Document:

exhibit_4-6.htm

EXHIBIT 4.6

 

FIRST LOAN MODIFICATION AGREEMENT

 

This First Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of April 25, 2013, by and between SILICON VALLEY BANK, a California corporation, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”) and ELRON ELECTRONIC INDUSTRIES LTD., a company organized under the laws of the State of Israel, with its principal place of business at Triangle Building, Azrieli Center, 42nd Floor, Tel Aviv, Israel 67023 (“Borrower”).

 

1.           DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Borrower is indebted to Bank pursuant to a loan arrangement dated as of November 9, 2011, evidenced by, among other documents, a certain Loan Agreement dated as of November 9, 2011, between Borrower and Bank (the “Loan Agreement”).  Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement (as amended by this Loan Modification Agreement).

 

2.           DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured by, among other property, (a) the Collateral, and (b) the Pledged Assets as defined in a certain Debenture Fixed Charge Agreement dated as of March 21, 2012, between Borrower and Bank, as amended by a certain Amendment to the Debenture Fixed Charge Agreement dated as of April 25, 2013 (as amended, the “Debenture”) (together with any other collateral security granted to Bank, the “Security Documents”).  Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.

 

3.           DESCRIPTION OF CHANGE IN TERMS.

 

	
  

	
 A.

	
Modifications to Loan Agreement.

 

	 	
1

	
Borrower acknowledges and agrees that a Term Loan Advance in the principal amount of Four Million Dollars ($4,000,000.00) is outstanding as of the First LMA Closing Date, and that Borrower has not requested, and will not request, and Bank shall have no obligation to make, any other Term Loan Advance.  Borrower and Bank acknowledge and agree that, except to the extent expressly provided herein, the terms and provisions of this Loan Modification Agreement will not modify the terms of the Loan Agreement applicable to such outstanding Term Loan Advance.

 

	 	
2

	
Borrower acknowledges and agrees that, in addition to and without limiting any provisions of the Loan Agreement (as amended hereby), as a condition precedent to Bank’s obligation to make the initial 2013 Term Loan Advance, Borrower shall deliver to Bank a legal opinion of Borrower’s counsel (authority/enforceability), in the same form and substance required in connection with the Loan Agreement (updated as appropriate to reflect this Loan Modification Agreement and the amendments to the Debenture).

 

	 	
3

	
The Loan Agreement shall be amended by deleting the following text, appearing in Section 2.1.1 thereof:

“           (b)           Interest Period.  Commencing on the first Payment Date of the calendar quarter following the month in which the Funding Date of such Term Loan Advance occurs, Borrower shall make quarterly payments of interest, in arrears, on the principal amount of each Term Loan Advance at the rate set forth in Section 2.2(a).”

 

  

  

  

 

and inserting in lieu thereof the following:

 

“           (b)           Interest Period.  Commencing on the first Payment Date of the calendar quarter following the month in which the Funding Date of such Term Loan Advance occurs, Borrower shall make quarterly payments of interest, in arrears, on the principal amount of each Term Loan Advance at the rate set forth in Section 2.2(a)(i).”

 

	 	
4

	
The Loan Agreement shall be amended by adding the following, to appear as Section 2.1.2 thereof:

 

“           2.1.2           2013 Term Loan Advances.

 

(a)           Availability.  Subject to the terms and conditions of this Agreement, during the 2013 Draw Period, Bank agrees to make advances (each a “2013 Term Loan Advance” and collectively, “2013 Term Loan Advances”) available to Borrower in an aggregate amount of up to the 2013 Term Loan Advance Amount.  Each 2013 Term Loan Advance must be in an amount at least equal to Five Million Dollars ($5,000,000.00).  After repayment, no 2013 Term Loan Advance (or any portion thereof) may be reborrowed.

 

(b)           Interest Period.  Commencing on the first Payment Date of the calendar quarter following the month in which the Funding Date of such 2013 Term Loan Advance occurs, Borrower shall make quarterly payments of interest, in arrears, on the principal amount of each 2013 Term Loan Advance at the rate set forth in Section 2.2(a)(ii).

 

(c)           Repayment.  All outstanding principal and accrued interest under each 2013 Term Loan Advance, and all other outstanding Obligations with respect to each 2013 Term Loan Advance, are due and payable in full on the applicable 2013 Term Loan Maturity Date.

 

(d)           Permitted Prepayment.   Borrower shall have the option to prepay any 2013 Term Loan Advance (or portion thereof), provided Borrower (i) provides written notice to Bank of its election to prepay such 2013 Term Loan Advance (or portion thereof) at least fourteen (14) days prior to such prepayment, and (ii) pays, on the date of such prepayment (A) all outstanding principal plus accrued interest under such 2013 Term Loan Advance (or portion thereof), and (B) all other sums, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.

 

(e)           Permitted Termination.  In no way derogating from Section 2.1.2(d) above,  Borrower shall be entitled to terminate this Agreement, without any liability, penalty, fees or costs to Borrower solely on account of such termination, upon Borrower (i) providing at least fourteen (14) days prior written notice to Bank (upon the provision of such notice, Borrower shall no longer be entitled to request any further 2013 Term Loan Advances) and (ii) paying, on the effective date of such termination (A) all outstanding principal plus accrued interest under all Credit Extensions and (B) all other sums that shall have become due and payable under the Loan Documents (including, without limitation, any outstanding Unused Commitment Fees), including interest at the Default Rate with respect to any past due amounts.

 

  

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(f)           Mandatory Prepayment.

 

(i)           In the event of a Qualifying Transaction occurring after the First LMA Closing Date, Bank shall be entitled to request that Borrower prepay, on account of the outstanding principal amount of 2013 Term Loan Advances (plus all interest accrued thereon), an amount equal to fifty percent (50.0%) of the Qualifying Proceeds in connection with such Qualifying Transaction.  Borrower shall give Bank prior written notice of the Qualifying Transaction or of the potential occurrence of a Qualifying Transaction (it being understood that such notice shall not constitute any assurance that the potential Qualifying Transaction will in fact occur and Borrower shall not be deemed to be in default of this Agreement should such potential Qualifying Transaction not occur), in any event, no later than the date of Borrower’s receipt of any portion of such Qualifying Proceeds.  Borrower shall, within five (5) Business Days if requested by Bank by notice to Borrower given within sixty (60) days of Bank’s receipt of the above-referenced notice from Borrower, make such prepayment.  For the sake of clarity, if, from time to time, Borrower receives an additional portion from such Qualifying Proceeds, then the above notice requirement and other provisions apply equally to such additional Qualifying Proceeds.

