SHARE PURCHASE AND SHAREHOLDERS AGREEMENT
This Share Purchase and Shareholders Agreement (this "AGREEMENT") is entered
into as of the 4th day of July, 1996, by and among APTEL LTD., Israeli company
no. 51-186956-2, of 1 Ha'amanut Street, Netanya 42160, Fax: 09-851189 (the
"COMPANY"), the persons whose names and addresses appear on EXHIBIT A hereto
(collectively, the "EXISTING SHAREHOLDERS"), and D.S.P. SEMICONDUCTORS LTD., a
company incorporated under the laws of the State of Israel and having its
principal offices at 13 Gush Etzion Street, Givat Shmuel, Israel, Fax: 03-
5323220 (the "PURCHASER").
Whereas Purchaser desires to make an investment in the Company and the Company
is interested in raising capital by selling shares to the Purchaser;
and
Whereas the parties wish to set forth herein the terms and conditions of their
mutual agreements in connection therewith.
NOW, THEREFORE, in consideration of the mutual promises and covenants,
conditions, representations and warranties set forth herein, and intending to be
legally bound hereby, the parties agree as follows:
1. INTERPRETATION; DEFINITIONS.
1.1 The Recitals and Exhibits hereto consist an integral part hereof.
1.2 The headings of the sections and subsections of this Agreement are
for convenience of reference only and are not to be considered in
construing this Agreement.
1.3 In this Agreement, unless the context otherwise requires:
1.3.1 "CORPORATE DOCUMENTS" means the Company's Memorandum of
Association and Articles of Association.
1.3.2 "INTERESTED PARTY" means any (i) director, office holder
or shareholder of the Company, (ii) any Person which is a
director, office holder or shareholder in any of the
above, (iii) any Person which directly, or indirectly
through one or more intermediaries, "Controls", or is
Controlled by, or is under common Control with, any of
the above, or (iv) any "Family Member" of any of the
above (the capitalized terms herein shall have the
meanings ascribed to them in the Israeli Securities Law
of 1968).
1.3.3 "LIENS" means mortgages, liens, pledges, charges,
security interests, or other claims or encumbrances of
any kind whatsoever.
1.3.4 "ORDINARY SHARES" means the Ordinary Shares of the
Company NIS 1 par value, and, after the Closing (as
defined below) and the split contemplated in connection
therewith, the Ordinary Shares of the Company NIS 0.05
par value.
1.3.5 "PERSON" means an individual, corporation, partnership,
joint venture, trust or unincorporated organization.
1.3.6 "RRE" means the official representative rate of exchange
of the US$ as published by the Bank of Israel and known
at the time of payment or calculation under this
Agreement.
1.3.7 "DSP" means DSP Group, Inc., a company incorporated
under the laws of the State of Delaware.
2. SALE AND PURCHASE OF SHARES
2.1 At the Closing, upon fulfillment of all conditions set forth herein,
the Company will issue and sell to the Purchaser, and the Purchaser
shall purchase, 691,300 Ordinary Shares of the Company par value NIS
0.05 (after split) (the "SHARES") in consideration of the payment by
the Purchaser to the Company of US$2,000,000 (Two Million Dollars).
2.2 The Company and the Existing Shareholders represent and warrant to
Purchaser that (i) immediately following the sale and issuance of
the Shares, such Shares shall represent 40% of the issued and
outstanding share capital of the Company on a fully diluted basis
(including all stock options and warrants, and all convertible
debentures or other convertible securities, outstanding on the date
thereof), excluding only the Employee Stock Option Plan adopted at
Closing as set forth in Section 3.2.4 hereof, and (ii) such Shares
shall entitle the Purchaser, as of Closing and excluding rights
under the Employee Stock Option Plan adopted at Closing, to 40% of
such dividends as may be declared by the Board of Directors of the
Company out of funds legally available therefor; to 40% of the
assets of the Company legally available for distribution to
shareholders after payment of all debts and other liabilities of the
Company subsequent to liquidation or dissolution of the Company; and
to such other rights as are specified in the Articles of Association
of the Company.
2.3 The Company represents and warrants to the Purchaser that the
Shares shall be, when issued and sold to it, duly authorized and
validly issued, fully paid and nonassessable, free and clear of all
Liens, and shall have all the rights, preferences, privileges and
restrictions set forth in the Corporate Documents of the Company,
as amended pursuant hereto.
3. CLOSING
3.1 CLOSING. The transactions contemplated hereby shall take place at a
closing (the "CLOSING") to be held at the offices of Dovrat, Shrem &
Co. Ltd., 37 Shaul Hamelech Blvd., Tel Aviv, at 10:00 a.m. on July
28, 1996 (the "CLOSING DATE"), or such other date, time and place as
the parties shall mutually agree.
3.2 TRANSACTIONS AND DELIVERIES AT CLOSING. At the Closing, the
following transactions and deliveries shall occur:
3.2.1 DELIVERIES. The Company shall deliver to the Purchaser the
following documents:
3.2.1.1 Notice of a general meeting, with a proposed
resolution of the Company's shareholders in the
form of Exhibit 7.1 hereto, by which, among other
things, the Articles of Association of the Company
shall be replaced with the amended Articles of
Association attached hereto (the "AMENDED
ARTICLES"), together with a duly completed notice
of such resolution to the Israeli Registrar of
Companies, all of the foregoing ready for filing
with the Israeli Registrar of Companies
immediately upon adoption thereof by the general
meeting.
3.2.1.2 Executed notice to the Company's shareholders in
the form of Exhibit 7.2, offering them to exercise
their pre-emptive rights in respect of the Shares
to be issued hereunder to the Purchaser.
3.2.1.3 All required consents under Section 4.27 below.
3.2.2 SALE OF SHARES BY THE COMPANY TO THE PURCHASER:
3.2.2.1 The Company shall deliver to the Purchaser copies
of all responses received from its shareholders
(other than the Existing Shareholders and
Purchaser) in connection with the offer set forth
in Exhibit 7.2, and
confirm in writing that no other responses have
been received.
3.2.2.2 The Company shall deliver to the Purchaser a copy
of a resolution of its Board of Directors, in the
form of EXHIBIT 3.2.2.2 attached hereto, pursuant
to which the Company shall issue to the Purchaser
691,300 Ordinary Shares par value NIS 0.05 and
shall register in the Company's Shareholders'
Ledger the name of the Purchaser as the holder
of the Shares issued thereunder, together with a
duly completed notice of such issuance to the
Israeli Registrar of Companies in form and
substance acceptable for filing with the Israeli
Registrar of Companies immediately upon Closing.
3.2.2.3 The Company shall deliver to the Purchaser a
validly executed share certificate covering the
Shares.
3.2.2.4 The Purchaser shall pay to the Company the amount
of US$2,000,000 (Two Million Dollars).
3.2.3 EXECUTION OF ESCROW AGREEMENT. The Company, the Existing
Shareholders and the Purchaser shall execute and deliver the
Escrow Agreement attached hereto as Exhibit 9.15.
3.2.4 EMPLOYEE STOCK OPTION PLAN. The Company's Board of Directors
shall adopt an Employee Stock Option Plan in the form
attached hereto as EXHIBIT 3.2.4.
3.2.5 REGISTRATION RIGHTS AGREEMENT; RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT. The Company, the Purchaser and the
Existing Shareholders shall execute and deliver a
Registration Rights Agreement in the form attached hereto
as Exhibit 10.8 and the Right of First Refusal and Co-Sale
Agreement attached hereto as Exhibit 10.9.
3.2.6 DIRECTORS. A general meeting of all shareholders of the
Company shall be convened, in which the Existing
Shareholders and the Purchaser shall elect Rami Kalish,
Eyal Kishon, Shmaryahu Shapira, Igal Kohavi and Eli Ayalon
as directors of the Company.
3.2.7 PAYMENTS. Any payment to be made hereunder to the Company
shall be paid in NIS, in an amount equivalent to any amount
set forth herein in US$ based on the RRE (and, if applicable
- less half of the foreign currency exchange fee paid by
the payor, if any); such payments shall be made by wire
transfer, banker's check, or such other form of payment
as is mutually agreed by the relevant parties.
3.3 CONDUCT OF BUSINESS THROUGH CLOSING. From the date hereof through
the Closing, and except as set forth herein, the Company: (a)
shall conduct its business solely in the ordinary course of its
business as is conducted on the date hereof, and, subject to such
conduct, in such manner as to preserve the accuracy of the
representations and warranties made by it herein; (b) shall not
declare or pay any dividends or make any other distributions with
respect to its share capital; (c) shall not issue any shares,
options, warrants, convertible debentures or any other security
of the Company; and (d) shall not enter into or renew any
agreement with an Interested Party (including an employment
agreement with any employee or director), or increase the
remuneration of any employee or director.
3.4 CONDITIONS TO CLOSING BY THE PURCHASER. The obligations of the
Purchaser at the Closing are subject to the fulfillment at or
before the Closing of the following conditions precedent, any one
or more of which may be waived in whole or in part by the
Purchaser, which waiver shall be at the sole discretion of the
Purchaser:
3.4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in this Agreement shall have
been true and correct when made, and, subject to the conduct
of the Company's business in the ordinary course of its
business as is conducted on the date hereof, and to all
actions required pursuant hereto, shall be true and correct
as of the Closing as if made on the date of the Closing.
3.4.2 COVENANTS. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with
by the Company and the Existing Shareholders prior to the
Closing, and at the Closing, shall have been performed or
complied with prior or at the Closing.
3.4.3 CONSENTS ETC. The Company shall have secured all permits,
consents and authorizations that shall be necessary or
required lawfully to consummate this Agreement; none of the
shareholders of the Company shall have duly notified the
Company of the exercise of its pre-emptive right under the
Company's Articles of Association in respect of the issuance
of the Shares, and the Amended Articles shall have been duly
filed with, and registered by, the Registrar of Companies.
3.4.4 DELIVERY OF DOCUMENTS. All the documents to be delivered by
the Company at Closing shall be in form and substance
reasonably satisfactory to the Purchaser and its counsel.
3.4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated
by this Agreement and all documents and instruments incident
to such
transactions shall be reasonably satisfactory in substance
and form to the Purchaser and its counsel, and the Purchaser
and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as
the Purchaser or its counsel may reasonably request.
3.4.6 ABSENCE OF ADVERSE CHANGES. From the date hereof and until
the Closing there will have been no material adverse change
in the financial or business condition of the Company.
3.5 CONDITIONS TO CLOSING BY THE EXISTING SHAREHOLDERS. The
obligations of the Existing Shareholders at the Closing are
subject to the fulfillment at or before the Closing of the
following conditions precedent, any one or more of which may be
waived in whole or in part by the Existing Shareholders, which
waiver shall be at their sole discretion:
3.5.1 COVENANTS. All covenants, agreements, and conditions
contained in this Agreement to be performed or complied with
by the Company and the Purchaser prior to the Closing, and
at the Closing, shall have been performed or complied with
prior to or at the Closing.
3.5.2 CONSENTS ETC. The Company shall have secured all permits,
consents and authorizations that shall be necessary or
required lawfully to consummate this Agreement, none of the
shareholders of the Company shall have duly notified the
Company of the exercise of its pre-emptive right under the
Company's Articles of Association in respect of the issuance
of the Shares, and the Amended Articles shall have been duly
filed with, and registered by, the Registrar of Companies.
3.5.3 DELIVERY OF DOCUMENTS. All the documents to be delivered by
the Company at Closing shall be in form and substance
reasonably satisfactory to the Existing Shareholders and
their counsel.
3.5.4 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated
by this Agreement and all documents and instruments incident
to such transactions shall be reasonably satisfactory in
substance and form to the Existing Shareholders and their
counsel, and the Existing Shareholders and their counsel
shall have received all such counterpart originals or
certified or other copies of such documents as the Existing
Shareholders or their counsel may reasonably request.
3.6 CONDITIONS TO CLOSING BY THE COMPANY. The obligations of the
Company at the Closing are subject to the fulfillment at or
before the Closing of the conditions that: (a) all covenants,
agreements and conditions contained in this Agreement to be
performed, or complied with, by the Existing Shareholders or the
Purchaser prior to the Closing shall have been
performed or complied with by such parties prior to or at the
Closing, and (b) the representations and warranties made by the
Existing Shareholders and the Purchaser in this Agreement shall
have been true and correct when made, and shall be true and
correct as of the date of the Closing, which conditions may be
waived in whole or in part by the Company, and which waiver shall
be at the sole discretion of the Company. In respect of any
necessary action of the Company, the Company shall assist the
Existing Shareholders and the Purchaser as reasonably possible in
performance of such conditions.
3.7 LOAN BY PURCHASER. On the date hereof, the Purchaser shall make a
loan to the Company in the amount of US$150,000 (One Hundred and
Fifty Thousand US Dollars) pursuant to an agreement in the form
of EXHIBIT 3.7 attached hereto.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser, and acknowledges that the
Purchaser is entering into this Agreement in reliance thereon, as follows:
4.1 The Company has the full power and authority to execute and
deliver this Agreement, and other agreements contemplated thereby
or which are ancillary thereto, and to consummate the
transactions contemplated thereby.
4.2 The Company is duly organized, validly existing and in good
standing under the laws of the State of Israel, and has the power
to own and lease its properties and to carry on its business as
now being conducted (and subject to obtaining all required
permits, licenses and consents, which the Company shall use its
best efforts to obtain - also as proposed to be conducted).
Attached hereto as EXHIBIT 4.2 are true copies of the Company's
Incorporation Certificate, Memorandum of Association and Articles
of Association as in effect prior to execution hereof.
4.3 Since its incorporation, no Special Resolutions have been adopted
by the Company's shareholders other than as set forth in EXHIBIT
4.3 attached hereto.
4.4 On the date hereof, and subject to registration by the Registrar
of Companies, the capitalization of the Company is as follows:
authorized share capital of NIS 150,000 divided into 127,500
Ordinary Shares par value NIS 1.- and 22,500 Class A Ordinary
Shares par value NIS 1.-, of which 45,Ordinary Shares are issued
and outstanding and owned as follows:
Number of
Ordinary
Name of Shareholder Shares % of Ownership*
Dovrat Shrem/Yozma Polaris Fund L.P. 28,726 62.96
Dovrat Shrem & Co. Ltd. 3,476 7.61
Leader Underwriters Ltd. 3,374 7.33
Adasha Yizum Proyektim (Tel Aviv) Ltd. 7,005 15.35
El-Kanit Development Ltd. 1,508 3.30
Haim Reiner 365 0.80
Menachem Kenan 193 0.42
Ofer Bar Or 438 0.96
Giora Eran 458 1.00
I. Fischer & Co. Trustees Ltd. 83 0.18
Total 45,626 100.00
* Excluding Employee Stock Option Plan (as set forth below) and
convertible debentures.
In addition, (i) the Company's Board of Directors has adopted the
Employee Stock Option Plan, a copy of which is attached hereto in
EXHIBIT 4.4, under which options to purchase 6,222 Class A Ordinary
Shares of the Company par value NIS 1 are outstanding; and (ii) US$
200,000 in principal amount of convertible debentures of the Company
are outstanding (copies of which are also attached hereto in EXHIBIT
4.4); under their terms, such debentures shall be repaid upon
Closing and all conversion rights thereof shall terminate.
4.5 All of the outstanding Ordinary Shares of the Company have been duly
authorized, validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof. The rights
and privileges of the Ordinary Shares and of the Class A Ordinary
Shares of the Company are as set forth in the Corporate Documents.
4.6 Other than as set forth in the Corporate Documents or otherwise
herein, there are no preemptive rights or other rights to subscribe
for or to purchase any Ordinary Shares or Class A Ordinary Shares
nor are there outstanding any options, warrants, convertible
instruments, or other rights, agreements, or commitments to acquire
or receive capital shares or other securities from the Company. For
the avoidance of doubt, the Existing Shareholders hereby waive and
relinquish any options, warrants, or other rights to purchase or
receive any shares or other securities of the Company set forth in
that certain Founders Agreement, a copy of which is attached as
EXHIBIT 4.6, or in any other agreement, except as set forth
expressly herein.
4.7 Except as set forth in EXHIBIT 4.7, in the Amended Articles and as
contemplated hereby, to the Company's best knowledge there are no
agreements, understandings, trusts or other collaborative
arrangements
or understandings concerning the voting of the capital shares of the
Company, and there are no agreements, understandings, trusts or
other understandings concerning transfers of the capital shares of
the Company; inasmuch as such agreements, understandings, trusts or
other collaborative arrangements or understandings exist, they are
hereby terminated by the parties hereto.
4.8 Subsequent to the Closing, the ownership of the shares of the
Company shall be as follows:
Number of
Ordinary
Name of Shareholder Shares** % of Ownership*
Dovrat Shrem/Yozma Polaris Fund L.P. 574,520 35.83
Dovrat Shrem & Co. Ltd. 69,520 4.33
Leader Underwriters Ltd. 67,480 4.20
Adasha Yizum Proyektim (Tel Aviv) Ltd. 140,100 8.74
El-Kanit Development Ltd. 30,160 1.89
Haim Reiner 7,300 0.45
Menachem Kenan 3,860 0.24
Ofer Bar Or 8,760 0.55
Giora Eran 9,160 0.57
I. Fischer & Co. Trustees Ltd. 1,660 0.10
Purchaser 691,300 43.10
Total 1,603,820 100.00
* Excluding Employee Stock Option Plans (as set forth in Sections 4.4 and
3.2.4).
** Par value NIS 0.05, after split.
4.9 The books, records and accounts of the Company are kept in
accordance with all requirements of applicable laws and fairly
reflect all dealings or transactions in relation to the Company's
business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.
4.10 The audited financial statements of the Company for the year ended
December 31, 1995, true and complete copies of which are attached
hereto in EXHIBIT 4.10 (the "FINANCIAL STATEMENTS"), accurately
and fairly reflect the transactions in and dispositions of the
assets of, and the results of operations of, the Company for the
year ended December 31, 1995. Such Statements were prepared in
accordance with Israeli generally accepted accounting principles
applied on a consistent basis.
4.11 [Intentionally omitted]
4.12 Except as fully reflected, disclosed or reserved for in EXHIBIT 4.12
attached hereto, in the Financial Statements or otherwise hereunder,
the Company does not have any material indebtedness or liability.
4.13 Since December 31, 1995, the Company has conducted its business in
the ordinary course consistent with past practice, and, other than
as expressly set forth herein, there has not been: (i) any event
that has had or may be expected to have a material adverse effect
on the business (including the continued operation thereof in the
manner currently conducted), assets, properties, prospects,
condition (financial or otherwise) or the results of operations of
the Company (collectively, the "CONDITION OF THE COMPANY") or that
would hereafter give rise to any debt or liability of the Company
or any claim, demand or suit against the Company or against the
Existing Shareholders as shareholders of the Company; (ii) any
declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the
Company; (iii) any damage, destruction or other casualty or loss
(whether or not covered by insurance) affecting the Condition of
the Company; (iv) any change in any method of accounting or
accounting practice by the Company; or (v) any agreement or
arrangement made by the Company to do any of the foregoing.
4.14 Except as set forth in the Financial Statements or otherwise herein,
the Company is not a guarantor of any debt or obligation of
another.
4.15 Except as set forth in EXHIBIT 4.15 attached hereto, there
are no loans, leases, royalty agreements or any other continuing or
other transactions, of any nature whatsoever, between the Company
and any Interested Party, and there are no debts of the Company, of
any nature whatsoever, to any such Interested Party, or debts of
any Interested Party to the Company, including under any guaranty
given by such Interested Party to the Company's debts.
4.16 The Company does not own any real property. The Company's personal
property is listed in EXHIBIT 4.16 hereto. Except as set forth in
Exhibit 4.16 and for Liens which arise in the ordinary course of
business and which do not affect material properties and assets of
the Company, the Company holds such property free and clear of all
Liens. With respect to the property and assets it leases, the
Company is in material compliance with such leases.
4.17 Except as set forth in EXHIBIT 4.17 attached hereto:
4.17.1 The Company has full title and ownership of, or is duly
licensed under or otherwise authorized to use, all
patents, patent applications, trademarks, service marks,
trade names, copyrights, mask works, trade secrets,
confidential and proprietary information, designs and
proprietary rights (each such asset referred to herein as
a "PROPRIETARY ASSET") listed in EXHIBIT 4.17, and, to
the best of its knowledge - it has full title and
ownership of, or is duly licensed under or otherwise
authorized to use, all Proprietary Assets necessary to
enable it to carry on its business as now conducted
without any conflict with or infringement of the rights
of others.
4.17.2 The Company has not granted, nor are there outstanding, any
options, licenses or agreements of any kind relating to any
Proprietary Asset owned by the Company and listed in Exhibit
4.17, nor is the Company boundby or a party to any option,
license or agreement of any kind with respect to any of such
Proprietary Assets; to the best of its knowledge, there are
not outstanding any options, licenses or agreements of any
kind relating to any Proprietary Asset necessary to enable
it to carry on its business as now conducted without any
conflict with or infringement of the rights of others, nor
is the Company bound by or a party to any option, license
or agreement of any kind with respect to any of such
Proprietary Assets. The Company is not obligated to pay any
royalties or other payments to any third party with respect
to the marketing, sale, distribution, manufacture, license
or use of any Proprietary Asset or any other property or
rights.
4.17.3 To the best of the Company's knowledge, the Company has not
violated or infringed, and is not currently violating or
infringing, and the Company has not received any
communications alleging that the Company (or any of its
employees or consultants) has violated or infringed, any
Proprietary Asset of any other person or entity, and no
threat of a claim or suit alleging such violation or
infringement has been brought to the Company's knowledge.
4.18 The Company has heretofore delivered to the Purchaser copies of all
material agreements and contracts of the Company, the list of which
is set forth in EXHIBIT 4.18. Subject to any applicable laws, all
such agreements and contracts are valid, subsisting, in full force
and effect and binding upon the Company and, to the best knowledge
of the Company, also upon the other parties thereto, in accordance
with their terms. The Company and, to the Company's best knowledge -
the other parties thereto, are in material compliance with such
agreements and contracts.
4.19 EXHIBIT 4.19 contains a list of all insurance policies covering the
assets, business, operations, employees, officers and directors of
the Company, and true and complete copies of all such policies have
been delivered to the Purchaser. All premiums payable under all such
policies have been paid and the Company is otherwise in full
compliance with the terms and conditions of all such policies.
4.20 The Company owns, possesses or has obtained all governmental
licenses, permits, and other authorizations necessary to own or
lease, as
the case may be, and to operate its properties and to conduct its
business as presently conducted; there are no threatened
proceedings that have been brought to the Company's knowledge,
and it has not received any notice of proceedings, relating to
revocation or modification of any such licenses, permits or
authorizations.
4.21 The Company is not, and would not, with the giving of notice or
lapse of time or both, be, in violation of, conflict with or default
under the Corporate Documents or any agreement or other instrument
to which it is a party or by which it is bound, or to which any of
its properties is subject, except for such violations, conflicts or
defaults which individually or in the aggregate do not and will not
have a material adverse effect on the Condition of the Company.
