Document:

exhibit_4-11.htm

Exhibit 4.11

 

SECURITIES PURCHASE AGREEMENT

           THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of December 11, 2012, is made between Elbit Vision Systems Ltd., a company organized under the laws of Israel, with headquarters located at 7 Bareket Street, P.O.B. 3047, Industrial Park, Caesarea, Israel 38900, Israel (the "Company"), and Avi Gross, Israeli ID number 056398464 of 13 Hamaphteach Rd, Michmoret 40297, Israel (the "Buyer").

 

           WHEREAS:

A. The Company and the Buyer are executing and delivering this Agreement in reliance upon an exemption from registration under the Securities Act of 1933, as amended (the "1933 Act") as promulgated by the United States Securities and Exchange Commission (the "SEC").

B. The Buyer wishes to purchase, and the Company wishes to (i) sell, upon the terms and conditions stated in this Agreement, 5,263,158 ordinary shares of the Company, par value NIS 1.0 ("Ordinary Shares") for $500,000 (the "Purchased Shares"); (ii) issue certain warrants (the “First Warrants”) to purchase Ordinary Shares with a value of $1,000,000 (the “First Warrant Shares”), in substantially the form attached hereto as Exhibit A (the “First Warrant Agreement”); (iii) issue additional warrants (the "Second Warrants" and together with the First Warrants, the "Warrants") to purchase Ordinary Shares with a value of $200,000 (the “Second Warrant Shares” and together with the First Warrant Shares, the "Warrant Shares") in substantially the form attached hereto as Exhibit B (the “Second Warrant Agreement” and together with the First Warrant Agreement, the "Warrant Agreements") and (iv) enter into a Convertible Loan (the "Loan") with the Buyer pursuant to which the Buyer may elect to convert the Convertible Loan in whole or in part for up to 3,157,895 additional Ordinary Shares (the “Loan Shares”);

C. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, in the form attached hereto as Exhibit C (the "Registration Rights Agreement"), pursuant to which the Company has agreed to provide certain registration rights with respect to the Purchased Shares, the Loan Shares and the Warrant Shares under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws, and a Convertible Loan Agreement in the form attached hereto as Exhibit D  (the "Convertible Loan Agreement") and together with this Agreement and the Schedules and Exhibits hereto and thereto, the "Transaction Documents").

D. The Purchased Shares, the Warrants, the Warrant Shares and the Loan Shares collectively are referred to herein as the "SECURITIES".

NOW, THEREFORE, the Company and the Buyer hereby agree as follows:

 

  

  

  

1.           PURCHASE AND SALE OF PURCHASED SHARES AND WARRANTS.

a.  PURCHASE OF PURCHASED SHARES AND WARRANTS. Upon the date hereof, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company, the Purchased Shares, along with Warrants to acquire that number of Warrant Shares as provided in the Warrant Agreements.

b.  PURCHASE PRICE. The purchase price for the Buyer (the "Purchase Price") of the Purchased Shares to be purchased by the Buyer shall be equal to nine and one half ($0.095) cents for each Purchased Share being purchased by the Buyer for aggregate consideration of $500,000. Subject to any adjustments under Section 3 of the Warrant Agreements, the exercise price of the First Warrant Shares shall be equal to either seventeen cents ($0.17) or twenty cents ($0.20) for each Warrant Share exercised under the First Warrants, and the exercise price of the Second Warrant Shares shall be equal to nine and one half ($0.095) cents for each Warrant Share exercised under the Second Warrants, as provided in the Warrant Agreements.

2.           BUYER'S REPRESENTATIONS AND WARRANTIES.

The Buyer represents and warrants with respect to only itself that:

a.  NO PUBLIC SALE OR DISTRIBUTION; PRIOR SALES. The Buyer is (i) acquiring the Purchased Shares and the Warrants, and (ii) upon exercise of the Warrants and/or conversion of the Convertible Loan, will acquire the Warrant Shares issuable upon exercise thereof, and/or the Loan Shares issuable upon conversion of the Convertible Loan, as the case may be, in the ordinary course of business for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempt under the 1933 Act and has no agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities; PROVIDED, HOWEVER, that by making the representations herein,  the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time provided that such disposition is in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

b.  ACCREDITED INVESTOR STATUS. The Buyer is an “accredited investor” within the meaning of Rule 501(a) under the 1933 Act;

c.  RELIANCE ON EXEMPTIONS. No prospectus or offering memorandum has been delivered to the Buyer in connection with the purchase of Securities. The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

 

  

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d.  INFORMATION. The Buyer and its advisors, if any, have been furnished with materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested for deciding whether to acquire the Ordinary Shares. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and have received, to their satisfaction, answers to such questions. Neither such inquiries nor any other investigations conducted by the Buyer or its advisors, if any, or its representatives shall modify, amend or affect the Buyer's right to rely on the Company's representations and warranties contained herein.

