Document:

exhibit_4-1.htm

Exhibit 4.1

 

SHARE PURCHASE AGREEMENT

This Share Purchase Agreement ("Agreement") dated as of January 3rd, 2013, is made between Medigus Ltd., an Israeli company with a registered address at Building 7A, Industrial Park, POB 3030, Omer 8496500 (the "Company") and OrbiMed Israel Partners Limited Partnership, an Israeli limited partnership with a registered address at 89 Medinat Hayehudim st. Building E Herzeliya Pituach, IL, 46140, POB 4023 (the "Investor").

 

RECITALS:

 

	
Whereas

	
the Investor is willing to purchase from the Company, and the Company desires to issue to the Investor, Ordinary Shares of the Company, par value NIS 0.01 each ("Ordinary Shares"), for an aggregate purchase price of US$8,000,000 on the terms and subject to the conditions more fully set forth in this Agreement; and

 

	
Whereas

	
simultaneously with the consummation of the Closing, the Company shall grant to the Investor a Warrant (as defined below) to purchase additional Ordinary Shares, on the terms and subject to the conditions more fully set forth in the Warrant; and

 

	
Whereas

	
simultaneously and as a condition to the execution of this Agreement, the Investor has received an undertaking letter executed by certain shareholders of the Company with respect to, inter alia, the appointment of certain board members of the Company, in the form attached hereto as Exhibit A (the "Undertaking Letter").

Now, Therefore, in consideration of the foregoing, and the mutual representations, warranties, covenants and undertakings contained herein, subject to the terms and conditions set forth herein, the parties hereby represent, warrant, undertake and agree as follows:

	
1.

	
Purchase and Sale; Transfer

On the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined in Section 5.1), the Company will issue to the Investor such number of Ordinary Shares resulting from dividing the Purchase Price (as defined below) by a price per share equal to the lower of (a) NIS 0.7336, which is the average Company's price per share of the 5 trading days prior to December 13, 2012, and (b) the average closing price per share of the Company's ordinary shares on the TASE during the five trading days prior to and including the date on which the Company's shareholders general meeting convened for the approval of the transactions contemplated herein is held; provided, however, that the price per share hereunder shall in any event not be lower than NIS 0.60 (the "Price Per Share"), for the aggregate purchase price of $8,000,000 (the "Purchase Price").

  

  

  

 

In addition, the Company shall issue to the Investor at the Closing a Warrant to purchase a number of Ordinary Shares equal to the number of Ordinary Shares purchased by the Investor at Closing, in the form attached hereto as Exhibit B (the "Warrant"). The Ordinary Shares to be issued upon Closing hereunder are referred to herein as the "Purchased Shares" and the Ordinary Shares issuable upon exercise of the Warrant are referred to herein as the "Warrant Shares".

	
2.

	
Interpretation

The section headings serve for convenience purposes only, and shall not affect in any way the interpretation of this Agreement.

	
3.

	
Representations of the company

The Company hereby represents and warrants to the Investor as follows and acknowledges that the Investor is specifically relying on each of the representations and warranties provided below:

 

	
  

	
3.1.

	
Organization. The Company is a public company (as such term is defined in the Israeli Companies Law, 5759-1999, the "Companies Law") registered in Israel, the shares of which are listed for trade on the Tel-Aviv Stock Exchange ("TASE"). The Company is duly organized and validly existing under the laws of the State of Israel and has full corporate power and authority to own and lease its properties and to carry on its business as now being conducted and as is currently proposed to be conducted and has not taken any action or, to its knowledge, failed to take any action, which action or failure would preclude or prevent the Company from conducting its business in the manner heretofore conducted or as currently proposed to be conducted.

	
  

	
3.2.

	
Reporting. The Company is in material compliance with all reporting requirements under applicable Israeli securities laws, the rules and regulations promulgated thereunder and the reporting requirements, rules and regulations of the TASE (collectively, "Securities Laws"). The Company has filed all documents and information required or desirable to be filed by it under applicable Securities Laws, including without limitation, any information with regards to interested parties transactions (all such documents filed prior to the date hereof, the "Public Disclosure Documents"). The Public Disclosure Documents were true, accurate and complete as of the date filed with the TASE and/or the Israel Securities Authority (the "ISA"), as applicable, and contain all the information that is necessary pursuant to applicable Securities Laws. All of the Public Disclosure Documents, as of their respective dates, complied as to both form and content in all material respects with the requirements of applicable Securities Laws. The Company is not aware of any material information that should have been reported in accordance with applicable Securities Laws, which was not reported by the Company.

  

  

  

 

	
  

	
3.3.

	
Financial Statements. The Company's audited financial statements for the year ended December 31, 2011 and the reviewed financial statements as of September 30, 2012 (the "Balance Sheet Date" and the "Financial Statements", respectively) are complete, true and accurate in all material respects, are in accordance with the books and records of the Company and adequately and fairly present the financial condition, results of operations, and the cash flows of the Company as of the relevant dates and for the relevant periods. The financial statements as of December 31, 2011 and the financial statements as of September 30, 2012 were prepared in accordance with International Financial Reporting Standards ("IFRS"), applied on a consistent basis. Except as set forth in the Financial Statements, as of the Balance Sheet Date, the Company is not a guarantor of any debt or obligation of another, nor has the Company given any indemnification, loan, security or otherwise agreed to become directly or contingently liable for any obligation of any person, and no person has given any guarantee of, or security for, any obligation of the Company. Other than as set forth in the Public Disclosure Documents, since the Balance Sheet Date and other than in the ordinary course of business, there has not been: (i) any material adverse change in the assets, liabilities, condition (financial or otherwise) or business of the Company; (ii) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties or business operations of the Company; (iii) any waiver by the Company of a valuable right or of a material debt owed to it; (iv) any material change in any compensation arrangement or agreement with any employee of the Company; any loans made by the Company to its employees, officers, or directors; or (v) any sale, transfer or lease of, or mortgage or pledge or imposition of lien on, any of the Company’s material assets other than the sale and/or lease of goods and inventory in the ordinary course of business. Except as set forth in the Financial Statements, the Company has no material liabilities or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to the Balance Sheet Date, (ii) obligations under contracts and commitments incurred in the ordinary course of business, and (iii) liabilities and obligations of a type or nature not required under generally accepted accounting principles to be reflected in the Financial Statements, which, in all such cases, individually and in the aggregate would not be reasonably expected to have a material adverse effect on the Company’s business, prospects, condition (financial or otherwise), affairs, operations or assets (a "Material Adverse Effect"). The Company maintains and will continue to maintain, to the extent required by applicable law, a standard system of accounting established and administered in accordance with IFRS.

	
  

	
3.4.

	
Authorization; Approvals. Except for the approval of the Company's shareholders, to be received as a condition to Closing, all corporate action on the part of the Company necessary for the authorization, execution, delivery, and performance of the Company's obligations under this Agreement and for the authorization, issuance, and allotment of the Purchased Shares, the Warrant and the Warrant Shares being sold under this Agreement has been completed, prior to the date hereof. Except for the approval of the Company's shareholders and the TASE Approval (as defined below), both to be received as a condition to Closing, the Company has received all consents, approvals, authorizations or permits which are required in connection with the consummation by the Company of the transactions contemplated by this Agreement, such approvals are listed in Schedule 3.4 hereto. Subject to the fulfillment of the conditions set forth in Section ‎6.1 below, this Agreement constitutes the valid and legally binding obligation of the Company, legally enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors’ rights generally or the availability of equitable remedies.

 

 

  

  

  

 

	
  

	
3.5.

	
Capitalization. The authorized capital stock of the Company consists of 250,000,000 Ordinary Shares, of which 90,234,732 shares are issued and outstanding as of the date hereof. All outstanding Ordinary Shares have been duly authorized, are validly issued and outstanding, and are fully paid and nonassessable. No securities issued by the Company from the date of its incorporation to the date hereof were issued in violation of any statutory or common law preemptive rights. There are no dividends which have accrued or been declared but are unpaid on the Ordinary Shares. All taxes required to be paid by the Company in connection with the issuance and any transfers of Ordinary Shares have been paid. All permits or authorizations required to be obtained from or registrations required to be effected with any person in connection with any and all issuances of securities of the Company from the date of the Company’s incorporation to the date hereof have been obtained or effected, and all securities of the Company have been issued and are held in accordance with the provisions of all applicable Securities Laws or other applicable laws. Except as set forth in the Public Disclosure Documents, there are no outstanding (a) securities, notes or instruments convertible into or exercisable for Ordinary Shares or other equity interests of the Company or its Subsidiary; (b) options, warrants, subscriptions or other rights to acquire capital stock or other equity interests of the Company or its Subsidiary, or (c) commitments, agreements or understandings of any kind, including employee benefit arrangements, relating to the issuance or repurchase by the Company or its Subsidiary of any capital stock or other equity interests of the Company or its Subsidiary, any such securities or instruments convertible or exercisable for securities or any such options, warrants or rights. Except as set forth in the Public Disclosure Documents, neither the Company nor its Subsidiary has granted anti-dilution rights to any person or entity in connection with any outstanding option, warrant, subscription or any other instrument convertible or exercisable for the securities of the Company or the Subsidiary. No holder of Ordinary Shares possesses any preemptive rights in respect of the Purchased Shares, the Warrant or Warrant Shares to be issued to the Investor, as applicable.

	
  

	
3.6.

	
Compliance with Other Instruments. The Company is not in default under its Articles of Association (the "Articles") or other documents under which the Company is bound, which default, in any such case, could reasonably be expected to have a Material Adverse Effect. The Company has received no valid notice from the TASE of any intention to delist its securities from trading and/or transfer the Company’s securities to a watch list, and has no reason to believe that the issuance of the Purchased Shares, the Warrant and/or the Warrant Shares would cause any of the Company's securities to be delisted from trading or transferred to a watch list.