4.22 The Company is not in violation of any applicable order of any
governmental body or law applicable to it, or affecting the
Condition of the Company, except for such violations which
individually or in the aggregate do not and will not have a
material adverse effect on the Condition of the Company.
4.23 Except as set forth in EXHIBIT 4.23 attached hereto, there is no
action, suit, proceeding or investigation pending or, to the best
knowledge of the Company, threatened, against the Company, its
directors, Office Holders (as such term is defined in the Companies
Ordinance) or the Company's shareholders in their capacity as such.
4.24 All the Company's employees, their terms of employment and their
employment, non-competition and confidentiality agreements with the
Company, are as set forth in a letter dated the date hereof and
delivered to Purchaser prior to Closing.
4.25 Except as provided herein, the Company has not granted or agreed to
grant to any person or entity any rights (including piggyback or
demand registration rights) to have any securities of the Company
registered with an exchange or any governmental authority.
4.26 No agent or broker or any person, firm or entity 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, in connection with the transactions
contemplated hereby.
4.27 Except as set forth in EXHIBIT 4.27, all consents, approvals,
authorizations or permits which are required in connection with the
consummation by the Company of the transactions contemplated by this
Agreement have been obtained as of the date hereof.
4.28 Subject to the conditions set forth herein, neither the execution
and delivery of this Agreement and the performance of the terms
hereof nor the consummation of the transactions contemplated
hereby are in or will
conflict with, or result in a violation of, or constitute a default
under the Corporate Documents, or any agreement, understanding
(whether oral or written), indenture or other instrument to which
the Company is a party or by which it is bound, or to which any of
its properties is subject; the execution of this Agreement or the
performance by the Company of its obligations hereunder do and will
not violate any law, rule, administrative regulation or decree of
any court, or any governmental agency or body having jurisdiction
over the Company or any of its properties or result in the creation
or imposition of any Lien upon any of the property or assets of the
Company.
4.29 This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes the valid and binding
agreement of the Company, and subject to all applicable laws - it is
enforceable against the Company in accordance with its terms.
4.30 This Agreement and the Exhibits and other documents delivered to
the Purchaser in connection herewith do not contain any material
untrue statement and do not omit to state a material fact
necessary in order to make the statements contained herein or
therein not misleading, inaccurate or incomplete.
4.31 The Company has one subsidiary, as described in EXHIBIT 4.31
hereto, and except as set forth therein, the Company does not own
any shares, other securities or other ownership interests of or
in any other company, partnership, or any other business entity.
4.32 The Company has timely filed all tax returns and reports required by
law. Based on its accountant's advice, all tax returns and reports
of the Company are true and correct in all material respects and
the Company has paid all taxes and other assessments due.
5. REPRESENTATIONS AND WARRANTIES OF THE EXISTING SHAREHOLDERS. Each of the
Existing Shareholders hereby severally represents and warrants to the
Purchaser, and acknowledges that the Purchaser is entering into this
Agreement in reliance thereon, as follows:
5.1 He or it has the full power and authority to execute and deliver
this Agreement and other agreements contemplated hereby or which
are ancillary hereto, and to consummate the transactions
contemplated thereby.
5.2 All consents, approvals, authorizations or permits which are
required in connection with the consummation by him or it of the
transactions contemplated by this Agreement have been obtained
prior to the date hereof.
5.3 Subject to the conditions set forth herein, neither the execution
and
delivery of this Agreement and the performance of the terms hereof
nor the consummation of the transactions contemplated hereby are in
or will conflict with, or result in a violation of, or constitute a
default under its corporate documents or other governing documents,
or any agreement, understanding (whether oral or written), indenture
or other instrument to which he or it is a party or by which he or
it is bound, or to which any of his or its properis subject; the
execution of this Agreement or the performance by him or it of his
or its obligations hereunder do not and will not violate any law,
rule, administrative regulation or decree of any court, or any
governmental agency or body having jurisdiction over him or it or
any of his or its properties or result in the creation or imposition
of any Lien upon any of his or its property or assets.
5.4 This Agreement has been duly and validly authorized, executed and
delivered by him or it, as applicable, and constitutes the valid and
binding agreement of him or it, and subject to all applicable laws -
it is enforceable against him or it in accordance with its terms.
5.5 Other than as set forth herein, he or it is not a party to any
voting agreement or similar arrangement or understanding regarding
voting of his or its shares in the Company; inasmuch as it or he
is a party to that certain Founders Agreement dated April 17, 1994,
a copy of which is attached in EXHIBIT 4.6 hereto, it or he agrees
to terminate such agreement with immediate effect.
6. REPRESENTATIONS OF THE PURCHASER. In order to induce the Company and the
Existing Shareholders to enter into this Agreement, the Purchaser hereby
represents and warrants to the Company and to the Existing Shareholders,
as of the date hereof and as of the Closing, as follows:
6.1 It is a corporation duly organized and validly existing under the
laws of the State of Israel. It has full power and authority to
execute and deliver this Agreement and other agreements contemplated
hereby or which are ancillary hereto, and to consummate the
transactions contemplated thereby.
6.2 All consents, approvals, authorizations or permits which are
required in connection with the consummation by it of the
transactions contemplated by this Agreement have been obtained
prior to the date hereof.
6.3 Subject to the conditions set forth herein, neither the execution
and delivery of this Agreement and the performance of the terms
hereof nor the consummation of the transactions contemplated hereby
are in or will conflict with, or result in a violation of, or
constitute a default under its corporate documents or other
governing documents, or any agreement, understanding (whether oral
or written), indenture or other instrument to which it is a party or
by which it is bound, or to which any of its properties
is subject; the execution of this Agreement or the performance by
it of its obligations hereunder does not and will not violate any
law, rule, administrative regulation or decree of any court, or any
governmental agency or body having jurisdiction over it or any of
its properties or result in the creation or imposition of any Lien
upon any of its property or assets.
6.4 This Agreement has been duly and validly authorized, executed and
delivered by it and constitutes the valid and binding agreement
of it, and subject to all applicable laws - it is enforceable
against it in accordance with its terms.
6.5 It has received or has had full access to all the information it
considers necessary or appropriate to make an informed investment
decision with respect to the transactions contemplated hereunder.
It further has had an opportunity to ask questions and receive
answers from the Company and to obtain additional information (to
the extent the Company possessed such information or could acquire
it without unreasonable effort or expense) necessary to verify any
information furnished to it or to which it had access. The
foregoing, however, does not in any way limit or modify the
representations and warranties made by the Company in Section 4.
6.6 It understands that the purchase of shares of the Company involves
substantial risk. It has experience as an investor in securities of
companies in a similar stage of development and acknowledges that
it is able to fend for itself, can bear the economic risks of its
investment in the shares of the Company and has such knowledge and
experience in financial or business matters that it is capable of
evaluating the merits and risks of this investment and protecting
its own interests in connection with this investment.
7. ACTIONS OF THE COMPANY AND THE EXISTING SHAREHOLDERS PRIOR TO CLOSING. The
Company and the Existing Shareholders undertake that, prior to Closing,
they shall act as follows:
7.1 The Company shall convene a general meeting of the shareholders of
the Company in order to adopt the resolution attached hereto as
EXHIBIT 7.1, which replaces the existing Articles of Association of
the Company with the Amended Articles attached thereto, splits each
share of the Company, whether Ordinary or Class A Ordinary bearing
a par value of 1 NIS, into 20 shares par value NIS 0.05 each,
appoints Doron & Co. as accountants and independent auditors of the
Company, elects directors as set forth in Section 3.2.6 (with the
election of Messrs. Kohavi and Ayalon to become effective only at
Closing) and approves the Company's execution of this Agreement. The
Existing Shareholders undertake to participate in such general
meeting and vote in favor of the proposed resolutions.
7.2 The Company's Board of Directors shall issue a written notice to all
shareholders of the Company, in the form attached hereto in EXHIBIT
7.2, offering them to exercise, within 7 days from delivery of such
notice, their pre-emptive rights under the Articles of Association
of the Company in respect of the Shares to be issued to Purchaser
pursuant hereto at Closing. All of the Existing Shareholders hereby
waive and relinquish their right to receive such notice and any pre-
emptive right they may have in respect of the Shares to be issued to
Purchaser hereunder at Closing.
8. OPTION TO THE PURCHASER. Conditioned upon the occurrence of the Closing,
the Company grants to the Purchaser (such term, in this Section, to
include DSP and any subsidiary of DSP) an option (the "OPTION") to
purchase Ordinary Shares of the Company, as follows:
8.1 The Option shall be exercisable from the date of the Closing until
the second anniversary thereof (the "OPTION PERIOD").
8.2 The Option entitles the Purchaser to purchase from the Company,
in consideration of the payment to the Company of the purchase
price thereof (as defined below), such number of Ordinary Shares
of the Company as shall be required to bring the Purchaser's
holdings in the Company up to 51% of the Company's then issued
and outstanding share capital on a fully diluted basis.
8.3 The purchase price of each Ordinary Share purchased by Purchaser in
exercising the Option shall be $2.893 (two and 893/1000 US Dollars).
In the event of any split, reverse-split or other similar
recapitalization of the Company's share capital such purchase price
shall be adjusted accordingly.
8.4 The Option shall be exercised by a written notice given by the
Purchaser to the Company, with a copy to the Existing Shareholders,
before the end of the Option Period, together with a banker's check
for the aggregate purchase price of purchased shares.
8.5 The Option is non-transferable and shall be exercisable only once.
8.6 The Company represents and warrants to the Purchaser that the
Ordinary Shares issued to it in exercising the Option shall be,
when issued and sold, duly authorized and validly issued, fully
paid and nonassessable, free and clear of all Liens, and shall have
all the rights, preferences, privileges and restrictions set forth
in the Corporate Documents of the Company, as amended pursuant
hereto.
9. ADDITIONAL OPTION TO THE PURCHASER. Conditioned upon the occurrence of
the Closing, the Existing Shareholders grant to the Purchaser (such
term, in this Section, to include DSP and any subsidiary of DSP) an
option (the "ADDITIONAL OPTION") to purchase all of their Ordinary
Shares, or, as the case may be, Class A Ordinary Shares (collectively,
"SHARES"), in the Company, as follows:
9.1 The Additional Option shall be exercisable from the end of the 12th
month from thedate of the Closing until the earlier of: (i) the end
of 30 months from the date of the Closing, or (ii) the closing of an
initial public offering of the Company's securities ("IPO") (the
"ADDITIONAL OPTION PERIOD").
9.2 The Additional Option shall be exercised by a written notice given
by the Purchaser to the Existing Shareholders and any other holder
of Shares of the Company or any other security of the Company, other
than Purchaser (the "HOLDERS"), with a copy to the Company, before
the expiration of the Additional Option Period ("EXERCISE NOTICE").
9.3 The Additional Option entitles the Purchaser to purchase from each
of the Holders, in consideration of the payment of the purchase
price thereof (as defined below), all of its Shares of the Company
then issued and outstanding.
9.4 The purchase price of each Share purchased by the Purchaser under
the Additional Option shall be, at the exclusive discretion of the
Holders (to be determined as set forth in Section 9.5 below), one
of the following:
9.4.1 US $2.893 (Two and 893/1000 US Dollars), plus an annual
cumulative return, compounded annually, calculated from
the date of the Closing, of 20% thereon, in readily
available funds (the "PRICE PER SHARE IN CASH"); or
9.4.2 Such number of shares of Common Stock of DSP (the "DSP
SHARES"), which is the result of dividing 250,000 (the
"BASIC NUMBER") by the number of Shares of the Company
transferred to the Purchaser upon the exercise of the
Additional Option (the "PRICE PER SHARE IN SHARES"). The
Basic Number shall be adjusted for any split, reverse split,
or similar recapitalization of the Company or in respect
of the DSP Shares.
The aforesaid DSP Shares shall be available for sale without
restrictions by the recipient thereof within not more than
50 days after the delivery of the DSP Shares to the Holders
(which DSP undertakes to complete within 30 days after the
determination set forth in Section 9.5), if the DSP Shares
are issued by DSP pursuant to and in accordance with
Regulation S ("REG S") promulgated under the U.S. Securities
Act of 1933, as amended. In such case, each Holder shall
have executed and delivered to DSP, upon the delivery of the
DSP Shares, representations in
substantially the form attached hereto as EXHIBIT 9.4.2
(with each Holder executing the form as a "Buyer"
thereunder). In the event that DSP is not able to issue the
DSP Shares to all of the Holders pursuant to Reg S because
one or more Holders is unable to truthfully execute
representations in substantially the form of Exhibit 9.4.2
or for any other reason, then DSP shall issue to the Holders
the DSP Shares (which DSP undertakes to complete within 30
days after the determination set forth in Section 9.5),
which shares shall not be transferred except pursuant to
Rule 904 of Reg S or other exemption from registration
unless such resale shall have been registered on Form S-3,
which registration DSP agrees to effect only once, in
respect of all the DSP Shares, as promptly as possible, and
not later than 50 days, following a written request by a
majority in interest of the Holders that it do so; provided,
however, that DSP may in lieu of such registration
repurchase such shares or arrange for their purchase at the
current market price in a transaction exempt from
registration, all within not more than 50 days after the
delivery of the DSP Shares to the Holders.
9.5 The Holders' decision which of the Price Per Share in Cash or the
Price Per Share in Shares shall apply shall be determined as
follows: each of the Holders shall give written notice to the
Escrow Agent (as defined in Section 9.15 hereof), within 14 days
after receipt of the Exercise Notice, which of the Prices Per Share
it chooses; the Escrow Agent shall tabulate the votes received
within such period of time and shall determine, in a written notice
to all parties hereto, which of the Prices Per Share received the
majority of votes of the participating Holders (based on their share
holdings in the Company at such time); such determination shall be
binding upon all the Holders entitled to participate in said vote,
whether or not they actually participated. In the event that the
Escrow Agent does not receive, within the aforesaid period of time,
any votes at all, it shall be deemed to be a determination of the
Holders to choose the Price Per Share in Cash.
9.6 From the date of the Closing, and until the earlier of (i) the date
on which the Additional Option has been exercised, or (ii) the end
of the Additional Option Period (the "EXPIRATION PERIOD"), the
Company shall not in any way or manner, without the Purchaser's
prior written approval, issue any shares ("ADDITIONAL SHARES"),
or grant any warrants, options, rights or other securities
exercisable or convertible into, or exchangeable for, Shares of the
Company (collectively, "CONVERTIBLE SECURITIES") unless the terms
of such Additional Shares or Convertible Securities provide that:
(a) if the Purchaser has exercised the Additional Option, then all
such Convertible Securities shall be deemed to be, automatically
and with no further action of the holder thereof or of the Company
required, exercised or converted into, or exchanged for, as the case
may be, Ordinary Shares,
or, as the case may be, Class A Ordinary Shares, of the Company, in
accordance with their terms; (b) the Purchaser shall be entitled to
purchase all such Additional Shares and Ordinary Shares or Class A
Ordinary Shares underlying the Convertible Securities (collectively,
the "NEW SHARES") from the holder thereof upon the same terms and
conditions set forth in Sections 9.2 - 9.4 hereof, subject, however,
to the following modifications: (x) the holder thereof shall be
entitled only to cash consideration for any New Share pursuant to
Section 9.4.1, and Section 9.4.2 shall not apply; and (y) the amount
in US$ set forth in Section 9.4.1 shall be replaced by the actual
price, in US$ (translated from NIS, if applicable, based on the
RRE), paid to the Company for the relevant New Share, and the annual
return set forth therein shall be calculated not from Closing but
from the date of purchase of such New Share (or original Convertible
Security) from the Company; and (c) notwithstanding the above, the
holder of a Convertible Security which is a debenture may inform the
Company and the Purchaser, within 7 days after receipt of the
Purchaser's Exercise Notice, that it desires to continue to hold
the Convertible Security in accordance with its terms but waives all
rights whatsoever to exercise, convert or exchange such Convertible
Security into or for Shares of the Company, and, upon such notice,
the terms and conditions of such Convertible Security shall,
automatically and with no further action of the holder thereof or
of the Company required, be amended to reflect such waiver.
9.7 From the date of the Closing and until the end of the Expiration
Period each of the Holders: (i) shall not in any way or manner sell,
assign or transfer its or his Shares of the Company (collectively, a
"TRANSACTION") unless the terms of such Transaction subject the
rights of any transferee thereunder to the right of the Purchaser
to purchase such Shares if it exercised the Additional Option
hereunder and to the Escrow Agreement, and (ii) other than in a
Transaction, shall not in any way or manner grant any warrants,
options, pledges, liens, security interests or other rights
whatsoever with respect to its or his Shares of the Company, or
dispose of the same in any other way or manner; any attempt to
provide otherwise shall be null and void.
9.8 If the Additional Option has been exercised by the Purchaser,
then the following shall apply to all shares and outstanding
options granted to employees and others (collectively,
"EMPLOYEES") subject to any of the Company's relevant Employee
Stock Purchase Plan or Employee Stock Option Plan adopted prior
to Closing:
9.8.1 VESTED SHARES. Vested shares under any Employee Stock
Purchase Plan shall be treated in an identical manner
to all Shares purchased by the Purchaser.
9.8.2 NON-VESTED SHARES. The rights of an Employee to receive any
shares to
which he or she is entitled under an Employee Stock
Purchase Plan which have not been vested at the time
the Purchaser exercised the Additional Option shall
terminate, and be replaced by the right to receive
from DSP, under a similar Stock Purchase Plan and on
substantially the same terms and conditions as were
applicable under the Company's applicable Employee Stock
Purchase Plan, such number of shares of registered Common
Stock of DSP (rounded up to the next full share of DSP's
Stock) (the "NEW NUMBER") which is the product of the Price
Per Share in Shares multiplied by the number of shares of
the Company to which he or she have been entitled under the
Company's applicable Employee Share Purchase Plan. The per
share purchase price applicable to such shares of registered
Common Stock of DSP shall be equal to (a) the aggregate
purchase price for the non-vested Shares of the Company to
which he or she shall have been entitled under the Company's
applicable Employee Share Purchase Plan, divided by (b) the
New Number.
9.8.3 VESTED OPTIONS. Any Employee's option which has been vested
pursuant to an Employee Stock Option Plan at the time the
Purchaser exercised the Additional Option shall be deemed
to be exercised, without any action on the part of the
holder thereof required, in exchange for the appropriate
number of Shares of the Company, and such Shares shall be
treated in an identical manner to all Shares purchased by
the Purchaser under the Additional Option.
9.8.4 NON-VESTED OPTIONS. Any Employee's option which has not been
vested pursuant to an Employee Stock Option Plan at the time
the Purchaser exercised the Additional Option shall expire,
and be replaced by the right to receive from DSP, under a
similar Stock Option Plan and on substantially the same
terms and conditions as were applicable under such Employee
Stock Option Plan, such number of shares of registered
Common Stock of DSP (rounded up to the next full share of
the Purchaser's Stock) (the "NEW SHARE NUMBER") which is
the product of the Price Per Share in Shares multiplied
by the number of shares of the Company into which the
non-vested options pursuant to the applicable Employee Stock
Option Plan could be exercised. The per share exercise price
applicable to such shares of registered Common Stock of DSP
shall be equal to (a) the aggregate exercise price for the
non-vested Shares of the Company to which he or she shall
have been entitled under the non-vested options granted
pursuant to the applicable Employee Stock Option Plan,
divided by (b) the New Share Number.
9.8.5 PAYMENT IN CASH. In the event that the Purchaser is
acquiring the Shares of the Company under the Additional
Option for the Price Per Share in Cash, as set forth in
Section 9.4.1, then in Section 9.8.2 and 9.8.4 above the
term "Price Per Share in Shares" shall be replaced by the
term "Applicable Price Per Share", which shall mean the
Price Per Share in Cash, divided by the average closing
bid price of a share of DSP's Common Stock as reported on
NASDAQ during the period of 25 consecutive trading days
preceding the exercise of the Additional Option (the
"AVERAGE PRICE").
9.8.6 TAX CONSEQUENCES. In respect of any Employee Stock Option
Plan or Employee Stock Purchase Plan which has been adopted
and approved under Section 102 of the Income Tax Ordinance,
the provisions of this Section 9.8 are subject to the terms
and conditions of such Section 102 including, if required,
the payment of income or capital gains tax by the Employee.
9.8.7 [Intentionally omitted].
9.8.8 EMPLOYEES' CHOICE. Notwithstanding anything to the contrary
set forth in Sections 9.8.1 and 9.8.3 above, each Employee
shall be entitled, by written notice to the Escrow Agent
within 14 days after receipt of the Exercise Notice, to
elect which of the Price Per Share in Cash or the Price Per
Share in Shares shall apply to his or her vested shares or
options, and, if such notice has been given as aforesaid,
such Employee's vested shares or options shall be treated
pursuant to the Employee's election as set forth above
(notwithstanding any other election by the other
shareholders). If no such notice has been given by an
Employee, Sections 9.8.1 and 9.8.3 shall apply.
9.9 If the Additional Option has been exercised by the Purchaser, then,
in respect of all shares and outstanding options granted to
Employees under any of the Company's Employee Stock Purchase Plan
or Employee Stock Option Plan adopted at or after the Closing,
Section 9.8 shall apply, MUTATIS MUTANDIS, provided, however, that
in the event Purchaser is acquiring the Shares of the Company under
the Additional Option for the Price Per Share in Shares, DSP's
Common Stock issued or issuable under Stock Purchase Plans or Stock
Option Plans, as set forth in Sections 9.8.2 or 9.8.4, to such
Employees shall not be deemed to be included in the Basic Number
but be issued or issuable in addition thereto.
9.10 In the event that the Purchaser is acquiring the Shares of the
Company under the Additional Option for the Price Per Share in
Shares, and a Holder or an Employee is prohibited under any
applicable law, including foreign currency control laws or
regulations, from receiving such Common Stock of DSP, then the
Purchaser shall purchase such Holder's Shares for a price per share
in cash equal to the Price Per Share in Shares multiplied by the
Average Price and the Basic Number shall be reduced accordingly,
except when under the terms of Section 9.9 it should not be reduced.
9.11 Exercise of the Additional Option shall be conditioned upon receipt
by the Purchaser of all required consents, approvals and permits
under any applicable laws and regulations, if, and to the extent,
required at the time of exercise of the Additional Option. The
parties hereto shall cooperate with each other and make all
reasonable efforts to assist in obtaining such required consents,
approvals and permits.
9.12 The Additional Option shall be exercisable only once.
9.13 Each of the Existing Shareholders represents and warrants to
Purchaser that those Shares transferred by him or it to Purchaser
under the Additional Option shall be, when transferred to the
Purchaser, duly authorized and validly issued, fully paid and
nonassessable, free and clear of all Liens.
9.14 In the event that in exercising the Additional Option the Purchaser,
notwithstanding that it fully complied with all provisions hereof,
could not purchase all of the share capital of the Company on a
fully diluted basis, Purchaser shall be free to apply to the
competent court under Section 233 or to pursue a compulsory
acquisition under Section 236 of the Companies Ordinance in order
to gain ownership of all share capital of the Company not
transferred to the Purchaser hereunder, and, if Purchaser shall have
complied with all provisions hereof, the other parties hereto shall
not object to such application or action by the Purchaser.
