Document:

exhibit_4b-2.htm

 

Exhibit 4.(b).2

 

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT, dated as of _______, 2009 (this "Agreement"), by and between Partner Communications Company Ltd., a company organized under the laws of Israel (the "Company"), and Scailex Corporation Ltd., a company organized under the laws of Israel (the "Shareholder").

WHEREAS, the Shareholder entered into that certain Share Purchase Agreement, dated as of August 12, 2009, by and between the Shareholder and Advent Investments Pte Ltd (the “Share Purchase Agreement”), under which the Shareholder will acquire 78,940,104 ordinary shares, par value NIS 0.01 per share, of the Company (the Company’s ordinary shares, the "Ordinary Shares");1

 

WHEREAS, in connection with the transactions contemplated by the Share Purchase Agreement the Shareholder desires that this Agreement shall be executed and delivered; and

 

WHEREAS, the audit committee and the board of directors of the Company have determined that it is in the best interests of the Company to enter into this Agreement with the Shareholder in connection with the Share Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties and conditions contained herein, the parties hereto agree as follows:

 

ARTICLE I

Definitions

SECTION 1.01. As used in this Agreement, the following terms shall have the following respective meanings:

"Commission" shall mean the United States Securities and Exchange Commission, or any other United States federal agency at the time administering the Securities Act or the Exchange Act, as applicable, whichever is the relevant statute.

 

"Exchange Act" shall mean the United States Securities Exchange Act of 1934, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be amended from time to time.

"Holder" shall mean the Shareholder or any transferee or assignee thereof to whom the rights under this Agreement are assigned in accordance with the provisions of Section 4.07 hereof.

"Person" shall mean a corporation, association, partnership, organization, group (as such term is used in Rule 13d-5 under the Exchange Act), business, individual, government or political subdivision thereof, governmental agency or other entity.

"Registrable Shares" shall mean any Ordinary Shares held by the Shareholder from time to time. For purposes of this Agreement, any Registrable Shares shall cease to be Registrable Shares when (x) a registration statement covering such Registrable Shares has been declared effective and such Registrable Shares have been disposed of pursuant to such effective registration statement or (y) such Registrable Shares are sold feely in the public market by a person in a transaction in which the rights under the provisions of this Agreement are not assigned.

"Securities Act" shall mean the United States Securities Act of 1933, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be amended from time to time.

 

1 This draft assumes that the registration rights agreement will be entered into prior to closing of the Share Purchase Agreement subject to obtaining the shareholders approval and the closing of the transactions contemplated by the Share Purchase Agreement.

 

  

  

  

 

ARTICLE II

Representations and Warranties

SECTION 2.01. Representations and Warranties of the Shareholder. The Shareholder hereby represents and warrants to the Company that it has all requisite power and authority, and has received all requisite approvals to complete the transactions contemplated hereby; this Agreement has been duly authorized, executed and delivered by the Shareholder and constitutes a valid and binding agreement enforceable against it in accordance with its terms.

SECTION 2.02. Representations and Warranties of the Company. The Company represents and warrants to the Shareholder that it has been `duly incorporated as a limited liability company under the laws of Israel and that (i) it has all requisite corporate power and authority, and has received all requisite approvals (including any necessary approval of its audit committee and board of directors) to complete the transactions contemplated hereby and (ii) this Agreement has been duly authorized, executed and delivered by it and constitutes it valid and binding agreement enforceable by the Shareholder against it in accordance with its terms.

 

ARTICLE III

Agreements in Respect of the Registrable Shares

SECTION 3.01. Demand Registrations. (a) Each Holder shall have the right (the "Demand Right") during the term of this Agreement to require the Company to file a registration statement under the Securities Act in respect of all or some of the Registrable Shares held by such Holder (but not less than a number of Registrable Shares that represents at least 2.65% of the then outstanding Ordinary Shares of the Company). Subject to the provisions of subsection (b) below, as promptly as practicable, but in no event later than 45 days after the Company receives a written request from such Holder demanding that the Company so register the number of Registrable Shares specified in such request, the Company shall file with the Commission and thereafter use its best efforts to cause to be declare effective promptly a registration statement (a "Demand Registration") providing for the registrations of all Registrable Shares as such Holder shall have demanded be registered. The Company may satisfy its obligation to file a Demand Registration through an automatic shelf registration statement on form F-3 within the meaning of Rule 405 under the Securities Act.  All requests made pursuant to this Section 3.01 (a) shall specify the amount of the Registrable Shares to be registered. The Demand Registration shall be for a firm commitment underwritten public offering.

(b) Anything in this Agreement to the contrary notwithstanding, the Company shall be entitled to postpone and delay the filing of any Demand Registration until the earliest practicable time at which such Demand Registration can be reasonably effected if (i) the Company is conducting or about to conduct an underwritten public offering of securities in which the Holder is entitled to join pursuant to Section 3.02 hereof, (ii) the Company is subject to an existing contractual obligation not to engage in a public offering, (iii) the financial statements of the Company for the fiscal period most recently ended prior to such written request are not yet available, or (iv) the Company shall determine that any such filing or the offering of any Registrable Shares would (x) in the good faith judgment of the Board of Directors of the Company, impede, delay or otherwise interfere with any pending or contemplated financing, acquisition, corporate reorganization or other similar transaction involving the Company, (y) based upon advice from the Company's investment banker or financial advisor, adversely affect any pending or contemplated offering or sale of any class of securities by the Company, or (z) require disclosure of material nonpublic information which, if disclosed at such time, would be materially harmful to the interests of the Company and its shareholders. After the expiration of any such postponement or delay and without any further request from a Holder, the Company shall effect the filing of the relevant Demand Registration and shall use its best efforts to cause any such Demand Registration to be declared effective as promptly as practicable unless such Holder shall have, prior to the effective date of such Demand Registration, withdrawn in writing its initial request, in which case such withdrawn request shall not constitute a Demand Registration.

 

  

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(c)     Notwithstanding anything contained in this Section 3.01:

(i) the Company shall not be required to file a registration statement within 180 days of the effective date of a prior registration statement filed as a result of a request for a Demand Registration by a Holder or within 180 days of the effective date of a prior registration statement registering Ordinary Shares;

(ii) a Holder shall not be entitled to request a Demand Registration until after twelve months from the Effective Date,

(iii) no request for a Demand Registration may be made by a Holder during the pendency of any lock-up period imposed in connection with a public offering of securities of the Company, except with the consent of the underwriters controlling the applicable lock-up agreement

(iv) the Company shall not be required to file a registration statement if the filing of such a registration statement, or the transactions contemplated by such filing, would in the good faith judgment of the Board of Directors of the Company be contrary to applicable rules or law;

(v) the Company shall not be required to file a registration statement if the filing of such registration statement, or the transactions contemplated by such fling, would in the good faith judgment of the Board of Directors of the Company result in a breach of the Company's license; and

(vi) the Company shall not be required to file a registration statement if the filing of such registration statement, or the transactions contemplated by such filing, would in the good faith judgment of the Board of Directors of the Company result in a breach of the Company's financing or other debt documents (including, any ancillary documents related thereto).

(d)           Notwithstanding anything contained in this Section 3.01, if the lead underwriter of an offering involving a Demand Registration advises the Holders that have requested such registration that the total number of Registrable Shames that the Holders intend to include is such as (i) would materially and adversely affect the price of the Ordinary Shares to be offered or (ii) result in a greater number of Ordinary Shares being offered than the market could reasonably absorb, then the number of Registrable Shares to be registered in the Demand Registration shall be reduced to such number which, in the opinion of such underwriters, can be sold without (i) materially and adversely affecting the price of the Ordinary Shares to be offered or (ii) resulting in a greater number of Ordinary Shares being registered than the market could absorb. Such Registrable Shares to be included in such registration shall be allocated pro rata among all requesting Holders on the basis of the relative number of securities originally requested to be registered by each of them.

 

  

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(e)    The Company shall be entitled to include newly issued Ordinary Shares in any Demand Registration; provided, however, that if the lead underwriter of an offering involving a Demand Registration advises the Holders that have requested such registration that the number of Ordinary Shares that the Company intends to include in addition to the total number of Registrable Shares that the Holders intend to include is such as (1) would materially and adversely affect the price of the Ordinary Shares to be offered or (ii) result in a greater number of Ordinary Shares being offered than the market could reasonably absorb, then the Holders will promptly, so advise the Company and may require, by written notice to the Company accompanying such advice, that, to the extent necessary to meet such limitation, newly issued Ordinary Shares shall be excluded from such Demand Registration.

