Document:

exhibit_4-6.htm

EXHIBIT 4.6

COMPUGEN LTD.

 

 

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2010 SHARE INCENTIVE PLAN

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Adopted: July 25, 2010

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_________________________________________________ 

 

	
COMPUGEN LTD.

	
2010 SHARE INCENTIVE PLAN

_________________________________________________

Unless otherwise defined, terms used herein shall have the meaning ascribed to them in Section ‎2 hereof.

 

	
1.

	
PURPOSE; TYPES OF AWARDS; CONSTRUCTION.

 

	
  

	
1.1.

	
Purpose.  The purpose of this 2010 Share Incentive Plan (as amended, the “Plan”) is to afford an incentive to existing and potential employees, directors, officers, consultants, advisors, and any other person or entity whose services are considered valuable (collectively, the “Service Providers”) to Compugen Ltd., an Israeli company (the “Company”), or any Affiliate of the Company, which now exists or hereafter is organized or acquired by the Company, to become or continue as Service Providers, to increase their efforts on behalf of the Company or Affiliate and to promote the success of the Company's business, by providing such Service Providers with opportunities to acquire a proprietary interest in the Company by  the grant of options to purchase Shares, the issuance of Shares of the Company, the issuance of restricted share awards (“Restricted Shares”) and other Awards pursuant to the Plan, provided that if any such Award is provided to a potential Service Provider, in no event shall the vesting of such Award commence prior to such person becoming a Service Provider.

 

	
  

	
1.2.

	
Types of Awards. The Plan is intended to enable the Company to issue Awards under varying tax regimes, including, without limitation:

 

	
  

	
(i)

	
pursuant and subject to the provisions of Section 102 of the Ordinance, including without limitation the Income Tax Rules (Tax Benefits in Stock Issuance to Employees) 5763-2003 (the “Rules”) or such other rules published by the Israeli Income Tax Authorities (the “ITA”) (such Awards, “102 Awards”). 102 Awards may either be granted to a Trustee or without a trustee;

 

	
  

	
(ii)

	
pursuant to Section 3(9) of the Ordinance (such Awards, “3(9) Awards”);

 

	
  

	
(iii)

	
Incentive Stock Options within the meaning of Section 422 of the Code, or the corresponding provision of any subsequently enacted United States federal tax statute, as amended from time to time, to be granted to Service Providers who are deemed to be residents of the U.S. for purposes of taxation;

 

	
  

	
(iv)

	
Nonqualified Stock Options to be granted to Service Providers who are deemed to be residents of the U.S. for purposes of taxation;

 

	
  

	
(v)

	
Restricted Share Awards pursuant to Section 11 hereof;

 

	
  

	
(vi)

	
Restricted Share Unit Awards pursuant to Section 12 hereof; and

 

	
  

	
(vii)

	
other share-based Awards pursuant to Section ‎13 hereof.

 

In addition to the issuance of Awards under the relevant tax regimes in the United States of America and the State of Israel, the Plan contemplates issuances to Grantees in other jurisdictions with respect to which the Committee is empowered to make the requisite adjustments in the Plan and set forth the relevant conditions in the Company’s agreement with the Grantee in order to comply with the requirements of the tax regimes in any such jurisdictions.

 

The Plan contemplates the issuance of Awards by the Company, both as a private company and as a publicly traded company.

 

  

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1.3.

	
Construction. To the extent any provision herein conflicts with the conditions of any relevant tax law or regulation which are relied upon for tax relief in respect of a particular Award to a Grantee, the provisions of such law or regulation shall prevail over those of the Plan and the Committee is empowered hereunder to interpret and enforce the said prevailing provisions.

 

2.           DEFINITIONS.

 

	
  

	
2.1.

	
Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth therein or herein), (ii) references to any law, constitution, statute, treaty, regulation, rule or ordinance, including any section or other part thereof shall refer to that it as amended from time to time and shall include any successor law, (iii) reference to a person shall means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof, (iv) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Plan in its entirety and not to any particular provision hereof and (v) all references herein to Sections shall be construed to refer to Sections to this Plan.

 

	
  

	
2.2.

	
Defined Terms. The following terms shall have the meanings ascribed to them in this Section ‎2:

 

	
  

	
2.2.1.

	
“Affiliate” shall mean an affiliate of, or person affiliated with, a specified person or company or other trade or business that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary. For the purpose of Options granted pursuant to Section 102 shall mean also an “employing company” within the meaning of Section 102(a) of the Ordinance.

 

	
  

	
2.2.2.

	
“Applicable Law” shall mean any applicable law, rule, regulation, statute, pronouncement, policy, interpretation, judgment, order or decree of any federal, provincial, state or local governmental, regulatory or adjudicative authority or agency, of any jurisdiction, and the rules and regulations of any stock exchange or trading system on which the Shares are then traded or listed.

 

	
  

	
2.2.3.

	
“Award” shall mean any Option, Share, Restricted Share, RSU or any other Share-based award, granted to a Grantee under the Plan and any shares issued pursuant to the exercise thereof.

 

	
  

	
2.2.4.

	
“Board” shall mean the Board of Directors of the Company.

 

	
  

	
2.2.5.

	
“Code” shall mean the United States Internal Revenue Code of 1986, as amended.

 

	
  

	
2.2.6.

	
“Committee” shall mean a committee established by the Board to administer the Plan, subject to Section ‎3.1.

 

  

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2.2.7.

	
“Companies Law” shall mean the Israel Companies Law-1999 and the regulations promulgated thereunder, all as amended from time to time.

 

	
  

	
2.2.8.

	
“Controlling Shareholder” shall have the meaning set forth in Section 32(9) of the Ordinance.

 

	
  

	
2.2.9.

	
“Disability” shall mean (i) the inability of a Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by a medical doctor satisfactory to the Committee or, if applicable, (ii) as “permanent and total disability” as defined in Section 22(e)(3) of the Code, as amended from time to time.

 

	
  

	
2.2.10.

	
“Employee” shall mean a person who is employed by the Company or any of its Affiliates, including, for the purpose of Section 102, an individual who is serving as an “office holder” as defined under the Companies Law, but excluding any Controlling Shareholder.

 

	
  

	
2.2.11.

	
“Exercise Period” shall mean the period, commencing on the date of grant of an Option, during which an Option shall be exercisable, subject to any vesting provisions thereof and the termination provisions hereof.

 

	
  

	
2.2.12.

	
“Exercise Price” shall mean the exercise price for each Share covered by an Option.

 

	
  

	
2.2.13.

	
“Fair Market Value” per share as of a particular date shall mean (i) the closing sales price per Share on the securities exchange on which the Shares are principally traded for the last preceding date on which there was a sale of such Shares on such exchange; or (ii) if the Shares are listed on Nasdaq, the last reported price per Share on Nasdaq on the last preceding date on which there was a sale of such Share on Nasdaq; or (iii) if the Shares are then traded in an over-the-counter market, the average of the closing bid and asked prices for the Shares in such over-the-counter market for the last preceding date on which there was a sale of such Shares in such market; (iv) if the Shares are not then listed on a securities exchange or market or traded in an over-the-counter market, such value as the Committee, in its sole discretion, shall determine, with full authority to determine the method for making such determination (which may be Black-Scholes model or any other method), and which determination shall be conclusive and binding on all parties, and shall be made after such consultations with outside legal, accounting and other experts as the Committee may deem advisable. The Committee may maintain a written record of its method of determining such value. If the Shares are listed or quoted on more than one established stock exchange or national market system, the Committee shall determine the appropriate exchange or system for the purpose of determination of Fair Market Value.

 

	
  

	
2.2.14.

	
“Grantee” shall mean an existing or potential Service Provider who receives a grant of Award under the Plan.

 

	
  

	
2.2.15.

	
“Incentive Stock Option” shall mean any Option granted to a U.S. Employee in accordance with Section 422 of the Code.

 

	
  

	
2.2.16.

	
“Non-Employee” shall mean a Service Provider who is not an Employee.

 

	
  

	
2.2.17.

	
“Nonqualified Stock Option” shall mean any Option granted to a Service Provider who is either (i) a citizen of the U.S. or (ii) deemed to be a resident of the U.S. and not a resident of Israel for tax purposes, which Option is not designated as, or does not meet the conditions for, an Incentive Stock Option.

 

  

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2.2.18.

	
“Options” shall mean all options to purchase Shares granted as 102 Awards, 3(9) Awards, Incentive Stock Options and Nonqualified Stock Options, as well as options to purchase Shares issued under other tax regimes.

 

	
  

	
2.2.19.

	
“Ordinance” shall mean the Israeli Income Tax Ordinance (New Version) 1961, and the regulations promulgated thereunder, all as amended from time to time.

 

	
  

	
2.2.20.

	
“Parent” shall mean any company (other than the Company), which now exists or is hereafter organized, (i) in an unbroken chain of companies ending with the Company, provided that at the time of granting an Award, each of the companies (other than the Company) in such chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain, or, if applicable, (ii) as defined in Section 424(e) of the Code.

 

	
  

	
2.2.21.

	
“Retirement” shall mean a Grantee's retirement (i) pursuant to applicable law or in accordance with the terms of any tax-qualified retirement plan maintained by the Company or any of its affiliates in which the Grantee participates, or (ii) after both (a) attaining sixty (60) years of age and (b) having been a Service Provider for the Company for at least twenty (20) years.

 

	
  

	
2.2.22.

	
“Securities Act” shall mean Securities Act of 1933, as amended.

 

	
  

	
2.2.23.

	
“Shares” shall mean Ordinary Shares, par value NIS 0.01 of the Company, or shares of such other class of shares of the Company as shall be designated by the Board in respect of the relevant Award.

 

	
  

	
2.2.24.

	
“Subsidiary” shall mean any company (other than the Company), which now exists or is hereafter organized or acquired by the Company, (i) in an unbroken chain of companies beginning with the Company if, at the time of granting an Award, each of the companies other than the last company in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain, or, if applicable, (ii) as defined in Section 424(f) of the Code.

 

	
  

	
2.2.25.

	
“Ten Percent Shareholder” shall mean a Grantee who, at the time an Incentive Stock Option is granted, owns shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary.

 

	
  

	
2.2.26.

	
“Trustee” shall mean the trustee appointed by the Committee or the Board, as the case may be, to hold the respective Options and/or Shares (and, in relation with 102 Awards, approved by the Israeli tax authorities), if so appointed.

 

	
  

	
2.3.

	
Other Defined Terms. The following terms shall have the meanings ascribed to them in the Sections set forth below:

 

	
Term

	
Section

	
102 Awards

	
‎1.2(i)

	
102 Capital Gains Track Options

	
‎9.1

	
102 Non-Trustee Options

	
‎9.2

	
102 Ordinary Income Track Options

	
‎9.1

	
102 Trustee Options

	
‎9.1

	
3(9) Awards

	
‎1.2(ii)

	
Cause

	
‎6.7.3

	
Company

	
‎1.1

	
Effective Date

	
‎25.1

	
Election

	
‎9.2

	
Eligible 102 Grantees

	
‎4.2

	
ISO Shares

	
8.6

	
ITA

	
‎1.2‎(i)

	
Market Stand-Off

	
‎17

	
Merger/Sale

	
‎14.2

	
Option Agreement

	
‎6

	
Plan

	
‎1.1

	
Required Holding Period

	
‎9.4

	
Restricted Period

	
‎11.4

	
Restricted Share Agreement

	
‎11

	
Restricted Share Unit Agreement

	
‎12.1

	
Restricted Shares

	
‎1.1

	
RSU

	
‎12.1

	
Rules

	
‎1.2‎(i)

	
Service Provider(s)

	
‎1.1

	
Successor Corporation

	
‎14.2.1

	
Withholding Obligations

	
‎18.3

 

  

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3.

	
ADMINISTRATION.

 

	
  

	
3.1.

	
To the extent permitted under Applicable Law and the Memorandum of Association, Articles of Association and any other governing document of the Company, the Plan shall be administered by the Committee.  In the event that the Board does not create a committee to administer the Plan, the Plan shall be administered by the Board in its entirety. In the event that an action necessary for the administration of the Plan is required under law to be taken by the Board, then such action shall be so taken by the Board. In any such event, all references herein to the Committee shall be construed as references to the Board.

 

	
  

	
3.2.

	
The Committee shall consist of two or more directors of the Company, as determined by the Board. The Board shall appoint the members of the Committee, may from time to time remove members from, or add members to, the Committee, and shall fill vacancies in the Committee however caused, provided that the composition of the Committee shall at all times be in compliance with any mandatory requirements of Applicable Law. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall determine.  The Committee may appoint a Secretary, who shall keep records of its meetings and shall make such rules and regulations for the conduct of its business, as it shall deem advisable and subject to requirements of Applicable Law.

 

	
  

	
3.3.

	
Subject to the terms and conditions of this Plan and any mandatory provisions of Applicable Law, and in addition to the Committee's powers contained elsewhere in this Plan, the Committee shall have full authority in its discretion, from time to time and at any time, to determine any of the following, or to recommend to the Board any of the following if it is not authorized to take such action according to Applicable Law:

 

	
  

	
(i)

	
eligible Grantees,

 

  

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(ii)

	
grants of Awards and setting the terms and provisions of option agreements (which need not be identical) and any other agreements or instruments under which Awards are made, including, but not limited to, the type of Award to be granted (as per 3.4 below) and the number of Shares underlying each Award,

 

	
  

	
(iii)

	
the time or times at which Awards shall be granted,

 

	
  

	
(iv)

	
the schedule and conditions on which Awards may be exercised,

 

	
  

	
(v)

	
the Exercise Price,

 

	
  

	
(vi)

	
to interpret the Plan,

 

	
  

	
(vii)

	
prescribe, amend and rescind rules and regulations relating to and for carrying out the Plan, as it may deem appropriate,

 

	
  

	
(viii)

	
the Fair Market Value of the Shares,

 

	
  

	
(ix)

	
the tax track (capital gains, ordinary income track or any other track available under the Section 102 of the Ordinance) for the purpose of 102 Awards, and

 

	
  

	
(x)

	
any other matter which is necessary or desirable for, or incidental to, the administration of the Plan and any Award thereunder.

 

	
  

	
3.4.

	
Grants of Awards shall be made pursuant to written notice to Grantees setting forth the terms of the Award. Such notice shall designate the type of Award as one of the following: (i) a 102 Award granted to a Trustee (either as a 102 Award (capital gain track) with Trustee or a 102 Award (ordinary income track) with Trustee), (ii) a 102 Award without a 102 Trustee, (iii) a 3(9) Award, (iv) an Incentive Stock Option, (v) a Nonqualified Stock Option, or (vi) any other type of Award.

 

	
  

	
3.5.

	
Subject to the mandatory provisions of Applicable Law, the grant of any Award, whether by the Committee or the Board, shall be deemed to include an authorization of the issuance of Shares upon the due exercise thereof.

 

	
  

	
3.6.

	
The authority granted hereunder includes the authority to modify Awards to eligible individuals who are foreign nationals or are individuals who are employed outside Israel to recognize differences in local law, tax policy or custom, in order to effectuate the purposes of the Plan but without amending the Plan.  The Committee shall have the authority to grant, in its discretion, to the holder of an outstanding Award, in exchange for the surrender and cancellation of such Award, a new Award having an exercise price lower than provided in the Award so surrendered and canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of the Plan or to set a new exercise price for the same Award lower than that previously provided in the Award.

 

	
  

	
3.7.

	
All decisions, determination and interpretations of the Committee shall be final and binding on all Grantees of any Awards under this Plan, unless otherwise determined by the Board. No member of the Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award granted hereunder.

 

4.           ELIGIBILITY.

 

	
  

	
4.1.

	
Awards may be granted to Service Providers of the Company and any Affiliate thereof, taking into account the qualification under each tax regime pursuant to which such Awards are granted. A person who has been granted an Award hereunder may be granted additional Awards, if the Committee shall so determine, subject to the limitations herein. In determining the persons to whom Awards shall be granted and the number of Shares to be covered by each Award, the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success of the Company and such other factors as the Committee shall deem relevant in connection with accomplishing the purpose of the Plan.

 

  

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4.2.

	
Subject to Applicable Law, 102 Awards may only be granted to Employees (including, for the purpose of clarification, directors) who are Israeli residents (“Eligible 102 Grantees”).  For the purpose of clarification, 102 Awards may not be granted to Controlling Shareholders.  Eligible 102 Grantees may receive only 102 Awards, which may either be grants to a Trustee or grants under Section 102 without a trustee. Unless otherwise permitted by the Ordinance and the Rules, no 102 Awards to a Trustee may be granted until the expiration of thirty (30) days after the requisite filings under the Ordinance and the Rules have been appropriately made with the ITA.

 

	
  

	
4.3.

	
Subject to Applicable Law, Non-Employees who are Israeli residents may only be granted 3(9) Awards under this Plan.

 

5.            SHARES.

 

The initial number of Shares reserved for the grant of Awards under the Plan shall be four million, nine hundred and fifty three thousand, eight hundred and fifty one (4,953,851) Shares. In addition, any available pool of shares under prior option plans, including any additional options that may return to such pool in connection with the termination of options granted under such prior option plans but not exercised prior to their termination, will be made available for future grants under the Plan. However, in no event shall more than 4 953,851 shares be issued as Incentive Stock Options. The class of said Shares shall be designated by the Board with respect to each Award and the notice of grant shall reflect such designation. Any Shares underlying an Award granted hereunder which has expired, or was cancelled or terminated or forfeited for any reason without having been exercised, shall be automatically, and without any further action on the part of the Company or any Grantee, returned to the “pool” of reserved Shares hereunder and shall again be available for grant for the purposes of this Plan (unless this Plan shall have been terminated) or unless the Board determines otherwise. Any changes in the “pool” of reserved Shares shall be updated with the relevant body (Tax Authority, Company Registrar and/or the Trustee, as applicable).  The Board may, subject to any other approvals required under any Applicable Law, increase or decrease the number of Shares to be reserved under the Plan. Such Shares may, in whole or in part, be authorized but unissued Shares, or Shares that shall have been or may be reacquired by the Company (to the extent permitted pursuant to the Companies Law) or by a trustee appointed by the Board under the relevant provisions of the Ordinance, the Companies Law or any equivalent provision. Any Shares which are not subject to outstanding options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan, the Company shall at all times reserve a sufficient number of Shares to meet the requirements of the Plan.

 

	
6.

	
TERMS AND CONDITIONS OF OPTIONS.

 

Each Option granted pursuant to the Plan shall be evidenced by a written agreement between the Company and the Grantee or a written notice delivered by the Company and accepted by the Grantee (the “Option Agreement”), in such form and containing such terms and conditions as the Committee shall from time to time approve, which Option Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Option Agreement or the terms referred to in Sections ‎9 and ‎10 below.

 

	
  

	
6.1.

	
Number of Shares. Each Option Agreement shall state the number of Shares covered by the Option.

 

  

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6.2.

	
Type of Option. Each Option Agreement shall specifically state the type of Option granted thereunder and whether it constitutes an Incentive Stock Option, Nonqualified Stock Option, 102 Option Award and the relevant track, 3(9) Option Award, or otherwise.

 

	
  

	
6.3.

	
Exercise Price. Each Option Agreement shall state the Exercise Price, which, in the case of an Incentive Stock Option or a Nonqualified Stock Option, shall not be less than one hundred percent (100%) of the Fair Market Value of the Shares covered by the Option on the date of grant. In the case of any other Option, the per-share Exercise Price shall be equal to the amount determined by the Committee. In the case of an Incentive Stock Option granted to any Ten-Percent Shareholder, the Exercise Price shall be no less than 110% of the Fair Market Value of the Shares covered by the Option on the date of grant as determined pursuant to the Code. In no event shall the Exercise Price of an Option be less than the par value of the shares for which such Option is exercisable. Subject to Section ‎3 and to the foregoing, the Committee may reduce the Exercise Price of any outstanding Option. The Exercise Price shall also be subject to adjustment as provided in Section ‎14 hereof.

 

	
  

	
6.4.

	
Manner of Exercise. An Option may be exercised, as to any or all Shares as to which the Option has become exercisable, by written notice delivered in person or by mail to the Secretary of the Company or to such other person as determined by the Committee, specifying the number of Shares with respect to which the Option is being exercised, accompanied by payment of the Exercise Price for such Shares in the manner specified in the following sentence. The Exercise Price shall be paid in full with respect to each Share, at the time of exercise, either in (i) cash, (ii) if the Company’s shares are publicly traded, all or part of the Exercise Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company or the Trustee, or (iii) in such other manner as the Committee shall determine, which may include procedures for cashless exercise, all subject to relevant tax considerations.

 

	
  

	
6.5.

