.

 

By:      __________________________________

 

Title:   __________________________________

	
Paddy McGwire

 

By:      __________________________________

 

	
OGI Infrastructure Telecom (pte) Ltd.

 

By:      __________________________________

 

Title:   __________________________________

	
Bamna Holdings Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

	
Asher Haddad

 

By:      __________________________________

 

	
Michael and Dorit Cohen

 

By:      __________________________________

 

	  

 

[SIGNATURE PAGE 2 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

 

THE SHAREHOLDERS:

	
Nachum Friedman

 

By:      __________________________________

 

 

	
J. Rieger Ltd.

 

By:      __________________________________

 

Title:   __________________________________

	
Mishor Dahan technologies Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

	
Tricko Fuchs Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

	
E.E.T. Holdings Ltd.

 

By:      __________________________________

 

Title:   __________________________________

      

	
87215 Canada Ltd.

 

By:      __________________________________

 

Title:   __________________________________

   

	
Anfield Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

	
Danny Silbiger

 

By:      __________________________________

	
Reuven Adler

 

By:      __________________________________

	
Ray Graf

 

By:      __________________________________

	
Michael Warren

 

By:      __________________________________

	
Jake Foley III

 

By:      __________________________________

 

	
ARZ Chemicals Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

	
Collace Services Ltd.

 

By:      __________________________________

 

Title:   __________________________________

       

	
Alon Barda

 

By:      __________________________________

	
Edward L. McCallum Jr.

 

By:      __________________________________

 

	
Gabriella Ravid

 

By:      __________________________________

	
Arik Lukatch

 

By:      __________________________________

	
Meir Heth

 

By:      __________________________________

	
Tal & Michal Rivkind

 

By:      __________________________________

	
Shevlin Ciral

 

By:      __________________________________

 

	
Moshit & Ron Yaffe

 

By:      __________________________________

 

	
Derek Locke

 

By:      __________________________________

	
Perry Goldberg

 

By:      __________________________________

 

[SIGNATURE PAGE 3 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

THE SHAREHOLDERS:

	
Gary Kneisel

 

By:      __________________________________

	
LeRoy C. Prichard

 

By:      __________________________________

	
Cary Kalant and Maria Kalant JTWROS

 

By:      __________________________________

 

	
D. Gideon Searle

 

By:      __________________________________

	
MPI 2008

 

By:      __________________________________

 

Title:   __________________________________

       

	
Red Car Group

 

By:      __________________________________

 

Title:   __________________________________

 

	
Ari Kalman

 

By:      __________________________________

	
Lawrence & Terence Byrne JTWROS

 

By:      __________________________________

	
Eunice Diane Goldberg

 

By:      __________________________________

 

	
Larry Byrne

 

By:      __________________________________

	
Sheila Saporito

 

By:      __________________________________

	
Emigrant Alternative Investments LLC

 

By:      __________________________________

 

Title:   __________________________________

 

	
Shimon Yakobov

 

By:      __________________________________

	
Thomas C. Reynolds

 

By:      __________________________________

	
Stephen A. Frost

 

By:      __________________________________

 

	
E. Scott Jackson Irrevocable Family Trust

 

By:      __________________________________

 

Title:   __________________________________           

	
Fred B Walters Irrevocable Family Trust (together 

with Roger Walters Irrevocable Family Trust)

 

By:      __________________________________

 

Title:   __________________________________

      

	
Marianne B. Kipper Separate Property Trust Est. 1-14-88, 

Marianne B. Kipper, Trustee

 

By:      __________________________________

 

Title:   __________________________________

 

	
Amir Avni

 

By:      __________________________________

	
Norman Jackson

 

By:      __________________________________

	
Samuel and Renee Sax Trust u/a/d 3/3/2004

 

By:      __________________________________

 

Title:   __________________________________

 

 

 [SIGNATURE PAGE 4 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

 

THE SHAREHOLDERS:

	
Lawrence Oberman

 

By:      __________________________________

	
Jody Williams

 

By:      __________________________________

	
David Gelfand

 

By:      __________________________________

 

	
Moked Ituran Ltd.