	
  

	
3.7.

	
Subsidiaries. The Company is the sole member of Medigus USA LLC, a limited liability corporation incorporated in Delaware, USA (the "Subsidiary"). The Company does not own any of the issued and outstanding share capital of any other company, and is not a participant in, nor does it hold any interest in any partnership, joint venture or other business association or organization. There are no contracts, arrangements or commitments providing for the issuance or granting to the Company of, or the purchase by the Company of, any share capital or any other interest in any company, partnership, joint venture or other business association or organization.

  

  

  

 

	
  

	
3.8.

	
No Breach. Neither the execution and delivery of this Agreement nor compliance by the Company with the terms and provisions hereof, will conflict with, or result in a breach or violation of, any of the terms, conditions and provisions of: (i) the Company's Articles (as defined above), or other governing instruments of the Company, (ii) any judgment, order, injunction, decree, or ruling of any court or governmental authority, domestic or foreign by which the Company is bound, (iii) any agreement, contract, lease, license or commitment to which the Company is a party or to which it is subject, or (iv) to the Company's knowledge, any applicable law, to the effect that any of the foregoing could reasonably be expected to have a Material Adverse Effect.

 

	
  

	
3.9.

	
The Purchased Shares and the Warrant Shares. Subject to the fulfillment of the conditions set forth in Section 6.1, the Company is entitled to and shall issue and allot the Purchased Shares, the Warrant and the Warrant Shares to the Investor on the terms and subject to the conditions set out in this Agreement. The Purchased Shares and the Warrant Shares, when issued and allotted in accordance with this Agreement will be duly authorized, validly issued, fully paid, nonassessable, and free of any preemptive rights, and will have all the rights, privileges, and restrictions set forth in the Company's Articles and under applicable law, and will be free and clear of any liens, claims, encumbrances or third party rights of any kind (except as specified in the Articles and the lock-up restrictions as detailed in Section 4.3 below) and duly registered in the name of the Company's registration company in the Company's register of shareholders and the actions contemplated under Section 7 shall have been completed.

	
  

	
3.10.

	
Registration for Trade in the TASE. The Purchased Shares and the Warrant Shares shall be registered for trading in the TASE in accordance with applicable Securities Laws, and, with respect to the Warrant Shares, in the manner set forth in the Warrant.

	
  

	
3.11.

	
Contracts. The Company is not in material breach of or default under, and has no knowledge of any breach or anticipated breach of any other party to, any material contract or agreement to which the Company is a party or by which the Company or any of its assets or properties is bound. All of such agreements and contracts are valid, binding and in full force and effect, without any material violation, breach or default of the Company thereunder. The Company has not received notice nor does it have reasonable grounds to believe that any party to any such agreement or contract intends to cancel or terminate any such agreement or contract or to exercise or not exercise any options thereunder or to seek a renegotiation or adjustment of any material provisions thereof.

  

  

  

 

	
  

	
3.12.

	
Intellectual Property.

 

	
  

	
3.12.1.

	
To the Company's knowledge following due inquiry, the Company has sufficient title and ownership of, or has obtained the rights to use, free and clear of all liens and claims, all of the Company's patent rights, trademark rights, service mark rights, trade name rights, copyrights (whether or not registered), and, to the extent necessary, all applications, registrations, licenses and rights with respect to any of the foregoing: trade secrets, proprietary rights and processes, any inventions (whether patentable or not), invention disclosures, improvements, proprietary information, know how, technology, technical data, proprietary processes and formulae, algorithms, specifications, supplier lists, any industrial designs and any registrations and applications therefor, Internet domain names or addresses, files, records and data, any schematics, and any rights in prototypes, any databases and data collections and any rights therein, any rights of inventors, however denominated, and any similar or equivalent rights to any of the foregoing, and any tangible embodiments of the foregoing (the "Intellectual Property") necessary for its and the Subsidiary’s business as now conducted and as presently proposed to be conducted .

	
  

	
3.12.2.

	
To the Company's best knowledge, the Intellectual Property is not infringing upon or violating any right, lien, or claim of any third party nor will the conducting of the Company’s and the Subsidiary's business and use of the Company's Intellectual Property, interfere, infringe upon, misappropriate or otherwise come into conflict with any intellectual property rights of any third party.

	
  

	
3.12.3.

	
The Company has not licensed any Intellectual Property on a non-exclusive or exclusive basis, nor has the Company entered in to any covenant not to compete in any market, field or application or geographical area or with any third party, except as set forth in Schedule 3.12.3.

	
  

	
3.12.4.

	
To the Company’s knowledge, no intellectual property will be necessary for the Company’s and the Subsidiary's business, as now proposed to be conducted, other than intellectual property which either can be developed independently by the Company with reasonable efforts and resources, or licensed from a third party on commercially reasonable terms and conditions.

	
  

	
3.12.5.

	
The Intellectual Property has not been and is not subject to any actual or, to the knowledge of the Company, threatened, litigation, proceeding, or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any manner the Company's and/or the Subsidiary's use, transfer, or licensing thereof or that may affect the validity, use or enforceability thereof, except as set forth in Schedule 3.12.5. To the knowledge of the Company, there is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates the Company and/or the Subsidiary to grant licenses or any ownership interest in any future Intellectual Property. Neither the Company nor the Subsidiary has received any written notice or claim, or an oral notice or claim, challenging or questioning the Company’s ownership in any Intellectual Property or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to the Company’s knowledge, is there a reasonable basis for any such claim.

  

  

  

 

	
  

	
3.12.6.

	
Neither the Company nor the Subsidiary has made any claim of any violation or infringement by others of its rights in the Intellectual Property, and the Company has no knowledge of any infringement giving right to such claims.

	
  

	
3.12.7.

	
All current and former employees and consultants of the Company have entered into a written agreement with the Company regarding non-disclosure of confidential information, and assignment to the Company of all rights in the Intellectual Property developed in the course of their employment by the Company or engagement with the Company for development of such Intellectual Property, and the following employees and consultants of the Company have executed valid and effective waivers of any rights to receive royalties or other payments in connection with the commercialization of such Intellectual Property: Dr. Elazar Sonnenschein, D.L.L.D Consulting Ltd., Dr. Aviel Roy-Shapira and Menashe Sonnenchein.

	
  

	
3.12.8.

	
To the Company's best knowledge including after reviewing all applicable prior engagement agreements and approvals of employees and confirmation of all employees and consultants, none of the Company's current or former employees and consultants are bound by any obligation towards any third party (including any other employer, hospital, Health Maintenance Organizations (Kupat Holim) or university) such that such third party may have any right or claim with respect to Intellectual Property developed, invented, discovered, derived, programmed or designed by such employee or consultant. No facilities, of a governmental hospital, HMO, university, college, or other educational, academic, or military institution or research center were used by the Company or any of its employees or service providers in the development of any of its Intellectual Property, with the exception of medical and clinical facilities in which clinical and pre-clinical tests and trials have been conducted, which have no right or claim with respect to the Company's Intellectual Property pursuant to the terms of engagement therewith.

	
  

	
3.12.9.

	
None of the representations and warranties in this Section 3.12 shall be deemed untrue or inaccurate due to the Company's membership in and activities relating to the "Biomedical Photonics" MAGNET consortium established under the auspices of the Chief Scientist, nor due to the Company's activities relating to the R&D plan approved by the EUREKA network and the Chief Scientist in collaboration with Qioptic GmbH, for the development of an endoscope for dental use, to the extent such activities are set forth in the Public Disclosure Documents.

	
  

	
3.13.

	
Litigation. No action, proceeding or governmental inquiry or investigation is pending or, to the Company’s knowledge, threatened against the Company or any of its officers, or directors (in their capacity as such) before any court, arbitration board or tribunal or administrative or other governmental agency (i) for an amount currently estimated, in the aggregate, to exceed $20,000, or (ii) that might result, either individually or in the aggregate, in any Material Adverse Effect. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company currently intends to initiate.

  

  

  

 

	
  

	
3.14.

	
Taxes. The Company has accurately prepared and timely filed all tax returns and reports required by it under applicable law, to the extent required, paid all taxes that are due and payable, and paid or accrued all taxes for which a notice of assessment or collection has been received. No taxing authority has asserted any claim for Taxes, or is threatening any claim for taxes that would have a material adverse effect on the Company. The Company has withheld and paid over to appropriate governmental authorities or are holding for payment all taxes required by law to have been withheld or collected. There are no liens for taxes on the assets of the Company other than liens that individually or in the aggregate would not have a material adverse effect. No jurisdiction in which the Company does not file tax returns has claimed that the Company is required to file tax returns or pay taxes in such jurisdiction. The Company has not made any elections under applicable laws or regulations (other than elections that related solely to methods of accounting, depreciation or amortization) that would have an adverse effect on the Company, its financial condition, its business as presently conducted or proposed to be conducted or any of its properties or assets. The Company is not currently liable for any tax (whether income tax, capital gains tax, or otherwise).

	
  

	
3.15.

	
Insurance. The insurance policies providing insurance coverage to the Company including for product liability are reasonably adequate for the business conducted by the Company and are, to the Company's knowledge, sufficient for compliance by the Company with all requirements of law and all material agreements to which the Company is a party or by which any of its assets are bound. All of such policies are in full force and effect and are valid and enforceable in accordance with their terms, and the Company has complied with all material terms and conditions of such policies, including premium payments. None of the insurance carriers has indicated to the Company an intention to cancel any such policy.

	
  

	
3.16.

	
Permits. The Company has permits, licenses and any similar authority necessary for the conduct of its business, the lack of which could reasonably be expected to have a Material Adverse Effect. The Company is not in default in any material respect under any of such permits, licenses or other similar authority.

	
  

	
3.17.

