Exhibit 10.5
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THE 2000 AMENDMENT AND RESTATEMENT TO
INVESTORS RIGHTS AGREEMENT
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THIS 2000 AMENDMENT AND RESTATEMENT (hereinafter the "Agreement") to the
Amendment and Restatement to the Investors Rights Agreement dated June 1 1999 is
made as of the 5th day of April, 2000, by and among RTS Software Ltd., an
Israeli company (the "Company"), the Investors identified in Schedule 1 attached
hereto (the "1996 Investors"), the Investors identified in Schedule 2 attached
hereto (the "1998 Investors"), the Investors identified in Schedule 3 attached
hereto (the "1999 Investors"), (the 1996 Investors, the 1998 Investors and the
1999 Investors are referred to collectively as the "Existing Investors") the
investors identified in Schedule 4 attached hereto (the "New Investors") (the
Existing Investors and the New Investors are referred to collectively as the
"Investors") and the Founders identified in Schedule 5 attached hereto (the
"Founders").
W I T N E S S E T H:
WHEREAS the 1996 Investors and the Company have entered into an Investors
Rights Agreement dated September 30, 1996 (the "1996 Investors
Rights Agreement"); and
WHEREAS the 1996 Investors and the 1998 Investors (other than GE Capital
Equity Holdings, Inc. (formerly GE Capital Advent Investment Corp.)
("GE Capital") have entered into an Amendment and Restatement to the
1996 Investors Rights Agreement dated February 27, 1998 (the "1998
Investors Rights Agreement").
WHEREAS the 1996 Investors and the 1998 Investors have entered into an
Amendment and Restatement to the 1998 Investors Rights Agreement
dated April 22, 1998 (the "Second 1998 Investors Rights Agreement");
WHEREAS the Existing Investors have entered into an Amendment and
Restatement to the Second 1998 Investors Rights Agreement dated June
1, 1999 (the "1999 Investors Rights Agreement");
WHEREAS the Investors and the Company wish to amend and restate the 1999
Investors Rights Agreement so that, as of the date first mentioned
above, all the provisions of the 1999 Investors Rights Agreement
would have no further force or effect and would be replaced by all
the provisions of this Agreement as detailed below; and
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WHEREAS the Investors are the holders of issued and outstanding Series A
Preferred Shares par value NIS 0.1 each of the Company (the "Series
A Preferred Shares"), Series B Preferred Shares par value NIS 0.1
each of the Company (the "Series B Preferred Shares"), Series C-1
Preferred Shares par value NIS 0.1 each of the Company (the "Series
C-1 Preferred Shares"), the Series C-2 Preferred Shares par value
NIS 0.1 each (the "Series C-2 Preferred Shares"), the Company's
Convertible Debentures issued under the Loan and Investment
Agreement of even date herewith (the "Convertible Debentures") and a
portion of the Ordinary Shares par value NIS 0.1 each (collectively
with any Ordinary Shares par value NIS 0.1 per share issued upon
conversion of the Convertible Debentures, the "Ordinary Shares").
The Series C-1 Preferred Shares and the Series C-2 Preferred Shares
shall be referred to herein collectively as the "Series C Preferred
Shares" and the Series A Preferred Shares, Series B Preferred Shares
and Series C Preferred Shares and any shares (other than Ordinary
Shares) issued upon conversion of the Convertible Debentures shall
be referred to herein collectively as the "Preferred Shares"); and
WHEREAS the Investors and the Company desire to set forth certain matters
regarding the ownership of the shares of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties (or that portion of the parties to the 1999 Investors
Rights Agreement required in order to amend the 1999 Investors Rights Agreement)
hereby agree that the provisions of the 1999 Investors Rights Agreement would,
as of the date first mentioned above, have no further force or effect and would
be replaced in its entirety with the provisions detailed below as follows:
1. Affirmative Covenants
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1.1. Delivery of Financial Statements
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The Company shall deliver (i) the New Investors, Eucalyptus and
Access until the consummation of the Company's IPO (as defined in
Section 1.7 below) and (ii) shall otherwise deliver to each Investor,
for so long as such Investor is the record holder of Ordinary Shares,
or other securities convertible into Ordinary Shares ("Ordinary Share
Equivalents"), in either case constituting at least four percent (4%)
of the Ordinary Shares (assuming, for purposes of such calculation,
the conversion into Ordinary Shares of all Ordinary Share
Equivalents):
1.1.1. As soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company as of the end of
such year, and statements of income and statements of cash
flow of the Company for such year (the "Audited Annual
Financial Statements"), setting forth in each case in
comparative form the figures for the previous fiscal year,
all
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in reasonable detail, prepared in accordance with United
States generally accepted accounting principles ("GAAP"),
audited by a firm of Independent Certified Public Accountants
in the State of Israel who are members of the Israeli
Institute of Certified Public Accountants, and accompanied by
an opinion of such firm which opinion shall state that such
balance sheet and statements of income and cash flow have
been prepared in conformity with GAAP, and present fairly in
all material aspects the financial position of the Company as
of their date, and that the audit by such accountants in
connection with such financial statements has been conducted
in accordance with generally accepted auditing standards.
1.1.2. As soon as practicable, but in any event within forty five
(45) days after the end of each quarter of each fiscal year
of the Company, an unaudited consolidated balance sheet of
the Company as at the end of each such period and unaudited
consolidated statements of (i) income and (ii) cash flow of
the Company for such period (the "Unaudited Quarterly
Financial Statements") and, in the case of the first, second
and third quarterly periods, for the period from the
beginning of the current fiscal year to the end of such
quarterly period, setting forth in each case in comparative
form the figures for the corresponding period of the previous
fiscal year, all in reasonable detail and except as otherwise
stated therein, fairly presenting the financial position of
the Company as of their date subject to (x) there being no
footnotes contained therein and (y) changes resulting from
year-end audit adjustments.
Notwithstanding the foregoing, if reasonably requested by the Clal
Group (as defined in Schedule 4 hereto), the Company shall provide the
Clal Investors with the Company's Audited Annual Financial Statements
within thirty (30) days after the end of each fiscal year of the
Company. Without derogating from the provisions of Section 1.6 below,
the Clal Group may attach information regarding the Company which is
derived from the Company's Audited Annual Financial Statements and
Unaudited Quarterly Financial Statements to Clal Group's reports to
the extent required in writing by the Israeli Securities Authority
provided that the Clal Group has promptly notified in writing the
Company of such disclosure requirement at least 20 days prior to
making such disclosure; and provided further that the Company has had
a reasonable opportunity to contest such disclosure.
1.2. Accounting
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The Company will maintain and cause each of its Subsidiaries to
maintain a system of accounting established and administered in
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accordance with GAAP (in the case of each Subsidiary (as defined
below) in the jurisdiction in which it is incorporated) consistently
applied, and will set aside on its books and cause each of its
operating Subsidiaries to set aside on its books all such proper
reserves as shall be required by GAAP (in the case of each Subsidiary
in the jurisdiction in which it is incorporated). For purposes of
this Section 1.2, "Subsidiary" means any corporation or entity at
least a majority of whose voting securities are at the time owned by
the Company, or by one or more Subsidiaries, or by the Company and
one or more Subsidiaries.