SECTION 3.02. Piggyback Registration. (a) If the Company proposes to file a registration statement under the Securities Act with respect to an offering of its Ordinary Shares (i) for its own account (other than a registration statement on Form F-4, S-4 or S-8 (or any substitute form that may be adopted by the Commission)) or (ii) for the account of any holders of its Ordinary Shares (including any pursuant to a Demand Registration), on a form and in a manner that would permit registration of Registrable Shares for sale to the public under the Securities Act, the Company shall give written notice of such proposed filing to each Holder as soon as practicable (but in any event not less than 30 days before the anticipated filing date), and such notice shall offer each Holder the opportunity to register such number of Registrable Shares as the Holder shall request. Upon the written direction of any Holder, given within 20 days following the receipt by such Holder of any such written notice (which direction shall specify the number of Registrable Shares intended to be disposed of by such Holder), the Company shall include in such registration statement (a "Piggyback Registration" and, collectively with a Demand Registration, a "Registration'") such number of Registrable Shares as shall be set forth in such notice.

(b)    Notwithstanding anything contained in this Section 3.02, if the lead underwriter of an offering involving a Piggyback Registration advises the Company that the inclusion of such Registrable Shares (i) would materially and adversely affect the price of the Ordinary Shares to be offered or (ii) result in a greater amount of Ordinary Shares being offered than the market could reasonably absorb, then the number of Registrable Shares to be registered by each party requesting Piggyback Registration shall be reduced such that the total number of Registrable Shares being registered is not larger than such number which, in the opinion of such underwriters, can be sold without (i) materially and adversely affecting the price of the Ordinary Shares to be offered or (ii) resulting in a greater number of Ordinary Shares being registered than the market could absorb. Such Registrable Shares to be included in such Registration shall be allocated pro rata among all requesting Holders on the basis of the relative number of securities originally requested to be registered by each of them. Nothing contained herein shall require the Company to reduce the number of Ordinary Shares proposed to be issued by the Company.

(c)    Subject to Section 3.01 (e) (ii) hereof, no Piggyback Registration effected under this Section 3.02 shall be deemed to have been effected pursuant to Section 3.01 hereof or shall release the Company of its obligations to effect any Demand Registration upon request as provided under Section 3.01 hereof

 

  

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(d)           The Company shall not be obligated to effect any registration of Registrable Shares under this Section 3.02 that is incidental to the registration of any of its securities in connection with any merger, acquisition, exchange offer, dividend reinvestment plan or stock option or other employee benefit plan.

(e)           Notwithstanding anything contained in this Section 3.02, if at any time after giving notice of its intention to register any of its securities and prior to the effective date of the registration statement fled in connection with such registration, the Company shall determine for any reason not to register such securities, the Company may, at its election, give written notice of such determination to the Holders participating in such registration and thereupon the Company shall be relieved of its obligation to register any Registrable Shares in connection with such registration (but not from its obligation to pay expenses incurred in connection with such registration to the extent provided in Section 3.05).

(f)    No Holder may participate in any underwritten registration pursuant to this Section 3.02 unless such Holder (i) agrees to sell such Holder's Registrable Shares on the basis provided in any underwritten arrangements approved by the Company and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

SECTION 3.03. Registration Procedures. (a) In connection with each Registration, and in accordance with the intended method or methods of distribution of the Ordinary Shares as described in such Registration, the Company shall, as soon as reasonably practicable (and, in any event, subject to the terms of this Agreement, at or before the time required by applicable laws and regulations):

(a)    prepare and file with the Commission a registration statement on an appropriate form with respect to such Registrable Shares and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby determined as provided hereafter;

(b)     prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares covered by such registration statement;

(c)     furnish to each Holder participating in such registration such numbers of copies of the registration statement and the prospectus included therein (including each preliminary prospectus and any amendments or supplements thereto), in conformity with the requirements of the Securities Act, any documents incorporating by reference in such registration statement or prospectus and such other documents and information as it may reasonably request in order to facilitate the age or disposition of such Registrable Shares;

 

(d)     use its reasonable best efforts to register or qualify the Registrable Shares covered by such registration statement under such other securities or blue sky laws of such jurisdiction within the United States as shall be reasonably appropriate for the distribution of the Registrable Shares covered by the registration statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business in or to file a general consent to service of process in any jurisdiction wherein it would not but for the requirements of this paragraph (d) be obligated to do so; and provided, further, that the Company shall not be required to qualify such Registrable Shares in any jurisdiction in which the securities regulatory authority requires that a Holder participating in such registration submit any of its Registrable Shares to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Shares in etch jurisdiction unless such Holder agrees to do so;

 

  

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(e)    promptly notify each Holder participating in such registration, (i) when a prospectus or any prospectus supplement or amendment has been filed, and, with respect to a registration statement or any post-effective amendment to a registration statement, when the same has become effective, (ii) of any request by the Commission for amendments or supplements to a registration statement or related prospectus or for additional information or any receipt of Commission comments, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a registration statement or the initiation of any proceedings for any such purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Shares for sale in any jurisdiction or the initiation or threat of any proceedings for such purpose, and (v) at any time when a prospectus relating to the Registrable Shares is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, and at the request of any such Holder promptly prepare, and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an 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 not misleading in light of the circumstances under which they were made and shall otherwise comply in all material respects with applicable law;

(f)     use its reasonable best efforts to furnish, at the request of any Holder requesting registration of Registrable Shares pursuant to Sections 3.01 or 3.02 hereof, if the method of distribution is by means of an underwriting, on the date that the Registrable Shares are, delivered to the underwriters for sale pursuant to such registration, or if such. Registrable Shares are not being sold through underwriters, on the date that the registration statement with respect to such Registrable Shares becomes effective, (1) a signed opinion, dated such date, of the independent legal counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Shares are not being sold through underwriters, then to the Holders making such request, as to such matters as such underwriters or the Holders may reasonably request and as would be customary in such a transaction; and (2) letters dated such date and the date the offering is priced from the independent certified public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Shares are not being sold through underwriters, then to the Holders malting such request and, if such accountants refuse to deliver such letters to such Holders, then to the Company (i) stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the registration statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and (ii) covering such other financial matters with respect to the registration in respect of which such letter is being given as such underwriters or the Holders, as the case may be, may reasonably request and as would be customary in such a transaction;

 

  

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(g)     enter into customary agreements (including if the method of distribution is by means of an underwritten public offering, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Shares to be so included in the registration statement;

(h)           otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, but not later than eighteen (18) months after the effective date of the registration statement, an earnings statement covering the period of at least twelve (12) months beginning with the first full month after the effective date of such registration statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act; and

(i)     use its best efforts to list such securities on each securities exchange on which Ordinary Shares or American Depositary Shares thereof are then listed, if such Registrable Shares are not already listed and if such listing is then permitted under the rules of such exchange.

(b)     Each Holder requesting registration shall furnish to the Company in writing such information regarding such Holder and its intended method of distribution of the Registrable Shares as the Company may from time to time reasonably request in writing and as shall be required by law or by the Commission in connection therewith. Such Holder shall notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Holder to the Company or of the occurrence of any event, in either case as a result of which any prospectus relating to the Registrable Shares contains or would contain an untrue statement of a material fact regarding such Holder or its intended method of distribution of such Registrable Shares or omits to state any material fact regarding such Holder or its intended method of distribution of such Registrable Shares required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and promptly furnish to the Company any additional information required to correct and update any previously furnished information, or required so that such prospectus shall not contain, with respect to such Holder or the intended method of distribution of the Registrable Shares, an 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 light of the circumstances under which they were made, not misleading and shall otherwise comply in all material respects with applicable law.

(c)     Each Holder participating in any registration pursuant to Section 3.01 or 3.02 shall enter into customary agreements (including if the method of distribution is by means of an underwritten public offering an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Shares to be so included in the registration statement.

(d)     Each Holder participating in any registration pursuant to Section 3.01 or 3.02 shall, upon receipt of notice of the occurrence of any of the events specified in Section 3.03 (c)(ii), (iii), (iv) or (v) hereof forthwith discontinue disposition of such Registrable Shares pursuant to the registration statement covering such Registrable Shares until such Holder's receipt of notice from the Company that the use of the applicable prospectus may be resumed or until such Holder's receipt of copies of an amended or supplemented prospectus.