 

By:      __________________________________

 

Title:   __________________________________

 

	
Hertzel Bybabyov

 

By:      __________________________________

	
Sid Black

 

By:      __________________________________

	
Mark Sweeny

 

By:      __________________________________

 

	
Thomas F. Sax

 

By:      __________________________________

	
Eddo Dinstein

 

By:      __________________________________

	
Tamar Ozeri

 

By:      __________________________________

 

	
Sigalit Kimchy

 

By:      __________________________________

	
Yoav Kimchy

 

By:      __________________________________

	
Andy Logan

 

By:      __________________________________

	
John Hayes

 

By:      __________________________________

	
Stuart Schwartz

 

By:      __________________________________

 

	
William (Irwin) and Linda Horwitch

 

By:      __________________________________

	
Sebastian Sax Supplemental Needs Trust u/a/d 3/3/2004

 

By:      __________________________________

 

Title:   __________________________________

 

	
Grant McCullagh

 

By:      __________________________________

	
Peter Ricker

 

By:      __________________________________

	
Richard E. Kipper Separate Property Trust Est. 1-14-88, 

Richard E. Kipper, Trustee

 

By:      __________________________________

 

Title:   __________________________________

	
Stanley Green and Adrienne Green, as joint 

tenants

 

By:      __________________________________

 

 

[SIGNATURE PAGE 5 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

 

THE SHAREHOLDERS:

 

	
Boaz Benzur

 

By:      __________________________________

	
Yitzchak Ostashinsky

 

By:      __________________________________

	
Yitzchak Abudy

 

By:      __________________________________

 

	
Dan Eilat

 

By:      __________________________________

 

	
Yoram Shafek

 

By:      __________________________________

	
Eldad Halevi

 

By:      __________________________________

	
Bruch Nachmias

 

By:      __________________________________

	
Zvika Kelich

 

By:      __________________________________

	
Ilan Eilat

 

By:      __________________________________

 

	
Helios Investments Pte Limited

 

By:      __________________________________

 

Title:   __________________________________

	
Rami Shlinger

 

By:      __________________________________

	  

 

[SIGNATURE PAGE 6 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

 

LENDERS WHO ARE NOT SHAREHOLDERS:

 

	
Shanghai Fosun Pharmaceutical Group Co. Ltd.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Joshua Ehrlich

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Bart Superannuation Pty Ltd.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Nir Grinberg

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Avraham Kuzitsky

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
DPC Big Bay Properties Trust

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Pinchas Dekel

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Sharon Zaworbach

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Minrav Holdings Ltd.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Moshe Haviv

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

[SIGNATURE PAGE 7 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

LENDERS WHO ARE NOT SHAREHOLDERS:

 

	
H.M.L.K Financial Consulting Ltd.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Capital Point Ltd.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Yossi Smira

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Norm Jackson

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Emil Mor- Business & Financial Consulting Ltd.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Scott Jackson

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Uri Perelman

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Dor Benvenisty

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

	
Everest Fund L.P.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Harmony (Ben Dov) Ltd.

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

 

[SIGNATURE PAGE 8 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

IN WITNESS WHEREOF the parties have signed this Amended and Restated Shareholders’ Agreement as of the date first hereinabove set forth.

 

LENDERS WHO ARE NOT SHAREHOLDERS:

 

	
Red Car Group

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

	
Yossi Avraham

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

 

[SIGNATURE PAGE 9 OF 9 OF AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT]

 

  

  

  

 

Schedule A

Shareholders

Ordinary Shareholders

	
Thomas F. Sax

	
Eddo Dinstein

 

	
Samuel and Renee Sax Trust u/a/d 3/3/2004

 

	
Tamar Ozeri

	
Sebastian Sax Supplemental Needs Trust u/a/d 3/3/2004

	
Sigalit Kimchy

 

	
Andy Logan

	
Yoav Kimchy

Preferred A Shareholders

	
Emigrant Alternative Investments LLC

 

	
William (Irwin) and Linda Horwitch

 

	
Counterpoint Ventures Fund LP

 

	
Stuart Schwartz

 

	
D. Gideon Searle

 

	
John Hayes

 

	
Richard E. Kipper Separate Property Trust Est. 1-14-88, Richard E. Kipper, Trustee

 