e. NO SOLICITATION OR ADVERTISING. The Buyer acknowledges that it has not purchased the Securities as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, or television, or any seminar or, meeting whose attendees have been invited by general solicitation or general advertising;

f. The Buyer understands that the market price of the Company’s Ordinary Shares is volatile and that no representation is being made as to the future value of the Company’s Ordinary Shares. The Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities and is able to afford a complete loss of such investment.

g.  NO GOVERNMENTAL REVIEW. The Buyer understands that no Israeli or United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

h.  TRANSFER OR RESALE. The Buyer understands that except as provided in the Registration Rights Agreement: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and subsequent offers and sales of the Securities shall be made only (A) to the Company or a subsidiary thereof, (B) pursuant to a registration statement which has been declared effective under the 1933 Act, (C) outside the United States in a transaction meeting the requirements of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations of the jurisdiction in which such sale is made , as applicable, or (D) pursuant to any other available exemption from the registration requirements of the 1933 Act; and (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder. The Buyer acknowledges that prior to registration, the Company shall require, prior to any offer, sale or other transfer of the Securities, the delivery of an opinion of counsel, in generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred only pursuant to an exemption from registration under the 1933 Act.

 

  

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i.  LEGENDS. The Buyer understands  and acknowledges that upon the original issuance of the Purchased Shares, Warrant Shares and Loan Shares, and until no longer required under the 1933 Act or applicable state securities laws, the certificates representing the Purchased Shares, Warrant Shares and Loan Shares will bear the following legend:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”).  THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A SATISFACTORY LEGAL OPINION TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

and that any certificate representing securities issued in exchange therefor or in substitution thereof will bear the same legend until, as provided by an opinion of counsel, such legend is no longer required under the 1933 Act. The Warrant Agreements shall bear the legend in the form attached hereto as Exhibit A.

h.  VALIDITY; ENFORCEMENT. The Transaction Documents have been executed and delivered by the Buyer and when delivered in accordance with the terms hereof assuming valid execution by the other parties thereto, shall constitute the legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with their respective terms, except (i) as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies, or (ii) as any rights to indemnity or contribution hereunder may be limited by federal and state securities laws and public policy consideration.

i.  RESIDENCY. The Buyer is a resident of Israel.

 

3.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

  

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The Company represents and warrants to the Buyer as of the date hereof that:

a.  ORGANIZATION; GOOD STANDING; POWER; etc. The Company is duly organized and validly existing under the laws of the State of Israel. The Company has the requisite power and authority to execute, deliver and perform this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereon. The execution, delivery and performance by the Company of this Agreement and consummation of the transactions contemplated hereby and thereon have been duly authorized by all necessary corporate actions of the Company.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof assuming valid execution by the other parties thereto, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application as applied by a competent court of law.  Each of the Purchased Shares, Warrant Shares and Loan Shares, when issued to the Buyer according to the Transaction Documents will (i) be duly authorized, validly issued, fully paid, and non-assessable, and free and clear of liens, security interests, pledges, charges and encumbrances ("Liens") other than those Liens created by or disclosed in writing prior to the date hereof to the Buyer; (ii) have the rights, preferences, privileges, and restrictions set forth in the Articles of Association of the Company, attached hereto as Exhibit E (the “Articles”); (iii) will be free and clear of any encumbrance and of restrictions on transfer other than restrictions on transfer under applicable securities laws as detailed herein, or as set forth in the Articles; (iv) will be duly registered in the name of the Buyer in the Company’s shareholders register.  No securities of the Company are entitled to preemptive or similar rights, and no third party has any right of first refusal, preemptive right, right of participation, or any similar right to participate in all or any of the transactions contemplated by the Transaction Documents.

 

b. CAPITALIZATION.  The authorized capitalization of EVS on the date hereof is NIS 120,000,000 divided into 120,000,000 ordinary shares, par value NIS 1.00 each.  As of the date hereof, 69,652,779 ordinary shares are outstanding.  The Company has reserved from its duly authorized share capital Ordinary Shares issuable pursuant to this Agreement, the Warrants and the Convertible Loan in order to issue the Shares, Warrant Shares and Loan Shares.

 

c. DOCUMENTS.  The Company has filed all reports required to be filed by it under the 1933 Act and the Securities Exchange Act of 1934, as amended (the "1934 Act"), including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof.  As of its date and as of the date hereof (except as any information in such report may have been superseded by subsequent reports filed or furnished to the SEC), the Company’s annual report on Form 20-F for the year ended December 31, 2011 complied in all material respects with the requirements of the 1933 Act and the 1934 Act and the rules and regulations of the Commission promulgated thereunder. The Form 20-F, together with all other reports filed or furnished to the SEC under the 1934 Act are hereinafter referred to as the “Public Documents”.