 

  

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SECTION 3.04. Registration Expenses. (a) In the case of a Registration proposed by the Company pursuant to which the Company is registering Ordinary Shares for its own account, all expenses, excluding underwriters' discounts and commissions and any stamp or transfer tax or duty, but including without limitation all registration, fling and qualification fees, word processing, duplicating, printers and accounting fees (including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance), fees of the Financial Industry Regulatory Authority or listing fees, messenger and delivery expenses, all fees and expenses of complying with state securities or blue sky laws, and fees and disbursements of counsel for the Company incurred in connection with each Registration shall be paid by the Company. In the case of such a Registration, each Holder participating in such Registration shall bear and pay the underwriting commissions and discounts and any stamp or transfer tax or duty and the fees and disbursements of counsel for such Holder applicable to securities offered for its account in connection with such Registration.

(b)           In the case of a Demand Registration, each Holder shall bear and pay the underwriting commissions and discounts and any stamp or transfer tax or duty and the fees and disbursements of counsel for such Holder applicable to securities offered for its account in connection with such Registration. All other expenses, including without limitation all registration, filing and qualification fees, word processing, duplicating, printers' and accounting fees (including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance), fees of the Financial Industry Regulatory Authority or listing fees, messenger and delivery expenses, all fees and expenses of complying with state securities or blue sky laws and fees and disbursements of counsel for the Company incurred in connection with each registration shall be paid by the Company and each Holder participating in such registration in proportion to the number of securities registered for the account of the Company and each Holder.

SECTION 3.05. Indemnification: Contribution. (a) Indemnification by the Company. The Company shall, and it hereby agrees to, indemnify and hold harmless, in the case of any registration statement fled pursuant to Section 3.01 or 3.02 registering Registrable Shares of a Holder, such Holder, such Holder's directors and officers, and each person who participates as a placement or sales agent or as an underwriter in any offering or sale of the Registrable Shares, from and against any losses, claims, damages or liabilities to which such Holder or such director or officer or such agent or underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any registration statement, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by it reference therein, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading and the Company shall, and it hereby agrees to, reimburse each such Holder or any such director or officer or agent or underwriter for any legal or other expenses reasonably incurred by than in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary or final prospectus, or amendment or supplement thereto, or document incorporated by reference therein, in reliance upon and in conformity with written information furnished to the Company by such Holder or such director or officer or any agent, underwriter or representative of such Holder expressly for use therein, or by such Holder's failure to furnish the Company, upon request; with the information with respect to such Holder, such Holder's directors and officers, or any agent, underwriter or representative of such Holder, or such Holder's intended method of distribution, that is the subject of the untrue statement or omission or if the Company shall sustain the burden of proving that such Holder, such Holder's directors and officers, or such agent or underwriter sold securities to the person alleging such loss, claim, damage or liability without sanding or giving, at or prior to the written confirmation of such We, a copy of the applicable prospectus (excluding any documents incorporated by reference therein) or of the applicable prospectus, as then amended or supplemented (excluding any documents incorporated by reference therein) if the Company had previously furnished copies thereof to the such Holder or such agent or underwriter, and such prospectus corrected such untrue statement or alleged untrue statement or omission or alleged omission made in such Registration.

 

  

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(b)           Indemnification by the Holder and Any Agent or Underwriters. Each Holder requesting or joining in a Registration severally and not jointly shall indemnify and hold harmless the Company, each of its directors and officers, each person, if any, who controls the Company within the meaning of the Securities Act, and each agent and any underwriter for the Company (within the meaning of the Securities Act) against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, controlling person, agent or underwriter may became subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged Untrue statement of any material fact contained in such registration statement, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, 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 made in any registration statement, preliminary or final prospectus, or amendments or supplements thereto, or documents incorporated by reference therein, in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder expressly for use therein; and each such Holder shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, agent or underwriter in connection with investigating or defending any such action or claim as such expenses are incurred.

 

(c)   Notice of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of, or as contemplated by, this Section 3.05, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than pursuant to such provisions. In case any such action or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof the indemnifying party shall be entitled to participate therein and to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party (which shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party shall not be liable to such indemnified party for any legal of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel (in addition to local counsel) for each indemnified party with respect to such claim. The indemnifying party will not be subject to any liability for any settlement made without its consent, which consent shall not be unreasonably withheld or delayed. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of or consent to the entry of any judgment with respect to, any pending or treated action or claim in respect of which indemnification or contribution may be sought unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault; culpability or a failure to act, by or behalf of any indemnified party.

 

  

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(d)    Contribution. Each Holder requesting or joining in a Registration and the Company agree that it, for any reason, the indemnification provisions contemplated by Section 3.05 (a) or Section 3.05(b) hereof are unavailable to or are insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative fault of, and benefits derived by, the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 3.05(d) were determined by pro rata allocation (even if the Holder or any agents for, or underwriters of the Registrable Shares, or all of them, were treated as one entity for such purposes); or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 3.05(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above shall be doomed to include (subject to the limitations set forth in Section 3.05(c) hereof)  any legal. or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  Notwithstanding the foregoing, an indemnifying party shall not be required to contribute under this Section 3.05(d) except under such circumstances as such indemnifying party would have been liable pursuant to Section 3.05(a) or (b) had such indemnification been enforceable under applicable law.

(e)    Beneficiaries of Indemnification. The obligations of the Company under this Section 3.05 shall be in addition to any liability that it may otherwise have and shall extend, upon the same terms end conditions, to each officer, director and partner of each Holder requesting or joining in a Registration and each agent and underwriter of the Registrable Shares and each person, if any, who controls such Holder or any such agent or underwriter within the meaning of the Securities Act; and the obligations of such Holder and any agents or underwriters contemplated by this Section 3.05 shall be in addition to any liability that such Holder or its respective agent or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his consent, is named in any registration statement as about to become a director of the Company) and to each person, if any, who controls the Company within the meaning of the Securities Act.

 

SECTION 3.06. Underwriters. If any of the Registrable Shares are to be sold pursuant to an underwritten offering, the investment banker or bankers and the managing underwriter or underwriters thereof shall be selected by the Company except in the case of a Demand Registration, in which case the managing underwriter or underwriters shall be selected by the Holder requesting such Registration after consultation with the Company and any other Holder who elects to participate in the registration (if known at the time of such selection) and taking into account the Company's and such other Holder's reasonable requests, provided that such managing underwriter or underwriters must be of recognized international standing.

 

  

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SECTION 3.07. Lockups. (a) Each Holder shall, in connection with any registration of the Company's securities pursuant to Section 3.01 or 3.02, upon the request of the Company or the underwriters managing any underwritten offering of the Company's securities, agree in writing not to effect any sale, disposition or distribution of any Registrable Shares (other than that included in the registration) without the prior written consent of the Company or the representatives of such underwriters, as the case may be, for such period of time not to exceed 180 days from the effective date of such registration as the Company or the underwriters may specify.

 

(b)     The Company shall, if so required by the managing underwriters in connection with an underwritten offering of Registrable Shares pursuant to Section 3.01 or 3.02, agree in writing not to effect any sale, disposition or distribution of any Ordinary Shares or securities convertible into or exchangeable or exercisable for Ordinary Shares (other than that included in the registration) without the prior written consent of the representatives of such underwriters for such period of time not to exceed 180 days from the effective date of such registration as the underwriter may specify, except in connection with a stock option plan, stock purchase plan, savings or similar plan, or an acquisition, merger or exchange offer.

SECTION 3.08. Over-allotment Options. It is understood that in any underwritten offering of Registrable Shares in addition to the shares (the "initial shares") the underwriters have committed to purchase, the underwriting agreement may grant the underwriters an option to purchase a number of additional shares (the "option shares") equal to up to 15% of the initial shares (or such other maximum amount as the Financial Industry Regulatory Authority may then permit), solely to cover over-allotments, if any. In the absence of agreement to the contrary, the number of initial shares and option shares to be sold by the Company and the Holders participating in such offering shall be allocated pro rata among such persons an the basis of the relative number of Registrable Shares each person has requested to be included in such registration.