	
Grant McCullagh

	
Marianne B. Kipper Separate Property Trust Est. 1-14-88, Marianne B. Kipper, Trustee

 

	
Peter Ricker

	
Lawrence Oberman

	
Sid Black

Preferred B Shareholders

	
Emigrant Alternative Investments LLC

 

	
Stanley Green and Adrienne Green, as joint tenants

 

	
Counterpoint Ventures Fund LP

 

	
Lawrence & Terence Byrne JTWROS

 

	
D. Gideon Searle

 

	
Stephen A. Frost

 

	
Richard E. Kipper Separate Property Trust Est. 1-14-88, Richard E. Kipper, Trustee

 

	
Sheila Saporito

 

	
Marianne B. Kipper Separate Property Trust Est. 1-14-88, Marianne B. Kipper, Trustee

 

	
Eunice Diane Goldberg

 

	
Lawrence Oberman

	
Paddy McGwire

 

  

  

  

 

Preferred C Shareholders

	
D. Gideon Searle

 

	
MPI 2008

	
Pontifax (Cayman) II L.P.

 

	
Counterpoint Ventures Fund II LP

 

	
Ari Kalman

 

	
Pontifax (Israel) II L.P.

 

	
Docor International BV

	
Cary Kalant and Maria Kalant JTWROS

	
Pontifax (Israel) II Individual Investors L.P.

 

	
Larry Byrne

	
Jacobs Investment Company LLC

 

	
Eunice Diane Goldberg

	
Emigrant Alternative Investments LLC

 

	
E.Scott Jackson Irrevocable Family Trust

	
Fred B Walters Irrevocable Family Trust (together with Roger Walters Irrevocable Family Trust)

 

	
Mark Sweeny

	
Amir Avni

	
Norman Jackson

 

	
Samuel and Renee Sax Trust u/a/d 3/3/2004 

 

	
Lawrence Oberman

 

	
Jody Williams

 

	
Edward L.  McCallum

 

	
David Gelfand

 

	
Moked Ituran Ltd.

 

	
Hertzel Bybabyov

 

	
Sheila Saporito

 

	
Shimon Yakobov

 

	
Thomas C. Reynolds

 

	
Moshit and Ron Yaffe

 

	
Spearhead Investments (Bio) Ltd.

 

	
Boaz Benzur

	
Yitzchak Ostashinsky

	
Yitzchak Abudy

 

	
Dan Eilat

	
Yoram Shafek

	
Helios Investments Pte Limited

 

	
Eldad Halevi

	
Bruch Nachmias

	
Ilan Eilat

 

	
Zvika Kelich

	
Rami Shlinger

	  

 

  

  

  

 

Preferred D Shareholders

	
BXR Portfolio Limited

 

	
Pontifax (Israel) II - Individual Investors, L.P.

 

	
Pontifax (Cayman) II L.P.

 

	
Pontifax (Israel) II L.P.

 

	
Bamna Holdings Ltd.

 

	
Remer Holdings Inc.

	
OGI Infrastructure & Telecom (pte) Ltd.

 

	
Docor International BV

 

	
Red Car Group

	
Asher Haddad

 

	
BioSec Ltd.

 

	
Jacobs Investment Company LLC

 

	
Michael and Dorit Cohen

 

	
Nachum Friedman

 

	
J. Rieger Ltd.

	
Mishor Dahan Technologies Ltd.

 

	
Tricko Fuchs Ltd.

 

	
E.E.T. Holdings Ltd.

 

	
87215 Canada Ltd.

 

	
Anfield Ltd.

 

	
Danny Silbiger

 

	
Reuven Adler

 

	
Ray Graf

	
Michael Warren

	
Jake Foley III

 

	
ARZ Chemicals Ltd.

 

	
Collace Services Limited

 

	
Alon Barda

 

	
Edward L. McCallum Jr.

 

	
Gabriella Ravid

 

	
Arik Lukatch

 

	
Meir Heth

 

	
Tal & Michal Rivkind

 

	
Shevlin Ciral

 

	
Moshit & Ron Yaffe

 

	
Derek Locke

 

	
Perry Goldberg

 

	
Gary Kneisel

 

	
LeRoy C. Prichard

 

	
Cary Kalant and Maria Kalant JTWROS

	
GE Ventures Limited

	  

  

  

  

 

Schedule B

Lenders

	
No.

