EXHIBIT 1.1
VIRYANET LTD.
__________ Ordinary Shares 1
UNDERWRITING AGREEMENT
----------------------
__________ , 2000
CHASE SECURITIES, INC.
SALOMON SMITH BARNEY INC.
DAIN RAUSCHER WESSELS
c/o Chase Securities, Inc.
One Bush Street
San Francisco, CA 94104
Ladies and Gentlemen:
ViryaNet Ltd., an Israeli corporation (herein called the Company),
proposes to issue and sell __________ shares of its authorized but unissued
Ordinary Shares, $____ par value NIS 0.1 per share (herein called the Ordinary
Shares) of the Company (said __________ Ordinary Shares being herein called the
Underwritten Shares). The Company proposes to grant to the Underwriters (as
hereinafter defined) an option to purchase up to __________ additional Ordinary
Shares. The additional __________ Ordinary Shares to be sold by the Company
pursuant to such option are herein collectively called the Option Shares and
with the Underwritten Shares herein collectively called the Shares. The
Ordinary Shares are more fully described in the Registration Statement and the
Prospectus hereinafter mentioned.
As part of the offering contemplated by this Agreement, Chase
Securities, Inc. (the "Designated Underwriter") has agreed to reserve out of the
Underwritten Shares purchased by it under this Agreement, up to _______ shares,
for sale to the Company's directors, officers, employees and other parties
associated with the Company (collectively, "Participants"), as set forth in the
Prospectus (as defined herein) under the heading "Underwriting" (the "Directed
Share Program"). The Underwritten Shares to be sold by the Designated
Underwriter pursuant to the Directed Share Program (the "Directed Shares") will
be sold by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not subscribed for by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
_______________________
1 Plus an option to purchase from the Company up to an aggregate of
_________________ additional shares to cover over-allotments.
The Company hereby confirms the agreements made with respect to the
purchase of the Shares by the several underwriters, for whom you are acting as
representatives, named in Schedule I hereto (herein collectively called the
Underwriters, which term shall also include any underwriter purchasing Shares
pursuant to Section 3(b) hereof). You represent and warrant that you have been
authorized by each of the other Underwriters to enter into this Agreement on its
behalf and to act for it in the manner herein provided.
1. Registration Statement. The Company has filed with the Securities
and Exchange Commission (herein called the Commission) a registration statement
on Form F-1 (No. 333-_____), including the related preliminary prospectus, for
the registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Shares. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Shares (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Shares first filed with the Commission pursuant to
Rule 424(b) and Rule 430A (or if no such filing is required, as included in the
Registration Statement) and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the filing
with the Commission of such supplement or the effectiveness of such amendment)
such prospectus as so supplemented or amended. The term Preliminary Prospectus
as used in this Agreement shall mean each preliminary prospectus included in
such registration statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. Representations and Warranties of the Company.
(a) The Company hereby represents and warrants as follows:
(i) Each of the Company and its subsidiaries (herein called the
Subsidiaries) has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own or lease its
properties and conduct its business as described in the
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Registration Statement and the Prospectus and as being conducted, and is
duly qualified as a foreign corporation and in good standing in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary,
except where the failure to be so qualified would not, individually or in
the aggregate, have a material adverse effect on the earnings, business,
prospects, management, properties, assets, rights, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole (herein called a Material Adverse Effect). The outstanding
shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable. The
capital stock in such Subsidiaries are owned by the Company or another
Subsidiary free and clear of all liens, encumbrances and equities and
claims; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding. The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than __________.
(ii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
materially adverse change in the earnings, business, prospects, management,
properties, assets, rights, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, other than as set forth in the Registration Statement and the
Prospectus, and since such dates, except in the ordinary course of
business, neither the Company nor any of the Subsidiaries has entered into
any material transaction not referred to in the Registration Statement and
the Prospectus.
(iii) The Registration Statement and the Prospectus comply, and
on the Closing Date (as hereinafter defined) and any later date on which
Option Shares are to be purchased, the Prospectus will comply, in all
material respects, with the provisions of the Securities Act and the rules
and regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date the Prospectus did not and, on the
Closing Date and any later date on which Option Shares are to be purchased,
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in this
subparagraph (iii) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters for use in the Registration
Statement or the Prospectus. The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; the Shares to be issued and sold by the Company have been
duly authorized and, when issued and paid for as contemplated herein, will
be validly issued, fully paid and non-assessable; and, except as set forth
in the Prospectus, no preemptive, co-sale right, registration right, right
of first refusal or other similar rights of shareholders exist with respect
to any of the
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Shares or the issue and sale thereof. No further approval or authority of
the shareholders or the Board of Directors of the Company will be required
for the issuance and sale of the Shares as contemplated herein. Neither the
filing of the Registration Statement nor the offering or sale of the Shares
as contemplated by this Agreement gives rise to any rights, other than
those which have been waived or satisfied, for or relating to the
registration of any shares of capital stock. Except as described in the
Prospectus, there are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act. Except as described in the
Prospectus, there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, the
Company.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct in all material
respects. All of the Shares conform in all material respects to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the legal requirements of the
jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of
the Shares, nor, to the best knowledge of the Company, instituted
proceedings for that purpose.
(vi) The Shares have been approved for listing on the Nasdaq
National Market, subject only to official notice of issuance.
(vii) The Company has full corporate power and authority to
enter into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement on the part of the Company,
enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; the
execution, delivery and performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, (i) any bond, debenture, note or other evidence of indebtedness, or
under any lease, contract, license, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which its or any of its
Subsidiaries' properties may be bound, (ii) the charter or bylaws of the
Company or any of its Subsidiaries, or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government
or governmental agency or body, domestic or foreign, having jurisdiction
over the Company or any of its
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subsidiaries or its properties except, in the case of clause (iii), where
such breach, violation or default would not have a Material Adverse Effect.