	
Brokers. No agent, broker, investment banker, person or firm acting in a similar capacity on behalf of or under the authority of the Company is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, on account of any action taken by the Company in connection with the transactions contemplated hereby.

 

 

  

  

  

	
  

	
3.18.

	
Voting Agreements. Except for the Undertaking Letter and the Shareholders' Agreement dated February 2006 referred to in section 4 of the Undertaking Letter, to the Company’s knowledge, no voting agreements exist among its shareholders.

	
  

	
3.19.

	
Environmental Matters. The operations and other properties of the Company are, and at all times within the period of the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof) have been, in compliance in all material respects with, and not subject to pending or threatened liability under, all applicable environmental laws and permits issued thereunder. No substance identified or regulated pursuant to any environmental law, including, without limitation, any hazardous substance, hazardous waste, toxic substance, pollutant, contaminant or petroleum or any fraction thereof, has been released in a reportable quantity or has otherwise come to be located on, at, proximate to or beneath any real property currently or formerly operated, leased, or used the Company. No facts or circumstances exist and no event or condition is occurring or has occurred with respect to the Company relating to any environmental law, any release of any hazardous substance, or the Company's compliance with current requirements of environmental law, that, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect on the Company.

	
  

	
3.20.

	
Labor. The Company is in compliance in all material respects with all applicable laws, policies, procedures and agreements relating to employment, terms and conditions of employment and to the proper withholding and remission to the proper tax authorities of all sums required to be withheld from employees or persons deemed to be employees under applicable tax laws. The Company has paid all of its employees all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to such employees on or prior to the date hereof. All of Company’s employees are parties to employment agreements, non-competition and confidentiality agreements with the Company, and all of the Company’s consultants who have access to the Company’s Intellectual Property are subject to consulting agreements and confidentiality agreements with the Company.

	
  

	
3.21.

	
Interested Parties Transactions. Except as described in the Public Disclosure Documents, there are no transactions or proposed transactions between the Company and any other person or entity that is at the date of such transaction or at the date of this Agreement an Interested Party (as defined in the Companies Law), and no Interested Party, employee, shareholder, officer or director of the Company is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them.

  

  

  

	
4.

	
Representations, warranties and covenants of the Investor

The Investor hereby represents and warrants to the Company and acknowledges that the Company is specifically relying on each of the representations and warranties provided below:

	
  

	
4.1.

	
Organization. The Investor is duly organized and validly existing under the laws of the state of Israel, and has full power and authority to own, lease and operate its properties and assets and to conduct its business as now being conducted.

	
  

	
4.2.

	
Authorization; Approvals. All action on the part of the Investor necessary for the authorization, execution, delivery, and performance of the Investor's obligations under this Agreement and for the purchase of the Purchased Shares under this Agreement has been or will be taken prior to the date hereof. This Agreement constitutes the valid and legally binding obligations of the Investor, legally enforceable against the Investor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors’ rights generally or the availability of equitable remedies.

	
  

	
4.3.

	
Lock Up. The Investor is aware of the fact that the Purchased Shares and Warrant Shares are subject to certain lock-up restrictions under the Securities Laws, and the transfer of the Purchased Shares and any Warrant Shares shall be subject to such restrictions. The Investor undertakes to comply with all such restrictions with respect to the Purchased Shares and the Warrant Shares.

	
  

	
4.4.

	
Financial Resources. The Investor has available all the financial resources necessary to meet its obligations and to pay the Purchase Price to the Company.

	
  

	
4.5.

	
Brokers. No agent, broker, investment banker, person or firm acting in a similar capacity on behalf of or under the authority of the Investor is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, on account of any action taken by the Investor in connection with the transactions contemplated by this Agreement.

	
  

	
4.6.

	
No Voting Agreements. Except for the Undertaking Letter, the Investor is not a party to any agreement or arrangement, whether written or oral, between the Investor and any of the Company's shareholders as of the date hereof or a corporation in which the Company's shareholders are an Interested Party (as defined in the Companies Law) as of the date hereof, regulating the management of the Company, the shareholders' rights in the Company, the transfer of shares in the Company, including any voting agreements, shareholder agreements or any other similar agreement even if its title is different or has any other relations or agreements with any of the Company's shareholders, directors or officers.

	
  

	
4.7.

	
Independent Advice. Without derogating from the representations and warranties set forth in Section 3, the Investor has obtained the advice of its own advisors, legal counsel and accountants and reviewed the Public Disclosure Documents.

	
  

	
4.8.

	
No Breach. Neither the execution and delivery of this Agreement nor compliance by the Investor with the terms and provisions hereof, will conflict with, or result in a breach or violation of, any of the terms, conditions and provisions of: (i) the Investor's governing instruments, (ii) any judgment, order, injunction, decree, or ruling of any court or governmental authority, domestic or foreign by which the Investor is bound, (iii) any agreement, contract, lease, license or commitment to which the Investor is a party or to which it is subject, or (iv) to the Investor's knowledge, any applicable law, to the effect that any of the foregoing could reasonably be expected to have a Material Adverse Effect.

  

  

  

 

	
  

	
5.

	
Purchase and Sale of Purchased Shares and grant of the Warrant

	
  

	
5.1.

	
Closing. The purchase of the Purchased Shares, the issuance and allotment of the Purchased Shares by the Company, the registration of the Purchased Shares in the register of shareholders of the Company and the grant of the Warrant to the Investor, shall take place at the Closing (the "Closing") to be held at the offices of Fischer, Behar, Chen, Well, Orion & Co., not later than the tenth day (or the first Business Day (as defined in Section 10.1 below) thereafter if not a Business Day) following the fulfillment of the Conditions to Closing (as defined below), or such other date, time and place as the Company and the Investor shall mutually agree in writing (the "Closing Date").

 

	
  

	
5.2.

	
Transactions at the Closing. At the Closing, the following transactions shall occur, which transactions shall be deemed to take place simultaneously and no transaction shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered:

	
  

	
5.2.1.

	
Deliveries of the Company. The Company shall deliver to the Investor (i) true and correct copies of the resolutions of its board of directors and its general meeting, as necessary and applicable, authorizing the transactions contemplated hereby, including the issuance and allotment of the Purchased Shares and the grant of the Warrant against payment of the Purchase Price; (ii) a certificate signed on behalf of the Company by an executive officer of the Company, confirming that the representations and warranties of the Company included herein are true and correct in all material respects as of the Closing Date, in the form attached hereto as Exhibit C; (iii) a letter from the chairman of the Company's board of directors pursuant to Section 282 of Companies Law confirming that all approvals required by the Company for the contemplated transactions have been obtained, in the form attached hereto as Exhibit D, and (iv) a legal opinion from the outside legal counsel of the Company in the form attached hereto as Exhibit E.

	
  

	
5.2.2.

	
Purchase of the Purchased Shares. At the Closing, the Company shall issue to the Investor the Purchased Shares and the Warrant free and clear of any liens, encumbrances or any other third party rights. The Purchase Price shall be paid by the Investor in US dollars, by way of a bank wire to the Company's bank account, pursuant to wiring instructions to be given in writing by the Company prior to the Closing.

 

  

  

  

 

	
  

	
5.2.3.

	
Documentation of Investors as Shareholder of Company. At the Closing, and subject to the payment in full of the Purchase Price by an Investor, the Company shall update its registry of shareholders according to section 5.2.1 above.

	
  

	
5.2.4.

	
Appointment of Board Members. The following persons shall be nominated as board members of the Company: Mr. Nissim Darvish, Ms. Anat Naschitz, Mr. Erez Chimovits and Mr. Chris Rowland.

	
  

	
5.2.5.

	
Indemnification Agreement. The Company shall grant a signed indemnification undertaking to each of the directors nominated upon Closing in the form attached hereto as Exhibit F.

 

	
6.

	
Conditions to Closing

	
  

	
6.1.

	
Mutual Conditions. The obligations of the Investor and the Company to complete the transactions contemplated herein are subject to the fulfillment of the following conditions at or before the Closing:

	
  

	
6.1.1.

	
No Actions. There shall be no action taken under any existing applicable laws of any statute, rule, regulation or order which is enacted, enforced, promulgated or issued by any court, department, commission, board, regulatory body, government or governmental authority or similar agency, domestic or foreign, that (a) makes illegal or otherwise directly or indirectly restrains, enjoins or prohibits the transactions contemplated herein, or (b) results in a judgment or assessment of material damages directly or indirectly relating to the transactions contemplated herein; it is agreed that the issuance of a "position notice" (הודעת עמדה) by a shareholder of the Company with respect to the transaction contemplated hereunder shall not be deemed an action preventing fulfillment of this closing condition;

	
  

	
6.1.2.

	
Shareholders Approval. The Company shall have received the approval of the Company's general meeting in accordance with the requirements of Section 274 or 275 of the Companies Law, which are necessary or required to enter into this Agreement and to consummate the transaction contemplated hereby, to issue the Purchased Shares and to grant the Warrant to the Investor at the Closing;

	
  

	
6.1.3.

	
TASE Approval. The Company shall have obtained the TASE's (a) approval and authorization to the issuance of the Purchased Shares and the listing thereof on TASE upon consummation of the Closing and (b) approval in principle, subject to the exercise of the Warrant, to the issuance of the Warrant Shares and the listing thereof on TASE upon the exercise of the Warrant; the parties shall not withhold consent to postpone the Closing Date in the event of delays not caused by the Company in obtaining such TASE approval;

	
  

	
6.1.4.

	
Best Efforts. The parties shall use their best efforts to complete all of the foregoing conditions to Closing in a timely manner so that the Closings shall occur no later than sixty (60) days following the date hereof. To the extent that the conditions to Closing have not been completed by ninety (90) days following the date hereof and have not been waived by the relevant party in its discretion, this Agreement may be terminated upon notice by either the Company or the Investor; provided, however, that the right to terminate this Agreement under this Section shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure to fulfill the conditions to closing set forth in this Section 6. In the event that the any of the parties terminates this Agreement pursuant to this Section,  neither party will have any further obligations to or rights against any other party hereto subject to such other party having fulfilled its obligations under this Section.