SECTION 3.09. Preparation: Reasonable Investigation. In connection with the preparation and fling of each registration statement registering Registrable Shares under the Securities Act, the Company will give the Holders participating in such registration and its underwriters, if any, and its counsel and accountants, the opportunity to participate in the preparation of such registration statement, each prospectus included therein are filed with the Commission, and each amendment thereof or supplement thereto, and will give it such access to its books and records and such opportunities to discuss the business of the Company with its of cars and the independent public accountants who have issued a report on its financial statements as shall be necessary, in the opinion of such Holders and such underwriters or their respective counsel to conduct a reasonable investigation within the meaning of the Securities Act.

ARTICLE IV

Miscellaneous

SECTION 4.01. Terms of Agreement: Termination. The term of this Agreement shall terminate with respect to a Holder on the earlier of: (i) five (5) years from the Effective Date; and (ii) when the Registrable Shares held by such Holder can be sold in the United States public market pursuant to an exemption from the registration requirements of the Securities Act and without regard to holding period, volume or manner-of-sale limitations.

 

  

11

  

SECTION 4.02. Effective Date.  This Agreement shall become effective subject to and only after the fulfillment of each of the following conditions (the date on which this Agreement shall become effective, the "Effective Date"):

(a)     A resolution at a general meeting of the shareholders of the Company to approve and adopt this Agreement shall have been dully passed; and

(b)     The consummation of the transactions contemplated by the Share Purchase Agreement shall have been occurred.

 

 

SECTION 4.03. Specific Performance and Other Equitable Rights. Each of the parties hereto recognizes and acknowledges that a breach by a party or by any assignee thereof of any covenants or other commitments contained in this Agreement will cause the other party to sustain injury for which it would not have an adequate remedy at law for money damages. Therefore, each of the parties hereto agrees that in the event of any such breach, the aggrieved party shall be entitled to the remedy of specific performance of such covenants or commitments and preliminary and permanent injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity, and the parties hereto hereby waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief.

 

SECTION 4.04. Notices. All notices, requests, demands and other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended or delivered by registered or certified mail, return receipt requested, or if sent by telecopier, upon receipt of oral confirmation that such transmission has been received, to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person:

 

(a)           If to the Company, addressed as follows:

Partner Communications Company Ltd.

8 Amal Street

Afeq Industrial Park

Rosh-Ha'ayin 48103

Israel

Attention: Roly Klinger

Telecopier: 054-7814193

 with copies to:

Shearman & Sterling

Broadgate West

9 Appold Street

London EC2A 2AP England

 

Attention:  Richard Price

            George Karafotias

Telecopier:  44-207 655 5500

 

  

12

  

 

(b)             If to the Shareholder, addressed as follows:

Scailex Corporation Ltd.

48 Ben Zion Galis St,

Segula Industrial Park,

Petach Tikva, Israel 49277

Attention: CEO

Telecopier: 03-930 0424

or to such other address as the relevant party may from time to time advise by notice in writing given pursuant to this Section 4.04. The date of receipt of any such notice, request, consent, agreement or approval shall be deemed to be the date of delivery thereof.

SECTION 4.05. Survival. The several indemnities, agreements, representations, warranties and each other provision set forth in this Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any party, any director or officer of such party, or any controlling person of any of the foregoing, and shall survive the transfer of any Registrable Shares by the Shareholder, and the indemnification and contribution provisions set forth in Section 3.05 hereof shall survive termination of this Agreement.

 

SECTION 4.06. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

SECTION 4.07. Transfer of Registration Rights. The registration rights of the Shareholder in this Agreement with respect to any Registrable Shares may be transferred to any person acquiring all of the Registrable Shares held by the Holder or a part of the Registrable Shares held by a Holder comprising at least 4.99% of the outstanding Ordinary Shares and the transferee acquires the right to nominate a representative to the board of directors of the Company at the time the transferee acquires such shares; provided, however, that the Company may deny the transfer of such registration rights in any such case if (i) such transfer relates to a sale or other transfer of all of the Registrable Shares to a person who is a competitor of the Company or its subsidiaries in the industry or (ii) any conditions in the last sentence of this Section 4.07 are not met. Each such transfer is contingent on the Shareholder or the transferring person satisfying the following: (i) the Shareholder or transferring person shall have given the Company written notice at or prior to the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which the rights under this Agreement are being transferred; (ii) such transferee shall have agreed in writing, in form and substance reasonably satisfactory to the Company, to be bound by the provisions of this Agreement; and (iii) immediately following such transfer the further disposition of such securities by each transferee shall be restricted under the Securities Act.

 

  

13

  

SECTION 4.08. Successors and Assigns. Except as otherwise expressly provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto. Except as expressly provided in this Agreement, nothing in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement.

 

SECTION 4.09. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

SECTION 4.10. Entire Agreement: Amendments. This Agreement and the other writings referred to herein or delivered pursuant hereto which fore a part hereof contain the entire understanding of the parties with respect is to its subject matter. This Agreement supersedes all prior agreements and understanding among the parties with respect to its subject matter. This Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by each of the parties, which shall be binding on all of the parties

SECTION 4.11. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shat constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

PARTNER COMMUNICATIONS COMPANY LTD.

 

By:  _______________________________________

Name:

Title:

SCAILEX CORPORATION LTD.

 

By:  ­­­­­­­­­­­­­­­­­________________________________________

Name:

Title:

 

148-K

                                                                    EXHIBIT 10.1

                            INKSURE TECHNOLOGIES INC.

                                   EXHIBIT "B"

                       SUBSCRIPTION DOCUMENTS FOR SHARES

                            MINIMUM SHARES AND AMOUNT

SALE OF 17,000,000 SHARES OF COMMON STOCK (THE "SHARES") (WHICH AFTER ISSUANCE
WOULD REPRESENT APPROXIMATELY FIFTY-ONE (51%) PERCENT OF THE TOTAL ISSUED AND
OUTSTANDING SHARES OF THE COMPANY) AT $0.125 PER SHARE FOR TOTAL CONSIDERATION
OF $2,125,000 (THE "MINIMUM SHARES")

                            MAXIMUM SHARES AND AMOUNT

SALE OF 25,000,000 SHARES OF COMMON STOCK (THE "SHARES") (WHICH AFTER ISSUANCE
WOULD REPRESENT APPROXIMATELY SIXTY (60%) PERCENT OF THE TOTAL ISSUED AND
OUTSTANDING SHARES OF THE COMPANY) AT $0.125 PER SHARE FOR TOTAL CONSIDERATION
OF $3,125,000

IN THE EVENT THAT YOU DECIDE NOT TO PURCHASE ANY SHARES, PLEASE RETURN THE
CONFIDENTIAL PRIVATE OFFERING MEMORANDUM AND THE SUBSCRIPTION DOCUMENTS TO THE
COMPANY

                                JANUARY 25, 2010

                            INKSURE TECHNOLOGIES INC.

                        SUBSCRIPTION DOCUMENTS FOR SHARES

                                  INSTRUCTIONS

                                       AND

                             SUBSCRIPTION AGREEMENT

                            INKSURE TECHNOLOGIES INC.

                             SUBSCRIPTION FOR SHARES

                           INSTRUCTIONS TO SUBSCRIBERS

                            INKSURE TECHNOLOGIES INC.

                           INSTRUCTIONS TO SUBSCRIBERS
                       FOR SUBSCRIPTION TO PURCHASE SHARES

     Persons and entities ("Subscribers") wishing to subscribe to shares of
Common Stock of INKSURE TECHNOLOGIES INC. (the "Shares") should complete and
sign the Subscription Agreement.

     IN ORDER TO COMPLY WITH THE INTERNATIONAL MONEY LAUNDERING ABATEMENT AND
ANTI-TERRORIST FINANCING ACT OF 2001 (TITLE III OF THE USA PATRIOT ACT OF 2001),
AS AMENDED, AND THE U.S. TREASURY DEPARTMENT'S OFFICE OF FOREIGN ASSETS CONTROL
("OFAC"), CERTAIN SUBSCRIBERS WILL BE REQUIRED TO PROVIDE ADDITIONAL
INFORMATION. IF NECESSARY, YOU WILL BE CONTACTED REGARDING THE PARTICULAR
INFORMATION THAT YOU WILL NEED TO PROVIDE AFTER YOU COMPLETE THE SUBSCRIPTION
AGREEMENT. YOU WILL NEED TO PROVIDE THE REQUESTED INFORMATION PRIOR TO
PURCHASING SHARES.