No consent, approval, authorization or order of or qualification with any
court, government or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its Subsidiaries or over its
or any of its Subsidiaries' properties is required for the execution and
delivery of this Agreement and the consummation by the Company of the
transactions herein contemplated, except such as may be required under the
Securities Act or under U.S. state or other securities or Blue Sky laws,
all of which requirements have been satisfied in all material respects.
(viii) Neither the Company nor any of its Subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since such date, there has not been any material change in
the capital stock or long-term debt of the Company or any Subsidiary or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company or any Subsidiary, otherwise than as set forth or contemplated in
the Prospectus.
(ix) The audited financial statements of the Company, together
with the related notes and supporting schedules, and the unaudited
financial statements, filed as part of the Registration Statement or
included or incorporated by reference in the Prospectus, fairly present the
financial condition and results of operations of the Company and its
Subsidiaries at the dates and for the periods indicated, in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The unaudited financial statements
(including related notes) filed as part of the Registration Statement or
included in the Prospectus include all adjustments, consisting of normal
recurring adjustments, that the Company considers necessary for a fair
presentation of the financial position and results of operations for these
periods. The selected and summary financial and statistical data included
in the Registration Statement present fairly the information shown therein
and have been compiled on a basis consistent with the audited financial
statements presented therein. No other financial statements or schedules
are required to be included in the Registration Statement.
(x) Kost, Forer & Gabbay, a member of Ernst & Young
International, who has audited the balance sheets of the Company as of
December 31, 1998 and 1999 and the related statements of operations,
shareholder's equity and cash flows, together with the related schedules
and notes for each of the three (3) years in the period ended December 31,
1999, whose report appears in the Registration Statement and in the
Prospectus and who have delivered the Original Letter referred to in
Section 9(f) hereof, are independent public accountants as required by and
within the meaning of the Securities Act and the Rules and Regulations.
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(xi) All real property and buildings held under lease by the
Company and its Subsidiaries are held by them under valid and enforceable
leases except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles, with such
exceptions as would not have a Material Adverse Effect.
(xii) The Company and its Subsidiaries carry or maintain
insurance in such amounts and covering such risks as is reasonably adequate
for the conduct of their respective businesses and the value of their
respective properties. Neither the Company nor its Subsidiaries has been
refused any insurance coverage sought or applied for; and neither the
Company nor any of its Subsidiaries has any reason to believe that they
will not be able to renew their existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue their respective businesses at a cost that
would not have a Material Adverse Effect.
(xiii) The Company and its Subsidiaries own or possess adequate
rights to use all inventions, designs, computer programs, computer code,
communications protocols, security devices, trade secrets, know-how,
trademarks, service marks, trade names, copyright works or other
information (herein collectively called Intellectual Property) which are
necessary to conduct their businesses as described in the Registration
Statement and the Prospectus; the Company has not received any notice of,
and has no knowledge of, any infringement of or conflict with any rights of
the Company by others with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect; the Company has
not received any notice of, and has no knowledge of, any infringement of or
conflict with any rights of others with respect to any Intellectual
Property which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect; none of the Intellectual Property licensed to or by the Company are
unenforceable or invalid; and the Company is not aware of the granting of
any patent rights to third parties or the filing of any patent applications
by third parties or any other rights of third parties to any Intellectual
Property owned by the Company or its Subsidiaries.
(xiv) There are no legal, governmental or administrative
proceedings pending to which the Company or any of its Subsidiaries is a
party or of which any property or assets of the Company or any of its
Subsidiaries is the subject which, if determined adversely to the Company,
may have a Material Adverse Effect, and to the Company's best knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or by others.
(xv) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement.
(xvi) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness
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by the Company or any of its Subsidiaries to or for the benefit of any of
the officers or directors of the Company or any of the members of the
families of any of them, which is required to be disclosed in the
Registration Statement and the Prospectus which is not so disclosed. No
relationship, direct or indirect, exists between or among the Company or
any of its Subsidiaries on the one hand, and the directors, officers,
shareholders, collaboration partners, joint venturers, licensees,
licensors, consultants, customers or suppliers of the Company or any of its
Subsidiaries on the other hand, which is required to be described in the
Prospectus which is not so described.
(xvii) No labor disturbance by the employees of the Company or
any of its Subsidiaries exists or, to the knowledge of the Company, is
imminent which might be expected to have a Material Adverse Effect. No
collective bargaining agreement exists with any of the Company's or any of
its Subsidiaries' employees and, to the best of the Company's knowledge, no
such agreement is imminent.
(xviii) The Company and its Subsidiaries have filed all foreign,
U.S. federal, state and local income and franchise tax returns required to
be filed through the date hereof and have paid all taxes due thereon, and
no tax deficiency has been determined adversely to the Company or its
Subsidiaries which will have (nor does the Company have any knowledge of
any tax deficiency which, if determined adversely to the Company, might
have) a Material Adverse Effect. All tax liabilities are adequately
provided for on the books of the Company and its Subsidiaries. Neither the
Company nor its Subsidiaries is currently subject to any audit by any tax
authorities and, to the Company's knowledge, no such audit is threatened or
contemplated by any such authorities.
(xix) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, neither the Company nor its Subsidiaries has
(i) issued or granted or obligated themselves to issue or grant any
securities, other than option grants pursuant to the Company's share option
plan in the ordinary course of business and consistent with past practice,
(ii) incurred any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business or (iv) declared or paid any dividend on their capital stock.
(xx) The Company and each Subsidiary (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurances that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of their financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for its assets, (C) access to its assets is permitted only
in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(xxi) Neither the Company nor its Subsidiaries (i) is in
violation of their charter or bylaws, (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any license agreement,
purchase order, manufacturing or supply agreement, collaboration agreement,
material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject, other than as would
not cause a Material Adverse Effect (and, to its knowledge, no other party
to any such agreement is in default thereof and no event has occurred
which, with notice, lapse of time or both, would constitute such a
default), or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject and neither the Company nor its
Subsidiaries has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary for the ownership of their property or to the conduct of their
businesses, other than as would not cause a Material Adverse Effect.
