REGISTRATION RIGHTS AGREEMENT
WHEREAS the Company and the Shareholders previously entered into an Investors Rights Agreement whereby the Shareholders were provided, inter alia, with certain registration rights which expired on October 10, 2006 ("Original Agreement");
WHEREAS, the Shareholders wish to enter into a new Registration Rights Agreement with the Company providing the Shareholders with registration rights with substantially similar terms to those provided in the Original Agreement; and
WHEREAS, the Audit Committee and the Board of Directors of the Company have determined that it is in the best interests of the Company that the Company enter into this Agreement.
NOW, THEREFORE, subject to Section 5 below, in consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto covenant and agree as follows:
1. GENERAL PROVISIONS
1.1 Shares Subject to this Agreement. The Parties hereto expressly agree that the terms and restrictions of this Agreement shall apply to all shares of the Company's share capital which any of them now owns or hereafter acquires by any means, including without limitation by purchase, assignment or operation of law, or as a result of any share dividend, share split, reorganization, reclassification, whether voluntary or involuntary, or other similar transaction, whether by sale, merger, consolidation or other similar transaction, or by purchase, assignment or operation of law (the "Shares").
1.2 Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:
"Affiliate" has the meaning ascribed to that term in Rule 12b-2 under the Exchange Act, or any successor rule.
"Articles" shall mean the Articles of Association of the Company as may hereafter be amended in accordance with their terms from time to time.
"Commission" shall mean the Securities and Exchange Commission and any successor agency of the Federal government administering the Securities Act and the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and any successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.
"Ordinary Shares" shall mean (i) the ordinary shares, NIS 0.05 par value per share, of the Company, (ii) any other capital shares of the Company, however designated, authorized on or after the date hereof, which shall neither be limited to a fixed sum or percentage of par value in respect of the rights of the holders thereof to participate in dividends nor entitled to a preference prior or equal to any class of preferred shares of the Company in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company; and (iii) any other securities of the Company into which or for which any of the securities described in (i) or (ii) may be converted or exchanged pursuant to any recapitalization, reorganization, merger, consolidation, sale of assets or other similar event.
"Permitted Transferee" shall mean with respect to any Shareholder, any Person that controls, is controlled by or is under common control with such Shareholder.
"Person" means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, or a government or any agency or political subdivision thereof.
"Registrable Securities" shall mean (i) Ordinary Shares held by the Shareholders from time to time and (ii) other Ordinary Shares or other securities of the Company, in each case, issued or issuable to the Shareholders or their Permitted Transferees with respect to such Ordinary Shares in connection with any share split, share dividend, recapitalization, reorganization, merger, consolidation, sale of assets or similar event, excluding in any event securities which have been (a) registered under the Securities Act pursuant to an effective registration statement filed thereunder and disposed of in accordance with the registration statement covering them, (b) publicly sold pursuant to Rule 144 under the Securities Act, or (c) sold by a person in a transaction in which the holder’s registration rights have not been assigned in accordance with Section 3.14 hereof.
"Registration Expenses" shall mean the expenses so described in Section 3.8.
"Securities Act" shall mean the Securities Act of 1933, as amended, and any successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.
"Selling Expenses" shall mean the expenses so described in Section 3.8.
2. Reserved
Upon request of a holder of such a certificate, the Company shall remove the foregoing legend from the certificate if (i) there is an effective registration statement covering the securities represented by such certificate, or (ii) with such request, the Company shall have received either the opinion referred to in Section 3.2(a)(i) or the "no-action" letter referred to in Section 3.2(a)(ii), or (iii) pursuant to any other express provision hereof such legend is no longer required.
3.2 Notice of Proposed Transfer.
(b) No such opinion of counsel or "no action" letter from the Commission, as set forth in Section 3.2(a) above, shall be required in the event of a sale or other transfer of any Registrable Securities to (i) any Affiliate of a Shareholder, including, without limitation, any venture capital limited partnership now existing or hereafter formed which controls, is controlled by or is under common control with such Shareholder; (ii) one or more partners or members of the transferor (in the case of a transferor that is a partnership, limited liability company or fund), to a shareholder (in the case of a transferor that is a corporation) or to a trust grantor (in the case of a transferor that is a trust) in each case in respect of the beneficial interest of such partner, shareholder or trust; or (iii) any successors or assigns of any of the foregoing persons, provided that the transferee agrees in writing to be subject to this Agreement to the same extent as if such transferee were originally a signatory.
