Exhibit 4.4
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of January 31, 2001, is entered
into by and between IIS INTELLIGENT INFORMATION SYSTEMS LIMITED, an Israeli
company, located at Gutwirth Science-Based Industrial Center, Technion City,
Haifa 32000, Israel (the "Company"), and the purchasers listed on Exhibit A
attached hereto (each, a "Purchaser," and collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Purchasers wish to purchase, and the Company wishes to issue, upon
the terms and subject to the conditions of this Agreement, units (the "Units"),
each Unit consisting of $100,000 principal amount of the Company's convertible
secured debentures (the "Debentures") and three-year non-redeemable warrants to
acquire 10,000 Ordinary Shares, par value NIS .003 per share (the "Ordinary
Shares") of the Company (the "Warrants"). The Debentures are convertible into
the Company's Ordinary Shares, on the terms set forth therein, and the Warrants
may be exercised for the purchase of the Company's Ordinary Shares, on the terms
set forth therein; and
WHEREAS, the Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemptions from registration provided by
Regulation D ("Regulation D") promulgated by the United States Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), and/or Section 4(2) of the Securities Act.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE
a. Purchase. Each of the Purchasers hereby agrees to purchase from the
Company the number of Units set forth next to its name on Exhibit A
hereto. The Debentures shall be issued in substantially the form attached
hereto as Exhibit B, and the Warrants shall be issued in substantially the
form attached hereto as Exhibit C. The purchase price for the Units is as
set forth on Exhibit A hereto.
b. Closing. The Debentures and Warrants to be purchased by the Purchasers
hereunder, in definitive form, shall be delivered by or on behalf of the
Company for the account of each such Purchaser, in consideration of
payment that was effected by such Purchaser on December 20, 2000, at the
offices of Efrati, Galili & Co., 6 Wissotsky Street, Tel-Aviv at 9:30
a.m., Israeli time on January __, 2001, or at such other time and date as
the
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purchasers or their representative, if any, and the Company may agree
upon in writing, such date being referred to herein as the "Closing Date".
2. PURCHASER REPRESENTATIONS AND WARRANTIES; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
Each Purchaser represents and warrants to, and covenants and agrees with, the
Company as follows (except that Meir Noga is not making the representation
set out in b. below):
a. The Purchaser is purchasing the Units and will be acquiring the Ordinary
Shares issuable upon conversion of, and in lieu of interest payments on,
the Debentures and upon exercise of the Warrants for its own account, for
investment purposes only and not with a view towards the public sale or
distribution thereof and not with a view to or for sale in connection with
any distribution thereof;
b. The Purchaser is (i) an "accredited investor," as that term is defined in
Rule 501 of the General Rules and Regulations under the Securities Act,
(ii) experienced in making investments of the kind described in this
Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors, to protect its own interests in connection with the transactions
described in this Agreement and the related documents, and (iv) able to
afford the entire loss of its investment in the Units;
c. All subsequent offers and sales of the Debentures or the Warrants and the
Ordinary Shares issuable upon conversion or exercise of, or in lieu of
interest payments on, the Debentures, or upon exercise of the Warrants
shall be made pursuant to an effective registration statement under the
Securities Act or pursuant to an applicable exemption from registration;
d. The Purchaser understands that the Units are being offered and sold to it
in reliance upon exemptions from the registration requirements of the
United States federal and state securities laws, and that the Company is
relying upon the truth and accuracy of the Purchaser's representations and
warranties, and the Purchaser's compliance with its agreements, each as set
forth herein, in order to determine the availability of such exemptions and
the eligibility of the Purchaser to acquire the Units;
e. The Purchaser and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Units which have been
requested by such Purchaser. The Purchaser and its advisors, if any, have
been afforded the opportunity to ask questions of the Company, and have
received answers to any such inquiries to their satisfaction.
f. The Purchaser acknowledges that it has been furnished with or has acquired
copies of the Company's Annual Report on Form 20-F (the "1999 Annual
Report") filed with the Commission for year ended December 31, 1999, and
each Form 6-K filed thereafter until the date hereof and the Proxy
Statement of the Company dated July 31, 2000 (the "Offering Materials").