(xxii) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the
consummation of the transactions herein contemplated (except such
additional steps as may be necessary to qualify the Shares for public
offering by the Underwriters under U.S. state securities or blue sky laws)
has been obtained or made and is in full force and effect.
(xxiii) The Company and its Subsidiaries are in compliance in
all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (herein called ERISA);
no "reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company or its
Subsidiaries would have any liability; neither the Company nor any
Subsidiary has incurred and do not expect to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretation
thereunder (herein called the Code); and each "pension plan" for which the
Company and its Subsidiaries would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure
to act, that would cause the loss of such qualification.
(xxiv) Except as set forth in the Registration Statement and
Prospectus, (i) and except as would not, singularly or in the aggregate
have a Material Adverse Effect, the Company and its Subsidiaries are in
compliance with all rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and protection of
health or the environment ("Environmental Laws") which are applicable to
its business, (ii) neither the Company nor its Subsidiaries has received
any notice from any governmental authority or third party of an asserted
claim under Environmental
8
Laws, which claim is required to be disclosed in the Registration Statement
and the Prospectus, and (iii) to the best of its knowledge, neither the
Company nor its Subsidiaries will be required to make future material
capital expenditures to comply with Environmental Laws. There has been no
storage, disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, medical wastes, hazardous wastes or
hazardous substances by the Company or its Subsidiaries (or, to the
knowledge of the Company, any of its or their predecessors in interest) at,
upon or from any of the property now or previously owned or leased by the
Company or its Subsidiaries in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or its Subsidiaries or
with respect to which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which
would not have or would not be reasonably likely to have, singularly or in
the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a Material Adverse Effect; and
the terms "hazardous wastes," "toxic wastes," "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable local,
state, federal and foreign laws or regulations with respect to
environmental protection.
(xxv) The Company and its Subsidiaries possess such valid and
current certificates, authorizations or permits issued by the appropriate
U.S. state, federal or foreign regulatory agencies or bodies necessary to
conduct their business, and neither the Company nor any of the Subsidiaries
has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, could result in a Material
Adverse Effect.
(xxvi) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will
not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
(xxvii) Neither the Company nor any of its Subsidiaries has at
any time during the last five (5) years (i) made any unlawful contribution
to any candidate for foreign office or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any foreign,
federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
9
(xxviii) The statements in the Prospectus, under the heading
"Certain Transactions," set forth all existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company and its
Subsidiaries, on the one hand, and any officer, director or shareholder of
the Company, or with any partner, affiliate or associate of any of the
foregoing persons or entities, on the other hand, required to be set forth
or described thereunder.
(xxix) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Shares
to facilitate the sale or resale of the Shares.
(xxx) The Company has not distributed and will not distribute
prior to the later of (i) the Closing Date, or any date on which Option
Shares are to be purchased, as the case may be, and (ii) completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
(xxxi) The Company has not had any disagreements, during its two
most recent fiscal years or any subsequent interim period, with an
independent accountant who was previously engaged as the principal
accountant to audit the Company's financial statements and on whom the
principal accountant expressed reliance in its report (either of whom
resigned, indicated that it declined to stand for re-election after the
completion of the current audit, or was dismissed), on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement(s) would require disclosure
in the Registration Statement.
(xxxii) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions
contemplated hereby.
(xxxiii) Each officer and director of the Company and each
beneficial owner of the outstanding issued capital stock of the Company has
agreed to sign an agreement substantially in the form attached hereto as
Exhibit A (the "Lock-up Agreements"). The Company has provided to counsel
for the Underwriters a complete and accurate list of all securityholders of
the Company and the number and type of securities held by each
securityholder. The Company has provided to counsel for the Underwriters
true, accurate and complete copies of all of the Lock-up Agreements
presently in effect or effected hereby. No stamp, registration or similar
tax or charge is required to be paid in connection with the offering and
sale of the Shares by the Underwriters.
(xxxiv) Except as disclosed in the Prospectus, under current
laws and regulations of the State of Israel and any political subdivision
thereof, all dividends and other distributions declared and payable on the
Shares may be paid by the Company to the holder thereof in United States
dollars or New Israeli Shekels that may be converted
10
into foreign currency and freely transferred out of Israel and all such
payments made to holders thereof or therein who are non-residents of Israel
will not be subject to income, withholding or other taxes under laws and
regulations of Israel or any political subdivision or taxing authority
thereof or therein and will otherwise be free and clear of any other tax,
duty, withholding or deduction in Israel or any political subdivision or
taxing authority thereof or therein and without the necessity of obtaining
any governmental authorization in Israel or any political subdivision or
taxing authority thereof or therein.
(xxxv) The Company does not believe that, upon the consummation
of the transactions contemplated hereby and the application of the proceeds
as described in the Registration Statement under the caption "Use of
Proceeds" it will become a passive foreign investment company (a "PFIC") as
defined in Section 1297 of the Internal Revenue Code of 1986, as amended
(the "Code").
(xxxvi) The Company has received an exemption from the Israel
Securities Authority to offer and sell the Shares, which exemption was in
full force and effect on the date hereof and which shall be in full force
and effect on the date of the Prospectus, on the date that any post-
effective amendment to the Registration Statement shall become effective,
when any supplement or amendment to the Prospectus is filed with the
Commission, and at the Closing Date.
(xxxvii) Except as described in the Prospectus, the Company is
in compliance with all material conditions and requirements stipulated by
the instruments of approval entitling it or any of its operations to the
status of "Approved Enterprise" under Israeli law and by Israeli laws and
regulations relating to such Approved Enterprise status, except such non-
compliance as would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole. All information supplied by the Company with
respect to such applications was true, correct and complete in all material
respects when supplied to the appropriate authorities.