  

  

  

 

	
  

	
6.2.

	
Conditions to the Obligations of the Investor to Effect the Closing. The obligations of the Investor to effect the Closing and the transactions contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing, of each of the following conditions, any of which may be waived, in writing, by the Investor:

	
  

	
6.2.1.

	
The representations and warranties of the Company contained in this Agreement (i) which are qualified by the expression "material", "material adverse change" or "Material Adverse Effect" shall be true and correct as of the Closing Date as if made on such date, and (ii) all other representations and warranties in this Agreement which are not so qualified shall be true and correct in all material respects on the Closing date as if made on such date, except as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect;

	
  

	
6.2.2.

	
The Company shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by it prior to Closing;

	
  

	
6.2.3.

	
Between the date of this Agreement and the date of Closing, nothing shall have occurred that has had or would be reasonably expected to have a Material Adverse Effect;

	
  

	
6.2.4.

	
The Undertaking Letter has not been terminated and is valid and in effect as of the Closing Date;

	
  

	
6.2.5.

	
The Company's board of directors shall consist of the following seven (7) directors: Dr. Nissim Darvish, Ms. Anat Naschitz, Mr. Erez Chimovits, Mr. Chris Rowland Mr. Yair Rabinovitch, Mr. Gabby Sarusi and Mr. Ori Hershkovitz. In the event of any impediment to the nomination of any such director which is not due to the absence of corporate approvals nor due to any action or inaction by the Company, then the parties shall endeavor in good faith to ensure such composition of the board or other arrangements which shall achieve the purpose of this Closing condition;

	
  

	
6.2.6.

	
The Company shall have provided the Office of the Chief Scientist of the Ministry of the Industry, Trade and Labor a notice of the issuance of the Purchased Shares and the Warrant in accordance with the terms of this Agreement.

  

  

  

	
  

	
6.3.

	
Additional Agreements of the Company. Between the date of this Agreement and the Closing Date, the Company shall (i) conduct its business only in, and not take any action except in, the usual, ordinary and regular course of business and consistent with past practice and in compliance with applicable laws, (ii) use its best efforts to satisfy (or cause the satisfaction of) the conditions precedent to its and the Investors’ obligations hereunder and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable under all applicable laws to complete the transactions contemplated by this Agreement, (iii) not enter into any transaction or perform any act that might interfere with or be inconsistent with the successful completion of the transactions contemplated herein or which would render, or which may reasonably be expected to render, untrue or inaccurate (without giving effect to, applying or taking into consideration any materiality or material adverse effect qualification already contained within such representation or warranty) in any material respect any of the Company’s representations and warranties set forth in this Agreement, (iv) not issue, sell, pledge, lease, dispose of, encumber or agree to issue, sell, pledge, lease, dispose of or encumber (or permit the Subsidiary to issue, sell, pledge, lease, dispose of, encumber or agree to issue, sell, pledge, lease, dispose of or encumber) any shares of, or any options, warrants, calls, conversion privileges or similar rights of any kind to acquire any shares of it or any of its subsidiaries, other than the issue of Ordinary Shares pursuant to the due exercise or conversion of options or warrants, in each case currently outstanding in accordance with their current terms, (v) not sell, lease, license, encumber or otherwise dispose of any Intellectual Property of the Company; (vi) not enter into any material contract or arrangement by which the Company or any of its assets or properties is bound or subject and/or enter into any partnership, joint venture or any other cooperation agreements, including, without limitation, for the sale, manufacture or development of any of the Company's current and/or future products, except for such agreements made in the ordinary course of business (vii) convene a general meeting of its shareholders for the approval of the transactions contemplated under this Agreement, the appointment of the board members listed in Section 5.2.4 with effect as of the Closing and the approval of the board composition set forth in Section 6.2.5, with effect as of the Closing.

	
7.

	
Listing of Purchased Shares for Trading

As soon as practicable after the Closing, the Company shall, with respect to the Purchased Shares, in no event later than three (3) Business Days thereafter, issue to the Registration Corporation providing services to the Company ("Hevra Lerishumim") a duly executed share certificate for the number of Purchased Shares, deliver such certificate (with a copy to Investor) to the Hevra Lerishumim and instruct it to deposit the Purchased Shares in the Investor's securities account per details to be provided in writing by the Investor (the "Investor's Account"), subject to the Investor having duly and punctually complied with any requirements of applicable Securities Laws. The provisions of this Section 7 shall apply with respect to the Warrant Shares, mutatis mutandis, to the extent the Warrant is exercised.

  

  

  

 

	
8.

	
[RESERVED]

 

	
9.

	
On-Going Reporting Obligations by the Investors

The Investor shall, at all relevant times either prior to or following the Closing, if and when required by law or regulations, duly and properly provide notices, file and/or procure the filing of any and all notices, in relation to its purchases, sales and holdings in the Company as made or in existence from time to time, and other information required under applicable law, and punctually provide copies of same to the Company, all as required by applicable law and the TASE's regulations.

	
10.

	
Miscellaneous

	
  

	
10.1.

	
Notice. The addresses of the parties to this Agreement shall be as detailed in Exhibit G. Such addresses may be changed by a notice in writing to all parties at their above designated addresses. Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon the next business day after personal delivery to the party to be notified, or the next business day after delivery by confirmed read email or fax transmission, or (7) days after mailed by registered mail. A business day shall be any trading day on the Tel Aviv Stock Exchange ("Business Day").

	
  

	
10.2.

	
Taxes. Each party shall bear its own costs and fees incurred by such party in connection with the negotiation and consummation of the transaction contemplated herein, including any tax payable as a result thereof.

 

	
  

	
10.3.

	
Indemnification.

 

	
  

	
10.3.1.

	
The Company agrees to indemnify and hold harmless the Investor, its affiliates, each of Investor's officers, directors, employees and agents and their respective successors and assigns, from and against any losses, damages, or expenses which are caused by or arise out of (i) any breach or default in the performance by the Company of any covenant or agreement made by the Company in this Agreement and/or the Warrant; (ii) any breach of warranty or representation made by the Company in this Agreement and/or the Warrant; and (iii) any and all third party actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees and expenses) incident to any of the foregoing (the "Indemnifiable Losses").

  

  

  

 

	
  

	
10.3.2.

	
If a claim by a third party is made or a third party notifies an intention to make a claim, and the Investor intends to claim indemnification under this Section, the Investor shall promptly notify the Company in writing of any claim (including reasonable details of the matter relating to such claim) in respect of which the Investor or any of its subsidiaries, directors, officers, employees or shareholders intends to claim such indemnification and the Company shall have  the right to assume the defense and/or settlement thereof with counsel reasonably satisfactory to the Investor (provided that the Investor may participate in any such proceeding with counsel of its choice at its own expense), except if, in the reasonable opinion of the Investor, there is any conflict of interest between the Investor and the Company. The indemnity undertakings in this Section shall not apply to amounts paid in settlement of any Indemnifiable Losses if such settlement is effected without the prior written consent of the Investor and the Company. The failure to deliver written notice to the Company within a reasonable time after the commencement of any such action, if adversely prejudicial to its ability to defend such action, shall relieve the Company of any liability to the Investor under this Section If the Company fails to provide defense of the claim, and to diligently defend or settle the same, the Investor may defend or settle the claim without prejudice to its rights to indemnification hereunder. The Investor, its employees and agents, shall cooperate fully with the Company and its legal representatives (including taking any action the Company requires to defend or resist the claim) and provide full information in the investigation of any Indemnifiable Losses covered by this indemnification.

 

	
  

	
 
10.3.3.

	
Notwithstanding anything to the contrary contained herein, except with respect to Indemnifiable Losses based on claims of fraud, intentional misrepresentation or intentional concealment, and/or breach of the representations and warranties set forth in Section 3.1 (Organization), Section 3.4 (Authorizations; Approvals), Section 3.5 (Capitalization), Section 3.9 (The Purchased Shares and the Warrant Shares)  Section 3.12.8 (Intellectual Property), and Section 3.14 (Taxes) with respect to which no limit applies, the liability of the Company under this Section shall be limited as follows:

	
  

	
(a)

	
the amounts payable by the Company shall be limited to the consideration payable hereunder for the Purchased Shares, the Warrants and the Warrant Shares (to the extent the Warrant is exercised); and

	
  

	
(b)

	
no claim or claims shall be brought later than thirty-six months from the Closing Date, or in the event of Indemnifiable Losses based on claims of breach of the representations and warranties set forth in Section 3.12 (Intellectual Property), except for claims of breach  of the representations and warranties in sub-section 3.12.8 (with respect to which no limit applies, as set forth above), forty-eight months from the Closing Date, unless a notice of the same claim has been given during the indemnification period; and

	
  

	
(c)

	
no claim or claims shall be brought unless the aggregate amount of such claims exceeds US$5,000 in which case the Investor shall be entitled to seek compensation for all Indemnifiable Losses without regard to the limitation set forth in this Section 10.3.3(c).

  

  

  

 

	
  

	
10.3.4.

	
Subject to Section 10.4 below, except with respect to claims based on fraud or intentional misrepresentation or intentional concealment, the indemnification provided in this Section (subject to the terms and limitations set forth herein) shall be the sole, final, exhaustive and exclusive remedy of the Investor from the Company in respect of any breach of any representation, warranty, covenant or undertaking of the Company under this Agreement.

 

	
  

	
10.4.