9.15 To ensure compliance with the provisions of this Section 9, from the
date of the Closing and until the end of the Expiration Period: (i)
the Existing Shareholders shall deposit at Closing all of their
Shares in the Company with I. Fischer & Co. Trustees Ltd. ("ESCROW
AGENT"), who shall serve as a trustee of the parties hereto
pursuant to an Escrow Agreement in the form of EXHIBIT 9.15
attached hereto (the "ESCROW AGREEMENT"), and (ii) in the event that
the Company shall issue or grant any shares or Convertible
Securities to any of the Existing Shareholders or to any third
party, such shares or Convertible Securities shall be issued or
granted to Escrow Agent, in trust for the recipient thereof pursuant
to the provisions of the Escrow Agreement.
9.16 For the avoidance of doubt, if Purchaser purchases Ordinary Shares
of the Company from any of the shareholders of the Company before
exercising the Additional Option, the Additional Option in respect
of such shares shall immediately terminate upon their transfer to
the Purchaser.
9.17 Notwithstanding anything to the contrary contained herein, in the
event of the automatic exercise under Section 9.6(a) or Section
9.8.3 hereof of any
Convertible Security which is an option or warrant whose terms
require the payment of an exercise price to the Company, the
Holder of such option or warrant shall pay to the Company, as a
condition to such exercise, such exercise price, or, at the Holder's
discretion, the Holder shall be entitled to request that the
Purchaser shall pay to the Company such exercise price and, upon
such request, the Purchaser shall pay to the Company such exercise
price and shall deduct the same from the consideration paid to the
Holder for the transfer of the Holder's shares to the Purchaser (in
the event that the Price Per Share in Shares applies, Purchaser
shall deduct such number of DSP Shares which reflects such
exercise price, based upon the Average Price).
10. MANAGEMENT OF THE COMPANY. Subsequent to Closing, the parties agree as
follows:
10.1 BOARD OF DIRECTORS. Until otherwise resolved by a a majority of
75% of the Company's shareholders, the Board of Directors shall
consist of five (5) members.
Until the exercise of the Option in full by the Purchaser such that
the Purchaser shall hold 51% of the issued and outstanding share
capital of the Company (the "CONTROL EVENT"), three board members
shall be designated by the Existing Shareholders and two board
members shall be designated by the Purchaser. Upon the occurrence
of the Control Event, the Purchaser shall be entitled to designate
three board members and the Existing Shareholders shall be entitled
to designate two board members (the term "MINORITY" shall mean
herein the Purchaser - before the occurrence of the Control Event,
or the Existing Shareholders - after the occurrence of the Control
Event).
The Existing Shareholders and the Purchaser shall attend all general
meetings of the Company and vote all their shares in the Company in
any such general meeting in order to appoint the nominees of the
Existing Shareholders and of the Purchaser, as aforesaid, to the
Board of Directors of the Company. Designation of the nominees of
the Existing Shareholders shall be in a written notice to the
Purchaser, executed by Existing Shareholders holding a majority of
the number of shares of the Company held by all Existing
Shareholders.
10.2 MAJOR DECISIONS. Subject to any applicable law or provision of the
Corporate Documents, all board of directors' resolutions and actions
shall be taken by a majority vote. To the extent permitted under
applicable law, the Chairman of the Board shall not have any
additional or casting vote.
Notwithstanding the aforesaid, until the earlier of: (i) in
respect of Purchaser's rights - Purchaser, on the one hand, and
in respect of the
Existing Shareholders rights - the Existing Shareholders, on the
other hand, cease to hold at least 20% of the outstanding share
capital of the Company, or (ii) the IPO, the Company shall not take
any of the following decisions or actions except as follows: (a) if
such decision or action is taken by the shareholders of the Company
- the Minority, voting as a separate class, voted in favor of such
decision or consented to such action, and (b) if such decision or
action is taken by the Board of Directors - at least one director
designated by the Minority voted in favor of or consented to such
decision or action (provided, however, that if the term "Minority"
refers herein to the Existing Shareholders or any of them, Section
10.2.1 hereof shall not apply and Section 10.2.8 shall not apply to
the appointment of an established firm in Israel which is associated
with an international firm of accountants and auditors (with the
parties' agreement that Doron & Co. qualify as such):
10.2.1 Approval of a material deviation from the Company's current
business plan.
10.2.2 Merger with or consolidation into any corporation, firm or
entity.
10.2.3 Sale, lease, or other disposition of all or substantially
all of the Company's assets.
10.2.4 Approving any transaction with any Interested Party or in
which an Interested Party has a personal interest.
10.2.5 Liquidation, dissolution or winding-up the business of the
Company.
10.2.6 Appointment of any committee of the Board of Directors.
10.2.7 Making a material change in the business of the Company.
10.2.8 Appointment of accountants to the Company.
In addition, until the earlier of: (i) the Option and the Additional
Option hereunder expired and none was exercised in full by the
Purchaser, or (ii) the IPO, upon Closing the Board of Directors
shall appoint a pricing committee, comprised of two directors
designated by the Purchaser and one director designated by the other
shareholders of the Company, which shall have the authority to
determine the type and price of any security issued by the Company
after the date of Closing; an affirmative vote of 80% of the
participating directors shall be required to overrule the
committee's decisions by the board of directors.
The parties also agree that notwithstanding the aforesaid, and as
long as the preceding paragraph applies, any resolution by a
majority of the directors, or by the two directors designated by
the Purchaser, that the Company requires additional capital in a
specified amount, shall be binding upon the Board of Directors.
10.3 FINANCIAL REPORTING. Shareholders of the Company holding more than
5% of its outstanding Ordinary Share capital shall be entitled to
receive the following, in English: (i) as soon as possible, and not
later than 21 calendar days after the end of each fiscal year of the
Company - copies of the Company's financial statements (including a
balance sheet, statement of income and statement of cash flow) for
the previous year, audited by the Company's independent CPA; (ii) as
soon as possible, and not later than 4 working days after the end of
each fiscal quarter of the Company - copies of the Company's
financial statements (including a balance sheet, statement of income
and statement of cash flow) for the previous quarter, unreviewed and
unaudited; and (iii) as soon as possible, and not later than 10
calendar days after the end of each fiscal quarter of the Company -
copies of the Company's financial statements (including a balance
sheet, statement of income and statement of cash flow) for the
previous quarter, reviewed (not audited) by the Company's
independent CPA.
Shareholders of the Company holding more than 10% of its outstanding
Ordinary Share capital shall also receive monthly summaries prepared
by the Company's management in the form determined by the Board of
Directors, and a report of the Company's management on any material
event, to be delivered to such Shareholders promptly after its
occurrence.
10.4 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of
all dealings or transactions in relation to its business and affairs
in accordance with generally accepted accounting principles applied
on a consistent basis.
10.5 ACCESS TO INFORMATION. Any shareholder of the Company holding more
than 10% of its outstanding Ordinary Share capital, or its
representatives, shall have full access at any reasonable time and
upon reasonable notice to all books and records of the Company, and
shall be entitled to review and copy them at its discretion.
10.6 PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENTS. The Company
will not employ, or continue to employ, any Person unless such
Person has executed and delivered a Proprietary Information and
Non-Competition Agreement to the satisfaction, as to substance and
form, of the Company's management.
10.7 ISSUANCE OF NEW SECURITIES. If at any time until the IPO the Company
proposes to issue and sell any New Securities, as defined in EXHIBIT
10.7 attached hereto, each shareholder holding Ordinary Shares of
the Company shall consider purchasing, and the Company shall enable
it to maintain its proportionate holdings of the share capital of
Company by
purchasing, its relative share of the New Securities on the terms
and conditions offered by the Company to all shareholders holding
Ordinary Shares; in the event that any such shareholder shall refuse
to purchase its proportionate share of such New Securities, its
share of the share capital of the Company shall be accordingly
diluted. The terms and conditions of such an offer are set forth
in EXHIBIT 10.7.
10.8 REGISTRATION RIGHTS. The Company and the Existing Shareholders shall
enter into a Registration Rights Agreement in the form of EXHIBIT
10.8 attached hereto.
10.9 RIGHT OF FIRST REFUSAL; CO-SALE. The Existing Shareholders and the
Purchaser shall enter into a Right of First Refusal and Co-Sale
Agreement in the form of EXHIBIT
10.10 LIMITATION ON TRANSFER OF SHARES. Each of Dovrat Shrem/Yozma Polaris
Fund L.P., Dovrat Shrem & Co. Ltd., Leader Underwriters Ltd., Adasha
Yizum Proyektim (Tel Aviv) Ltd. and El-Kanit Development Ltd.
undertakes not to transfer, sell, assign, or otherwise dispose of
any of its Shares in the Company for a period of six (6) months from
Closing.
10.11 USE OF PROCEEDS. The Company shall use the proceeds of the Rights
Offering for such uses and purposes as set forth in the budget
attached hereto as EXHIBIT 10.11 (including the return at Closing
of US$350,000 of loans made by some of the Existing Shareholders
to the Company under convertible debentures or otherwise). The
Board of Directors of the Company shall be authorized to change
such budget at its discretion, subject to the provisions of
Section 10.2 hereof.
10.12 JOINT DEVELOPMENT AGREEMENT. The Company shall discuss with
Purchaser the details of a Joint Development Agreement in
connection with the execution of the research program set forth
in the proposal submitted by both companies to BIRD, a copy of
which is attached hereto as EXHIBIT 10.12.
11. CONFIDENTIALITY; NON-COMPETE. Without derogating from any other agreement
or undertaking to which any of the parties hereto is subject, and in
addition to any such agreement or undertaking, each of the parties hereto
undertakes as follows:
11.1 It shall maintain all non-public information and materials,
written and oral, including, but not limited to, any and all
patent applications, drawings, specifications, test results,
techniques, diagrams, charts, plans, statements, assessments,
analyses, estimates, views and opinions, know-how, processes,
machines, practices, inventions, improvements and records, and
all other technical, business and financial information
regarding, among other things, the Company's ownership, banking,
investments, investors, properties, employees, marketing plans,
customers, suppliers and products (all actual, planned or potential)
(the "INFORMATION"), received by it from the Company or any of the
other parties to this Agreement, or known to it otherwise, regarding
the Technology and the Company's business and financial activities
(actual or planned), in full and absolute confidence, and shall not
disclose it to any third party nor use it, directly or indirectly,
for any use or purpose whatsoever except as directed by the Company;
the aforesaid shall not apply to such Information which, based on
sufficient and reliable evidence, (a) was known to it prior to
receipt of such Information hereunder free of any confidentiality
restrictions, or (b) has become known to or generally available to
the public subsequent to that date not as a result of a breach by it
of this Agreement, (c) has been received by it from a third party
free of any confidentiality restrictions, or (d) a party hereto is
required to disclose under applicable law.
11.2 As long as it is a director or an employee of the Company, or is
designating a director on the Company's board of directors, or is a
shareholder holding more than 10% of the Company's outstanding share
capital, and for six (6) months thereafter, it shall not, directly
or indirectly, independently or as an owner, employee, partner,
joint-venturer, shareholder or otherwise, engage in any business or
trade which is engaged in two-way paging or telemetry, provided,
however, that an investment in up to 25% of the share capital of
another company, without being involved in its management as a
director or an employee, or by designating a director, shall be
permitted hereunder, and provided further that the engagement in
two-way paging or telemetry of any company in which any of the
parties is involved or invested on the date hereof shall not be
deemed to be a breach hereof.
12. MISCELLANEOUS
12.1 Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given for all purposes (a) when received or
seven (7) days after it is mailed by prepaid registered airmail,
return receipt requested; (b) upon the transmittal thereof by
telecopier; or (c) upon the manual delivery thereof, to the
respective addressee or fax numbers set forth above or to such other
address of which notice as aforesaid is actually received.
12.2 Each of the parties shall take such actions, including the execution
and delivery of further instruments and including voting their
shares in the Company, as may be necessary to give full effect to
the provisions hereof and to the intent of the parties hereto.
12.3 This Agreement may not be assigned by any of the parties hereto
except as set forth herein or in the Corporate Documents of the
Company. Notwithstanding the aforesaid, Dovrat Shrem/Yozma Polaris
Fund L.P. shall be entitled to assign its rights hereunder to any
fund managed or co-managed by Dovrat Shrem & Co. Ltd., Dovrat Shrem
S.A., Dash-Polaris or any of the principals of any thereof, or to
its general partner, shareholders therein or its limited partners,
provided such assignee shall confirm in writing its agreement to be
bound by the provisions hereof and the obligations of the
transferor. Upon such permitted assignment, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties hereto.
12.4 This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matters
hereof and thereof, and supersedes all prior agreements between
all or some of the parties hereof with regard to such subject
matter, including, without limitation, that certain Term Sheet
executed by the Company and the Purchaser in February, 1996.
12.5 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 with the written
consent of all of the parties to this Agreement.
12.6 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 therefore 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.
12.7 All remedies, either under this Agreement or by law or otherwise
afforded to any of the parties, shall be cumulative and not
alternative.
12.8 This Agreement shall be governed exclusively by and construed solely
in accordance with, the laws of the State of Israel. The parties
each hereby agrees to the exclusive jurisdiction of the appropriate
courts of the State of Israel, the District of Tel Aviv.
12.9 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 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.
12.10 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.
12.11 Stamp duty in connection with any issuance of shares by the Company
shall be borne by the Company.
IN WITNESS WHEREOF the parties have signed this Agreement as of the date first
herein above set forth.
/s/
______________________________
APTEL LTD.
By: __________________________
/s/ ELI AYALON /s/ IGAL KOHAVI
______________________________ _____________________________
D.S.P. SEMICONDUCTORS LTD. D.S.P. SEMICONDUCTORS LTD.
By: Eli Ayalon By: Igal Kohavi
WE AGREE TO COMPLY WITH THE PROVISIONS APPLYING TO DSP GROUP, INC.:
/s/ IGAL KOHAVI
______________________________
DSP GROUP, INC.
By: Igal Kohavi, Chairman
SHARE PURCHASE AND SHAREHOLDERS AGREEMENT DATED JULY 4, 1996
LIST OF EXHIBITS
Exhibit A - List and Signatures of Existing Shareholders
Exhibit 3.2.2.2 - Resolution of Board: Issuance of Shares
Exhibit 3.2.4 - Resolution of Board: Adoption of Employee Option Plan
Exhibit 3.7 - Loan Agreement
Exhibit 4.2 - Incorporation Certificate Memorandum & Articles of
Association
Exhibit 4.3 - Special Resolutions
Exhibit 4.4 - Stock Option Plan; Convertible Debentures
Exhibit 4.6 - Founders Agreement
Exhibit 4.7 - Agreements re Voting and Transfer of Shares
Exhibit 4.10 - Financial Statements of the Company (Dec. 31, 1995)
Exhibit 4.12 - Material Debts and Liabilities
Exhibit 4.15 - Debts to Interested Parties
Exhibit 4.16 - Personal Property; Liens
Exhibit 4.17 - Intellectual Property
Exhibit 4.18 - Material Agreements
Exhibit 4.19 - Insurance Policies
Exhibit 4.23 - Litigation
Exhibit 4.27 - Required Consents
Exhibit 4.31 - Subsidiaries
Exhibit 7.1 - Resolution of Shareholders; Amended Articles
Exhibit 7.2 - Notice of Pre-emptive Right
Exhibit 9.4.2 - Representations Under Regulation S
Exhibit 9.15 - Escrow Agreement
Exhibit 10.7 - Issuance of New Securities
Exhibit 10.8 - Registration Rights
Exhibit 10.9 - Right of First Refusal and Co-Sale Agreement
Exhibit 10.11 - Budget (Use of Proceeds)
Exhibit 10.12 - BIRD Application
EXHIBIT A
Dovrat Shrem/Yozma Polaris Fund L.P. /s/
________________________
By:
Dovrat Shrem & Co. Ltd. /s/
________________________
By:
Leader Underwriters Ltd. /s/
________________________
By:
Adasha Yizum Proyektim (Tel Aviv) Ltd. /s/
________________________
By:
El Kanit Development Ltd. /s/
________________________
By:
Menachem Kenan /s/ MENACHEM KENAN
________________________
Ofer Bar Or /s/ OFER BAR OR
________________________
EXHIBIT 3.2.4
APTEL LTD.
PRIVATE COMPANY NO. 51-186956-2
Minutes of the Meeting of the Board of Directors of the
Company duly convened and held on ___________
PRESENT: All Directors
AGENDA: Adoption of an Employee Stock Option Plan and Grant of Options
thereunder
CHAIRMAN OF THE MEETING: Rami Kalish
THE FOLLOWING RESOLUTION WAS ADOPTED UNANIMOUSLY BY THE BOARD OF DIRECTORS:
RESOLVED, to adopt the 1996 (No. 2) Employee Stock Option Plan in the form
attached hereto as Exhibit A (the "Plan"); and
FURTHER RESOLVED, to grant the employees whose names are set forth in Exhibit B
hereto such number of Options under the Plan set forth opposite their names;
vesting of Options not vested with immediate effect on the Date of Grant, as set
forth in Exhibit B hereto, shall vest as follows: one third (1/3) of the number
of such Options for future vesting shall vest on each of the first, second and
third anniversary of the Date of Grant; the exercise price of all such Options
shall be 50 US cents (based on the representative rate of exchange). Such grant
is subject to the terms and conditions of the Plan, including the receipt of the
approval of the Israeli tax authorities thereto; and
FURTHER RESOLVED, that the Company shall reserve 192,020 Class A Ordinary Shares
par value NIS 0.05 each for issuance to employees pursuant to the Plan, as shall
be determined in the future by the Board of Directors; and
FURTHER RESOLVED, that Igal Kohavi and Eyal Kishon are authorized to and
shall take all necessary actions on behalf of the Company for the
implementation of the Plan, including the appointment of a Trustee under the
Plan, filing an application for the approval of the Plan by the tax
authorities, giving the employees whose names are set forth in Exhibit B
hereto Notice of Grant (only after all required approvals for the Plan have
been obtained) and receiving therefrom the executed Grantee Agreements. The
Date of Grant for purposes hereof shall be the date on which the last Grantee
Agreement is executed by all of the aforesaid employees.
_______________
Rami Kalish
EXHIBIT A
APTEL LTD.
1996 (No. 2) EMPLOYEE STOCK OPTION PLAN
A. NAME AND PURPOSE
1. NAME: This plan, as amended from time to time, shall be known as the
"Aptel 1996 (No. 2) Employee Stock Option Plan" (the "PLAN").
2. PURPOSE: The purpose and intent of the Plan is to provide incentives to
employees of APTEL LTD. (the "COMPANY") by providing them with
opportunities to purchase Class A Ordinary Shares, nominal value 0.05 New
Israeli Shekels each (the "SHARES"), of the Company, pursuant to a plan
approved by the Board of Directors of the Company which is designed to
benefit from, and is made pursuant to, the provisions of Section 102 of the
Israeli Income Tax Ordinance [New Version], 1961, and the rules and
regulations promulgated thereunder.
B. GENERAL TERMS AND CONDITIONS OF THE PLAN
3. ADMINISTRATION:
3.1 The Plan will be administered by the Board of Directors of the Company
(the "BOARD") or by a committee appointed by the Board (the
"COMMITTEE"), which, if appointed, will consist of such number of
Directors of the Company as may be fixed, from time to time, by the
Board. If a Committee is not appointed, the term Committee, whenever
used herein, shall mean the Board. The Board shall appoint the members
of the Committee, may from time to time remove members from, or add
members to, the Committee and shall fill vacancies in the Committee
however caused.
3.2 The Committee shall select one of its members as its Chairman and
shall hold its meetings at such times and places as it shall
determine. Actions taken by a majority of the members of the
Committee, at a meeting at which a majority of its members is
present, or acts reduced to or approved in writing by all members
of the Committee, shall be the valid acts of the Committee. The
Committee may appoint a Secretary, who shall keep records of its
meetings and shall make such rules and regulations for the conduct
of its business as it shall deem advisable.
3.3 Subject to the general terms and conditions of this Plan, the
Committee shall have the full authority in its discretion, from time
to time and at any time, to determine (i) the persons ("GRANTEES") to
whom options to purchase Shares ("OPTION(S)") shall be granted, (ii)
the number of Shares to be covered by each Option, (iii) the time or
times at which the same shall be granted, (iv) the price, schedule and
conditions on which such Options may be exercised and on which such
Shares shall be paid for, and/or (v) any other matter which is
necessary or desirable for, or incidental to, the administration of
the Plan. In determining the number of Shares covered by the Option to
be granted to each Grantee, the Committee may consider, among other
things, the Grantee's salary and the duration of the Grantee's
employment by the Company.
3.4 The Committee may, from time to time, adopt such rules and regulations
for carrying out the Plan as it may deem necessary. No member of the
Board or of the Committee shall be liable for any act or determination
made in good faith with respect to the Plan or any Option granted
thereunder.
3.5 The interpretation and construction by the Committee of any provision
of the Plan or of any Option thereunder shall be final and conclusive
unless otherwise determined by the Board.
4. ELIGIBLE GRANTEES: The Committee, at its discretion, may grant Options
to any employee of the Company (including Directors who are employees of
the Company). Anything in this Plan to the contrary notwithstanding, all
grants of Options to Directors and Office Holders --"Nosei Misra" -- as
such term is defined in the Israeli Companies Ordinance (New Version),
1983, as amended from time to time (the "COMPANIES ORDINANCE") -- shall
be authorized and implemented only in accordance with the provisions of
the Companies Ordinance. The grant of an Option to a Grantee hereunder,
shall neither entitle such Grantee to participate, nor disqualify him
from participating, in any other grant of options pursuant to this Plan
or any other stock option plan of the Company.
5. GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST; DIVIDEND AND VOTING
RIGHTS:
5.1 GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST.
5.1.1 Subject to Section 7. 1 hereof, the effective date of the grant of an
Option (the "DATE OF GRANT") shall be the date specified by the
Committee in its determination relating to the award of such Option.
The Committee shall promptly give the Grantee written notice (the
"NOTICE OF GRANT") of the grant of an Option.
5.1.2 Anything herein to the contrary notwithstanding, all Options granted
under the Plan shall be granted by the Company to a trustee designated
by the Board and approved by the Israeli Commissioner of Income Tax
(the "TRUSTEE"), and the Trustee shall hold each such Option and the
Shares issued upon exercise thereof in trust (the "TRUST") for the
benefit of the Grantee in respect of whom such Option was granted (the
"BENEFICIAL GRANTEE"). All certificates representing Shares issued to
the Trustee under the Plan shall be deposited with the Trustee, and
shall be held by the Trustee until such time that such Shares are
released from the Trust as herein provided.
5.1.3 Anything herein to the contrary notwithstanding, no Options or Shares
shall be released from the Trust until the later of (i) two (2) years
after the Date of Grant, and (ii) the vesting of such Shares pursuant
to Section 7.3 hereof (such later date being hereinafter referred to
as the "RELEASE DATE").