(xxxviii) Except as described in the Prospectus, neither the
Company nor any of its subsidiaries is in material violation of any
conditions or requirements stipulated by the instruments of approval
granted to any of them by the Office of Chief Scientist in the Ministry of
Industry & Trade and any applicable laws and regulations, with respect to
any research and development grants given to it by such office, which
violation, individually or in the aggregate, could have a material adverse
effect on the business, financial condition, or results of operations of
the Company and its subsidiaries taken as a whole. All information supplied
by the Company with respect to such applications was true, correct and
complete in all material respects when supplied to the appropriate
authorities.
(xxxix) The Company's employment agreements in Israel do not
differentiate between compensation paid to employees for a 43 hour work
week or for maximum daily hours, and compensation for overtime work. The
Company believes that it does not have any material exposure by reason of
claims by the employees due to
11
(i) the fact that most of the employees of the Company are in position of
"special trust," (ii) the agreement by the employees to be compensated on a
fixed basis, (iii) the payment by the Company of higher salaries, which
take into account payments for additional hours, (iv) the distribution of
bonuses and share options by the Company, which come in part as
compensation for additional hours, (v) the fact that a non-material number
of overtime hours has been reported, and (vi) the fact that most employees
sign a "waiver of claims" letter upon termination of employment.
(xl) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency, other than those
obtained, is required in connection with the offering of the Directed
Shares in any jurisdiction where the Directed Shares are being offered. The
Company has not offered, or caused the Designated Underwriter to offer,
Stock to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business
with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
(xli) Any certificate signed by an officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall
be deemed to be a representation and warranty by the Company to each
Underwriter as to the matters set forth therein.
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell __________ Underwritten Shares to the several Underwriters and
each of the Underwriters agrees to purchase from the Company the respective
aggregate number of Underwritten Shares set forth opposite its name in Schedule
I. The price at which such Underwritten Shares shall be sold by the Company and
purchased by the several Underwriters shall be $___ per share. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of Underwritten Shares
specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail
or refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of Shares agreed to be purchased by such Underwriter or
Underwriters, the Company shall immediately give notice thereof to you, and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by you of such notice to purchase, or procure one or more other
Underwriters to purchase, in such proportions as may be agreed upon between you
and such purchasing Underwriter or Underwriters and upon the terms herein set
forth, all or any part of the Shares which such defaulting Underwriter or
Underwriters agreed to purchase. If the non-defaulting Underwriters fail so to
make such arrangements with respect to all such shares and portion, the number
of Shares which each non-defaulting Underwriter is otherwise obligated to
purchase under this Agreement shall be automatically increased on a pro rata
basis to absorb the remaining
12
shares and portion which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such Shares exceeds
10% of the total number of Shares which all Underwriters agreed to purchase
hereunder. If the total number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase shall not be purchased or absorbed in accordance
with the two preceding sentences, the Company shall have the right, within 24
hours next succeeding the 24-hour period above referred to, to make arrangements
with other underwriters or purchasers satisfactory to you for purchase of such
shares and portion on the terms herein set forth. In any such case, either you
or the Company shall have the right to postpone the Closing Date determined as
provided in Section 5 hereof for not more than seven business days after the
date originally fixed as the Closing Date pursuant to said Section 5 in order
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made. If neither the non-defaulting
Underwriters nor the Company shall make arrangements within the 24-hour periods
stated above for the purchase of all the Shares which the defaulting Underwriter
or Underwriters agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the Company
to any non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this paragraph (b), and no
action taken hereunder, shall relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions herein set
forth, the Company grants an option to the several Underwriters to purchase,
severally and not jointly up to ___________ Option Shares in the aggregate from
such Company at the same price per share as the Underwriters shall pay for the
Underwritten Shares. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Shares by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of Option Shares
as to which the several Underwriters are exercising the option. Delivery of
certificates for the Option Shares, and payment therefor, shall be made as
provided in Section 5 hereof. The number of Option Shares to be purchased by
each Underwriter shall be the same percentage of the total number of Option
Shares to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Shares, as adjusted by you in such manner as you
deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters
of the Shares to be purchased by them shall be as set forth in the Prospectus.
The Underwriters may from time to time change the public offering price after
the closing of the initial public offering and increase or decrease the
concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front
cover page and in the fifth paragraph under "Underwriting" in the Registration
Statement, any Preliminary Prospectus and the Prospectus relating to the Shares
filed by the Company (insofar as such
13
information relates to the Underwriters) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus, and the Prospectus, and you on behalf of
the respective Underwriters represent and warrant to the Company that the
statements made therein are correct.
(c) The Underwriters shall not, in the aggregate, offer the
Shares in Israel to more than 35 offerees. The Underwriters shall obtain from
such offerees in Israel written confirmation that they are acquiring the Shares
for investment purposes only and not with a view toward distribution or resale
and shall provide copies of these written confirmations to the Company on the
Closing Date. On the Closing Date, the Underwriters shall furnish to the Company
a list of such offerees, the number of Shares acquired by such offerees and the
addresses of such offerees. The Company shall not, under any circumstances,
offer the Shares to any prospective purchaser in Israel without the prior
consent of Chase Securities, Inc.
5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) Delivery of certificates for the Underwritten Shares and the
Option Shares (if the option granted by Section 3(c) hereof shall have been
exercised not later than 10:00 A.M., New York time, on the date two business
days preceding the Closing Date), and payment therefor, shall be made at the
office of Brobeck, Phleger & Harrison LLP, 1633 Broadway, 47th Floor, New York,
New York 10019, at 10:00 a.m., New York time, on the fourth business day after
the date of this Agreement, or at such time on such other day, not later than
seven full business days after such fourth business day, as shall be agreed upon
in writing by the Company and you. The date and hour of such delivery and
payment (which may be postponed as provided in Section 3(b) hereof) are herein
called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be
exercised after 10:00 a.m., New York time, on the date two business days
preceding the Closing Date, delivery of certificates for the Option Shares, and
payment therefor, shall be made at the office of Brobeck, Phleger & Harrison
LLP, 1633 Broadway, 47th Floor, New York, New York 10019, at 10:00 a.m., New
York time, on the third business day after the exercise of such option.