1.3. Insurance
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The Company will maintain fire and casualty insurance policies
substantially as in effect on the date of this Agreement. In addition
to the foregoing, the Company shall maintain from financially sound
and reputable insurers (and shall pay all premiums and maintain in
full force and effect), term life insurance (with the Company named
as beneficiary) on the lives of each of Samuel HaCohen and Vladimir
Morgenstern, each in the amount of two million United States dollars
($2,000,000).
1.4. Proprietary Information and Non-Competition Agreements
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From and after September 30, 1996, the Company and its subsidiaries
have not and will not employ, or otherwise contract with any person
who will have access to confidential information with respect to the
Company and its operations 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 Board of
Directors.
1.5. Annual Plan; Monthly Report
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The management of the Company shall establish annually an operating
plan and budget for the Company (the "Annual Plan") in consultation
with the Board. The Annual Plan for the following year shall be
submitted to the Board of Directors for its approval at least
fourteen (14) days prior to the first day of the year covered by such
Annual Plan.
The management of the Company shall submit to the Company's Board of
Directors as soon as practicable, but in any event within thirty (30)
days after the end of each month, an unaudited consolidated balance
sheet of the Company as at the end of such month, and an unaudited
estimated consolidated statement of income and statements of cash
flow for such month.
1.6. Confidentiality
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The Investors agree that any information with respect to the Company
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or any of its subsidiaries obtained pursuant (a) to this Agreement,
the Investment and Loan Agreement dated as of April 5, 2000 (the
"Investment and Loan Agreement") and Amendment and Restatement to the
Shareholders Agreement dated April 5, 2000 (the "2000 Shareholders
Agreement"); (b) the 1999 Investors Rights Agreement, the Second 1998
Investors Rights Agreement and the Share Purchase Agreement (the
"1999 Share Purchase Agreement") dated as of June 1, 1999 entered
into by and among the purchasers detailed in Schedule 1.1 to that
Agreement and the Company; (c) the Second Amendment and Restatement
to the Shareholders Agreement (the "1999 Shareholders Agreement")
entered into by the parties detailed in Schedules 1, 2 and 3 to that
Agreement dated June 1, 1999 and (d) in addition with respect to the
1996 Investors and the 1998 Investors, the information obtained
pursuant to the Share Purchase Agreement dated as of April 22, 1998
entered into by and among GE Capital and the Company and the
Amendment and Restatement to the Amendment and Restatement to the
Shareholders Agreement (the "Second 1998 Shareholders Agreement")
entered into by the parties detailed in Schedules 1, 2 and 3 to that
Agreement dated as of April 22, 1998, and (e) in addition, with
respect to the 1996 Investors and the 1998 Investors, other than GE
Capital, the information obtained pursuant to the Share Purchase
Agreement dated as of February 26, 1998 entered into by and among the
purchasers detailed in Schedule 1.1 to that Agreement and the
Company, the information obtained pursuant to the 1998 Investors
Rights Agreement and the information obtained pursuant to the
Amendment and Restatement to the Shareholders Agreement dated as of
February 27, 1998 (the "1998 Shareholders Agreement"), and (f) with
respect to the 1996 Investors, the information obtained pursuant to
the Share Purchase Agreement dated as of September 30, 1996 entered
into by and among the purchasers detailed in Schedule 1.1 to that
Agreement and the Company, the information obtained pursuant to the
1996 Investors Rights Agreement and the information obtained pursuant
to the Shareholders Agreement entered into by the parties detailed in
Schedule 1 to that agreement dated as of 30, September, 1996 (the
"1996 Shareholders Agreement") except for information which became
publicly known not due to any action or inaction of any of the
Investors, will not be disclosed without the prior written consent of
the Company; provided that, in connection with periodic reports to
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their shareholders or partners, the Investors may, without first
obtaining such written consent, make general statements, not
containing technical information, regarding the nature and progress
of the Company's business; and provided further, that the Investors
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may provide summary information regarding the Company's financial
information in their reports to the respective shareholders or
partners, but may not annex to such reports the full financial
information to be provided hereunder by the Company; and provided
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further, however, that in the event that an Investor is required to
annex financial information obtained to such reports, such Investor
shall exert its reasonable efforts to avoid annexing such financial
information, in a manner consistent with
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applicable law and practice, but to the extent that its efforts are
unsuccessful, such Investor shall be entitled to annex such financial
information to such reports. Notwithstanding the foregoing, GE
Capital may disclose such information to its affiliates and permitted
transferees pursuant to Section 2.3 of the Shareholders Agreement,
solely for purposes of monitoring the performance and prospects of,
and managing its investment in, the Company.
1.7. Termination of Financial Information Rights
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The Company's obligation to deliver the financial statements and
other information under Section 1.1 shall terminate and shall be of
no further force or effect upon the closing of the Company's initial
firmly underwritten public offering of its Ordinary Shares pursuant
to an effective registration statement under the United States
Securities Act of 1933, as amended (the "Securities Act"), or
equivalent law of another jurisdiction, at a price per share of not
less than six United States Dollars and ninety nine cents ($6.99)
(adjusted for share combination or subdivision or other
recapitalization of the Company's shares) with net proceeds to the
Company of not less than seven million five hundred thousand United
States Dollars ($7,500,000) (the "IPO"). Thereafter, the Company
shall deliver to the Investors, and its assignees or transferees,
such financial information as the Company from time to time provides
to other holders of its shares.
1.8. The STAR Shareholders (as such term is defined in the Shareholders
Agreement), ATV (as defined in Schedule 1), the JPV Investors (as
such term is defined in Schedule 1), and the Clal Group shall each,
at any time that such group not actually designate a director to the
Board of Directors, be entitled to designate a non-voting observer to
the Company's Board of Directors. Such observer shall be entitled to
attend all Board of Directors meetings, shall be entitled to receive
all documents and information provided to any director, but will not
be entitled to vote at any Board of Directors meeting. Any observer
may only be removed from office by the holders who designated such
observer. Should such group's holding of the Company's shares be
reduced so that such holder holds less than four percent (4%) of the
issued and outstanding share capital of the Company (assuming for
purposes of such determination, that all options and warrants to
purchase the Company's shares have been exercised), then such group
will cease to possess the right to designate an observer, and any
observer so designated will automatically and without further action
be removed from office.
1.9. In addition, in the event that Bessemer Venture Partners IV L.P.
designates a person to the Company's Board of Directors which is not
affiliated with the Bessemer Investors (as such a term is defined in
Schedule 2 hereto) or any of them and such designee is approved by a
majority of the Company's Board of Directors (excluding an existing
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director designated by Bessemer Venture Partners IV L.P, if any) then
the Bessemer Investors would be entitled to designate a non-voting
observer to the Company's Board of Directors; provided, however, that
such approval by a majority of the other directors shall in no way be
a condition to such designee becoming a director or serving as a
director. Such observer shall be entitled to attend all Board of
Directors meetings, shall be entitled to receive all documents and
information provided to any director, but will not be entitled to
vote at any Board of Directors meeting. Such observer may only be
removed from office by the holders who designated such observer.
Should the Bessemer Investors' holding of the Company's shares be
reduced to less than four percent (4%) of the issued and outstanding
share capital of the Company (assuming for purposes of such
determination, that all options and warrants to purchase the
Company's shares have been exercised) then such group will cease to
possess the right to designate an observer, and any observer so
designated will automatically and without further action be removed
from office.