	
Term and Vesting of Options. Each Option Agreement shall provide the vesting schedule for the Option as determined by the Committee. To the extent permitted under Applicable Law, the Committee shall have the authority to determine the vesting schedule and accelerate the vesting of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. Unless otherwise resolved by the Committee and stated in the Option Agreement, and subject to Sections ‎6.7 and ‎6.8 hereof, Options shall vest and become exercisable under the following schedule: For the initial options granted: twenty-five percent (25%) of the Shares covered by the Option shall vest and become exercisable  on the first anniversary of the date on which such Option is granted, provided that the Grantee remains continuously a Service Provider for that one year, and 1/48th of the Shares covered by the Option shall vest and become exercisable each month, provided that the Grantee remains continuously a Service Provider for each such month, over the course of the following 36 months. For follow-on grants (after the initial grant): 1/48th of the Shares covered by the Option shall vest and become exercisable at the end of each month following the date of grant, provided that the Grantee remains continuously a Service Provider for each such month, over the course of the such 48 months. The Option Agreement may contain performance goals and measurements, and the provisions with respect to any Option need not be the same as the provisions with respect to any other Option.  The Exercise Period of an Option will be (i) with respect to Employees, ten (10) years from the date of grant of the Option unless otherwise determined by the Committee, and (ii) with respect to Non-Employees, six (6) years from the date of grant of the Option unless otherwise determined by the Committee, but in either case, subject to the vesting provisions described above and the early termination provisions set forth in Sections 6.7 and ‎6.8 hereof; provided, however, that in the case of an Incentive Stock Option granted to a Ten Percent Shareholder, such Exercise Period shall not exceed five (5) years from the date of grant of such Option. At the expiration of the Exercise Period, all unexercised Options shall become null and void.

 

  

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6.6.

	
Indexation Base. Each Option Agreement will be subject to the indexation base of the Value of Benefit, as defined on Section 102(a) of the Ordinance, as determined by the Committee, pursuant to the Rules and/or such other rules published by the ITA (as may be amended from time to time). In the event that the Company completes an initial public offering in any stock market outside of Israel, the Committee shall be entitled to amend retroactively the indexation base, pursuant to the Rules and/or such other rules published by the ITA (as may be amended from time to time), without the Grantee’s consent.

 

	
  

	
6.7.

	
Termination.

 

	
  

	
6.7.1.

	
Unless determined otherwise by the Committee and except as provided in this Section 6.7 and in Section ‎6.8 hereof, an Option may not be exercised unless the Grantee is at such time of exercise a Service Provider. In the event that a Grantee’s engagement as a Service Provider shall terminate (other than by reason of death, Disability or Retirement), all Options of such Grantee that are vested and exercisable at the time of such termination may, unless earlier terminated in accordance with their terms, be exercised within ninety (90) days after the date of such termination (or such different period as the Committee shall prescribe which may cause an Incentive Stock Option to become a Nonqualified Stock Option as described in Section 6.7.2 below); provided, however, that if the Company (or the Subsidiary or Affiliate, when applicable) shall terminate the engagement of the Grantee as a Service Provider for Cause (as defined below) or if, whether or not the Grantee’s engagement as a Service Provider is terminated by either party, circumstances arise or are discovered with respect to the Grantee that would have constituted Cause for termination of his or her employment or service, all Options theretofore granted to such Grantee (whether vested or not) shall, to the extent not theretofore exercised, terminate on the date of such termination (or on which such circumstance arise or are discovered, as the case may be) unless otherwise determined by the Committee.

 

	
  

	
6.7.2.

	
In the case of a Grantee engaged as a Service Provider to a Subsidiary or Affiliate, such engagement shall also be deemed terminated for purposes of this Section 6.7 as of the date on which such principal employer ceases to be a Subsidiary or Affiliate. Notwithstanding anything to the contrary, the Committee, in its absolute discretion may, on such terms and conditions as it may determine appropriate, extend the periods for which the Options held by any individual may continue to vest and be exercisable; provided, that such Options may lose their status as Incentive Stock Options under applicable law and be deemed Nonqualified Stock Options in the event that the period of vesting and/or exercisability of any Incentive Stock Option occurs beyond the later of: (i) ninety (90) days after the date of cessation as an Employee; or (ii) the applicable period under Section ‎6.8 below.

 

	
  

	
6.7.3.

	
For purposes of this Plan, the term “Cause” shall mean any of the following: (a) fraud, embezzlement or felony or similar act by the Grantee; (b) an act of moral turpitude by the Grantee, or any act that causes significant injury to the reputation, business, assets, operations or business relationship of the Company (or a Subsidiary or Affiliate, when applicable); (c) any material breach by the Grantee of an agreement between the Company or any Subsidiary or Affiliate and the Grantee (including material breach of confidentiality, non-competition or non-solicitation covenants) or of any duty of the Grantee to the Company or any Subsidiary or Affiliate thereof; or (d) any circumstances that constitute grounds for termination for cause under the Grantee’s employment, consulting or service agreement with the Company or Subsidiary or Affiliate, to the extent applicable.

 

  

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6.8.

	
Death, Disability or Retirement of Grantee. If a Grantee shall die while engaged as a Service Provider, or within the ninety (90) days after the date of termination of such, (or within such different period as the Committee may have provided pursuant to Section 6.7 hereof), or if the Grantee's engagement as a Service Provider shall terminate by reason of Disability, all Options theretofore granted to such Grantee may (to the extent otherwise vested and exercisable and unless earlier terminated in accordance with their terms), be exercised by the Grantee or by the Grantee's estate or by a person who acquired the right to exercise such Options by bequest or inheritance or otherwise by result of death or Disability of the Grantee, at any time within one (1) year after the death or Disability of the Grantee (or such different period as the Committee shall prescribe which may cause an Incentive Stock Option to become a Nonqualified Stock Option as described below). In the event that an Option granted hereunder shall be exercised by the legal representatives of a deceased or former Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative to exercise such Option. In the event that the employment or service of a Grantee shall terminate on account of such Grantee's Retirement, all Options of such Grantee that are exercisable at the time of such Retirement may, unless earlier terminated in accordance with their terms, be exercised at any time within the ninety (90) day period after the date of such Retirement (or such different period as the Committee shall prescribe which may cause an Incentive Stock Option to become a Nonqualified Stock Option as described below). Incentive Stock Options shall lose their status as Incentive Stock Options under applicable law and be deemed Nonqualified Stock Options in the event that they are exercised more than one (1) year from Disability or more than ninety (90) days after Retirement.

 

	
  

	
6.9.

	
Suspension of Vesting. Unless the Board or the Committee provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence, other than in the case of any (a) leave of absence which was pre-approved by the Company for purposes of continuing the vesting of Options, or (b) transfers between locations of the Company or between the Company, any Affiliate, or any respective successor thereof.  However, for Incentive Stock Options, any leave of absence granted by the Board or Committee of greater than ninety days, unless pursuant to a contract or statute that guarantees the right to reemployment, shall cause such Incentive Stock Option to become a Nonqualified Option on the 181st day following such leave of absence.

 

	
  

	
6.10.

	
Other Provisions. The Option Agreement evidencing Awards under the Plan shall contain such other terms and conditions not inconsistent with the Plan as the Committee may determine, at or after the date of grant, including without limitation, provisions in connection with the restrictions on transferring the Awards, which shall be binding upon the Grantees and other terms and conditions as the Committee shall deem appropriate.

 

  

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7.

	
NONQUALIFIED STOCK OPTIONS.

 

Options granted pursuant to this Section ‎7 are intended to constitute Nonqualified Stock Options and shall be subject to the general terms and conditions specified in Section ‎6 hereof and other provisions of the Plan, except for any provisions of the Plan applying to Options under different tax laws or regulations.

 

No adjustment shall be made to a Nonqualified Stock Option that would cause any adverse tax consequences for the holders of Nonqualified Stock Options, including, but not limited to, pursuant to Section 409A of the Code.  If the Board or the Committee determines that such adjustments made with respect to Options would constitute a modification or other adverse tax consequence, it may refrain from making such adjustments, unless the holder of a Nonqualified Stock Option specifically agrees in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the Option.

 

	
8.

	
INCENTIVE STOCK OPTIONS.

 

Options granted pursuant to this Section ‎8 are intended to constitute Incentive Stock Options and shall be granted subject to the following special terms and conditions, the general terms and conditions specified in Section ‎6 hereof and other provisions of the Plan, except for any provisions of the Plan applying to Options under different tax laws or regulations:

 

	
  

	
8.1.

	
Value of Shares. The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Shares with respect to which all Incentive Stock Options granted under this Plan and all other option plans of any Subsidiary or Affiliate become exercisable for the first time by each Grantee during any calendar year shall not exceed one hundred thousand United States dollars ($100,000) with respect to such Grantee.  To the extent that the aggregate Fair Market Value of Shares with respect to which the Incentive Stock Options are exercisable for the first time by any Grantee during any calendar years exceeds one hundred thousand United States dollars ($100,000), such Options shall be treated as Nonqualified Stock Options.  The foregoing shall be applied by taking options into account in the order in which they were granted, with the Fair Market Value of any Share to be determined at the time of the grant of the Option.  In the event the foregoing results in the portion of an Incentive Stock Option exceeding the one hundred thousand United States dollars ($100,000) limitation, only such excess shall be treated as a Nonqualified Stock Option.

 

	
  

	
8.2.

	
Ten Percent Shareholder. In the case of an Incentive Stock Option granted to a Ten Percent Shareholder, (i) the Exercise Price shall not be less than one hundred and ten percent (110%) of the Fair Market Value of the Shares on the date of grant of such Incentive Stock Option, and (ii) the Exercise Period shall not exceed five (5) years from the date of grant of such Incentive Stock Option.

 

	
  

	
8.3.

	
Approval. The status of any Incentive Stock Options shall be subject to approval of the Plan by the Company’s shareholders, such approval to be provided 12 months before or after the date of adoption of the Plan by the Board.

 

	
  

	
8.4.

	
Exercise Following Termination. Notwithstanding anything else in this Plan to the contrary, Incentive Stock Options that are not exercised within ninety (90) days following termination of Grantee’s employment in the Company or its Affiliates and Subsidiaries, or within one year in case of termination of Grantee’s employment in the Company or its Affiliates and Subsidiaries due to a disability (within the meaning of section 22(e)(3) of the Code), shall be deemed to be Nonqualified Stock Options.

 

	
  

	
8.5.

	
Adjustments to Incentive Stock Options. Any Option Agreement providing for the grant of Incentive Stock Options shall indicate that adjustments made pursuant to the Plan with respect to Incentive Stock Options could constitute a “modification” of such Incentive Stock Options (as that term is defined in Section 424(h) of the Code) or could cause adverse tax consequences for the holder of such Incentive Stock Options and that the holder should consult with his or her tax advisor regarding the consequences of such “modification” on his or her income tax treatment with respect to the Incentive Stock Option.

 

  

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8.6.

	
Notice to Company of Disqualifying Disposition. Each Grantee who receives an Incentive Stock Option must agree to notify the Company in writing immediately after the Grantee makes a Disqualifying Disposition of any shares received pursuant to the exercise of Incentive Stock Options (“ISO Shares”). A “Disqualifying Disposition” is any disposition (including any sale) of such ISO Shares before the later of (i) two years after the date the Grantee was granted the Incentive Stock Option, or (ii) one year after the date the Grantee acquired Shares by exercising the Incentive Stock Option. If the Grantee dies before such ISO Shares are sold, these holding period requirements do not apply and no disposition of the ISO Shares will be deemed a Disqualifying Disposition.

 

	
9.

	
102 OPTION AWARDS.

 

	
  

	
9.1.

	
Options granted pursuant to this Section ‎9 are intended to be granted pursuant to Section 102 of the Ordinance pursuant to either (a) Section 102(b)(2) thereof as capital gains track options (“102 Capital Gains Track Options”), or (b) Section 102(b)(1) thereof as ordinary income track options (“102 Ordinary Income Track Options”; together with 102 Capital Gains Track Options, “102 Trustee Options”).  102 Trustee Options shall be granted subject to the following special terms and conditions contained in this Section ‎9, the general terms and conditions specified in Section ‎6 hereof and other provisions of the Plan, except for any provisions of the Plan applying to Options under different tax laws or regulations.

 

	
  

	
9.2.

	
The Company may grant only one type of 102 Trustee Option at any given time to all Grantees who are to be granted 102 Trustee Options pursuant to this Plan, and shall file an election with the ITA regarding the type of 102 Trustee Option it elects to grant before the date of grant of any 102 Trustee Options (the “Election”). Such Election shall also apply to any bonus shares received by any Grantee as a result of holding the 102 Trustee Options. The Company may change the type of 102 Trustee Option that it elects to grant only after the passage of at least 12 months from the end of the year in which the first grant was made in accordance with the previous Election, or as otherwise provided by Applicable Law. Any Election shall not prevent the Company from granting Options, pursuant to Section 102(c) of the Ordinance without a Trustee (“102 Non-Trustee Options”).

 

	
  

	
9.3.

	
Each 102 Trustee Option will be deemed granted on the date stated in a written notice to be provided by the Company, provided that on or before such date (i) the Company has provided such notice to the Trustee and (ii) the Grantee has signed all documents required pursuant to Applicable Law and under the Plan.

 

	
  

	
9.4.

	
Each 102 Trustee Option, each Share issued pursuant to the exercise of any 102 Trustee Option, and any rights granted thereunder, including, without limitation, bonus shares, shall be allotted and issued to and registered in the name of the Trustee and shall be held in trust for the benefit of the Grantee for a period of not less than the requisite period prescribed by the Ordinance and the Rules or such longer period as set by the Committee (the “Required Holding Period”). In the event that the requirements under Section 102 to qualify an Option as a 102 Trustee Option are not met, then the Option may be treated as a 102 Non-Trustee Option, all in accordance with the provisions of Section 102 and the Rules.  After termination of the Required Holding Period, the Trustee may release such 102 Trustee Option and any such Shares, provided that (i) the Trustee has received an acknowledgment from the ITA that the Grantee has paid any applicable taxes due pursuant to the Ordinance or (ii) the Trustee and/or the Company and/or its Affiliate withholds any applicable taxes due pursuant to the Ordinance arising from the 102 Trustee Options and/or any Shares allotted or issued upon exercise of such 102 Trustee Options. The Trustee shall not release any 102 Trustee Options or Shares issued upon exercise thereof prior to the payment in full of the Grantee’s tax liabilities arising from such 102 Trustee Options and/or Shares or the withholding referred to in (ii) above.

 

  

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9.5.

	
Each 102 Trustee Option shall be subject to the relevant terms of the Ordinance and the Rules, which shall be deemed an integral part of the 102 Trustee Option and shall prevail over any term contained in the Plan or Option Agreement which is not consistent therewith. Any provision of the Ordinance, the Rules and any approvals by the Income Tax Commissioner not expressly specified in this Plan or Option Agreement which, as determined by the Committee, are necessary to receive or maintain any tax benefit pursuant to Section 102 shall be binding on the Grantee. The Grantee granted a 102 Trustee Option shall comply with the Ordinance and the terms and conditions of the Trust Agreement entered into between the Company and the Trustee. The Grantee agrees to execute any and all documents, which the Company and/or its Affiliates and/or the Trustee may reasonably determine to be necessary in order to comply with the Ordinance and the Rules.

 

	
  

	
9.6.

	
During the Required Holding Period, the Grantee shall not release from trust or sell, assign, transfer or give as collateral, the Shares issuable upon the exercise of a 102 Trustee Option and/or any securities issued or distributed with respect thereto, until the expiration of the Required Holding Period. Notwithstanding the above, if any such sale or release occurs during the Required Holding Period it will result in adverse tax consequences to the Grantee under Section 102 of the Ordinance and the Rules, which shall apply to and shall be borne solely by such Grantee. Subject to the foregoing, the Trustee may, pursuant to a written request from the Grantee, release and transfer such Shares to a designated third party, provided that both of the following conditions have been fulfilled prior to such release or transfer: (i) payment has been made to the ITA of all taxes required to be paid upon the release and transfer of the Shares, and confirmation of such payment has been received by the Trustee and (ii) the Trustee has received written confirmation from the Company that all requirements for such release and transfer have been fulfilled according to the terms of the Company’s corporate documents, the Plan, the Option Agreement and any Applicable Law.

 

	
  

	
9.7.

	
If a 102 Trustee Option is exercised during the Required Holding Period, the Shares issued upon such exercise shall be issued in the name of the Trustee for the benefit of the Grantee. If such 102 Trustee Option is exercised after the expiration of the Required Holding Period, the Shares issued upon such exercise shall, at the election of the Grantee, either (i) be issued in the name of the Trustee, or (ii) be issued to the Grantee, provided that the Grantee first complies with all applicable provisions of the Plan and all taxes with respect thereto shall have been fully paid to the ITA.

 

	
  

	
9.8.

	
The foregoing provisions of this Section ‎9 relating to 102 Trustee Options shall not apply with respect to 102 Non-Trustee Options, which shall, however, be subject to the relevant provisions of Section 102 and the Rules.

 

	
  

	
9.9.

	
Upon receipt of a 102 Trustee Option, the Grantee will sign an undertaking to release the Trustee from any liability with respect to any action or decision duly taken and executed in good faith by the Trustee in relation to the Plan, or any 102 Trustee Option or Share granted to such Grantee thereunder.

 

  

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10.

	
3(9) OPTION AWARD.

 

	
  

	
10.1.

	
Options granted pursuant to this Section ‎10 are intended to constitute a 3(9) Option Award and shall be granted subject to the general terms and conditions specified in Section ‎6 hereof and other provisions of the Plan, except for any provisions of the Plan applying to Options under different tax laws or regulations.

 

	
  

	
10.2.

	
To the extent required by the Ordinance or the ITA or otherwise deemed by the Committee prudent or advisable, the 3(9) Option Awards granted pursuant to the Plan shall be issued to a Trustee nominated by the Committee in accordance with the provisions of the Ordinance and the ITA.  In such event, the Trustee shall hold such Options in trust, until exercised by the Grantee, pursuant to the Company's instructions from time to time as set forth in a trust agreement, which will be entered into between the Company and the Trustee.  If determined by the Board or the Committee, and subject to such trust agreement the Trustee shall be responsible for withholding any taxes to which a Grantee may become liable upon the exercise of Options.

 

	
11.

	
RESTRICTED SHARES.

 

The Committee may award Restricted Shares to any eligible Grantee, including under Section 102 of the Ordinance. Each Award of Restricted Shares under the Plan shall be evidenced by a written agreement between the Company and the Grantee (the “Restricted Share Agreement”), in such form as the Committee shall from time to time approve. The Restricted Share Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Agreement:

 

	
  

	
11.1.

	
Number of Shares. Each Restricted Share Agreement shall state the number of Shares covered by an Award.

 

	
  

	
11.2.

	
Purchase Price. Each Restricted Share Agreement may state an amount of purchase price to be paid by the Grantee in consideration for the issuance of the Restricted Shares and the terms of payment thereof, which may include, payment by issuance of promissory notes or other evidence of indebtedness on such terms and conditions as determined by the Committee.

 

	
  

	
11.3.

	
Vesting. Each Restricted Share Agreement shall provide the vesting schedule for the Restricted Shares as determined by the Committee, provided that (to the extent permitted under Applicable Law) the Committee shall have the authority to determine the vesting schedule and accelerate the vesting of any outstanding Restricted Share at such time and under such circumstances as it, in its sole discretion, deems appropriate. Unless otherwise resolved by the Committee and stated in the Restricted Share Agreement, Restricted Shares shall vest in the same vesting schedule as set forth in Section 6.5 hereof.

 

	
  

	
11.4.

	
Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, for such period as the Committee shall determine from the date on which the Award is granted (the “Restricted Period”).  The Committee may also impose such additional or alternative restrictions and conditions on the Restricted Shares, as it deems appropriate, including the satisfaction of performance criteria. Such performance criteria may include, but are not limited to, sales, earnings before interest and taxes, return on investment, earnings per share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee. Certificates for shares issued pursuant to Restricted Share Awards shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares in contravention of such restrictions shall be null and void and without effect.  Such certificates may, if so determined by the Committee, be held in escrow by an escrow agent appointed by the Committee, or, if a Restricted Share Award is made pursuant to Section 102, by the Trustee. In determining the Restricted Period of an Award the Committee may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded Restricted Shares on successive anniversaries of the date of such Award. To the extent required by the Ordinance or the ITA, the Restricted Shares issued pursuant to Section 102 of the Ordinance shall be issued to the Trustee in accordance with the provisions of the Ordinance and the Restricted Shares shall be held for the benefit of the Grantee for such period as may be required by the Ordinance.

 

  

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11.5.