(c) Payment for the Shares purchased from the Company shall be
made to the Company or its order in each case by one or more certified or
official bank check or checks in same day funds. Such payment shall be made upon
delivery of certificates for the Shares to you for the respective accounts of
the several Underwriters against receipt therefor signed by you. Certificates
for the Shares to be delivered to you shall be registered in such name or names
and shall be in such denominations as you may request at least one business day
before the Closing Date, in the case of Underwritten Shares, and at least one
business day prior to the purchase thereof, in the case of the Option Shares.
Such certificates will be made available to the Underwriters for inspection,
checking and packaging at the offices of Lewco Securities Corporation, 2
Broadway, New York, New York 10004 on the business day prior to the Closing Date
or, in the case of the Option Shares, by 3:00 p.m., New York time, on the
business day preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any
14
Underwriter whose check shall not have been received by you on the Closing Date
or any later date on which Option Shares are purchased for the account of such
Underwriter. Any such payment by you shall not relieve such Underwriter from any
of its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees as
follows:
(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A and (ii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously
have been advised and furnished with a copy or to which you shall have
reasonably objected in writing or which is not in compliance with the
Securities Act or the rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the
event of (i) the request by the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, (iii) the
institution or notice of intended institution of any action or proceeding
for that purpose, (iv) the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in
any jurisdiction, or (v) the receipt by it of notice of the initiation or
threatening of any proceeding for such purpose. The Company will make every
reasonable effort to prevent the issuance of such a stop order and, if such
an order shall at any time be issued, to obtain the withdrawal thereof at
the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver
to you a signed copy of the Registration Statement as originally filed and
of each amendment thereto filed prior to the time the Registration
Statement becomes effective and, promptly upon the filing thereof, a signed
copy of each post-effective amendment, if any, to the Registration
Statement (together with, in each case, all exhibits thereto unless
previously furnished to you) and will also deliver to you, for distribution
to the Underwriters, a sufficient number of additional conformed copies of
each of the foregoing (but without exhibits) so that one copy of each may
be distributed to each Underwriter, (ii) as promptly as possible deliver to
you and send to the several Underwriters, at such office or offices as you
may designate, as many copies of the Prospectus as you may reasonably
request, and (iii) thereafter from time to time during the period in which
a prospectus is required by law to be delivered by an Underwriter or
dealer, likewise send to the Underwriters as many additional copies of the
Prospectus and as many copies of any supplement to the Prospectus and of
any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event
relating to or affecting the Company, or of which the Company shall be
advised in writing by you, shall occur as a
15
result of which it is necessary, in the opinion of counsel for the Company
or of counsel for the Underwriters, to supplement or amend the Prospectus
in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the
Shares, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the
Prospectus as so supplemented or amended will not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
existing at the time such Prospectus is delivered to such purchaser, not
misleading. If, after the initial public offering of the Shares by the
Underwriters and during such period, the Underwriters shall propose to vary
the terms of offering thereof by reason of changes in general market
conditions or otherwise, you will advise the Company in writing of the
proposed variation, and, if in the opinion either of counsel for the
Company or of counsel for the Underwriters such proposed variation requires
that the Prospectus be supplemented or amended, the Company will forthwith
prepare and file with the Commission a supplement to the Prospectus or an
amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Shares may be sold by the
several Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Shares in accordance with
the applicable provisions of the Securities Act and the applicable rules
and regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company
will submit to you, for your information, a copy of any post-effective
amendment to the Registration Statement and any supplement to the
Prospectus or any amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in
the qualification of the Shares for offer and sale under the securities or
blue sky laws of such jurisdictions as you may designate and, during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, in keeping such qualifications in good standing
under said securities or blue sky laws; provided, however, that the Company
shall not be obligated to file any general consent to service of process or
to qualify as a foreign corporation in any jurisdiction in which it is not
so qualified. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to
continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the Shares.
(g) During a period of five years commencing with the date
hereof, the Company will furnish to you, and to each Underwriter who may so
request in writing, copies of all periodic and special reports furnished to
shareholders of the Company and of all information, documents and reports
filed with the Commission.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date,
the Company will make generally available to its security holders an
earnings statement in accordance with Section 11(a) of the Securities Act
and Rule 158 thereunder.
16
(i) During a period of five (5) years after the date hereof, the
Company will furnish to its shareholders, annual reports (including
financial statements audited by independent certified public accountants)
within ninety (90) days after the end of each fiscal year and unaudited
quarterly reports of operations for each of the first three quarters of the
fiscal year within forty-five (45) days after the end of each fiscal
quarter, and will furnish to you and the other several Underwriters
hereunder, upon request (i) concurrently with furnishing such reports to
its shareholders, statements of operations of the Company for each of the
first three (3) quarters in the form furnished to the Company's
shareholders, (ii) concurrently with furnishing to its shareholders, a
balance sheet of the Company as of the end of such fiscal year, together
with statements of operations, of shareholders' equity, and of cash flows
of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent certified public accountants,
(iii) as soon as they are available, copies of all reports (financial or
other) mailed to shareholders, (iv) as soon as they are available, copies
of all reports and financial statements furnished to or filed with the
Commission, any securities exchange or the National Association of
Securities Dealers, Inc. (herein called the NASD), (v) every material press
release and every material news item or article in respect of the Company
or its affairs which was generally released to shareholders or prepared by
the Company or any of its subsidiaries, and (vi) any additional information
of a public nature concerning the Company or its subsidiaries, or their
respective businesses which is in the Company's possession and which you
may reasonably request. During such five (5) year period, if the Company
shall have active subsidiaries, the foregoing financial statements shall be
on a consolidated basis to the extent that the accounts of the Company and
its subsidiaries are consolidated, and shall be accompanied by similar
financial statements for any significant subsidiary which is not so
consolidated.