5.1.4 Subject to the terms hereof, at any time after the Release Date with
respect to any Options or Shares the following shall apply:
5.1.4.1 Options granted, and/or Shares issued to the Trustee shall
continue to be held by the Trustee, on behalf of the
Beneficial Grantee. From and after the Release Date, upon the
written request of any Beneficial Grantee, the Trustee shall
release from the Trust the Options granted, and/or the Shares
issued, on behalf of such Beneficial Grantee, by executing and
delivering to the Company such instrument(s) as the Company
may require, giving due notice of such release to such
Beneficial Grantee, provided, however, that the Trustee shall
not so release any such Options and/or Shares to such
Beneficial Grantee unless the latter, prior to, or
concurrently with, such release, provides the Trustee with
evidence, satisfactory in form and substance to the Trustee,
that all taxes, if any, required to be paid upon such release
have, in fact, been paid.
5.1.4.2 Alternatively, from and after the Release Date, upon the
written instructions of the Beneficial Grantee to
sell any Shares issued upon exercise of Options, the Trustee
shall use its best efforts to effect such sale and shall
transfer such Shares to the purchaser thereof concurrently
with the receipt, or after having made suitable arrangements
to secure the payment of the proceeds, of the purchase price
in such transaction. The Trustee shall withhold from such
proceeds any and all taxes required to be paid in respect of
such sale, shall remit the amount so withheld to the
appropriate tax authorities and shall pay the balance thereof
directly to the Beneficial Grantee, reporting to such
Beneficial Grantee and to the Company the amount so withheld
and paid to said tax authorities.
5.2 DIVIDEND AND VOTING RIGHTS. The Class A Ordinary Shares issued upon
the exercise of Options granted under this Plan are entitled to the
same rights and privileges of the holders of the Ordinary Shares,
except that:
5.2.1 such Class A Ordinary Shares shall not have any rights to be
invited to, or participate in, the Company's general meetings
or to vote therein; and
5.2.2 such Class A Ordinary Shares shall be entitled to share
equally, on a per share basis, in such dividends as may be
declared by the Board of Directors of the Company only after
the holder of each Ordinary Share shall have been paid
dividends in an amount equal to twenty (15) US cents (0.15 US
dollars) in respect of such Share in each year in which
dividends were so declared; and
5.2.3 upon liquidation or dissolution of the Company, such Class A
Ordinary Shares shall be entitled to share equally, on a per
share basis, in the assets of the Company legally available
for distribution to shareholders, as set forth in the
Company's Articles of Association, only after the holder of
each Ordinary Share received such assets in an amount equal
to, in aggregate, two US dollars and 89 cents ($2.89), in
addition to any and all accumulated declared but unpaid
dividends, in respect of such Share;
provided, however, that upon closing of the Company's initial public
offering of its securities in Israel or abroad ("IPO_") such Shares
shall automatically convert to Ordinary Shares of the Company.
For so long as Shares issued to the Trustee on behalf of a Beneficial
Grantee are held in the Trust, any dividends or asset distributions
paid or distributed with respect thereto shall be remitted to the
Trustee for the benefit of such Beneficial Grantee.
6. RESERVED SHARES: The number of authorized but unissued Shares for purposes
of the Plan shall be determined, from time to time, by the Board, and shall
be subject to adjustments as provided in Section 11 hereof. All Shares
under the Plan, in respect of which the right hereunder of a Grantee to
purchase the same shall, for any reason, terminate, expire or otherwise
cease to exist, shall again be available for grant through Options under
the Plan.
7. GRANT OF OPTIONS:
7.1 The Committee in its discretion may award to Grantees Options to
purchase Shares in the Company available under the Plan. Options may
be granted at any time after the passage of thirty (30) days following
the delivery by the Company to the appropriate income tax authorities
of a notice pertaining to the appointment of the Trustee and the
adoption of the Plan.
7.2 The Notice of Grant shall state, inter alia, the number of Shares
covered thereby, the dates when the Option may be exercised, the
exercise price, and such other terms and conditions as the Committee
at its discretion may prescribe, provided that they are consistent
with this Plan.
7.3 Without derogating from the rights and powers of the Committee under
Section 7.2 hereof, unless otherwise specified in the Notice of Grant
each Option under the Plan shall be for a term of eight (8) years, and
the schedule pursuant to which such Options shall vest, and the
Beneficial Grantee thereof shall be entitled to pay for, and acquire,
the Shares, shall be such that a third (1/3) of such Options shall
vest on each of the first, second and third anniversaries of the Date
of Grant.
7.4 Each Option granted hereunder shall be evidenced by a Grantee
Agreement, to be entered into by and between the Company and such
Grantee, in the form attached hereto as EXHIBIT A or in such other
form and substance as may be approved by the Committee from time to
time, which shall incorporate the provisions of this Plan. In the
event of any conflict between the terms and conditions of a Grantee
Agreement and the terms hereof, the terms hereof shall control.
8. EXERCISE PRICE: The exercise price per Share covered by each Option shall
be determined by the Committee in its sole and absolute discretion;
provided, however, that such exercise price shall not be less than the
nominal value of the Shares into which such Option is exercisable.
9. EXERCISE OF OPTIONS:
9.1 Options shall be exercisable pursuant to the terms under which they
were awarded and subject to the terms and conditions of the Plan.
9.2 The exercise of an Option shall be made by a written notice of
exercise (the "NOTICE OF EXERCISE") delivered by the Beneficial
Grantee (or, with respect to Options held in the Trust, by the Trustee
upon receipt of written instructions from the Beneficial Grantee) to
the Company at its principal executive office, specifying the number
of Shares to be purchased and accompanied by the payment therefor, and
containing such other terms and conditions as the Committee shall
prescribe from time to time.
9.3 Anything herein to the contrary notwithstanding, but without
derogating from the provisions of Section 10 hereof, if any Option has
not been exercised and the Shares covered thereby not paid for within
eight (8) years after the Date of Grant (or any shorter period set
forth in the Notice of Grant), such Option and the right to acquire
such Shares shall terminate, all interests and rights of the Grantee
in and to the same shall ipso facto expire, and, in the event that in
connection therewith any Options are still held in the Trust as
aforesaid, the Trust with respect thereto shall ipso facto expire and
the Trustee shall thereafter hold such Options in an unallocated pool
until instructed by the Company that some or all of such Options are
again to be held in trust for one or more Grantees.
9.4 Each payment for Shares shall be in respect of a whole number of
Shares, and shall be effected in cash or by a cashier's check payable
to the order of the Company, or such other method of payment
acceptable to the Company.
10. TERMINATION OF EMPLOYMENT:
10.1 In the event that a Grantee ceases, for any reason, to be employed by
the Company, all Options theretofore granted to such Grantee shall
terminate as follows:
(a) If the Grantee's termination of employment is due to such Grantee's
death or "Disability" (as hereinafter defined), such Options (to the
extent exercisable at the time of the Grantee's termination of
employment) shall be exercisable by the Grantee's legal
representative, estate of other person to whom the Grantee's rights
are transferred by will or by laws of descent or distribution for a
period of six (6) months following such termination of employment (but
in no event after the expiration date of such Option), and shall
thereafter terminate. For purposes hereof, "DISABILITY" shall mean the
inability, due to illness or injury, to engage in any gainful
occupation for which the individual is suited by education, training
or experience, which condition continues for at least six (6)
months.
(b) If the Grantee's termination of employment is for any other reason,
such Options (to the extent exercisable at the time of the Grantee's
termination of employment) shall be exercisable for a period of sixty
(60) days following such termination of employment, and shall
thereafter terminate; PROVIDED, HOWEVER, that if the Grantee dies
within such sixty-day period, such Options (to the extent exercisable
at the time of the Grantee's termination of employment) shall be
exercisable by the Grantee's legal representative, estate or other
person to whom the Grantee's rights are transferred by will or by laws
of descent or distribution for a period of six (6) months following
the Grantee's death (but in no event after the expiration date of such
Option), and shall thereafter terminate, and, PROVIDED FURTHER, that
in the event the employment of a Grantee is terminated by the Company
for "cause", as defined hereafter, such Grantee shall not be entitled
to exercise any such Options subsequent to the time of delivery of the
notice of discharge. For purposes of this Section, "CAUSE" shall
include the commitment of a serious breach of trust, including, but
not limited to, theft, embezzlement or self-dealing; the prohibited
disclosure to unauthorized persons or entities of confidential or
proprietary information of or relating to the Company; the engaging by
Grantee in any prohibited business competitive to the business of the
Company and/or its affiliates; or the failure to perform any of his or
her material duties and obligations as an employee of the Company as a
result of gross negligence or willful misconduct.
10.2. Notwithstanding the foregoing provisions of Section 10.1, the
Committee may provide, either at the time an Option is granted or
thereafter, that such Option may be exercised after the periods
provided for in Section 10.1, but in no event beyond the term of the
Option.
11. ADJUSTMENT UPON CHANGES IN CAOR CHANGE IN CONTROL:
11.1 Subject to any required action by the shareholders of the Company,
the number of Shares covered by each outstanding Option, and the
number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Shares covered by each
such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from
a stock split, reverse stock split, stock dividend, combination or
reclassification of the Shares or the payment of a stock dividend
(bonus shares) with respect to the Shares or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; PROVIDED, HOWEVER, that conversion of
any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such
adjustment shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares
subject to an Option.
11.2 In the event of the proposed dissolution or liquidation of the
Company, the Committee shall notify each Grantee at lease fifteen (15)
days prior to such proposed action. To the extent it has not been
previously exercised, each Option will terminate immediately prior to
the consummation of such proposed action. In the event of a
consolidation or the merger of the Company with or into another
corporation, each Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation.
11.3 In the event of a "Change in Control" of the Company, as defined
below, then the following provisions shall apply:
11.3.1 For purposes of this Section 11.3, a "Change in Control" means
when any person or entity (the "Purchaser") becomes the owner,
directly or indirectly, of securities of the Company
representing more than 95% of the combined voting power of the
Company's then outstanding securities entitled to vote
generally in the Company's general meetings.
11.3.2 Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control
all outstanding Options, to the extent they are exercisable
and vested, shall be exercised by the Grantee thereof
(otherwise they shall expire) and the underlying Class A
Ordinary Shares, together with any Class A Ordinary Shares
owned by such Grantee as a result of the earlier exercise of
Options granted hereunder, shall be subject to purchase by the
Purchaser, which shall be mandatory if the Purchaser purchases
more than 95% of the combined voting power of the Company's
then outstanding securities entitled to vote generally in the
Company's general meetings, on the same terms and conditions on
which such Purchaser purchased shares in the Company as part
of the Change in Control event, and any unvested Options shall
remain in full force and effect except if the terms of such
Change in Control provide that the same be exchanged for
options of the Purchaser on the terms and conditions set forth
therein.
11.3.3 Notwithstanding anything to the contrary contained herein, in the
event of the exercise of an Option, as set forth in Section
11.3.2, the Grantee of such Option shall pay to the Company,
as a condition to such exercise, the applicable exercise
price, or, at the Grantee's discretion, he shall be entitled
to request that the Purchaser shall pay to the Company such
exercise price and, upon such request, the Purchaser shall pay
to the Company such exercise price and shall deduct the same
from the consideration paid to the Grantee for the transfer of
the Grantee's shares to the Purchaser.
11.3.4 The Committee shall determine the specific adjustments to be
made under this paragraph 11.3, and its determination shall be
conclusive.
12. NON-TRANSFERABILITY:
12.1 No Option shall be assignable or transferable by the Grantee to whom
granted otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of
the Grantee only by such Grantee or by such Grantee's guardian or
legal representative. The terms of such Option shall be binding upon
the beneficiaries, executors, administrators, heirs and successors of
such Grantee.
12.2 No shares purchasable hereunder which were not fully paid for, shall
be assignable or transferable by the Grantee. In addition, and without
derogating from the rights and powers of the Committee to provide
otherwise hereunder, until the closing the IPO, the following
provisions shall apply to all transfers of shares of the Company by
any of the Grantees or the Trustee on their behalf (the "TRANSFEROR"):
12.2.1 The Transferors shall sell, assign or transfer (collectively,
"TRANSFER") all or any part of the Shares owned by them only
in compliance with the terms of this Section 12.2.
12.2.2 RIGHT OF REFUSAL ON TRANSFERS.
(a) If at any time any Transferor wishes to Transfer any or all
Shares owned by him ("OFFEROR") pursuant to the terms of a
bona fide offer received from a third party, he shall submit a
written offer (the "OFFER") to sell such Shares (the "OFFERED
SHARES") to all other shareholders of the Company other than
shareholders solely as a result of grant hereunder or under a
similar plan ("OFFEREES") on terms and conditions, including
price, identical to those proposed by such third party.
The Offer shall disclose the identity of the proposed
purchaser or transferee, the Shares proposed to be sold or
transferred and the agreed terms of the sale or transfer.
(b) Each Offeree shall have the right to purchase that number of the
Offered Shares as shall be equal to the aggregate Offered
Shares multiplied by a fraction, the numerator of which is the
number of Shares then owned by such Offeree and the
denominator of which is the aggregate number of Shares then
issued and outstanding and held by all of the Offerees (such
fraction is hereinafter referred to as the "PRO RATA FRACTION"
of each Offeree).
(c) Each Offeree shall have the right to accept the Offer only as to
all of the Pro Rata Fraction. In the event an Offeree does not
wish to purchase his Pro Rata Fraction of the Offered Shares,
then any other Offeree who so elects shall have the right to
purchase, on a pro rata basis with other Offerees who so
elect, any Pro Rata Fraction of Offered Shares not purchased
by an Offeree. If the Offerees do not elect to purchase all of
the Offered Shares, then there shall be no right to purchase
Shares pursuant to this Section 12.2.
(d) Within 14 days from the date of receipt of the Offer, each of the
Offerees shall give written notice to the Offeror (the
"RESPONSE NOTICE") whether he wishes to purchase his Pro Rata
Fraction of the Offered Shares, and whether he wishes to
purchase, in addition, his applicable Pro Rata Fraction of
Offered Shares not purchased by other Offerees, all pursuant
to the Proposed Terms. If such Response Notice has not been
given by an Offeree within the aforesaid time period, he shall
be deemed to have refused to purchase his Pro Rata Fraction of
the Offered Shares.
(e) At the expiration of the said 14 days: (i) if notices of
Offerees who expressed their wish to purchase Offered Shares
have been received by the Offeror in respect of all of the
Offered Shares, the Offered Shares shall be Transferred by the
Offeror to such Offerees pursuant to the Proposed Terms; (ii)
in the event that the Offerees do not elect to purchase all of
the Offered Shares, then such Offered Shares may be
Transferred by such Offeror at any time within 90 days
thereafter. Any such Transfer shall be not less than the price
and upon other terms and conditions, if any, not more
favorable to the purchaser than the Proposed Terms. Any Shares
not sold within such 90-day period shall continue to be
subject to the requirements of a prior offer and right of
first refusal pursuant to this Section 12.2.2. In the event of
a sale of Shares to any of the Offerees hereunder, each of the
Grantees covenants that those Shares transferred by him or her
hereunder shall be, when transferred, duly authorized and
validly issued, fully paid and nonassessable, free and clear
of all mortgages, liens, pledges, charges, security interests,
or other claims or encumbrances of any kind whatsoever
("LIENS").
(f) Anything herein to the contrary notwithstanding, the provisions
of paragraphs (a) through (e) above shall not apply to: (a) any
transfer of Shares by an Offeror to, or for the benefit of,
any member or members of his immediate family (which shall be
deemed to include a mother-in-law, father-in-law,
brother-in-law and/or sister-in-law); (b) any transfer by an
Offeror to a corporation controlled by it. In the event of any
such transfer, the transferee of the Shares shall hold the
Shares so acquired with all the rights conferred by, and
subject to all the restrictions imposed by, this Plan.
(g) For avoidance of doubt, the foregoing shall not be deemed to
restrict the transfer of a Grantee's rights in respect of
Option Awards or Shares purchasable pursuant to the exercise
thereof upon the death of such Grantee to his estate or other
successors by operation of law or will, whose rights therein
shall be governed by Section 10.2 hereof.
12.3 Other than a Transfer permitted hereunder, until the closing of the
Company's IPO Grantee shall not grant any warrants, options, or other
rights whatsoever with respect to his or her Options granted
hereunder, or shares of the Company resulting from the exercise
thereof, and shall not pledge, hypothecate, grant security interest,
subject to a lien, mortgage or in any other way encumber all or any
part of such Options or shares or allow such Options or shares to be
under any lien or attachment.
12.4 The Company shall not register any transfer of Shares not made in
accordance with the provisions of this Plan, the Company's Articles of
Association and any applicable law.
13. TERM AND AMENDMENT OF THE PLAN:
13.1 The Plan was authorized by the Board on __________, 1996, and shall
expire on ________ __, 2004 (except as to Options outstanding on that
date), but such expiration shall not affect the instructions contained
herein or in any applicable law with respect to the Options and Shares
held in the Trust at such time of expiration.
13.2 Subject to applicable laws, the Board may, at any time and from time
to time, terminate or amend the Plan in any respect. In no event may
any action of the Company alter or impair the rights of a Grantee,
without his consent, under any Option previously granted to him.
14. TAX CONSEQUENCES: All tax consequences arising from the grant or exercise
of any Option, from the payment for, or the subsequent disposition of,
Shares covered thereby or from any other event or act (of the Company or
the Grantee) hereunder, shall be borne solely by the Grantee, and the
Grantee shall indemnify the Company and the Trustee and hold them harmless
against and from any and all liability for any such tax or interest or
penalty thereon, including without limitation, liabilities relating to the
necessity to withhold, or to have withheld, any such tax from any payment
made to the Grantee.
15. MISCELLANEOUS:
15.1 CONTINUANCE OF EMPLOYMENT: Neither the Plan nor the grant of an Option
thereunder shall impose any obligation on the Company to continue the
employment of any Grantee, and nothing in the Plan or in any Option
granted pursuant thereto shall confer upon any Grantee any right to
continue in the employ of the Company, or restrict the right of the
Company to terminate such employment at any time.
15.2 GOVERNING LAW: The Plan and all instruments issued thereunder or in
connection therewith, shall be governed by, and interpreted in
accordance with, the laws of the State of Israel.
15.3 APPLICATION OF FUNDS: The proceeds received by the Company from the
sale of Shares pursuant to Options granted under the Plan will be used
for general corporate purposes of the Company.
15.4 MULTIPLE AGREEMENTS: The terms of each Option may differ from other
Options granted under the Plan at the same time, or at any other time.
The Committee may also grant more than one Option to a given Grantee
during the term of the Plan, either in addition to, or in substitution
for, one or more Options previously granted to that Grantee. The grant
of multiple Options may be evidenced by a single Notice of Grant or
multiple Notices of Grant, as determined by the Committee.
15.5 NON-EXCLUSIVITY OF THE PLAN: The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any
limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific
cases.
APTEL LTD.
1 Ha'amnut Street, Netanya
Date: _________
_______________
_______________
_______________
Dear Sir/Madam:
We are very happy to inform you that, in deep appreciation of your contribution
to the company, the board of directors of Aptel Ltd. (the "Company") has
approved the issuance to you of options to purchase Class A Ordinary Shares of
the Company pursuant to the terms and conditions set forth in the Aptel 1996
(No. 2) Employee Stock Option Plan (the "Plan"), a copy of which is attached
hereto.
Pursuant to the resolution of the board, you will be entitled to _______ options
(the "Options"), each exercisable into one Class A Ordinary Share, par value
0.05 New Israeli Shekels, of the Company. The Options shall vest as follows:
_____ Options shall vest immediately upon grant; ____ options shall vest in the
future, such that one third (1/3) of such number of Options shall vest on each
of the first, second and third anniversaries of the Date of Grant. The exercise
price of all such Options shall be US$0.50 per Share.
The grant of the Options hereunder is subject to the terms and conditions of the
Plan, including receiving the approval of the Israeli tax authorities thereto
and your execution of the Grantee's Agreement, a form of which is also attached
hereto.
Sincerely yours,
___________________
Aptel Ltd.
EXHIBIT B
NAME OF EMPLOYEE TOTAL IMMEDIATE FUTURE
NUMBER VESTING VESTING
OF ON THE
OPTIONS DATE OF
GRANT
_________________________________________________________________
Menachem Kenan 61,840 --- 61,840
Ofer Bar Or 44,180 --- 44,180
Gil Natan 3,560 --- 3,560
Asaf Somech 3,560 --- 3,560
Shimon Zigdon 3,560 --- 3,560
Amnon Hazan 3,560 --- 3,560
Miri Birenzweig 3,560 --- 3,560
Ariel Goldstein 9,600 --- 9,600
Shlomi Sharetzky 2,880 --- 2,880
Shay Strool 2,880 --- 2,880
Baruch Bublil 2,880 --- 2,880
Iris Brezner 2,880 --- 2,880
Igal Butbul 1,920 --- 1,920
Oleg Donayevsky 1,920 --- 1,920
_________________________________________________________________
TOTAL 148,780 --- 148,780
EXHIBIT 3.7
LOAN AGREEMENT
This LOAN AGREEMENT is made and entered into as of the ___ day of _____,
1996, by and between APTEL LTD., Israeli company no. 51-186956-2, of 1
Ha'amanut Street, Netanya (the "BORROWER") and D.S.P. SEMICONDUCTORS LTD., an
Israeli company of 13 Gush Etzion Street, Givat Shmuel (the "LENDER").
WHEREAS, Borrower and Lender have entered today into a Share Purchase and
Shareholders Agreement (the "Agreement") regarding an investment by Lender in
Borrower pursuant to the terms set forth therein (the "Investment"); and
WHEREAS, until "Closing" of the Investment, as such term is defined in the
Agreement (the "Closing") Borrower requires additional funds for its
operation; and
WHEREAS, Borrower has applied to Lender for a loan, the details of which are
set forth herein, and Lender is willing to extend such loan to Borrower, all
pursuant to the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
and intending to be legally bound, Lender and Borrower agree as follows.
1. LOAN. On the basis of the representations and covenants made by Borrower
herein, Lender shall loan to Borrower (the "Loan") an amount equal in NIS
(based on the representative rate of exchange) to $150,000 (One Hundred and
Fifty Thousand U.S. Dollars) (the "Loan Amount") on the date hereof.
2. LOAN DISBURSEMENT. The Loan Amount shall be disbursed by Lender to Borrower
pursuant to instructions given to it by Borrower.
3. LINKAGE; INTEREST. The Loan Amount shall be linked to the representative
rate of exchange of the US$ and shall not bear interest.
4. LOAN REPAYMENT. Borrower shall repay to Lender the Loan Amount together
with linkage differentials accrued thereon on the earlier to occur of (i)
_______, 1996, or (ii) the Closing. If the Closing occurs before the
aforesaid date, Lender
instructs the Borrower to set off the amount to be repaid to Lender against
any payment it owes to the Borrower thereunder.
5. REPRESENTATIONS OF BORROWER. Borrower hereby represents to Lender that:
5.1. Borrower is an Israeli corporation duly formed and validly existing,
with full power and authority to consummate the transaction
contemplated hereunder.
5.2. The consummation of the transaction contemplated hereunder and the
performance of this Loan Agreement by Borrower do not violate the
provisions of any applicable law, and will not result in any breach
of, or constitute a default under, any agreement or instrument to
which Borrower is a party or under which Borrower is bound.