3.3 Reserved
3.4 Required Registration
(a) One or more of the Shareholders holding Registrable Securities constituting at least 5% of the total number of Ordinary Shares then outstanding may request the Company to register for sale under the Securities Act all or any portion of the Ordinary Shares held by such requesting holder or holders for sale in the manner specified in such notice; provided, however, that the proposed aggregate offering price of the Ordinary Shares held by such holder or holders must be at least US$15,000,000.
(b) Following receipt of any notice under this Section 3.4, the Company shall promptly notify all holders of Registrable Securities from whom notice has not been received and such holders shall then be entitled within thirty (30) days after receipt of such notice from the Company to request the Company to include in the requested registration all or any portion of their Ordinary Shares. The Company shall use its best efforts to register under the Securities Act, for public sale in accordance with the method of disposition specified in the notice from requesting holders described in paragraph (a) above, within 180 days of its receipt of such notice, the number of shares of Registrable Securities specified in such notice (and in all notices received by the Company from other holders within thirty (30) days after the receipt of such notice by such holders). The Company shall be obligated to register the Ordinary Shares pursuant to this Section 3.4 on two (2) occasions only, provided, however, that such obligation shall be deemed satisfied only when a registration statement covering all of the Ordinary Shares specified in notices received as aforesaid (except to the extent reduced by the managing underwriter pursuant to Section 3.4(d)) shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto; provided, further, that, upon effectiveness of the registration statement satisfying the second registration obligation set forth in this Section 3.4, the Company shall have no further obligation to register any Ordinary Shares not otherwise included in the notices described above. Notwithstanding anything to the contrary contained herein, no request may be made under this Section 3.4 during the period commencing 60 days prior to the Company’s good faith estimate of the effectiveness of a registration statement filed by the Company covering a firm commitment underwritten public offering (other than pursuant to this Section 3.4) and prior to the later to occur of the completion of the period of distribution for such offering or 120 days after the effective date of such registration statement.
(c) If the holders requesting such registration intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 3.4 and the Company shall include such information in the written notice referred to in paragraph (b) above. The right of any holder to registration pursuant to this Section 3.4 shall be conditioned upon such holder's agreeing to participate in such underwriting and to permit inclusion of such holder's Ordinary Shares in the underwriting. If such method of disposition is an underwritten public offering, the Company may designate the managing underwriter(s) of such offering, which managing underwriter(s) shall be reasonably acceptable to the holders of at least a majority in interest of the shares of Registrable Securities to be sold in such offering. A holder may elect to include in such underwriting all or a part of the Registrable Securities it holds.
(d) A registration statement filed pursuant to this Section 3.4 may, subject to the following provisions, include (i) Ordinary Shares for sale by the Company for its own account, (ii) Ordinary Shares held by officers or directors of the Company and (iii) Ordinary Shares held by other holders of Registrable Securities to be included in the securities to be covered by such registration statement in accordance with Section 3.5 and Ordinary Shares held by other holders of Ordinary Shares who may from time to time have the right to seek to include such Ordinary Shares in such registration statement (the holders referred to in this clause (iii), collectively, "Other Shareholders"), in each case for sale in accordance with the method of disposition specified by the requesting holders. If such registration shall be underwritten, the Company, such officers and directors and Other Shareholders proposing to distribute their shares through such underwriting shall enter into an underwriting agreement in customary form (including representations, warranties and indemnification provisions customary for a transaction of this kind) with the representative of the underwriter or underwriters selected for such underwriting on terms no less favorable to such officers, directors or Other Shareholders than the terms afforded the holders of Registrable Securities. If and to the extent that the managing underwriter determines that marketing factors require a limitation on the number of shares to be included in such registration, then the Ordinary Shares held by officers or directors (other than Registrable Securities) of the Company or by Other Shareholders (other than Registrable Securities) and Ordinary Shares to be sold by the Company for its own account shall be excluded from such registration to the extent so required by such managing underwriter, and unless the holders of such shares and the Company have otherwise agreed in writing, such exclusion shall be applied first to the Ordinary Shares of the Company to be included for its own account to the extent required by the managing underwriter, and then to the shares held by the directors and officers and the Other Shareholders to the extent required by the managing underwriter, ratable among them on the basis of the respective number of shares held by each of them. If the managing underwriter determines that marketing factors require a limitation of the number of Registrable Securities to be registered under this Section 3.4, then Registrable Securities shall be excluded in such manner that the securities to be sold shall be allocated among the selling holders pro rata based on their ownership of Registrable Securities. In any event all securities to be sold other than Registrable Securities will be excluded prior to any exclusion of Registrable Securities. No Registrable Securities or any other security excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any holder of Registrable Securities, officer, director or Other Shareholder who has requested inclusion in such registration as provided above, disapproves of the terms of the underwriting, such holder of securities may elect to withdraw therefrom by written notice to the Company and the managing underwriter. The securities so withdrawn shall also be withdrawn from registration. Except for registration statements on Form S-4, S-8 or any comparable form or successor thereto, the Company will not file with the Commission any other registration statement with respect to its Ordinary Shares, whether for its own account or that of other shareholders, from the date of receipt of a notice from requesting holders pursuant to this Section 3.3 until the completion of the period of distribution of the registration contemplated thereby or 120 days after the effective date of such registration, whichever is earlier, if in the good faith judgment of the managing underwriter marketing factors would materially adversely affect the price of the Registrable Securities subject to such underwritten registration.