 

(ii)           In the event that, after the First LMA Closing Date, Borrower makes a distribution to all of its shareholders (by way of dividend or otherwise) (without limiting any provisions of this Agreement, including, without limitation, Section 7.6, provided however that no such distribution shall be made unless and until Borrower receives notice from Bank as provided below (or Bank fails to give such notice within the fourteen (14) day period for Bank to give notice as provided below)), whether with respect to Qualifying Proceeds or otherwise, Borrower shall notify Bank thereof simultaneously with its notice to the public declaring the distribution (and in any case, at least fourteen (14) days prior to the date of the proposed distribution), and Borrower shall, simultaneously with the making of the distribution if requested by Bank by notice to Borrower given within fourteen (14) days of Bank’s receipt of the above-referenced notice from Borrower, repay the outstanding principal amount of 2013 Term Loan Advances (plus all interest accrued thereon) in an amount equal to one hundred percent (100.0%) of such distribution.

 

(iii)           In the event of an early prepayment whether at the request of Bank pursuant to Section 2.1.2(f)(i) above or at the request of Borrower pursuant to Section 2.1.2(d) above (the amount of principal and interest actually repaid in each such event, the “Early Prepayment Amount”), then Borrower shall be entitled to make a distribution to its shareholders in the aggregate amount up to the Early Prepayment Amount without the obligation to make any payment to Bank pursuant to Section 2.1.2(f)(ii) above (for the avoidance of doubt, Borrower would still be required to give Bank notice of such distribution in accordance with Section 2.1.2(f)(ii)).

 

(iv)           Notwithstanding the aforesaid, in no event shall any amount repaid by Borrower to Bank pursuant to the mandatory prepayment under this Section 2.1.2(f) exceed the then existing outstanding principal amount of 2013 Term Loan Advances (plus all interest accrued thereon).”

 

  

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5

	
The Loan Agreement shall be amended by deleting the following text, appearing in Section 2.2 thereof:

 

“           (a)           Interest Rate.  Subject to Section 2.2(b), the principal amount outstanding under each Term Loan Advance shall accrue interest at a floating per annum rate equal to three-quarters of one percentage point (0.75%) above the Prime Rate, which interest shall be payable quarterly.”

 

and inserting in lieu thereof the following:

 

“           (a)           Interest Rate.

 

(i)           Term Loan Advances.  Subject to Section 2.2(b), the principal amount outstanding under each Term Loan Advance shall accrue interest at a floating per annum rate equal to three-quarters of one percentage point (0.75%) above the Prime Rate, which interest shall be payable quarterly.

 

(ii)           2013 Term Loan Advances.  Subject to Section 2.2(b), the principal amount outstanding under each 2013 Term Loan Advance shall accrue interest at a floating per annum rate equal to one and three-quarters of one percentage points (1.75%) above the Prime Rate, which interest shall be payable quarterly.”

 

	 	
6

	
The Loan Agreement shall be amended by deleting the following text, appearing in Section 2.3 thereof:

“               (b)           Term Loan Advance Fees.  In addition to the commitment fee provided in Section 2.3(a), in respect of (and as a condition precedent to) each Term Loan Advance, a fully earned, non-refundable fee of one-quarter of one percent (0.25%) of the principal amount of such Term Loan Advance, on the Funding Date of such Term Loan Advance (collectively, “Term Loan Advance Fees”); and

 

 (c)           Bank Expenses.  All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due.”

 

and inserting in lieu thereof the following:

 

“               (b)           Term Loan Advance Fees.  In addition to the commitment fee provided in Section 2.3(a), in respect of (and as a condition precedent to) (i) each Term Loan Advance, a fully earned, non-refundable fee of one-quarter of one percent (0.25%) of the principal amount of such Term Loan Advance, on the Funding Date of such Term Loan Advance, and (ii) each 2013 Term Loan Advance, a fully earned, non-refundable fee of one-half of one percent (0.50%) of the principal amount of such 2013 Term Loan Advance, on the Funding Date of such 2013 Term Loan Advance (collectively, “Term Loan Advance Fees”);

 

  

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(c)           Unused Commitment Fee.  Borrower shall pay to Bank a fee (the “Unused Commitment Fee”), payable quarterly, in arrears, on a calendar year basis, on the first (1st) calendar day of each calendar quarter, in an amount equal to one-half of one percent (0.50%) per annum of the average unused portion of the 2013 Term Loan Advance Amount, as determined by Bank.  The unused portion of the 2013 Term Loan Advance Amount, for purpose of this calculation, shall equal the difference between (i) the 2013 Term Loan Advance Amount and (ii) the average for the period of the daily closing balance of the aggregate original principal amount of all 2013 Term Loan Advances made by Bank through and including the time of determination.  Borrower shall not be entitled to any credit, rebate or repayment of any Unused Commitment Fee previously earned by Bank pursuant to this Section 2.3(c) notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make Credit Extensions hereunder; and

 

(d)           Bank Expenses.  All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due.”

 

	 	
7

	
The Loan Agreement shall be amended by deleting the following text, appearing in Section 3.2 thereof:

“           (g)           delivery to Bank of the following, each in form and substance satisfactory to Bank: (i) a certificate of the secretary of Borrower with respect to Borrower’s articles, by-laws, incumbency and resolutions authorizing and approving the Term Loan Advance being requested and all related actions, transactions and documents, including, without limitation, the documentation delivered pursuant to Section 3.2(e), and (ii) completed and executed resolutions adopted by Borrower’s board of directors (and, if required, stockholders) authorizing and approving the Term Loan Advance being requested and all related actions, transactions and documents, including, without limitation, the documentation delivered pursuant to Section 3.2(e); and”

 

and inserting in lieu thereof the following:

 

“           (g)           delivery to Bank of the following, each in form and substance satisfactory to Bank: (i) a certificate of the secretary of Borrower with respect to Borrower’s articles, by-laws, incumbency and resolutions authorizing and approving the Term Loan Advance or 2013 Term Loan Advance, as applicable, being requested and all related actions, transactions and documents, including, without limitation, the documentation delivered pursuant to Section 3.2(e), and (ii) completed and executed resolutions adopted by Borrower’s board of directors (and, if required, stockholders) authorizing and approving the Term Loan Advance or 2013 Term Loan Advance, as applicable, being requested and all related actions, transactions and documents, including, without limitation, the documentation delivered pursuant to Section 3.2(e); and”

 

  

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8

	
The Loan Agreement shall be amended by deleting the following text, appearing in Section 4.1 thereof:

“Borrower undertakes to create in favor of Bank, prior to and as a condition precedent to requesting and receiving any Term Loan Advance, a first priority security interest and a first ranking fixed pledge and charge over the Collateral, which shall be such shares of stock in Given owned by Borrower as have an aggregate value (as reasonably determined by Bank) at least equal to three hundred twenty-five percent (325.0%) of the amount (as reasonably determined by Bank) of all outstanding Obligations (plus the amount of the Term Loan Advance requested), and such other shares of stock in Given owned by Borrower and other assets over which Borrower grants a first priority security interest and a first ranking fixed pledge and charge to Bank (if and to the extent provided in this Agreement and/or the Debenture), all in accordance with the Debenture Fixed Charge Agreement attached hereto as Exhibit C (as amended, modified or restated from time to time, the “Debenture”).  In addition, prior to and as a condition precedent to requesting and receiving any Term Loan Advance, Borrower shall (a) execute and deliver to Bank such additional debentures, or amendments to the Debenture, as requested by Bank, to give Bank a first priority security interest and a first ranking fixed pledge and charge over the Collateral (each such new and/or amended debenture shall be included in the definition of the term “Debenture” herein), and (b) deliver to Bank (at Bank’s Israeli office) the certificates evidencing the shares of stock in Given owned by Borrower that constitute, or will constitute, Collateral.”