	
Adjustment of Performance Goals. The Committee may adjust performance goals to take into account changes in law and accounting and tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the inclusion or the exclusion of the impact of extraordinary or unusual items, events or circumstances.  The Committee also may adjust the performance goals by reducing the amount to be received by any Grantee pursuant to an Award if and to the extent that the Committee deems it appropriate.

 

	
  

	
11.6.

	
Forfeiture. Subject to such exceptions as may be determined by the Committee, if the Grantee's continuous employment with the Company or any Subsidiary or Affiliate shall terminate for any reason prior to the expiration of the vesting date or Restricted Period of an Award or prior to the payment in full of the purchase price of any Restricted Shares with respect to which the vesting date or the Restricted Period has expired, any shares remaining subject to vesting or restrictions or with respect to which the purchase price has not been paid in full, shall thereupon be forfeited and shall be deemed transferred to, and reacquired by, or cancelled by, as the case may be, the Company or a Subsidiary at no cost to the Company or Subsidiary, subject to all Applicable Laws. Upon forfeiture of Restricted Shares, the Grantee shall have no further rights with respect to such Restricted Shares.

 

	
  

	
11.7.

	
Ownership. During the Restricted Period the Grantee shall possess all incidents of ownership of such Restricted Shares, subject to Section ‎11.4, including the right to receive dividends with respect to such shares.  All distributions, if any, received by a Grantee with respect to Restricted Shares as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award.

 

	
12.

	
RESTRICTED SHARE UNITS.

 

	
  

	
12.1.

	
A Restricted Share Unit (an “RSU”) is an Award covering a number of Shares that is settled by issuance of those Shares. An RSU may be awarded to any eligible Grantee, including under Section 102 of the Ordinance.  Each grant of RSUs under the Plan shall be evidenced by a written agreement between the Company and the Grantee (the “Restricted Share Unit Agreement”), in such form as the Committee shall from time to time approve. Such RSUs shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Unit Agreements entered into under the Plan need not be identical. RSUs may be granted in consideration of a reduction in the recipient’s other compensation.

 

	
  

	
12.2.

	
Other than the par value of the Shares, no payment of cash shall be required as consideration for RSUs. RSUs may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Unit Agreement.

 

	
  

	
12.3.

	
No voting or dividend rights as a shareholder shall exist prior to the actual issuance of Shares in the name of the Grantee.  Notwithstanding anything else in this Plan (as may be amended from time to time) to the contrary, unless otherwise specified by the Committee, each RSU awarded to an Employee shall be for a term of ten (10) years and each RSU awarded to a Non-Employee shall be for a term of six (6) years. Each Restricted Share Unit Agreement shall specify its term and any conditions on the time or times for settlement, and provide for expiration prior to the end of its term in the event of termination of employment or service providing to the Company, and may provide for earlier settlement in the event of the Grantee’s death, Disability or other events.

 

  

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12.4.

	
Settlement of vested RSUs shall be made in the form of Shares. Distribution to a Grantee of an amount (or amounts) from settlement of vested RSUs can be deferred to a date after settlement as determined by the Committee. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until the grant of RSUs is settled, the number of such RSUs shall be subject to adjustment pursuant hereto.

 

	
13.

	
OTHER SHARE OR SHARE-BASED AWARDS.

 

The Committee may grant other Awards under the Plan pursuant to which Shares (which may, but need not, be Restricted Shares pursuant to Section ‎11 hereof), cash or a combination thereof, are or may in the future be acquired or received, or Awards denominated in stock units, including units valued on the basis of measures other than market value. The Committee may also grant stock appreciation rights without the grant of an accompanying option, which rights shall permit the Grantees to receive, at the time of any exercise of such rights, cash equal to the amount by which the Fair Market Value of all Shares in respect to which the right was granted exceeds the exercise price thereof. The Committee may, and it is hereby deemed to be an Award under the terms of the Plan, grant to Grantees (including employees) the opportunity to purchase Shares of the Company in connection with any public offerings of the Company’s securities. Such other Share based Awards may be granted alone, in addition to, or in tandem with any Award of any type granted under the plan and must be consistent with the purposes of the Plan.

 

The Company intends that the Plan and any Share-Based Awards granted hereunder to a U.S. citizen be exempt from the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4) of subsection (a) of Section 409A of the Code, to the extent applicable, and be operated in accordance with Section 409A so that any compensation deferred under any Share-Based Award (and applicable investment earnings) shall not be included in income under Section 409A of the Code.  Any ambiguities in the Plan shall be construed to affect the intent as described in this Section 13.

 

	
14.

	
EFFECT OF CERTAIN CHANGES.

 

	
  

	
14.1.

	
General. In the event of a subdivision of the outstanding share capital of the Company, any payment of a stock dividend (distribution of bonus shares), a recapitalization, a reorganization (which may include a combination or exchange of shares), a consolidation, a stock split, a reverse stock split, a spin-off or other corporate divestiture or division, a reclassification or other similar occurrence, the Committee shall make such adjustments as determined by the Committee to be appropriate in order to adjust (i) the number of Shares available for grants of Awards, (ii) the number of Shares covered by outstanding Awards, and (iii) the exercise price per share covered by any Award; provided, however, that any fractional shares resulting from such adjustment shall be rounded up to the nearest whole share.

 

	
  

	
14.2.

	
Merger and Sale of Company.  In the event of (i) a sale of all or substantially all of the assets of the Company; or (ii) a sale (including an exchange) of all or substantially all of the shares of the Company, or an acquisition by a shareholder of the Company or by an Affiliate of such shareholder, of all the shares of the Company held by other shareholders or by other shareholders who are not Affiliated with such acquiring party; (iii) a merger, consolidation, amalgamation or like transaction of the Company with or into another corporation; (iv) a scheme of arrangement for the purpose of effecting such sale, merger or amalgamation; or (v) such other transaction that is determined by the Committee to be a transaction having a similar effect (all such transactions being herein referred to as a “Merger/Sale”), then, without the Grantee’s consent and action:

 

  

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14.2.1.

	
unless otherwise determined by the Committee in its sole and absolute discretion, any Award then outstanding shall be assumed or an equivalent Award shall be substituted by such successor corporation of the Merger/Sale or any parent or Affiliate thereof as determined by the Board in its discretion (the “Successor Corporation”), under substantially the same terms as the Award;

 

For the purposes of this Section ‎14.2.1, the Award shall be considered assumed if, following a Merger/Sale, the Award confers on the holder thereof the right to purchase or receive, for each Share underlying an Award immediately prior to the Merger/Sale, either (i) the consideration (whether stock, cash, or other securities or property) distributed to or received by holders of Shares in the Merger/Sale for each Share held on the effective date of the Merger/Sale (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares), which may be subject to vesting  and other terms as determined by the Committee in its discretion, or (ii) regardless of the consideration received by the holders of Shares in the Merger/Sale, solely shares (or their equivalent) of the Successor Corporation at a value to be determined by the Committee in its discretion, which may be subject to vesting  and other terms as determined by the Committee in its discretion. The foregoing shall not limit the Committee authority to determine, in its sole discretion, that in lieu of such assumption or substitution of Awards for Awards of the Successor Corporation, such Award will be substituted for any other type of asset or property, including under Section ‎14.2.2 hereunder.

 

	
  

	
14.2.2.

	
In the event that the Awards are not assumed or substituted by an equivalent Award, then the Committee may (but shall not be obligated to), in lieu of such assumption or substitution of the Award and in its sole discretion, (i) provide for the Grantee to have the right to exercise the Award, or otherwise for the acceleration of vesting of such Award, as to all or part of the Shares, including Shares covered by the Award which would not otherwise be exercisable or vested, under such terms and conditions as the Committee shall determine, including the cancellation of all unexercised Awards upon closing of the Merger/Sale; and/or (ii) provide for the cancellation of each outstanding Award at the closing of such Merger/Sale, and payment to the Grantee of an amount in cash as determined by the Committee to be fair in the circumstances (with full authority to determine the method for making such determination, which may be Black-Scholes model or any other method, and which determination shall be conclusive and binding on all parties), and subject to such terms and conditions as determined by the Committee.

 

	
  

	
14.2.3.

	
Notwithstanding the foregoing, in the event of a Merger/Sale, the Committee may determine, in its sole discretion, that upon completion of such Merger/Sale, the terms of any Award be otherwise amended, modified or terminated, as the Committee shall deem in good faith to be appropriate, and if an Option Award, that the Option Award shall confer the right to purchase or receive any other security or asset, or any combination thereof, or that its terms be otherwise amended, modified or terminated, as the Committee shall deem in good faith to be appropriate. Neither the authorities and powers of the Committee under this Section 14.2.3, nor the exercise or implementation thereof, shall (i) be restricted or limited in any way by any adverse consequences (tax or otherwise) that may result to any holder of an Award, and (ii) as, inter alia, being a feature of the Award upon its grant, be deemed to constitute a change or an amendment of the rights of such holder under this Plan, nor shall any such adverse consequences (as well as any adverse tax consequences that may result from any tax ruling or other approval or determination of any relevant tax authority) be deemed to constitute a change or an amendment of the rights of such holder under this Plan.

 

  

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14.3.

	
Reservation of Rights. Except as expressly provided in this Section ‎14, the Grantee of an Award hereunder shall have no rights by reason of any subdivision or consolidation of shares of any class or the payment of any stock dividend (bonus shares), any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, Merger/Sale, or consolidation, divestiture or spin-off of assets or shares of another company. Any issue by the Company of shares of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, type or price of shares subject to an Award.  The grant of an Award pursuant to the Plan shall not affect in any way the right of power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structures or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or part of its business or assets or engage in any similar transactions.

 

	
15.

	
NON-TRANSFERABILITY OF AWARDS; SURVIVING BENEFICIARY.

 

	
  

	
15.1.

	
All Awards granted under the Plan shall not be transferable otherwise than by will or by the laws of descent and distribution.  Awards may be exercised or otherwise realized, during the lifetime of the Grantee, only by the Grantee or by his guardian or legal representative, to the extent provided for herein. Any transfer of an Award not permitted hereunder (including transfers pursuant to any decree of divorce, dissolution or separate maintenance, any property settlement, any separation agreement or any other agreement with a spouse) and any grant of any interest in any Award to, or creation in any way of any interest in any Award by, any party other than the Grantee shall be null and void and shall not confer upon any party or person, other than the Grantee, any rights. A Grantee may file with the Committee a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Grantee, the executor or administrator of the Grantee's estate shall be deemed to be the Grantee's beneficiary. Notwithstanding the foregoing, upon the request of the Grantee and subject to Applicable Law the Committee, at its sole discretion, may permit to transfer the Award (other than an Incentive Stock Option) to a family trust.

 

	
  

	
15.2.

	
As long as the Shares are held by the Trustee in favor of the Grantee, all rights possessed by the Grantee over the Shares are personal, and may not be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.

 

	
16.

	
CONDITIONS UPON ISSUANCE OF SHARES

 

	
  

	
16.1.

	
Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Award, unless the exercise of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws as determined by counsel to the Company. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, and the inability to issue Shares hereunder due to non-compliance with any Company policies with respect to the sale of Shares, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority or compliance shall not have been obtained or achieved. Shares issued pursuant to an Awards shall be subject to the Articles of Association of the Company and any other governing documents of the Company, including all policies, manuals and internal regulations adopted by the Company from time to time, as may be amended from time to time, including, without limitation, any provisions included therein concerning restrictions or limitations on transferability of Shares or grant of any rights with respect thereto and any provisions concerning restrictions on the use of inside information and other provisions deemed by the Company to be appropriate in order to ensure compliance with Applicable Laws, statutes and regulations.

 

  

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16.2.

	
Investment Representations.  As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, and make other representations as may be required under applicable securities laws if, in the opinion of counsel for the Company, such representations are required, all in form and content specified by the Company.

 

	
17.

	
MARKET STAND-OFF

 

	
  

	
17.1.

	
In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the United States Securities Act of 1933, as amended or equivalent law in another jurisdiction, the Grantee shall not directly or indirectly, without the prior written consent of the Company or its underwriters, (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares acquired under this Plan or any securities of the Company (whether or not such Shares acquired under this Plan), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Shares acquired under this Plan, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Shares acquired under this Plan or such other securities, in cash or otherwise. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the effective date of the registration statement relating to such offering, as may be requested by the Company or such underwriters, however in any event, such period shall not exceed 180 days (in the case of the Company’s first underwritten offering of its Shares) following the effective date of such registration statement; or 90 days (in the case of a registration statement thereafter).

 

	
  

	
17.2.

	
In the event of a subdivision of the outstanding share capital of the Company, the declaration and payment of a stock dividend (distribution of bonus shares), the declaration and payment of an extraordinary dividend payable in a form other than stock, a recapitalization, a reorganization (which may include a combination or exchange of shares or a similar transaction affecting the Company’s outstanding securities without receipt of consideration), a consolidation, a stock split, a spin-off or other corporate divestiture or division, a reclassification or other similar occurrence, an adjustment in conversion ratio, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off.

 

  

- 20 -

  

 

	
  

	
17.3.

	
In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Plan until the end of the applicable stand-off period.

 

	
  

	
17.4.

	
The underwriters in connection with a registration statement so filed are intended to be third party beneficiaries of this Section ‎‎17 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

	
18.

	
AGREEMENT BY GRANTEE REGARDING TAXES.

 

	
  

	
18.1.

	
If the Committee shall so require, as a condition of exercise of an Award, the release of Shares by the Trustee or the expiration of the Restricted Period, a Grantee shall agree that, no later than the date of such occurrence, he will pay to the Company or make arrangements satisfactory to the Committee and the Trustee (if applicable) regarding payment of any applicable taxes of any kind required by Applicable Law to be withheld or paid.

 

	
  

	
18.2.

	
ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH MAY ARISE FROM THE GRANT OF ANY AWARDS OR THE EXERCISE THEREOF, THE SALE OR DISPOSITION OF ANY SHARES GRANTED HEREUNDER OR ISSUED UPON EXERCISE OF ANY AWARD OR FROM ANY OTHER ACTION OF THE GRANTEE IN CONNECTION WITH THE FOREGOING SHALL BE BORNE AND PAID SOLELY BY THE GRANTEE, AND THE GRANTEE SHALL INDEMNIFY THE COMPANY, ITS SUBSIDIARIES AND AFFILIATES AND THE TRUSTEE, AND SHALL HOLD THEM HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY SUCH TAX OR PENALTY, INTEREST OR INDEXATION THEREON. EACH GRANTEE AGREES TO, AND UNDERTAKES TO COMPLY WITH, ANY RULING, SETTLEMENT, CLOSING AGREEMENT OR OTHER SIMILAR AGREEMENT OR ARRANGEMENT WITH ANY TAX AUTHORITY IN CONNECTION WITH THE FOREGOING WHICH IS APPROVED BY THE COMPANY.

 

THE GRANTEE IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING OR EXERCISING AWARDS HEREUNDER. THE COMPANY DOES NOT ASSUME ANY RESPONSIBILITY TO ADVISE THE GRANTEE ON SUCH MATTERS, WHICH SHALL REMAIN SOLELY THE RESPONSIBILITY OF THE GRANTEE.

 

	
  

	
18.3.

	
The Company or any Subsidiary or Affiliate may take such action as it may deem necessary or appropriate, in its discretion, for the purpose of or in connection with withholding of any taxes which the Company or any Subsidiary or Affiliate is required by any Applicable Law to withhold in connection with any Awards (collectively, “Withholding Obligations”). Such actions may include, without limitation, (i) requiring a Grantees to remit to the Company in cash an amount sufficient to satisfy such Withholding Obligations; (ii) subject to Applicable Law, allowing the Grantees to provide Shares to the Company, in an amount that at such time, reflects a value that the Committee determines to be sufficient to satisfy such Withholding Obligations; (iii) withholding Shares otherwise issuable upon the exercise of an Award at a value which is determined by the Committee to be sufficient to satisfy such Withholding Obligations; or (iv) any combination of the foregoing. The Company shall not be obligated to allow the exercise of any Award by or on behalf of a Grantee until all tax consequences arising from the exercise of such Award are resolved in a manner acceptable to the Company.

 

	
  

	
18.4.

	
Each Grantee shall notify the Company in writing promptly and in any event within ten (10) days after the date on which such Grantee first obtains knowledge of any tax bureau inquiry, audit, assertion, determination, investigation, or question relating in any manner to the Awards granted or received hereunder or Shares issued thereunder and shall continuously inform the Company of any developments, proceedings, discussions and negotiations relating to such matter, and shall allow the Company and its representatives to participate in any proceedings and discussions concerning such matters.  Upon request, a Grantee shall provide to the Company any information or document relating to any matter described in the preceding sentence, which the Company, in its discretion, requires.

 

  

- 21 -

  

 

	
  

	
18.5.

	
With respect to 102 Non-Trustee Options, if the Grantee ceases to be employed by the Company or any Affiliate, the Grantee shall extend to the Company and/or its Affiliate with whom the Grantee is employed a security or guarantee for the payment of taxes due at the time of sale of Shares, all in accordance with the provisions of Section 102 of the Ordinance and the Rules.

 

	
19.

	
RIGHTS AS A STOCKHOLDER; VOTING AND DIVIDENDS.

 

	
  

	
19.1.

	
Subject to Section ‎11.7, a Grantee shall have no rights as a shareholder of the Company with respect to any Shares covered by the Award until the date of the issuance of a share certificate to the Grantee for such Shares.  In the case of 102 Option Awards or 3(9) Option Awards (if such Share Options are being held by a Trustee), a the Trustee shall have no rights as a shareholder of the Company with respect to any Shares covered by such Award until the date of the issuance of a share certificate to the Grantee for such Shares for the Grantee’s benefit, and the Grantee shall have no rights as a shareholder of the Company with respect to any Shares covered by the Award until the date of the release of such Shares from the Trustee to the Grantee and the issuance of a share certificate to the Grantee for such Shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights for which the record date is prior to the date such share certificate is issued, except as provided in Section ‎14 hereof.

 

	
  

	
19.2.

	
With respect to all Shares issued in the form of Awards hereunder or upon the exercise of Awards hereunder, the Grantee shall be entitled to receive dividends distributed with respect to such Shares, subject to the provisions of the Company’s Articles of Association, as amended from time to time, and subject to any Applicable Law.

 

	
  

	
19.3.

	
The Company may, but shall not be obligated to, register or qualify the sale of Shares under any applicable securities law or any other applicable law.

 

	
20.

	
NO REPRESENTATION BY COMPANY.

 

By granting the Awards, the Company is not, and shall not be deemed as, granting any representation or warranties to the Grantee regarding the Company, its business affairs, its prospects or the future value of its Shares.

 

	
21.

	
NO RETENTION RIGHTS.

 

Nothing in the Plan or in any Award granted or agreement entered into pursuant hereto shall confer upon any Grantee the right to continue in the employ of, or be in a consultant, advisor, director, officer or supplier relationship with, the Company or any Subsidiary or Affiliate or to be entitled to any remuneration or benefits not set forth in the Plan or such agreement or to interfere with or limit in any way the right of the Company or any such Subsidiary or Affiliate to terminate such Grantee's employment or service. Awards granted under the Plan shall not be affected by any change in duties or position of a Grantee as long as such Grantee continues to be employed by, or be in a consultant, advisor, director, officer or supplier relationship with, the Company or any Subsidiary or Affiliate.

 

  

- 22 -

  

 

	
22.

	
PERIOD DURING WHICH AWARDS MAY BE GRANTED.

 

Awards may be granted pursuant to the Plan from time to time within a period of ten (10) years from the Effective Date. From the tenth (10th) anniversary of the Effective Date no grants of Awards may be made and the Plan shall continue to be in full force and effect solely with respect to such Awards that remain outstanding. The Plan shall terminate at such time after the tenth (10th) anniversary of the Effective Date that no Awards remain outstanding.

 

	
23.

	
TERM OF AWARD

 

Anything herein to the contrary notwithstanding, but without derogating from the provisions of Sections 6.7, ‎6.8 or ‎8.2 hereof, if any Award, or any part thereof, has not been exercised and the Shares covered thereby not paid for within the term of the Award as determined by the Committee, which in any event shall not exceed ten (10) years after the date on which the Award was granted, as set forth in the Notice of Grant in the Grantee’s Award, such Award, or such part thereof, and the right to acquire such Shares shall terminate, and all interests and rights of the Grantee in and to the same shall expire. In the case of Shares held by a Trustee, the Grantee shall elect whether to release such Shares from trust or sell the Shares and upon such release or sale such trust shall expire.

 

	
24.

	
AMENDMENT AND TERMINATION OF THE PLAN.