     Normally, Subscribers may subscribe by completing the following steps:

     CAREFULLY REVIEW THE MEMORANDUM AND THE EXHIBITS THERETO.

1.   SUBSCRIPTION AGREEMENT:

     Complete applicable Sections in Article IV, complete and sign the signature
page (on page 12).

2.   FORM W-9:

     Complete and sign the attached Form W-9. Completed Subscription Agreements
and Form W-9 should be returned to:

                       Inksure Technologies Inc.
                       c/o Lichter Gliedman Offenkrantz PC
                       551 Fifth Avenue - 24th Floor
                       New York, New York 10176

INSTRUCTIONS FOR TRANSMITTAL OF FUNDS:

Your subscription payment may be made by wire transfer in accordance with the
following wire instructions:

                       JPMORGAN CHASE BANK, N.A.
                       ABA #:                             021000021
                       Account #:                         114-729484
                       Lichter Gliedman Offenkrantz PC, Special Account
                       551 Fifth Avenue
                       New York, NY 10176

     Please inform Mr. Leonard Lichter at (212) 867-7750 of the date, the
amount, the bank and branch from which the wire transmittals originate. This
will allow us to confirm the receipt of your wire transfer. If you prefer to
make your subscription by check, please make your check payable to "Lichter
Gliedman Offenkrantz PC Special Account" and deliver it with your completed
documents to Lichter Gliedman Offenkrantz PC, Attention: Leonard Lichter, Esq..

     Retain the Confidential Private Placement Memorandum for your files. Upon
acceptance, the Company will acknowledge your subscription and return a copy to
you.

     PLEASE INDICATE ON PAGE 12 OF THE SUBSCRIPTION AGREEMENT THE COMPLETE NAME
OF THE PERSON OR ENTITY AS IT SHOULD APPEAR ON THE SHARES.

     The payment of the amount of your Subscription into the Escrow Account of
the Company's attorneys will be retained until all requirements for the release
of the funds, as set forth in the Escrow Agreement and the Memorandum, have been
satisfied. If not so satisfied, all funds, will be returned by the Escrow Agent
to the subscribers.

     THE SUBSCRIBER UNDERSTANDS AND ACKNOWLEDGES THAT THE SUBSCRIPTION AGREEMENT
IS IRREVOCABLE WITH RESPECT TO THE SUBSCRIPTION FOR SHARES UNLESS AND UNTIL
REJECTED IN WRITING BY THE COMPANY, IN WHOLE OR IN PART, AND THAT THE COMPANY
HAS RESERVED THE RIGHT, IN ITS SOLE DISCRETION, TO REFUSE TO ACCEPT
SUBSCRIPTIONS, IN WHOLE OR IN PART, BY ANY PERSON AT ANY TIME.

                                       2

                            INKSURE TECHNOLOGIES INC.

                        SUBSCRIPTION AGREEMENT FOR SHARES

                            INKSURE TECHNOLOGIES INC.

                        SUBSCRIPTION AGREEMENT FOR SHARES

                                    ARTICLE I

                               PURCHASE OF SHARES

     1.01 SUBSCRIPTION. The undersigned ("Subscriber") hereby subscribes (the
"Subscription") for Shares in the amount set forth on the signature page hereto
in INKSURE TECHNOLOGIES INC. (the "Company"), incorporated under the laws of the
State of Delaware, with a mailing address at P.O. Box 7006, Audubon, PA 19407.
This subscription shall become effective when it has been duly executed by
Subscriber and this Subscription Agreement has been accepted, in whole or in
part, and agreed to by the Company.

     1.02 RECEIPT OF MEMORANDUM ACKNOWLEDGED. The Subscriber acknowledges
receipt from the Company of a copy of the Confidential Private Placement
Memorandum dated January 25, 2010 (the "Memorandum").

          THE SUBSCRIBER ACKNOWLEDGES THAT THE SUBSCRIBER IS ACQUIRING THE
          SHARES AFTER INVESTIGATION OF THE COMPANY AND ITS PROSPECTS AND THAT
          NO POTENTIAL SALE OF SHARES HAS BEEN MADE EXCEPT THROUGH THE
          MEMORANDUM. THE SUBSCRIBER FURTHER ACKNOWLEDGES THAT THE SUBSCRIBER IS
          NOT RELYING UPON ANY REPRESENTATION MADE BY ANY PERSON EXCEPT AS SET
          FORTH IN THE MEMORANDUM.

     1.03 PAYMENT FOR SUBSCRIPTION. The Subscriber agrees that the purchase
price for the amount of Subscriber's subscription for Shares is to be made upon
submission of the Subscription Agreement.

     1.04 TERMS AND CONDITIONS. The Subscription is made subject to the
following terms and conditions:

          The Company shall have the right to accept or reject the Subscription,
     in whole or in part, for any reason whatsoever, including but not limited
     to, the belief that the Subscriber is not an Accredited Investor (as such
     term is defined in Rule 501 of Regulation D ("Regulation D") promulgated by
     the Securities and Exchange Commission ("SEC") under the Securities Act of
     1933, as amended (the "1933 Act")).

                                   ARTICLE II

                 REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

     2.01 REPRESENTATIONS AND WARRANTIES BY SUBSCRIBER. The Subscriber
represents and warrants to the Company that:

          (a) Subscriber is acquiring the Shares for the Subscriber's own
     account, as principal, for investment purposes only, and not with any
     intention to resell, distribute or otherwise dispose of or fractionalize
     the Shares, in whole or in part.

          (b) Subscriber has been furnished, has carefully read, and has relied
     solely (except for information obtained pursuant to paragraph (c) below),
     on the information contained in the Memorandum and the Subscriber has not
     received any offering literature or prospectus and no representations or
     warranties have been made to the Subscriber by the Company or its
     directors, employees or agents, other than the representations set forth in
     the Memorandum.

          (c) Subscriber has had an unrestricted opportunity to: (i) obtain
     additional information concerning the offering of Shares pursuant to the
     Memorandum (the "Offering"), and any other matters relating directly or
     indirectly to the Subscriber's purchase of the Shares, and (ii) ask
     questions of, and receive answers from the Company concerning the terms and
     conditions of the Offering and to obtain such additional information as may
     have been necessary to verify the accuracy of the information contained in
     the Memorandum.

          (d) Subscriber is an Accredited Investor, and all information that
     Subscriber has provided concerning the Subscriber, the Subscriber's
     financial position and knowledge of financial and business matters is true,
     correct and complete.

          (e) Except for __________________________________________________
     [FILL IN NAME OF BROKER - IF LEFT BLANK, SUBSCRIBER HAS NOT DEALT WITH A
     BROKER], Subscriber has not dealt with a broker in connection with the
     purchase of the Interest and agrees to indemnify and hold the Company
     harmless from any claims for brokerage or fees in connection with the
     transactions contemplated herein.

          (f) The Subscriber is not relying on the Company, its directors,
     employees or agents, or any information in the Memorandum, with respect to
     any legal, investment or tax considerations involved in the purchase,
     ownership and disposition of the Shares. The Subscriber has relied solely
     upon the advice of, or has consulted with, in regard to the legal,
     investment and tax considerations involved in the purchase, ownership and
     disposition the Shares, the Subscriber's legal counsel, business and/or
     investment adviser, accountant and tax adviser.

          (g) If the Subscriber is a corporation, partnership, trust or other
     entity: (i) it is authorized and qualified to purchase the Shares; (ii) the
     person signing this Subscription Agreement on behalf of such entity has
     been duly authorized by such entity to do so; and (iii) such entity was not
     organized or reorganized for the specific purpose of acquiring the Shares.

                                       2

          (h) The Subscriber understands that the Shares have not been
     registered under the 1933 Act, or under any applicable state securities or
     blue sky laws or the laws of any other jurisdiction, and cannot be resold
     unless they are so registered or unless an exemption from registration is
     available. The Subscriber understands that there is no plan to register the
     Shares under any law.

          (i) Subscriber has carefully reviewed the various risks of an
     investment in the Shares, including the risks summarized under "RISK
     FACTORS" in the Memorandum. Subscriber can afford to bear the risks of an
     investment in the Shares.

          (j) The Subscriber is willing and able to bear the economic risks of
     an investment in the Shares for an indefinite period of time.