1.10. GE Capital shall be entitled to designate a non-voting observer to
the Company's Board. Such observer, who shall be selected by GE
Capital and approved by the Company's Board (which approval shall not
be unreasonably withheld), shall be entitled to attend all Board
meetings, shall be entitled to receive all documents and information
provided to any director, but will not be entitled to vote at any
Board meeting. Such observer may only be removed from office by GE
Capital. Should the holdings of GE Capital (together with its
permitted transferees pursuant to Section 2.3 of the Shareholders
Agreement) in the aggregate be reduced to less than two percent (2%)
of the issued and outstanding share capital of the Company (assuming
for purposes of such determination, that all options and warrants to
purchase the Company's shares have been exercised), then such group
will cease to possess the right to designate an observer, and any
observer so designated will automatically and without further action
be removed from office. The documents and other information received
by the GE Capital observer pursuant to this paragraph shall be used
by such observer and by GE Capital and its affiliates and permitted
transferees pursuant to Section 2.3 of the Shareholders Agreement,
solely for purposes of monitoring the performance and prospects of
and managing their investment in the Company.
2. Pre-emptive Right
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Until the IPO, the Company hereby grants to each Investor rights of first
refusal to purchase such Investor's pro-rata share (or any portion thereof)
of New Securities (as defined below) that the Company may, from time to
time, propose to sell and issue. The Investor's pro rata share shall be the
ratio of the number of shares of the Company's Ordinary Shares (assuming
for purposes of this Section that all Preferred Shares have been converted
into Ordinary Shares) then held by the Investor as of the date of the
Rights Notice (as defined
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in Section 2(b)), to the sum of the total number of Ordinary Shares
outstanding as of such date.
This right of first refusal shall be subject to the following provisions:
(a) "New Securities" shall mean any Ordinary Shares or Preferred Shares of any
kind of the Company, whether now or hereafter authorized, and rights,
options, or warrants to purchase said Ordinary Shares or Preferred Shares,
and securities of any type whatsoever that are, or may become, convertible
into said Ordinary Shares or Preferred Shares; provided, however, that "New
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Securities" shall not include (i) securities issuable upon conversion of
Preferred Shares; (ii) securities offered to the public in the IPO; (iii)
securities issued in connection with the acquisition of another
corporation, business entity or line of business of another business entity
by the Company by merger, consolidation, purchase of all or substantially
all of the assets, or other reorganization as a result of which the Company
owns not less than fifty percent (50%) of the voting power of such
corporation; (iv) the Company's Ordinary Shares or Preferred Shares issued
in connection with any stock split, stock dividend, recapitalization,
reclassification or similar event by the Company; (v) securities authorized
by the Company's Board of Directors (including the affirmative vote of at
least two (2) of the Directors appointed by the holders of Preferred
Shares) to be issued in connection with the acquisition of assets by the
Company or supply arrangements for the Company; (vi) Ordinary Shares or
options, or any other securities convertible into Ordinary Shares to be
issued to employees, directors, contractors, or consultants of the Company
in accordance with the Board of Directors' resolutions; (vii) securities
issued to a Strategic Investor (as defined below); (viii) securities issued
upon the exercise of outstanding options and warrants or any other
convertible securities granted at or prior to the date of the Closing of
the Investment and Loan Agreement; or (ix) securities to be sold and issued
by the Company which securities have been exempt from the definition of
"New Securities" by a resolution unanimously adopted, in the best interest
of the Company, by all the directors lawfully entitled to vote on such a
resolution.
"Strategic Investor" in this Agreement shall mean an investor which is
capable of materially contributing, directly or indirectly, (other than by
investing capital in the Company) to the Company's marketing, distribution
or sales and which is approved as such by at least two of the Directors
appointed by the holders of Preferred Shares of which one is the Preferred
C-1 Director (as defined in the Company's Articles of Association).
(b) If the Company proposes to issue New Securities, it shall give the
Investors written notice (the "Rights Notice") of its intention, describing
the New Securities, the price, the general terms upon which the Company
proposes to issue them, and the number of shares that the Investor has the
right to purchase under this Section 2. Each Investor shall have twenty-one
(21) days from delivery of the Rights Notice to agree to purchase (i) all
or any part of its pro-rata share of such New Securities and (ii) all or
any part of the pro-rata share of any other shareholder (including for this
purpose any permitted transferee of
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such holder) entitled to such rights to the extent that such other
shareholder does not elect to purchase its full pro-rata share, in each
case for the price and upon the general terms specified in the Rights
Notice, by giving written notice to the Company setting forth the quantity
of New Securities to be purchased. If the Investors who elect to purchase
their full pro-rata shares also elect to purchase in the aggregate more
than 100% of the New Securities, such New Securities shall be sold to such
Investors in accordance with their respective pro-rata shares.
(c) If the Investors fail to exercise in full the right of first refusal within
the period or periods specified in Section 2(b), the Company shall have
ninety (90) days after delivery of the Rights Notice to sell the unsold New
Securities at a price and upon general terms no more favorable to the
purchasers thereof than specified in the Company's notice. If the Company
has not sold the New Securities within said ninety (90) day period the
Company shall not thereafter issue or sell any New Securities without first
offering such securities to the Investors in the manner provided above.
(d) The pre-emptive right mentioned herein shall not be in addition to the pre-
emptive right described in Article 11(b) of the Articles of Association
adopted as of the date of this Agreement, but shall be subject to the
provisions of such Article 11(b).
3. Registration
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The following provisions govern the registration of the Company's
securities:
3.1. Definitions
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As used in this Agreement, the following terms have the following
meanings:
"Form S-3" means Form S-3 or Form F-3 under the Securities Act, as in
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effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Securities and Exchange
Commission ("SEC") which permits inclusion or incorporation of
substantial information by reference to other documents filed by the
Company with the SEC.
"Founders" means: Samuel HaCohen, Vladimir Morgenstern Yitzhak Chemo,
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Shimon Katz and Sequel Technology Ltd.
"Founders' Shares" means all Ordinary Shares owned by the Founders.
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"Holder" means any holder of outstanding Registrable Shares or shares
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convertible into Registrable Shares who acquired such Registrable
Shares or shares convertible into Registrable Shares in a transaction
or series of transactions not involving any registered public
offering.
"Initiating Holders" means Holders holding more than fifty percent
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(50%) of the Registrable Shares, assuming for purposes of such
determination the conversion of all shares convertible into
Registrable Shares.
"Register," "registered" and "registration" refer to a registration
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effected by filing a registration statement in compliance with the
Securities Act and the declaration or ordering by the Commission of
effectiveness of such registration statement, or the equivalent
actions under the laws of another jurisdiction.
"Registrable Shares" means all Ordinary Shares issuable upon
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conversion of the Preferred Shares and Convertible Debentures, all
Ordinary Shares issued by the Company in respect of such shares and
all Ordinary Shares that the Investors may hereafter purchase
pursuant to their warrants, preemptive rights or rights of first
refusal, or Ordinary Shares issued on conversion or exercise of other
securities so purchased; provided, however, that any Ordinary Shares
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that could be sold by the holder thereof (in accordance with
applicable law) within six (6) months without the registration of
such shares, shall not be deemed to be Registrable Shares.
"SEC" means the U.S. Securities and Exchange Commission.