5.3. No consents, authorizations or approvals of any kind of any
governmental authority or other third party, which were not obtained
prior to execution hereof, are required in connection with the
execution or performance of this Loan Agreement.
5.4. The execution and performance of this Loan Agreement by the Borrower
have been duly authorized by all necessary action, and this Loan
Agreement has been duly executed and delivered by it.
6. MISCELLANEOUS
6.1. Each of the parties hereto shall not assign or transfer any of its
rights or obligations hereunder absent the consent of the other party.
6.2. This Loan Agreement may not be amended, supplemented, discharged,
terminated or altered except by a writing signed by the parties
hereto.
6.3. This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matter
hereof, and supersedes all prior agreements between the parties hereof
with regard to such subject matter.
6.4. No failure or delay by any party to this Loan Agreement to enforce at
any time any of the provisions hereof, or to exercise any power or
right hereunder, shall operate as or be construed to be, a waiver of
any such provision, power or right. Any waiver of any provision hereof
or any power or right hereunder shall be in writing, and shall be
effective only in the specific instance and for the purpose for which
given.
6.5. All stamping and other expenses incurred in connection with the
execution or performance of this Loan Agreement shall be borne by
Borrower.
6.6. Any notice required or permitted hereunder shall be in writing and
shall be sent by registered mail or confirmed facsimile to the parties
hereto at the following respective addresses (as may be changed by
each of the parties from time to time):
If to Borrower: Aptel Ltd., 1 Ha'amanut Street, Netanya,
fax 09-851189.
If to Lender: DSP Semiconductors Ltd., 13 Gush Etzion Street, Givat
Shmuel, fax 03-5323220
6.7. This Loan Agreement shall be governed for all purposes by the laws of
the State of Israel.
IN WITNESS WHEREOF, this Loan Agreement has been executed by the parties hereto
as of the day and year first hereinabove written.
APTEL LTD. D.S.P. SEMICONDUCTORS LTD.
______________________________ ________________________________
By: By:
Title: Title:
EXHIBIT 9.4.2
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller as follows:
1. Buyer is not a "U.S. person" as defined by Rule 902 of Regulation S
promulgated under the Securities Act of 1993 (the "Securities Act"), was
not organized under the laws of any U.S. jurisdiction, and was not formed
for the purpose of investing in securities of U.S. companies not registered
under the Securities Act;
2. At the time the buy order for this transaction was originated, Buyer was
outside the United States;
3. No offer to purchase the Shares was made in the United States;
4. Buyer is either (a) purchasing the Shares for its own account for
investment purposes and not with a view towards distribution;
5. All subsequent offers and sales of the Shares will be made outside the
United States in compliance with Rule 903 or Rule 904 of Regulation S,
pursuant to registration of the Shares under the Securities Act, or
pursuant to an exemption from such registration. Buyer understands the
conditions of the exemption from registration afforded by section 4(1) of
the Securities Act and acknowledges that there can be no assurance that it
will be able to rely on such exemption. In any case, Buyer will not resell
the Shares to U.S. Persons or within the United States until after the end
of the forty (40) day period commencing on the date of completion of the
option transaction (the "Restricted Period");
6. Buyer agrees not to enter into any short sales with respect to the common
stock of Seller at any time after the execution hereof by Buyer and prior
to the expiration of the Restricted Period. Buyer further agrees that, at
all time after the execution hereof by Buyer and prior to the expiration of
the Restricted Period, it will keep its purchase of the Shares
confidential, except as required by law and except as necessary in the
ordinary course of Buyer's business;
7. Buyer understands that the Shares are being offered and sold to in reliance
on specific provisions of federal and state securities laws and that Seller
is relying upon the truth and accuracy of the representations, warranties,
agreements,
acknowledgments and understandings of Buyer set forth herein in order to
determine the applicability of such provisions. Accordingly, Buyer
agrees to notify Seller of any events which would cause the
representations and warrants of Buyer to be untrue or breached at any
time after the execution hereof by Buyer and prior to the expiration to
the Restricted Period;
8. These Representations and Warranties have been duly authorized, validly
executed, and delivered on behalf of Buyer and constitute a valid and
binding agreement enforceable in accordance with its terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors rights generally.
9. Any transaction offering documents received by Buyer include statements to
the effect that the Shares have not been registered under the Securities
Act and may not be offered or sold in the United States or to U.S. persons
during the Restricted Period, unless the Shares are registered or unless
such resale is exempt from or not subject to the registration requirements
of the Securities Act;
10. Buyer, in making the decision to purchase the Shares subscribed for, has
relied upon independent investigations made by it and has not relied on any
information or representations made by third parties;
11. In the event of resale of the Shares during the Restricted Period, Buyer
shall provide a written confirmation or other written notice to any
distributor, dealer, or person receiving a selling concession, fee, or
other remuneration in respect of the Shares stating that such purchaser is
subject to the same restrictions on offers and sale that apply to the
undersigned, and shall require that any such purchaser shall provide such
written confirmation or other notice upon resale during the Restricted
Period; and
12. Buyer has not taken any action that would cause Seller to be subject to any
claim for commission or other fee or remuneration by any broker, finder, or
other person and Buyer hereby indemnifies Seller against any such claim
caused by the actions of Buyer or any of its employees or agents.
IN WITNESS WHEREOF, these Representations and Warranties were duly executed on
the date first written above.
_______________________
BUYER:
EXHIBIT 9.15
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of ________, 1996,
by and among APTEL LTD., Israeli company no. 51-186956-2, of 1 Ha'amanut Street,
Netanya 42160, Fax: 09-851189 (the "COMPANY"), the persons whose names and
addresses appear on EXHIBIT A hereto (collectively, the "EXISTING
SHAREHOLDERS"), D.S.P. SEMICONDUCTORS LTD., a company incorporated under the
laws of the State of Israel and having its principal offices at 13 Gush Etzion
Street, Givat Shmuel, Israel, Fax: 03-5323220 (the "PURCHASER") and I. FISCHER
& CO. TRUSTEES LTD., of 25 Ibn Gvirol Street, Tel Aviv, fax 03-5250141 (the
"ESCROW AGENT").
RECITALS
WHEREAS, the Company, the Purchaser and the Existing Shareholders entered on
the date hereof into a Share Purchase and Shareholders Agreement
(the "PURCHASE AGREEMENT"; all capitalized terms used and not
otherwise defined herein shall have the meanings ascribed to them
in the Purchase Agreement); and
WHEREAS, pursuant to Section 9 of the Purchase Agreement, the Existing
Shareholders granted the Purchaser an option to purchase all of
their shares (whether Ordinary Shares or Class A Ordinary Shares)
in the Company (the "SHARES"), on the terms and conditions set
forth therein (the "ADDITIONAL OPTION"), and the Company undertook
certain obligations related to such Additional Option, as set forth
therein; and
WHEREAS, in the Purchase Agreement the parties agreed that in order to
ensure compliance with the provisions of such Section 9 thereof the
Existing Shareholders shall deposit all of their Shares with an
escrow agent, who shall serve as a trustee of the parties hereto
pursuant to an escrow agreement, and that in the event that the
Company shall issue or grant any Shares or Convertible Securities
to any of the Existing Shareholders or to any third party, such
Shares or Convertible Securities shall also be issued or granted to
the escrow agent, in trust for the recipient thereof
pursuant to the provisions of an escrow agreement; and
WHEREAS, the Company, the Purchaser and the Existing Shareholders have
requested Escrow Agent, and Escrow Agent has agreed, to serve as
the escrow agent for purposes of Section 9 of the Purchase
Agreement, upon the terms and conditions set forth in this Escrow
Agreement;
NOW THEREFORE, in consideration of their mutual covenants and undertakings
contained herein, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. PURPOSE OF AGREEMENT
The sole purpose of this Agreement is to authorize and enable Escrow Agent
to take and to hold the Shares and the Convertible Securities and to act
with regard to such Shares and Convertible Securities in accordance with
the instructions set forth herein. The Escrow Agent shall be regarded at
all times as a mere Escrow Agent with respect to his holding of the Shares
and Convertible Securities and, in such capacity, shall have no beneficial
right, title or interest in the Shares, in the Convertible Securities or in
dividends or distributions of any kind paid or made in respect of the
Shares or the Convertible Securities, or in the proceeds of any sale,
exchange or other disposition of the Shares or any Convertible Securities.
The Shares and the Convertible Securities shall be conclusively deemed to
be held by Escrow Agent on behalf of the Existing Shareholders and any
applicable third party pursuant to this Agreement.
2. DEPOSIT OF SHARES AND CONVERTIBLE SECURITIES IN ESCROW
2.1 At the Closing of the transaction pursuant to the Purchase Agreement,
each of the Existing Shareholders shall deliver to the Escrow Agent a
duly executed Share Transfer Deed transferring all of the Shares then
held by it to the Escrow Agent, and the Escrow Agent shall execute and
deliver such Deeds to the Company for registration of such Shares
under its name, and hold such Shares in trust for such Existing
Shareholder until such time that the same are either transferred to
the Purchaser under Section 4 hereof or released from escrow under
Section 5 hereof, all as herein provided.
2.2 In the event of issuance of any Shares or Convertible Securities by
the Company after the date hereof to any of the Existing Shareholders
or any third party, such Shares or Convertible Securities shall be
issued by the Company to the Escrow Agent, and the Escrow Agent shall
hold such Shares or Convertible Securities in trust for such Existing
Shareholder or third party until such time that the same are either
transferred to the Purchaser under Section 4 hereof or released from
escrow under Section
5 hereof, all as herein provided.
2.3 Each of the Existing Shareholders and the aforesaid third parties
shall be referred to herein, in respect of the Shares or
Convertible Securities held by the Escrow Agent on his or its
behalf, as the "BENEFICIAL OWNER", and such Shares or Convertible
Securities shall be referred to herein as the "ESCROWED SECURITIES".
2.4 The Escrow Agent shall grant to each Beneficial Owner a proxy, under
which the Beneficial Owner shall be entitled to receive notices of,
and to attend, general meetings of securityholders of the Company and
to vote for all purposes on behalf of such of the Escrowed Securities
having voting rights.
2.5 All dividends, bonus shares, options or other distributions
(collectively, "DISTRIBUTIONS") to shareholders or securityholders as
may be declared by the board of directors of the Company in respect of
the Escrowed Securities shall be treated as follows: (i) if the
Distribution is in cash or in assets, other than securities of the
Company -- the same shall be paid or distributed to the Beneficial
Owner directly; (ii) if the Distribution is of securities of the
Company -- it shall be issued or distributed to the Escrow Agent in
escrow, and shall be treated hereunder identically to the Escrowed
Securities to which it is attributable.
2.6 For all purposes under the Purchase Agreement, including in respect of
any right granted to any of the Existing Shareholders which is
conditioned upon owning a certain number of securities in the Company,
the Existing Shareholders shall be deemed to be the owners of the
Escrowed Securities, and they shall be entitled to exercise on behalf
of the Escrow Agent, with respect to the Escrowed Securities, all
other rights and privileges granted to the Escrow Agent as shareholder
or securityholder of the of the Company.
3. TRANSFER OF SHARES OR CONVERTIBLE SECURITIES
3.1 Each of the Beneficial Owners shall be entitled to sell, assign or
transfer any of his or its Escrowed Securities (collectively,
"TRANSACTION") to any person or entity, including any of the Existing
Shareholders (the "BUYER"), only in compliance with the terms and
subject to any limitation set forth in the Purchase Agreement and that
certain Right of First Refusal and Co-Sale Agreement (the "RIGHTS
AGREEMENT") among the Existing Shareholders and Purchaser dated the
date hereof (the "TRANSFER TERMS").
3.2 Upon compliance with the Transfer Terms, the Beneficial Owner shall be
entitled to consummate the Transaction provided, however, that the
relevant Escrowed Securities shall remain in escrow with the Escrow
Agent, for the benefit of, or subject to the rights of, the Buyer,
until such time that the same are either transferred to the Purchaser
under Section 4 hereof or released from escrow under Section 5 hereof,
all as herein provided, and, further, that the Buyer confirms in
writing its agreement to be bound by this Agreement as a Beneficial
Owner hereunder.
3.3 For purposes of the first refusal or co-sale rights granted under the
Rights Agreement, and any other similar right or limitation (including
preemptive rights in respect of securities issued by the Company)
under the Company's Memorandum and Articles of Association or any
agreement by which any of the parties hereto is or will be bound, each
Beneficial Owner shall be deemed to be a shareholder or a
securityholder of the Company subject to the provisions thereof and
all determinations, paor notices thereunder shall be made by, given to
or received by the Beneficial Owners, not by the Escrow Agent. The
Escrow Agent's duty in connection therewith shall be solely to act
upon the Beneficial Owner's instructions in connection therewith and
confirm in writing the Transaction consummated and its holding of the
relevant Escrowed Securities in trust for the new Beneficial Owner
thereof.
3.4 Until the escrow hereunder is released, other than a Transfer, or
transmission by operation of law, of Shares or Convertible Securities
pursuant to the Transfer Terms, the Beneficial Owners shall not grant
any warrants, options or other rights whatsoever in respect of their
Shares or Convertible Securities and shall not pledge, hypothecate,
grant security interest, subject to a lien, mortgage or in any other
way encumber all or any part of the Shares or Convertible Securities
owned by them, or allow such Shares or Convertible Securities to be
under any lien or attachment.
4. EXERCISE OF ADDITIONAL OPTION BY PURCHASER
4.1 Upon receipt of written notice from any of the Holders, within 14 days
after receipt of written notice from the Purchaser of the exercise of
the Additional Option by the Purchaser, which of the Prices Per Share
(as the same are defined in the Purchase Agreement), the Escrow Agent
shall tabulate the votes received within such period of time and shall
determine, in a written notice to all parties hereto, which of the
Prices Per Share received the majority of votes of the participating
Holders (based on their share holdings in the Company at such time);
such determination shall be binding upon all the Holders entitled to
participate in said vote, whether or not they actually participated.
In the event that the Escrow Agent does not receive, within the
aforesaid period of time, any votes at all, it shall be deemed to be a
determination of the Holders to choose the Price Per Share in Cash.
4.2 Upon receipt of written notice from the Purchaser of the exercise of
the
Additional Option by the Purchaser in compliance with the
provisions of the Purchase Agreement, the Escrow Agent shall
execute share transfer deeds and such other documents as may be
required in order to transfer all Escrowed Securities held by it at
that time to Purchaser, and, upon confirmation of receipt by the
Beneficial Owners -- or deposit with the Escrow Agent for their
benefit -- of the agreed upon consideration therefor, as set forth
in the Purchase Agreement, the Escrow Agent shall deliver to the
Purchaser the Escrowed Securities, and, if applicable, such deeds
and other documents as may be required to transfer the Escrowed
Securities to the Purchaser, for execution by Purchaser and
delivery to the Company for registration of such transfer.
5. RELEASE OF SHARES AND CONVERTIBLE SECURITIES
If the Additional Option has not been exercised by the Purchaser, then,
upon the earlier of: (i) the expiration of the Additional Option Period, as
such term is defined in the Purchase Agreement, or (ii) the effective date
of a registration statement under the Securities Act of 1933, as amended,
or a similar document in connection with an initial public offering of the
Company's securities to the public, notification of which shall be given
immediately by the Company to all parties hereto, then, immediately after
such event the escrow hereunder shall terminate, and the Escrow Agent
deliver to the Beneficial Owners all Escrowed Securities, and, if
applicable, such deeds and other documents as may be required to transfer
the Escrowed Securities to the Beneficial Owners.
By execution hereof the Company approves, and represents that its Board of
Directors approved, such transfer of all Escrowed Securities to the
Beneficial Owners thereof, and covenants that upon termination of the
escrow hereunder, and transfer of all Escrowed Securities as aforesaid, it
shall register the Beneficial Owners as the holders of the Escrowed
Securities in its books and ledgers.
6. RELEASE OF ESCROW AGENT
All responsibilities and obligations of the Escrow Agent under the terms of
this Agreement shall terminate at such time as the Escrow Agent shall have
delivered or made available to the Purchaser, under Section 4, or to the
Beneficial Owners, under Section 5, all Escrowed Securities or deeds or
other documents required to transfer the Escrowed Securities to the
Purchaser or Beneficial Owners, as applicable. Such termination of Escrow
Agent's responsibilities and obligations shall not prejudice in any way or
manner Escrow Agent's rights hereunder, including under Sections 7 - 10
hereof.
7. ACTIONS OF ESCROW AGENT; REFUSAL TO ACT
7.1 The Escrow Agent shall be protected in acting upon any written notice,
request, waiver, consent, certificate, receipt, authorization or other
document that the Escrow Agent believes to be genuine, provided,
however, that Escrow Agent shall give all parties hereto prior written
notice of at least seven days before it takes any action -- or fails
to act -- based on such notice, document etc. The Escrow Agent may
absolutely rely upon a certificate of the Chairman of the Board of the
Company with respect to the occurrence of any action by or relating to
the Company. The Escrow Agent may confer with legal counsel in the
event the provisions hereof, or its duties hereunder, so require, and
it shall incur no liability and it shall be fully protected in acting
in accordance with the opinions and instructions of such counsel.
7.2 In the event of any disagreement resulting in adverse claims or
demands being made by the parties to this Agreement in connection with
any of the Escrowed Securities, or in the event that the Escrow Agent
is in doubt as to what action it should take hereunder, the Escrow
Agent may, at its option, refuse to comply with any claims or demands
on it, or refuse to take any other action hereunder, so long as such
disagreement continues or such doubt exists, and in any such event the
Escrow Agent shall not be or become liable in any way or to any person
for its failure or refusal to act, and the Escrow Agent shall be
entitled to continue to so refrain from acting until (a) the rights of
all parties have been adjudicated by a court of competent
jurisdiction, or (b) all differences shall have been adjudged or all
doubt resolved by agreement among the parties to this Agreement and
the Escrow Agent shall have been notified thereof in writing signed by
such parties. In addition to the foregoing remedies, the Escrow Agent
is hereby authorized, in the event of any doubt as to its course of
action, to petition a court of competent jurisdiction for
instructions. In any event, the Company hereby agrees to defend and to
hold the Escrow Agent harmless from all liability or loss occasioned
thereby and to pay any and all of its costs, expenses and attorneys'
fees incurred in any such action, and agrees that on such petition or
interpleader action the Escrow Agent, its servants, agents, employees
and officers will be relieved of any further liability.
8. ACTION OF ESCROW AGENT NOT CONCLUSIVE
For the avoidance of doubt the parties hereto confirm that their mutual
rights and obligations shall always be governed by the provisions of the
Purchase Agreement, and that the action or inaction of the Escrow Agent
hereunder, in any matter whatsoever, shall not change any of their
substantive rights under the Purchase Agreement.
9. FEES; REIMBURSEMENT OF EXPENSES
Escrow Agent shall be entitled to receive from the Company its fees, as
shall be agreed upon between Escrow Agent and the Company, and
reimbursement for all reasonable out-of-pocket expenses incurred by Escrow
Agent in the performance of its services hereunder.
10. INDEMNIFICATION
In connection with the performance of the escrow services hereunder (and of
any other or additional escrow services which may be requested in the
future), Escrow Agent shall not have or incur any liability whatsoever by
reason of any act or omission of Escrow Agent towards any peror entity,
whether a party to this agreement or not, whether based upon mistake of
fact or law, error of judgment, negligence or otherwise, on condition only
that the said acts or omissions are in good faith; and the Company shall
indemnify Escrow Agent and hold it harmless, against and from any and all
loss, cost, liability, damage or expenses which it may incur by reason of
any such act or omission, on the condition aforesaid.
11. RESIGNATION OF ESCROW AGENT
Escrow Agent may resign at any time upon thirty (30) days prior written
notice to the parties hereto. Upon the resignation of Escrow Agent, Escrow
Agent shall transfer the Escrowed Securities to the escrow agent appointed
to replace it, or according to the written instructions of all parties
hereto.
12. CONFIDENTIALITY
Escrow Agent shall maintain in the strictest confidence the contents and
subject matter hereof. Escrow Agent shall dispose of all documents
containing any such information which are in Escrow Agent's possession or
under its control, in accordance with written instructions in such regard
received from the Company from time to time.
13. PLURAL EXPRESSIONS
The terms Existing Shareholders, Beneficial Owners or Escrowed Securities
used herein shall always apply severally, in respect of each Existing
Shareholder or Beneficial Owner and the Escrowed Securities held on his,
her or its behalf, and there shall not be any joint liability upon, or
right of, the Existing Shareholders or the Beneficial Owners together.
14. AMENDMENT
This Agreement may not be modified or amended except by mutual written
agreement of all the parties hereto. However, a party hereto may waive the
observance of any of the terms hereof in respect of his or its rights only.
15. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns, provided,
however, that Escrow Agent shall have no right to assign or transfer the
Escrowed Securities to any party other than as specified in this Agreement.
16. FURTHER ASSURANCES
Consistent with the terms and conditions hereof, each party hereto will
execute and deliver such instruments certificates and other documents, and
take such other action as any other party hereto may reasonably require in
order to carry out the purpose of this Agreement and the transactions
contemplated hereby.
17. GOVERNING LAW
This Agreement shall be governed and enforced in accordance with the laws
of the State of Israel.
18. ENTIRE AGREEMENT
This Agreement contains the entire agreement of the parties with relation
to the subject matter hereof, and cancels and supersedes all prior and
contemporaneous negotiations, correspondence, understandings and agreements
(oral or written) of the parties relating to such subject matter.
19. SEVERABILITY
In case any one or more of the provisions contained in this Agreement shall
for any reason to be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein.
20. COUNTERPARTS
This Agreement may be executed in multiple counterparts, which taken
together shall constitute a single document.
21. NOTICES
Any notice under this Agreement shall be in writing and shall be deemed to
have been duly given for all purposes (a) seven (7) days after it is mailed
by registered mail; (b) upon the transmittal thereof by telecopier; or (c)
upon the manual delivery thereof, to the respective addressee or fax
numbers set forth herein or to such other address of which notice as
aforesaid is actually received.
If to the Company, at:
APTEL Ltd.
1 Ha'amanut Street, Netanya 42160
Fax: 09-851189
If to the Purchaser:
D.S.P. Semiconductors Ltd.
13 Gush Etzion Street, Givat Shmuel
Fax: 03-5323220
If to the Escrow Agent:
I. Fischer & Co. Trustees Ltd.
25 Ibn Gvirol Street, Tel Aviv
Fax: 03-5250141
If to any of the Existing Shareholders:
At the addresses set forth opposite each Existing Shareholder's
name on Exhibit A hereto.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
set forth above.
THE COMPANY :
_______________________
Aptel Ltd.
By:
PURCHASER:
__________________________
D.S.P. Semiconductors Ltd.