	
Lender's Name

	
Credit Line Amount

	
Address

 

	
1.

	
Shanghai Fosun Pharmaceutical Group Co. Ltd. and/or its subsidiary

	
US$ 4,000,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

with a copy to: (which shall not 

constitute service on Fosun Pharma)

Herzog Fox & Neeman Law Offices

Asia House

4 Weizmann Street

Tel Aviv 6423904, Israel

Tel: +972-3-6922894

Fax: +972-3-6966464

Attention: Yair Geva, Adv.

	
2.

	
Counterpoint Ventures Fund II LP

 

	
US$ 255,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
3.

	
Pontifax (Cayman) II LP

	
US$ 733,256

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
4.

	
Pontifax (Israel) II Individual Investors LP

	
US$ 214,410

 

	
5.

	
Pontifax (Israel) II LP

	
US$ 552,334

	
6.

	
Docor International BV

	
US$ 500,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
7.

	
Bart Superannuation Pty Ltd.

	
US$ 500,000

	
__________________________

__________________________

Tel: +61-292335015

Fax: +61-29233411

Attention: Fred Bart

 

  

  

  

	
No.

	
Lender's Name

	
Credit Line Amount

	
Address

 

	
8.

	
Joshua Ehrlich

	
US$ 250,000

	
__________________________

__________________________

Tel: + 61-417040226

Fax: (02) 93277075

Attention: Joshua Ehrlich

	
9.

	
Scott Jackson

	
US$ 50,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
10.

	
Minrav Holdings Ltd

 

 

	
US$ 500,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
11.

	
Avraham Kuznitsky

 

	
US$ 250,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
12.

	
Pinchas Dekel

 

 

	
US$ 100,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
13.

	
Emil Mor- Business & Financial Consulting Ltd.

 

	
US$ 100,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
14.

	
Harmony (Ben Dov) Ltd

 

 

	
US$ 750,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

 

  

  

  

 

	
No.

	
Lender's Name

	
Credit Line Amount

	
Address

 

	
15.

	
GE Ventures Limited

 

 

	
US$ 350,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
16.

	
Yossi Smira

 

 

	
US$ 150,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
17.

	
H.M.L.K. Financial Consulting Ltd.

 

 

	
US$ 360,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
18.

	
Sharon Zaworbach

 

 

	
US$ 100,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
19.

	
Moshe Haviv

 

 

	
US$ 100,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
20.

	
Nir  Greenberg

 

 

	
US$ 100,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
21.

	
Dor Benvenisty

 

 

	
US$ 50,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

 

  

  

  

	
No.

	
Lender's Name

	
Credit Line Amount

	
Address

 

	
22.

	
Norm Jackson

 

 

	
US$ 50,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
23.

	
Shevlin Ciral

 

 

	
US$ 50,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
24.

	
Everest Fund L.P.

 

 

	
US$ 120,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
25.

	
Uri Perekman

 

 

	
US$ 70,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
26.

	
DPC Big Bay Properties Trust

 

 

	
US$ 100,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
27.

	
Capital Point Ltd.

 

 

	
US$ 500,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
28.

	
Yossi Avraham

 

 

	
US$ 250,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

 

  

  

  

	
No.

	
Lender's Name

	
Credit Line Amount

	
Address

 

	
29.

	
Red Car Group

 

 

	
US$ 200,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________

	
30.

 

	
Beeston Nominees (Panama) Inc.

 

 

	
US$ 695,000

	
__________________________

__________________________

__________________________

Tel: ______________________

Fax: ______________________

Attention: _________________exhibit_10-4.htm

Exhibit 10.4

 

CHECK-CAP LTD.