3.5 Incidental Registration. If the Company at any time proposes to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4, S-8 or any successor to such forms or another form not available for registering the Registrable Securities for sale to the public), each such time it will promptly give written notice to all holders of the Registrable Securities of its intention so to do. Upon the written request of any such holder, received by the Company within thirty (30) days after the giving of any such notice by the Company, to register any or all of its Registrable Securities, the Company will use its reasonable best efforts to cause the Registrable Securities as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by the holder (in accordance with its written request) of such Registrable Securities so registered. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the holders of Registrable Securities as a part of the written notice given pursuant to this Section 3.5. In such event the right of any holder of Registrable Securities to registration pursuant to this Section 3.5 shall be conditioned upon such holder's participation in such underwriting to the extent provided herein. All holders of Registrable Securities proposing to distribute their securities through such underwriting shall (together with the Company and the other shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for underwriting by the Company. Notwithstanding any other provision of this Section 3.5, if the underwriter determines that marketing factors require a limitation on the number of shares to be underwritten, the Company shall so advise all holders of securities requesting registration of any limitations on the number of shares to be underwritten, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated (i) first to the party initiating such registration procedure (whether the Company for selling Ordinary Shares for its own account or any holder of Registrable Securities initiating such registration); and (ii) then, to Other Shareholders requesting registration pursuant to this Section 3.5 or other similar piggy-back registration rights and to the Company with respect to Ordinary Shares being sold for its own account (unless allocated first under clause (i) above), in proportion, as nearly as practicable, to the respective amounts of securities requested by them to be included in such registration. Notwithstanding the foregoing provisions, the Company may withdraw any registration statement referred to in this Section 3.5 without thereby incurring any liability to the holders of Registrable Securities. If any holder of Registrable Securities disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.
3.6 Registration on Form F-3.
(a) In addition to the rights provided in Section 3.4, provided that at least nine (9) months have elapsed since the most recent registration in which the shareholder seeking to make a request under this Section 3.6 was entitled to request that any of its Registrable Securities be included therein, if at any time (i) any holder or holders of the Registrable Securities request that the Company file a registration statement on Form F-3 or any comparable or successor form thereto for a public offering of all or any portion of the shares of Registrable Securities held by such requesting holder or holders, the reasonably anticipated aggregate price to the public of which would exceed US$15,000,000 (in case of an underwritten offering) or $5,000,000 (in case of a non-underwritten offering), and (ii) the Company is a registrant entitled to use Form F-3 or any comparable or successor form thereto to register such shares, then the Company shall use its best efforts to register under the Securities Act on Form F-3 or any comparable or successor form thereto, for public sale in accordance with the method of disposition specified in such notice, the number of Registrable Securities specified in such notice. Whenever the Company is required by this Section 3.6 to use its best efforts to effect the registration of Registrable Securities, each of the procedures and requirements of Section 3.4 (with all holders of Registrable Securities being treated equally), including but not limited to the requirement that the Company notify all holders of Registrable Securities from whom notice has not been received and provide them with the opportunity to participate in the offering, shall apply to such registration, provided, however, that except as provided above, there shall be no limitation on the number of registrations on Form F-3 which may be requested and obtained under this Section 3.6.