 

and inserting in lieu thereof the following:

 

“Borrower undertakes to create in favor of Bank, prior to and as a condition precedent to requesting and receiving any Term Loan Advance or 2013 Term Loan Advance, a first priority security interest and a first ranking fixed pledge and charge over the Collateral, which shall be such shares of stock in Given owned by Borrower as have an aggregate value (as reasonably determined by Bank) at least equal to three hundred twenty-five percent (325.0%) of the amount (as reasonably determined by Bank) of all outstanding Obligations (plus the amount of the Term Loan Advance or 2013 Term Loan Advance, as applicable, requested), and such other shares of stock in Given owned by Borrower and other assets over which Borrower grants a first priority security interest and a first ranking fixed pledge and charge to Bank (if and to the extent provided in this Agreement and/or the Debenture), all in accordance with the Debenture Fixed Charge Agreement attached hereto as Exhibit C (as amended by a certain Amendment to the Debenture Fixed Charge Agreement dated as of April 25, 2013, and as further amended, modified or restated from time to time, the “Debenture”).  In addition, prior to and as a condition precedent to requesting and receiving any Term Loan Advance or 2013 Term Loan Advance, Borrower shall (a) execute and deliver to Bank such additional debentures, or amendments to the Debenture, as requested by Bank, to give Bank a first priority security interest and a first ranking fixed pledge and charge over the Collateral (each such new and/or amended debenture shall be included in the definition of the term “Debenture” herein), and provide Bank with evidence satisfactory to Bank that all filings in connection therewith have been made with the Registrar (including, without limitation, duly executed and stamped forms with a “received stamp” by the Registrar with respect thereto), and (b) deliver to Bank (at Bank’s Israeli office) the certificates evidencing the shares of stock in Given owned by Borrower that constitute, or will constitute, Collateral.”

 

  

6

  

 

	 	
9

	
The Loan Agreement shall be amended by deleting the following, appearing as Section 8.1 thereof:

“           8.1           Payment Default.  Borrower fails to (a) make any payment of principal or interest on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the applicable Term Loan Maturity Date).  During the cure period, the failure to make or pay any payment specified under clause (a) or (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);”

 

and inserting in lieu thereof the following:

 

“           8.1           Payment Default.  Borrower fails to (a) make any payment of principal or interest on any Credit Extension, or any payment of the Unused Commitment Fee, on its due date, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the applicable Term Loan Maturity Date or the applicable 2013 Term Loan Maturity Date).  During the cure period, the failure to make or pay any payment specified under clause (a) or (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);”

 

	 	
10

	
The Loan Agreement shall be amended by deleting the following, appearing as Section 8.9 thereof:

“           8.9           Subordinated Debt.  Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement.”

 

and inserting in lieu thereof the following:

 

“           8.9           Subordinated Debt.  Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement; or

 

8.10           Mandatory Prepayment.  Borrower fails or neglects to perform any obligation in Section 2.1.2(f).”

 

	 	
11

	
The Loan Agreement shall be amended by inserting the following new definitions, to appear alphabetically in Section 13.1 thereof:

 

“           “2013 Term Loan Advance” and “2013 Term Loan Advances” are defined in Section 2.1.2(a).”

 

“           “2013 Term Loan Advance Amount” is Twenty-Five Million Dollars ($25,000,000.00), provided that, if, as of December 31, 2013, Borrower has not requested, and Bank has not made, 2013 Term Loan Advances with an aggregate original principal amount of at least Ten Million Dollars ($10,000,000.00), then the 2013 Term Loan Advance Amount shall, as of January 1, 2014 and at all times thereafter, be reduced by the difference between (a) Ten Million Dollars ($10,000,000.00) and (b) the aggregate original principal amount of 2013 Term Loan Advances requested by Borrower, and made by Bank, on or before December 31, 2013.”

 

“           “2013 Term Loan Maturity Date” is, for each 2013 Term Loan Advance, the date that is twenty-four (24) months after the Funding Date of such 2013 Term Loan Advance.”

 

  

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“           “2013 Draw Period” is the period of time commencing upon the First LMA Closing Date through the earlier to occur of (a) October 30, 2014, and (b) an Event of Default.”

 

“           “Early Prepayment Amount” is defined in Section 2.1.2(f) of this Agreement.”

 

“           “First LMA Closing Date” is April 25, 2013.”

 

“           “Qualifying Proceeds” are the aggregate proceeds consisting of cash or proceeds converted into cash by Borrower, resulting from a Qualifying Transaction and which were actually received by Borrower.”

 

“           “Qualifying Transaction” is a single transaction from a sale, assignment, disposition of assets, liquidation, merger, consolidation, change of ownership, or other similar transaction, with respect to any one (1) of Borrower’s portfolio companies (including, without limitation, any sale of equity or debt securities of any of Borrower’s portfolio companies), entitling Borrower to receive aggregate proceeds in an amount of at least Thirty Million Dollars ($30,000,000.00) (including, without limitation, from equity, debt or otherwise, and whether immediate, deferred, escrowed or otherwise).”

 

“           “Unused Commitment Fee” is defined in Section 2.3(c) of this Agreement.”

 

	 	
12

	
The Loan Agreement shall be amended by deleting the following text, appearing in the definition of “Permitted Indebtedness” in Section 13.1 thereof:

 

“           (e)           unsecured Indebtedness in favor of DIC, IDBD or IDBH, provided that such unsecured Indebtedness (i) is Subordinated Debt, (ii) is not incurred prior to Borrower requesting and receiving Term Loan Advances in an aggregate amount of Thirty Million Dollars ($30,000,000.00), (iii) does not exceed at any time, in the aggregate, Thirty Million Dollars ($30,000,000.00), and (iv) is not repaid (in whole or in part) until such time as (A) the Obligations are fully paid in cash, (B) Bank has no commitment or obligation to lend any further funds to Borrower, and (C) all financing agreements between Bank and Borrower are terminated by Borrower or Bank pursuant to the terms hereunder;”

 

and inserting in lieu thereof the following:

 

“           (e)           unsecured Indebtedness in favor of DIC, IDBD or IDBH, provided that such unsecured Indebtedness (i) is Subordinated Debt, (ii) is not incurred prior to Borrower requesting and receiving Term Loan Advances and 2013 Term Loan Advances in an aggregate amount of (A) Five Million Dollars ($5,000,000.00) plus (B) the 2013 Term Loan Advance Amount, (iii) does not exceed at any time, in the aggregate, Thirty Million Dollars ($30,000,000.00), and (iv) is not repaid (in whole or in part) until such time as (A) the Obligations are fully paid in cash, (B) Bank has no commitment or obligation to lend any further funds to Borrower, and (C) all financing agreements between Bank and Borrower are terminated by Borrower or Bank pursuant to the terms hereunder;”

 

  

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13

	
The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:

 

“           “Credit Extension” is any Term Loan Advance.”