The Purchaser is not relying upon any representations or
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other information (whether oral or written) other than as set forth in this
Agreement, and the Offering Materials.
g. The Purchaser acknowledges that in making its decision to purchase the
Units, it has relied upon independent investigations made by it and its
representatives, if any, and the Purchaser and such representatives, if
any, have been provided access and the opportunity to examine all material,
publicly available books and records of the Company, all material contracts
and documents relating to this offering and have had an opportunity to ask
questions and to receive answers from the Company or persons acting on its
behalf concerning the terms and conditions of this offering. The Purchaser
and its advisors, if any, have been furnished with access to all publicly
available materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Units which
have been requested. The Purchaser and its advisors, if any, have received
answers to any such inquiries which they have deemed to be satisfactory.
h. The Purchaser understands that no federal or state agency has passed on or
made any recommendation or endorsement of the Units.
i. Among the risks associated with an investment by the Purchaser in the Units
are: (1) the Company's limited access to additional capital, (2) risks
associated with technology-based companies generally, including the risks
of technological change and new products, and (3) the limited trading
market of the Ordinary Shares, and the consequent lack of liquidity of an
investment in the Debentures and the Warrants. In addition, the Purchasers
acknowledge that they are aware that StoreAge Networks Ltd ("StoreAge") is
a start-up high-tech company and that the shares held by the Company in
StoreAge are the Company's only material asset; in the event that the
Company does not obtain significant cash for its shares in StoreAge, the
Company may not be able to repay the principal amount of the Debentures,
and the Purchasers could lose their entire investment. In addition, the
Purchasers acknowledge that the Company has not made any representations to
the Purchasers as to the prospects of success of StoreAge. In addition, the
Purchaser acknowledges that the transfer of the shares of StoreAge held by
the Company are subject to certain restrictions on transfer and, to the
extent relevant, the Purchaser undertakes to comply with such restrictions.
j. This Agreement has been duly and validly authorized, executed and delivered
on behalf of the Purchaser and is a valid and binding agreement of the
Purchaser, enforceable in accordance with its terms, except to the extent
that enforcement of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and to general principles of equity.
k. Organization. The Purchaser (if a company) is a company duly organized,
validly existing and in good standing under its respective jurisdiction of
incorporation.
l. Legality. The Purchaser has the power and authority to enter into this
Agreement to purchase the Debentures and the Warrants. This Agreement has
been duly and validly
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executed and delivered by and on behalf of the Purchaser, and is a valid
and binding agreement of the Purchaser, enforceable against it in
accordance with its terms, except to the extent that enforcement of this
Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and to general principles of
equity.
m. Non-contravention. The execution and delivery of this Agreement, and each
of the other Primary Documents, and the consummation by the Purchaser of
the other transactions contemplated by this Agreement and each of the other
Primary Documents (as defined in section 3.g. below), does not and will not
conflict with or result in a breach by the Purchaser of any of the terms or
provisions of, or constitute a default under any indenture, mortgage, deed
of trust or other material agreement or instrument to which the Purchaser
is a party or by which it or any of its properties or assets are bound, or
any material existing applicable law, rule, or regulation or any applicable
decree, judgment or order of any court, in their respective jurisdictions,
federal or state regulatory body, administrative agency, or any other
governmental body having jurisdiction over the Purchasers, their
subsidiaries, or any of their properties or assets, except such conflict,
breach or default which would not have a material adverse effect on the
transactions contemplated by this Agreement or by the other Primary
Documents.
n. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the shareholders of any of the Purchaser is required
to be obtained by the Purchaser for the entry into or the performance of
this Agreement and the other Primary Documents, except such authorizations,
approvals and consents that have been obtained.
3. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to each Purchaser that:
a. Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Israel. Each
of the Company's subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective
jurisdiction.
b. Capitalization. On the date hereof, the authorized capital of the Company
shall consist of 16,666,666 Ordinary Shares, of which 8,907,126 were
issued and outstanding as of December 21, 2000. Schedule 1 hereto sets
forth the options, warrants and convertible securities of the Company (the
"Derivative Securities") which are outstanding on the date hereof.
c. Concerning the Ordinary Shares. The Ordinary Shares issuable upon
conversion of, the Debentures, and upon exercise of the Warrants, when so
issued, shall be duly and validly issued, fully paid and non-assessable,
and will not subject the holder thereof to personal liability by reason of
being such a holder. There are no preemptive rights of any
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stockholder of the Company, as such, to acquire the Ordinary Shares
issuable to the Purchaser's pursuant to the terms of the Debentures or the
Warrants.
d. Reporting Company Status. The Company's Ordinary Shares are registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Company has duly and timely filed all materials and
documents required to be filed pursuant to all reporting obligations under
either Section 13(a) or 15(d) of the Exchange Act for a period of at least
twelve (12) months immediately preceding the offer and sale of the Units.
The Company's Ordinary Shares are listed and traded on the Nasdaq
SmallCapMarket ("Nasdaq"), and the Company is not aware of any pending
action or proceeding of any kind to suspend the trading of the Ordinary
Shares.
e. Authorized Shares. The Company has legally available a sufficient number
of authorized and unissued Ordinary Shares as may be reasonably necessary
to effect the conversion of the Debentures and the exercise of the
Warrants.
f. Legality. The Company has the requisite corporate power and authority to
enter into this Agreement and to issue and deliver the Debentures and the
Warrants. The issuance of the Debentures and the Warrants (and the
Ordinary Shares issuable upon conversion of, the Debentures and exercise
of the Warrants) have been duly and validly authorized by all necessary
corporate action by the Company, and this Agreement has been duly and
validly executed and delivered by and on behalf of the Company, and is a
valid and binding agreement of the Company, enforceable against it in
accordance with its terms, except to the extent that enforcement of this
Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and to general principles of
equity.
g. Transaction Agreements. This Agreement, the Registration Rights Agreement,
the form of which is attached hereto as Exhibit D (the "Registration Rights
Agreement" and together with this Agreement, the Debentures and the
Warrants, the "Primary Documents"), and the transactions contemplated
thereby, have been duly and validly authorized by the Company, this
Agreement has been duly executed and delivered by the Company and this
Agreement is, and the Primary Documents, when executed and delivered by the
Company, will each be, valid and binding agreements of the Company,
enforceable in accordance with their respective terms, except to the extent
that enforcement of each of the Primary Documents may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to creditors'
rights generally and to general principles of equity.
h. Non-contravention. The execution and delivery of this Agreement, and each
of the other Primary Documents, and the consummation by the Company of the
other transactions contemplated by this Agreement and each of the other
Primary Documents, does not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under, the Memorandum of Association or the Articles of Association
of the Company, or any indenture, mortgage, deed of trust or
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other material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which they or any of their properties or
assets are bound, or any material existing applicable law, rule, or
regulation or any applicable decree, judgment or order of any court,
Israeli or United States federal or state regulatory body, administrative
agency, or any other governmental body having jurisdiction over the
Company, its subsidiaries, or any of their properties or assets, except
such conflict, breach or default which would not have a material adverse
effect on the transactions contemplated by this Agreement or by the other
Primary Documents.
i. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the Shareholders of the Company is required to be
obtained by the Company for the entry into or the performance of this
Agreement and the other Primary Documents, except such authorizations,
approvals and consents that have been obtained.
j. SEC Filings. None of the reports or documents filed by the Company with
the Commission since January 1, 1999 contained, at the time they were
filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein, or necessary to make the
statements made therein in light of the circumstances under which they were
made, not misleading.
k. Absence of Certain Changes. Since December 31, 1999, except as disclosed
in the Company's reports on Form 6-K, there has been no material adverse
change and no material adverse development in the business properties,
operations, financial condition or results of operations of the Company.
l. Title to Properties; Liens and Encumbrances. The Company has good and
marketable title to all of its properties and assets, both real and
personal, and has good title to all its leasehold interests, in each case
subject only liens, and conditional sale agreementscreated in the ordinary
course of business. The Company's assets are not subject to any pledge or
charges, of any kind whatsoever, except certain pledges imposed on certain
motor vehicles and the first -ranking floating charge on all its assets
which have been registered in favor of the Purchasers.