          (k) The Subscriber maintains the Subscriber's domicile, and is not
     merely a transient or temporary resident, at the principal address shown on
     the signature page of this Subscription Agreement.

          (l) The Subscriber is, unless otherwise stated below, a United States
     citizen if an individual, and if an entity, is organized under the laws of
     the United States or a state thereof, or is otherwise a U.S. Person.(1)

          (m) Subscriber certifies that the Shares were not offered to
     Subscriber by means of any general solicitation or general advertising by
     the Company or any person acting on its behalf, including without
     limitation, (i) any advertisement, article, notice, or other communication
     published in any newspaper, magazine, or similar media or broadcast over
     television or radio, or (ii) any seminar or meeting to which Subscriber was
     invited by any general solicitation or general advertising.

          (n) Subscriber has no need for liquidity of Subscriber's investment in
     the Shares, and has no reason to anticipate any change in financial
     condition or circumstances which may cause or require the sale or
     distribution of the Shares purchased.

          (o) The representations, warranties, agreements, and indemnification
     obligations of Subscriber contained in this Subscription Agreement will
     survive the execution hereof and the purchase of the Shares.

          (p) Subscriber represents and warrants as follows with the
     understanding that the Company will rely on the accuracy of these
     representations and warranties to establish the Company's compliance with
     the laws enforced by the United States Department of Treasury's Office of
     Foreign Assets Control ("OFAC"), and any other applicable laws, rules,
     regulations and other legal requirements relating to the combating of money
     laundering and/or terrorism:

               (i) Subscriber declares, represents and warrants that amounts
          invested in the Shares (1) are not property constituting, or derived
          from, proceeds obtained from a criminal offense in any jurisdiction;
          (2) do not constitute assets used to provide material support or
          resources for terrorist activities described in Title 18 of the United
          States Code, Section 2339A or used in preparation for, or in carrying
          out, the concealment or an escape from the commission of any such
          activities; (3) are not otherwise derived from activities that may
          contravene U.S. federal or state or any international regulations,
          including those relating to money laundering, support of terrorism or
          dealing with countries or persons on prohibited lists maintained by
          the U.S. Office of Foreign Assets Control, the U.S. Securities and
          Exchange Commission or other U.S. Governmental Authority.

------------------------------
(1)  See footnote 2 on page 9.

                                       3

               (ii) If Subscriber is an entity (e.g., a corporation,
          partnership, limited liability company, trust), (1) Subscriber has
          exercised due diligence to establish the identity of each person who
          possesses the power, directly or indirectly, to direct or cause the
          direction of Subscriber's management and policies; (2) if ownership
          interests in Subscriber are not publicly traded on an exchange or an
          organized over-the-counter market that is regulated by any foreign
          government, or any governmental body or regulatory organization
          empowered by a foreign government to administer or enforce its laws as
          they relate to securities matters, Subscriber has exercised due
          diligence to establish the identity of each person who holds, directly
          or indirectly, a beneficial interest in Subscriber, and (3) if
          Subscriber is a financial intermediary (e.g., a bank, brokerage firm,
          depositary), Subscriber has exercised due diligence to establish the
          identity of each of its account holders (each of the foregoing persons
          listed in this paragraph being, an "Affiliated Person"). Subscriber
          (a) maintains records of all documents it uses to verify the
          identities of its Affiliated Persons, and (b) will maintain all such
          records for a period of at least five (5) years after the first date
          on which Subscriber's Interest has been redeemed.

               (iii) Subscriber declares, represents and warrants, that
          Subscriber, any person for which Subscriber is acting as agent, its
          beneficial owner or controlling person, is not (1) a foreign shell
          bank, or acting directly or indirectly on behalf of a "foreign shell
          bank", as defined in the U.S.A. Patriot Act of 2001 and the
          regulations promulgated thereunder, (2) a person listed in the Annex
          to Executive Order No. 13224 (2001) issued by the President of the
          United States (Executive Order Blocking Property and Prohibiting
          Transactions with Persons Who Commit, or Support Terrorism), (3) named
          on the List of Specially Designated Nationals and Blocked Persons
          maintained by OFAC (the "SDN List"), (4) a person or entity that has
          acted on behalf of any person or organization (a) residing or having a
          place of business in a country or territory subject to embargo under
          laws enforced by OFAC, or (b) identified as a terrorist, terrorist
          organization, specially designated national or blocked person by OFAC,
          any other department, agency, division, board, bureau or other
          instrumentality of the United States Government, or any recognized
          international organization, multilateral expert group or governmental
          or industry publication, or (5) a person otherwise prohibited from
          investing in the Partnership pursuant to applicable U.S. anti-money
          laundering, anti-terrorist and asset control laws, regulations, rules
          or orders.

               (iv) Unless Subscriber has otherwise notified the Company,
          Subscriber declares, represents and warrants that: (1) If Subscriber
          is an individual, Subscriber is neither a foreign public official,
          including a head of state or of government; a senior politician; a
          senior governmental, judicial or military official; or a senior member
          of a political party ("Foreign Public Official") nor an immediate
          family member or close associate of a Foreign Public Official; or (2)
          if Subscriber is not an individual then: (a) if Subscriber is not a
          publicly-traded entity, no beneficial owner of Subscriber is a Foreign
          Public Official or an immediate family member or close associate of a
          Foreign Public Official; (b) if Subscriber is a publicly-traded
          entity, no control person of Subscriber is a Foreign Public Official
          or an immediate family member or close associate of a Foreign Public
          Official; and (c) Subscriber is not acting as a nominee or agent
          intending to hold Shares of the Company on behalf of a Foreign Public
          Official or an immediate family member or close associate of a Foreign
          Public Official. Each person as described in this paragraph (s)(iv) is
          referred to herein as a "Prohibited Person".

                                       4

               (v) Subscriber declares, represents and warrants that Subscriber
          is not a Prohibited Person, none of its Affiliated Persons is a
          Prohibited Person, and Subscriber is not acquiring, and does not
          intend to acquire, any Shares for the direct or indirect benefit of
          any Prohibited Person. Subscriber acknowledges and agrees that if, at
          any time, the Company determines that Subscriber is or may be a
          Prohibited Person, or that any Prohibited Person holds or may hold a
          direct or indirect Interest in Subscriber or any Shares held by
          Subscriber, the Company may, in its sole discretion, prohibit
          Subscriber from purchasing Shares in the Company.

               (vi) Subscriber acknowledges that, any provision of this
          subscription application and the Memorandum to the contrary
          notwithstanding, pursuant to applicable laws or regulations relating
          to the combating of terrorism and/or money laundering, the Company may
          be required to release information regarding Subscriber to law
          enforcement authorities and/or regulators.

     2.02 INDEMNIFICATION. The Subscriber understands that the offer to
subscribe to the Shares was made in reliance upon Subscriber's representations
and warranties set forth in this ARTICLE II above. The Subscriber agrees to
provide, if requested, any additional information that may reasonably be
requested by the Company to determine the eligibility of the Subscriber to
purchase the Shares. The Subscriber hereby agrees to indemnify the Company, and
its respective affiliates and to defend and hold each of them harmless from and
against any loss, claim, damage, liability, cost or expense (including
reasonable attorneys' fees) due to or arising out of a breach of any
representation, warranty or agreement of the Subscriber contained in this
Subscription Agreement or in any other document provided by the Subscriber to
the Company in connection with the Subscriber's purchase of the Shares. The
Subscriber hereby agrees to indemnify the Company and its respective affiliates,
and to defend and hold each of them harmless against all losses, claims,
damages, liabilities, costs or expenses (including reasonable attorneys' fees)
arising as a result of the sale or distribution of the Shares or any part
thereof by the Subscriber in violation of the 1933 Act and/or other applicable
law or any misrepresentation or breach by the Subscriber with respect to the
matters set forth herein. In addition, the Subscriber agrees to indemnify the
Company and its affiliates and to defend and hold each of them harmless from and
against, any and all loss, claim, damage, liability, cost or expense (including
reasonable attorneys' fees) to which they may be put or which they may incur or
sustain by reason of or in connection with any misrepresentation made by the
Subscriber with respect to the matters about which representations and
warranties are required by the terms of this Subscription Agreement, or any
breach of any such warranties or any failure to fulfill any covenants or
agreements set forth herein or included in the Memorandum. Notwithstanding any
provisions of this Subscription Agreement, the Subscriber does not waive any
rights granted to it under applicable securities laws.