(j) So long as the Company is required to file an annual report
on Form 20-F with the Commission, the Company will file with the Commission
within forty-five (45) days after the end of each of the first three fiscal
quarters a report on Form 6-K containing quarterly interim reports that
contain (i) an unaudited consolidated statement of operations, balance
sheet, statement of cash flows and statement of changes in shareholders'
equity, all prepared in accordance with U.S. generally accepted accounting
principles.
(k) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(l) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which
may be the same entity as the transfer agent) for its Ordinary Shares.
(m) The Company will conduct its affairs in such a manner to
ensure that the Company will not be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act.
17
(n) The Company will take all reasonable steps to ensure that it
will not become a PFIC.
(o) The Company agrees to pay all costs and expenses incident to
the performance of their obligations under this Agreement, including all
costs and expenses incident to (i) the preparation, printing and filing
with the Commission and the NASD of the Registration Statement, any
Preliminary Prospectus and the Prospectus, (ii) the furnishing to the
Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished,
(iii) the printing of this Agreement and related documents delivered to the
Underwriters, (iv) the preparation, printing and filing of all supplements
and amendments to the Prospectus referred to in paragraph (d) of this
Section 6, (v) the furnishing to you and the Underwriters of the reports
and information referred to in paragraph (g) of this Section 6 and (vi) the
printing and issuance of share certificates, including the transfer agent's
fees.
(p) The Company agrees to reimburse you, for the account of the
several Underwriters, for blue sky fees and related disbursements
(including counsel fees and disbursements and cost of printing memoranda
for the Underwriters) paid by or for the account of the Underwriters or
their counsel in qualifying the Shares under state securities or blue sky
laws and in the review of the offering by the NASD.
(q) The provisions of paragraphs (o) and (p) of this Section are
intended to relieve the Underwriters from the payment of the expenses and
costs which the Company hereby agrees to pay and shall not affect any
agreement which the Company may make, or may have made, for the sharing of
any such expenses and costs.
(r) The Company hereby agrees that, without the prior written
consent of Chase Securities, Inc. on behalf of the Underwriters, the
Company will not, for a period of 180 days following the commencement of
the public offering of the Shares by the Underwriters, directly or
indirectly, (i) sell, offer, contract to sell, make any short sale, pledge,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer
or dispose of any shares of Ordinary Shares or any securities convertible
into or exchangeable or exercisable for or any rights to purchase or
acquire Ordinary Shares or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences or
ownership of Ordinary Shares, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Ordinary Shares or
such other securities, in cash or otherwise. The foregoing sentence shall
not apply to the Shares to be sold to the Underwriters pursuant to this
Agreement.
(s) If at any time during the 25-day period after the
Registration Statement becomes effective any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in
your opinion the market price for the Shares has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company
will, after written notice from you advising the Company to the effect set
forth above, forthwith prepare, consult with you concerning the substance
of, and disseminate a press
18
release or other public statement, reasonably satisfactory to you,
responding to or commenting on such rumor, publication or event.
(t) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the NASD or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date of
the effectiveness of the Registration Statement. The Designated Underwriter
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.
(u) The Company (i) will indemnify the Designated Underwriter
for any losses incurred in connection with the Directed Share Program, (ii)
will comply with all applicable securities and other applicable laws, rules
and regulations in each jurisdiction in which the Directed Shares are
offered in connection with the Directed Share Program and (iii) will pay
all reasonable fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and any stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
underwriters in connection with the Directed Share Program.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section
7, the Company agrees to indemnify and hold harmless each Underwriter and each
person (including each partner or officer thereof) who controls any Underwriter
within the meaning of Section 15 of the Securities Act from and against any and
all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Securities Exchange Act of 1934, as amended (herein called the Exchange
Act), or the common law or otherwise, and the Company agrees to reimburse each
such Underwriter and controlling person for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or 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 (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (1) the indemnity agreements of the Company
contained in this paragraph (a) shall not apply to any such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise
19
furnished in writing to the Company by or on behalf of any Underwriter for use
in any Preliminary Prospectus or the Registration Statement or the Prospectus or
any such amendment thereof or supplement thereto and (2) the indemnity agreement
contained in this paragraph (a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Shares which
is the subject thereof (or to the benefit of any person controlling such
Underwriter) if at or prior to the written confirmation of the sale of such
Shares a copy of the Prospectus (or the Prospectus as amended or supplemented)
was not sent or delivered to such person and the untrue statement or omission of
a material fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented) unless the failure is
the result of noncompliance by the Company with paragraph (c) of Section 6
hereof. The indemnity agreements of the Company contained in this paragraph (a)
and the representations and warranties of the Company contained in Section 2
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Shares.
The Company agrees to indemnify and hold harmless The Designated
Underwriter and its affiliates and each person, if any, who controls The
Designated Underwriter or its affiliates within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act (the "Designated
Entities"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) (i)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the consent of the Company for
distribution to participants in connection with the Directed Share Program, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) the failure of any participant to pay for and accept delivery
of Directed Shares that the participant has agreed to purchase; or (iii) related
to, arising out of, or in connection with the Directed Share Program other than
losses, claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of the Designated Entities.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its officers who signs the Registration Statement
on his own behalf or pursuant to a power of attorney, each of its directors,
each other Underwriter and each person (including each partner or officer
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Securities Act, from and against any and all
losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b )
20
registration statement) or 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 (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of such indemnifying Underwriter for use in the Registration
Statement or the Prospectus or any such amendment thereof or supplement thereto.
The indemnity agreement of each Underwriter contained in this paragraph (b)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Shares.