m. Patents and Other Proprietary Rights. The Company has sufficient title and
ownership of all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
necessary for the conduct of its business as now conducted and as proposed
to be conducted, and such business does not, and would not, conflict with
or constitute an infringement on the rights of others.
n. Permits. The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now conducted, the
lack of which would materially and adversely affect the business, or
financial condition of the Company. The Company is not in default in any
material respect under any of such franchises, permits, licenses or similar
authority.
o. Absence of Litigation. Except as set forth in the Offering Material, there
is no action,
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suit, proceeding, inquiry or investigation before or by any court, public
board or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company or any of its
subsidiaries, in which an unfavorable decision, ruling or finding would
have a material adverse effect on the properties, business, condition
(financial or other), results of operations or prospects of the Company and
its subsidiaries, taken as a whole, or the transactions contemplated by the
Primary Documents, or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform
its obligations under the Primary Documents.
p. No Default. Each of the Company and its subsidiaries is not in default in
the performance or observance of any material obligation,, covenant or
condition contained in any material indenture, mortgage, deed of trust or
other instrument or agreement to which it is a party or by which it or its
property may be bound.
q. Taxes. All applicable tax returns required to be filed by the Company and
each of its subsidiaries have been filed, or if not yet filed have been
granted extensions of the filing dates which extensions have not expired,
and all taxes, assessments, fees and other governmental charges upon the
Company, its subsidiaries, or upon any of their respective properties,
income or franchises, shown in such returns and on assessments received by
the Company or its subsidiaries to be due and payable have been paid, or
adequate reserves therefor have been set up if any of such taxes are being
contested in good faith; or if any of such tax returns have not been filed
or if any such taxes have not been paid or so reserved for, the failure to
so file or to pay would not in the aggregate have a material adverse effect
on the business or financial condition of the Company and its subsidiaries,
taken as a whole.
r. Investment Company Act. The Company is not an "investment company" as
defined in Section 3(a) of the Investment Company Act of 1940, as amended.
s. Agent Fees. The Company has not incurred any liability for any finder's or
brokerage fees or agent's commissions in connection with the offer and sale
of the Units hereunder.
t. Private Offering. Subject to the accuracy of the Purchaser's
representations and warranties set forth in Section 2 hereof, the offer,
sale and issuance of the Units as contemplated by this Agreement are exempt
from the registration requirements of the Securities Act. The Company
agrees that neither the Company nor anyone acting on its behalf will offer
any of the Units, the Debentures or the Warrants or any similar securities
for issuance or sale, or solicit any offer to acquire any of the same from
anyone so as to render the issuance and sale of the Units subject to the
registration requirements of the Securities Act.
u. Full Disclosure. The representations and warranties of the Company set
forth in this Agreement do not contain any untrue statement of a material
fact or omit any material fact necessary to make the statements contained
herein, in light of the circumstances under which they were made, not
misleading.
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4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. Each Purchaser acknowledges that (1) neither the
Debentures nor the Warrants have been, and are not being registered under
the Securities Act and, except as provided in the Registration Rights
Agreement, the Ordinary Shares issuable upon conversion of the Debentures,
and upon exercise of the Warrants, have not been and are not being
registered under the Securities Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Purchaser shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in
form and substance to the Company, to the effect that such Debentures,
Warrants or Ordinary Shares (collectively, the "Securities"), to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance upon Rule 144
under the Securities Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of the
Securities under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as that term is
used in the Securities Act, may require compliance with another exemption
under the Securities Act and the rules and regulations of the Commission
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the
Registration Rights Agreement) under the Securities Act or to comply with
the terms and conditions of any exemption thereunder. The provisions of
Section 4(a) and 4(b) hereof shall be binding upon any subsequent
transferee of the Debentures and the Warrants.
b. Restrictive Legend. Each Purchaser acknowledges and agrees that the
Debentures and the Warrants, and, until such time as the Ordinary Shares
issuable upon conversion of the Debentures, or upon exercise of the
Warrants shall have been registered under the Securities Act as
contemplated by the Registration Rights Agreement and sold in accordance
with such Registration Statement, such securities shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may
be placed against transfer of such Securities).