 

WARRANT

To purchase

______________  Preferred C1 Shares (subject to adjustment) of

Check-Cap Ltd.  (the "Company")

at a per share price and subject to the terms detailed below

VOID AFTER 17:00 p.m. Israel Standard Time

on the last day of the Warrant Period (as defined below)

THIS IS TO CERTIFY THAT, ___________ (the "Holder"), is entitled to purchase from the Company, an aggregate of up to __________ (as may be adjusted hereunder) Preferred C1 Shares of the Company, nominal value NIS 0.01 per share (the "Warrant Shares"), at an aggregate purchase price of US$ __________ reflecting an exercise price of US$0.2495  per Warrant Share (as may be adjusted hereunder) (the "Exercise Price"), during the Warrant Period.

 

	
1.

	
EXERCISE OF WARRANT

 

	
1.1.

	
Warrant Period. This Warrant may be exercised, subject to the terms and conditions hereof, in whole or in part, at one time or from time to time during the period commencing on June 1st, 2009, and for ten (10) years thereafter. The above period shall be referred to hereinafter as the "Warrant Period".

 

	
1.2.

	
Exercise for Cash. This Warrant may be exercised by presentation and surrender thereof to the Company at its principal office or at such other office or agency as it may designate from time to time, accompanied by:

 

	
  

	
1.2.1.

	
A duly executed notice of exercise, in the form attached hereto as Schedule 1.2.1 (the "Exercise Notice"); and

 

	
  

	
1.2.2.

	
Payment to the Company, for the account of the Company, of the aggregate Exercise Price, payable in immediately available funds by wire transfer to the Company's bank account. The Exercise Price will be paid in United States Dollars or the equivalent sum in NIS according to the Bank of Israel exchange rate as published upon Exercise.

 

	
1.3.

	
Exercise on Net Issuance Basis. In lieu of payment to the Company as set forth in Section 1.2 above, the Holder may elect to convert this Warrant into the number of Warrant Shares calculated pursuant to the formula below, by presentation and surrender thereof to the Company at its principal office or at such other office or agency it may designate from time to time, accompanied by a duly executed notice of exercise, in the form attached hereto as Schedule 1.3 (the "Net Issuance Notice"):

 

              Y*(A - B)

X         =              -----------------

    A

 

  

  

  

           Where:

	
  

	
X =

	
the number of Warrant Shares to be issued to the Holder;

	
  

	
Y =

	
the number of Warrant Shares otherwise purchasable upon exercise of this Warrant;

 

	
  

	
A =

	
the fair market value of one Warrant Share; and

	
  

	 

	
  

	
B =

	
the Exercise Price per one Warrant Share.

For purposes of this Section 1.3, the "fair market value" of one (1) Warrant Share as of a particular date shall be: (a) if applicable, the average of the closing bid and asked prices of Warrant Shares (or of any securities to which the Warrant Shares have been converted to in accordance with the Company's organizational documents and applicable law) quoted in the over-the-counter market summary or the closing price quoted on any exchange on which the Warrant Share (or any securities to which the Warrant Shares have been converted to in accordance with the Company's organizational documents and applicable law) is listed, whichever is applicable, as published in the Wall Street Journal for the ten (10) trading days immediately prior to but not including the date of determination of fair market value, (b) if the exercise pursuant to this Section 1.3 is immediately prior to the consummation of a merger or sale of all or substantially all of the assets or shares of the Company (or other similar corporate transaction), then the fair market value of one (1) Warrant Share (or of any securities to which the Warrant Shares have been converted to in accordance with the Company's governing documents and applicable law) in such transaction. In the event that the price in the transaction is not in cash, then the applicable fair market value shall be determined by the Board of Directors of the Company; or (c) if the exercise pursuant to this Section 1.3 is immediately prior to the closing of an initial public offering by the Company or a corporate successor of its equity interests, then the public offering price (before deduction of discounts, commissions or expenses) in such offering.

 

	
1.4.

	
Issuance of Warrant Shares. Upon presentation and surrender of this Warrant, accompanied by (a) the duly executed Exercise Notice and the payment of the applicable aggregate Exercise Price pursuant to Section 1.2 above; or (b) the duly executed Net Issuance Notice pursuant to Section 1.3 above, as the case may be, the Company shall promptly (i) issue to the Holder the Warrant Shares to which the Holder is entitled; and (ii) deliver to the Holder the share certificate evidencing such Warrant Shares.