                                       5

                                   ARTICLE III

                            SUITABILITY REQUIREMENTS

     3.01 GENERAL. The information contained herein is being furnished to the
Company in order for the Company to determine whether the Subscription may be
accepted pursuant to Section 4(2) of the Securities Act of 1933 and/or Rule 506
of Regulation D. The Subscriber understands that (i) the Company will rely upon
the following information, (ii) the Shares will not be registered under the 1933
Act in reliance upon the exemptions from registration provided by Section 4(2)
of the 1933 Act and/or Rule 506 of Regulation D, and (iii) NO SUBSCRIPTION FOR
SHARES WILL BE ACCEPTED UNLESS THE SUBSCRIBER IS AN ACCREDITED INVESTOR. In
accordance with the foregoing, the Subscriber makes the representations and
warranties to the Company as set forth below.

     3.02 Individual Qualification as an Accredited Investor.

          (a) In order to qualify as an Accredited Investor, the Subscriber must
     satisfy at least one of the following tests:

          (PLEASE CHECK APPLICABLE BOXES)

               (i)  The Subscriber is a natural person whose own net worth, or
                    joint net worth with the Subscriber's spouse, at the time of
                    purchase, exceeds $1 million;

                    Yes [_] No [_]

               (ii) The Subscriber is a natural person who has had income in
                    excess of $200,000 in each of the two most recent years or
                    joint income with the Subscriber's spouse in excess of
                    $300,000 in each of those years and has a reasonable
                    expectation of reaching the same in the current year.

                    Yes [_] No [_]

          (b) Additional representations for individual:

               (i)  The Subscriber has knowledge and experience in financial and
                    business matters so as to be capable of evaluating the
                    relative merits and risks of an investment in the Shares.

                    Yes [_] No [_]

               (ii) The Subscriber is willing and able to bear the economic risk
                    of an investment in the Shares.

                    Yes [_] No [_]

                                        6

               (iii) The Subscriber is a resident of the State of ____________.

     3.03 Entity Qualification as an Accredited Investor.

          (a) In order to qualify as an Accredited Investor, the Subscriber must
     meet one of the following tests:

          (PLEASE CHECK BOX AT THE END OF EACH APPLICABLE SECTION)

          1.   A bank as defined in Section 3(a)(2) of the 1933 Act, or any
               savings and loan association or other institution as defined in
               Section 3(a)(5)(A) of the 1933 Act whether acting in its
               individual or fiduciary capacity: [_]

          2.   A broker or dealer registered pursuant to Section 15 of the
               Securities Exchange Act of 1934, as amended: [_]

          3.   An insurance company as defined in Section 2(13) of the 1933 Act.
               [_]

          4.   An investment company registered under the ICA: [_]

          5.   A business development company as defined in Section 2(a)(48) of
               the ICA: [_]

          6.   A Small Business Investment Company licensed by the U.S. Small
               Business Administration under Section 301(c) or (d) of the Small
               Business Investment Act of 1958: [_]

          7.   A private business development company as defined in Section
               202(a)(22) of the Advisers Act: [_]

          8.   An employee benefit plan within the meaning of Title I of the
               Employee Retirement Income Security Act of 1974 ("ERISA"), (a)
               whose investment decisions are made by a plan fiduciary, as
               defined in Section 3(21) of ERISA, which is either a bank,
               insurance company or registered investment advisor; or (b) having
               total assets in excess of $5,000,000; or (c) if self-directed,
               the investment decisions are made solely by persons that are
               Accredited Investors: [_]

                                        7

          9.   An organization described in Section 501(c)(3) of the Internal
               Revenue Code of 1986, as amended, corporation, Massachusetts or
               similar business trust, or partnership, not formed for the
               specific purpose of acquiring an Interest, having total assets in
               excess of $5 million: [_]

          10.  A trust, with total assets in excess of $5 million not formed for
               the specific purpose of acquiring an Interest, whose purchase is
               directed by an investor as described in Rule 506(b)(2)(ii)
               promulgated by the SEC under the 1933 Act. [_]

          11.  An individual retirement account in which the sole participant is
               an Accredited Investor.

          12.  (a) An entity in which all of the equity owners are Accredited
               Investors:

               [_]  (SECTION 3.02 OR SECTION 3.03 (AS APPLICABLE) MUST ALSO BE
                    COMPLETED, AND A SIGNATURE PAGE TO THIS AGREEMENT (PAGE 12)
                    MUST ALSO BE COMPLETED AND SIGNED, BY EACH EQUITY OWNER)

                    If you checked the box in this Section 11(a), please
                    indicate how many equity owners the Subscriber has:

                    ______________________________________________.

               (b) If the Subscriber is a partnership or a limited liability
          company, please check whichever box is applicable:

               [_]  The Subscriber hereby represents that no individual partner
                    or group of partners, or individual member or group of
                    members, as the case may be, of the Subscriber had the right
                    to elect whether or not to participate in the investment of
                    the Subscriber in the Partnership or to determine the level
                    of participation of such partner, member or group therein.

               [_]  The Subscriber is not able to so represent.

                                        8

     3.04 FOR NON-UNITED STATES PERSONS.

               If you are not a U.S. Person(2), please check here [_]

               I am a citizen of ____________________________________ and a
               resident of _________________________________________.

                                   ARTICLE IV

                                  MISCELLANEOUS

     4.01 SIGNATURE PAGE TO PARTNERSHIP AGREEMENT. By signing the signature page
attached to this Subscription Agreement, the Subscriber agrees to be bound by
the terms and conditions thereof.

     4.02 ADDRESSES AND NOTICES. The address of each party for all purposes
shall be the address set forth on the first page of this Subscription Agreement,
as to the Company, or on the signature page annexed hereto, as to the
Subscriber, or such other address of which the other party has received written
notice. Any notice, demand or request required or permitted to be given or made
hereunder shall be in writing and shall be deemed given or made when delivered
in person or when sent to such party at such address by registered or certified
mail, return receipt requested.

     4.03 TITLES AND CAPTIONS. All Article and Section titles or captions in
this Subscription Agreement are for convenience only. They shall not be deemed
part of this Subscription Agreement and do not in any way define, limit, extend
or describe the scope or intent of any provisions hereof.

     4.04 ASSIGNABILITY. This Subscription Agreement is not transferable or
assignable by the Subscriber.

     4.05 PRONOUNS AND PLURALS. Whenever the context may require, any pronoun
used herein shall include the corresponding masculine, feminine or neuter forms.
The singular form of nouns, pronouns and verbs shall include the plural and vice
versa.

---------------------------
(2) The term "U.S. Person" means, with respect to individuals, any U.S. Citizen
(and certain former U.S. citizens) or "resident alien" within the meaning of
U.S. income tax laws as in effect from time to time. Currently, the term
"resident alien" is defined under U.S. income tax laws to generally include any
individual who (i) holds an Alien Registration Card (a "green card") issued by
the U.S. Immigration and Naturalization Service, or (ii) meets a "substantial
presence" test. The "substantial presence" test is generally met with respect to
any current calendar year if (i) the individual was present in the U.S. on at
least thirty-one (31) days during such year, and (ii) the sum of the number of
days on which such individual was present in the U.S. during the current year,
1/3 of the number of such days during the first preceding year, and 1/6 of the
number of such days during the second preceding year, equals or exceeds 183
days. With respect to persons other than individuals, the term "U.S. Person"
means (i) a corporation or partnership created or organized in the United States
or under the laws of the United States or any state or (ii) a trust or estate
which is subject to U.S. tax on its worldwide income from all sources.

                                        9

     4.06 FURTHER ACTION. The parties shall execute and deliver all documents,
provide all information and take or forbear from taking all such action as may
be necessary or appropriate to achieve the purposes of this Subscription
Agreement. Each party shall bear its own expenses in connection therewith.

     4.07 APPLICABLE LAW. This Subscription Agreement shall be construed in
accordance with and governed by the laws of the State of New York without regard
to New York conflict of law rules.

     4.08 PERMITTED TRANSACTIONS AND BINDING EFFECT. This Subscription Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, administrators, successors, legal representatives, personal
representatives, successors and permitted assigns. If the Subscriber is more
than one person, the obligation of the Subscriber shall be joint and several and
the agreements, representations, warranties and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and the
Subscriber's heirs, executors, administrators and successors.