 

The Board at any time and from time to time may suspend, terminate, modify or amend the Plan, whether retroactively or prospectively; provided, however, that, unless otherwise determined by the Board, an amendment which requires shareholder approval in order for the Plan to continue to comply with any Applicable Law shall not be effective unless approved by the requisite vote of shareholders, and provided further that except as provided herein, no suspension, termination, modification or amendment of the Plan may adversely affect any Award previously granted, unless the written consent of the respective Grantee is obtained.

 

	
25.

	
APPROVAL.

 

	
  

	
25.1.

	
The Plan shall take effect upon its adoption by the Board (the “Effective Date”), except that solely with respect to grants of Incentive Stock Options the Plan shall also be subject to approval within one year of the Effective Date, by a majority of the votes cast on the proposal at a meeting or a written consent of shareholders.  Failure to obtain approval by the shareholders shall not in any way derogate from the valid and binding effect of any grant of an Award, which is not an Incentive Stock Option. Upon approval of the Plan by the shareholders of the Company as set forth above, all Incentive Stock Options granted under the Plan on or after the Effective Date shall be fully effective as if the shareholders of the Company had approved the Plan on the Effective Date.  Notwithstanding the foregoing, in the event that approval of the Plan by the shareholders of the Company is required under Applicable Law, in connection with the application of certain tax treatment or pursuant to applicable stock exchange rules or regulations or otherwise, such approval shall be obtained within the time required under the Applicable Law.

 

	
  

	
25.2.

	
The 102 Awards are subject to the approval, if required, of the ITA and receipt by the Company of all approvals thereof.

 

	
26.

	
RULES PARTICULAR TO SPECIFIC COUNTRIES

 

Notwithstanding anything herein to the contrary, the terms and conditions of the Plan may be amended with respect to a particular country by means of an appendix to the Plan, and to the extent that the terms and conditions set forth in any appendix conflict with any provisions of the Plan, the provisions of the appendix shall govern. Terms and conditions set forth in the Appendix shall apply only to Award granted to a Grantee under the jurisdiction of the specific country that is the subject of the appendix and shall not apply to Awards issued to a Grantee not under the jurisdiction of such country. The adoption of any such appendix shall be subject to the approval of the Board or Committee, and if required in connection with the application of certain tax treatment, pursuant to applicable stock exchange rules or regulations or otherwise, then also the approval of the shareholders of the Company at the required majority.

 

  

- 23 -

  

 

	
27.

	
GOVERNING LAW; JURISDICTION.

 

The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Israel, except with respect to matters that are subject to tax laws, regulations and rules in any specific jurisdiction, which shall be governed by the respective laws, regulations and rules of such jurisdiction. Certain definitions, which refer to laws other than the laws of such jurisdiction, shall be construed in accordance with such other laws.  The competent courts located in Tel-Aviv-Jaffa, Israel shall have exclusive jurisdiction over any dispute arising out of or in connection with this Plan and any Award granted hereunder, and by signing any agreement relating to an Award hereunder each Grantee irrevocably submits to such exclusive jurisdiction.

 

	
28.

	
NON-EXCLUSIVITY OF THE PLAN.

 

Neither the adoption of the Plan by the Board nor the submission of the Plan to shareholders of the Company for approval (to the extent required under Applicable Law), shall be construed as creating any limitations on the power or authority of the Board to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which the Company or any Subsidiary now has lawfully put into effect, including, without limitation, any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits and executive short-term or long-term incentive plans.

 

	
29.

	
MISCELLANEOUS.

 

	
  

	
29.1.

	
Additional Terms. Each Award awarded under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.

 

	
  

	
29.2.

	
Severability. If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.  In addition, if any particular provision contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographic scope, activity or subject, it shall be construed by limiting and reducing such provision as to such characteristic so that the provision is enforceable to fullest extent compatible with the applicable law as it shall then appear.

 

	
  

	
29.3.

	
Captions and Titles. The use of captions and titles in this Plan or any Option Agreement, Restricted Share Agreement or other Award related agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such agreement.

 

 

- 24 -exhibit_4-20.htm

Exhibit 4.20

 

Execution Verion

 

SHARE PURCHASE AGREEMENT

 

BY AND AMONG

 

RAKUTO BIO TECHNOLOGIES LTD.,

 

SYNERON MEDICAL LTD.,

 

THE SELLERS

SET FORTH ON THE SIGNATURES PAGES HERETO

 

AND

 

MR. HAIM LASSER,

AS THE SELLERS' REPRESENTATIVE

 

Dated as of May 30, 2012

  

  

  

 

TABLE OF CONTENTS

 

	 	Page
	Article 1 DEFINITIONS	
5

	 	
1.1

	
Defined Terms

	
5

	 	
1.2

	
Additional Defined Terms

	
9

	 	
1.3

	
Interpretation

	
10

	Article 2 PURCHASE OF Shares	
11

	 	
2.1

	
Purchase and Sale of Shares 

	
11

	 	
2.2

	
Purchase Price 

	
12

	 	
2.3

	
Company Options and Warrants 

	
14

	 	
2.4

	
Closing; Deliverables 

	
15

	 	
2.5

	
Withholding

	
15

	Article 3 REPRESENTATIONS AND WARRANTIES  CONCERNING THE SELLERS	
16

	 	
3.1

	
Power and Authority; Enforceability

	
16

	 	
3.2

	
Title to Shares; Waiver of Limitations on Transfer 

	
16

	 	
3.3

	
No Conflict; Consents and Approvals

	
17

	 	
3.4

	
Restrictions 

	
17

	 	
3.5

	
Claims

	
17

	 	
3.6

	
Company Intellectual Property

	
17

	 	
3.7

	
Taxes 

	
17

	 	
3.8

	
Brokers’ Fee

	
17

	 	
3.9

	
Disclosure

	
17

	Article 4 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY	
18

	 	
4.1

	
Organization, Good Standing and Qualification

	
18

	 	
4.2

	
Power and Authority; Enforceability

	
18

	 	
4.3

	
No Conflict; Consents and Approvals

	
18

	 	
4.4

	
Capitalization 

	
19

	 	
4.5

	
No Debt 

	
20

	 	
4.6

	
Litigation

	
20

	 	
4.7

	
Compliance with Laws

	
20

	 	
4.8

	
Brokers’ Fees

	
20

	 	
4.9

	
Disclosure

	
20

	Article 5 REPRESENTATIONS AND WARRANTIES OF THE BUYER	
20

	 	
5.1

	
Power and Authority; Enforceability

	
21

	 	
5.2

	
No Conflict; Consents and Approvals

	
21

 

  

i

  

	Article 6 COVENANTS	
21

	 	
6.1

	
Maintenance of Business

	
21

	 	
6.2

	
Conduct of Business

	
21

	 	
6.3

	
Notification 

	
23

	 	
6.4

	
Regulatory Permits

	
23

	 	
6.5

	
Necessary Consents

	
23

	 	
6.6

	
Access to Information

	
24

	 	
6.7

	
Satisfaction of Conditions Precedent

	
24

	 	
6.8

	
Books and Records

	
24

	 	
6.9

	
Further Assurances

	
24

	 	
6.10

	
Publicity

	
24

	 	
6.11

	
Non Solicitation 

	
25

	 	
6.12

	
Equity and Benefit Plans 

	
25

	 	
6.13

	
Covenants of the Sellers 

	
25

	 	
6.14

	
Covenants of the Buyer.

	
25

	 	
6.15

	
Termination of  Shareholders’ Rights Agreement 

	
26

	 	
6.16

	
Waiver by the Company 

	
26

	Article 7 CONDITIONS TO CLOSING	
26

	 	
7.1

	
Conditions Precedent to the Buyer’s Obligations

	
26

	 	
7.2

	
Conditions Precedent to the Sellers’ and the Company’s Obligations

	
28

	Article 8 SURVIVAL; INDEMNIFICATION	
29

	 	
8.1

	
Survival 

	
29

	 	
8.2

	
Indemnification 

	
29

	 	
8.3

	
No Right of Contribution

	
30

	 	
8.4

	
Procedure for Claims

	
30

	 	
8.5

	
Sellers' Representative.

	
31

	Article 9 TERMINATION	
32

	 	
9.1

	
Termination

	
32

	 	
9.2

	
Effect of Termination

	
32

	Article 10 MISCELLANEOUS	
33

	 	
10.1

	
Notices

	
33

	 	
10.2

	
Entire Agreement; Amendments and Waivers

	
34

	 	
10.3

	
Assignment

	
34

	 	
10.4

	
Choice of Law

	
34

	 	
10.5

	
Attorney Fees

	
34

	 	
10.6

	
Invalidity

	
34

	 	
10.7

	
No Third Party Beneficiaries

	
35

	 	
10.8

	
Remedies Cumulative; Specific Performance

	
35

	 	
10.9

	
No Strict Construction

	
35

	 	
10.10

	
Headings

	
35

	 	
10.11

	
Counterparts

	
35

 

  

ii

  

 

EXHIBITS AND SCHEDULES

 

Exhibit A – Form of Release

Exhibit B – Form of Share Transfer Deed

Exhibit C - Paying Agent Agreement

Schedule 2.2 – Allocation and Wire Transfer Instructions for the Sellers

Schedule 2.2(b)(ii) – promissory note table

Schedule 2.2(c) – Royalty Per Share

Schedule 4 - Company Disclosure Schedule

 

  

iii

  

SHARE PURCHASE AGREEMENT

 

THIS SHARE PURCHASE AGREEMENT (this “Agreement”) is entered into as of May 30, 2012 by and among (i) RAKUTO BIO TECHNOLOGIES LTD., an Israeli company (the “Company”), (ii) SYNERON MEDICAL LTD., an Israeli company (the “Buyer”), (iii) the holders of the securities of the Company set forth on the signature pages hereto (each, a “Seller” and collectively, the “Sellers”) and (iv) MR. HAIM LASSER as the Sellers' Representative (as defined in Section ‎8.5(a) below).  Each of the Company, the Buyer, the Sellers and the Sellers' Representative is referred to herein as a “Party,” and collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, (a) the Buyer and the Sellers own all of the issued and outstanding Company Shares (as defined in Section ‎1.1 below); and (b) other than the Company Options and the Warrants, there are no other equity securities or equity derivative securities of the Company outstanding;

 

WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires to purchase from the Sellers, the Sellers' Shares (as defined in Section ‎1.1 below);

 

WHEREAS, in order to induce each other to enter into this Agreement, the Parties have agreed to execute, deliver and perform certain obligations under this Agreement and the Ancillary Agreements.

 

NOW THEREFORE, in consideration of the foregoing recitals and the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1           Defined Terms. As used in this Agreement, the following terms have the meanings indicated:

 

 “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person, including any Subsidiary of such Person.  For purposes of this definition, “control” (including the terms “controlling,” “controlled by” and “under common control with”) has the meaning set forth in the Israeli Securities Law, 1968.

 

“Ancillary Agreements” means the Releases and the other agreements, documents, instruments and certificates prepared and delivered or to be delivered pursuant to or in connection with this Agreement.

 

“Business” means the business of the Company as presently conducted by the Company, including the design, development, marketing, commercialization, provision, distribution, licensing, maintenance and support of the Products.

 

  

5

  

“Business Day” means any day other than a Friday, Saturday or other day on which banks in Israel are required to be closed.

 

“Buyer Indemnified Parties” means: (i) the Buyer and its Affiliates, (ii) the Company; (iii) the Buyer's and the Company’s respective officers (or Persons fulfilling equivalent positions), directors (or Persons fulfilling equivalent positions), employees agents and (iii) the respective heirs, personal representatives, successors and assigns of the Persons referred to in clauses (i), (ii) and (iii) above; provided, however, that the officers, directors and shareholders of the Company prior to the Closing shall not be deemed to be “Buyer Indemnified Parties.

 

“Call Option Agreement” means that certain Call Option Agreement by and between the Sellers, the Buyer and the Company dated February 12, 2008.

 

“Company Articles of Association” means the Articles of Association of the Company as amended, as filed with the Israeli Registrar of Companies in effect as the Closing Date.

 

“Company Intellectual Property” means all Intellectual Property owned or purported to be owned by the Company.

 

“Company Material Adverse Effect” means any event, change, development or state of facts that (i) is or would reasonably be expected to be, either individually or in the aggregate, materially adverse to the business, assets, Liabilities, operations, conditions (financial or otherwise) and prospects of the Company, taken as a whole, or (ii) would, individually or in the aggregate, prevent or materially delay or alter any of the transactions contemplated by this Agreement; provided, however, that the following shall not be taken into account in determining whether a Company Material Adverse Effect has occurred: (i) changes in general economic or political conditions affecting the industry in which the Company operates generally, (ii) changes in the industry in which the Company operates, (iii) changes in Law or in any authoritative interpretation of any Law by any Governmental Entity, (iii) the effect of any action required to be taken or prohibited from being taken resulting primarily from the execution or performance of this Agreement or the consummation of the transactions hereunder.

 

“Company Options” means options or other equity compensation awards to purchase or receive Company Ordinary Shares.

 

“Company Ordinary Shares” means the Ordinary Shares of the Company, nominal value NIS 0.01 per share.

 

“Company Preferred A Shares” means the Series A Preferred Shares of the Company, nominal value NIS 0.01 per share and the Series A-1 Preferred Shares of the Company, nominal value NIS 0.01 per share.

 

“Company Preferred A-1 Shares” means the Series A-1 Preferred Shares of the Company, nominal value NIS 0.01 per share.

 

“Company Shares” means the Company Ordinary Shares, the Company Preferred A Shares and the Company Preferred A-1 Shares.

 

  

6

  

“Consent” means any required approval, consent, ratification, permission, waiver or authorization (including by any Governmental Authority).

 

 “Contract” means any written or oral, legally binding agreement, contract, subcontract, lease, binding understanding, instrument, note, bond, mortgage, indenture, option, warranty, purchase order, license, sublicense, benefit plan, obligation, commitment or undertaking of any nature.

 

 “Damage” means any direct Liability, loss, damage,  diminution in value, award, fine, penalty, interest, Tax, , remediation and reasonable costs, fees or expenses (including reasonable attorney, consultant and expert fees and expenses).

 

 “GAAP” means generally accepted accounting principles as applicable in the United States of America and applied on a consistent basis.

 

“Governmental Authority” means any government, any governmental entity, governmental department, governmental commission, governmental board, governmental agency or governmental instrumentality, and any court, tribunal, arbitrator (public or private) or judicial body, in each case whether national, state, provincial, local or foreign.

 

“Intellectual Property” means all inventions, technology, trade secrets, software, proprietary information, materials, works of authorship, or the like that are used in, support, or have arisen from the Business.

 

“Knowledge,” “to the Knowledge of” or “Known” shall mean matters which are actually known to the relevant Party.

 

“Laws” means all laws and ordinances; and all rules, regulations and policies promulgated by any Governmental Authority.

 

“Liability” means, as to any Person, any debt, adjudicated  adverse claim by a competent authority, liability, obligation or commitment of such Person of any kind or nature, whether determined or determinable, , liquidated or unliquidated, due or to become due, and regardless of whether arising out of or based upon contract, tort, strict liability, statute or otherwise.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, title defect, voting trust agreement, restriction, easement, Tax assessment, agreement to sell or purchase, preemptive right, right of refusal, right of possession or use, security interest, encumbrance, ownership interest, asserted written claim of ownership, option, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, including any Contract to give or grant any of the foregoing.

 

“Order” means any award, decision, judgment, injunction, order, ruling, subpoena, decree, charge or verdict entered, issued, made or rendered by any Governmental Authority.

 

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

 

  

7

  

“Permits” means all certifications (including those of standards-setting organizations), licenses, permits, franchises, approvals, authorizations, notices to, Consents or Orders of, or filings with, any trade association, any standards-setting organization, or any Governmental Authority, necessary or desirable for the past or present conduct or operation of the business of the Company or ownership of the assets of the Company.

 

“Person” means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, association or other entity, including any Governmental Authority.

 

“Pro Rata Portion” means, with respect to each Seller, a fraction, (i) the numerator of which is the number of Company Shares and Company Options and Warrants held by such Seller, and (ii) the denominator of which is the sum of total number of Company Shares plus the total number of Company Options, warrants and such other convertible securities on a fully diluted as converted basis.

 

“Proceeding” means any claim, action, suit, proceeding (including arbitration and mediation) or investigation, whether civil, criminal or administrative.

 

"Product(s)" means skin whitening (including skin lightening, brightening and the like) products based on Company Intellectual Property LIP enzyme.

 

“Product Net Sales" shall mean the total payments actually received by the Buyer and/or any of its Subsidiaries from a third party for the price invoiced on sales of Products, less the following deductions (provided that none of the following deductions shall be taken into consideration more than once): (a) trade, quantity, or cash discounts; (b) amounts repaid or credited by reason of rejection or return or price reductions; (c)  rebates and chargebacks; (d) commissions that were paid to independent third parties for performance of the following logistical activities: transportation, freight charges (by land, sea or air) and insurance directly;  (e) any taxes, including value added tax (VAT), import/export taxes, customs, duties, sales taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of the Products, not including  any taxes on income; (f) commissions that were paid to independent third parties and representatives as sales commissions.  Any Product transfers, transfer price, intra company purchases, etc. between Buyer and any of its Subsidiaries shall not be calculated into the computation of the Product Net Sales. A “sale” shall not include transfers or other distributions or dispositions of Products at no charge for regulatory purposes, clinical trials, patient assistance programs trials, charitable purposes or to physicians or hospitals for promotional purposes. With respect to Products that are bundled with other products or are otherwise sold in conjunction with other products, of any kind and/or related services, the term "Product Net Sales" shall mean the price of such Product, as appears in the official price list in the relevant territory, region, market segment or otherwise as may be applicable, with respect to the sale of which any payments have actually been received, less the deductions set forth above.

 

“Product Operating Profit" shall mean the operating profit based on US GAAP, annually reviewed by Buyer’s auditors, derived from Buyer's and Buyer's Subsidiaries' (including the Company) operations related to the Products.  Product Operating Profit shall be calculated as follows (in accordance with US GAAP): Product Net Sales less the Product Operating Expenses..

 

  

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“Product Operating Expenses" shall mean all fees, expenses and costs incurred by Buyer and/or any of its Subsidiaries (determined on a US GAAP basis) incurred in connection with the Products.  To the extent that any such fees, expenses and costs are also related to other products and operations that are bundled or consolidated (i.e. cannot be allocated specifically) with Products and operations related to the Products, the portion of such fees, expenses and costs allocated to the Products shall be proportional to the revenues derived from sales of the Products, as a percentage of the Buyer’s overall relevant revenues derived from such other products and operations.

 

“Initial Purchase Price” means an amount equal to US$5,000,000.

 

“Sellers' Shares” means the Company Ordinary Shares, the Company Preferred A-1 Shares and the Company Options and Warrants exercisable into Company Shares held by the Sellers.

 

“Subsidiary” means, with respect to any Person, (i) any corporation or other legal entity of which at least 50% of the securities or interests having, by their terms, ordinary voting power to elect members to the board of directors, or other Persons performing similar functions with respect to such corporation or other legal entity, is held, directly or indirectly, by such Person; or (ii) any partnership or limited liability company of which (A) such Person is a general partner or managing member or (B) such Person possesses a 50% or greater interest in the total capital or total income of such partnership or limited liability company.

 

“Tax” or “Taxes” means any state, local, municipal or foreign income, gross receipts, license, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, capital gain, franchise, profits, escheat, withholding, social security, national insurance, unemployment, disability, real property, personal property, unclaimed property, purchase, betterment, sales, use, transfer, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

 

“Warrants” means that certain options to purchase a total aggregate of 18,100 Ordinary Shares of the company, issued to Dr. Shimon Eckhouse, Sara Brener and Michal Drayman on or about June 2005.