 

“           “Draw Period” is the period of time commencing upon the Effective Date through the earlier to occur of (a) the date that is eighteen (18) months from the Effective Date, and (b) an Event of Default.”

 

“           “Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, Term Loan Advance Fees, the Commitment Fee, Bank Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all Secured Amounts (as defined in the Debenture), including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.”

 

“           “Term Loan Advance” and “Term Loan Advances” are defined in Section 2.1.2(a).”

 

and inserting in lieu thereof the following:

 

“           “Credit Extension” is any Term Loan Advance or 2013 Term Loan Advance.”

 

“           “Draw Period” is the period of time commencing upon the Effective Date through the earlier to occur of (a) the date immediately preceding the First LMA Closing Date, and (b) an Event of Default.”

 

“           “Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, Term Loan Advance Fees, the Commitment Fee, the Unused Commitment Fee, Bank Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, all Secured Amounts (as defined in the Debenture), including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.”

 

“           “Term Loan Advance” and “Term Loan Advances” are defined in Section 2.1.1(a).”

 

	 	
14

	
The Payment/Advance Form appearing as Exhibit A to the Loan Agreement is hereby deleted and replaced with the Payment/Advance Form attached as Schedule 1 hereto.

 

  

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4.           FEES AND EXPENSES.  Borrower shall pay to Bank a modification fee equal to One Hundred Twenty-Five Thousand Dollars ($125,000.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof.  Borrower shall also reimburse Bank for all reasonable legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents.

 

5.           RATIFICATION OF DEBENTURE.  Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of the Debenture, and acknowledges, confirms and agrees that the Debenture shall remain in full force and effect and that the indebtedness secured thereby includes, without limitation, the Obligations.

 

6.           CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.

 

7.           NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.

 

8.           CONTINUING VALIDITY.  Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents and as updated (with respect to Borrower’s representations and warranties) as shown on Schedule 2 attached hereto.  Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect.  Bank’s agreement to modifications to the existing Obligations pursuant to this  Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations.  Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing.  No maker will be released by virtue of this Loan Modification Agreement.

 

9.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.

 

[The remainder of this page is intentionally left blank]

 

  

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This Loan Modification Agreement is executed as of the date first written above.

 

	
BORROWER:

	
BANK:

	
ELRON ELECTRONIC INDUSTRIES LTD.

	
SILICON VALLEY BANK

	
By: /s/Ari Bronshtein & Yaron Elad

	
By: /s/ David Reimer

	
Name:  /s/Ari Bronshtein & Yaron Elad

	
Name: /s/ David Reimer

	
Title: CEO, CFO

	
Title: SVP

  

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SCHEDULE 1

EXHIBIT A – LOAN PAYMENT/ADVANCE REQUEST FORM

Deadline for same day processing is Noon EASTERN Time

 

 

	Fax To:  	Date: _____________________

 

	
Loan Payment: 

 

ELRON ELECTRONIC INDUSTRIES LTD.  

	  
 
From Account #________________________________ 

                                         (Deposit Account #)   

Principal $____________________________________   

 

 
Authorized Signature: ____________________ 

Print Name/Title:_________________________   

                

	
 

To Account #__________________________________________

                                                     (Loan Account #)

and/or Interest $______________________________________

 

Phone Number:_______________________________

 

	
 
Loan Advance:

Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

	  
 
From Account #________________________________ 

                                        (Loan Account #)   

 
 

Amount of 2013 Term Loan Advance $___________________________

	
 

To Account #__________________________________________

                                                    (Deposit Account #)

 

	  
All Borrower’s representations and warranties in the Loan Agreement (as amended) are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date:

	
 

Authorized Signature: ____________________

Print Name/Title:_________________________ 

	
 

Phone Number:_______________________________

 

	
 
Outgoing Wire Request:

Complete only if all or a portion of funds from the loan advance above is to be wired.

Deadline for same day processing is noon, Eastern Time

 

	
Beneficiary Name: ____________________________

Beneficiary Bank: ______________________________

City and State: _____________________________

 

Beneficiary Bank Transit (ABA) #: __________________

 

 

Intermediary Bank: ______________________________ 

	
Amount of Wire: $________________________

Account Number: _________________________

 

 

Beneficiary Bank Code (Swift, Sort, Chip, etc.):____________

 (For International Wire Only)

 

Transit (ABA) #:____________________________

	 
For Further Credit to: ______________________________________________________________________________________________________

	Special Instruction: _______________________________________________________________________________________________________

 

 

 

  

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By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).

Authorized Signature: ___________________________                                                                                             2nd Signature (if required): _______________________________

Print Name/Title: ______________________________                                                                                            Print Name/Title: ______________________________________

 
Telephone #: ____________________________                                                                                                       Telephone #: ____________________________

 

 

  

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SCHEDULE 2

 

 

14exhibit_10-1.htm

Exhibit 10.1

 

SHARE PURCHASE AGREEMENT

 

This Share Purchase Agreement (the "Agreement"), is dated as of January 13, 2014, between Pointer Telocation Ltd. ("Pointer"), a public company, incorporated under the laws of the State of Israel, company number 520041476, and the sellers whose names are set forth in Schedule A hereunder (each a "Seller" and collectively the "Sellers").

 

R E C I T A L S

 

WHEREAS,                      Pointer and the Sellers are each shareholders of Shagrir Systems Ltd. ("Shagrir"), a private company, incorporated under the laws of the State of Israel, company number 511767832; and

 

WHEREAS,                      the Sellers wish to sell to Pointer 3,383 Ordinary Shares of Shagrir, par value NIS 1.00 each (the "Shagrir Shares"), constituting in the aggregate 3.7% of the issued share capital of Shagrir, on a fully diluted basis; and

 

WHEREAS,                      Pointer wishes to purchase from the Sellers all of their shares in Shagrir in consideration for the issuance of Ordinary Shares of Pointer, par value NIS 3.00 each, and cash consideration as more fully set forth herein.

 

NOW THEREFORE, Pointer and the Sellers, intending to be legally bound, agree to the terms set forth below:

 

	
  

	
1.

	
Sale of Shagrir Shares Against the Shagrir Consideration.

 

	
  

	
Subject to and in accordance with the terms and conditions of this Agreement, in consideration for the sale by the Sellers of the Shagrir Shares in the amounts set forth opposite their names in Schedule A attached hereto, Pointer shall (i) issue to the Sellers, an aggregate of 80,357 Ordinary Shares of Pointer, par value NIS 3.00 each (the "Pointer Shares"); and (ii) pay an aggregate cash consideration of NIS 2,181,755 (the "Cash Consideration" and together with the Pointer Shares, the "Shagrir Consideration").  The specific amount of Pointer Shares to be issued to each Seller and the respective Cash Consideration amounts to be paid to each Seller is set forth in Schedule A attached hereto.