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY
TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
c. Filings. The Company undertakes and agrees to make all necessary filings
in connection with the sale of the Units to each Purchaser as required by
Israeli and/or United States laws and regulations, or by any domestic
securities exchange or trading market,
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including, if applicable, the filing of a notice on Form D (at such time
and in such manner as required by the Rules and Regulations of the
Commission), and to provide copies thereof to the Purchaser promptly after
such filing or filings.
d. Nasdaq Listing. Within thirty (30) Business Days after the Closing Date,
the Company will take such actions as shall be necessary to cause the
listing of the Ordinary Shares issuable upon conversion of the Debentures,
and upon exercise of the Warrants on Nasdaq, and upon request, shall
furnish to each Purchaser evidence of such actions, including copies of any
documents filed with Nasdaq to effectuate such listing.
e. Reporting Status. So long as any of the Purchasers beneficially own any of
the Securities, the Company shall file all reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act,
and, except in connection with an acquisition transaction in which at least
50% of the Company's voting equity securities are acquired by another
entity, the Company shall not terminate its status as an issuer required to
file reports under the Exchange Act even if the Exchange Act or the rules
and regulations thereunder would permit such termination.
f. Use of Proceeds. The Company has used the proceeds from the issuance of
the Units (excluding amounts paid by the Company for legal fees and
finder's fees in connection with the sale of the Units) for the sole
purpose of investing in StoreAge as part of an investment by existing
Shareholders and/or external investors of $25,000,000.
g. Reservation of Ordinary Shares. The Company will at all times have
authorized and reserved for the purpose of issuance a sufficient number of
Ordinary Shares to provide for the conversion of the Debentures and the
exercise of the Warrants.
The number of Ordinary Shares reserved for issuance by the Company upon
conversion of the Debentures or upon exercise of the Warrants shall at all
times be allocated pro rata among the Purchasers based upon the aggregate
purchase price of the Units purchased by each Purchaser, and no Purchaser
may at any time convert its Debentures or exercise Warrants so as to obtain
a greater number of Ordinary Shares than its pro rata allocation of the
Company's reserved Ordinary Shares. In the event that a Purchaser shall
sell or otherwise transfer, in whole or in part, any of its Securities
(except for Ordinary Shares of the Company subject to an effective
registration statement under the Securities Act or otherwise freely
tradable by such Purchaser), each transferee shall, for purposes of
determining such transferee's allocation of the Company's reserved Ordinary
Shares, be allocated a pro rata portion of the initial purchase price paid
by the Transferor upon its purchase of the Units.
h. Board of Directors. The Company shall use its best efforts to ensure that
in the event that the Purchasers hold (together) at least five percent (5%)
of the Company's issued and outstanding share capital, the Purchasers shall
be entitled to appoint one (1) director to the Board of Directors of the
Company. In addition, as long as the Debentures remain unpaid, the
Purchasers (as a group) will have the right to appoint an observer to the
Board of Directors of the Company. The observer will have the right to
participate in the meetings of the Board of Directors, with no right to
vote.
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5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that no instruction other than the instructions
referred to in this Section 5 and stop transfer instructions to give effect
to Sections 4(a) and 4(b) hereof prior to the registration and sale of the
Ordinary Shares issuable upon conversion of the Debentures, or upon
exercise of the Warrants under the Securities Act will be given by the
Company to the transfer agent and that such Ordinary Shares shall otherwise
be freely transferable on the books and records of the Company as and to
the extent provided in this Agreement, the Registration Rights Agreement,
and applicable law. Nothing in this Section shall affect in any way the
Purchaser's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If a Purchaser provides the
Company with an opinion of counsel reasonably satisfactory to the Company
that registration of a resale by the Purchaser of any of the Securities in
accordance with clause (1)(B) of Section 4(a) of this Agreement is not
required under the Securities Act, the Company shall (except as provided in
clause (2) of Section 4(a) of this Agreement) permit the transfer of the
Securities and, in the case of the Ordinary Shares, promptly instruct the
Company's transfer agent to issue one or more certificates for Ordinary
Shares without legend in such names and in such denominations as specified
by the Purchaser.
b. The Company will permit each Purchaser to exercise its right to convert the
Debentures or to exercise the Warrants by faxing an executed and completed
Notice of Conversion or Form of Election to Purchase, as applicable, to the
Company, and delivering within three (3) business days thereafter, the
original Notice of Conversion (and the related original Debentures) or Form
of Election to Purchase (and the related original Warrants) to the Company
by express courier, duly endorsed. Each date on which a Notice of
Conversion or Form of Election to Purchase is received by the Company in
accordance with the provisions hereof shall be deemed a "Conversion Date."