     4.09 INTEGRATION. This Subscription Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes and replaces all contemporaneous and prior agreements and
understandings, whether written or oral, pertaining thereto. No covenant,
representation or condition not expressed in this Subscription Agreement shall
affect or be deemed to interpret, change or restrict the express provisions
hereof.

     4.10 AMENDMENT. This Subscription Agreement may be modified or amended only
with the written approval of all parties.

     4.11 CREDITORS. None of the provisions of this Subscription Agreement shall
be for the benefit of or enforceable by creditors of any party.

     4.12 WAIVER. No failure by any party to insist upon the strict performance
of any covenant, agreement, term or condition of this Subscription Agreement or
to exercise any right or remedy available upon a breach thereof shall constitute
a waiver of any such breach or of such or any other covenant, agreement, term or
condition.

     4.13 RIGHTS AND REMEDIES. The rights and remedies of each of the parties
hereunder shall be mutually exclusive, and the implementation of one or more of
the provisions of this Subscription Agreement shall not preclude the
implementation of any other provision.

     4.14 COUNTERPARTS. This Subscription Agreement may be executed in
counterparts, all of which taken together shall constitute one agreement binding
on all the parties notwithstanding that all the parties are not the signatories
to the original or the same counterpart.

     4.15 SIGNATURES. BY EXECUTING THIS SUBSCRIPTION AGREEMENT, SUBSCRIBER
CONFIRMS THAT IT HAS READ AND AGREED TO ALL THE REPRESENTATIONS AND TERMS
HEREOF.

                                        10

NOTES:

(a) A corporation should affix its common seal (if any) and execute under the
hand of a duly authorized official who should state his representative capacity.

(b) The Subscription Agreement may be completed by a duly authorized agent on
behalf of the Subscriber(s). Such person represents and warrants that he is duly
authorized to sign this form and on behalf of the Subscriber(s).

(c) The Subscription Agreement includes the information contained under
"INSTRUCTIONS TO SUBSCRIBERS" and Subscription Agreement. If all of the
subscription documents are not fully completed to the satisfaction of the
Company the subscription may not be accepted.

                                    --------

                       THE REMAINDER OF THIS PAGE HAS BEEN
                             INTENTIONALLY LEFT BANK

                                        11

     IN WITNESS WHEREOF, the Subscriber has executed this Agreement on this
______ day of __________, 2010.

          NUMBER OF SHARES SUBSCRIBED FOR AT $0.125 PER SHARE __________________

          TOTAL SUBSCRIPTION PRICE FOR SHARES                $__________________

_____________________________________         __________________________________
Social Security or Employer                   Print Name of Subscriber
 Identification Number

Signature for Individual Subscribers:         Signature for Subscriber Other
                                              than Individual:

_____________________________________         By:_______________________________
Signature of Subscriber                       Signature of Authorized Signatory

_____________________________________         __________________________________
Signature of Subscriber, if Joint             Print Name and Title of Authorized
Ownership                                     Signatory

Mailing Address of Subscriber:                Principal Address of Subscriber:

_____________________________________         __________________________________
              Street                                       Street

_____________________________________         __________________________________
City          State          Zip Code         City         State        Zip Code

                                              __________________________________
                                              Telephone Number of Subscriber

                                              __________________________________
                                              Facsimile Number of Subscriber

                                              __________________________________
                                              E-Mail Address of Subscriber

If Joint Ownership, check one:

[_]    Joint Tenants with Right of Survivorship
[_]    Tenants-in-Common
[_]    Community Property
[_]    Estate

If Other than Individual Subscribers, check one:

[_]   General Partnership        [_]   Trust
[_]   Limited Partnership        [_]   "Grantor" Trust
[_]   Corporation                [_]   Limited Liability Company
[_]   S Corporation              [_]   Other (specify):____________

FOREGOING SUBSCRIPTION ACCEPTED: As to ________________ Shares

                                 As to $_______________ total subscription price
                                 for Shares

                            INKSURE TECHNOLOGIES INC.

                            By:________________________________________

                                        12

                            INKSURE TECHNOLOGIES INC.

                                    FORM W-9

                            INKSURE TECHNOLOGIES INC.

                       JANUARY 25, 2010 PRIVATE PLACEMENT
                            CLOSING ON MARCH 11, 2010
                      SUBSCRIPTIONS ACCEPTED AND NUMBER OF
                     SHARES TO BE ISSUED TO EACH SUBSCRIBER

SUBSCRIPTIONS ACCEPTED AND
SOCIAL SECURITY NUMBER               SUBSCRIPTION    NUMBER OF
OR I.D. NUMBER                          AMOUNT        SHARES
FOR U.S. SUBSCRIBERS                   ACCEPTED    TO BE ISSUED
--------------------------            ----------    ----------

ICTS International, N.V.
Biesbosch 225, 1181 JC Amstelveen
The Netherlands                        $ 675,000     5,400,000

Newco Holdings Corp.
Centro Comercial Bal Harbour
Suite 43 A
Via Italia, Punta Paitilla
Ciudad De Panama                         400,000     3,200,000

Peleg Investment Management LLC
551 Fifth Avenue - 24th Floor
New York, NY 10176
ID#: 20-3697516                          400,000     3,200,000

Pierre L. Schoenheimer
551 Fifth Avenue - 24th Floor
New York, NY 10176
SS#: ###-##-####                         250,000     2,000,000

Credit Agricole (Suisse) SA
Administrative Center
Chemin de Beree 46-48
1010 Lausanne 10
Switzerland                              200,000     1,600,000

John Sauder
Cheryl Sauder
111 Congress #3000
Austin, TX 78701
SS#:###-##-#### (John)                   200,000     1,600,000

James E. Lineberger
725 Palm Trail #11
Delray Beach, FL 33483
SS#: ###-##-####                         150,000     1,200,000

                                      13-B

SUBSCRIPTIONS ACCEPTED AND
SOCIAL SECURITY NUMBERS             SUBSCRIPTION    NUMBER OF
OR I.D. NUMBER                         AMOUNT        SHARES
FOR U.S. SUBSCRIBERS                  ACCEPTED    TO BE ISSUED
--------------------------           ----------     ----------

Jonathan Berger
14 East 75th Street, Apt. 10D
New York, NY 10021
SS#: ###-##-####                      $ 143,750      1,150,000

Yusuf Taragano
G.O.S.B. Kemal Nehrozogln Street
Gebze/Kocaeli, Turkey 41480             100,000        800,000

Yaron Meerfeld
3 Yehezkel Street
Ramat Gan, Israel 52245                 100,000        800,000

Israel Kariv
31 Atzmon Street
Ramat-Hasharon, Israel 47287             75,000        600,000

Leonard Lichter
40 Stonygate Oval
New Rochelle, NY 10804
SS#: ###-##-####                         75,000        600,000

Robert Lapin Revocable Trust
4 Sutton Drive
Boynton Beach, FL 33436
SS#: ###-##-####                         62,500        500,000

Lineberger & Co., LLC
1120 Boston Post Road
Darien, CT 06820
ID#: 06-1557367                          50,000       400,000

Bruce Nakfoor
9119 Spinning Leaf Cove
Austin, TX 78735
SS#: ###-##-####                         50,000       400,000

Ronald A. Hirsch
668 N. Coast Hwy, #171
Laguna Beach, CA 92651
SS#: ###-##-####                         50,000       400,000

                                      13-B

SUBSCRIPTIONS ACCEPTED AND
SOCIAL SECURITY NUMBERS        SUBSCRIPTION   NUMBER OF
OR I.D. NUMBER                   AMOUNT        SHARES
FOR U.S. SUBSCRIBERS            ACCEPTED     TO BE ISSUED
--------------------------     ----------     ----------

Gary N. Moss
505 East 79th Street
New York, NY 10075
SS#: ###-##-####                $  50,000        400,000

Haim Y. Kaplan
10 Shmuel Tamiz
Tel Aviv, Israel 69637             50,000        400,000

Alon Raich
Shalom Ash 7
Petach-Tikva, Israel 49410         25,000        200,000

Charles Salfeld
150 East 69th Street
New York, NY 10021
SS#: ###-##-####                   18,750        150,000
                               ----------     ----------

         Totals                $3,125,000     25,000,000
                               ==========     ==========

                                      13-B

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