	
NO LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR: (i) ANY LOSS OF PROFIT; (ii) ANY LOSS OF GOODWILL; (iii) ANY LOSS OF BUSINESS OR BUSINESS OPPORTUNITY; (iv) ANY COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANY ENTITY; OR (v) ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, IN EACH CASE HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. FOR THE AVOIDANCE OF DOUBT, ANY DECREASE IN THE VALUE OF THE PURCHASED SHARES AND/OR THE WARRANT SHARES SHALL NOT BE DEEMED AN INDIRECT OR CONSEQUENTIAL DAMAGE. NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION, THE LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION ABOVE AND IN SECTION 10.3.4, SHALL NOT APPLY TO: (i) ANY CLAIMS FOR FRAUD OR INTENTIONAL MISREPRESENTATION OR INTENTIONAL CONCEALMENT; (ii) TO THE EXTENT OTHERWISE NOT PERMITTED BY LAW, AND (iii) WITH RESPECT TO ANY CLAIMS AND/OR LOSSES RELATING TO OR RESULTING FROM A BREACH OF ANY APPLICABLE SECURITIES LAWS.

	
  

	
10.5.

	
Publications. Subject to applicable law or regulations and to the extent possible, neither the Company nor the Investor shall make any press release or other publicity about the existence of this Agreement or its terms or the transactions contemplated hereby without the prior approval of any other party to this Agreement. Subject to applicable law or regulations, the Company shall provide the Investor with a reasonable period of time to review and comment on all such press releases or public statements including, without limitation, the notice of the general meeting referred to in subsection 6.3(vii) above prior to release thereof. Subject to the requirements by applicable law or regulations, the parties agree to issue jointly or concurrently with the other parties a press release with respect to this Agreement as soon as practicable, in a form acceptable to each party. Each of the parties agrees not to make any public statement that is inconsistent with such press release (other than to the extent superseded by a subsequent press release or public filing)

	
  

	
10.6.

	
Waiver/Amendment. Any term of this agreement may be amended and the observance of any term hereof may be waived (either prospectively or retroactively, and either generally or in a particular instance) only in writing by all parties. No delay or omission to exercise any right, power, or remedy accruing to any party upon any breach or default under this Agreement, shall be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative.

  

  

  

 

	
  

	
10.7.

	
Governing Law; Venue. This Agreement shall be governed by the Laws of the State of Israel, without regard to conflict of law principles thereof, and the competent courts of Tel-Aviv shall have exclusive jurisdiction in all matters relating to this Agreement and the Transaction, to the exclusion of any other jurisdiction.

	
  

	
10.8.

	
Further Assurances. Each of the parties hereto shall perform such further acts and execute such further documents as may reasonably be necessary to carry out and give full effect to the provisions of this Agreement and the intentions of the parties as reflected thereby.

 

	
  

	
10.9.

	
Expenses. The Company shall reimburse the Investor upon the Closing for the Investors' legal fees and other expenses incurred with respect to transaction set forth in this Agreement in the amount of fifty thousand US Dollars ($50,000) plus Value Added Tax.

	
  

	
10.10.

	
Exchange Rate. To the extent that in connection with any payment under this Agreement, a conversion of either United States Dollars ("US$") to New Israeli Shekels ("NIS"), or of NIS to US$ shall be required, any conversion shall be made in accordance with the most recent representative exchange rate ('shaar yatzig') published by the Bank of Israel immediately prior to such payment. However, for conversion of the Purchase Price to NIS for the purpose of determining the quantity of Purchased Shares hereunder, the representative exchange rate published by the Bank of Israel on the date on which the Company's shareholders general meeting convenes for the approval of the transactions contemplated herein is held shall apply, or, in the case no rate is published on that date for any reason, the representative exchange rate published most recently prior to such date.

	
  

	
10.11.

	
Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, then such provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

	
  

	
10.12.

	
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument.

  

  

  

 

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

	
 

_____________________________________

Medigus Ltd.

 

 

By:______________________

Title:____________________

 

	  	
 

 
_____________________________________

OrbiMed Israel Partners,

Limited Partnership

 

By: OrbiMed Israel Biofund GP, L.P., its general partner; and

 

By: OrbiMed Israel GP Limited, its general partner

 

By: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Name: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Title:­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

 

By: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Name: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Title:­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

***

Signature Page to OrbiMed-Medigus Share Purchase Agreementexhibit_4-2.htm

Exhibit 4.2

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of June 29, 2014, between Medigus Ltd., an Israeli corporation (the “Company”), and OrbiMed Israel Partners Limited Partnership with a registered address of 89 Medinat Hayehudim ( the “Purchaser”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement the Company and the Purchaser agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under the Israeli Securities Law.

 

“Board of Directors” means the board of directors of the Company.

 

“Broker” means Roth Capital and Ladenburg, Thalman & Co. Inc.

 

“Business Day” means any day except any Friday, Saturday, any Sunday, any day which is a federal legal holiday in the United States or legal holiday in Israel or any day on which banking institutions in the State of New York or in Israel are authorized or required by law or other governmental action to close.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” shall be as soon as possible, but no later than 3 Business Days after satisfaction (or waiver by the Party entitled to waive such conditions) of all the conditions precedent to the Closing as set out herein in Article II.

 

“Commission” means the United States Securities and Exchange Commission.

 

 "Companies Law" means the Israeli Companies Law, 5759-1999

 

 “Effective Date” means the earliest of the date that the initial Registration Statement of the American Depository Shares (ADS) of the Company under the ADR Facility has been declared effective by the Commission.

 

“Escrow Agent” means the Escrow Agent under the Escrow Agreement.

 

  

  

  

 

“Escrow Agreement” means the escrow agreement to be signed by the Parties within 14 days from the date of this Agreement (unless otherwise agreed in writing by the Company and the Purchaser Majority), by and among the Company, the Escrow Agent and the Purchaser pursuant to which the Purchaser shall deposit the Subscription Amounts with the Escrow Agent to be applied to the transactions contemplated hereunder, and to be subsequently held by the Escrow Agent on behalf of the Company as of and concurrent with the Closing.

 

“Escrow Date” means the close of trading on such day which is five Israeli Business Days prior to the date of the Shareholders Approval.

 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exempt Issuance” means the issuance of (a) Ordinary Shares or options to employees, service providers, officers or directors of the Company, or other plan beneficiaries, pursuant to any share or option plan duly adopted for such purpose in accordance with the Companies Law and/or Israeli Securities Laws (as defined below) not to exceed 3% on an annual basis (which for avoidance of doubt the options grants approved as set forth in the Option Plan Outline of Offering shall not be subject to such limitation), (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into Ordinary Shares already issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, other than as per the terms set forth in such already issued securities, or (c) any issuance of securities in connection with an acquisition of the equity or assets of another entity or to strategic partners; provided, however, that securities issued pursuant to acquisitions or strategic transactions shall be approved by a majority of the independent directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

 

 “Israeli Institutional Investors Transaction” shall have the meaning ascribed to such term in Section ‎4.11.

 

“Israeli Securities Laws” means the Securities Law, the rules and regulations promulgated under the Securities Law and any rules and regulations of the TASE.

 

“Purchaser Account” means an Israeli securities account(s) (or, an account with a foreign bank which works with an Israeli corresponding bank), that the Purchaser shall provide to the Company in accordance with the provisions of this Agreement, in which the Shares (and Warrant Shares, unless otherwise specified in the Exercise Notice) shall be deposited with respect to the Purchaser, including name of Account holder, Account number and the name of the TASE member managing such Account.

 

  

2

  

 

“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material Adverse Effect” means any of (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document.

 

 “Option Plan Outline of Offering” shall mean an outline of offering with respect to the Company’s 2013 option plan, and the options grants approved by the Board of Directors on May 29, 2014 with respect thereto, all as set forth on Form T170 filed by the Company on June 1, 2014 (as supplemented by the filing on June 19, 2014), and as may be supplemented to or amended from time to time in accordance with TASE and/or ISA requirements.

 

“Ordinary Shares” means the ordinary shares of the Company, nominal value, NIS 0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Ordinary Shares Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Ordinary Shares, including, without limitation, any debt, preferred share, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Ordinary Shares.

 

“Per Share Purchase Price” means a price per 1 Ordinary Share of the Company in US Dollars determined on the date hereof that is equal to (A) ninety-eight percent (98%) of (B) the quotient obtained by dividing (i) the daily closing price of one Ordinary Share of the Company on the TASE for the Trading Day immediately  prior to the date hereof  , by (ii) the representative exchange rate (as published by the Bank Of Israel) of 1 US Dollar to New Israeli Shekels on the date prior to the date hereof.

 

 “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

 “Registration Statement” means a registration statement registering the resale by the Purchasers of the ADRs representing the Shares and Warrant Shares (or registering for resale the Shares and Warrant Shares directly), which registration permits the Purchaser to sell such securities without restriction or limitation in the United States, other than as to delivery of a prospectus or conformity with the plan of distribution contained in such Registration Statement.

 

  

3

  

 

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(b).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Securities” means the Shares, the Warrants and the Warrant Shares.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Securities Law” means the Israeli Securities Law - 1968.

 

“Shareholders Approval” means the approval of the Company's general meeting of shareholders, for this Agreement, the Transaction Documents and the transactions contemplated herein and therein, in accordance with the requirements of Sections 270 (4)(a), 270(5) and 275 of the Companies Law.

 

“Shares” means the Ordinary Shares issued or issuable to each Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable Ordinary Shares). 

 

“Subscription Amount” means, US $1,000,000 to be paid for all of the Shares and Warrants to be purchased by the Purchaser hereunder” in United States dollars and in immediately available funds.

 

 “TASE” means the Tel Aviv Stock Exchange.