(b) The Company shall use its best efforts to qualify for registration on Form F-3 or any comparable or successor form or forms; and to that end the Company shall register (whether or not required by law to do so) the Ordinary Shares under the Exchange Act in accordance with the provisions of that Act following the effective date of the first registration of any securities of the Company on Form F-1 or any comparable or successor form.
(a) prepare and file with the Commission a registration statement (which, in the case of an underwritten public offering pursuant to Section 3.4, shall be on Form F-1 or other form of general applicability satisfactory to the managing underwriter selected as therein provided) with respect to such securities including executing an undertaking to file post-effective amendments and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (determined as provided below);
(b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period specified herein and comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement in accordance with the sellers' intended method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Registrable Securities and to each underwriter such number of copies of the registration statement and each such amendment and supplement thereto (in each case including all exhibits) and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such registration statement;
(d) use its best efforts to register or qualify the Registrable Securities covered by such registration statement under the securities or "blue sky" laws of such jurisdictions as the sellers of Registrable Securities or, in the case of an underwritten public offering, the managing underwriter reasonably shall request, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction, unless the Company is already subject to service in such jurisdiction;
(e) use its best efforts to list the Registrable Securities covered by such registration statement with any securities exchange on which the Ordinary Shares of the Company are then listed;
(i) make available for inspection by each seller of Registrable Securities, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such seller or underwriter, all at the cost and expense of such sellers or underwriters, as the case may be, reasonable access to all financial and other records, pertinent corporate documents and properties of the Company, as such parties may reasonably request, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, all subject to the recipients' signing non-disclosure undertakings in form designated by the Company;
(l) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement reasonably acceptable to the Company, in usual and customary form, with the managing underwriter of such offering.
For purposes of this Agreement, the period of distribution of Registrable Securities in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it, and the period of distribution of Registrable Securities in any other registration shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby or 180 days after the effective date thereof, provided, however, in the case of any registration of Registrable Securities on Form F-3 or a comparable or successor form which are intended to be offered on a continuous or delayed basis, such 180 day-period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold (but in no event longer than nine months after the effective date of such registration statement), provided that Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and provided, further, that applicable rules under the Securities Act governing the obligation to file a post effective amendment, permit, in lieu of filing a post-effective amendment which (y) includes any prospectus required by Section 10(a)(3) of the Securities Act or (z) reflects facts or events representing a material or fundamental change in or omission from the information set forth in the registration statement, the incorporation by reference of information required to be included in (y) and (z) above contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement.
3.8 Expenses.
(a) All expenses incurred by the Company in complying with Sections 3.4, 3.5 and 3.6, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or "blue sky" laws, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of any insurance which might be obtained by the Company with respect to the offering by the Company, and fees and disbursements of one counsel selected by the holders of at least two-thirds (2/3) of the Registrable Securities being sold, but excluding any Selling Expenses, are called "Registration Expenses". All underwriting discounts and selling commissions applicable to the sale of Registrable Securities are called "Selling Expenses".
(b) The Company will pay all Registration Expenses in connection with each registration statement under Sections 3.4, 3.5 or 3.6; provided, that, in the event of a registration pursuant to Section 3.4 hereof which is withdrawn at the request of the Shareholders other than (i) as a result of the Company's failure to perform its obligations hereunder, (ii) as a result of a cutback by the underwriter of such registration in the amount of Registrable Securities which may be included in such registration by more than 25% or (iii) as a result of information concerning a materially adverse change in the Company's business or financial condition that is made known to the Shareholders after the date on which such registration was requested, the Shareholders shall pay the Registration Expenses with respect to such registration. In the event that a registration pursuant to Section 3.4 hereof is withdrawn pursuant to clauses (i), (ii) or (iii) of this Section 3.8(b), the Shareholders shall, immediately following such withdrawal, be entitled to that number of registration requests pursuant to Section 3.4 hereof to which they would have been entitled not taking into account the withdrawn request. All Selling Expenses in connection with each registration statement under Sections 3.4, 3.5 or 3.6 shall be borne by the participating sellers in proportion to the number of shares registered by each, or by such participating sellers other than the Company (except to the extent the Company shall be a seller) as they may agree.