The Company will transmit the certificates representing the Ordinary Shares
issuable upon conversion of any Debentures or upon exercise of any Warrants
(together with the Debentures not so converted, or the Warrants not so
exercised) to such Purchaser via express courier or by electronic transfer,
as soon as practicable thereafter (but in all events within three (3)
business days), after receipt by the Company of the original Notice of
Conversion (and the related original Debentures) or the original Form of
Election to Purchase (and the related original Warrants) to be converted
(the "Delivery Date"). For purposes of this Agreement, such conversion of
the Debentures or exercise of the Warrants shall be deemed to have been
made immediately prior to the close of business on the Conversion Date.
c. In lieu of delivering physical certificates representing the Ordinary
Shares issuable upon the conversion of the Debentures or exercise of the
Warrants, provided the Company's transfer agent is participating in the
Depositary Trust company ("DTC") Fast Automated Securities Transfer
program, on the written request of a Purchaser who shall have previously
instructed such Purchaser's prime broker to confirm such request to the
Company's transfer agent, the Company shall use commercially reasonable
efforts to cause its transfer agent to electronically transmit such
Ordinary Shares to the Purchaser by crediting the account of the
Purchaser's prime broker with DTC through its Deposit
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Withdrawal Agent Commission ("DWAC") system no later than the applicable
Delivery Date.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO ISSUE THE UNITS.
The Purchaser understands that the Company's obligation to issue the Units on
the Closing Date to the Purchasers pursuant to this Agreement is conditioned
upon:
a. The accuracy on the Closing Date of the representations and warranties of
the applicable Purchaser contained in this Agreement as if made on such
Closing Date and the performance by the Purchasers on or before such
Closing Date of all covenants and agreements of the applicable Purchasers
required to be performed on or before such Closing Date;
b. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent
or approval which shall not have been obtained.
7. CONDITIONS TO THE PURCHASERS' OBLIGATION TO PURCHASE THE UNITS.
The Company understands that each Purchaser's obligation to purchase the Units
on the Closing Date is conditioned upon:
a. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement
as if made on the Closing Date, and the performance in all material
respects by the Company on or before the Closing Date of all covenants and
agreements of the Company required to be performed on or before the Closing
Date;
b. On the Closing Date, the Purchaser shall have received an opinion of
Israeli counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to each Purchaser, to the effect set
forth in Exhibit E hereto, and an opinion of U.S. counsel for the Company,
dated the Closing Date, in form, scope and substance reasonably
satisfactory to each Purchaser, to the effect set forth in Exhibit F
attached hereto;
c. The Company shall have executed and delivered a signed counterpart to the
Registration Rights Agreement;
d. On or prior to the Closing Date, there shall not have occurred any of the
following: (i) a suspension or material limitation in the trading of
securities generally on the New York Stock Exchange or Nasdaq or; (ii) a
general moratorium on commercial banking activities in New York or the
State of Israel declared by the applicable banking authorities.
11
8. EXPENSES.
The Company covenants and agrees with the Purchasers that the Company will pay
or cause to be paid the following: (a) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the issuance of the
Securities, and (b) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 8. If the Company fails to satisfy its obligations or to satisfy
any condition set forth in this Agreement, as a result of which the Units are
not delivered to any of the Purchasers on the terms and conditions set forth
herein, the Company shall reimburse such Purchasers for any out-of-pocket
expenses reasonably incurred by such in making preparations for the purchase,
sale and delivery of the Units not so delivered, without derogating from any
other remedy available to the Purchasers under these circumstances.
