Document:

exv4w1

 

Exhibit 4.1

TopSpin Medical, Inc.

(“The Company”)

*

CERTIFICATE No. _

For
______ warrants (Series 3), registered in the name of the Registration Company of Bank
Hapoalim Ltd.

	 	1.	 	This Certificate witnesseth that the Company hereby grants for no consideration, a
quantity of up to __   ___   __ registered warrants (series 3), unlisted for trading, for the
purchase of up to ______ ordinary shares of US$0.001 par value each of the Company
(“warrants (Series 3)”), wherein each warrant (Series 3) entitles the holder to acquire one
(1) ordinary share of US$0.001 par value each of the Company.
	 
	 	2.	 	Every warrant (Series 3) shall entitle its holder to acquire in return for the exercise
price indicated in the supplement to this warrant, (hereinafter: “the warrant (Series 3)
overleaf conditions”) from the Company one ordinary share of the Company of US$0.001 par
value each (hereinafter: “the exercise share”), on any commerce day during a period
starting on the day in which the stock exchange approves the listing of the exercise shares
underlying the warrants (Series 3) and ending on June 30, 2009 at a cash exercise price of
NIS 0.84.
	 
	 	3.	 	The exercise ratio between the warrant (Series 3) and the exercise share (1:1) and the
exercise price shall be subject to adjustments as stipulated in the warrant (Series 3)
overleaf conditions.
	 
	 	4.	 	The warrants (Series 3) shall only be listed for trading on the stock exchange
subject to the provisions of the warrant (Series 3) overleaf conditions.
	 
	 	5.	 	It is stipulated that no exercise of warrants (Series 3) can take place pending the
approval of the stock exchange for the listing of the exercise shares underlying the
warrants (Series 3) for trading on the stock exchange.
	 
	 	6.	 	This warrant (Series 3) is issued pursuant to and in accordance with the warrant
overleaf conditions.

Signed on:                              

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Top Spin Medical, Inc. 	 
	 	 	 

 

 

	 	 	 	 	 

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TopSpin Medical, Inc. (“the Company”)

Overleaf Conditions

	1.	 	Definitions
	 
	 	 	The following definitions shall apply to terms used in this Warrant (Series 3):
	 
	 	 	 “Special Resolution”
	 
	 	 	A resolution passed (a) at a general meeting of the holders of warrants (Series 3) at a
majority of at least 75% of the votes participating in the vote.
	 
	 	 	Business Day
	 
	 	 	Any day on which the majority of banks in Israel are open for transactions.
	 
	 	 	Commerce Day
	 
	 	 	A day on which transactions are conducted on the stock exchange.
	 
	 	 	Exercise date or Exercise day
	 
	 	 	As defined in art 3.1 hereinbelow.
	 
	 	 	 “The Warrant Holders (Series 3)”
	 
	 	 	The persons whose names appear at the relevant time in the register of warrant (Series 3)
holders, and in the event of a number of joint holders, the joint holder whose name appears
first in the register.
	 
	 	 	Register 
	 
	 	 	The register of warrant (Series 3) holders.
	 
	 	 	The Stock Exchange
	 
	 	 	The Tel-Aviv Stock Exchange Ltd.
	 
	 	 	The Company Law
	 
	 	 	The Israeli Company Law, 1999

	2.	 	General

	 	2.1	 	The Company hereby issues for no consideration a quantity of up to ______
warrants (Series 3), registered but unlisted for trading, for the purchase of up to
______ ordinary

 

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	 	 	 	shares of $0.001 par value each in the Company (“the Series 3 Warrants”), wherein
each warrant (Series 3) entitles to the purchase of one (1) ordinary share of
$0.001 par value of the Company against payment of the exercise price defined
hereinbelow.

	 	2.2	 	Every warrant (Series 3) shall entitle its holder to acquire, in return for
the exercise price specified hereinbelow, one ordinary share of the Company of $0.001
par value (“the exercise share”) on any commerce day in the period starting on the day
in which the stock exchange approves the listing of the exercise shares underlying the
warrants (Series 3) for trading on the stock exchange and ending on June 30, 2009
(“the exercise period”), at an exercise price in cash of NIS 0.84 (“the exercise
price”). In the event of the deadline for exercise of the warrants (Series 3) falling
on a non-commerce day, the said deadline shall be deferred to the next commerce day.

	 	2.3	 	The exercise ratio between the warrant (Series 3) and the exercise share
(1:1) and the exercise price shall be subject to adjustments as stipulated in art. 4
hereinbelow.