 

  

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d. FINANCIAL STATEMENTS.  The audited consolidated financial statements (the “Financial Statements”) of the Company for the year ended December 31, 2011 (i) were prepared in accordance with generally accepted accounting standards in the United States consistently applied throughout the periods involved, (ii) comply in all material respects with applicable accounting requirements and the published rules and regulations of the SEC, and (iii) fairly present, in all material respects, the consolidated financial condition, results of operations, cash flows and changes in shareholders’ equity of the Company and its subsidiaries at the dates and for the periods presented.

 

e. MATERIAL CHANGES. Since the report of the independent registered public accounting firm to the Board of Directors and Shareholders of the Company, dated April 29, 2012, there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect. “Material Adverse Effect” means a material and adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company, or on its ability to execute or perform any transaction or act contemplated under the Transaction Documents.

 

f.  FILINGS, CONSENTS AND APPROVALS.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) the filing with the United States Securities and Exchange Commission (the "Commission") of the Registration Statement in accordance with the requirements of the Registration Rights Agreement and (ii) those that have been made or obtained prior to the date of this Agreement, including the consent of Bank Hapoalim BM and Bank Leumi Le-Israel Ltd, which are attached hereto as Exhibit F. The execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby will not result in (i) any violation of, be in conflict with or constitute, with or without the passage of time or giving of notice, a material default under any provision of the Articles, or of any contract, order, license or permit to which the Company is a party or by which it or any of its property is bound, or applicable to the Company, its assets or its business; (ii) the creation of any encumbrance upon any assets of the Company; (iii) the suspension, revocation, impairment, forfeiture, or non-renewal of any permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets; or (iv) discontinuation of, or changes in the terms of, any business activity in which the Company is currently engaged or which it proposes to be engaged in.

 

g. COMPLIANCE WITH SECURITIES LAWS. The Securities have been offered in compliance with all applicable securities laws, including, without limitation, the Israeli Securities Law, 1968.

 

h. NO SOLICITATION OR ADVERTISING. No form of general solicitation or general advertising (as those terms are used in Regulation D) was  used by the Company, its affiliates or persons acting on behalf of any of them, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, in connection with the offer or sale of the Securities in the United States.

 

  

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i.  LITIGATION.  Except as specified in the Public Documents or otherwise disclosed to the Buyer in writing prior to the date hereof, no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened against the Company.

 

j. INTELLECTUAL PROPERTY.  Except as disclosed to the Buyer in Schedule 3(j) hereto, the Company owns, has developed, or has obtained the right to use free and clear of all liens and obligations (i) all Intellectual Property, including any Intellectual Property that resulted from or arose out of any work performed by or on behalf of the Company or by any employee, officer, consultant or contractor of the Company; (ii) there are no actions against the Company that are currently pending, or to the knowledge of the Company, threatened by any third party contesting the validity, enforceability, use or ownership, or involving infringement, unauthorized use, of any Intellectual Property in any jurisdiction.  To the knowledge of the Company, there are no facts or circumstances that would form the basis for any such action; (iii) to the knowledge of the Company, the Company’s ownership, use, or otherwise commercial exploitation of the Intellectual Property does not constitute an unauthorized use, infringement or misappropriation of any patent, copyright, trade secret or other similar right, of any person (including pursuant to any non-disclosure agreements or obligations to which the Company or any of its present or former employees is a party); (iv)  the Intellectual Property includes all of the intellectual property rights necessary to enable the Company to conduct its business in the manner in which it is currently being conducted and as currently proposed to be conducted; and (v) to the knowledge of the Company, no person is infringing, violating, misusing or misappropriating any Intellectual Property, and no such claims have been made against any person by the Company, in any jurisdiction; “Intellectual Property” means any invention (whether or not patentable), patent or patent application for an invention (together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof), identifying mark in which a party asserts trademark rights (whether registered or unregistered and whether or not relating to a published work), registration or pending application for registration of a trademark, name used as a trade name, name used as a fictitious business name, service mark (whether registered or unregistered), registration or pending application for registration of a service mark, goodwill, any work with respect to which a person asserts copyright rights (whether registered or unregistered), registration or pending application for copyright registration of a work (including any renewals thereof), any work with respect to which a person asserts maskwork protection, application for registration of a maskwork, domain name registration, information used by a person in connection with its business (including confidential business information, pricing and cost information, business and marketing plans and customer and supplier lists and information), any information of a person that it holds in confidence as a trade secret, any information of a person that it holds as proprietary know how, drawings, schematic drawings, methods, process engineering, secret processes and generic proprietary business assets commonly described using terms such as franchise, system, computer software, license to software or any other intellectual property or proprietary right, invention, design, blueprint, proprietary product, technology, proprietary right or other intellectual property right or intangible asset.