 

“TASE Approval” means the TASE's approval and authorization of (a) the issuance of the Shares and the listing thereof on TASE upon consummation of the Closing, and (b) approval, subject to the exercise of the Warrant, to the issuance of the Warrant Shares and the listing thereof on TASE upon the exercise of the Warrant.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Ordinary Shares are listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the Tel Aviv Stock Exchange, the OTC Bulletin Board  (or any successors to any of the foregoing).

 

  

4

  

 

“Transaction Documents” means this Agreement, the Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

 “Transfer Agent” means a transfer agent employed by the Company once the ADR Facility is formed and registered.

 

“Warrants” means, collectively, the Ordinary Shares purchase warrants delivered to the Purchasers at the Closing pursuant to this Agreement, in the form of Exhibit A attached hereto.

 

“Warrant Shares” means the Ordinary Shares issuable upon exercise of the Warrants.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing.

 

(a)           On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser, agrees to purchase from the Company (a) the aggregate number of Ordinary Shares, calculable by dividing the Subscription Amount by the  Per Share Purchase Price, all on the terms and subject to the conditions more fully set forth in this Agreement, and (b) non-registered warrants to purchase additional Ordinary Shares issuable upon exercise of the Purchaser’s Warrant, with an exercise price equal to 140% of the Per Share Purchase Price, such that the total number of warrants issued to each Purchaser shall be equal to 40% of the number of Shares acquired by the Purchaser, and with a term of exercise of 3 years beginning on the date of issuance.

 

(b)             Upon satisfaction or waiver of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Amit, Pollak, Matalon & Co., 17 Yitzhak Sadeh Street, Tel-Aviv, Israel or such other location as the parties shall mutually agree.

 

(c)           Within 2 Business Days following the Escrow Date, the Purchaser shall transfer  the Subscription Amount, in US Dollars, to the  Escrow Agent in accordance with the Escrow Agreement. The escrow agent account's details shall be delivered to the Purchaser by the Escrow Agent prior to the Escrow Date ("Escrow Account").

 

(d)           All the actions and transactions occurring at the Closing and specified in this Agreement shall be deemed to take place simultaneously and no transactions shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered:

 

  

5

  

 

2.2           Deliveries.

 

(a)           On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:

 

(i)           Copy of a new share certificate for the Shares registered under the name of the Registration Company of Bank Hapoalim Ltd., the registration company of the Company (the "Registration Company");

 

(ii)           Copy of the notice of the Company to the Registration Company with respect to the issuance of the Shares (including all documents required by the Registration Company and/or Israeli Securities Laws, except for Form T87), with a stamp indicating the acceptance of such notice by the Registration Company (the "Registration Notice"), irrevocably instructing the Registration Company to credit the Shares to the Purchaser's Account, the details of which shall be provided by the Purchaser in writing to the Company at least 4 Business Days following the Escrow Date; 

 

(iii)           The executed Warrants in the name of the Purchaser signed by the Company;

 

(iv)           The TASE Approval;

 

(v)           A copy of an executed Form T87 reflecting the allocation of the Shares and the Warrants to the Purchaser;

 

(vi)           A certificate, duly executed by the Company, confirming that, each of the representations and warranties set forth in Article III is full and accurate in all material respects as of the Closing Date as if made on the Closing Date and that the Company has performed and complied in all material respects with all its covenants, agreements, and undertakings as set forth herein required to be performed at or prior to the Closing Date (the “Company Certificate”); and

 

(vii)           Duly executed copy of the minutes, or a certified Corporate Secretary extract thereof,  of the resolutions of the Board of Directors approving the Transaction Documents, and all corporate proceedings and required approvals related thereto, as required by Chapter 5 of the Companies Law have been obtained, all in accordance with the provisions of Section 282 of the Companies Law.

 

(b)           On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company, as applicabl the details of the Purchaser Account.

 

(c)           At the Closing, the Company shall file with the TASE the T87 Form, and immediately thereafter shall deliver such executed T87 form to the Registration Company.

 

  

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(d)           No later than 4 Business Days following the Escrow Date, the Escrow Agent shall confirm in writing to the Company that the entire Subscription Amount is deposited in the Escrow Account.  Upon the fulfillment of all conditions to the Closing set forth in this Agreement as confirmed to the Escrow Agent by Company and Purchasers' Israeli Counsel, the Subscription Amount shall be held by the Escrow Agent on behalf of the Company without any restrictions whatsoever as of the time that the Company files the Form T87 with the TASE. Subsequent to such filing of Form T87, the Escrow Agent shall deliver by wire transfer, subject to the terms of the Escrow Agreement (which shall reflect, inter alia, the provisions of this sub-Section ‎2.2‎(c)), to the Company the Subscription Amount.

 

2.3           Closing Conditions.

 

(a)           Mutual Conditions. The obligations of the Purchaser and the Company to complete the transactions contemplated herein are subject to the fulfillment of the following conditions at or before the Closing:

 

(i)           No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(ii)           Shareholders’ Approval. The Company shall have received the Shareholders Approval;

 

(iii)           TASE Approval. The Company shall have obtained the TASE Approval.

 

(b)           The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met, any of which may be waived, in writing, by the Company:

 

(i)           the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)           all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed;

 

(iii)           the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement; and

 

(iv)           The Escrow Agent confirming in writing to the Company that the entire Subscription Amount is deposited in the Escrow Account, and that contemporaneously with the filing of the Form T87 by the Company shall be held exclusively for the benefit of the Company subject to no restrictions whatsoever;

 

  

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(c)           The obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met, any of which may be waived, in writing, by the Purchaser, which waiver shall be at the sole discretion of the Purchaser:

 

(i)           The accuracy when made, in all material respects, of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date) and the accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)           all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

(iii)           the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv)           there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

(v)           from the date hereof to the Closing Date, trading in the Ordinary Shares of the Company shall not have been suspended for any reason   except for a suspension by the TASE of trading for not more than 60 minutes due to a reporting of the Company.

 

(d)           Best Efforts. The parties shall use commercially reasonable best efforts to complete all of the conditions to Closing specified above in a timely manner so that the Closings shall occur no later than 45 days following the date hereof.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser:

 

(a)                      Authorization; Enforcement.  Other than in connection with the Required Approvals, the Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of this Agreement and the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection herewith or therewith other than in connection with the Required Approvals.  This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof including the receipt of the Required Approvals and the fulfillment of the conditions set forth in Section ‎2.3 above, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally.

 

  

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(b)          Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Sections 2.2, 4.2 and 4.4 of this Agreement, (ii) the filing and approval of the Commission of the ADR Facility and in the case of a Non-Uniform Offering, the approval of the Israeli Securities Authority (“ISA”) to publish the Listing Prospectus (as defined in below), (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Shares and Warrant Shares, and as applicable the ADSs of the Company, for trading thereon in the time and manner required thereby, (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws, (v) the Shareholders Approval; (vi) the TASE Approval, (collectively, the “Required Approvals”).

 

(c)           Issuance of the Securities.  The Shares and the Warrants are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents and under applicable law, including the Israeli Securities Laws.  The Warrant Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents and under applicable law, including the Israeli Securities Laws.  The Company has reserved from its duly authorized share capital the maximum number of Ordinary Shares issuable pursuant to this Agreement and the Warrants.

 

(d)           Private Placement. Assuming the accuracy of the Purchaser's representations and warranties set forth in Section 3.2, (i) no registration under the Securities Act, and (ii) no prospectus under the Israeli Securities Laws, is required for the offer and sale of the Shares and Warrants by the Company to the Purchasers as contemplated hereby, or for the issuance of the Warrant Shares upon exercise of the Warrants. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(e)           Registration Rights.  Other than each of the Purchaser, and the investors under each of the US Investors Transaction, the Israeli Institutional Investors Transaction and the Capital   Transaction, and without prejudice to the last sentence set forth in Section ‎4.2(a) hereinafter,  no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

  

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(f)           Disclosure. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that the Purchaser is not making and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(g)           No Integrated Offering. Assuming the accuracy of the Purchaser's representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) except with respect to the Capital Transaction , US Investors Transaction, and the Israeli Institutional Investors Transaction, any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(h)           No General Solicitation.  Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising (within the meaning of Regulation D).  The Company has offered the Securities for sale only to the Purchaser.

 

(i)            Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees that the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or any of its e representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser's purchase of the Securities.  The Company further represents to the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

  

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3.2           Representations and Warranties of the Purchasers.  The Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)           Organization; Authority.  The Purchaser is an entity duly incorporated or formed, validly existing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited  liability company or similar action, as applicable, on the part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation ofthe Purchaser, enforceable against it in accordance with its terms, except as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally.

 

(b)           Experience of Such Purchaser.  The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(c)           General Solicitation.  The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

(d)           Lock Up. The Purchaser is aware of the fact that the Shares and the Warrant Shares are subject to certain lock-up restrictions under Israeli Securities Laws, and the transfer of the Securities shall be subject to such restrictions. Such Purchaser undertakes to comply with all such restrictions with respect to the Securities.

 

(e)           No Voting Agreements. Except for the Undertaking Letter executed by and among the Purchaser and the Current Shareholders (as such term is defined in the Undertaking Letter) dated January 3, 2013, the Purchaser is not a party to any agreement or arrangement, whether written or oral, between the Purchaser and any of the Company's shareholders as of the date hereof or a corporation in which the Company's shareholders are an Interested Party (as defined in the Companies Law) as of the date hereof, regulating the management of the Company, the shareholders' rights in the Company, the transfer of shares in the Company, including any voting agreements, shareholder agreements or any other similar agreement even if its title is different or has any other relations or agreements with any of the Company's shareholders, directors or officers.

 

(f)           Brokers. No agent, broker, investment banker, person or firm acting in a similar capacity on behalf of or under the authority of the Purchaser is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, for which the Company or any of its Affiliates or the Brokers after the Closing could have any liabilities in connection with this Agreement, any of the transactions contemplated by this Agreement, or on account of any action taken by the Purchaser in connection with the transactions contemplated by this Agreement.