(c) Each party indemnified under the provision of paragraphs (a)
and (b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the Notice of Defense) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the
21
indemnifying party or parties will not be liable under paragraphs (a) through
(c) of this Section 7 for any legal or other expenses subsequently incurred by
the indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear such
other expenses as it or they have authorized to be incurred by the indemnified
party or parties. If, within a reasonable time after receipt of the Notice, no
Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the Shares received by the Company and the total underwriting discount
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to the aggregate public offering price of the Shares. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
22
(e) Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in paragraph (c) of this Section 7).
(f) The Company will not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such Underwriter
or any person who controls such Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company if after the
date of this Agreement trading in the Ordinary Shares shall have been suspended,
or if there shall have occurred (i) the engagement in hostilities or an
escalation of major hostilities by the United States or Israel, or the
declaration of war or a national emergency by the United States or Israel on or
after the date hereof, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Shares
impracticable, (iii) suspension of trading in securities generally or a material
adverse decline in value of securities generally on the New York Stock Exchange,
the American Stock Exchange, or The Nasdaq Stock Market, or limitations on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such exchange or system, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company to the Underwriters
and no liability of the Underwriters to the Company; provided, however, that in
the event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the performance
of the obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (o) and (p) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Shares shall be subject to the
performance by the
23
Company of all its obligations to be performed hereunder at or prior to the
Closing Date or any later date on which Option Shares are to be purchased, as
the case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective; and
no stop order suspending the effectiveness thereof shall have been issued
and no proceedings therefor shall be pending or threatened by the
Commission.
(b) The legality and sufficiency of the sale of the Shares
hereunder and the validity and form of the certificates representing the
Shares, all corporate proceedings and other legal matters incident to the
foregoing, and the form of the Registration Statement and of the Prospectus
(except as to the financial statements contained therein), shall have been
approved at or prior to the Closing Date by Brobeck, Phleger & Harrison LLP
and Herzog, Fox & Neeman, counsel for the Underwriters.
(c) You shall have received an opinion, addressed to the
Underwriters and dated the Closing Date, from (i) Testa, Hurwitz &
Thibeault, LLP, U.S. counsel for the Company, covering the matters set
forth in Annex A hereto, (ii) Meitar, Liquornik Geva & Co., Israeli counsel
for the Company covering the matters set forth in Annex B hereto, (iii)
__________, English counsel for the Company, covering the matters set forth
in Annex C hereto, and (iv) _________, Japanese counsel for the Company,
covering the matters set forth in Annex D hereto, and if Option Shares are
purchased at any date after the Closing Date, additional opinions from each
such counsel, addressed to the Underwriters and dated such later date,
confirming that the statements expressed as of the Closing Date in such
opinions remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus were
true and correct and neither the Registration Statement nor the Prospectus
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not
misleading, (ii) since the Effective Date, no event has occurred which
should have been set forth in a supplement or amendment to the Prospectus
which has not been set forth in such a supplement or amendment, (iii) since
the respective dates as of which information is given in the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein, there has not been any material adverse
change or any development involving a prospective material adverse change
in or affecting the business, properties, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, and,
since such dates, except in the ordinary course of business, neither the
Company nor any of its Subsidiaries has entered into any material
transaction not referred to in the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein,
(iv) neither the Company nor any of its Subsidiaries has any material
contingent obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are not any pending or known
threatened legal proceedings to which the Company or any of its
Subsidiaries is a party or of which property of the Company or any of its
Subsidiaries is the subject which are material and which are not disclosed
in the Registration Statement and the Prospectus,
24
(vi) there are not any franchises, contracts, leases or other documents
which are required to be filed as exhibits to the Registration Statement
which have not been filed as required, (vii) the representations and
warranties of the Company herein are true and correct in all material
respects as of the Closing Date or any later date on which Option Shares
are to be purchased, as the case may be, and (viii) there has not been any
material change in the market for securities in general or in political,
financial or economic conditions from those reasonably foreseeable as to
render it impracticable in your reasonable judgment to make a public
offering of the Shares, or a material adverse change in market levels for
securities in general (or those of companies in particular) or financial or
economic conditions which render it inadvisable to proceed.
(e) You shall have received on the Closing Date and on any later
date on which Option Shares are is purchased a certificate, dated the
Closing Date or such later date, as the case may be, and signed by the
President and the Chief Financial Officer of the Company, stating that the
respective signers of said certificate have carefully examined the
Registration Statement in the form in which it originally became effective
and the Prospectus contained therein and any supplements or amendments
thereto, and that the statements included in clauses (i) through (viii) of
paragraph (d) of this Section 9 are true and correct.
(f) You shall have received from Kost, Forer & Gabbay, a member
of Ernst & Young International, a letter or letters, addressed to the
Underwriters and dated the Closing Date and the Option Closing Date, as the
case may be, confirming that they are independent public accountants with
respect to the Company within the meaning of the Securities Act and the
applicable published rules and regulations thereunder and based upon the
procedures described in their letter delivered to you concurrently with the
execution of this Agreement (herein called the Original Letter), but
carried out to a date not more than three business days prior to the
Closing Date or such later date on which Option Shares is purchased (i)
confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or the
Option Closing Date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter which are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or
to reflect the availability of more recent financial statements, data or
information. The letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties
of the Company or any of its Subsidiaries which, in your sole judgment,
makes it impractical or inadvisable to proceed with the public offering of
the Shares or the purchase of the Option Shares as contemplated by the
Prospectus. The Original Letter shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and
shall (i) represent, to the extent true, that they are independent
certified public accountants with respect to the Company within the meaning
of the Securities Act and the applicable published Rules and Regulations,
(ii) set forth their opinion with respect to their examination of the
consolidated balance sheet of the Company as of December 31, 1999 and
related consolidated statements of operations, shareholders' equity, and
cash flows for the year ended December 31, 1998, (iii) state that they have
performed the procedures set out in Statement on Accounting Standards No.