 

  

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k. RELATED PARTY TRANSACTIONS.  Except as disclosed in the Public Documents, the Company is not indebted, directly or indirectly, to any of its Major Shareholders, directors, employees or to the knowledge of the Company their respective immediate families or to any affiliate of any of the foregoing, other than in connection with expenses or advances of expenses incurred in the ordinary course of business and for other customary employee benefits made generally available to all employees. Unless otherwise disclosed to the Buyer in writing prior to the date hereof, and except as disclosed in the Public Documents, none of the Company’s Major Shareholders, directors, employees or to the knowledge of the Company any members of their immediate families, or any affiliate of the foregoing are, directly or indirectly, indebted to the Company or any of its subsidiaries, or have, either directly or indirectly, any (i) material commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship with the Company or any of its subsidiaries, or any of the Company’s customers, suppliers, service providers, joint venture partners, licenses or competitors that are required to be disclosed  under the reporting rules of any exchange on which the Company is traded, the laws or regulations of its jurisdiction of incorporation or the United States securities laws or rules or regulations thereunder; or (ii) financial interest in any material contract or arrangement to which the Company is a party or by which it may be bound. A "Major Shareholder" is a person or entity holding at least five percent (5%) of the Company's fully-diluted share capital as of the date of this Agreement.

 

l. OWNERSHIP OF TANGIBLE ASSETS.  Except as disclosed in Schedule 3(l), the Company has good title to its tangible properties and assets.  With respect to the real property and tangible assets it leases, the Company is in material compliance with such leases and holds a valid leasehold interest free of any encumbrance of such leasehold interest. No tangible asset owned by the Company is shared by the Company with any other person.

 

m. TAX RETURNS.  Other than the tax return for the year ended December 31, 2011, the Company has filed any and all tax returns and reports as required under applicable law and has paid any and all taxes and other assessments due (whether income tax, capital gains tax, or otherwise), if any. Each such return or report was true and complete in all material respects when filed. The Company has not made any elections under applicable laws or regulations (other than elections that related solely to methods of accounting, depreciation or amortization) that would have a Material Adverse Effect. The Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the Company has made adequate provisions on its books of account for all taxes, assessments and governmental charges with respect to its business, properties and operations for such period. The Company has withheld or collected from each payment made to each of its employees, the amount of all taxes required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories. There are no applicable taxes, fees or governmental charges payable by the Company in connection with the execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereunder.

 

  

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n. EMPLOYEES.  To its knowledge, the Company is in material compliance with all employment practices regarding minimum wages, work permits, health and safety, discrimination, and other laws which may be required in any jurisdiction in which the Company conducts business.

 

o.  INSURANCE.  All insurable assets and activities of the Company have been insured as is customary in the industry and pursuant to policies with terms customary in the industry in which the Company operates. No insurance company has ever denied coverage to the Company and its business. There is no claim by the Company pending under any of such policies. All premiums due under such policies have been paid and the Company is otherwise in compliance in all material respects with the terms and conditions of all such policies. Such policies are in full force and effect. The Company has not undertaken any action, or omitted to take any action, which could render any such insurance policy void or voidable or which would result in a material increase in the premium for any such insurance policy.

 

p.  UNDERTAKINGS TO ISRAELI BANKS.  The Company has been, and is in compliance with, and has not been and is not in any default or breach of any of its obligations under any of its agreements with any Israeli banks. True and correct copies of all contracts with Israeli banks and all amendments thereto have been provided to Buyer.

 

q. REPORTS TO PUBLIC EXCHANGE.  Notwithstanding anything herein to the contrary, information disclosed by the Company to the public by way of EDGAR, the SEC’s filing site, shall be deemed for all purposes of this Agreement as having been disclosed to the Buyer and included in the representations and warranties contained in this Section 3.

 

r.  FINANCING.  The Company is, and believes that it will be, in a position to repay the Loan (as defined in the Convertible Loan Agreement) as it becomes due.

 

4.           TRANSACTIONS UPON EXECUTION

The following actions shall take place immediately prior to or simultaneously upon the execution of this Agreement, and all such actions shall be deemed to take place simultaneously in accordance with their respective terms and none of which shall be deemed to have been completed until all such actions have been completed:

	
  

	
(i)

	
The Buyer shall execute each of the Transaction Documents and deliver the same to the Company.

 

  

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(ii)

	
The Company shall execute and deliver to the Buyer (i) each of the Transaction Documents and (ii) the Purchased Shares and the related Warrants being purchased by the Buyer pursuant to this Agreement.