By:
THE ESCROW AGENT:
______________________________
I. Fischer & Co. Trustees Ltd.
By: __________________________
EXHIBIT A
THE EXISTING SHAREHOLDERS:
Dovrat Shrem/Yozma Polaris Fund L.P. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6963735
Dovrat Shrem & Co. Ltd. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6953137
Leader Underwriters Ltd. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6962888
Adasha Yizum Proyektim (Tel Aviv) Ltd. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6950489
El-Kanit Development Ltd. ________________________
By:
Address for Notices: 33 Yaavetz Street,
Tel Aviv; fax __________
Menachem Keinan ________________________
Address for Notices: ___________
______________________________
______________________________
Ofer Bar Or ________________________
Address for Notices: ___________
______________________________
______________________________
EXHIBIT 10.7
ISSUANCE OF NEW SECURITIES
If at any time until the closing of the IPO the Company proposes to issue and
sell New Securities, as defined below, it shall enable each of the Existing
Shareholders and the Purchaser ("Offerees") to maintain his or its proportionate
holdings of the share capital of the Company as follows:
1. DEFINITION
"NEW SECURITIES" shall mean any capital stock of the Company, whether or
not now authorized, and rights, options or warrants to purchase capital
stock, and securities of any type whatsoever that are, or may become,
convertible into capital stock; provided that the term "New Securities"
shall not include (i) shares of the Company issuable upon exercise of
options or warrants outstanding on the date hereof (including pursuant to
the Option and the Additional Option, as such terms are defined in the
Agreement); (ii) securities offered to the public; (iii) securities issued
pursuant to the acquisition of another corporation by the Company by
merger, purchase of substantially all the assets of another corporation or
any other reorganization whereby the Company owns not less than fifty-one
percent (51%) of the voting power of such corporation; (iv) securities
issued to employees, consultants or directors of the Company pursuant to
any stock option plan or stock purchases or stock bonus arrangement
approved by the Board of Directors of the Company; (v) securities issued
pursuant to payment of any dividend or distribution with respect to the
Company's issued and outstanding capital stock; (vi) securities issued to
any person or entity (other than an employee, director or shareholder of
the Company) in consideration of services rendered to the Company.
2. OFFER TO OFFEREES
In the event the Company undertakes an issuance of New Securities, it shall
give each Offeree written notice thereof, which notice may be given, at
the sole discretion of the Company, either concurrently with, or
following, such issuance, describing the type of New Securities and the
price and the terms upon which the Company proposes to issue the same,
and offering such Offeree to purchase such number of such New
Securities, at such price and on such terms, as is necessary for such
Offeree to retain the proportion of the Company's share capital which it
held immediately prior to such issuance. For the avoidance of doubt,
such proportion shall include any and all classes of shares of the
Company, such that an Offeree who is holding Ordinary Shares and Class A
Ordinary Shares shall be entitled to retain the aggregate proportion of
his holdings, provided, however, that the Company shall be bound to
offer to such Offeree, and he shall be only entitled to, shares of the
same class for each class of shares held by him (e.g., he shall be
offered, and entitled to purchase, only Class A Ordinary Shares in order
to retain the proportion of his holdings of shares of Class A Ordinary
Shares). Such Offeree shall have fourteen (14) days from the date of
such notice to accept such offer, in whole or in part, by written notice
to the Company, and to enter into an agreement with the Company with
respect thereto, provided that if the purchase by such Offeree is being
effected prior to, or concurrently with, such issuance of New Securities
(rather than subsequent thereto) then such Offeree shall be obligated to
consummate the purchase of such New Securities only if the Company
consummates the sale of the balance of the New Securities, pursuant to
the terms described in such notice.
3. SALE UPON REFUSAL
In the event that such offer is made to an Offeree prior to, or
concurrently with, such issuance of New Securities (rather than subsequent
thereto) and the Offeree fails to accept such offer as to all of the New
Securities apportioned to him or it, the Company shall have the right
within one hundred and twenty (120) days thereafter to sell or enter into
an agreement (pursuant to which the sale of New Securities covered thereby
shall be closed, if at all, within sixty (60) days from the date of said
agreement), to sell the New Securities as to which such offer was not
accepted, provided, however, that no such sale be effected at a price or
upon terms more favorable to the purchasers thereof than those specified in
the Company's notice pursuant to Section 2. In the event the Company has
not sold or entered into an agreement to sell such New Securities within
the periods specified above, the Company shall not thereafter issue or sell
such New Securities without first complying with the procedure set forth in
this Exhibit.
EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
The Company and the Persons whose name is set forth in Schedule A hereto
covenant and agree as follows:
1. DEFINITIONS. For purposes of this Exhibit:
1.1 The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such
registration statement or document;
1.2 The term "Registrable Securities" means the Ordinary Shares presently
held or hereinafter acquired by any of the shareholders of the Company
prior to the conversion of the Class A Ordinary Shares of the Company
to Ordinary Shares.
1.3 The term "Holder" means any Person holding Ordinary Shares of the
Company, whether or not he or it is a party hereto.
1.4 The term "Securities Act" means the U.S. Securities Act of 1933, as
amended.
1.5 The term "Public Corporation" means a corporation which has a class of
equity security registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or which is
required to file periodic reports pursuant to Section 15(d) of the
1934 Act.
1.6 The term "SEC" means the United States Securities and Exchange
Commission.
2. REQUIRED REGISTRATION
2.1 Subject to the further provisions of this Exhibit, any Holder or
Holders of at least a Majority (as such term is defined herein) of
Registrable Securities not previously registered may request, at
any time during the four-year period commencing nine months after
the date the Company becomes a Public Corporation, a registration
of all or part of his Registrable Securities. Within ten (10) days
after receipt of such request, the Company will serve written
notice of such registration request to all Holders and will,
subject to the further provisions of this Exhibit, include in such
registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within
twenty (20) business days after the receipt by the applicable
Holder of the mailing of the Company's notice. All requests made
pursuant to this Section 2.1 will specify the number of Registrable
Securities to be registered and will also specify the intended
method of disposition thereof. For purposes of this Section, the
term "Majority" means a majority of all Registrable Securities not
previously registered, or a majority of all Registrable Securities,
excluding any Registrable Securities held by D.S.P Semiconductors
Ltd. or any of its transferees or assigns, not previously
registered.
2.2 If the Holders initiating the registration request hereunder
("Initiating Holders") 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 2 and the Company shall include such information in the
written notice referred to in Section 2. 1. In such event, the right
of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such Holder) to the
extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall be responsible for
underwriting commissions and fees applicable to the sale of their
respective securities and shall (together with the Company as provided
in Section 4.5 below) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company and the Initiating Holders.
Notwithstanding any other provision of this Section 2, if the
underwriter advises the Company in writing that marketing factors
require a limitation of the number of shares to be underwritten, then
the Company shall be required to include in the offering only that
number of Registrable Securities of the Holders which the underwriters
believe will not jeopardize the success of the offering (reduced pro
rata among the participating Holders based upon the number of
Registrable Securities held by them).
2.3 The Company is obligated to effect, in the aggregate, only two (2)
required registrations pursuant to this Section 2. In addition, the
Company shall not be obligated to effect such registration unless the
Registrable Securities requested by all Holders to be registered
pursuant to this Section 2 have an anticipated aggregate public
offering price (before any underwriting discounts and commissions) of
at least US$4,000,000.
2.4 Notwithstanding the foregoing, if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 2 a
certificate signed by the Chairman of the Board of Directors of the
Company stating that in the good faith judgment of the Board of
Directors, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration
statement, the Company shall have the right to defer such filing for a
period of not more than one hundred twenty (120) days after receipt of
the request of the Initiating Holders.
3. INCIDENTAL REGISTRATION. If at any time after the Company becomes a Public
Corporation (but without any obligation to do so) the Company proposes to
register (including for this purpose a registration effected by the Company
for shareholders other than the Holders) any of its stock or other
securities under the Securities Act in connection with the public offering
of such securities solely for cash (other than a registration of securities
to be offered to employees pursuant to employee benefit plan on Form S-8, a
registration in connection with an exchange offer or any acquisition or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, each
such time, cause to be registered under the Securities Act all of the
Registrable Securities of each Holder requesting such registration, subject
to Section 7 hereof.
4. OBLIGATIONS OF THE COMPANY. Whenever required under this Exhibit to file a
registration statement with respect to the Registrable Securities, the
Company shall use its best efforts to, as expeditiously as reasonably
possible:
4.1 Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use it best efforts to cause such
registration statement to become effective, and keep such registration
statement current and effective for up to ninety (90) days.
4.2 Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement.
4.3 Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
4.4 Register and qualify the securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Holders;
provided that in no event shall the Company be required to qualify to
do business in any state or to take any action which would subject it
to general or unlimited service of process in any state where it is
not now so subject.
4.5 In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with terms
generally satisfactory to the managing underwriter of such offering.
Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
5. INFORMATION. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Exhibit that the selling
Holders shall furnish to the Company such information regarding themselves,
the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
6. EXPENSES OF REGISTRATION. All expenses incurred by the Company in
connection with any registration pursuant to this Exhibit (other than
underwriter's commissions and fees or any fees of others employed by a
selling Holder, including attorneys' fees), including without limitation
all registration, filing and qualification fees, printers' and accounting
fees, and fees and disbursements of counsel for the Company, shall be borne
by the Company.
7. UNDERWRITING REQUIREMENTS. In connection with any offering involving an
underwriting of securities being issued by the Company, the Company shall
not be required under Section 3 to include any of the Holders' securities
in such underwriting unless they accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it, and
then only in such quantity, if any, as will not, in the opinion of the
underwriters, jeopardize or in any way reduce the success of the offering
by the Company. If the total amount of Registrable Securities that all
Holders with registration rights under Section 3 request to be included in
such offering exceed the amount of such securities that the underwriters
reasonably believe compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of
Registrable Securities of the Holders which the underwriters believe will
not jeopardize the success of the offering; provided that the Registrable
Securities to be included in such case shall be apportioned pro rata among
the Holders based upon the total amount of Registrable Securities held by
them. For the avoidance of doubt, nothing herein shall limit in any way the
Company's sole and absolute discretion in selecting underwriters for an
offering by the Company.
8. INDEMNIFICATION. In the event any Registrable Securities are included in a
registration statement under this Exhibit:
8.1 To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the 1934 Act or any state
securities law or regulation, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation") : (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus -- or final prospectus
contained therein or any amendments or supplements thereto, (ii) 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, or (iii) any violation or alleged violation by the Company
of the Securities Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the 1934 Act
or any state securities law; and the Company will reimburse each such
Holder, officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in a connection
with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
contained in this Section 8.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if
such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
8.2 To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors and officers, any
underwriter (as defined in the Securities Act) for the Company, each
person, if any,
who controls the Company or any such underwriter within the meaning
of the Securities Act or the 1934 Act, and any Holder selling
securities in such registration statement or any of its directors
or officers or any person who controls such Holder against any
losses, claims, damages, or liabilities (or actions in respect
thereto) which arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, any person who controls the
Company, any underwriter or controlling person of any such
underwriter, any other such Holder, officer, director, or
controlling person in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 8.2
shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected
without the consent of the Holder (which consent shall not be
unreasonably withheld), and provided further that the obligations
of each selling Holder hereunder shall be limited to an amount
equal to the proceeds of each such selling Holder of the shares
sold by such selling Holder pursuant to such registration.
8.3 Promptly after receipt by an indemnified party under this Section 8.3
of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 8, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to
the parties. The failure to notify an indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability that it may have to
any indemnified party otherwise than under this Section 8.
9. REPORTS UNDER THE 1934 ACT. If the Company is a Public Corporation, then
with a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of
the SEC that may at any time permit a Holder to sell securities of the
Company to the public without registration or pursuant to a registration
form which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC, the Company
agrees to for up to three (3) years from the date the Company becomes a
Public Corporation:
9.1 Make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
9.2 File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the 1934 Act; and
9.3 Furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon reasonable request (i) a written statement
by the Company that it has complied with the reporting requirements of
the 1934 Act (at any time after it has become subject to such
reporting requirements), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation
of the SEC permitting the selling of any such securities without
registration or pursuant to such form.
10. LOCK-UP. In any registration of the Company's shares all Holders agree that
any sale of Registrable Securities shall be subject to a "lock-up" period
restricting such sales for up to one hundred and eighty (180) days, and all
Holders will agree to abide by such customary "lock-up" period of up to one
hundred and eighty (180) days with such customary terms as is required by
the underwriter in such registration, and will execute such underwriter's
standard form of lock-up agreement evidencing such obligation.
11. HOLDBACK. Each Holder that is not participating in a given Registration in
which Registrable Securities are included agrees not to sell or distribute
any shares of the Company during the period beginning fourteen days prior
to, and ending one hundred and eighty (180) days following, the effective
date of such registration, and will execute such customary form of
agreement evidencing such obligation.
12. THIRD PARTY BENEFICIARIES. This Agreement shall inure to the benefit of all
shareholders of the Company holding Ordinary Shares, whether or not they
are parties hereto.
13. AMENDMENT. This Agreement may be amended with the written consent of the
Company and the holders of at least 75% of the Ordinary Shares of the
Company then issued and outstanding, provided, however, that the terms of
any such amendment shall apply equally to all Holders.
SCHEDULE A to REGISTRATION RIGHTS AGREEMENT
LIST OF PARTIES
D.S.P. Semiconductors Ltd. ________________________
By:
Dovrat Shrem/Yozma Polaris Fund L.P. ________________________
By:
Dovrat Shrem & Co. Ltd. ________________________
By:
Leader Underwriters Ltd. ________________________
By:
Adasha Yizum Proyektim (Tel Aviv) Ltd. ________________________
By:
El Kanit Development Ltd. ________________________
By:
Menachem Kenan ________________________
Ofer Bar Or ________________________
EXHIBIT 10.9
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
THIS RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT (this "Agreement") is entered
as of ________, 1996, by and among the persons and entities whose names and
addresses appear on EXHIBIT A hereto (collectively, the "EXISTING
SHAREHOLDERS"), and D.S.P. SEMICONDUCTORS LTD., a company incorporated under the
laws of the State of Israel and having its principal offices at 13 Gush Etzion
Street, Givat Shmuel, Israel (the "PURCHASER"; the Existing Shareholders and the
Purchaser are hereinafter collectively referred to as the "SHAREHOLDERS").
WHEREAS, each of the Shareholders owns Ordinary and/or Class A Ordinary Shares
(collectively, "SHARES") of Aptel Ltd., an Israeli company (the
"COMPANY"); and
WHEREAS, the Shareholders wish to set forth in writing their agreements
regarding sales or transfers of such Shares in the future;
NOW, THEREFORE, the parties hereto agree as follows:
1. PROHIBITED TRANSFERS
In addition to any limitation applying to any of the Shareholders under
that certain Share Purchase and Shareholders Agreement entered into on the
date hereof among the Company, the Existing Shareholders, and the Purchaser
(the "INVESTMENT AGREEMENT"), the Shareholders shall not sell, assign or
transfer (collectively, "TRANSFER"), all or any part of the Shares (as
hereinafter defined) owned by them during the term of this Agreement other
than in compliance with the terms of this Agreement. For purposes of this
Agreement, the term "SHARES" shall mean and include all shares of the
Company and all rights to acquire shares of the Company owned by the
Shareholders, whether presently held or hereafter acquired.
2. PURCHASER RIGHT OF CO-SALE
2.1 If at any time any of the Existing Shareholders desires to Transfer in
any manner any Shares pursuant to the terms of a bona fide offer
received from a third party (in this Section, the "BUYER"), such
Existing Shareholder shall promptly notify the Purchaser and the
Purchaser shall have the right to require, as a condition to such
Transfer, that the Buyer purchase from the Purchaser at the same price
per share and on the same terms and conditions as involved in such
Transfer by the Existing Shareholder that percentage of the Shares
(regardless of whether the Shares consist of Ordinary or Series A
Ordinary Shares) proposed to be acquired by the Buyer (in this
Section, the "TRANSACTION SHARES") expressed by a fraction, the
numerator of which is the number of Shares then held by the Purchaser
and the denominator of which is the sum of (i) the aggregate number of
Shares then held by the Purchaser and (ii) the aggregate number of
Shares then held by the Existing Shareholders (such percentage shall
be referred to as the "PURCHASER CO-SALE PRO RATA PERCENTAGE").
2.2 The Purchaser shall act upon the Buyer's offer to buy within seven (7)
days after receipt of written notice delivered to the Purchaser by the
selling Existing Shareholder which fully describes the offer (in this
Section, the "CO-SALE OFFER'). In the event that the Purchaser shall
elect to participate in such Transfer, the Purchaser shall communicate
in writing such election to the selling Existing Shareholder within
the aforesaid period of time, and, if the Transfer to the Buyer is
consummated, Purchaser shall be entitled to Transfer to the Buyer as
part thereof the Purchaser Co-Sale Pro Rata Percentage of the
Transaction Shares, at the same price per share and on the same terms
and conditions as set forth in the Co-Sale Offer. If the Purchaser did
not respond within the aforesaid time period, it shall be deemed to be
refusing to participate in such Transfer.
2.3 If the Purchaser did not elect to participate in such Transfer, then
the selling Existing Shareholder shall be entitled to Transfer the
Transaction Shares to the Buyer at any time within 90 days thereafter,
subject to Section 4 hereof. Any such Transfer shall be at not less
than the price and upon other terms and conditions, if any, not more
favorable to the selling Existing Shareholder than those specified in
the Co-Sale Offer. Any Shares not sold within such 90-day period shall
continue to be subject to the requirements of this Section 2.
3. EXISTING SHAREHOLDERS RIGHT OF CO-SALE
3.1 If at any time the Purchaser desires to Transfer in any manner any
Shares pursuant to the terms of a bona fide offer received from a
third party (in
this Section, the "BUYER"), it shall promptly notify the Existing
Shareholders and the Existing Shareholders shall have the right to
require, as a condition to such Transfer, that the Buyer purchase
from the Existing Shareholders at the same price per share and on
the same terms and conditions as involved in such Transfer by the
Purchaser that percentage of the Shares (regardless of whether the
Shares consist of Ordinary or Series A Ordinary Shares) proposed to
be acquired by the Buyer (in this Section, the "TRANSACTION
SHARES") expressed by a fraction, the numerator of which is the
number of Shares then held by the Existing Shareholders and the
denominator of which is the sum of (i) the aggregate number of
Shares then held by the Purchaser and (ii) the aggregate number of
Shares then held by the Existing Shareholders (such percentage
shall be referred to as "EXISTING SHAREHOLDERS CO-SALE PRO RATA
PERCENTAGE").
3.2 The Existing Shareholders shall act upon the Buyer's offer to buy
within seven (7) days after receipt of written notice delivered to the
Existing Shareholders by the Purchaser which fully describes the offer
(the "CO-SALE OFFER'). In the event that one or more of the Existing
Shareholders shall elect to participate in such Transfer, each such
Existing Shareholder shall communicate in writing such election to the
Purchaser within the aforesaid period of time, and, if the Transfer to
the Buyer is consummated, such Existing Shareholders shall be entitled
to Transfer to the Buyer as part thereof the Existing Shareholders Co-
Sale Pro Rata Percentage of the Transaction Shares (to be allocated
among them pro rata to their holdings in the Company), at the same
price per share and on the same terms and conditions as set forth in
the Co-Sale Offer. If an Existing Shareholder did not respond within
the aforesaid time period, it shall be deemed to be refusing to
participate in such Transfer.
3.3 If none of the Existing Shareholders elected to participate in such
Transfer, then the Purchaser shall be entitled to sell or transfer the
Transaction Shares to the Buyer at any time within 90 days thereafter,
subject to Section 4. Any such Transfer shall be at not less than the
price and upon other terms and conditions, if any, not more favorable
to the Purchaser than those specified in the Co-Sale Offer. Any Shares
not sold within such 90-day period shall continue to be subject to the
requirements of this Section 3.
4. RIGHT OF FIRST REFUSAL
The Shareholders shall have a right of first refusal with respect to any
Transfer by a Shareholder of all or any of his or its shares in the
Company, and with respect to any transmission by operation of law of any
or all of his or its shares, as follows:
4.1 If at any time, after completing the procedures set forth in Sections
2 or 3, as applicable, any Shareholder wishes to Transfer any or all
Shares owned by him or it ("OFFEROR") pursuant to the terms of a bona
fide offer received from a third party, he shall submit a written
offer (the "OFFER") to sell such Shares (the "OFFERED SHARES") to the
other Shareholders ("OFFEREES") on terms and conditions, including
price, identical to those proposed by such third party; in the event
of transmission by operation of law of any or all of a Shareholder's
Shares, the Company shall give written notice of such transmission to
all Shareholders , and such notice shall be deemed to be an Offer to
purchase such Shares at their fair market value determined by an
appraiser agreed upon among the parties (the terms of the Offer are
referred to herein as the "PROPOSED TERMS"). The Offer shall disclose
the of the proposed purchaser or transferee, the Shares proposed to be
sold or transferred and the Proposed Terms..
4.2 Each Offeree shall have the right to purchase that number of the
Offered Shares as shall be equal to the aggregate Offered Shares
multiplied by a fraction, the numerator of which is the number of
Shares then held by such Offeree and the denominator of which is the
aggregate number of Shares then owned by all of the Offerees (such
fraction hereinafter referred to as the "PRO RATA FRACTION" of each
Offeree). Each Offeree shall have the right to accept the Offer only
as to all of the Pro Rata Fraction. In the event an Offeree does not
wish to purchase his Pro Rata Fraction of the Offered Shares, then any
other Offeree who so elects shall have the right to purchase, on a pro
rata basis with other Offerees who so elect, any Pro Rata Fraction of
Offered Shares not purchased by an Offeree. If the Offerees do not
elect to purchase all of the Offered Shares, then there shall be no
right to purchase Shares pursuant to this Section 2.
4.3 Within 14 days from the date of receipt of the Offer, each of the
Offerees shall give written notice to the Offeror (the "RESPONSE
NOTICE") whether he wishes to purchase his Pro Rata Fraction of the
Offered Shares, and whether he wishes to purchase, in addition, his
applicable Pro Rata Fraction of Offered Shares not purchased by other
Offerees, all pursuant to the Proposed Terms. If such Response Notice
has not been given by an Offeree within the aforesaid time period, he
shall be deemed to have refused to purchase his Pro Rata Fraction of
the Offered Shares.
4.4 At the expiration of the said 14 days: (i) if notices of Offerees who
expressed their wish to purchase Offered Shares have been received by
the Offeror in respect of all of the Offered Shares, the Offered
Shares shall be Transferred by the Offeror to such Offerees pursuant
to the Proposed Terms; (ii) in the event that the Offerees do not
elect to purchase all of the Offered Shares, then such Offered Shares
may be Transferred by such Offeror at any time within 90 days
thereafter. Any such Transfer shall be at not less than the price and
upon other terms and
conditions, if any, not more favorable to the purchaser than the
Proposed Terms. Any Shares not sold within such 90-day period shall
continue to be subject to the requirements of a prior offer and
right of first refusal pursuant to this Section 4.
5. PERMITTED TRANSFERS
5.1 The right of co-sale or first refusal contained in this Agreement
shall not apply to: (a) any Transfer of Shares by a Shareholder to any
member or members of his immediate family (which shall be deemed to
include a mother-in-law, father-in-law, brother-in-law and/or sister-
in-law); (b) with respect to any corporate Shareholder - any Transfer
to another corporate entity which controls, is controlled by, or is
under common control with such corporate Shareholder, or to one or
more of its shareholders, directors, officers or limited or general
partners, or to entities that manage or co-manage, directly or
indirectly, the Shareholder or any of its general or limited partners;
and (c) any Transfer between the Existing Shareholders.