	 	2.4	 	The Company may at any time allocate additional warrants (Series 3) without
restriction, at its sole discretion, without having to seek approval by the warrant
(Series 3) holders. The status of the additional warrants (Series 3) from the moment
of their issue shall be the same as that of the warrants (Series 3) under this
certificate. The warrants (Series 3) under this certificate and the additional
warrants (Series 3) (from the time of issue) shall constitute a single series to all
intents and purposes.

	 	2.5	 	Moreover, the Company may allocate warrants of a different class or other
securities, with or without inherent rights to the purchase of shares of the Company,
on such terms regarding redemption, interest, linkage differential, repayment rank in
case of liquidation and other conditions as the Company may deem fit, regardless of
whether superior, equal or inferior to the terms of the warrants (Series 3), the
Company being under no obligation to seek any approval from the warrant holders
(Series 3).

	 	2.6	 	Listing for Trade on the Stock Exchange

	 	 	 	The warrants (Series 3) are not listed for trading on the stock exchange. The
Company shall act, at its sole discretion, for listing the warrants (Series 3) for
trading on the stock exchange.

	 	2.7	 	Subject to any other provision of this warrant and any law, the Company
and/or a subsidiary of the Company and/or another corporation controlled by the
Company (“the acquiring corporation”) shall be entitled at any time to buy warrants
(Series 3) at their sole discretion at such price as they deem fit.

 

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	 	2.8	 	The warrants (Series 3) to be held as aforesaid by the acquiring corporation
shall constitute an asset of the acquiring corporation (and subject to the foregoing
in this article, the acquiring corporation may perform any operation in connection
with the warrants (Series 3), including sale thereof, from time to time, and if the
warrants (Series 3) are listed for trading on the stock exchange they shall not be
stricken off the trading on the stock exchange. everything subject to the provisions
of any law.

	 	2.9	 	The Company shall act, in its sole discretion, for registering the warrants
(Series 3) in the name of a registration company of one of the banks in Israel and
shall enter then as a non-registered security at the stock exchange clearing house
that shall provide clearing services for the warrants (Series 3), subject to the
proper permits from the Securities Authority and/or the stock exchange and/or the
stock exchange clearing house and/or any other authority for the purpose of making the
registration at the stock exchange clearing house. It is stipulated that as long as
the warrants (Series 3) remain registered as a non-registered security there shall be
no transfers of warrants (Series 3) except with approval by the Company.

	 	2.10	 	Linkage Conditions of the Exercise Price

	 	 	 	The exercise price shall not be linked.

	3.	 	Exercise of the Warrants (Series 3)

	 	3.1	 	Subject to getting the approval of the stock exchange for the listing of the
exercise shares underlying the warrants (Series 3) for trading, every warrant (Series
3) holder desiring to exercise his right to buy exercise shares by virtue of the
warrants (Series 3) held by him shall do so during the exercise period by way of
submitting an exercise notice to the Company on a form to be established by the
Company to this effect, at the registered office of the Company, and in the event of
an applicant not entered in the register of option holders (non-registered applicant)
 — to a stock exchange member through which he holds the warrants, payment of the
exercise price in cash, and return of the allocation letter, as proof of his
eligibility for the exercise. Once sent the exercise notice may not be cancelled or
modified. The person applying for exercise shall, whenever required by the Company to
do so, sign any documents necessary under the provisions of any law for granting the
exercise shares.

	 	 	 	The exercise day or exercise time shall be the day on which an exercise notice is
delivered to the Company in the event of a registered applicant, and in case of
submission of an exercise notice through a stock exchange member by a
non-registered applicant — the day

 

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	 	 	 	of receipt at the stock exchange clearing house of the exercise notice for the
warrant (Series 3) that meets all of the above requirements. To this effect, an
exercise notice received after 12:00 hrs shall be deemed to have been received
before 12:00 hrs on the following commerce day.

	 	 	 	The applicant shall, whenever required to do so by the Company or the registration
company, sign any additional document as shall be necessary under the provisions of
any law or the incorporation documents of the Company for validating the allocation
of the exercise shares.

	 	 	 	In the event of the applicant having failed to comply with all the conditions for
exercise of the warrant (Series 3), the exercise notice shall be deemed to be null
and void, and the warrants (Series 3) allocation letters and the money attached to
the exercise notice shall be returned to the applicant within two(2) business days
from the Company’s ruling that the said notice is null and void.

	 	 	 	An exercise notice may not be cancelled or amended. No right shall be granted to
exercise any fractional warrant (Series 3); however, an allocation letter for an
warrant (Series 3) may be split or transferred as provided in articles 7 and 8 of
this warrant.

	 	 	 	In the event of the deadline for exercise of warrants (Series 3) falling on a
non-commerce day, it shall be extended to the next commerce day.