9. GOVERNING LAW; MISCELLANEOUS
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Israel. Each of the parties consents to the exclusive
jurisdiction of the Tel-Aviv courts, Israel in connection with any dispute
arising under this Agreement or any of the Primary Documents or relating to the
offer or sale of the Units, the Debentures, the Warrants and Ordinary Shares,
and hereby waives, to the maximum extent permitted by law, any objection,
including any objections based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions. The Purchasers are entering into this
Agreement, each separately from the others, thus each Purchaser will not be
responsible for any act or omission of the other Purchasers, including a breach
by the latter of any of the provisions or representations contained herein. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or enforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement
shall inure to the benefit of, and be binding upon the successors and assigns of
each of the parties hereto, including any transferees of the Securities. This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
10. NOTICES.
Any notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be effective upon personal delivery, via
facsimile (upon receipt of confirmation or error-free transmission) or two
business days following deposit of such notice with an internationally
recognized courier service, with postage prepaid and addressed to each of the
other parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days advance written notice to each of
the other parties hereto.
COMPANY: IIS INTELLIGENT INFORMATION SYSTEMS LIMITED
Gutwirth Science-Based Industrial Center, Technion City
Haifa 31015, Israel
12
ATT: Chairman and CEO
TEL: 972-4-8328803
FAX: 972-4- 8328804
with a copy to:
Efrati, Galili & Co.
6 Wissotsky Street
Tel-Aviv 62338
ATT: Ian Rostowsky, Adv.
TEL: 972-3-605 1010
FAX: 972-3-604 0111
PURCHASERS: At the addresses set forth on the signature page of
this Agreement, as such addresses may be updated in
writing from time to time by each of the Purchasers.
with a copy to:
Gil Ron, Advocate
3A Jabotinsky Street
Ramat-Gan 52520 Israel
ATT: Gil Ron
TEL: 972-3-613-7979
FAX: 972-3-613-7969
11. CONFIDENTIALITY.
Each of the Company and the Purchaser agrees to keep confidential, and not to
disclose to or use for the benefit of any third party the terms of this
Agreement, any of the other Primary Documents or any other information which at
any time is designated in writing by the other party as confidential without the
prior written approval of the other party; provided, however, that this
-------- --------
provision shall not apply to information which, at the time of disclosure, is
already part of the public domain (except by breach of this Agreement) and
information which is required to be disclosed by law or applicable regulation.
[Signature Page Follows]
13
IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
undersigned.
"COMPANY"
I.I.S. INTELLIGENT INFORMATION SYSTEMS
By: _________________________________
Name: Robi Hartman
Title: Chairman and CEO
"PURCHASERS"
CDC Holdings Ltd.
By: _________________________________
Name:
Title:
Armour Investments Ltd.
By:
Name:
Title:
Industrial Systems & Equipment Co.
By: _________________________________
Name:
Title:
_________________
Meir Noga
_________________
Nachum Ezra
14
EXHIBIT A PURCHASERS
EXHIBIT B FORM OF DEBENTURE
EXHIBIT C FORM OF WARRANT
EXHIBIT D REGISTRATION RIGHTS AGREEMENT
EXHIBIT E OPINION OF EFRATI, GALILI & CO.
EXHIBIT F OPINION OF BROWN, RAYSMAN
OPTIONS WARRANTS AND CONVERTIBLE SECURITIES
15
EXHIBIT A TO SECURITIES PURCHASE AGREEMENT
------------------------------------------
PURCHASERS
Principal Amount of
Purchaser Debentures Purchased Number of Warrants
- --------- -------------------- ------------------
CDC Holdings Ltd. $2,100,000 210,000
- ------------------------------------------------------------------------------------
Armour Investments Ltd. $ 400,000 40,000
- ------------------------------------------------------------------------------------
Industrial Systems & Equipment Co. $ 300,000 30,000
- ------------------------------------------------------------------------------------
Meir Noga $ 100,000 10,000
- ------------------------------------------------------------------------------------
Nachum Ezra $ 100,000 10,000
- ------------------------------------------------------------------------------------
16
SCHEDULE 1 TO SECURITIES PURCHASE AGREEMENT
OPTIONS, WARRANTS & CONVERTIBLE SECURITIES
17