 

	
  

	
2.

	
Closing.

 

	
  

	
2.1

	
Closing Date.  Subject to the conditions set forth in Section ‎6 below, the consummation of the transaction contemplated hereby (hereinafter, the “Closing”) shall take place  at the offices of Yigal Arnon & Co., 1 Azrieli Center, Round Building, 46th Floor, Tel Aviv, Israel, upon fulfillment of all conditions to Closing (“hereinafter, the Closing Date”). The Closing Date is anticipated to take place no later than March 31, 2014.  Should the Closing not take place by March 31, 2014, this Agreement shall be cancelled and be null and void and no party shall have any claim against the other party in connection thereto.

 

  

  

  

 

	
  

	
2.2

	
Closing Deliveries.

 

The following instruments, agreements and documents shall be executed and delivered at the Closing and all such documents shall be deemed delivered simultaneously and all transactions contemplated hereby and thereby shall be deemed to take place simultaneously, and no such document shall be deemed delivered until all such transactions are completed and all such documents are delivered:

 

	
  

	
2.2.1

	
The following deliveries will be made by each Seller to Pointer at the Closing:

 

	
  

	
2.2.1.1

	
Confirmation of ESOP Management and Trust Services Ltd. ("ESOP"), the trustee holding the Shagrir Shares in trust for each of the Sellers, substantially in the form attached hereto as Exhibit ‎2.2.1.1, confirming it agrees to act as a trustee in favor of Pointer for the purpose of deducting and withholding all required taxes under Israeli law on payment of the Shagrir Consideration and to transfer, either directly or through Shagrir, the amounts required under Israeli law to the Israeli Tax Authorities no later than the dates on which such amounts are to be transferred;

 

	
  

	
2.2.1.2

	
A duly executed shares transfer deed regarding the sale and transfer of the Seller's portion of the Shagrir Shares, executed by ESOP, on behalf of each Seller, in the form attached hereto as Exhibit ‎2.2.1.2;

 

	
  

	
2.2.1.3

	
a certificate executed by each of the Sellers in the form attached hereto as Exhibit ‎2.2.1.3 certifying that each of the representations and warranties of such Seller under this Agreement are true and accurate as of the Closing Date as if made on the Closing Date.

 

	
  

	
2.2.2

	
The following deliveries will be made by Pointer to the Sellers at the Closing:

 

	
  

	
2.2.2.1

	
Resolution of the Board of Directors of Pointer, substantially in the form attached hereto as Exhibit ‎2.2.2.1, authorizing the Shagrir Consideration;

 

	
  

	
2.2.2.2

	
Issuance of Share Certificates in respect of the Pointer Shares in the name of ESOP;

 

	
  

	
2.2.2.3

	
Transfer of the Cash Consideration to the bank account of ESOP by way of immediately available funds wire transfer, per the details attached in Schedule A.

 

  

2

  

 

	
  

	
2.2.2.4

	
a certificate executed by an officer of Pointer in the form attached hereto as Exhibit 2.2.2.4 certifying that each of the representations and warranties of Pointer under this Agreement are true and accurate as of the Closing Date as if made on the Closing Date.

 

	
  

	
3.

	
Representations and Warranties of Each Seller.

 

Each Seller makes the following representations and warranties to Pointer:

 

	
  

	
3.1

	
Shagrir Shares. The Shagrir Shares are held in trust by ESOP solely for the benefit of the Seller, in accordance with the provisions of Section 102 to the Income Tax Ordinance.  The Shagrir Shares to be sold and transferred are free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights.

 

	
  

	
3.2

	
No Rights or Claims. As of the Closing no Seller shall have any rights in Shagrir (other than by virtue of their holdings of the Pointer Shares) and any and all such rights previously granted to the Seller shall be terminated.  Each Seller hereby irrevocably waives, on his behalf any right and/or claim and/or demand whatsoever against Shagrir.

 

	
  

	
3.3

	
Authority. Each Seller has full right and power to enter into and perform pursuant to this Agreement and sell and transfer to Pointer his portion of the Shagrir Shares, and this Agreement constitutes each Seller’s valid and legally binding obligation, enforceable in accordance with its terms. Each Seller is authorized and otherwise duly qualified to receive, via ESOP, the Shagrir Consideration and to enter into this Agreement.

 

	
  

	
3.4

	
Purchase for Investment.  The Seller is acquiring all of the Pointer Shares to be acquired by him hereunder for his own account for investment and without a view to the distribution or resale of such Pointer Shares, it being understood that this Section ‎3.4 shall not prevent the Seller from selling or otherwise disposing of any of the Pointer Shares, at his sole discretion, in any transaction which does not violate the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act").

 

	
  

	
3.5

	
U.S. Federal Securities Laws. The Seller understands that the Pointer Shares have not been registered under the Securities Act and that the issuance contemplated hereby is being made in reliance on an exemption from registration under the Securities Act for nonpublic offerings.

 

	
  

	
3.6

	
Purchaser Status.  At the time such Seller was offered the Pointer Shares, he was, and is as of the date hereof,  an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

 

	
  

	
3.7

	
Receipt of Information. He acknowledges that he and/or his representatives have had a reasonable opportunity to ask questions and receive answers from management of Pointer, or a person or persons acting on its behalf concerning the Pointer Shares, and all such questions have been answered to the full satisfaction of the Seller. Except for the representations regarding the Pointer Shares provided herein, each Seller is purchasing the Pointer Shares AS IS, has reached his own investment decision and waives any and all claims he may have against Pointer for nondisclosure of any information.

 

  

3

  

 

	
  

	
3.8

	
Investment Experience. Each Seller has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the receipt of the Pointer Shares pursuant to the terms of this Agreement and of protecting his interests in connection therewith. Such Seller is able to bear the economic risk of this transaction.

 

	
  

	
3.9

	
Restricted Securities. Each Seller understands that the Pointer Shares are restricted securities and agrees that if he decides to transfer any of such securities, he will not do so, directly or indirectly, except (i) to Pointer; (ii) pursuant to a registration statement under the Securities Act; (iii) pursuant to Rule 144 under the Securities Act; (iv) outside the United States in a transaction meeting the requirements of Regulation S under the Securities Act and in compliance with applicable local laws and regulations of the jurisdiction(s) in which such sale is made; or (v) pursuant to another transaction that is exempt from registration under the Securities Act and applicable state securities laws and the Seller has provided a legal opinion reasonably satisfactory to Pointer, that such registration is not required under the Securities Act.