 

  

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(g)           Independent Advice. The Purchaser understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Purchaser in connection with the purchase of the Securities constitutes legal, tax or investment advice.

 

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1           Transfer Restrictions.

 

(a)           The Securities may only be disposed of in compliance with state and federal securities laws to the extent applicable and the Israeli Securities Laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act or is not otherwise being transferred in violation of the Israeli Securities Laws.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement, other than with respect to such rights which are explicitly denoted in this Agreement as being non-transferable rights.

 

The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties, it being clarified however that any rights under this Agreement which are explicitly denoted as being non-transferable rights shall not accrue to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.

 

  

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(b)                      The Purchasers confirms and acknowledges that, to the extent applicable,  the resale of the Securities shall be restricted under US applicable law, in the following manner:

 

THE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY

 

 The Securities shall not be so restricted (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Shares or Warrant Shares, to a transferee that is not an affiliate of Purchaser or the Company, pursuant to Rule 144 (iii) if such Shares or Warrant Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and Warrant Shares and without volume or manner-of-sale restrictions, (iv)  following any sale of such Securities pursuant to Rule 904 of Regulation S under the U.S. Securities Act ("Rule 904"), or (iv) if the resale of the Securities is not otherwise restricted or prohibited under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) and the rules and regulations promulgated thereunder.  If all or any portion of a Warrant is exercised at a time when there is an ADR Facility, or if such Shares or Warrant Shares may be sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144, in compliance with Rule 904, or if the Shares or Warrant Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares or Warrant Shares or if no restriction on resale of the Securities exist under any US applicable law, then the resale of such Warrant Shares shall not be restricted as specified above . The Company agrees that following the Effective Date or at such time as nor restriction on the resale of the Securities exist under this Section 4.1(c), it will, no later than three (3) Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate or other evidence representing Shares or Warrant Shares, as the case may be, (such third Trading Day, the “Restriction Removal Date”), deliver or cause to be delivered to such Purchaser a certificate or other evidence representing such shares that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.

 

  

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(c)           In addition to such Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as liquidated damages and not as a penalty, for each $1,000 of Shares or Warrant Shares (based daily volume weighted average price of one Ordinary Share of the Company on the TASE for the five Trading Days prior to the date such Securities are submitted to the Transfer Agent) delivered for removal of any restriction and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day ten (10) Trading Days after such damages have begun to accrue) for each Trading Day after the Restriction Removal Date until such certificate is delivered without confirming no restriction on resale of such Securities exist. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

(d)           The  Purchaser agrees with the Company that, to the extent applicable, the Purchaser will sell any Securities only pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of any restriction on resale from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

 

(e)           In addition, the Shares and the Warrant Shares are subject to certain lock-up restrictions as specified under Section 15C of the Securities Law and the regulations promulgated under such Section, and each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities only in accordance with the requirements set forth therein.

 

4.2           Registration Rights.

 

(a)           American Depository Receipts. On or before the seven-month anniversary of the Closing Date, the Company agrees to have in place a Level II American Depositary Receipts facility (“ADR” and "ADR Facility", respectively) on NASDAQ or the New York Stock Exchange (NYSE).  The Purchaser shall have the right to have the Shares (or any portion of them) and, once issued upon exercise of the Warrants, the Warrant Shares (or any portion of them) be converted into American Depositary Shares, at the Company’s expense, immediately following the completion of the implementation of the ADR Facility. At least 30 days prior to the formation of the ADR Facility, the Company will notify the Purchaser of its rights to have his Shares and Warrant Shares (if converted) be registered under the ADR Facility, and shall register such Shares and Warrant Shares under the ADR Facility at the election of the Purchaser. Implementation of ADR Facility shall be deemed completed when the Company’s Registration Statement filed with the Commission with respect to ADSs of the Company is declared effective by the Commission. The Company covenants to make reasonable commercial efforts to maintain the registration of the Ordinary Shares through such ADR Facility, or to register and maintain an Alternative US Registration, in each case, until the later of (i) the third anniversary  following effectiveness thereof, and (ii)  the six-month anniversary of the exercise of the last of the Warrants (provided that any Warrants that expire prior to exercise shall, for purposes of this sentence, be deemed to have been exercised six months prior to expiration). The Purchaser agrees that, in the sole discretion of the Company and any other shareholders of the Company, additional shares of the Company which have been issued to shareholders, or which may be issued to shareholders in the future, may be converted into American Depositary Shares, as part of the completion of the implementation of the ADR Facility, or at any time thereafter. As used herein, an Alternative US Registration shall mean a registration of the Ordinary Shares (including the Shares and Warrant Shares) with effect for the benefit of the Purchaser at least as beneficial as provided under the ADR Facility.

 

  

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(b)           Release of Israeli Lock-Up Restrictions. If the Company is unable to establish the ADR Facility within a (seven) 7 month period from the Closing Date, the Company shall take all necessary actions,  in order to permit resale by the Purchaser of no less than 100% of the Purchased Shares and 100% of the Warrant Shares (once issued upon exercise of the Warrants) on the TASE by release of the Israeli lock-up restrictions from the Shares and Warrant Shares by publishing an underwritten non-uniform offering prospectus or an underwritten shelf offering report (the "Listing Prospectus") with the Israeli Securities Authority and the TASE (the "Non-Uniform Offering"). The Company undertakes that (A) such Non-Uniform Offering shall be completed within seven (7) months from the Closing Date and shall be in full compliance with any and all Israeli Securities Laws requirements, including insuring that such Non-Uniform Offering is underwritten, (b) that the underwriter in such offering (the "Pricing Underwriter") participated in the determination of the Per Share Purchase Price under this Agreement, in accordance with an agreement with such underwriter attached as Schedule 4.2(b) to this Agreement, and (C) that the Pricing Underwriter complies with all requirements and limitations under Israeli Securities Laws (including and in particular any and all requirements and limitations pertaining to conflict of interest of an underwriter in a non-uniform offering). The above notwithstanding, and with no further obligation by the Company to the Purchaser, the Company agrees to use commercially reasonable efforts to complete the establishment of the ADR Facility even after such seven (7) month period has expired and the publishing of the Listing Prospectus and in such case, the Purchasers shall have the right to convert their Shares and Warrant Shares, once exercised, to ADSs of the Company under the ADR Facility.

 

(c)            It is agreed and acknowledged by the Purchaser, that the Listing Prospectus will release the Israeli lock up restrictions on the Shares and the Warrant Shares, only for the Purchaser so long as it is (A) an Institutional Investor (as defined above) at the time of this Agreement, at the time of the Closing and at the time such Listing Prospectus is published, and (B) only for the Purchaser (and not to any transferees of such Purchaser).  It is further agreed and acknowledged by the Purchaser that the Listing Prospectus, or other TASE prospectus or offering report similar thereto, may be used to facilitate a release of Israeli lockup restrictions on any shares and warrants sold pursuant to the Israeli Institutional Investors Transaction and/or the Capital Transaction and/or US Investors Transaction; provided, however, that if the Listing Prospectus is utilized to release any lock-up provisions other than the Purchaser's lock-up provisions, Purchaser's rights as provided under this Agreement shall not be adversely affected from such joinder.

 

  

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(d)           If following the seven (7) month anniversary of the Closing Date(i) a Registration Statement registering for resale by the Purchaser all of the ADRs representing the Shares and Warrant Shares (or registering for resale all of the Shares and Warrant Shares directly) is not declared effective by the Commission, and  (ii) all lock-up restrictions on the trading of the Shares and Warrant Shares in Israel were not removed in a Non-Uniform Offering (the existence of both (i) and (ii) above, shall be referred herein as a "Registration Failure"), then, in addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as  liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of Securities still held by the Purchaser and still subject to any lock up period under the Israeli Securities Laws (which lock-up period would otherwise be released by the Company taking such actions as set forth above) on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) following the occurrence and during the continuance of a Registration Failure, until the date such Registration Failure is cured.  The payments to which the Purchaser shall be entitled pursuant to this Section 4.2(d) are referred to herein as “Registration Failure Payments.”  In no event shall Registration Failure Payments be payable by the Company in respect of more than twelve (12) thirty (30)-day periods.     Registration Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Registration Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Registration Failure Payments is cured.  In the event the Company fails to make Registration Failure Payments in a timely manner, such Registration Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Subject to the provisions of the last sentence of this Section 4.2(d), nothing herein shall limit the Purchaser’s right to pursue actual damages for the Registration Failure, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The Parties agree that the Registration Failure Payments were considered by them and were agreed as foreseeable and reasonable estimation of the damages incurred by the Purchaser for the failure by the Company to register the Shares and Warrant Shares as ADR or to remove the restrictions on such Shares and Warrant Shares in a Non-Uniform Offering, as required under this Section 4.2.  Notwithstanding any provision in this Agreement, if the Purchaser delays providing customary information, or takes other actions that directly causes the Company to make a Registration Failure,  then the Company can exclude the Purchaser’s shares from the Registration Statement and/or Listing Prospectus without liability to such Purchaser. In addition, the Company’s obligations hereunder to a Purchaser (and the determination of whether a Registration Failure has occurred) shall be conditioned on the Purchasers’ timely provision in all material respects of information reasonably requested by the Company in connection with any filing with the Securities and Exchange Commission and/or the Israeli Securities Authority, and no Registration Failure Payments to a Purchaser shall be incurred in the event of unreasonable delay caused by the Purchaser’s failure to respond to the Company’s information requests or requests for customary representations; provided, however, that the obligations of the Company towards any Purchaser under this Section 4(2) (including the obligation to pay Registration Failure Payments) that has complied with the above, shall not be prejudiced in any way due to a non-compliance of any other purchaser (participating in the Israeli Institutional Investors Transaction and/or the US Investors  Transaction and/or Capital Transaction) with such provisions.