	
  

	
(iii)

	
The Company shall deliver to the Buyer true and correct copies of resolutions of the Company's board of directors (i) issuing and selling to the Buyer the Purchased Shares against payment of the Purchase Price, (ii) reserving for issuance up to 11,145,511 Ordinary Shares for the purpose of issuing the Loan Shares and Warrant Shares in accordance with their terms; and (iii) provided that the Observer Letter is received at least two business days prior to the date of such resolutions, approving the appointment of the specified individual  as an Observer to the board of directors of the Company, to be effective upon notification by the Buyer (should the Buyer elect to appoint and Observer).

	
  

	
(iv)

	
The Buyer shall deliver to the Company the Purchase Price for the Purchased Shares being purchased by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

	
  

	
(v)

	
Should the Buyer elect to appoint an Observer to the board of directors of the Company, the Buyer shall execute and deliver to the Company and the Company and its Representative (as defined in the Observer Letter) shall execute and deliver to the Buyer, the Observer Letter in the form attached hereto as Exhibit G.

	
  

	
(vi)

	
A copy of the Company’s updated register of shareholders of the Company reflecting the issuance of the Purchased Shares shall be delivered to the Buyer.

5.           OMITTED

6.           COVENANTS.

	
  

	
(i)

	
The Company agrees that the Buyer may request, and upon such request, the Company shall appoint to the Board of Directors of the Company a nominee the name of whom the Buyer shall notify the Company in writing, in place of the right to appoint an Observer pursuant to Section 4(v) herein; provided that the Investor has converted and/or exercised an aggregate of at least 50% of the value of the Loan and Second Warrant. For the avoidance of doubt, if an Observer was appointed pursuant to Section 4(v) herein, the service of such Observer shall terminate upon the appointment of a director pursuant to this Section 6(i).

	
  

	
(ii)

	
The majority of the proceeds from the issuance and sale of the Purchased Shares, Warrant Shares and Loan Shares shall be utilized for the expansion of the Company’s marketing efforts and activities mainly in Asia and Brazil.

 

  

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(iii)

	
The Company shall convert a portion of its share premium into share capital in compliance with Section 304 of the Companies Law, 1999 share capital.

7.           MISCELLANEOUS.

a.  GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Israel, without giving effect to any statutes concerning choice or conflict of law (whether of the State of Israel or any other jurisdiction) that would cause the application of the laws of any jurisdiction other that the State of Israel. Any controversy or claim arising out of or in connection with this agreement or any breach or alleged breach hereof shall be exclusively resolved by the competent courts of Tel Aviv, Israel, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such courts.

b. COUNTERPARTS. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

c.  HEADINGS. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

d.  SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

e.  ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the other Transaction Documents, supersedes all other prior oral or written agreements between the Buyer, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyer. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

  

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f.  NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) two business days in Israel after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

 

Elbit Vision Systems Ltd.

7 Bareket Street, P.O.B. 3047

Industrial Park, Caesarea

Israel 38900

Telephone: +(972)-4-610-7609

Fax: : +(972)-4-610-7619

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

Yigal Arnon & Co.

One Azrieli Center, Round Tower, Tel Aviv, Israel

Telephone:    +(972)-3-608-7864

Facsimile:       +(972)-3-608-7714

Attention:      Adrian Daniels, Adv.

If to the Buyer:

Mr. Avi Gross

13 Hamaphteach Rd.

Michmoret 40297

Israel

Email: adivatex@gmail.com

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

Gornitzky & Co.

45 Rothschild Blvd. Tel Aviv, Israel

Telephone:    +(972)-3-710-9191

Facsimile:       +(972)-3-560-6555

Attention:      Timor Belan, Adv.

A party’s address and facsimile number set forth above may be changed provided that such change is specified by written notice given to the other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

  

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g. SUCCESSORS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors. Subject to the relevant securities laws, the Buyer may assign its rights hereunder without the consent of the Company provided that any assignee shall agree in writing to become subject to the terms of this Agreement and the other Transaction Documents. Notwithstanding the previous sentence, the right to appoint an Observer (as provided in the Observer Letter) shall not be assignable and shall terminate upon the assignment of this Agreement.

h.  NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

i.  FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

j.  NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

[SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities Purchase Agreement to be duly executed as of the date first written above.

 

COMPANY:

 

Elbit Vision Systems Ltd.