 

	
  

	
3.10

	
Legend on Shares. The Seller is aware that the certificate representing the Pointer Shares shall be stamped or otherwise imprinted on its face with a legend in the following form:

 

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE HOLDER HEREOF, MAY OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THE SHARES ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT (D) OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS OF THE JURISDICTION(S) IN WHICH SUCH SALE IS MADE OR (E) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A LEGAL OPINION REASONABLY SATISFACTORY TO COUNSEL OF THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT."

 

	
  

	
4.

	
Representations and Warranties of Pointer.

 

Pointer makes the following representations and warranties to each of the Sellers:

 

	
  

	
4.1

	
Corporate Action. This Agreement has been duly authorized, executed and delivered by Pointer and constitutes the legal, valid and binding obligations of Pointer, enforceable against Pointer in accordance with its terms.   The issuance and delivery of the Pointer Shares and the payment of the Cash Consideration have been duly authorized by all required corporate action on the part of Pointer and do not violate any applicable law or the provision of the Articles of Association of Pointer or any other constitutional documents thereof.

 

  

4

  

 

	
  

	
4.2

	
Documents.  Pointer has filed all reports required to be filed by it under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including pursuant to Section 13(a) or 15(d) thereof, for the six months preceding the date hereof.

 

	
  

	
4.3

	
Filings, Consents and Approvals.  Other than such notifications as may be required by Nasdaq, Pointer 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 it of this Agreement, other than the filing with the United States Securities and Exchange Commission of the Registration Statement in accordance with the Section 6 herein.

 

	
  

	
4.4

	
Pointer Shares. The Pointer Shares when issued and against receipt of the Shagrir Shares, will be validly issued and will be free and clear of all liens, charges, restrictions, claims, encumbrances or third party rights.

 

	
  

	
4.5

	
Shagrir Shares. Except for the representations regarding the Shagrir Shares provided herein, Pointer is purchasing the Shagrir Shares AS IS and has reached its own investment decision and waives any and all claims it may have against the Sellers for nondisclosure of information.

 

	
  

	
5.

	
Registration Rights.

 

	
  

	
5.1

	
F-3 Registration Statement. Pointer shall use its best efforts to prepare and file with the SEC, within 60 days of the date of Closing (such period to be extended if the Sellers have not provided all requested information in writing as set forth below), a registration statement on Form F-3 (the "Registration Statement") registering the Pointer Shares and will use its best efforts to have such Registration Statement declared effective by the Securities and Exchange Commission as soon as practicable. In the event that the Form F-3 is unavailable under the applicable eligibility standards, the Pointer shall use such other form as is available for such a registration.

 

It shall be a condition precedent to the obligations of Pointer to complete the Registration Statement pursuant to this Agreement with respect to the Pointer Shares of the Sellers that each Seller furnish to Pointer such information regarding himself, the Pointer Shares held by him and the intended method of disposition of the Pointer Shares held by him as shall be reasonably required to effect the effectiveness of the registration of such Pointer Shares and shall execute such documents in connection with such registration as Pointer may reasonably request. All information provided to the Pointer by the Seller pursuant to this section 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. The Sellers agree to cooperate with Pointer as reasonably requested by Pointer in connection with the preparation and filing of the Registration Statement hereunder, unless the Seller has notified Pointer in writing of his election to exclude all of its Pointer Shares from such Registration Statement.

 

  

5

  

 

 

	
  

	
5.2

	
Pointer's Obligations. At such time as Pointer is obligated to file a Registration Statement with the SEC pursuant to this Agreement, Pointer shall, use its best efforts to effect the registration of the Pointer Shares and without derogation from its undertakings and obligations herein shall have the following obligations:

 

	
  

	
5.2.1

	
Pointer shall submit to the SEC, promptly after it 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, and after receiving the approval of the Sellers pursuant to Section 5.2.3 below, 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. Pointer shall keep each Registration Statement effective at all times until the earlier of (i) the date as of which the Sellers may sell all of the Pointer Shares without restriction pursuant to Rule 144 (or successor thereto) promulgated under the 1933 Act or (ii) the date on which the Sellers shall have sold all the Pointer Shares (the "Registration Period"). Pointer 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.

 

	
  

	
5.2.2

	
Pointer shall prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement.

 

  

6

  

 

	
  

	
5.2.3

	
Pointer shall permit Sellers 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. Pointer shall not submit a request for acceleration of the effectiveness of a Registration Statement without the prior approval of the Sellers, which consent shall not be unreasonably withheld, conditioned or delayed.

 

	
  

	
5.2.4

	
Pointer shall notify the Sellers 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, promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission. Pointer shall also promptly notify the Sellers 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 Sellers 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 Pointer's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

 

	
  

	
5.2.5

	
Pointer 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 Pointer Shares for sale in any jurisdiction and, if such an order or suspension is issued, to use its best efforts to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Seller who holds Pointer Shares 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.

 

  

7

  

 

	
  

	
5.2.6

	
Pointer shall hold in confidence and not make any disclosure of information concerning the Sellers provided to it 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. Pointer agrees that it shall, upon learning that disclosure of such information concerning the Seller is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Sellers and allow the Sellers, solely at the their expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

 

	
  

	
5.2.7

	
Pointer shall cooperate with the Sellers and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Pointer Shares 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 Seller may reasonably request.

 

	
  

	
5.2.8

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

 

	
  

	
5.2.9

	
Promptly after the Registration Statement (which covers the Pointer Shares) is ordered effective by the SEC, the Pointer  shall deliver, and shall cause its legal counsel to deliver, to the transfer agent for such shares (with copies to the Seller whose shares are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.

 

	
  

	
5.2.10

	
Notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the SEC, Pointer may delay the disclosure of material non-public information concerning Pointer the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of Pointer and its counsel, in the best interest Pointer and, in the opinion of counsel to Pointer, otherwise required (a "Grace Period"); provided, that Pointer shall promptly (i) notify the Sellers in writing of the existence of a Grace Period in conformity with the provisions of this Section ‎5.2.10 (provided that in each notice Pointer will not disclose the content of such material non-public information to the Sellers) and the date on which the Grace Period will begin, and (ii) notify the Sellers 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 Sellers receive the notice referred to in clause (i) and shall end on and include the later of the date the Sellers receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 5.2.4 hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, Pointer shall again be bound by the first sentence of Section 5.2.4 with respect to the information giving rise thereto unless such material non-public information is no longer applicable.

 

  

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5.2.11

	
All obligations under this Section 5 shall cease and be of no further effect on the earlier of such date that (i) each Seller may sell all of the Pointer Shares without restriction pursuant to Rule 144 (or successor thereto) under the 1933 Act or (ii) the date on which the Sellers shall have sold all the Pointer Shares.

 

	
  

	
5.3

	
Registration Expenses.  Pointer shall be responsible for all registration expenses incurred in connection with the transactions described in this Section ‎5. Registration expenses include all expenses incident or ancillary to Pointer's performance of or compliance with this Agreement, including without limitation expenses incurred in connection with the preparation of a prospectus, filing and qualification fees, printers' and accountant fees but not including any legal fees incurred by the Sellers.