	 	3.2	 	Stock Exchange Clearing House Regulations on the Timetable for Exercise of
Warrants

	 	 	 	If the warrants (Series 3) shall be registered as non-registered security or for
listing on the stock exchange, their exercise shall be subject to the following
stock exchange clearing house regulations, subject to the foregoing provisions. The
stock exchange clearing house regulations stipulate as follows.

	 	a.	 	Exercise notices received by 12:00 hrs at the office of a
stock exchange member shall be handed over by the said member to the stock
exchange clearing house not later than 12:00 hrs on the following commerce
day.
	 
	 	b.	 	On receipt of an exercise note from a stock exchange member
by 12:00 hrs, the stock exchange clearing house shall debit the said stock
exchange member with its money equivalent and shall accordingly credit the
registration company not later than 12:00 hrs on the following commerce day
after receiving the said notice.
	 
	 	c.	 	On receiving a credit note pursuant to the foregoing
sub-article (b) by 12:00 hrs, the registration company shall transfer the
exercise notice to the registered office of the Company not later than 12:00
hrs on the following commerce day.

 

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	 	d.	 	Any of the aforementioned notices received after 12:00 hrs on
a commerce day shall be deemed to have been received before 12:00 hrs on the
following commerce day.

	 	 	 	Notwithstanding the foregoing, on the exercise deadline — and if the latter is not
a commerce day, then on the following commerce day — the stock exchange clearing
house members shall submit to the stock exchange clearing house the final exercise
applications by 09:00 hrs. The exercise shall take place on the same day. A
clearing house member who has failed to submit an application by the said time
shall be deemed by the clearing house to have failed to exercise his right,
whereupon the warrant shall expire and become null and void.

	4.	 	Adjustments and Participation in the Issue of Rights, Bonus Shares, and Distribution of
Dividend.

	 	4.1	 	The following provisions shall apply to the warrants (Series 3) from the day
of grant of the warrants (Series 3) to the end of the exercise period in any case of
issue of bonus shares.

	 	4.1.1	 	In the event of the Company distributing bonus shares the
date of record for the distribution of which is prior to the exercise day, the
exercise shares to which the warrant (Series 3) holder is entitled on exercise
of the warrants (Series 3) and the payment of the exercise price shall be
joined by ordinary shares of the Company for every warrant (Series 3) in the
number to which he would have been entitled as bonus shares if he had
exercised the warrant (Series 3) prior to the day of record for the right to
obtain bonus shares.
	 
	 	 	 	The exercise price of all warrants (Series 3) shall
remain unchanged as aforesaid. The provisions with regard to the
exercise shares shall apply also to the shares to be added to the exercise
shares, subject to any necessary changes. In the event of adjustments
pursuant to this sub-article, the applicant shall not be entitled to obtain
any fractional share, and the provisions of article 5 hereinbelow shall
apply. This adjustment method is not subject to change.
	 
	 	4.1.2	 	In the event of the shareholders of the Company being
offered — by way of rights — rights to the purchase of any securities
whatsoever, the number of shares arising from the exercise of the warrants
shall be adjusted to the bonus component of the rights as evident in the ratio
between the share price on the stock exchange on the day of record and the “ex
Rights” basic share price. In case of adjustment pursuant to this sub-article,
the applicant shall not be entitled to obtain any

 

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	 	 	 	fractional share and the provisions of article 5 hereinbelow shall apply.
This adjustment method is not subject to any change.
	 
	 	 	 	The number of exercise shares due to a warrant (Series 3) holder shall only
be adjusted in case of distribution of bonus shares and rights but not in
the event of any other issues, including an issue to interested parties.

	 	4.1.3	 	If the Company pays dividend to its shareholders,
immediately after the date of record for the right to obtain cash dividend the
exercise price of the outstanding warrants (Series 3) shall be adjusted by
multiplication by the ratio between the basic “ex Dividend” share price and
the closing share price established at the stock exchange for the Company
shares on the day of record for eligibility for dividend. The Company shall
announce by an immediate report and an announcement to the stock exchange
clearing house the adjusted exercise price not later than the day on which
trading with the “ex dividend” shares begins.

	5.	 	Starting from the date of grant of the warrants (Series 3) and as long as the
warrants (Series 3) have not been exercised or expired, the following provisions shall
apply:

	 	5.1	 	The Company shall reserve sufficient amount of ordinary share in its
registered share capital to enable the right of exercise and if required will cause
for increasing its registered share capital.
	 
	 	5.2	 	If the Company shall make a split or a reverse-split of its issued share
capital, the number of exercise shares to be issued upon exercise of warrants (Series
3) shall be increased or decreased, respectively.
	 