3.9 Indemnification and Contribution.
(a) In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to any of Sections 3.4, 3.5 or 3.6, the Company will indemnify and hold harmless each holder of Registrable Securities, its officers, directors and partners, each underwriter of such Registrable Securities thereunder and each other person, if any, who controls such holder or underwriter within the meaning of the Securities Act (each, an "Indemnitee"), against any losses, claims, damages or liabilities, joint or several, to which such Indemnitee may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any prospectus, offering circular or other document incident to such registration (including any related notification, registration statement under which such Registrable Securities were registered under the Securities Act pursuant to any of Sections 3.4, 3.5, or 3.6 any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof), (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a "Blue Sky Application"), (iii) any omission or alleged omission to state in any such registration statement, prospectus, amendment or supplement or in any Blue Sky Applications executed or filed by the Company, a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iv) any violation by the Company of the Securities Act or any rule or regulation promulgated under the Securities Act or any state law applicable to the Company and relating to action or inaction required of the Company in connection with such registration, and will reimburse each Indemnitee for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, promptly after being so incurred, provided, however, that the Company will not be liable to an Indemnitee if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with written information furnished by such Indemnitee, in writing specifically for use in such registration statement or prospectus; provided further, however, that, other than in a firm commitment underwriting, the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Indemnitee from whom the person asserting any such losses, claims, damages or liabilities purchased shares in the offering, if a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Indemnitee to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the shares to such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability.
(b) In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to any of Sections 3.4, 3.5 or 3.6, each seller of such Registrable Securities thereunder, severally and not jointly, will indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director of the Company, each other seller of Registrable Securities, each underwriter and each person who controls any underwriter within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, other seller, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any prospectus, offering circular or other document incident to such registration (including any related notification, registration statement under which such Registrable Securities were registered under the Securities Act pursuant to any of Sections 3.4, 3.5 or 3.6, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof), or any Blue Sky Application or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, other seller, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, promptly after being so incurred, provided, however, that such seller will be liable hereunder in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such seller, as such, furnished in writing to the Company by such seller specifically for use in such registration statement or prospectus; and provided, further, however, that the liability of each seller hereunder shall be limited to the proceeds received by such seller from the sale of Registrable Securities covered by such registration statement. Not in limitation of the foregoing, it is understood and agreed that the indemnification obligations of any seller hereunder pursuant to any underwriting agreement entered into in connection herewith shall be limited to (or be reasonably comparable to, in the event an underwriter reasonably requires the use of its form of underwriting agreement) the obligations contained in this subparagraph (b).
(c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 3.9 and shall only relieve it from any liability which it may have to such indemnified party under this Section 3.9 if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel selected by such indemnifying party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 3.9 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the counsel selected by the indemnifying party shall have reasonably concluded that there may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party. No indemnifying party, in the defense of any such claim or action, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or action, and no indemnified party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of the indemnifying party, which consent shall not be unreasonably withheld. Each indemnified party shall furnish such information regarding itself or the claim in question as an indemnifying party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.
(d) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any indemnified party makes a claim for indemnification pursuant to this Section 3.9 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 3.9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such indemnified party in circumstances for which indemnification is provided under this Section 3.9; then, and in each such case, the indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities to which such party may be subject in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of material fact related to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing (A) no such holder of Registrable Securities will be required to contribute any amount in excess of the proceeds received from the sale of all such Registrable Securities offered by it pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.
(e) The indemnities and obligations provided in this Section 3.9 shall survive the transfer of any Registrable Securities by such holder.
(a) use its best efforts to comply with all of the applicable reporting requirements of the Exchange Act and shall comply with all other public information reporting requirements of the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any of the Registrable Securities by any holder of Registrable Securities pursuant to Rule 144 or Rule 144A thereof, as amended from time to time, or any successor rule thereto or otherwise;
(b) cooperate with each holder of Registrable Securities in supplying such information as may be necessary for such holder of Registrable Securities to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act under Rule 144 or Rule 144A thereunder for the sale of any of the Registrable Securities by any holder of Registrable Securities; and
(c) furnish to each holder of Registrable Securities forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 or Rule 144A (or any successor rule) and, at any time after it has become subject to such reporting requirements, of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such holder to sell any Registrable Securities without registration.
The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of said period.
3.13 Reserved
3.14 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Article 3 may be assigned (but only with all related obligations) by a holder of Registrable Securities to a transferee or assignee of such securities who is not engaged in a business activity competitive with the Company (as reasonably determined by the Company's Board of Directors) and who, after such assignment or transfer, holds at least 500,000 shares of Registrable Securities (subject to appropriate adjustment for share splits, share dividends, combinations and similar recapitalization events), provided, that, the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and provided, further, that such assignment shall be effective only if (i) immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and (ii) the transferee or assignee shall acknowledge in writing that the transferred or assigned Registrable Securities shall remain subject to this Agreement. For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of transferees and assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership; provided, that, all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under this Article 3.