 

	
  

	
5.4

	
No Earlier Registration.  Pointer undertakes to the Sellers that it shall not register for resale any other securities of Pointer purchased by any third parties or otherwise issued by it, prior to the filing date of the Registration Statement. For purposes of clarity, the Sellers acknowledge that Pointer may offer and sell securities under its existing shelf registration statements, on Form F-3, at any time.

 

	
  

	
5.5

	
Pointer Indemnity. Pointer hereby agrees to indemnify and hold harmless each Seller, from and against any and all claims, liabilities, losses, damages and expenses (including reasonable attorneys’ fees and disbursements) asserted against or incurred by the Seller which shall be caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages, liabilities and expenses shall be caused by any untrue statement or omission based upon information furnished in writing to Pointer by the Sellers. In no event shall the liability of Pointer hereunder be greater in amount than the dollar amount of the net proceeds received by the Seller upon the sale of the Pointer Shares giving rise to such indemnification obligation.

 

  

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5.6

	
Seller Indemnity. Each Seller will indemnify and hold harmless Pointer, its directors, officers, employees, any underwriter for Pointer and each person, if any, who controls Pointer (within the meaning of section 15 of the Securities Act or Section 20(a) of the Exchange Act) 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 such Seller's consent) asserted against or incurred by Pointer, its directors, officers, employees, any such underwriter or any such controlling person which shall be caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the prospectus (or any amendment or supplement thereto), or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Seller will reimburse Pointer, its directors, officers, employees, any such underwriter and each such controlling person of Pointer or any such 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, that such untrue statement or omission is contained in any information so furnished in writing by the Seller to Pointer for inclusion in the Registration Statement or such prospectus; provided, however, that the indemnity agreement contained in this Section ‎5.6 shall not apply to amounts paid in settlement of any losses if such settlement is effected without the prior written consent of the Seller.  In no event shall the liability of the Seller hereunder be greater in amount than the dollar amount of the net proceeds received by the Seller upon the sale of the Pointer Shares giving rise to such indemnification obligation.

 

  

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6.

	
Conditions to Closing.

 

	
  

	
6.1

	
The obligation of the Sellers to sell and transfer the Shagrir Shares to  Pointer is subject to the fulfillment on or before the Closing, of the following conditions precedent:

 

	
  

	
6.1.1

	
The representations and warranties of Pointer contained in Section ‎4 shall be true and correct when made and shall be true and correct at the date of the Closing as though such representations and warranties had been made on and of the date of the Closing.

 

	
  

	
6.1.2

	
All deliverables to be provided to the Sellers by Pointer in accordance with Section ‎2.2.2 shall be provided in form satisfactory to Sellers.

 

	
  

	
6.2

	
The obligation of Pointer to provide the Shagrir Consideration to the Sellers are subject to the fulfillment on or before the Closing, of each of the following conditions precedent:

 

	
  

	
6.2.1

	
The representations and warranties of each of the Sellers contained in Section ‎3 shall be true and correct when made and shall be true and correct at the date of the Closing as though such representations and warranties had been made on and of the date of the Closing.

 

	
  

	
6.2.2

	
Pointer shall have received funding from banking institutions for payment of the Cash Consideration.

 

	
  

	
6.2.3

	
All deliverables to be provided to Pointer by the Sellers in accordance with Section ‎2.2.1 shall be provided in form satisfactory to Pointer.

 

	
  

	
7.

	
Miscellaneous.

 

	
  

	
7.1

	
Entire Agreement.  This Agreement constitutes the sole understanding of the parties with respect to the subject matter hereof and it supersedes any previous agreement among the parties with respect to such subject matter. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by Pointer and the Sellers. Furthermore, each party acknowledges that it/he has not been induced to enter into this Agreement by any representation or warranty other than the statements contained or referred to herein.

 

  

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7.2

	
Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors of the parties hereto; provided, however, that this Agreement may not be assigned by any party without the prior written consent of the other party hereto, except for assignments by the Sellers to any corporate entity which is controlled by, or is under common control with such Seller, in each case provided that such assignee agrees in writing with Pointer to be bound by the terms of this Agreement.

 

	
  

	
7.3

	
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

 

	
  

	
7.4

	
Headings. The headings of the Sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

 

	
  

	
7.5

	
No Waiver. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party hereto, will be deemed to constitute a waiver by the party taking any action of compliance with any representation, warranty or agreement contained herein.  The waiver by any party hereto of any condition or of a breach of any other provision of this Agreement will not operate or be construed as a waiver of any other condition or subsequent breach.  The waiver by any party of any of the conditions precedent to its/his obligations under the Agreement will not preclude it/he from seeking redress for breach of this Agreement other than with respect to the condition so waived.

 

	
  

	
7.6

	
No Broker. Each of the parties represents, as to itself/himself, its subsidiaries and its affiliates (if applicable), that no agent, broker, investment banker or other firm or person, is or shall be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with this Agreement.

 

	
  

	
7.7

	
Expenses. Each party shall bear the expenses incurred by it in connection with this Agreement.

 

	
  

	
7.8

	
Notices.  Any notice, request, instruction or other document (each, a "notice") to be given hereunder by any party hereto to any other party hereto shall be in writing and delivered personally, sent by registered or certified mail, postage prepaid.

 

  

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If to Pointer to:

14 Hamleacha Street

Park Afek, Rosh Ha'ayin

48091, Israel

Attn: Zvi Fried

E-mail: zvif@pointer.com

 

With a copy to:

 

Yigal Arnon & Co.

1 Azrieli Center, Tel Aviv

67021, Israel

Attn: Orly Tsioni, Adv.

E-mail: orly@arnon.co.il

 

If to the Sellers, as set forth in Schedule A attached hereto:

 

	
  

	
7.9

	
Remedies; Severability. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

 

	
  

	
7.10

	
Governing Law. The Laws of the State of Israel shall govern the validity, performance and enforcement of this Agreement. The parties hereto irrevocably submit to the exclusive jurisdiction of the Courts of Tel-Aviv in respect of any dispute or matter arising out of or connected with this Agreement.

 

-Remainder of Page Left Blank-

 

  

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on its behalf as of the date first above written.

 

	
POINTER TELOCATION LTD.

 

By:           _______________

Title:        _______________

Name:      _______________

	  	
MICHA KRAUS

 

By:           _______________

Title:        _______________

Name:      _______________

 

	
ILAN GOLDSTEIN

 

By:           _______________

Title:        _______________

Name:      _______________

	  	
YOSSI REGEV

 

By:           _______________

Title:       _______________

Name:      _______________

  

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SCHEDULE A

 

	
Name of Seller

	 	
Address

	 	
# of Shagrir Shares to be Transferred

	 	 	
# of Pointer Shares to be Issued

	 	 	
Cash Consideration in NIS

	 
	
Micha Kraus

	 	  	 	 	2,781	 	 	 	66,057	 	 	 	1,793,515	 
	
Ilan Goldstein

	 	  	 	 	301	 	 	 	7,150	 	 	 	194,120	 
	
Yossi Regev

	 	  	 	 	301	 	 	 	7,150	 	 	 	194,120	 
	
TOTAL

	 	  	 	 	3,383	 	 	 	80,357	 	 	 	2,181,755	 

  

15

  

Exhibit 2.2.1.1

 

ESOP Confirmation

 

The undersigned, ESOP Management and Trust Services Ltd., hereby confirms and undertakes as follows:

 

	
  

	
1.