 

By:                                           

Name:

Title:

BUYER:

___________________________

Avi Gross

 

  

14

  

EXHIBITS

 

	
Exhibit A

	
Form of First Warrant

	
Exhibit B

	
Form of Second Warrant

	
Exhibit C

	
Form of Registration Rights Agreement

	
Exhibit D

	
Form of Convertible Loan Agreement

	
Exhibit E

	
Articles of Association of the Company

	
Exhibit F

	
Bank Consents

	
Exhibit G

	
Form of Observer Declaration

 

15exhibit_4-12.htm

Exhibit 4.12

 

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December 11, 2012, is made between Elbit Vision Systems Ltd., a company organized under the laws of Israel, with headquarters located at 7 Bareket Street, P.O.B. 3047, Industrial Park, Caesarea, Israel 38900, Israel (the "Company"), and Avi Gross, Israeli ID number 056398464 of 13 Hamaphteach Rd, Michmoret 40297, Israel (the "Investor").

WHEREAS:

     A. In connection with the Securities Purchase Agreement by and among the parties hereto of even date herewith (the "Securities Purchase Agreement"), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to (i) issue and sell on the date hereof to the Investor up to 5,263,158 Ordinary Shares of the Company par value NIS 1.00 (the "Ordinary Shares") for $500,000 (the "Purchased Shares"); (ii) issue to the Investor warrants to purchase Ordinary Shares with an aggregate value of $1,200,000 on the terms set forth in the Warrant Agreements (as exercised, collectively, the "Warrant Shares") and (iii) enter into a Convertible Loan  with the Investor pursuant to which the Investor may elect to convert the Convertible Loan in whole or in part for up to 3,157,895 Ordinary Shares as may be adjusted pursuant the terms set forth therein (the “Loan Shares”);

     B. To induce the Investor to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

     1.   DEFINITIONS.

     As used in this Agreement, the following terms shall have the following meanings:

              a. "Business Day" means any day other than Saturday, Sunday or any other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

b. "Buyer" means the Investor, any permitted transferee or assignee thereof to whom a Buyer assigns its rights under this Agreement and who agrees in writing to become bound by the provisions of this Agreement and any transferee or assignee thereof to whom a transferee or assignee validly assigns its rights under this Agreement and who agrees in writing to become bound by the provisions of this Agreement.

c. "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and governmental or any department or agency thereof.

 

  

  

  

d. "Register," "Registered," and "Registration" refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the "SEC").

e. "Registrable Securities" means (i) the Purchased Shares, (ii) the Warrant Shares, (iii) the Loan Shares and (iv) any shares issued or issuable with respect to the Purchased Shares, the Warrant Shares or the Loan Shares as a result of any share split, share dividend, recapitalization, exchange or similar event or otherwise. Any securities which have been sold, or which may be sold publicly pursuant to Rule 144 without any limitations shall cease to be “Registrable Securities”.

f. "Registration Statement" means a registration statement or registration statements of the Company filed under the 1933 Act covering the Registrable Securities.

     Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement.

     2.   REGISTRATION.

a. MANDATORY REGISTRATION. The Company shall use its best efforts to prepare and file with the SEC, within 12 months of the date hereof (the “Filing Date”), a Registration Statement on Form F-3 covering the resale of the Purchased Shares and the maximum allowable number of Warrant Shares and Loan Shares (collectively, the "Initial Registration Shares") and any additional Securities which the SEC permits to be registered under such Registration Statement. Any Initial Registration Shares which have been sold, or which may be sold publicly pursuant to Rule 144 without any limitations shall not be required to be included in the Registration Statement. In the event that the Form F-3 is unavailable under the applicable eligibility standards, the Company shall use such other form as is available for such a registration. Once filed, the Company shall use its best efforts to have the Registration Statement declared effective by the SEC as soon as practicable.  In the event that the Company is unable to register all of the Registrable Securities, the Company shall, as soon as practicable upon being able or permitted, file a new registration statement (or registration statements) covering the remaining Registrable Securities. The Company shall use its best efforts to respond, file, amend the Registration Statement, and satisfy any questions, comments, demands, or any other requests of the SEC.

b. ALLOCATION OF REGISTRABLE SECURITIES. Notwithstanding Section 2(a) above, in the event that the SEC requires that in order for the Registration Statement to be declared effective, the number of Registrable Securities included in the Registration Statement be reduced, then first the Warrant Shares shall not be included in the Registration Statement, then the Loan Shares shall not be included in the Registration Statement and then, in the event that the number of Registrable Securities needs to be further reduced, the number of Purchased Shares shall be reduced to the minimum extent necessary.

c. NO EARLIER REGISTRATION.  The Company undertakes to the Buyer that it shall not register for resale any other securities of the Company purchased by any third parties, prior to (or, if such registration would cause the number of Initial Registration Shares to be reduced, concurrent with) the effective registration of all of the Registrable Securities. Notwithstanding the previous sentence, securities held by officers or directors of the Company may be included in the same registration statement used to register securities held by the Buyer (provided that if the number of securities that may be registered in the Registration Statement is limited than securities held by officers or directors shall not be included until all Registrable Securities have been included). The Company hereby confirms to the Buyer that there are no outstanding third party registration rights that could affect the rights granted under this Agreement.