86 for a review of Management's
25
Discussion and Analysis of Financial Condition and Results of Operations
("MD&A") contained in the Prospectus, (iv) state that the underlying
information, determinations, estimates and assumptions contained in the
MD&A provide a reasonable basis for the statements contained therein, and
(v) address other matters agreed upon by them and you.
(g) You shall have received from Kost, Forer & Gabbay, a member
of Ernst & Young International, a letter stating that their review of the
Company's system of internal accounting controls, to the extent they deemed
necessary in establishing the scope of their examination of the Company's
financial statements as at December 31, 1999, did not disclose any weakness
in internal controls that they considered to be material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the Nasdaq National Market upon official notice
of issuance.
(j) On or prior to the Closing Date, you shall have received
from all directors, officers, and beneficial holders of the outstanding
capital stock of the Company agreements, in form reasonably satisfactory to
Chase Securities, Inc., stating that without the prior written consent of
Chase Securities, Inc. on behalf of the Underwriters, such person or entity
will not, for a period of 180 days following the commencement of the public
offering of the Shares by the Underwriters, directly or indirectly, (i)
sell, offer, contract to sell, make any short sale, pledge, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of
any Ordinary Shares or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Ordinary Shares or
(ii) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences or ownership of Ordinary Shares,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Ordinary Shares or such other securities, in cash or
otherwise.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Brobeck, Phleger & Harrison LLP, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in paragraphs (o) and (p) of
Section 6 hereof, and (ii) if this Agreement is terminated by you because of any
refusal, inability or failure on the part of the
26
Company to perform any agreement herein, to fulfill any of the conditions
herein, or to comply with any provision hereof other than by reason of a default
by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation of the
Company to deliver the Shares shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company by giving
notice to you. Any such termination shall be without liability of the Company to
the Underwriters and without liability of the Underwriters to the Company;
provided, however, that in the event of any such termination the Company agrees
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company under this
Agreement, including all costs and expenses referred to in paragraphs (o) and
(p) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 7 hereof, the several parties (in addition
to the Company and the several Underwriters) indemnified under the provisions of
said Section 7, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Shares from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Chase Securities, Inc., One Bush Street,
San Francisco, California 94104, with a copy to Brobeck, Phleger & Harrison LLP,
1633 Broadway, 47th Floor, New York, New York 10019, Attention: Brian B.
Margolis, Esq.; and if to the Company, shall be mailed, telegraphed or delivered
to it at its office, Kiryat Mada Street, Science Based Industries Campus, P.O.
Box
27
23052, Har Hatzvim, Jerusalem 91230, Israel, Attention: Samuel I. HaCohen.
All notices given by telegraph shall be promptly confirmed by letter.
14. CONSENT TO SERVICE; SUBMISSION TO JURISDICTION. The Company, by
the execution and delivery of this Agreement, designates and appoints ViryaNet,
Inc., a company incorporated under the laws of the State of Delaware as the
authorized agent of the Company, upon whom process may be served in any suit,
proceeding or other action against the Company instituted by any Underwriter or
by any person controlling an Underwriter as to which such Underwriter or any
such controlling person is a party and based upon this Agreement, or in any
other action against the Company in any U.S. federal or state court sitting in
the County of New York, arising out of the offering made by the Prospectus or
any purchase or sale of securities in connection therewith and the Company
expressly accepts the exclusive jurisdiction of any such court in respect of any
such suit, proceeding or other action and, without limiting other methods of
obtaining jurisdiction, each expressly submits to the exclusive personal
jurisdiction of any such court in respect of any such suit, proceeding or other
action. Such designations and appointment shall be irrevocable, unless and until
a successor authorized agent in the County and State of New York reasonably
acceptable to you shall have been appointed by the Company, such successor shall
have accepted such appointment and written notice thereof shall have been given
to the Underwriters. In the event that the Company at any time shall cease to
own a majority of the outstanding voting securities of ViryaNet, Inc., the
Company shall promptly appoint a new agent for service of process hereunder,
which agent shall be reasonably acceptable to you. The Company further agrees
that service of process upon its authorized agent or successor (and written
notice of said service to the Company mailed by certified mail or sent by telex
or delivered, as provided in Section 13 above) shall be deemed in every respect
personal service of process upon the Company in any such suit, proceeding or
other action.
The Company hereby irrevocably waives any objection that it may have
or hereafter have to the laying of venue of any such action or proceeding
arising out of or based on the Shares or this Agreement, or otherwise relating
to the offering, issuance and sale of the Shares in any U.S. federal or state
court sitting in the County of New York and each hereby further irrevocably
waives any claim that any such action or proceeding in any such court has been
brought in an inconvenient forum. The Company agrees that any final judgment
after exhaustion of all appeals or the expiration of time to appeal in any such
action or proceeding arising out of the sale of the Shares or this Agreement
rendered by any such U.S. federal court or state court shall be conclusive, and
subject to applicable law, may be enforced in any other jurisdiction by suit on
the judgment or in any other manner provided by law. Nothing contained in this
Agreement shall affect or limit the right of the Underwriters to serve any
process or notice of motion or other application in any other manner permitted
by law or limit or affect the right of the Underwriters to bring any action or
proceeding against the Company or any of their respective property in the courts
of any other jurisdiction. The Company further agrees to take any and all
actions, including the execution and filing of all such instruments and
documents, as may be necessary to continue such designation and appointment or
such substitute designation and appointment in full force and effect. The
Company hereby agrees to the exclusive jurisdiction of the courts of the State
of New York or the U.S. federal courts, in each case sitting in the County of
New York, in connection with any action brought by them.
28
15. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers, and (c) delivery and payment for the
Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without giving effect to the principles of
conflicts of laws thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
29
Please sign and return to the Company in care of the Company the
enclosed duplicates of this letter, whereupon this letter will become a binding
agreement among the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
VIRYANET LTD.
By __________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
CHASE SECURITIES, INC.
SALOMON SMITH BARNEY INC.
DAIN RAUSCHER WESSELS
By Chase Securities, Inc.
By __________________________
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
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