5.2 In the event of any such Transfer, the transferee of the Shares shall
hold the Shares so acquired with all the rights conferred by, and
subject to all the restrictions imposed by, this Agreement and, as a
condition to such Transfer, shall execute a counterpart of this
Agreement as a party hereto.
6. OPTIONS, WARRANTS, PLEDGES, LIENS ETC.
Other than a Transfer, or transmission by operation of law, of shares
pursuant to the provisions of this Agreement, the Shareholders, during the
term of this Agreement, shall not grant any warrants, options, or other
rights whatsoever with respect to their Shares of the Company and shall not
pledge, hypothecate, grant security interest, subject to a lien, mortgage
or in any other way encumber all or any part of the Shares owned by them,
or allow such Shares to be under any lien or attachment.
7. TERMINATION
This Agreement shall terminate upon the earlier of: (i) the end of 30
months from the date hereof, except that (x) if Purchaser exercised the
Option (as such term is defined in the Investment Agreement), this period
shall be extended, in respect of Sections 3 and 5 only - to 48 months from
the date hereof, and (y) in respect of Sections 4 and 5, this clause (i)
shall not apply; (ii) the exercise of the Additional Option (as such term
is defined in the Investment Agreement) by Purchaser, and, in respect of
Section 2 only, the exercise of the Option (as such term is defined in the
Investment Agreement) by Purchaser, or (iii) the effective
date of a registration statement under the Securities Act of 1933, as
amended, or a similar document in connection with an initial public
offering of the Company's securities to the public.
8. SPECIFIC PERFORMANCE
The rights of the parties under this Agreement are unique and, accordingly,
the parties shall, in addition to such other remedies as may be available
to any of them at law or in equity, have the right to enforce their rights
hereunder by actions for specific performance to the extent permitted by
law.
9. GENERAL PROVISIONS
9.1 This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matters
hereof and thereof, and supersedes all prior agreements between all or
some of the parties hereof with regard to such subject matter;
however, notwithstanding any provision of this Agreement to the
contrary, the Shareholders hereby agree that any Transfer of Shares is
expressly subordinate and subject to the provisions of the Investment
Agreement, and, specifically, to the provisions of that certain Trust
Agreement entered into on the date hereof among the Existing
Shareholders, the Purchaser, the Company and others.
9.2 Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given for all purposes (a) when received or
seven (7) days after it is mailed by prepaid registered mail; (b) upon
the transmittal thereof by telecopier; or (c) upon the manual delivery
thereof, to the respective addressee or fax numbers set forth above or
herein or to such other address of which notice as aforesaid is
actually received.
9.3 The parties hereto agree upon request to execute any further documents
or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
9.4 This Agreement may not be assigned by any of the parties hereto except
as set forth in the Investment Agreement or in the Memorandum and
Articles of Association of the Company. Upon such permitted
assignment, the provisions hereof shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto.
9.5 Any term of this Agreement may be amended only with the written
consent of all of the parties to this Agreement. However, a party
hereto
may waive the observance of any of the terms hereof in respect of his
or its rights only.
9.6 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 therefore 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.
9.7 All remedies, either under this Agreement or by law or otherwise
afforded to any of the parties, shall be cumulative and not
alternative.
9.8 This Agreement shall be governed exclusively by and construed solely
in accordance with, the laws of the State of Israel. The parties each
hereby agrees to the exclusive jurisdiction of the appropriate courts
of the State of Israel, the District of Tel Aviv.
9.9 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.
9.10 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.
IN WITNESS WHEREOF the parties have signed this Agreement as of the date first
herein above set forth.
PURCHASER:
__________________________
D.S.P. Semiconductors Ltd.
By:
EXHIBIT A
THE EXISTING SHAREHOLDERS:
Dovrat Shrem/Yozma Polaris Fund L.P. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6963735
Dovrat Shrem & Co. Ltd. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6953137
Leader Underwriters Ltd. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6962888
Adasha Yizum Proyektim (Tel Aviv) Ltd. ________________________
By:
Address for Notices: 37 Shaul Hamelech Blvd.,
Tel Aviv; fax 03-6950489
El-Kanit Development Ltd. ________________________
By:
Address for Notices: 33 Yaavetz Street,
Tel Aviv; fax __________
Menachem Kenan ________________________
Address for Notices: ___________
______________________________
______________________________
Ofer Bar Or ________________________
Address for Notices: ___________
______________________________
______________________________
EXHIBIT 10.11
BUDGET (USE OF PROCEEDS)
APTEL LTD.
BUDGET Q3-Q4/96, 1997
PREPARED BY:
JACK HOTZ / FINANCIAL MANAGER DSP GROUP
MENACHEM KENAN / GENERAL MANAGER APTEL
TABLE OF CONTENTS
ACTIVITIES
2-Way paging:
Telemetry:
Cordless:
POTENTIAL PARTNERS / CUSTOMERS
2-Way paging:
Telemetry:
Cordless:
BURN RATE
Personnel:
REVENUES
2-Way paging:
Telemetry:
Cordless:
P&L
ASSUMPTIONS
ACTIVITIES
2-WAY PAGING:
APTEL Ltd. has developed a two way paging concept which allows paging
operators to offer full coverage service from the very first day of
operation. This approach is made possible by the use of very large
cells ( receiving base stations ), which operate in Direct Sequence
Spread Spectrum modulation. The capacity of the system can be
increased as the number of subscribers grows
[ * ] .
APTEL designs the receiving base stations, the center control
management station, and the 2-way pagers hand sets.
TELEMETRY:
Paging operators worldwide are seeking to diversify their services
from man-to-man, to man-to-machine and machine-to-man. A modification
of the APTEL 2-way pager will allow paging operators to penetrate a
whole new array of services including:
[ * ]
. The commonality in the R&D effort if very high
between with the 2-way pager and telemetry project. The receive base
station are literally the same, and major parts of the network
management center can be utilized in telemetry projects.
[ * ]
.
CORDLESS:
APTEL has developed unique expertise in Spread Spectrum Direct
Sequence modulation, a method which became the preferred
implementation in 900 MHz spread spectrum cordless telephones. DSP
Group Inc., a leading TAD chip provider and a major share holder in
APTEL, has submitted an application to BIRD F for the design of a DSP
chip as well as an RF module for cordless application.
[ * ]
.
[ * ] Confidential Treatment Requested
POTENTIAL PARTNERS / CUSTOMERS
2-WAY PAGING:
[ * ]
TELEMETRY:
[ * ]
[ * ] Confidential Treatment Requested
CORDLESS:
[ * ]
[ * ] Confidential Treatment Requested
BURN RATE
PERSONNEL:
R&D:
12 engineers are now employed in APTEL. In order to fulfill its tasks,
APTEL plans to add engineers at a rate of [ * ] per month to a total
of [ * ] in mid 97. The average expense per engineer per year as
estimated at $ [ * ] US. Hence the current R&D expense of $[ * ] is
expected to rise to $[ * ], linearly, by 97.
G&A:
Current G&A expense are $ [ * ] . As APTEL starts selling and
manufacturing, its G&A expenses are expected to reach about
$ [ * ]
MARKETING:
Today, the marketing department includes [ * ] . It is projected
that the following functions will be added during the course of the
next 12 months:
[ * ]
.
OPERATIONS:
APTEL plans to recruit [ * ] individuals to supervise the
following functions:
[ * ]
[ * ] Confidential Treatment Requested
REVENUES
2-WAY PAGING:
First revenues are expected in [ * ] assuming that APTEL will
conclude a business deal with either [ * ] or similar major paging
vendor. In the case of [ * ], quantities in [ * ] are expected to
reach [ * ] 2-way pagers, for which APTEL expects to receive between
[ * ] dollars for each pager produced.
APTEL is also hoping to receive revenues from licensing of its
technology, however such revenues are more likely to be accepted after
a deal with [ * ] is signed.
TELEMETRY:
First revenues are expected in [ * ] assuming that APTEL will invest
in its production capabilities. Each transceiver is expected to sell
for approximately $ [ * ] US. in the first year of sales, APTEL
expects to sell about [ * ] units which may result in gross revenues
over $[ * ] and a gross profit of $ [ * ] .
CORDLESS:
[ * ] .
[ * ] Confidential Treatment Requested
P&L
- ---
Q3-Q4 1996 Q1-Q4 1997
----------- ----------
$ $
- -
REVENUES
2-way paging [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Telemetry [ * ] [ * ]
----------- ----------
Total Revenues [ * ] [ * ]
----------- ----------
EXPENSES
OPERATIONS
Salaries [ * ] [ * ]
Other [ * ] [ * ]
----------- ----------
[ * ] [ * ]
----------- ----------
R&D
SALARIES [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
Period 7-12/97 [ * ]
MATERIALS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
SUBCONTRACTORS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
TRAVEL [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist
PATENTS [ * ] [ * ]
Other [ * ] [ * ]
----------- ----------
[ * ] [ * ]
----------- ----------
GENERAL, ADMIN & MARKETING
Salaries & related expenses [ * ] [ * ]
Rent & related expenses [ * ] [ * ]
Office expenses [ * ] [ * ]
Travel [ * ] [ * ]
Professional fees [ * ] [ * ]
Marketing expenses -travel [ * ] [ * ]
Other [ * ] [ * ]
----------- ----------
[ * ] [ * ]
----------- ----------
----------- ----------
Total Expenses [ * ] [ * ]
----------- ----------
[ * ] Confidential Treatment Requested
----------- ----------
Profit/(Loss) [ * ] [ * ]
----------- ----------
----------- ----------
[ * ] Confidential Treatment Requested
REFUND FROM CHIEF SCIENTIST /BIRD FOUNDATION
SALARIES [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
MATERIALS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
SUBCONTRACTORS [ * ] [ * ]
BIRD F (Cordless) [ * ] [ * ]
Chief Scientist [ * ] [ * ]
TRAVEL
BIRD F (Cordless) [ * ] [ * ]
PATENTS
Chief Scientist [ * ] [ * ]
-------- --------
[ * ] [ * ]
-------- --------
-------- --------
Net Results [ * ] [ * ]
-------- --------
-------- --------
[ * ] Confidential Treatment Requested
ASSUMPTIONS
1. The direct cost of an engineer is in the region of $[ * ] per year.
2. [ * ] engineers are going to be added during the next [ * ] months. [ * ]
production personnel will be added within [ * ] months. [ * ] marketing
personnel will be added. [ * ] G&A personnel will be added.
3. All expenses besides salaries have been based on the level of expenses
incurred during the 1995 year, taking into account adjustments for staff
increases.
4. The refund from the Chief Scientist in 1996 has been calculated at a
rate of $ [ * ] per man month for salaries of R&D engineers and [ * ] of
cost of materials and subcontractors.
5. Revenues are based on assumption that the above resources are put into
place.
[ * ] Confidential Treatment Requested
Exhibit 10.12
BIRD Application
PROPOSAL
To: ISRAEL-U.S. BINATIONAL RESEARCH AND DEVELOPMENT FOUNDATION
From: APTEL LTD, KIRIAT NORDAU NEW IND. PARK
NETANYA, ISRAEL
Tel: 09-851201 Fax:09-851189
DSPG INC. 3120 SCOTT BOULEVARD SANTA CLARA
CA 94303, USA
Tel 408-986-4300: Fax 408-986-4442
PROJECT TITLE: [*]
PROJECT BUDGET: First
Project
Period
Project Duration: [*] months
Project Cost: $[*]m
submitted by: Israeli Company Officer U.S. Company Officer
Signature /s/ MENACHEM KENAN /s/ OFFER RONEN
----------------------- --------------------
Printed Name Menachem Kenan Offer Ronen
Date Submitted: March 31st, 1996
Preferred date for project funding(1): July 1st, 1996
[*] Confidential Treatment Requested
Full Scale BIRD F. Project Proposal
March 31st, 1996
DSP Group - APTEL
[*]
[*] - Table Of Contents
1. EXECUTIVE SUMMARY (C)
1.1 GENERAL BACKGROUND
1.1.1 DSP GROUP AND APTEL
1.1.2 PROJECT SUMMARY
1.2 [*] - THE INNOVATION
1.2.1 PROJECT OBJECTIVES (C1)
1.2.2 COLLABORATIVE RELATIONSHIP
1.2.3 NON BIRD FUNDING
1.3 COMMERCIAL POTENTIAL (C2)
1.3.1 WORLDWIDE MARKET
1.3.2 [*] CHIP SET PRICES
1.3.3 PROJECTED REVENUES
1.4 CAPABILITIES AND PERFORMANCES OF DSPG & APTEL IN RELATED AREAS. (C3)
1.4.1 DSP GROUP, INC.
1.4.2 APTEL, LTD.
1.4.3 COMPETITIVE EDGE
1.5 PREVIOUS BIRD PROJECTS (C4)
1.5.1 APTEL
1.5.2 DSP GROUP
[*]
2. THE INNOVATION (D)
2.1 THE CURRENT SOLUTIONS (D1)
2.2 THE CURRENT DEFICIENCIES (D2)
2.3 THE DSP GROUP - APTEL APPROACH (D3)
2.4 THE UNIQUENESS (D4)
2.5 BUDGET AND GANTT (D5)
2.6 PATENTS (D6)
2.7 STANDARDS (D7)
3. PROPOSED R&D PROGRAM (E)
3.1 ANALYSIS OF THE PROBLEM (E1)
3.1.1.1 [*] CHIP SPECIFICATION (E.1.a)
3.1.1.2 [*] MODULE SPECIFICATION (E.1.a)
3.1.1.3 [*] MODULE SPECIFICATION (E.1.a)
3.1.2 KEY TECHNOLOGICAL ISSUES PERTAINING TO 3.1.1 (E.1.b)
3.2 PROPOSED APPROACH (E.2)
3.2.1 WORK PLAN ( TASKS DESCRIPTION ) (E.2.a)
3.2.2 RELEVANT TECHNOLOGIES IN DSP GROUP AND APTEL (E.2.b)
3.2.3 TECHNICAL AND/OR ECONOMICAL CONSTRAINTS (E.2.c)
3.2.4 IDENTIFICATION AND DETAILED DESCRIPTION OF EACH TASK (E.2.d)
4. PROGRAM PLAN (F)
[*] Confidential Treatment Requested
4.1 BLOCK DIAGRAM
4.1.1 CHIP SET BLOCK DIAGRAM
4.1.2 DETAILED ASIC PART BLOCK DIAGRAM
4.2 GANTT CHART
4.2 MANPOWER LOADING CHART
5. THE MARKET (G)
5.1 GENERAL (G1)
5.1.1 MARKET NEEDS
5.1.2 SIMILAR PRODUCT LINES OF DSP GROUP AND APTEL SOLD TO THIS MARKET
5.1.3 THE BASIS FOR THIS MARKET NEED
5.2 PRICE PERFORMANCE AND ASSOCIATED MANUFACTURING COSTS (G2)
5.2.1 FEATURES & PRICES
5.2.2 PRODUCTION COST
5.2.3 COMPETITIVE PRICES
5.3 MARKETING ASPECTS (G3)
5.3.1 WORLDWIDE MARKET
5.3.2 CURRENT MARKETING CHANNELS OF DSPG
5.3.3 MARKET GROWTH PATTERN
5.3.4 MARKET SHARE AND NUMBER OF UNITS SOLD PER ANNUM
5.3.5 UNITS SELLING PRICE GRAPH
5.4 REGULATORY ISSUES (G4)
5.5 COMPETITION (G5)
5.5.1 CURRENT PLAYERS
5.5.2 COMPETITION IMPACT ON DSP GROUP-APTEL PRODUCT
6. COMMERCIALIZATION - PLANS AND PROSPECTS (H)
6.1 PRODUCTION (H1)
6.2 MARKETING CHANNELS (H2)
6.3 CURRENT DISTRIBUTION NETWORK (H3)
6.4 FINANCIAL RESOURCES (H4)
7. COOPERATION AND BENEFITS (I)
8. ORGANIZATION AND MANAGEMENT PLAN (J)
8.1 PROCEDURES AND MEETINGS (J1)
8.2 PROJECT ORGANIZATION STRUCTURE (J2)
8.3 STAFF (J3)
9. THE COMPANIES AND PROJECT PERSONNEL (K)
9.1 COMPANIES' BACKGROUNDS, OWNERSHIP, & MAIN BUSINESS
9.2 THE SYNERGISM OF THIS PROJECT WITH THE COMPANIES' ACTIVITIES
9.3 DESCRIPTION OF PREVIOUS BIRD PROJECTS
9.4 FINANCIAL RECORDS ( ANNUAL REPORTS)
9.5 KEY PERSONNEL ( RESUME)
10. PROJECT BUDGET (L)
10.1 CASH FLOW:
10.2 PROPOSED PROJECT BUDGET
1. EXECUTIVE SUMMARY (C)
1.1 GENERAL BACKGROUND
1.1.1 DSP GROUP AND APTEL
- -------------------------------------------------------------------------------
ISRAELI COMPANY US COMPANY
--------------- ----------
- -------------------------------------------------------------------------------
COMPANY NAME APTEL Ltd. DSP Group, Inc.
- -------------------------------------------------------------------------------
Year Established 1993 1987
- -------------------------------------------------------------------------------
Revenues; Most recent
fiscal year Has not started to sell yet $ 50 M
- -------------------------------------------------------------------------------
Increase/ (decrease)
over previous year N/A 75 %
- -------------------------------------------------------------------------------
Number of employees 15 106
- -------------------------------------------------------------------------------
Ownership Private Public
- -------------------------------------------------------------------------------
Number of previous
BIRD Projects None Two
- -------------------------------------------------------------------------------
1.1.2 Project Summary
- -------------------------------------------------------------------------------
EXPECTED PROJECT TITLE: [*] Chip Set
- -------------------------------------------------------------------------------
ESTIMATED PROJECT BUDGET: $ [*] M
- -------------------------------------------------------------------------------
EXPECTED PROJECT DURATION: [*] Months
- -------------------------------------------------------------------------------
[*] Confidential Treatment Requested
1.2 Digital Cordless - The Innovation
1.2.1 Project Objectives (C1)
APTEL and DSP Group will join forces and resources to provide
solutions to the rapidly growing [*] market. Initially
the companies will target the [*], however second phase activities
[*].
This project proposal includes the definition & development of a cost-
effective [*].
The [*] chip will perform the following functions: [*].
[*]
The technology and capabilities developed as a result of this project
will lead APTEL and DSP Group into a number of other adjacent markets
including the [*] markets.
[*]
1.2.2 Collaborative Relationship
The project responsibilities will be shared between the companies as
follows:
APTEL will be responsible for the development of the [*].
DSP Group will lead the development of the [*].
[*] Confidential Treatment Requested
1.2.3 Non BIRD Funding
The non BIRD funding will be matched by APTEL and DSP Group. DSP Group
plans to invest in APTEL for an equity stake in the company. In
addition, DSP will allocate and hire additional people to develop the
[*]. APTEL will invest in the development of the [*].
During commercialization, APTEL will receive from DSP Group a per unit
[*] royalty for each unit sold.
[*] Confidential Treatment Requested
1.3 Commercial Potential (C2)
1.3.1 Worldwide Market
Forward Concepts, a market research firm, estimates that
in 1996, [*] will represent [*] of the US market and that
[*] will represent [*]. The average selling price
("ASP") of a [*] is roughly $[*], the ASP of a
[*] is - $ [*], and that of a [*] is $[*]. ASP doesn't
vary much because added functionality is provided
through software which doesn't impact product cost.
Worldwide [*] sales are predicted to grow dramatically,
and [*] market share is predicted to grow from [*]
in 1995 to roughly [*] in year 1999.
The DSP chip market for [*] telephony will be total $[*]
in year 2000, while the [*] chip market will be total $[*]
in the same year.
This forecast does not include other [*] technologies and
standards, such as [*] which will function at [*]. We
expect that our involvement in the [*]
business will allow an easier migration into [*].
[*] Confidential Treatment Requested
1.3.2 [*] Chip Set Prices
Each [*] will contain [*]. Our target
prices for each [*] are $ [*] respectively.
Obviously, these prices will drop over time. Some of our customers
will buy both [*] chips while others who have their own [*] will
purchase only the [*] chip.
ESTIMATED PRICES OF THE DSPG/APTEL CHIPS:
[*]
Based on previous experience in chip manufacturing, we have estimated
that our total manufacturing cost would be approximately [*] of our
selling price.
1.3.3 Projected Revenues
Assuming a market share of roughly [*] in year 2000 and the above chip
price, DSP and APTEL predict that revenues from selling [*]
will grow according to the following table:
PROJECTED REVENUES FROM SELLING [*]
[*]
Note:
The repayment to BIRD Foundation will be based on Actual Revenues on
the sale of [*] sales.
[*] Confidential Treatment Requested
1.4 Capabilities and performances of DSPG & APTEL in related areas. (C3)
1.4.1 DSP Group, Inc.
Founded in 1986, DSP Group is a global leader in the development and
marketing of high-performance, cost-effective digital signal
processing (DSP) solutions for the consumer telephone, computer
telephony and personal computer industries. By combining three key
technologies -- speech processing algorithms, telephony algorithms and
digital signal processors -- the company has delivered a wide range of
DSP based products to manufacturers of telephones, computers and
consumer electronics.
DSP Group pioneered low-power digital signal processing for telephone
answering devices (TAD), which has become a major aspect of the
company's business. In addition to the chips for the TAD market, DSP
Group has recently introduced three new speech co-processors for the
PC market. DSP Group also licenses its internally developed DSP cores
(PineDSPCore-TM- and OakDSPCore-TM-) and the TrueSpeech compression
algorithms to a variety of PC software, hardware and semiconductor
manufacturers.
1.4.2 APTEL, Ltd.
APTEL specializes in the design of low-power RF circuitry for mobile
applications.
Since its inception in 1993, the company developed unique expertise in
the design of miniaturized RF devices which require complex power
management in the [*]. Much of APTEL's technology rests in
the implementation of Direct Sequence Spread Spectrum modulation
which is the method most frequently employed in [*].
APTEL's RF capabilities supplement the strength which DSP Group
brings to this joint project, and will facilitate the introduction of
a [*].
1.4.3 Competitive Edge
1.4.3.1 Integrated, low-cost, low-power solution:
Both DSP Group and APTEL have low-cost, low-power solutions. The
combination of DSP Group's DSP and VLSI expertise coupled with APTEL's
[*] expertise will, facilitate the introduction of
a very competitive low-power, low cost offering for the cordless
market. This will allow us to introduce integrated chip sets for
prices which are at least [*] lower than the competition.
1.4.3.2 Strong marketing and sales channels:
DSP Group will market these products through its existing TAD
(Telephone Answering Device) channels. DSP Group has the largest
market share (over [*]) of the digital TAD chip market and is
recognized as the technology leader in this market.
Most of DSPG's TAD customers have already introduced or are
considering introducing [*]. Currently, over [*] of
DSPG's TAD chips are incorporated with [*] units. The
feedback DSP has received from its customers is that by [*] many of
its customers plan to develop [*].
[*] Confidential Treatment Requested
DSP has already contacted several of its major customers regarding the
proposed DSP/APTEL solution and received a very positive response that
indicates strong sales potential.