 

Upon receipt by the Company of this Warrant and the applicable duly executed notice of exercise (and the aggregate Exercise Price, if applicable), together with any other documents and/or approvals that may be required by law, the Holder shall be deemed to be the holder of record of the Warrant Shares issuable upon such exercise, notwithstanding that the share transfer books of the Company shall then be closed or that certificates representing such shares shall not then be actually delivered to the Holder.

 

	
1.5.

	
Fractional Shares. No fractions of Shares shall be issued in connection with the exercise of this Warrant, and the number of shares issued shall be rounded up to the nearest whole number.

 

	
1.6.

	
Additional Documents. The Holder will sign and deliver any and all documents or approvals required by law, to facilitate the issuance of shares upon exercise of this Warrant.

 

  

2

  

 

	
1.7.

	
Loss or Destruction of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably expenses reimbursement and satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date.

 

	
1.8.

	
Vesting.  Warrant Shares constituting 75% of the entire amount of Warrant Shares shall vest quarterly over a period of three (3) years, commencing  on March 8th, 2008.

 

	
1.9.

	
Acceleration. Immediately prior to the consummation of a Notice Event (as defined in Section 5.2 below) then, notwithstanding the vesting periods set forth above, all of the Warrant Shares which have not yet vested shall be accelerated and become immediately vested and exercisable.

 

	
2.

	
TAXES

 

	
2.1.

	
The Holder acknowledges that the grant of the Warrant, the issue of the Warrant Shares and the execution and/or performance of this Warrant may have tax consequences to the Holder and that the Company is not able to ensure or represent to the Holder the nature and extent of such tax consequences.

 

	
2.2.

	
The Company shall pay all of the applicable taxes and other charges payable by the Company in connection with the issuance of the Warrant Shares and the preparation and delivery of share certificates pursuant to Section 1 in the name of the Holder (such as transfer taxes in respect of the issue or delivery of Warrant Shares on exercise of this Warrant), if any, but shall not pay any taxes payable by the Holder by virtue of the holding, issuance, exercise or sale of this Warrant or the Warrant Shares by the Holder.

 

	
3.

	
RESERVATION OF SHARES; PRESERVATION OF RIGHTS OF HOLDER

 

	
3.1.

	
Reservation of Shares. The Company hereby agrees that, at all times prior to the expiration or exercise of this Warrant, it will maintain and reserve, free from pre-emptive or similar rights, such number of authorized but unissued shares so that this Warrant may be exercised without additional authorization of shares.

 

	
3.2.

	
Preservation of Rights. The Company will not, by amendment of its organizational documents or through reorganization, recapitalization, consolidation, merger, dissolution, transfer of assets, issue or sale of securities or any other voluntary act, avoid or seek to avoid the observance or performance of any of the covenants, stipulations, conditions or terms to be observed or performed hereunder, but will at all times in good faith assist in the carrying out of all the provisions hereof and in taking of all such actions and making all such adjustments as may be necessary or appropriate in order to fulfill the provisions hereof.

	
4.

	
ADJUSTMENT

 

	
4.1.

	
The number of Warrant Shares purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time or upon exercise, as follows:

 

  

3

  

 

	
  

	
4.1.1.

	
Bonus Shares. In the event that during the Warrant Period the Company shall distribute a non-cash dividend or shares pursuant to a reclassification of its share capital, to all of the holders of shares of the Company (i.e., bonus shares), then this Warrant shall represent the right to acquire, in addition to the number of Warrant Shares indicated in the caption of this Warrant, the amount of such bonus shares that are distributed to persons holding the class of share capital for which the Warrant is exerciseable and/or to receive the stock dividends which are distributed to persons holding the class of share capital for which the Warrant is exerciseable, without payment of any additional consideration therefor, to which the Holder would have been entitled had this Warrant been exercised prior to the distribution of the stock dividends or the bonus shares.

 

	
  

	
4.1.2.

	
Consolidation and Division. In the event that during the Warrant Period the Company consolidates its share capital into shares of greater par value, or subdivides them into shares of lesser par value, then the number of Warrant Shares to be allotted on exercise of this Warrant after such consolidation or subdivision shall be reduced or increased accordingly, as the case may be, and in each case the Exercise Price shall be adjusted appropriately such that the aggregate consideration hereunder to the Company shall not change.