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3.2. Incidental Registration
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If the Company at any time proposes to register any of its
securities, other than in a demand registration under Section 3.3 of
this Agreement, it shall give notice to the Holders and Founders of
such intention. Upon the written request of any Holder or Founder
given within twenty (20) days after receipt of any such notice, the
Company shall include in such registration all of the Registrable
Shares or Founders' Shares, as the case may be, indicated in such
request, so as to permit the disposition of the shares so registered.
Notwithstanding any other provision of this Section 3.2, if the
managing underwriter advises the Company in writing that marketing
factors require a limitation of the number of shares to be
underwritten, then there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation,
first shares held by shareholders other than the Holders and Founders
(pro rata to the total number of Registrable Shares held by each of
the Holders of such group), then shares held by the Founders (pro
rata to the total number of Registrable Shares held by each of the
Holders of such group), then to the extent necessary, shares held by
the Holders (pro rata to the respective total number of Registrable
Shares held by each of the Holders).
3.3. Demand Registration
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At any time during the period beginning one (1) year following the
closing of the IPO, (a) the Initiating Holders may request in writing
that all or part of the Registrable Shares shall be registered for
trading on
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any securities exchange on which the Company's shares are otherwise
traded, and (b) after the Company has completed at least one (1)
registration at the request of the Holders, the Founders holding a
majority of the Founders' Shares may request in writing that all or
part of the Founders Shares shall be registered for trading on any
securities exchange on which the Company's shares are otherwise
traded. Any request under this Section must request the registration
of shares in a minimum amount of five million United States dollars
($5,000,000) (or, if on Form S-3, one million United States dollars
($1,000,000)). Within twenty (20) days after receipt of any such
request, the Company shall give written notice of such request to the
other Holders (and following the first such registration, the
Founders) and shall include in such registration all Registrable
Shares (and following the first such registration, the Founders
Shares) held by all such Holders (or following the first such
registration, the Founders) who wish to participate in such demand
registration and provide the Company with written requests for
inclusion therein within fifteen (15) days after the receipt of the
Company's notice. Thereupon, the Company shall effect the registration
of all Registrable Shares (and, in the case of a request submitted by
the Founders, Founders Shares) as to which it has received requests
for registration for trading on the securities exchange specified in
the request for registration; provided, however, that the Company
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shall not be required to effect any registration under this Section
3.3 within a period of twelve (12) months following the effective date
of a previous registration. Notwithstanding any other provision of
this Section 3, if the managing underwriter advises the Holders (and
following the first such registration, the Founders) in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation, first
shares held by shareholders other than the Holders and Founders (pro
rata to the total number of Registrable Shares held by each of the
Holders of such group), then shares which the Company may wish to
register for its own account, then shares held by the Founders (pro
rata to the total number of Registrable Shares held by each of the
Holders of such group) and thereafter, to the extent necessary, shares
held by the Holders (pro rata to the respective total number of
Registrable Shares held by each of the Holders), provided, however,
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that in any event all Registrable Shares must be included in such
registration prior to any other shares of the Company. The Company
shall not register securities for sale for its own account in any
registration requested pursuant to this Section 3.3 unless permitted
to do so by the written consent of Holders (or, in the case of a
registration requested by Founders, Founders) who hold at least 66% of
the Registrable Shares (or, in the case of a registration requested by
Founders, Founders Shares) as to which registration has been
requested. The Company shall not be required to effect more than four
(4) registrations at the request of the Initiating Holders under this
Section 3.3 and two (2) registrations at the request of the Founders
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under this Section 3.3.
3.3A Notwithstanding the provisions of Section 3.2 and 3.3 hereof, if the
Company consummates a subsequent investment in the Company's share
capital yielding to the Company gross proceeds of at least US$10
million of which at least US$5 million are invested by third parties
who are not shareholders of the Company prior to such investment
("Private Placement") then, the holders of the Convertible Debentures
shall be entitle to the same registration rights granted to the
investors in such Private Placement.
3.4. Designation of Underwriter
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(a) In the case of any registration effected pursuant to Section 3.3,
(i) the majority of the Holders participating shall have the
right to designate the managing underwriter(s) in any
underwritten offering provided that such managing underwriter(s)
shall be either one of the Lead Underwriter or Co-Manager in the
Company's IPO or an underwriter which is among the twenty (20)
leading underwriting firms as measured by revenues and (ii) the
Company and all Holders and Founders participating in such
underwritten registration shall enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such underwriting.
(b) In the case of any registration initiated by the Company, the
Company shall have the right to designate the managing
underwriter in any underwritten offering and any Holders or
Founders participating in such underwritten registration shall
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
3.5. Expenses
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All expenses incurred in connection with any registration under
Section 3.2 and Section 3.3 (including the preparation of the
registration statement) shall be borne by the Company; provided,
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however, that each of the Holders or Founders participating in such
-------
registration shall pay its pro rata portion of the fees, discounts or
commissions payable to any underwriter and any fees of counsel to such
Holders or Founders.
3.6. Indemnification
---------------
In the event any Ordinary Shares are included in a registration
statement in accordance herewith:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each one of the Holders and/or Founders, the
partners, officers, directors and shareholders of each one of the
Holders and/or Founders, legal counsel and accountants for each
-13-
one of the Holders and/or Founders, any underwriter (as defined
in the Securities Act) for such Holder and/or Founder and each
person, if any, who controls Holder and/or Founder or underwriter
within the meaning of the Securities Act or the 1934 Act against
any losses, expenses, claims, damages, or liabilities to which
they become subject under the Securities Act, the 1934 Act or
other United States federal or state laws or the securities laws
of the State of Israel or any other jurisdiction in which the
Registrable Shares are sold, insofar as such losses, expenses,
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 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 in light
of the circumstances under which they were made, or (iii) any
violation or alleged violation by the Company of the Securities
Act, the 1934 Act, any Federal or state securities law or any
rule or regulation promulgated under the Securities Act, the 1934
Act or any federal or state securities law, or any of the
securities laws of the State of Israel or any other jurisdiction
in which the Registrable Shares are sold or any rule or
regulation thereunder; and the Company will reimburse each such
Holder, Founder, officer or director, underwriter or controlling
person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 3.6(a), 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 to the
Holders and/or Founders, underwriter or controlling person 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 to the Company expressly for use in
connection with such registration by the Holders and/or Founders,
underwriter or controlling person provided further, however, that
the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Holder and/or
Founder or underwriter, or any person controlling such Holder
and/or Founder or underwriter, from whom the person asserting any
such losses, claims, damages or liabilities purchased shares in
the offering, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments
or supplements
-14-
thereto) was not sent or given by or on behalf of such Holder
and/or Founder or underwriter to such person, if required by law
so to have been delivered, at or prior to the written
confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(b) To the extent permitted by law, each selling Holder and/or
Founder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company within
the meaning of the Securities Act, any underwriter (within the
meaning of the Securities Act) for the Company, any person who
controls such underwriter, and any Holder and/or Founder selling
securities in such registration statement or any directors or
officers or any persons controlling such parties, against any
losses, claims, expenses, damages, or liabilities to which any of
the forgoing persons become subject under the Securities Act, the
1934 Act or other United States federal or state securities law,
or any of the securities laws of the State of Israel or any other
jurisdiction in which the Registrable Shares are sold, insofar as
such losses, expenses, claims, damages, liabilities (or actions
in respect thereto) arise out of or are based upon any Violation
(including alleged 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 to the
Company by such Holder and/or Founder expressly for use in
connection with such registration; and each such Holder and/or
Founder will reimburse any persons intended to be indemnified
pursuant to this section 3.6(b) for any legal or other expenses
reasonably incurred by such 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 3.6(b) 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 Holders and/or Founders, which consent shall not
be unreasonably withheld: provided that in no event shall any
indemnity under this Section 3.6(b) exceed the gross proceeds
from the offering received by such Holder and/or Founder.