1.4.3.3 Proven, leading technologies
DSP and APTEL intend to use their advanced technologies in the
proposed [*] product. These include the DSP core architecture,
and telephony and speech algorithms (including [*]
offered by DSP, as well as the [*].
[*] Confidential Treatment Requested
1.5 Previous BIRD Projects (C4)
1.5.1 APTEL
APTEL was not involved in BIRD projects in the past. The company has
informed the BIRD foundation of potential projects in the past, and
meetings have been held with third parties.
Individuals within APTEL management have worked before with the BIRD
F. in their previous capacities and successfully defined and completed
BIRD projects.
1.5.2 DSP Group
DATE PROJECT NO. PROJECT NAME MONEY RECEIVED REPAYMENT
$ $
- --------------------------------------------------------------------------------
01/10/88 434 DSP Based TAD [*] [*]
(Telephone
Answering Device)
01/11/89 475 DSP Based Chip Set [*] [*]
for an Integrated
Fax/Speakerphone/
TAD Machine
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2. The Innovation (D)
[*]
[*]
2.1 The Current Solutions (D1)
[*]
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[*]
Existing solutions are illustrated in the following figure :
[*]
[*]
A few companies, most prominently [*]
have recently announced [*] chip sets, which
perform [*]. Those solutions use a costly, complex
design and are very expensive. In addition, they do not include a
[*] such as those are available from DSP Group.
Other suppliers that have already entered the [*] market include
[*]. Other competitors targeting the
same market with partial solutions include: [*].
[*] Confidential Treatment Requested
2.2 The Current Deficiencies (D2)
[*] currently carry high retail prices ([*]),
which have limited sale volumes. Lack of open
standards in the [*], and to the home and/or office has also
limited sales.
[*]
As mentioned earlier, [*] tends to be more complex than
digital sections implementation and therefore more time consuming.
As of yet, no vendor offers [*].
2.3 The DSP Group - APTEL Approach (D3)
DSP Group and APTEL have joined forces to develop a [*]
chipset which can support [*].
Initially, the companies aim to produce a chip which will support
[*]. This chip [*] will support [*]. DSPG and APTEL will
provide application notes and reference designs.
[*]
The design of the [*] will be more involved than that of the
[*] chip. DSP Group and APTEL will consider providing the
customer with [*]. [*] This project
proposal pertains to the development of the [*]
which will sell it. It corresponds to stage 1 and stage 2
of section 3.2.
2.4 THE UNIQUENESS (D4)
APTEL expertise in [*], coupled with DSP
Group's capabilities in DSP design, create an opportunity to introduce
a [*] chipset solution which will be unique in the
marketplace.
Most vendors provide either [*] and
leave the integration phase to the OEM customer. This approach creates
a long time-to-market factor which could be eliminated by the DSP
Group-APTEL approach.[*]
DSP Group has DSP expertise in speech and telephony algorithms. In
addition, DSP has developed proprietary DSP cores, PineDSP Core and
OakDSP Core, which are state of the art DSP processors with wide
endorsement in the DSP marketplace. (See appendix B.) DSPG'S
[*] Confidential Treatment Requested
licensee list consist of more than 24 licensees including - Siemens,
NEC, Samsung, LSI Logic, VLSI Technology, GEC Plessey and TEMIC. The
OakDSPCore is a second generation DSP from DSPG. It is a 16 bit,
fixed point DSP which reaches over 40 MIPS in a 0.6u process. Both the
Pine and Oak cores have smart power management which lends itself to
the high demands of the [*] market. See attachment Appendix B on
PINE and OAK specifications.
DSP Group's ability to include TAD and voice compression features in
the same chip set, facilitates the introduction of a uniquely powerful
chipset. DSP Group possesses over [*] of the world digital TAD chipset
market. The chips are based on the Pine and Oak cores and employ
TrueSpeech, a DSP voice compression algorithm licensed to leading
computer and telephony suppliers worldwide.
2.5 BUDGET AND GANTT (D5)
The R&D phase is expected to last [*] months, and upon its completion
DSPG and APTEL expect to introduce a [*]. The estimate cost of the
project is $[*] million, derived from the gantt chart and budget
described in later sections.
2.6 PATENTS (D6)
Neither DSP Group nor APTEL have applied for specific patents
pertaining to [*] in the [*]. However, some of
the existing technologies to be incorporated in the new product
[*] are based on
existing intellectual properties belonging to DSPG and APTEL. [*]
2.7 STANDARDS (D7)
There are no standards governing the use of [*] within
the [*]. The [*] need to comply with [*]. However,
no rules apply to [*].
[*] standards are emerging which provides an opportunity
to develop a chipset which will be compatible with the new digital
standards. This approach will allow the sale of chips along with other
vendors chipsets.
[*] Confidential Treatment Requested
3. Proposed R&D Program (E)
3.1 ANALYSIS OF THE PROBLEM (E1)
Numerous issues need to be addressed:
- Marketing Channels - DSP Group has a comprehensive distribution
network for its current products. We need to
examine the importance of including features
or products from DSP Group's current
offerings in this chipset, to ensure easier
penetration to the existing install base of
customers. We expect to determine the
appropriate set of features during the first
two months of the project.
- Digital Standards - The implementation of a standard protocol
has clear advantages over a proprietary are
[*] currently appears to be the most
promising standard. It seems [*] could
be obtained from vendors who have already
implemented this protocol.
[*]
3.1.1.1 [*] SPECIFICATION (E.1.a)
[*]
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3.1.1.2 [*] MODULE SPECIFICATION (E.1.a)
[*]
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3.1.1.3 [*] MODULE SPECIFICATION (E.1.a)
[*]
3.1.2 KEY TECHNOLOGICAL ISSUES PERTAINING to 3.1.1 (E.1.b)
- The implementation of the [*] chip using the Pine and/or Oak DSP
cores.
- The inclusion of a [*] protocol in
the [*] chip
(Technical tasks are reasonable straight forward)
[*] Confidential Treatment Requested
3.2 Proposed Approach (E.2)
[*]
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3.2.1 Work Plan (Tasks Description ) (E.2.a)
The H/W developed in the first stage of the project will be the base
for all stages. The work includes [*].
Stage 1 will include the following tasks:
DEFINITION - [*] MONTHS
[*]
HIGH LEVEL LOGIC DESIGN (VERILOG) - [*] MONTHS
[*]
CIRCUIT & LAYOUT - [*] MONTHS -
[*]
CHIP INTEGRATION - [*] MONTHS.
[*]
[*] SOFTWARE DEVELOPMENT - [*] MONTHS ( THROUGH ALL H/W DESIGN
STAGES)
[*]
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[*]
MILESTONES
[*]
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3.2.2 RELEVANT TECHNOLOGIES IN DSP GROUP AND APTEL (E.2.b)
APTEL
[*] [*]
Power Supply [*]
DSP GROUP
[*] Design [*]
Voice Compression [*]
Other TAD / Telephony Algorithms
[*]
3.2.3 Technical and/or Economical Constraints (E.2.c)
The target chip-set has to meet the following constraints:
[*]
Advanced power management (in standby mode)
The [*] will be designed from discrete components and will be
used as a reference design in the first design stage. A commercial
[*] will be designed in the second stage. It will marketed to
customers without [*] capabilities. A more integrated solution,
which will include a hybrid implementation of [*]
is considered as a future project.
Concerning economical issues, the non BIRD funding will be matched by
APTEL and DSP Group. DSP Group plans to invest in APTEL for an equity
stake in the company. In addition, DSP will allocate and hire
additional people to develop the [*]. APTEL will invest in the
development of the [*]. During commercialization, APTEL will receive
from DSP Group a per unit [*] royalty for each unit sold.
[*] Confidential Treatment Requested
3.2.4 IDENTIFICATION AND DETAILED DESCRIPTION OF EACH TASK (E.2.d)
(see Program Section)
Chip Design stages and tools :
Definition :
[*]
CHIP BASIC PARTITION :
[*]
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[*]
[*] Confidential Treatment Requested
LOGIC DESIGN :
[*]
CIRCUIT DESIGN :
[*]
LAYOUT DESIGN :
[*]
TAPEOUT :
[*]
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[*]
SW DESIGN :
[*]
DETAILED TASK DESCRIPTION
[*]
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[*]
[*] Confidential Treatment Requested
[*]
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4. Program Plan (F)
4.1 Block Diagram
4.1.1 Chip set Block diagram
The product proposed by DSP Group and APTEL will look like that:
[ * ]
[ * ] Confidential Treatment Requested
The [ * ] is capable of handling most of the control functions needed in
the system.
[ * ]
4.1.2 Detailed [ * ] block diagram
THESE ARE THE FUNCTIONAL BLOCKS TO BE DEVELOPED:
[ * ]
[ * ] Confidential Treatment Requested
4.2 Gantt Chart
[ * ]
[ * ] Confidential Treatment Requested
4.2 Manpower Loading Chart
[ * ]
[ * ] Confidential Treatment Requested
5. THE MARKET (G)
5.1 General (G1)
The basic need for this project arises from the poor allocation of
frequencies for the [*], and the consequent low voice
quality. New [ * ] can operate in the [ * ],
and deliver much improved art voice performance.
[*] solutions do not provide well [*].
[ * ]. However, today's [ * ]
solutions are expensive and are based on complex unintegrated designs. DSP
Group - Aptel's solution is designed to meet the need for a low cost and
integrated solution for [ * ].
5.1.1 Market Needs
[ * ]
5.1.2 Similar Product lines of DSP Group and APTEL sold to this market
DSP Group's TAD chips are currently being sold to vendors of [*]
and are integrated in their current products as an add-on
function to the [*]. The decision makers in these
organizations are known to our marketing personnel, and related
products can be promoted through the same channels.
[ * ] Confidential Treatment Requested
5.1.3 The Basis for this market need
[ * ]
[ * ] sales are predicted to grow dramatically, and
[ * ] market share is predicted to grow from [ * ] in 1995
to roughly [ * ] in year 1999.
[ * ]
[ * ]
Note: The last row in the above table describes the target market of this
project
[ * ] Confidential Treatment Requested
5.2 PRICE PERFORMANCE AND ASSOCIATED MANUFACTURING COSTS (G2)
see chapter 10
5.2.1 FEATURES & PRICES
see 5.1.3
5.2.2 PRODUCTION COST
Based on previous experience in chip manufacturing and [*] pricing,
we have assumed that our total manufacturing cost would be approximately
[ * ] of our selling price.
5.2.3 COMPETITIVE PRICES
[ * ] is the only vendor to provide a similar complete solution and it is
currently sold at a very high price (over [ * ] for total solution).
No other vendor offers a [ * ].
5.3 MARKETING ASPECTS (G3)
5.3.1 WORLDWIDE MARKET
Please refer to section 5.1.3.
[ * ] Confidential Treatment Requested
5.3.2 CURRENT MARKETING CHANNELS OF DSPG
DSP Group sales offices in the USA, Israel Japan and Europe. The sales uses
local distributors and representatives such as Tomen, KEC in Japan, DSP
Technology in Korea, DSP Solutions in Hong Kong and DSP Applications in
Taiwan. With this mixture of direct sales and distributors/reps, DSPG has
built a very long, reliable list of world class customers including:
JAPAN EUROPE SOUTH EAST ASIA USA & CANADA
----- ------ --------------- ------------
Panasonic Philips Samsung VTech
Sharp Siemens Maxon GE
Sanyo Alcatel LG AT&T
Sony Sagem Hyundai Bell South
NEC Ascom
Uniden Matra
5.3.3 Market Growth Pattern
Please refer to section 5.1.3.
5.3.4 Market Share and Number of units sold per Annum
See section 1.3.3
5.3.5 Units Selling Price Graph
See section 1.3.2
5.4 Regulatory Issues (G4)
[ * ]
[ * ] Confidential Treatment Requested
5.5 Competition (G5)
5.5.1 Current Players
A few companies, most prominently [*] have recently announced [ * ] chip
sets, which perform all [ * ] functions and integrate the [ * ] functions.
Those solutions use a costly, complex design and thus are very expensive
[ * ]. In addition, they do not include [ * ] such as those available from
DSP Group.
Other suppliers that have already entered the [ * ] include
[ * ]. Other competitors targeting the
same market and have partial solutions include [ * ].
5.5.2 Competition Impact on DSP Group-APTEL Product
Since the market share of [ * ] is still modest,
we feel that other vendors interest in this market will help build and
expand the market. Our design will have cost advantage and more attractive
in features so that we should be very competitive in this market.
As DSP Group represent over [ * ] of the total TAD chipset market, we have
an effective distribution network at our disposal. This will be a
remarkable benefit that will help us to play a significant role in that
market.
[ * ] Confidential Treatment Requested
6. COMMERCIALIZATION - PLANS AND PROSPECTS (H)
The project responsibilities will be shared between the companies as
follows:
APTEL will be responsible for the development of [ * ]
DSP Group will lead the development of the [ * ]
6.1 Production (H1)
Production of [ * ] chips will be done by outside contractors (fabs).
Similar, successful, production arrangements as used today.
The [ * ] will be manufactured by sub-contractors, and/or licensed to
OEMs.
6.2 Marketing Channels (H2)
DSP Group will market the products via its existing TAD channels. DSP
Group has the largest market share (over [*]) of the digital TAD market and
is recognized as the technology leader in this market.
[ * ]
DSP Group has already contacted several of its major customers regarding
the proposed DSP/APTEL solution and received a very positive response that
indicates strong sales potential.
6.3 Current Distribution Network (H3)
Please refer to section 5.3.2.
6.4 Financial Resources (H4)
The accumulative cash-flow deficit that could reach as much as $[*] in the
middle of [ * ], together with the participation of the BIRD foundation we
are confident that DSPG will have sufficient internal resources to fund the
project.
[ * ] Confidential Treatment Requested
The non BIRD funding will be matched by APTEL and DSP Group. DSP Group
plans to invest in APTEL for an equity stake in the company. In addition,
DSP Group will allocate and hire additional people to develop the [ * ]
chip. APTEL will invest in the development of the [ * ]. During
commercialization, APTEL will receive from DSP Group a per unit [ * ]
royalty for each unit sold.
[ * ] Confidential Treatment Requested
7. COOPERATION AND BENEFITS (I)
The project responsibilities will be shared between the companies as
follows:
APTEL will be responsible for the development of [ * ].
DSP Group will lead the development of the [ * ].
[ * ]
[ * ] Confidential Treatment Requested
8. ORGANIZATION AND MANAGEMENT PLAN (J)
8.1 Procedures and Meetings (J1)
A WEEKLY PROJECT DEVELOPMENT TEAM has been set for every Wednesday at
16:00. All participating team members will be present. Meetings will take
place either in the APTEL offices in Netanya or in DSP Group facilities in
Givat Shmuel.
A MONTHLY MARKETING MEETING has been set to take place in the California
offices of DSP Group. The primary goal is to ensure that development is
done according to the varying demands of potential customers. These meeting
will always include discussions with one or more potential clients.
PDRs and advance design reviews will take place as stated in the project
gantt chart. We expect that customer inputs may influence the project
specifications, time to market and overall chipset performance.
8.2 Project Organization Structure (J2)
In order to ensure that the development team will function as one, all the
team leaders in both companies will report to the project manager for the
full duration of the project development cycle.
8.3 Staff (J3)
The Project will managed by the following individuals:
[ * ]
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9. THE COMPANIES AND PROJECT PERSONNEL (K)
9.1 Companies' backgrounds, ownership, & Main Business
Founded in 1986, DSP Group is a global leader in the development and
marketing of high-performance, cost effective digital signal processing
(DSP) solutions for the consumer telephone, computer telephony and
personal computer industries. By combining three key technologies -- speech
processing algorithms, telephony algorithms and digital signal
processors -- the company has delivered a wide range of DSP based products
to manufacturers of telephones, computers and consumer electronics.
DSP Group pioneered low-power digital signal processing for telephone
answering devices (TAD), which has become a major aspect of the company's
business. In addition to the chips for the TAD market, DSP Group has
recently introduced three new speech co-processors for the PC market. DSP
Group also licenses its internally developed DSP cores (PineDSPCore-TM- and
OakDSPCore-TM-) and the TrueSpeech compression algorithms to a variety of
PC software, hardware and semiconductor manufacturers.
History: [ * ]
APTEL's [*] capabilities supplement the assets which DSP Group brings to
this joint project, and facilitate the introduction of a [ * ].
[ * ] Confidential Treatment Requested
- -------------------------------------------------------------------------------
ISRAELI COMPANY US COMPANY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
COMPANY NAME APTEL LTD. DSP GROUP, INC.
- -------------------------------------------------------------------------------
Year Established 1993 1987
- -------------------------------------------------------------------------------
Revenues; Most recent Has not started to sell $50 M
fiscal year yet
- -------------------------------------------------------------------------------
Increase/(decrease) N/A 75%
over previous year
- -------------------------------------------------------------------------------
Number of employees 15 106
- -------------------------------------------------------------------------------
Ownership Private Public
- -------------------------------------------------------------------------------
Number of previous BIRD None Two
Projects
- -------------------------------------------------------------------------------
9.2 The Synergism of this project with the companies' activities
Both DSP Group and APTEL have low cost, low power solutions. The
combination of the DSP and VLSI expertise of the DSP Group coupled with
[ * ] of APTEL, facilitates the introduction of an integrated
solution with a very competitive low power, low cost offering for the
[ * ] market. This fact will allow us to introduce integrated chip sets
for prices lower by at least [ * ] compared to competition.
DSP and APTEL intend to use some of their state-of-the-art technologies
that are essential and strongly fit the proposed [ * ] product. These
include the DSP cores, and the telephony and speech algorithms (such
[ * ]) offered by DSP as well as the leading edge [ * ]
technologies from APTEL.
9.3 Description of Previous BIRD Projects
DSP Group has already completed several BIRD projects. The TAD component
may be used in this project:
1. DSP - based TAD / project #434
2. Chipset for fax / speakerphone / project # 475
3. Digital Hearing Aid / project # 384
4. Digital Vox for HF Radio Communication / project # 402
5. DSP Based Speech Processing Modules / project # 459
for Cellular Telephones
[ * ] Confidential Treatment Requested
APTEL was not involved in BIRD projects in the past. The company has
informed the BIRD foundation of potential projects in the past, and
meetings have been held with third parties.
Individuals within APTEL management have worked before with the BIRD F. in
their previous capacities and successfully defined and completed BIRD
projects.
9.4 FINANCIAL RECORDS (ANNUAL REPORTS)
AUDITED FINANCIAL STATEMENTS FOR DSP GROUP INC. AND APTEL LTD. WILL BE
FOLLOWING SHORTLY.
9.5 KEY PERSONNEL (RESUME)
APTEL
MR. MENACHEM KENAN. General Manager
Born: 1959
Education:
1987: M. Sc. Industrial Engineering, S.U.N.Y. New York.
1985: B. Sc. in economics & Applied Math, and Statistics S.U.N.Y.
1978: Electronic Technician Computer and Communications, Israel
Defense Forces.
1977: Electronics Technician Diploma in Computers,
Microprocessors, and Communications, School for Certified
Technicians, Tel-Aviv.
Experience:
1995: President of APPALL
1993-1995: Vice President for Business Development and
marketing, APTEL
1992-1993: Vice President for Marketing & Sales, Nice Systems
Group
1987-1992: Marketing Manager for Northern Europe, Africa, and
Pacific Rhn, RAD data Communications.
1985-1987: M.I.S. Manager, Tadiran Electronics, Inc. (N.Y.)
1982-1984: Air Freight Coordinator, Burlington Air Freight. JFK
Airport, N.Y.
1977-1982: Communications Team Office, Israel Defense Forces
Languages:
Hebrew, English, Spanish
MR. OFER BAR-OR, Vice President of Engineering
Born: 1965
Education:
1992: M. Sc. in Physics with Honors from Tel Aviv University,
School of Physics and Astrophysics; Thesis Title: "a
radiometric Method for Investigating Infra Rad Optical Fiber
Properties"
1986: B. Sc. in Physics and Mathematics with honors from Hebrew
University School of Physics, Jerusalem
1986: Graduate of "Talpiot", a special course offered by the
Israel Defense Forces which combines academic studies and
military service.
Experience:
1995: Vice President of Engineering, APTEL
1993-1995: Software Manager, APTEL
1990-1993: Satellite Integration Group manager, Israel Aircraft
Industries, Space Department
1986-1990: A variety of engineering roles in electronics,
software, and satellite integration, Israel Aircraft
Industries, Space Department
Languages:
Hebrew, English
MR. ARIEL GOLDSTEIN, Vice President of Marketing
Born: 1954
Education:
1984: MBA in Marketing, Finance, and Management Policy, J.L.
Kellogg Graduate School of Management, Northwestern
University, Evanston, Illinois, U.S.A.
1979: Juries Doctorate, University of Chicago Low School, Chicago
Illinois, U.S.A.
1976: B.A. in Literature, Harvard University, Cambridge,
Massachusetts, U.S.A.
Experience:
1995: Vice President of Marketing, APTEL
1993-1995: Attorney, Jacob Katz & Co. Tel Aviv
1992-1993: Articled Legal Clerk
1988-1992: Immigration to Israel, Hebrew Language Studies,
religious studies
1984-1988: Strategic Planning Manager, Motorola Inc. Land Mobile
Communication Products, Schaumburg, Illinois, U.S.A.
1980-1982: Attorney, Isham, Lincoln & Beale, Chicago, Illinois.
U.S.A.
Languages:
English, Hebrew
DSPG
YUVAL COHEN Vice president of business Development
Education:
1989-1991: MBA, Harvard Business School
1985-1987: B.Sc. Industrial engineering, Tel Aviv University
Experience:
1995- Vice President of Licensing and Business
Development, DSP Group Inc.
1993-1995: Assistant to Sr. Vice President, Business Development,
Intel Corporation
1992-1993: Marketing Manager, Intel Corporation
1991-1992: Program Manager, Operations, KLA Instruments
1987-1989: Production Planning & Control, Scitex Corporation Ltd.
1981-1985: Company Commander, Artillery Corps, IDF
SHIMON RAVIV Technical Marketing Support Manager Semiconductors
Division.
Born 1958
EDUCATION
1984: BSEE from Ben-Gurion University, Beer Sheva, Israel.
EXPERIENCE :
1990 - 1996 DSP group - Semiconductors division.
Since 9/95 - Current position marketing
1992-1995 - Circuit group manager.
1990-1992 - Participated in the start up of the Semiconductors
division
1987 - 1990 Digital Equipment - VLSI design center, Jerusalem,
Israel. Testing engineer and Chip Design
1984 - 1987 El-Op - Electro Optics industry, Rehovot, Israel,
Laser Department
10. PROJECT BUDGET (L)
10.1 Cash Flow:
CASH FLOW - SAMPLE CALCULATION
[ * ]
[ * ] Confidential Treatment Requested
10.2 Proposed Project Budget
PROPOSED PROJECT BUDGET
DSP GROUP, INC.
[ * ]
[ * ] Confidential Treatment Requested
PROPOSED PROJECT BUDGET
APTEL LTD.
[ * ]
[ * ] Confidential Treatment Requested