 

  

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      3.   RELATED OBLIGATIONS.

 

      At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2, the Company shall use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

 

a. The Company shall submit to the SEC, promptly after the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on a particular Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than 96 hours after the submission of such request. The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Buyer may sell all of the Registrable Securities covered by such Registration Statement without restriction pursuant to Rule 144 (or successor thereto) promulgated under the 1933 Act or (ii) the date on which the Buyer shall have sold all the Registrable Securities covered by such Registration Statement (the "Registration Period"). The Company shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.

 

b. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b) by reason of the Company filing a report under the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC promptly after the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.

 

c. The Company shall permit the Buyer to review and comment upon (i) a Registration Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for amendments and supplements relating to Annual Reports on Form 20-F, and Current Reports on Form 6-K and any similar or successor reports) if practicable prior to their filing with the SEC. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement without the prior approval of the Buyer, which consent shall not be unreasonably withheld, conditioned or delayed. The Company shall furnish to the Buyer, without charge, copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement.

 

  

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d. The Company shall notify the Buyer in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(m), promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission. The Company shall also promptly notify the Buyer in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Buyer promptly after the date of effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

 

e. The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Buyer who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

f. The Company shall hold in confidence and not make any disclosure of information concerning the Buyer provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws or other applicable rules and regulations, (ii) the disclosure of such information is necessary or desirable to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Buyer is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Buyer and allow the Buyer, solely at the Buyer’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

 

 g. The Company shall cooperate with the Buyer and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Buyer may reasonably request.

 

h. If requested by the Buyer, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as the Buyer reasonably requests in writing to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration Statement if reasonably requested by the Buyer.

 

  

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i. The Company shall use its best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

 

j. The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

 

k. Promptly after a Registration Statement which covers Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Buyer whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.

 

                l. Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the SEC, the Company may delay the disclosure of material non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a "Grace Period"); provided, that the Company shall promptly (i) notify the Buyer in writing of the existence of a Grace Period in conformity with the provisions of this Section 3(m) (provided that in each notice the Company will not disclose the content of such material non-public information to the Buyer) and the date on which the Grace Period will begin, and (ii) notify the Buyer in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of thirty (30) days and the first day of any Grace Period must be at least two (2) trading days after the last day of any prior Grace Period (each, an "Allowable Grace Period"). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Buyer receive the notice referred to in clause (i) and shall end on and include the later of the date the Buyer receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 3(d) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(d) with respect to the information giving rise thereto unless such material non-public information is no longer applicable.

 

Should the Company fail to file the Registration Statement on or prior to the Filing Date, the Company shall pay to the Buyer an amount of 1% (one percent) of the purchase price paid by the Buyer for the amount of Initial Registration Shares (or other shares required to be registered) then held by the Buyer and which are not eligible to be sold publicly pursuant to Rule 144, for each full month in which the Registration Statement is not filed.

 

  

5

  

 

     4.  OBLIGATIONS OF THE BUYER.

a. At least seven (7) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify the Buyer in writing of the information the Company requires from the Buyer in order to include the Buyer’s Registrable Securities in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of the Buyer that the Buyer furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. All information provided to the Company by the Buyer pursuant to this Section 3(a) shall be in writing, and such writing shall expressly acknowledge that the information is being provided for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto.

b. The Buyer agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless the Buyer has notified the Company in writing of its election exclude all of its Registrable Securities from such Registration Statement.

c. The Buyer covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement.

 

     5.   EXPENSES.

The Company shall bear all expenses in connection with the registration procedures set forth in Sections 1 and 2 above, other than fees and expenses, if any, of counsel or other advisers to the Buyer or underwriting discounts, brokerage fees and commissions incurred by the Buyer, if any.

 

     6.   INDEMNITIES.  In the event of any registered offering of Ordinary Shares of the Company pursuant to this Agreement:

 

a. The Company will indemnify and hold harmless, to the fullest extent permitted by law, the Buyer, the directors, officers and each Person, if any, who controls the Buyer (each an "Indemnitee") from and against any and all losses, damages, claims, liabilities, joint or several, costs and expenses (including any amounts paid in any settlement effected with the Company’s consent) to which an Indemnitee may become subject under applicable law or otherwise, insofar as such losses, damages, claims, liabilities (or actions or proceedings in respect thereof), costs or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the registration statement or included in the final prospectus, as amended or supplemented, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they are made, not misleading, and the Company will reimburse an Indemnitee, promptly upon demand, for any reasonable legal or any other expenses incurred by them in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with such loss, claim, damage, liability, action or proceeding; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing by such Indemnitee; provided, further, that the indemnity agreement contained in this subsection 6(a) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld.