(c) Promptly after receipt by an indemnified party under this Section
3.6(c) 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 3.6, 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
-15-
similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties
that may be represented without conflict by one counsel) shall
have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding.
The failure to notify an indemnifying party in writing within a
reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnifying
party under this Section 3.6, but the omission so to deliver
written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise
than under this Section 3.6.
(d) if the indemnification provided for in this Section 3.6 is held
by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim,
damage or expense referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim,
damage or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and
of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability,
claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and
of the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or
by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
relating to indemnification and contribution contained in the
underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company, the Holders and the Founders
under this Section 3.6 shall survive the completion of any
-16-
offering of Registrable Shares and/or Founders Shares in a
registration statement under this Section 3.
3.7. Obligations of the Company
--------------------------
Whenever required under this Section 3 to effect the registration of
any Registrable Shares, the Company shall, as expeditiously as
possible:
3.7.1. prepare and file with the SEC a registration statement with
respect to such Registrable Shares and use its best efforts
to cause such registration statement to become effective,
and, upon the request of the holders of a majority of the
Registrable Shares registered thereunder, keep such
registration statement effective for a period of up to nine
(9) months or, if sooner, until the distribution
contemplated in the Registration Statement has been
completed.
3.7.2. 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
Registrable Shares covered by such registration statement.
3.7.3. furnish to the Holders or the Founders, as the case may be,
such numbers 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 Shares owned by them.
3.7.4. use all reasonable efforts to 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 or the
Founders, as the case may be, provided that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions.
3.7.5. in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement,
in usual and customary form, with the managing underwriter
of such offering. Each Holder or Founder, as the case may
be, participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
3.7.6. notify each holder of Registrable Shares or Founders' Shares
covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered
under
-17-
the Securities Act or the happening of any event as a result
of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing.
3.7.7. cause all Registrable Shares or Founders' Shares registered
pursuant thereunder to be listed on each securities exchange
on which similar securities issued by the Company are then
listed.
3.7.8. provide a transfer agent and registrar for all Registrable
Shares or Founders' Shares registered pursuant hereunder and
a CUSIP number for all such Registrable Shares or Founders
Shares, in each case not later than the effective date of
such registration.
3.7.9. furnish, at the request of any Holder or Founder requesting
registration of Registrable Shares or Founders' Shares, as
the case may be, pursuant to this Section 3, on the date
that such Registrable Shares are delivered to the
underwriters for sale in connection with a registration
pursuant to this Section 3, if such securities are being
sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the
registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given
to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and (ii) a letter
dated such date, from the independent certified public
accountant of the Company, in form and substance as is
customarily given by independent certified public
accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any.
3.8. Reports Under Securities Exchange Act of 1934.
---------------------------------------------
With a view to making available to the Holders and Founders 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 or Founder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the
effective date of the IPO;
-18-
(b) 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
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request a written statement by the
Company that it has complied with the foregoing subsections
3.8(a) and 3.8 (b).
3.9. Assignment of Registration Rights
---------------------------------
Any of the Holders or Founders may assign its rights to cause the
Company to register Shares pursuant to this Section 3 to a transferee
or transferees of all or any part of its Registrable Shares or
Founders' Shares. The transferor shall, within twenty (20) days after
such transfer, furnish the Company with written notice of the name and
address of such transferee and the securities with respect to which
such registration rights are being assigned, and the transferee's
written agreement to be bound by this Section 3.
3.10. Rights that may be Granted to Subsequent Investors
--------------------------------------------------
The Company may grant to investors in the Company only such rights of
registration as shall be approved by a majority of the Board of
Directors (which majority includes the affirmative vote of two of the
Directors designated by the holders of Preferred Shares).
3.11. Lock-Up
-------
In any registration of the Company's shares all Holders and Founders
agree that any sales of Registrable Shares or Founders Shares may be
subject to a "lock-up" period restricting such sales beginning thirty
(30) days prior to, and (i) for up to one hundred and eighty (180)
days following in the case of the Company's IPO or (ii) ninety (90)
days in the case of any offering initiated during the period of two
(2) years following the IPO, and all Holders will agree to abide by
such customary "lock-up" period within the foregoing time limits as is
required by the underwriter in such registration.
4. Negative Covenants
------------------
Until an IPO, the Investors agree that except as otherwise required by law,
all the following decisions of the Company will be brought first to the
Board of Directors of the Company for its approval and that in the event
they participate in a vote on one of the matters described in this Section,
they shall vote their Shares in the Company, and shall use their best
efforts to cause the directors of the Company designated by each of them, in
order that the Company shall not, without (if such decision may be taken by
the Investors) the affirmative vote of the holders of record of at least
sixty six and two thirds percent (662/3%) of the
-19-
outstanding Preferred A Shares, Preferred B Shares and Preferred C Shares
(all such Preferred Shares voting as one class) and the affirmative vote
of the holders of record of at least sixty six and two thirds percent
(662/3%) of the outstanding shares of Ordinary Shares, (voting as a
separate class), and without (when the decision is brought to the Board
of Directors) the consent of one of the Preferred Shares Directors (as
defined in Section 6 of the Shareholders Agreement) and one of the
Management Shares Directors (as defined in Section 6 of the Shareholders
Agreement):
(i) adopt any amendment of the Memorandum or Articles of Association of the
Company or any other action which would have the effect of amending the
specific rights, preferences or privileges of the Preferred Shares;
(ii) authorize or issue any equity securities of any class with rights equal
to or superior to those of the shares of Preferred Shares or other
securities convertible into such securities, nor enter into any contract
or grant any option for the issue of any such securities;
(iii) merge with or consolidate into any corporation, firm or entity, or sell
or otherwise dispose of all or substantially all of its assets;
(iv) increase the number of Directors above eight (8);
(v) declare or pay any dividend or other distribution of cash, shares, or
other assets to the Company's shareholders in their capacity as such; and
(f) appoint or remove from office either of the Company's legal adviser
and/or auditors.
For the purposes of this Section 4 the holders of the Convertible
Debentures shall be entitled to vote as if the Convertible Debentures held
thereby have been converted into Series C-2 Preferred Shares at a
conversion price of $10 per share.
5. Expenses
--------
The Company shall reimburse its members of the Board of Directors for
overseas expenses incurred by directors in connection with overseas
travel in order to participate in the Board of Directors meetings.
6. Miscellaneous
-------------
6.1. Further Assurances
------------------
Each of the parties hereto shall perform such further acts and
execute such further documents as may reasonably be necessary to
carry out and give full effect to the provisions of this Agreement
and the intentions of the parties as reflected thereby.