	 	5.3	 	The Company shall not distribute bonus shares other than ordinary shares.
	 
	                                                       
	 	5.4	 	Within 10 days from each adjustment in accordance with art. 4 above, the
Company shall give a notice regarding the rights of the warrant (Series 3) holders to
exercise their warrants (Series 3), including the exercise price, the exercise period,
number of exercise shares underlying on warrant and the number and type of bonus
shares to which they are entitled in both of the following ways:
	                                                        

	 	5.4.1	 	By sending a notice in Hebrew and English by registered mail to the latest address of the holder of the warrant (Series 3) as entered in the register. This alternative is only applicable
to warrant (Series 3) holders entered personally in the register, i.e. not by means of a nominee company; and, in addition
	 
	 	5.4.2	 	By an advertisement in Hebrew inserted in two large-distribution Hebrew daily newspapers in Israel.

	 	5.5	 	The Company shall make available at its registered office a copy of the
annual reports and the intermediate financial statements for the warrants (Series
3) holders in its usual business hours. Following a request of a holder registered in
the warrants (Series 3) register, the Company shall send him a copy of the said report
to the address sent by him.
	 
	 	5.6	 	The Company shall not adopt a resolution or declare a distribution of
dividend or bonus shares or rights offering, for which the date if record for the
relevant right is prior to the date of the

 

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	 	 	 	resolution, and the date of record shall be no less than ten (10) business days after
adopting such resolution or such decleration.

	 	5.7	 	In case of adopting a resolution of voluntary liquidation, each warrant
(Series 3) holder registered in the warrants (Series 3) register shall be considered
as if he used his exercise right, right prior to adopting such resolution. In such
case warrants (Series 3) holders shall be entitled to the amount to which they were
entitled if prior to adopting such resolution they would have held the exercise shares
underlying their warrants (Series 3) minus the exercise price of the warrants (series
3).

	 	5.8	 	The Company shall refrain from any action, including the distribution of
bonus shares, that may decrease the price of the exercise share below the par value.

	6.	 	Allocation of Exercise Shares

	 	6.1.1	 	The Company shall proceed as follows with regard to the allocation
of exercise shares. On the first business day after the exercise day the Company
shall, by means of share certificates for applicants directly holding warrants
(Series 3) and for the registration company for holders of warrants (Series 3)
through the registration company, allocate the exercise shares due to them and
after approval of the listing of the exercise shares on the stock exchange, the
Company shall immediately approach the stock exchange with an application for
causing the listing of the exercise shares as speedily as possible thereafter.

	 	6.1.2	 	Whenever required to do so, the applicant shall such additional
document as may be required under the provisions of any law and the Company
guidelines for validating the allocation of the exercise shares.

	 	6.1.3	 	The applicant shall not be entitled to obtain fractional exercise
shares. Any remaining surpluses of exercise shares shall be sold by the trustee to
be appointed by the Company for this purpose at the stock exchange within a period
of one month from the allocation date, and the net proceeds, after deduction of
the sale expenses and the relative exercise price, and after deduction of other
commissions and compulsory payments, if any, shall be paid to the entitled person
within fourteen (14) days from the sale date. The Company shall not send checks to
the entitled persons for amounts of less than NIS 50; these can be collected at
the Company office.

	 	6.1.4	 	Immediately after the exercise date, the exercise shares shall be
equal in every way to the ordinary shares in the share capital of the Company and
shall entitle their owners

 

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	 	 	 	to the full amount of dividend in cash or bonus shares, as well as to every
other distribution for which the date of record is from the exercise date
onward.

	7.	 	Transfers

	 	 	 	The allocation letters for warrants (Series 3) are transferable subject to submission
of appropriate transfer deeds to the Company. The transfer deeds shall be of the same
format as share transfer deeds. The Company shall keep in its registered office a
register containing a list of the holders of warrants (Series 3) registered in the
Company.
	 
	 	 	 	The articles of association of the Company with regard to the transfer of wholly paid
up shares shall apply, mutatis mutandis, to the transfer of warrant (Series 3)
allocation letters. It is stipulated that as long as the warrants (Series 3) shall be a
non-registered security, any transfer thereof is subject to approval by the Company.

	8.	 	Splitting of Allocation Letters

	 	 	 	Any allocation letter on warrant (Series 3) may be split into a number of allocation
letters where the sum total of warrants (Series 3) covered by them equals the number of
warrants (Series 3) included in the allocation letter whose split is requested. The
splitting shall take place on the basis of a splitting application signed by the
registered holder of the respective allocation letter, or his legal representatives,
and it shall be submitted to the Company at its registered office together with the
allocation letter whose splitting is requested. All expenses involved in the splitting,
including stamp tax and other mandatory payments, if any, shall be paid by the
applicant.