 

	
  

	
4.1.3.

	
Capital Reorganization. In the event that during the Warrant Period a reorganization of the share capital of the Company is effected (other than subdivision, combination or reclassification provided for elsewhere in this Section 4) and the Preferred C1 Shares are exchanged for other securities of the Company, then, as part of such reorganization, provision shall be made so that the Holder shall be entitled to purchase upon exercise of this Warrant such kind and number of shares or other securities of the Company to which the Holder would have been entitled had this Warrant been exercised without taking into effect such reorganization.

 

	
4.2.

	
Whenever an adjustment is effected hereunder, the Company shall promptly compute such adjustment and deliver to the Holder a certificate setting forth the number of Warrant Shares (or any other securities) for which this Warrant is exercisable and the Exercise Price as a result of such adjustment, a brief statement of the facts requiring such adjustment and the computation thereof and when such adjustment has or will become effective.

 

	
5.

	
NOTICE OF CERTAIN EVENTS

 

	
5.1.

	
If at any time during the Warrant Period, any of the Notice Events set forth in Section 5.2 below shall occur, then, in any one or more of such events, the Company shall deliver to the Holder written notice thereof, including the date on which (a) a record shall be taken in connection with such event (if applicable); and (b) the consummation date of such event. Such written notice shall be delivered to the Holder at least (if possible under the circumstances) thirty (30) days prior to the consummation of the applicable event and not less than thirty (30) days prior to the record date in respect thereto.

 

	
5.2.

	
For the purposes hereof, a "Notice Event" shall mean (i) an initial public offering by the Company or a corporate successor of its equity interests; (ii) the merger or sale of all or substantially all of the assets or shares of the Company (or other similar corporate transaction); and/or (iii) a voluntary or involuntary dissolution, liquidation or winding up of the Company.

 

  

4

  

	
6.

	
RIGHTS OF THE HOLDER

 

	
6.1.

	
This Warrant shall not entitle the Holder, by virtue hereof, to any voting rights or other rights as a shareholder of the Company, except for the rights expressly set forth herein.

 

	
6.2.

	
The Holder acknowledges that the Warrant Shares shall be subject to such certain rights, privileges, restrictions and limitations as set forth in this Warrant, and the organizational documents of the Company (or any other agreement with respect thereto), as may be amended from time to time, and that, as a result, inter alia, of such limitations, it may be difficult or impossible for the Holder to realize his investment and/or to sell or otherwise transfer the Warrant Shares. The Holder further acknowledges that the Company's shares are not publicly traded.

 

	
7.

	
REPRESENTATIONS OF THE COMPANY

 

The Company represents and warrants to the Holder as follows: (i) this Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms; (ii) the Warrant Shares are duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and not subject to any third party rights (except any rights thereto afforded by the Holder); and (iii) the execution and delivery of this Warrant are not, and the issuance of the Warrant Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the Company's governing documents, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration with or the taking of any action in respect of or by, any government authority or agency or other person, other than those consents or approvals that shall have been previously obtained.

	
8.

	
TERMINATION

 

Notwithstanding anything to the contrary, this Warrant and all the rights conferred hereby shall terminate and expire at the aforementioned time on the last day of the Warrant Period, unless the Warrant was previously exercised.

 

	
9.

	
MISCELLANEOUS

 

	
9.1.

	
Entire Agreement; Amendment. This Warrant sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all existing agreements among them concerning such subject matter. All article and section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provision of this Warrant. No modification or amendment of this Warrant will be valid unless executed in writing by the Company and the Holder.

 

  

5

  

 

	
9.2.

	
Waiver. No failure or delay on the part of any of the parties in exercising any right, power or privilege hereunder and/or under any applicable laws or the exercise of such right or power in a manner inconsistent with the provisions of this Warrant or applicable law shall operate as a waiver thereof. Any waiver must be evidenced in writing signed by the party against whom the waiver is sought to be enforced.

 

	
9.3.