6.2. Governing Law; Jurisdiction
---------------------------
-20-
This Agreement shall be governed by and construed according to the
laws of the State of Israel, without regard to the conflict of laws
provisions thereof. Any dispute arising under or in relation to this
Agreement shall be resolved exclusively in the competent court for
Tel Aviv-Jaffa district, and each of the parties hereby submits
irrevocably to the exclusive jurisdiction of such court for any such
dispute.
6.3. Successors and Assigns; Assignment
----------------------------------
Except as otherwise expressly limited herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties hereto.
None of the rights, privileges, or obligations set forth in, arising
under, or created by this Agreement may be assigned or transferred
without the prior consent in writing of each party to this
Agreement, with the exception of (a) assignments and transfers
between the Investors, (b) assignments and transfers from an
Investor to any other entity which controls, is controlled by or is
under common control with, such Investor, (c) as to any Investor
which is a partnership, in addition, assignments and transfers to
its partners and to affiliated partnerships managed by the same
management company or managing general partner or by an entity which
controls, is controlled by, or is under common control with, such
management company or managing general partner; (d) as to any
shareholder's partner which is a limited liability company,
following assignments and transfers by such shareholder to its
partners which are limited liability companies, such limited
liability companies may make assignments and transfers to such
limited liability companies' respective members, or (e) as to GE
Capital, any permitted transferee pursuant to Section 2.3 of the
Shareholders Agreement; provided, however, that any
transfers/assignment according to (c) and (d) above shall be
permissible only provided that all said partners and company members
of such partners nominate a single individual or a single entity as
their representative to serve as such until the Company's IPO, with
respect to all their affairs with the Company, which representative
shall be their proxy and agent until the IPO to act in their name in
all matters related to their rights as shareholders in the Company
and provided further that any assignment of any rights or
obligations by any of the parties to this Agreement to any assignee
shall be permissible only if the party assigning rights or
obligations has transferred all of the shares of the Company held by
it/him to such assignee.
Notwithstanding anything contained in this Agreement to the
contrary, in the event GE Capital transfers more than 256,410
Ordinary Shares (or Series C-1 Preferred Shares or warrants
convertible or exercisable for such number of Ordinary Shares) to
any person or entity (other than to a permitted transferee pursuant
to Section 2.3 of the Shareholders Agreement), such transferee may,
at the request of GE Capital, upon execution of appropriate
documentation, become a party to this
-21-
Agreement, with all the rights and obligations of a holder of the
class (or classes) of securities then held by it (but without any of
the rights specifically provided herein only to GE Capital), and
such transferee and its subsequent transferees shall have the same
right to transfer its rights hereunder to any transferee of all of
its securities issued by the Company.
6.4. Entire Agreement; Amendment and Waiver
--------------------------------------
This Agreement and the Schedules hereto constitute the full and
entire understanding and agreement between the parties or any of
them and supersedes any prior agreement between the parties or any
of them with regard to the subject matters hereof and thereof. 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 following written
notice to all of the Investors and with the written consent of (a)
Investors holding at least ninety percent (90%) in interest of the
Ordinary Shares (not including Ordinary Shares received upon
conversion of Preferred Shares), (b) Investors holding at least
ninety percent (90%) in interest of the Preferred A Shares and
Preferred B Shares (including all Ordinary Shares received upon
conversion of Preferred A Shares and Preferred B Shares), (voting
together as a single class), and (c) Investors holding at least
ninety percent (90%) in interest of the Preferred C Shares
(including all Ordinary Shares received upon conversion of Preferred
C Shares).
6.5. Notices
-------
All notices and other communications required or permitted hereunder
to be given to a party to this Agreement shall be in writing and
shall be telecopied or mailed by registered or certified mail,
postage prepaid, or otherwise delivered by hand or by messenger if
sent to an address within Israel, or by Courier Service (such as
Federal Express) if sent to an address outside of Israel, addressed
to such party's address as set forth below or at such other address
as the party shall have furnished to each other party in writing in
accordance with this provision:
if to the 1996 Investors: to the addresses set forth in Schedule
1
if to the 1998 Investors: to the addresses set forth in Schedule
2.
if to the 1999 Investors: to the addresses set forth in Schedule
3.
if to the New Investors: to the address set forth in Schedule 4.
if to the Founders: to the addresses set forth in Schedule 5.
if to the Company: RTS Software Ltd.
Science Based Industries Campus
P.O. Box 23504, Jerusalem 91230, Israel
-22-
Facsimile: 972-2-5815-507
or such other address with respect to a party as such party shall
notify by ten (10) days advance written notice to each other party
in writing as above provided. Any notice sent in accordance with
this Section 6.5 shall be effective (i) if mailed five (5) business
days after mailing, (ii) if sent by messenger, upon receipt, and
(iii) if sent via telecopier, upon transmission and electronic
confirmation of receipt or (if transmitted and received on a non-
business day on the first business day following transmission and
electronic confirmation of receipt).
6.6. Delays or Omissions
-------------------
No delay or omission to exercise any right, power, or remedy
accruing to any party upon any breach or default under this
Agreement, shall be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent, or
approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of
any party of any provisions or conditions of this Agreement, must be
in writing and shall be effective only to the extent specifically
set forth in such writing. All remedies, either under this Agreement
or by law or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
6.7. Severability
------------
If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, then such
provision shall be excluded from this Agreement and the remainder of
this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms;
provided, however, that in such event this Agreement shall be
--------
interpreted so as to give effect, to the greatest extent consistent
with and permitted by applicable law, to the meaning and intention
of the excluded provision as determined by such court of competent
jurisdiction.
6.8. Counterparts
------------
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original and enforceable against the
parties actually executing such counterpart, and all of which
together shall constitute one and the same instrument.
6.9. Administration of Certain Investors
-----------------------------------
For purposes of administrative simplicity, any right of the STAR
Investors (as defined in Schedule 1), hereunder shall be exercised
by SVM STAR Venture Capital Management Ltd. ("SVM"), and each of the
STAR Investors hereby appoints SVM as its agent and proxy for such
purposes. For purposes of determining the availability of any right
-23-
or the applicability of any limitation under this Agreement, all
Ordinary Shares or Preferred Shares, as the case may be, held by any
of the STAR Investors (as defined in Schedule 1) and any transferee
of any STAR Investor permitted under Section 8.3 of that certain
Share Purchase Agreement dated as of February 26, 1998 entered into
by and among the purchasers detailed in Schedule 1.1 to that
agreement and the Company, shall be aggregated and the STAR
Investors and any such transferees be viewed as a single Investor.