	9.	 	Notices

	 	 	 	Unless expressly provided otherwise in the warrants (Series 3) and except in the cases
where this warrant (Series 3) stipulates otherwise, notices by the Company to the
holders of warrants (Series 3) shall be made in both of the following ways at the
discretion of the Company:

	 	9.1	 	By sending a notice in Hebrew and English by registered mail to the latest address of the holder of
the warrant (Series 3) as entered in the register; and any notice so mailed shall be
deemed to have been delivered to the warrant (Series 3) holder within three business
days from being so mailed. This alternative is only applicable to warrant (Series 3)
holders entered personally in the register, i.e. not by means of the nominee company;
and, in addition

 

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	 	9.2	 	By an advertisement in Hebrew inserted in two large-distribution Hebrew daily
newspapers in Israel. A notice so published shall be deemed to have been delivered on
the day of its publication.

 

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	10.	 	Waivers, Settlements, Changes of the Warrant (Series 3)

	 	 	 	The Company may, by way of a special resolution by a separate general meeting of the
holders of warrants (Series 3), enter into settlements with the warrant (Series 3) holders
with regard to any right or claim on their part and/or introduce any amendment,
modification or settlement regarding their rights or any other provision contained in the
warrant (Series 3).
	 
	 	 	 	Notwithstanding the foregoing, if the warrants
(Series 3) are listed in the Stock Exchange no change of the terms of the warrants (Series 3) with
regard to the exercise price, the exercise period can be made, except a change of the
exercise period and/or the exercise price of the warrants in the course of a settlement or
composition, approved by court, pursuant to art. 350 of the Company Law.
	 
	 	 	 	All the provisions of the articles of incorporation of the Company with regard to general
meetings of the company shall be regarded as referring to to separate general meetings of
warrant (Series 3) holders as if the warrants (Series 3) constitute a class of shares in
the share capital of the Company; however, the quorum at a meeting of the holders of
warrants (Series 3) shall be at least two (2) warrant (Series 3) holders attending in
person or by proxy, holding one third or more of the existing warrants (Series 3). In the
absence of quorum at a deferred meeting held after notifying the warrant (Series 3) holders
of the holding of the deferred meeting, where it is stated that at least two (2) of the
warrant (Series 3) holders who are attending in person or are represented by proxy shall
constitute quorum, two (2) warrant (Series 3) holders attending in person or by proxy shall
constitute quorum at the deferred meeting as aforesaid. Voting at general meetings of the
warrants (Series 3) shall be by ballot only, every warrant entitling to one vote. In this
context there shall be no distinction between persons who are interested parties in the
Company and those who are not. It is stipulated that the quorum for the purpose of holding
the general meetings of the warrant (Series 3) holders for passing a special resolution and
in the count of votes for such special resolution shall not include the votes of warrant
(Series 3) holders who are holders of controlling interest in the Company, companies
controlled by holders of controlling interest in the Company or companies related to the
Company according to the definitions of these terms in the Securities Law, except those of
the foregoing who are investors belonging to the investors named in the First Supplement to
the Securities Law (concerning art. 15(a)(b)(1) of the Securities Law), who is not an
investor for himself, his vote will be counted.
	 
	 	 	 	The following procedure shall apply to all cases of convening a general meeting of warrant
(Series 3) holders with regard to unregistered holders:
	 
	 	 	 	Voting at meetings of warrant (Series 3) holders of the Company, pending the issuance of
detailed instructions and/or arrangements in regulations of the stock exchange clearing
house with regard to

 

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	 	 	 	voting at meetings of companies incorporated outside Israel and issued at the Tel-Aviv
Stock Exchange Ltd.:
	 
	 	 	 	Warrant holders holding a warrant (Series 3) with a stock exchange member on the date of
record, the said warrant being included among the warrants (Series 3) registered in the
name of the Registration Company of Bank Hapoalim Ltd. (“registration company”) who desire
to vote at a general meeting shall approach the stock exchange member with whom their right
to warrant (Series 3) is registered and request that the stock exchange member act through
the stock exchange clearing house for obtaining a power of attorney from the registration
company in his name or in the name of an authorized person on his behalf.
	 
	 	 	 	A warrant (Series 3) holder with an warrant (Series 3) in his name held by a stock exchange
member on the date of record may only participate in and vote at the meeting by presenting
such a power of attorney, and he may not prove his ownership or take part in the vote by
presenting a proof of ownership (as defined in the Company Law) from a stock exchange
member on his holdings of warrant (Series 3) on the date of record.
	 