 

1.2            Additional Defined Terms.  As used in this Agreement, the following terms shall have the meanings defined in the introduction, Preamble, Recitals or Section as indicated below:

 

	
“Additional Investment Amount”

	
Section 2.2(b)(iii)

	
“Agreement”

	
Preamble

	
“Assignee”

	
Section 2.2(c)(iii)

	
“Buyer”

	
Preamble

	
“Bank Loan”

	
Section 6.14.1

	
“Cashed-Out Option”

	
Section 2.3

 

  

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“Claim”

	
Section 8.4

	
“Claim Notice”

	
Section 8.4

	
“Closing”

	
Section 2.4(a)

	
“Closing Date”

	
Section 2.4(a)

	
“Companies Registrar”

	
Section 7.1(g)

	
“Company”

	
Preamble

	
“Company Board”

	
Section 2.3(a)

	
“Company Disclosure Schedule”

	
Article 4

	
“Company Financial Statements”

	
Section 4.7(a)

	
“Company Option Plan”

	
Section 4.5(b)

	
“Company Valuation”

	
Section 2.2(b)(ii)

	
“Cut-Off Date”

	
Section 8.1(b)

	
“Debt”

	
Section 2.1(c)

	
“Extended Cut-Off Date”

	
Section 8.1(b)

	
“First Milestone Payment”

	
Section 2.2(b)(i)

	
“Indemnified Party”

	
Section 8.4

	
“Indemnifying Party”

	
Section 8.2(a)(i)

	
“Interest”

	
Section 2.2(d)

	
“ITA”

	
Section 2.5

	
“Majority Sellers”

	
Section 2.2(e)

	
“Milestone Payments”

	
Section 2.2(b)(ii)

	
“Party” or “Parties”

	
Preamble

	
"Paying Agent"

	
Section 2.2(e)

	
“Pre-Closing Period”

	
Section 6.1

	
“Promissory Notes”

	
Section 2.2(b)(iii)

	
“Releases”

	
Section 7.1(f)

	
“Seller” or “Sellers”

	
Preamble

	
“Sellers' Representative”

	
Section 8.5(a)

	
“Sellers' Shares”

	
Recitals

	
“Shareholders’ Rights Agreement”

	
Section 6.15

	
“Syneron Beauty”

	
Section 6.14.2

	
“Third Party Claim”

	
Section 8.4

	
“Valid Certificate”

	
Section 2.5

	
“Yearly Milestone Payments”

	
Section 2.2(b)(ii)

	
“Yearly Milestone Payment Period”

	
Section 2.2(b)(ii)

 

1.3           Interpretation.  In this Agreement, unless otherwise specified, the following rules of interpretation apply:

 

(a)           references to “Articles,” “Sections,” “Schedules” and “Exhibits” are references to articles, sections or subsections, schedules and exhibits of this Agreement;

 

(b)           references to any Person include references to such Person’s successors and permitted assigns;

 

(c)           words importing the singular include the plural and vice versa;

 

  

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(d)           words importing one gender include the other gender;

 

(e)           references to the word “including” do not imply any limitation;

 

(f)           the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

 

(g)           references to “$” or “dollars” refer to U.S. dollars and references to “NIS” or “shekels” refer to New Israeli Shekels;

 

(h)           a defined term has its defined meaning throughout this Agreement and in each Exhibit and Schedule to this Agreement, regardless of whether it appears before or after the place where it is defined; and

 

(i)           references to any specific provision of any Law shall also be deemed to be references to any successor provisions, amendments thereof or any rules or regulations promulgated thereunder.

 

ARTICLE 2

PURCHASE OF SHARES

 

2.1           Purchase and Sale of Shares.

 

(a)           Sale of Shares.  Subject to the terms and conditions of this Agreement, at the Closing, the Sellers shall sell, transfer and assign to the Buyer, and the Buyer shall purchase from the Sellers, all right, title and interest in and to the Sellers' Shares, free and clear of all Liens.

 

(b)          No Other Securities.  The Company and the Sellers acknowledge and agree that, as a result of the foregoing sale and purchase of Sellers’ Shares, the Buyer will own all of the issued and outstanding equity of the Company and all of the issued and outstanding securities convertible, exercisable or exchangeable therefor (whether vested or unvested).

 

    (c)          No Other Debt.  The Company and each of the Sellers severally and not jointly, acknowledge and agree that, between the date of execution of this Agreement, and the Closing Date, except for costs and expenses incurred by the Company in accordance with this Agreement, if any, and the Ancillary Agreements and as disclosed in Schedule ‎4.5 below, the Company and the Sellers shall not, except in the ordinary course of business and in accordance with the Company's budget, take any action intended to create any Debt of the Company, in favor of any Person. In this Agreement, “Debt” means the principal amount of the Company’s outstanding indebtedness for borrowed money, including any interest accrued thereon, whether, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, due or to become due, asserted or unasserted.

 

(d)          Call Option Agreement. This Agreement shall be deemed as exercise of the call option set forth in the Call Option Agreement, subject to the terms of this Agreement, and upon consummation of the Closing, the Call Option Agreement shall terminate and shall no longer be valid. In any event of inconsistency between the terms hereof and the terms of the Call Option Agreement, the terms hereof shall prevail.

 

  

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2.2           Purchase Price.

 

(a)           Purchase Price for Shares.  Subject to Section ‎2.5 at Closing, the Buyer shall pay through the Paying Agent each Seller's Pro Rata Portion of the Initial Purchase Price (in accordance with the allocations listed on Schedule 2.2 hereto), by check or wire transfer of immediately available funds, in accordance with the or wire transfer instructions to be provided by Paying Agent.

 

(b)           Performance-Based Milestone Payments.  As additional consideration to the Sellers, subject to Section ‎2.5, the Buyer shall pay through the Paying Agent each Seller as follows:

 

   (i)           Upon the first anniversary of the Closing Date,  each Seller shall be entitled to its Pro Rata Portion of the aggregate amount of US$5,000,000 in cash (the "First Milestone Payment"), by check or wire transfer of immediately available funds, in accordance with the allocations and payment or wire transfer instructions listed on Schedule 2.2 hereto and to be provided by Paying Agent.

 

   (ii)          Commencing on the second anniversary of the Closing Date and until the expiration of the Yearly Milestone Payment Period (as defined below), each Seller shall be entitled to its Pro Rata Portion of the yearly payments (the “Yearly Milestone Payments”) to the Sellers, to be paid on the relevant anniversary of the Closing Date, in the aggregate amount equal to 50.48% of the Company valuation (“Company Valuation”) (which percentage reflects the Sellers' aggregate shareholdings in the Company immediately prior to the Closing Date (on a fully diluted as converted basis), less the Initial Purchase Price and any Milestone Payments previously received:

 

Company Valuation = ((11* Product Operating Profit)/2) + ((1.7* Product Net Sales)/2)

 

The Buyer, either through the Company or any of its affiliates, shall make the Yearly Milestone Payments under this Section 2.2(b)(iii) to the Sellers within sixty (60) days following the release of Buyer's annual reports in NASDAQ.

 

“Milestone Payments” means collectively the First Milestone Payment and the Yearly Milestone Payments.

 

                                                  Notwithstanding anything to the contrary in this Section 2.2(b), prior to making such Yearly Milestone Payments, the Buyer shall first repay, on behalf of the Company, all of the unpaid principal amount and accrued interest thereon (the “Loan Amount”) in connection with those certain promissory notes issued by the Company to certain Sellers in the aggregate  amount of $234,997 in or about January 24, 2011 (the “Promissory Note(s)”), as detailed in the chart set forth in Schedule 2.2(b)(ii) attached hereto. Notwithstanding anything to the contrary in the Promissory Notes, the Buyer shall repay, on behalf of the Company, the Loan Amount only upon the first anniversary of the Closing Date. Each of the Parties agrees and acknowledges that the execution of this Agreement by the Buyer, the Company and the Sellers shall be sufficient to effect the foregoing amendment of rights and obligations under the Promissory Notes according to Section 2.2(b) to this Agreement.

 

  

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                                                  "Yearly Milestone Payment Period" means the period of time commencing on the second anniversary of the Closing Date and ending on the earlier of (a) the date upon which the Yearly Milestone Payments in aggregate reach $15,240,000 (which amount is equal to 50.48% of a Company Valuation of US$50,000,000 less the Initial Purchase Price and the First Milestone Payment) or (b) the seventh anniversary of the Closing Date.

 

   (iii)         Off-Set. The Parties hereby acknowledge and agree that the Company may require an additional investment in the amount of up to US$1,800,000 (the “Additional Investment Amount”), of which US$891,360 shall be invested by Buyer and US$908,640 shall be invested Sellers, in accordance with the Buyer's and Sellers' pro rata shareholdings in the Company on a fully diluted as converted basis immediately prior to the Closing Date.  The Parties further acknowledge and agree that while the Additional Investment Amount is to be allocated between the Buyer and Sellers in accordance with their pro rata shareholdings in the Company immediately prior to the Closing Date, Buyer shall be responsible for providing the full amount of the Additional Investment Amount, in which case the Milestone Payments to be paid to the Sellers by Buyer shall be reduced by 50.48% of the Additional Investment Amount provided by the Buyer, and shall be borne by Sellers in accordance with their respective Pro Rata Portions.

 

(c)           Royalty Payments. As additional consideration to the Sellers, subject to Section ‎2.5, following the Closing:

 

(i)          each of the Sellers shall be entitled to receive, through the Paying Agent, an additional contingent payment for unlimited period (perpetual) (the "Royalty Period") per each Seller's Shares sold hereunder which is equal to the Royalty Per Share as set forth in Schedule 2.2(c) hereto (the “Royalty Per Share”).

 

(ii)         The Buyer, either through the Company or any of its affiliates, shall make the payments through the Paying Agent under this Section 2.2(c)(i) to the Sellers within sixty (60) days following the release of Buyer's quarterly reports in NASDAQ; such payments shall be accompanied by a written confirmation from the Buyer's Chief Financial Officer as of the accuracy of the calculation thereof. The Sellers, as a group, via the Sellers Representative, shall be provided with all relevant public financial information of the Buyer and shall have the right to audit, through an independent certified public accountant, the accounts of the Buyer twice a year, in connection with payments due under Sections 2.2(b) and 2.2(c) above, and shall bear the expenses of such auditor and audit. Notwithstanding the aforesaid, the Buyer shall pay all reasonable costs, expenses and fees of such audit if it is revealed in the framework of such audit that a deviation of more that 5% of the Royalty Per Share occurred. Payments to Sellers will be adjusted in accordance with the results of the audit, in any event of a discrepancy between such actual payments and audit.

 

  

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(iii)        It is hereby specifically agreed that in any event of assignment of this Agreement by Buyer, or assignment of rights or grant of any license by Buyer hereunder or sale of the Company, that shall result in the sale of Products by third parties who are not agents, distributers, representatives or re-sellers of Buyer or its Subsidiaries (each an "Assignee"), then for purpose of Schedule 2.2(c) hereto, reference to "actually received by the Buyer or any of its Subsidiaries" in the definition of "Product Net Sales" shall be expanded to include (in addition to Buyer, if applicable) all such Assignees and/or Purchasers (as applicable), and Buyer shall ensure and shall remain liable for the performance by all such Assignees of the respective obligations hereunder, including, without limitation, payment obligations.

 

It is agreed that all payments set forth in Section 2.2 constitute the consideration payable to Sellers in connection with Sellers' Shares, and do not constitute payments for any other services, assets or rights.

 

(d)           Interest for Late Payments. Any payments due to Sellers under this Section 2.2 shall bear an interest at a rate of 5% per-annum (the "Interest"). The Interest shall accrue from the fifth (5) Business Day following the date on which the relevant payment was due and until the actual day of payment. Interest shall be paid together with the relevant due payment. Nothing in this Section shall be deemed as a waiver by Sellers or any of them of any remedy legally available thereto.

 

(e)           Paying Agent. Payment of any and all consideration and payments due to Sellers under this Agreement shall be effected through SGS Trusts Ltd.. who shall act as a paying agent (the "Paying Agent") pursuant to the terms and conditions set forth in that certain paying agent agreement in the form attached hereto as Exhibit C. Buyer shall deposit with the Paying Agent all payments due under this Agreement on the relevant dates to enable distribution of such payments to the Sellers in accordance with the terms of this Agreement. Paying Agent may be replaced with the consent of the Sellers who, immediately prior to Closing, are the holders of at least 60% of the Sellers' Shares (the "Majority Sellers"). The receipt of such consideration and payments due under this Agreement by the Paying Agent shall be sufficient to discharge of the Buyer’s obligation to pay any such amounts, and the Buyer shall have no responsibility or Liability, under any circumstances, for the allocation thereof among the Sellers.

 

2.3           Company Options and Warrants.

 

Cancelled Company Options .  Prior to the Closing, the Company Board (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary to provide that each Company Option and Warrant (whether vested or unvested) shall be cancelled immediately upon the Closing Date; provided however that, each Company Option and Warrant (such Company Option and/or Warrant, a “Cashed-Out Option”) shall entitle the owner thereof to receive, with respect to each Company Ordinary Share underlying such Cashed Out Option, the respective Pro-Rata Portion of the Initial Purchase Price, the Milestone Payments and the Royalty Payments less the exercise price of such Company Option or Warrant, after giving effect to currency exchange, if applicable, and the related rights detailed in Section 2.2 above, all in accordance with the terms of Section 2.2 above. 

 

  

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2.4           Closing; Deliverables.

 

(a)           Closing.  The consummation of the transactions contemplated by this Agreement (the “Closing”) will take place at the offices of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co., One Azrieli Center, Round Tower, Tel Aviv, Israel, as promptly as practicable (and in any event within two (2) Business Days) after the conditions set forth in ‎Article 7 are satisfied (other than those conditions which by their nature are normally satisfied at the Closing) or waived, or such other time and place that is agreed to in writing by the Sellers and the Buyer (the “Closing Date”). It is the Parties intent to use reasonable efforts to execute this Agreement simultaneously with the consummation of the Closing.

 

(b)           Deliveries at the Closing by the Company and the Sellers.  At the Closing, and upon satisfaction or waiver of the conditions set forth in Section ‎7.2, the Sellers and the Company will deliver or cause to be delivered the instruments, Consents, certificates and other documents required of them by Section ‎7.1.

 

(c)           Deliveries at the Closing by the Buyer.  At the Closing, and upon satisfaction or waiver of the conditions set forth in Section ‎7.1, the Buyer will deliver or cause to be delivered the instruments, Consents, certificates and other documents required of it by Section 7.2.

 

2.5           Withholding.  Each of the Buyer and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any Seller such amounts as the Buyer is required to deduct and withhold under any Tax Law of the State of Israel, with respect to the making of such payment.  To the extent that amounts are so withheld by the Buyer and/or Paying Agent, and paid over to the appropriate Tax authority within the required payment period, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Sellers in respect of whom such deduction and withholding was made by the Buyer and/or Paying Agent and such payment was made to the appropriate Tax authority such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Seller in respect of which such deduction and withholding was made by the Buyer and/or the Paying Agent.

 

Notwithstanding the aforementioned, however, that if the Seller has provided to the Buyer and/or the Paying Agent a Valid Certificate at least one Business Day prior to any payment payable pursuant to this Agreement, the withholding (if any) of any amount under the Israeli tax Law from the consideration payable to such Seller hereunder, and the payment of the consideration or any portion thereof, shall be made in accordance with the provisions of such Valid Certificate.  A “Valid Certificate” shall be a certificate or ruling issued by the Israeli tax authority (the “ITA”) which is sufficient to enable the Buyer and/or the Paying Agent to conclude in its reasonable discretion that no withholding (or reduced withholding) of Israeli Tax is required with respect to such Seller. The Parties agree that a certificate of exemption from withholding with respect to “Services and Assets” issued by the ITA will be deemed a Valid Certificate if in force on the date that payment is made.  Notwithstanding the above, the Buyer and/or the Paying shall release any such withheld amounts (or such applicable portion thereof) not yet remitted to the ITA to the Seller in accordance with a Valid Certificate provided by the Seller prior to Buyer’s and/or Paying Agent’s submission of such amounts to the ITA, which submission shall be made by the Buyer and/or the Paying Agent not earlier than three Business Days prior to the last day on which the Buyer and/or the Paying Agent is required to make submission pursuant to the Israeli Tax Law.  If the Buyer and/or the Paying Agent so withholds amounts and pays them to the ITA with respect to a Seller, the Seller shall furnish to the Seller documents evidencing such withholding within the time period required by the Israeli Tax Law.

 

  

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

CONCERNING THE SELLERS

 

Each Seller, severally and not jointly, hereby represents and warrants to the Buyer that each of the statements contained in this Article 3 as it pertains to that individual Seller is true and correct as of the date hereof.

 

3.1           Power and Authority; Enforceability.  The Seller has all necessary power and authority to enter into this Agreement and each Ancillary Agreement to which it is a party and has taken all actions necessary to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder.  If Seller is a corporation or other entity, it is duly organized, validly existing and, to the extent applicable, in good standing under the Laws of the jurisdiction of its incorporation.  This Agreement and each Ancillary Agreement to which the Seller is party have been duly executed and delivered by the Seller and constitutes the valid and binding obligation of such Seller, enforceable against such Seller in accordance with their respective terms, except that enforceability may be limited by the effect of (a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to or affecting the rights of creditors or (b) general principles of equity (regardless of whether enforceability is considered in a Proceeding at law or in equity).

 

3.2           Title to Shares; Waiver of Limitations on Transfer. The Seller is the sole and lawful beneficial and record owner of the Sellers' Shares set forth opposite its name on Schedule 2.2, as applicable, and Section ‎4.4(a) and Section ‎4.4(b) of the Company Disclosure Schedule, as applicable and, at the Closing, will deliver to the Buyer good and marketable title to such Shares, free and clear of all Liens. The Seller does not have nor has Seller granted any preemptive or other rights, options, warrants or other agreements or commitments other than this Agreement to sell or acquire any securities of the Company or obligations convertible into or exchangeable for any securities of the Company.  The description of the shares and interests of Seller in or to any securities of the Company is completely and accurately listed on in Sections ‎4.4(a) and 4.4(b) of the Company Disclosure Schedule; and to the Knowledge of the Seller the information in Sections ‎4.4(a) and 4.4(b) of the Company Disclosure Schedule, pertaining to holdings of securities of the Company, is correct. There is no Proceeding before any Governmental Authority now pending or, to the Knowledge of the Seller, threatened against such Seller which would adversely affect its rights in and to the Sellers' Shares or the ability of such Seller to consummate the transactions contemplated by this Agreement and each Ancillary Agreements to which such Seller is a party.

 

  

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3.3           No Conflict; Consents and Approvals .  The Seller’s execution, delivery or performance of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, will not (a) violate or conflict with any provision of the governing documents of such Seller, in the event that Seller is a corporation;  (b) violate or conflict with any Order or Law applicable to such Seller that is likely to have an impact on the transactions contemplated hereunder; (c) conflict with, result in a breach of or constitute a default under (with or without notice or the passage of time), result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which such Seller is a party or by which it is bound or to which any of its properties or assets is subject in a manner that is likely to have an impact on the transactions contemplated hereunder;  or (d) result in the imposition of any Lien upon any properties or assets of such Seller in a manner that is likely to have an impact on the transactions contemplated hereunder .  No declaration, filing or registration with, approvals or consents of or assignment by any Persons (including any Governmental Authority) are necessary to be made or obtained in connection with the execution, delivery or performance of this Agreement or the Ancillary Agreements by the Seller or the consummation of the transactions contemplated hereby or thereby, except (which exception shall no longer apply as of the Closing Date) as to that certain tax ruling obtained by certain Sellers in connection to this Agreement and the transactions contemplated hereby. Each Seller hereby waives, effecting as of the Closing, his, her or its rights to all advance notices required to be given to such shareholders of the Company.

 

3.4           Restrictions.   As to each Seller, except for (i) this Agreement and the Ancillary Agreements executed in connection herewith, and (ii) the Company Articles of Association, and (iii) the Shareholders’ Rights Agreement, there are no Contracts restricting the voting, dividend rights or disposition of the Sellers' Shares or otherwise granting any Person any right in respect of the Sellers' Shares held by such Seller.

 

3.5           Claims.  The Seller has no claims against the Company, or its officers, directors, shareholders, agents, successors or assigns in their capacity as such and in his/her capacity as a Seller, other than claims Seller has generally as a current creditor or shareholder of the Company (and as to which no controversy exists), all of the above except for claims with respect to the rights set forth in this Agreement.

 

3.6           Company Intellectual Property.  The Seller has no right or interest (including, without limitation, any ownership right) in or to any Company Intellectual Property.

 

3.7           Taxes.  To the extent the Seller provided or is currently providing services to the Company as an independent contractor or as a consultant, such Seller has paid all due applicable Taxes relating to compensation paid by the Company in respect of such services.

 

3.8           Brokers’ Fee.  The Seller has no Liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which the Buyer could become liable or obligated.

 

3.9           Disclosure.  The representations and warranties of the Sellers contained in this Agreement and the Ancillary Agreements do not contain any untrue statement of a material fact or, omit to state any material fact necessary in order to make the statements and information contained in this Agreement and the Ancillary Agreements not false or misleading.

 

  

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES

CONCERNING THE COMPANY

 

The Company hereby represents and warrants to the Buyer that each of the statements contained in this Article 4 is true and correct as of the date hereof, subject to the disclosures made in the disclosure schedule of the Company (the “Company Disclosure Schedule”) delivered to the Buyer concurrently with the execution and delivery of this Agreement.  The disclosures included in any section of the Company Disclosure Schedule shall be numbered to correspond to the applicable sections and subsections of this Article 4.