 

  

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4.3           Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities by the Company hereunder or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.4           Securities Laws Disclosure; Publicity.  The Company shall by the earlier of (i) 9:30 a.m. (Israeli time) on the Trading Day immediately following the date hereof, or (ii) as otherwise required under the Israeli Securities Laws, (a) issue a press release disclosing the material terms of the transactions contemplated hereby, (b) file an Immediate Report to the TASE and the ISA disclosing all material terms of the transactions contemplated hereby, and all other disclosures pertaining to this Agreement as required by Israeli Securities Laws. In addition when required under the Israeli Securities Laws, but no later than 3 Trading Days following the report filed as per sub-Section (b) above, file immediate report with respect to an exceptional private offering, a material private offering and/or a private offering, all in accordance with Israeli Securities Laws, including a notice of a shareholders' meeting and the intention of the Company to release the Shares and the Warrant Shares from any lock-up restrictions in a non-uniform offering.  The Company and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing required under the Israeli Securities Laws, without the prior written consent of the Purchaser, except: (a) as required by federal securities law, including in connection with  any Registration Statement contemplated hereby  and/or the ADR Facility, and (b) to the extent such disclosure is required by law, including the Israeli Securities Laws and/or the Companies Law (including for avoidance of doubt the provisions set forth in Section 185 of the Companies Law and any subsequent public disclosures the Company have to make as a result of this section), or Trading Market regulations, in which case the Company shall provide the Purchaser with prior notice of such disclosure permitted under this clause (b).

 

  

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4.5           Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder for working capital and other general corporate purposes.  The Company also may use a portion of the net proceeds, currently intended for general corporate purposes, to acquire or invest in technologies, products, services or companies that complement its business, although the Company has no present plans or commitments and is not currently engaged in any material negotiations with respect to these types of transactions. Pending these uses, the Company intends to invest the net proceeds from this offering in short-term, interest-bearing, investment-grade securities, or as otherwise pursuant to the Company’s customary investment policies.  The Company shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables or the Company’s bank overdrafts  in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Ordinary Shares or Ordinary Shares Equivalents, (c) for the settlement of any outstanding litigation as of the date hereof or (d) in violation of FCPA or OFAC regulations.

 

4.6           Reservation of Ordinary Shares. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available until exercise or expiration of the Warrant, free of preemptive rights, a sufficient number of Ordinary Shares for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.

 

4.7           Listing of Ordinary Shares. The Company hereby agrees to use commercially reasonable best efforts to maintain as long as any Warrant is outstanding (and for a period of 6 months thereafter), the listing or quotation of the Ordinary Shares on the Trading Market on which it is currently listed.  The Company will take all action reasonably necessary to continue the listing or quotation and trading of its Ordinary Shares on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. Following the formation of the ADR Facility, and for as long as any Warrant is outstanding (and for a period of 6 months thereafter), the Company agrees to maintain the eligibility of the Ordinary Shares for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

 

4.8           Form D; Blue Sky Filings.  To the extent applicable, the Company agrees to timely file, but in any event no earlier than the filings of the first report required to be filed by the Company in accordance with the provisions of Section ‎4.4 above,  a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

 

  

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4.9            Acknowledgment of Dilution.  The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding Ordinary Shares, which dilution may be substantial under certain market conditions.  The Company further acknowledges that, subject to the receipt of the Required Approvals, its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Shares and Warrant Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against the Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other shareholders of the Company.

 

4.10           Israeli Institutional Investors; US Investors; Capital .  For avoidance of doubt it is clarified that it is agreed and understood by the Purchaser that any possible or contemplated parallel investment in the Company by either of (i) any Israeli Institutional Investors, as such are defined in the first Annex to the Securities Law (an “Israeli Institutional Investors Transaction”), and/or (i) Capital Point Ltd., an Israeli corporation (“Capital” and the “Capital  Transaction”  and/or (ii) certain accredited investors (as defined under federal securities laws) in the USA (the “US Investors Transaction”), is not a condition precedent to effect the Closing, and the Closing shall take place upon satisfaction of all conditions precedent to the Closing as set forth in this Agreement, irrespective of any failure by the Company to negotiate, complete the execution of, or closing thereunder, any investment agreement with any Israeli Institutional Investors and/or Capital and/or the US Investors Transaction; whether such failure is due to the Company, any Israeli Institutional Investor, Capital, or any investor participating in the US Investors Transaction, or caused by failure to achieve any required shareholder or other required corporate approvals to any such possible investment agreement between Capital and the Company and/or Israeli Institutional Investors and the Company and/or the investors in the US Investors Transaction and the Company.

 

Without prejudice to the provisions of this Section ‎4.11 above, and notwithstanding anything else set forth herein this agreement, at the sole discretion of the Company , without any obligations hereunder to the Purchaser, the Company may in tandem to entering into this Agreement, also enter into an investment agreements with any Israeli Institutional Investors and/or certain accredited investors (as defined under federal securities laws) in the USA for the acquisition of additional Securities of the Company on terms that are substantially similar to those set forth herein (subject to the receipt of any other corporate approvals necessary for the closing of such separate and independent investment agreements); provided, however, that the price per Ordinary Share, the number of warrants per each Ordinary Share purchased under such agreements, and the exercise price for such warrants shall be equal to the ones specified in this Agreement, and provided, further, that  such additional investors may be entitled to all benefits and/or privileges accorded to the Purchaser but shall not receive any benefits and/or privileges and/or rights not received by the Purchaser.

 

  

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ARTICLE V.

MISCELLANEOUS

 

5.1           Termination.  This Agreement may be terminated by the Company or by any Purchaser, by written notice to the other parties, if the Closing has not been consummated on or before 90 days following the date hereof; provided, however, that that the right to terminate this Agreement under this Section shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure to fulfill the conditions to closing set forth in this Agreement In the event that the any of the parties terminates this Agreement pursuant to this Section, neither party will have any further obligations to or rights against any other party hereto subject to such other party having fulfilled its obligations under this Section; and further provided, however, that the provisions of Article 5 (Miscellaneous) will survive any termination hereof; and further provided that such termination will not affect the right of any party to sue for any breach by any other party (or parties).

 

5.2            Fees and Expenses.  At the Closing, the Company has agreed to reimburse the Purchaser the non-accountable sum of $15,000 (plus VAT) for its legal fees and expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, including any tax payable as a result thereof.  The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3           Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of confirmation of transmission, if confirmation of such notice or communication which is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto is made at or prior to 5:30 p.m. (Israel time) on a Trading Day, (b) the next Trading Day after the date of confirmation of transmission, if confirmation of such notice or communication which is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto is made on a day that is not a Trading Day or later than 5:30 p.m. (Israel  time) on any Trading Day, (c) the seventh (7th) Trading Day following the date of mailing, if sent by U.S. or Israeli nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5           Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser, or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any waiver, permit, consent, or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.

 

  

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5.6           Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7           Successors and Assigns.  Without prejudice to the rights which are explicitly stated to be non-transferable, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement  or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger).  Other than any rights which are denoted herein as being non-transferable, the Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchaser.”

 

5.8           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.9           Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Israel, without regard to the principles of conflicts of law thereof;.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in competent court in Tel Aviv. Each party hereby irrevocably submits to the exclusive jurisdiction of such court as aforesaid for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of the competent court in Tel Aviv.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices of service to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then in addition to the obligations of the Company under Section 4.7, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

  

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5.10           Survival.  The representations and warranties contained herein shall survive until the date that is 24 months following the Closing and the delivery of the Securities, and the covenants and agreements contained in this Agreement requiring performance following the Closing shall survive the Closing in accordance with their respective terms.

 

5.11           Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.12           Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13            Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely (after giving effect to any cure period) perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any Ordinary Shares subject to any such rescinded exercise notice concurrently with the return to the Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to the Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

5.14           Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

  

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5.15           Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.16           Independent Nature of Purchasers’ Obligations and Rights.  The obligations of the Purchaser under any Transaction Document are several and not joint with the obligations of any other purchaser in any other parallel transaction being contemplated thereto, and the Purchaser shall not be responsible in any way for the performance or non-performance of the obligations of any other purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by the Purchaser pursuant hereof or thereto, shall be deemed to constitute the Purchaser together with the purchasers under any parallel  investments in the Company, as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchaser is in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  The  Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other purchaser to be joined as an additional party in any proceeding for such purpose.  The Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.

 

5.17           Liquidated Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

5.18           Fridays, Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day or Business Day, then such action may be taken or such right may be exercised on the next succeeding Trading Day or Business Day, as applicable.

 

5.19           Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and Ordinary Shares in any Transaction Document shall, in accordance with applicable Trading Market regulations, be subject to adjustment for reverse and forward share splits, share dividends, share combinations and other similar transactions of the Ordinary Shares that occur after the date of this Agreement.

 

(Signature Pages Follow)

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	
MEDIGUS LTD.

 

 

	
Address for Notice:

Suite 7A, Industrial Park, POB 

3030, Omer 8496500, Israel

	
By:__________________________________________

     Name: Chris Rowland                 Avraham Ben-Tzvi

     Title:     CEO                                 General Counsel

 

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

	
Fax: +972 72 2602231

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

  

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[PURCHASER SIGNATURE PAGES TO MDGS SECURITIES PURCHASE AGREEMENT]

 

	
OrbiMed Israel Limited Partnership

OrbiMed Israel Partners

 

By: OrbiMed Israel Biofund GP, L.P., its general partner;

and

By: OrbiMed Israel GP Limited, its general partner

 

By: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Name: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Title:­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

 

By: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Name: ­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

Title:­­­­­­­­­­­­­­­­­­­­­­­­­­­_________________

 

Subscription Amount: $1,000,000

Shares: 7,663,109

Warrant Shares: 3,065,244

EIN Number: _______________________

 

25

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