	 	 	 	The registration company shall approach the stock exchange clearing house with a request to
certify that the approvals of the applications for power of attorney handed over to it as
aforesaid, according to a list of the requested quantity with every clearing house member,
were held on the date of record for the meeting by the clearing house member as indicated
on the list. After receipt of the said certification by the clearing house, the
registration company shall provide the warrant (Series 3) holders with a power of attorney
according to the respective applications, whereby the registration company empowers every
one of the unregistered warrant (Series 3) holders to vote at a general meeting at his sole
discretion with regard to the totality of warrants (Series 3) held by such holder, and also
to note that every one of them is entitled to deliver to the Company, not later than the
time of the meeting, a proxy on its behalf, empowering another person to vote on his
behalf.
	 
	 	 	 	In the event of issue of detailed guidelines and/or instructions as part of the stock
exchange clearing house regulations with regard to voting at meetings of companies
incorporated outside Israel and issuing on the Tel-Aviv stock exchange Ltd., the said
guidelines and/or instructions shall apply subject to its adjustment to the laws of the
State of Delaware.
	 
	 	 	 	Voting by proxy and/or appointment letter does not contradict the provisions of US law with
regard to voting at meetings.

	11.	 	Register of Warrant (Series 3) Holders

 

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	 	11.1	 	The Company shall manage in its registered office or shall cause others to do
so, a separate register of warrant (Series 3) holders, where the Company shall
indicate the names and addresses of the warrant (Series 3) holders and the number of
warrants (Series 3) held by them. All ownership transfers with regard to the warrants
(Series 3) shall also be entered in the register. The warrant (Series 3) holders shall
be entitled to inspect the register at any reasonable time subject to prior
appointment with the Company.
	 
	 	11.2	 	The Company is under no obligation to enter in the register any notice of
express, implied or assumed trusteeship, or any mortgage or lien, or any equitable
right, claim, offsetting or any other right in connection with the warrants (Series
3). The Company shall only recognize the ownership of the person whose name appears on
the warrants (Series 3) on the condition that his legal inheritors, the administrators
of the estate or the executors of the will of the entered person and any person
entitled to the warrants (Series 3) following bankruptcy (and in case of a corporation
 — liquidation or winding up) of any registered owner shall be entitled to be
registered as their owner after submitting proof that in the opinion of the Company
managers is sufficient to demonstrate his right to be registered as the owner of the
said warrants (Series 3).
	 
	 	11.3	 	The Company may close the register from time to time for a period or periods
not exceeding an aggregate of thirty days annually.

	12.	 	General Provisions

	 	12.1	 	The warrant (Series 3) holders hereby acknowledge on receiving this warrant
(Series 3) that pursuant to the Securities Law, 1968, and art. 5 of the Securities
Regulations (Details Concerning Articles 15a through 15c of the Law), 2000, there
exist restrictions on the resale of warrants (Series 3) and of the exercise shares
until the date of their listing at the stock exchange, and on receiving the warrants
(Series 3) they undertake to comply with all of these restrictions as stipulated by
law. The said restrictions are as follows:

	 	12.1.1	 	Offering through the Stock Exchange of the warrants (Series 3) and the exercise shares underlying the warrants (Series 3)(hereinafter, together: “the Securities”) cannot
be made in the six month period starting on the date of issuance of the Securities (hereinafter: “the absolute restriction period”).
	 
	 	12.1.2	 	Offering through the Stock Exchange of the Securities can be made during the six consequent quarters starting at the end
of the absolute restriction period (hereinafter: “the additional periods”) only if at each of the said quarters in the additional periods the following two conditions
are fulfilled:
	 
	 	12.1.2.1	 	The amount of the Securities offered in the Stock Exchange in each Commerce Day is no greater than the average trading volume
in the Stock Exchange of the shares of the Company during the eight weeks period preceding the day of offering the Securities.
	 
	                                                       
	 	12.1.2.2	 	The amount of the Securities offered in the Stock Exchange in each quarter in the additional periods is no greater than 1% of the issued
and outstanding share capital of the Company.
	                                                        
	 
	                                                       
	 	 	 	 Issued and outstanding share capital for the purpose of this section is excluding shares underlying conversion or exercise of convertible securities which were still not converted
or exercised until the day of offering the Securities in the Stock Exchange.
	                                                        

	 	12.2	 	This section 12 also applies to Securities purchased during the absolute restriction period or the additional periods not in accordance with an Israeli
prospectus and not made through the Stock Exchange, including the shares underlying the Securities.
	 