For purposes of determining the availability of any right or the
applicability of any limitation under this Agreement, all Ordinary
Shares or Preferred Shares, as the case may be, held by Clal Venture
Capital Ltd., Clalit Capital Fund, Clal Industries and Investments
and by Clal Electronics Industries Ltd. and any assignee thereof
shall be aggregated and the Clal Investors (as defined in Schedule
1) and any such transferee be viewed as a single Investor. For
purposes of determining the availability of any right or
applicability of any limitation under this Agreement, all Ordinary
Shares or Preferred Shares, as the case may be, held by Jerusalem
Pacific Ventures (1994) Ltd. and Unicycle Trading Company and any
assignee thereof shall be aggregated and the JPV Investors (as
defined in Schedule 1) and any such transferees be viewed as a
single Investor and for the purposes of administrative simplicity
any rights of the JPV Investors (as defined in Schedule 1) hereunder
shall be exercised by Jerusalem Pacific Ventures (1994) L.P. and
Unicycle Trading Company hereby appoints Jerusalem Pacific Ventures
(1994) L.P. as its agent and proxy for such purposes. For purposes
of determining the availability of any right or the applicability of
any limitation under this Agreement, all Ordinary Shares or
Preferred Shares, as the case may be, held by Bessemer Venture
Investors L.P., Bessemer Venture Partners IV L.P. or Bessec Ventures
IV L.P., and any assignee of Bessemer Venture Investors L.P.,
Bessemer Venture Partners IV L.P. or Bessec Ventures IV L.P., shall
be aggregated and the Bessemer Investors (as defined in Schedule 2)
and any such transferees be viewed as a single Investor and for the
purposes of administrative simplicity any rights of the Bessemer
Investors (as defined in Schedule 2) hereunder shall be exercised by
Bessemer Venture Partners IV L.P. and each of the Bessemer Investors
hereby appoints Bessemer Venture Partners IV L.P. as its agent and
proxy for such purposes. For purposes of determining the
availability of any right or applicability of any limitation under
this Agreement, all Ordinary Shares or Preferred Shares, as the case
may be, held by GE Capital or any permitted transferee thereof
pursuant to Section 2.3 of the Shareholders Agreement, shall be
aggregated and viewed as a single investor and for the purposes of
administrative simplicity any rights of such Investors hereunder
shall be exercised by GE Capital. For the purpose of determining the
availability of any right or the applicability of any limitation
under this Agreement, all Ordinary Shares and Preferred Shares held
by any of Eucalyptus Ventures L.P., Eucalyptus Ventures (Cayman)
L.P., Eucalyptus Ventures Affiliate Fund L.P., Eucalyptus Ventures
(Israel) L.P. and Access Technology
-24-
Partners L.P. and their permitted assignees shall be aggregated and
the Eucalyptus Investors (as defined in Schedule 3) and any such
permitted assignees shall be viewed as a single Investor and for the
purposes of administrative simplicity, any rights of the Eucalyptus
Investors (as defined in Schedule 3) hereunder shall be exercised by
Eucalyptus Venture Management LLC and each of the Eucalyptus
Investors hereby appoints Eucalyptus Venture Management LLC as its
agent and proxy for such purposes.
6.10. Titles, Subtitles, Preamble and Schedules
-----------------------------------------
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement. The preamble and Schedules are an
integral and inseparable part of this Agreement.
6.11. Prior Agreement
---------------
This Agreement supersedes the 1999 Amendment and Restatement to
Investors Rights Agreement, Second 1998 Amendment and Restatement to
Investors Rights Agreement, the Amendment and Restatement to the
Investors Rights Agreement dated as of February 27, 1998 and the
Investors Rights Agreement dated as of September 30, 1996, among the
Company and certain of the Investors (and their predecessors in
interest).
[THIS SPACE INTENTIONALLY LEFT BLANK]
-25-
IN WITNESS WHEREOF the parties have signed this Agreement as of the date first
hereinabove set forth.
RTS Software Ltd.
By: _______________________________
____________________________________
Clal Industries and Investments Ltd.
By: _______________________________
____________________________________
Clal Electronics Industries Ltd.
By: _______________________________
____________________________________
The Challenge Fund - Etgar II L.P.
By: _______________________________
____________________________________
Koonras Technologies Ltd.
By: _______________________________
____________________________________
Dubfam Investments Ltd.
By: _______________________________
____________________ ___________________
Eucalyptus Ventures L.P. Eucalyptus Ventures (Cayman) L.P.
by its General Partner Eucalyptus by its General Partner Eucalyptus
Venture Management L.L.C. Venture Management L.L.C.
____________________ ___________________
Eucalyptus Ventures (Israel) L.P. Eucalyptus Ventures Affiliate Fund L.P.
by its General Partner Eucalyptus its General Partner Eucalyptus
Venture Management L.L.C. Venture Management L.L.C.
Bessemer Venture Partners IV L.P.
GE Capital Equity Holdings, Inc.
-26-
By_______________________________ By Deer IV & Co. LLC
Bessemer Venture Investors L.P. By: _______________________________
by Deer IV & Co. LLC
by_______________________________
___________________________________
_________________________________ Bessec Ventures IV L.P.
Link Technologies Venture Capital
1 LLC.
by_______________________________
by Deer IV & Co. LLC
by_________________________________
_________________________________ ___________________________________
SVE STAR Ventures Enterprises SVE STAR Ventures Enterprises No
No III, A German Civil Law IIIa, a German Civil Law Partnership
Partnership (with Limitation of (with Limitation of liability)
liability)
By: SVM STAR Ventures By: SVM STAR Ventures
Management GMBH No.3 Management GMBH No.3
by:______________________________ by: _______________________________
_________________
SVM STAR Ventures ___________________________________
Managementgesellschaft mbH SVE STAR Ventures Enterprises No
No.3 & Co Beteiligungs KG V,A German Civil Law partnership
(with Limitation of liability)
By: SVM STAR Ventures
Management GMBH No.3 By: SVM STAR Venture
Management GMBH No.3
by:______________________________
by:________________________________
_____________________
SVM Star Venture Management
GmbH No.3
by:________________________________
_________________________________ ___________________________________
Jerusalem Pacific Ventures (1994) Clal Venture Capital L.P..
-27-
L.P.
by:___________________________ by:______________________________
______________________________
Unicycle Trading Company L.P.
by:___________________________
______________________________ _________________________________
Clalit Capital Fund L.P. Advanced Technology Ventures IV
L.P.
by:___________________________ by:______________________________
______________________________
STAR Management of Investments
(1993) Limited Partnership
by:___________________________
______________________________ _________________________________
One Liberty Fund III L.P. Gilde IT Fund B.V.
By:___________________________ By:______________________________
______________________________ _________________________________
Leumi & Co. Investment Bankers Inter Cosma Ltd.
Ltd.
by:___________________________ by:______________________________
______________________________ _________________________________
Courses Technology Investments Steps Technology Investments Ltd.
Ltd.
by:___________________________ by:______________________________
____________________ _____________________
Samuel HaCohen Sequel Technology Ltd.
____________________ by:______________________________
-28-
Shimon Katz
____________________ _____________________
Yizhak Chemo Vladimir Morgernstern
________________________________ __________________________________
Hambrecht & Quist California Hambrecht & Quist Employee Venture
by its Fund, L.P. II
by its General Partner Hambrecht &
Quist Venture Management, L.L.C.
________________________________ __________________________________
Access Technology Partners, L.P. Access Technology Partners Brokers
by its General Partner Access Fund, L.P.
Technology Management, L.L.C. by its General Partner Hambrecht &
and by its Managing Member Quist Venture Management L.L.C.
Hambrecht & Quist Venture
Management, L.L.C.
________________________________ __________________________________
Hambrecht & Quist RTS Software Migdal Eshcol Financim Ltd.