 

4.1           Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing under the Laws of the State of Israel.  The Company is duly authorized to conduct business and is in good standing under the Laws of each jurisdiction where such qualification is required.  The Company has all necessary corporate or similar power and authority: (a) to conduct its business in the manner in which its business is currently being conducted, (b) to own and use its assets in the manner in which its assets are currently owned and used and (c) to perform its obligations under any Contract by which it is bound.  The current officers and directors of the Company, including their titles and a designation of the Chairman of the Company Board, is set forth in Section 4.1 of the Company Disclosure Schedule.  There has not been any violation of any of the provisions of any of the Company Articles of Association or other charter, organizational or governing documents of the Company, and the Company has not taken any action that is inconsistent with any resolution adopted by the shareholders of the Company or the Company Board (including any committee thereof).

 

4.2           Power and Authority; Enforceability.  The Company has all necessary corporate power and authority to enter into this Agreement and each Ancillary Agreement to which it is a party and has taken all corporate or other action necessary to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder.  This Agreement and each Ancillary Agreement to which the Company is party have been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, except that enforceability may be limited by the effect of (a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to or affecting the rights of creditors or (b) general principles of equity (regardless of whether enforceability is considered in a Proceeding at law or in equity).

 

4.3           No Conflict; Consents and Approvals.  The Company’s execution, delivery or performance of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, will not (a) violate or conflict with any provision of any organizational or governing documents of the Company, (b) violate or conflict with any Order or Law applicable to the Company, (c) conflict with, result in a breach of or constitute a default under (with or without notice or the passage of time), result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Company is a party or by which it is bound or to which any of its properties or assets is subject, or (d)  to the best knowledge of the Company, result in the imposition of any Lien upon any properties or assets of the Company.  No declaration, filing or registration with, waivers, approvals or consents of or assignment by any Persons (including any Governmental Authority) are necessary to be made or obtained in connection with the execution, delivery or performance of this Agreement or the Ancillary Agreements by the Company or the consummation of the transactions contemplated hereby or thereby.

 

  

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4.4           Capitalization.

 

(a)           Share Capital.  As of the date hereof, the authorized capital of the Company consists of 3,578,877 Company Ordinary Shares, 322,800 shares of which are issued and outstanding; 221,123 Company Preferred A Shares, 184,269 shares of which are issued and outstanding, and 70,000 Company Preferred A-1 Shares, 30,424 shares of which are issued and outstanding.  Section 4.4(a) of the Company Disclosure Schedule sets forth by name each holder of Company Share and the number of Company Shares held by such holder. The Company has not repurchased any shares of Company Share and does not hold any Company Shares as dormant shares.  All of the outstanding Company Shares have been duly authorized and validly issued, and are fully paid and nonassessable.  The rights, preferences and privileges of Company Shares are as set forth in the Company Articles of Association.

 

(b)           Options .  As of the date hereof, 58,368 Company Ordinary Share are reserved for issuance under the Company’s 2009 Israeli Share Option Plan (the “Company Option Plan”).  The Company has granted options to purchase an aggregate of 58,368 Company Ordinary Share under the Company Option Plan, all of which remain unexercised and outstanding. Section 4.4(b) of the Company Disclosure Schedule sets forth the name of each holder of Company Options, the number of Company Ordinary Shares for which each such Company Option is exercisable, the vesting schedule and exercise price for each Company Option, the number of shares vested and unvested as of the date of this Agreement, and the price per share of Company Ordinary Share for which each such Company Option is exercisable.  None of the Company’s share purchase agreements or share option documents contains a provision for acceleration of vesting (or lapse of a repurchase right) or other changes in the vesting provisions or other terms of such agreement or understanding upon the occurrence of any event or combination of events.  The Company has never adjusted or amended the exercise price of any stock options previously awarded, whether through amendment, cancellation, replacement grant, re-pricing, or any other means.  The Company has no obligation (contingent or otherwise) to purchase or redeem any of its capital stock.

 

(c)           Intentionally Omitted.

 

(d)           No Other Rights.  Except as set forth in the Company Articles of Association, and the Company Options and Warrants: (i) none of the outstanding Company Shares is entitled or subject to any preemptive right, right of first offer or any similar right created by the Company or imposed under applicable Law with respect to the share capital of the Company; (ii) none of the outstanding Company Shares is subject to any right of first refusal in favor of the Company; (iii) except as set forth in Section 4.4(d) of the Company Disclosure Schedule, there is no Contract relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or granting any option or similar right with respect to), any Company Shares; (iv) there are no authorized or outstanding options, warrants, conversion rights, exchangeable rights, purchase rights, subscription rights or other Contracts or commitments that would obligate the Company to issue, sell or otherwise cause to become outstanding any additional Company Shares or any other equity securities of the Company; (v) no Person has any right of first offer, right of first refusal or preemptive right in connection with any future offer, sale or issuance of securities by the Company; and (vi) the Company is not under any obligation, or is bound by any Contract pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any outstanding Company Shares.

 

  

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(e)           No Other Securities.  The Sellers' Shares being purchased pursuant to this Agreement constitute all of the issued and outstanding equity of the Company and all of the issued and outstanding securities convertible, exercisable or exchangeable therefore (whether vested or unvested).

 

4.5           No Debt.  As of the Closing Date, except as set forth in Section ‎4.5 of the Company Disclosure Schedule and except in the ordinary course of business, the Company  does not have any Debt, material Liability or material obligation of any nature, whether or not accrued, contingent or otherwise.

 

4.6           Litigation.  The Company is not subject to, and none of the assets or properties of the Company is bound by, any Order.  The Company is not a party, or, to the Knowledge of the Company, is threatened to be made a party, to any Proceeding, of, in or before any Governmental Authority.  Section ‎4.6 of the Company Disclosure Schedule contains a complete and accurate description of all Proceedings during the four (4) years preceding the date of execution of this Agreement, to which the Company has been a party or which relate to the business, assets or the officers (or Persons fulfilling equivalent positions) or directors (or Persons fulfilling equivalent positions) of the Company or any Proceedings which were settled prior to the institution of formal proceedings.

 

4.7           Compliance with Laws.  The Company is in compliance in all material respects with all applicable Laws and Orders.  The Company has not received any notice to the effect that, or has otherwise been advised that, the Company is not in compliance with any such Laws or Orders and the Company has no reason to anticipate that any existing circumstances are likely to result in any material violation of any such Laws or Orders.

 

4.8           Brokers’ Fees.  The Company has no Liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which the Buyer could become liable or obligated.

 

4.9           Disclosure.  The  representations and warranties of the Company contained in this Agreement and the Ancillary Agreements (including the Company Disclosure Schedule) do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Agreement and the Ancillary Agreements (including the Company Disclosure Schedule) not false or misleading.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer hereby represents and warrants to the Sellers and the Company that each of the statements contained in this Article 5 is true and correct as of the date hereof.

 

  

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5.1           Power and Authority; Enforceability.  The Buyer has all necessary corporate power and authority to enter into this Agreement and each Ancillary Agreement to which it is a party and has taken all corporate or other action necessary to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder.  This Agreement and each Ancillary Agreement to which the Buyer is party have been duly executed and delivered by the Buyer and constitutes the valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with their respective terms, except that enforceability may be limited by the effect of (a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to or affecting the rights of creditors or (b) general principles of equity (regardless of whether enforceability is considered in a Proceeding at law or in equity).

 

5.2           No Conflict; Consents and Approvals.  The Buyer’s execution, delivery or performance of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, will not (a) violate or conflict with any provision of the governing documents of the Buyer; or (b) violate or conflict with any material Order or material Law applicable to the Buyer.  No material declaration, filing or registration with, approvals or consents of or assignment by any Persons (including any Governmental Authority) are necessary to be made or obtained in connection with the execution, delivery or performance of this Agreement or the Ancillary Agreements by the Buyer or the consummation of the transactions contemplated hereby or thereby.

 

ARTICLE 6

COVENANTS

 

The Parties undertake to comply with the following provisions that are applicable thereto, during the relevant periods detailed below:

 

6.1           Maintenance of Business.  From the date hereof until the Closing Date (the “Pre-Closing Period”), the Company shall use reasonable commercial efforts to carry on and preserve the business of the Company and relationships with customers and employees in substantially the same manner as it has prior to the date hereof consistent with its past practices.

 

6.2           Conduct of Business.  During the Pre-Closing Period, the Company shall continue to conduct its business in the Ordinary Course of Business, and the Company shall not, without the prior written consent of the Buyer, except as contemplated by this Agreement:

 

(a)           take any action which could reasonably be expected to result in a Company Material Adverse Effect;

 

(b)           declare, set aside or pay any dividend or make any distribution (whether in cash or in kind) with respect to any security of the Company or redeem, purchase or otherwise acquire any security of the Company;

 

(c)           issue, or commit to issue, any securities of the Company, including any Company Options;

 

  

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(d)           mortgage, lease, sublease, license, pledge or subject to any Lien any of the Company’s assets;

 

(e)           sell, transfer, exclusively license or otherwise dispose of any of the Company’s assets, or acquire any assets or rights, except in the Ordinary Course of Business;

 

(f)           waive or release any material right or claim for or with respect to the Company;

 

(g)           change any insurance coverage as is currently in effect;

 

(h)           incur or assume any Liabilities or assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations (absolute, accrued, contingent or otherwise) of any Person, other than Liabilities for trade payables and employee compensation in each case incurred in the Ordinary Course of Business;

 

(i)           make any loans, advances or capital contributions to, or investments in, any Person;

 

(j)           amend, modify, terminate or waive or exercise any right under any material contract of the Company or make or enter into any new contract, with respect to all of the above, except in the ordinary course of business;

 

(k)           take any action that is reasonably expected to alter the past practice of the Company’s business with respect to the collection of accounts receivable or payments of accounts payable;

 

(l)           make or change any Tax election, settle or compromise any claim, notice, audit report or assessment in respect of Taxes, change any annual Tax accounting period, adopt or change any method of Tax accounting, file any amended Tax Return or any other material Tax Return, enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement relating to any Tax, surrender any right to claim a Tax refund, or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;

 

(m)           take, or agree to or commit to take, any action that is reasonably likely to result in any of the conditions to the Closing set forth in ‎Article 7 hereto not being satisfied, or is reasonably expected to make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Closing Date, or that would impair the ability of the Company, the Sellers or the Buyer to consummate the Closing in accordance with the terms hereof or materially delay such consummation; or

 

(n)           agree to do any of the things described in clauses (a) through (m) above.

 

  

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6.3           Notification.

 

(a)           During the Pre-Closing Period, each Party shall promptly notify the other Parties in writing of: (i) the discovery by such Party of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes an  inaccuracy in or breach of any representation or warranty made by such Party in this Agreement; (ii) any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that is reasonably likely to cause or constitute an inaccuracy in or breach of any representation or warranty made by such Party in this Agreement if such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement; (iii) any breach of any covenant or obligation of such Party set forth in this Agreement; and (iv) any event, condition, fact or circumstance that are reasonably expected to make the timely satisfaction of any of the conditions set forth in ‎Article 7 impossible or unlikely.  Without limiting the generality of the foregoing, the Company and the Sellers shall promptly advise the Buyer in writing of (X) any Proceeding threatened, commenced or asserted against or with respect to the Company, or (Y) any event, condition, fact or circumstance known to them that has had or could reasonably be expected to have a Company Material Adverse Effect.

 

(b)           If any event, condition, fact or circumstance that is required to be disclosed by the Sellers or the Company pursuant to Section 6.3(a) would require any change in the Company Disclosure Schedule in order to make the representation or warranty accurate, or if any such event, condition, fact or circumstance would require such a change assuming the Company Disclosure Schedule was dated as of the date of the occurrence, existence or discovery of such event, condition, fact or circumstance, then the Company shall promptly (upon discovery) deliver to Buyer an update to the Company Disclosure Schedule specifying the details of such event, condition, fact or circumstance and why it necessitates a change to the Company Disclosure Schedule.  No such update shall be deemed to supplement or amend the Company Disclosure Schedule for the purpose of determining the accuracy of any of the representations and warranties made by the Company or any of the Sellers in this Agreement for purposes of Article 7 or Article 8 of this Agreement. No notification given pursuant to Section 6.3(a) shall otherwise limit or otherwise affect any of the representations, warranties, covenants or obligations of the Parties contained in this Agreement.

 

6.4           Regulatory Permits.  Each Party will promptly execute and file, or join in the execution and filing of, any application, notification or other document that may be necessary in order to obtain the authorization, approval or Consent of any Governmental Authority that may be reasonably required, or which another Party may reasonably request, in connection with the consummation of the transactions contemplated by this Agreement or any Ancillary Agreement.

 

6.5           Necessary Consents.  Each Party will use commercially reasonable efforts to promptly obtain such written Consents and authorizations of third parties, give notices to third parties and take such other actions as may be necessary or appropriate in order to effect the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements and to enable the Buyer to carry on all of the business of the Company immediately after the Closing, unless otherwise specifically agreed to in writing by the Parties.

 

  

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 During the Pre-Closing Period, each Party will notify the others in writing promptly after learning of any Proceeding by or before any court, arbitrator or arbitration panel, board or Governmental Authority, initiated by or against it, or known by such Party to be threatened against it that could materially delay or alter the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

 

6.6           Access to Information.  During the Pre-Closing Period, the Company will allow the Buyer and its agents access at reasonable times to the files, books, records, technology, Contracts, personnel and offices of the Company, including any and all information relating to the Taxes, commitments, Contracts, leases, licenses, Liabilities, financial condition and real, personal and intangible property of the Company. Buyer undertakes to maintain all such information of the Company and, if applicable, third parties, in strict confidence and not to use it for any purpose except in connection with the execution and performance of this Agreement. In the event of termination of this Agreement, Buyer shall return all such information to the Company, without maintaining any copies thereof, and shall continue to be bound by the confidentiality and non-use provisions of this Section 6.6.

 

6.7           Satisfaction of Conditions Precedent.  During the Pre-Closing Period, the Company, the Sellers and the Buyer will use all commercially reasonable efforts to satisfy or cause to be satisfied all the conditions set forth in Article 7 and to cause the transactions contemplated by this Agreement to be consummated by such Party in accordance with the terms of this Agreement.

 

6.8           Books and Records.  If, in order to properly prepare any documents required to be filed with Governmental Authorities (including Tax authorities), financial statements or for any other business purpose, it is necessary that the Buyer be furnished with additional information and such information is in the possession of the Sellers or the Company, such Party shall promptly furnish or cause to be furnished such information to the Buyer upon reasonable prior written notice.

 

6.9           Further Assurances.  In case at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement or the Ancillary Agreements, each Party hereto shall, at its own expense, execute and deliver such documents and other papers and take such further actions as may be reasonably required to carry out the provisions of this Agreement and to give effect to the transactions contemplated by this Agreement and the Ancillary Agreements.

 

6.10         Publicity.  Except as required by applicable Law, no Party shall issue any press release or make any public statement regarding the transactions contemplated by this Agreement without the prior written consent of the other Parties; provided, however, that prior to Closing the Buyer shall be permitted to make any public statement relating to the transactions contemplated hereunder and consistent therewith without obtaining the consent of the Company or the Sellers if the disclosure is deemed by the Buyer to be required by applicable Laws or the requirements of the Securities and Exchange Commission or NASDAQ Global Market; and provided, further, that following the Closing the Buyer shall be permitted to make any public statement relating to the transactions contemplated hereunder and consistent therewith in its sole discretion without obtaining the consent of the Company or the Sellers.

 

  

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6.11           Non Solicitation. During the Pre-Closing Period, each of the Sellers and the Company shall, and shall cause their respective representatives, to refrain from soliciting, inducing or initiating any alternate proposals by any other Person related to a merger, acquisition, sale of securities or fundraising involving the Company.

 

6.12           Equity and Benefit Plans.   Prior to the Closing, the Company's Board shall adopt appropriate resolutions, which shall be in form and substance reasonably acceptable to Buyer, and take all other actions necessary to provide that effective at the Closing the Company Options and Warrants are treated in accordance with Section 2.3 of this Agreement.

 

6.13           Covenants of the Sellers.  By executing this Agreement and subject to Closing, (a) each Seller waives any and all rights and provisions of first refusal, no-sale, co-sale (including any limitations on sale of securities of the Company by the founders of the Company) and any other rights thereof, including any such rights under the Company Articles of Association, the agreements listed under Section 3.4 and Schedule 4.4(d) of the Company’s Disclosure Schedule or any other Contract or instrument and under any applicable Law, applicable with respect to, or inconsistent with the sale of Sellers' Shares by all other Sellers as contemplated hereunder; and (b) each Seller acknowledges and agrees that the distribution of the payments due to Sellers under this Agreement shall be made in accordance with Pro Rata Portion and Royalty Per Share calculations, as detailed in this Agreement, and hereby waives any claims of preference in distribution of such payments, including without limitation, any claim of liquidation or deemed liquidation preference.

 

6.14           Covenants of the Buyer.  Buyer undertakes to comply with the following:

 

6.14.1 Bank Loan. Buyer shall, within thirty (30) days following the Closing assume all Sellers' personal guaranties provided in connection with that certain guaranty for the benefit of the Company made to Bank Discount LeIsrael Ltd. dated October 23, 2011 (the “Bank Loan”), and shall release Sellers from all commitments and obligations thereof related to the Bank Loan. Each Seller and the Buyer hereby acknowledges and agrees that it will execute any document necessary to enable the Buyer to perform its undertaking under this Section ‎6.134.1.

 

6.14.2 Covenants regarding Syneron Beauty. Without  derogating from Buyer's obligations hereunder, Buyer shall ensure that in the event that Syneron Beauty Ltd. an Israeli company ("Syneron Beauty") shall cease to be a subsidiary of Buyer (i.e., the financial reports of Syneron Beauty shall no longer be consolidated with those of Buyer): (i) the terms "Product Operating Profit", “Product Operating Expenses” and "Product Net Sales", as used in the formula of "Company Valuation" shall continue to include the relevant data of Syneron Beauty, in addition to that of Buyer and/or, if applicable, as set forth in Section 2.2(c)(iii); (ii) without derogating from Buyer's obligations under Section 2.2(c)(iii) above, either the Buyer or Syneron Beauty, at the Buyer’s sole discretion, shall comply with Buyer's payments obligations under Section 2.2(c), with respect to payments received by Syneron Beauty in connection with the sale of Products; and (iii) Syneron Beauty shall grant the Company audit rights, in accordance with the terms of Section 2.2(c)(ii). Buyer shall provide a written notice to Sellers' Representative of any act performed in connection with Section 6.14.2, and shall remain liable for the performance hereunder pursuant to and as set forth in this Agreement.

 

  

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6.14.3 Marketing. Buyer represents and warrants that it intends to purchase Products from the Company for purpose of resale by Buyer and its Subsidiaries. Buyer shall use reasonable commercial efforts to, directly or through others, promote, advertise, market, distribute and sell the Products in the relevant markets, and perform all of the above detailed and any related actions, at such scopes and levels as are customary in markets of products similar to those of the Products.

 

6.15           Termination of  Shareholders’ Rights Agreement. The Parties hereto agree that upon consummation of the Closing, the Shareholders’ Rights Agreement dated February 12, 2008 by and between the Company, the Buyer and the Sellers (the “Shareholders’ Rights Agreement”) shall automatically be terminated and shall thereafter no longer be of further force or effect.

 

6.16           Waiver by the Company.  The Company hereby waives any and all obligations of the Sellers to make investments therein, other than as detailed in Section 2.2(b)(iii) above.

 

ARTICLE 7

CONDITIONS TO CLOSING

 

7.1           Conditions Precedent to the Buyer’s Obligations.  The obligation of the Buyer to consummate the transactions contemplated by this Agreement is expressly subject to the fulfillment or express written waiver by the Buyer of the following conditions on or prior to the Closing Date:

 

(a)           Representations and Warranties True .  Each of the representations and warranties of the Sellers and the Company set forth in this Agreement qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, in each case, as of the date hereof and as of the Closing as though made on and as of the Closing Date.

 

  

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(b)           Covenants Performed.  The Company and the Sellers shall each have performed in all material respects, on or before the Closing Date, all obligations contained in this Agreement which by the terms hereof are required to be performed by them on or before the Closing Date.

 

(c)           Compliance Certificate.  In the event that signing of this Agreement and Closing do not take place simultaneously, the Buyer shall have received a certificate signed by each Seller  (with respect thereto only) and the Chief Executive Officer of the Company (with respect to the Company only) certifying as to the matters set forth in Sections 7.1(a) and (b) above.