	 	12.3	 	Meetings of the warrant (Series 3) holders shall be held as stated in art. 10
above.
	 
	 	12.4	 	The competent courts of the state of Delaware shall have sole jurisdiction with
regard to the warrant (Series 3) in accordance with the laws of the state of Delaware.exv10w25

 

CREDIT LINE AGREEMENT

This Credit Line Agreement (the “Agreement”), dated as of April 30, 2007, is made and entered
into by and among TopSpin Medical Inc., a corporation incorporated under the laws of the State of
Delaware (the “Company”) and Poalim IBI — Managing & Underwriting Ltd. (“IBI”).

The Company requires funding to finance its activities, and the parties have agreed that IBI will
make available to the Company a credit line in NIS amount equal to the amount of up to US$ 250,000
translated into NIS pursuant to the official representative rate of exchange of the US$ as
published by the Bank of Israel on the date such amount was actually transferred to the Company
(the “Principal Amount”), pursuant to the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, and intending to be
legally bound, IBI and Company agree as follows:

	 	1.	 	The Credit Line. On the basis of the representations and covenants made
by Company herein, IBI undertakes to make available to Company from and after the
date hereof a credit line of up to the Principal Amount (the “Credit Line”). The
Company shall be entitled, from time to time but not later than July 31, 2007 (the
“Repayment Date”), by advance written notice of two business days to IBI (the
“Notice”), to request that the Principal Amount not yet transferred to the Company,
or any part thereof, will be transferred to the Company’s bank account the details
of which will be provided to IBI together with the Notice, and IBI undertakes to
make the Principal Amount available to the Company as set forth herein. Any portion
of the Principal Amount provided to the Company shall be linked to the rate of
increase of the Consumer Price Index until the time of repayment and shall bear an
interest at the rate of 8% per annum, from the date of its actual payment to the
Company and until its repayment (the Principal Amount actually transferred to the
Company and all accrued and unpaid interest thereon shall be referred to herein,
collectively, as the “Loan Amount”). Notwithstanding the above, the Loan Amount will
be made available to the Company only after a loan in the amount of US$ 500,000 is
actually provided to the Company by certain controlling shareholders of the Company
(the “Shareholders Loan”).
	 
	 	2.	 	Repayment of the Loan Amount. The Loan Amount shall be repaid by the
Company not later than the Repayment Date. The Company may repay the Loan Amount or
any part thereof at any time prior to the Repayment Date, at its sole discretion.
For the avoidance of doubt, any part of the Principal Amount repaid to IBI prior to
the Repayment Date will again be available to the Company pursuant to the terms of
this Agreement until the Repayment Date.
	 
	 	3.	 	Credit Line Fees. Upon the transfer of the Shareholders Loan to the
Company the Company shall pay IBI one time cash fee in the amount of US$3,750.
	 
	 	4.	 	Use of Principal Amount. The Company undertakes that any Principal Amount
transferred to it by IBI shall be used to fund the day-to-day operations of the
Company. The Principal Amount shall not be used for the repayment of the
Shareholders Loan.

 

 

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	 	5.	 	Validity of Transaction. The Company declares that it has all requisite
power and authority to execute, deliver, and perform this Agreement. All necessary
corporate proceedings of the Company have been duly taken to authorize the
execution, delivery, and performance of this Agreement by the Company. This
Agreement, when duly executed and delivered by IBI, shall constitute the legal,
valid, and binding obligation of the Company, enforceable as to the Company in
accordance with its terms. The Company further represents and warrants to IBI that
it has good and valid title to all of the Pledged Shares (as defined below), free
and clear of all liens, security interests and other encumbrances.
	 
	 	 	 	IBI declares that it has all requisite power and authority to execute, deliver, and perform
this Agreement. All necessary corporate proceedings of IBI have been duly taken to authorize
the execution, delivery, and performance of this Agreement by IBI. This Agreement, when duly
executed and delivered by IBI, shall constitute the legal, valid, and binding obligation of
IBI, enforceable as to IBI in accordance with its terms.
	 
	 	6.	 	Security. As security to ensure the full and timely repayment of the Loan
Amount, the Company hereby creates and grants to IBI a security interest in 7,521
Ordinary Shares NIS 1.00 par value each of the Company’s wholly owned subsidiary,
TopSpin Medical (Israel) Ltd. (the “Subsidiary” and the “Pledged Shares”,
respectively), subject to the following terms and conditions:

	 	6.1.	 	In the event of any default in repayment of the Loan Amount, IBI shall
be entitled to take possession of the Pledged Shares and, with respect to the
Pledged Shares only, to exercise any and all rights afforded to a secured party
under any applicable law.
	 