 

  

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b. The Buyer will indemnify and hold harmless the Company, any underwriter for the Company, and each Person, if any, who controls the Company or such underwriter, from and against any and all losses, damages, claims, liabilities, costs or expenses (including any amounts paid in any settlement effected with the selling shareholder’s consent) to which the Company or any such controlling Person and/or any such underwriter may become subject under applicable  law or otherwise, insofar as such losses, damages, claims, liabilities (or actions or proceedings in respect thereof), costs or expenses arise out of or are based on (i) any untrue or alleged untrue statement of any material fact contained in the registration statement or included in the prospectus, as amended or supplemented, or (ii) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, and the Buyer will reimburse the Company, any underwriter and each such controlling Person of the Company or any underwriter, promptly upon demand, for any reasonable legal or other expenses incurred by them in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with such loss, claim, damage, liability, action or proceeding; in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in conformity with written information furnished by the Buyer for inclusion therein.  This indemnity shall not be deemed to relieve any underwriter of any of its due diligence obligations; provided, further, that the indemnity agreement contained in this subsection 6(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Buyer, which consent shall not be unreasonably withheld.

 

c. Promptly after receipt by an indemnified party pursuant to the provisions of Sections 6(a) or 6(b) of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of said Section 6(a) or 6(b), promptly notify the indemnifying party of the commencement thereof; but the omission to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any action include both the indemnified party and the indemnifying party and there is a conflict of interests which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party or parties shall have the right to select one separate counsel to participate in the defense of such action on behalf of such indemnified party or parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of said Sections 6(a) or 6(b) for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed counsel in accordance with the provision of the preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action and within fifteen (15) days after written notice of the indemnified party’s intention to employ separate counsel pursuant to the previous sentence, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

 

  

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d. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

 

     7.   CONTRIBUTION.

 

     To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

 

     8.   REPORTS UNDER THE 1934 ACT.

 

     With a view to making available to the Buyer the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Buyer to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to:

 

a. make and keep public information available, as those terms are understood and defined in Rule 144;

 

b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

 

c. furnish to the Buyer so long as the Buyer owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144 and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Buyer to sell such securities pursuant to Rule 144 without registration.

 

  

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     9.   ASSIGNMENT OF REGISTRATION RIGHTS.

 

     The rights under this Agreement shall be automatically assignable by the Buyer to any transferee of all or any portion of the Buyer’s Registrable Securities if: (i) the Buyer agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws;  and (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein as if it were the “Buyer”.

 

     10.  AMENDMENT OF REGISTRATION RIGHTS.

     Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Buyer. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon the Buyer and the Company. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

     11.  MISCELLANEOUS.

a. A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the record owner of such Registrable Securities.

b. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

 

Elbit Vision Systems Ltd.

7 Bareket Street, P.O.B. 3047

Industrial Park, Caesarea

Israel 38900

Telephone: +(972) -4-610-7609

Fax:  +(972) -4-610-7619

 

  

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

Yigal Arnon & Co.

One Azrieli Center, Round Tower, Tel Aviv, Israel

Telephone:    +(972)-3-608-7864

Facsimile:       + (972)-3-608-7714

Attention:      Adrian Daniels, Adv.

If to the Investor:

Mr. Avi Gross

13 Hamaphteach Rd.

Michmoret 40297

Israel

Email: adivatex@gmail.com

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

Gornitzky & Co.

45 Rothschild Blvd. Tel Aviv, Israel

Telephone:   +(972)-3-710-9191

Facsimile:      +(972)-3-560-6555

Attention:     Timor Belan, Adv.

 

Notices shall be delivered as provided above (or as a transferee Buyer may provide in writing at the time of such transfer) subject to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

     c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

     d. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Israel, without giving effect to any statutes concerning choice or conflict of law (whether of the State of Israel or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Israel.  Any controversy or claim arising out of or in connection with this agreement or any breach or alleged breach hereof shall be exclusively resolved by the competent courts of Tel Aviv, Israel, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such courts.

 

  

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     e. This Agreement, the Securities Purchase Agreement, the Warrants and the instruments referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the Securities Purchase Agreement, the Warrants and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

     f.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

     g. This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

     h.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

      i.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

     j.   This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

     k.  This Agreement shall terminate and be of no further effect on the date on which the Buyer shall have sold, or can sell publicly pursuant to Rule 144, all of the Registrable Securities, without any limitation whatsoever, including any volume limitations, and further provided, that the restrictive legend is eligible to be removed from all of the Registrable Securities.

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

COMPANY:

ELBIT VISION SYSTEMS LTD.

 

By:                                           

Name:

Title:

BUYER:

_______________________

Avi Gross

 

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