3.15 Blockage Periods. Notwithstanding any other provision of this Agreement, the Company shall be permitted to defer the filing of any registration statement under Sections 3.4 or 3.6 if the Company’s Board of Directors determines in good faith, as certified in writing by the Company’s President or Chief Executive Officer to the holder of Registrable Securities requesting registration pursuant to any of the said Sections, that the filing of such a registration statement at such time would be seriously detrimental to the business of the Company. The Company may decline to file any registration statement for this reason only once in any 12-month period and only for a maximum period of 90 days at any one time.
3.16 Termination of Registration Rights. The rights under this Section 3 will expire with respect to each of the Shareholders and their respective successors, assigns and transferees, upon the earlier of (i) five years after the date of the approval of this Agreement by the Company's shareholders or (ii) with respect to a particular holder or any of it successors, assigns or transferees, the earlier of such person's ceasing to hold any Registrable Securities or at such time as such person is entitled to sell all of its Registrable Securities within a consecutive 90-day period pursuant to Rule 144.
4. MISCELLANEOUS
If to the Company: Given Imaging Ltd.
2 Ha’Carmel Street
New Industrial Park
P.O. Box 258
Yoqneam 20692
Israel
Attn: the CEO
972-4-959-2466 (Fax)
If to the Shareholders: To the addresses set forth on Exhibit A
4.2 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.
4.3 Modifications and Amendments. This Agreement may be amended or modified, and any provision hereof may be waived, only with the written consent of (i) the Company and (ii) the holders of at least two-thirds (2/3) of the Registrable Securities whose rights under Section 3 have not terminated according to the provisions of this Agreement. Any waiver or consent hereunder shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
4.5 Benefit. All statements, representations, warranties, covenants and agreements in this Agreement shall be binding on the parties hereto and shall inure to the benefit of the respective successors and permitted assigns of each party hereto. Nothing in this Agreement shall be construed to create any rights or obligations except among the parties hereto, and no person or entity shall be regarded as a third-party beneficiary of this Agreement.
4.10 Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof.
4.12 No Waiver of Rights, Powers and Remedies. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing among the parties hereto, shall operate as a waiver of any such right, power or remedy of the party, other than as provided by Section 4.3 above. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.
4.13 Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
5. Condition Precedent The execution, delivery and performance of this Agreement is conditional upon obtaining the approval of the shareholders of the Company in accordance with applicable law. If such approval is not obtained, this Agreement shall be deemed null and void ab initio.
| GIVEN IMAGING LTD. |
| |
| By: | /s/ Nachum Shamir |
| | Mr. Nahum (Homi) Shamir |
| | President and Chief |
| | Executive Officer |
| | |
| By: | /s/ Yuval Yanai |
| | Mr. Yuval Yanai |
| | Chief Financial Officer |
DISCOUNT INVESTMENT CORPORATION LTD.
| By: | /s/ Shlomo Cohen |
| Name: | Shlomo Cohen |
| Title: | Legal Counsel |
| By: | /s/ Michel Dahan |
| Name: | Michel Dahan |
| Title: | VP and Controller |
ELRON ELECTRONIC INDUSTRIES LTD.
| By: | /s/ Doron Birger |
| Name: | Doron Birger |
| Title: | Chief Executive Officer |
| By: | /s/ Paul Weinberg |
| Name: | Paul Weinberg |
| Title: | General Counsel |
RDC RAFAEL DEVELOPMENT CORPORATION LTD.
| /s/ Avishai Friedman |
| Avishai Friedman |
| Title: | Chief Executive Officer |
EXHIBIT A
RDC Rafael Development Corporation Ltd.
Address: |
| |
| Building 7 |
| New Industrial Park |
| Yoqneam 20692 |
| Israel |
Discount Investment Corporation Ltd.
Address: |
| |
| Triangular Tower |
44th Floor |
| 3 Azrieli Center |
| Tel Aviv 67023 |
| Israel |
Elron Electronic Industries Ltd.
|
| |
| Triangular Tower |
42nd Floor |
| 3 Azrieli Center |
| Tel Aviv 67023 |
|