	 	6.2.	 	The Company undertakes to execute any document required to register the
pledge of the Pledged Shares with the Israeli Registrar of Pledges.
Alternatively, at the request of IBI after the date hereof, the Company
undertakes to produce and execute such instruments as are necessary for IBI to
perfect a security interest in the Pledge Shares under the Uniform Commercial
Code in Delaware within 7 days of its request.
	 
	 	6.3.	 	Until the Loan amount was not fully repaid, the Subsidiary shall not
issue any securities of the Subsidiary reflecting pre-money valuation for the
Subsidiary of less than US$32,000,000, without the prior written consent of
IBI.
	 
	 	6.4.	 	Upon payment in full of the Loan Amount, the pledge and security
interest on the Pledged Shares shall be released, and IBI shall execute and
deliver to the Company an instrument acknowledging the termination of the
security interest hereunder.

	 	7.	 	Default. The Loan Amount will immediately become due and payable upon
any Event of Default as defined herein. The occurrence of any of the following shall
be an Event of Default:

	 	(a)	 	any material breach by the Company of any of its obligations or
representations under this Agreement;

 

 

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	 	(b)	 	the commencement by the Company of any liquidation proceedings or the
adoption of a winding up resolution by the Company, or the appointment of a
receiver or trustee over the whole or any part or the Company’s assets, or the
calling by the Company of a meeting of creditors for the purpose of entering into a
scheme or arrangement with them, and if any of the aforementioned actions or
proceedings is not canceled within sixty (60) days of its initiation; or
	 
	 	(c)	 	The levy of an attachment or the institution of execution proceedings
against the whole or a substantial part of the Company’s assets, where such
attachment or execution proceeding is not discharged within sixty (60) days; or
	 
	 	(d)	 	If the Company shall cease to operate its business; or
	 
	 	(e)	 	Upon the occurrence of any other material event which could adversely
effect the rights of IBI hereunder.

The Company shall notify IBI within three business days of any such attachment or
proceeding.

	 	8.	 	Miscellaneous

	 	8.1.	 	Company shall not be entitled to assign or transfer any of its rights
or obligations hereunder in the absence of specific written consent of IBI.
IBI may freely assign or transfer its rights and obligations hereunder to any
entity Controlling or Controlled by IBI, or to GMF Limited, provided, however,
that the transferee shall undertake in writing to fully maintain Company’s
rights hereunder. In this Section the term “Control” mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a company, whether through
ownership of voting securities, by contract, or otherwise. Any other assignment
by IBI shall require the Company’s prior written consent.
	 
	 	8.2.	 	This Agreement may not be amended, supplemented, discharged, terminated
or altered except by writing signed by the parties hereto.
	 
	 	8.3.	 	This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matter hereof, and
supersedes all prior agreements between the parties hereof with regard to such
subject matter.
	 
	 	8.4.	 	No failure or delay by any party to this Agreement to enforce at any
time any of the provisions hereof, or to exercise any power or right
thereunder, shall operate as or be construed to be, a waiver of any such
provision, power or right. Any waiver of any provision hereof or any power or
right thereunder shall be in writing, and shall be effective only in the
specific instance and for the purpose for which given.
	 
	 	8.5.	 	Any notice required or permitted thereunder shall be in writing and
shall be sent by courier, registered mail or confirmed facsimile to the parties
hereto at the respective addresses set forth next to their respective
signatures, as may be changed by each of the parties in a written notice from
time to time.
	 
	 	8.6.	 	It is hereby agreed between the parties that the laws of the State of
Israel shall apply to this Agreement and that the sole and exclusive place of
jurisdiction in

 

 

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	 	 	 	any matter arising out of or in connection with this Agreement shall be the
competent courts of Tel-Aviv, Israel.

IN WITNESS WHEREOF the parties have signed this Agreement as of the date first hereinabove set
forth.

	 	 	 
	/s/ Erez Golan                              /s/ Eyal Kolka

	 	/s/ Eliav Bar-David
	 

	 	 
	TopSpin Medical Inc.

	 	Poalim IBI — Managing & Underwriting Ltd.

	 	 	 
	By:    Erez Golan                    Eyal Kolka

	 	By:  Eliav Bar-David     
	Title:  CEO          CFO                    

	 	Title:                     CEO                    
	Address: 2 Yodfat Street

	 	Address:  9 Achad Haam St.
	                  Lod, Israel     

	 	                      Tel-Aviv, Israel     
	     Fax:   972-8-9259003

	 	     Fax:     972-3-5175411          
	     Attn: Eyal Kolka

	 	     Attn:   Eliav Bar-David

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