Investors, LLC
By:_____________________________ By:_______________________________
-29-
SCHEDULE 1
THE 1996 INVESTORS
SVE STAR Ventures Enterprises No III , A German Civil Law Partnership (with
Limitation of liability);
Possartsrasse 9
D-81679 Munich, Germany
SVE STAR Ventures Enterprises No IIIa, a German Civil Law Partnership (with
Limitation of liability)
Possartsrasse 9
D-81679 Munich, Germany
SVM Star Venture Management GmbH No.3
Possartsrasse 9
D-81679 Munich, Germany
SVM STAR Ventures Managementgesellschaft mbH No.3 & Co. Beteiligungs KG
Possartsrasse 9
D-81679 Munich, Germany
SVE STAR Ventures Enterprises No. V, A German Civil Law partnership (with
Limitation of liability)
Possartsrasse 9
D-81679 Munich, Germany
STAR Management of Investments (1993) Limited Partnership
11 Galgalei Haplada St., Herzelia Pituach
(the "STAR Investors")
Clal Venture Capital L.P.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel
("Clal Venture Capital")
Clalit Capital Fund L.P.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel
("Clalit")
-30-
Jerusalem Pacific Ventures (1994) L.P.
505 Sansome St. (15th floor)
San francisco, CA 94111
Unicycle Trading Company L.P.
611 No. Oakhurst Drive
Beverly Hills, CA 90210
(hereinafter the "JPV Investors")
Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301
("ATV")
One Liberty Fund III L.P.
Newtonlaan 91, PO Box 85067, the Netherlands
Gilde IT Fund B.V.
Newtonlaan 91, PO Box 85067, the Netherlands
Leumi & Co. Investment Bankers Ltd.
25 Kalisher St. Tel Aviv
InterCosma Ltd.
Atarot PO Box 1365, Jerusalem
Courses Technology Investments Ltd.
9 Achad Haam St., Tel Aviv
Steps Technology Investments Ltd.
9 Achad Haam St., Tel Aviv
-31-
SCHEDULE 2
THE 1998 INVESTORS
GE Capital Equity Holdings, Inc.
120 Long Ridge Road
Stamford CT 06927
USA
(hereinafter "GE Capital")
Bessemer Venture Investors L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
Bessemer Venture Partners IV L.P.
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
Bessec Ventures IV L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
(hereinafter: the "Bessemer Investors")
Link Technologies Venture Capital I LLC.
200 West Ninth Street Plaza, Wilmington
Delaware 19801, USA
SVE STAR Ventures Enterprises No III, A
German Civil Law Partnership
(with Limitation of liability);
Possartsrasse 9
D-81679 Munich, Germany
SVE STAR Ventures Enterprises No IIIa, a
German Civil Law Partnership
(with Limitation of liability)
Possartsrasse 9
D-81679 Munich, Germany
SVM Star Venture Management GmbH No.3
Possartsrasse 9
-32-
D-81679 Munich, Germany
SVM STAR Ventures Managementgesellschaft
mbH No.3 & Co. Beteiligungs KG
Possartsrasse 9
D-81679 Munich, Germany
SVE STAR Ventures Enterprises No. V,A
German Civil Law partnership (with Limitation
of liability)
Possartsrasse 9
D-81679 Munich, Germany
STAR Management of Investments (1993)
Limited Partnership
11 Galgalei Haplada St., Herzelia Pituach
(the "STAR Investors")
Clal Venture Capital L.P.
Clal Building
Kiriat Atidim,
Tel Aviv, Israel
Clalit Capital Fund L.P.
Clal Building
Kiriat Atidim,
Tel Aviv, Israel
Jerusalem Pacific Ventures (1994) L.P.
505 Sansome St. (15th floor)
San francisco, CA 94111
Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301
Gilde IT Fund B.V.
Newtonlaan 91, PO Box 85067, the Netherlands
Courses Technology Investments Ltd.
9 Achad Haam St., Tel Aviv
Steps Technology Investments Ltd.
9 Achad Haam St., Tel Aviv
-33-
SCHEDULE 3
THE 1999 INVESTORS
Eucalyptus Ventures L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
Eucalyptus Ventures (Cayman) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
Eucalyptus Ventures (Israel) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
Eucalyptus Ventures Affiliate Fund L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
Hambrecht & Quist California
One Bush Street
San Francisco, CA 94104
United States
Hambrecht & Quist Employee Venture Fund L.P. II
One Bush Street
San Francisco, CA 94104
United States
Access Technology Partners, L.P.
One Bush Street
San Francisco, CA 94104
United States
Access Technology Partners Brokers Fund L.P.
One Bush Street
San Francisco, CA 94104
United States
-34-
Hambrecht & Quist RTS Software Investors, LLC
One Bush Street
San Francisco, CA 94104
United States
Samuel HaCohen
15 Ben Zeev St., Jerusalem
Leumi & Co. Investment Bankers Ltd.
25 Kalisher St. Tel Aviv
Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301
Link Technologies Venture Capital I LLC.
200 West Ninth Street Plaza, Wilmington
Delaware 19801, USA
Bessemer Venture Partners IV L.P.
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
Bessec Ventures IV L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
GE Capital Equity Holdings, Inc.
120 Long Ridge Road
Stamford CT 06927
USA
-35-
SCHEDULE 4
THE NEW INVESTORS
Clal Electronics Industries Ltd.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel
Clal Industries and Investments Ltd.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel
Clalit Capital Fund L.P.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel
(collectively with Clal Venture Capital, the "Clal Group" or the "Clal
Investors")
The Challenge Fund-Etgar II L.P.
1 Ha'shikma Street
Savyon, Israel 56530
Koonras Technologies Ltd.
21 Ha'arba'a Street,
Tel Aviv, Israel
Dubfam Investments Ltd.
284 Musgrave Road, Berea,
Durban, South Africa
InterCosma Ltd
Atarot PO Box 1365, Jerusalem
Migdal Eshcol Financim Ltd.
26 Saadia Gaon Street
Tel Aviv, Israel
Jerusalem Pacific Ventures (1994) L.P.
505 Sansome St. (15th floor)
San francisco, CA 94111
Unicycle Trading Company L.P.
611 No. Oakhurst Drive
-36-
Beverly Hills, CA 90210
Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301
Link Technologies Venture Capital I LLC
200 West Ninth Street Plaza, Wilmington
Delaware 19801, USA
Bessemer Venture Partners IV L.P.
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
Bessemer Venture Investors L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
Bessec Ventures IV L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA
GE Capital Equity Holdings, Inc.
120 Long Ridge Road
Stamford CT 06927
USA
Eucalyptus Ventures L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
Eucalyptus Ventures(Cayman) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd
Tel Aviv 66883
Israel
Eucalyptus Ventures (Israel) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
-37-
Eucalyptus Ventures Affiliate Fund L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
Hambrecht & Quist California
One Bush Street
San Francisco, CA 94104
United States
Hambrecht & Quist Employee Venture Fund L.P. II
One Bush Street
San Francisco, CA 94104
United States
Access Technology Partners, L.P.
One Bush Street
San Francisco, CA 94104
United States
Access Technology Partners Brokers Fund L.P.
One Bush Street
San Francisco, CA 94104
United States
Hambrecht & Quist RTS Software Investors, LLC
One Bush Street
San Francisco, CA 94104
United States
-38-
SCHEDULE 5
THE FOUNDERS
Samuel HaCohen
15 Ben Zeev St., Jerusalem
Vladimir Morgenstern
26 Lohamei Hagetaot St., Jerusalem
Yitzhak Chemo
24 David Meretz St., Jerusalem
Shimon Katz
54 Shmaryahu Levin St., Jerusalem
Sequel Technology Ltd.
c/o Hayman Friedlander
4 Hapalmah St., Kiriat Ono