 

(d)           No Restraints.  There shall not be any Order of any Governmental Authority restraining, enjoining, prohibiting or invalidating the consummation of the transactions which are the subject of this Agreement.  No Proceeding shall be pending before any Governmental Authority or threatened in writing by any Governmental Authority wherein an unfavorable Order would reasonably be expected to (i) prevent consummation of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation.

 

(e)           Execution of Agreement by All Security Holders.  The Buyer shall have received copies of  this Agreement executed by each holder of Company Shares and Company Options and Warrants issued by the Company; (ii) at the Closing there shall be no outstanding right to acquire any securities of the Company (other than the rights of the Buyer under this Agreement); and (iii) immediately following the Closing, the Buyer shall own or have assumed all of the outstanding equity securities of the Company and any other securities convertible, exercisable or exchangeable therefor.

 

(f)            Execution and Delivery of Ancillary Agreements.

 

(i)          Releases.  Each of the Sellers shall have executed and delivered the releases, each in substantially the form attached as Exhibit A hereto (the “Releases”), in favor of the Buyer, and each of the Releases shall be in full force and effect.

 

(g)           Delivery of Certain Instruments:

 

(i)          Share Certificates. Each Seller who is a shareholder of the Company immediately prior to Closing shall have delivered to the Buyer the share certificate(s), duly endorsed by the Company, representing the Sellers' shares in the Company being sold hereunder, or alternatively, if a Seller has lost a certificate, that the Seller who held the certificate signed a statement certifying that it was lost.

 

(ii)         Share Transfer Deed. Each Seller who is a shareholder of the Company immediately prior to Closing, shall deliver to the Buyer a duly executed and witnessed Share Transfer Deed(s), in the form attached hereto as Exhibit B, transferring the Shares to the Buyer, effective as of the Closing.

 

(iii)        Register of Shareholders. The Company shall deliver to the Buyer an updated Register of Shareholders of the Company showing that immediately following the Closing all of the Shares are held by the Buyer, constituting the entire issued share capital of the Company on a fully diluted basis.

 

  

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(iv)        Report to Companies Registrar.  The Company shall deliver to the Buyer a report to the Israeli Companies Registrar (the “Companies Registrar”) indicating transfer of all of the issued and outstanding share capital of the Company to Buyer, signed by the CEO of the Company.

 

(h)          Resignations.  Each of the directors, other than Fabian Tenenbaum, Louis Scafuri and David Schlachet and Chief Financial Officer of the Company shall have delivered duly executed resignations to the Buyer.

 

(i)           Company Corporate Resolutions. The Company shall deliver to the Buyer a copy of resolutions of the Company’s directors approving the execution, delivery and performance by the Company of this Agreement and the Ancillary Agreements required to be approved by the board of directors of the Company, and all transactions and the other matters contemplated hereby required to be approved by the board of directors of the Company, in the form attached hereto as Exhibit 7.1‎(i).

 

(j)           Options; Warrants.  Each Company Options and Warrants shall have been exercised or terminated (Subject to the provisions of Section 2.3 above) and the Company has obtained all necessary waivers to permit treatment of each Company Options pursuant to the terms of this Agreement.

 

(k)           OCS Notification/Approval. The Company shall deliver to the Buyer a notification, duly signed by the Company’s chief executive officer to be delivered to the Office of the Chief Scientist.

 

(l)           No Company Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Company Material Adverse Effect.

 

(m)          Consents.  All Consents required to be obtained in connection with the transactions contemplated by this Agreement and the Ancillary Agreements shall have been obtained and shall be in full force and effect.

 

7.2           Conditions Precedent to the Sellers’ and the Company’s Obligations.  The obligation of the Sellers and the Company to consummate the transactions contemplated by this Agreement is expressly subject to the fulfillment or express written waiver by the Sellers' Representative of the following conditions on or prior to the Closing Date:

 

(a)           Representations and Warranties True.  Each of the representations and warranties of the Buyer set forth in this Agreement qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, in each case, as of the date hereof and as of the Closing Date as though made on the Closing Date, except to the extent such representations and warranties relate to an earlier date (in which case such representations and warranties qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date).

 

  

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(b)           Covenants Performed.  The Buyer shall have performed in all material respects, on or before the Closing Date, all obligations contained in this Agreement which by the terms hereof are required to be performed by the Buyer on or before the Closing Date.

 

(c)           Compliance Certificate.  In the event that signing of this Agreement and Closing do not take place simultaneously, the Company and the Sellers shall have received a certificate signed by an authorized officer of the Buyer certifying as to the matters set forth in Sections 7.2(a) and (b).

 

(d)           No Restraints.  There shall not be any Order of any Governmental Authority restraining, enjoining, prohibiting or invalidating the consummation of the transactions which are the subject of this Agreement.  No Proceeding shall be pending before any Governmental Authority or threatened in writing by any Governmental Authority wherein an unfavorable Order could reasonably expected to (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation thereof.

 

ARTICLE 8

SURVIVAL; INDEMNIFICATION

 

8.1           Survival. 

 

(a)           Representations and Warranties of the Company and the Sellers.  The representations and warranties of the Sellers contained in this Agreement and in the Ancillary Agreements shall survive the Closing Date, and claims based upon or arising out of such representations and warranties may be asserted at any time prior to the date that is 24 months following the Closing Date (the “Cut-Off Date”); provided, that the representations and warranties contained in Section ‎3.1 (Power and Authority; Enforceability), Section ‎3.2 (Title to Shares), Section ‎4.1 (Organization, Good Standing and Qualification), Section ‎4.2 (Power and Authority; Enforceability) and Section ‎4.4 (Capitalization) shall survive until expiration of all relevant statutes of limitation (including any extensions thereof), and claims based upon or arising out of such representations and warranties may be asserted until such time.  Except with respect to claims based upon or arising out of fraud, intentional misrepresentation or willful breach, which shall survive in perpetuity and such claims may be asserted at any time, no claim for indemnification hereunder for breach of any representation or warranty may be brought after the Cut-Off Date.

 

8.2           Indemnification.

 

(a)           General.

 

(i)           From and after the Closing Date, each of the Sellers (the “Indemnifying Parties”), severally and not jointly, shall hold harmless and indemnify each of the Buyer Indemnified Parties from and against any Damages that are suffered or incurred by any of the Buyer Indemnified Parties (regardless of whether or not such Damages relate to any Third Party Claim) and that arise from or as a result of, or are  connected with: (A) any inaccuracy in or breach of any representation or warranty set forth in ‎Article 3 whether such inaccuracy or breach exists as of the date hereof or as of the Closing Date; (B) any breach of any covenant or obligation of such Seller explicitly set forth in this Agreement; or (C) any Proceeding relating to any inaccuracy, breach or expense of the type referred to in clause (A) or (B) above (including any Proceeding commenced by any Buyer Indemnified Parties for the purpose of enforcing any of its rights under this ‎Article 8). No Seller Shall be liable for (i) Damages caused by any other Seller, by Company or by Buyer; (ii) any indirect or consequential Damages and no Damage, whether caused to one or more of Buyer's Indemnified Parties, shall be paid more than once or in any duplicative manner.

 

  

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(b)           Buyer's Sole and Exclusive Remedy.  From and after the Closing Date, with the exception of remedies based on fraud, intentional misconduct or willful breach, the remedies set forth in this Article 8 shall be the sole and exclusive remedy for Buyer's Indemnified Parties' money damages for any action arising out of this Agreement (it being understood that nothing in this Section 8.2(b) or elsewhere in this Agreement shall affect the Parties’ rights to specific performance or other equitable remedies).

 

(c)           Exercise of Remedies by Buyer Indemnified Parties.  Any Buyer Indemnified Party may seek a claim for indemnification under this Article 8; provided, however, that no Buyer Indemnified Party (other than the Buyer or any successor thereto or assign thereof) shall be permitted to assert any indemnification claim or exercise any other remedy under this Agreement unless the Buyer (or any successor thereto or assign thereof) shall have consented to the assertion of such indemnification claim or the exercise of such other remedy.

 

8.3           No Right of Contribution.  From and after the Closing Date, the Indemnifying Parties shall have no right of contribution against the Buyer for any breach of any representation, warranty, covenant or agreement of the Company.

 

8.4           Procedure for Claims.  If a claim for indemnification pursuant to Section 8.2 (a “Claim”) is to be made by a Buyer Indemnified Party entitled to indemnification hereunder, the Buyer Indemnified Party claiming such indemnification (the “Indemnified Party”) shall give written notice (a “Claim Notice”) to the relevant Seller and to Sellers' Representative (without any liability to Sellers' Representative) promptly after the Indemnified Party becomes aware of any fact, condition or event which may give rise to Damages for which indemnification may be sought under Section 8.2.  The failure of any Indemnified Party to give timely notice hereunder shall not affect rights to indemnification hereunder except and only to the extent that, the Indemnifying Party demonstrates actual material damage caused by such failure, and then only to the extent thereof.  In the case of a Claim brought pursuant to Sections 8.2(a)(i) or 8.2(a)(ii) involving the assertion of a claim by a third party (whether pursuant to a lawsuit, other legal action or otherwise, a “Third Party Claim”), the  Buyer shall, without derogating from the rights of the relevant Seller to defend himself/herself and the rights thereof, determine and conduct the defense, compromise or settlement of such Third Party Claim, provided however, that Buyer shall not agree to any settlement or compromise relating to Seller(s) or affecting a Seller or Sellers' rights without the prior written consent of such Seller(s), which consent shall not be unreasonably withheld; and (a) all reasonable expenses relating to the defense of such Third Party Claim shall be borne and paid exclusively by the relevant Indemnifying Party; (ii) the Indemnifying Party shall make available to the Buyer any documents and materials in the possession or control thereof that may be necessary to the defense of such Third Party Claim; and (c) the  Buyer shall keep the  relevant Seller and the Sellers’ Representative informed of all material developments and events relating to such Third Party Claim.  The respective Indemnifying Party shall be liable for any settlement of any Third-Party Claim affected pursuant to and in accordance with this Section 8.4 and for any final judgment (subject to any right of appeal). If there is a Third Party Claim that, if adversely determined would give rise to a right of recovery for Damages hereunder, then any amounts incurred by the respective Indemnified Party in the defense of such claim conducted in good faith, regardless of the outcome of such claim, shall be deemed “Damages” hereunder.  In the event a Claim for indemnification is made against all Sellers' Sellers' Representative shall act as representative of all Sellers for the purpose of this Section 8.4.

 

  

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8.5           Sellers' Representative. 

 

(a)           Sellers' Representative.  The Sellers hereby appoint Mr. Haim Lasser as their agent for purposes of this Agreement (the “Sellers' Representative”), and Mr. Haim Lasser hereby accepts such appointment as the Sellers' Representative. Sellers' Representative may be removed and a new Sellers' Representative may be appointed, with the written consent of the Majority Sellers.

 

(b)           Each of the Sellers hereby grants to the Sellers’ Representative the absolute and unrestricted right, power and authority to execute, deliver, acknowledge, certify and file on behalf of such Seller any and all documents that the Sellers’ Representative may, in its sole discretion, determine to be necessary, desirable or appropriate, in such forms and containing such provisions as the Sellers’ Representative may, in its sole discretion, determine to be appropriate, in performing its duties. Sellers' Representative's duties shall be:  as contemplated by ‎Article 8, to exercise  Sellers' rights under Sections 2.2(c)(ii) and 6.14.2, and as specifically set forth in this Agreement, and to negotiate execute, deliver and amend the Paying Agent Agreement. Sellers' Representative shall inform all Sellers of communications thereof with the Buyer. The authority and power of attorney granted to Sellers' Representative hereunder  shall survive the death or incapacity of any of the Sellers.

 

(c)           No bond shall be required of the Sellers' Representative, and the Sellers' Representative shall not receive compensation for his services.  Notices or communications to or from the Sellers' Representative shall constitute notice to or from each of the Sellers. If the Sellers' Representative shall resign from duty, die, become disabled or otherwise be unable to fulfill his responsibilities as agent of the Sellers, then the Sellers shall, within 30 days after such death or disability, appoint a successor agent and, promptly thereafter, notify the Buyer of the identity of the Sellers' Representative.  Any such successor shall become the “Sellers' Representative” for purposes of this Agreement.  If, for any reason, there is no Sellers' Representative at any time, all references herein to the “Sellers' Representative” shall be deemed to refer to the Sellers.

 

(d)           Exculpation; Costs.  The Sellers' Representative shall not be liable for any act done or omitted hereunder as Sellers' Representative while acting in good faith and in the exercise of reasonable judgment, and any act done or omitted pursuant to the advice of counsel shall be conclusive evidence of such good faith.  The Sellers shall, jointly and severally, indemnify the Sellers' Representative and hold him harmless against any loss, liability or expense incurred without gross negligence or bad faith on the part of the Sellers' Representative and arising out of or in connection with the acceptance or administration of his duties hereunder. The Sellers shall bear, in accordance with their Pro Rata Portions, any costs and expenses incurred by the Sellers' Representative in the performance of his role hereunder.

 

  

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(e)           Actions of the Sellers' Representative.  A decision, act, consent or instruction of the Sellers' Representative in the matters set forth in Section 8.5(b) above, shall constitute a decision for all of the Sellers, and shall be final, binding and conclusive upon each of such Seller and the Buyer may rely exclusively upon any such decision, act, consent or instruction of the Sellers' Representative as being the decision, act, consent or instruction of every such Seller. Sellers' Representative shall keep the Sellers' informed of his actions under this Agreement.

 

ARTICLE 9

TERMINATION

 

9.1           Termination.  Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated prior to the Closing in one of the following ways:

 

(a)           by mutual written consent of the Sellers holding at least 75% of the Sellers' Shares as for the date of execution of this Agreement and the Buyer. The Company's consent shall be required, in addition to the above detailed consents, in the event of any amendment to Article 4;

 

(b)           by the Buyer, if any of the conditions contained in Section 7.1 shall have become incapable of fulfillment (other than as a result of a breach of this Agreement by the Buyer) which is not cured within 10 days after the Buyer gives the Sellers' Representative and, if applicable, the Company written notice identifying in reasonable detail the circumstances which rendered such condition incapable of fulfillment;

 

(c)           by the Sellers holding at least 75% of the Sellers' Shares as for the date of execution of this Agreement , if any of the conditions contained in Section 7.2 shall have become incapable of fulfillment (other than as a result of a breach of this Agreement by the Sellers) which is not cured within 10 days after the Sellers' Representative  gives the Buyer written notice identifying in reasonable detail the circumstances which rendered such condition incapable of fulfillment; or

 

(d)           by either the Sellers' Representative or the Buyer, if any court or Governmental Authority has issued a final and non-appealable Order permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement or if the consummation of the transactions contemplated by this Agreement is otherwise prohibited by Law.

 

9.2           Effect of Termination.  In the event of the termination of this Agreement pursuant to Section 9.1, this Agreement shall be of no further force or effect (and, except as provided in this Section 9.2 and in Section 6.6, there shall be no liability or obligation hereunder (including for costs and expenses incurred by the other Parties in connection with this Agreement or the transactions contemplated hereby) on the part of any of the Parties or their respective officers, directors, shareholders or Affiliates); provided, however, that (a) the provisions of this Section 9.2, Section 6.6 and Article 10 shall survive the termination of this Agreement and shall remain in full force and effect, and (b) the termination of this Agreement shall not relieve any Party from any liability for any willful breach of any representation, warranty or covenant contained in this Agreement.

 

  

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ARTICLE 10

MISCELLANEOUS

 

10.1           Notices.  All notices and communications to a Party hereunder shall be made in writing and shall be deemed to have been adequately given if (a) delivered in person (in a manner through which delivery may be verified), (b) sent by facsimile transmission at the facsimile number set forth below, (c) sent by nationally recognized overnight delivery service or (d) mailed, certified mail, return receipt requested, to such Party at its address set forth below (or such other address as it may from time to time designate in writing to the other Parties hereto):

 

If to the Company, to:

Rakuto Bio Technologies Ltd .

5 Ha'Carmel St., Yokneam, Israel

Facsimile:  04- 9594077

Attn: CEO

 

If to the Buyer, to:

Syneron Medical Ltd.

Industrial Zone

Tavor Building

P.O.B. 550

Yokneam Illit 20692

Israel

Attention:  CFO

Facsimile:  972-73-244-2202

with a copy (which shall not constitute notice) to:

Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.

One Azrieli Center, Round Building

Tel Aviv 67021

Israel

Attention:  Einat Meisel, Adv.

Facsimile:  972-3-607-4411

If to the Sellers' and/or to Sellers' Representative, to:

Mr. Haim Lasser

Moran 12, Kfar Saba, Israel

e-mail:  Hlasser@netvision.net.il

 

If to any Seller, to its address set forth on the applicable signature page hereto.

 

Any such notice shall be deemed to have been given when received.

  

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10.2           Entire Agreement; Amendments and Waivers.  This Agreement, together with the Ancillary Agreements and all Exhibits and Schedules hereto and thereto, and constitute the entire agreement among the Parties pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties  No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the Buyer and by the Sellers holding at least 75% of the Sellers' Shares as for the date of execution of this Agreement , and (i) if relates to rights and/or obligations of the Company- also by the Company; and (ii) if related to specific Seller or derogates  from any rights applicable thereto under this Agreement- also by such Seller.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

 

10.3           Assignment.  Neither this Agreement nor any of the rights or obligations of the Company or the Sellers hereunder may be assigned by the Company or the Sellers without the prior written consent of the Buyer; all subject to the provisions of Section 10.7.  The Buyer may, subject to the relevant terms and conditions of this Agreement, and without any effect on Sellrs' Rights hereunder, assign any or all of its rights and obligations under this Agreement (including its indemnification rights under Article 8), in whole or in part, to any other Person without obtaining the consent or approval of any other Party hereto or of any other Person; provided however   that any assignee of Buyer shall assume all of Buyer's respective obligations (including payment obligations, and with respect to Royalty Payments, in accordance with the provisions of Section 2.2(c)(iii)), shall abide by the terms of this Agreement that are applicable to Buyer, and Buyer shall remain liable for the performance by such assignee. Buyer shall provide Sellers' Representative a prior written notice of at least 10 Business Days prior to any such assignment, which notice shall include the name of assignee and a detail of assurances agreed in compliance with the provisions of this Section 10.3.

 

10.4           Choice of Law; Jurisdiction.  This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the Laws of the State of Israel, without giving effect to any choice of Law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of Israel. Any dispute arising under or in relation to this Agreement shall be resolved exclusively in the competent court in Tel Aviv, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such court.

 

10.5           Attorney Fees.  If any Party hereto brings an action to enforce its rights under this Agreement in accordance with the provisions hereof, the prevailing Party shall be entitled to recover its actual out-of-pocket costs and expenses, including reasonable attorneys’ fees reasonably incurred in connection with such action, including any appeal of such action.

 

10.6           Invalidity.  In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.

 

  

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10.7           No Third Party Beneficiaries.  Sellers' rights under this Agreement shall inure to the benefit of their heirs, successors and permitted assigns. Except as otherwise expressly set forth in this Agreement, nothing in this Agreement will be construed as giving any Person, other than the Parties hereto and their respective heirs, successors and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof.

 

10.8           Remedies Cumulative; Specific Performance.  Subject to the provisions of ‎Article 8 above, the rights and remedies of the Parties hereto shall be cumulative (and not alternative).  The Parties hereto agree that, in the event of any breach or threatened breach by any Party to this Agreement of any covenant, obligation or other provision set forth in this Agreement for the benefit of any other party to this Agreement, such other Party shall be entitled (in addition to any other remedy that may be available to it) to seek (a) a decree or Order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision, and (b) an injunction restraining such breach or threatened breach.

 

10.9           No Strict Construction.  The Parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement, this Agreement shall be construed as if drafted jointly by the Parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of authoring any of the provisions of this Agreement.

 

10.10         Headings.  The headings of Articles and Sections herein are inserted for convenience of reference only and shall be ignored in the construction or interpretation hereof.

 

10.11         Counterparts.  This Agreement may be executed in one or more counterparts and signatures may be delivered by facsimile or other electronic transmission, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Signature Pages Follow]

  

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IN WITNESS WHEREOF, each Party hereto has executed this Agreement or caused this Agreement to be duly executed on its behalf by its officer thereunto duly authorized, as of the day and year first above written.

 

	 	
COMPANY:

RAKUTO BIO TECHNOLOGIES LTD.

By: /s/ Haim Lasser

Name:  Haim Lasser

Title:  CEO

By: /s/Michal Drayman

Name:  Michal Drayman

Title:  CFO

BUYER:

SYNERON MEDICAL LTD.