	
Successors and Assigns; Assignment. Except as otherwise expressly limited herein, this Warrant shall inure to the benefit of, be binding upon, and be enforceable by the Holder and its respective successors, and administrators and is otherwise non-transferable without the prior consent of the Company. The Holder represents and warrants to the Company that this Warrant and the Warrant Shares, if and when purchased by the Holder, are for the Holder's own account and for investment purposes only and not with a view for resale or transfer and that all the rights pertaining to the Warrant or the Warrant Shares, by law or equity, shall be purchased and possessed by the Holder for the Holder exclusively.

 

	
9.4.

	
Governing Law.  This Warrant shall be exclusively governed and construed in accordance with the laws of the State of Israel, without regard to conflicts of laws provisions thereof.

 

	
9.5.

	
Arbitration.  Any dispute, controversy or claim arising in relation to this Warrant, including with regard to its validity, invalidity, breach, enforcement or termination, will be referred to a single arbitrator, who shall be appointed by the Head of the Israeli Bar Association.  Arbitration proceedings shall take place in Tel Aviv, Israel, and shall be conducted in English and according to the rules of substantive law (per Section 9.4 above). The arbitrator will not be bound by rules of evidence or procedure and will give the reasons for his judgment. The arbitrator's decision shall be final and enforceable in any court. This paragraph shall constitute an arbitration agreement between the parties.

 

	
9.6.

	
Notices.  Any notice required or permitted to be given to a party pursuant to the provisions of this Warrant will be in writing and will be effective and deemed delivered to such party on the earliest of the following: (a) all notices and other communications delivered in person or by courier service shall be deemed to have been delivered as of actual delivery thereof; (b) those given by facsimile transmission shall be deemed delivered on the following business day after transmission, with confirmed transmission thereof; and/or (c) all notices and other communications sent by registered mail (or air mail if the posting is international) shall be deemed given three (3) days after posting.

 

	
9.7.

	
Severability.  If any provision of this Warrant is held to be unenforceable, this Warrant shall be considered divisible and such provision shall be deemed inoperative to the extent it is deemed unenforceable, and in all other respects this Warrant shall remain in full force and effect; provided, however, that if any such provision may be made enforceable by limitation thereof, then such provision shall be deemed to be so limited and shall be enforceable to the maximum extent permitted by applicable law.

 

	
9.8.

	
Counterparts.  This Warrant may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.  Facsimile signatures of a party shall be binding as evidence of such party's agreement hereto and acceptance hereof.

 

	
9.9.

	
Amendments.  To the extent that any amendments to that certain Series C Preferred Share Purchase Agreement dated June 1st, 2009 (the "Share Purchase Agreement") or the transactions contemplated thereby results in a required amendment to the terms of this Warrant, this Warrant shall be deemed amended to the extent that the amendments to the Share Purchase Agreement are completed in accordance with the provisions of that agreement.

 

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]

 

  

6

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

 

	
Dated:  June 1st, 2009

 

	 
	
Check-Cap Ltd.

 

By: ______________________________

       Name:

       Title:

	
Check-Cap Ltd.

 

By: ______________________________

       Name:

       Title:

 

AGREED AND ACCEPTED:

__________________________

 

___________________________

 

Name: ___________________

 

  

7

  

 

Schedule 1.2.1

Exercise Notice

 

Date: ____________

 

To:         Check-Cap Ltd.

 

The undersigned, pursuant to the provisions set forth in the Warrant to which this Exercise Notice is attached (the "Warrant:), hereby elects to purchase the Warrant Shares (as such term is defined in the Warrant) pursuant to Section 1.2 of the Warrant, and herewith makes payment of _____________, representing the full Exercise Price for such shares as provided for in such Warrant.

 

	 	 Signature: 
	 	 Address:                                                      
	 	
                                                                       

                                                                       

 

  

8

  

                                                      

Schedule 1.3

Net Issuance Notice

 

Date: ____________

 

To:         Check-Cap Ltd.                                                                        

 

The undersigned, pursuant to the provisions set forth in the Warrant to which this Exercise Notice is attached (the "Warrant"), hereby elects to exercise the Warrant for the purchase of Warrant Shares (as such term is defined in the Warrant), pursuant to the provisions of Section 1.3 of the Warrant.

 

	 	 Signature: 
	 	 Address:                                                      
	 	
                                                                       

                                                                       

 

9

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