	
We have read this Agreement and agree to act in accordance with Section 2.2.1 of this Agreement.

 

	
  

	
2.

	
We are trustees, on behalf of all three Sellers, of the Shagrir Shares which have been issued pursuant to Section 102 of the Income Tax Ordinance [New Version], 1961 and are recognized as such by the Israeli Tax Authorities.

 

	
  

	
3.

	
We agree to act as a trustee in favor of Pointer Telocation Ltd. for the purpose of deducting and withholding all required taxes under Israeli law on payment of the Shagrir Consideration and to transfer the amounts required under Israeli law to the Israeli Tax Authorities no later than the dates on which such amounts are to be transferred.

 

	
  

	
4.

	
Any payments made to Sellers at Closing, including Pointer Shares, will be subject to deduction or withholding of Israeli Tax under the Israeli Tax Ordinance, unless a tax ruling (or the Interim Ruling) shall have been obtained from the Israeli tax authorities before the tenth (10th) day of the calendar month following the month during which the Closing occurs (the "Withholding Drop Date"). For the purpose of tax withholding in accordance with this section, the value of the shares shall be equal to the higher of (a) the closing price of a Pointer Shares as reported on the Nasdaq on the Closing Date, and (b) the closing price of Pointer Shares as reported on the Nasdaq on the earliest of the Withholding Drop Date or of the day of request for release of the shares. We shall retain, until the Withholding Drop Date, the Cash Consideration in order to ensure the full withholding tax due in respect of the share portion of the Consideration.

 

	 	 	 	 
	 ESOP Management and Trust Services Ltd.	 	  Date	 

                                                                      

  

16

  

 

Exhibit ‎2.2.1.2

 

SHARE TRANSFER DEED

 

The undersigned, ESOP Management and Trust Services Ltd., company number 513699538, acting as trustee for and on behalf of Micha Kraus (the "Transferor"), hereby transfers to Pointer Telocation Ltd., company number 520041476 (the "Transferee"), 2,781 Ordinary Shares, par value NIS 1.00 each, of Shagrir Systems Ltd., a private company incorporated under the laws of the State of Israel, company number 511767832, (the "Shares"), free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights, so that the Transferee shall hold the same in accordance with the terms upon which the Transferor held the Shares immediately prior to signature of this deed, and the Transferee agrees to receive the Shares upon the abovementioned terms.

 

In witness whereof we have hereunto set our hands this __________________, 2014.

 

 

	 	 	 	 
	
ESOP Management and Trust Company Ltd.

	 	Pointer Telocation Ltd.	 

                                                                      

	 	 	 	 
	

Witness                                                                                     

	 	Witness	 

                                                                      

  

17

  

 

SHARE TRANSFER DEED

 

The undersigned, ESOP Management and Trust Services Ltd., company number 513699538, acting as trustee for and on behalf of Ilan Goldstein (the "Transferor"), hereby transfers to Pointer Telocation Ltd., company number 520041476 (the "Transferee"), 301 Ordinary Shares, par value NIS 1.00 each, of Shagrir Systems Ltd., a private company incorporated under the laws of the State of Israel, company number 511767832, (the "Shares"), free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights, so that the Transferee shall hold the same in accordance with the terms upon which the Transferor held the Shares immediately prior to signature of this deed, and the Transferee agrees to receive the Shares upon the abovementioned terms.

 

In witness whereof we have hereunto set our hands this __________________, 2014.

 

 

	 	 	 	 
	

ESOP Management and Trust Company Ltd.

	 	Pointer Telocation Ltd.	 

                                                                      

	 	 	 	 
	

Witness                                                                                     

	 	Witness	 

                                                                      

  

18

  

 

SHARE TRANSFER DEED

 

The undersigned, ESOP Management and Trust Services Ltd., company number 513699538, acting as trustee for and on behalf of Yossi Regev (the "Transferor"), hereby transfers to Pointer Telocation Ltd., company number 520041476 (the "Transferee"), 301 Ordinary Shares, par value NIS 1.00 each, of Shagrir Systems Ltd., a private company incorporated under the laws of the State of Israel, company number 511767832, (the "Shares"), free and clear of all liens, charges, restrictions, claims, encumbrances or any third party rights, so that the Transferee shall hold the same in accordance with the terms upon which the Transferor held the Shares immediately prior to signature of this deed, and the Transferee agrees to receive the Shares upon the abovementioned terms.

 

In witness whereof we have hereunto set our hands this __________________, 2014.

 

	 	 	 	 
	

ESOP Management and Trust Company Ltd.

	 	Pointer Telocation Ltd.	 

                                                                      

	 	 	 	 
	

Witness                                                                                     

	 	Witness	 

                                                                      

  

19

  

 

Exhibit 2.2.1.3

 

Date:  ____________

To:

 

Pointer Telocation Ltd.

 

Dear Sirs,

 

COMPLIANCE CERTIFICATE

 

In connection with the Share Purchase Agreement, dated January __, 2014 (the "SPA"), by and among Pointer Telocation Ltd. (“Pointer”) the undersigned, _____________ (the "Seller") and other sellers and pursuant to Section ‎2.2.1.3 thereto, the undersigned hereby confirms that:

 

The representations and warranties provided by me, as set forth in Section 3 of the SPA were true, complete and correct as of the date of execution of the SPA and are true and correct as of the date hereof.

 

____________________

 

[Name of Seller]

 

  

20

  

 

Exhibit ‎2.2.2.1

 

Resolutions of the Board of Directors of Pointer

 

  

21

  

 

Exhibit ‎2.2.2.4

 

Date:  ____________

 

To:

 

Micha Kraus

 

Ilan Goldstein

 

Yossi Regeve

 

Dear Sirs,

 

COMPLIANCE CERTIFICATE

 

In connection with the Share Purchase Agreement, dated January __, 2014 (the "SPA"), by and among Pointer Telocation Ltd. (“Pointer”) Micha Kraus, Ilan Goldstein and Yossi Regev (the "Sellers") and pursuant to Section ‎2.2.2.4 thereto, the undersigned, the Chief Executive Officer of Pointer, hereby confirms to the Sellers that:

 

The representations and warranties of Pointer set forth in Section ‎4 of the SPA were true, complete and correct as of the date of execution of the SPA and are true and correct as of the date hereof.

 

____________________

 

Pointer Telocation Ltd.

 

Name:      David Mahlab

 

Title:        Chief Executive Officer

 

22

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