By: /s/ Louis Scafuri

Name:  Louis Scafuri

Title: CEO

 

SELLERS' REPRESENTATIVE:

MR. HAIM LASSER

/s/ Haim Lasser

 

  

36

  

	 	
SELLERS:

SELLER’S NAME: Reuven Gershony

SIGNATURE: /s/ Reuven Gershony

 

Address: *    *    *

Facsimile: *    *    *

 

  

37

  

 

	 	
SELLERS:

SELLER’S NAME: Shelly Gershoni

 

SIGNATURE: /s/ Shelly Gershoni

 

Address: *    *    *

Facsimile: _______

 

  

38

  

 

	 	SELLERS: 

SELLER’S NAME: Ron Gershoni

SIGNATURE: /s/ Ron Gershoni

 

Address: *    *    *

Facsimile: *    *    *

 

  

39

  

	 	
SELLERS:

SELLER’S NAME: Eric Gershoni

SIGNATURE: /s/ Eric Gershoni

Address: *    *    *

Facsimile: *    *    *

 

  

40

  

	 	

SELLERS:

SELLER’S NAME: Isaac Gershoni

SIGNATURE: /s/ Isaac Gershoni

Address: *    *    *

Facsimile: *    *    *

  

41

  

	 	

SELLERS:

SELLER’S NAME: Shimon Eckhouse

SIGNATURE: /s/ Shimon Eckhouse

Address: *    *    *

Facsimile: *    *    *

 

  

42

  

 

	 	

SELLERS:

SELLER’S NAME: Eli Unger

SIGNATURE: /s/ Eli Unger

 

Address: *    *    *

Facsimile: *    *    *

 

  

43

  

	 	
SELLERS:

SELLER’S NAME: Bella Krinfeld

SIGNATURE: /s/ Bella Krinfeld

 

Address: *    *    *

Facsimile: *    *    *

  

44

  

	 	

SELLERS:

SELLER’S NAME: Haim Lasser

SIGNATURE: /s/ Haim Lasser

 

Address: *    *    *

Facsimile: *    *    *

 

  

45

  

	 	

SELLERS:

SELLER’S NAME: Dr. Paula Adriana Belinsky

SIGNATURE: /s/ Dr. Paula Adriana Belinsky

 

Address: *    *    *

Facsimile: *    *    *

  

46

  

	 	

SELLERS:

SELLER’S NAME: Yoram Karmon

SIGNATURE: /s/ Yoram Karmon

 

Address: *    *    *

Facsimile: *    *    *

 

  

47

  

	 	

SELLERS:

SELLER’S NAME: Sara Brenner

SIGNATURE: /s/ Sara Brenner

 

Address: *    *    *

Facsimile: *    *    *

 

  

48

  

	 	

SELLERS:

SELLER’S NAME: Michal Drayman

SIGNATURE: /s/ Michal Drayman

 

Address: *    *    *

Facsimile: *    *    *

 

  

49

  

	 	

SELLERS:

SELLER’S NAME: Orit Tal-Shmayovits

SIGNATURE: /s/ Orit Tal-Shmayovits

 

Address: *    *    *

Facsimile: *    *    *

 

  

50

  

	 	

SELLERS:

SELLER’S NAME: Shaul Cohen

SIGNATURE: /s/ Shaul Cohen

 

Address: *    *    *

Facsimile: *    *    *

  

51

  

Exhibit A

 

FORM OF GENERAL RELEASE

 

This General Release (this “General Release”) is being executed and delivered as of ____________, 2012, on behalf of [________] (the “Releasor”) to and in favor of, and for the benefit of, Syneron Medical Ltd., an Israeli company (the “Buyer”); Rakuto Bio Technologies Ltd., an Israeli company (the “Company”); and the other Releasees (as defined in Section 2).

 

Recitals

 

A.           Buyer intends to purchase all of the outstanding Seller Shares of the Company pursuant to the terms of, and subject to the conditions set forth in, the Share Purchase Agreement, dated as of ____________, 2012 (the “Purchase Agreement”), by and among Buyer, the Company, the Sellers named therein and the Seller Representative (the “Transaction”).  Capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Purchase Agreement.

 

B.           In connection with the Transaction and as a condition to the consummation of such Transaction, Buyer has required that the Releasor enter into this General Release, and the Releasor is entering into this General Release in order to induce Buyer to consummate the Transaction.

 

Agreement

 

1.           Release.  The Releasor, for himself and for each of the Associated Parties, hereby absolutely, generally, irrevocably, unconditionally and completely releases and forever discharges each of the Releasees from, and hereby irrevocably, unconditionally and completely waives and relinquishes, each of the Released Claims. The Releasor also hereby waives the benefits of, and any rights the Releasor may have under, any statute or common law principle of similar effect in any jurisdiction for recourse for any Released Claim.

 

2.           Definitions.

 

(a)           The term “Associated Parties” shall mean and include:  (i) the Releasor’s predecessors, successors, executors, administrators, trusts, spouse, heirs and estate; (ii) the Releasor’s past, present and future assigns and representatives; (iii) each entity that the Releasor has the power to bind (by the Releasor’s acts or signature) or over which the Releasor directly or indirectly exercises control; and (iv) each entity of which the Releasor owns, directly or indirectly, a majority of the outstanding equity, beneficial, proprietary, ownership or voting interests.

 

(b)           The term “Releasees” shall mean and include: (i) Buyer; (ii) the Company; (iii) each of the Subsidiaries of Buyer; and (iv) the successors and past, present and future assigns, directors, officers, employees, agents, attorneys and representatives of the respective entities identified or otherwise referred to in clauses “(i)” through “(iii)” of this sentence, other than the Releasor.

 

  

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(c)           The term “Claims” shall mean and include all past and present disputes, claims, controversies, demands, rights, obligations, promises, debts, liabilities, actions, counterclaims, covenants, contracts, compensation and causes of action of every kind and nature, whether matured or unmatured, absolute or contingent (including any unknown, unsuspected or undisclosed claim) (i) that may be asserted or exercised, or indirectly or beneficially possessed or claimed, by the Releasor or any of such Releasor’s Associated Parties in the Releasor’s (or such Associated Party’s), except in Releasor's capacity as officer, employee and/or consultant of the Company or which relate to or arise from the Releasor's or such Releasor's Associated Parties' prior relationship with the Company or (ii) that is based upon any breach of any express, implied, oral or written contract or agreement between the Company and the Releasor (or any of such Releasor’s Associated Parties).

 

(d)           The term “Released Claims” shall mean and include each and every Claim that (i) the Releasor or any Associated Party may have had in the past, may now have or may have in the future against any of the Releasees, and (ii) has arisen or arises directly or indirectly out of, or relates directly or indirectly to, any circumstance, promise, agreement, activity, action, omission, event or matter occurring or existing on or prior to the Closing Date (excluding only the Releasor’s rights, if any, under the Purchase Agreement and the agreements entered into in connection therewith (including the Ancillary Agreements (as defined in the Purchase Agreement)).

 

3.           No Suits or Actions.  The Releasor hereby irrevocably covenants to refrain from asserting any claim or demand, or commencing, instituting or causing to be commenced, any suit, action or proceeding of any kind against any Releasee based upon any Released Claim.  If the Releasor brings any claim, suit, action or manner of action against any Releasee in legal or administrative proceedings, in arbitration or admiralty, at law, in equity, or mixed, anywhere in the world with respect to any Released Claim, then the Releasor shall indemnify such Releasee in the amount or value of any final judgment or settlement (monetary or other) and any related cost (including without limitation reasonable legal fees) entered against, paid or incurred by the Releasee.  Nothing in this General Release shall be construed as releasing any Releasee from any Claim the basis of which arises after the Closing Date.

 

4.           Governing Law.  This General Release shall be construed in accordance with, and governed in all respects by, the laws of the State of Israel (without giving effect to conflicts of law principles thereof).

 

(signature page follows)

 

  

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In Witness Whereof, the Releasor has caused this General Release to be executed as of the date first written above, effective as of the Closing Date.

 

	 	

______________________________________

 

Printed Name:____________________________

 

  

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Exhibit B

 

FORM OF SHARE TRANSFER DEED

 

The undersigned, _____________________ (hereinafter, the “Transferor”), for value received, hereby transfers to Syneron Medical Ltd. of Yokneam, Israel (the “Transferee”) ______________ Ordinary Shares and ______________ Series A-1 Preferred Shares, each having a nominal value of NIS 0.01, of Rakuto Bio Technologies Ltd., a company incorporated and registered under the laws of the State of Israel (hereinafter, the “Company”), to hold unto the Transferee, his executors, administrators and assigns under the conditions which the Transferor held the same at the time of execution hereof;

The Transferee hereby agrees to take the said shares subject to the conditions as aforesaid.

 

Effective as of the __ day of ____ 2012.

 

	
________________________

(Transferor)

 

By: ____________________

 

Name: ____________________

 

Title: ____________________

 

	  	
________________________________

(Transferee)

 

By: ____________________

 

Name: ____________________

 

Title: ____________________

 

  

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Exhibit C

 

PAYING AGENT AGREEMENT

 

May 30, 2012

Meitav Benefits Ltd.

Museum Tower, 4 Berkovitz St.

P.O.B. 18096

Tel-Aviv 61180

Ladies and Gentlemen:

 

Syneron Medical Ltd.  a company organized under the laws of the State of Israel (the "Buyer"), Rakuto Bio Technologies Ltd., a company organized under the laws of the State of Israel (the “Company”), all holders of securities of the Company except for Buyer (the “Sellers”) and Mr. Haim Lasser, as the Sellers' Representative, have entered into a Share Purchase Agreement dated May 30, 2012 (the “Purchase Agreement”).  Buyer has provided you with a true copy of the Purchase Agreement.  Capitalized terms used but not defined in this Agreement (as defined below) have the meanings ascribed to them in the Purchase Agreement.

 

(i)         Pursuant to the terms and conditions of the Purchase Agreement, at the Closing, (i) Buyer will purchase from the Sellers all Company shares owned by the Shareholders for an amount of cash as set forth in the Purchase Agreement, which includes the Initial Purchase Price, the Milestone Payments, and the Royalty Payments, all as detailed in the Purchase Agreement (collectively: the "Consideration"), (ii) all each Company Option and Warrant (whether vested or unvested) shall be cancelled immediately upon the Closing Date; provided however that, each Company Option and Warrant (such Company Option and/or Warrant, a “Cashed-Out Option”) shall entitle the owner thereof to receive, with respect to each Company Ordinary Share underlying such Cashed Out Option, the respective Pro-Rata Portion of the Initial Purchase Price, the Milestone Payments and the Royalty Payments less the exercise price of such Company Option or Warrant, after giving effect to currency exchange. The term “Optionholders” refers to those Persons who are the holders of Options.

 

This Paying Agent Agreement (this “Agreement”) between Meitav Benefits Ltd. (“you”), Buyer the Company and the Sellers' Representative acting for the benefit of the Sellers (who may be replaced in accordance with the terms of the Purchase Agreement, and a notice will be provided to the Paying Agent), and Buyer confirms and sets forth the agreement among the parties hereto that you will act as the Paying Agent in connection with the payment of the Consideration in accordance with the terms and conditions of this Agreement.  In such capacity you will make payment for, on behalf of Buyer pursuant to the terms of the Purchase Agreement.  In carrying out your duties as the Paying Agent in connection with the payment of Consideration, you agree to act in accordance with the following instructions:

 

1.      Payment Fund.  Buyer will provide you (A) within five (5) Business Days from the Closing Date, (B) at the first anniversary of the Closing and thereafter on each anniversary of the Closing Date, and until such time as set forth in the Purchase Agreement, and (C) on a quarterly basis, in accordance with the provisions of Section 2.2(c) the funds necessary to make the cash payments set forth in Section ‎2.2 of the Purchase Agreement to the Sellers (the “Payment Fund”).  The Payment Fund shall be held by you, in your capacity as Paying Agent for and on behalf of the Sellers and shall be disbursed [within three (3) Business Days thereafter] only pursuant to the terms and conditions of this Agreement.  You shall invest the Payment Fund in weekly bank deposits (the “Investment Fund”).  You shall have the right to liquidate any investments held in the Investment Fund in order to provide funds necessary to make required payments under this Agreement.  You shall have no liability for any loss sustained as a result of any investment made in accordance with this Section ‎1 or as a result of any liquidation of any investment prior to its maturity, except that you shall be responsible for any loss of the original amount of the Payment Fund.  You will reinvest all interest accrued on the Property (as defined below) and all interest accrued on any such accrued interest, if any (the “Earnings”) in that portion of the Investment Fund in which the Payment Fund was invested.  All Earnings will be the sole and exclusive property of Sellers and will be distributed to the Sellers pro-rata portion (of the respective Payment Fund not yet distributed)  at the time of distribution of the relevant portions of the Investment Fund thereto.

 

  

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2.      Sellers Payments.  At the Closing, and at the relevant times thereafter, as set forth in Section  1 above, Buyer will instruct you to pay by wire transfer of same-day funds the relevant Consideration (as set forth in the Spreadsheet attached as Exhibit A, which shall include with respect to each Seller: name, address, ID number, date of birth or incorporation, place of residence or incorporation, details regarding number of shares and/or options held, as applicable and the bank account details, and with respects to Optionholders, the date of grant, exercise price and tax route of each option) net of any applicable withholding taxes, to each Seller.  Such payment shall be made by wire transfer to the account specified in the Spreadsheet.  For the avoidance of doubt, your duties as Paying Agent are subject at all times to the instructions of Buyer and  Sellers' Representative acting jointly.

 

3.      Further Instructions.  You shall follow and act upon any written amendments, modifications or supplements to these instructions, and upon any further written instructions in connection with the payment of the Consideration, all as mutually agreed by Buyer and Sellers' Representative.

 

4.      Termination Date.  This Agreement shall terminate upon the earlier of (a) Buyer's and Sellers' Representative's joint notification to you in writing that no further payments shall be necessary; or (b) the termination of this Agreement upon the mutual written consent of Buyer, Sellers' Representative and you (such date, the “Termination Date”).  On the Termination Date, all cash remaining in the Payment Fund then held by you shall be delivered to Sellers' in accordance with the pro rata portion (of the respective Payment Fund not yet distributed) by wire transfer in immediately available funds.

 

5.      Israeli Tax Withholding.  

 

(a)                 You shall deduct and withhold Israeli Taxes from any Consideration payable to any Seller such amounts as determined in accordance with this Section 5.

 

(b)                 Consideration payable to each of the Sellers hereunder shall be paid to and retained by you for the benefit of each such Sellers until the Withholding Drop Date, being defined as three Business Days prior to the last day on which the Buyer and/or the Paying Agent is required to make submission of withheld amounts pursuant to the Israeli tax law(with respect to each payment event), during which time neither Buyer nor you shall withhold any Israeli Tax on such Consideration, except as provided below, and during which time each Sellers may obtain a Qualified Withholding Certificate, or, with respect to Optionholders covered by that [temporary] tax ruling dated May 30, 2012 (the "Ruling"), in accordance with the terms thereof, in form and substance reasonably acceptable to Paying Agent, (x) exempting Buyer from the duty to withhold Israeli Taxes with respect to such Seller, or (y) determining the applicable rate of Israeli Tax to be withheld from such Sellers. In the event that no later than five (5) Business Days before the Withholding Drop Date, a Sellers submits a Qualified Withholding Certificate, in form and substance reasonably acceptable to Buyer, you shall withhold and transfer to the Israeli Tax Authority ("ITA") such amount of withholding due from such Sellers as specified in such Qualified Withholding Certificate and the Ruling, and shall pay to such Sellers only the balance of the payment due to such Sellers that is not so withheld.  If any Seller (A) does not provide you with a Qualified Withholding Certificate, in form and substance reasonably acceptable to Buyer, no later than five (5) Business Days before the Withholding Drop Date, or (B) submits a written request with you to release his/her portion of the Consideration prior to the Withholding Drop Date and fails to submit a Qualified Withholding Certificate at or before such time, in form and substance reasonably acceptable to Buyer, then the amount to be withheld from such Seller’s portion of the Consideration shall be calculated according to the applicable withholding rate as determined by  Buyer, which amount shall be delivered to the ITA by you and shall pay to such Seller the balance of the payment due to such Seller that is not so withheld.

 

  

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(c)                 Notwithstanding the aforesaid, in the event that amounts required to be withheld exceed the portion of Consideration payable to a Seller subject to withholding, if applicable, Buyer shall transfer to you the balance between the amount to be withheld for such Seller and the Consideration payable to such Seller and you shall remit the entire amount to be withheld to the ITA.

 

6.      Other Provisions.  As Paying Agent you:

 

(a)                 shall have no duties or obligations other than those specifically set forth in this Agreement or as may be subsequently agreed to in a writing signed by Buyer and you, and no implied duties or obligations shall be read into this Agreement against you;

 

(b)                 shall not be required to initiate any legal action hereunder which might, in your judgment, involve any expense or liability, unless you shall have been furnished with such indemnity as shall be reasonably satisfactory to you;

 

(c)                 may rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telex, telegram or other document, or any note delivered to you, and believed by you to be genuine and to have been signed by the proper party or parties;

 

(d)                 may rely on and shall be protected in acting upon written or oral instructions from any authorized representative of Buyer, and if applicable, of Sellers' Representative, with respect to any action taken or omitted by you as Paying Agent; and/or

 

(e)                 may consult with counsel satisfactory to you and the written advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by you hereunder in good faith and in accordance with such advice or opinion of such counsel.

 

7.      Status of Property.  It is understood and agreed that any money, assets or property (collectively, the “Property”) to be deposited with or received by you as Paying Agent from Buyer constitutes a special, segregated account, held solely for the benefit of the Sellers, as their interests may appear, and the Property shall not be commingled with the money, assets or properties of you or any other person, firm or corporation.

 

8.      Fees.  For services rendered as Paying Agent hereunder, you shall be entitled to the compensation as specified in Exhibit B hereto.

 

9.      Notices.  All reports, notices, and other communications required or permitted hereunder shall be in writing (unless otherwise provided herein) and shall be deemed given when addressed and delivered by hand, facsimile transmission (with machine verification of receipt) or registered first-class mail, postage prepaid, as follows:

 

To the Paying Agent:

 

Meitav Benefits Ltd.

Museum Tower, 4 Berkovitz St.

P.O.B. 18096

Tel-Aviv 61180

Attention: Tzvika Bernstein, CEO

 

To Buyer :

 

Syneron Medical Ltd.

Industrial Zone

Tavor Building

P.O.B. 550

Yokneam Illit 20692

Israel

Attention:  CFO

Facsimile:  972-73-244-2202

 

  

58

  

With a copy, in the case of notice to Buyer, to:

 

Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.

One Azrieli Center, Round Building

Tel Aviv 67021

Israel

Attention:  Einat Meisel, Adv.

Facsimile:  972-3-607-4411

To Sellers' Representative, to:

Mr. Haim Lasser

Moran 12, Kfar Saba, Israel

e-mail:  Hlasser@netvision.net.il

 

10.        Recitals; Captions.  The recitals contained herein shall be taken as the statement of Buyer, and you assume no responsibility for the correctness thereof.  The captions and heading in this Agreement are provided for ease of reference only and shall not be used in interpreting or construing the meaning or intent of this Agreement.

 

11.        Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Israel (without regard to laws regarding choice of laws or conflict of any laws) and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of the parties hereto.

 

12.        Counterparts.  This Agreement may be executed in separate counterparts, each of which when executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

 

13.        USA. Patriot Act Compliance Information.   To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each Person who opens an account.  For a non-individual Person such as a business entity, a charity, a trust or other legal entity the Paying Agent will ask for documentation to verify its formation and existence as a legal entity. The Paying Agent may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.  Parent agrees to provide all such information and documentation as to itself as may be requested by the Paying Agent to ensure compliance with federal law.

 

14.        Amendments. This Agreement may only be amended with the written consent of Buyer, Sellers' Representative and yourself.

 

(The remainder of this page has intentionally been left blank)

 

  

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If the foregoing is acceptable to you, please acknowledge your receipt of and agreement to this Paying Agent Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy.

 

	 	
Very truly yours,

SYNERON MEDICAL LTD.

	 
	 	 	 
	 	By:   	 	 
	 	Name:	 	 
	
 

	Title:	 	 
	 	 	 	 
	 	
RAKUTO BIO TECHNOLOGIES LTD.

	 
	 	 	 	 
	 	By:     	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 
	 	 	 	 
	 	
HAIM LASSER

	 

 

Accepted and agreed as of the date first above written:

Meitav Benefits Ltd.

By: ____________          

Name: Tzvika Bernstein

Title:    CEO

Attachments:

Exhibit A    -    Spreadsheet

Exhibit B    -    Fees of Paying Agent

 

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